Rhinebeck Bancorp reported higher third-quarter profit, supported by growth in net interest income and improved credit measures. The Poughkeepsie-based bank holding company also completed a major capital transaction in July, raising $88.8 million in a stock offering as part of its conversion from a mutual holding company to a publicly traded company.
The new capital has expanded Rhinebeck’s equity base and gives it funding to pursue growth initiatives. It has also contributed to a larger share of the company’s assets being held in lower-yielding cash and securities, putting pressure on its net interest margin.
Key details
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Third-quarter profit rose 17% year over year. Net income was $3.2 million, or $0.21 per basic and diluted share, compared with $2.7 million, or $0.18 per share, a year earlier. For the first nine months of 2026, net income increased 3.6% to $8.0 million, or $0.53 per basic share and $0.52 per diluted share.
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Net interest income grew, but the margin narrowed. Third-quarter net interest income increased 8.1% to $13.0 million. The net interest margin fell 14 basis points from a year earlier to 3.79%, while the interest-rate spread declined to 3.03% from 3.27%.
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The larger balance sheet reflects the capital raise and deposit growth. Average interest-earning assets increased 12.2% year over year to $1.36 billion. Average cash and cash equivalents rose by $110.0 million and available-for-sale securities by $79.7 million, while average loans fell by $40.4 million. Rhinebeck said the higher share of lower-yielding liquid assets contributed to the margin decline.
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Funding costs and asset growth helped lift interest income. Rhinebeck attributed the increase in net interest income mainly to higher balances of interest-earning assets and lower costs on interest-bearing liabilities. Those benefits were partly offset by lower yields on earning assets and higher balances of interest-bearing liabilities.
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Deposits expanded. Total deposits were up $147.0 million, or 13.4%, from Dec. 31, 2025, including $31.1 million of growth in non-interest-bearing deposits.
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Credit measures improved. Past-due loans declined 28.2% from year-end 2025. Net charge-offs were $211,000 in the third quarter, down from $963,000 in the year-earlier quarter. For the first nine months, lower provision for credit losses also contributed to the increase in net income.
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Operating efficiency improved modestly. The third-quarter efficiency ratio was 68.37%, compared with 69.61% a year earlier. The company said higher non-interest expense partly offset the benefit of increased net interest income during the quarter.
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The July conversion raised $88.8 million in gross proceeds. Rhinebeck sold 8,880,210 shares at $10 each. The former mutual holding company ceased to exist after the second-step conversion. Public shareholders of the prior company received 1.3978 shares of the new company for each share they held. Stock and per-share figures for periods before the July 21 conversion have been adjusted to reflect that exchange ratio.
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Stockholders’ equity reached $220.8 million following the conversion and offering. The company said it plans to use the added capital and flexibility to expand commercial banking, deepen existing customer relationships and develop digital banking capabilities.
What the results show
Rhinebeck earned more in the quarter, with growth in net interest income and better credit performance contributing to the improvement. But the capital raise and deposit inflows have also increased the amount of lower-yielding liquid assets on the balance sheet, weighing on the margin.
Returns reflect the enlarged equity and asset base as well as operating performance. Third-quarter return on average assets rose to 0.86% from 0.82% a year earlier, while return on average equity declined to 6.01% from 8.18%. For the first nine months, return on average assets was 0.79% versus 0.81%, and return on average equity was 6.59% versus 8.09%. Rhinebeck attributed the year-to-date declines mainly to the increase in average assets and equity after the conversion and offering.