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

August 12, 2021

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
rpeacock@orangebanktrust.com
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 spread¹						2.96%						3.15%
Net interest margin²						3.09%						3.34%
Average interest earning assets to interest-bearing liabilities		158.6%						159.6%

Notes:
¹The 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 spread¹						3.04%						3.30%
Net interest margin²						3.18%						3.51%
Average interest earning assets to interest-bearing liabilities		158.4%						155.0%


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