POUGHKEEPSIE, NY – Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), a regional bank with a market capitalization of $103 million and shares trading near its 52-week high of $10.24, has completed a strategic sale and reinvestment of a portion of its available-for-sale investment securities portfolio. The move, aimed at repositioning the company’s balance sheet, involved the sale of $71 million in securities in September 2024, followed by an additional $21 million in December 2024.
The proceeds from these sales were reinvested into new securities with yields 3.06% higher than the sold assets. This restructuring is anticipated to enhance the bank’s earnings per share by $0.04 and increase its net interest margin by 0.04% over the next year, starting in the first quarter of 2025.
Rhinebeck Bank’s President and CEO, Michael J. Quinn, commented on the restructuring, “This strategic restructuring is a positive move that will improve the profitability of the Company going forward and provide a long-term benefit to the Company, our shareholders and the Bank’s customers.”
The bank sold longer-term, low-yielding securities, which had a yield of 1.37% and a weighted average life of approximately 6.2 years. The new investments carry a yield of 4.44% with a weighted average life of around 1.8 years. This shift not only promises to improve the bank’s earnings but also increases balance sheet flexibility by providing liquidity for commercial loan growth and decreasing reliance on wholesale funding.
Despite recognizing a one-time pre-tax loss of $4.1 million due to the transaction, Rhinebeck Bank maintains a “well capitalized” status and robust liquidity metrics, including over $35 million in cash, cash equivalents, and Treasury securities, in addition to an unused secured line of credit of over $250 million with the Federal Home Loan Bank of New York. According to InvestingPro analysis, the bank currently shows a WEAK overall Financial Health Score, though it has demonstrated strong price momentum with a 19.25% year-to-date return.
Rhinebeck Bancorp, Inc. is a Maryland corporation and the mid-tier holding company of Rhinebeck Bank, serving consumer and commercial customers through its branches in New York State. The company also provides financial services through Rhinebeck Asset Management, a division of the bank. Investors anticipating the company’s next earnings report on January 24, 2025, can access detailed financial analysis and additional insights through InvestingPro, which offers exclusive metrics and professional-grade tools for comprehensive investment research.
This news is based on a press release statement from Rhinebeck Bancorp, Inc. and does not include any forward-looking statements or predictions of future performance.
In other recent news, Rhinebeck Bancorp has restructured its portfolio to secure higher yields. The company sold $71 million of its available-for-sale securities, reinvesting the proceeds into new securities with yields 3.11% higher than those sold. This strategic move is projected to increase the bank’s earnings per share by $0.12 and its net interest margin by 0.17% over the next year, starting in the fourth quarter of 2024. Despite a one-time pre-tax loss of $12.0 million from the sale, Rhinebeck Bank maintains robust liquidity metrics.
In addition to these financial developments, Rhinebeck Bancorp has also seen changes in its executive leadership. Contracts for President and CEO Michael J. Quinn, and Jamie J. Bloom, EVP, COO & Chief Banking Officer, were not renewed as part of a shift in corporate strategy. Kevin Nihill, a banking veteran with over 20 years of experience, has been appointed as the new Chief Financial Officer, succeeding Michael McDermott.
These recent developments underscore Rhinebeck Bancorp’s focus on strategic growth and leadership excellence. The company’s actions, both in financial restructuring and leadership changes, are part of a broader strategy to capitalize on market conditions and streamline operations.
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