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

Thursday, August 12, 2021 8:50 PM
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Orange County Bancorp, Inc.

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

  • Net Income for Q2 2021 increased $2.3 million, or 80.4%, to a record $5.2 million versus Q2 2020 
  • Return on average assets for Q2 2021 rose 28 basis points year-over-year to 1.05% 
  • Return on common equity for Q2 2021 rose 603 basis points year-over-year to 15.0% 
  • Provision for loan losses of $809 thousand declined 38% versus the same period last year due to stabilizing credit trends 
  • Average Loans (net of PPP) for Q2 2021 increased 22.3% year-over-year, to $1.1 billion 
  • Average Demand Deposits for Q2 2021 grew 37.4% year-over-year to $627.8 million 
  • Total Assets grew $387.3 million, or 23.3%, from year-end 2020 to $2.1 billion at June 30, 2021 
  • Trust and asset advisory business revenue increased 26.3%, to $2.4 million, for Q2 2021 

MIDDLETOWN, NY / ACCESSWIRE / August 12, 2021 / Orange County Bancorp, Inc. (the "Company") (NASDAQ:OBT), parent company of Orange Bank & Trust Co. (the "Bank") and Hudson Valley Investment Advisors, Inc. ("HVIA"), today announced net income of $5.2 million, or $1.16 per basic and diluted share, for the three months ended June 30, 2021. This compares with net income of $2.9 million, or $0.64 per basic and diluted share, for the three months ended June 30, 2020. For the first six months of 2021, net income increased by $4.9 million, or 90.8%, over the prior year period, to $10.2 million, or $2.28 per basic and diluted share. This compares with net income of $5.4 million, or $1.19 per basic and diluted share, for the first six months of 2020.

"I am pleased to announce yet another record quarter of financial performance for the Bank and Company," said Orange County Bancorp President & CEO, Michael Gilfeather. "These results reflect significant growth across all facets of our business, with particularly noteworthy increases in assets and loans as liquidity initiatives took hold and credit uncertainty gave way to an increasingly favorable business outlook."

"The quarter also represents a very important transition period for the organization," Gilfeather added. "As the growth strategy we initiated several years ago continued to yield strong results, the Board and management team elected to leverage our success through a NASDAQ IPO. I am pleased to announce completion of our offering and subsequent NASDAQ Capital Market listing under the stock symbol "OBT" during the first week of August. Our transaction was upsized in the face of strong demand and culminated in the sale of 1.15 million shares to new investors at $33.50 per share, for gross proceeds of approximately $38.5 million. While technically a Q3 event, the groundwork for the transaction began in earnest in Q2 and entailed major contributions from all divisions of the Bank. It was a phenomenal success, particularly in conjunction with the financial results just reported, and positions the Company well for continued growth going forward.

To further highlight our financial accomplishments in Q2, net income of $5.2 million for the quarter pushed our first half net income over $10 million, nearly double the same period last year. Total assets of the Bank also exceeded $2 billion for the first time, increasing $387.3 million, or 23.3%, from year-end 2020.

Total loans were $1.29 billion as of June 30, 2021, representing a $134.1 million, or 11.6%, increase from $1.15 billion at December 31, 2020. This growth was primarily due to increases in commercial real estate and Payroll Protection Program (PPP) loans. Net of PPP, loans grew $94.4 million, reflecting improving economic strength and business opportunities our clients are seeing across the regions we serve. Since the government approved a second round of PPP funding in early 2021, the Bank's PPP loan balance has risen 58%, from nearly $69 million at year-end 2020 to nearly $109 million at the close of Q2 2021. While the program ended on May 31, 2021 we continue to work with our PPP borrowers to assess whether their loans qualify for government forgiveness and, if so, help them through the process.

Deposit growth was also strong for the quarter, with total deposits of $1.87 billion as of June 30, 2021 representing a $382.4 million, or 25.7%, increase from $1.49 billion at December 31, 2020. Over half of these deposits are in low to zero cost NOW and Demand Deposit accounts, resulting in our relatively low average cost of deposits.

Our net interest margin for the three months ended June 30, 2021 was 3.09%, compared to 3.34% for the three months ended June 30, 2020, and 3.18% for the six months ended June 30, 2021, compared to 3.51% for the same period last year.While we did experience margin compression, overall loan growth resulted in an increase in net interest income for the quarter of $2.9 million, or 24.2%, versus the same period last year. For the six months ended June 30, 2021, net interest income increased $5.2 million, or 22.6%, versus the same period last year.

The Company's Wealth Management initiative, which launched earlier this year, also enjoyed strong growth. Orange Wealth Management is a platform that provides a comprehensive suite of wealth management services delivered through the Company's Private Banking and Trust Services Division and HVIA subsidiary. Revenues grew 26.3%, to $2.4 million, for the second quarter 2021 verses the same quarter last year and are up 22.4% for the six months ended June 30, 2021 compared to the same period in 2020. Assets under management (AUM) ended Q2 at $1.24 billion, up $48.4 million for the first half of the year. HVIA, which until recently focused its marketing efforts on our historical operating region, is now actively expanding into Westchester to leverage and support our business relationships there. We remain excited by the growth prospects for this exciting initiative.

While pleased with these results, much remains to be done. We just opened a new branch in the Bronx with a seasoned team that is well respected in the local business community. Senior Vice President and Senior Commercial Loan Officer, Anthony Mormile, is leading this effort and we are very encouraged by the results to date. Additionally, our scheduled Nanuet branch opening later this year will strengthen our presence in Rockland County and, given its proximity to New Jersey, provide a point of entree into Bergen County. In keeping with our broader strategy for the Bank, we intend to remain disciplined and rigorous with branch initiatives.

The success we've enjoyed the past several years doesn't happen without a dedicated staff," Gilfeather concluded. "Last year, the pandemic and need to provide PPP loans to our business clients pushed the Bank beyond what even we thought possible. Our employees responded without hesitation, implementing new systems and processing more than $100 million in loans for clients in a matter of months. This quarter, we sought to raise the public profile of our efforts, improve liquidity, and fund further growth of the Company through an initial public offering. This required enormous effort from the entire organization and, again, our employees responded, assuming important responsibilities in addition to their daily work servicing clients and providing trust and investment assistance. Their efforts resulted in an outstanding transaction, ensuring future growth and viability for the Company. I thank them for a job well done."

Second Quarter and First Half 2021 Financial Review

Net Income 

Net income for the second quarter of 2021 was $5.2 million, compared to net income of $2.9 million for the second quarter of 2020, an increase of $2.3 million, or 80.4%. Net income for the six months ended June 30, 2021 was $10.2 million, compared to net income of $5.4 million for the same period of 2020, an increase of $4.8 million, or 90.8%. The increase for both the three and six month periods in 2021 compared to 2020 was driven primarily by an increase in net interest income and decrease in provision for loan losses, partially offset by increases in non-interest expense and provision for income taxes.

Net Interest Income 

For the three months ended June 30, 2021, net interest income increased by $2.9 million, or 24.2%, versus the same period last year. For the six months ended June 30, 2021, net interest income increased by $5.2 million, or 22.6%, versus the same period last year.

Total interest income increased $2.7 million, or 21.1%, and $4.8 million, or 19.0%, for the three and six months ended June 30, 2021, respectiveley, versus the corresponding periods last year. The increase in interest income was primarily due to loan growth and fees associated with PPP loan forgiveness.

Total interest expense decreased $121 thousand in the second quarter of 2021, to $1.0 million, compared to $1.1 million in the second quarter of the prior year, and decreased $388 thousand for the six months ended June 30, 2021, to $2.0 million from $2.4 million, for the six months ended June 30, 2020. The decrease resulted from a reduction in deposit interest expense partially offset by an increase in interest expense 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 provisions for loan losses of $809 thousand and $875 thousand for the three and six months ended June 30, 2021, respectively, compared to $1.3 million and $2.5 million for the three and six months ended June 30, 2020, respectively. The lower provisions reflect improved credit metrics and declining loan deferrals. The allowance for loan losses to total loans was 1.32% as of June 30, 2021. Excluding PPP loans, the ratio was 1.45%.

Non-Interest Income 

Non-interest income was $3.0 million during both the second quarter of 2021 and 2020, while non-interest income was $5.9 million for the six months ended June 30, 2021 compared to $5.5 million for the same period in 2020, an increase of $372 thousand, or 6.7%. 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 $10.4 million and $9.9 million during the second quarters of 2021 and 2020, respectively, an increase of $497 thousand, or 5%, while non-interest expense was $20.7 million for the six months ended June 30, 2021, compared to $19.5 million for the same period in 2020, an increase of $1.2 million, or 6.3%. The increase in non-interest expense for the three and six month periods was due to the Bank's continued investment in growth. This investment was comprised primarily of increases in salaries, information technology, professional fees, and deposit insurance costs resulting from significant growth in deposit balances. The efficiency ratio improved to 58.90% for the three months ended June 30, 2021 from 66.98% for the same period in 2020, and improved to 60.41% for the six months ended June 30, 2021 from 67.97% for the six months ended June 30, 2020.

Income Tax Expense 

The provision for income taxes for the three months ended June 30, 2021 was $1.3 million compared to $695 thousand for the same period in 2020. The provision for income taxes for the six months ended June 30, 2021 was $2.5 million compared to $1.3 million for the same period in 2020. The increase for both periods was due to the increase in income before income taxes. The effective tax rate for the three and six month periods ended June 30, 2021 was 19.5%, versus 19.5% and 19.8%, respectively, for the same periods last year.

Financial Condition 

Total consolidated assets increased $387.3 million, or 23.3%, from $1.7 billion at December 31, 2020 to $2.1 billion at June 30, 2021. The increase reflects 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 $322.9 million at June 30, 2021, an increase of $201.7 million, or 166.4%. The increase 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 $47.6 million from $330.1 million at December 31, 2020 to $377.7 million at June 30, 2021. The increase was primarily in mortgage backed and municipal securities.

Total loans increased from $1.2 billion at December 31, 2020 to $1.3 billion at June 30, 2021, an increase of $134.1 million, or 11.6%. This increase was primarily due to an increase in commercial real estate loans of $82.9 million and PPP loans of $39.7 million.

Total deposits increased $382.4 million to $1.9 billion at June 30, 2021, from $1.5 billion at December 31, 2020. The increase was primarily related to business account activity, PPP loan proceeds and government liquidity efforts, combined with municipal deposit growth attributable to cyclical real estate tax collections.

Stockholders' equity increased $5.5 million to $140.9 million at June 30, 2021 from $135.4 million at December 31, 2020 due to an $8.4 million net increase in retained earnings partially offset by a $2.9 million decline in AOCI during the first half of 2021 resulting from a change in the market value of investments.

At June 30, 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 7.56%, both the common equity and Tier 1 capital to risk weighted assets were 12.13% and the total capital to risk weighted assets ratio was 13.38%.

Loan Quality 

At June 30, 2021, the Bank had total non-accrual loans of $2.0 million, or 0.16% of total loans, which included $959.0 thousand of Troubled Debt Restructured Loans ("TDRs"), or 0.07% of total loans. This total was unchanged from year end 2020. Accruing loans delinquent greater than 30 days were $1.1 million as of June 30, 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 COUNTY BANCORP, INC. 
SUMMARY OF LOAN PORTFOLIO SEGMENTS AND DEFERMENTS 
(UNAUDITED) 
(Dollar Amounts in thousands)
            
           Total Deferments as of June 30, 2021
Industry Classification
 June 30, 2021
Balance
  Loan Count  % of Total Loans  Outstanding Balance  Loan Count  Deferred %
Real Estate and Rental Leasing
 $529,630   496   41.0%  $4,081   5   0.8%
Healthcare and Social Assistance
  106,158   624   8.2%   695   3   0.7%
Construction
  74,111   102   5.7%   -   -   0.0%
Retail Trade
  44,131   79   3.4%   -   -   0.0%
Management of Companies/Enterprise
  34,233   16   2.7%   -   -   0.0%
Wholesale Trade
  34,173   73   2.6%   -   -   0.0%
Manufacturing
  44,815   105   3.5%   -   -   0.0%
Hotel / Motel
  27,043   10   2.1%   7,588   3   28.1%
Professional, Scientific, and Technical Services
  17,994   169   1.4%   51   2   0.3%
Finance and Insurance
  24,803   66   1.9%   -   -   0.0%
Contractors
  15,515   103   1.2%   -   -   0.0%
Educational Services & Child Care
  13,344   32   1.0%   -   -   0.0%
Administrative and Management
  14,495   89   1.1%   -   -   0.0%
Food Service
  17,886   34   1.4%   -   -   0.0%
Art, Entertainment, and Recreation
  14,919   10   1.2%   -   -   0.0%
Transportation and Warehousing
  10,274   33   0.8%   -   -   0.0%
Residential Real Estate & Other
  159,234   1,297   12.3%   -   -   0.0%
PPP Loans
  108,711   592   8.4%   -   -   0.0%
Total system loan balances
 $1,291,469   3,930   100.0%  $12,415   13   1.0%
Net deferred & unapplied
  (4,584)                   
Total loans
  1,286,885                    
          Total Deferments as of June 30, 2021
Loan Portfolio Category
June 30, 2021
Balance
  Loan Count  % of Total Loans  Outstanding Balance  Loan Count  Deferred %
CRE:                      
Multifamily
$162,274   91   12.6%  $2,367   1   1.5%
Non-owner occupied
 445,549   388   34.5%   8,192   5   1.8%
Owner occupied
 174,276   189   13.5%   1,110   2   0.6%
Construction, development, land
 71,059   38   5.5%   -   -   0.0%
                       
C&I
 241,103   1,791   18.7%   746   5   0.3%
PPP Loans
 108,711   592   8.4%   -   -   0.0%
                       
Consumer:
                      
Residential
 71,687   528   5.6%   -   -   0.0%
Non-residential
 16,810   313   1.3%   -   -   0.0%
Total system loan balances
$1,291,469   3,930   100.0%  $12,415   13   1.0%
Net deferred & unapplied
 (4,584)                   
Total loans
 1,286,885                    
                       

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 economic slowdown. 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 $44.9 million, or 3.5%, of our loan portfolio. At quarter end, these categories accounted for 61.1% of our total $12.4 million of 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 June 30, 2021 were $12.4 million, or 1.0%, of our portfolio, compared with $48.8 million, or 4.2%, of our loan portfolio at December 31, 2020.

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 ongoing innovation and an unwavering commitment to its community and business clientele to more than $2.0 billion in total assets. 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.

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.

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

ORANGE COUNTY BANCORP, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION 
(UNAUDITED)
 
(Dollar Amounts in thousands except per share data)
  June 30, 2021  December 31, 2020 

ASSETS

        
Cash and due from banks
 $322,919  $121,232 
Investment securities - available-for-sale
  377,738   330,105 
Restricted investment in bank stocks
  2,109   1,449 
         
Loans
  1,286,885   1,152,738 
Allowance for loan losses
  (17,049)  (16,172)
Loans, net
  1,269,836   1,136,566 
         
Net Premises and equipment
  14,124   14,017 
Accrued interest receivable
  7,090   6,295 
Bank owned life insurance
  29,064   28,520 
Goodwill
  5,359   5,359 
Intangible assets
  1,821   1,963 
Other assets
  22,172   19,430 
 
        
TOTAL ASSETS
 $2,052,232  $1,664,936 
 
        
LIABILITIES AND STOCKHOLDERS' EQUITY
        
         
Deposits:
        
Noninterest bearing
 $652,767  $521,093 
Interest bearing
  1,218,898   968,201 
Total deposits
  1,871,665   1,489,294 
         
Note payable
  3,000   3,000 
Subordinated notes, net of issuance costs
  19,358   19,323 
Accrued expenses and other liabilities
  17,298   17,896 
         
TOTAL LIABILITIES
  1,911,321   1,529,513 
 
        
STOCKHOLDERS' EQUITY
        
         
Common stock, $0.50 par value; 15,000,000 shares authorized;
        
4,533,304 issued; 4,488,437 and 4,483,102 outstanding,
        
at June 30, 2021 and December 31, 2020, respectively
  2,266   2,266 
Surplus
  84,936   85,111 
Retained Earnings
  56,118   47,683 
Accumulated other comprehensive income (loss), net of taxes
  (1,116)  1,819 
Treasury stock, at cost; 44,867 and 50,202 shares at June 30,
        
2021 and December 31, 2020, respectively
  (1,293)  (1,456)
TOTAL STOCKHOLDERS' EQUITY
  140,911   135,423 
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 $2,052,232  $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. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(UNAUDITED)
 
(Dollar Amounts in thousands except per share data)
  
  Three Months Ended June 30,  Six Months Ended June 30, 
  2021  2020  2021  2020 
INTEREST INCOME                
Interest and fees on loans
 $14,033  $11,444  $27,261  $22,446 
Interest on investment securities:
                
Taxable
  1,156   1,223   2,284   2,558 
Tax exempt
  408   233   771   359 
Interest on Federal funds sold and other
  61   28   104   208 
TOTAL INTEREST INCOME
  15,658   12,928   30,420   25,571 
                 
INTEREST EXPENSE
                
Interest on savings and NOW accounts
  617   851   1,209   1,807 
Interest on time deposits
  137   254   295   535 
Interest on FHLB advances
  -   -   -   10 
Interest on note payable
  42   42   84   84 
Interest on subordinated notes
  230   -   460   - 
TOTAL INTEREST EXPENSE
  1,026   1,147   2,048   2,436 
                 
NET INTEREST INCOME
  14,632   11,781   28,372   23,135 
                 
Provision for loan losses
  809   1,310   875   2,510 
NET INTEREST INCOME AFTER
                
PROVISION FOR LOAN LOSSES
  13,823   10,471   27,497   20,625 
                 
NONINTEREST INCOME
                
Service charges on deposit accounts
  158   117   333   325 
Trust income
  1,184   918   2,307   1,956 
Investment advisory income
  1,235   997   2,411   1,898 
Investment securities gains(losses)
  -   586   -   586 
Earnings on bank owned life insurance
  173   182   345   347 
Other
  278   206   523   435 
TOTAL NONINTEREST INCOME
  3,028   3,006   5,919   5,547 
                 
NONINTEREST EXPENSE
                
Salaries
  4,726   4,634   9,273   8,819 
Employee benefits
  876   1,105   2,002   2,254 
Occupancy expense
  967   934   1,932   1,872 
Professional fees
  1,023   1,004   1,930   1,575 
Directors' fees and expenses
  252   276   494   569 
Computer software expense
  1,032   920   2,090   1,714 
FDIC assessment
  267   197   555   366 
Advertising expenses
  285   338   568   651 
Advisor expenses related to trust income
  140   88   261   243 
Telephone expenses
  136   140   270   269 
Intangible amortization
  71   71   143   143 
Other
  626   197   1,198   1,020 
TOTAL NONINTEREST EXPENSE
  10,401   9,904   20,716   19,495 
                 
Income before income taxes
  6,450   3,573   12,700   6,677 
                 
Provision for income taxes
  1,257   695   2,482   1,323 
NET INCOME
 $5,193  $2,878  $10,218  $5,354 
                 
Basic and diluted earnings per share
 $1.16  $0.64  $2.28  $1.19 
                 
Weighted average shares outstanding
  4,488,602   4,514,345   4,485,886   4,512,382 
                 

Note: There were minor changes made to the previously reported June 30, 2020 income statement periods related to corrections for the treatment of deferred costs on loans.

 
ORANGE COUNTY BANCORP, INC. 
NET INTEREST MARGIN ANALYSIS 
(UNAUDITED)
 
(Dollar Amounts in thousands)

 
Three Months Ended June 30,

 
2021  2020

 
Average Balance Interest Average Rate  Average Balance Interest Average Rate
Assets:                  
Loans Receivable (net of PPP)
$1,148,215 $12,883  4.50%  $938,942 $11,003  4.71%
PPP Loans
 119,463  1,150  3.86%   67,879  441  2.61%
Investment securities
 361,541  1,541  1.71%   276,908  1,439  2.09%
Due from banks
 270,259  61  0.09%   132,991  28  0.08%
Other
 2,038  23  4.53%   1,446  17  4.73%
Total interest earning assets
 1,901,516  15,658  3.30%   1,418,166  12,928  3.67%
Non-interest earning assets
 81,249         72,429      
Total assets
$1,982,765        $1,490,595      
                   
Liabilities and equity:
                  
Interest-bearing demand accounts
$276,609 $84  0.12%  $203,334 $102  0.20%
Money market accounts
 627,289  478  0.31%   464,021  681  0.59%
Savings accounts
 183,867  55  0.12%   128,487  68  0.21%
Certificates of deposit
 88,537  137  0.62%   89,830  254  1.14%
Total interest-bearing deposits
 1,176,302  754  0.26%   885,672  1,105  0.50%
FHLB Advances and other borrowings
 3  0  0.27%   -  -  0.00%
Note payable
 3,000  42  5.62%   3,000  42  5.63%
Subordinated notes
 19,348  230  4.77%   -  -  0.00%
Total interest bearing liabilities
 1,198,653  1,026  0.34%   888,672  1,147  0.52%
Non-interest bearing demand accounts
 627,806         456,931      
Other non-interest bearing liabilities
 17,563         16,210      
Total liabilities
 1,844,022         1,361,813      
Total shareholders' equity
 138,744         128,782      
Total liabilities and shareholders' equity
$1,982,766        $1,490,595      
                   
Net interest income
   $14,632        $11,781   
Interest rate spread 1
       2.96%         3.15%
Net interest margin 2
       3.09%         3.34%
Average interest earning assets to interest-bearing liabilities
 158.6%         159.6%      

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. 
NET INTEREST MARGIN ANALYSIS 
(UNAUDITED)
 
(Dollar Amounts in thousands)

 
Six Months Ended June 30,
 2021  2020
 Average Balance  Interest  Average Rate  Average Balance  Interest  Average Rate
Assets:                      
Loans Receivable (net of PPP)
$1,116,706  $24,886   4.49%  $927,768  $22,004   4.77%
PPP Loans
 107,040   2,375   4.47%   33,939   442   2.62%
Investment securities
 351,169   3,013   1.73%   267,617   2,883   2.17%
Due from banks
 224,083   104   0.09%   95,589   208   0.44%
Other
 1,780   42   4.76%   1,361   34   5.02%
Total interest earning assets
 1,800,778   30,420   3.41%   1,326,274   25,571   3.88%
Non-interest earning assets
 81,459           73,464        
Total assets
$1,882,237          $1,399,738        
                       
Liabilities and equity:
                      
Interest-bearing demand accounts
$269,626  $165   0.12%  $202,450  $205   0.20%
Money market accounts
 583,535   939   0.32%   433,956   1,456   0.67%
Savings accounts
 171,449   105   0.12%   126,286   146   0.23%
Certificates of deposit
 89,660   295   0.66%   88,913   535   1.21%
Total interest-bearing deposits
 1,114,270   1,504   0.27%   851,605   2,342   0.55%
FHLB Advances and other borrowings
 1   0   0.40%   1,163   10   1.73%
Note payable
 3,000   84   5.65%   3,000   84   5.63%
Subordinated notes
 19,668   460   4.72%   -   -   0.00%
Total interest-bearing liabilities
 1,136,939   2,048   0.36%   855,768   2,436   0.57%
Non-interest bearing demand accounts
 590,332           401,039        
Other non-interest bearing liabilities
 18,306           16,539        
Total liabilities
 1,745,577           1,273,346        
Total shareholders' equity
 136,660           126,392        
Total liabilities and shareholders' equity
$1,882,237          $1,399,738        
                       
Net interest income
    $28,372          $23,135    
Interest rate spread 1
         3.04%           3.30%
Net interest margin 2
         3.18%           3.51%
Average interest earning assets to interest-bearing liabilities
 158.4%           155.0%        
                       

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. 
SELECTED RATIOS AND OTHER DATA 
(UNAUDITED)
  
 Three Months Ended June 30, (1)  Six Months Ended June 30, (1)
 2021 2020  2021 2020
Performance Ratios:            
Return on average assets
 1.05%  0.77%   1.09%  0.77%
Return on average equity
 14.97%  8.94%   14.95%  8.47%
Interest rate spread (2)
 2.96%  3.15%   3.04%  3.30%
Net interest margin (3)
 3.09%  3.34%   3.18%  3.51%
Efficiency ratio (4)
 58.90%  66.98%   60.41%  67.97%
Dividend payout ratio (5)
 17.29%  31.37%   17.56%  33.71%
Non-interest income to average total assets
 0.61%  0.81%   0.63%  0.79%
Non-interest expenses to average total assets
 2.10%  2.00%   2.20%  2.07%
Average interest-earning assets to average interest-bearing liabilities
 158.64%  159.58%   158.39%  154.98%
Average equity to average total assets
 7.00%  8.64%   7.26%  9.03%
Net (charge-offs) recoveries to average outstanding loans during the period
 0.00%  0.07%   0.00%  0.07%
             
 At  At
 June 30, 2021  December 31, 2020
Asset Quality Ratios:      
Non-performing assets to total assets
 0.12%   0.15%
Non-performing loans to total loans
 0.19%   0.22%
Allowance for loan losses to non-performing loans
 691.08%   641.24%
Allowance for loan losses to total loans
 1.32%   1.40%
       
Capital Ratios:(6)
      
Total capital (to risk-weighted assets)
 13.38%   13.49%
Tier 1 capital (to risk-weighted assets)
 12.13%   12.24%
Common equity tier 1 capital (to risk-weighted assets)
 12.13%   12.24%
Tier 1 capital (to average assets)
 7.56%   8.16%
       

Notes:
(1) Annualized for the three and six month periods ended June 30, 2021 and 2020, respectively.
(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. 
SELECTED OPERATING DATA 
(UNAUDITED)
 
(Dollar Amounts in thousands except per share data)
 
 Three Months Ended June 30,  Six Months Ended June 30,
 2021 2020  2021 2020
Interest income
15,658 12,928  30,420 25,571
Interest expense
 1,026  1,147   2,048  2,436
Net interest income
 14,632  11,781   28,372  23,135
Provision for loan losses
 809  1,310   875  2,510
Net interest income after provision for loan losses
 13,823  10,471   27,497  20,625
Noninterest income
 3,028  3,006   5,919  5,547
Noninterest expenses
 10,401  9,904   20,716  19,495
Income before income taxes
 6,450  3,573   12,700  6,677
Provision for income taxes
 1,257  695   2,482  1,323
Net income
5,193 2,878  10,218 5,354
             
Basic and diluted earnings per share
1.16 0.64  2.28 1.19
Weighted average common shares outstanding
 4,488,602  4,514,345   4,485,886  4,512,382
             
 At  At
 June 30, 2021  December 31, 2020
Book value per share
31.39  30.21
Net tangible book value per share (1)
29.79  28.57
Outstanding common shares
 4,488,437   4,483,102

Notes:
(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 $1,821, and $1,963 in other intangible assets for June 30, 2021 and December 31, 2020, respectively.

 
ORANGE COUNTY BANCORP, INC. 
LOAN COMPOSITION 
(UNAUDITED)
 
 (Dollar Amounts in thousands)
 
 At June 30, 2021  At December 31, 2020
 Amount  Percent  Amount  Percent
Commercial and industrial (a)
346,727   26.94%  299,049   25.94%
Commercial real estate
 781,074   60.69%   698,130   60.56%
Commercial real estate construction
 66,781   5.19%   63,544   5.51%
Residential real estate
 62,274   4.84%   57,941   5.03%
Home equity
 13,057   1.01%   13,960   1.21%
Consumer
 16,972   1.32%   20,114   1.74%
Total loans
 1,286,885   100.00%   1,152,738   100.00%
Allowance for loan losses
 17,049       16,172    
Total loans, net
1,269,836      1,136,566    
(a) - Includes PPP loans of:
108,711      68,974    
               
ORANGE COUNTY BANCORP, INC. 
DEPOSITS BY ACCOUNT TYPE 
(UNAUDITED)
  
(Dollar Amounts in thousands)

 
 At June 30, 2021  At December 31, 2020 

 
 Amount  Percent  Average Rate  Amount  Percent  Average Rate 
Noninterest-bearing demand accounts
 652,767   34.88%   0.00%  521,093   34.99%   0.00% 
Interest bearing demand accounts
  300,340   16.05%   0.11%   236,951   15.91%   0.15% 
Money market accounts
  642,177   34.31%   0.28%   483,044   32.43%   0.36% 
Savings accounts
  189,154   10.11%   0.11%   157,007   10.54%   0.12% 
Certificates of Deposit
  87,227   4.66%   0.60%   91,199   6.12%   0.75% 
Total
 1,871,665   100.00%   0.15%  1,489,294   100.00%   0.20% 
                         
ORANGE COUNTY BANCORP, INC. 
NON-PERFORMING ASSETS 
(UNAUDITED)
  
(Dollar Amounts in thousands)
 June 30, 2021  December 31, 2020
Non-accrual loans:      
Commercial and industrial
5  -
Commercial real estate
 1,345   1,345
Commercial real estate construction
 -   -
Residential real estate
 653   657
Home equity
 -   -
Consumer
 -   -
Total non-accrual loans 1
 2,003   2,002
Accruing loans 90 days or more past due:
      
Commercial and industrial
 337   457
Commercial real estate
 -   -
Commercial real estate construction
 -   -
Residential real estate
 1   2
Home equity
 -   -
Consumer
 126   61
Total loans 90 days or more past due
 464   520
Total non-performing loans
 2,467   2,522
Other real estate owned
 -   -
Other non-performing assets
 -   -
Total non-performing assets
2,467  2,522
       
Ratios:
      
Total non-performing loans to total loans
 0.19%  0.22
Total non-performing loans to total assets
 0.12%  0.15
Total non-performing assets to total assets
 0.12%  0.15
       
Notes:
      
1 - Includes non-accruing TDRs:
959  959
       

SOURCE: Orange County Bancorp, Inc.

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