Orange County Bancorp, Inc.

What they do

Through Orange Bank & Trust Company, a New York state-chartered trust company, the Company provides commercial and consumer banking, private banking and municipal banking to small businesses, middle-market enterprises, local governments and individuals, supported by 16 branches and one loan production office. Its trust department and Orange Investment Advisors, Inc. provide trust, estate and wealth management services, including a niche focus on Special Needs Trust and Guardianship. At December 31, 2025, assets, loans, deposits and stockholders' equity totaled $2.7 billion, $2.0 billion, $2.3 billion and $284.4 million, respectively.

Revenue drivers

• Net interest income — The largest contributor to net income, earned as the spread between interest and fees on loans and securities and the cost of deposits and borrowings; net interest margin was 4.44% for the quarter ended June 30, 2026.
• Commercial lending (non-owner occupied commercial real estate) — Loans totaled approximately $2.0 billion at June 30, 2026, with the largest segment being non-owner occupied commercial real estate, including multi-family, retail and general construction properties.
• Trust and wealth management — Noninterest income is primarily investment advisory income from OIA and trust income from the Bank's trust department, which combined had $1.9 billion in assets under management at December 31, 2025.
• Business and private banking deposits — Core deposits, including checking, savings, money market, certificates of deposit and municipal accounts, fund the balance sheet; deposits grew $120.8 million, or 5.2%, to $2.4 billion at June 30, 2026 versus June 30, 2025.

Recent performance

For the quarter ended June 30, 2026, net income rose $3.2 million, or 30.6%, to $13.7 million, or $1.02 per diluted share, from $10.5 million, or $0.87 per diluted share, in the prior-year quarter. Net interest margin increased 38 basis points to 4.44% from 4.06%, and total deposits grew to $2.4 billion. Results included a $5.3 million deferred tax valuation allowance reversal largely offset by a $4.8 million fair value adjustment on loans held-for-sale; excluding both, management estimated net income of approximately $12.6 million. For the six months ended June 30, 2026, net income was $24.9 million, or $1.87 per diluted share, compared with $19.2 million, or $1.64 per diluted share, a year earlier. Total loans, including held-for-sale, were approximately $2.0 billion, held back by $81.1 million of unanticipated payoffs in the first half of 2026.

Strategy

Management is focused on growing organically sourced, low-cost core deposits, which enabled the Company to nearly eliminate higher-cost broker-sourced deposits and borrowings; the average cost of deposits was 0.96% in the second quarter of 2026. The Company continues recruiting seasoned lenders with established relationships in newer markets such as Rockland and Westchester Counties, where it reports strong growth, while Orange County remains approximately 42% of deposits. Trust and wealth management remains a priority, supported by dedicated Special Needs Trust personnel. Management describes a robust new loan pipeline and expects loan growth to return to more normal levels after elevated payoffs.

Risks

• Geographic and credit concentration — Most business activity is with customers in Orange, Westchester, Bronx and Rockland Counties, New York, so credit risk is significantly affected by the economies of those counties.
• Commercial real estate concentration — The largest loan segment is non-owner occupied commercial real estate, including multi-family, retail and general construction loans, which exposes the Company to fluctuations in real estate values and commercial real estate market conditions.
• Interest rate and margin sensitivity — Management states that a downward yield curve at lower rates would be expected to have an adverse impact on net interest income, and deposit costs are largely driven by FRB actions and market competition.
• Loan growth volatility from payoffs — Unanticipated loan payoffs of $81.1 million in the first half of 2026 versus $28.5 million in the prior-year period held the total loan portfolio relatively flat at $2.0 billion.

Outlook

Management said the second quarter of 2026 was a record quarter, led by continued growth of the low-cost deposit base and strength in net interest margin. It expects the new loan pipeline to support a return to more normal loan growth after the elevated payoffs in the first half of 2026. Management describes its deposit cost advantage as a key competitive strength that will remain central to results. No specific numerical guidance was provided in the excerpts.