Orange County Bancorp, Inc. Announces Third Quarter and Year-to-Date Results through September 30, 2020

MIDDLETOWN, NY / ACCESSWIRE / October 22, 2020 / Orange County Bancorp, Inc. (the "Company")(OTCQX:OCBI), parent of Orange Bank & Trust Co. (the "Bank") and Hudson Valley Investment Advisors, Inc. (HVIA), today announced net income of $2.9 million, or $0.64 per share, and $8.0 million, or $1.78 per share, for the three and nine months ended September 30, 2020, respectively. This compares with net income of $3.2 million, or $0.70 per share, and $8.2 million, or $1.82 per share, for the three and nine months ended September 30, 2019, respectively.

  • Net Interest Income for the first nine months of 2020 was $35.9 million, up 11.5% over last year and for the third quarter of 2020 was $12.6 million, up 9.9% over the same period last year
  • Average Loans for the third quarter of 2020 was $1.05 billion, up 25.1% over same quarter last year, including PPP loans
  • Average Non-Interest-Bearing Deposits for the first nine months of 2020 were $429.4 million, up 51.2%, including undrawn PPP loan related deposits compared to last year.
  • Provisions for Loan Losses for the first nine months of 2020 were $3.7 million, up $2.0 million, or 117.6%, from $1.7 million last year
  • Net Income for the first nine months of 2020 was $8.0 million or $200 thousand less than the same period last year. A $2 million increase in Provision for loan losses for the first nine months of 2020 was a material factor in the net income decline.
  • Total Assets increased $496 million or 40.4% from December 31, 2019 to $1.72 billion
  • Tangible Book Value per Share of $27.34 increased 8.7% from December 31, 2019

"This was a dynamic and challenging quarter for the Bank and I am proud of how our team responded," said President and Chief Executive Officer Michael Gilfeather. "We continue to be impacted by economic and operational issues related to COVID-19, but managed to produce another strong quarter, with earnings of $2.9 million, or $.64 per share, bringing our 9 month total to $8.0 million, or $1.78 per share.

New York State's ongoing efforts to curb the spread of the virus recently allowed for the partial re-opening of business in the economies we serve. Though economic activity remains well short of pre-COVID levels, we saw sufficient economic momentum to reduce deferred loan balances more than two-thirds from their second quarter peak and are seeing this trend continue. We will, as always, continue to monitor and work closely with clients, especially those still on deferral, and are cautiously optimistic loans brought current will remain so and that we will continue to reduce deferrals as business in the markets we serve improves further.

The unprecedented federal response to the economic shutdown has left the entire banking community dealing with the challenge of historically low rates and high levels of liquidity. Despite significant interest rate margin pressure this created across our industry, we managed to grow net interest income 6.1% quarter over quarter, and 11.5% through the first 9 months of the year. This was accomplished despite an average of $87 million in Payroll Protection Program loans during the quarter, which carry an interest rate of just 1%. The Bank was very active in the PPP program, originating over $100 million in loans for more than 800 clients, and stands ready to assist clients as the forgiveness process evolves.

Loans and deposits also showed strong growth in the quarter, with the latter outpacing the former due to a decision to temper loan growth, despite significant demand, as we continue to monitor economic conditions and maintain conservative lending standards in today's low rate environment. Of particular note is the growth in our average non-interest bearing deposits, which were up over 50% to nearly $430 million, as compared to the same period last year. While some of this increase represents clients yet unused PPP loans, the majority of this growth was the result of our concerted efforts to expand business client outreach and earn a greater share of their banking business.

Though the low interest rate environment has presented challenges, it did provide us an opportunity to raise $20 million in cost effective debt through the issuance of 10-year Subordinated Notes with a 5-year fixed interest rate of 4.25%. This debt, combined with our low cost deposit base, further strengthens our economic foundation which should support continued growth for the forseeable future. As of September 30, 2020, none of these proceeds were down-streamed to the Bank as capital. The Company will contribute proceeds of this offering as additional capital to the Bank as needed to support future growth.

We remain on track to open branches in the Bronx and Nanuet by early next year. Additionally, we are ready to launch the Bank's new service called Orange Wealth Solutions which is financial planning along with a new tool called Orange Wealth Navigator which aggregates all of your financial accounts and important documents in one place.

Despite the challenging operating environment, the bank and our employees have remained steadfast in their dedication and commitment to our customers, the maintenance of conservative lending standards, and improving and expanding the services and experience we provide. This has enabled us to continue to deliver outstanding results and provides the framework for future growth our clients and shareholders have come to expect."

Income Statement Summary
Net interest income for the three months ended September 30, 2020 increased $1.1 million, or 9.9%, to $12.6 million, compared with the three months ended September 30, 2019. The increase is primarily due to a $384.7 million, or 33.5%, increase in average interest earning assets. The growth in average earning assets includes $87.0 million in low rate PPP loans and $172.2 million in low rate deposits with banks, contributing to an 82 basis point decline in average earning rates. Despite the decline in earning rates, interest revenue increased during the period. Net interest income for the nine months ended September 30, 2020 increased $3.7 million, or 11.5%, to $35.8 million, compared with the nine months ended September 30, 2019. Average earning assets grew $298.3 million, or 27.3%, for the period. The increase in average interest earning assets was driven primarily by a $191.3 million, or 23.9%, increase in average loans outstanding.

Net interest margin of 3.26% for the three months ended September 30, 2020 represents a 69 basis point, or 17.5%, decline versus 3.95% for the same period last year. The average cost of interest-bearing deposits for the three months ended September 30, 2020 dropped 22 basis points to 0.47%, from 0.69% for the three months ended September 30, 2019, a 31.9% decrease. This drop in funding costs was insufficient to offset the impact of the decline in earnings rates. As explained above, the average asset earning rate was materially impacted by $87.0 million of 1% loans through the PPP program, as well as a precautionary increase in liquid funds on deposit at the federal reserve during this uncertain period. The interest rate picture has changed dramatically over the past 7 months following the Federal Reserve's move to significantly reduce overnight rates and, through direct bond purchases, reduce market rates to unprecedented levels. The feds funds rate is currently between 0% and 0.25% and the 10-year treasury yield is close to 0.70%. The Bank responded by reducing its interest bearing deposit costs. The cost of funds also benefited from continued strong growth in non-interest-bearing demand accounts, with a $177.3 million, or 57.5%, increase to an average of $485.5 million versus the three months ended September 30, 2019. Accordingly, the total cost of deposits dropped 17 basis points, or 36.2%, from 47 basis points to 30 basis points.

The margin outlook includes the benefit of unamortized fees to be recognized at the time PPP loans are forgiven. The unamortized portion of such fees totaled $2.6 million at September 30, 2020. In addition, as opportunities arise, the Bank plans to prudently increase loan balances by redeploying excess liquidity to increase average earning rates.

The Bank's provision for loan losses was $1.2 million for the three months ended September 30, 2020, an increase of $575 thousand, or 89.8%, versus $640 thousand for the three months ended September 30, 2019. For the nine months ended September 30, the provision was $3.7 million compared to $1.7 million for the same period last year. The increases were made in response to uncertainty surrounding loan performance due to the COVID-19 related shutdown of various business sectors. While the asset quality of the Bank's loan portfolio remains high, non-performance statistics do not reflect the potential stresses facing loans on deferred status. Details of deferred loans are shown in the table below. Management believes it is prudent to increase reserves due to this uncertainty. Non-accrual loans, as a percent of total loans, was 0.10% as of September 30, 2020, a 0.13% decrease from the period ended September 30, 2019. See the asset quality section below for additional information.

Non-interest income increased $253 thousand to $3.0 million for the three months ended September 30, 2020, compared to the three months ended September 30, 2019. Non-interest income increased $1.1 million, to $8.8 million, for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The improvement in the current quarter's results is primarily driven by $218 thousand in securities gains and by improved trust asset management revenue, as detailed in the income statement comparison below.

Non-interest expense increased $1.2 million, to $10.8 million, for the three months ended September 30, 2020, compared to the three months ended September 30, 2019. Non-interest expense increased $3.0 million, to $30.9 million, for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019. The increase versus last year was due primarily to an FDIC deposit insurance increase of $243 thousand (due to a credit realized during 2019), and a one-time charge of $400 thousand related to trading error losses in asset management operations during the most recent quarter. Year-to-date increases include $606 thousand of FDIC insurance expense and a $1.3 million increase in growth-related salaries and benefits.

The Company's effective income tax rate for the three and nine months ended September 30, 2020 were 19.6% and 19.7%, respectively. For the same periods last year, the effective tax rates were 20.4% and 20.2%, respectively.

Balance Sheet Summary
Total assets increased $496.3 million, or 40.4%, to $1.72 billion at September 30, 2020, from $1.23 billion at December 31, 2019. This was primarily comprised of increases of $186.5 million in loans, $234.6 million in cash and cash equivalents, and $72.7 million in investment securities, including a $6.6 million increase in unrealized gains. The increases in cash and cash equivalents and investment securities was primarily due to increases in deposits, while the increase in loans was the result of $232.2 million of new loan originations and $45.6 million in purchases, partially offset by $91.3 million of net amortization and repayments on our existing portfolio. Draws on credit lines were immaterial during the period.

Total liabilities increased $486.6 million, to $1.59 billion, at September 30, 2020, from $1.11 billion at December 31, 2019. This was due to a $470.1 million, or 43.4%, increase in deposits and a $20 million increase in borrowed funds raised in a subordinated debt offering in late September, partially offset by a $5 million reduction in FHLB advances.

Deposit growth continues to be fueled by non-interest-bearing commercial demand deposits ("DDA") and NOW accounts. Growth in these deposits was $274.1 million, or 83.3%, from December 31, 2019, consistent with the Bank's strategy to grow value added business deposits with the support of advanced cash management services. It also includes remaining PPP loan balances. Commercial deposits represented 52.3% of total deposits at September 30, 2020, compared to 46.7% at December 31, 2019. This increase reflects strong response to our company-wide focus on business relationships. Total DDA and NOW balances were 50.0% of total deposits at September 30, 2020.

Total shareholders' equity increased $9.7 million, or 8.0%, to $130.6 million at September 30, 2020, from $120.9 million at December 31, 2019. This increase was due to a $5.3 million increase in retained earnings and a $4.4 million improvement in the market value of securities available for sale.

At September 30, 2020, the Company's book value per common share and tangible book value per common share were $28.98 and $27.34, respectively, compared to $26.85 and $25.16, respectively, at December 31, 2019. This represents increases of 7.9% and 8.7%, respectively. At September 30, 2020, the Bank exceeded the "well capitalized" thresholds under applicable regulatory guidelines.

Asset Quality Summary

Non-performing loans decreased $186 thousand, or 15.2%, to $1.0 million at September 30, 2020 from $1.2 million at June 30, 2020, and decreased $508 thousand from $1.5 million at December 31, 2019. Non- performing loans to total loans was 0.10%, 0.12% and 0.17% at September 30, 2020, June 30, 2020 and December 31, 2019, respectively.

Loans classified as substandard or doubtful increased $491 thousand, or 4.2%, to $12.1 million at September 30, 2020 from $11.6 million at June 30, 2020, and decreased $1.9 million, or 13.6%, from $14.0 million at December 31, 2019. Watch rated loans increased $5.4 million, or 28.0%, to $24.8 million at September 30, 2020 from $19.3 million at June 30, 2020. Delinquencies (inclusive of loans on non-accrual) increased to $3.8 million, or 0.35%, of total loans at September 30, 2020, from $3.2 million, or 0.31%, of total loans at June 30, 2020, and decreased $4.4 million from $8.2 million, or 0.27%, of total loans at December 31, 2019. Higher deferred loan balances will tend to understate delinquency statistics. The Bank's asset quality metrics have remained stable or improved even as the deferred loans have declined to $118.5 million at September 30, 2020 from $310 million at June 30, 2020. The Bank continues to work proactively with customers to manage COVID-19 related forbearance requests, where necessary, with a renewed focus on current and prospective business performance and available liquidity for the resumption of loan payments over the near-term. Particular emphasis is given to loans approaching or recently past their deferral dates.

Management continues to actively evaluate performance trends and industry dynamics across asset classes to assess underlying business and liquidity risks stemming from the economic impact of COVID-19. While the Bank is taking active steps to provide payment relief from debt service through forbearance agreements, the focus has shifted toward the resumption of loan payments, as management believes borrowers in need of payment deferrals have largely been accommodated at this time. This relief has been structured as 90-day deferments of principal and interest and effected broadly across the portfolio based on our analysis and direct feedback from customers. Most borrowers that requested payment deferrals early in the cycle have commenced scheduled repayments of their loan obligations after the end of their initial 90 day deferral. During the third quarter of 2020, there were 411 loans with a total principal balance of $310.3 million that reached the end of their 90-day deferment period. About 88 of those loans with a principal balance of $104.9 million (representing 21.4% of loans by number and 33.8% of balances), requested and received approval for an additional 90-day deferment during the most recent quarter. There were 11 loans totaling $6.4 million that requested and received intial deferrals during the quarter. The other 66% of previously deferred loans are with borrowers that have the financial wherewithal and business continuity to resume required debt service obligations at this time. Management believes the deferral program has been successful in helping customers bridge a difficult economic environment. Current estimates for year end 2020 deferrals is less than $20 million. Deferred loans at September 30, 2020 are shown in the table below:

Summary of Loan Portfolio Segments and Deferments at September 30, 2020
(dollar amounts in thousands)

           Total Deferments    
Industry Classification Balance  Loan Count  % of Total Loans  Outstanding Balance  Loan Count  Deferred % 
Real Estate and Rental Leasing $388,069   464   35.9% $50,561   24   13.0%
Healthcare and Social Assistance  119,250   686   11.0%  16,362   49   13.7%
Construction  66,446   96   6.1%  -   1   0.0%
Retail Trade  45,146   80   4.2%  19,322   4   42.8%
Management of Companies/Enterprise  37,216   18   3.4%  3,353   1   9.0%
Wholesale Trade  27,677   76   2.6%  43   1   0.2%
Manufacturing  26,517   97   2.5%  -   0   0.0%
Hotel / Motel  24,843   13   2.3%  912   1   3.7%
Professional, Scientific, and Technical Services  21,362   206   2.0%  145   1   0.7%
Finance and Insurance  17,657   67   1.6%  -   0   0.0%
Contractors  16,588   106   1.5%  -   0   0.0%
Educational Services & Child Care  17,026   33   1.6%  -   0   0.0%
Administrative and Management  15,949   85   1.5%  7,764   2   48.7%
Food Services  17,408   37   1.6%  6,495   1   37.3%
Art, Entertainment, and Recreation  3,168   10   0.3%  2,931   2   92.5%
Transportation and Warehousing  2,875   35   0.3%  1,307   3   45.5%
Residential Real Estate & Other  149,290   1,349   13.8%  2,149   9   1.4%
PPP Loans  85,473   686   7.9%  -   0   0.0%
TOTAL $ 1,081,960   4,144   100.0% $ 111,344   99   10.3%
                         
           Total Deferments    
                   
Loan Portfolio Category Balance  Loan Count  % of Total Loans  Outstanding Balance  Loan Count  Deferred % 
CRE:                  
Multifamily $160,945   93   14.9% $12,642   6   7.9%
Non-owner occupied  310,700   341   28.7%  69,388   22   22.3%
Owner occupied  154,739   182   14.3%  14,332   15   9.3%
Construction, development, land  61,523   25   5.7%  1,351   1   2.2%
                         
C&I  220,562   1,911   20.4%  12,619   50   5.7%
PPP Loans  85,473   686   7.9%  -   0   0.0%
                         
Consumer:                        
Residential  66,347   549   6.1%  1,012   5   1.5%
Non-residential  21,671   357   2.0%  -   0   0.0%
TOTAL $ 1,081,960   4,144   100.0% $ 111,344   99   10.3%

The Company's allowance for loan losses increased $2.7 million, or 21.8%, to $14.9 million, at September 30, 2020, from $12.2 million at December 31, 2019. At September 30, 2020, the allowance was 1.38% of total loans outstanding, an increase from 1.37% at December 31, 2019. Excluding the $87 million in PPP loans, which are characterized as a zero risk-weighted asset class, the allowance to loans ratio is 1.50% at September 30, 2020. Continued uncertainties about the current credit environment prompted the increase in allowance for unimpaired credits in 2020.

After charge-offs taken for impaired credits, the allowance for impaired loans in the aggregate declined to $1.2 million in the most recent quarter versus $1.4 million for the quarter ended June 30, 2020. The Bank has historically maintained a high ratio of loan loss allowances relative to its peers, and will continue to prudently manage reserves through close monitoring of business conditions and higher risk loans, as well as thorough analysis of the profitability and cash flow of loan customers.

Trust and Advisory Summary

Trust and Asset Management performed well during the quarter, increasing fee related revenue by $142 thousand, or 6.8%, compared to the same period last year. Year-to-date, these businesses showed a $340 thousand, or 5.7%, increase in fee revenue compared to the first nine months of 2019, despite volatile market performance since the beginning of the year. The combination of new account growth and the recovery in stock and bond prices increased assets under management ("AUM") materially during the most recent quarter. AUM is the basis on which revenues are earned in these businesses. Future AUM growth will depend on market performance and the quality of service we provide our customers. The introduction of additional wealth management tools, combined with continuous outreach to our Trust and Asset Management customers, provides valued support during this uncertain time and serves as the foundation for growth of this business.

About Orange County Bancorp, Inc.

Orange County Bancorp, Inc. is the parent company of Orange Bank & Trust Company and Hudson Valley Investment Advisors, Inc. Orange Bank & Trust Company is an independent bank that began with the vision of 14 founders over 125 years ago. It has grown through conservative banking practices, ongoing innovation, and an unwavering commitment to its community and business clientele to more than $1.5 billion in Total Assets. In recent years, Orange Bank & Trust Company has added branches in Rockland and Westchester Counties, and is in the process of opening a new branch in Nanuet and the Bronx. Hudson Valley Investment Advisors, Inc. is a Registered Investment Advisor in Goshen, NY. It was founded in 1996 and was acquired by the Company in 2012. For more information, visit orangebanktrust.com or hviaonline.com

For further information:

Robert L. Peacock
EVP Chief Financial Officer
rpeacock@orangebanktrust.com
Phone: (845) 341-5005

Orange County Bancorp, Inc.
Consolidated Statements of Condition (unaudited)

(dollar amounts in thousands except per share data)

          
  September 30,  December 31,  September 30, 
  2020  2019  2019 
ASSETS         
          
Cash and due from banks $259,707  $25,112  $65,667 
Investment securities - available-for-sale  327,623   254,915   257,624 
Restricted investment in bank stocks  1,449   1,474   1,477 
Loans, net of deferrals  1,077,244   890,704   868,244 
Allowance for loan losses  (14,956)   (12,275)  (12,345)
Loans, net  1,062,288   878,429   855,899 
             
Premises and equipment  14,234   14,599   14,503 
Accrued interest receivable  8,296   3,202   4,327 
Cash surrender value of bank-owned life insurance  28,337   27,818   27,644 
Goodwill  5,359   5,359   5,359 
Intangible assets  2,035   2,249   2,321 
Other assets  15,367   15,273   9,516 
             
TOTAL ASSETS $1,724,695  $1,228,430  $1,244,337 
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Deposits:            
Noninterest bearing $507,349  $335,469  $332,681 
Interest bearing  1,045,851   747,663   771,896 
Total deposits  1,553,200   1,083,132   1,104,577 
             
FHLB advances  -   5,000   5,000 
Subordinated notes  20,000   -   - 
Note payable  3,000   3,000   3,013 
Accrued expenses and other liabilities  17,872   16,357   13,251 
             
TOTAL LIABILITIES  1,594,072   1,107,489   1,125,841 
             
STOCKHOLDERS' EQUITY            
             
             
at September 30, 2020, December 31, 2019 and September 30, 2019, respectively  2,253   2,266   2,255 
Surplus  84,739   85,178   84,849 
Undivided profits  44,090   38,467   36,728 
Accumulated other comprehensive loss, net of taxes  345   (4,044)  (4,390)
Treasury stock, at cost  (804)   (926)  (946)
TOTAL STOCKHOLDERS' EQUITY  130,623   120,941   118,496 
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,724,695  $1,228,430  $1,244,337 
             
Book value per share $28.98  $26.85  $26.31 
Tangible book value per share $27.34  $25.16  $24.61 
             

Orange County Bancorp, Inc.
Consolidated Statements of Income (unaudited)

(dollar amounts in thousands except per share data)

  Three Months EndedSeptember 30,  Nine Months EndedSeptember 30, 
  2020  2019  2020  2019 
INTEREST INCOME            
Interest and fees on loans $12,271  $10,680  $34,868  $30,116 
Interest on investment securities:                
Taxable  1,102   1,695   3,661   4,345 
Tax exempt  297   131   656   516 
Interest on Federal funds sold and other  46   282   254   636 
                 
TOTAL INTEREST INCOME  13,716   12,788   39,439   35,613 
                 
INTEREST EXPENSE                
Interest on demand, savings and money market accounts  868   977   2,674   2,267 
Interest on time deposits  227   309   762   919 
Interest on FHLB advances  -   21   10   136 
Interest on notes payable  59   46   143   137 
TOTAL INTEREST EXPENSE  1,154   1,353   3,589   3,459 
                 
NET INTEREST INCOME  12,562   11,435   35,850   32,154 
                 
Provision for loan losses  1,215   640   3,725   1,660 
                 
NET INTEREST INCOME AFTER PROVISION  11,347   10,795   32,125   30,494 
                 
OTHER OPERATING INCOME                
Service charges on deposit accounts  155   254   480   695 
Trust income  1,001   949   2,958   2,636 
Investment advisory income  1,215   1,125   3,399   3,381 
Investment securities gains (losses)  218   -   804   (219)
Earnings on bank-owned life insurance  173   176   520   516 
Other  237   242   671   725 
TOTAL OTHER OPERATING INCOME  2,999   2,746   8,832   7,734 
                 
OTHER OPERATING EXPENSES                
Salaries  3,911   3,658   11,930   10,661 
Employee benefits and taxes  1,711   1,816   5,149   5,164 
Occupancy expense  938   879   2,810   2,653 
Professional fees  894   672   2,495   1,975 
Directors' fees and expenses  268   282   837   823 
Computer software expense  986   821   2,700   2,218 
FDIC assessment  243   -   609   245 
Advertising expenses  277   324   929   965 
Advisor expenses related to trust income  248   213   777   631 
Telephone expenses  144   115   413   339 
Intangible amortization  71   71   214   214 
Other  1,077   719   2,070   2,068 
TOTAL OTHER OPERATING EXPENSES  10,768   9,570   30,933   27,956 
                 
Income before income taxes  3,578   3,971   10,024   10,272 
                 
Provision for income taxes  700   810   1,975   2,073 
NET INCOME $2,878  $3,161  $8,049  $8,199 
                 
Weighted average earnings per share $0.64  $0.70  $1.78  $1.82 
                 
Cash dividends declared per share $0.20  $0.20  $0.60  $0.60 
                 
Weighted average shares outstanding  4,507,315   4,505,966   4,511,425   4,507,316 
                 

Orange County Bancorp, Inc.
Net Interest Margin Analysis (unaudited)

(dollar amounts in thousands)

  Three Months Ended September, 30
  2020  2019
  Average Balance  Interest  Average Rate  Average Balance  Interest  Average Rate 
Assets:                  
Loans Receivable (net of PPP) $966,369  $11,645   4.79% $841,944  $10,680   5.03%
PPP Loans  87,006   626   2.86%  -   -   0.00%
Investment securities  308,062   1,399   1.81%  262,659   1,826   2.76%
Federal funds sold and other  172,160   46   0.11%  44,352   282   2.52%
Total interest earning assets  1,533,597   13,716   3.56%  1,148,955   12,788   4.42%
Non-interest earning assets  82,883           70,111         
Total assets $1,616,480          $1,219,066         
                         
Liabilities and equity:                        
Demand accounts $214,793  $111   0.21% $186,627  $117   0.25%
Savings and money market accounts  675,282   757   0.45%  494,038   860   0.69%
Time deposits  91,071   227   0.99%  91,241   309   1.34%
Total interest-bearing deposits  981,146   1,095   0.44%  771,906   1,286   0.66%
FHLB Advances and notes  4,740   59   4.95%  8,020   67   3.31%
Total interest bearing liabilities  985,886   1,154   0.47%  779,926   1,353   0.69%
Non-interest bearing deposits  485,481           308,194         
Other non-interest bearing liabilities  14,624           13,530         
Total liabilities  1,485,991           1,101,650         
Total shareholders' equity  130,489           117,416         
Total liabilities and shareholders' equity $1,616,480          $1,219,066         
                         
Net interest income     $12,562          $11,435     
Interest rate spread 1          3.09%          3.73%
Net interest margin 2          3.26%          3.95%
Average interest earning assets to interest-bearing liabilities  155.6%          147.3%        
                         

Notes:

1 The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
2 Net interest margin is the annualized net interest income divided by average interest-earning assets.

Orange County Bancorp, Inc.
Net Interest Margin Analysis (unaudited)

(dollar amounts in thousands)

  Nine Months Ended September, 30 
  2020  2019 
  Average Balance  Interest  Average Rate  Average Balance  Interest  Average Rate 
Assets:                  
Loans Receivable (net of PPP) $939,719  $33,801   4.80% $800,153  $30,116   5.03%
PPP Loans  51,757   1,067   2.75%  -   -   0.00%
Investment securities  279,717   4,317   2.06%  257,668   4,861   2.52%
Federal funds sold and other  121,299   254   0.28%  36,364   636   2.34%
Total interest earning assets  1,392,492   39,439   3.78%  1,094,185   35,613   4.35%
Non-interest earning assets  79,223           66,454         
Total assets $1,471,715          $1,160,639         
                         
Liabilities and equity:                        
Demand accounts $206,594  $316   0.20% $183,613  $205   0.15%
Savings and money market accounts  598,869   2,358   0.53%  459,673   2,062   0.60%
Time deposits  89,638   762   1.14%  93,743   919   1.31%
Total interest-bearing deposits  895,101   3,436   0.51%  737,029   3,186   0.58%
FHLB Advances and notes  4,357   153   4.69%  13,510   273   2.70%
Total interest bearing liabilities  899,458   3,589   0.53%  750,539   3,459   0.62%
Non-interest bearing deposits  429,391           283,977         
Other non-interest bearing liabilities  15,897           13,237         
Total liabilities  1,344,746           1,047,753         
Total shareholders' equity  126,969           112,887         
Total liabilities and shareholders' equity $1,471,715          $1,160,639         
                         
Net interest income     $35,850          $32,154     
Interest rate spread 1          3.25%          3.74%
Net interest margin 2          3.44%          3.93%
Average interest earning assets to interest-bearing liabilities  154.8%          145.8%        

Notes:

1 The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
2 Net interest margin is the annualized net interest income divided by average interest-earning assets.

Orange County Bancorp, Inc.
Selected Financial Data (unaudited)

(dollar amounts in thousands except per share data)

  For the Quarter Ended 
  September 30,2020  June 30,2020  March 31,2020  December 31,2019  September 30,2019 
Performance Ratios 1               
Return on average assets  0.71%  0.74%  0.74%  0.98%  1.03%
Return on average equity  8.77%  8.67%  7.93%  10.17%  10.67%
Interest rate spread  3.09%  3.18%  3.53%  3.60%  3.76%
Net interest margin  3.26%  3.38%  3.74%  3.83%  3.98%
Efficiency Ratio  69.20%  68.53%  70.02%  70.09%  67.29%
                     
Noninterest income to average assets  0.74%  0.85%  0.83%  0.86%  0.90%
Noninterest expense to average assets  2.65%  2.77%  3.04%  3.14%  3.14%
Average interest-earning assets to average interest-bearing liabilities  155.56%  158.78%  149.63%  150.63%  147.32%
Average equity to average assets  8.07%  8.56%  9.39%  9.56%  9.63%
Dividend payout ratio  31.13%  32.60%  36.99%  30.97%  28.36%
  As of the Quarter Ended 
  September 30,2020  June 30,2020  March 31,2020  December 31,2019  September 30,2019 
                
Loans to Deposits  69.36%  73.00%  77.53%  82.23%  78.61%
Noninterest bearing deposits to total deposits  32.66%  34.85%  30.00%  30.97%  30.12%
                     
Share Data:                    
Shares outstanding  4,507,315   4,506,653   4,518,128   4,504,389   4,503,779 
Book value per common share $28.98  $28.69  $28.13  $26.85  $26.31 
Tangible book value per common share 2 $27.34  $27.02  $26.45  $25.16  $24.61 
                     
Capital Ratios 3                    
Tier 1 capital (to adjusted total assets)  7.62%  8.16%  9.13%  9.39%  8.95%
Common equity Tier 1 capital (to risk weighted assets)  12.06%  12.55%  12.29%  12.52%  12.16%
Tier 1 capital (to risk-weighted assets)  12.06%  12.55%  12.29%  12.52%  12.16%
Total capital (to risk-weighted assets)  13.31%  13.80%  13.53%  13.77%  13.41%
                     
                     

Notes:

1 Performance ratios are annualized.
2 Tangible book value per share is a non-GAAP measure and equals total shareholders' equity, less goodwill and other intangible assets, divided by shares outstanding.
3 Represents Orange Bank & Trust Company's ratios.

Orange County Bancorp, Inc.
Condensed Financial Information (unaudited)

(dollar amounts in thousands except per share data)

  As of             
Condensed Balance Sheets September 30,2020  June 30,2020  March 31,2020  December 31,2019  September 30,2019 
                
Cash and Cash Equivalents $259,707  $187,892  $84,347  $25,112  $65,667 
Total Investment Securities  329,072   288,749   276,242   256,389   259,101 
Loans, net  1,062,288   1,033,309   925,092   878,429   855,899 
Other Assets  73,628   72,104   69,561   68,500   63,670 
Total Assets $1,724,695  $1,582,054  $1,355,242  $1,228,430  $1,244,337 
                     
Total Deposits $1,553,200  $1,434,843  $1,210,620  $1,083,132  $1,104,577 
FHLB Advances & Note Payable  3,000   3,000   3,000   8,000   8,013 
Subordinated Notes  20,000   -   -   -   - 
Other Liabilities  17,872   15,721   15,310   16,357   13,251 
Total Liabilities  1,594,072   1,453,564   1,228,930   1,107,489   1,125,841 
Total Shareholders' Equity  130,623   128,490   126,312   120,941   118,496 
Total Liabilities and Shareholders' Equity $1,724,695  $1,582,054  $1,355,242  $1,228,430  $1,244,337 

Orange County Bancorp, Inc.
Selected Financial Data (unaudited)

(Dollar Amounts in thousands except per share data)

  Three Months Ended 
Condensed Income Statements September 30,2020  June 30,2020  March 31,2020  December 31,2019  September 30,2019 
                
Interest Income $13,716  $12,991  $12,731  $12,682  $12,788 
Interest Expense  1,154   1,147   1,289   1,381   1,353 
Net Interest Income  12,562   11,844   11,442   11,301   11,435 
Provision for Loan Loss  1,215   1,310   1,200   535   640 
Noninterest Income  2,999   3,150   2,683   2,698   2,746 
Noninterest Expense  10,768   10,275   9,890   9,812   9,570 
Income before income tax expense  3,578   3,409   3,035   3,652   3,971 
Income Tax Expense  700   661   613   753   810 
Net income $2,878  $2,748  $2,422  $2,899  $3,161 
                     
                     
Weighted average earnings per Share $0.64  $0.61  $0.54  $0.65  $0.70 

Orange County Bancorp, Inc.
Loan Portfolio (unaudited)

(dollar amounts in thousands)

LOANS September 30,  June 30,  March 31,  December 31,  September 30, 
  2020  2020  2020  2019  2019 
Commercial:               
                
Commercial & industrial $220,364  $213,862  $240,155  $222,229  $220,157 
PPP Loans  85,473   101,245   -   -   - 
CRE* owner occupied  154,739   163,368   143,063   133,355   121,707 
CRE non-owner occupied  310,700   289,103   280,595   256,639   251,765 
CRE multifamily  160,945   140,476   136,862   144,328   143,308 
CRE construction  58,324   59,147   53,396   55,808   56,939 
Total commercial  990,545   967,201   854,071   812,359   793,875 
                     
Consumer:                    
Residential real estate  52,721   52,239   50,923   52,478   49,519 
Home equity loans and lines  13,626   13,397   13,574   11,668   11,840 
Residential construction  3,199   3,991   5,217   13,937   13,276 
Other  21,869   15,898   16,873   2,436   1,846 
Total consumer  91,415   85,525   86,587   80,519   76,480 
Total loans  1,081,960   1,052,726   940,658   892,878   870,355 
                     
Deferrals  (4,716)  (5,345)  (2,085)  (2,174)  (2,111)
Loans, net of deferrals  1,077,244   1,047,381   938,573   890,704   868,244 
Allowance for loan losses  (14,956)  (14,072)  (13,481)  (12,275)  (12,345)
Loans, net $1,062,288  $1,033,309  $925,092  $878,429  $855,899 
                     
* CRE = Commercial Real Estate loans                    

Orange County Bancorp, Inc.
Deposit Portfolio (unaudited)

(dollar amounts in thousands)

DEPOSIT TREND September 30,2020  June 30,2020  March 31,2020  December 31,2019  September 30,2019 
Demand Deposits $507,349  $500,002  $363,214  $335,469  $332,681 
NOW  269,103   197,003   200,930   166,907   183,883 
Money market accounts  528,908   514,546   433,081   369,507   364,767 
Savings  152,638   133,501   124,085   122,592   132,844 
Time  95,202   89,791   89,310   88,657   90,403 
                     
Total deposits $1,553,200  $1,434,843  $1,210,620  $1,083,132  $1,104,577 
                     
                   Growth 
DEPOSIT COMPOSITION and GROWTH ANALYSIS  September 30, 2020   % of Total Deposits   September 30,
2019
   % of Total Deposits   $   % 
Demand Deposits $507,349   32.7% $332,681   30.1% $174,668   52.5%
NOW  269,103   17.3%  183,883   16.6%  85,220   46.3%
Money market accounts  528,908   34.1%  364,767   33.0%  164,141   45.0%
Savings  152,638   9.8%  132,844   12.0%  19,794   14.9%
Time  95,202   6.1%  90,403   8.2%  4,799   5.3%
Total deposits $1,553,200   100.0% $1,104,577   100.0% $448,623   40.6%
                         
Commercial $812,534   52.3% $530,004   48.0% $282,530   53.3%
Consumer  464,674   29.9%  353,115   32.0%  111,559   31.6%
Municipal  275,992   17.8%  221,458   20.0%  54,534   24.6%
Total Deposits $1,553,200   100.0% $1,104,577   100.0% $448,623   40.6%

Orange County Bancorp, Inc.
Asset Quality Trends (unaudited)

(dollar amounts in thousands)

ASSET QUALITY  September 30,    June 30,    March 31,    December 31,    September 30, 
   2020    2020    2020    2019    2019 
                         
Total Loans    1,081,960      1,052,726      940,658      892,878      870,355 
                                        
Non-performing loans:                                       
Commercial & industrial  -    148    495    502    603 
Commercial real estate    959      959      959      959      1,348 
Consumer - residential real estate    82      84      86      88      91 
Consumer - home equity loans and lines    -      36      51      -      - 
TOTAL NON-PERFORMING LOANS ("NPLs")  1,041    1,227    1,591    1,549    2,042 
                                        
Delinquencies:                                       
                                        
30-59 days past due  735    632    10,038    5,674    1,050 
60-89 days past due    296      979      60      360      352 
90+ days past due    1,776      460      1,766      683      576 
On non-accrual    959      1,143      1,505      1,461      1,951 
TOTAL PAST DUE LOANS  3,766    3,214    13,369    8,178    3,929 
                                        
Troubled debt restructurings:                                       
On non-accrual (included in total NPLs above)  959    959    959    959    1,348 
On accrual    12,146      10,801      10,842      11,436      11,713 
TOTAL TROUBLED DEBT RESTRUCTURINGS  13,105    11,760    11,801    12,395    13,061 
                                        
ALLOWANCE FOR LOAN LOSSES  14,956    14,072    13,481    12,275    12,345 
                                        
Allowance for loan losses as a % of total loans    1.38%    1.34%    1.43%    1.37%    1.42%
Allowance for loan losses as a % of total NPLs    1436.70%    1146.86%    847.33%    792.45%    604.55%
Allowance for loan losses as a % of delinquent loans    397.13%    437.83%    100.84%    150.10%    314.20%
NPLs as a % of total loans    0.10%    0.12%    0.17%    0.17%    0.23%
                                        
Net charge-offs (recoveries)  331    719    (6)  605    142 
Net charge-offs (recoveries) to average outstanding loans during the period    0.03%    0.07%    0.00%    0.07%    0.02%
                                        

SOURCE: Orange County Bancorp, Inc.



View source version on accesswire.com:
https://www.accesswire.com/611844/Orange-County-Bancorp-Inc-Announces-Third-Quarter-and-Year-to-Date-Results-through-September-30-2020

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