Rhinebeck Bancorp, Inc.

What they do

Rhinebeck Bank was organized in 1860 and operates 12 branches in Dutchess, Orange and Ulster Counties, plus representative offices in Albany County for indirect automobile and commercial loan origination and in Dutchess County for financial services. It takes deposits from the public and uses those funds plus borrowings to originate commercial real estate, multi-family, commercial construction, commercial business and indirect automobile loans, and to purchase one- to four-family residential loans and investment securities. Investment advisory and financial product sales are offered through a division doing business as Rhinebeck Asset Management.

Revenue drivers

• Net interest income from loans and securities — The core business: interest earned on commercial real estate, commercial business, indirect automobile and residential loans and on investment securities, less interest paid on deposits and borrowings. Net interest income was $11.6 million in Q2 2026, up 1.2% year over year.
• Commercial real estate and commercial business lending — CRE includes multi-family and commercial construction loans; CRE loans decreased $11.6 million in the first half of 2026. Management cites expanding commercial banking capabilities as a growth priority.
• Indirect automobile lending — Loans originated through automobile dealerships, including via the Albany County representative office. The company strategically cut indirect auto loans by $25.7 million in the first half of 2026, bringing them to 12.8% of total assets from 16.4% at year-end 2025.
• Non-interest income — Includes financial services and investment advisory through Rhinebeck Asset Management, deposit account fees and other banking service charges. Non-interest income increased 8.8% year over year in Q2 2026.

Recent performance

Q2 2026 net income was $2.6 million, or $0.24 per diluted share, down 4.0% from $2.7 million ($0.25) in Q2 2025; six-month 2026 net income was $4.8 million ($0.44 diluted), down 3.6%. Net interest income rose 1.2% to $11.6 million, though the net interest margin narrowed 19 basis points to 3.78%. Return on average assets was 0.79% and return on average equity 7.56% for the quarter. Total assets grew 12.9% to $1.47 billion at June 30, 2026, driven by cash and deposit growth including $156.0 million of stock subscription deposits, while net loans fell 3.7% to $918.5 million. Past-due loans decreased 34.6% from year-end, and non-accrual loans declined 8.4% to $3.4 million.

Strategy

Management says it is repositioning the franchise for sustainable growth, with second-quarter results reflecting higher net interest and non-interest income, disciplined funding-cost management and improvement in past-due loans. The company is investing in talent, technology and capabilities, and intends to expand commercial banking capabilities and advance retail and digital deposit initiatives. The completed second-step conversion generated $88.8 million in gross proceeds from 8,880,210 shares sold at $10.00, and management says it will deploy that capital prudently. In the first half of 2026 the company also reduced its indirect automobile loan concentration and, on the liability side, paid down FHLB advances by $20.0 million using excess liquidity.

Risks

• Margin compression — The net interest margin fell 19 basis points year over year to 3.78% in Q2 2026 and the interest rate spread narrowed to 3.20%, with lower yields on earning assets partly offset by higher balances.
• Rising non-interest expense — Management attributed the year-over-year declines in quarterly and six-month net income primarily to increases in non-interest expense, including spending on talent and technology.
• Loan concentration and credit quality — Indirect automobile loans were 12.8% of total assets at June 30, 2026, and the company reduced this concentration by $25.7 million; non-accrual loans of $3.4 million remain, and CRE loans also declined $11.6 million.
• Competitive and rate environment in the Hudson Valley — The company cites competition among depository institutions, inflation and changes in market interest rates, and demand for loans and deposits in its market area among factors that could affect results.

Outlook

Management describes the second-step conversion as a milestone that significantly strengthens the capital position, and says it remains focused on deploying that capital prudently. Stated priorities are expanding commercial banking capabilities, advancing retail and digital deposit initiatives, and investing in infrastructure to support responsible, sustainable growth. The company also cited continued discipline in managing funding costs and meaningful improvement in past-due loans as part of its repositioning.