Table of Contents

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018Quarterly Period Ended March 31, 2024

or

ORTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

¨TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 333-227266001-38779

Rhinebeck Bancorp, Inc.

(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)

Maryland
83-2117268

Maryland

83-2117268

(State or Other Jurisdictionother jurisdiction of Incorporation
incorporation or Organization)organization)

(I.R.S. Employer
Identification No.)Number)

2 Jefferson Plaza, Poughkeepsie, New York

12601

2 Jefferson Plaza

Poughkeepsie, New York

12601
(Address of Principal Executive Offices)

(Zip Code)

(845) (845) 454-8555

(Registrant’s Telephone Number, Including Area Code)

N/Atelephone number)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

RBKB

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

YES     ¨    NO  x

Yes         No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES     x    NO  ¨

Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  ¨

Accelerated filer  ¨

Non-accelerated filer   x

Smaller reporting company   x

Emerging growth company   x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES     ¨    NO  xYes         No   

100As of May 1, 2024, there were 11,072,607 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding as of December 21, 2018.outstanding.

Rhinebeck Bancorp, Inc.

Form 10-Q

Table of Contents

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

2

1

Consolidated Statements of Financial Condition at September 30, 2018 (unaudited)March 31, 2024 and December 31, 20172023

2

1

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2018March 31, 2024 and 2017 (unaudited)2023

3

2

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2018March 31, 2024 and 2017 (unaudited)2023

4

3

Consolidated StatementStatements of Changes in Stockholders’ Equity for the NineThree Months Ended September 30, 2018March 31, 2024 and 2017 (unaudited)2023

5

4

Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2018March 31, 2024 and 2017 (unaudited)2023

6

5

Notes to Consolidated Financial Statements (unaudited)

7

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

52

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

64

47

Item 4.

Controls and Procedures

64

47

PART II. OTHER INFORMATION

64

48

Item 1.

Legal Proceedings

64

48

Item 1A.

Risk Factors

64

48

Item 2.

Unregistered Sales of Equity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities

64

48

Item 3.

Defaults Upon Senior Securities

64

48

Item 4.

Mine Safety Disclosures

64

48

Item 5.

Other Information

64

48

Item 6.

Exhibits

65

49

SIGNATURES

66

50

Table of Contents

EXPLANATORY NOTEPART I — FINANCIAL INFORMATION

ITEM 1.

Rhinebeck Bancorp, Inc. (the “Company,” “we” or “our”) was formedand Subsidiary

Consolidated Statements of Financial Condition (Unaudited)

(In thousands, except share and per share data)

March 31, 

December 31, 

    

2024

    

2023

Assets

Cash and due from banks

$

13,825

$

14,178

Federal funds sold

15,298

7,524

Interest bearing depository accounts

1,549

427

Total cash and cash equivalents

30,672

22,129

Available for sale securities (at fair value)

 

182,645

 

191,985

Loans receivable (net of allowance for credit losses of $7,973 and $8,124, respectively)

 

993,346

 

1,008,851

Federal Home Loan Bank stock

 

5,614

 

6,514

Accrued interest receivable

 

4,611

 

4,616

Cash surrender value of life insurance

 

30,215

 

30,031

Deferred tax assets (net of valuation allowance of $593 and $598, respectively)

 

10,070

 

9,936

Premises and equipment, net

 

14,592

 

17,567

Other real estate owned

 

 

25

Goodwill

 

2,235

 

2,235

Intangible assets, net

 

225

 

246

Other assets

 

24,559

 

19,067

Total assets

$

1,298,784

$

1,313,202

Liabilities and Stockholders’ Equity

 

  

 

  

Liabilities

 

  

 

  

Deposits

 

  

 

  

Non-interest bearing

$

236,957

$

249,793

Interest bearing

 

800,067

 

780,710

Total deposits

 

1,037,024

 

1,030,503

Mortgagors’ escrow accounts

 

7,301

 

9,274

Advances from the Federal Home Loan Bank

 

108,064

 

128,064

Subordinated debt

 

5,155

 

5,155

Accrued expenses and other liabilities

 

26,968

 

26,521

Total liabilities

 

1,184,512

 

1,199,517

Stockholders’ Equity

 

  

 

  

Preferred stock (par value $0.01 per share; 5,000,000 authorized, no shares issued)

Common stock (par value $0.01; authorized 25,000,000; issued and outstanding 11,072,607)

 

111

 

111

Additional paid-in capital

 

45,951

 

45,959

Unearned common stock held by the employee stock ownership plan

(3,219)

(3,273)

Retained earnings

 

101,507

 

100,386

Accumulated other comprehensive loss:

 

 

Net unrealized loss on available for sale securities, net of taxes

 

(26,657)

 

(26,077)

Defined benefit pension plan, net of taxes

 

(3,421)

 

(3,421)

Total accumulated other comprehensive loss

 

(30,078)

 

(29,498)

Total stockholders’ equity

 

114,272

 

113,685

Total liabilities and stockholders’ equity

$

1,298,784

$

1,313,202

See accompanying notes to serve as the mid-tier stock holding company for Rhinebeck Bank in connection with the reorganization of Rhinebeck Bank and its mutual holding company, Rhinebeck Bancorp, MHC, into the two-tier mutual holding company structure. As of September 30, 2018, the reorganization had not been completed and the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q relate solely to the consolidated financial results and financial position of Rhinebeck Bancorp, MHC and Rhinebeck Bank.statements

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of Rhinebeck Bank at and for the year ended December 31, 2017 contained in the Company’s definitive prospectus dated November 9, 2018 (the “Prospectus”), as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on November 21, 2018.

1

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Rhinebeck Bancorp, MHC and Subsidiary
Consolidated Statements of Financial Condition
(dollars in thousands)

Consolidated Statements of Income (Unaudited)

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
Assets        
         
Cash and due from banks $12,596  $10,460 
Available for sale securities (at fair value)  102,387   113,302 
Held to maturity securities (fair value of $0 and $1,928, respectively)  -   1,914 
Loans receivable (net of allowance for loan losses of $6,310 and $5,457, respectively)  652,053   566,178 
Federal Home Loan Bank stock  2,874   1,108 
Accrued interest receivable  2,418   2,149 
Cash surrender value of life insurance  17,918   17,577 
Deferred tax assets (net of valuation allowance of $985 and $982, respectively)  3,332   3,021 
Premises and equipment, net  16,593   17,025 
Other real estate owned  1,739   2,233 
Goodwill  1,410   1,505 
Intangible assets, net  294   326 
Other assets  6,093   5,305 
         
Total assets $819,707  $742,103 
         
Liabilities and Capital        
         
Liabilities        
         
Deposits        
Noninterest bearing $185,222  $157,828 
Interest bearing  506,496   492,277 
Total deposits  691,718   650,105 
         
Mortgagors’ escrow accounts  3,521   7,284 
Advances from the Federal Home Loan Bank  53,621   14,900 
Subordinated debt  5,155   5,155 
Accrued expenses and other liabilities  8,679   9,682 
         
Total liabilities  762,694   687,126 
         
Stockholders’ Equity        
Common stock (par value $0.01 per share, 100 shares outstanding)  -   - 
Additional paid-in capital  100   100 
Retained earnings  64,991   61,832 
Accumulated other comprehensive loss:        
Net unrealized loss on available for sale securities, net of taxes  (4,244)  (2,322)
Defined benefit pension plan, net of taxes  (3,834)  (4,633)
         
Total accumulated other comprehensive loss  (8,078)  (6,955)
         
Total stockholders’ equity  57,013   54,977 
         
Total liabilities and stockholders’ equity $819,707  $742,103 

(In thousands, except share and per share data)

Three Months Ended March 31, 

    

2024

    

2023

Interest and Dividend Income

Interest and fees on loans

$

14,381

$

13,395

Interest and dividends on securities

 

1,037

 

1,018

Other income

 

217

 

189

Total interest and dividend income

 

15,635

 

14,602

Interest Expense

 

  

 

  

Interest expense on deposits

 

5,134

 

3,970

Interest expense on borrowings

 

1,605

 

768

Total interest expense

 

6,739

 

4,738

Net interest income

 

8,896

 

9,864

Provision for credit losses

 

83

 

1,014

Net interest income after provision for credit losses

 

8,813

 

8,850

Non-interest Income

 

  

 

  

Service charges on deposit accounts

 

743

 

708

Net gain on sales of loans

 

46

 

10

Increase in cash surrender value of life insurance

 

184

 

160

Net gain from sale of other real estate owned

 

4

 

(Loss) gain on disposal of premises and equipment

 

(18)

 

17

Investment advisory income

 

381

 

309

Other

 

166

 

172

Total non-interest income

 

1,506

 

1,376

Non-interest Expense

 

  

 

  

Salaries and employee benefits

 

4,992

 

5,240

Occupancy

 

1,053

 

1,079

Data processing

 

495

 

472

Professional fees

 

414

 

366

Marketing

 

121

 

104

FDIC deposit insurance and other insurance

 

253

 

282

Amortization of intangible assets

 

21

 

24

Other

 

1,528

 

1,636

Total non-interest expense

 

8,877

 

9,203

Income before income taxes

 

1,442

 

1,023

Provision for income taxes

 

321

 

225

Net income

$

1,121

$

798

Earnings per common share:

Basic

$

0.10

$

0.07

Diluted

$

0.10

$

0.07

Weighted average shares outstanding, basic

10,748,006

10,881,885

Weighted average shares outstanding, diluted

10,844,287

11,021,395

See accompanying notes to consolidated financial statements.


2

Rhinebeck Bancorp, MHC and Subsidiary
Consolidated Statements of Income
(dollars in thousands)

Table of Contents

  Three months ended  Nine months ended 
  September 30,  September 30, 
  2018  2017  2018  2017 
  (unaudited)  (unaudited) 
             
Interest and Dividend Income                
Interest and fees on loans $8,570  $6,477  $22,713  $18,738 
Interest and dividends on securities  578   590   1,762   1,859 
Other income  5   25   14   48 
                 
Total interest and dividend income  9,153   7,092   24,489   20,645 
                 
Interest expense on deposits  1,112   784   2,927   2,287 
Interest expense on borrowings  311   45   673   153 
                 
Total interest expense  1,423   829   3,600   2,440 
                 
Net interest income  7,730   6,263   20,889   18,205 
                 
Provision for loan losses  525   225   1,575   675 
                 
Net interest income after provision for loan losses  7,205   6,038   19,314   17,530 
                 
Noninterest Income                
Service charges on deposit accounts  785   613   2,030   1,799 
Net realized loss on sales and calls of securities  (21)  (2)  (22)  (14)
Net gain on sales of loans  167   163   435   432 
Increase in cash surrender value of insurance  101   116   300   345 
Net gain from sale of other real estate owned  -   1   -   - 
Write-downs of other real estate owned  -   -   (387)  - 
Other real estate owned income  11   10   32   32 
Gain on sale of subsidiary  -   1,834   -   1,834 
Loss on disposal of premises and equipment  -   (106)  -   (106)
Insurance related income  -   283   -   1,403 
Investment advisory income  225   183   557   565 
Other  230   253   685   735 
                 
Total noninterest income  1,498   3,348   3,630   7,025 
                 
Noninterest Expenses                
Salaries and employee benefits  3,601   3,287   10,520   10,267 
Sales commissions  -   30   -   217 
Occupancy  818   787   2,572   2,532 
Data processing  283   272   851   879 
Professional fees  217   186   635   588 
Advertising  148   166   532   460 
FDIC deposit insurance and other insurance  229   182   608   612 
Other real estate owned expense  101   76   184   139 
Amortization of intangible assets  11   14   32   57 
Impairment loss on goodwill  -   -   95   - 
Other  1,065   1,010   3,211   3,099 
                 
Total noninterest expenses  6,473   6,010   19,240   18,850 
                 
Income before income taxes  2,230   3,376   3,704   5,705 
                 
Provision for income taxes  266   754   545   1,471 
                 
Net income $1,964  $2,622  $3,159  $4,234 

Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands, except share and per share data)

Three Months Ended March 31, 

    

2024

    

2023

Net Income

$

1,121

$

798

Other Comprehensive Income

 

 

Net unrealized (losses) gains on available for sale securities

 

(734)

 

2,811

Tax effect

 

154

 

(590)

Unrealized (losses) gains on available for sale securities, net of tax

 

(580)

 

2,221

Other comprehensive (loss) income:

 

(580)

 

2,221

Total Comprehensive Income

$

541

$

3,019

See accompanying notes to consolidated financial statements.


Rhinebeck Bancorp, MHC and Subsidiary
Consolidated Statements of Comprehensive Income
(dollars in thousands)

  Three months ended  Nine months ended 
  September 30,  September 30, 
  2018  2017  2018  2017 
  (unaudited)  (unaudited) 
             
Net Income $1,964  $2,622  $3,159  $4,234 
                 
Other Comprehensive Loss                
Unrealized (losses) gains on available for sale securities:                
Unrealized holding (losses) gains arising during the period  (670)  1   (2,455)  645 
Reclassification adjustment for losses realized in net realized gain on sales and calls of securities on the consolidated statements of income  21   2   22   14 
                 
Net unrealized (losses) gains on available for sale securities  (649)  3   (2,433)  659 
                 
Tax effect  137   (1)  511   (224)
                 
Unrealized (losses) gains on available for sale securities, net of tax  (512)  2   (1,922)  435 
                 
Defined benefit pension plan:                
Actuarial gain arising during the period  -   -   823   - 
Reclassification adjustment for amortization of net actuarial loss  -   -   187   - 
                 
Total  -   -   1,010   - 
                 
Tax effect  -   -   (211)  - 
                 
Defined pension benefit plan gain, net of tax  -   -   799   - 
                 
Other comprehensive (loss) income  (512)  2   (1,123)  435 
                 
Total Comprehensive Income $1,452  $2,624  $2,036  $4,669 

3

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(a) - Includes $4 and $1 for the three months and $5 and $5 for the nine months ended September 30, 2018 and 2017, respectively, for tax effect of realized losses which are included in the provision for income taxes on the consolidated statements of income.
(b) - Included in salaries and employee benefits on the consolidated statements of income.
(c) - Includes $39 for the nine months ended September 30, 2018 for tax effect of amortization of net actuarial loss included in the provision for income taxes on the consolidated statements of income.

(In thousands, except share and per share data)

Unearned

Accumulated

 

Additional

Common

Other

Common

Paid-in

Stock Held

Retained

Comprehensive

    

Stock

    

Capital

by the ESOP

    

Earnings

    

Loss

    

Total

Balance at December 31, 2022

$

113

$

47,075

$

(3,491)

$

96,624

$

(32,189)

$

108,132

Cumulative effect of change in accounting principle (See Note 1 of the Consolidated Financial Statements– Impact of Recent Accounting Pronouncements), net of tax

$

$

$

$

(633)

$

$

(633)

Balance at January 1, 2023 as adjusted for change in accounting principle

$

113

$

47,075

$

(3,491)

$

95,991

$

(32,189)

$

107,499

Net income

 

 

 

 

798

 

 

798

Other comprehensive income

 

 

 

 

2,221

 

2,221

ESOP shares committed to be allocated

 

(5)

54

49

Share-based compensation expense

150

 

150

Balance at March 31, 2023

$

113

$

47,220

$

(3,437)

$

96,789

$

(29,968)

$

110,717

Balance at December 31, 2023

$

111

$

45,959

$

(3,273)

$

100,386

$

(29,498)

$

113,685

 

  

 

  

 

  

 

  

 

  

 

Net income

 

 

 

 

1,121

 

 

1,121

Other comprehensive loss

 

 

 

 

 

(580)

 

(580)

ESOP shares committed to be allocated

(8)

54

46

Balance at March 31, 2024

$

111

$

45,951

$

(3,219)

$

101,507

$

(30,078)

$

114,272

See accompanying notes to consolidated financial statements.


4

Rhinebeck Bancorp, MHC and Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands)

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

(In thousands, except share and per share data)

Three Months Ended March 31, 

    

2024

    

2023

Cash Flows from Operating Activities

Net income

$

1,121

$

798

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Amortization and accretion of premiums and discounts on investments, net

 

61

 

72

Net realized gain on sale of other real estate owned

(4)

Provision for credit losses

 

83

 

1,014

Loans originated for sale

 

(1,957)

 

(1,510)

Proceeds from sale of loans

 

2,017

 

1,079

Net gain on sale of loans

 

(46)

 

(10)

Amortization of intangible assets

 

21

 

24

Depreciation and amortization

 

344

 

358

Net loss (gain) from disposal of premises and equipment

 

18

 

(17)

Deferred income tax expense (benefit)

 

20

 

(338)

Increase in cash surrender value of insurance

 

(184)

 

(160)

Net increase in accrued interest receivable

 

5

 

1,256

Expense of earned ESOP shares

 

46

 

49

Share-based compensation expense

150

Net increase in other assets

 

(5,492)

 

(1,227)

Net increase in accrued expenses and other liabilities

 

447

 

1,568

Net cash (used in) provided by operating activities

 

(3,500)

 

3,106

Cash Flows from Investing Activities

 

  

 

  

Proceeds from maturities and principal repayments of securities

 

8,545

 

4,226

Net purchases of FHLB Stock

 

900

 

(2,192)

Net decrease (increase) in loans

 

15,408

 

(11,601)

Purchases of bank premises and equipment

 

(244)

 

(63)

Proceeds from disposal of premises and equipment

 

2,857

 

27

Net increase of other real estate owned

 

29

 

Net cash provided by (used in) investing activities

 

27,495

 

(9,603)

Cash Flows from Financing Activities

 

  

 

  

Net decrease in demand deposits, NOW, money market and savings accounts

 

(8,403)

 

(104,127)

Net increase in time deposits

 

14,924

 

67,718

Net decrease in mortgagors' escrow accounts

 

(1,973)

 

(1,062)

Net (decrease) increase in short-term debt

 

(20,000)

 

28,727

Net increase in long-term debt

 

 

20,000

Net cash (used in) provided by financing activities

 

(15,452)

 

11,256

Net increase in cash and cash equivalents

 

8,543

 

4,759

Cash and Cash Equivalents

 

  

 

  

Beginning balance

 

22,129

 

31,384

Ending balance

$

30,672

$

36,143

Supplemental Disclosures of Cash Flow Information

 

  

 

  

Cash paid for:

 

  

 

  

Interest

$

6,547

$

4,465

Income taxes

$

108

$

106

  Common
Stock
  Additional
Paid-in
Capital
  Retained
Earnings
  Accumulated
Other
Comprehensive
Loss
  Total 
                
Balance at December 31, 2017 $-  $100  $61,832  $(6,955) $54,977 
                     
Net income  -   -   3,159   -   3,159 
Other comprehensive loss  -   -   -   (1,123)  (1,123)
                     
Balance at September 30, 2018 (unaudited) $-  $100  $64,991  $(8,078) $57,013 
                     
Balance at December 31, 2016 $-  $100  $57,686  $(5,269) $52,517 
                     
Net income  -   -   4,234   -   4,234 
Other comprehensive loss  -   -   -   435   435 
                     
Balance at September 30, 2017 (unaudited) $-  $100  $61,920  $(4,834) $57,186 

See accompanyingnotes to consolidated financial statements.statements


5

Rhinebeck Bancorp, MHC and Subsidiary
Consolidated Statements of Cash Flows
(dollars in thousands)

  For the nine months ended 
  September 30, 
  2018  2017 
  (unaudited) 
Cash Flows from Operating Activities        
Net income $3,159  $4,234 
Adjustments to reconcile net income to net cash provided by operating activities:        
Amortization and accretion of premiums and discounts on investments, net  265   286 
Net realized loss on sales and calls of securities  22   14 
Provision for loan losses  1,575   675 
Loans originated for sale  (26,937)  (29,615)
Proceeds from sale of loans  29,146   29,567 
Net gain on sale of mortgage loans  (435)  (432)
Net gain on sale of other real estate owned  -   -
Amortization of intangible assets  32   57 
Gain on sale of subsidiary  -   (1,834)
Impairment loss on goodwill  95   - 
Depreciation and amortization  866   856 
Write-down of other real estate owned  387   - 
Loss from disposal of premises and equipment  -   106 
Deferred income tax (benefit) expense  (12)  134 
Increase in cash surrender value of insurance  (300)  (345)
Decrease (increase) in accrued interest receivable  (269)  325 
Decrease (increase)  in other assets  (788)  697 
Increase in accrued expenses and other liabilities  7   217 
         
Net cash provided by operating activities  6,813   4,942 
         
Cash Flows from Investing Activities        
Proceeds from sales and calls of available for sale securities  2,113   26,519 
Proceeds from maturities and principal repayments of securities  11,881   14,542 
Purchases of securities  (3,885)  (19,568)
Net (purchases) sales of FHLB stock  (1,766)  1 
Net increase in loans  (89,224)  (34,489)
Purchases of bank owned life insurance policies  (41)  (41)
Purchases of bank premises and equipment  (434)  (408)
Proceeds from disposal of premises and equipment  -   525 
Net decrease of other real estate owned  -   2 
Proceeds from sale of other real estate owned  108   281 
Proceeds from sale of subsidiary  -   3,443 
         
Net cash used in investing activities  (81,248)  (9,193)
         
Cash Flows from Financing Activities        
Net increase in demand deposits, NOW, money market and savings accounts  30,911   17,035 
Net increase (decrease) in time deposits  10,702   (10,902)
Decrease in mortgagors’ escrow accounts  (3,763)  (3,317)
Net increase in short-term debt  20,537   700 
Net increase in long-term debt  18,184   - 
         
Net cash provided by financing activities  76,571   3,516 
         
Net increase (decrease) in cash and due from banks  2,136   (735)
         
Cash and Due from Banks        
Beginning balance  10,460   12,976 
         
Ending balance $12,596  $12,241 
         
Supplemental Disclosures of Cash Flow Information        
Cash paid for:        
Interest $2,081  $1,610 
         
Income taxes $368  $1,009 
         
Noncash Investing and Financing Activities        
Unrealized holding (loss) gain on available for sale securities arising during the period $(2,433) $659 
         
Transfer of loans to other real estate owned $-  $139 
         
Decrease in defined benefit plan liability included in other comprehensive loss $1,010  $- 

See accompanying notes to consolidated financial statements.


Table of ContentsRHINEBECK BANCORP, MHC AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

1.Nature of Business and Significant Accounting Policies

Rhinebeck Bancorp, MHC (“Company”Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

1.    Nature of Business and Significant Accounting Policies

The financial statements include the accounts of Rhinebeck Bancorp, Inc. (the “Company”) is, a mutualstock holding company, whoseand its wholly-owned subsidiary, is Rhinebeck Bank (“Bank”(the “Bank”), a New York chartered stock savings bank. The primary purpose of the Company is to act as a holding company for the Bank. The Bank provides a full range of banking and financial services to consumer and commercial customers through its eleventhirteen branches and two representative offices located in Dutchess, Ulster, Orange, and Albany counties. Financial services, including investment advisory and financial product sales, are offered through a division of the Bank doing business as Rhinebeck Asset Management (“RAM”Management.

The unaudited consolidated financial statements reflect all adjustments, which in the opinion of management are necessary for a fair presentation of the results of the interim periods and are of a normal and recurring nature. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other period.

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of the Company at and for the year ended December 31, 2023 contained in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 26, 2024 (the “Annual Report on form 10-K”).

A description ofFor more information regarding the Company'sCompany’s significant accounting policies, are presented below.see the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K. As of March 31, 2024, the critical accounting policies of the Company have not changed materially from those disclosed in the Annual Report on Form 10-K. See Note 1 of the Consolidated Financial Statements– Impact of Recent Accounting Pronouncements.

Basis of Financial Statements Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, as of the date of the consolidated statements of financial condition and reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loancredit losses the valuation of securities and other real estate owned, the evaluation of investment securities for other-than-temporary impairment,(“ACL”), the evaluation of goodwill for impairment and the valuation of deferred tax assets and the determination of pension obligations.

The interim financial statements at September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017, respectively, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the results to be achieved for the remainder of 2018 or any other period.

assets.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

Significant Group Concentrations of Credit Risk

Most of the Company’s activities are with customers located in the New York State counties of Dutchess, Ulster, Orange, Columbia, Putnam, and Albany. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ abilities to repay their loans is dependent on the economic conditions in the territories in which the Company operates.

Cash and Cash Equivalents

Cash and due from banks and federal funds sold are recognized as cash equivalents in the consolidated statements of financial condition and cash flows. Federal funds sold generally mature in one day. The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Investment in Debt and Marketable Equity Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and are recorded at amortized cost. “Trading” securities, if any, are carried at fair value, with unrealized gains and losses recognized in earnings. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as “available for sale” and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income (loss), net of taxes. Purchase premiums and discounts are recognized in interest income using the interest method over the maturity terms of the securities. Realized gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

The Company evaluates securities for other-than temporary impairment on a regular basis. The evaluation considers several factors including the amount of the unrealized loss, the period of time the security has been in a loss position and the credit standing of the issuer. When the Company does not intend to sell the security and it is likely that the Company will not be required to sell the security before recovery of its cost basis, the credit loss determined due to a permanent impairment will be recognized in earnings. The credit loss component recognized is identified as the amount of future principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow estimates discounted at the applicable original yield of the security.

Loans Receivable

Loans that the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances adjusted for unearned income, including any allowance for loan losses and any unamortized deferred fees or costs.

Interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a level yield adjustment over the respective term of the loan.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Consumer automobile and installment loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued, but not collected, for loans that are placed on nonaccrual status or charged off, is reversed against interest income. The interest on these loans is accounted for on the cash-basis method until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management determines all or part of the loan balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the size and composition of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance calculation methodology involves segregation of the total loan portfolio into segments. The Company’s loans receivable portfolio is comprised of the following segments: commercial real estate, residential real estate, commercial and industrial and consumer. The segments of the Company’s loans receivable portfolio are further disaggregated into classes based on identified associated risks within those segments. This allows management to better monitor risk and performance.

Commercial real estate loans are separated into the two classes: non-residential and multi-family. Non-residential and multi-family loans include long-term loans financing commercial properties and includeboth owner and non-owner occupied properties. Construction loans, which includeland loans,arecomprised mostly of non-owner occupied projects, whereby the property is generally under development and tends to have more risk than the owner occupied loans.The Company grants loans for the construction of residential homes, residential developments and land development projects. Repayment of these loans is mostly dependent upon either the ongoing cash flow of the borrowing entity or the resale or lease of the subject property.

Residential real estate loans are secured by the borrower’s residential real estate generally in a first lien position. Residential mortgages have varying loan interest rates depending on the financial condition of the borrower, the loan to value ratio and the term of the loan.

The commercial and industrial loan segment consists of loans made for purposes of financing the activities of commercial customers. The assets financed through commercial and industrial loans are used within the business for its ongoing operations. Repayment of commercial and industrial loans predominately comes from the cash flow of the business or the ongoing operations of assets.

Consumer loans are classified into the following three classes: indirect automobile loans, home equity loans and other consumer loans. Indirect automobile loans are secured by the borrowers’ automobiles and originated through the Company’s relationships with the automobile dealers in the various counties in the Company’s service area. Home equity loans are secured by the borrower’s residential real estate in a first or second lien position. Other direct consumer loans may be unsecured.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The Company has established credit policies applicable to each type of lending activity in which it engages. The Company evaluates the creditworthiness of each customer and, in most cases, extends credit of up to 80% of the market value of the collateral at the date of the credit extension, depending on the borrowers' creditworthiness and the type of collateral. The Company’s credit policies determine advance rates against the different forms of collateral that can be pledged against commercial and industrial and commercial real estate loans. Typically, the majority of loans will be limited to a percentage of their underlying collateral values such as real estate values, automobiles, equipment, eligible accounts receivable and inventory. Individual loan advance rates may be higher or lower depending upon the financial strength of the borrower, past experience with the borrower, the nature of the collateral, competitive offerings and/or term of the loan.

The market value of collateral is monitored on an ongoing basis and additional collateral may be obtained when warranted. While collateral provides some assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment to be based on the borrower's ability to generate continuing sufficient cash flows. The Company's policy for collateral requires that, generally, the amount of the loan may not exceed 90% of the original appraised value of the property. Private mortgage insurance is usually required for that portion of the loan in excess of 80% of the appraised value of the property.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated at least quarterly or when credit deficiencies arise, such as when loan payments are delinquent. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass.

The allowance consists of specific and general components. The specific component relates to loans that are considered impaired. For such impaired loans, an allowance is established when the discounted cash flows (or observable market price or collateral value if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan. The general component covers all other loans, segregated generally by loan type and is based on historical loss experience with adjustments for qualitative factors which are made after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss data.

These qualitative risk factors generally include:

1.Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices.

2.National, regional and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans.

3.Size and composition of the portfolio and terms of loans.

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

4.Volume and severity of past due, classified and nonaccrual loans as well as loan modifications.

5.Existence and effect of any concentrations of credit and changes in the level of such concentrations.

6.Effect of external factors, such as competition and legal and regulatory requirements.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls are not necessarily classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and real estate loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. The estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loans’ collateral.

For loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the size of the loan, age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted for expected sales costs to arrive at the estimated recognizable value of the collateral, which is considered to be the estimated fair value. The recorded investment in consumer mortgages and loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $593 and $97 on September 30, 2018 and December 31, 2017, respectively.

For loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

The evaluation of the need and amount of the allowance for impaired loans and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The Company may grant a concession or modification for economic or legal reasons related to a borrower's financial condition that it would not otherwise consider resulting in a modified loan which is then identified as a troubled debt restructuring (“TDR”). These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculating the Company's allowance for loan losses.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The Company identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, negative trends, or specific conditions that may result in a payment default in the near future.

Regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

Loans Held for Sale

Loans held for sale are those mortgage loans the Company has the intent to sell in the foreseeable future and are carried at the lower of aggregate cost or market value, with valuation changes recorded in noninterest income. Gains and losses on sales of loans are recognized at the trade dates and are determined by the difference between the sales proceeds and the carrying value of the loans.

Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold. Mortgage service rights are recorded and amortized over the life of the loan.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

Servicing

Servicing assets are recognized as separate assets developed through the sale of residential mortgages. Servicing rights are initially recorded at fair value with the income statement effect recorded in gain or loss on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to and over the period of the estimated future net servicing income of the underlying financial assets.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is recognized through a valuation allowance and charged to noninterest income, to the extent that fair value is less than the capitalized amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income.

Other Real Estate Owned

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in operations. Costs relating to the development and improvement of the property are capitalized, subject to the resulting limit of fair value of the collateral. Gains or losses are included in operations upon disposal. Other real estate owned included $935 and $1,322 of residential real estate and $804 and $911 of commercial property on September 30, 2018 and December 31, 2017, respectively.

Premises and Equipment

Premises and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is charged to operations using the straight-line method over the estimated useful lives of the related assets. Rent expense is charged to operations over the expected lease term using the straight-line method. Leasehold improvements are amortized over the shorter of the improvements' estimated economic lives or the related lease terms. Gains and losses on dispositions are recognized upon realization. Maintenance and repairs are expensed as incurred and improvements are capitalized.

Bank-Owned Life Insurance

The Company purchased bank owned life insurance (“BOLI”) on a chosen group of employees and trustees. The Company is the owner and sole beneficiary of the policies. Earnings from BOLI are recognized as part of noninterest income. BOLI is carried at cash surrender value. Death benefit proceeds received in excess of the policies cash surrender values are recognized in income upon receipt. The Company does not intend to surrender these policies and, accordingly, no deferred taxes have been provided.

Significant One-Time Business Transactions

At the close of business on August 15, 2017, the Bank sold all of its interest in its subsidiary Brinckerhoff and Neuville, Inc. (“B&N”) in a stock transaction for net proceeds of $3,443. As a result, the Company realized a $1,834 net gain on the sale, which is separately reported on the consolidated statements of income. B&N had pre-tax profit of $437 in 2017.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Goodwill and Amortizable Intangible Assets

The excess of the purchase price of an acquisition over the net fair value of the identifiable tangible and intangible assets and liabilities is assigned to goodwill. Goodwill is not amortizable, but is subject to at least an annual assessment, or more frequently in the presence of certain circumstances, for impairment.

Other intangible assets are stated at cost, less accumulated amortization and consist of purchased customer accounts. Purchased customer accounts primarily consist of records and files that contain information about investment holdings. These assets are amortized on a straight-line basis over the related estimated lives of approximately 13 years. In the presence of certain circumstances, intangible assets may be assessed for impairment as well. Impairment exists when carrying value exceeds its fair value. In such circumstances a charge for the relevant impairment is recognized and the net book value is reduced to the appropriate value.

Income Taxes

The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that all or some portion of the deferred tax assets will not be realized.

When tax returns are filed, it is highly expected that most positions taken would be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company has no liabilities for uncertain tax positions at September 30, 2018 and December 31, 2017.

Interest and penalties associated with unrecognized tax benefits, if any, would be classified as an additional provision for income taxes in the consolidated statements of income.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Comprehensive Income (Loss)

GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and the net actuarial loss of the defined benefit pension plan, are reported as a separate component of the stockholders’ equity section of the consolidated statements of financial condition, such items, along with net income, are components of comprehensive income (loss).

Fair Value

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability.

Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment.

The Company's fair value measurements are classified into a fair value hierarchy based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The three categories within the hierarchy are as follows:

Level 1Quoted prices in active markets for identical assets and liabilities.

Level 2Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active; and model-based valuation techniques for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Reclassifications

Certain amounts in the prior year consolidated financial statements have beenmay be reclassified as required to conform to the current year’s presentation. These reclassifications have no effect on our previously reported net income or shareholders’ equity.

6

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Impact of Recent Accounting Pronouncements

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU No. 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The Company used the modified retrospective method for transition with the cumulative effect recognized as of the date of initial application with no restatement of prior periods. The adoption did not have a significant effect on the Company’s financial statements as the recognition of interest income has been scoped out of the guidance and noninterest income recognition is similar to current revenue recognition practices. See Note 16 for additional information related to the adoption of ASU No. 2014-09.

In February 2016,October 2023, the FASB issued ASU No. 2016-02 “Leases (Topic 842)”. This ASU requires lessees2023-06, which amends the disclosure or presentation requirements related to recognize the assets and liabilities that arise from leases with a lease term of more than 12 months on the balance sheet. A lessee should recognizevarious subtopics in the statementsFASB Accounting Standards Codification. In annual periods, this requires disclosure of financial position a right-of-use asset representing its rightan entity’s accounting policy related to use the underlying assetentity’s presentation of cash flows associated with derivative instruments and the related gains and losses in the statement of cash flows. This also requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods. The effective dates of ASU 2023-06 will be the lease term and a liability to make lease payments. This ASU isdate on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, for the Company in 2019. Earlywith early adoption is permitted.prohibited. The Company is currently assessingevaluating the effect that ASU No. 2016-02 will have on its results of operations, financial position and cash flows.

In June 2016, the FASB issued ASU No. 2016-13 on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU requires credit losses on most financial assets be measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The measurement of expected credit losses is based upon relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This ASU is effective for the Company in 2021. Early adoption is permitted in 2019. The Company does not believe that the adoption of these updates will have a material effect on its results of operations, financial position and cash flows.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Effective January 1, 2018, the Company adopted ASU 2016-01 “Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities”. This makes significant changes in U.S. GAAP related to certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The changes provided for in this Update that are applicable to the Company are as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; however, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (2) for equity investments without readily determinable fair values, require a qualitative assessment to identify impairment and if a qualitative assessment indicates that impairment exists, requiring an entity to measure the investment at fair value; (3) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (4) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (5) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (6) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (7) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For the Company, the adoption of ASU 2016-01 resulted in the use of an exit price to determine the fair value of financial instruments not measured at fair value in the consolidated statements of financial condition. Accordingly, we refined the calculation used to determine the disclosed fair value of the Company’s loans held for investment as part of adopting this standard. The refined calculation did not have a significant impact on the Company’s fair value disclosures.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other” to simplify the accounting for goodwill impairment. This guidance, among other things, removes step 2 of the goodwill impairment test thus eliminating the need to determine the fair value of individual assets and liabilities of the reporting unit. Upon adoption of this ASU goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This may result in more or less impairment being recognized than under current guidance. This will become effective for the Company’s annual goodwill impairment test in 2020. The Company does not believe that the adoption of this Update will have a material effect on its results of operations, financial position and cash flows.

In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220).” ASU 2018-02 permits a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the reduction in the corporate income tax rate to 21% with the newly enacted Tax Cuts and Jobs Act. As required by GAAP, the Company had re-measured all deferred tax amounts at 21% at December 31, 2017 with the change included in provision for income taxes in 2017, the period of enactment. This left deferred tax items in accumulated other comprehensive loss at the old rate of 34% used by the Company. The reclassification allows the Company to transfer an amount equal to the change in the rate related to those deferred tax items included in accumulated other comprehensive loss to retained earnings. ASU 2018-02 is effective for the Company in 2019 but early adoption is permitted. The Company elected to adopt this guidance at December 31, 2017.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

In May 2018, the FASB issued ASU No. 2018-06, “Codification Improvements to Topic 942, Financial Services - Depository and Lending”. This update superseded outdated guidance related to the Office of the Comptroller of the Currency's Banking Circular 202, Accounting for Net Deferred Tax Charges. The Company does not expect the new guidanceit to have a material impact on the Company’s consolidated financial statements.

In June 2018,November 2023, the FASB issued ASU No. 2018-07, “Compensation- Stock Compensation2023-07, "Segment Reporting (Topic 718)280): Improvements to Nonemployee Share-Based Payment Accounting”. This update expandsReportable Segment Disclosures,” which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. Under ASU 2023-07, public entities must disclose significant expense categories and amounts for each reportable segment, where significant expense categories are defined as those that are regularly reported to an entity’s chief operating decision-maker and included in a segment’s reported measures of profit or loss. Additionally, public entities must disclose the scopeamount of Topic 718 to include share based payment transactions for acquiring goodsother segment items and services from nonemployees. As a result, nonemployee share based payment awards will be measured at the grant-date fair valuedescription of the equity instruments that an entity is obligated to issue when the service has been rendered, subject to the probability of satisfying performance conditions when applicable. This updateits composition. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. As the Company has only one reportable segment, ASU 2023-07 does not have an impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures.”The amendments in 2019.ASU 2023-09 require greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid. The ASU indicates that all entities will apply its guidance prospectively with an option for retroactive application to each period in the financial statements. The guidance will be effective for fiscal years beginning after December 15, 2024, and for interim periods for fiscal years beginning after December 15, 2025, with an allowance for early adoption. The Company is evaluating the impact of this ASU but does not expect the new guidanceit to have a material impact on the Company’s consolidated financial statements.

In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” to address stakeholder suggestions for minor corrections and clarifications within the codification. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this update do not require transition guidance and will be effective upon issuance of this update. However, many of the amendments in this update do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. The Company does not expect the new guidance to have a material impact on the consolidated financial statements.

In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” to address certain narrow aspects of the guidance issued in ASU No. 2016-02. This guidance did not change the Company's assessment of the impact of ASU No. 2016-02 on the consolidated financial statements as described above.

In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, which amends Topic 842, Leases, to (1) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption, and (2) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract. This guidance did not change the Company's assessment of the impact of ASU No. 2016-02 on the consolidated financial statements as described above.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20)”. The amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. Although narrow in scope, the amendments are considered an important part of FASB's efforts to improve the effectiveness of disclosures in the notes to financial statements. ASU 2018-14 is effective for the Company in 2021. Early adoption is permitted. The Company has not evaluated the new guidance for its effect on the consolidated financial statements.

Emerging Growth Company Status

As an emerging growth company, the Company may delay adoption of new or revised financial accounting standards until such date that the standards are required to be adopted by non-issuer companies. If such standards would not apply to non-issuer companies, no deferral would be applicable. The Company intends to takeis taking advantage of the benefits of the extended transition periods allowed under the Jumpstart Our Business Startups Act.

Accordingly, the Company'sCompany’s consolidated financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. The effective dates of the following recent accounting standards reflect those that relate to non-issuer companies. The Company expects to lose its emerging growth company status on December 31, 2024.

18

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Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Rhinebeck Bancorp, Inc. and Subsidiary

2.Available for Sale

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

2.    Investment Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities are as follows:

March 31, 2024

Gross

Gross

Unrealized

Unrealized

    

Amortized Cost

    

Gains

    

Losses

    

Fair Value

U.S. Treasury securities

$

20,048

$

$

(905)

$

19,143

U.S. government agency mortgage-backed securities–residential

152,958

(28,824)

124,134

U.S. government agency securities

 

24,772

 

 

(1,676)

 

23,096

Municipal securities(1)

 

3,161

 

 

(279)

 

2,882

Corporate bonds

 

14,700

 

 

(1,966)

 

12,734

Other

 

750

 

 

(94)

 

656

Total

$

216,389

$

$

(33,744)

$

182,645

  September 30, 2018 
  (unaudited) 
  Amortized Cost  Gross
Unrealized
Gains
  

Gross
Unrealized

Losses

  Fair Value 
             
U.S. Treasury securities $3,039  $     -  $(111) $2,928 
U.S. government agency mortgage-backed securities-residential  86,568   -   (4,555)  82,013 
U.S. government agency securities  16,923   -   (706)  16,217 
Municipal securities ¹  1,229   1   (1)  1,229 
Total $107,759  $1  $(5,373) $102,387 
                 
   December 31, 2017 
                 
U.S. Treasury securities $3,048  $-  $(47) $3,001 
U.S. government agency mortgage-backed securities-residential  93,858   1   (2,470)  91,389 
U.S. government agency securities  16,935   -   (409)  16,526 
Municipal securities ¹  2,401   1   (16)  2,386 
Total $116,242  $2  $(2,942) $113,302 

¹ The issuers of municipal securities are all within New York State.

    

December 31, 2023

Gross

Gross

Unrealized

Unrealized

    

Amortized Cost

    

Gains

    

Losses

    

Fair Value

U.S. Treasury securities

$

25,072

$

$

(1,066)

$

24,006

U.S. government agency mortgage-backed securities–residential

156,523

(27,943)

128,580

U.S. government agency securities

24,774

 

 

(1,616)

 

23,158

Municipal securities(1)

 

3,163

 

 

(260)

 

2,903

Corporate bonds

14,700

 

 

(2,060)

 

12,640

Other

763

 

 

(65)

 

698

Total

$

224,995

$

$

(33,010)

$

191,985


Rhinebeck Bancorp, MHC and Subsidiary

(1)

Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The issuers of municipal securities are all within New York State.

The following table presentstables present the fair value and unrealized losses of the Company’s available for sale securities with gross unrealized losses aggregated by the length of time the individual securities have been in a continuous unrealized loss position:

March 31, 2024

Less Than 12 Months

12 Months or Longer

Total

Unrealized

Unrealized

Unrealized

    

Fair Value

    

Losses

    

Fair Value

    

Losses

    

Fair Value

    

Losses

U.S. Treasury securities

$

$

$

19,143

$

(905)

$

19,143

$

(905)

U.S. government agency mortgage-backed securities-residential

124,101

(28,824)

124,101

(28,824)

U.S. government agency securities

23,095

(1,676)

23,095

(1,676)

Municipal securities

2,766

(279)

2,766

(279)

Corporate bonds

12,734

(1,966)

12,734

(1,966)

Other

629

(94)

629

(94)

Total

$

629

$

(94)

$

181,839

$

(33,650)

$

182,468

$

(33,744)

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Rhinebeck Bancorp, Inc. and Subsidiary

  Less Than 12 Months  12 Months or Longer  Total 
  Fair Value  Unrealized
Losses
  Fair Value  Unrealized
Losses
  Fair Value  Unrealized
Losses
 
        September 30, 2018       
           (unaudited)         
U.S. Treasury securities $-  $-  $2,928  $(111) $2,928  $(111)
U.S. government agency mortgage-backed securities-residential  6,908   (168)  74,676   (4,387)  81,584   (4,555)
U.S. government agency securities  -   -   16,217   (706)  16,217   (706)
Municipal Securities  533   (1)  -   -   533   (1)
Total $7,441  $(169) $93,821  $(5,204) $101,262  $(5,373)
                         
       December 31, 2017     
U.S. Treasury securities $3,001  $(47) $-  $-  $3,001  $(47)
U.S. government agency mortgage-backed securities-residential  34,601   (542)  56,170   (1,928)  90,771   (2,470)
U.S. government agency securities  3,923   (50)  12,603   (359)  16,526   (409)
Municipal Securities  593   (3)  977   (13)  1,570   (16)
Total $42,118  $(642) $69,750  $(2,300) $111,868  $(2,942)

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

    

December 31, 2023

Less Than 12 Months

12 Months or Longer

Total

Unrealized

Unrealized

Unrealized

    

Fair Value

    

Losses

    

Fair Value

    

Losses

    

Fair Value

    

Losses

U.S. Treasury securities

$

$

$

24,006

$

(1,066)

$

24,006

$

(1,066)

U.S. government agency mortgage-backed securities-residential

128,580

(27,943)

128,580

(27,943)

U.S. government agency securities

23,158

(1,616)

23,158

(1,616)

Municipal securities

512

(18)

2,276

(242)

2,788

(260)

Corporate bonds

12,640

(2,060)

12,640

(2,060)

Other

672

(65)

672

(65)

Total

$

1,184

$

(83)

$

190,660

$

(32,927)

$

191,844

$

(33,010)

At September 30, 2018 and DecemberMarch 31, 2017,2024, the Company had 98 and 100231 individual available-for-sale securities in an unrealized loss position with unrealized losses totaling $5,373 and $2,942, respectively,$33,744 with an aggregate depreciation of 5.31% and 2.63%, respectively,15.61% from the Company’s amortized cost.

Management believes that none of theThe Company evaluates securities in an unrealized loss position for impairment related to credit losses on available for sale securitiesat least a quarterly basis. Securities in unrealized loss positions are other-than-temporary because substantially all of the unrealized losses in the Company’s investment portfolio relatefirst assessed as to market interest rate changes on debt and mortgage-backed securities issued either directly by the government or from government sponsored enterprises. Because the Company does notwhether we intend to sell, the securities andor if it is more likely than not likely that the Companywe will be required to sell the securitiessecurity before recovery of theirits amortized cost basis. If one of the criteria is met, the security’s amortized cost basis which may be maturity,is written down to fair value through current earnings. For securities that do not meet these criteria, the Company does not consider those investmentsevaluates whether the decline in fair value resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be other-than-temporarily impairedcollected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses on asset backed securities, state and municipal securities, and corporate bonds have not been recognized into income because the issuers are of high credit quality, we do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale securities was recorded as of March 31, 2024.

Federal agency obligations, residential mortgage backed pass-through securities and commercial mortgage-backed pass-through securities are issued by U.S. Government agencies and U.S. Government sponsored enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the full faith and credit of the federal government. Nonetheless, at September 30, 2018this time we do not foresee any set of circumstances in which the government would not fund its commitments on these investments.

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Table of Contents

Rhinebeck Bancorp, Inc. and December 31, 2017.Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The amortized cost and fair value of available for sale debt securities at September 30, 2018March 31, 2024 and December 31, 2017,2023, by contractual maturities, are presented below. Actual maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties. Because mortgage-backed securities are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary as follows:summary:


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

 September 30, 2018  December 31, 2017 
 (unaudited)      
 Amortized Cost Fair Value Amortized Cost Fair Value 

March 31, 2024

December 31, 2023

    

Amortized Cost

    

Fair Value

    

Amortized Cost

    

Fair Value

Maturity:         

Within 1 year $320  $321  $335  $335 

$

11,442

$

11,285

$

15,449

$

15,170

After 1 but within 5 years  18,162   17,418   20,074   19,623 

 

31,839

 

29,553

 

32,860

 

30,569

After 5 but within 10 years  1,975   1,902   1,975   1,954 

 

19,400

 

17,017

 

19,400

 

16,968

After 10 years  734   733   -   - 

 

 

 

 

Total Maturities

 

62,681

 

57,855

 

67,709

 

62,707

Mortgage-backed securities  86,568   82,013   93,858   91,390 

 

152,958

 

124,134

 

156,523

 

128,580

                

Other

 

750

 

656

 

763

 

698

Total $107,759  $102,387  $116,242  $113,302 

$

216,389

$

182,645

$

224,995

$

191,985

At September 30, 2018March 31, 2024 and December 31, 2017,2023, available for sale securities with a carrying value of $27,769$12,634 and $1,285,$13,130, respectively, were pledged to secure Federal Home Loan Bank of New York (“FHLBNY”FHLB”) borrowings. In addition, $1,029at March 31, 2024 and $2,350, respectively,December 31, 2023, $69,180 and $75,769 of available for sale securities were pledged to secure borrowings at the Federal Reserve Bank of New York (“FRBNY”FRB”)., respectively.

ForDuring the first ninethree months of 2018,ended March 31, 2024, there were $2,113 of securities sold as compared to sale proceeds of $30,786 for the year ended December 31, 2017. During the period ended September 30, 2018, there were no gross gains recorded while for the year ended December 31, 2017 there were gross gains of $45. During these two reported periods there were gross losses of $22 and $72 realized on the sales of available for sale securities respectively.

3.Held to Maturity Securities

and no realized gains or losses.

The amortized cost, gross unrealized gainsCompany elected not to measure an allowance for credit losses for accrued interest receivable, because a timely write-off policy exists. A security is placed on non-accrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on non-accrual is reversed against interest income. There were no securities on non-accrual status and losses and fair values of heldtherefore there was no accrued interest related to maturity securities are as follows:

  September 30, 2018 
  (unaudited) 
  Amortized
Cost
  Gross
Unrealized
Gains
  Gross
Unrealized
Losses
  Fair Value 
             
Other $-  $-  $-  $- 
Municipal securities ¹  -   -   -   - 
Total $-  $-  $-  $- 
                 
  December 31, 2017 
                 
Other $332  $-  $-  $332 
Municipal securities ¹  1,582   15   (1)  1,596 
Total $1,914  $15  $(1) $1,928 

¹ The issuers of municipal securities are all within New York State.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The amortized cost and fair value of held to maturity debt securities at September 30, 2018reversed against interest income for the periods ended March 31, 2024 and December 31, 2017, by contractual maturities, are presented below. Actual maturities of mortgage-backed2023. Total accrued interest receivable on available for sale securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties:

  September 30, 2018  December 31, 2017 
  (unaudited)       
  Amortized Cost  Fair Value  Amortized Cost  Fair Value 
Maturity:                
Within 1 year $       -  $     -  $252  $252 
After 1 but within 5 years  -   -   576   575 
After 5 but within 10 years  -   -   -   - 
After 10 years  -   -   754   769 
Other  -   -   332   332 
                 
Total $-  $-  $1,914  $1,928 

At September 30, 2018totaled $578 and $602 at March 31, 2024 and December 31, 2017, held2023, respectively, and was reported in accrued interest receivable on the consolidated statements of financial condition.

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Rhinebeck Bancorp, Inc. and Subsidiary

Notes to maturity securities with an amortized cost of $0Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and $1,362, respectively, were pledged at the FRBNYper share data)

3.    Loans and Allowance for borrowings.

During the third quarter, as part of an effort to increase the performance of our investment portfolio, seven underperforming bonds were swapped for better yielding instruments. It was later discovered that in the group sold were two bonds, totaling $575 in book value, which were designated as held to maturity (“HTM”). As part of that transaction a loss on disposition of $4 was recognized. As a further consequence of this action, in accordance with ASC 320-10-35, the four remaining HTM securities that totaled $1,163 were reclassified as available for sale (“AFS”) and the unrealized holding loss of $1 was recognized in AOCI, net of the applicable taxes for the period ended September 30, 2018. As a result of the sale and subsequent reclassification, the whole of our investment portfolio is now AFS. Securities purchased in the future will be designated as AFS.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

4.Loans and Allowance for LoanCredit Losses

A summary of the Company’s loan portfolio is as follows:

 September 30, December 31, 
 2018  2017 
  (unaudited)     
Commercial real estate:        

March 31, 

December 31, 

    

2024

    

2023

Commercial real estate loans:

 

 

  

Construction $10,407  $5,621 

$

20,438

$

20,208

Non-residential  201,913   192,469 

 

329,241

 

324,493

Multifamily  12,379   13,103 
Residential real estate  44,388   43,300 
Commercial and industrial  79,055   67,650 
Consumer:        

Multi-family

 

87,881

 

83,376

Residential real estate loans

 

78,846

 

77,259

Commercial and industrial loans(1)

 

91,291

 

88,927

Consumer loans:

 

  

 

  

Indirect automobile  272,892   214,823 

 

367,011

 

394,245

Home equity  19,559   19,452 

 

11,494

 

11,990

Other consumer  10,453   9,929 

 

7,641

 

8,095

        
Total gross loans  651,046   566,347 

 

993,843

 

1,008,593

        
Net deferred loan costs  7,317   5,288 
Allowance for loan losses  (6,310)  (5,457)
        

Dealer reserves

 

7,476

 

8,382

Allowance for credit losses

 

(7,973)

 

(8,124)

Total net loans $652,053  $566,178 

$

993,346

$

1,008,851

(1)

Includes $226 and $272 in U.S. Small Business Administration (“SBA”), paycheck protection program (“PPP”) loans at March 31, 2024 and December 31, 2023, respectively.

At September 30, 2018March 31, 2024 and December 31, 2017,2023, the unpaid principal balances of loans held for sale included in the residential real estate category above were $286$893 and $2,059.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

$908, respectively.

The following tables present the classes of the loan portfolio summarized by the pass category and the criticized categories of special mention, substandard and doubtful within the internal risk system:

  September 30, 2018 
  (unaudited) 
     Special          
  Pass  Mention  Substandard  Doubtful  Total 
                     
Commercial real estate:                    
Construction $10,407  $-  $-  $-  $10,407 
Non-residential  189,009   7,276   1,414   4,214   201,913 
Multifamily  11,926   -   -   453   12,379 
Residential  41,943   -   -   2,445   44,388 
Commercial and industrial  77,768   -   657   630   79,055 
Consumer:                    
Indirect automobile  272,350   -   -   542   272,892 
Home equity  19,287   -   -   272   19,559 
Other consumer  10,430   -   -   23   10,453 
                     
Total $633,120  $7,276  $2,071  $8,579  $651,046 
                     
   December 31, 2017 
      Special          
  Pass  Mention  Substandard  Doubtful  Total 
                     
Commercial real estate:                    
Construction $4,495  $-  $1,126  $-  $5,621 
Non-residential  181,720   3,485   7,264   -   192,469 
Multifamily  13,103   -   -   -   13,103 
Residential  41,115   -   -   2,185   43,300 
Commercial and industrial  65,351   125   2,156   18   67,650 
Consumer:                    
Indirect automobile  214,381   -   -   442   214,823 
Home equity  19,334   -   -   118   19,452 
Other consumer  9,925   -   -   4   9,929 
                     
Total $549,424  $3,610  $10,546  $2,767  $566,347 

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The past due status of all classes of loans is determined based on contractual due dates for loan payments.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrualnon-accrual loans:

 September 30, 2018 
 (unaudited) 
        Greater Than      
    30-59 Days 60-89 Days 90 Days Past Total Loans    
 Current  Past Due  Past Due  Due  Receivable  Nonaccrual 

March 31, 2024

Greater Than

30-59 Days

60-89 Days

90 Days Past

Total Loans

    

Current

    

Past Due

    

Past Due

    

Due

    

Receivable

    

Non-accrual

Commercial real estate:                        

  

  

  

  

  

  

Construction $10,407  $-  $-  $-  $10,407  $- 

$

20,438

$

$

$

$

20,438

$

Non-residential  197,367   -   332   4,214   201,913   4,214 

324,593

2,035

2,613

329,241

2,613

Multifamily  11,745   181   -   453   12,379   453 

87,881

87,881

Residential  42,823   849   56   660   44,388   2,366 

Residential real estate

 

76,577

 

1,039

 

1,154

 

76

 

78,846

 

1,143

Commercial and industrial  78,710   16   6   323   79,055   630 

 

90,658

 

318

 

128

 

187

 

91,291

 

187

Consumer:                        

 

  

 

  

 

 

  

 

  

 

Indirect automobile  268,108   3,627   640   517   272,892   542 

 

356,740

 

8,265

1,570

 

436

 

367,011

 

476

Home equity  19,255   137   -   167   19,559   265 

 

11,295

 

14

46

 

139

 

11,494

 

139

Other consumer  10,281   112   38   22   10,453   23 

 

7,366

 

233

 

40

 

2

 

7,641

 

2

                        
Total $638,696  $4,922  $1,072  $6,356  $651,046  $8,493 

$

975,548

$

11,904

$

2,938

$

3,453

$

993,843

$

4,560

                        
  December 31, 2017 
  Greater Than  
  30-59 Days 60-89 Days 90 Days Past Total Loans    
 Current  Past Due  Past Due  Due  Receivable  Nonaccrual 
Commercial real estate:                        
Construction $4,494  $-  $-  $1,127  $5,621  $1,127 
Non-residential  184,877   2,229   921   4,442   192,469   4,442 
Multifamily  12,637   -   466   -   13,103   - 
Residential  41,989   450   422   439   43,300   2,100 
Commercial and industrial  66,542   69   19   1,020   67,650   1,237 
Consumer:                        
Indirect automobile  209,574   4,022   808   419   214,823   442 
Home equity  18,637   676   127   12   19,452   12 
Other consumer  9,742   176   7   4   9,929   4 
                        
Total $548,492  $7,622  $2,770  $7,463  $566,347  $9,364 


11

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

December 31, 2023

Greater Than

30-59 Days

60-89 Days

90 Days Past

Total Loans

    

Current

    

Past Due

    

Past Due

    

Due

    

Receivable

    

Non-accrual

Commercial real estate:

  

  

  

  

  

  

Construction

$

20,208

$

$

$

$

20,208

$

Non-residential

319,467

1,276

2,129

1,621

324,493

1,621

Multifamily

83,376

83,376

Residential real estate

 

75,998

 

888

 

37

 

336

 

77,259

 

1,624

Commercial and industrial

 

88,646

 

17

 

83

 

181

 

88,927

 

181

Consumer:

 

  

 

  

 

 

  

 

  

 

Indirect automobile

 

382,042

 

10,155

1,478

 

570

 

394,245

 

631

Home equity

 

11,843

 

48

 

99

 

11,990

 

99

Other consumer

 

7,844

 

202

 

24

 

25

 

8,095

 

25

Total

$

989,424

$

12,538

$

3,799

$

2,832

$

1,008,593

$

4,181

All of our non-accrual loans are individually analyzed for credit loss. The Company has one individually analyzed home equity loan of $98 that was accruing interest at March 31, 2024.

The following tables summarize informationtable presents the Company’s amortized cost basis of non-accrual loans for which there is no  related ACL:

March 31, 2024

December 31, 2023

Commercial real estate:

 

  

 

  

Non-residential

$

1,375

$

1,152

Residential real estate

1,143

1,624

Commercial and industrial

172

150

Consumer:

  

  

Indirect automobile

150

160

Home equity

139

99

Other consumer

2

25

Total

$

2,981

$

3,210

The following table presents the Company’s amortized cost basis of only those non-accrual loans with a related ACL:

March 31, 2024

December 31, 2023

Non-accrual loans

    

Related ACL

    

Non-accrual loans

    

Related ACL

Commercial real estate:

 

  

 

  

 

  

 

  

Non-residential

$

1,238

$

290

$

469

$

16

Commercial and industrial

15

1

31

32

Consumer:

 

  

 

 

  

 

Indirect automobile

326

99

471

167

Total

$

1,579

$

390

$

971

$

215

12

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in regards to impairedthousands, except share and per share data)

For the three months ended March 31, 2024, $56 in accrued interest was reversed during the period for non-accrual loans. Total accrued interest receivable associated with loans by loan portfolio class:

  September 30, 2018 
  (unaudited) 
  Recorded
Investment
  Unpaid
Principal
Balance
  Related
Allowance
  Average
Recorded
Investment
 
With no related allowance recorded:                
Commercial real estate:                
Construction $-  $-  $       -  $563 
Non-residential  4,214   4,616   -   3,877 
Multifamily  453   458   -   227 
Residential  2,445   3,070   -   2,315 
Commercial and industrial  625   749   -   922 
Consumer:                
Indirect automobile  211   247   -   210 
Home equity  272   282   -   195 
Other consumer  2   2   -   1 
                 
Total $8,222  $9,424  $-  $8,310 
                 
With an allowance recorded:                
Commercial real estate:                
Construction $-  $-  $-  $- 
Non-residential  -   -   -   451 
Multifamily  -   -   -   - 
Residential  -   -   -   - 
Commercial and industrial  5   5   5   12 
Consumer:                
Indirect automobile  331   338   83   282 
Home equity  -   -   -   - 
Other consumer  20   20   11   12 
                 
Total $356  $363  $99  $757 
                 
Total:                
Commercial real estate:                
Construction $-  $-  $-  $563 
Non-residential  4,214   4,616   -   4,328 
Multifamily  453   458   -   227 
Residential  2,445   3,070   -   2,315 
Commercial and industrial  630   754   5   934 
Consumer:                
Indirect automobile  542   585   83   492 
Home equity  272   282   -   195 
Other consumer  22   22   11   13 
                 
Total $8,578  $9,787  $99  $9,067 


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

  December 31, 2017 
  Recorded
Investment
  Unpaid
Principal
Balance
  Related
Allowance
  Average
Recorded
Investment
 
With no related allowance recorded:                
Commercial real estate:                
Construction $1,127  $1,137  $      -  $1,127 
Non-residential  3,539   3,584   -   2,878 
Multifamily  -   -   -   - 
Residential  2,184   2,741   -   2,114 
Commercial and industrial  1,219   1,700   -   1,325 
Consumer:                
Indirect automobile  210   237   -   179 
Home equity  118   119   -   182 
Other consumer  -   1   -   2 
                 
Total $8,397  $9,519  $-  $7,807 
                 
With an allowance recorded:                
Commercial real estate:                
Construction $-  $-  $-  $- 
Non-residential  903   903   300   451 
Multifamily  -   -   -   - 
Residential  -   -   -   - 
Commercial and industrial  19   447   19   221 
Consumer:                
Indirect automobile  232   247   75   292 
Home equity  -   -   -   - 
Other consumer  3   3   3   18 
                 
Total $1,157  $1,600  $397  $982 
                 
Total:                
Commercial real estate:                
Construction $1,127  $1,137  $-  $1,127 
Non-residential  4,442   4,487   300   3,330 
Multifamily  -   -   -   - 
Residential  2,184   2,741   -   2,114 
Commercial and industrial  1,238   2,147   19   1,546 
Consumer:                
Indirect automobile  442   484   75   471 
Home equity  118   119   -   182 
Other consumer  3   4   3   19 
                 
Total $9,554  $11,119  $397  $8,789 


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

A loan is considered impaired when based on current informationtotaled $4,033 and events it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans and loans modified as troubled debt restructurings (“TDRs”). Loan modifications, which resulted in these loans being considered TDRs, are primarily in the form of rate concessions and extensions of maturity dates. The Company does not generally recognize interest income on a loan in an impaired status. At September 30, 2018$4,014, at March 31, 2024 and December 31, 2017, three2023, respectively, and was reported in accrued interest receivable on the consolidated statements of financial condition.

The Company has transferred a portion of its originated commercial real estate loans totaling $1,803to participating lenders. The amounts transferred have been accounted for as sales and four loans totaling $1,815, respectively, which wereare therefore not included in impairedthe Company’s accompanying statements of financial condition. The Company and participating lenders share ratably in any gains or losses that may result from a loan’s performance under its contractual terms. The Company continues to service the loans were identified as TDRs. In 2018, the Company restructured two loans, a residential mortgage and home equity loan, into a single residential mortgage, with a carrying value of $117, which included both rate and term modifications. In 2017, the Company modified a residential loan and a commercial loan with carrying amounts of $1,661 and $19, respectively, through rate and term modifications. Interest income on impaired loans was immaterial during eachbehalf of the periods presented.participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At September 30, 2018March 31, 2024 and December 31, 2017, all2023, the Company was servicing loans were performingfor participants aggregating $48,318 and $44,418, respectively.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in accordance with their restructured terms. During the nine months ended September 30, 2018, one loan for $19 had defaulted in its modified termsprocess totaled $99 and was charged off. At September 30, 2018$152 at March 31, 2024 and December 31, 2017, the Company had no commitments to advance additional funds to borrowers under TDR loans.

2023, respectively, and are all individually analyzed for credit loss.

The Company services certain loans that it has sold without recourse to third parties. The aggregate balances of loans serviced for others were $253,856$279,235 and $244,765$282,269 as of September 30, 2018March 31, 2024 and December 31, 2017,2023, respectively.

Included in these loans serviced for others are loans serviced for the Federal Home Loan Mortgage Corporation with a recourse provision whereby the Company is obligated to bear all costs when a default, including foreclosure, occurs. At March 31, 2024 and December 31, 2023, the maximum contingent liability associated with loans sold with recourse was $1,155 and $1,873, respectively, which is not recorded in the consolidated financial statements. Losses are borne in priority order by the borrower, private mortgage insurance andthe Company. The Company has never repurchased any loans or incurred any losses under these recourse provisions.

The balancebalances of capitalized servicing rights, included in other assets at September 30, 2018March 31, 2024 and December 31, 2017,2023 were $2,278$1,880 and $2,260,$1,977, respectively. Fair value exceeds carrying value. Novalue, and thus, no impairment charges related to servicing rights were recognized during the ninethree-month period ended March 31, 2024 or the year ended December 31, 2023.

13

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Activity in the Company’s ACL for loans for the three months ended September 30, 2018March 31, 2024 is summarized in the table below.

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

    

Consumer

    

Totals

Three months ended March 31, 2024

Allowance for credit losses:

Beginning balance

$

2,716

$

346

$

606

$

4,348

$

108

$

8,124

Provision for (reversal of) credit losses

323

9

(7)

(238)

12

99

Loans charged-off

(34)

(895)

(32)

(961)

Recoveries

 

 

 

1

 

699

 

11

 

711

Ending balance

$

3,039

$

355

$

566

$

3,914

$

99

$

7,973

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans individually analyzed

$

291

$

$

$

99

$

$

390

Loans collectively analyzed

$

2,748

$

355

$

566

$

3,815

$

99

$

7,583

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

437,560

$

78,846

$

91,291

$

367,011

$

19,135

$

993,843

Ending balance:

 

  

 

 

  

 

  

 

  

 

  

Loans individually analyzed

$

2,613

$

1,143

$

187

$

476

$

239

$

4,658

Loans collectively analyzed

$

434,947

$

77,703

$

91,104

$

366,535

$

18,896

$

989,185

Activity in the Company’s allowance for credit losses for the three months ended March 31, 2023 and 2017.December 31, 2023 is summarized in the tables below. The adoption of ASC 326 row presents adjustments recorded on January 1, 2023 through retained earnings.

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

Consumer

    

Totals

Three months ended March 31, 2023

Allowance for credit losses:

Beginning balance

$

3,031

$

103

$

881

$

3,868

$

60

$

7,943

Adoption of ASC 326

(860)

54

(383)

1,710

59

580

Provision for credit losses

170

13

703

104

4

994

Loans charged-off

(989)

(22)

(1,011)

Recoveries

 

 

 

 

585

 

12

 

597

Ending balance

$

2,341

$

170

$

1,201

$

5,278

$

113

$

9,103

The Company has also recorded an ACL for unfunded commitments, which was recorded in other liabilities. The provision for unfunded commitments is recorded within the provision for credit losses on the Company’s income statement. Activity in the Company’s ACL for unfunded commitments for the three months ended March 31, 2024 is summarized in the tables below. The adoption of ASC 326 row presents adjustments recorded on January 1, 2023 through retained earnings.

    

Commercial 

    

    

Commercial 

    

    

    

    

Real Estate

    

Residential

    

and Industrial

    

Indirect

    

Consumer

    

Totals

    

Three months ended March 31, 2024

Allowance for credit losses:

Beginning balance

$

172

$

$

72

$

$

13

$

257

Reversal of credit losses

(14)

(1)

(1)

(16)

Ending balance

$

158

$

$

71

$

$

12

$

241

14

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

    

Commercial 

    

    

Commercial 

    

    

    

    

Real Estate

    

Residential

    

and Industrial

    

Indirect

    

Consumer

    

Totals

    

Three months ended March 31, 2023

Allowance for credit losses:

Beginning balance

$

$

$

$

$

$

Adoption of ASC 326

149

65

7

221

Provision for credit losses

19

1

20

Ending balance

$

158

$

$

71

$

$

12

$

241

The following tables summarizetable summarizes the segments of the loan portfolio and the allowanceprovision for loan losses, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment and the activity in the allowance for loancredit losses for the periods then ended:three months ended March 31, 2024 and 2023:

Three months ended March 31,

    

2024

    

2023

Provision for credit losses - loans

$

99

$

994

(Reversal of) provision for credit losses - unfunded commitments

(16)

20

Provision for credit losses

$

83

$

1,014

  Commercial Real Estate  Residential   Commercial and Industrial  Consumer  Totals 
  Three months ended September 30, 2018 
  (unaudited) 
Allowance for loan losses:                    
Beginning balance $947  $513  $1,082  $3,397  $5,939 
Provision for loan losses  (77)  (40)  (27)  669   525 
Loans charged-off  -   -   -   (372)  (372)
Recoveries  -   1   -   217   218 
Ending balance $870  $474  $1,055  $3,911  $6,310 
Ending balance:                    
Individually evaluated for impairment $-  $-  $5  $94  $99 
Collectively evaluated for impairment $870  $474  $1,050  $3,817  $6,211 
Loan receivables:                    
Ending balance $224,699  $44,387  $79,055  $302,905  $651,046 
Ending balance:                    
Individually evaluated for impairment $4,668  $2,445  $630  $836  $8,579 
Collectively evaluated for impairment $220,031  $41,942  $78,425  $302,069  $642,467 
    
  Three months ended September 30, 2017 
  (unaudited) 
Allowance for loan losses:                    
Beginning balance $936  $585  $574  $3,383  $5,478 
    Provision for loan losses  46   3   (60)  236   225 
    Loans charged-off  (16)  -   (181)  (378)  (575)
    Recoveries  -   3   -   272   275 
Ending balance $966  $591  $333  $3,513  $5,403 
Ending balance:                    
Individually evaluated for impairment $-  $-  $2  $74  $76 
Collectively evaluated for impairment $966  $591  $331  $3,439  $5,327 
Loan receivables:                    
Ending balance $204,793  $41,417  $60,706  $240,124  $547,040 
Ending balance:                    
Individually evaluated for impairment $3,011  $1,988  $2,325  $652  $7,976 
Collectively evaluated for impairment $201,782  $39,429  $58,381  $239,472  $539,064 

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

  Commercial Real Estate  Residential   Commercial and Industrial  Consumer  Totals 
  Nine months ended September 30, 2018 
  (unaudited) 
Allowance for loan losses:                    
Beginning balance $1,305  $455  $879  $2,818  $5,457 
Provision for loan losses  (132)  15   91   1,601   1,575 
Loans charged-off  (303)  -   (28)  (1,125)  (1,456)
Recoveries  -   4   113   617   734 
Ending balance $870  $474  $1,055  $3,911  $6,310 
Ending balance:                    
Individually evaluated for impairment $-  $-  $5  $94  $99 
Collectively evaluated for impairment $870  $474  $1,050  $3,817  $6,211 
Loan receivables:                    
Ending balance $224,699  $44,387  $79,055  $302,905  $651,046 
Ending balance:                    
Individually evaluated for impairment $4,668  $2,445  $630  $836  $8,579 
Collectively evaluated for impairment $220,031  $41,942  $78,425  $302,069  $642,467 
                     
  Nine months ended September 30, 2017 
  (unaudited) 
Allowance for loan losses:                    
Beginning balance $1,092  $1,231  $775  $2,778  $5,876 
Provision for loan losses  (202)  (567)  152   1,292   675 
Loans charged-off  (16)  (79)  (596)  (1,313)  (2,004)
Recoveries  92   6   2   756   856 
Ending balance $966  $591  $333  $3,513  $5,403 
Ending balance:                    
Individually evaluated for impairment $-  $-  $2  $74  $76 
Collectively evaluated for impairment $966  $591  $331  $3,439  $5,327 
Loan receivables:                    
Ending balance $204,793  $41,417  $60,706  $240,124  $547,040 
Ending balance:                    
Individually evaluated for impairment $3,011  $1,988  $2,325  $652  $7,976 
Collectively evaluated for impairment $201,782  $39,429  $58,381  $239,472  $539,064 


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

  Commercial
Real Estate
  Residential  Commercial
and Industrial
  Consumer  Totals 
  December 31, 2017 
Allowance for loan losses:                    
Beginning balance $1,092  $1,231  $775  $2,778  $5,876 
    Provision for loan losses  137   (707)  698   772   900 
    Loans charged-off  (16)  (78)  (596)  (1,724)  (2,414)
    Recoveries  92   9   2   992   1,095 
Ending balance $1,305  $455  $879  $2,818  $5,457 
Ending balance:                    
Individually evaluated for impairment $300  $-  $19  $78  $397 
Collectively evaluated for impairment $1,005  $455  $860  $2,740  $5,060 
Loan receivables:                    
Ending balance $211,193  $43,300  $67,650  $244,204  $566,347 
Ending balance:                    
Individually evaluated for impairment $5,569  $2,184  $1,238  $563  $9,554 
Collectively evaluated for impairment $205,624  $41,116  $66,412  $243,641  $556,793 

In the normal course of business, the Company grants loans to officers, trusteesdirectors and other related parties. SuchBalances and activity of such loans during the periods presented were not material.  

15

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, multifamily, construction and commercial loans. To assist in the review process, the Company engages an independent third-party to review a significant portion of loans within these segments.  Consumer loans are rated as performing or non-performing based on payment status in presented periods.accordance with regulatory retail credit guidance. Management uses the results of these reviews as part of its annual review process.  In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality of other loan segments.  

5.Premises and Equipment

Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination and is updated on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful.

PremisesThe Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and equipmentloans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and/or insufficient collateral. They are summarizedcharacterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as follows:non-performing have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered Pass rated loans.

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
Land $3,536  $3,536 
Buildings and improvements  23,504   23,409 
Furniture, fixtures and equipment  11,036   10,725 
Construction in progress  40   43 
         
Total  38,116   37,713 
         
Less accumulated depreciation  (21,523)  (20,688)
         
Net $16,593  $17,025 

16

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Table of Contents

6.Goodwill

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the three months ended March 31, 2024, and by fiscal year of origination as of March 31, 2024.

Revolving

Loans by Origination Year

Loans

2024

2023

2022

2021

2020

Prior

Amortized Cost

Total

Commercial construction

Watch

641

15,399

4,398

-

-

-

-

20,438

Total commercial construction

641

15,399

4,398

-

-

-

-

20,438

Commercial non-residential

Pass

$

2,021

$

34,387

$

52,760

$

26,360

$

16,493

$

87,069

$

-

$

219,090

Watch

2,776

16,542

16,259

7,470

11,645

37,747

-

92,439

Special mention

-

-

-

896

360

6,084

-

7,340

Substandard

-

-

2,895

1,386

460

5,631

-

10,372

Total commercial non-residential

4,797

50,929

71,914

36,112

28,958

136,531

-

329,241

Multifamily

Pass

$

-

$

804

$

18,681

$

30,175

$

2,084

$

5,832

$

-

$

57,576

Watch

-

1,000

6,732

11,895

-

10,331

-

29,958

Substandard

-

-

-

-

-

347

347

Total multifamily

-

1,804

25,413

42,070

2,084

16,510

-

87,881

Residential

Performing

$

3,034

$

28,170

$

25,068

$

2,122

$

2,708

$

16,601

$

-

$

77,703

Non-performing

-

-

-

-

-

1,143

-

1,143

Total residential

3,034

28,170

25,068

2,122

2,708

17,744

-

78,846

Commercial and industrial

Pass

$

2,382

$

12,044

$

25,244

$

10,193

$

1,241

$

1,940

$

10,446

$

63,490

Watch

676

2,005

3,129

296

470

1,591

16,483

24,650

Special mention

-

224

-

275

108

24

-

631

Substandard

-

-

-

-

-

869

1,651

2,520

Total commercial and industrial

3,058

14,273

28,373

10,764

1,819

4,424

28,580

91,291

Current-period gross write-offs

-

-

-

-

-

32

2

34

Indirect automobile

Performing

$

15,025

$

93,746

$

145,617

$

64,530

$

28,830

$

18,787

$

-

$

366,535

Non-performing

-

50

161

182

53

30

-

476

Total indirect automobile

15,025

93,796

145,778

64,712

28,883

18,817

-

367,011

Current-period gross write-offs

-

153

414

210

61

57

-

895

Home equity

Performing

$

-

$

-

$

-

$

-

$

-

$

4,155

$

7,200

$

11,355

Non-performing

-

-

-

-

-

99

40

139

Total home equity

-

-

-

-

-

4,254

7,240

11,494

Other consumer

Performing

$

694

$

2,507

$

3,057

$

729

$

308

$

116

$

228

$

7,639

Non-performing

-

-

-

2

-

-

-

2

Total other consumer

694

2,507

3,057

731

308

116

228

7,641

Current-period gross write-offs

-

4

-

3

24

-

1

32

Total Loans

Pass/performing

$

23,156

$

171,658

$

270,427

$

134,109

$

51,664

$

134,500

$

17,874

$

803,388

Watch

4,093

34,946

30,518

19,661

12,115

49,669

16,483

167,485

Special mention

0

224

0

1,171

468

6,108

-

7,971

Substandard

-

-

2,895

1,386

460

6,500

1,651

12,892

Non-performing

-

50

161

184

53

1,272

40

1,760

Total Loans

$

27,249

$

206,878

$

304,001

$

156,511

$

64,760

$

198,396

$

36,048

$

993,843

Total Current-period gross write-offs

$

0

$

157

$

414

$

213

$

85

$

89

$

3

$

961

17

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the year ended December 31, 2023, and by fiscal year of origination as of December 31, 2023.

Revolving

Loans by Origination Year

Loans

2023

2022

2021

2020

2019

Prior

Amortized Cost

Total

Commercial construction

Pass

$

-

$

8,227

$

-

$

-

$

-

$

-

$

-

$

8,227

Watch

9,328

2,653

-

-

-

-

-

11,981

Total commercial construction

9,328

10,880

-

-

-

-

-

20,208

Commercial non-residential

Pass

$

34,508

$

43,534

$

26,600

$

16,673

$

39,943

$

44,412

$

-

$

205,670

Watch

16,575

19,235

14,854

12,747

7,573

38,004

-

108,988

Special mention

-

-

-

-

5,884

963

-

6,847

Substandard

-

-

-

-

465

2,523

-

2,988

Total commercial non-residential

51,083

62,769

41,454

29,420

53,865

85,902

-

324,493

Multifamily

Pass

$

807

$

18,765

$

30,374

$

2,100

$

1,540

$

4,348

$

-

$

57,934

Watch

1,000

6,754

6,925

-

1,265

9,498

-

25,442

Total multifamily

1,807

25,519

37,299

2,100

2,805

13,846

-

83,376

Residential

Performing

$

28,670

$

25,260

$

2,150

$

2,732

$

2,626

$

14,197

$

-

$

75,635

Non-performing

-

257

-

-

-

1,367

-

1,624

Total residential

28,670

25,517

2,150

2,732

2,626

15,564

-

77,259

Current-period gross write-offs

-

-

-

-

-

-

-

-

Commercial and industrial

Pass

$

12,637

$

26,070

$

10,804

$

1,474

$

962

$

1,254

$

11,662

$

64,863

Watch

2,082

3,227

321

620

482

1,603

14,204

22,539

Special mention

224

-

301

-

33

-

-

558

Substandard

-

-

-

-

83

841

43

967

Total commercial and industrial

14,943

29,297

11,426

2,094

1,560

3,698

25,909

88,927

Current-period gross write-offs

-

-

710

-

-

126

-

836

Indirect automobile

Performing

$

101,230

$

160,439

$

72,941

$

34,196

$

19,035

$

5,773

$

-

$

393,614

Non-performing

31

259

196

69

63

13

-

631

Total indirect automobile

101,261

160,698

73,137

34,265

19,098

5,786

-

394,245

Current-period gross write-offs

198

1,492

1,034

418

309

126

-

3,577

Home equity

Performing

$

-

$

-

$

-

$

-

$

34

$

4,064

$

7,793

$

11,891

Non-performing

-

-

-

-

-

99

-

99

Total home equity

-

-

-

-

34

4,163

7,793

11,990

Other consumer

Performing

$

2,928

$

3,477

$

856

$

411

$

138

$

22

$

238

$

8,070

Non-performing

-

-

-

24

-

-

1

25

Total other consumer

2,928

3,477

856

435

138

22

239

8,095

Current-period gross write-offs

8

30

10

11

-

3

-

62

Total Loans

Pass/performing

$

180,780

$

285,772

$

143,725

$

57,586

$

64,278

$

74,070

$

19,693

$

825,904

Watch

28,985

31,869

22,100

13,367

9,320

49,105

14,204

168,950

Special mention

224

-

301

0

5,917

963

-

7,405

Substandard

-

-

-

-

548

3,364

43

3,955

Non-performing

31

516

196

93

63

1,479

1

2,379

Total Loans

$

210,020

$

318,157

$

166,322

$

71,046

$

80,126

$

128,981

$

33,941

$

1,008,593

Total Current-period gross write-offs

$

206

$

1,522

$

1,754

$

429

$

309

$

255

$

-

$

4,475

18

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

4.    Goodwill and Intangible Assets

The Company evaluates goodwill annually in the fourth quarter of the fiscal year or more often if events occur or circumstances change that indicate an impairment may exist. Management has determined that no write-down was required for the first three months of 2024 or 2023.

The changes in the carrying value of goodwillthe customer list and core deposit intangibles are as follows:

  Three Months Ended
September 30, 2018
  Three Months Ended
September 30, 2017
 
  (unaudited)  (unaudited) 
  B&N  RAM  Total  B&N  RAM  Total 
Beginning balance $-  $1,410  $1,410  $1,276  $1,505  $2,781 
Relief due to asset sale  -   -   -   (1,276)  -   (1,276)
                         
Ended balance $-  $1,410  $1,410  $-  $1,505  $1,505 
                         
Accumulated impairment $-  $1,116  $1,116  $-  $1,021  $1,021 
                         
  

Nine Months Ended
September 30, 2018

  Nine Months Ended
September 30, 2017
 
  (unaudited)  (unaudited) 
  B&N  RAM  Total  B&N  RAM  Total 
Beginning balance $-  $1,505  $1,505  $1,276  $1,505  $2,781 
Impairment  -   (95)  (95)  -   -   - 
Relief due to asset sale  -   -   -   (1,276)  -   (1,276)
                         
Ended balance $-  $1,410  $1,410  $-  $1,505  $1,505 
                         
Accumulated impairment $-  $1,116  $1,116  $-  $1,021  $1,021 
                         
              December 31, 2017 
              B&N  RAM  Total 
Beginning balance             $1,276  $1,505  $2,781 
Relief due to asset sale              (1,276)  -   (1,276)
                         
Ended balance             $-  $1,505  $1,505 
                         
Accumulated impairment             $-  $1,021  $1,021 

Three Months Ended March 31,

    

2024

    

2023

Beginning balance

$

246

$

334

Amortization

 

(21)

 

(24)

 

  

 

  

Ending balance

$

225

$

310

Accumulated amortization and impairment

$

1,052

$

967

ForCore deposit intangibles represent the nine months ended September 30, 2017, the Company had no amortization or impairment expenses related to goodwill.

As discussed in Note 1, in 2017 the Bank sold its entire interest in B&N resulting in the removal of the remaining goodwill. At June 30, 2018 the Company tested the goodwill recorded for RAM and determined that a write-down of $95 was required to reflect impairment due to the loss of expected revenue. The similar test done at September 30, 2018 determined that no additional write-down was necessary. At year end 2017 the Company tested the goodwill recorded for RAM and determined that no impairment charge was required.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

7.Intangible Assets

The changes in the carryingestimated fair value of acquired customer list intangibledeposit relationships on the date of acquisition and are as follows:

  Three Months Ended
September 30, 2018
  Three Months Ended
September 30, 2017
 
  (unaudited)  (unaudited) 
  B&N  RAM  Total  B&N  RAM  Total 
Beginning balance $-  $305  $305  $336  $347  $683 
Amortization  -   (11)  (11)  (3)  (11)  (14)
Relief due to asset sale  -   -   -   (333)  -   (333)
                         
Ended balance $-  $294  $294  $-  $336  $336 
Accumulated amortization and impairment $-  $653  $653  $-  $611  $611 
                         
  Nine Months Ended
September 30, 2018
  Nine Months Ended
September 30, 2017
 
  (unaudited)  (unaudited) 
  B&N  RAM  Total  B&N  RAM  Total 
Beginning balance $-  $326  $326  $358  $368  $726 
Amortization  -   (32)  (32)  (25)  (32)  (57)
Relief due to asset sale  -   -   -   (333)  -   (333)
                         
Ended balance $-  $294  $294  $-  $336  $336 
Accumulated amortization and impairment $-  $653  $653  $-  $611  $611 
                         
              December 31, 2017 
              B&N  RAM  Total 
Beginning balance             $358  $368  $726 
Amortization              (25)  (42)  (67)
Relief due to asset sale              (333)  -   (333)
                         
Ended balance             $-  $326  $326 
Accumulated amortization and impairment             $-  $621  $621 

amortized over their estimated useful lives. Purchased customer accounts primarily consist of records and files that contain information about investment holdings. The valuevalues assigned to customer listlists and core deposit intangibles isare based upon a multiplethe application of the amount of commission revenue generated from the identified premiums.income approach. The customer listsintangibles are expected to have useful lives of approximately 13 years and 4 months.years. The Company recognized $32$21 and $24 of amortization expense related to its intangible assets for the ninethree months ended September 30, 2017.

As discussed in Note 1, in 2017 the Bank sold its entire interest in B&N resulting in the removal of the remaining related intangibles. At September 30, 2018, based upon the amount of future commission revenue available from the then existing RAM customer premiums on hand, the Company determined that the fair value of the amortizable intangible assets exceeded their carrying values recorded at year end.

March 31, 2024 and 2023, respectively.

As of September 30, 2018March 31, 2024, the future amortization expense for amortizable intangible assets for the respective years isended December 31, was as follows:

2018 $10 
2019  42 
2020  42 
2021  42 
2022  42 
               Thereafter  116 

2024

    

$

58

2025

 

60

2026

 

29

2027

 

21

2028

 

16

Thereafter

41

Total

$

225


19

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Table of Contents

8.

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

5.    Deposits

Deposits werebalances are summarized as follows:

 September 30, December 31, 
 2018  2017 
 (unaudited)    
     
Noninterest bearing demand deposits $185,222  $157,828 
        

March 31, 

December 31,

    

2024

    

2023

Non-interest bearing demand deposits

$

236,957

$

249,793

Interest bearing accounts:        

 

  

 

  

NOW  95,857   101,167 

NOW(1)

 

126,058

 

125,628

Savings  128,733   125,244 

 

144,932

 

146,172

Money market  128,982   123,643 

 

196,107

 

190,864

Time certificates of deposit  152,924   142,223 

 

332,970

 

318,046

        
Total interest bearing accounts  506,496   492,277 

 

800,067

 

780,710

        
Total deposits $691,718  $650,105 

$

1,037,024

$

1,030,503

(1)Negotiable order of withdrawal

The Company has established a relationship to participate in a reciprocal deposit program with other financial institutions. The reciprocal deposit program provides access to Federal Deposit Insurance Corporation (“FDIC”) insurance deposit products in aggregate amounts exceeding the current limits for depositors. At March 31, 2024 and December 31, 2023, total reciprocal deposits were $43,488 and $40,009. Included in time certificates of deposit at September 30, 2018March 31, 2024 and December 31, 20172023 were reciprocal deposits totaling $21,311$27,580 and $20,673,$23,357, respectively, with original maturities of one to three years. Reciprocal deposits included in money market accounts totaled $15,908 and $16,652 at March 31, 2024 and December 31, 2023, respectively.

The Company had no brokered deposits at either March 31, 2024 or December 31, 2023. Time certificates of deposit in denominations of $250 or greater were $15,138$100,385 and $13,920$100,063 as of September 30, 2018March 31, 2024 and December 31, 2017,2023, respectively.

Contractual maturities of time certificates of deposit at March 31, 2024 are summarized below:

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
within 1 year $107,625  $69,634 
1 - 2 years  23,000   47,603 
2 - 3 years  4,299   10,988 
3 - 4 years  14,991   7,521 
4 - 5 years  3,009   6,477 
over 5 years  -   - 
         
            Total $152,924  $142,223 

March 31, 

    

2024

Within 1 year

$

324,632

1 – 2 years

 

5,115

2 – 3 years

 

1,561

3 – 4 years

 

428

4 – 5 years

 

1,234

Total

$

332,970


20

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

9.Long-Term Debt and FHLBNY Stock

Table of Contents

FHLBNYRhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

6.    Long-Term Debt and FHLB Stock

FHLB Borrowings and Stock

The CompanyBank is a member of the FHLBNY.FHLB. At September 30, 2018March 31, 2024 and December 31, 2017,2023, the CompanyBank had access to a preapproved secured line of credit with the FHLBNYFHLB of $409,776$649,283 and $370,974,$656,516, respectively. Borrowings under this line require collateralization through the pledge of specific loans and securities. At September 30, 2018March 31, 2024 and December 31, 2017,2023, the CompanyBank had pledged assets of $148,006$227,899 and $25,608,$228,172, respectively. At September 30, 2018 and December 31, 2017, theThe Company had no outstanding overnight line of credit balances with the FHLBNY of $17,500 and $14,500, respectively.FHLB at either March 31, 2024 or December 31, 2023. These borrowings would mature the following business day. The interest rate was 2.38% at September 30, 2018 and 1.53% at December 31, 2017. At September 30, 2018, the Company also had structured borrowings in the amount of $36,121.

The outstanding principal amounts and the related terms and rates at September 30, 2018March 31, 2024 were as follows (unaudited):follows:

Term Principal  Maturity Rate  Due in one year  Long term 
5 month bullet $10,000  February 26, 2019  2.64% $10,000  $- 
1 year amortizing  3,762  May 15, 2019  2.50%  3,762   - 
1 year amortizing  4,175  June 7, 2019  2.53%  4,175   - 
2 year amortizing  4,390  May 15, 2020  2.78%  2,482   1,908 
2 year amortizing  4,594  June 8, 2020  2.76%  2,687   1,907 
3 year amortizing  9,200  May 17, 2021  2.92%  3,813   5,387 
                   
Total $36,121  Weighted Average Rate  2.72% $26,919  $9,202 

Term

    

Principal

    

Maturity

    

Rate

    

Due in one year

    

Long term

Fixed short-term

$

10,000

April 23, 2024

5.70

%  

$

10,000

$

Fixed short-term

10,000

May 17, 2024

5.59

%  

10,000

Fixed short-term

10,000

June 17, 2024

5.60

%  

10,000

Fixed short-term

10,000

July 17, 2024

5.59

%  

10,000

Fixed short-term

10,000

August 6, 2024

5.42

%

10,000

Fixed short-term

10,000

September 6, 2024

5.39

%

10,000

Fixed medium-term

20,000

March 20, 2025

4.47

%  

20,000

Fixed medium-term

722

October 31, 2025

4.87

%  

722

Fixed medium-term

5,000

November 3, 2025

4.87

%  

5,000

Fixed medium-term

728

December 5, 2025

4.34

%  

728

Fixed medium-term

1,233

September 21, 2026

5.20

%

1,233

Fixed medium-term

381

November 9, 2026

5.04

%  

381

Fixed medium-term

20,000

May 2, 2028

3.88

%

20,000

Total

$

108,064

Weighted Average Rate

 

4.99

%  

$

60,000

$

48,064

At December 31, 2017, the Company did not have any structured advances with the FHLBNY.

The CompanyBank is required to maintain an investment in FHLB capital stock, of the FHLBNY, as collateral, in an amount equal to a certain percentage of its outstanding debt. FHLBNYFHLB stock is considered restricted stock and is carried at cost. The CompanyBank evaluates FHLB stock for impairment based on the ultimate recovery ability of the cost. No impairment was recognized at September 30, 2018either March 31, 2024 or December 31, 2017.

2023.

Subordinated Debt

During 2005,In addition to the Bank, the Company formedhas one other wholly-owned subsidiary, RSB Capital Trust I (“Trust”(the “Trust”). In 2005, the Trust issued $5,000 of pooled trust preferred securities in a private placement and owns allissued 155 shares of common stock at $1 par value per share, to the Trust’s common securities.Company. The Trust, which has no independent assets or operations, and was createdformed in 2005 for the sole purpose of issuing trust preferred securities and investing the proceeds thereof in an equivalent amount of junior subordinated debentures issued bydebentures. The proceeds from the Company. Trustissuance of the trust preferred securities were down-streamed to the Bank and are currently considered Tier 1 capital for purposes of determining the Bank’s capital ratios. The trust securities also bear interest at 3-month LIBOR plus 2.00%. The duration of the Trust is 30 years.

The subordinated debt securities of $5,155 are unsecured obligations of the Company and are subordinate and junior in right of payment to all present and future senior indebtedness of the Company. The Company has entered into a guarantee, which together with its obligations under the subordinated debt securities and the declaration of trust governing the Trust, including its obligations to pay costs, expenses, debts and liabilities, other than trust securities, provides a full and unconditional guarantee of amounts on the capital securities. The subordinated debentures, which bear interest at 3-month LIBORthe three month term Secured Overnight Financing Rate (“SOFR”) plus 2.00% (4.310%2% and a relative spread adjustment of

21

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

0.26% was 7.58%  and 7.64% at September 30, 2018March 31, 2024 and 3.454% at December 31, 2017)2023, respectively. The subordinated debentures mature on May 23, 2035.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

AvailableOther Borrowings

The CompanyBank has an unsecured, uncommitted $10,000 line of credit with Zions Bank. There were no advances outstanding under this line of credit at September 30, 2018 andeither March 31, 2024 or December 31, 2017.2023.

10.Income Taxes

The componentsBank also has an unsecured, uncommitted $50,000 line of the provision for income taxes are as follows:

  Three Months Ended September 30,  Nine Months Ended September 30, 
  2018 2017  2018 2017 
  (unaudited)  (unaudited) 
Current expense (benefit):              
Federal $89 $831  $550 $1,408 
State  (6) (89)  7  (71)
Total  83  742   557  1,337 
               
Deferred (benefit) expense:              
Federal  183  12   (12) 134 
State  -  -   -  - 
Total  183  12   (12) 134 
               
Total provision for income taxes $266 $754  $545 $1,471 

The following is a reconciliation between the expected federal statutory income tax ratecredit with Pacific Coast Bankers Bank. There were no advances outstanding under this line of 21% (2018) and 34% (2017) and the Company’s actual income tax expense and rate:

  Three months ended September 30,  Nine months ended September 30, 
  2018  2017  2018  2017 
  (unaudited)  (unaudited) 
Provision at statutory rate $468   21% $1,148   34% $778   21% $1,940   34%
Tax exempt income  (22)  -1%  (41)  -1%  (70)  -2%  (129)  -2%
State income taxes, net of federal income tax benefit  24   1%  6   0%  14   0%  17   0%
Tax basis difference on sale of B&N  -   0%  (296)  -9%  -   0%  (296)  -5%
Other, net  (204)  -5%  (63)  -1%  (177)  -4%  (61)  -1%
                                 
Effective income tax and rate $266   16% $754   23% $545   15% $1,471   26%

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The tax effects of temporary differences that give rise to significant components of the deferred tax assets and deferred tax liabilitiescredit at September 30, 2018 andeither March 31, 2024 or December 31, 2017:2023.

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
Deferred tax assets:        
Allowance for loan losses $1,704  $1,473 
Deferred expenses  767   717 
Depreciation and amortization  79   105 
Unrecognized pension liability  1,019   1,232 
Postretirement liability  919   901 
Deferred loss on OREO  187   83 
Unrealized loss on securities  1,128   617 
State tax NOLs  647   647 
Other  198   232 
Gross deferred tax assets  6,648   6,007 
         
Deferred tax liabilities:        
Prepaid expenses  (277)  (181)
Prepaid pension  (1,304)  (1,148)
Deferred loan fees  (135)  (65)
Mortgage servicing rights  (615)  (610)
Gross deferred tax liabilities  (2,331)  (2,004)
         
Net deferred tax asset  4,317   4,003 
         
Deferred tax valuation allowance  (985)  (982)
         
Deferred tax assets, net of allowance $3,332  $3,021 

The 2015-16 New York Tax State (“NYS”) Budget enacted on March 31, 2015 contained a significant reform of NYS’s corporate tax system (Part A of Chapter 59 of the Laws of 2015). The budget enacted on April 13, 2016 presented technical and clarifying amendments to the previously enacted tax reform statutes (Part T of Chapter 59 of the Laws of 2016) which were effective for tax years effective on or after January 1, 2016.

Among the many changes related to the Company, the separate tax article 32 that used to apply to financial institutions became no longer applicable and the Company was required to file as a general business corporation (Article 9-A) starting in 2015. The new tax law provided for a permanent deduction of income from “qualified” loans from taxable income for community banks. As such, management determined that the Company would most likely not pay any income tax but rather generate New York net operating losses (“NOLs”) for the foreseeable future. The Company would likely pay the NYS capital based tax until the phase out of that tax which is scheduled for the year ended December 31, 2020. While the change was positive for the Company (it would likely pay less cash taxes in future years due to the permanent deduction afforded), one immediate negative impact was the reduced value of the Company’s NYS deferred tax assets (“DTAs”).


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

In management’s opinion, it is expected that in future years there will be no opportunity to reverse the NYS DTAs to provide for a reduction in NYS income taxes. Therefore, at year end 2015 management established a full valuation allowance to recognize the fully diminished value of these DTAs.

Retained earnings at September 30, 2018 and December 31, 2017 and 2016 include a contingency reserve for loan losses of approximately $1,534 which represents the tax reserve balance existing at December 31, 1987 and is maintained in accordance with provisions of the Internal Revenue Code applicable to mutual savings banks. Amounts transferred to the reserve have been claimed as deductions from taxable income and, if the reserve is used for purposes other than to absorb losses on loans, a federal income tax liability could be incurred. It is not anticipated that the Company will incur a federal income tax liability relating to this reserve balance and accordingly, deferred income taxes of approximately $414 at September 30, 2018 and $614 at December 31, 2017 and 2016 have not been recognized.

11.7.  Employee Benefits

Pension Plan

The Bank maintains a noncontributory defined benefit pension plan covering substantially all of its employees 21 years of age or older who havehad completed at least one year of service. On April 24,service as of June 30, 2012, the effective date on which the Board of Directors of Rhinebeckthe Bank voted to freeze the Bank’s defined benefit plan as of June 30, 2012.

plan.

The following table sets forth the plan’s funded status and amounts recognized in the Company’s consolidated statements of financial condition:

     Nine months ended
September 30,
  Year ended
December 31,
 
     2018  2017 
       (unaudited)     
             
Projected and accumulated benefit obligation   $(18,304) $(19,777)
Plan assets at fair value     18,281   18,166 
Funded status included in other liabilities   $(23) $(1,611)

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

March 31, 

December 31, 

    

2024

    

2023

Projected and accumulated benefit obligation

$

(17,986)

$

(17,868)

Plan assets at fair value

 

18,139

 

18,062

Funded status included in accrued expenses and other liabilities

$

153

$

194

Amounts recognized in accumulated other comprehensive loss consisted of the following:

  Nine months ended
September 30,
  Year ended
December 31,
 
  2018  2017 
  (unaudited)    
         
Net actuarial loss $4,855  $5,865 

The net periodic pension (benefit) cost and amounts recognized in other comprehensive income (loss)expense are as follows:

  Three months ended September 30,  Nine months ended September 30, 
  2018 2017  2018 2017 
  (unaudited)  (unaudited) 
           
Net periodic pension (income) cost $- $19  $(2)$   57 
Net actuarial pension (gain) loss  - -   (1,010) - 
              
    Total $-$19  $(1,012)$57 

Three months ended March 31,

    

2024

    

2023

Interest cost

$

213

$

215

Expected return on plan assets

 

(249)

 

(232)

Amortization of unrecognized loss

 

74

 

93

Net periodic cost

$

38

$

76

In 2018 and 2017, net actuarial (gain) loss resulted primarily from changes in the discount rate.

Estimated net actuarial loss of $374 will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2018. Weighted-average assumptions used by the Company to determine the pension benefit obligation consisted of the following:

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
         
Discount rate  4.11%  3.53%

Weighted-average assumptions used by the Company to determine the net periodic pension cost consisted of the following:

  September 30,  December 31, 
  2018  2017 
  (unaudited)    
         
Discount rate  4.11%  4.06%
Rate of increase in compensation  -   - 
Expected long-term rate of retun on assets  6.00%  6.00%

The expected long-term rate of return on plan assets has been determined by applying historical average investment returns from published indexes relating to the current allocation of assets in the plan. Plan assets are invested in pooled separate accounts consisting of underlying investments in nineeight diversified investment funds.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

As of September 30, 2018, the investment funds include six equity funds, three bond funds and a real estate fund, each with its own investment objectives, investment strategies and risks, as detailed in the Company’s investment policy statement. At DecemberMarch 31, 2017 and 20162024, the investment funds included fivesix equity funds threeand two fixed income bond funds, and a taxable money market fund, each with its own investment objectives, investment strategies and risks, as detailed in the Company’s investment policy statement. The Company determines the appropriate strategic asset allocation versus plan liabilities, as governed by the investment policy statement.

22

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The assets of the plan are invested under the supervision of the Company’s investment committee in accordance with the investment policy statement. The investment options of the plan are chosen in a manner consistent with generally accepted standards of fiduciary responsibility. The investment performance of the Company’s individual investment managers, with the assistance of the Company’s investment consultant, is monitored on a quarterly basis and is reviewed at least annually relative to the objectives and guidelines as stated in the Company’s investment policy statement.

The Company did not contribute to the plan in the first three months of 2024 or 2023.

The fair value of the Company’s pension plan assets, by fair value hierarchy, are as follows:

  Balance  Quoted Prices in
Active
Markets for
Identical Assets
(Level 1)
  Significant
Observable
Inputs
(Level 2)
  Significant
Observable
Inputs
(Level 3)
 
  September 30, 2018 
  (unaudited) 
Pooled separate accounts $18,281  $         -  $18,281  $        - 
                 
  December 31, 2017 
                 
Pooled separate accounts $18,166  $-  $18,166  $- 

March 31, 2024

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

Investment in separate accounts

Fixed income

$

12,686

$

$

$

12,686

Equity

 

5,453

 

 

 

5,453

Total assets at fair value

$

18,139

$

$

$

18,139

December 31, 2023

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

Investment in separate accounts

Fixed income

$

12,293

$

$

$

12,293

Equity

 

5,769

 

 

 

5,769

Total assets at fair value

$

18,062

$

$

$

18,062

The pooled separate accounts are valued at the net asset per unit, based on either the observable net asset value of the underlying investment or the net asset value of the underlying pool of securities. Net asset value is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding. Pooled separate accounts are classified within level 2

For a detailed disclosure on the Bank’s pension and employee benefits plans, please refer to Note 9 of the valuation hierarchy described in Note 1.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Employer contributions and benefit payments are as follows:

  Three months ended September 30,  Nine months ended September 30, 
  2018  2017  2018  2017 
  (unaudited)  (unaudited) 
                 
Employer contribution $570  $-  $570  $- 
                 
Benefits paid $(110) $(100) $(331) $(300)

As ofCompany’s Consolidated Financial Statements for the year ended December 31, 2018 and 2017, the following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Years ended December 31, 2018  2017 
         
2018 $540  $538 
2019  567   564 
2020  636   633 
2021  667   666 
2022  711   708 
2023 - 2027  4,206   4,284 

On August 14, 2018, the Company made a contribution to the plan2023 included in the amount of $570. The contribution was made to reduce the underfunded status of the plan and realize a higher tax deduction due to the decrease of the federal tax rate in 2018.

Annual Report on Form 10-K.

Defined Contribution Plan

The CompanyBank sponsors a 401(k) defined contribution plan. Participants are permitted, in accordance with the provisions of Section 401(k) of the Internal Revenue Code, to contribute up to 25% of their earnings (as defined) into the plan with the CompanyBank matching up to 6%, subject to Internal Revenue Service limitations. The Company’sBank’s contributions charged to operations amounted to $577, $508$269 and $686$286 for the ninethree months ended September 30, 2018March 31, 2024 and 20172023, respectively.

23

Table of Contents

Rhinebeck Bancorp, Inc. and year ended December 31, 2017, respectively.Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Bank Owned Life Insurance(Dollars in thousands, except share and per share data)

The Company has an investment in and is the beneficiary of, life insurance policies on the lives of certain officers and trustees. The purpose of these life insurance policies is to provide income through the appreciation in cash surrender value of the policies, which is expected to offset the cost of the deferred compensation plans. These policies have aggregate cash surrender values of $17,736 and $17,577 at September 30, 2018 and December 31, 2017, respectively. Net earnings on these policies aggregated $345 and $345 for the nine months ended September 30, 2018 and 2017 and $460 for the year ended December 31, 2017, respectively, which are included in noninterest income in the consolidated statements of income.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Deferred Compensation Arrangements

Trustees’Directors’ Plan,

(formerly the “Trustees Plan”)

The Company’s 1991Bank’s Deferred Compensation Plan for Fees of Directors, as amended and restated effective January 1, 2005 (the “Trustees’“Directors’ Plan”), covers Trusteesdirectors who elect to defer fees earned. Under the termsreceipt of the Trustees’ Plan, each participant may elect to defer all or parta portion of their annual director’s fees.fees until separation from service. Upon resignation, retirement, or death, the participants’participant’s total deferred compensation, including earnings thereon, will be paid out. At September 30, 2018March 31, 2024 and December 31, 2017, $1,7602023, total amounts due to participants of $3,483 and $1,648,$3,278, respectively, iswere included in accrued expenses and other liabilities, which represents cumulative amounts deferred and earnings thereon.liabilities. Total expenseexpenses related to the Trustees’Directors’ Plan were $63 and $51 for the ninethree months ended September 30, 2018March 31, 2024 and 2017 were $61 and $44 and year ended December 31, 2017 was $62,2023, respectively, which arewere included in noninterestother non-interest expense in the consolidated statements of income.

Executive Long-Term Incentive and Retention Plan

The CompanyBank maintains an Executive Long-Term Incentive and Retention Plan (the “Executive Plan”). Participation in the Executive Plan is limited to officers of the Company designated as participants by the Board of Trustees and who filed a properly completed and executed participation agreement in accordance with the terms of the Executive Plan.Directors. Under the Executive Plan, the Board of TrusteesDirectors may grant annual incentive awards equal to a percentage of a participant’s base salary at the rate in effect on the last day of the Executive Plan year, as determined by the Board of TrusteesDirectors based on the attainment of criteria established annually by the Board of Trustees.Directors. Incentive awards under the Executive Plan are credited to the participant’s incentive benefit account as of the last day of the Executive Plan year to which the award relates and earn interest at a rate determined annually by the Board of Trustees.Directors. Participants vest in their benefit accounts in accordance with the vesting schedule approved by the Board of Trustees,Directors, which ranges from one to five years of service. At September 30, 2018March 31, 2024 and December 31, 2017, $8402023, $1,980 and $813,$1,962, respectively, iswas included in accrued expenses and other liabilities, which represents the cumulative amounts deferred and earnings thereon. The Company recognized expenses of $27$45 and $23$131 for the ninethree months ended September 30, 2018March 31, 2024 and 2017, and $76 for the year ended December 31, 2017,2023, respectively, related to this plan, and which are included in salaries and employee benefits expense and other non-interest expense in the consolidated statements of income.

Group Term Replacement Plan

Under the terms of the “Group Term Replacement Plan”, the Company provides postretirement life insurance benefits to certain officers. The liability related to these postretirement benefits is being accrued over the individual participants’ service period and aggregated $1,300$1,655 and $1,260, respectively,$1,642 at September 30, 2018March 31, 2024 and December 31, 2017.2023, respectively. The Company recognized expenses of $40$13 for both of the three-month periods ended March 31, 2024 and $41 for the nine months ended September 30, 2018 and 2017 and $71 for the year ended DecemberMarch 31, 2017, respectively,2023, related to this plan, which are included in salaries and employee benefits expense in the consolidated statements of income.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Other Director and Officer Postretirement Benefits

The Company has individual fee continuation agreements with certain directors and a supplemental retirement agreement with an executive officer, each of which provide for fixed postretirement benefits to be paid to the directors andor the officer, or their beneficiaries, for periods ranging from 15 to 20 years. In addition, the Company has agreements with certain directors which provide for certain postretirement life insurance benefits. The liability related to these postretirement benefits is being accrued over the individual participants’ service period and aggregated $2,105$2,072 and $2,078, respectively,$2,068 at September 30, 2018March 31, 2024 and December 31, 2017.2023, respectively. The Company recognized expenses of $75$14 and $178$16 for the ninethree months ended September 30, 2018March 31, 2024 and 2017 and $292 for the year ended December 31, 2017,2023, respectively, related to these benefits, which are included in other noninterestnon-interest expenses in the consolidated statements of income.

24

12.Commitments and Contingencies

Table of Contents

LeasesRhinebeck Bancorp, Inc. and SubleasesSubsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Employee Stock Ownership Plan

On January 1, 2019, the Bank established an Employee Stock Ownership Plan (“ESOP”) to provide Company stock to eligible employees. The plan is a tax-qualified retirement plan for the benefit of Bank employees. On January 16, 2019, the Company granted a loan to the ESOP to purchase 436,425 shares of the Company’s common stock at a price of $10.00 per share. The loan obtained by the ESOP from the Company is payable annually over 20 years at a rate per annum equal to the Prime Rate, reset annually on January 1st (8.50% at January 1, 2024). Loan payments are funded by cash contributions from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. The balance of the ESOP loan at March 31, 2024 was $3,612. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares committed to be released annually is 21,821 through 2039.

Shares held by the ESOP include the following:

March 31, 

December 31, 

2024

    

2023

Allocated

109,107

 

87,286

Committed to be allocated

5,454

 

21,821

Unallocated

321,864

 

327,318

Paid out to participants

(10,988)

(10,988)

Total shares

425,437

 

425,437

The Company leases certain branch offices and equipment under operating lease agreements which expirefair value of unallocated shares was $2,720 at various dates through 2025. The Company has the option to renew the leases for its branch offices at fair rental values. In addition to rental payments, the branch leases require payments for property taxes in excess of base year taxes.

As of September 30, 2018, future minimum rental commitments under the terms of these leases, by year and in the aggregate, are as follows:

Years ending December 31,   
2018 $168 
2019  673 
2020  641 
2021  564 
2022  509 
2023 and thereafter  963 
     
Total $3,518 

March 31, 2024.

Total rentalcompensation expense charged to operations for cancelable and non-cancelable operating leases were $155 and $162recognized in connection with the ESOP for the three months ended March 31, 2024 and $4792023 was $46 and $469$49, respectively.

Share-Based Compensation Plan

On May 26, 2020, stockholders of the Company approved the 2020 Equity Incentive Plan (the “EIP”).  The  EIP authorizes the issuance to participants of up to 763,743 shares of Rhinebeck Bancorp common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock units.  Of this number, the maximum number of shares of Rhinebeck Bancorp common stock that may be issued under the EIP pursuant to the exercise of stock options is 545,531 shares, and the maximum number of shares of Rhinebeck Bancorp common stock that may be issued as restricted stock awards or restricted stock units is 218,212 shares.  These amounts represented 4.90% and 1.96%, respectively, of the number of shares of common stock issued in the stock offering of Rhinebeck Bancorp.

Pursuant to terms of the EIP, on August 25, 2020, the Board of Directors granted restricted stock and stock options to employees and directors. All of these awards vested annually over a three-year period from the date of the grant and the term of each option is ten years. As of March 31, 2024, there were 105,146 stock options and 49,778 restricted stock awards that remained available for future grants.

The fair value of each option granted under the nine months ended September 30, 2018EIP is estimated on the date of grant using the Black-Scholes Option-Pricing Model. The expected volatility is based on the historical volatility of a peer group of comparable SEC-reporting bank holding companies. The dividend yield assumption is based on the Company’s expectation of dividend payouts. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the date of grant. The Company has elected to recognize forfeitures as they occur.

25

Table of Contents

Rhinebeck Bancorp, Inc. and 2017Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and $626 forper share data)

A summary of options under the year ended December2020 EIP as of March 31, 2017, respectively. Rental income2024 is presented below:

Weighted -

Weighted-Average

Number of

Average

Remaining Contractual

Shares

Exercise Price

Term (in Years)

Options outstanding at beginning of year

436,263

$

6.62

6.64

Expired

(1,333)

6.57

-

Options outstanding at March 31, 2024

434,930

$

6.62

6.50

Options exercisable at March 31, 2024

434,930

$

6.62

6.50

At March 31, 2024, the aggregate intrinsic value of the stock options outstanding, which fluctuates based on changes in the fair market value of the Company’s stock, was $806. The aggregate intrinsic value represents the total pre-tax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of period and the weighted-average exercise price, multiplied by the number of shares) that would have been issued had all option holders exercised their options on March 31, 2024.

As of March 31, 2024, all of the outstanding stock options and restricted stock awards granted under subleases was $81 and $67the 2020 EIP had vested, therefore there were no compensation costs for the three months and $230 and $239 forended March 31, 2024.

For the ninethree months ended September 30, 2018March 31, 2023, share-based compensation of options and 2017,restricted stock under the plan totaled $150.

.

26

Table of Contents

Rhinebeck Bancorp, Inc. and $319Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

8.  Leases

As of March 31, 2024, the Company leased real estate for seven branch offices and two administrative offices under various lease agreements. All of our leases are classified as operating leases.

The calculated amount of the year endedright-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present the value of the minimum lease payments. The Company’s leases have maturities which range from 2024 to 2041, some of which include lessee options to extend the lease term. If the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. The weighted average remaining life of the lease terms for these leases was 10.6 years and 10.8 years as of March 31, 2024 and December 31, 2017,2023, respectively. As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at each lease commencement date. The Company utilized a weighted average discount rate of 2.60% in determining the lease liability as of both March 31, 2024 and December 31, 2023.

For the three months ended March 31, 2024 and 2023, total operating lease costs were $182 and $178, respectively, and were included in occupancy and other expense. The right-of-use asset, included in other assets, was $6,157 and $6,307 and the corresponding lease liability, included in accrued expenses and other liabilities, was $6,218 and $6,375 as of March 31, 2024 and December 31, 2023, respectively.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2024 were as follows:

Years ending December 31:

    

2024

$

573

2025

 

739

2026

 

720

2027

 

676

2028

 

677

Thereafter

 

3,778

Total future minimum lease payments

7,163

Amounts representing interest

(945)

Present Value of Net Future Minimum Lease Payments

$

6,218


27

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

9.  Commitments and Contingencies and Derivatives

Legal Matters

The Company is involved in various legal proceedings which have arisen in the normal course of business. Management believes that resolution of these matters will not have a material effect on the Company'sCompany’s financial condition or results of operations.

Employment Agreements

The Company has entered into employment agreements with certain officers. The agreements provide for base salaries and incentive compensation based on performance criteria outlined in the agreements. The agreements also provide for insurance and various other benefits.

13.Financial Instruments with Off-Balance-Sheet Risk

Financial Instruments with Off-Balance-Sheet Risk

In the normal course of business, the Company is a party to financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include standby letters of credit and commitments to extend credit, which include new loan commitments, and undisbursed portions of construction loans and other lines of credit.credit and loans sold with recourse. We are obligated under a recourse provision associated with certain first mortgage renovation loans sold in the secondary market to bear all costs when a default, including a foreclosure, occurs. These financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the statements of financial condition. The contractual amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer defaults and the value of any existing collateral become worthless. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Financial instruments whose contract amounts represent off-balance sheet credit risk are as follows:

 September 30, December 31, 
 2018  2017 
 (unaudited)    
Commitments to extend credit summarized as follows        

March 31, 

December 31, 

    

2024

    

2023

Commitments to extend credit summarized as follows:

Future loan commitments $4,998  $3,805 

$

3,401

$

5,318

Undisbursed construction loans  12,413   7,175 

 

40,747

 

42,482

Undisbursed home equity lines of credit  10,955   11,185 

 

10,788

 

10,727

Undisbursed commercial and other line of credit  59,969   60,897 

 

70,957

 

69,258

Standby letters of credit  2,324   3,429 

 

3,115

 

4,965

        

Loans sold with recourse

 

1,155

 

1,873

Total $90,659  $86,491 

$

130,163

$

134,623

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Since these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The Company evaluates each customer'scustomer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon an extension of credit, is based on management'smanagement’s credit evaluation of the counterparty. Collateral held varies but may include residential and commercial property, deposits and securities.

14.Regulatory Matters

28

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Interest Rate Swaps

The Company enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate loan agreement to a fixed-rate loan agreement. Under these agreements, the Company simultaneously enters into a variable-rate loan and an interest rate swap agreement with a customer. The Company then enters into a corresponding and offsetting swap agreement with a third party to hedge the exposure created by the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under FASB ASC Topic 815, Derivatives and Hedging, and are marked to market through earnings. The fair values of the swaps are recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions.  The accrued interest receivable and payable of $166 and $132 related to our swaps is recorded in other assets and other liabilities as of March 31, 2024 and December 31, 2023, respectively.

Summary information regarding these derivatives is presented below:

March 31, 

December 31,

2024

2023

Notational amount

$

88,780

$

65,420

Fair value

$

5,735

$

5,343

Weighted average pay rates

5.03

%

5.064

%

Weighted average receive rates

7.44

%

7.49

%

Weighted average maturity (in years)

9.04

8.88

Number of Contracts

16

14

In addition, as of March 31, 2024, the Company has four forward rate swaps with a notional value of $30,560 and a fair value of $856 with effective dates at various points in 2024 and 2025. These forward swaps have a fixed weighted average pay rate of 5.75% and the related weighted average adjustable receive rates will be determined at the time the forward swaps become effective. As of December 31, 2023, there were five forward swaps with a notional value of $30,211, a fair value of $970 and a fixed average pay rate of 4.95%.

29

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

10.  Regulatory Matters

The Bank areis subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company'sCompany’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and the Bank’s assets, liabilities and certain off-balance-sheet items, as calculated under regulatory accounting practices. The Company's and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The final rules implementing the BASEL Committee on Banking Supervisor’s Capital Guidance for U.S. Banks (BASEL III) became effective for the Company and Bank on January 1, 2016. Compliance with the requirements is being phased in over a four year period with full compliance as of January 1, 2019. All presented capital ratios are calculated using BASEL III rules.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the tables below) of total, common equity Tier 1 and additional Tier I capital (as defined in the regulations)12 C.F.R. § 324.20) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined).assets. Management believes, as of September 30, 2018March 31, 2024 and December 31, 2017,2023, that the Company and the Bank met all capital adequacy requirements to which they are subject.

The most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory framework. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, common equity Tier 1, Tier I risk-based and Tier I leverage ratios as set forth in the table below. There are no conditions or events since then which management believes have changed the Bank'sBank’s category.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The Company’s and Bank'sBank’s actual capital amounts and ratios were:

To be Well Capitalized under 

 

For Capital Adequacy

Prompt Corrective Action

 

Actual

Purposes

Provisions

 

    

Amount

    

Ratio

    

Amount

    

Ratio

    

Amount

    

Ratio

 

 Actual  For Capital
Adequacy Purposes
  To be Well
Capitalized under
Prompt Corrective
Action Provisions
 
 Amount  Ratio  Amount  Ratio  Amount  Ratio 
 September 30, 2018 
      (unaudited)      
Rhinebeck Bancorp, MHC                        
Total capital (to risk-weighted assets) $69,698   9.86% $56,538   8.00% $70,672   10.00%
Tier 1 capital (to risk-weighted assets)  63,388   8.97%  42,403   6.00%  56,538   8.00%
Common equity tier one capital (to risk weighted assets)  63,388   8.97%  31,803   4.50%  45,937   6.50%
Tier 1 capital (to average assets)  63,388   7.85%  32,319   4.00%  40,399   5.00%
                        

March 31, 2024

 

Rhinebeck Bank                        

 

  

 

Total capital (to risk-weighted assets) $72,858   10.31% $56,526   8.00% $70,657   10.00%

$

145,962

 

12.99

%  

$

89,892

 

8.00

%  

$

112,366

 

10.00

%

Tier 1 capital (to risk-weighted assets)  66,548   9.42%  42,394   6.00%  56,526   8.00%

 

137,749

 

12.26

%  

 

67,419

 

6.00

%  

 

89,892

 

8.00

%

Common equity tier one capital (to risk weighted assets)  66,548   9.42%  31,796   4.50%  45,927   6.50%

 

137,749

 

12.26

%  

 

50,564

 

4.50

%  

 

73,038

 

6.50

%

Tier 1 capital (to average assets)  66,548   8.24%  32,313   4.00%  40,391   5.00%

 

137,749

 

10.28

%  

 

53,582

 

4.00

%  

 

66,977

 

5.00

%

                        
 December 31, 2017 
Rhinebeck Bancorp, MHC                        
Total capital (to risk-weighted assets) $65,623   10.94% $47,977   8.00% $59,971   10.00%
Tier 1 capital (to risk-weighted assets)  60,166   10.03%  35,983   6.00%  47,977   8.00%
Common equity tier one capital (to risk weighted assets)  60,166   10.03%  26,987   4.50%  38,891   6.50%
Tier 1 capital (to average assets)  60,166   8.16%  29,488   4.00%  36,860   5.00%
                        
Rhinebeck Bank                        
Total capital (to risk-weighted assets) $68,631   11.45% $47,964   8.00% $59,955   10.00%
Tier 1 capital (to risk-weighted assets)  63,174   10.54%  35,973   6.00%  47,964   8.00%
Common equity tier one capital (to risk weighted assets)  63,174   10.54%  26,980   4.50%  38,971   6.50%
Tier 1 capital (to average assets)  63,174   8.57%  29,488   4.00%  36,860   5.00%

15.Fair Value

December 31, 2023

 

Rhinebeck Bank

 

  

 

  

 

  

 

  

 

  

 

  

Total capital (to risk-weighted assets)

$

144,675

 

12.70

%  

$

91,154

 

8.00

%  

$

113,942

 

10.00

%

Tier 1 capital (to risk-weighted assets)

 

136,295

 

11.96

%  

 

68,365

 

6.00

%  

 

91,154

 

8.00

%

Common equity tier one capital (to risk weighted assets)

 

136,295

 

11.96

%  

 

51,274

 

4.50

%  

 

74,062

 

6.50

%

Tier 1 capital (to average assets)

 

136,295

 

10.10

%  

 

53,990

 

4.00

%  

 

67,488

 

5.00

%

As described

30

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Note 1, thethousands, except share and per share data)

11.  Fair Value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. A description of the valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value for financial and non-financial instruments not recorded at fair value, is set forth below.

Cash and Due from Banks, Accrued Interest Receivable and Mortgagors' Escrow Accounts

Cash Equivalents

The carrying amount is a reasonable estimate of fair value.

Available for Sale and Held to Maturity Securities

Where quoted prices are available in an active market for identical securities, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include marketable equity securities and U.S. Treasury obligations. If quoted prices are not available, then fair values are estimated by using pricing models (i.e., matrix pricing) or quoted prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. Examples of such instruments include government agency bonds, mortgage-backed securities and municipal bonds. The Company does not have any Level 3 securities include securities for which significant unobservable inputs are utilized. Available for sale securities are recorded at fair value on a recurring basis and held to maturity securities are only disclosed at fair value.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

basis.

FHLBNYFHLB Stock

The carrying value of FHLBNYFHLB stock approximates fair value based on the redemption provisions of the FHLBNY.FHLB.

Loans

Loans receivable are carried at cost. For variable rate loans, which reprice frequently, and have no significant change in credit risk, carrying values are a reasonable estimate of fair values adjusted for credit losses inherent in the portfolios. The fair value of fixed rate loans is estimated by discounting the future cash flows using the year end rates, estimated using local market data, at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, adjusted for credit losses inherent in the portfolios. The Company does not record loans at fair value on a recurring basis. However, from time to time, nonrecurring fair value adjustments to collateral-dependent impairedindividually analyzed loans are recorded to reflect partial write-downs based on the observable market price or current appraised value of collateral. The fair value of loans held for sale is estimated using quoted market prices.

Other Real Estate Owned

Other real estate owned represents real estate acquired through foreclosure and is carried at the lower of cost or fair value less estimated selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. These assets are included as Level 3 fair values, based upon the lowest level of input that is utilized in the fair value measurements.

Accrued Interest

The carrying amounts of accrued interest approximate fair value.

31

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

Mortgage Servicing Rights

The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated future net servicing income. Mortgage servicing rights are carried at the lower of amortized cost or estimated fair value and are included in other assets on the consolidated statements of financial condition.

Deposits

Deposit liabilities are carried at cost. The fair value of NOW, savings and money market deposits is the amount payable on demand at the reporting date. The fair value of time certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities estimated using local market data to a schedule of aggregated expected maturities on such deposits.

Mortgagors’ Escrow Accounts

The fair value is estimated using a discounted cash flow calculation that applies interest rates currently being offered on deposited escrow accounts of similarly expected maturities.

Advances from the FHLBNY

FHLB

The fair value of the advances is estimated using a discounted cash flow calculation that applies current FHLBNYFHLB interest rates for advances of similar maturity to a schedule of maturities of such advances.


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

Subordinated Debt

Based on the floating rate characteristic of these instruments, the carrying value is considered to approximate fair value.

Off-Balance-SheetOff-Balance-Sheet Instruments

Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties'counterparties’ credit standings. Such amounts are not significant.

Loan Level Interest Rate Swaps

The fair value is based on settlement values adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves.

32

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The following tables detail the assets that are carried at fair value on a recurring basis as of the periods shown and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

Quoted Prices in

Active Markets

Significant

Significant

for Identical

Observable

Unobservable

    

Balance

    

Assets (Level 1)

    

Inputs (Level 2)

    

Inputs (Level 3)

March 31, 2024

Assets:

U.S. Treasury securities

$

19,143

$

19,143

$

$

U.S. government agency mortgage-backed securities-residential

124,134

124,134

U.S. government agency securities

 

23,096

 

 

23,096

 

Municipal securities

 

2,882

 

 

2,767

 

115

Corporate Bonds

12,734

12,734

Other

 

656

 

 

656

 

Total available for sale securities

182,645

19,143

163,387

115

Loan level interest rate swaps

6,591

6,591

Total assets

$

189,236

$

19,143

$

169,978

$

115

Liabilities:

Loan level interest rate swaps

$

6,591

$

$

6,591

$

Total liabilities

$

6,591

$

$

6,591

$

    

December 31, 2023

Assets:

U.S. Treasury securities

$

24,006

$

24,006

$

$

U.S. government agency mortgage-backed securities – residential

128,580

128,580

U.S. government agency securities

 

23,158

 

 

23,158

 

Municipal securities

 

2,903

 

 

2,788

 

115

Corporate Bonds

12,640

12,640

Other

 

698

 

 

698

 

Total available for sale securities

191,985

24,006

167,864

115

Loan level interest rate swaps

6,278

6,278

Total assets

$

198,263

$

24,006

$

174,142

$

115

Liabilities:

Loan level interest rate swaps

$

6,278

$

$

6,278

$

Total liabilities

$

6,278

$

$

6,278

$

33

Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

     Identical Assets  Inputs  Inputs 
  Balance  (Level 1)  (Level 2)  (Level 3) 
  September 30, 2018 
  (unaudited) 
                 
U.S. Treasury securities $2,928  $2,928  $-  $- 
U.S. government agency mortgage-backed securities-residential  82,013   -   81,584   429 
U.S. government agency securities  16,217   -   16,217   - 
Municipal securities  1,229   -   1,229   - 
                 
Total $102,387  $2,928  $99,030  $429 
                 
  December 31, 2017 
                 
U.S. Treasury securities $3,001  $3,001  $-  $- 
U.S. government agency mortgage-backed securities-residential  91,390   -   91,390   - 
U.S. government agency securities  16,526   -   16,526   - 
Municipal securities  2,385   -   2,385   - 
                 
Total $113,302  $3,001  $110,301  $- 

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

The following tables detail the assets carried at fair value and measured at fair value on a nonrecurring basis as of September 30, 2018March 31, 2024 and December 31, 2017 and 20162023, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

  Balance  Quoted Prices in
Active
Markets for
Identical Assets
(Level 1)
  Significant
Observable
Inputs
(Level 2)
  Significant
Observable
Inputs
(Level 3)
 
  September 30, 2018 
  (unaudited) 
Assets held at fair value                
                 
Impaired loans $258  $          -  $     -  $258 
                 
Other real estate owned $1,074  $-  $-  $1,074 
                 
 December 31, 2017 
Assets held at fair value                
                 
Impaired loans $760  $-  $-  $760 
                 
Other real estate owned $773  $-  $-  $773 

Quoted Prices in

Active Markets

Significant

Significant

for Identical

Observable

Unobservable

    

Balance

    

Assets (Level 1)

    

Inputs (Level 2)

    

Inputs (Level 3)

March 31, 2024

Individually analyzed loans, with specific reserves

$

1,189

$

$

$

1,189

Total

$

1,189

$

$

$

1,189

    

December 31, 2023

Individually analyzed loans, with specific reserves

$

758

$

$

$

758

Other real estate owned

 

25

 

 

 

25

Total

$

783

$

$

$

783

Loans that were individually analyzed using the fair value of the collateral had recorded investments of $1,579 and $973 with valuation allowances of $390 and $215 and fair values of $1,189 and $758 at March 31, 2024 and December 31, 2023, respectively. The valuation allowance represents specific allocations to the allowance for credit losses.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

  Fair Value Estimate  Valuation Technique Unobservable Input Range
  September 30, 2018
  (unaudited)
Assets held at fair value          
           
Impaired loans $258  Appraisal of collateral(1) Appraisal adjustments(2) 0% - 20%
        Liquidation expenses(3) 0% - 6%
Other real estate owned  1,074  Appraisal of collateral(1) Appraisal adjustments(2) 0% - 20%
           
  December 31, 2017
           
Impaired loans $760  Appraisal of collateral(1) Appraisal adjustments(2) 0% - 20%
        Liquidation expenses(3) 0% - 6%
Other real estate owned  773  Appraisal of collateral(1) Appraisal adjustments(2) 0% - 20%

(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraised value.

(3) Estimated costs to sell.

The Company discloses fair value information about financial instruments, whether or not recognized in the statements of financial condition, for which it is practicable to estimate that value. Certain financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

Quantitative Information About Level 3 Fair Value Measurements

Fair Value 

Valuation

Unobservable

Range

    

Estimate

    

Techniques

    

Input

    

(Weighted Average)

March 31, 2024

Individually analyzed loans, with specific reserves

$

1,189

 

Appraisal of collateral

(1)  

Liquidation expenses

(3)  

0% to 8%

Appraisal adjustments

(2)  

0% to 20%

December 31, 2023

Individually analyzed loans, with specific reserves

$

758

 

Appraisal of collateral

(1)  

Liquidation expenses

(3)  

0% to 8%

Appraisal adjustments

(2)  

0% to 20%

Other real estate owned

 

25

 

Appraisal of collateral

(1)  

Liquidation expenses

(3)  

0% to 6%

 

  

 

  

 

Appraisal adjustments

(2)  

0% to 20%


Rhinebeck Bancorp, MHC

(1)

Fair value is generally through independent appraisals of the underlying collateral that generally include various level 3 inputs which are not identifiable.

(2)

Appraisals may be adjusted by management for qualitative factors such as economic conditions and Subsidiary

Notes to Consolidated Financial Statements
September 30, 2018estimated liquidation expenses. The range of liquidation expenses and 2017 (unaudited) and December 31, 2017
(dollars in thousands)other appraisal adjustments are presented as a percentage of the appraised value.

(3)

Estimated costs to sell.

The estimated fair value amounts for 2018, 20172024 and 20162023 have been measured as of their respective reporting dates and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than amounts reported at each year-end.

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Table of Contents

Rhinebeck Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

The information presented should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company'sCompany’s assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company'sCompany’s disclosures and those of other companies may not be meaningful.

As of the following dates, the carrying value and fair values of the Company'sCompany’s financial instruments were:

 September 30, December 31, 
 2018  2017 
 (unaudited)      
 Carrying
Value
  Fair
Value
  Carrying
Value
  Fair
Value
 
                

March 31, 

December 31, 

2024

2023

    

Carrying Value

    

Fair Value

    

Carrying Value

    

Fair Value

Financial Assets:                

  

  

  

  

Cash and due from banks (Level 2) $12,596  $12,596  $10,460  $10,460 

Cash and cash equivalents (Level 1)

$

30,672

$

30,672

$

22,129

$

22,129

Available for sale securities (Level 1)

 

19,143

 

19,143

 

24,006

 

24,006

Available for sale securities (Level 2)  102,387   102,387   113,302   113,302 

 

163,387

 

163,387

 

167,864

 

167,864

Held to maturity securities (Level 2)  -   -   1,914   1,928 
FHLBNY stock (Level 2)  2,874   2,874   1,108   1,108 

Available for sale securities (Level 3)

 

115

 

115

 

115

 

115

Loan level interest rate swaps (Level 2)

6,591

6,591

6,278

6,278

FHLB stock (Level 2)

 

5,614

 

5,614

 

6,514

 

6,514

Loans, net (Level 3)  652,053   643,286   566,178   565,765 

 

993,346

 

972,258

 

1,008,851

 

979,037

Accrued interest receivable (Level 2)  2,418   2,418   2,149   2,149 

 

4,611

 

4,611

 

4,616

 

4,616

Mortgage servicing rights (Level 3)  2,278   4,628   2,260   4,122 

 

1,880

 

4,520

 

1,977

 

4,720

                
Financial Liabilities:                

 

  

 

  

 

  

 

  

                
Deposits (Level 2)  691,718   690,260   650,105   649,517 

 

1,037,024

 

962,985

 

1,030,503

 

948,140

Mortgagors escrow accounts (Level 2)  3,521   3,521   7,284   7,284 
FHLBNY advances (Level 2)  53,621   53,621   14,900   14,900 

Mortgagors' escrow accounts (Level 2)

 

7,301

 

7,301

 

9,274

 

9,274

FHLB advances (Level 2)

 

108,064

 

107,057

 

128,064

 

127,592

Subordinated debt (Level 2)  5,155   5,155   5,155   5,155 

 

5,155

 

5,155

 

5,155

 

5,155

Loan level interest rate swaps (Level 2)

6,591

6,591

6,278

6,278

Accrued interest payable (Level 2)

1,681

1,681

1,488

1,488

16.Revenue Recognition(unaudited)

12.  Accumulated Other Comprehensive Loss

The Company generally fully satisfies its performance obligations on its contracts with customers as services are renderedcomponents of other comprehensive loss at March 31, 2024 and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.  The main types of revenue contracts included in non-interest income within the consolidated statements of income areDecember 31, 2023 were as follows:

March 31, 

December 31,

    

2024

    

2023

    

Securities available for sale:

    

Net unrealized loss on securities available for sale

$

(33,744)

$

(33,009)

 

Related deferred tax

 

7,087

 

6,932

 

Net accumulated other comprehensive loss

 

(26,657)

 

(26,077)

 

Defined benefit pension plan:

 

  

 

  

 

Unrecognized net actuarial loss and prior service cost

 

(4,330)

 

(4,330)

 

Related deferred tax

 

909

 

909

 

Net accumulated other comprehensive loss

 

(3,421)

 

(3,421)

 

Total accumulated other comprehensive loss

$

(30,078)

$

(29,498)

 


Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

·Fees for services to customers include service charges on deposits which are included as liabilities in the consolidated statements of financial condition and consist of transaction-based fees: stop payment fees, Automated Clearing House (ACH) fees, account maintenance fees, wire fees, official check fees and overdraft services fees for various retail and business checking customers. These fees are charged as earned on the day of the transaction or within the month of the service. Service charges on deposits are withdrawn directly from the customer’s account balance. ATM and debit card fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Sales of checks to depositors earn fees as a contractual discount to the retail price of the sale from a third-party provider. These fees earned are remitted by the third-party to the Company quarterly.

·The Company earns interchange fee income from credit/debit cardholder transactions conducted through MasterCard payment networks.  Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized monthly, concurrently with the transaction processing services provided to the cardholder within the month.

·The Company records a gain or loss from the sale of other real estate owned (OREO) when control of the property transfers to the buyer, which generally occurs at the time of an executed deed; at this time the OREO asset is derecognized and the gain or loss on the sale is recorded. Rental income received from leased OREO property is recognized during the month it is earned.

·Retail brokerage and advisory fee income is accrued monthly to properly record the revenues in the month they are earned.  Advisory fees are collected in advance on a quarterly basis.  These advisory fees are recorded in the first month of the quarter for which the service is being performed.  Investments into mutual funds and annuities generate fees that are recorded as revenue at the time of the initial sale. In subsequent years the mutual funds and variable annuities generate recurring fees (referred to as 12B-1 fees) that are paid in advance on the anniversary of the original transaction. Fees that are transaction based are recognized at the point in time that the transaction is executed (i.e. trade date)(1)    Related deferred tax is calculated using an income tax rate of 21.0%. Life insurance products are sold on a commission basis that generates a fee that is recorded as revenue within the month of the approved transaction.

·Other income includes rental income, mortgage origination and service fees and late fees on serviced mortgages. All items are recorded as revenue within the month that the service is provided.

Rhinebeck Bancorp, MHC and Subsidiary
Notes to Consolidated Financial Statements
September 30, 2018 and 2017 (unaudited) and December 31, 2017
(dollars in thousands)

17.Plan of Reorganization

On June 12, 2018, the Board

35

Table of Trustees of the Company and the Board of Directors of the Bank adopted a Plan of Reorganization and Minority Stock Issuance (the “Plan”). The Plan is subject to the approval of the Board of Governors of the Federal Reserve System and the New York State Department of Financial Services and must be approved by the affirmative vote of 75% of the votes cast by depositors of the Bank at a special meeting.  Pursuant to the Plan, the Bank proposes to reorganize into the “two-tier” mutual holding company form of ownership.  In connection with the reorganization, a new stock holding company named Contents

Rhinebeck Bancorp, Inc. hasand Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except share and per share data)

13.  Earnings Per Share

Basic earnings per share represent income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental shares (computed using the treasury method) that would have been organized and will becomeoutstanding if all potentially dilutive common stock equivalents (such as options) were issued during the bank holding companyperiod. There were no anti-dilutive options for the Bank. As partthree months ended March 31, 2024 or 2023. Unearned ESOP shares are not deemed outstanding for earnings per share calculations.

Three Months Ended March 31, 

2024

2023

Net income applicable to common stock

$

1,121

$

798

 

  

 

  

Average number of common shares outstanding

 

11,072,607

 

11,228,299

Less: Average unearned ESOP shares

 

324,601

 

346,414

Average number of common shares outstanding used to calculate basic earnings per common share

 

10,748,006

 

10,881,885

Additional common stock equivalents (nonvested stock) used to calculate diluted earnings per share

34,822

Additional common stock equivalents (stock options) used to calculate diluted earnings per share

96,281

104,688

Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share

10,844,287

11,021,395

 

  

 

  

Earnings per Common share:

 

  

 

  

Basic

$

0.10

$

0.07

Diluted

$

0.10

$

0.07

36

Table of the reorganization, Rhinebeck Bancorp, Inc. will sell stock to the public, with the total offering valueContents

Item 2.          Management’s Discussion and numberAnalysis of sharesFinancial Condition and Results of common stock based upon an independent appraiser’s valuation.  The stock will be priced at $10.00 per share.  In addition, the Bank’s Board of Directors will adopt an employee stock ownership plan (“ESOP”), which is permitted to subscribe for up to 3.92% of the common stock to be outstanding following the completion of the reorganization and the offering. Rhinebeck Bancorp, Inc. is organized as a Maryland corporation and will offer 43% of its common stock to be outstanding to the Bank’s eligible members, the ESOP and certain other persons. The Bank also intends to form a charitable foundation, Rhinebeck Bank Community Foundation, Inc., and fund it with 2% of the shares to be outstanding following completion of the reorganization and the offering and up to $200 in cash. The Company will own 55% of the common stock of Rhinebeck Bancorp, Inc. outstanding upon completion of the reorganization and stock offering.

The costs of the reorganization and the issuing of the common stock will be deferred and deducted from the sales proceeds of the offering. If the reorganization and offering is unsuccessful, all deferred costs will be charged to operations. As of September 30, 2018, $471 of reorganization costs had been incurred.

18.Subsequent Events

As of November 7, 2018 Rhinebeck Bancorp, MHC contributed $1,750 of additional capital to Rhinebeck Bank.


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of financial condition and results of operations at September 30, 2018March 31, 2024 and December 31, 2023, and for the three and nine months ended September 30, 2018March 31, 2024 and 20172023, is intended to assist in understanding the financial condition and results of operations of Rhinebeck Bancorp, MHCthe Company and Rhinebeckthe Bank. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect”“expect,” “intend,” “predict,” “forecast,” “improve,” “continue,” “will,” “would,” “should,” “could,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:

statements of our goals, intentions and expectations;

statements regarding our business plans, prospects, growth and operating strategies;

statements regarding the quality of our loan and investment portfolios; and

estimates of our risks and future costs and benefits.

·

statements of our goals, intentions and expectations;

·

statements regarding our business plans, prospects, growth and operating strategies;

·

statements regarding the quality of our loan and investment portfolios; and

·

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

Forward-looking statements, by their nature, are subject to risks and uncertainties.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

general economic conditions, either nationally or in our market area, including potential recessionary conditions;
changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates or methodology in the calculation of the allowance for credit losses;
our ability to access cost-effective funding;
fluctuations in real estate values and both residential and commercial real estate market conditions;
demand for loans and deposits in our market area;
our ability to continue to implement our business strategies;
our ability to manage or reduce expenses;
changes in the determination of goodwill impairment;

37

Table of Contents

competition among depository and other financial institutions;
inflation and changes in market interest rates that affect our margins and yields, the fair value of financial instruments, our volume of loan originations and loan sales, or the level of defaults, losses and prepayments on loans, whether held in portfolio or sold in the secondary market;
adverse changes in the securities markets;
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, Federal Deposit Insurance Corporation premiums and capital requirements, and changes in the monetary and fiscal policies of the Board of Governors of the Federal Reserve System;
negative financial impact from potential supervisory action, regulatory penalties and/or settlements;
our ability to manage interest rate risk, market risk, credit risk and operational risk;
our ability to enter new markets successfully and capitalize on growth opportunities;
our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as well as new management personnel or customers, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
changes in consumer spending, borrowing and savings habits;
the current or anticipated impact of military conflict, terrorism or other geopolitical events;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
our ability to retain key employees;
a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
system failures or cybersecurity threats against our informational technology and those of our third-party providers and vendors;
the failure to maintain current technologies and to successfully implement future information technology enhancements;
our compensation expense associated with equity allocated or awarded to our employees;
changes in the financial condition, results of operations or prospects of issuers of securities that we own; and
conditions relating to the Coronavirus (“COVID-19”) pandemic, or other public health emergencies.

Additional factors that may affect our results are discussed in our market area, that are worse than expected;

changes inAnnual Report on Form 10-K under the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses;

our ability to access cost-effective funding;

fluctuations in real estate values and both residential and commercial real estate market conditions;

demand for loans and deposits in our market area;

our ability to continue to implement our business strategies;

competition among depository and other financial institutions;

inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary market;

adverse changes in the securities markets;

52

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

our ability to manage market risk, credit risk and operational risk;

our ability to enter new markets successfully and capitalize on growth opportunities;

the imposition of tariffs or other domestic or international governmental polices impacting the value of the agricultural or other products of our borrowers;

our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as well as new management personnel or customers, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

changes in consumer spending, borrowing and savings habits;

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

our ability to retain key employees;

our compensation expense associated with equity allocated or awarded to our employees; and

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

heading “Risk Factors.” Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Additional factors that may affect our results are discussed in the Prospectus under the heading “Risk Factors.”Accordingly, you should not place undue reliance on such statements.

38

Table of Contents

Critical Accounting Policies

A summary of ourOur most significant accounting policies isare described in Note 1 to the unaudited consolidated financial statements included Item 1statements.  Certain of this report. Critical accounting estimates are necessary in the application of certainthese accounting policies require management to use significant judgment and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that couldestimates, which can have a material impact on the carrying value of certain assets and liabilities. We consider these policies to be our critical accounting estimates.  The judgment and assumptions made are based upon historical experience, future forecasts, and/or on income under differentother factors that management believes to be reasonable.  Because of the nature of the judgment and assumptions, or conditions. Actualactual results could differ from these judgments and estimates, under different conditions, resulting in a change thatwhich could have a material impacteffect on the carrying values of our assetsfinancial condition and liabilities and our results of operations. Management believes thatWe consider the allowance for credit losses to be our most critical accounting policies, which involve the most complex or subjective decisions or assessments, are as follows:policy.

Allowance for Loan Losses.Credit Losses

The methodology for determining theCompany's allowance for loancredit losses is considered a critical accounting policy by management becauseits estimate of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses. The allowance for loancredit losses is determined by management based upon portfolio segment, past experience, evaluation of estimated loss and impairmentcurrently expected in the loan portfolio, current economic conditionson unfunded lending commitments, and other pertinent factors. Management also considers risk characteristics byin its available-for-sale securities portfolio segments. The allowance for loan losses is maintained at a level that management considers adequate to provide for estimated losses and impairment based upon an evaluationover the expected life of known and inherent risk in the loan portfolio. Loan impairment is evaluatedthose assets. While these estimates are based on substantive methods for determining the fair value of collateralrequired allowance, actual outcomes may differ significantly from estimated results, especially when determining required allowances for larger, complex commercial credits or cash flows. While management usesunfunded lending commitments to commercial borrowers. Consumer loans, including indirect automobile loans and single family residential real estate, are smaller and generally behave in a similar manner, and loss estimates for these credits are considered more predictable. Additionally, the best information available to make such evaluations, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluations.


The allowance for loan losses is established through a provision for loan losses charged to expense, which is based upon past loan loss experience and an evaluation of estimated losses in the current loan portfolio, including the evaluation of impaired loans. Determining the amount ofCompany estimates the allowance for loancredit losses necessarily involvesas a high degreecalculation of judgment. Amongexpected lifetime credit losses utilizing a forward-looking forecast of macroeconomic conditions, which may differ significantly from actual results. Further discussion of the material estimates required to establishmethodology used in establishing the allowance are: overall economic conditions; value of collateral; strength of guarantors; loss exposure at default; the amount and timing of future cash flows on impaired loans; and determination of loss factors to be appliedis provided in Note 3 to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management regularly reviews the level of loss experience, current economic conditions and other factors relatedNotes to the collectability of the loan portfolio. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, our banking regulators, as an integral part of their examination process, periodically review our allowance for loan losses. Our banking regulators may require us to recognize adjustments to the allowance based on judgments about information available to them at the time of its examination.

Our financial results are affected by the changes in and the level of the allowance for loan losses. This process involves our analysis of internal and external variables, and it requires that we exercise judgment to estimate an appropriate allowance for loan losses. As a result of the uncertainty associated with this subjectivity, we cannot assure you that our allowance will be adequate if we experience sizeable loan losses in any particular period.

Deferred Income Taxes.   At September 30, 2018, we had net deferred tax assets totaling $3,332 million. In accordance with Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect earnings. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the federal portion of its deferred tax assets. However, due to changes in New York state tax law, we do not believe we can realize our state deferred tax assets. Accordingly, we established a 100% valuation allowance against such assets.

Fair Value Measurements. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. These estimates are subjective in nature and imprecision in estimating these factors can impact the amount of revenue or loss recorded. A more detailed description of the fair values measured at each level of the fair value hierarchy and the methodology we utilize can be found in Note 15 to the unaudited consolidated financial statementsConsolidated Financial Statements included in Item 1this Form 10-Q and in “Item 7. Management’s Discussion and Analysis of this report.Financial Condition and Results of Operations—Terms of Critical Accounting Policies” in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 26, 2024.

Investment Securities. Available for sale and held to maturity securities are reviewed regularly for possible other-than-temporary impairment. The review includes an analysis of the facts and circumstances of each individual investment such as the severity of loss, the length of time the fair value has been below cost, the expectation for that security’s performance, the creditworthiness of the issuer and our intent and ability to hold the security to recovery. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest income in the statements of income. At September 30, 2018, we believe the unrealized losses are primarily a result of increases in market interest rates from the time of purchase. In general, as market interest rates rise, the fair value of securities will decrease; as market interest rates fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

54

39

Goodwill.    The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the dateTable of acquisition. Goodwill is recognized for the excess of the acquisition cost over the fair values of the net assets acquired and is not subsequently amortized. Identifiable intangible assets include customer lists and are being amortized on a straight-line basis over their estimated lives. Management assesses the recoverability of goodwill at least on an annual basis and all intangible assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The impairment test uses a combined qualitative and quantitative approach. The initial qualitative approach assesses whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this assessment, we determine that it is more likely than not that the fair value is less than the carrying value, the two-step quantitative impairment test is performed. Step one of the quantitative impairment test compares book value to the fair value of the reporting unit. If step one is failed, a more detailed analysis is performed, which involves measuring the excess of the fair value of the reporting unit, as determined in step one, over the aggregate fair value of the individual assets, liabilities, and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the carrying amount exceeds fair value, an impairment charge is recorded through earnings.Contents

Pension Obligations.   We maintain a non-contributory defined benefit pension plan, which was frozen in 2012. We account for benefits under the plan in accordance with ASC Topic 715 “Pension and Other Postretirement Benefits.” The guidance requires an employer to: (1) recognize in its statement of financial position the over funded or underfunded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation; (2) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); and (3) recognize as a component of other comprehensive income, net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period.

Comparison of Financial Condition at September 30, 2018March 31, 2024 and December 31, 20172023

Total Assets. Total assets increased $77.6were $1.30 billion at March 31, 2024 as compared to $1.31 billion at December 31, 2023, reflecting a decrease of $14.4 million, or 10.5%1.1%. Loans receivable decreased by $15.5 million, or 1.5%, available for sale securities decreased $9.3 million, or 4.9%, premises and equipment decreased $3.0 million, or 16.9%, and Federal Home Loan Bank stock decreased $900,000. The decreases were partially offset by an increase in cash of $8.5 million, or 38.6%, and an increase in other assets of $5.5 million, or 28.8%.

Cash and Cash Equivalents. Cash and cash equivalents increased $8.5 million, or 38.6%, to $819.7$30.7 million at September 30, 2018March 31, 2024 from $742.1$22.1 million at December 31, 2017.2023, primarily due to an increase in deposits held at the Federal Reserve Bank of New York as customer deposits increased, specifically time certificates and money market accounts.

Investment Securities Available for Sale. Investment securities available for sale decreased 9.3 million, or 4.9%, to $182.6 million at March 31, 2024 from $192.0 million at December 31, 2023, primarily due to paydowns, calls and maturities of $8.5 million and an increase in the unrealized loss of $734,000. The proceeds from the maturity of securities were primarily used to paydown the advances from the Federal Home Loan Bank.

Net Loans. Total net loans receivable were $993.3 million at March 31, 2024, a decrease of $15.5 million, or 1.5%, as compared to $1.01 billion at December 31, 2023. The decrease was primarily due to a decrease in indirect automobile loans of $27.2 million, or 6.9%, reflecting a strategic decision to decrease that loan portfolio as a percentage of our balance sheet. Partially offsetting the decreases in automobile loans were increases in commercial real estate loans of $9.5 million, or 2.2%, residential real estate loans of $1.6 million, or 2.1%, and commercial and industrial loans of $2.4 million, or 2.7%. Non-accrual loans increased $379,000, or 9.1%, to $4.6 million at March 31, 2024 from $4.2 million at December 31, 2023.

Federal Home Loan Bank Stock. FHLB stock decreased $900,000, or 13.8%, to $5.6 million at March 31, 2024, primarily due to a reduction in mandatory FHLB stock in connection with the pay-off of $20.0 million in advances during the quarter ended March 31, 2024.

Premises and Equipment.  Premises and equipment decreased $3.0 million, or 16.9%, to $14.6 million at March 31, 2024 from $17.6 million at March 31, 2023 as the Beacon branch office was sold in February of 2024 for $2.9 million. The sale included the land and building as well of all branch furniture and equipment. All of the branch accounts were redomiciled to the customer’s nearest branch and all employees were placed in open positions.

Other Assets. Other assets increased $5.5 million, or 28.8%, primarily due to a $5.0 million U.S. Treasury bond that matured on March 31, 2024 and was awaiting settlement.

Total Liabilities. Total liabilities decreased $15.0 million, or 1.3%, to $1.18 billion at March 31, 2024 from $1.20 billion at December 31, 2023, primarily due to a decrease in borrowings of $20.0 million and a decrease in mortgagors’ escrow accounts of $2.0 million, partially offset by an increase in deposits of $6.5 million.

Deposits. Deposits increased $6.5 million, or 0.6%, to $1.04 billion at March 31, 2024 from $1.03 billion at December 31, 2023. For the quarter ended March 31, 2024, interest-bearing accounts increased $19.4 million, or 2.5%, to $800.1 million, while non-interest bearing balances decreased $12.8 million, or 5.1%, to $237.0 million. Of the interest bearing accounts, transaction accounts (including NOW, savings and money market accounts) increased $4.4 million, or 1.0%, while time deposits increased $14.9 million, or 4.7%, at March 31, 2024. The continued growth in interest-bearing deposits was primarily due a shift in deposits from non-interest bearing and lower-yielding transaction accounts to higher-yielding time deposits and money market accounts as customers sought higher interest rates, contributing to the decrease in non-interest bearing and lower interest-bearing deposits.  

40

We participate in reciprocal deposit programs, obtained through the Certificate Deposit Account Registry Service (CDARS) and IntraFi Cash Service (ICS) networks, that provide access to FDIC-insured deposit products in aggregate amounts exceeding the current limits for depositors. This allows us to maintain deposits that might otherwise be uninsured. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $43.5 million and $40.0 million, respectively, at March 31, 2024. We had no brokered deposits at either March 31, 2024 or December 31, 2023.

Mortgagors’ escrow accounts.Mortgagors’ escrow accounts decreased $2.0 million, or 21.3%, from $9.3 million at December 31, 2023 to $7.3 million at March 31, 2024, primarily due to the timing of tax disbursements.

Advances from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank decreased $20.0 million, or 15.6%, from $128.1 million at December 31, 2023 to $108.1 million at March 31, 2024, primarily as the proceeds from the maturity of securities and a reduction in the origination of indirect automobile loans was used to pay down the debt.

Stockholders’ Equity. Stockholders' equity increased $587,000, or 0.5%, to $114.3 million at March 31, 2024 from $113.7 million at December 31, 2023. The increase was primarily due to increasesnet income of $85.9$1.1 million, partially offset by a $580,000 increase in accumulated other comprehensive loss primarily reflecting valuation changes in our available-for-sale securities portfolio due to current financial market conditions. At March 31, 2024, the Company’s book value per share was $10.32 and the Company’s ratio of stockholders’ equity-to-total assets was 8.80%. At December 31, 2023, the Company’s book value per share was $10.27 and the Company’s ratio of stockholders’ equity-to-total assets was 8.66%. Unearned common stock held by the Bank’s employee stock ownership plan was $3.2 million and $3.3 million at March 31, 2024 and December 31, 2023, respectively.

Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023

Net Income. Net income for the three months ended March 31, 2024 increased $323,000, or 40.5%, to $1.1 million, or 15.2%, in$0.10 per diluted share, compared to net loans, $2.1income of $798,000, or $0.07 per diluted share, for the three months ended March 31, 2023. Interest and dividend income increased $1.0 million, or 20.4%7.1%, in cash and cash equivalents and $1.8interest expense increased $2.0 million, or 159.4%42.2%, the provision for credit losses decreased $931,000, or 91.8%, non-interest income increased $130,000, or 9.4%, non-interest expense decreased $326,000, or 3.5%, and taxes increased $96,000, or 42.7%, between comparable quarters.

Net Interest Income. Net interest income decreased $968,000, or 9.8%, to $8.9 million for the three months ended March 31, 2024, compared to $9.9 million for the quarter ended March 31, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 3.1% to 131.88% while our net interest margin decreased by 29 basis points to 2.92% when comparing the first quarter of 2024 to the same quarter in 2023.

Interest Income. Interest income increased $1.0 million, or 7.1%, to $15.6 million for the three months ended March 31, 2024 from $14.6 million for the comparable 2023 period primarily due to the rising interest rate environment and an increase in the average balance of loans, offset by a decrease in the average balance of available for sale securities. The overall average yield of interest-earning assets increased by 39 basis points to 5.14% and the overall average balance of interest-earning assets decreased $23.0 million, or 1.8%.  The average yield on loans increased 31 basis points, while the average yield on available for sale securities increased 13 basis points.. For the three months ended March 31, 2024, the average balance of loans increased $6.7 million, while the average balance of available for sale securities decreased $32.2 million when compared to the three months ended March 31, 2023.

41

Interest Expense. Interest expense increased $2.0 million, or 42.2%, from $4.7 million for the quarter ended March 31, 2023, to $6.7 million for the quarter ended March 31, 2024. The average cost of interest-bearing liabilities increased 82 basis points to 2.92% for the quarter ended March 31, 2024, due to the current interest rate environment, a greater proportion of deposits consisting of higher-yielding certificates of deposit, and the higher average balance of borrowings. The average balance of total interest-bearing liabilities also increased $12.0 million, or 1.3%, to $928.3 million. Between the three months ended March 31, 2023 and 2024, the average cost of Federal Home Loan Bank stock,advances increased by 33 basis points and the average balance increased by $63.0 million. An increase of $89.7 million, or 36.8%, in the average balance of certificates of deposit was offset by a $10.9decrease of $139.9 million, or 9.6%23.3%, in the average balance of our core interest-bearing deposits (consisting of savings, NOW and money market accounts) as depositors sought higher yields in the increasing interest rate environment.

Provision for Credit Losses. The provision for credit losses on loans decreased by $931,000, or 91.8%, from $1.0 million for the quarter ended March 31, 2023 to $83,000 for the current quarter. The decrease in available for sale securities combined with a $1.9 million decrease in heldwas primarily attributable to maturity securities due to the reclassification of these securities to available for saledecreased loan production during the period.quarter, changes to qualitative factors in response to improving economic conditions and decreased charge-offs.

Cash and Cash Equivalents.    Total cash and cash equivalents increased $2.1 million, or 20.4%,Net charge-offs decreased $164,000 from $414,000 for the first quarter of 2023 to $12.6 million at September 30, 2018 from $10.5 million at December 31, 2017. This increase primarily reflected proceeds from maturing securities and an increase in deposits and Federal Home Loan Bank advances.

Securities Available$250,000 for Sale.    Total securities available-for-sale decreased $10.9 million, or 9.6%, to $102.4 million at September 30, 2018 from $113.3 million at December 31, 2017. The decrease reflected the strategyfirst quarter of increasing Rhinebeck Bank’s loans-to-assets ratio to increase the overall yield on interest-earning assets and improve profitability.

Net Loans.    Net loans increased $85.9 million, or 15.2%, to $652.1 million at September 30, 2018 from $566.2 million at December 31, 2017. The increase was primarily due to increases of $58.1 million, or 27.0%, in indirect automobile loans, $11.4 million, or 16.9%, in commercial business loans, $8.7 million, or 4.2%, in commercial real estate loans and $4.8 million, or 85.1%, in commercial construction loans. The increase in indirect automobile loans reflected the hiring in March 2018 of a team of lenders operating in Albany, as well as increased market share in the Hudson Valley market. Commercial real estate loans and commercial business loans increased, reflecting Rhinebeck Bank’s focus on increasing these portfolios. The increase in commercial construction loans reflected $3.5 million in additional extensions on previously originated loans and $4.6 million in loans originated in 2018.

Non-Performing Assets.    Non-performing loans decreased from $9.4 million, or 1.65% of total loans at December 31, 2017, to $8.5 million, or 1.30% of total loans, at September 30, 2018.2024. The decrease was primarily due to decreased net charge-offs of indirect automobile loans of $208,000. The percentage of overdue account balances to total loans decreased to 1.84% as of March 31, 2024 from 1.90% as of December 31, 2023, while non-performing assets increased $354,000, or 8.4%, to $4.6 million at March 31, 2024.

Non-Interest Income. Non-interest income totaled $1.5 million for the salethree months ended March 31, 2024, an increase of development property at foreclosure$130,000, or 9.4%, from the comparable period in 2023, due primarily to an increase of $72,000, or 23.3%, in investment advisory income resulting from the improved investment market and economic conditions, an increase of $36,000 in the recapturenet gain on sales of $1.6mortgage loans as we sold $2.0 million of residential mortgage loans in the first quarter of 2024 as compared to $1.1 million in principal balances. Real estate owned decreased from $2.2the first quarter of 2023, and an increase of $35,000 in service charges on deposit accounts.

Non-Interest Expense. For the first quarter of 2024, non-interest expense totaled $8.9 million, at December 31, 2017 to $1.7 million at September 30, 2018 due to a $387,000 write down on a residential property and the sale of two lots.


Deposits. Total deposits increased $41.6 million, or 6.4%, to $691.7 million at September 30, 2018 from $650.1 million at December 31, 2017. The increase in interest-bearing deposits reflected increases of $10.7 million, or 7.5%, in certificates of deposit, $5.3 million, or 4.3%, in money market accounts and $3.5 million, or 2.8%, in savings accounts, offset by a decrease of $5.3 million,$326,000, or 5.2%3.5%, over the comparable period in NOW accounts.2023. The increase in certificates of deposit reflected the effects of promotional offers. The decrease in NOW accounts was primarily due to a $248,000, or 4.7%, decrease in salaries and benefits  due to a Company-wide reduction in force of approximately 5% in the discontinuancefirst quarter of a higher-tiered product. Noninterest-bearing deposits increased $27.4 million,2023. Other non-interest expense decreased $108,000, or 17.4%6.6%, to $185.2 million at September 30, 2018 from $157.8 million at December 31, 2017, primarily due to the typical seasonal increase in tax payments received by Rhinebeck Bank.

Federal Home Loan Bank Advances.Federal Home Loan Bank advances increased $38.7 million,decreased retail banking expenses. FDIC deposit insurance and other insurance decreased $29,000, or 259.9%10.3%, to $53.6 million at September 30, 2018 from $14.9 million at December 31, 2017. The increase wasprimarily due a decreased assessment rate while occupancy expense decreased $26,000, or 2.4%, due to additional advances taken to fund loan growth.a branch closure in the first quarter of 2024. Professional fees, data processing fees and marketing expense increased by $48,000, $23,000 and $17,000, respectively, partially offsetting the other decreases in non-interest expense.

Total Equity.Total equityIncome Taxes. Income taxes increased $2.0 million,by $96,000, or 3.7%42.7%, to $57.0 million at September 30, 2018 from $55.0 million at December 31, 2017. The increase was due to $3.2 million of net income for the ninethree months ended September 30, 2018, offset by an aggregate increase of $1.2 millionMarch 31, 2024 as compared to the same three month period in accumulated other comprehensive loss on2023 as our availableincome before income taxes increased. Our effective tax rate for sale securities and defined benefit pension plan.the three months ended March 31, 2024 was 22.26% compared to 21.99% for the three months ended March 31, 2023.

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42

Average Balance Sheets for the Three Months Ended March 31, 2024 and Related Yields and Rates

2023

The following tables present information regardingset forth average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualizedbalance sheets, average yields and costs. The yieldscosts, and costscertain other information for the periods indicated are derived by dividing income or expense by theindicated. All average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated usingare daily balances. Nonaccrual loans are included in average balances, only. Loanthe yields set forth below include the effect of deferred fees and discounts and premiums that are included inamortized or accreted to interest income on loans and are not material. Tax exempt income on loans and on investment securities has been calculated on a tax equivalent basis using a combined federal and state marginal tax rate(dollars in thousands).

For the Three Months Ended March 31, 

2024

2023

    

Average

    

Interest and

    

    

Average

    

Interest and

    

    

Balance

Dividends

Yield/Cost(3)

Balance

Dividends

Yield/Cost(3)

Assets:

 

  

 

  

 

  

 

  

 

  

 

  

 

Interest bearing depository accounts and federal funds sold

$

17,274

$

217

 

5.05

%  

$

17,691

$

189

 

4.33

%  

Loans(1)

 

1,009,612

 

14,381

 

5.73

%  

 

1,002,908

 

13,395

 

5.42

%  

Available for sale securities

 

190,900

 

870

 

1.83

%  

 

223,067

 

936

 

1.70

%  

Other interest-earning assets

 

6,441

 

167

 

10.43

%  

 

3,523

82

9.44

%  

Total interest-earning assets

1,224,227

15,635

 

5.14

%  

1,247,189

14,602

 

4.75

%  

Non-interest-earning assets

 

88,866

 

  

 

  

 

87,547

 

  

 

  

Total assets

$

1,313,093

 

  

 

  

$

1,334,736

 

  

 

  

Liabilities and equity:

 

  

 

  

 

  

 

  

 

  

 

  

NOW accounts

$

123,779

$

42

 

0.14

%  

$

144,128

$

49

 

0.14

%  

Money market accounts

 

188,896

 

1,259

 

2.68

%  

 

281,198

 

1,835

 

2.65

%  

Savings accounts

 

147,116

 

132

 

0.36

%  

 

174,370

 

157

 

0.37

%  

Certificates of deposit

 

333,342

 

3,681

 

4.44

%  

 

243,675

 

1,909

 

3.18

%  

Total interest-bearing deposits

 

793,133

 

5,114

 

2.59

%  

 

843,371

 

3,950

 

1.90

%  

Escrow accounts

 

7,017

 

20

 

1.15

%  

 

7,761

 

20

 

1.05

%  

Federal Home Loan Bank advances

 

122,993

 

1,507

 

4.93

%  

 

60,007

 

681

 

4.60

%  

Subordinated debt

5,155

 

98

 

7.65

%  

 

5,155

 

87

 

6.84

%  

Total other interest-bearing liabilities

 

135,165

 

1,625

 

4.84

%  

 

72,923

 

788

 

4.38

%  

Total interest-bearing liabilities

928,298

6,739

 

2.92

%  

916,294

4,738

 

2.10

%  

Non-interest-bearing deposits

 

243,017

 

  

 

  

 

283,887

 

  

 

  

Other non-interest-bearing liabilities

 

26,620

 

  

 

  

 

24,979

 

  

 

  

Total liabilities

1,197,935

 

  

 

  

1,225,160

 

  

 

  

Total stockholders’ equity

 

115,158

 

  

 

  

 

109,576

 

  

 

  

Total liabilities and stockholders’ equity

$

1,313,093

 

  

 

  

$

1,334,736

 

  

 

  

Net interest income

 

  

$

8,896

 

  

 

  

$

9,864

 

  

Interest rate spread

 

  

 

  

 

2.22

%  

 

  

 

  

 

2.65

%

Net interest margin(2)

 

  

 

  

 

2.92

%  

 

  

 

  

 

3.21

%  

Average interest-earning assets to average interest-bearing liabilities

 

  

 

  

 

131.88

%  

 

  

 

  

 

136.11

%  

(1)

Non-accruing loans are included in the outstanding loan balance. Deferred loan fees included in interest income totaled $17,000 and $16,000 for the three months ended March 31, 2024 and 2023, respectively.

(2)

Represents the difference between interest earned and interest paid, divided by average total interest earning assets.

(3)

Annualized.

43

Table of 27% for 2018 and 40% for the previous periods.Contents

  Three Months Ended September 30, 
  2018  2017 
                   
  Average  Interest and     Average  Interest and    
  Balance  Dividends  Yield/Cost  Balance  Dividends  Yield/Cost 
  (Dollars in thousands) 
Interest-earning assets:                        
Cash and due from banks $1,353  $5   1.47% $8,252  $25   1.20%
Loans  640,534   8,570   5.31   546,554   6,477   4.70 
Marketable securities  106,322   578   2.16   120,344   590   1.95 
                         
Total interest-earning assets  748,209   9,153   4.85   675,150   7,092   4.17 
                         
Non-interest-earning assets  53,819           55,755         
                         
Total assets $802,028          $730,905         
                         
Interest-earning liabilities:                        
NOW accounts $97,770  $63   0.26  $92,281  $41   0.18 
Money market accounts  129,582   313   0.96   128,212   208   0.64 
Savings accounts  127,398   82   0.26   128,855   60   0.18 
Certificates of deposit  152,440   621   1.62   142,485   443   1.23 
                         
Total interest-bearing deposits  507,190   1,079   0.84   491,833   752   0.61 
                         
Escrow accounts  10,719   33   1.22   10,394   32   1.22 
Federal Home Loan Bank advances  39,140   254   2.57   761   2   1.04 
Subordinated debt  5,155   57   4.39   5,155   43   3.31 
                         
Total interest-bearing liabilities  562,204   1,423   1.00   508,143   829   0.65 
                         
Non-interest-bearing deposits  174,450           157,620         
Other non-interest-bearing liabilities  8,906           9,080         
                         
Total liabilities  745,560           674,843         
                         
Total stockholders’ equity  56,468           56,062         
                         
Total liabilities and stockholders’ equity $802,028          $730,905         
                         
Net interest income     $7,730          $6,263     
                         
Net interest-earning assets $186,005          $167,007         
                         
Interest rate spread          3.85%          3.52%
Net interest margin          4.10%          3.68%
Average interest-earning assets to average interest-bearing liabilities  133.08%          132.87%        


  Nine Months Ended September 30, 
                   
  2018  2017 
                   
  Average  Interest and     Average  Interest and    
  Balance  Dividends  Yield/Cost  Balance  Dividends  Yield/Cost 
  (Dollars in thousands) 
Interest-earning assets:                        
Cash and due from banks $1,269  $14   1.48% $6,249  $48   1.03%
Loans  606,566   22,713   5.01   534,765   18,738   4.68 
Marketable securities  109,827   1,762   2.14   123,976   1,859   2.00 
                         
Total interest-earning assets  717,662   24,489   4.56   664,990   20,645   4.15 
                         
Non-interest-earning assets  53,825           56,874         
                         
Total assets $771,487          $721,864         
                         
Interest-earning liabilities:                        
NOW accounts $100,643  $172   0.23  $89,923  $118   0.18 
Money market accounts  127,385   763   0.80   128,373   620   0.65 
Savings accounts  125,827   219   0.23   125,773   140   0.15 
Certificates of deposit  148,482   1,696   1.53   146,059   1,335   1.22 
                         
Total interest-bearing deposits  502,337   2,850   0.76   490,128   2,213   0.60 
                         
Escrow accounts  8,312   77   1.24   8,011   74   1.24 
Federal Home Loan Bank advances  29,853   516   2.31   4,750   31   0.87 
Subordinated debt  5,155   157   4.07   5,155   122   3.16 
                         
Total interest-bearing liabilities  545,657   3,600   0.88   508,044   2,440   0.64 
                         
Non-interest-bearing deposits  161,142           150,410         
Other non-interest-bearing liabilities  9,431           9,029         
                         
Total liabilities  716,230           667,483         
                         
Total stockholders’ equity  55,257           54,381         
                         
Total liabilities and stockholders’ equity $771,487          $721,864         
                         
Net interest income     $20,889          $18,205     
                         
Net interest-earning assets $172,005          $156,946         
                         
Interest rate spread          3.68%          3.51%
Net interest margin          3.89%          3.66%
Average interest-earning assets to average interest-bearing liabilities  131.52%          130.89%        


Rate/Volume Analysis

The following table sets forthpresents the effects of changing rates and volumes on our net interest income.income for the period indicated (in thousands). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the priorrate and volume columns. ChangesFor purposes of this table, changes attributable to changes in both rate and volume, thatwhich cannot be segregated, have been allocated proportionallyproportionately based on the changes due to rate and the changes due to volume.

  Three Months Ended September 30, 2018 Compared to Three Months Ended  Nine Months Ended September 30, 2018 Compared to Nine Months Ended 
  September 30, 3017  September 30, 3017 
  Increase (Decrease) Due to  Increase (Decrease) Due to 
  Volume  Rate  Net  Volume  Rate  Net 
  (In thousands) 
Interest income:                        
Cash and due from banks $(25) $5  $(20) $(53) $19  $(34)
Loans  1,184   909   2,093   2,601   1,374   3,975 
Marketable securities  (73)  61   (12)  (220)  123   (97)
Total interest-earning assets  1,086   975   2,061   2,328   1,516   3,844 
                         
Interest expense:                        
Deposits  41   286   327   36   601   637 
Escrow accounts  1   -   1   3   -   3 
Federal Home Loan Bank advances  105   147   252   245   240   485 
Subordinated debt  -   14   14   -   35   35 
Total interest-bearing liabilities  147   447   594   284   876   1,160 
Net increase (decrease) in net interest income $939  $528  $1,467  $2,044  $640  $2,684 

Comparison of Operating Results for the Three Months Ended September 30, 2018 and September 30, 2017

General. Net income decreased by $658,000, The Company does not have any excludable out-of-period items or 25.1%, to $2.0 million for the three months ended September 30, 2018 from $2.6 million for the three months ended September 30, 2017. The decrease was primarily due to a $1.9 million decrease in non-interest income, a $463,000 increase in non-interest expense, and a $300,000 increase in the provision for loan losses, offset by a $1.5 million increase in net interest income and a $488,000 decrease in income tax expense.adjustments.

Three Months Ended March 31, 2024

Compared to Three Months Ended

March 31, 2023

Increase (Decrease)

Due to

    

Volume

    

Rate

    

Net

(unaudited)

Interest income:

 

  

 

  

 

  

Interest bearing depository accounts

$

(5)

$

33

$

28

Loans receivable

 

90

 

896

 

986

Available for sale securities

 

(142)

 

76

 

(66)

Other interest-earning assets

 

75

 

10

 

85

Total interest-earning assets

 

18

 

1,015

 

1,033

Interest expense:

 

  

 

  

 

  

Deposits

 

193

 

971

 

1,164

Escrow accounts

 

(2)

 

2

 

Federal Home Loan Bank advances

 

768

 

58

 

826

Subordinated debt

 

 

11

 

11

Total interest-bearing liabilities

 

959

 

1,042

 

2,001

Net decrease in net interest income

$

(941)

$

(27)

$

(968)

Net Interest Income. Net interest income increased $1.4 million, or 23.4%, to $7.7 million for the three months ended September 30, 2018 compared to $6.3 million for the three months ended September 30, 2017. The increase reflected a $19.0 million increase in the average balance of net interest-earning assets to $186.0 million for the three months ended September 30, 2018 from $167.0 million for the three months ended September 30, 2017, combined with a 33 basis point increase in the interest rate spread to 3.85% for the three months ended September 30, 2018 from 3.52% for the three months ended September 30, 2017. The net interest margin increased 42 basis points to 4.10% for the three months ended September 30, 2018 from 3.68% for the three months ended September 30, 2017.

Interest and Dividend Income. Interest and dividend income increased $2.1 million, or 29.1%, to $9.2 million for the three months ended September 30, 2018, from $7.1 million for the three months ended September 30, 2017. The increase primarily reflected a $73.0 million increase in the average balance of interest-earning assets and a 68 basis point increase in the average yield to 4.85% for the three months ended September 30, 2018 from 4.17% for the three months ended September 30, 2017. The increased yield reflected an increase in market interest rates.

Interest income on loans increased $2.1 million primarily due to a $93.9 million increase in the average balance of loans to $640.5 million for the three months ended September 30, 2018 from $546.6 million for the three months ended September 30, 2017, and a 61 basis point increase in the average yield to 5.31% for the three months ended September 30, 2018 from 4.70% for the three months ended September 30, 2017. Interest income on loans also increased due to the payoff in the third quarter of 2018 of three commercial loans totaling $2.2 million, which were on non-accrual status, resulting in recognized interest of $603,000.


Interest income on securities decreased $12,000, or 2.0%, to $578,000 primarily due to a $14.0 million decrease in the average balance of securities to $106.3 million for the three months ended September 30, 2018 from $120.3 million for the three months ended September 30, 2017, offset in part by a 21 basis point increase in the average yield to 2.16% for the three months ended September 30, 2018 from 1.95% for the three months ended September 30, 2017. The decrease in the average balance of securities reflects Rhinebeck Bank’s strategy to improve the overall yield on interest-earning assets by decreasing the level of its securities portfolio while simultaneously increasing its loans-to-assets ratio.

Interest Expense. Interest expense increased $594,000, or 71.7%, to $1.4 million for the three months ended September 30, 2018 from $829,000 for the three months ended September 30, 2017. The increase primarily reflects a $54.1 million increase in the average balance of interest-bearing liabilities and a 35 basis point increase in the average cost to 1.00% for the three months ended September 30, 2018 from 0.65% for the three months ended September 30, 2017. The increase in the cost of funds reflects an increase in market interest rates.

Interest expense on non-escrow interest-bearing deposits increased $328,000, or 41.8%, primarily due to a $15.4 million increase in the average balance of deposits to $507.2 million for the three months ended September 30, 2018 from $491.8 million for the three months ended September 30, 2017, combined with a 23 basis point increase in the average rate paid on interest-bearing deposits to 0.84% for the three months ended September 30, 2018 from 0.61% for the same period in the prior year.

Interest expense on Federal Home Loan Bank advances increased $251,000, primarily due to a $38.1 million increase in the average balance of Federal Home Loan Bank advances to $39.1 million for the three months ended September 30, 2018 from $1.0 million for the three months ended September 30, 2017, and a 101 basis point increase in the average cost of Federal Home Loan Bank advances to 2.57% for the three months ended September 30, 2018 from 1.56% for the three months ended September 30, 2017. Rhinebeck Bank added higher cost borrowings to fund loan growth that exceeded deposit growth.

Provision for Loan Losses. We recorded a provision for loan losses of $525,000 for the three months ended September 30, 2018 compared to $225,000 for the three months ended September 30, 2017. The increase in the provision reflected management’s assessment of the loss inherent in our loan portfolio due in part to the growth of the indirect automobile, commercial real estate and commercial business loan portfolios, offset by decreases in charge-offs and non-performing loans. Net charge-offs decreased $146,000 from $300,000 for the three months ended September 30, 2017 to $154,000 for the three months ended September 30, 2018.

Non-Interest Income. Non-interest income decreased $1.8 million, or 55.3%, to $1.5 million for the three months ended September 30, 2018 from $3.3 million for the three months ended September 30, 2017. The decrease was primarily due to the recognition of a $1.7 million net gain on the sale of our insurance subsidiary in August 2017 and a $283,000 decrease in insurance-related income resulting from the sale of the insurance subsidiary. These decreases were offset in part by a $171,000 increase in service charges on deposit accounts and a $43,000 increase in investment advisory income. The increase in service charges on deposit accounts reflected a new deposit fee structure that was implemented in May 2018. The increase in investment advisory income reflected more income from annuities and mutual funds.

Non-Interest Expense. Non-interest expense increased $463,000, or 7.7%, to $6.5 million for the three months ended September 30, 2018. The increase was due primarily to an increase of $314,000 in salaries and employee benefits, which reflected the increased number of employees necessary to support Rhinebeck Bank’s growth, a $47,000 increase in insurance mostly due to a higher FDIC assessment rate, a $30,000 increase in accounting and auditing services, a $25,000 increase in OREO expenses due to efforts to sell our properties, and a general increase in net expenses of $79,000 mainly due to growth-related IT and office supply increases. These expense increases were offset by a $90,000 reduction in consolidated expenses resulting from the sale of our insurance subsidiary in August 2017.

Income Tax Expense. Income tax expense decreased $488,000, or 64.7%, to $266,000 for the three months ended September 30, 2018 from $754,000 for the three months ended September 30, 2017. The decrease resulted primarily from lower pre-tax income combined with the lower effective federal corporate tax rate under the Tax Cuts and Jobs Act, which reduced the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Additionally, the decrease in income tax expense for the three months ended September 30, 2018 reflected the benefit of tax planning implemented in 2018.   Such strategies, which included additional pension payments made in 2018 and a repairs and maintenance study that allowed Rhinebeck Bancorp, MHC to take tax deductions at a 34% rate for 2017 compared to a 21% rate in 2018 and thereafter. The benefit of such strategies was reflected in the quarter.


Comparison of Operating Results for the Nine Months Ended September 30, 2018 and September 30, 2017

General. Net income decreased by $1.0 million, or 25.4%, to $3.2 million for the nine months ended September 30, 2018 from $4.2 million for the nine months ended September 30, 2017. The decrease was primarily due to a $3.4 million decrease in non-interest income, a $390,000 increase in non-interest expense and a $900,000 increase in the provision for loan losses, offset by a $2.7 million increase in net interest income and a $926,000 decrease in income tax expense.

Net Interest Income. Net interest income increased $2.7 million, or 14.7%, to $20.9 million for the nine months ended September 30, 2018 compared to $18.2 million for the nine months ended September 30, 2017. The increase reflected a $15.1 million increase in the average balance of net interest-earning assets to $172.0 million for the nine months ended September 30, 2018 from $156.9 million for the nine months ended September 30, 2017, and a 17 basis point increase in the interest rate spread to 3.68% for the nine months ended September 30, 2018 from 3.51% for the nine months ended September 30, 2017. The net interest margin increased 23 basis points to 3.89% for the nine months ended September 30, 2018 from 3.66% for the nine months ended September 30, 2017.

Interest and Dividend Income. Interest and dividend income increased $3.9 million, or 18.6%, to $24.5 million for the nine months ended September 30, 2018, from $20.6 million for the nine months ended September 30, 2017. The increase primarily reflected a $52.7 million increase in the average balance of interest-earning assets, and a 41 basis point increase in the average yield to 4.56% for the nine months ended September 30, 2018 from 4.15% for the nine months ended September 30, 2017. The increased yield reflected an increase in market interest rates.

Interest income on loans increased $4.0 million primarily due to a $71.8 million increase in the average balance of loans to $606.6 million for the nine months ended September 30, 2018 from $534.8 million for the nine months ended September 30, 2017 and a 33 basis point increase in the average yield to 5.01% for the nine months ended September 30, 2018 from 4.68% for the nine months ended September 30, 2017. Interest income on loans also increased due to the payoff in the third quarter of 2018 of three commercial loans totaling $2.2 million, which were on non-accrual status, resulting in recognized interest of $603,000.

Interest income on securities decreased $97,000 primarily due to a $14.2 million decrease in the average balance of securities to $109.8 million for the nine months ended September 30, 2018 from $124.0 million for the nine months ended September 30, 2017, offset in part by a 14 basis point increase in the average yield to 2.14% for the nine months ended September 30, 2018 from 2.00% for the nine months ended September 30, 2017. The decrease in the average balance of securities reflects Rhinebeck Bank’s strategy to improve the overall yield on interest-earning assets by decreasing the level of its securities portfolio while simultaneously increasing its loans-to-assets ratio.

Interest Expense. Interest expense increased $1.2 million, or 47.5%, to $3.6 million for the nine months ended September 30, 2018 from $2.4 million for the nine months ended September 30, 2017. The increase primarily reflected a $37.6 million increase in the average balance of interest-bearing liabilities and a 24 basis point increase in the average cost to 0.88% for the nine months ended September 30, 2018 from 0.64% for the nine months ended September 30, 2017. The increase in the cost of funds reflects an increase in market interest rates.

Interest expense on non-escrow interest-bearing deposits increased $637,000, or 28.8%, primarily due to a $12.2 million increase in the average balance of deposits to $502.3 million for the nine months ended September 30, 2018 from $490.1 million for the nine months ended September 30, 2017, and a 16 basis point increase in the average rate paid on interest-bearing deposits to 0.76% for the nine months ended September 30, 2018 from 0.60% for the same period in the prior year.

Interest expense on Federal Home Loan Bank advances increased $485,000, primarily due to a $25.1 million increase in the average balance of Federal Home Loan Bank advances to $29.9 million for the nine months ended September 30, 2018 from $4.8 million for the nine months ended September 30, 2017, and a 144 basis point increase in the average cost of Federal Home Loan Bank advances to 2.31% for the nine months ended September 30, 2018 from 0.87% for the nine months ended September 30, 2017. Rhinebeck Bank added higher cost borrowings to fund loan growth that exceeded deposit growth.


Provision for Loan Losses. We recorded a provision for loan losses of $1.6 million for the nine months ended September 30, 2018 compared to $675,000 for the nine months ended September 30, 2017. The increase in the provision reflected management’s assessment of the loss inherent in our loan portfolio combined with the growth of the indirect automobile, commercial real estate and commercial business loan portfolios, offset by decreases in charge-offs and non-performing assets. Net charge-offs decreased $427,000 to $722,000 for the nine months ended September 30, 2018 from $1.1 million for the nine months ended September 30, 2017.

Non-Interest Income. Non-interest income decreased $3.4 million, or 48.3%, to $3.6 million for the nine months ended September 30, 2018 from $7.0 million for the nine months ended September 30, 2017. The decrease was due primarily to the recognition of a $1.7 million gain on the sale of our insurance subsidiary in August 2017, a $1.4 million decrease in insurance-related income resulting from the sale of the insurance subsidiary, and to a $387,000 write down of a foreclosed residential real estate property. These decreases were offset in part by a $231,000 increase in service charges on deposit accounts. The increase in service charges on deposit accounts reflected a new deposit fee structure that was implemented in May 2018.

Non-Interest Expense. Non-interest expense increased $390,000, or 2.1%, to $19.2 million for the nine months ended September 30, 2018. The increase was due primarily to a $253,000 increase in salaries and employee benefits due to the increased number of employees necessary to support Rhinebeck Bank’s growth, a $95,000 impairment charge for goodwill related to the valuation of Rhinebeck Asset Management and a $72,000 increase in advertising expense associated with a greater focus on marketing. These increases were offset by the sale of our insurance subsidiary in August 2017, which resulted in no insurance sales commissions being paid during the nine months ended September 30, 2018 compared to $217,000 in sales commissions paid during the nine months ended September 30, 2017.

Income Tax Expense. Income tax expense decreased $926,000, or 63.0%, to $545,000 for the nine months ended September 30, 2018 from $1.5 million for the nine months ended September 30, 2017. The decrease resulted from lower pre-tax income combined with the lower effective federal corporate tax rate under the Tax Cuts and Jobs Act. Additionally, the decrease in income tax expense for the nine months ended September 30, 2018 reflected the benefit of tax planning strategies implemented in 2018 as previously described. The benefit of such strategies was reflected in the nine-month period.

Management of Market Risk

General.General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of loans and securities, have longer maturities than our liabilities, consisting primarily of deposits.deposits and Federal Home Loan Bank advances. As a result, a principal part of our business strategy is to manage our exposure to changes in market interest rates. Accordingly, the boardBoard of directors establishedDirectors maintains a management-level Asset/Liability Management Committee (the “ALCO”), which takes initialprimary responsibility for reviewing the Company’s asset/liability management process and related procedures, establishing and monitoring reporting systems and ascertaining that established asset/liability strategies are being maintained. On at least a quarterly basis, the ALCO reviews and reports to the Board asset/liability management outcomes with the ALCO. This committeefrom various modeling scenarios. The ALCO also implements any changes in strategies and reviews the performance of any specific asset/liability management actions that have been implemented.

We try to manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market interest rates. We have implemented the following strategies to manage our interest rate risk: originating loans with adjustable interest rates;rates or with shorter terms, promoting core deposit products;products, and adjusting the interest rates and maturities of funding sources, as necessary. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

44

Net PortfolioEconomic Value Simulation.We analyze ourthe Bank’s sensitivity to changes in interest rates through a net portfolioeconomic value of equity (“NPV”EVE”) model. NPVEVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet contracts. The NPVEVE ratio represents the dollar amount of our NPVEVE divided by the present value of our total assets for a given interest rate scenario. NPVEVE attempts to quantify our economic value using a discounted cash flow methodology while the NPVEVE ratio reflects that value as a form of capital ratio. We estimate what our NPVEVE would be at a specific date. We then calculateforecast what the NPV wouldEVE might be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We currently calculate NPVthe EVE under the assumptions thatscenarios where interest rates increase 100, 200, 300 and 400 basis points from current market rates and thatwhere interest rates decrease 100, 200, 300 and 400 basis points from current market rates.


The following table presents the estimated changes in our NPVthe Bank’s EVE that would result from changes in market interest rates at September 30, 2018. All estimated changes presentedMarch 31, 2024 (dollars in the table are within the policy limits approved by our board of directors.thousands).

Net Economic Value as a 

Net Economic Value

Percentage of Assets

    

Dollar

    

Dollar

    

Percent

    

EVE

    

Percent

 

Basis Point Change in Interest Rates

Amount

Change

Change

Ratio

Change

 

(Dollars in thousands)

 

400

$

113,537

$

(51,313)

 

(31.1)

%  

9.67

%  

(25.0)

%

300

 

125,161

 

(39,689)

 

(24.1)

%  

10.46

%  

(19.0)

%

200

 

138,208

 

(26,642)

 

(16.2)

%  

11.30

%  

(12.4)

%

100

 

151,212

 

(13,638)

 

(8.3)

%  

12.10

%  

(6.2)

%

0

 

164,850

 

 

%  

12.90

%  

%

(100)

168,508

3,658

 

2.2

%  

12.91

%  

0.0

%

(200)

168,645

3,795

2.3

%  

12.63

%  

(2.1)

%  

(300)

162,663

(2,187)

(1.3)

%  

11.92

%  

(7.6)

%  

(400)

147,475

(17,375)

 

(10.5)

%  

10.57

%  

(18.1)

%

  NPV  Net Portfolio Value As Percent of Portfolio Value of Assets 
Basis Point (“bp”) Change in Interest Rates Dollar Amount  Dollar Change  Percent Change  NPV Ratio  Change 
  (Dollars in thousands) 
400 $88,071   (15,721)  -18%  11.85%  -7%
300  92,239   (11,553)  -13%  12.15%  -5%
200  96,311   (7,481)  -8%  12.42%  -3%
100  100,711   (3,081)  -3%  12.69%  -1%
0  103,792   -   0%  12.79%  0%
-100  98,129   (5,663)  -6%  11.84%  -7%

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The above table assumes that the composition of our interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPVEVE and will likely differ from actual results.

Liquidity Management

Liquidity and Capital Resources

Liquidity. Liquidity is the abilityWe maintain liquid assets at levels we consider adequate to meet currentboth our short-term and future financial obligations of a short-term nature. long-term liquidity needs. We adjust our liquidity levels to fund deposit outflows, repay our borrowings and to fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of funds consist of deposit inflows,liquidity are deposits, loan repaymentssales, amortization and sales and maturities of securities. While maturities and scheduled amortizationprepayment of loans and mortgage-backed securities, maturities, sales and calls of investment securities and other short-term investments, earnings, funds provided from operations, as well as access to FHLB advances and other borrowings. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable sourcessource of funds, deposit flows and mortgageloan and security sales and prepayments and loan sales are greatly influenced by generalmarket interest rates, economic conditions, and rates offered by our competition. We set the interest rates on our deposits to maintain a desired level of total deposits.

We regularly reviewAs reported in the needConsolidated Statements of Cash Flows, our cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows. Net cash used in operating activities was $3.5 million for the three months ended March 31, 2024 as compared to adjustnet cash provided by operating activities of $3.1 million for the three months ended March 31, 2023. These amounts differ from our investmentsnet income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. The cash outflow in liquidoperating activities was

45

primarily due to an increase in other assets based uponof $5.5 million, which was mostly caused by $5.0 million U.S. Treasury bond that matured on March 31, 2024 and was awaiting settlement. Net cash provided by investing activities was $27.5 million for the three months ended March 31, 2024, while net cash used in investing activities was $9.6 million for the three months ended March 31, 2023, principally reflecting our assessment of: (1) expectedinvestment security and loan demand, (2) expected depositactivities in the respective periods. A cash inflow of $15.4 million for a decrease in loans was the primary contributor to the cash used in investing activities for the three months ended March 31, 2024 as opposed to a cash outlay of $11.6 million for an increase in loans for the three months ended March 31, 2023. Proceeds from the maturities of securities was also a main contributor to the cash provided by investing activities. Deposit and borrowing cash flows (3) yields available on interest-earning deposits and securities, and (4) the objectiveshave traditionally comprised most of our asset/liability management program. Excess liquid assets are invested generallyfinancing activities, which resulted in interest-earning deposits and short- and intermediate-term securities.

Our most liquid assets area net cash andoutflow of $15.5 million in the three months ended March 31, 2024, as opposed to a net cash equivalents. The levelsinflow of these assets are dependent on our operating, financing, lending and investing activities during any given$11.3 million in the comparable 2023 period. At September 30, 2018, cash and cash equivalents totaled $12.6 million. Securities classified as available-for-sale, which provide an additional source of liquidity, totaled $102.4 million at September 30, 2018.

At September 30, 2018,March 31, 2024, we had the abilityfollowing main sources of availability of liquid funds and borrowings:

(In thousands)

    

Total

Available liquid funds:

  

Cash and cash equivalents

$

30,672

Unencumbered securities

115,747

Availability of borrowings:

Zions Bank line of credit

10,000

Pacific Coast Bankers Bank line of credit

50,000

FHLB secured line of credit

119,834

FRB secured line of credit

353,081

Total available sources of funds

$

679,334

The Bank has access to borrow up to $146,006 from the Federal Home Loan Bank of New York, $53.6 million of which was outstanding. At September 30, 2018, we also had an availablea preapproved secured line of credit with the Federal Reserve Bank of New York’s discount window program of $1 million, none ofFHLB which was outstandingtotaled $649,283 at that date. Rhinebeck Bank, MHC has a $10 millionMarch 31, 2024. Additional funds available under this line of credit with an unaffiliated bank, none of which was outstanding at September 30, 2018.

are not included in the table above as we do not consider it to be as readily accessible as the funds above.

We also have no material commitments or demands that are likelyand obligations under our off-balance sheet financial instruments, post-retirement plan and other benefit plans as described in Note 7 and Note 9 to affect our liquidity other than as set forth below. If loan demand increases faster than expected, or any unforeseen demand or commitment occurs, we could access borrowings from the Federal Home Loan Bankconsolidated financial statements.

46

Impact of Inflation and Changing Prices

The financial statements and related notes of the Federal Reserve BankCompany have been prepared in accordance with GAAP. GAAP generally requires the measurement of New York.

At September 30, 2018, we had $5 millionfinancial condition and operating results in terms of loan commitments outstanding and $83.4 millionhistorical dollars without consideration for changes in the relative purchasing power of approved, but un-advanced, fundsmoney over time due to borrowers. We also had $2.3 millioninflation. The impact of inflation is reflected in outstanding letters of credit at September 30, 2018.


Certificates of deposit due within one year of September 30, 2018 totaled $107.6 million. If these deposits do not remain with us, we will be required to access other sources of funds, including other certificates of deposit and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit. We believe, however, based on past experience that a significant portionincreased cost of our certificates of deposit will remain with us. We have the ability to attractoperations. Unlike industrial companies, our assets and retain deposits by adjusting theliabilities are primarily monetary in nature. As a result, changes in market interest rates offered.have a greater impact on performance than the effects of inflation.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk

For information regarding market risk, see “Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operation - Management of Market Risk.”

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.Item 4.           Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2018.March 31, 2024. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2018, there have beenThere were no changes in the Company’s internal controls over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

47

PART II  OTHER INFORMATION

Item 1.Item 1.           Legal Proceedings

We are notperiodically involved in legal proceedings, such as employment-related claims against us, claims to enforce liens, foreclosure or condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans, and other issues incidental to our business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any pending legal proceedings asthat we believe would have a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at September 30, 2018, we were not involved in any legal proceedings the outcome of which would be material toeffect on our financial condition, or results of operations.operations or cash flows.

Item 1A.        Risk Factors

Item 1A.Risk Factors

In additionThere have been no material changes to the other information set forth in this report, you should carefully consider the factors discussed under the heading “Risk Factors” contained in the Prospectus. The Company’s evaluation of the risk factors applicable to it has not changed materiallythe Company from those disclosed in our Annual Report on Form 10-K for the Prospectus.fiscal year ended December 31, 2023.

Item 2.

Item 2.           Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

In September 2022, the Board approved a stock repurchase plan pursuant to which the Company is authorized to repurchase up to 247,506 shares of its common stock. No shares were repurchased under the stock repurchase plan for the three months ended March 31, 2024.

There were no sales of unregistered securities during the quarter ended March 31, 2024.

Item 3.           Defaults Upon Senior Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Item 4.           Mine Safety Disclosures

Not applicable.

Item 5.           Other Information

(c) Director and Section 16 Officer Rule 10b5-1 Trading Arrangements

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

48

Item 6.           Exhibits

Item 5.Other Information

None.

64

Item 6.Exhibits

Exhibit
Number

3.1

Description

3.1

Articles of Incorporation of Rhinebeck Bancorp, Inc. (incorporated(Incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 as amended (Commission File No.of Rhinebeck Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange Commission on September 10, 2018.)

3.2

Bylaws of Rhinebeck Bancorp, Inc. (incorporated(Incorporated by reference to Exhibit 3.2 of the Company’s Registration StatementCurrent Report on Form S-1, as amended (Commission File No.8-K of Rhinebeck Bancorp, Inc. (File no. 333-227266), filed with the Securities and Exchange Commission on September 27, 2019.)

4.1

4.0

Form of Common Stock Certificate of Rhinebeck Bancorp, Inc. (incorporated(Incorporated by reference to Exhibit 4 of the Company’s Registration Statement on Form S-1 as amended (Commission File No.of Rhinebeck Bancorp, Inc. (File no. 333-227266), originally filed with the Securities and Exchange Commission on September 10, 2018.)

31.1

Certification of Chief Executive Officer Pursuantrequired pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer Pursuantrequired pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuantpursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.0

The following materials for the quarterperiod ended September 30, 2018,March 31, 2024, formatted in inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (v)(vi) Notes to Consolidated Financial Statements

104.0

The cover page from Rhinebeck Bancorp’s Form 10-Q for the quarterly period ended March 31, 2024, formatted in inline XBRL (contained in Exhibit 101.0)

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49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

RHINEBECK BANCORP, INC.

Date: May 9, 2024

Date: December 21, 2018

/s/ Michael J. Quinn

Michael J. Quinn


President and Chief Executive Officer

Date: May 9, 2024

/s/ Michael J. McDermott

Michael J. McDermott
Chief Financial Officer

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