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Orange County Bancorp, Inc. Announces Record Q4 and FY 2020 Results

  • Net Income for full-year 2020 increased 2.6% to $11.4 million
  • Allowance for loan losses rose 31.7% year-over-year to $16.2 million following a $3.2 million increase in provision for loan losses in 2020
  • Average Loans (net of PPP) increased 17.6% year-over-year to $961.8 million
  • Average Demand Deposits grew 51.7% year-over-year to $449.4 million
  • Total Assets grew $435.8 million, or 35.5%, year-over-year to $1.66 billion
  • Tangible Book Value per Share of $28.26 rose $3.10, or 12.3%, versus year end 2019
  • Return on common equity for full-year 2020 rose 23 basis points to 8.88%
  • Return on average assets for full-year 2020 fell 19 basis points to 0.79%
  • Revenues on our trust and asset advisory businesses increased 17.6% to $8.8 million

MIDDLETOWN, NY., February 1, 2021 – Orange County Bancorp, Inc. (the “Company”) (OTCQX:OCBI), parent of Orange Bank & Trust Co. (the “Bank”) and Hudson Valley Investment Advisors, Inc. (HVIA), today announced net income for the quarter and twelve month period ended December 31, 2020 of $3.3 million, or $0.74 per share, and $11.4 million, or $2.53 per share, respectively. These results compare favorably with $3.1 million, or $0.70 per share, and $11.1 million, or $2.46 per share for the three and twelve months ended December 31, 2019, respectively, and reflect record fourth quarter and full year results for the Company.

“2020 was a dynamic and challenging year for the Company and I am extremely proud of how our team responded,” said Michael Gilfeather, Orange County President and Chief Executive Officer. “Despite continued economic and operational challenges related to COVID-19, we were able to generate record earnings despite taking a conservative and higher than normal provision for loan losses to account for the economic uncertainty brought on by the pandemic. Our loans, deposits and tangible book value all saw significant year-over-year increases. All this was accomplished while actively helping clients manage through an unprecedented health crisis and economic shut down.

New York State’s ongoing efforts to balance economic interests and further spread of the virus recently allowed for partial re-opening of business in many of the economies we serve. The resulting increase in economic activity, though still below pre-COVID levels, enabled us to reduce deferred loan balances more than 84% at year end from their second quarter peak. We remain cautious, however, and will continue to closely monitor and work with clients through this challenging period. Barring any significant reversal, we expect loans brought current will remain so and that we will be able to further reduce deferrals as business in the markets we serve continues to improve.

At the national level, unprecedented federal response to the COVID shutdown has left the entire U.S. banking community with the challenge of historically low interest rates and high levels of liquidity. This has created significant margin pressure across the industry. Despite these challenges, we grew net interest income 16.6% in the 4th quarter and 12.8% for full year 2020. These numbers include $59.2 million of Payroll Protection Program (PPP) loans held by the bank, which carry an interest rate of just 1%. This was an important program for our clients, which I am extremely proud of the Bank’s role in, as we originated more than $100 million in loans for over 800 clients on an unusually accelerated basis. We stand ready to assist clients further as the loan forgiveness process unfolds and are already active in the second round of PPP funding with over $53 million in approved and pending applications through January 25, 2021.

Loans and deposits both showed strong growth during the quarter and year, even as we continued to maintain conservative lending standards in the current business and interest rate environment. Of particular note is our growth in average non-interest bearing deposits, which rose over 50% for the year to $449 million. While a portion of this increase represents liquidity added to the banking system through Fed action, it also reflects success in our efforts to expand business client outreach and earn a greater share of their banking business.

Though the current interest rate environment presents challenges, it also enabled us to secure $20 million in low-cost financing in the 3rd quarter through the issuance of 10-year Subordinated Notes with a 5-year fixed interest rate of 4.25%. This debt, combined with our low-cost deposit base, strengthens the Bank’s financial foundation and will support continued growth in the future. As of December 31, 2020, $10 million of these proceeds were down-streamed to the Bank as capital. The Company expects to contribute additional capital in this fashion as required. During the quarter we also authorized a $5 million share repurchase program. When market conditions resulted in our stock falling to levels we felt represented an attractive buying opportunity, we purchased 19,522 shares of common at an average price of $27.16 per share.

The Company’s Trust Division and its investment advisory subsidiary, HVIA, also grew in 2020, finishing the year with over $1.2 billion in combined assets under management (“AUM”), a $108 million increase. The growth in new AUM totaled $104 million, while rising market values completely offset any attrition. In aggregate, revenue from these businesses rose $361 thousand, or 17.6%.

To build on this momentum and success of the Bank’s Private Banking program, the Company reorganized its wealth management practices under a new umbrella at the holding company level at the end of the 4th quarter. Centralization of the Banks’ investment management, banking and trust services is a natural evolution that will enable us to continue to develop superior asset management tools for our top business and consumer clients.

At the same time, the Bank announced its new “Orange Wealth Solutions” service. Orange Wealth Solutions combines best-in-class personal service with technology designed to provide sound and actionable financial planning. The service has two products: (i) “Orange Wealth Navigator” a cloud based account aggregation tool that delivers comprehensive, real-time analysis, insight and planning with a secure online portal, and a “data vault” where clients can retain and easily access important documents anywhere, anytime all on a single dynamic platform, and (ii) Financial Planning, comprehensive planning provided by a certified financial planner to assist clients to better evaluate their overall current and long term financial requirements.

In other important news, our new branches in the Bronx and Nanuet are under construction and expected to open in the spring. These new locations hold great, untapped potential and are natural extensions for the bank, especially for the business, trust and wealth services we offer.

With 2020 behind us, we hope for an improving, calmer, more stable operating environment in the year ahead. Many of last year’s challenges, however, remain. Experience has repeatedly shown us dedication to our clients, adherence to conservative banking and lending standards, and excellence in the products and services we provide, are our best means of navigating such challenges and continuing to deliver outstanding results to our shareholders. We remain committed to doing so in 2021 and beyond.”

Income Statement Summary
Net interest income for the twelve months ended December 31, 2020 increased $5.5 million, or 12.8%, to $49.0 million compared with the same period last year. The increase is primarily the result of a $329.6 million, or 29.5%, increase in average interest earning assets, including a $143.7 million, or 17.5%, increase in average core loans and $59.2 million of PPP loans. Despite higher net interest income, net interest margin for the twelve months ended December 31, 2020 fell to 3.39%, down 48 basis points versus the same period last year. The decline in margin is due primarily to the high level of Federal funds sold earning just 22 basis points, combined with lower earnings on the investment portfolio resulting from historically low market interest rates. The cost of interest-bearing deposits for the twelve months ended December 31, 2020 was 0.51%, compared to 0.64% for the twelve months ended December 31, 2019, a decrease of 13 basis points. The Company experienced exceptional growth in non-interest bearing demand accounts, with an increase of $153.1 million, or 51.7%, to $449.4 million in average non-interest bearing demand accounts for the twelve months ended December 31, 2020. The total cost of deposits for the twelve months ended December 31, 2020 was 0.34% compared to 0.46% for the twelve months ended December 31, 2019.

Net interest income for the three months ended December 31, 2020 rose $1.9 million, or 16.6%, to $13.2 million, versus the prior year. The increase is primarily the result of a $422.7 million, or 35.8%, increase in average interest earning assets and related $156.4 million, or 18.0%, increase in core average loans outstanding, plus $81.2 million of PPP loans. Net interest margin of 3.27% for the three months ended December 31, 2020 represents a 53 basis point, or 13.9%, decrease versus 3.80% for the same period last year.

The bank’s total provision for loan losses was $5.4 million for the twelve months ended December 31, 2020, compared with $2.2 million for the year ended December 31, 2019. Non-accrual loans, as a percent of total loans outstanding, was 0.17% as of December 31, 2020, an increase of 0.07% versus the prior quarter and unchanged versus the same quarter last year.

Non-interest income increased $1.6 million to $12.0 million, on a year-over-year basis, primarily due to a $1.0 million increase in investment securities and a $543 thousand increase in Trust fee income. During the three months ended December 31, 2020, non-interest income rose $491 thousand, to $3.2 million, compared to the three months ended December 31, 2019, primarily as a result of a $221 thousand increase in Trust fee income and a $140 thousand increase of investment advisory income.

Non-interest expense rose $3.7 million, or 9.8%, to $41.5 million for the twelve months ended December 31, 2020, as a result of a $1.4 million increase in salaries and employee benefits associated with growth-related staffing, a $962 thousand increase in computer software expense, which included a $300 thousand expense related to a volume based fee on a terminated contract, a $764 thousand increase in professional expenses related to increased fees for internal and external auditing for organizations over $1 billion in assets and third party management of the investment function, as well as a $540 thousand increase in the Federal Deposit Insurance Corporation (“FDIC”) insurance assessment resulting from deposit growth and absence of a $370 thousand FDIC insurance credit issued to small institutions in 2019. Non-interest expense increased $985 thousand, to $10.6 million, for the three months ended December 31, 2020 compared to the three months ended December 31, 2019.

Total income before taxes increased $230 thousand, or 1.7%, to $14.15 million for the twelve months ended December 31, 2020, from $13.92 million for the twelve months ended December 31, 2019. The Company’s effective income tax rates for the quarter and twelve months ended December 31, 2020 were 19.1% and 19.5%, respectively. These compare with effective tax rates of 19.3% and 20.3% for the quarter and twelve months ended December 31, 2019.

Balance Sheet Summary
Total assets increased $435.8 million, or 35.5%, to $1.66 billion at December 31, 2020, from $1.23 billion at December 31, 2019. This was primarily due to increases of $260.2 million, or 29.2%, in loans receivable and $96.1 million, or 382.8%, in cash and cash equivalents. The increase in cash and cash equivalents is principally due to increases in deposits combined with the $20 million in proceeds from the subordinated debt offering, while the increase in loans receivable was the result of $298.0 million of new loan originations and $88.1 million in participations and purchases, partially offset by $125.2 million of net amortization and repayments on our existing portfolio. For the quarter ended December 31, 2020, new loan originations totaled $77.8 million, loan participations and purchases totaled $45.9, and net amortization and repayments totaled $50.1 million.

Total liabilities increased $422.8 million, or 38.2%, to $1.53 billion for the twelve months ended December 31, 2020, from $1.11 billion at December 31, 2019. This was due primarily to a $406.2 million increase in total deposits and the issuance of $20 million in subordinated notes in September of 2020, partially offset by a $5 million reduction in FHLB advances. Total liabilities decreased $64 million, from $1.59 billion, at September 30, 2020, driven by anticipated seasonal reductions in municipal deposit balances.

Total deposits as of December 31, 2020 were $1.49 billion, an increase of $406.2 million, or 37.5%, from the prior year. Commercial deposits increased $241.5 million, or 44.4%, to $785.8 million, or 52.8%, of total deposits at December 31, 2020 compared to $544.2 million, or 50.2%, of total deposits at December 31, 2019. Noninterest bearing demand deposits increased $185.6 million, or 55.3%, to $521.1 million during the twelve months ended December 31, 2020.

Total shareholders’ equity increased $13.1 million, or 10.8%, to $134.0 million at December 31, 2020, from $120.9 million at December 31, 2019. This was due to an $8.1 million increase in retained earnings, a $4.9 million increase in the market value of securities available for sale, and a $1.4 million improvement in the unfunded pension liability, partially offset by a $530 thousand increase in treasury stock related to the share repurchase in 2020.

At December 31, 2020, the Company’s book value per common share and tangible book value per common share were $29.89 and $28.26, respectively, compared to $26.85 and $25.16, respectively, at December 31, 2019. This represents increases of 11.3% and 12.3%, respectively. At December 31, 2020, the Bank exceeded the “well capitalized” thresholds under applicable regulatory guidelines.

Asset Quality Summary

Non-performing loans increased to $2.00 million or 0.17% of total loans as of December 31, 2020, from $1.55 million or 0.17% of total loans as of as of December 31, 2019.

Loans classified as substandard or doubtful decreased $2.3 million, or 16.6%, to $11.7 million at December 31, 2020 from $14.0 million at December 31, 2019. Watch rated loans increased $19.9 million to $31.2 million at December 31, 2020 from $11.2 million at December 31, 2019. The increase in “watch” loans is consistent with the uncertainties in the market due to COVID-19. Delinquencies decreased to $3.7 million or 0.32% of total loans at December 31, 2020, a decrease of $4.4 million from $8.2 million or 0.92% of total loans at December 31, 2019. The decrease in delinquencies is primarily attributable to a single relationship made current by the borrower subsequent to the year ended December 31, 2019.

Management continues to actively evaluate performance trends and industry dynamics across asset classes to assess underlying business and liquidity risks stemming from the economic impact of COVID-19. While the Bank is taking active steps to provide payment relief from debt service through forbearance agreements, the focus has shifted toward the resumption of loan payments, as management believes borrowers in need of payment deferrals have largely been accommodated at this time. This relief has been structured as 90-day deferments of principal and interest and effected broadly across the portfolio based on our analysis and input from customers. Most borrowers that requested payment deferrals early in the cycle commenced scheduled repayments of their loan obligations after the end of their initial 90 day deferral. Deferred loans at June 30, 2020 were $310.4 million, or 29.5%, of the loan portfolio. At December 31, 2020, deferred loan balances fell to $48.8 million, or 4.2%. of the portfolio. Through January 25, 2021, $13.6 million of deferred loans resumed payments and came off of deferral, reducing the deferred balance to $35.2, or 3.0% of total loans. Management anticipates this trend to continue into 2021 and believes the deferral program has proven instrumental in helping customers bridge this difficult economic environment.

Deferred loans at December 31, 2020 are shown in the table below:

Summary of Loan Portfolio Segments and Deferments at December 31, 2020
(dollar amounts in thousands)
Total Deferments
Industry Classification
Balance Loan Count % of Total Loans Outstanding Balance Loan Count Deferred %
Real Estate and Rental Leasing
$ 456,942 481 39.5 % $ 4,516 6 1.0 %
Healthcare and Social Assistance
109,956 670 9.5 % 11,757 12 10.7 %
Construction
71,350 94 6.2 % 0.0 %
Retail Trade
45,380 87 3.9 % 11,178 1 24.6 %
Management of Companies/Enterprise
42,394 19 3.7 % 0.0 %
Wholesale Trade
27,574 72 2.4 % 0.0 %
Manufacturing
39,342 103 3.4 % 0.0 %
Hotel / Motel
25,883 13 2.2 % 7,593 3 29.3 %
Professional, Scientific, and Technical Services
21,108 204 1.8 % 0.0 %
Finance and Insurance
17,540 63 1.5 % 0.0 %
Contractors
17,248 97 1.5 % 0.0 %
Educational Services & Child Care
16,972 33 1.5 % 0.0 %
Administrative and Management
15,482 86 1.3 % 6,884 2 44.5 %
Food Service
14,466 30 1.3 % 443 1 3.1 %
Art, Entertainment, and Recreation
3,155 21 0.3 % 2,878 1 91.2 %
Transportation and Warehousing
4,698 34 0.4 % 0.0 %
Residential Real Estate & Other
157,195 1,327 13.6 % 3,520 3 2.2 %
PPP Loans
68,974 579 6.0 % 0.0 %
TOTAL
$ 1,155,659 4,013 100.0 % $ 48,769 29 4.2 %
Total Deferments
Loan Portfolio Category
Balance Loan Count % of Total Loans Outstanding Balance Loan Count Deferred %
CRE:
Multifamily
$ 157,251 90 13.6 % $ 2,367 1 1.5 %
Non-owner occupied
372,469 360 32.2 % 26,694 9 7.2 %
Owner occupied
169,197 187 14.6 % 15,721 9 9.3 %
Construction, development, land
66,756 32 5.8 % 0.0 %
C&I
231,634 1,321 20.0 % 3,390 9 1.5 %
PPP Loans
68,974 579 6.0 % 0.0 %
Consumer:
Residential
69,382 540 6.0 % 596 1 0.9 %
Non-residential
19,996 904 1.7 % 0.0 %
TOTAL
$ 1,155,659 4,013 100.0 % $ 48,769 29 4.2 %

Uncertainties about the credit environment during the pandemic prompted the increase in allowance for loan losses in 2020. The Company’s allowance for loan losses increased $3.9 million, or 31.8%, to $16.2 million at December 31, 2020 from $12.2 million at December 31, 2019. At December 31, 2020, the allowance was 1.40% of total loans outstanding, an increase from 1.38% at December 31, 2019. Excluding the $69 million in PPP loans, which are characterized as a zero risk-weighted asset class, the allowance to loans ratio is 1.49% at December 31, 2020. The Bank will continue to prudently manage reserves through close monitoring of business conditions and higher risk loans, as well as thorough analysis of the profitability and cash flow of loan customers.

About Orange County Bancorp, Inc.
Orange County Bancorp, Inc. is the parent company of Orange Bank & Trust Company and Hudson Valley Investment Advisors, Inc. Orange Bank & Trust Company is an independent bank that began with the vision of 14 founders over 125 years ago. It has grown through conservative banking practices, ongoing innovation and an unwavering commitment to its community and business clientele to $1.7 billion in total assets. In recent years, Orange Bank & Trust Company has added branches in Rockland and Westchester Counties and is opening a new office in the Bronx and one in Nanuet in 2021. Hudson Valley Investment Advisors, Inc. is a Registered Investment Advisor in Goshen, NY. It was founded in 1996 and was acquired by the Company in 2012. For more information, visit orangebanktrust.com or hviaonline.com.

For further information:
Robert L. Peacock
EVP Chief Financial Officer
rpeacock@orangebanktrust.com
Phone: (845) 341-5005

Orange County Bancorp, Inc.
Consolidated Statements of Condition (unaudited)
(dollar amounts in thousands except per share data)
December 31, December 31,
2020 2019
ASSETS
Cash and due from banks
$ 121,231 $ 25,112
Investment securities – available-for-sale
330,105 254,915
Restricted investment in bank stocks
1,449 1,474
Loans, net of deferrals
1,150,951 890,704
Allowance for loan losses
(16,172) (12,275 )
Loans, net
1,134,779 878,429
Premises and equipment
14,017 14,599
Accrued interest receivable
6,295 3,202
Cash surrender value of bank-owned life insurance
28,520 27,818
Goodwill
5,359 5,359
Intangible assets
1,964 2,249
Other assets
20,482 15,273
TOTAL ASSETS
$ 1,664,201 $ 1,228,430
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest bearing
$ 521,093 $ 335,469
Interest bearing
968,201 747,663
Total deposits
1,489,294 1,083,132
FHLB advances
5,000
Subordinated notes
20,000
Note payable
3,000 3,000
Accrued expenses and other liabilities
17,896 16,357
TOTAL LIABILITIES
1,530,190 1,107,489
STOCKHOLDERS’ EQUITY
Common stock, $0.50 par value; 15,000,000 shares authorized;
4,533,304 issued; 4,483,102, and 4,504,389 outstanding
at December 31, 2020 and December 31, 2019, respectively
2,254 2,266
Surplus
84,859 85,178
Retained earnings
46,535 38,467
Accumulated other comprehensive income (loss), net of taxes
1,819 (4,044 )
Treasury stock, at cost
(1,456) (926 )
TOTAL STOCKHOLDERS’ EQUITY
134,011 120,941
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 1,664,201 $ 1,228,430
Book value per share
$ 29.89 $ 26.85
Tangible book value per share
$ 28.26 $ 25.16
Orange County Bancorp, Inc.
Consolidated Statements of Income (unaudited)
(dollar amounts in thousands except per share data)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020 2019 2020 2019
INTEREST INCOME
Interest and fees on loans
$ 12,929 $ 10,861 $ 47,797 $ 40,977
Interest on investment securities:
Taxable
991 1,480 4,651 5,732
Tax exempt
338 124 994 641
Interest on Federal funds sold and other
40 217 294 945
TOTAL INTEREST INCOME
14,298 12,682 53,736 48,295
INTEREST EXPENSE
Interest on demand, savings and money market accounts
715 1,023 3,389 3,291
Interest on time deposits
155 302 917 1,221
Interest on FHLB advances
12 10 147
Interest on notes payable
247 44 390 181
TOTAL INTEREST EXPENSE
1,117 1,381 4,706 4,840
NET INTEREST INCOME
13,181 11,301 49,030 43,455
Provision for loan losses
1,688 535 5,413 2,195
NET INTEREST INCOME AFTER PROVISION
11,493 10,766 43,617 41,260
OTHER OPERATING INCOME
Service charges on deposit accounts
201 226 682 921
Trust income
1,116 895 4,074 3,531
Investment advisory income
1,304 1,164 4,703 4,545
Investment securities gains (losses)
804 (219 )
Earnings on bank-owned life insurance
182 173 702 690
Other
386 240 1,056 964
TOTAL OTHER OPERATING INCOME
3,189 2,698 12,021 10,432
OTHER OPERATING EXPENSES
Salaries
4,594 4,461 18,430 17,066
Employee benefits and taxes
920 988 4,163 4,128
Occupancy expense
934 870 3,744 3,523
Professional fees
840 596 3,335 2,342
Directors’ fees and expenses
251 286 1,088 1,108
Computer software expense
1,338 860 4,038 3,133
FDIC assessment
302 125 910 370
Advertising expenses
263 352 1,191 1,177
Advisor expenses related to trust income
276 269 1,054 995
Telephone expenses
140 120 552 459
Intangible amortization
71 71 286 286
Other
626 814 2,697 3,181
TOTAL OTHER OPERATING EXPENSES
10,555 9,812 41,488 37,768
Income before income taxes
4,127 3,652 14,150 13,924
Provision for income taxes
787 753 2,762 2,826
NET INCOME
$ 3,340 $ 2,899 $ 11,388 $ 11,098
Weighted average earnings per share
$ 0.74 $ 0.65 $ 2.53 $ 2.46
Cash dividends declared per share
$ 0.20 $ 0.20 $ 0.80 $ 0.80
Weighted average shares outstanding
4,502,037 4,504,180 4,508,508 4,506,545

Orange County Bancorp, Inc.
Net Interest Margin Analysis (unaudited)

(dollar amounts in thousands)

Three Months Ended December, 31
2020 2019
Average Balance Interest Average Rate Average Balance Interest Average Rate
Assets:
Loans Receivable (net of PPP)
$ 1,027,480 $ 11,962 4.63 % $ 871,066 $ 10,861 4.95 %
PPP Loans
81,187 967 4.74 % 0.00 %
Investment securities
328,261 1,329 1.61 % 256,817 1,604 2.48 %
Federal funds sold and other
167,214 40 0.10 % 53,475 217 1.61 %
Total interest earning assets
1,604,142 14,298 3.55 % 1,181,358 12,682 4.26 %
Non-interest earning assets
82,037 68,515
Total assets
$ 1,686,179 $ 1,249,873
Liabilities and equity:
Demand accounts
$ 236,106 $ 98 0.17 % $ 175,014 $ 95 0.22 %
Savings and money market accounts
675,196 617 0.36 % 511,880 928 0.72 %
Time deposits
91,999 155 0.67 % 90,310 302 1.33 %
Total interest-bearing deposits
1,003,301 870 0.34 % 777,204 1,325 0.68 %
FHLB Advances and notes
23,000 247 4.27 % 5,669 56 3.92 %
Total interest bearing liabilities
1,026,301 1,117 0.43 % 782,873 1,381 0.70 %
Non-interest bearing deposits
509,207 308,194
Other non-interest bearing liabilities
189,639 41,390
Total liabilities
1,725,147 1,132,457
Total shareholders’ equity
132,031 117,416
Total liabilities and shareholders’ equity
$ 1,686,179 $ 1,249,873
Net interest income
$ 13,181 $ 11,301
Interest rate spread 1
3.11 % 3.56
Net interest margin 2
3.27 % 3.80 %
Average interest earning assets to interest-bearing liabilities
156.3 % 150.9 %

Notes:
The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
2 Net interest margin is the annualized net interest income divided by average interest-earning assets.

Orange County Bancorp, Inc.
Net Interest Margin Analysis (unaudited)

(dollar amounts in thousands)

Twelve Months Ended December, 31
2020 2019
Average Balance Interest Average Rate Average Balance Interest Average Rate
Assets:
Loans Receivable (net of PPP)
$ 961,779 $ 45,763 4.76 % $ 818,027 $ 40,977 5.01 %
PPP Loans
59,155 2,034 3.44 % 0.00 %
Investment securities
291,919 5,645 1.93 % 257,454 6,465 2.51 %
Federal funds sold and other
132,840 295 0.22 % 40,617 853 2.10 %
Total interest earning assets
1,445,693 53,737 3.72 % 1,116,098 48,295 4.33 %
Non-interest earning assets
79,931 67,033
Total assets
$ 1,525,624 $ 1,183,131
Liabilities and equity:
Demand accounts
$ 214,012 $ 414 0.19 % $ 181,446 $ 300 0.17 %
Savings and money market accounts
618,055 2,975 0.48 % 472,832 2,991 0.63 %
Time deposits
90,232 917 1.02 % 92,878 1,221 1.31 %
Total interest-bearing deposits
922,299 4,306 0.47 % 747,156 4,512 0.60 %
FHLB Advances and notes
8,661 400 4.62 % 11,533 328 2.84 %
Total interest bearing liabilities
930,960 4,706 0.51 % 758,689 4,840 0.64 %
Non-interest bearing deposits
449,454 296,360
Other non-interest bearing liabilities
16,968 13,237
Total liabilities
1,397,382 1,068,286
Total shareholders’ equity
128,242 114,543
Total liabilities and shareholders’ equity
$ 1,525,624 $ 1,183,131
Net interest income
$ 49,031 $ 43,455
Interest rate spread 1
3.21 % 3.69 %
Net interest margin 2
3.39 % 3.89 %
Average interest earning assets to interest-bearing liabilities
155.3 % 147.1 %

Notes:
The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
2 Net interest margin is the annualized net interest income divided by average interest-earning assets.

Orange County Bancorp, Inc.
Selected Financial Data (unaudited)

(dollar amounts in thousands except per share data)

For the Quarter Ended Twelve Months Ended
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
December 31,
2020
December 31,
2019
Performance Ratios 1
Return on average assets
0.79 % 0.71 % 0.74 % 0.74 % 0.98 % 0.75 % 0.94 %
Return on average equity
10.06 % 8.77 % 8.67 % 7.93 % 10.17 % 8.88 % 9.69 %
Interest rate spread
3.11 % 3.09 % 3.18 % 3.53 % 3.56 % 3.21 % 3.69 %
Net interest margin
3.27 % 3.26 % 3.38 % 3.74 % 3.80 % 3.39 % 3.89 %
Efficiency Ratio
64.48 % 69.20 % 68.53 % 70.02 % 70.09 % 67.96 % 70.09 %
Noninterest income to average assets
0.75 % 0.74 % 0.85 % 0.83 % 0.86 % 0.79 % 0.62 %
Noninterest expense to average assets
2.49 % 2.65 % 2.77 % 3.04 % 3.14 % 2.72 % 2.48 %
Average interest-earning assets to average interest-bearing liabilities
156.30 % 155.56 % 158.78 % 149.63 % 150.90 % 155.29 % 147.11 %
Average equity to average assets
7.83 % 8.07 % 8.56 % 9.39 % 9.56 % 8.41 % 9.68 %
Dividend payout ratio
26.83 % 31.13 % 32.60 % 36.99 % 30.97 % 31.49 % 32.33 %
As of the Quarter Ended
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
Loans to Deposits
77.28 % 69.36 % 73.00 % 77.53 % 82.23 %
Noninterest bearing deposits to total deposits
34.99 % 32.66 % 34.85 % 30.00 % 30.97 %
Share Data:
Shares outstanding
4,483,102 4,507,315 4,506,653 4,518,128 4,504,389
Book value per common share
$ 29.89 $ 28.98 $ 28.69 $ 28.13 $ 26.85
Tangible book value per common share 2
$ 28.26 $ 27.34 $ 27.02 $ 26.45 $ 25.16
Capital Ratios 3
Tier 1 capital (to adjusted total assets)
8.08 % 7.62 % 8.16 % 9.13 % 9.39 %
Common equity Tier 1 capital (to risk weighted assets)
12.13 % 12.06 % 12.55 % 12.29 % 12.52 %
Tier 1 capital (to risk-weighted assets)
12.13 % 12.06 % 12.55 % 12.29 % 12.52 %
Total capital (to risk-weighted assets)
13.38 % 13.31 % 13.80 % 13.53 % 13.77 %

Notes:
Performance ratios are annualized.
Tangible book value per share is a non-GAAP measure and equals total shareholders’ equity, less goodwill and other intangible assets, divided by shares outstanding.
Represents Orange Bank & Trust Company’s ratios.

Orange County Bancorp, Inc.
Condensed Financial Information (unaudited)

(dollar amounts in thousands except per share data)

As of
Condensed Balance Sheets
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
Cash and Cash Equivalents
$ 121,231 $ 259,707 $ 187,892 $ 84,347 $ 25,112
Total Investment Securities
331,554 329,072 288,749 276,242 256,389
Loans, net
1,134,779 1,062,288 1,033,309 925,092 878,429
Other Assets
76,637 73,628 72,104 69,561 68,500
Total Assets
$ 1,664,201 $ 1,724,695 $ 1,582,054 $ 1,355,242 $ 1,228,430
Total Deposits
$ 1,489,294 $ 1,553,200 $ 1,434,843 $ 1,210,620 $ 1,083,132
FHLB Advances & Note Payable
3,000 3,000 3,000 3,000 8,000
Subordinated Notes
20,000 20,000
Other Liabilities
17,896 17,872 15,721 15,310 16,357
Total Liabilities
1,530,190 1,594,072 1,453,564 1,228,930 1,107,489
Total Shareholders’ Equity
134,011 130,623 128,490 126,312 120,941
Total Liabilities and Shareholders’ Equity
$ 1,664,201 $ 1,724,695 $ 1,582,054 $ 1,355,242 $ 1,228,430

Orange County Bancorp, Inc.
Selected Financial Data (unaudited)

(Dollar Amounts in thousands except per share data)

Three Months Ended
Condensed Income Statements
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
Interest Income
$ 14,298 $ 13,716 $ 12,991 $ 12,731 $ 12,682
Interest Expense
1,117 1,154 1,147 1,289 1,381
Net Interest Income
13,181 12,562 11,844 11,442 11,301
Provision for Loan Loss
1,688 1,215 1,310 1,200 535
Noninterest Income
3,189 2,999 3,150 2,683 2,698
Noninterest Expense
10,555 10,768 10,275 9,890 9,812
Income before income tax expense
4,127 3,578 3,409 3,035 3,652
Income Tax Expense
787 700 661 613 753
Net income
$ 3,340 $ 2,878 $ 2,748 $ 2,422 $ 2,899
Weighted average earnings per Share
$ 0.74 $ 0.64 $ 0.61 $ 0.54 $ 0.65

Orange County Bancorp, Inc.
Loan Portfolio (unaudited)
(dollar amounts in thousands)

LOANS
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
Commercial:
Commercial & industrial
$ 231,634 $ 220,364 $ 213,862 $ 240,155 $ 222,229
PPP Loans
68,974 85,473 101,245
CRE* owner occupied
168,787 154,739 163,368 143,063 133,355
CRE non-owner occupied
372,879 310,700 289,103 280,595 256,639
CRE multifamily
157,251 160,945 140,476 136,862 144,328
CRE construction
63,761 58,324 59,147 53,396 55,808
Total commercial
1,063,286 990,545 967,201 854,071 812,359
Consumer:
Residential real estate
55,303 52,721 52,239 50,923 52,478
Home equity loans and lines
13,960 13,626 13,397 13,574 11,668
Residential construction
2,996 3,199 3,991 5,217 13,937
Other
20,114 21,869 15,898 16,873 2,436
Total consumer
92,373 91,415 85,525 86,587 80,519
Total loans
1,155,659 1,081,960 1,052,726 940,658 892,878
Deferrals
(4,708 ) (4,716 ) (5,345 ) (2,085 ) (2,174 )
Loans, net of deferrals
1,150,951 1,077,244 1,047,381 938,573 890,704
Allowance for loan losses
(16,172 ) (14,956 ) (14,072 ) (13,481 ) (12,275 )
Loans, net
$ 1,134,779 $ 1,062,288 $ 1,033,309 $ 925,092 $ 878,429

* CRE = Commercial Real Estate loans

Orange County Bancorp, Inc.
Deposit Portfolio (unaudited)

(dollar amounts in thousands)

DEPOSIT TREND
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
Demand Deposits
$ 521,093 $ 507,349 $ 500,002 $ 363,214 $ 335,469
NOW
236,951 269,103 197,003 200,930 166,907
Money market accounts
483,043 528,908 514,546 433,081 369,507
Savings
157,008 152,638 133,501 124,085 122,592
Time
91,199 95,202 89,791 89,310 88,657
Total deposits
$ 1,489,294 $ 1,553,200 $ 1,434,843 $ 1,210,620 $ 1,083,132
DEPOSIT COMPOSITION and GROWTH ANALYSIS
Growth
December 31,
2020
% of Total Deposits December 31,
2019
% of Total Deposits $ %
Demand Deposits
$ 521,093 35.0 % $ 335,469 31.0 % $ 185,624 55.3 %
NOW
236,951 15.9 % 166,907 15.4 % 70,044 42.0 %
Money market accounts
483,043 32.4 % 369,507 34.1 % 113,536 30.7 %
Savings
157,008 10.5 % 122,592 11.3 % 34,416 28.1 %
Time
91,199 6.1 % 88,657 8.2 % 2,542 2.9 %
Total deposits
$ 1,489,294 100.0 % $ 1,083,132 100.0 % $ 406,162 37.5 %
Commercial
$ 785,785 52.8 % $ 544,249 50.2 % $ 241,536 44.4 %
Consumer
504,974 33.9 % 364,307 33.6 % 140,667 38.6 %
Municipal
198,535 13.3 % 174,576 16.1 % 23,959 13.7 %
Total Deposits
$ 1,489,294 100.0 % $ 1,083,132 100.0 % $ 406,162 37.5 %

Orange County Bancorp, Inc.
Asset Quality Trends (unaudited)

(dollar amounts in thousands)

ASSET QUALITY
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
Total Loans
1,155,659 1,081,960 1,052,726 940,658 892,878
Non-performing loans:
Commercial & industrial
$ $ $ 148 $ 495 $ 502
Commercial real estate
1,344 959 959 959 959
Consumer – residential real estate
658 82 84 86 88
Consumer – home equity loans and lines
36 51
TOTAL NON-PERFORMING LOANS (“NPLs”)
$ 2,002 $ 1,041 $ 1,227 $ 1,591 $ 1,549
Delinquencies:
30-59 days past due
$ 825 $ 735 $ 632 $ 10,038 $ 5,674
60-89 days past due
473 296 979 60 360
90+ days past due
520 1,776 460 1,766 683
On non-accrual
1,923 959 1,143 1,505 1,461
TOTAL PAST DUE LOANS
$ 3,741 $ 3,766 $ 3,214 $ 13,369 $ 8,178
Troubled debt restructurings:
On non-accrual (included in total NPLs above)
$ 959 $ 959 $ 959 $ 959 $ 959
On accrual
14,992 12,146 10,801 10,842 11,436
TOTAL TROUBLED DEBT RESTRUCTURINGS
$ 15,951 $ 13,105 $ 11,760 $ 11,801 $ 12,395
ALLOWANCE FOR LOAN LOSSES
$ 16,172 $ 14,956 $ 14,072 $ 13,481 $ 12,275
Allowance for loan losses as a % of total loans
1.40 % 1.38 % 1.34 % 1.43 % 1.37 %
Allowance for loan losses as a % of total NPLs
807.79 % 1436.70 % 1146.86 % 847.33 % 792.45 %
Allowance for loan losses as a % of delinquent loans
432.29 % 397.13 % 437.83 % 100.84 % 150.10 %
NPLs as a % of total loans
0.17 % 0.10 % 0.12 % 0.17 % 0.17 %
Net charge-offs (recoveries)
$ 473 $ 331 $ 719 $ (6 ) $ 605
Net charge-offs (recoveries) to average outstanding loans during the period
0.04 % 0.03 % 0.07 % 0.00 % 0.07 %

SOURCE: Orange County Bancorp, Inc.