POUGHKEEPSIE, N.Y., Oct. 6, 2022
/PRNewswire/ -- Rhinebeck Bancorp, Inc. (the "Company") (NASDAQ:
RBKB), the holding company of Rhinebeck
Bank (the "Bank"), reported the Bank and the New York State Department of Financial
Services ("DFS") reached a settlement regarding claims based on
DFS's detection of statistical differences in dealer reserve (i.e.,
dealer markup) charged by automobile dealers to different borrower
groups on loans purchased by the Bank through its indirect
automobile lending program.
While the Bank does not agree with the findings and denies the
allegations, it agreed to a settlement so as not to engage in a
lengthy and costly legal challenge.
"This settlement reflects a striking departure by DFS from the
current approach of virtually every federal and state banking
regulator and enforcement agency on fair lending cases involving
dealer reserve," said Rhinebeck Bank
President and Chief Executive Officer Michael J. Quinn. "Dealers, not banks, determine
how much markup to charge customers. Banks do not know the racial
or ethnic characteristics of borrowers before a loan is originated.
In fact, banks are prohibited by law from ever asking for that
information, which means the DFS action is based on allegations
where the affected customers are only presumed to be members of a
particular race or ethnicity, based on their last name and
geographic location, as a proxy for those borrower
characteristics."
Rhinebeck Bank was not accused of
intentional discrimination. DFS said they "did not find evidence of
any intentional discrimination against applicants on the part of
the Bank or its employees."
Quinn said Rhinebeck Bank is
committed to treating its customers fairly and equitably and has
abided by that commitment as reflected in its fair lending
analysis, which shows consistent pricing across the Bank's
portfolio of loans offered directly to consumers by the Bank.
"We have proudly served communities in New York for more than 160 years," Quinn said.
"Our commitment to fair and equal access to credit to all members
of our communities is reflected in initiatives throughout our
footprint."
Rhinebeck Bank offers business
loan programs in underserved areas of Poughkeepsie and Newburgh and recently opened a branch in the
City of Newburgh, while other
banks have exited that market. The Bank also provides financial
support and human resources to assist a wide variety of community
service organizations that aid and provide opportunities to
underserved and minority neighborhoods.
"We do this and more because it reflects our core values, and it
is the right thing to do," Quinn said.
Quinn said the Bank has fully reserved for this settlement and
there will be no further impact on earnings. The average refund
amount is $133.
"While Rhinebeck Bank fully
supports the Department's mission of protecting the residents of
New York from unlawful lending
discrimination, we do not believe that mission is served by
pursuing dealer markup cases in indirect auto lending using the
methodology employed by DFS, but in the best interest of our
customers and shareholders, we believe a settlement was the correct
decision," Quinn said.
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 fifteen
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
The statements contained herein that are not historical facts
are forward-looking statements (as defined by the Private
Securities Litigation Reform Act of 1995) based on management's
current expectations and beliefs concerning future developments and
their potential effects on Rhinebeck Bancorp. Such statements
involve inherent risks and uncertainties, many of which are
difficult to predict and are generally beyond the control of
Rhinebeck Bancorp. There can be no assurance that future
developments affecting Rhinebeck Bancorp will be the same as those
anticipated by management. These statements are evidenced by terms
such as "anticipate," "estimate," "should," "expect," "believe,"
"intend," and similar expressions. Although these statements
reflect management's good faith beliefs and projections, they are
not guarantees of future performance and they may not prove true.
These projections involve risk and uncertainties that could cause
actual results to differ materially from those addressed in the
forward-looking statements. Readers should not place under reliance
on such forward-looking statements, which speak only as of the date
made. For a discussion of these risks and uncertainties, see the
section of the periodic reports filed by Rhinebeck Bancorp with the
Securities and Exchange Commission entitled "Risk Factors." We
specifically disclaim any obligation to update any factors or to
publicly announce the result of revisions to any of the
forward-looking statements included herein to reflect future events
or developments.
CONTACT: TIM MASSIE (845)
390-0209
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SOURCE Rhinebeck Bancorp, Inc.
