Rhinebeck Bancorp, Inc. Reports Results for the Quarter and Year Ended December 31, 2023
- Net income for the quarter ended December 31, 2023, increased by 15.1% compared to the prior year
- The company's return on average assets and equity decreased in 2023 compared to 2022
- Non-interest expense decreased by 4.9% for the fourth quarter of 2023 compared to the prior year
- Stockholders' equity increased by 5.1% to $113.7 million at December 31, 2023
- Net income for the year ended December 31, 2023, decreased by 37.2% compared to the prior year
- Net interest income decreased by 6.3% for the quarter ended December 31, 2023, compared to the prior year
- Non-interest income decreased by 2.0% for the year ended December 31, 2023, compared to the prior year
- Total assets decreased by 1.7% to $1.313 billion at December 31, 2023, from $1.336 billion at December 31, 2022
Insights
The reported net income increase for Rhinebeck Bancorp, Inc. for the fourth quarter of 2023, juxtaposed with a significant annual net income decline, suggests a complex financial landscape influenced by the broader economic conditions of rising interest rates and tightening money supply. The quarter's performance, with a 15.1% income rise, is a positive signal for short-term investors, reflecting effective cost management and an improved non-interest income. However, the stark 37.2% annual net income reduction may raise concerns about the bank's interest rate risk management and long-term profitability.
Considering the banking sector's sensitivity to interest rate fluctuations, the shift in deposit types and higher borrowing costs highlight the challenges faced by financial institutions in a volatile rate environment. The increased provision for credit losses, despite a quarterly decrease, underscores the cautious approach to potential credit risks amidst uncertain economic conditions. The balance sheet contraction, with a notable decrease in deposits, could reflect a shift in consumer behavior and competition for deposits.
For stakeholders, the bank's strategic decisions, such as retaining more mortgage loans and reducing the indirect automobile loan portfolio, indicate a reorientation of the asset mix, which could have implications for future revenue streams and risk profiles. The tangible book value per share increase is a positive indicator of the bank's underlying value, which could be a point of interest for value investors.
The banking industry is currently experiencing a significant transition due to macroeconomic factors such as rising interest rates. Rhinebeck Bancorp's mixed financial results reflect this dynamic, with a decrease in net interest income indicating potential pressure on margins. The strategic decision to hold new mortgage loan production rather than selling may suggest an anticipation of more favorable interest rates or a desire to maintain a stable interest income stream.
The reduction in force and branch closures point to a broader industry trend of cost optimization and digital transformation. The bank's emphasis on improving asset and liability pricing, coupled with operating cost reductions, is aligned with industry efforts to enhance efficiency in response to digitalization and shifting consumer preferences.
From a market perspective, the bank's response to changing conditions, including the adjustment of its loan portfolio and the reduction in non-interest expenses, will be critical in maintaining competitiveness. The ability to navigate the current economic climate, particularly with the Federal Reserve's anticipated rate changes, will be pivotal for the bank's performance and investor confidence in the sector.
The reported financials of Rhinebeck Bancorp, Inc. provide insight into the broader economic trends affecting regional banks. The decline in net interest income and the increase in the provision for credit losses highlight the impact of a restrictive monetary policy environment, where rising interest rates can dampen loan demand and elevate credit risk.
The bank's management of its asset portfolio, particularly the increase in commercial and residential real estate loans, reflects a strategic adaptation to these economic conditions. The decrease in deposits and increase in Federal Home Loan Bank borrowings may indicate liquidity management challenges that banks face when interest rates rise and deposit competition intensifies.
The bank's performance metrics, such as return on average assets and return on average equity, provide a nuanced picture of financial health. The decrease in these ratios year-over-year suggests that while the bank has managed to improve performance in the short term, there may be underlying pressures that could affect long-term sustainability. These metrics are essential for understanding the bank's operational efficiency and capital adequacy in relation to industry norms.
POUGHKEEPSIE, NY / ACCESSWIRE / January 25, 2024 / Rhinebeck Bancorp, Inc. (the "Company") (NASDAQ:RBKB), the holding company of Rhinebeck Bank (the "Bank"), reported net income for the three months ended December 31, 2023 of
The increase in net income for the quarter ended December 31, 2023 was primarily due to an increase in non-interest income and decreases in the provision for credit losses and non-interest expenses, partially offset by a decrease in net interest income as compared to the quarter ended December 31, 2022. The decrease in net income for the year ended December 31, 2023 was primarily due to a decrease in net interest income and an increase in the provision for credit losses, partially offset by a decrease in operating expenses. The Company's return on average assets and return on average equity were
President and Chief Executive Officer Michael J. Quinn said, "The past year was a period of rapidly rising interest rates and tightening of the money supply. Together, they impaired the ability of banks to generate new deposits and fund new loans. Looking forward, the Fed is signaling some rate decreases in the coming year, which we anticipate will result in more normal conditions, leading to the easing of deposit rates and improving demand for loans. We expect our deposit activity to normalize and are forecasting growth in certain segments of our loan book for the year. This past year, we increased our tangible book value per share to
Income Statement Analysis
Net interest income decreased
For the three months ended December 31, 2023, the average balance of interest-earning assets decreased by
For the year ended December 31, 2023, the average balance of interest-earning assets grew by
The provision for credit losses on loans decreased by
Net charge-offs decreased
Non-interest income totaled
Non-interest income totaled
For the fourth quarter of 2023, non-interest expense totaled
For the year ended December 31, 2023, non-interest expense totaled
Balance Sheet Analysis
Total assets decreased
Past due loans decreased
Total liabilities decreased
Stockholders' equity increased
About Rhinebeck Bancorp
Rhinebeck Bancorp, Inc. is a Maryland corporation organized as the mid-tier holding company of Rhinebeck Bank and is the majority-owned subsidiary of Rhinebeck Bancorp, MHC. The Bank is a New York chartered stock savings bank, which provides a full range of banking and financial services to consumer and commercial customers through its fourteen branches and two representative offices located in Dutchess, Ulster, Orange, and Albany counties in New York State. Financial services including comprehensive brokerage, investment advisory services, financial product sales and employee benefits are offered through Rhinebeck Asset Management, a division of the Bank.
Forward Looking Statements
This press release contains certain forward-looking statements about the Company and the Bank. Forward-looking statements include statements regarding anticipated future events or results and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe", "expect", "anticipate", "estimate", "intend", "predict", "forecast", "improve", "continue", "will", "would", "should", "could", or "may". Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, inflation, changes in the interest rate environment, fluctuations in real estate values, general economic conditions or conditions within the securities markets, potential recessionary conditions, changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio, changes in asset quality, loan sale volumes, charge-offs and loan loss provisions, changes in demand for our products and services, legislative, accounting, tax and regulatory changes, including changes in the monetary and fiscal policies of the Board of Governors of the Federal Reserve System, political developments, a potential government shutdown, uncertainties or instability, catastrophic events, acts of war or terrorism, natural disasters, such as earthquakes, drought, pandemic diseases, extreme weather events, or breach of our operational or security systems or infrastructure, including cyberattacks that could adversely affect the Company's financial condition and results of operations and the business in which the Company and the Bank are engaged.
Accordingly, you should not place undue reliance on forward-looking statements. Rhinebeck Bancorp, Inc. undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.
The Company's summary consolidated statements of income and financial condition and other selected financial data follow:
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Interest and Dividend Income | ||||||||||||||||
Interest and fees on loans | $ | 14,230 | $ | 12,207 | $ | 55,077 | $ | 44,419 | ||||||||
Interest and dividends on securities | 1,152 | 1,004 | 4,409 | 3,848 | ||||||||||||
Other income | 202 | 115 | 1,173 | 325 | ||||||||||||
Total interest and dividend income | 15,584 | 13,326 | 60,659 | 48,592 | ||||||||||||
Interest Expense | ||||||||||||||||
Interest expense on deposits | 4,795 | 2,838 | 17,617 | 5,611 | ||||||||||||
Interest expense on borrowings | 1,646 | 730 | 5,077 | 1,145 | ||||||||||||
Total interest expense | 6,441 | 3,568 | 22,694 | 6,756 | ||||||||||||
Net interest income | 9,143 | 9,758 | 37,965 | 41,836 | ||||||||||||
Provision for credit losses | 230 | 302 | 1,702 | 1,414 | ||||||||||||
Net interest income after provision for credit losses | 8,913 | 9,456 | 36,263 | 40,422 | ||||||||||||
Non-interest Income | ||||||||||||||||
Service charges on deposit accounts | 716 | 704 | 2,880 | 2,829 | ||||||||||||
Net realized loss on sales and calls of securities | - | - | - | (170 | ) | |||||||||||
Net gain on sales of loans | 26 | 24 | 118 | 864 | ||||||||||||
Increase in cash surrender value of life insurance | 172 | 159 | 665 | 640 | ||||||||||||
Gain (loss) on disposal of premises and equipment | 10 | (38 | ) | 46 | (38 | ) | ||||||||||
Gain on life insurance | 3 | - | 221 | - | ||||||||||||
Investment advisory income | 300 | 301 | 1,164 | 1,233 | ||||||||||||
Other | 173 | 143 | 686 | 538 | ||||||||||||
Total non-interest income | 1,400 | 1,293 | 5,780 | 5,896 | ||||||||||||
Non-interest Expense | ||||||||||||||||
Salaries and employee benefits | 4,594 | 5,206 | 19,459 | 21,599 | ||||||||||||
Occupancy | 1,041 | 1,189 | 4,256 | 4,583 | ||||||||||||
Data processing | 536 | 461 | 2,015 | 1,882 | ||||||||||||
Professional fees | 447 | 451 | 1,919 | 1,743 | ||||||||||||
Marketing | 177 | 235 | 555 | 693 | ||||||||||||
FDIC deposit insurance and other insurance | 308 | 227 | 1,232 | 829 | ||||||||||||
Other real estate owned expense | 3 | - | 3 | - | ||||||||||||
Amortization of intangible assets | 21 | 24 | 88 | 99 | ||||||||||||
Write-down on branch held-for-sale | 375 | - | 375 | - | ||||||||||||
Other | 1,620 | 1,800 | 6,527 | 5,994 | ||||||||||||
Total non-interest expense | 9,122 | 9,593 | 36,429 | 37,422 | ||||||||||||
Income before income taxes | 1,191 | 1,156 | 5,614 | 8,896 | ||||||||||||
Provision for income taxes | 261 | 348 | 1,219 | 1,899 | ||||||||||||
Net income | $ | 930 | $ | 808 | $ | 4,395 | $ | 6,997 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.09 | $ | 0.07 | $ | 0.41 | $ | 0.65 | ||||||||
Diluted | $ | 0.09 | $ | 0.07 | $ | 0.40 | $ | 0.64 | ||||||||
Weighted average shares outstanding, basic | 10,742,550 | 10,876,426 | 10,789,009 | 10,839,335 | ||||||||||||
Weighted average shares outstanding, diluted | 10,746,119 | 11,019,506 | 10,855,552 | 11,004,597 | ||||||||||||
Rhinebeck Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition (Unaudited)
(In thousands, except share and per share data)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
Assets | ||||||||
Cash and due from banks | $ | 14,178 | $ | 13,294 | ||||
Federal funds sold | 7,524 | 14,569 | ||||||
Interest bearing depository accounts | 427 | 3,521 | ||||||
Total cash and cash equivalents | 22,129 | 31,384 | ||||||
Available for sale securities (at fair value) | 191,985 | 223,659 | ||||||
Loans receivable (net of allowance for credit losses of | 1,008,851 | 994,368 | ||||||
Federal Home Loan Bank stock | 6,514 | 3,258 | ||||||
Accrued interest receivable | 4,616 | 4,255 | ||||||
Cash surrender value of life insurance | 30,031 | 29,794 | ||||||
Deferred tax assets (net of valuation allowance of | 9,936 | 10,131 | ||||||
Premises and equipment, net | 17,567 | 18,722 | ||||||
Other real estate owned | 25 | - | ||||||
Goodwill | 2,235 | 2,235 | ||||||
Intangible assets, net | 246 | 334 | ||||||
Other assets | 19,067 | 17,837 | ||||||
Total assets | $ | 1,313,202 | $ | 1,335,977 | ||||
Liabilities and Stockholders' Equity | ||||||||
Liabilities | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 249,793 | $ | 283,563 | ||||
Interest bearing | 780,710 | 846,370 | ||||||
Total deposits | 1,030,503 | 1,129,933 | ||||||
Mortgagors' escrow accounts | 9,274 | 9,732 | ||||||
Advances from the Federal Home Loan Bank | 128,064 | 57,723 | ||||||
Subordinated debt | 5,155 | 5,155 | ||||||
Accrued expenses and other liabilities | 26,521 | 25,302 | ||||||
Total liabilities | 1,199,517 | 1,227,845 | ||||||
Stockholders' Equity | ||||||||
Preferred stock (par value | - | - | ||||||
Common stock (par value | 111 | 113 | ||||||
Additional paid-in capital | 45,959 | 47,075 | ||||||
Unearned common stock held by the employee stock ownership plan | (3,273 | ) | (3,491 | ) | ||||
Retained earnings | 100,386 | 96,624 | ||||||
Accumulated other comprehensive loss: | ||||||||
Net unrealized loss on available for sale securities, net of taxes | (26,077 | ) | (28,192 | ) | ||||
Defined benefit pension plan, net of taxes | (3,421 | ) | (3,997 | ) | ||||
Total accumulated other comprehensive loss | (29,498 | ) | (32,189 | ) | ||||
Total stockholders' equity | 113,685 | 108,132 | ||||||
Total liabilities and stockholders' equity | $ | 1,313,202 | $ | 1,335,977 | ||||
Rhinebeck Bancorp, Inc. and Subsidiary
Selected Ratios (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Performance Ratios(1): | ||||||||||||||||
Return on average assets (2) | 0.28 | % | 0.24 | % | 0.33 | % | 0.54 | % | ||||||||
Return on average equity (3) | 3.43 | % | 2.99 | % | 4.03 | % | 6.06 | % | ||||||||
Net interest margin (4) | 2.96 | % | 3.16 | % | 3.06 | % | 3.45 | % | ||||||||
Efficiency ratio (5) | 86.52 | % | 86.81 | % | 83.28 | % | 78.40 | % | ||||||||
Average interest-earning assets to average interest-bearing liabilities | 132.96 | % | 138.48 | % | 133.80 | % | 142.18 | % | ||||||||
Total gross loans to total deposits | 97.87 | % | 87.65 | % | 97.87 | % | 87.65 | % | ||||||||
Average equity to average assets (6) | 8.18 | % | 8.14 | % | 8.19 | % | 8.91 | % | ||||||||
Asset Quality Ratios: | ||||||||||||||||
Allowance for credit losses on loans as a percent of total gross loans | 0.81 | % | 0.80 | % | 0.81 | % | 0.80 | % | ||||||||
Allowance for credit losses on loans as a percent of non-performing loans | 194.26 | % | 179.54 | % | 194.26 | % | 179.54 | % | ||||||||
Net charge-offs to average outstanding loans during the period | (0.06 | )% | (0.09 | )% | (0.21 | )% | (0.11 | )% | ||||||||
Non-performing loans as a percent of total gross loans | 0.41 | % | 0.45 | % | 0.41 | % | 0.45 | % | ||||||||
Non-performing assets as a percent of total assets | 0.32 | % | 0.33 | % | 0.32 | % | 0.33 | % | ||||||||
Capital Ratios (7): | ||||||||||||||||
Tier 1 capital (to risk-weighted assets) | 11.96 | % | 11.55 | % | 11.96 | % | 11.55 | % | ||||||||
Total capital (to risk-weighted assets) | 12.70 | % | 12.25 | % | 12.70 | % | 12.25 | % | ||||||||
Common equity Tier 1 capital (to risk-weighted assets) | 11.96 | % | 11.55 | % | 11.96 | % | 11.55 | % | ||||||||
Tier 1 leverage ratio (to average total assets) | 10.10 | % | 9.75 | % | 10.10 | % | 9.75 | % | ||||||||
Other Data: | ||||||||||||||||
Book value per common share | $ | 10.27 | $ | 9.58 | ||||||||||||
Tangible book value per common share(8) | $ | 10.04 | $ | 9.35 | ||||||||||||
(1) Performance ratios for the three month periods ended December 31, 2023 and 2022 are annualized.
(2) Represents net income divided by average total assets.
(3) Represents net income divided by average equity.
(4) Represents net interest income as a percent of average interest-earning assets.
(5) Represents non-interest expense divided by the sum of net interest income and non-interest income.
(6) Represents average equity divided by average total assets.
(7) Capital ratios are for Rhinebeck Bank only. Rhinebeck Bancorp, Inc. is not subject to the minimum consolidated capital requirements as a small bank holding company with assets of less than
(8) Represents a non-GAAP financial measure, see table below for a reconciliation of the non-GAAP financial measures.
NON-GAAP FINANCIAL INFORMATION
This release contains financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). Such non-GAAP financial information includes the following measure: "tangible book value per common share." Management uses this non-GAAP measure because we believe that it may provide useful supplemental information for evaluating our operations and performance, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes this non-GAAP measure may also provide users of our financial information with a meaningful measure for assessing our financial results, as well as a comparison to financial results for prior periods. This non-GAAP measure should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP and are not necessarily comparable to other similarly titled measures used by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included below.
(In thousands, except per share data) | December 31, | |||||||
| 2023 | 2022 | |||||||
Book value per common share reconciliation | ||||||||
Total shareholders' equity (book value) (GAAP) | $ | 113,685 | $ | 108,132 | ||||
Total shares outstanding | 11,073 | 11,285 | ||||||
Book value per common share | $ | 10.27 | $ | 9.58 | ||||
Total common equity | ||||||||
Total shareholders' equity (book value) (GAAP) | $ | 113,685 | $ | 108,132 | ||||
Goodwill | (2,235 | ) | (2,235 | ) | ||||
Intangible assets, net | (246 | ) | (334 | ) | ||||
Tangible common equity (non-GAAP) | $ | 111,204 | $ | 105,563 | ||||
Tangible book value per common share | ||||||||
Tangible common equity (non-GAAP) | $ | 111,204 | $ | 105,563 | ||||
Total shares outstanding | 11,073 | 11,285 | ||||||
Tangible book value per common share (non-GAAP) | $ | 10.04 | $ | 9.35 | ||||
Related Links
SOURCE: Rhinebeck Bancorp, Inc.
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FAQ
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