SEC Filing | Orange County Bancorp, Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40711

Orange County Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Delaware	26-1135778
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

212 Dolson Avenue

Middletown, New York 10940

(Address of Principal Executive Offices)

(845) 341-5000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.50 per share	OBT	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2022, there were 5,642,621 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of Condition as of September 30, 2022 and December 31, 2021 (Unaudited)	3

	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income/(Loss) for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49

Item 4.	Controls and Procedures	49

Part II	Other Information

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	50

Item 4.	Mine Safety Disclosures	50

Item 5.	Other Information	50

Item 6.	Exhibits	50

Exhibit Index		50

Signatures		51

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(UNAUDITED)

(Dollar amounts in thousands except per share data)


	September 30, 2022		December 31, 2021
ASSETS
Cash and due from banks	$	180,249	$	306,179
Investment securities – available-for-sale		547,272		464,797
Restricted investment in bank stocks		3,382		2,217
Loans		1,547,704		1,291,428
Allowance for loan losses		(22,888)		(17,661)
Loans, net		1,524,816		1,273,767
Premises and equipment, net		14,596		14,601
Accrued interest receivable		5,554		6,643
Bank owned life insurance		40,222		39,513
Goodwill		5,359		5,359
Intangible assets		1,464		1,678
Other assets		45,456		27,829
TOTAL ASSETS	$	2,368,370	$	2,142,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest bearing	$	788,106	$	701,645
Interest bearing		1,399,447		1,212,739
Total deposits		2,187,553		1,914,384
Note payable		3,000		3,000
Subordinated notes, net of issuance costs		19,431		19,376
Accrued expenses and other liabilities		22,196		22,987
TOTAL LIABILITIES		2,232,180		1,959,747
STOCKHOLDERS’ EQUITY
Common stock, $0.50 par value; 15,000,000 shares authorized; 5,683,304 issued; 5,642,121 and 5,637,376 outstanding, at September 30, 2022 and December 31, 2021, respectively		2,842		2,842
Surplus		120,068		119,825
Retained Earnings		76,860		64,941
Accumulated other comprehensive income (loss), net of taxes		(62,315)		(3,443)
Treasury stock, at cost; 41,183 and 45,928 shares at September 30, 2022 and December 31, 2021, respectively		(1,265)		(1,329)
TOTAL STOCKHOLDERS’ EQUITY		136,190		182,836
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,368,370	$	2,142,583

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollar amounts in thousands except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
INTEREST INCOME
Interest and fees on loans	$	18,113	$	15,104	$	48,319	$	42,364
Interest on investment securities:
Taxable		2,848		1,213		6,735		3,497
Tax exempt		621		417		1,655		1,189
Interest on Federal funds sold and other		1,259		126		1,886		230
TOTAL INTEREST INCOME		22,841		16,860		58,595		47,280
INTEREST EXPENSE
Savings and NOW accounts		1,099		591		2,320		1,801
Time deposits		55		117		194		412
Note payable		42		42		126		126
Subordinated notes		230		230		692		689
TOTAL INTEREST EXPENSE		1,426		980		3,332		3,028
NET INTEREST INCOME		21,415		15,880		55,263		44,252
Provision for loan losses		2,084		1,008		8,517		1,883

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		19,331		14,872		46,746		42,369
NONINTEREST INCOME
Service charges on deposit accounts		182		166		511		499
Trust income		1,176		1,230		3,569		3,537
Investment advisory income		1,085		1,176		3,385		3,588
Earnings on bank owned life insurance		240		209		709		554
Other		250		247		741		770
TOTAL NONINTEREST INCOME		2,933		3,028		8,915		8,948
NONINTEREST EXPENSE
Salaries		5,863		4,970		16,631		14,243
Employee benefits		1,483		958		4,258		2,960
Occupancy expense		1,063		1,024		3,391		2,956
Professional fees		766		880		2,885		2,810
Directors’ fees and expenses		249		251		754		745
Computer software expense		1,276		1,120		3,629		3,209
FDIC assessment		384		333		1,006		889
Advertising expenses		372		297		1,127		865
Advisor expenses related to trust income		28		134		186		395
Telephone expenses		192		150		505		420
Intangible amortization		71		71		214		214
Other		808		785		2,322		2,050
TOTAL NONINTEREST EXPENSE		12,555		10,973		36,908		31,756
Income before income taxes		9,709		6,927		18,753		19,561
Provision for income taxes		1,856		1,351		3,460		3,767
NET INCOME	$	7,853	$	5,576	$	15,293	$	15,794

Basic and diluted earnings per share	$	1.40	$	1.06	$	2.72	$	3.33
Weighted average shares outstanding		5,623,172		5,249,876		5,619,897		4,743,348

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(UNAUDITED)

(Dollar amounts in thousands except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income	$	7,853	$	5,576	$	15,293	$	15,794
Other comprehensive income/(loss):
Unrealized gains/losses on securities:
Unrealized holding gains/(losses) arising during the period		(21,201)		(134)		(75,262)		(3,856)
Tax effect		(4,452)		(28)		(15,805)		(810)
Net of tax		(16,749)		(106)		(59,457)		(3,046)
Defined benefit pension plans:
Net gain arising during the period		240		6		720		20
Reclassification adjustment for amortization of prior service cost and net gains included in net periodic pension cost		(7)		—		(21)		—
Tax effect		49		1		147		4
Net of tax		198		5		594		16
Deferred compensation liability:
Unrealized loss		(4)		(4)		(11)		(12)
Tax effect		(1)		(1)		(2)		(3)
Net of tax		(3)		(3)		(9)		(9)
Total other comprehensive income/(loss)		(16,554)		(104)		(58,872)		(3,039)
Total comprehensive income/(loss)	$	(8,701)	$	5,472	$	(43,579)	$	12,755

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(Dollar amounts in thousands except per share data)


							Accumulated Other
	Common				Retained		Comprehensive		Treasury
	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance, July 1, 2022	$	2,842	$	119,946	$	70,131	$	(45,761)	$	(1,435)	$	145,723
Net income		—		—		7,853		—		—		7,853
Other comprehensive loss, net of taxes		—		—		—		(16,554)		—		(16,554)
Cash dividends declared ($0.20 per share)		—		—		(1,124)		—		—		(1,124)
Treasury stock purchased (3,035 shares)		—		—		—		—		(119)		(119)
Restricted stock expense		—		33		—		—		—		33
Stock-based compensation (9,637 shares)		—		89		—		—		289		378
Balance, September 30, 2022	$	2,842	$	120,068	$	76,860	$	(62,315)	$	(1,265)	$	136,190

Balance, January 1, 2022	$	2,842	$	119,825	$	64,941	$	(3,443)	$	(1,329)	$	182,836
Net income		—		—		15,293		—		—		15,293
Other comprehensive loss, net of taxes		—		—		—		(58,872)		—		(58,872)
Cash dividends declared ($0.60 per share)		—		—		(3,374)		—		—		(3,374)
Treasury stock purchased (7,652 shares)		—		—		—		—		(308)		(308)
Restricted stock expense		—		133		—		—		—		133
Stock-based compensation (12,397 shares)		—		110		—		—		372		482
Balance, September 30, 2022	$	2,842	$	120,068	$	76,860	$	(62,315)	$	(1,265)	$	136,190


							Accumulated Other
	Common				Retained		Comprehensive		Treasury
	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance, July 1, 2021	$	2,266	$	84,936	$	56,118	$	(1,116)	$	(1,293)	$	140,911
Net income		—		—		5,576		—		—		5,576
Other comprehensive loss, net of taxes		—		—		—		(104)		—		(104)
Cash dividends declared ($0.20 per share)		—		—		(1,124)		—		—		(1,124)
Treasury stock purchased (1,061 shares)		—		—		—		—		(36)		(36)
Restricted stock expense		—		128		—		—		—		128
Issuance of stock offering, net of costs (1,150,000 shares)		576		34,676		—		—		—		35,252
Balance, September 30, 2021	$	2,842	$	119,740	$	60,570	$	(1,220)	$	(1,329)	$	180,603

Balance, January 1, 2021	$	2,266	$	85,111	$	47,683	$	1,819	$	(1,456)	$	135,423
Net income		—		—		15,794		—		—		15,794
Other comprehensive loss, net of taxes		—		—		—		(3,039)		—		(3,039)
Cash dividends declared ($0.60 per share)		—		—		(2,907)		—		—		(2,907)
Issue of restricted stock (15,162 shares)		—		(436)		—		—		436		—
Treasury stock purchased (13,292 shares)		—		—		—		—		(379)		(379)
Restricted stock expense		—		390		—		—		—		390
Stock-based compensation (2,404 shares)		—		(1)		—		—		70		69
Issuance of stock offering, net of costs (1,150,000 shares)		576		34,676								35,252
Balance, September 30, 2021	$	2,842	$	119,740	$	60,570	$	(1,220)	$	(1,329)	$	180,603

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollar amounts in thousands except per share data)


	Nine Months Ended
	September 30,
	2022		2021
Cash flows from operating activities
Net income	$	15,293	$	15,794
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		8,517		1,883
Depreciation		1,150		1,002
Accretion on loans		(2,298)		(4,321)
Amortization of intangibles		214		214
Amortization of subordinated notes issuance costs		55		52
Restricted stock expense		133		390
Stock-based compensation		482		69
Net amortization of investment premiums		1,339		1,583
Earnings on bank owned life insurance		(709)		(554)
Net change in:
Accrued interest receivable		1,089		(618)
Other assets		(1,230)		(3,379)
Other liabilities		(799)		2,438
Net cash from operating activities		23,236		14,553
Cash flows from investing activities
Purchases of investment securities available-for-sale		(210,589)		(193,490)
Proceeds from sales and paydowns of investment securities available-for-sale		46,360		68,051
Proceeds from maturities and calls of investment securities available-for-sale		5,154		28,013
(Purchase) proceeds of restricted investment in bank stocks		(1,189)		(783)
Proceeds from redemptions of restricted investment in bank stocks		24		15
Loans purchased		—		(8,232)
Net increase in loans		(257,268)		(122,301)
Additions to premises and equipment		(1,145)		(1,367)
Purchase of bank owned life insurance		—		(10,200)
Net cash used by investing activities		(418,653)		(240,294)
Cash flows from financing activities
Net increase in deposits		273,169		462,614
Repayments of note payable		—		—
Issuance of subordinated notes, net of issuance costs		—		—
Proceeds of issuance of stock offering , net of costs		—		35,252
Cash dividends paid		(3,374)		(2,907)
Purchases of treasury stock		(308)		(379)
Net cash from financing activities		269,487		494,580
Net change in cash and cash equivalents		(125,930)		268,839
Beginning cash and cash equivalents		306,179		121,232
Ending cash and cash equivalents	$	180,249	$	390,071
Supplemental cash flow information: