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What changed in Orange County Bancorp, Inc. /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Orange County Bancorp, Inc. /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+335 added−336 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-29)

Top changes in Orange County Bancorp, Inc. /DE/'s 2024 10-K

335 paragraphs added · 336 removed · 305 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

106 edited+5 added−9 removed184 unchanged
Biggest changeFor example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one-to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans or are on non-accrual status and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
Biggest changeFor example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one-to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans or are on non-accrual status and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors. 19 Table of Contents In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
The summary is not intended to be exhaustive and is qualified in its entirety by reference to the actual laws and regulations. ​ Bank Regulation Loans and Investments State commercial banks and trust companies have authority to originate and purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans.
The summary is not intended to be exhaustive and is qualified in its entirety by reference to the actual laws and regulations. ​ Bank Regulation Loans and Investments State commercial banks and trust companies have the authority to originate and purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans.
Specifically, the CRE Guidance provides that a bank has a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by multi-family properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for construction, land development, and other 18 Table of Contents land represent 300% or more of total risk-based capital and the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
Specifically, the CRE Guidance provides that a bank has a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by multi-family properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for construction, land development, and other land represent 300% or more of total risk-based capital and the bank’s commercial real estate loan portfolio has 18 Table of Contents increased 50% or more during the prior 36 months.
On October 24, 2023, the FRB and the other the federal bank regulatory agencies issued a final rule to strengthen and modernize the federal CRA regulations.
On October 24, 2023, the FRB and the other federal bank regulatory agencies issued a final rule to strengthen and modernize the federal CRA regulations.
Investment Advisory Regulations We offer wealth management services through HVIA, a wholly owned subsidiary of the Company. HVIA is a registered investment advisor under the Investment Advisors Act of 1940, as amended, and as such, is supervised by the SEC. HVIA is also subject to various other federal laws and state licensing and/or registration requirements.
Investment Advisory Regulations We offer wealth management and investment advisory services through HVIA, a wholly owned subsidiary of the Company. HVIA is a registered investment advisor under the Investment Advisors Act of 1940, as amended, and as such, is supervised by the SEC. HVIA is also subject to various other federal laws and state licensing and/or registration requirements.
Orange County, located 60 miles from New York City, is an attractive and stable market. Our over 130-year-operating history in the region provides us a strong foundation for growth and low- cost deposit funding. Economic activity in the region stems from local business activity and increasing support services to the New York metropolitan area.
Orange County, located 60 miles from New York City, is an attractive and stable market. Our over 130 year-operating history in the region provides a strong foundation for growth and low- cost deposit funding. Economic activity in the region stems from local business activity and increasing support services to the New York metropolitan area.
Most business lines of credit are written on demand and may be renewed annually. When making commercial and industrial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, and the value of the collateral, accounts receivable, inventory and equipment.
Most business lines of credit are written on demand and may be renewed annually. When making commercial and industrial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, and the value of the collateral, including accounts receivable, inventory and equipment.
We also purchase whole loans from other lenders. Beginning in 2018, we have purchased commercial and industrial loans made to medical professionals throughout the U.S. such as to doctors, dentists, accountants, and attorneys secured by a blanket lien on their business assets from a national provider of such loans.
We also may purchase whole loans from other lenders. Beginning in 2018, we have purchased commercial and industrial loans made to medical professionals throughout the U.S. such as to doctors, dentists, accountants, and attorneys secured by a blanket lien on their business assets from a national provider of such loans.
Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, such as: • The Truth-In-Lending Act, and Regulation Z promulgated thereunder, governing disclosures of credit terms to consumer borrowers; • The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; • The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; • Unfair or Deceptive Acts or Practices laws and regulations; • The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, such as: • The Truth-In-Lending Act, and Regulation Z promulgated thereunder, governing disclosures of credit terms to consumer borrowers; • The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; 24 Table of Contents • The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; • The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; • Unfair or Deceptive Acts or Practices laws and regulations; • The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
We believe that there may be significant cross-selling opportunities with our high-net-worth and business clients through this new platform. ​ Our History Born of the vision of 14 founders, the Bank opened for business in May 1892 as Orange County Trust and Safe Deposit Company.
We believe that there may be significant cross-selling opportunities with our high-net-worth and business clients through this platform. Our History Born of the vision of 14 founders, the Bank opened for business in May 1892 as Orange County Trust and Safe Deposit Company.
We generally require a debt service coverage ratio of at least 1.20x. All commercial real estate loans of $500,000 or more are appraised by outside independent appraisers. Personal guarantees are generally obtained from the principals of commercial real estate loans. All commercial real estate loans of more than $500,000 must have an environmental assessment completed.
We generally require a debt service coverage ratio of at least 1.20x. All commercial real estate loans of $500,000 or more are appraised by independent appraisers. Personal guarantees are generally obtained from the principals of commercial real estate loans. All commercial real estate loans of more than $500,000 must have an environmental assessment completed.
We originate commercial and industrial loans, consisting of short-term loans, lines of credit and term loans to businesses located in our primary lending market. These loans are used for various business purposes including the finance of machinery and equipment purchases, inventory and accounts receivable as well as real estate purchases.
We originate commercial and industrial loans, consisting mainly of short-term loans, lines of credit and term loans to businesses located in our primary lending market. These loans are used for various business purposes including the finance of machinery and equipment purchases, inventory and accounts receivable as well as real estate purchases.
Our typical commercial real estate loan has a three, five or seven-year fixed rate term which then adjusts at a margin above the FHLB of New York fixed rate advance index for the remainder of the term with a balloon payment due usually at the end of ten years.
Our typical commercial real estate loan has a three, five or seven-year fixed rate term which then adjusts to a margin above the FHLB of New York fixed rate advance index for the remainder of the term with a balloon payment due usually at the end of ten years.
We view all of our recent openings and locations as natural and logical extensions for the Bank and consistent with our geographic footprint. Our operating markets have demographic, economic and competitive dynamics that we believe are favorable to continued execution of our strategic plan: Orange County.
We view all of our recent and expected openings and locations as natural and logical extensions for the Bank and consistent with our geographic footprint. Our operating markets have demographic, economic and competitive dynamics that we believe are favorable to continued execution of our strategic plan: Orange County.
These lenders typically have long standing relationships with businesses in our local community, such as real estate developers and owners, enabling them to serve as trusted advisors across financial transactions and products.
These lenders typically have long-standing relationships with businesses in our local community and markets, such as real estate developers and owners, enabling them to serve as trusted advisors across financial transactions and products.
Consumer loans may entail greater credit risk than do residential real estate loans particularly in the case of consumer loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment.
Consumer loans may entail greater credit risk than residential real estate loans particularly in the case of consumer loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment.
State member banks deemed by the FRB to be “critically undercapitalized” also may not make any payment of principal or interest on certain subordinated debt, extend credit for a highly leveraged transaction, or enter into any material transactions outside the ordinary course of business after 60 days of obtaining such status, and are subject to the appointment of a receiver or conservator within 270 days after obtaining such status. ​ Dividends Under federal and state law and applicable regulations, a state member bank may generally declare a dividend, without approval from the NYSDFS or FRB, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for dividend.
State member banks deemed by the FRB to be “critically undercapitalized” also may not make any payment of principal or interest on certain subordinated debt, extend credit for a highly leveraged transaction, or enter into any material transactions outside the 20 Table of Contents ordinary course of business after 60 days of obtaining such status, and are subject to the appointment of a receiver or conservator within 270 days after obtaining such status. ​ Dividends Under federal and state law and applicable regulations, a state member bank may generally declare a dividend, without approval from the NYSDFS or FRB, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for dividend.
Among other things, Title III of the USA PATRIOT Act and the related regulations require: • Establishment of anti-money laundering compliance programs that includes policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; • Filing of certain reports to Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; • Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; 23 Table of Contents • In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and other suspicious activity; • Monitoring account activity for suspicious transactions; and • A heightened level of review for certain high-risk customers or accounts.
Among other things, Title III of the USA PATRIOT Act and the related regulations require: • Establishment of anti-money laundering compliance programs that includes policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; • Filing of certain reports to Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; • Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; • In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and other suspicious activity; • Monitoring account activity for suspicious transactions; and • A heightened level of review for certain high-risk customers or accounts.
Consequently, bank holding companies such as the Company with less than $3.0 billion of consolidated assets are not subject to the consolidated holding company capital requirements unless otherwise directed by the FRB. ​ Source of Strength The FRB has issued regulations requiring that all bank holding companies serve as a source of strength to their subsidiary depository institutions by providing financial, managerial and other support in times of an institution’s distress.
Consequently, bank holding companies such as the Company with less than $3.0 billion of consolidated assets are not subject to the consolidated holding company capital requirements unless otherwise directed by the FRB. ​ Source of Strength The FRB has issued regulations requiring that all bank holding companies serve as a source of strength to their subsidiary depository institutions by providing financial, managerial and other support in times of a banking institution’s distress.
In November 2021, the federal bank regulatory agencies issued a final rule requiring banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that rises to the level of a “notification incident,” as those terms are defined in the final rule, has occurred.
The federal bank regulatory agencies issued a final rule requiring banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that rises to the level of a “notification incident,” as those terms are defined in the final rule, has occurred.
We generally do not sell loans and did not sell any loans during the years ended December 31, 2023 or 2022. ​ 13 Table of Contents Credit Risk Management We control credit risk both through disciplined underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a transaction.
We generally do not sell loans and did not sell any loans during the years ended December 31, 2024 or 2023. ​ 13 Table of Contents Credit Risk Management We control credit risk both through disciplined underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a transaction.
We also offer a variety of deposit accounts to businesses and consumers, including checking accounts and a full line of municipal banking accounts. These activities, together with our 15 branch offices and one loan production office, generate a stable source of low-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.
We also offer a variety of deposit accounts to businesses and consumers, including checking accounts and a full line of municipal banking accounts. These activities, together with our 16 branch offices and one loan production office, generate a stable source of low-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.
Competition The banking business is highly competitive and we face strong competition from many other financial institutions. Our principal competitors are commercial and community banks, credit unions, savings and loan associations, mortgage banking firms and online mortgage lenders and consumer finance companies, including large national financial institutions that operate in our market.
Competition The banking business remains highly competitive and we face strong competition from many other financial institutions. Our principal competitors are commercial and community banks, credit unions, savings and loan associations, mortgage banking firms and online mortgage lenders and consumer finance companies, including large national financial institutions that operate in our market.
We offer a full suite of financial products, including checking, savings and money market accounts, certificates of deposit and treasury management services. The Company continues to successfully recruit seasoned lenders with expertise and proven track records in its historic and expanded operating markets.
We offer a full suite of financial products, including checking, savings and money market accounts, certificates of deposit and treasury management services. The Company continues to successfully recruit seasoned lenders with expertise and proven track records in its historical and expanded operating markets.
The strength of our deposit franchise is derived from our long-standing relationships with our clients and the strong ties we have to the markets we serve. Our deposit footprint has provided, and we believe will continue to provide, primary support for the growth of our loan portfolio.
The strength of our deposit franchise is derived from our long-standing relationships with our clients and the strong ties within the markets we serve. Our deposit footprint has provided, and we believe will continue to provide, primary support for the growth of our loan portfolio.
At December 31, 2023, we had a portfolio of investment securities available for sale which is reported at fair value through accumulated other comprehensive loss. 15 Table of Contents Deposit Funding Deposits are our primary source of funds to support our interest earning assets and growth. As of December 31, 2023, we held approximately $2.0 billion of total deposits.
At December 31, 2024, we had a portfolio of investment securities available for sale which is reported at fair value through accumulated other comprehensive loss. 15 Table of Contents Deposit Funding Deposits are our primary source of funds to support our interest earning assets and growth. As of December 31, 2024, we held approximately $2.2 billion of total deposits.
The Bank is required to pay an annual assessment to the NYSDFS and FRB to fund the agencies’ operations. ​ 22 Table of Contents Community Reinvestment Act and Fair Lending Laws Federal Regulation Under the CRA, the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.
The Bank is required to pay an annual assessment to the NYSDFS and FRB to fund the agencies’ operations. ​ Community Reinvestment Act and Fair Lending Laws Federal Regulation Under the CRA, the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.
Aggregate loans by a bank to its insiders and insiders’ related interests may not exceed 15% of the bank’s unimpaired capital and unimpaired surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral, or when the aggregate amount on all of the extensions of credit outstanding to all of these persons would exceed the bank’s unimpaired capital and unimpaired surplus.
Aggregate loans by a bank to its insiders and insiders’ related interests may not exceed 15% of the bank’s unimpaired capital and unimpaired surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral, or when the aggregate amount on all 21 Table of Contents of the extensions of credit outstanding to all of these persons would exceed the bank’s unimpaired capital and unimpaired surplus.
Under the prompt corrective action requirements, insured depository institutions are required to meet the following in order to qualify as “well capitalized:” (1) a common equity Tier 1 risk-based capital ratio of 6.5%; (2) a Tier 1 risk- 20 Table of Contents based capital ratio of 8%; (3) a total risk-based capital ratio of 10% and (4) a Tier 1 leverage ratio of 5%.
Under the prompt corrective action requirements, insured depository institutions are required to meet the following in order to qualify as “well capitalized:” (1) a common equity Tier 1 risk-based capital ratio of 6.5%; (2) a Tier 1 risk-based capital ratio of 8%; (3) a total risk-based capital ratio of 10% and (4) a Tier 1 leverage ratio of 5%.
Common equity Tier 1 capital consists primarily of common stockholders’ equity and related surplus, plus retained earnings, less any amounts of goodwill, other intangible assets, and other items required to be deducted. Tier 1 capital consists primarily of common equity Tier 1 and Additional Tier 1 capital.
Common equity Tier 1 capital consists primarily of common stockholders’ equity and related surplus, plus retained earnings, less certain amounts of goodwill, other intangible assets, and other items required to be deducted. Tier 1 capital consists primarily of common equity Tier 1 and Additional Tier 1 capital.
We expect this growth to continue as the Bank continues to incorporate the tools our clients need to operate more efficiently and profitably. We also believe our strong commercial and public sector relationships will supplement our retail deposit base, further enhancing deposit growth and, ultimately, continued growth of our loan portfolio.
We expect this growth to continue as the Bank continues to enhance our technology resources and to incorporate the tools our clients need to operate more efficiently and profitably. We also believe our strong commercial and public sector relationships will supplement our retail deposit base, further enhancing deposit growth and, ultimately, continued growth of our loan portfolio.
The Bank was classified as well capitalized at December 31, 2023. ​ State member banks that have insufficient capital are subject to certain mandatory and discretionary supervisory measures.
The Bank was classified as well capitalized at December 31, 2024. ​ State member banks that have insufficient capital are subject to certain mandatory and discretionary supervisory measures.
The Bank has adopted policies and procedures to comply with these requirements. Privacy and Cybersecurity Laws The Bank is subject to a variety of federal and state privacy laws, which govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have in place policies regarding information privacy and security.
The Bank has adopted policies and procedures to comply with these requirements. Privacy and Cybersecurity Laws 23 Table of Contents The Bank is subject to a variety of federal and state privacy laws, which govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have in place policies regarding information privacy and security.
We strive to identify potential problem loans early in an effort to aggressively seek resolution of these situations before the loans create a loss, record any necessary charge- offs promptly and maintain adequate allowance levels for probable loan losses incurred in the loan portfolio.
We strive to identify potential problem loans early in an effort to aggressively seek resolution of these situations before the loans create a loss, record any necessary charge- offs promptly and maintain adequate allowance levels for lifetime loan losses in the loan portfolio.
We focus on small to medium sized businesses (characterized as businesses with annual revenues of less than $50 million), attorneys and other professionals, and provide a broad range of banking services to businesses, high net worth individuals, business owners and retail customers.
We remain focused on small to medium sized businesses (characterized as businesses with annual revenues of less than $50 million), attorneys and other professionals, and provide a broad range of banking services to businesses, high net worth individuals, business owners and retail customers.
A key element of our strategy to enhance funding sources is our cash management services, which has helped our team expand the depth and efficiency of our product offerings, and is expected to contribute to profitability, account growth, and customer retention going forward.
A key component of our strategy to enhance funding sources is our cash management services, which has helped our team expand the depth and efficiency of our product offerings, and is expected to contribute to profitability, customer account growth, and relationship retention going forward.
In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. Loan Purchases, Participations and Sales .
In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and as a result, are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. Loan Purchases, Participations and Sales .
Certain covered transactions, such as loans to or guarantees on behalf of an affiliate, must be secured by collateral in amounts ranging from 100 to 130 percent of the loan amount, depending 21 Table of Contents upon the type of collateral.
Certain covered transactions, such as loans to or guarantees on behalf of an affiliate, must be secured by collateral in amounts ranging from 100 to 130 percent of the loan amount, depending upon the type of collateral.
With a median household income of $47,036 estimated as of July 1, 2023, the Bronx remains home to a significant number of health care & social assistance businesses and non-profit organizations. A persistent need for housing in the region generates constant growth through demand for construction lending and refinancing activity.
With a median household income of $49,036 estimated as of July 1, 2024, the Bronx remains home to a significant number of health care & social assistance businesses and non-profit organizations. A persistent need for housing in the region generates constant growth through demand for construction lending and refinancing activity.
Our current investment policy authorizes us to invest in debt securities issued by the U.S. government and its agencies or government sponsored enterprises. In addition, management is authorized to invest in investment grade state and municipal obligations.
Our current investment policy authorizes us to invest in debt securities issued by the U.S. government and its agencies or government sponsored enterprises. In addition, management is authorized to invest in investment-grade investments with underlying state and municipal obligations.
At December 31, 2023, we had $1.6 billion of assets under management in a fiduciary, custodial or agency capacity for customers. These assets are not assets of Orange Bank & Trust Company or HVIA and therefore are not included in the consolidated balance sheets included in the Annual Report on Form 10-K.
At December 31, 2024, we had $1.8 billion of assets under management in a fiduciary, custodial or agency capacity for customers. These assets are not assets of Orange Bank & Trust Company or HVIA and therefore are not included in the consolidated balance sheets included in the Annual Report on Form 10-K.
The regulatory structure gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
The 17 Table of Contents regulatory structure gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
Acquisition of Control of the Company Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as the Company unless the FRB has prior written notice and has not issued a notice disapproving the proposed acquisition.
Acquisition of Control of the Company Under the Change in Bank Control Act, no person or group of persons may acquire control of a bank holding company such as the Company unless the FRB has prior written notice and has not issued a notice disapproving the proposed acquisition.
The Company continues to enjoy particularly strong growth in its newer markets of Rockland and Westchester Counties, which offer significant growth potential as a function of market size and demographics, while Orange County continues to represent approximately 43% of the Bank’s deposits as of December 31, 2023. Private Banking .
The Company continues to enjoy particularly strong growth in its newer markets of Rockland and Westchester Counties, which offer significant growth potential as a function of market size and demographics, while Orange County continues to represent approximately 40% of the Bank’s deposits as of December 31, 2024. Private Banking .
Personnel As of December 31, 2023, we had 197 full-time equivalent employees at Orange County Bancorp, Orange Bank & Trust Company and HVIA, none of whom are represented by a collective bargaining unit. We believe we have a good working relationship with our employees.
Personnel As of December 31, 2024, we had 225 full-time equivalent employees at Orange County Bancorp, Orange Bank & Trust Company and HVIA, none of whom are represented by a collective bargaining unit. We believe we have a good working relationship with our employees.
The Bank did not elect into the CBLR framework and at December 31, 2023, the Bank’s capital exceeded all applicable requirements.
The Bank did not elect into the CBLR framework and at December 31, 2024, the Bank’s capital exceeded all applicable requirements.
The Bank’s capital conservation buffer was greater than 2.5% of risk-weighted assets at December 31, 2023.
The Bank’s capital conservation buffer was greater than 2.5% of risk-weighted assets at December 31, 2024.
The regulatory structure establishes a comprehensive framework of activities in which a 17 Table of Contents state member bank may engage and is primarily intended for the protection of depositors, customers and the DIF.
The regulatory structure establishes a comprehensive framework of activities in which a state member bank may engage and is primarily intended for the protection of depositors, customers and the DIF.
To qualify for this additional 10% the Bank must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the 15% general limit. At December 31, 2023, our regulatory limit on loans-to-one borrower was approximately $35.9 million. Ongoing Credit Risk Management.
To qualify for this additional 10% the Bank must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the 15% general limit. At December 31, 2024, our regulatory limit on loans-to-one borrower was approximately $43.0 million. Ongoing Credit Risk Management.
In this regard, 24 Table of Contents the CFPB has several rules that implement various provisions of the Dodd-Frank Act that were specifically identified as being enforced by the CFPB.
In this regard, the CFPB has several rules that implement various provisions of the Dodd-Frank Act that were specifically identified as being enforced by the CFPB.
That vision continues to drive the Company today, as we serve customers in Orange, Rockland, and Westchester Counties and the Bronx through a network of 15 branches, one loan production office and approximately 200 employees.
That vision continues to drive the Company today, as we serve customers in Orange, Rockland, and Westchester Counties and the Bronx through a network of 16 branches, one loan production office and approximately 225 employees.
During the year ended December 31, 2023, we modified the arrangement and, effectively, replaced the Partial Guaranteed Loans with Direct Purchase Loans. During the years ended December 31, 2022, we did not purchase any Partial Guaranteed Loans.
During the year ended December 31, 2024, we modified the arrangement and, effectively, replaced the Partial Guaranteed Loans with Direct Purchase Loans. During the year ended December 31, 2023, we did not purchase any Partial Guaranteed Loans.
The Bronx market is densely populated with 1,356,476 residents estimated as of July 1, 2023 and has maintained a diversified economy typical of most urban population centers. The majority of employment provided is by services, wholesale/retail trade and finance/ insurance/real estate with services accounting for the largest employment sector in the county.
The Bronx market is densely populated with 1,384,724 residents estimated as of July 1, 2024 and has maintained a diversified economy typical of most urban population centers. The majority of employment provided is by services, wholesale/retail trade and finance/ insurance/real estate with services accounting for the largest employment sector in the county.
As we have successfully done with our banking business, we intend to continue expansion of HVIA’s services into Westchester and Rockland Counties. Additionally, our newest service, private banking, continued to grow in 2023 and now supports approximately 625 clients (an increase from 440 clients in 2022) to fully leverage the resources and capabilities of our platform.
As we have successfully done with our banking business, we intend to continue the expansion of HVIA’s services into Westchester and Rockland Counties. Additionally, private banking, continued to grow in 2024 and now supports approximately 759 clients (an increase from 625 clients in 2023) to fully leverage the resources and capabilities of our platform.
Our Business Strategy Our goal is to build the premier business bank in the Lower Hudson Valley, primarily through organic growth of our client base.
Our Business Strategy Our goal is to continue building the premier business bank in the Lower Hudson Valley, primarily through organic growth of our client base.
Our profitability depends in large part based upon our continued ability to successfully compete with these institutions for lending opportunities, deposit funds, financial products, bankers and potential acquisition targets. We conduct business through 15 banking offices and one loan production office in Orange, Westchester, Rockland and Bronx Counties in New York.
Our profitability depends in large part based upon our continued ability to successfully compete with these institutions for low-cost funding sources, primarily deposit funds, lending opportunities, financial products, bankers and potential acquisition targets. We conduct business through 16 banking offices and one loan production office in Orange, Westchester, Rockland and Bronx Counties in New York.
In May 2018, we joined a community bank lending network operated by BancAlliance which provides the opportunity to participate in commercial and industrial loans and lines of credit that are broadly syndicated to member banks and outside institutions. As of December 31, 2023, the outstanding balances of loans sourced through this program totaled $24.8 million, across six distinct borrower relationships.
In May 2018, we joined a community bank lending network operated by BancAlliance which provides the opportunity to participate in commercial and industrial loans and lines of credit that are broadly syndicated to member banks and outside institutions. As of December 31, 2024, the outstanding balances of loans sourced through this program totaled $11.9 million, across three distinct borrower relationships.
HVIA is in the process of expanding its product capabilities and expanding third party product distribution. We recently launched the Orange Wealth Management initiative, which combines services offered by HVIA, our private bank and trust department in a coordinated strategy for growth.
HVIA is in the process of expanding its product capabilities and expanding third party product distribution. In recent years, we have grown the Orange Wealth Management initiative, which combines services offered by HVIA, our private bank and trust department in a coordinated strategy for growth.
Deposits from municipalities totaled $270.1 million, or 13.3%, of our total deposits at December 31, 2023. Continue to Build Fee-Based Business. We have built a strong foundation of fee-based revenue through our trust services and wealth management businesses.
Deposits from municipalities totaled $281.8 million, or 13.1%, of our total deposits at December 31, 2024. Continue to Build Fee-Based Business. We have built a strong foundation of fee-based revenue through our trust services and wealth management businesses.
HVIA and Orange Bank & Trust Company’s trust department collectively had 42 full-time equivalent employees as of December 31, 2023 and revenue of $10.3 million or approximately 8.8% of our total revenues in 2023. Investments Our board of directors is responsible for approving and overseeing our investment policy.
HVIA and Orange Bank & Trust Company’s trust department collectively had 40 full-time equivalent employees as of December 31, 2024 and revenue of $12.3 million or approximately 8.6% of our total revenues in 2024. Investments Our board of directors is responsible for approving and overseeing our investment policy.
Like our core banking business, our trust and advisory services have also achieved significant recent milestones, with combined assets under management (AUM) in the two groups aggregating $1.6 billion at December 31, 2023, in spite of difficult market conditions.
Like our core banking business, our trust and advisory services have also achieved significant recent milestones, with combined assets under management (AUM) in the two groups aggregating $1.8 billion at December 31, 2024, in spite of very competitive market conditions.
As of December 31, 2023, we had $1.3 billion in total commercial real estate loans, representing approximately 72.1% of total loans. We originate loans to finance commercial real estate, primarily secured by commercial retail space, multifamily properties, office buildings and warehouses in our primary lending market.
As of December 31, 2024, we had $1.4 billion in total commercial real estate loans, representing approximately 75.0% of total loans. We originate loans to finance commercial real estate, primarily secured by commercial retail space, multifamily properties, office buildings and warehouses in our primary lending market.
Commercial real estate construction loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions and uncertainties of construction costs. Residential Real Estate Lending . As of December 31, 2023, we had $78.3 million in total residential real estate loans, representing 4.5% of total loans.
Commercial real estate construction loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions and uncertainties of construction costs. Residential Real Estate Lending . As of December 31, 2024, we had $75.0 million in total residential real estate loans, representing 4.1% of total loans.
As of December 31, 2023, we had $13.5 million in total home equity loans, representing less than 1% of total loans. We originate home equity lines of credit and closed-end loans. These loans are generally secured by properties located in, or made to customers who reside in, our primary market area.
As of December 31, 2024, we had $17.4 million in total home equity loans, representing less than 1% of total loans. We originate home equity lines of credit and closed-end loans. These loans are generally secured by properties located in, or provided to customers who reside in, our primary market area.
As of December 31, 2023, we had $36.6 million in consumer loans, representing 2.1% of total loans. We offer a variety of secured and unsecured consumer loans, including vehicle loans, loans secured by savings deposits as well as other types of consumer loans.
As of December 31, 2024, we had $38.0 million in consumer loans, representing 2.1% of total loans. We offer a variety of secured and unsecured consumer loans, including vehicle loans, loans secured by savings deposits as well as other types of consumer loans.
Core deposits (deposits excluding time deposits) comprise 89.1% of our total funding, with a low cost of 1.26% at and for the year ended December 31, 2023.
Core deposits (deposits excluding time deposits) comprise 89.7% of our total funding, with a low cost of 1.04% at and for the year ended December 31, 2024.
We have invested in personnel, business and compliance processes and technology that enable us to acquire, and efficiently and effectively serve, a wide array of business deposit accounts, while continuing to provide the level of customer service for which we are known.
We have invested in personnel, business and compliance processes and technology that enable us to acquire and service, in an efficient and effective manner, a wide array of business deposit accounts, while continuing to provide the level of customer service for which we are known.
Orange County Bancorp, Inc. is a reporting company subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. 27 Table of Contents Emerging Growth Company Status The Jumpstart Our Business Startups Act (the “JOBS Act”), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets.
Orange County Bancorp, Inc. is a reporting company subject to certain information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. Emerging Growth Company Status The Jumpstart Our Business Startups Act (the “JOBS Act”), has made numerous changes to the federal securities laws to facilitate access to capital markets.
In November 2023, the NYSDFS amended its cybersecurity regulations to include heightened governance requirements and an expansion of the breadth and depth of required policies and procedures, among other things.
The Bank is subject to ongoing compliance and reporting requirements of the NYSDFS. In November 2023, the NYSDFS amended its cybersecurity regulations to include heightened governance requirements and an expansion of the breadth and depth of required policies and procedures, among other things.
As of December 31, 2023, we had $495.6 million of available borrowing capacity with the FHLB. On that date, we had $234.5 million in advances outstanding from the FHLB. The other borrowing lines are maintained primarily for contingency funding sources and had no amounts outstanding at December 31, 2023.
As of December 31, 2024, we had $512.2 million of available borrowing capacity with the FHLB. On that date, we had $123.5 million in advances outstanding from the FHLB. The other borrowing lines are maintained primarily for contingency funding sources and had no amounts outstanding at December 31, 2024.
Changes in economic conditions that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Commercial and Industrial Lending. As of December 31, 2023, we had $273.6 million in commercial and industrial loans (including PPP loans), representing 15.7% of total loans.
Changes in economic conditions that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Commercial and Industrial Lending. As of December 31, 2024, we had $242.4 million in commercial and industrial loans (including PPP loans), representing 13.4% of total loans.
Terms of construction loans depend on the specifics of the project such as the estimated time for completion, the planned construction costs and the prospective appraised value of those projects. At December 31, 2023, we have made commitments of $244.4 million of which $85.7 million has been drawn by our commercial real estate construction borrowers.
Terms of construction loans depend on the specifics of the project such as the estimated time for completion, the planned construction costs and the prospective appraised value of those projects. At December 31, 2024, we have made commitments of $165.1 million of which $101.9 million has been drawn by our commercial real estate construction borrowers.
With a population estimated as of July 1, 2023 at 407,370 and a median household income of $91,806 as of the same date, the local economy is distinct and remains somewhat insulated from economic activity in New York City and Westchester County, and includes a growing number of service, warehousing, and logistical businesses.
With a population estimated as of July 1, 2024 at 411,767 and a median household income of $96,497 as of the same date, the local economy is distinct and remains somewhat insulated from economic activity in New York City and Westchester County, and includes a growing number of service, warehousing, and logistical businesses.
We intend to continue to take advantage of recent economic disruption in our operating markets, which we believe has created an environment of underbanked customers.
We intend to continue to take advantage of market disruption in our operating territories, which we believe has created an environment of underbanked customers.
Additionally, by continuing to broaden our suite of business services, from sophisticated cash management to enhanced commercial lending, loans and deposits grew to $1.7 billion and $2.0 billion at year end 2023, up 11.3% and 3.3%, respectively, over year end 2022.
Additionally, by continuing to broaden our suite of business services, from sophisticated cash management to enhanced commercial lending, loans and deposits grew to $1.8 billion and $2.2 billion at year end 2024, up 3.9% and 5.6%, respectively, over year end 2023.
At December 31, 2023, 10.9% of our commercial real estate loans were for owner-occupied properties. At December 31, 2023, we had $269.8 million in loans secured by multifamily properties. At December 31, 2023, the following represents a summary of commercial real estate loans by the four largest New York counties within our geographic market areas.
At December 31, 2024, 13.7% of our commercial real estate loans were for owner-occupied properties. At December 31, 2024, we had $370.6 million in loans secured by multifamily properties. At December 31, 2024, the following represents a summary of commercial real estate loans by the four largest New York counties within our geographic market areas.
As of December 31, 2023, the Company’s assets, loans, deposits and stockholders’ equity totaled $2.5 billion, $1.7 billion, $2.0 billion and $165.4 million, respectively. Orange Bank & Trust Company’s trust department and HVIA had a combined $1.6 billion in assets under management at December 31, 2023.
As of December 31, 2024, the Company’s assets, loans, deposits and stockholders’ equity totaled $2.5 billion, $1.8 billion, $2.2 billion and $185.5 million, respectively. Orange Bank & Trust Company’s trust department and HVIA had a combined $1.8 billion in assets under management at December 31, 2024.
As of December 31, 2023, we had $85.7 million in commercial real estate construction loans, representing 4.9% of total loans. We engage in commercial real estate construction lending, primarily for projects located within our primary lending market.
As of December 31, 2024, we had $81.0 million in commercial real estate construction loans, representing 4.5% of total loans. We engage in commercial real estate construction lending, primarily for projects located within our primary lending market.
At December 31, 2023, our core deposits (which includes all deposits except for certificates of deposit) totaled $1.8 billion, or 89.1% of our total deposits, and our cost of funds on this stable funding source was 1.26% anchored by our noninterest bearing demand deposits which represented 34.3% of total deposits at December 31, 2023.
At December 31, 2024, our core deposits (which includes all deposits except for certificates of deposit) totaled $1.9 billion, or 89.7% of our total deposits, and our cost of funds on this stable funding source was 1.04% anchored by our noninterest bearing demand deposits which represented 30.2% of total deposits at December 31, 2024.
We also consider the business the borrower is in and the economic conditions affecting that business. 11 Table of Contents Commercial and industrial loans generally have a greater credit risk than one- to four-family mortgage loans.
We also evaluate the borrower’s business and industry as well as the economic conditions affecting that business. 11 Table of Contents Commercial and industrial loans generally have a greater credit risk than one- to four-family mortgage loans.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAt December 31, 2023, commercial real estate loan participations, including construction, for which we were not the lead lender totaled $112.2 million, or 10.2% of our commercial real estate loan portfolio, including commercial real estate construction, and commercial and industrial loan participations for which we were not the lead lender totaled $1.5 million, or 0.57% of our commercial and industrial loan portfolio. 31 Table of Contents We underwrite each commercial real estate loan and commercial and industrial loan that we participate in and establish the loan classification and loan provision using the same criteria we use for loans we originate.
Biggest changeAt December 31, 2024, commercial real estate loan participations, including construction, 31 Table of Contents for which we were not the lead lender totaled $91.3 million, or 6.7% of our commercial real estate loan portfolio, including commercial and industrial loan participations for which we were not the lead lender totaled $2.0 million, or 0.83% of our commercial and industrial loan portfolio.
This could require increasing our allowance for credit losses to address the decrease in the value of the real estate securing our loans, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Inflation can have an adverse impact on our business and on our customers.
This could require increasing our allowance for credit losses to address the decrease in the value of real estate securing our loans, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Inflation can have an adverse impact on our business and on our customers.
Accordingly, we could suffer losses if we fail to properly anticipate and manage these risks. Risks Related to Competitive Matters 37 Table of Contents We may be unable to successfully compete with others for business. The area in which we operate is a highly competitive banking market.
Accordingly, we could suffer losses if we fail to properly anticipate and manage these risks. ​ 37 Table of Contents Risks Related to Competitive Matters We may be unable to successfully compete with others for business. The area in which we operate is a highly competitive banking market.
These factors include, among other things: • general economic conditions and overall market fluctuations; • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in accounting standards, policies, guidance, interpretations or principles; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • changes in financial estimates and recommendations by securities analysts following our stock; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; 41 Table of Contents • the trading volume of our common stock; • new technology used, or services offered, by competitors; and • changes in business, legal or regulatory conditions, or other developments affecting the financial services industry, participants in our industry, and publicity regarding our business or any of our significant customers or competitors.
These factors include, among other things: • general economic conditions and overall market fluctuations; • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in accounting standards, policies, guidance, interpretations or principles; 41 Table of Contents • the public reaction to our press releases, our other public announcements and our filings with the SEC; • changes in financial estimates and recommendations by securities analysts following our stock; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • the trading volume of our common stock; • new technology used, or services offered, by competitors; and • changes in business, legal or regulatory conditions, or other developments affecting the financial services industry, participants in our industry, and publicity regarding our business or any of our significant customers or competitors.
These provisions, and the corporate and banking laws and regulations applicable to us: • enable our board of directors to increase the size of the board and fill the vacancies created by the increase; • provide for the division of the board of directors into three staggered classes so that it would require replacing more than one class of directors to gain control of the board of directors; • provide that directors may only be removed for cause and by a majority of the votes entitled to be cast; • enable our board of directors to amend our Bylaws without shareholder approval, subject, however, to the general right of shareholders to change such action in accordance with pertinent sections of the Bylaws and Delaware General Corporation Law; • require advance notice and certain ownership requirements for director nominations; • require advance notice for shareholder proposals; • require the request of record holders of at least 25% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting; 43 Table of Contents • require a supermajority vote of the shareholders to approve a merger with a person owning 10% or more of the Company’s common stock, unless such merger is approved by a supermajority of unaffiliated members of the board of directors; and • require prior regulatory application and approval of any transaction involving control of our organization.
These provisions, and the corporate and banking laws and regulations applicable to us: • enable our board of directors to increase the size of the board and fill the vacancies created by the increase; • provide for the division of the board of directors into three staggered classes so that it would require replacing more than one class of directors to gain control of the board of directors; • provide that directors may only be removed for cause and by a majority of the votes entitled to be cast; 43 Table of Contents • enable our board of directors to amend our Bylaws without shareholder approval, subject, however, to the general right of shareholders to change such action in accordance with pertinent sections of the Bylaws and Delaware General Corporation Law; • require advance notice and certain ownership requirements for director nominations; • require advance notice for shareholder proposals; • require the request of record holders of at least 25% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting; • require a supermajority vote of the shareholders to approve a merger with a person owning 10% or more of the Company’s common stock, unless such merger is approved by a supermajority of unaffiliated members of the board of directors; and • require prior regulatory application and approval of any transaction involving control of our organization.
If the FRB, our primary federal regulator, were to impose restrictions on the amount of such loans we can hold in our portfolio or require us to implement additional compliance measures, for reasons noted above or otherwise, our earnings would be adversely affected as would our earnings per share.
If the FRB, our primary federal regulator, were to impose restrictions on the amount of loans we can hold in our portfolio or require us to implement additional compliance measures, for reasons noted above or otherwise, our earnings would be adversely affected as would our earnings per share.
As a result, we are exposed to risks associated with lack of geographic diversification. The occurrence of an economic downturn in these areas, or adverse changes in laws or regulations in New York could impact the credit quality of our assets, the businesses of our customers and ability to expand our business.
As a result, we are exposed to risks associated with lack of geographic diversification. The occurrence of an economic downturn in these areas, or adverse changes in laws or regulations in New York could affect the credit quality of our assets, the businesses of our customers and ability to expand our business.
Reduced liquidity may arise due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects third parties or us. Our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated reductions in our liquidity.
Reduced liquidity may arise due to circumstances that we may be unable to control, such as market disruption or an operational problem that affects third parties or us. Our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated reductions in our liquidity.
We primarily serve individuals, businesses and municipalities located in the New York City metropolitan area and in Orange, Westchester and Rockland Counties, New York. As of December 31, 2023, most of our loan portfolio was secured by real estate and other assets located in these areas in New York.
We primarily serve individuals, businesses and municipalities located in the New York City metropolitan area and in Orange, Westchester and Rockland Counties, New York. As of December 31, 2024, most of our loan portfolio was secured by real estate and other assets located in these areas in New York.
The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances. Risks Related to Operations and Security We face significant operational risks because the nature of the financial services business involves a high volume of transactions.
The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances. ​ ​ ​ 35 Table of Contents Risks Related to Operations and Security We face significant operational risks because the nature of the financial services business involves a high volume of transactions.
In addition, in a falling rate environment or the recent pandemic-related environment where the Federal Reserve held the federal reference rate near 0.00%, loans may be prepaid sooner than we expect, which could result in a delay between when we receive the prepayment and when we are able to redeploy the funds into new interest-earning assets and in a decrease in the amount of interest income we are able to earn on those assets.
In addition, in a falling rate environment or the previous pandemic-related environment where the FRB held the federal reference rate near 0.00%, loans may be prepaid sooner than we expect, which could result in a delay between when we receive the prepayment and when we are able to redeploy the funds into new interest-earning assets and in a decrease in the amount of interest income we are able to earn on those assets.
We cannot predict how changes in technology will impact our business; increased use of technology may expose us to service interruptions or breaches in security.
We cannot predict how changes in technology will affect our business; increased use of technology may expose us to service interruptions or breaches in security.
If our underwriting of these purchased loans is not sufficient, our non-performing loans may increase and our earnings may decrease. Risks Related to Wealth Management Involvement in wealth management creates risks associated with the industry. At December 31, 2023, we had approximately $1.6 billion in assets under management.
If our underwriting of these purchased loans is not sufficient, our non-performing loans may increase and our earnings may decrease. Risks Related to Wealth Management Involvement in wealth management creates risks associated with the industry. At December 31, 2024, we had approximately $1.8 billion in assets under management.
Our directors and executive officers, as a group, beneficially owned approximately 10.9% of our outstanding shares of common stock as of December 31, 2023. To our knowledge, although there is no written agreement between members of the Morrison family to act in concert, relatives of director William D. Morrison and William D.
Our directors and executive officers, as a group, beneficially owned approximately 9.14% of our outstanding shares of common stock as of December 31, 2024. To our knowledge, although there is no written agreement between members of the Morrison family to act in concert, relatives of director William D. Morrison and William D.
Risks Related to Deposits We accept deposits that do not have a fixed term and which may be withdrawn by the customer at any time for any reason. At December 31, 2023, we had $1.8 billion of deposit liabilities that have no maturity and, therefore, may be withdrawn by the depositor at any time.
Risks Related to Deposits We accept deposits that do not have a fixed term and which may be withdrawn by the customer at any time for any reason. At December 31, 2024, we had $1.9 billion of deposit liabilities that have no maturity and, therefore, may be withdrawn by the depositor at any time.
The impact on our customers will likely vary depending on their 40 Table of Contents specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors.
The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of governmental and regulatory agencies, particularly the Federal Reserve.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of governmental and regulatory agencies, particularly the FRB.
Other Risks Related to Our Business Liquidity is essential to our businesses. Liquidity is essential to our business as we must be able to meet the cash needs of borrowers and depositors. Our liquidity could be impaired by an inability to access the capital markets or unforeseen outflows of cash.
Liquidity is essential to our business as we must be able to meet the cash needs of borrowers and depositors. Our liquidity could be impaired by an inability to access the capital markets or unforeseen outflows of cash.
Municipal deposits are a significant source of funds for our lending and investment activities. At December 31, 2023, $270.1 million, or 13.3% of our total deposits, consisted of municipal deposits from local government entities such as county, village and town governments, school districts, fire departments and other municipalities, which are collateralized by investment securities.
Municipal deposits are a significant source of funds for our lending and investment activities. At December 31, 2024, $281.8 million, or 13.1% of our total deposits, consisted of municipal deposits from local government entities such as county, village and town governments, school districts, fire departments and other municipalities, which are collateralized by investment securities.
Commercial real estate loans represent 417% of our risk-based capital at December 31, 2023 and the outstanding balance of our commercial real estate loan portfolio has increased by 102% during the 36 months preceding December 31, 2023. In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
Commercial real estate loans represent 422% of our risk-based capital at December 31, 2024 and the outstanding balance of our commercial real estate loan portfolio has increased by 76% during the 36 months preceding December 31, 2024. In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
In addition, our emphasis on loan growth and on increasing our portfolios of commercial real estate and commercial and industrial loans, as well as any future credit deterioration, could require us to increase our allowance for credit losses in the future. At December 31, 2023, our allowance for credit losses was 1.44% of total loans and 568.8% of nonperforming loans.
In addition, our emphasis on loan growth and on increasing our portfolios of commercial real estate and commercial and industrial loans, as well as any future credit deterioration, could require us to increase our allowance for credit losses in the future. At December 31, 2024, our allowance for credit losses was 1.44% of total loans and 414.0% of nonperforming loans.
As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses.
With instability in the rate environment, the value of our investment securities, particularly those with longer maturities, could decrease, although this effect can be less pronounced for floating rate instruments. In addition, potential inflation increases the cost of goods and services in our business operations, such as electricity and other utilities, which increases our noninterest expenses.
We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. At December 31, 2023, approximately $1.4 billion, or 77.0%, of our total loan portfolio was secured by commercial real estate, almost all of which is located in our primary lending market.
We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. At December 31, 2024, approximately $1.4 billion, or 79.5%, of our total loan portfolio was secured by commercial real estate, including construction, almost all of which is located in our primary lending market.
Significant adverse changes in the economy or local market conditions in which our commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets, resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our business, financial condition and results of operations. 30 Table of Contents If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
Significant adverse changes in the economy or 30 Table of Contents local market conditions in which our commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets, resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our business, financial condition and results of operations.
We consider most of the proceedings to be in the normal course of our business or typical for the industry; however, it is inherently difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation.
We have been and may in the future become involved in legal and regulatory proceedings. We consider most of the proceedings to be in the normal course of our business or typical for the industry; however, it is inherently difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation.
The application of such stringent capital requirements could, among other things, result in lower returns on equity, requiring the raising of additional capital, and resulting in regulatory actions constraining us from paying dividends or repurchasing shares if we are unable to comply with such requirements. 38 Table of Contents Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
The application of such stringent capital requirements could, among other things, result in lower returns on equity, requiring the raising of additional capital, and resulting in 38 Table of Contents regulatory actions constraining us from paying dividends or repurchasing shares if we are unable to comply with such requirements.
At December 31, 2023, our purchased commercial and industrial loans totaled $53.5 million, or 3.1% of our loan portfolio and 19.6% of our commercial and industrial loan portfolio, none of which were delinquent 60 days or more. During the year ended December 31, 2023, we did not purchase any loans from the partially guaranteed consumer loan program.
At December 31, 2024, our purchased commercial and industrial loans totaled $48.6 million, or 2.7% of our loan portfolio and 20.1% of our commercial and industrial loan portfolio, none of which were delinquent 60 days or more. During the year ended December 31, 2024, we did not purchase any loans from the partially guaranteed consumer loan program.
These deposit liabilities include our checking, savings, and money market deposit accounts. Market conditions may impact the competitive landscape for deposits in the banking industry. The rising interest rate environment and future actions the FRB may take may impact pricing and demand for deposits in the banking industry.
These deposit liabilities include our checking, savings, and money market deposit accounts. Market conditions may affect the competitive landscape for deposits in the banking industry. The volatility of the interest rate environment and future decisions by the FRB may impact pricing and demand for deposits in the banking industry.
A large portion of our loan portfolio is comprised of commercial and industrial loans secured by receivables, inventory, equipment or other commercial collateral, the deterioration in value of which could increase the potential for future losses.
A large portion of our loan portfolio is comprised of commercial and industrial loans secured by receivables, inventory, equipment or other commercial collateral, the deterioration in value of which could increase the potential for future losses. At December 31, 2024, $242.4 million, or 13.4% of our total loan portfolio, consisted of commercial and industrial loans.
Such changes could also affect (i) demand for our products and services and price competition, in turn affecting our ability to originate loans and obtain deposits; (ii) the fair value of our financial assets and liabilities; (iii) the average duration of our mortgage-backed securities portfolio and other interest-earning assets; (iv) levels of defaults on loans; and (v) loan prepayments. 34 Table of Contents During 2023, in response to accelerated inflation, the Federal Reserve continued to implement monetary tightening policies, resulting in increased interest rates.
Such changes could also affect (i) demand for our products and services and price competition, in turn affecting our ability to originate loans and obtain deposits; (ii) the fair value of our financial assets and liabilities; (iii) the average duration of our mortgage-backed securities portfolio and other interest-earning assets; (iv) levels of defaults on loans; and (v) loan prepayments. 34 Table of Contents During 2024, the FRB reduced interest rates in response to economic indicators.
At December 31, 2023, our non-performing assets, which consist of non-performing loans and other real estate owned, were $4.4 million, or 0.18% of total assets.
At December 31, 2024, our non-performing assets, which consist of non-performing loans and other real estate owned, were $6.3 million, or 0.25% of total assets.
Cash available to pay dividends to our stockholders is derived primarily, if not entirely, from dividends paid by Orange Bank & Trust Company to us.
Our principal business operations are conducted through our subsidiary, Orange Bank & Trust Company. Cash available to pay dividends to our stockholders is derived primarily, if not entirely, from dividends paid by Orange Bank & Trust Company to us.
Morrison beneficially owned collectively approximately 24.5% of our outstanding shares of common stock as of December 31, 2023. William D. Morrison beneficially owned approximately 1.0% of our outstanding shares of common stock as of December 31, 2023.
Morrison beneficially owned collectively approximately 25.6% of our outstanding shares of common stock as of December 31, 2024. William D. Morrison beneficially owned approximately 1.0% of our outstanding shares of common stock as of December 31, 2024.
Consumers and businesses also may change their behavior on their own as a result of these concerns. We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. During 2023, inflation in the United States remained elevated.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. During 2024, inflation in the United States experienced a slight decrease as compared to 2023.
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, regulatory restrictions, and other factors that our board of directors may deem relevant. 42 Table of Contents Our principal business operations are conducted through our subsidiary, Orange Bank & Trust Company.
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, regulatory restrictions, and other factors that our board of directors may deem relevant.
At December 31, 2023, no loan participations were delinquent 60 days or more. If our underwriting of these participation loans is not sufficient, our non-performing loans may increase, and our earnings may decrease.
At December 31, 2024, we had one loan participation which was delinquent 60 days or more. If our underwriting of these participation loans is not sufficient, our non-performing loans may increase, and our earnings may decrease.
Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.
Earnings could also be adversely affected if the interest rates received on loans and other investments drop at a faster pace than the interest rates paid on deposits and other borrowings.
Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside our company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control systems and compliance requirements. 35 Table of Contents Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.
Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or individuals outside our company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control systems and compliance requirements.
Our commercial real estate loans expose us to greater risk of nonpayment and loss than one- to four-family family residential mortgage loans because repayment of the loans often depends on the successful operation and income stream of the borrowers.
At December 31, 2024, our commercial real estate loans totaled $1.4 billion, or 79.5%, of our total loan portfolio. Our commercial real estate loans expose us to greater risk of nonpayment and loss than one- to four-family family residential mortgage loans because repayment of the loans often depends on the successful operation and income stream of the borrowers.
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses could have a negative impact on their ability to repay their loans with us. 29 Table of Contents Risks Related to Lending Activities Our emphasis on commercial real estate loans involves risks that could adversely affect our financial condition and results of operations.
Furthermore, 29 Table of Contents our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses could have a negative impact on their ability to repay their loans with us.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: • Telecommunications; • Data processing; • Automation; • Internet-based banking, including personal computers, mobile phones and tablets; • Debit cards and so-called “smart cards”; • Remote deposit capture; • Artificial Intelligence; • Cryptocurrency; and • Use of Blockchain.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: • Telecommunications; • Data processing; • Automation; • Internet-based banking, including personal computers, mobile phones and tablets; • Debit cards and so-called “smart cards”; • Remote deposit capture; • Artificial Intelligence; • Cryptocurrency; and • Use of Blockchain. ​ Our ability to compete successfully in the future will depend, to a certain extent, on whether we can anticipate and respond to technological changes.
We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans.
If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans.
In addition, increased use of electronic banking creates opportunities for interruptions in service or security breaches, which could expose us to claims by clients or other third parties and damage our reputation.
The successful operation and further development of these and other new technologies will likely require additional capital investment in the future. In addition, increased use of electronic banking creates opportunities for interruptions in service or security breaches, which could expose us to claims by clients or other third parties and damage our reputation.
The collateral securing such loans may decline in value more rapidly than we anticipate, or may be difficult to market, sell or appraise, exposing us to increased credit risk.
Further, the repayment of commercial and industrial loans is dependent upon the degree of success of the borrower’s underlying business. The collateral securing such loans may decline in value more rapidly than we anticipate, or may be difficult to market, sell or appraise, exposing us to increased credit risk.
Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.
Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect all potential environmental hazards.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other federal and state fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Consumer Financial Protection Bureau (“CFPB”), the United States Department of Justice, the NYSDFS and other federal agencies are responsible for enforcing these laws and regulations.
The Consumer Financial Protection Bureau (“CFPB”), the United States Department of Justice, the NYSDFS and other federal agencies are responsible for enforcing these laws and regulations.
In such events, our cost of funds may increase, thereby reducing our net interest income, or we may need to sell a portion of our investment and/or loan portfolio, which, depending upon market conditions, could result in us realizing a loss. 39 Table of Contents Public health emergencies, like the COVID-19 outbreak, may have an adverse impact on our business and results of operations.
In such events, our cost of funds may increase, thereby reducing our net interest income, or we may need to sell a portion of our investment and/or loan portfolio, which, depending upon market conditions, could result in us realizing a loss. Legal and regulatory proceedings and related matters could adversely affect us.
The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations. We are subject to the Community Reinvestment Act (“CRA”) and fair lending laws, and failure to comply with these laws could lead to material penalties.
Failure to comply with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations.
The Federal Reserve has signaled that interest rates may remain elevated. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected.
The FRB has indicated a cautious approach in 2025 in order to control inflation. Rate cuts are anticipated but not certain. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected.
If, as a result, some investors find our common stock less attractive, there may be a less active trading market for our common stock, which could result in a reductions and greater volatility in the prices of our common stock.
If, as a result, some investors find our common stock less attractive, there may be a less active trading market for our common stock, which could result in a reduction and greater volatility in the price of our common stock. ​ 42 Table of Contents Our dividend policy may change without notice and any payment of dividends in the future is subject to the discretion of our Board of Directors.
These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a per loan basis. Further, the repayment of commercial and industrial loans is dependent upon the degree of success of the borrower’s underlying business.
Our commercial and industrial loans are collateralized by general business assets, including accounts receivable, inventory and equipment and generally backed by a personal guaranty of the borrower or principal. These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a per loan basis.
The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network.
If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts.
Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers. Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns.
Our ability to compete successfully in the future will depend, to a certain extent, on whether we can anticipate and respond to technological changes. We offer electronic banking services for our consumer and business clients via our website, www.orangebanktrust.com, including Internet banking and electronic bill payment, as well as mobile banking by phone.
We offer electronic banking services for our consumer and business clients via our website, www.orangebanktrust.com, including Internet banking and electronic bill payment, as well as mobile banking by phone. We also offer check cards, ATM cards, credit cards, and automatic and ACH transfers.
Although we have paid a cash dividend for at least 39 consecutive years, we have no obligation to continue paying dividends.
The holders of our common stock will receive cash dividends if and when declared by our board of directors out of legally available funds. Although we have paid a cash dividend for at least 40 consecutive years, we have no obligation to continue paying dividends.
Our loan portfolio includes commercial real estate loans, primarily loans secured by commercial retail space, office buildings and multifamily properties. At December 31, 2023, our commercial real estate loans totaled $1.3 billion, or 72.1%, of our total loan portfolio.
Risks Related to Lending Activities Our emphasis on commercial real estate loans involves risks that could adversely affect our financial condition and results of operations. Our loan portfolio includes commercial real estate loans, primarily loans secured by commercial retail space, office buildings and multifamily properties.
As a result, the FRB has continued to increase the federal funds rate by an additional 100 basis points in 2023 and has indicated its intention to maintain the increased interest rates in an effort to combat inflation.
Accordingly, the FRB lowered the federal funds rate by half of a percentage point in September 2024, the first cut since 2020, followed by a quarter point in November 2024 and then again in December 2024. The FRB has indicated its intention to maintain its effort to combat inflation.
Removed
At December 31, 2023, $274.6 million, or 15.7% of our total loan portfolio, consisted of commercial and industrial loans (including $215 thousand of PPP loans). Our commercial and industrial loans are collateralized by general business assets, including accounts receivable, inventory and equipment and generally backed by a personal guaranty of the borrower or principal.
Added
We underwrite each commercial real estate loan and commercial and industrial loan that we participate in and establish the loan classification and loan provision using the same criteria we use for loans we originate.
Removed
Declines in market value may result in other-than-temporary impairments of these assets, which may lead to accounting charges that could have a material adverse effect on our net income and stockholders’ equity.
Added
The Company also evaluates the need to establish and maintain an allowance for credit losses on investment securities. The allowance for credit losses is increased through a provision for credit losses charged to operations.
Removed
These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches.
Added
Like loans, investment security credit losses are charged against their respective allowance for credit losses when management believes that the collectibility of all or a portion of the principal is unlikely.
Removed
The COVID-19 pandemic caused significant economic dislocation in the United States. Certain industries were particularly hard-hit, including the travel and hospitality industry, the restaurant industry, the retail industry, the healthcare industry, restaurants and food services, and entertainment and recreation.
Added
While management uses available information to determine potential credit losses on investment securities, future additions to the allowance may be required based on changes in economic conditions, regulatory requirements, or other information. These charges could have a material adverse effect on our net income and stockholders’ equity.
Removed
As a result of a public health emergency, including the COVID-19 pandemic, and the related adverse local and national consequences, and as a result of governmental, consumer and business responses to any outbreak, we may be subject to the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, or results of operations: demand for our products and services may decline; if consumer and business activities are restricted, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could increase loan losses; our allowance for credit losses may have to be increased if borrowers experience financial difficulties; a material decrease in net income or a net loss over several quarters could affect our ability to pay cash dividends; cyber security risks may be increased as the result of an increase in the number of employees working remotely; critical services provided by third-party vendors may become unavailable; government actions and vaccine mandates in response to a pandemic may affect our workforce, human capital resources and infrastructure; and the Company may experience staffing shortages and unanticipated unavailability or loss of key employees, harming our ability to execute our business strategy.
Added
Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.
Removed
Any one or a combination of the foregoing factors could negatively impact our business, financial condition, results of operations and prospects. Legal and regulatory proceedings and related matters could adversely affect us. We have been and may in the future become involved in legal and regulatory proceedings.
Added
Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions. The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities.
Removed
We also offer check cards, ATM cards, credit cards, and automatic and ACH transfers. The successful operation and further development of these and other new technologies will likely require additional capital investments in the future.
Added
We are subject to the Community Reinvestment Act (“CRA”) and fair lending laws, and failure to comply with these laws could lead to material penalties. The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other federal and state fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
Removed
Our dividend policy may change without notice and any payment of dividends in the future is subject to the discretion of our Board of Directors. The holders of our common stock will receive cash dividends if and when declared by our board of directors out of legally available funds.
Added
Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. The policies of the FRB impact us significantly. The FRB regulates the supply of money and credit in the United States.
Added
Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold. Those policies determine to a significant extent our cost of funds for lending and investing.
Added
Changes in those policies are beyond our control and are difficult to predict. 39 Table of Contents FRB policies can also affect our borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of the money supply by the FRB could reduce the demand for a borrower’s products and services.
Added
This could adversely affect the borrower’s earnings and ability to repay its loan, which could have a material adverse effect on our financial condition and results of operations.
Added
The monetary policies of the FRB may be affected by certain policy initiatives of the new administration, which has announced tariffs on certain U.S. trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S. trading partners may be announced in the future) and has implemented stricter immigration policies.
Added
Although forecasts have varied, many economists are projecting that such policy initiatives may halt productivity growth and reduce available labor, creating inflationary pressures. Under such a scenario, the FRB may decide to maintain the federal funds rate at a relatively elevated level for a prolonged period of time.
Added
The extent and timing of the new administration’s policy changes and their impact on the policies of the FRB, as well as our business and financial results, are uncertain at this time. Other Risks Related to Our Business Liquidity is essential to our businesses.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCyber-attacks or other security breaches could adversely affect our operations, net income, or reputation. Cybersecurity risk is initially overseen by bank management through a Cybersecurity Management Committee (“CMC”). The CMC is responsible for the coordination, oversight, and development of the bank-wide cyber security policies, standards, guidelines, and procedures.
Biggest changeCyber-attacks or other security breaches could adversely affect our operations, net income, or reputation. Cybersecurity risk is initially overseen by bank management through a Cybersecurity Management Committee (“ CMC ”). The CMC is responsible for the coordination, oversight, and development of the bank-wide cyber security policies, standards, guidelines, and procedures.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We operate from our main office and 15 branch offices. We own our main office in Middletown, New York, and five branch offices located at North Street in Middletown, at Trust Way in Middletown, in Chester, in Newburgh and in Montgomery, New York.
Biggest changeItem 2. Properties We operate from our main office and 15 branch offices. We own our main office in Middletown, New York, and four branch offices which are located at Trust Way in Middletown as well as in Chester, in Newburgh and in Montgomery, New York.
We lease nine branch offices located in Goshen, Cortlandt Manor, White Plains, Mamaroneck, New City, Mt. Pleasant, Mount Vernon, Bronx, and Nanuet, and New York. The branches are leased under agreements that may be renewed for varying periods. In addition, HVIA operates from leased offices located in Goshen, New York.
We lease eleven branch offices located in Middletown, Goshen, Cortlandt Manor, White Plains, Mamaroneck, New City, Mt. Pleasant, Mount Vernon, Bronx, Nanuet, and Yonkers, New York. The branches are leased under agreements that may be renewed for various periods. In addition, HVIA operates from leased offices located in Goshen, New York.
At December 31, 2023, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $16.2 million. ​
At December 31, 2024, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $15.8 million. ​ ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we are a party to various litigation matters incidental to the conduct of our business. As of December 31, 2023, we do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition or results of operations. ​ Item 4.
Biggest changeItem 3. Legal Proceedings From time to time, we are a party to various litigation matters incidental to the conduct of our business. As of December 31, 2024, we do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition or results of operations.
Mine Safety Disclosures Not applicable. ​ 46 Table of Contents PART II
Mine Safety Disclosures Not applicable. ​ 47 Table of Contents PART II
Added
On October 25, 2024, the Bank filed a civil complaint in the United States District Court for the District of New Jersey against the lead lender, Valley National Bank, of the non-performing commercial real estate loan participation. This action cites breach of contract and other claims related to the participation agreement with the lead lender.
Added
The lawsuit requests damages and demands repurchase by the lead lender of the participated loan amount in accordance with the rights available under the terms of the participation agreement. As of December 31, 2024, the Bank remains as plaintiff in this litigation. ​ 46 Table of Contents Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of Orange County Bancorp, Inc. has been listed on The Nasdaq Capital Market under the symbol “OBT” since August 5, 2021. At March 20, 2024, Orange County Bancorp, Inc. had approximately 209 stockholders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of Orange County Bancorp, Inc. has been listed on The Nasdaq Capital Market under the symbol “OBT” since August 5, 2021. At March 10, 2025, Orange County Bancorp, Inc. had approximately 204 stockholders of record.
Any future determination to pay cash dividends on our common stock will be made by our board of directors and will depend on a number of factors, including: • our historical and projected financial condition, liquidity and results of operations; • our capital levels and requirements; • statutory and regulatory prohibitions and other limitations; • any contractual restriction on our ability to pay cash dividends, including pursuant to the terms of any of our credit agreements or other borrowing arrangements; • our business strategy; • tax considerations; • any acquisitions or potential acquisitions that we may examine; • general economic conditions; and • other factors deemed relevant by our board of directors.
Any future determination to pay cash dividends on our common stock will be made by our board of directors and will depend on a number of factors, including: • our historical and projected financial condition, liquidity and results of operations; • our capital levels and regulatory requirements; • statutory and regulatory prohibitions and other limitations; • any contractual restriction on our ability to pay cash dividends, including pursuant to the terms of any of our credit agreements or other borrowing arrangements; • our business strategy; • tax considerations; • any acquisitions or potential acquisitions that we may assess; • general economic conditions; and • other factors deemed relevant by our board of directors.
See “Item 1 Business — Supervision and Regulation — Bank Regulation — Dividends.” To pay a cash dividend, a state member bank must also maintain an adequate capital conservation buffer under the capital rules described in “Item 1 Business — Supervision and Regulation — Bank Regulation — Capitalization.” There were no sales of unregistered securities or repurchases of shares of common stock during the quarter ended December 31, 2023. ​ Item 6.
See “Item 1 Business — Supervision and Regulation — Bank Regulation — Dividends.” To pay a cash dividend, a state member bank must also maintain an adequate capital conservation buffer under the capital rules described in “Item 1 Business — Supervision and Regulation — Bank Regulation — Capitalization.” There were no sales of unregistered securities or repurchases of shares of common stock during the quarter ended December 31, 2024. ​ Item 6.
In addition, as a 47 Table of Contents depository institution the deposits of which are insured by the FDIC, Orange Bank & Trust Company may not pay dividends or distribute any of its capital assets while it remains in default on any assessment due to the FDIC or if in the FDIC’s opinion, the payment of dividends would constitute an unsafe or unsound practice.
In addition, as a 48 Table of Contents depository institution the deposits of which are insured by the FDIC, Orange Bank & Trust Company may not pay dividends or distribute any of its capital assets while it remains in default on any assessment due to the FDIC or if in the FDIC’s opinion, the payment of dividends would constitute an unsafe or unsound practice.
Subject to prior approval from our board of directors and regulatory restrictions, we intend to continue the payment of a cash dividend of $0.23 per share on a quarterly basis to holders of our common stock.
Subject to prior approval from our board of directors and regulatory restrictions, we intend to continue the payment of a cash dividend of $0.13 per share on a quarterly basis to holders of our common stock.
Rese rved ​ ​ 48 Table of Contents
Rese rved ​ ​ 49 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved ​ 48 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 49 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 68 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 70 ​ ​ ​
Biggest changeItem 6. Reserved ​ 49 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 50 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 69 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 71 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDeferred loan fees totaled $4.9 million and $5.2 million for the years ended December 31, 2023 and 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2023 ​ 2022 ​ Average ​ ​ ​ Average ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average ​ ​ Balance ​ Interest ​ Yield/Rate ​ Balance ​ Interest ​ Yield/Rate ​ (Dollars in thousands) ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) ​ $ 1,683,232 ​ $ 96,236 5.72 % $ 1,426,478 ​ $ 68,405 4.80 % PPP loans ​ 1,133 ​ 28 2.47 % 9,280 ​ 922 9.94 % Investment securities available for sale ​ 503,410 ​ 14,055 2.79 % 522,902 ​ 11,969 2.29 % Cash and due from banks and other ​ 142,003 ​ 6,498 4.58 % 257,218 ​ 2,739 1.06 % Restricted stock ​ 11,561 ​ 953 8.24 % 3,643 ​ 188 5.16 % Total interest-earning assets ​ 2,341,339 ​ 117,770 5.03 % 2,219,521 ​ 84,223 3.79 % Noninterest-earning assets ​ 96,259 ​ ​ ​ 91,830 ​ ​ Total assets ​ $ 2,437,598 ​ ​ ​ ​ $ 2,311,351 ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 331,056 ​ $ 1,284 0.39 % $ 345,550 ​ $ 524 0.15 % Money market deposits ​ 617,345 ​ 9,429 1.53 % 689,610 ​ 2,931 0.43 % Savings deposits ​ 245,663 ​ 2,413 0.98 % 227,938 ​ 658 0.29 % Certificates of deposit ​ 165,239 ​ 6,393 3.87 % 75,354 ​ 346 0.46 % Total interest-bearing deposits ​ 1,359,303 ​ 19,519 1.44 % 1,338,452 ​ 4,459 0.33 % FHLB Advances and other borrowings ​ 170,371 ​ 8,938 5.25 % 12,791 ​ 599 4.68 % Note payable ​ - ​ - — % 2,605 ​ 154 5.91 % Subordinated notes ​ 19,481 ​ 922 4.73 % 19,410 ​ 923 4.76 % Total interest-bearing liabilities ​ 1,549,155 ​ 29,379 1.90 % 1,373,258 ​ 6,135 0.45 % Noninterest-bearing demand deposits ​ 717,689 ​ ​ ​ ​ 761,393 ​ ​ ​ Other noninterest-bearing liabilities ​ 23,338 ​ ​ ​ ​ 20,744 ​ ​ Total liabilities ​ 2,290,182 ​ ​ ​ ​ 2,155,395 ​ ​ Total stockholders’ equity ​ 147,416 ​ ​ ​ ​ 155,956 ​ ​ Total liabilities and stockholders’ equity ​ $ 2,437,598 ​ ​ ​ ​ $ 2,311,351 ​ ​ Net interest income ​ ​ ​ ​ $ 88,391 ​ ​ $ 78,088 ​ Net interest rate spread (1) ​ ​ ​ 3.13 % ​ ​ 3.34 % Net interest-earning assets (2) ​ $ 792,184 ​ ​ $ 846,263 ​ ​ Net interest margin (3) ​ ​ ​ 3.78 % ​ 3.52 % Average interest-earning assets to interest-bearing liabilities ​ ​ ​ ​ ​ ​ 151.1 % ​ ​ ​ ​ 161.6 % (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
Biggest changeDeferred loan fees totaled $4.9 million for each of the years ended December 31, 2024 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2024 ​ 2023 ​ Average ​ ​ ​ Average ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average ​ ​ Balance ​ Interest ​ Yield/Rate ​ Balance ​ Interest ​ Yield/Rate ​ (Dollars in thousands) ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) ​ $ 1,760,057 ​ $ 106,022 6.01 % $ 1,683,232 ​ $ 96,236 5.72 % PPP loans ​ 192 ​ 8 4.16 % 1,133 ​ 28 2.47 % Investment securities available for sale ​ 467,145 ​ 13,255 2.83 % 503,410 ​ 14,055 2.79 % Cash and due from banks and other ​ 153,634 ​ 7,221 4.69 % 142,003 ​ 6,498 4.58 % Restricted stock ​ 8,218 ​ 721 8.75 % 11,561 ​ 953 8.24 % Total interest-earning assets ​ 2,389,246 ​ 127,227 5.31 % 2,341,339 ​ 117,770 5.03 % Noninterest-earning assets ​ 95,597 ​ ​ ​ 96,259 ​ ​ Total assets ​ $ 2,484,843 ​ ​ ​ ​ $ 2,437,598 ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 366,103 ​ $ 1,751 0.48 % $ 331,056 ​ $ 1,284 0.39 % Money market deposits ​ 670,231 ​ 15,199 2.26 % 617,345 ​ 9,429 1.53 % Savings deposits ​ 254,098 ​ 3,525 1.38 % 245,663 ​ 2,413 0.98 % Certificates of deposit ​ 168,202 ​ 7,399 4.39 % 165,239 ​ 6,393 3.87 % Total interest-bearing deposits ​ 1,458,634 ​ 27,874 1.91 % 1,359,303 ​ 19,519 1.44 % FHLB Advances and other borrowings ​ 126,149 ​ 6,666 5.27 % 170,371 ​ 8,938 5.25 % Subordinated notes ​ 19,553 ​ 921 4.70 % 19,481 ​ 922 4.73 % Total interest-bearing liabilities ​ 1,604,336 ​ 35,461 2.20 % 1,549,155 ​ 29,379 1.90 % Noninterest-bearing demand deposits ​ 675,983 ​ ​ ​ ​ 717,689 ​ ​ ​ Other noninterest-bearing liabilities ​ 26,440 ​ ​ ​ ​ 23,338 ​ ​ Total liabilities ​ 2,306,759 ​ ​ ​ ​ 2,290,182 ​ ​ Total stockholders’ equity ​ 178,084 ​ ​ ​ ​ 147,416 ​ ​ Total liabilities and stockholders’ equity ​ $ 2,484,843 ​ ​ ​ ​ $ 2,437,598 ​ ​ Net interest income ​ ​ ​ ​ $ 91,766 ​ ​ $ 88,391 ​ Net interest rate spread (1) ​ ​ ​ 3.11 % ​ ​ 3.13 % Net interest-earning assets (2) ​ $ 784,910 ​ ​ $ 792,184 ​ ​ Net interest margin (3) ​ ​ ​ 3.83 % ​ 3.78 % Average interest-earning assets to interest-bearing liabilities ​ ​ ​ ​ ​ ​ 148.9 % ​ ​ ​ ​ 151.1 % (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
Noninterest expense includes salaries, employee benefits, occupancy, furniture and equipment expense, professional fees, directors’ fees and expenses, computer software expense, Federal deposit insurance assessment, advertising expenses, advisor expenses related to trust income and other expenses. In evaluating our level of noninterest expense we closely monitor our efficiency ratio.
Noninterest expense includes salaries, employee benefits, occupancy, furniture and equipment expenses, professional fees, directors’ fees and expenses, computer software expense, Federal deposit insurance assessment, advertising expenses, advisor expenses related to trust income and other expenses. In evaluating our level of noninterest expense, we closely monitor our efficiency ratio.
On January 1, 2023, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. The allowance for credit losses is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio.
On January 1, 2023, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. The allowance for credit losses is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio.
Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts.
Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts.
Management evaluates a variety of factors including available published economic information in arriving at its forecast. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.
Management evaluates a variety of factors including available published economic information in arriving at its forecast. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.
Also included in the allowance for credit losses are qualitative reserves that are expected, but, in management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above.
Also included in the allowance for credit losses are qualitative reserves that are expected, but, in management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above.
Factors may include changes in lending policies and procedures, size and composition of the portfolio, experience and depth of management and the effect of external factors such as competition, legal and regulatory requirements, among others. The allowance is available for any loan that, in management’s judgment, should be charged off.
Factors may include changes in lending policies and procedures, size and composition of the portfolio, experience and depth of management and the effect of external factors such as competition, legal and regulatory requirements, among others. The allowance is available for any loan that, in management’s judgment, should be charged off.
Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in these counties. The Company’s largest loan segment is non-owner occupied commercial real estate. Property types within this segment include: multi- family properties, retail properties, and general construction loans.
Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in these counties. The Company’s largest loan segment remains non-owner occupied commercial real estate. Property types within this segment include: multi-family properties, retail properties, and general construction loans.
We also offer a variety of deposit accounts to businesses and consumers, including checking accounts and a full line of municipal banking accounts through our business banking platform. These activities, together with our 15 branches and one loan production office, generate a stable source of low- cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.
We also offer a variety of deposit accounts to businesses and consumers, including checking accounts and a full line of municipal banking accounts through our business banking platform. These activities, together with our 16 branches and one loan production office, generate a stable source of low- cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.
We also have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $2.5 million at December 31, 2023. There were no outstanding borrowings with ACBB at December 31, 2023. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.
We also have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $2.5 million at December 31, 2024. There were no outstanding borrowings with ACBB at December 31, 2024. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.
In addition, noninterest income is also impacted by net gains on the sale of investment securities, service charges on deposit accounts, earnings on bank owned life insurance and other fee income consisting primarily of debit card fee income, checkbook fees and rebates and safe deposit box rental income. 49 Table of Contents Noninterest Expense .
In addition, noninterest income is also impacted by net gains on the sale of investment securities, service charges on deposit accounts, earnings on bank owned life insurance and other fee income consisting primarily of debit card fee income, checkbook fees and rebates and safe deposit box rental income. 50 Table of Contents Noninterest Expense .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2023 and 2022 should be read in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.
While industry exposure is widely dispersed, the Company does have a significant concentration of commercial and industrial loans within the healthcare and social assistance industry. Credit Quality . We have well established loan policies and underwriting practices that have resulted in very low levels of charge-offs and nonperforming assets.
While industry exposure is widely dispersed, the Company does have a significant concentration of commercial and industrial loans within the healthcare and social assistance industry. Credit Quality . We have well established loan policies and underwriting practices that have resulted in low historical levels of charge-offs and nonperforming assets.
We strive to originate quality loans that will maintain the credit quality of our loan portfolio. However, credit trends in the markets in which we operate are largely impacted by economic conditions beyond our control and can adversely impact our financial condition. Competition. The industry and businesses in which we operate are highly competitive.
We strive to generate quality loans that will maintain the credit quality of our loan portfolio. However, credit trends in the markets in which we operate are largely impacted by economic conditions beyond our control and can adversely impact our financial condition. Competition. The industry and businesses in which we operate are highly competitive.
Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months. 54 Table of Contents The following table sets forth information regarding our non-performing assets.
Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months. 55 Table of Contents The following table sets forth information regarding our non-performing assets.
This slight increase was due to continued acquisition of new assets under management combined with an increase in the market value of assets under management.
This increase was due to continued acquisition of new assets under management combined with an increase in the market value of assets under management.
Average Balance Sheet and Related Yields and Rates The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the years ended December 31, 2023 and 2022. No tax equivalent yield adjustments have been made as the effects would be immaterial.
Average Balance Sheet and Related Yields and Rates The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the years ended December 31, 2024 and 2023. No tax equivalent yield adjustments have been made as the effects would be immaterial.
The increase was due to the continued growth in our operations and compensation as well as an investment in additional staffing to support the future growth of the wealth management segment. Liquidity and Capital Resources Liquidity . Liquidity is the ability to meet current and future financial obligations of a short-term nature.
The increase was due to the continued growth in our operations and compensation as well as an investment in technology and staffing to support the future growth of the wealth management segment. Liquidity and Capital Resources Liquidity . Liquidity is the ability to meet current and future financial obligations of a short-term nature.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss 55 Table of Contents reserve is not warranted.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
See Note 13 to the Notes to the Consolidated Audited Financial Statements appearing elsewhere in this Annual Report on Form 10-K for actual and required capital amounts and ratios at December 31, 2023 and December 31, 2022. Off-Balance Sheet Arrangements Off-Balance Sheet Arrangements .
See Note 13 to the Notes to the Consolidated Audited Financial Statements appearing elsewhere in this Annual Report on Form 10-K for actual and required capital amounts and ratios at December 31, 2024 and December 31, 2023. Off-Balance Sheet Arrangements Off-Balance Sheet Arrangements .
(3) Net interest margin represents net interest income divided by average total interest-earning assets. ​ 61 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rate/Volume Analysis The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest-bearing liabilities for the years indicated.
(3) Net interest margin represents net interest income divided by average total interest-earning assets. ​ 62 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rate/Volume Analysis The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest-bearing liabilities for the years indicated.
The average balances are daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount 60 Table of Contents accretion and net deferred loan origination costs accounted for as yield adjustments.
The average balances are daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount 61 Table of Contents accretion and net deferred loan origination costs accounted for as yield adjustments.
Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control. 51 Table of Contents Discussion and Analysis of Financial Condition Summary Financial Condition .
Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control. 52 Table of Contents Discussion and Analysis of Financial Condition Summary Financial Condition .
Financial Position and Results of Operations of our Wealth Management Business Segment We conduct our business through two business segments: (1) our banking business segment, which involves the delivery of loan and deposit products to our customers through Orange Bank & Trust Company that provides revenues in 65 Table of Contents our banking business segment; and (2) our wealth management business segment, which includes asset management and trust services to individuals and institutions through HVIA and Orange Bank & Trust Company that provides trust and investment management fee income in our wealth management business segment.
Financial Position and Results of Operations of our Wealth Management Business Segment We conduct our business through two business segments: (1) our banking business segment, which involves the delivery of loan and deposit products to our customers through Orange Bank & Trust Company that provides revenues in our banking business segment; and (2) our wealth management business segment, which includes asset management and trust services to individuals and institutions through HVIA and Orange Bank & Trust Company that provides trust and investment management fee income in our wealth management business segment.
Management believes that the most critical accounting estimate, which involves the most complex or subjective decisions or assessments, is as follows: 50 Table of Contents Allowance for Credit Losses.
Management believes that the most critical accounting estimate, which involves the most complex or subjective decisions or assessments, is as follows: 51 Table of Contents Allowance for Credit Losses.
An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes.
The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes.
Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely given the lack of historical credit losses and governmental backing.
Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely 59 Table of Contents given the lack of historical credit losses and governmental backing.
Based on our deposit retention experience, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity. Capital Resources .
Based on our deposit retention experience 68 Table of Contents and growth in 2024, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity. Capital Resources.
We also offer private banking services through Orange Bank & Trust Private Banking, a division of Orange Bank & Trust Company, and provide trust and wealth management services through Orange Bank & Trust Company’s trust services department and HVIA, which combined has $1.6 billion in assets under management at December 31, 2023.
We also offer private banking services through Orange Bank & Trust Private Banking, a division of Orange Bank & Trust Company, and provide trust and wealth management services through Orange Bank & Trust Company’s trust services department and HVIA, which combined has $1.8 billion in assets under management at December 31, 2024.
We held approximately $172.4 million in brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at December 31, 2023 and $33.0 million in brokered deposits at December 31, 2022.
We held approximately $180.0 million in brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at December 31, 2024 and $172.4 million in brokered deposits at December 31, 2023.
Income Tax Expense. We recorded an income tax expense of $7.7 million for the year ended December 31, 2023, reflecting an effective tax rate of 20.6%. For the year ended December 31, 2022, we recorded an income tax expense of $5.9 million, reflecting an effective tax rate of 19.5%.
Income Tax Expense. We recorded an income tax expense of $6.9 million for the year ended December 31, 2024, reflecting an effective tax rate of 19.9%. For the year ended December 31, 2023, we recorded an income tax expense of $7.7 million, reflecting an effective tax rate of 20.6%.
The market value of assets under management and/or administration at December 31, 2023 and 2022 was approximately $1.6 billion at December 31, 2023, and $1.3 billion at December 31, 2022. This includes assets held at both Orange Bank & Trust Company and HVIA at December 31, 2023 and 2022, respectively.
The market value of assets under management and/or administration at December 31, 2024 and 2023 was approximately $1.8 billion at December 31, 2024, and $1.6 billion at December 31, 2023. This includes assets held at both Orange Bank & Trust Company and HVIA at December 31, 2024 and 2023, respectively.
Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $144.9 million and $434.1 million for the year ended December 31, 2023 and the year ended December 31, 2022, respectively.
Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $29.4 million and $144.9 million for the year ended December 31, 2024 and the year ended December 31, 2023, respectively.
We are subject to various regulatory capital requirements administered by the Federal Reserve and New York State Department of Financial Services. At December 31, 2023 and December 31, 2022, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.
We are subject to various regulatory capital requirements administered by the FRB and New York State Department of Financial Services. At December 31, 2024 and December 31, 2023, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.
The average yield on securities increased by 50 basis points from 2.29% for the year ended December 31, 2022 to 2.79% for the year ended December 31, 2023. The increase in the average yield on securities resulted from higher-yielding securities purchased during a period of increasing market interest rates combined with the maturity of lower-yielding investment securities during 2023.
The average yield on securities increased by four basis points from 2.79% for the year ended December 31, 2023 to 2.83% for the year ended December 31, 2024. The increase in the average yield on securities resulted from higher-yielding securities purchased during a period of increasing market interest rates combined with the maturity of lower-yielding investment securities during 2024.
We designated $32.8 million of our assets at December 31, 2023 as special mention compared to $8.0 million designated as special mention at December 31, 2022. Allowance for Credit Losses Please see “— Critical Accounting Estimates — Allowance for Credit Losses” for additional discussion.
We designated $20.9 million of our assets at December 31, 2024 as special mention compared to $32.8 million designated as special mention at December 31, 2023. Allowance for Credit Losses Please see “— Critical Accounting Estimates — Allowance for Credit Losses” for additional discussion.
Regionally, commercial real estate loans are concentrated within the Company’s primary operating footprint, including Orange, Westchester, Rockland and Bronx counties. Commercial and industrial loans are concentrated in Orange County, New York and outside of the Company’s core market, primarily as a result of purchased loans.
Regionally, commercial real estate loans are concentrated within the Company’s primary operating footprint, including Orange, Westchester, Rockland and Bronx counties. Commercial and industrial loans are concentrated in Orange County, New York and outside of the Company’s core market.
We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program.
We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest earning deposits and short- and intermediate-term securities.
Net cash provided by financing activities, consisting of activity in deposit accounts and borrowings, was $161.7 million and $183.5 million for the year ended December 31, 2023 and the year ended December 31, 2022, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily.
Net cash used by financing activities, consisting of activity in deposit accounts and borrowings, was $2.2 million for the year ended December 31, 2024 and net cash provided by financing activities for the year ended December 31, 2023, was $161.7 million. We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily.
We also incurred an additional $922,000 in interest expense for the year ended December 31, 2023 as compared to $923,000 for the year ended December 31, 2022 due to the issuance in September 2020 of $20.0 million in outstanding subordinated notes which carries an interest rate of 4.25%. Net Interest Income.
We also incurred $921 thousand in interest expense for the year ended December 31, 2024 as compared to $922 thousand for the year ended December 31, 2023 due to the issuance in September 2020 of $20.0 million in outstanding subordinated notes which carries an interest rate of 4.25%. Net Interest Income.
At December 31, 2023, we had a $2.3 million collateralized line of credit from the Federal Reserve Bank of New York with no outstanding balance. Additionally, we had a total of $25.0 million of discretionary lines of credit at December 31, 2023.
At December 31, 2024, we had a $93.2 million collateralized line of credit from the Federal Reserve Bank of New York with no outstanding balance. Additionally, we had a total of $20.0 million of discretionary lines of credit at December 31, 2024.
The Company also evaluated available for sale debt securities that are in an unrealized loss position as of December 31, 2023 and has determined that the declines in fair value are mainly attributable to interest rates, credit spreads, market volatility and liquidity conditions, not credit quality or other factors.
The Company also evaluated available for sale debt securities that are in an unrealized loss position as of December 31, 2024 and determined that the declines in fair value are mainly attributable to interest rates, credit spreads, market volatility and liquidity conditions, not credit quality or other factors. No provision was recorded for the year ended December 31, 2024.
Supporting the increase in interest income was an increase in the average yield on interest earning assets of 124 basis points to 5.03% during the year ended December 31, 2023 from 3.79% for the year ended December 31, 2022.
Supporting the increase in interest income was an increase in the average yield on interest earning assets of 28 basis points to 5.31% during the year ended December 31, 2024 from 5.03% for the year ended December 31, 2023.
The increase in interest expense on interest-bearing deposits was due to an increase in the average cost of deposits combined with an increase in the average balance of interest-bearing deposits. The average cost of interest-bearing deposits increased 111 basis points to 1.44% during the year ended December 31, 2023.
The increase in interest expense on interest-bearing deposits was due to an increase in the average cost of deposits combined with an increase in the average balance of interest-bearing deposits. The average cost of interest-bearing deposits increased 47 basis points to 1.91% during the year ended December 31, 2024.
From time to time, as part of our loss mitigation strategy, we may renegotiate loan terms based on the economic and legal reasons related to the borrower’s financial difficulties. There were no loans modified due to financial difficulties during the year ended December 31, 2023 or new troubled debt restructurings during the year ended December 31, 2022. Classified Assets.
From time to time, as part of our loss mitigation strategy, we may renegotiate loan terms based on certain economic and legal reasons related to the borrower’s financial situation. There were no loans modified due to financial difficulties during the year ended December 31, 2024 and during the year ended December 31, 2023. Classified Assets.
Our income related to our wealth management business segment, which we record as noninterest income, increased $1.0 million, or 11.2%, to $10.3 million for the year ended December 31, 2023 compared to $9.3 million for the year ended December 31, 2022.
Our income related to our wealth management business segment, which we record as noninterest income, increased $1.9 million, or 18.5%, to $12.2 million for the year ended December 31, 2024 compared to $10.3 million for the year ended December 31, 2023.
Commercial real estate loans increased $161.3 million, or 14.7%, to $1.26 billion at December 31, 2023 from $1.10 billion at December 31, 2022 primarily as a result of continued loan demand by our commercial real estate customers and developers, along with our strategy to expand commercial real estate lending in our market area.
Commercial real estate loans increased $102.7 million, or 8.2%, to $1.4 billion at December 31, 2024 from $1.3 billion at December 31, 2023 primarily as a result of continued loan demand by our commercial real estate customers and developers, along with our strategy to expand commercial real estate lending in our market area.
Net cash provided by operating activities was $44.5 million and $30.5 million for the year ended December 31, 2023 and the year ended December 31, 2022, respectively.
Net cash provided by operating activities was $34.6 million and $44.5 million for the year ended December 31, 2024 and the year ended December 31, 2023, respectively.
At December 31, 2022, we had $389.1 million in loan commitments outstanding. We also had $13.6 million in standby letters of credit at December 31, 2022. For further information, see Note 16 to the Notes to the Consolidated Audited Financial Statements appearing elsewhere in this Annual Report on Form 10-K.
At December 31, 2023, we had $409.5 million in loan commitments outstanding. We also had $17.3 million in standby letters of credit at December 31, 2023. For further information, see Note 16 to the Notes to the Consolidated Audited Financial Statements appearing elsewhere in this Annual Report on Form 10-K.
Net interest rate spread decreased by 21 basis points to 3.13% for the year ended December 31, 2023 from 3.34% for the year ended December 31, 2022, reflecting a 145 basis points increase in the average rate paid on interest-bearing liabilities, partially offset by a 124 basis points increase in the average yield on interest-earning assets. Provision for Credit Losses.
Net interest rate spread decreased by two basis points to 3.11% for the year ended December 31, 2024 from 3.13% for the year ended December 31, 2023, reflecting a 30 basis points increase in the average rate paid on interest-bearing liabilities, partially offset by a 28 basis points increase in the average yield on interest-earning assets. Provision for Credit Losses.
The increase in the average balance of loans was primarily due to our continued investment in commercial real estate, construction, and commercial and industrial loans, whereas the increase in average yield on loans continued to be driven by the rising interest rate environment within the market for new loan originations.
The increase in the average balance of loans was primarily due to our continued investment in commercial real estate, construction, and commercial and industrial loans, whereas the increase in average yield on loans was driven by a disciplined pricing approach within the market for new loan originations.
The average balance of loans (excluding PPP loans) increased by $256.8 million, or 18.0%, to $1.7 billion for the year ended December 31, 2023 compared to $1.4 billion for the year ended December 31, 2022.
The average balance of loans (excluding PPP loans) increased by $76.8 million, or 4.6%, to $1.8 billion for the year ended December 31, 2024 compared to $1.7 billion for the year ended December 31, 2023.
Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments. 67 Table of Contents At December 31, 2023, we had $409.5 million in loan commitments outstanding. We also had $17.3 million in standby letters of credit at December 31, 2023.
Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments. At December 31, 2024, we had $390.6 million in loan commitments outstanding. We also had $15.5 million in standby letters of credit at December 31, 2024.
This increase was the result of an increase in our average interest-earning assets which increased by $121.8 million, or 5.5%, to $2.3 billion for the year ended December 31, 2023 compared to $2.2 billion for the year ended December 31, 2022.
This increase was the result of an increase in our average interest-earning assets which increased by $47.9 million, or 2.1%, to $2.4 billion for the year ended December 31, 2024 compared to $2.3 billion for the year ended December 31, 2023.
The average balance of securities decreased by $19.5 million, or 3.7%, to $503.4 million for the year ended December 31, 2023 compared to $522.9 million for the year ended December 31, 2022. The decrease in the average balance of securities was due to maturity and amortization of lower yielding securities during 2023 as compared to 2022.
The average balance of securities decreased by $36.3 million, or 7.2%, to $467.1 million for the year ended December 31, 2024 compared to $503.4 million for the year ended December 31, 2023. The decrease in the average balance of securities was due to maturity and amortization of lower yielding securities during 2024 as compared to 2023.
As of December 31, 2023, our assets, loans, deposits and stockholders’ equity totaled $2.5 billion, $1.7 billion, $2.0 billion and $165.4 million, respectively. Key Factors Affecting Our Business Net Interest Income .
As of December 31, 2024, our assets, loans, deposits and stockholders’ equity totaled $2.5 billion, $1.8 billion, $2.2 billion and $185.5 million, respectively. Key Factors Affecting Our Business Net Interest Income .
Interest rates continued to remain elevated in 2023. Based on our asset sensitivity, a steepened yield curve and higher interest rates generally could have a beneficial impact on our net interest income. Conversely, a flat yield curve at lower rates would be expected to have an adverse impact on our net interest income. Noninterest Income .
Interest rates experienced some volatility during 2024. Based on our asset sensitivity, a steepened yield curve and higher interest rates generally could have a beneficial impact on our net interest income. Conversely, a flat yield curve at lower rates would be expected to have an adverse impact on our net interest income. Noninterest Income .
Our total assets were $2.5 billion at December 31, 2023, an increase of $198.1 million from $2.3 billion at December 31, 2022. The increase was primarily due to increased net loan growth of approximately $174.3 million, or 11.3%, during the year. The increase in assets also included an increase in cash and due from banks of $61.3 million, or 71.2%.
Our total assets were $2.5 billion at December 31, 2024, an increase of $24.5 million from December 31, 2023. The increase was primarily due to increased net loan growth of approximately $67.8 million, or 3.9%, during the year. The increase in assets also included an increase in cash and due from banks of $3.0 million, or 2.0%.
The average rate paid on interest-bearing liabilities increased 145 basis points to 1.90% during the year ended December 31, 2023 from 0.45% for the year ended December 31, 2022.
The average rate paid on interest-bearing liabilities increased 30 basis points to 2.20% during the year ended December 31, 2024 from 1.90% for the year ended December 31, 2023.
Interest income on cash and due from banks and other increased $3.8 million, or 137.2%, to $6.5 million for the year ended December 31, 2023 from $2.7 million for the year ended December 31, 2022.
Interest income on cash and due from banks and other increased $723 thousand, or 11.1%, to $7.2 million for the year ended December 31, 2024 from $6.5 million for the year ended December 31, 2023.
Net interest income increased $10.3 million, or 13.2%, to $88.4 million for the year ended December 31, 2023 from $78.1 million for the year ended December 31, 2022 due primarily to an increase in net interest margin.
Net interest income increased $3.4 million, or 3.8%, to $91.8 million for the year ended December 31, 2024 from $88.4 million for the year ended December 31, 2023 due primarily to an increase in net interest margin.
Interest expense on Federal Home Loan Bank borrowings increased to $8.9 million for the year ended December 31, 2023 as compared to $599 thousand for the year ended December 31, 2022.
Interest expense on Federal Home Loan Bank borrowings decreased to $6.7 million for the year ended December 31, 2024 as compared to $8.9 million for the year ended December 31, 2023.
The following table sets forth the maturity of these uninsured certificates of deposit as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ At December 31, 2023 ​ (In thousands) Maturing period: ​ ​ ​ Three months or less ​ $ 1,437 Over three months through six months ​ 873 Over six months through twelve months ​ 2,828 Over twelve months ​ 6,185 Total ​ $ 11,323 ​ ​ Borrowings Our borrowings consist of both short-term and long-term borrowings and provide us with one of our sources of funding.
The following table sets forth the maturity of these uninsured certificates of deposit as of December 31, 2024. ​ ​ ​ ​ ​ ​ At December 31, 2024 ​ (In thousands) Maturing period: ​ ​ ​ Three months or less ​ $ 8,106 Over three months through six months ​ 1,253 Over six months through twelve months ​ 1,667 Over twelve months ​ 571 Total ​ $ 11,597 ​ ​ 60 Table of Contents Borrowings Our borrowings consist of both short-term and long-term borrowings and provide us with one of our sources of funding.
The allowance for credit losses was $25.2 million, or 1.44%, of loans outstanding at December 31, 2023 compared to $21.9 million, or 1.39%, of loans outstanding at December 31, 2022. Noninterest Income.
The allowance for credit losses was $26.1 million, or 1.44%, of loans outstanding at December 31, 2024 compared to $25.2 million, or 1.44%, of loans outstanding at December 31, 2023. 65 Table of Contents ​ Noninterest Income.
Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control. 56 Table of Contents The following table sets forth activity in our allowance for credit losses for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the Year Ended ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ (Dollars in thousands) Balance at beginning of year ​ $ 21,832 ​ $ 17,661 ​ Adoption of ASC 326 ​ ​ 1,483 ​ ​ — ​ Charge-offs: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 1,569 ​ 4,962 Commercial real estate ​ — ​ — Commercial real estate construction ​ — ​ — Residential real estate ​ — ​ 65 Home equity ​ — ​ — Consumer ​ 37 ​ 479 PPP loans ​ — ​ — Total charge-offs ​ 1,606 ​ 5,506 Recoveries: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 75 ​ 66 Commercial real estate ​ 173 ​ 52 Commercial real estate construction ​ — ​ — Residential real estate ​ — ​ — Home equity ​ — ​ — Consumer ​ 211 ​ 42 Total recoveries ​ 459 ​ 160 Net charge-offs (recoveries) ​ 1,147 ​ 5,346 Provision for credit losses ​ 3,014 ​ 9,517 Balance at end of period ​ $ 25,182 ​ $ 21,832 ​ Ratios: ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average loans outstanding ​ 0.18 % 0.37 % Allowance for credit losses to non-performing loans at end of period ​ 568.83 % 258.34 % Allowance for credit losses to total loans at end of period ​ 1.44 % 1.39 % Allowance for credit losses to total loans (excluding PPP Loans) at end of period ​ 1.44 % 1.39 % ​ ​ The following table presents the summary of net charge-offs (recovery) to average loans outstanding by loan type for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average loans outstanding ​ ​ 0.07% ​ ​ 0.37% Broken down by loan type as follows, excluding PPP: ​ ​ ​ ​ ​ ​ Commercial and Industrial ​ 0.09% ​ 0.34% Commercial real estate ​ 0.00% ​ 0.00% Commercial real estate construction ​ 0.00% ​ 0.00% Residential real estate ​ 0.00% ​ 0.00% Home equity ​ 0.00% ​ 0.00% Consumer ​ -0.01% ​ 0.03% ​ The allowance for credit losses increased by $3.4 million, or 15.3%, to $25.2 million, or 1.44% of total loans at December 31, 2023 from $21.8 million, or 1.39% of total loans, at December 31, 2022.
Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control. 57 Table of Contents The following table sets forth activity in our allowance for credit losses for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 ​ ​ (Dollars in thousands) Balance at beginning of year ​ $ 25,182 ​ $ 21,832 ​ Adoption of ASC 326 ​ ​ — ​ ​ 1,483 ​ Charge-offs: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 10 ​ 1,569 Commercial real estate ​ 8,685 ​ — Commercial real estate construction ​ — ​ — Residential real estate ​ 94 ​ — Home equity ​ 33 ​ — Consumer ​ 1 ​ 37 PPP loans ​ — ​ — Total charge-offs ​ 8,823 ​ 1,606 Recoveries: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 53 ​ 75 Commercial real estate ​ — ​ 173 Commercial real estate construction ​ — ​ — Residential real estate ​ — ​ — Home equity ​ — ​ — Consumer ​ 79 ​ 211 Total recoveries ​ 132 ​ 459 Net charge-offs (recoveries) ​ 8,691 ​ 1,147 Provision for credit losses ​ 9,586 ​ 3,014 Balance at end of year ​ $ 26,077 ​ $ 25,182 ​ Ratios: ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average loans outstanding ​ 0.49 % 0.07 % Allowance for credit losses to non-performing loans at end of year ​ 413.99 % 568.83 % Allowance for credit losses to total loans at end of year ​ 1.44 % 1.44 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table presents the summary of net charge-offs (recovery) to average loans outstanding by loan type for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average loans outstanding ​ ​ 0.49% ​ ​ 0.07% Broken down by loan type as follows, excluding PPP: ​ ​ ​ ​ ​ ​ Commercial and Industrial ​ 0.00% ​ 0.09% Commercial real estate ​ 0.48% ​ 0.00% Commercial real estate construction ​ 0.00% ​ 0.00% Residential real estate ​ 0.01% ​ 0.00% Home equity ​ 0.00% ​ 0.00% Consumer ​ 0.00% ​ -0.01% ​ The allowance for credit losses increased by $895 thousand, or 3.6%, to $26.1 million, or 1.44% of total loans at December 31, 2024 from $25.2 million, or 1.44% of total loans, at December 31, 2023.
The increase was primarily the result of the increase of $22.7 million in retained earnings during the current year and a $4.1 million decrease in accumulated other comprehensive loss due to an increase in the fair market value of our securities available-for-sale during 2023.
The increase was primarily the result of the increase of $22.6 million in retained earnings during the current year, offset in part by a $3.6 million increase in accumulated other comprehensive loss due to a decrease in the fair market value of our securities available-for-sale during 2024.
As of December 31, 2023 and December 31, 2022, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $1.0 billion and $1.2 59 Table of Contents billion, respectively.
As of December 31, 2024, and December 31, 2023, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $1.1 billion and $1.0 billion, respectively. In addition, as of December 31, 2024, the aggregate amount of all our uninsured certificates of deposit was $11.6 million.
The average yield on loans increased by 92 basis points from 4.80% for the year ended December 31, 2022 to 5.72% for the year ended December 31, 2023.
The average yield on loans increased by 29 basis points from 5.72% for the year ended December 31, 2023 to 6.01% for the year ended December 31, 2024.
Net interest-earning assets decreased by $54.1 million to $792.2 million for the year ended December 31, 2023 from $846.3 million for the year ended December 31, 2022.
Net interest-earning assets decreased by $7.3 million to $784.9 million for the year ended December 31, 2024 from $792.2 million for the year ended December 31, 2023.
The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2023 ​ 2022 ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ Days ​ Days ​ or More ​ Days ​ Days ​ or More ​ Past Due Past Due Past Due Past Due Past Due Past Due ​ (In thousands) Commercial and industrial ​ $ 229 ​ $ — ​ $ 327 ​ $ 1,497 ​ $ 1,583 ​ $ 2,854 Commercial real estate ​ 20 ​ — ​ 300 ​ 563 ​ — ​ 952 Commercial real estate construction ​ — ​ — ​ — ​ — ​ — ​ — Residential real estate ​ — ​ — ​ 1,167 ​ 2 ​ — ​ 1,188 Home equity ​ — ​ — ​ — ​ — ​ — ​ — Consumer ​ — ​ — ​ — ​ 584 ​ 634 ​ 476 Total ​ $ 249 ​ $ — ​ $ 1,794 ​ $ 2,646 ​ $ 2,217 ​ $ 5,470 ​ 53 Table of Contents The following table sets forth our loan delinquencies, including non-accrual loans, at the dates indicated as a percentage of loans for the corresponding types. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2023 ​ ​ 2022 ​ ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ ​ Days ​ Days ​ or More ​ ​ Days ​ Days ​ or More ​ ​ Past Due Past Due Past Due ​ Past Due Past Due Past Due Commercial and industrial 0.08 % — % 0.12 % ​ 0.58 % 0.62 % 1.11 % Commercial real estate 0.00 % — % 0.02 % ​ 0 — % 0.09 % Commercial real estate construction — — — ​ — — — Residential real estate — % — 1.49 % ​ 0.00 % — 1.60 % Home equity — — — ​ — — % — % Consumer — % — % — % ​ 3.58 % 3.89 % 2.92 % Total 0.01 % — % 0.10 % ​ 0.17 % 0.14 % 0.35 % ​ Non-performing Assets Management reviews a loan for impairment or individual evaluation when it is non-performing or when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.
The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ Days ​ Days ​ or More ​ Days ​ Days ​ or More ​ Past Due Past Due Past Due Past Due Past Due Past Due ​ (In thousands) Commercial and industrial ​ $ — ​ $ 128 ​ $ 150 ​ $ 229 ​ $ — ​ $ 327 Commercial real estate ​ 141 ​ 398 ​ 6,000 ​ 20 ​ — ​ 300 Commercial real estate construction ​ — ​ — ​ — ​ — ​ — ​ — Residential real estate ​ 294 ​ — ​ — ​ — ​ — ​ 1,167 Home equity ​ — ​ — ​ — ​ — ​ — ​ — Consumer ​ — ​ — ​ — ​ — ​ — ​ — Total ​ $ 435 ​ $ 526 ​ $ 6,150 ​ $ 249 ​ $ — ​ $ 1,794 ​ 54 Table of Contents The following table sets forth our loan delinquencies, including non-accrual loans, at the dates indicated as a percentage of loans for the corresponding types. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2024 ​ ​ 2023 ​ ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ 30 – 59 ​ 60 – 89 ​ 90 Days ​ ​ ​ Days ​ Days ​ or More ​ ​ Days ​ Days ​ or More ​ ​ Past Due Past Due Past Due ​ Past Due Past Due Past Due Commercial and industrial — % 0.05 % 0.06 % ​ 0.08 % — % 0.12 % Commercial real estate 0.01 % 0.03 % 0.44 % ​ 0.00 % — % 0.02 % Commercial real estate construction — — — ​ — — — Residential real estate 0.39 % — — % ​ — % — 1.49 % Home equity — — — ​ — — % — % Consumer — % — % — % ​ — % — % — % Total 0.02 % 0.03 % 0.34 % ​ 0.01 % — % 0.10 % ​ Non-performing Assets Management reviews a loan for individual evaluation when it is non-performing or when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.
Interest income increased $33.5 million, or 39.8%, to $117.8 million for the year ended December 31, 2023 from $84.2 million for the year ended December 31, 2022.
Interest income increased $9.5 million, or 8.0%, to $127.2 million for the year ended December 31, 2024 from $117.8 million for the year ended December 31, 2023.
Our strategic focus is to increase commercial deposit relationships through our suite of cash management products and continued attention to low cost deposits. Our strategy remains centered on increasing business demand deposit accounts through our customer centric business development approach.
Our strategic focus is to increase commercial deposit relationships through our suite of cash management products and continued attention to low-cost deposits. Our strategy remains centered on increasing business demand deposit accounts through our customer centric business development approach. Money market deposits increased $94.1 million and savings deposits increased $42.9 million while noninterest-bearing demand deposits decreased $48.1 million during 2024.
Interest expense increased $23.2 million, or 378.9%, to $29.4 million for the year ended December 31, 2023 from $6.1 million for the year ended December 31, 2022. The increase in interest expense was a result of the increase in rates on interest-bearing liabilities, primarily deposits, coupled with an increase in the average balance of interest-bearing liabilities.
Interest expense increased $6.1 million, or 20.7%, to $35.5 million for the year ended December 31, 2024 from $29.4 million for the year ended December 31, 2023. The increase in interest expense was a result of the higher interest rate environment associated with interest-bearing liabilities, primarily deposits, coupled with an increase in the average balance of interest-bearing liabilities.
The increase was mainly driven by a $10.3 million increase in net 62 Table of Contents interest income, a $1.4 million increase in noninterest income and a decrease in the provision for credit losses of $1.6 million, partially offset by an increase in noninterest expense of $6.5 million. Interest Income.
The decrease was mainly driven by an $8.4 million increase in 63 Table of Contents noninterest expense and partially offset by an increase in net interest income of $3.4 million and an increase of $2.6 million in noninterest income. Interest Income.
Interest income on securities increased by $2.1 million, or 17.4%, to $14.0 million during the year ended December 31, 2023 from $12.0 million during the year ended December 31, 2022. The increase in interest income on securities was due to an increase in the average yield on securities, partially offset by a decrease in the average balance of securities.
Interest income on investment securities decreased by $800 thousand, or 5.7%, to $13.3 million during the year ended December 31, 2024 from $14.1 million during the year ended December 31, 2023. The decrease in interest income on securities was due to a decrease in the average balance of securities, partially offset by an increase in the average yield on securities.
The increase in noninterest expense for the year ended December 31, 2023 as compared to the prior year was mainly due to a $2.3 million increase in salaries, a $1.9 million increase in employee benefits, a $687 thousand increase in professional fees, a $294 thousand increase in occupancy expense and a $56 thousand increase in advertising expenses.
The increase in noninterest expense for the year ended December 31, 2024 as compared to the prior year was mainly due to a $2.7 million increase in salaries, a $1.5 million increase in employee benefits, a $1.2 million increase in professional fees, a $902 thousand increase in computer software expense and a $2.6 million increase in other expenses.
Average balances for cash and due from banks decreased to $142.0 million for the year ended December 31, 2023 from $257.2 million for the year ended December 31, 2022, representing a decrease of $115.2 million, or 44.8%. Interest Expense.
Average balances for cash and due from banks increased to $153.6 million for the year ended December 31, 2024 from $142.0 million for the year ended December 31, 2023, representing an increase of $11.6 million, or 8.2%. Interest Expense.
Interest income on loans increased by $26.9 million, or 38.9%, to $96.3 million during the year ended December 31, 2023 from $69.3 million during the year ended December 31, 2022.
Interest income on loans increased by $9.8 million, or 10.2%, to $106.0 million during the year ended December 31, 2024 from $96.2 million during the year ended December 31, 2023.
We had no other real estate owned at December 31, 2023. Non-performing assets decreased $4.0 million, or 47.6%, to $4.4 million, or 0.18% of total assets, at December 31, 2023 from $8.5 million, or 0.37% of total assets, at December 31, 2022.
We had no other real estate owned at December 31, 2024 or 2023, respectively. Non-performing assets increased $1.9 million, or 42.3%, to $6.3 million, or 0.25% of total assets, at December 31, 2024 from $4.4 million, or 0.18% of total assets, at December 31, 2023.
In September 2020, we issued $20.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of September 30, 2030, and bear interest at a fixed rate of 4.25% per year until September 30, 2025.
The 2020 Notes are non-callable for five years, have a stated maturity of September 30, 2030, and bear interest at a fixed rate of 4.25% per year until September 30, 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed5 unchanged
Biggest changeIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Explanatory Paragraph - Change in Accounting Principle ​ As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2023 due to the adoption of ASC 326, Financial Instruments – Credit Losses. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company's management.
Biggest changeIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company's management.
(the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").
(the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").
We believe that our audits provide a reasonable basis for our opinion. ​ ​ /s/ Crowe LLP ​ ​ We have served as the Company's auditor since 2018. ​ Livingston, New Jersey March 29, 2024 ​ 69 Table of Contents ​
We believe that our audits provide a reasonable basis for our opinion. ​ ​ /s/ Crowe LLP ​ ​ We have served as the Company's auditor since 2018. ​ Livingston, New Jersey March 17, 2025 ​ 70 Table of Contents ​
Item 7A. Quantitative and Qualitative Disclosures About Market Risk A smaller reporting company is not required to provide the information related to this item. ​ ​ 68 Table of Contents ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ Stockholders and Board of Directors of Orange County Bancorp, Inc.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not required to provide the information related to this item. ​ ​ 69 Table of Contents ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ Stockholders and Board of Directors of Orange County Bancorp, Inc.

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