Orange County Bancorp, Inc. Announces Record First Quarter 2021 Results
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Orange County Bancorp, Inc. Announces Record First Quarter 2021 Results

Monday, May 3, 2021 4:00 PM
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Topic:
Earnings

Net Income for Q1 2021 increased by $2.5 million, or 103%, to a record $5.03 million compared to Q1 2020

Return on average assets for Q1 2021 rose 37 basis points year-over-year to 1.1%

Return on common equity for Q1 2021 rose 688 basis points year-over-year to 14.9%

Loan loss provision for Q1 2021 of $66 thousand was $1.1 million below the same period last year due to stabilizing credit trends

Average Loans (net of PPP) for Q1 2021 increased 18.5% year-over-year, to $1.1 billion

Average Demand Deposits grew 60.1% year-over-year to $552.4 million

Total Assets grew $243.8 million, or 14.6% from year-end 2020 to $1.9 billion

Trust and asset advisory business revenue increased 18.6% to $2.3 million for the quarter

MIDDLETOWN, NY / ACCESSWIRE / May 3, 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 of $5.03 million, or $1.12 per share, for the three months ended March 31, 2021. This compares with net income of $2.48 million, or $0.55 per share, for the three months ended March 31, 2020.

"I am extremely proud of the results our team produced this quarter," said Orange County Bancorp President & CEO, Michael Gilfeather. "They reflect the earnings power of our focused and deliberate strategy to grow the Bank and make it a more accessible and important partner for our clients in Orange, Rockland and Westchester Counties. The momentum we were building in 2020, despite the considerable challenges presented by COVID, carried into the first quarter of 2021, resulting in 105% year-over-year growth in net income to a record of over $5 million.

Our core lending business has been and remains strong, with loan growth, net of PPP, up over 18.5% in the first quarter of 2021 versus the same period last year. Many of the compelling opportunities reflected in these figures emerged late last year and continued into the recent quarter. While new loan demand is weighted toward commercial real estate, for which the Bank remains well within conservative concentration limits, overall loan activity remains diverse across both industries and the region we serve. Additionally, despite meaningful growth in the size of our loan portfolio, improving economic and credit trends allowed us to reduce our provision for loan losses more than $1 million versus the same quarter last year. Loans on deferral also continued to decline, finishing the first quarter at just over $32 million, or 2.6% of our loan portfolio, down from nearly 30% at the end of our June quarter in 2020.

As has been widely reported, the Federal Reserve responded to the financial shock of the pandemic last Spring by slashing interest rates and injecting unprecedented liquidity into the banking system. This helped stabilize the economy, but now has the banking system confronting the challenge of elevated deposit levels and narrower lending margins. We sought to manage this by attracting a greater share of business clients' non-interest bearing deposits. The results surpassed expectations, with Average Demand Deposits increasing more than 60% during the quarter versus the same period last year, while total deposits grew to over $1.7 billion. This effort blunted margin pressure during the quarter and should continue to reduce the deposit volatility that often accompanies Fed action in response to changing economic trends.

Another significant development the Bank actively engaged in during the COVID-19 pandemic was the federally-funded Paycheck Protection Program (PPP). Our early decision to participate was driven by recognition of the vital role this program could play in supporting the economic viability of our business clients. While the Bank has enjoyed some revenue from the program, primarily through monthly interest rate accruals and the "true-up" fee when PPP loans are forgiven, we view this income as unique to the time and tangential to our core business. This said, we remain actively involved with clients on the second round of PPP financing and anticipate loan volume may well approach levels we saw during its initial phase.

In addition to these activities, the Company's newly created Orange Wealth Management initiative, which includes our private bank, trust, and HVIA advisory business, saw revenue grow nearly 19%, to $2.3 million, versus the same quarter last year. This growth stemmed primarily from a $41 million increase, to $1.2 billion, in assets under management (AUM). To further support this program, the Bank hired veteran banker Ron Coccaro, who will be responsible for identifying and pursuing new growth and sales opportunities. We expect growth and opportunities to result from broader adoption and integration of our Wealth Solutions service, which combines best-in-class technology with top rated financial advisors to give our clients an accurate, comprehensive picture of their financial health and strategies for long-term growth and security.

We are also currently building new branches in the Bronx and Nanuet, and anticipate opening the former in late June or early July, with the latter to follow shortly thereafter. We view these locations as very natural and logical extensions for the Bank, with our regional footprint and experience giving us confidence in their potential. We look forward to these openings and further expanding the Bank's reach.

Orange Bank's successful 127-year operating history has been characterized by cautious lending standards and thoughtful, patient growth. This legacy guides our decision making today, with any contemplated changes or additions to our service offerings evaluated in terms of their impact on our community, clients, and investors. Our record first quarter 2021 results indicate we are succeeding on all three fronts, and provide a strong foundation for the year ahead. Rest assured we will remain vigilant in our efforts and continue to build on these accomplishments."

First Quarter 2021 Financial Review

Net Income

Net income for the first quarter of 2021 was $5.03 million, compared to net income of $2.48 million for the first quarter of 2020, an increase of $2.55 million, or 105%. The increase was driven primarily by growth in net interest income and a concurrent decrease in the provision for loan losses, partially offset by an increase in non-interest expense.

Net Interest Income

For the three months ended March 31, 2021, net interest income increased $2.4 million, or 21.0%, versus the same period last year.

Total interest income increased $2.1 million, or 16.6%, for the three months ended March 31, 2021 versus the corresponding period last year. This increase in interest income was primarily due to loan growth and fees associated with PPP loan forgiveness.

Total interest expense decreased $267 thousand in the first quarter of 2021, to $1.0 million, compared to $1.3 million in the first quarter of the prior year. The decrease resulted from a $487 thousand reduction in deposit interest expense partially offset by an increase in interest expense of $230 thousand due to the subordinated debt issued in September 2020. Lower interest expense on deposits was consistent with the reduction of the Fed Funds rate in the first quarter of 2020 in response to the COVID-19 pandemic.

Provision for Loan Losses

The Company recognized a $66 thousand provision for loan losses for the three months ended March 31, 2021, well below the $1.2 million provision for loan losses recorded in the same period in the prior year. The lower provision reflects significantly improved credit metrics and loan deferrals. The allowance for loan losses to total loans was 1.32% as of March 31, 2021. Excluding PPP loans, the ratio was 1.46% as of March 31, 2021.

Non-Interest Income

Non-interest income was $2.9 million during the first quarter of 2021, an increase of $351 thousand, or 13.8%, versus the first quarter of 2020. The increase was a result of continued growth in the Bank's trust operations and HVIA's asset management activities.

Non-Interest Expense

Non-interest expense was $10.3 million during the first quarter of 2021, an increase of $725 thousand, or 7.6%, versus the first quarter of 2020 due to the Bank's continued investment in growth. Continued investment to support growth was comprised primarily of a $362,000 increase in salaries, a $264,000 increase in information technology costs and a $120,000 increase in deposit insurance expense resulting from the significant growth in deposit balances. The efficiency ratio improved 701 basis points during the first quarter of 2021, to 62.02%, compared with the same period last year.

Income Tax Expense

Income tax accrual for the three months ended March 31, 2021 was $1.2 million versus $628 thousand for the same period in 2020 due to the increase in income before income tax expense. The effective tax rates for the two periods were 19.6% and 20.2%, respectively.

 

Financial Condition

Total consolidated assets increased $243.8 million, or 14.6%, from $1.66 billion at December 31, 2020 to $1.91 billion at March 31, 2021. The increase in total consolidated assets reflected increases in cash and due from banks, loans receivable and investments.

Total cash and due from banks increased from $121.2 million at December 31, 2020 to $253.1 million at March 31, 2021, an increase of $131.9 million, or 108.8%. The increase in cash was primarily due to increases in deposit account balances driven by seasonal increases in municipal deposits, ongoing success attracting business account assets, and government efforts to increase liquidity in the economy.

Total investments increased $29.3 million from $330.1 million at December 31, 2020 to $359.4 million at March 31, 2021. The increase was primarily in mortgage backed and municipal securities.

Total loans increased from $1.15 billion at December 31, 2020 to $1.23 billion at March 31, 2021, an increase of $80.0 million. This increase was due primarily to a $51.9 million increase in PPP loans.

Total deposits increased $244.3 million to $1.73 billion at March 31, 2021, from $1.49 billion at December 31, 2020. While the increase was primarily related to increases in business accounts, it included $80.6 million of seasonal inflows of government and municipal deposits attributable to the cyclical nature of real estate tax collections.

Borrowed funds of $22.3 million at March 31, 2021 was unchanged from December 31, 2020.

Stockholders' equity remained relatively flat at $135.1 million at March 31, 2021 as the $4.1 million increase in retained earnings during the first quarter of 2021 was offset by the $4.4 million decline in AOCI, for the same period, resulting from the impact of higher interest rates on the market value of investments.

At March 31, 2021, the Bank maintained capital ratios in excess of regulatory standards for well capitalized institutions. The Bank's Tier 1 capital to average assets ratio was 8.19%, both the common equity and Tier 1 capital to risk weighted assets were 12.39% and the total capital to risk weighted assets ratio was 13.64%.

Loan Quality

At March 31, 2021, the Bank had total non-accrual loans of $2.0 million, which included $959.0 thousand of Troubled Debt Restructured Loans ("TDRs"). This total was unchanged from year end 2020. Accruing loans delinquent greater than 30 days were $1.9 million as of March 31, 2021, compared to $1.8 million at December 31, 2020. The following table shows the current status of loans deferred as a result of the COVID-19 pandemic.

Orange Bank & Trust Co.
Summary of Loan Portfolio Segments at 03/31/21 and Deferments to Date (unaudited)
(dollars in thousands)

       

Total Deferments as of March 31, 2021

Industry Classification

March 31, 2021 Balance

Loan Count

% of Total Loans

Outstanding Balance

Loan Count

Deferred %

Real Estate and Rental Leasing

$481,223

480

38.9%

$6,677

5

1.4%

Healthcare and Social Assistance

108,874

647

8.8%

7,484

6

6.9%

Construction

77,430

98

6.3%

-

0

0.0%

Retail Trade

43,962

85

3.6%

-

0

0.0%

Management of Companies/Enterprise

35,725

17

2.9%

-

0

0.0%

Wholesale Trade

33,522

74

2.7%

-

0

0.0%

Manufacturing

43,728

103

3.5%

-

0

0.0%

Hotel / Motel

25,551

10

2.1%

7,588

3

29.7%

Professional, Scientific, and Technical Services

17,812

166

1.4%

52

2

0.3%

Finance and Insurance

18,540

64

1.5%

-

0

0.0%

Contractors

15,004

107

1.2%

-

0

0.0%

Educational Services & Child Care

14,065

33

1.1%

-

0

0.0%

Administrative and Management

14,666

88

1.2%

6,882

2

46.9%

Food Service

17,338

31

1.4%

650

3

3.7%

Art, Entertainment, and Recreation

3,412

10

0.3%

2,878

1

84.3%

Transportation and Warehousing

4,708

34

0.4%

-

0

0.0%

Residential Real Estate & Other

158,398

1,320

12.8%

-

0

0.0%

PPP Loans

121,779

780

9.9%

-

0

0.0%

Total system loan balances

$1,235,737

4,147

100.0%

$32,211

22

2.6%

Net deferred & unapplied

(4,109)

         

Total Loans

$1,231,628

         
       

Total Deferments as of March 31, 2021

Loan Portfolio Category

March 31, 2021 Balance

Loan Count

% of Total Loans

Outstanding Balance

Loan Count

Deferred %

CRE:

           

Multifamily

$157,956

90

12.8%

$2,367

1

1.5%

Non-owner occupied

381,004

369

30.8%

14,779

6

3.9%

Owner occupied

171,314

190

13.9%

14,269

8

8.3%

Construction, development, land

76,841

24

6.2%

-

0

0.0%

             

C&I

236,731

1,819

19.2%

796

7

0.3%

PPP Loans

121,779

780

9.9%

-

0

0.0%

             

Consumer:

           

Residential

71,660

546

5.8%

-

0

0.0%

Non-residential

18,452

329

1.5%

-

0

0.0%

Total system loan balances

$1,235,737

4,147

100.0%

$32,211

22

2.6%

Net deferred & unapplied

(4,109)

         

Total Loans

$1,231,628

         

At the outset of the pandemic, management identified certain industries, including hospitality, healthcare, and retail, it viewed as most susceptible to stress from a prolonged slowdown in the economy. Notwithstanding perceived industry risks, portfolio concentration and exposure across these segments is modest. Notably, Lodging and Food Services, which broadly reflect our exposure to hotels, food and beverage, constitute $42.9 million, or 3.5%, of our loan portfolio. At quarter end, these categories accounted for 19.3% of total loans on payment deferral.

Management continues to evaluate performance trends across industry groups to assess underlying business and liquidity risks due to the economic impacts of COVID-19. While the Bank has continued to provide relief from debt service through forbearance agreements, its focus has shifted toward the resumption of loan payments, as management believes clients in need of deferral have largely been accommodated at this time. Most borrowers requesting deferral early in the cycle resumed scheduled repayment of their loan obligations at the end of their initial 90-day deferral period. Deferred loans at March 31, 2021 were $32.2 million, or 2.6%, of our portfolio, compared with $310.4 million, or 29.5%, of our loan portfolio at June 30, 2020.

Forward Looking Statements

Certain statements contained herein are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by the use of forward looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the real estate and economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. Further, given its ongoing and dynamic nature, it is difficult to predict what the continuing effects of the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, continue to result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions that may be made to any forward looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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 over $1.9 billion in Total Assets. In recent years, Orange Bank & Trust Company has added branches in Rockland and Westchester Counties. Hudson Valley Investment Advisors, Inc. is a Registered Investment Advisor in Goshen, NY. It was founded in 1996 and acquired by the Company in 2012. For additional information, visit orangebanktrust.com or hviaonline.com

For further information:
Robert L. Peacock
EVP Chief Financial Officer
[email protected]
Phone: (845) 341-5005

ORANGE COUNTY BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION
(Dollar Amounts in thousands except per share data)

 
  March 31, 2021     December 31, 2020  
 
           
ASSETS
           
 
           
Cash and due from banks
  $ 253,091     $ 121,232  
Investment securities - available-for-sale
    359,372       330,105  
Restricted investment in bank stocks
    1,752       1,449  
 
               
Loans
    1,231,628       1,152,738  
Allowance for loan losses
    (16,283 )     (16,172 )
Loans, net
    1,215,345       1,136,566  
 
               
Net Premises and equipment
    14,048       14,017  
Accrued interest receivable
    7,319       6,295  
Bank owned life insurance
    28,691       28,520  
Goodwill
    5,359       5,359  
Intangible assets
    1,892       1,963  
Other assets
    21,885       19,430  
 
               
TOTAL ASSETS
  $ 1,908,754     $ 1,664,936  
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
 
               
Deposits:
               
Noninterest bearing
  $ 598,493     $ 521,093  
Interest bearing
    1,135,066       968,201  
Total deposits
    1,733,559       1,489,294  
 
               
FHLB advances
    -       -  
Note payable
    3,000       3,000  
Subordinated notes, net of issuance costs
    19,340       19,323  
Accrued expenses and other liabilities
    17,774       17,896  
 
               
TOTAL LIABILITIES
    1,773,673       1,529,513  
 
               
STOCKHOLDERS' EQUITY
               
 
               
Common stock, $0.50 par value; 15,000,000 shares authorized;
               
4,533,304 issued; 4,490,973 and 4,483,102 outstanding,
               
at March 31, 2021 and December 31, 2020, respectively
    2,266       2,266  
Surplus
    84,775       85,111  
Retained Earnings
    51,817       47,683  
Accumulated other comprehensive income (loss), net of taxes
    (2,559 )     1,819  
Treasury stock, at cost; 42,331 and 50,202 shares at March 31,
               
2021 and December 31, 2020, respectively
    (1,218 )     (1,456 )
TOTAL STOCKHOLDERS' EQUITY
    135,080       135,423  
 
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 1,908,754     $ 1,664,936  

Note: There were minor changes made to the previously reported December 31, 2020 balance sheet related to corrections for the treatment of deferred costs on loans.

ORANGE COUNTY BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in thousands except per share data)

 
  For the Three Months Ended March 31,  
 
  2021     2020  
INTEREST INCOME
           
Interest and fees on loans
  $ 13,228     $ 11,002  
Interest on investment securities:
               
Taxable
    1,127       1,335  
Tax exempt
    363       126  
Interest on Federal funds sold and other
    44       180  
 
               
TOTAL INTEREST INCOME
    14,762       12,643  
 
               
INTEREST EXPENSE
               
Interest on savings and NOW accounts
    592       956  
Interest on time deposits
    158       281  
Interest on FHLB advances
    -       10  
Interest on note payable
    42       42  
Interest on subordinated notes
    230       -  
TOTAL INTEREST EXPENSE
    1,022       1,289  
 
               
NET INTEREST INCOME
    13,740       11,354  
 
               
Provision for loan losses
    66       1,200  
NET INTEREST INCOME AFTER
               
PROVISION FOR LOAN LOSSES
    13,674       10,154  
 
               
NONINTEREST INCOME
               
Service charges on deposit accounts
    175       208  
Trust income
    1,124       1,038  
Investment advisory income
    1,176       901  
Earnings on bank owned life insurance
    171       165  
Other
    245       229  
TOTAL NONINTEREST INCOME
    2,892       2,541  
 
               
NONINTEREST EXPENSE
               
Salaries
    4,547       4,185  
Employee benefits
    1,126       1,148  
Occupancy expense
    965       938  
Professional fees
    907       584  
Directors' fees and expenses
    242       293  
Computer software expense
    1,058       794  
FDIC assessment
    289       169  
Advertising expenses
    283       314  
Advisor expenses related to trust income
    121       155  
Telephone expenses
    133       128  
Intangible amortization
    71       71  
Other
    574       811  
TOTAL NONINTEREST EXPENSE
    10,316       9,591  
 
               
Income before income taxes
    6,250       3,104  
 
               
Provision for income taxes
    1,225       628  
NET INCOME
  $ 5,025     $ 2,476  
 
               
Basic and diluted earnings per share
  $ 1.12     $ 0.55  
 
               
Weighted average shares outstanding
    4,483,139       4,510,420  

Note: There were minor changes made to the previously reported March 31, 2020 income statement related to corrections for the treatment of deferred costs on loans.

Orange County Bancorp, Inc. and Subsidiaries
Net Interest Margin Analysis (unaudited)
(Dollar Amounts in thousands)

 
  Three Months Ended March 31,  
 
  2021     2020  
 
  Average Balance     Interest     Average Rate     Average Balance     Interest     Average Rate  
Assets:
                                   
Loans Receivable (net of PPP)
  $ 1,084,848     $ 12,036       4.50 %   $ 915,124     $ 11,001       4.83 %
PPP Loans
    94,479       1,192       5.12 %     -       -       0.00 %
Investment securities
    340,682       1,392       1.66 %     258,327.14       1,462       2.28 %
Due from banks
    177,393       44       0.10 %     58,187       180       1.24 %
Other
    1,520       98       26.24 %     1,275       -       0.00 %
Total interest earning assets
    1,698,923       14,762       3.52 %     1,232,913       12,643       4.12 %
Non-interest earning assets
    81,012                       74,808                  
Total assets
  $ 1,779,934                     $ 1,307,721                  
 
                                               
Liabilities and equity:
                                               
Interest-bearing demand accounts
  $ 262,565     $ 82       0.13 %   $ 201,566     $ 103       0.21 %
Money market accounts
    539,295       459       0.35 %     403,893       774       0.77 %
Savings accounts
    158,893       51       0.13 %     124,085       78       0.25 %
Certificates of deposit
    90,796       158       0.71 %     87,996       281       1.28 %
Total interest-bearing deposits
    1,051,550       750       0.29 %     817,539       1,237       0.61 %
FHLB Advances
    -       -       0.00 %     2,326       10       1.77 %
Note payable
    3,000       42       5.68 %     3,000       42       5.62 %
Subordinated notes
    19,335       230       4.75 %     -       -       0.00 %
Total interest bearing liabilities
    1,073,885       1,022       0.39 %     822,865       1,289       0.63 %
Non-interest bearing demand accounts
    552,441                       345,146                  
Other non-interest bearing liabilities
    19,057                       16,867                  
Total liabilities
    1,645,383                       1,184,879                  
Total shareholders' equity
    134,552                       122,842                  
Total liabilities and shareholders' equity
  $ 1,779,934                     $ 1,307,721                  
 
                                               
Net interest income
          $ 13,740                     $ 11,354          
Interest rate spread 1
                    3.14 %                     3.50 %
Net interest margin 2
                    3.28 %                     3.70 %
Average interest earning assets to interest-bearing liabilities
    158.2 %                     149.8 %                

Notes:

1 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. and Subsidiaries
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)
  $ 963,333     $ 45,487       4.72 %   $ 819,205     $ 40,803       4.98 %
PPP Loans
    59,205       2,034       3.44 %     -       -       0.00 %
Investment securities
    295,303       5,575       1.89 %     254,388       6,373       2.51 %
Due from banks
    132,840       294       0.22 %     40,677       853       2.10 %
Other
    1,405       70       4.99 %     1,436       92       6.41 %
Total interest earning assets
    1,452,086 #       53,462       3.68 %     1,115,705       48,121       4.31 %
Non-interest earning assets
    75,142                       68,602                  
Total assets
  $ 1,527,227                     $ 1,184,308                  
 
                                               
Liabilities and equity:
                                               
Interest-bearing demand accounts
  $ 214,012     $ 414       0.19 %   $ 181,446     $ 300       0.17 %
Money market accounts
    480,149       2,709       0.56 %     346,776       2,687       0.77 %
Savings accounts
    137,906       266       0.19 %     126,056       304       0.24 %
Certificates of deposit
    90,232       917       1.02 %     92,878       1,221       1.31 %
Total interest-bearing deposits
    922,299       4,306       0.47 %     747,155       4,512       0.60 %
FHLB Advances
    578       10       1.77 %     8,506       147       1.73 %
Note payable
    3,000       160       5.35 %     3,028       181       5.97 %
Subordinated notes
    4,918       246       5.00 %     -       -       0.00 %
Total interest bearing liabilities
    930,796       4,723       0.51 %     758,689       4,840       0.64 %
Non-interest bearing demand accounts
    449,454                       296,360                  
Other non-interest bearing liabilities
    17,469                       13,787                  
Total liabilities
    1,397,718                       1,068,836                  
Total shareholders' equity
    129,509                       115,472                  
Total liabilities and shareholders' equity
  $ 1,527,227                     $ 1,184,308                  
 
                                               
Net interest income
          $ 48,739                     $ 43,281          
Interest rate spread 1
                    3.17 %                     3.68 %
Net interest margin 2
                    3.36 %                     3.88 %
Average interest earning assets to interest-bearing liabilities
    156.0 %                     147.1 %                

Notes:

1 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. and Subsidiaries
Ratios and Other Data (unaudited)
(Dollar Amounts in thousands)

 
  At or For the Three Months Ended March 31, (1)     At or For the Year Ended December 31,  
 
  2021     2020     2020     2019  
Performance Ratios:
                       
Return on average assets
    1.13 %     0.76 %     0.77 %     0.97 %
Return on average equity
    14.94 %     8.06 %     9.11 %     10.02 %
Interest rate spread (2)
    3.09 %     3.48 %     3.18 %     3.68 %
Net interest margin (3)
    3.24 %     3.68 %     3.36 %     3.88 %
Efficiency ratio (4)
    62.02 %     69.03 %     66.87 %     68.73 %
Dividend payout ratio (5)
    17.72 %     36.19 %     30.70 %     31.23 %
Non-interest income to average total assets
    0.65 %     0.78 %     0.75 %     0.83 %
Non-interest expenses to average total assets
    2.32 %     2.93 %     2.64 %     3.08 %
Average interest-earning assets to average interest-bearing liabilities
    158.20 %     149.83 %     155.81 %     146.90 %
Average equity to average total assets
    7.56 %     9.39 %     8.41 %     9.68 %
 
                               
Asset Quality Ratios:
                               
Non-performing assets to total assets
    0.13 %     0.25 %     0.15 %     0.18 %
Non-performing loans to total loans
    0.20 %     0.36 %     0.22 %     0.25 %
Allowance for loan losses to non-performing loans
    667.55 %     401.50 %     641.23 %     550.20 %
Allowance for loan losses to total loans
    1.32 %     1.44 %     1.41 %     1.38 %
Net (charge-offs) recoveries to average outstanding loans during the period
    0.00 %     0.00 %     0.15 %     0.07 %
 
                               
Capital Ratios:(6)
                               
Total capital (to risk-weighted assets)
    13.64 %     13.54 %     13.38 %     13.77 %
Tier 1 capital (to risk-weighted assets)
    12.39 %     12.29 %     12.13 %     12.52 %
Common equity tier 1 capital (to risk-weighted assets)
    12.39 %     12.29 %     12.13 %     12.52 %
Tier 1 capital (to average assets)
    8.19 %     9.13 %     8.08 %     9.39 %
(1) Annualized for the three-month periods ended March 31, 2021and 2020.
(2) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the periods.
(3) The net interest margin represents net interest income as a percent of average interest-earning assets for the periods.
(4) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
5) The dividend payout ratio represents dividends paid per share divided by net income per share.
(6) Ratios are for the Bank only.

Orange County Bancorp, Inc. and Subsidiaries
Selected Operating Data (unaudited)
(Dollar Amounts in thousands)

 
  Three months ended     Year ended  
 
  March 31,     December 31,  
 
  2021     2020     2020     2019  
Interest income
  $ 14,762     $ 12,643     $ 53,461     $ 48,121  
Interest expense
    1,022       1,289       4,722       4,840  
Net interest income
    13,740       11,354       48,739       43,281  
Provision for loan losses
    66       1,200       5,413       2,195  
Net interest income after provision for loan losses
    13,674       10,154       43,326       41,086  
Noninterest income
    2,892       2,541       11,423       9,814  
Noninterest expenses
    10,316       9,591       40,231       36,491  
Income before income taxes
    6,250       3,104       14,518       14,409  
Provision for income taxes
    1,225       628       2,839       2,928  
Net income
  $ 5,025     $ 2,476     $ 11,679     $ 11,481  
 
                               
Earnings per common share:
                               
Basic
  $ 1.12     $ 0.55     $ 2.59     $ 2.56  
Book value per share
    30.08       27.96       29.89       26.85  
Net tangible book value per share (1)
    28.46       26.29       28.26       25.16  
Weighted average common shares - basic
    4,483,139       4,510,420       4,508,508       4,484,317  
Outstanding common shares - basic
    4,490,973       4,518,128       4,483,102       4,504,389  

(1) Net tangible book value represents the amount of your total tangible assets reduced by our total liabilities. Tangible assets are calculated by reducing total assets, as defined by GAAP, by $5,358 in goodwill and $1,892, and $2,178 in other intangible assets for the three months ended March 31, 2021 and 2020, respectively and $1,964, and $2,249 in other intangible assets for years ended December 31, 2020 and 2019, respectively.

Orange County Bancorp, Inc. and Subsidiaries
Loan Composition (unaudited)
(Dollar Amounts in thousands)

 

At March 31,

At December 31,

 

2021

2020

2019

 

Amount

Percent

Amount

Percent

Amount

Percent

             

Commercial and industrial (a)

$355,415

28.86%

$299,049

25.94%

$222,111

24.90%

Commercial real estate

709,761

57.63%

698,130

60.56%

534,407

59.90%

Commercial real estate construction

76,570

6.22%

63,544

5.51%

56,412

6.32%

Residential real estate

58,123

4.72%

57,941

5.03%

65,290

7.32%

Home equity

13,197

1.07%

13,960

1.21%

11,668

1.31%

Consumer

18,563

1.51%

20,114

1.74%

2,236

0.25%

Total loans

1,231,628

100.00%

1,152,738

100.00%

892,124

100.00%

Allowance for loan losses

16,283

 

16,172

 

12,275

 

Total loans, net

$1,215,345

 

$1,136,566

 

$879,849

 
             

(a) - Inlcudes PPP loans of:

$121,779

 

$69,874

 

$-

 

Orange County Bancorp, Inc. and Subsidiaries
Deposits by Account Type (unaudited)
(Dollar Amounts in thousands)

The following table sets forth the distribution of total deposits by account type at the dates indicated.

 
  At March 31,     At December 31,  
 
  2021     2020     2019  
 
  Amount     Percent     Average Rate     Amount     Percent     Average Rate     Amount     Percent     Average Rate  
 
                                                     
Noninterest-bearing demand accounts
  $ 598,493       34.52 %     0.00 %   $ 521,093       34.99 %     0.00 %   $ 335,469       30.97 %     0.00 %
Interest bearing demand accounts
    276,987       15.98 %     0.13 %     236,951       15.91 %     0.15 %     166,907       15.41 %     0.22 %
Money market accounts
    599,127       34.56 %     0.31 %     483,044       32.43 %     0.36 %     368,799       34.05 %     0.87 %
Savings accounts
    168,934       9.74 %     0.10 %     157,007       10.54 %     0.12 %     123,330       11.39 %     0.25 %
Certificates of Deposit
    90,019       5.19 %     0.66 %     91,199       6.12 %     0.75 %     88,657       8.19 %     1.36 %
Total
  $ 1,733,559       100.00 %     0.17 %   $ 1,489,294       100.00 %     0.20 %   $ 1,083,162       100.00 %     0.47 %

Orange County Bancorp, Inc. and Subsidiaries
Non-performing Assets (unaudited)
(Dollar Amounts in thousands)

 
  At March 31,     At December 31,  
 
  2021     2020     2019  
Non-accrual loans:
                 
Commercial and industrial
  $ -     $ -     $ 502  
Commercial real estate
    1,345       1,345       959  
Commercial real estate construction
    -       -       -  
Residential real estate
    655       657       88  
Home equity
    -       -       -  
Consumer
    -       -       -  
Total non-accrual loans 1
    2,000       2,002       1,549  
Accruing loans 90 days or more past due:
                       
Commercial and industrial
    345       457       215  
Commercial real estate
    -       -       -  
Commercial real estate construction
    -       -       -  
Residential real estate
    2       2       416  
Home equity
    -       -       51  
Consumer
    93       61       -  
Total loans 90 days or more past due
    439       520       682  
Total non-performing loans
    2,439       2,522       2,231  
Other real estate owned
    -       -       -  
Other non-performing assets
    -       -       -  
Total non-performing assets
  $ 2,439     $ 2,522     $ 2,231  
 
                       
Ratios:
                       
Total non-performing loans to total loans
    0.20 %     0.22 %     0.25 %
Total non-performing loans to total assets
    0.13 %     0.15 %     0.18 %
Total non-performing assets to total assets
    0.13 %     0.15 %     0.18 %
 
                       
1 - Includes non-accruing TDRs:
  $ 959     $ 959     $ 959  
 
SOURCE: Orange County Bancorp, Inc.
Orange County Bancorp, Inc.
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