POUGHKEEPSIE, N.Y.,
May 1, 2020 /PRNewswire/
-- Rhinebeck Bancorp, Inc., (the "Company") (NASDAQ:
RBKB), the holding company of Rhinebeck
Bank (the "Bank"), reported net income for the three months
ended March 31, 2020 of $1.1 million ($0.10
per basic and diluted common share), $164,000, or 18.0%, more than the $911,000 reported for the comparable prior year
period.
On January 16, 2019, the Company
became the holding company for the Bank when it closed its stock
offering in connection with the completion of the reorganization of
the Bank and Rhinebeck Bancorp, MHC into a two-tier mutual holding
company form of organization. The Company sold 4,787,315
shares of common stock at a price of $10.00 per share, for net proceeds of
$46.0 million, and issued 6,345,975
shares to Rhinebeck Bancorp, MHC. The consolidated financial
results contained herein reflect the consolidated accounts of the
Company and the Bank at and for the periods after January 16, 2019.
COVID-19 Impact
Operational Readiness. The coronavirus
pandemic currently impacting the nation has caused an upheaval to
the economy. Since mid-March, the Company and the Bank have
felt the impact of this global pandemic. In response to the state
of emergency, the Bank has implemented several temporary
operational changes to serve customers and protect its employees
during the COVID-19 crisis. Lobby services have been essentially
suspended, while drive-thru, mobile, and online banking have become
the Bank's primary channels of serving customers. Furthermore,
various measures have been taken to encourage social distancing and
we have also enhanced our cleaning and sanitizing procedures at all
office, drive-thru locations and ATM terminals. Additionally, over
half of our staff have been assigned to work from home when
possible, while other employees are on staggered or reduced
hour schedules. We continue to monitor the latest
COVID-19 developments and are following guidance provided by the
Centers for Disease Control, as well as federal, state and local
agencies.
Paycheck Protection Program. As part of the
Coronavirus Aid, Relief, and Economic Security Act (the CARES Act)
enacted on March 27, 2020, the
Payroll Protection Program ("PPP") Loan Program allocated first
$350 billion, and just recently an
additional $310 billion, in funds to
assist small businesses. Rhinebeck
Bank, as a qualified U.S. Small Business Administration
("SBA") lender, is an authorized participant in this program.
To meet customer demand, a bank-wide team was formed to provide
communications to our customer base, establish procedures and
documentation to accept loan applications under the PPP program,
evaluate potential automated system solutions to process the loan
applications, allocate resources to underwrite the loans, submit
applications to the SBA for approval, develop new documents for the
loans, and close, fund, and book the loans.
As of April 28, 2020, we had
received 578 applications for up to $83.8
million of loans under the PPP. We received SBA approval for
566 applications totaling $83.3
million. By that date we had funded 331 loans for
$70.1 million, none of which were
funded at March 31, 2020. To fund
this additional loan demand, the Bank became a participant in the
Federal Reserve's Payroll Protection Program Lending Facility which
allows us to present these loans as collateral for 100% principal
funding at the Federal Reserve's discount window. The term of these
loans will mirror the actual maturity of the underlying collateral
and will have a fixed interest rate of 0.35%. To date we have
received $57.1 million in such
funding and have submitted for an additional $8.7 million.
Other financial highlights:
- Total assets grew $33.3 million,
or 3.4%, to $1.0 billion at
March 31, 2020 from $974,000 at December 31,
2019.
- Gross loans increased a total of $17.4
million, or 2.2%, to $807.0
million at March 31, 2020 from
$790.0 million at December 31, 2019.
- Total deposit balances were $784.7
million at March 31, 2020,
increasing $11.3 million, or 1.5%,
from $773.3 million at December 31, 2019.
- Return on average assets was 0.44% for the first quarter ended
March 31, 2020 compared to 0.43% for
the corresponding period of 2019.
- Return on average equity was 3.85% for the first quarter of
2020 compared to 3.93% for the same period of 2019.
- Our efficiency ratio improved 5.7%, falling to 73.87% for the
first quarter of 2020 from 78.31% in the same quarter of 2019.
Michael J. Quinn, President and
Chief Executive Officer, said: "The Bank's first quarter
earnings were negatively impacted by the COVID-19 crisis which
contributed to an increase to our loan loss provision based on
qualitative factors. However, our return on
assets still increased slightly to 0.44%
from 0.43% one year ago. This performance, along
with our continued ability to grow our balance sheet through
loans and deposits while improving our efficiency
ratio is encouraging. Our staff continues to serve our
customers' needs through the current crisis and has performed at
the highest level to help small businesses access the PPP loan
program. I am confident that we will continue to meet
the challenges of this crisis as we have done for over 160
years."
Income Statement Analysis
Net interest income increased $751,000, or 9.9%, to $8.3
million for the quarter ended March
31, 2020, from $7.6 million
for the quarter ended March 31, 2019.
The increase in interest income was mostly driven by increasing
originations of higher yielding indirect automobile loans
accompanied by additional production of commercial real estate
loans. This additional revenue was offset by increases in deposit
pricing and borrowing costs that were primarily driven by
competitive market forces and the changing interest rate
environment.
Our net interest margin declined 18 basis points to 3.62% when
compared to the prior year quarter. The net interest margin
was impacted by a lag in deposit pricing reductions as interest
rates declined due to competitive pricing pressures.
We recorded a provision for loan losses of $1.2 million for the first quarter 2020 as
compared to $780,000 for the
comparable prior year period. The increase in the provision was
mainly attributable to the significant negative impact of the
change in qualitative factors reflecting the diminished economic
environment resulting from the COVID-19 pandemic and the resultant
risk the pandemic poses for the Bank's borrowers, which may lead to
credit quality deterioration. The amount of increase in our loan
loss allowance related to the economic environment was based, in
part, on the amount of loans to borrowers that had their loan
payments deferred because they had been negatively impacted by the
pandemic. As of April 24, 2020, the
Bank had received 1,868 deferral requests from 1,565 customers.
Although the actual amount of payments deferred is not known until
the deferral application is completed by collections staff,
approximately $3.1 million of
payments have been deferred. Net charge-offs for the quarter
ended March 31, 2020 totaled $535,000 compared to $243,000 for the respective period in 2019.
The increase was due to higher charge-offs in our indirect
automobile book which grew by $50.4
million, or 15.9%, in loan balances between periods and was
further impacted by the maturing nature of loss development within
our relatively new Albany
portfolio.
Non-interest income totaled $1.6
million for the three months ended March 31, 2020; an increase of $296,000, or 23.4%, from the comparable period in
the prior year. Net gain on the sale of loans increased
$299,000, or 180.1% while investment
advisory income increased $99,000 to
$312,000. These increases were
offset by a $46,000 decrease in
service charges on deposit accounts and a $29,000 loss on the sale of securities.
For the first quarter of 2020, non-interest expenses increased
$381,000 to $7.3 million, or 5.5%, over the comparable 2019
period. Salaries and employee benefits increased $264,000, or 6.8%, attributable to annual salary
merit increases, production incentives, employee benefit increases
and additions to staff. The growth of other non-interest
expense was mainly due to increases in overall processing volumes,
the additions of new technologies and equipment, and additional
costs related to our new status as a public company.
Balance Sheet Analysis
Total assets were $1.0 billion at
March 31, 2020, representing an
increase of $33.3 million, or 3.4%,
from $973.9 million at December 31, 2019. Cash and due from banks
increased $9.8 million over
December 31, 2019, to $21.8 million. Net loans increased $16.9 million, or 2.1%, including an increase of
$6.7 million, or 1.9%, in indirect
automobile loan balances and an increase in commercial real estate
balances of $12.6 million or 4.7% at
March 31, 2020 as compared to
December 31, 2019. Other assets also
include the right-of-use asset of $6.6
million at March 31, 2020 due
to the adoption of the Accounting Standards Update 2016-02, Leases
(Topic 842).
Past due loans increased $3.0
million, or 17.3%, between December
31, 2019 and March 31, 2020
finishing at 2.6% of total loans, or $20.6
million, increasing from 2.2% of total loans at year-end
2019. During the same timeframe, non-performing assets decreased
$721,000 or 7.0%, to $9.6 million. Our reserve as a percentage of
total gross loans was 0.82% at March 31,
2020 as compared to 0.75% at December
31, 2019.
During the first quarter of 2020, total liabilities increased
$29.3 million, or 3.4%, to
$893.4 million, mainly due to an
$11.3 million increase in deposits,
an increase of $13.3 million in
Federal Home Loan Bank advances and the establishment of a
$6.6 million lease liability.
Stockholders' equity increased $4.0
million to $113.9 million at
March 31, 2020, primarily due to a
decrease in total accumulated other comprehensive loss and net
income of $1.1 million for the
period. The Company's ratio of average equity to average assets was
11.41% at March 31, 2020 and 11.42%
at December 31, 2019.
About Rhinebeck Bancorp
Rhinebeck Bancorp, Inc. is a Maryland corporation organized as the mid-tier
holding company of Rhinebeck Bank
and is itself the majority-owned subsidiary of Rhinebeck Bancorp,
MHC. The Bank is a New York
chartered stock savings bank which provides a full range of banking
and financial services to consumer and commercial customers through
its eleven branches and two representative offices located in
Dutchess, Ulster, Orange, and Albany counties in New York State.
Financial services including comprehensive brokerage, investment
advisory services, financial product sales and employee benefits
are offered through Rhinebeck Asset Management, a division of the
Bank.
Forward Looking Statements
This press release contains certain forward-looking statements
about the Company and the Bank. Forward-looking statements
include statements regarding anticipated future events or results
and can be identified by the fact that they do not relate strictly
to historical or current facts. They often include words such
as "believe", "expect", "anticipate", "estimate", "intend",
"predict", "forecast", "improve", "continue", "will", "would",
"should", "could", or "may". Forward-looking statements, by
their nature, are subject to risks and uncertainties. Certain
factors that could cause actual results to differ materially from
expected results include increased competitive pressures, changes
in the interest rate environment, general economic conditions or
conditions within the securities markets, and legislative and
regulatory changes that could adversely affect the business in
which the Company and the Bank are engaged.
Further, given its ongoing and dynamic nature, it is difficult
to predict the full impact of the COVID-19 outbreak on our
business. The extent of such impact will depend on future
developments, which are highly uncertain, including when the
coronavirus can be controlled and abated and when and how the
economy may be reopened. As the result of the COVID-19 pandemic and
the related adverse local and national economic consequences, we
could be subject to any of the following risks, any of which could
have a material, adverse effect on our business, financial
condition, liquidity, and results of operations: the demand for our
products and services may decline, making it difficult to grow
assets and income; if the economy is unable to substantially
reopen, and high levels of unemployment continue for an extended
period of time, loan delinquencies, problem assets, and
foreclosures may increase, resulting in increased charges and
reduced income; collateral for loans, especially real estate, may
decline in value, which could cause loan losses to increase; our
allowance for loan losses may increase if borrowers experience
financial difficulties, which will adversely affect our net income;
the net worth and liquidity of loan guarantors may decline,
impairing their ability to honor commitments to us; as the result
of the decline in the Federal Reserve Board's target federal funds
rate to near 0%, the yield on our assets may decline to a greater
extent than the decline in our cost of interest-bearing
liabilities, reducing our net interest margin and spread and
reducing net income; our wealth management revenues may decline
with continuing market turmoil; our cyber security risks are
increased as the result of an increase in the number of employees
working remotely; and FDIC premiums may increase if the agency
experiences additional resolution costs.
Accordingly, you should not place undue reliance on
forward-looking statements. Rhinebeck Bancorp, Inc. undertakes no
obligation to revise these forward-looking statements or to reflect
events or circumstances after the date of this press release.
The Company's summary consolidated statements of income and
financial condition and other selected financial data follow:
Rhinebeck
Bancorp, Inc. and Subsidiary
|
Consolidated
Statements of Comprehensive Income (Unaudited)
|
(Dollars in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
2019
|
|
Interest and
Dividend Income
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
10,046
|
|
$
|
8,715
|
|
Interest and dividends
on securities
|
|
|
683
|
|
|
608
|
|
Other income
|
|
|
11
|
|
|
35
|
|
Total interest
and dividend income
|
|
|
10,740
|
|
|
9,358
|
|
Interest
Expense
|
|
|
|
|
|
|
|
Interest expense on
deposits
|
|
|
2,017
|
|
|
1,382
|
|
Interest expense on
borrowings
|
|
|
402
|
|
|
406
|
|
Total interest
expense
|
|
|
2,419
|
|
|
1,788
|
|
Net interest
income
|
|
|
8,321
|
|
|
7,570
|
|
Provision for loan
losses
|
|
|
1,200
|
|
|
780
|
|
Net interest
income after provision for loan losses
|
|
|
7,121
|
|
|
6,790
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
Service charges on
deposit accounts
|
|
|
652
|
|
|
698
|
|
Net realized loss on
sales and calls of securities
|
|
|
(29)
|
|
|
—
|
|
Net gain on sales of
loans
|
|
|
465
|
|
|
166
|
|
Increase in cash
surrender value of life insurance
|
|
|
97
|
|
|
100
|
|
Other real estate owned
income
|
|
|
—
|
|
|
10
|
|
Investment advisory
income
|
|
|
312
|
|
|
213
|
|
Other
|
|
|
63
|
|
|
77
|
|
Total
noninterest income
|
|
|
1,560
|
|
|
1,264
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
Salaries and employee
benefits
|
|
|
4,152
|
|
|
3,888
|
|
Occupancy
|
|
|
850
|
|
|
895
|
|
Data
processing
|
|
|
354
|
|
|
307
|
|
Professional
fees
|
|
|
322
|
|
|
266
|
|
Marketing
|
|
|
143
|
|
|
155
|
|
FDIC deposit insurance
and other insurance
|
|
|
168
|
|
|
141
|
|
Other real estate owned
expense
|
|
|
17
|
|
|
39
|
|
Amortization of
intangible assets
|
|
|
11
|
|
|
11
|
|
Other
|
|
|
1,282
|
|
|
1,216
|
|
Total
noninterest expense
|
|
|
7,299
|
|
|
6,918
|
|
Income before
income taxes
|
|
|
1,382
|
|
|
1,136
|
|
Provision for
income taxes
|
|
|
307
|
|
|
225
|
|
Net
income
|
|
$
|
1,075
|
|
$
|
911
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.10
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
|
10,710,501
|
|
|
10,699,592
|
|
Weighted average
shares outstanding, diluted
|
|
|
10,710,501
|
|
|
10,699,592
|
|
Rhinebeck
Bancorp, Inc. and Subsidiary
|
Consolidated
Statements of Financial Condition (Unaudited)
|
(Dollars in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
21,796
|
|
$
|
11,978
|
|
Available for sale
securities (at fair value)
|
|
|
115,134
|
|
|
114,832
|
|
Loans receivable (net
of allowance for loan losses of $6,620 and $5,954,
respectively)
|
|
|
810,361
|
|
|
793,471
|
|
Federal Home Loan
Bank stock
|
|
|
4,035
|
|
|
3,435
|
|
Accrued interest
receivable
|
|
|
3,102
|
|
|
2,903
|
|
Cash surrender value
of life insurance
|
|
|
18,554
|
|
|
18,457
|
|
Deferred tax assets
(net of valuation allowance of $1,247 and $1,202,
respectively)
|
|
|
1,541
|
|
|
2,255
|
|
Premises and
equipment, net
|
|
|
18,504
|
|
|
18,338
|
|
Other real estate
owned
|
|
|
1,382
|
|
|
1,417
|
|
Goodwill
|
|
|
1,410
|
|
|
1,410
|
|
Intangible assets,
net
|
|
|
230
|
|
|
241
|
|
Other
assets
|
|
|
11,217
|
|
|
5,209
|
|
Total
assets
|
|
$
|
1,007,266
|
|
$
|
973,946
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
Noninterest
bearing
|
|
$
|
174,958
|
|
$
|
179,236
|
|
Interest
bearing
|
|
|
609,697
|
|
|
594,107
|
|
Total
deposits
|
|
|
784,655
|
|
|
773,343
|
|
|
|
|
|
|
|
|
|
Mortgagors' escrow
accounts
|
|
|
7,063
|
|
|
8,106
|
|
Advances from the
Federal Home Loan Bank
|
|
|
79,645
|
|
|
66,304
|
|
Subordinated
debt
|
|
|
5,155
|
|
|
5,155
|
|
Accrued expenses and
other liabilities
|
|
|
16,851
|
|
|
11,156
|
|
Total
liabilities
|
|
|
893,369
|
|
|
864,064
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Preferred stock (par
value $0.01 per share; 5,000,000 authorized, no shares
issued)
|
|
|
—
|
|
|
—
|
|
Common stock (par
value $0.01 per share; 25,000,000 authorized, 11,133,290 issued and
outstanding)
|
|
|
111
|
|
|
111
|
|
Additional paid-in
capital
|
|
|
45,869
|
|
|
45,869
|
|
Unearned common stock
held by the employee stock ownership plan ("ESOP")
|
|
|
(4,091)
|
|
|
(4,146)
|
|
Retained
earnings
|
|
|
73,227
|
|
|
72,152
|
|
Accumulated other
comprehensive loss:
|
|
|
|
|
|
|
|
Net unrealized gain
(loss) on available for sale securities, net of taxes
|
|
|
2,412
|
|
|
(195)
|
|
Defined benefit pension
plan, net of taxes
|
|
|
(3,631)
|
|
|
(3,909)
|
|
Total
accumulated other comprehensive loss
|
|
|
(1,219)
|
|
|
(4,104)
|
|
Total
stockholders' equity
|
|
|
113,897
|
|
|
109,882
|
|
Total
liabilities and stockholders' equity
|
|
$
|
1,007,266
|
|
$
|
973,946
|
|
Rhinebeck
Bancorp, Inc. and Subsidiary
|
Selected Ratios
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
|
|
Year
ended
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
|
2019
|
|
Performance
Ratios (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (2)
|
|
0.44
|
%
|
0.43
|
%
|
0.65
|
%
|
Return on average
equity (3)
|
|
3.85
|
%
|
3.93
|
%
|
5.73
|
%
|
Net interest margin
(4)
|
|
3.62
|
%
|
3.80
|
%
|
3.76
|
%
|
Efficiency ratio
(5)
|
|
73.87
|
%
|
78.31
|
%
|
73.73
|
%
|
Average
interest-earning assets to average interest-bearing
liabilities
|
|
135.85
|
%
|
139.46
|
%
|
137.50
|
%
|
Total gross loans to
total deposits
|
|
102.84
|
%
|
103.34
|
%
|
102.09
|
%
|
Average equity to
average assets (6)
|
|
11.41
|
%
|
10.92
|
%
|
11.42
|
%
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios:
|
|
|
|
|
|
|
|
Allowance for loan
losses as a percent of total gross loans
|
|
0.82
|
%
|
1.02
|
%
|
0.75
|
%
|
Allowance for loan
losses as a percent of non-performing loans
|
|
80.39
|
%
|
125.69
|
%
|
66.74
|
%
|
Net charge-offs to
average outstanding loans during the period
|
|
0.07
|
%
|
0.03
|
%
|
0.43
|
%
|
Non-performing loans
as a percent of total gross loans
|
|
1.02
|
%
|
0.81
|
%
|
1.13
|
%
|
Non-performing assets
as a percent of total assets
|
|
0.99
|
%
|
0.83
|
%
|
1.06
|
%
|
|
|
|
|
|
|
|
|
Capital
Ratios (7):
|
|
|
|
|
|
|
|
Tier 1 capital (to
risk-weighted assets)
|
|
12.04
|
%
|
12.95
|
%
|
12.13
|
%
|
Total capital (to
risk-weighted assets)
|
|
12.80
|
%
|
13.90
|
%
|
12.83
|
%
|
Common equity Tier 1
capital (to risk-weighted assets)
|
|
12.04
|
%
|
12.95
|
%
|
12.13
|
%
|
Tier 1 leverage ratio
(to average total assets)
|
|
10.68
|
%
|
11.34
|
%
|
10.84
|
%
|
|
(1)
Performance ratios for the three months ended March 31, 2020 and
2019 are annualized.
|
(2)
Represents net income divided by average total assets.
|
(3)
Represents net income divided by average equity.
|
(4)
Represents net interest income as a percent of average
interest-earning assets.
|
(5)
Represents non-interest expense divided by the sum of net interest
income and non-interest income (Non-GAAP
measure).
|
(6)
Represents average equity divided by average total
assets.
|
(7)
Capital ratios are for Rhinebeck Bank only. Rhinebeck Bancorp, Inc.
is not subject to the minimum consolidated capital
requirements
as a small bank holding company with assets less than $3.0
billion.
|
CONTACT: Michael J. Quinn,
President and Chief Executive Officer, Telephone: (845)
790-1501
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SOURCE Rhinebeck Bancorp, Inc.