Rhinebeck Bancorp, Inc. operates as the bank holding company for Rhinebeck Bank that provides a range of banking and financial services to consumer and commercial customers.
The company operates through branches and 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). The company’s primary busines...
Rhinebeck Bancorp, Inc. operates as the bank holding company for Rhinebeck Bank that provides a range of banking and financial services to consumer and commercial customers.
The company operates through branches and 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). The company’s primary business activity is accepting deposits from the general public and using those funds, primarily to originate indirect automobile loans (automobile loans referred to the company by automobile dealerships), commercial real estate loans (including multi-family real estate loans and commercial construction loans), commercial business loans and one- to four-family residential real estate loans, and to purchase investment securities.
Market Area
The company’s primary market area includes Albany, Dutchess, Orange, and Ulster counties (and their contiguous counties), which are located in the Hudson Valley region of New York. Its retail banking offices are located in these four counties and serve the surrounding areas. The company also maintains representative office in Albany County to originate indirect automobile and commercial loans. It views Orange and Albany counties, which have larger populations than Dutchess and Ulster counties, as primary areas for growth.
Lending Activities
Indirect Automobile Loans.
The company provides indirect financing of automobile purchases. The company acquires its indirect automobile loans from 85 automobile dealerships located in the Hudson Valley region and 35 dealers located in the Albany area, under an arrangement where the dealer receives a flat fee for referring the loan to it, which is known as dealer participation or dealer reserve.
Each dealer that originates automobile loans makes representations and warranties with respect to the company’s security interests in the related financed vehicles in a separate dealer agreement with it. The dealers are also responsible for ensuring that the company’s security interest in the financed vehicles is perfected. The company obtains a credit report from a major credit reporting agency summarizing the borrower’s credit history and paying habits, including such items as open accounts, delinquent payments, bankruptcies, repossessions, lawsuits and judgments. The company generally follows the same underwriting guidelines in originating direct (non-dealer) automobile loans.
The company regularly reviews the quality of the loans it purchases from the dealers and periodically conduct quality control audits to ensure compliance with its established policies and procedures.
Non-Residential Commercial Real Estate Loans.
The company’s commercial real estate loans are generally secured by properties used for business purposes, such as office buildings, industrial facilities and retail facilities. The company originates a variety of commercial real estate loans with terms and amortization periods generally up to 25 years, for large newly constructed commercial developments, including retail plazas and up to 20 years for almost all other commercial properties. The company selectively offers interest rate swaps for both commercial and multi-family real estate loans. The company monitors borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement updates.
Commercial Business Loans.
The company originates commercial business loans and lines of credit to a variety of small- and medium-sized businesses in its market area. The company’s commercial business borrowers include professional organizations, family-owned businesses, and not-for-profit organizations. The company encourages its commercial business borrowers to maintain their primary deposit accounts with it, many of which are non-interest-bearing, which improves its overall interest rate spread and profitability.
The company’s commercial business loans include term loans and revolving lines of credit. Commercial loans and lines of credit are made with either variable or fixed rates of interest. The company requires commercial business loans extended to closely held businesses to be guaranteed by the principals, as well as other appropriate guarantors, when personal assets are in joint names or a principal’s net worth is not sufficient to support the loan.
Commercial business loans include participations the company purchases from a single, board-approved third party in leveraged lending transactions. Leveraged lending transactions are generally used to support a merger- or acquisition-related transaction, to back a recapitalization of a company’s balance sheet or to refinance debt. The company also monitors industry and customer concentrations.
Residential Mortgage and Residential Construction Loans.
The company’s one- to four-family residential loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, most of which serve as the primary residence of the borrower. Most of these one- to four-family residential properties are located in the company’s primary market area. The company will consider originating one- to four-family residential real estate loans secured by properties located outside its normal lending area on a case-by-case basis, preferably to preexisting customers with a relationship of one year or longer, and provided the property is located in New York.
The company offers fixed-rate and adjustable-rate residential mortgage loans with maturities up to 30 years. The one- to four-family residential mortgage loans that the company originates are generally underwritten according to Freddie Mac guidelines, and it refers to loans that conform to such guidelines as conforming loans. Loans to be sold to other approved investors or secondary market sources are underwritten to their specific requirements. The company originates both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits. To a lesser extent, the company also originates loans above the conforming limits, which are referred to as jumbo loans. The company usually underwrites jumbo loans, whether originated or purchased, in a manner similar to conforming loans.
The majority of the mortgage loans that the company originated were sold to Freddie Mac on a servicing rights retained basis. The company also originated State of New York Mortgage Agency (SONYMA) loans, which were sold on a servicing released basis. The company originates one- to four-family residential mortgage loans with loan-to-value ratios of up to 80% of the appraised value, depending on the size of the loan. The company’s conforming mortgage loans may be for up to 97% of the appraised value of the property provided the borrower obtains private mortgage insurance. Additionally, mortgage insurance is required for all mortgage loans that have a loan-to-value ratio greater than 80%. The company only permits borrowers to purchase mortgage insurance from companies that have been approved by Freddie Mac or Fannie Mae. The company maintains wholesale broker relationships that give it a wider range of products to better serve its existing customers and to attract new customers for its mortgage loan products. These wholesale relationships provide it access to government-backed loan programs, such as Federal Housing Administration and Department of Veterans Affairs financing.
The company originates loans to finance the construction of one- to four-family residential properties. The company also originates rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure, which are structured as construction loans and monitored in the same manner. Most of these loans are secured by properties located in the company’s primary market area.
The company’s residential land and acquisition loans are generally structured as two-year interest-only balloon loans. The company’s construction-to-permanent loans are generally structured as interest-only, one-year, fixed-rate loans during the construction phase. The company provides permanent financing or sell the permanent mortgage to an investor like Freddie Mac. Before making a commitment to fund a construction loan, the company generally requires an appraisal of the property by an independent licensed appraiser.
Multi-Family Real Estate Loans.
The company’s multi-family real estate loans are generally secured by multi-unit rental properties, consisting of five to 100 rental units, in its market area.
The company will originate multi-family real estate loans with terms and amortization periods of up to 30 years. In underwriting multi-family real estate loans, the company considers a number of factors including the projected net cash flows to the loan’s debt service requirement (generally requiring a minimum of 1.20x), the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. Where appropriate, the company also requires corporate guarantees or personal guarantees. The company monitors borrowers’ and guarantors’ financial information on an ongoing basis by requiring periodic financial statement updates.
Commercial Construction and Land Development Loans.
The company originates loans to finance the construction of commercial properties, multi-family projects (including one- to four-family non-owner occupied residential properties) and professional complexes, or to acquire land for development for these purposes. The company also originates rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure, which are structured as a construction loan and monitored in the same manner. All of these loans are secured by properties located in the company’s primary market area.
The company’s construction and land development loans are generally structured as two-year interest-only balloon loans. The company generally offers commercial construction loans with a loan-to-value ratio of up to 75% of the appraised value on a completed basis or the cost of completion, whichever is less. The company offers financing to purchase land for development with a maximum loan-to-value ratio of 50%.
Before making a commitment to fund a commercial construction loan, the company generally requires an appraisal of the property by an independent licensed appraiser. As of December 31, 2023, the company’s largest construction and land development loan was a hotel construction project located in Saratoga Springs, New York.
Consumer Loans.
The company offers consumer loans to customers residing in its primary market area. The company’s consumer loans consist primarily of indirect automobile loans. Other consumer loans consist mostly of home equity loans, lines of credit and direct automobile loans.
Home equity loans and lines of credit are multi-purpose loans used to finance various home or personal needs, where a one- to four-family primary or secondary residence serves as collateral. The company generally originates home equity loans and lines of credit of up to $150,000, with a maximum loan-to-value ratio of 80% (including any first lien position) and terms of up to 20 years. Home equity lines of credit are secured by residential real estate in a first or second lien position.
Investment Portfolio
As of December 31, 2023, the company’s investment portfolio included U.S. Treasury securities; U.S. government agency mortgage-backed securities–residential; U.S. government agency securities; municipal securities; corporate bonds; and other securities.
Deposit Accounts
The substantial majority of the company’s deposits are from depositors who reside in its primary market area. As of December 31, 2023, the company’s deposits included non-interest bearing demand deposits; and interest bearing accounts, such as NOW, savings, money market, and time certificates of deposit.
Supervision and Regulation
As a New York-chartered savings bank, the bank is subject to comprehensive regulation by the New York State Department of Financial Services (the NYSDFS), as its chartering agency, and by the Federal Deposit Insurance Corporation (FDIC), as its deposit insurer. The bank is a member of the FHLB of New York and its deposits are insured up to applicable limits by the FDIC. The bank is required to file reports with, and is periodically examined by, the FDIC and the NYSDFS concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including mergers with or acquisitions of other financial institutions. Deposit accounts in the bank are insured by the FDIC’s Deposit Insurance Fund (DIF) generally up to a maximum of $250,000 per separately insured depositor. New York has its own statutory counterpart to the Community Reinvestment Act (CRA), which is applicable to the bank. The bank’s latest Federal Deposit Insurance Corporation CRA rating was Satisfactory.
As a bank holding company, the company is required to comply with the rules and regulations of the Board of Governors of the Federal Reserve System (the Federal Reserve Board) and the NYSDFS. It is required to file certain reports with the Federal Reserve Board and is subject to examination by and the enforcement authority of the Federal Reserve Board and the NYSDFS. The company also is subject to the rules and regulations of the Securities and Exchange Commission (the SEC) under the federal securities laws.
Rhinebeck Bancorp, MHC and the company are registered as bank holding companies with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended, and subject to its regulations, examinations, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over the company and its non-savings bank subsidiaries.
The bank is subject to a variety of federal and New York statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit. These statutes and regulations provide for a range of sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief. Certain of these statutes, including Section 5 of the Federal Trade Commission Act.
Rhinebeck Bancorp, MHC and the company are also subject to regulation under New York banking law. Among other requirements, Rhinebeck Bancorp, MHC and the company must receive the approval of the NYSDFS before acquiring 10% or more of the voting stock of another banking institution, or to otherwise acquire a banking institution by merger or purchase. The company’s common stock was registered with the Securities and Exchange Commission after its offering. The company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
The USA PATRIOT Act of 2001 gave the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application of a member institution. The company has established policies, procedures and systems designed to comply with these regulations.
The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The company has policies, procedures and systems designed to comply with these regulations, and it reviews and documents such policies, procedures and systems to ensure continued compliance with these regulations.
History
Rhinebeck Bancorp, Inc. was founded in 1860. The company, a Maryland corporation, was incorporated in 2018.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
