OBT 10-K & 10-Q changes, risk factors and insider trading

A substantial portion of our business is in the New York City Metropolitan area and in Orange, WestchesterWestchester, Bronx, and Rockland Counties in New York and, therefore, our business is particularly vulnerable to an economic downturn in our primary market area.

We primarily serve individuals, businesses and municipalities located in the New York City metropolitan area and in Orange, WestchesterWestchester, Bronx, and Rockland Counties, New York. As of December 31, 2024,2025, most of our loan portfolio was secured by real estate and other assets located in these areas in New York. 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. Our success significantly depends upon the growth in population, income levels, deposits and housing in our market area. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may be negatively affected.

At December 31, 2024,2025, approximately $1.4$1.6 billion, or 79.5%,81.0%, of our total loan portfolio was secured by commercial real estate, including construction, almost all of which is located in our primary lending market. Future declines in the real estate values in the New York City metropolitan area and in Orange, WestchesterWestchester, Bronx, and Rockland Counties and surrounding markets could significantly impair the value of the particular collateral securing our loans and our ability to sell the collateral upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us. 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 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 2024,2025, inflation in the United States experienced a slight decrease as compared to 2023.2024. Accordingly, theThe FRB lowered the federal funds rate by halfa quarter of a percentage point in September 2024,2025, theOctober first cut since 2020, followed by a quarter point in November 20242025 and then again in December 2024.2025. TheAlthough the FRB has indicated its intentionoutlook tofor maintaingrowth itsis effortrelatively to combat inflation. With instability instable, the rateuncertainty environment,about growth remains high. Accordingly, the value of our investment securities, particularly those with longer maturities, could decrease,decrease if rates rise, 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. 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.

Our loan portfolio includes commercial real estate loans, primarily loans secured by commercial retail space, office buildings and multifamily properties. At December 31, 2024,2025, our commercial real estate loansloans, including construction loans, totaled $1.4$1.6 billion, or 79.5%,81.0%, 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. If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential property because there are fewer potential purchasers of the collateral. Moreover, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential loans. Accordingly, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. An unexpected adverse development on one or more of these types of loans can expose us to a significantly greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan.

We purchase commercial and industrial loans from time to time outside our market area. We have purchased loans primarily extended to the medical industry that are secured by UCC blanket liens on all business assets and are distributed throughout the United States. These loan purchases may have a higher risk of loss than loans we originate because they are located outside of our primary market area. All loans purchased are in compliance with our approved underwriting standards specific to purchased loans under this program. These loans may have a higher risk of loss as our decision regarding the classification of these loans and loan loss provisions associated with these loans are made in part based upon information provided by the servicer. At December 31, 2024,2025, our purchased commercial and industrial loans totaled $48.6$11.0 million, or 2.7%0.6% of our loan portfolio and 20.1%4.4% of our commercial and industrial loan portfolio, none of which were delinquent 60 days or more. During the year ended December 31, 2024,2025, we did not purchase any loans from the partially guaranteed consumer loan program. If our underwriting of these purchased loans is not sufficient, our non-performing loans may increase and our earnings may decrease.

At December 31, 2024,2025, we had approximately $1.8$1.9 billion in assets under management. Our wealth management operations with HVIAOIA and our trust and administration services provided through the Bank’s trust services department present special risks not borne by institutions that focus exclusively on other traditional retail and commercial banking products. For example, the investment advisory industry is subject to fluctuations in the stock market that may have a significant adverse effect on transaction fees, client activity and client investment portfolio gains and losses. Also, additional or modified regulations may adversely affect our wealth management and trust services operations. In addition, our wealth management and trust service operations are dependent on a small number of established financial advisors and other service providers, whose departure could result in the loss of a significant number of client accounts. A significant decline in fees and commissions or trading losses suffered in the investment portfolio could adversely affect our income and potentially require the contribution of additional capital to support our operations.

We may choose to expand by making acquisitions, including other financial institutions, branches or fee- basedfee-based businesses, that could be material to our business, results of operations, financial condition and cash flows. Acquisitions involve many risks, including the following:

During 2024,2025, the FRB reduced interest rates in response to economic indicators.indicators, mainly associated with a weaker labor market and unemployment trends rather than recessionary concerns. The FRB has indicated a cautioussteady approach in 20252026 inas ordermarket conditions appear to controlbe inflation.stabilizing. Rate cutsRates are anticipatedexpected to remain stable 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. In addition, our net interest margin may contract in a rising rate environment because our funding costs may increase faster than the yield we earn on our interest-earning assets. In a rising rate environment, demand for loans may decrease and loans with adjustable interest rates are more likely to experience a higher rate of default. Additionally, changes in interest rates also affect the fair value of the securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. The combination of these events may adversely affect our financial condition and results of operations.

Our success depends in large part on the performance of our key personnel at Orange Bank & Trust Company and HVIA,OIA, as well as on our ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. We may not be successful in retaining our key employees, and the unexpected loss of services of one or more of our key personnel at Orange Bank & Trust Company or HVIAOIA could have a material adverse effect on our business because of their skills, knowledge of our primary markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel. If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have a material adverse effect on our business, financial condition, results of operations and future prospects.

The area in which we operate isremains a highly competitive banking market. We compete for loans and deposits with numerous regional and national banks and other community banking institutions, as well as other kinds of financial institutions and enterprises, such as securities firms, insurance companies, savings associations, credit unions, mortgage brokers and private lenders. The trust department of the Bank competes with national trust companies and local attorneys for fiduciary appointments. In addition, HVIAOIA competes with a multitude of investment companies, from online providers to similarly structured investment advisors. Many competitors have substantially greater resources than we do. The differences in resources may make it harder for us to compete profitably, reduce the rates that we can earn on loans and investments, increase the rates we must offer on deposits and other funds, and adversely affect our overall financial condition and earnings.

The policies of the FRB represent significant potential impact usfor significantly.us. The FRB regulates the supply of money and credit in the United States. 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. Changes in those policies are beyond our control and are difficult to predict.

The monetary policies of the FRB may be affected by certain policy initiatives of the newcurrent 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. 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. The extent and timing of the newcurrent 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.

We are a bank holding company headquartered in Middletown, New York and registered under the BHC Act. Through our wholly owned subsidiaries, Orange Bank & Trust Company and Hudson ValleyOrange Investment Advisors, Inc., we offer full-service commercial and consumer banking products and services and trust and wealth management services to small businesses, middle-market enterprises, local municipal governments and affluent individuals in the Lower Hudson Valley region, the New York metropolitan area and nearby markets in Connecticut and New Jersey. By combining the high-touch service and relationship- basedrelationship-based focus of a community bank with the extensive suite of financial products and services offered by our larger competitors, we believe we can capitalize on the substantial growth opportunities available in our market areas. 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- costlow-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields. 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,OIA, which combined has $1.8$1.9 billion in assets under management at December 31, 2024.2025. As of December 31, 2024,2025, our assets, loans, deposits and stockholders’ equity totaled $2.5$2.7 billion, $1.8$2.0 billion, $2.2$2.3 billion and $185.5$284.4 million, respectively.

Interest rates experienced some volatility and pressure during 2024.2025. 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 flatdownward yield curve at lower rates would be expected to have an adverse impact on our net interest income.

Noninterest Income. Noninterest income is also a contributor to our net income. Noninterest income consists primarily of our investment advisory income and trust income generated by HVIAOIA and our trust department. In addition, noninterest income is also impacted by net gains on the sale of investment securities,securities or other assets, 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.

Credit Quality. We have well establishedwell-established loan policies and underwriting practices that have resulted in low historical levels of charge-offs and nonperforming assets. 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.

Assets. Our total assets were $2.5$2.7 billion at December 31, 2024,2025, an increase of $24.5$149.5 million from December 31, 2023.2024. The increase was primarily due to increased net loan growth of approximately $67.8$132.3 million, or 3.9%,7.4%, during the year. The increase in assets also included an increase in cash and due from banks of $3.0$53.9 million, or 2.0%.35.9%. During 2024,2025, investment securities decreased by $46.2$24.4 million, or 9.4%.5.5%. This decrease represents management’s continued focus on increased liquidity as the maturities of securities were primarily used to enhance the Bank’s cash position and pay downpay-down borrowings.

Cash and due from banks. Cash and due from banks increased $3.0$53.9 million, or 2.0%,35.9%, to $204.2 million at December 31, 2025 from $150.3 million at December 31, 2024 from $147.4 million at December 31, 2023.2024. The increase was primarily driven by strong deposit growth during the year coupled with a strategic focus to increase cash balances, while paying down borrowings in order to maintain continued strong cash levels while ensuring that contingent liquidity sources are available.

Management reviews a loan for individual evaluationindividually 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. When a loan is determined to be non-performing, the measurement of the loan in the allowance for credit losses is based on the fair value of the collateral for all collateral-dependent loans. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at the lower of carrying amount or fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for credit losses, or, if the existing allowance is inadequate, charged to expense of the current period. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. As of December 31, 2025, the Company had no real estate owned.

Non-performing loans at December 31, 20242025 totaled $6.3$11.1 million and consisted mainly of $6.0$8.7 million related to commercial real estate loans and $293$1.6 thousandmillion of commercial and industrial loans as well as $6$844 thousand ofassociated residentialwith realhome estateequity loans. We had no other real estate owned at December 31, 20242025 or 2023,2024, respectively.

Non-performing assets increased $1.9$4.8 million, or 42.3%,76.7%, to $11.1 million, or 0.42% of total assets, at December 31, 2025 from $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, 2023.2024. The increase in non- performingnon-performing assets at December 31, 20242025 compared to December 31, 20232024 was primarily due to oneseveral commercial and industrial loans as well as certain loans within the commercial real estate loan participation which defaulted during 2024 and is currently recorded at $6.0 million.category.

The allowance for credit losses increased by $895 thousand, or 3.6%, to $26.1$2.3 million, or 1.44%8.7%, to $28.3 million, or 1.45% of total loans at December 31, 20242025 from $25.2$26.1 million, or 1.44% of total loans, at December 31, 2023.2024. The increase in the allowance for credit losses for 20242025 was driven mainly by a provision of $8.7$7.8 million forrelated one nonaccrual loan participation of a commercial real estate transaction andto growth inof our commercial real estate loanportfolio segment.as Thiswell loan also wasas the primaryimpact reasonof for$6.1 increasedmillion in charge-offs during 2024.the year. Commercial and industrial loans represented the most significant impact on net charge-offs as a result of two relationships which had deteriorated.

Available for sale securities decreased $46.2$24.4 million, or 9.4%,5.5%, to $419.4 million at December 31, 2025 from $443.8 million at December 31, 2024 from $489.9 million at December 31, 2023,2024, as mortgage-backed securities decreased $32.9$5.5 million, municipal securities decreased $3.1$7.5 million, and U.S. Government agency securities decreased $10.9$14.6 million, while corporate securities increased $758$3.2 thousand.million. The overall decrease was primarily the result of management’s continued intent to increase our liquidity position for funding purposes and maintain the maturing investments within the cash accounts. During the first quarter of 2024, the Company recognized a net creditnet-credit related to the provision for credit losses of $1.9 million. The recovery was received for proceeds from the sale of subordinated debt securities which were previously charged off during 2023. Management determined that an ACL was not required for the portfolio and the amount was reversed from the provision which reduced the ACL on investment securities to zero. The 2023 provision included the effect of a $5 million reserve associated with the write-off of an investment in Signature Bank subordinated debt. No credit related provision for credit losses was required to be recorded against the investment portfolio during 2025.

The Company also evaluated available for sale debt securities that are in an unrealized loss position as of December 31, 20242025 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 yearyears ended December 31, 2024.2025 Duringand 2023,2024, the Company wrote off approximately $5.0 million associated with Signature Bank subordinated notes.respectively.

Total deposits increased $114.6$157.0 million, or 5.6%,7.3%, to $2.3 billion at December 31, 2025 from $2.2 billion at December 31, 20242024. fromWe $2.0stay billionfocused aton December 31, 2023. Our strategic focus is to increaseincreasing commercial deposit relationships through our suite of cash management products and continuedcontinuing attention to low-cost deposits. Our strategy remains centered on increasing business demand deposit accounts through our customer centric business development approach. MoneyNoninterest-bearing marketdemand deposits increasedgrew $94.1$74.5 million and savings deposits increased $42.9 million while noninterest-bearing demand deposits decreased $48.1$88.4 million during 2024.2025. Interest bearing demand deposits increased $26.2$88.5 million in 20242025 due to certain seasonality of municipal deposit relationships,relationships ascombined well aswith the impact of attorney trust account growth during the year. At December 31, 2024,2025, our core deposits (which includes all deposits except for certificates of deposit) totaled $1.9$2.2 billion, or 89.7%93.1% of our total deposits. The overall increase in deposits represented a continued strategic focus on maintaininggrowing increasedcustomer liquiditydeposit duringrelationships 2024.in order to maintain a low cost and stable funding source. Certificates of deposit decreased $504$62.0 thousand,million, or 0.2%28.1%, to $159.0 million at December 31, 2025 from $221.0 million at December 31, 2024 from $221.5 million at December 31, 2023,2024, primarily due to relativelyreduced level balanceslevels of brokerbrokered deposits to support loan growth.growth as a result of the core deposit growth during the year. We held approximately $180.0$125.0 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, 20242025 and $172.4$180.0 million in brokered deposits at December 31, 2023.2024. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $6.9$5.8 million and $92.5$96.0 million, respectively, at December 31, 2024.2025.

Total borrowings from the Federal Home Loan Bank of New York were $10.0 million at December 31, 2025 and $123.5 million at December 31, 2024 and $234.5 million at December 31, 2023.2024. The decrease in borrowings was relateddriven toby management’sincreased deposits which outpaced loan growth in 2025 and allowed for paydowns of borrowings while maintaining strong cash levels at year end. The decrease in borrowings reflects a strategic focus on reducingactively borrowingsmanaging withliquidity increasedsources depositand levels.opportunities to reduce funding costs. We have the capacity to borrow up to $512.2$652.7 million from the Federal Home Loan Bank of New York at December 31, 2024.2025.

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 arewere non-callable for five years, havehad a stated maturity of September 30, 2030, and bear interest at a fixed interest rate of 4.25% per year until September 30, 2025. From September 30, 2025 to the maturity date or early redemption date, the interest rate willwould reset quarterly to a level equal to the then current three-month SOFR plus 413 basis points, payable quarterly in arrears. These notes were redeemed during September 2025 with a portion of the proceeds from the 2025 Notes as described below.

Total stockholders’ equity increased $20.2$98.8 million, or 12.2%,53.3%, to $284.4 million at December 31, 2025, from $185.5 million at December 31, 2024, from $165.4 million at December 31, 2023.2024. The increase was primarilydue to the resultcombination of thea increasecommon stock offering which netted approximately $43.0 million, earnings of $22.6$41.6 million, and a decrease in unrealized losses of $19.9 million in retained earnings duringon the currentmarket year,value offsetof ininvestment partsecurities bywithin athe $3.6Company’s millionequity increase inas accumulated other comprehensive income (loss) due(“AOCI”), tonet aof decreasetaxes. This reduction of the unrealized losses represents an increase in the fair market value of our securities available-for-sale during 2024.2025.

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, 20242025 and 2023.2024. No tax equivalent yield adjustments have been made as the effects would be immaterial. The average balances are daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments. Deferred loan fees totaled $4.8 million and $4.9 million for each of the years ended December 31, 20242025 and 2023,2024, respectively.

Interest income on loans increased by $9.8 million, or 10.2%,9.2%, to $115.8 million during the year ended December 31, 2025 from $106.0 million during the year ended December 31, 2024 from $96.2 million during the year ended December 31, 2023.2024. The increase in interest income on loans was primarily due to the increase in the average balance of loans (excluding PPP loans), combined with the effect of an increase in the average yield on loans. The average balance of loans (excluding PPP loans) increased by $76.8$135.8 million, or 4.6%,7.7%, to $1.9 billion for the year ended December 31, 2025 compared to $1.8 billion for the year ended December 31, 2024 compared to $1.7 billion for the year ended December 31, 2023.2024. The average yield on loans increased by 2910 basis points from 5.72% for the year ended December 31, 2023 to 6.01% for the year ended December 31, 2024.2024 to 6.11% for the year ended December 31, 2025. 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, whereaswhile the increase in average yield on loans was driven by a disciplined pricing approach within the market for new loan originations.

Interest income on investment securities decreased by $800$1.1 thousand,million, or 5.7%,7.9%, to $12.2 million during the year ended December 31, 2025 from $13.3 million during the year ended December 31, 2024 from $14.1 million during the year ended December 31, 2023.2024. 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 average balance of securities decreased by $36.3$39.2 million, or 7.2%,8.4%, to $428.0 million for the year ended December 31, 2025 compared to $467.1 million for the year ended December 31, 2024 compared to $503.4 million for the year ended December 31, 2023.2024. The decrease in the average balance of securities was due to maturity and amortization of lower yielding securities during 20242025 as compared to 2023.2024. The average yield on securities increased by fourtwo basis points from 2.79% for the year ended December 31, 2023 to 2.83% for the year ended December 31, 2024.2024 to 2.85% for the year ended December 31, 2025. 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 2024.2025.

Interest income on cash and due from banks and other increaseddecreased $723$797 thousand, or 11.1%,11.0%, to $6.4 million for the year ended December 31, 2025 from $7.2 million for the year ended December 31, 2024 from $6.5 million for the year ended December 31, 2023.2024. The increasedecrease in interest income from cash and due from banks and other was attributable to ana increasedecrease in the average yield earned on cash and due from banks combinedoffset withby increaseda slight increase in average balances during the year. The average yield increasedfor 11cash and due from banks decreased 62 basis points to 4.07% in 2025 from 4.69% in 2024 from 4.58% in 2023 as a result of increaseddecreased short-term market interest rates during the first half of 2024.2025. Average balances for cash and due from banks increased to $158.0 million for the year ended December 31, 2025 from $153.6 million for the year ended December 31, 2024 from $142.0 million for the year ended December 31, 2023,2024, representing an increase of $11.6$4.3 million, or 8.2%.2.8%.

Interest Expense. Interest expense increaseddecreased $6.1$4.5 million, or 20.7%,12.8%, to $30.9 million for the year ended December 31, 2025 from $35.5 million for the year ended December 31, 2024 from $29.4 million for the year ended December 31, 2023.2024. The increasedecrease in interest expense was a result of the higherlower interest rate environment associated with interest-bearing liabilities, primarilyincluding deposits,the coupledcontinued reduction of interest costs associated with anlower increaseFHLB advances and borrowings as well as a decrease in brokered deposits due to increased customer deposit levels during the average balance of interest-bearing liabilities.year. The average rate paid on interest-bearing liabilities increaseddecreased 3031 basis points to 2.20%1.89% during the year ended December 31, 20242025 from 1.90%2.20% for the year ended December 31, 2023.2024. The average balance of interest-bearing liabilities increased by $55.2$30.2 million, or 3.6%,1.9%, to approximately $1.6 billion for the year ended December 31, 20242025 compared to $1.5 billion for the year ended December 31, 2023.2024.

Interest expense on interest-bearing deposits increaseddecreased by $8.4$641 million,thousand, or 42.8%,2.3%, to $27.2 million during the year ended December 31, 2025 from $27.9 million during the year ended December 31, 2024 from $19.5 million during the year ended December 31, 2023.2024. The increasedecrease in interest expense on interest-bearing deposits was due to ana increasedecrease in the average cost of deposits combinedpartially withoffset by an increase in the average balance of interest-bearing deposits. The average cost of interest-bearing deposits increaseddecreased 4717 basis points to 1.91%1.74% during the year ended December 31, 2024.2025. The average cost of interest-bearing deposits decreased due to the lower interest rate environment as all deposit categories experienced lower costs during the year. The average balance of interest-bearing deposits increased by $99.3$105.3 million, or 7.3%,7.2%, to $1.6 billion for the year ended December 31, 2025 compared to $1.5 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to increases in the average balances of all deposit categories.categories, except certificates of deposit. The averagereduction cost of interest-bearing deposits increased due toin the higherbalance interest rate environment as we continued to experience rate pressure on all interest-bearing deposit categories, demand deposit accounts, savings, money market, andof certificates of deposit accounts.was due to lower brokered deposit levels as customer balances increased during 2025 and there was less reliance on brokered funding.

Interest expense on Federal Home Loan Bank borrowings decreased to $2.2 million for the year ended December 31, 2025 as compared to $6.7 million for the year ended December 31, 2024 as compared to $8.9 million for the year ended December 31, 2023.2024. The decrease in interest expense on borrowed funds was primarily due to reducedthe continued reduction of Federal Home Loan Bank advances as a result of increased deposit levels during the year which supported loan growth. The average balance of Federal Home Loan Bank advances decreased from $170.4$126.2 million for the year ended December 31, 20232024 to an average balance of $126.1$49.6 million for the year ended December 31, 2024.2025. In addition,Additionally, the average rate of Federal Home Loan Bank advances remainedexperienced relativelyan stable and only increased two86 basis points reduction from 5.25% for the year ended December 31, 2023 to 5.27% for the year ended December 31, 2024.2024 to 4.41% for the year ended December 31, 2025. We alsodid incurredincur $921$1.5 thousandmillion in interest expense for the year ended December 31, 20242025 as compared to $922$921 thousand for the year ended December 31, 20232024 duerelated to the issuancereplacement of $20 million of outstanding subordinated notes issued in September 2020 which carried an interest rate of $20.04.25%. The replacement was part of a $25 million in outstanding subordinated notesnote issuance during September 2025 which carries an interest rate of 4.25%.6.50%.

Net Interest Income. Net interest income increased $3.4$12.3 million, or 3.8%,13.4%, to $104.1 million for the year ended December 31, 2025 from $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. The net interest margin increased five35 basis points to 4.18% for the year ended December 31, 2025 from 3.83% for the year ended December 31, 2024 fromdue 3.78%to forthe increase in interest and fees on loans during the year endedcombined Decemberwith 31,lower 2023costs dueassociated towith stabilityinterest withinbearing liabilities. The fed funds rate reductions by the FRB as part of its 2025 interest rate policy bycreated the FRB which did not decrease rates until September 2024 coupled with a focus on managing interestlower costs associated with deposits and borrowings. Net interest-earning assets decreasedincreased by $7.3$69.4 million to $854.3 million for the year ended December 31, 2025 from $784.9 million for the year ended December 31, 20242024. fromNet $792.2interest millionrate spread increased by 42 basis points to 3.53% for the year ended December 31, 2023.2025 Net interest rate spread decreased by two basis points tofrom 3.11% for the year ended December 31, 2024 from 3.13% for the year ended December 31, 2023,2024, reflecting a 3031 basis points increasedecrease in the average rate paid on interest-bearing liabilities, partiallyand offsetan by a 2811 basis points increase in the average yield on interest-earning assets.

Provision for Credit Losses. Our provision for credit losses was $7.8 million for the year ended December 31, 2025 compared to $7.7 million for the year ended December 31, 2024 compared to $7.9 million for the year ended December 31, 2023.2024. The decrease in the provision for credit2025 losseswas primarilydriven reflectedmainly by growth of the impact of a net recovery during 2024 associated with the previously charged-off Signature Bank subordinated debt and offset by provisions related to one nonaccrualCompany’s loan participation of a commercial real estate transaction.portfolio. The provision for the year ended December 31, 2024 included the recognition ofa credit lossesprovision associated with the participationrecovery asof well$1.9 as the additional provisionmillion related to theSignature growthBank ofsubordinated thedebt Company’swhich loanwas portfolio.previously written off. No reserves for investment securities were recorded during 2025 or 2024. The allowance for credit losses was $28.3 million, or 1.45%, of loans outstanding at December 31, 2025 compared to $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, 2023.2024.

Noninterest income increased by $2.6$7.2 million, or 19.0%,44.9%, to $23.2 million for the year ended December 31, 2025 from $16.0 million for the year ended December 31, 2024 from $13.4 million for the year ended December 31, 2023.2024. The increasegrowth inincluded noninterestincreased fee income in each of the yearCompany’s ended December 31, 2024 was primarily due to increases infee income fromcategories, including investment advisory incomeincome, trust income, and trustservice income.charges on deposit accounts. Investment advisory income and trust income increased $1.5$814 millionthousand and $413$1.0 thousand,million, respectively, primarily the result of asset growth and the impact of equity markets and the interest rate environment. The year ended December 31, 2025 also included BOLI proceeds of $3.6 million related to policy proceeds from a death benefit and $932 thousand of insurance proceeds related to a claim for a previous fraudulent incident as well as a $1.2 million gain related to the sale of a branch location, partially offset by a $568 thousand loss connected to a $15 million repositioning of our investment securities portfolio. Service charges on deposit accounts increased $206$349 thousand during 2025 as compared to 2024 directly related to customer activity. We had no investment securities gains in 2024 and $107 thousand in gains associated with investment securities for 2023.

Noninterest expense increased $8.4$2.7 million, or 14.8%,4.1%, to $67.9 million during the year ended December 31, 2025 from $65.2 million during the year ended December 31, 2024 from $56.8 million during the year ended December 31, 2023.2024. The increase in noninterest expense for the year ended December 31, 20242025 as compared to the prior year was mainly due to a $2.7$1.9 million increase in computer software expenses and technology, a $919 thousand increase in salaries, a $1.5$684 millionthousand increase in employee benefits, a $1.2 million increase in professional fees, a $902$398 thousand increase in computeradvertising software expenseexpense, and a $2.6$338 thousand increase in occupancy expense partially offset by a $2.1 million increasedecrease in other expenses.

•Other expenses increaseddecreased mainly fromdue theto recognitionexpenses ofrecognized increasedduring costsfourth associatedquarter with a nonperforming loan participation and certain costs2024 related to a fraudulent incident within one of our branches.branches and certain costs associated with a nonperforming loan participation and associated lawsuit.

Income Tax Expense. We recorded an income tax expense of $6.9$9.9 million for the year ended December 31, 2025, reflecting an effective tax rate of 19.3%. For the year ended December 31, 2024, we recorded an income tax expense of $6.9 million, 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 decreasedincreased tax expense was reflective of the reductiongrowth in pre-tax income during 2024.2025.

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 HVIAOIA and Orange Bank & Trust Company that provides trust and investment management fee income in our wealth management business segment. For further information, see Note 20 of the Notes to the Audited Consolidated Financial Statements.

Comparison at or for the years ended December 31, 20242025 and 2023.2024. The market value of assets under management and/or administration at December 31, 20242025 and 20232024 was approximately $1.9 billion at December 31, 2025, and $1.8 billion at December 31, 2024, and $1.6 billion at December 31, 2023.2024. This includes assets held at both Orange Bank & Trust Company and HVIAOIA at December 31, 20242025 and 2023,2024, respectively. This increase was due to continued acquisition of new assets under management combined with an increase in the market value of assets under management.

Our income related to our wealth management business segment, which we record as noninterest income, increased $1.9 million, or 18.5%,15.2%, to $14.1 million for the year ended December 31, 2025 compared to $12.2 million for the year ended December 31, 2024 compared to $10.3 million for the year ended December 31, 2023.2024. The increase was mainly due to the impact of equity markets and thegrowth interestof rate environmentassets during the year.

Our expenses related to our wealth management business segment, which we record as noninterest expense, increaseddecreased $1.4$216 million,thousand, or 17.5%,2.4%, to $8.9 million for the year ended December 31, 2025 compared to $9.1 million for the year ended December 31, 2024 compared to $7.8 million for the year ended December 31, 2023.2024. The increasedecrease was due to thea continuedmanagement growthfocus inon ouroperating operations and compensationcosts as well as ana investmentreduction in technologycompensation andcosts staffingduring to support the future growth of the wealth management segment.2025.

Although customer deposits remain our preferred source of funds, maintaining back up sources of liquidity is part of our prudent liquidity risk management practices. We have the ability to borrow from the Federal Home Loan Bank of New York.York (“FHLBNY”). At December 31, 2024,2025, we had $123.5$10.0 million in advances outstanding along with $87.4 million in Municipal Letter of Credits and the ability to borrow up to an additional $398.7$555.3 million.million from the FHLBNY. Additional funding is available to us through collateralized lines of credit with the Federal Reserve. The combined availability at the Federal Reserve, between the Discount Window and the Borrower-In-Custody program, was approximately $228.4 million at December 31,2025. At December 31, 2024,2025, wethe hadBank awas $93.2not millionutilizing collateralizedany lineavailable of creditfunding from the Federal Reserve Bank of New York with no outstanding balance.Reserve. Additionally, we had a total of $20.0 million of discretionary lines of credit with certain correspondent banks at December 31, 2024.2025. We also have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $2.5$5.0 million at December 31, 2024.2025. There were no outstanding borrowings with ACBB at December 31, 2024.2025.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $43.9 million and $34.6 million for the year ended December 31, 2025 and the year ended December 31, 2024, 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$74.2 million and $144.9$29.4 million for the year ended December 31, 20242025 and the year ended December 31, 2023,2024, respectively. Net cash used byfrom financing activities, consisting of activity in deposit accountsaccounts, borrowings, capital and borrowings,debt issuances was $2.2$84.2 million for the year ended December 31, 20242025 and net cash providedused by financing activities for the year ended December 31, 2023,2024, was $161.7$2.2 million.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and growth in 2024,2025, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained,retained and renewed, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity.

The consolidated financial statements and related financial data included in this Annual Report on Form 10-K have been prepared in accordance with generally accepted accounting principles in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than dothe impact of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

The following discussion and analysis of our financial condition and results of operations at MarchJune 31,30, 2026 and December 31, 2025 and for the three and six months ended MarchJune 31,30, 2026 and 2025 should be read in conjunction with our audited consolidated financial statements and the accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements.

We are a bank holding company headquartered in Middletown, New York and registered under the Bank Holding Company Act. Through our wholly owned subsidiaries, Orange Bank & Trust Company and Orange Investment Advisors, formallyformerly known as Hudson Valley Investment Advisors, Inc., we offer full-service commercial and consumer banking products and services and trust and wealth management services to small businesses, middle-market enterprises, local municipal governments and affluent individuals in the Lower Hudson Valley region, the New York metropolitan area and nearby markets in Connecticut and New Jersey. By combining the high-touch service and relationship-based focus of a community bank with the extensive suite of financial products and services offered by our larger competitors, we believe we can continue to capitalize on the growth opportunities available in our market areas. 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 offices and one loan production office, continue to produce a stable source of low- costlow-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields. 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 OIA, which combined had $1.6$1.7 billion in assets under management at MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, our assets, loans, deposits and stockholders’ equity totaled $2.7$2.8 billion, $1.9 billion, $2.4 billion and $291.7$306.6 million, respectively.

At MarchJune 31,30, 2026, we operate from our main office and 15 branch offices. We own our main office in Middletown, New York, and three branch offices which are located in Chester, Newburgh and in Montgomery, New York. We lease twelve branch offices located in Middletown, Goshen, Cortlandt Manor, White Plains, Mamaroneck, New City, Mt. Pleasant, Mount Vernon, Nanuet, Yonkers, and two Bronx locations, all in New York. The branches are leased under agreements that may be renewed for various periods. In addition, OIA operates from leased offices located in Goshen, New York. At MarchJune 31,30, 2026 and December 31, 2025, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $15.6 million and $15.5 million, respectively.million.

Noninterest Income. Noninterest income is also a contributor to our net income. Noninterest income consists primarily of our investment advisory income, trust income generated by OIA and our trust department, as well as income generated by our BOLI investment earnings. In addition, noninterest income is also impacted by net gains (losses) on the sale of investment securities,securities and loans, service charges on deposit accounts, and other fee income consisting primarily of debit card fee income, checkbook fees and rebates and safe deposit box rental income.

Noninterest Expense. Noninterest expense includes salaries, employee benefits, occupancy, 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. The efficiency ratio is calculated by dividing noninterest expense toby net interest income plus noninterest income. We continue to seek to identify ways to streamline our business and operate more efficiently.

Allowance for Credit Losses. Management believes that the determination of the allowance for credit losses involves a high degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact the results of operations for Orange County Bancorp. The methodology, assumptions, and governance of this CECL model have been codified in a policy document that was most recently reviewed and approved by the Company’s Audit & Risk Committee during the fourth quarter of 2025. While there were no fundamental changes to the CECL model during the quarter, management evaluated certain probability of default assumptions as well as the loss driver analysis. This evaluation resulted in adjustment of certain assumptions but were not considered significant changes to the model. Accordingly, management believes there were no significant changes to the critical accounting estimates during the three and six months ended MarchJune 31,30, 2026, and as disclosed in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2026. A summary of our accounting policies, including the Allowance for Credit Losses, is included in the Company’s Annual Report on Form 10-K.

Assets. Our total assets were $2.7$2.8 billion at MarchJune 31,30, 2026, an increase of $46.2$141.0 million, or 1.7%,5.3%, from December 31, 2025. The increase was primarily driven by increases of $53.3$130.7 million in cash and due from banks and $2.2$63.6 million in loans,loans held-for-sale, while loans decreased by $38.0 million and investment securities, available for sale, decreased by $11.9$23.5 million during the threesix months ended MarchJune 31,30, 2026.

Cash and due from banks. Cash and due from banks increased $53.3$130.7 million, or 26.1%,64.0%, to $257.5$334.9 million at MarchJune 31,30, 2026, from $204.2 million at December 31, 2025. The increase was mainly the result of management’s focus on deposit growth during the threesix months ended MarchJune 31,30, 2026 combined with repayments of loans and paydowns and maturities of securities during the second quarter which led to higher levels of liquidity.

The following table sets forth information regarding our non-performing assets. Non-performing loans aggregated approximately $26.1$22.2 million at MarchJune 31,30, 2026 as compared to $11.1 million at December 31, 2025.

Non-performing loans at MarchJune 31,30, 2026 totaled $26.1$22.2 million and consisted of $23.0$15.6 million related to commercial real estate loans, $2.3$2.4 million associated with commercial and industrial loans, and $833 thousand ofrelated to home equity loans. Although there was an increase in the commercial and industrial segment of the portfolio, the level of non-performing loans was still mainly related to the commercial real estate portfolio. The commercial real estate non-performing loans were mainly the result of payment disruption and non-accrual classification during the quarter for a $14.3$14.2 million participation related to a senior living facility and the continued non-performance of a non-accrual commercial real estate office spaceparticipation loan that experienced payment disruption during the six months ended June 30, 2026 due to bankruptcy at the parent company, offset partially by settlement of a previously reported participation whichloan wasfor classifiedan asoffice non-accrualcomplex. The settlement reduced non-performing loans by approximately $6.0 million during the second quarter of 2024.2026. TheTotal officeaccruing spaceloans loan90 remaineddays ator $6.0more past due represented $3.3 million of loans as of MarchJune 31,30, 2026.2026, Thecompared otherto loans$18 designated as non-accrual were based upon individual analysis and payment performance. We had no other real estate ownedthousand at March 31, 2026 and December 31, 2025. The increase in accruing loans 90 days or more past due was related primarily to a commercial real estate participation loan that experienced an administrative delay in the processing of an extension/modification during the six months ended June 30, 2026 due to divorce proceedings, and remains a performing loan and in accrual status at June 30, 2026.

Led by the increase in non-accrual loans,loans and loans 90 days past due, non-performing assets increased $15.0$11.0 million, or 134.4%,99.1%, to $26.1$22.2 million, or 0.96%0.79% of total assets, at MarchJune 31,30, 2026 from $11.1 million, or 0.42% of total assets, at December 31, 2025. Management continues to focus on credit quality and attention to assets with potential concerns.

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 threesix months ended MarchJune 31,30, 2026.

On the basis of management’s review of our assets, we have classified $80.9$66.4 million of our assets at MarchJune 31,30, 2026 as substandard compared to $73.7 million at December 31, 2025, with the increasedecrease due to a combination of risk ratings resulting from certain trends, including delinquencies within the loan portfolio, and the sale or chargeoff of certain loans. There were no doubtful assets as of MarchJune 31,30, 2026 andor December 31, 2025. We designated $47.2$43.1 million of our assets at MarchJune 31,30, 2026 as special mention compared to $58.4 million designated as special mention at December 31, 2025.

As presented below, the allowance for credit losses increaseddecreased by $1.4$2.1 million, or 5.6%,7.3%, to $27.8$26.3 million, or 1.43%1.38% of total loans at MarchJune 31,30, 2026, from $26.4$28.4 million, or 1.42%1.48% of total loans at MarchJune 31,30, 2025. The increasedecrease in the allowance was due primarily dueto toslower loan growth ofduring 2026 combined with lower reserves associated with the overallcomposition portfolioof loans closed in 2026 and a $633 thousand reduction related to loans transferred to loans held-for-sale during 2025 and the first quartersix months of 2026. The threesix months ended MarchJune 31,30, 2026 also included net recoverieschargeoffs of approximately $2.0$524 thousand.

For the threesix months ended MarchJune 31,30, 2026, the Company recognized net charge-offs of $524 thousand, or 0.03%. Commercial real estate loans reflected a net charge-offs of $535 thousand associated with the settlement and payoff of certain loans. For the period, the commercial and industrial segment of the loan portfolio hadrecognized a net charge-off amount of $17$13 thousand, or a net charge-off ratio of 0.74%.0.03%. The consumer loan portfolio experienced net recoveries during the quartersix month period of approximately $19$24 thousand related to collection of certain loans. For the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, no other category of loans had a net charge-off ratio which exceeded 0.01% either individually, or in the aggregate.

Available for sale securities decreased $11.9$23.5 million, or 2.8%,5.6%, to $407.5$395.9 million at March,June 31,30, 2026 primarily due mainly to limitedinvestments purchasesrepayments and maturities combined with continued declinesdecline for all investment categories, except corporate securities,categories due to normal amortization and cash flow during the threesix month period ended MarchJune 30, 2026. We did not have held-to-maturity securities at June 30, 2026 or December 31, 2026.2025.

Total deposits increased $39.4$120.8 million, or 1.7%,5.2%, to $2.4 billion at MarchJune 31,30, 2026 from $2.3 billion at December 31, 2025 driven by continued deposit growth focused on commercial transaction accounts during the first quartersix months of 2026. This growth allows for continued stability and strength of liquidity levels for the Bank. Non-interest-bearing demand deposits increased $1.7$68.3 million due to normal business activity and continued focus on transactional accounts during the first threesix months of 2026. Interest bearing demand deposits experienced a $53.4$71.1 million, or 12.7%,17.0%, increase while money market deposits decreased $369.7$391.6 million, and savings deposits increased by $447.0$496.0 million during the first threesix months of 2026 primarily related to our continued strategic focus on business account activity and a shift in certain customer accounts from money market accounts to savings accounts during the quarter.first six month period in 2026. At MarchJune 31,30, 2026, our core deposits (which includes all deposits except for certificates of deposit) totaled $2.3$2.4 billion, or 97.2%98.5% of our total deposits. Certificates of deposit decreased by $93.1$123.0 million, or 58.6%,77.3%, mainly from non-renewals of brokered deposits during the threesix months ended MarchJune 31,30, 2026. We helddid not have any brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at June 30, 2026. We had approximately $30.0$125.0 million of brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at March 31, 2026 as compared to $125.0 million at December 31, 2025. This decrease represents a continued strategic initiative to reduce short term brokered deposits as a result of increased core deposits and allow for replacement of maturing brokered deposits with transactional customer deposits with lower interest expense. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $128.8$144.5 million at MarchJune 31,30, 2026 and the CDARS and ICS deposits totaled $101.8 million at December 31, 2025. Uninsured deposits, net of fully collateralized municipal relationships, remained stable and represent approximately 49%52% of total deposits as of MarchJune 31,30, 2026 and 46% of total deposits as of December 31, 2025.

Total borrowings from the Federal Home Loan Bank of New York were $10.0 million at MarchJune 31,30, 2026 and December 31, 2025 as deposit growth exceeded loan growth during the period. This level balance represents the continued focus by management to reduce borrowings and the related interest expense by using lower-cost deposits for funding. We have the unused capacity to borrow an additional $563.3$597.0 million from the Federal Home Loan Bank of New York as of MarchJune 31,30, 2026.

Stockholders’ equity increased $7.3$22.3 million, or 2.6%,7.8%, to $291.7$306.6 million at MarchJune 31,30, 2026 from $284.4 million at December 31, 2025. The increase was due to the combination of $11.3$24.9 million in net incomeincome, offseta by$3.6 anmillion increase in surplus and a decrease in unrealized lossesgains of approximately $2.8$1.4 million on the market value of investment securities within the Company’s equity as accumulated other comprehensive income (loss) (“AOCI”), net of taxes during the first threesix months of 20262026, andoffset the impact ofby dividends paid of $4.8 million during the period.six months ended June 30, 2026. The increase of $3.6 million in surplus was primarily due to a liability-to-equity reclassification of equity awards in the amount of $2.3 million during the six months ended June 30, 2026.

The following tabletables presentspresent average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and six month periods ended MarchJune 31,30, 2026 and 2025. No tax equivalent yield adjustments have been made, as the effects would be immaterial. The average balances are daily averages for loans, as presented. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments. Average deferred loan fees totaled $4.7 million and $4.9 million for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. Average deferred loan fees totaled $4.7 million and $4.9 million for the six months ended June 30, 2026 and 2025, respectively.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Summary Income Statements. The following table sets forth the income summary for the periods indicated:

General. Net income increased $2.6$3.2 million, or 29.6%,30.6%, to $11.3$13.7 million for the three months ended MarchJune 31,30, 2026 from $8.7$10.5 million for the three months ended MarchJune 31,30, 2025. The increase was driven primarily by an increase of $4.3$3.3 million related to net interest income growthgrowth, a decrease of $5.2 million in provision for income taxes and a reductiondecrease of $3.1 million in provision for credit losses ofon $638 thousandloans, partially offset by a decrease of $7.9 million in noninterest income and an increase of $515 thousand in noninterest expense ofin $1.4the current period. Net income for the six months ended June 30, 2026 was $24.9 million, as compared to $19.2 million asfor wellthe assame period in 2025. The overall increase was driven by $7.6 million of net interest income growth combined with decreased provision for income taxes of $4.5 million and a reductiondecreased provision for credit losses on loans of $3.8 million, partially offset by a decrease in noninterest income of $179$8.1 thousandmillion and an increase of $1.9 million in noninterest expense during the first quartersix months of 2026 as compared to the same quarterprior inyear 2025.period.

Interest Income. Interest income increased $2.5$1.3 million, or 7.9%,4.0%, to $34.4$34.5 million for the three months ended MarchJune 31,30, 2026 from $31.9$33.2 million for the three months ended MarchJune 31,30, 2025. This increase was driven by a $142.6$84.0 million increase in the balance of average interest-earning assets between the two periods. Within the average balance of interest-earning assets, the average balance of loans grew $125.4$89.7 million, or 6.9%,4.8%, between the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. During the current period, the average yield of interest-earning assets increased by 10three basis points from 5.33%5.36% for the three months ended MarchJune 31,30, 2025 to 5.43%5.39% for the three months ended MarchJune 31,30, 2026 as a result primarily of increased yields and fees associated with loans originated in 2025 and the early part of 2026.

Interest income onincreased securities$3.8 decreasedmillion, byor $2325.9%, thousand to $2.9 million duringfor the threesix months ended MarchJune 31,30, 2026 fromreaching $3.1$68.9 million duringfrom $65.1 million for the threesix months ended MarchJune 31,30, 2025. TheThis decrease in interest income on securitiesincrease was driven primarily by a decrease$113.1 million increase in the balance of average interest-earning assets between the two periods. Within the average balance of securitiesinterest-earning outstanding duringassets, the current period due to certain maturities and securities sales. The average balance of securitiesloans decreasedreceivable bygrew $24.6$107.4 million, or 5.6%,5.8%, to $417.2 million forbetween the threesix months ended MarchJune 31,30, 2026 comparedand toJune $441.830, million2025. forDuring the threeperiod, months ended March 31, 2025. Thethe average yield onof investmentinterest-earning securitiesassets decreasedincreased by six basis points overallfrom to 2.81%5.35% for the threesix months ended MarchJune 31,30, 20262025 fromto 2.87%5.41% for the threesix months ended MarchJune 31,30, 2025.2026 Theas decreasea result primarily of increased yields and fees associated with loans originated in the2025 average yield reflectedand the continuedearly maturitypart of investments coupled with the effect of lower yields.2026.

Interest expenseincome on interest-bearingloans deposits decreasedincreased by $1.1$1.5 million, or 5.4%, to $29.6 million to $6.0 million forduring the three months ended MarchJune 31,30, 2026 from $7.1$28.1 million forduring the three months ended MarchJune 31,30, 2025. The decreaseincrease in interest expenseincome on interest-bearing depositsloans was primarily due mainly to athe decreaseincrease in the average ratebalance onof interest-bearingloans depositscombined with higher yields during the current period. The average balance of interest-bearingthese depositsloans increased by $59.8$89.7 million, or 3.9%,4.8%, to $1.6$2.0 billion for the three months ended MarchJune 31,30, 2026 as compared to $1.5the billionthree months ended June 30, 2025. The increase in the average balance of loans was due to growth in multi-family, commercial real estate, home equity lines of credit as well as growth in our consumer installment loan portfolio. The average yield on loans increased by three basis points to 6.03% for the three months ended MarchJune 31,30, 2026 from 6.00% for the three months ended June 30, 2025 as a result of thedisciplined increasesloan inpricing during 2025 and the averagefirst balancesquarter of total core deposits which excludes certificates of deposit, which included lower levels of brokered deposits at higher rates. The average cost of interest-bearing deposits decreased thirty-six basis points to 1.52% during the three months ended March 31, 2026 as compared to 1.88% for the three months ended March 31, 2025 as a result of the lower interest rate environment.2026.

We also recorded interest expense of $430 thousand during the three months ended MarchJune 31,30, 2026 related to subordinated debt as compared to $230$231 thousand in interest expense for the three months ended MarchJune 31,30, 2025. The increase iswas related to the issuance in September 2025 of $25.0 million in outstanding subordinated notes. In addition, we expensed $860 thousand and $461 thousand in interest expense for the six months ended June 30, 2026 and June 30, 2025, respectively. The increased interest costs represent the debt service required as part of the 2025 subordinated notes.

The interest expense related to borrowingsFHLB advances in the firstsecond quarter of 2026 decreased $241 thousand to $98$134 thousand at an average cost of 3.97%3.95% as compared to interest expense of $931$375 thousand at an average cost of 4.44%4.38% for the same period in 2025. The firstdecrease quarter 2026 averagein FHLB and other borrowings decreased to $10.0 million compared to $85.0 million of average FHLB and other borrowingsexpense in the samesecond quarter of 2025.2026 was primarily due to a decrease of $20.7 million in the average balance of such advances and a decrease in the average cost paid on FHLB advances. The decrease in average borrowingsFHLB balance was the direct result of paydowns driven by increased deposits during the current period. Management wasbeing able to replace higher cost FHLB borrowings with lower cost deposits and reduce interest expense during the current period. Although borrowings remain a potential source of strategic funding for the Company, the reduction in borrowings during the quarter reflects the ability of the Company to increase deposits and strategically reduce related interest costs.

Net Interest Income. Net interest income increased $4.3$3.3 million, or 18.1%,13.1%, to $27.9$28.4 million for the three months ended MarchJune 31,30, 2026 from $23.6$25.1 million for the three months ended MarchJune 31,30, 2025 due to the increase in income from average interest earning assets and the reduction of interest costs associated with interest bearing liabilities. Net interest rate spread increased by 5344 basis points to 3.81%3.87% for the three months ended MarchJune 31,30, 2026 from 3.28%3.43% for the three months ended MarchJune 31,30, 2025, reflecting a 10three basis points increase in the average yield on interest-earning assets combined with a 4341 basis points decrease in the average rate paid on interest-bearing liabilities. The net interest margin rose by forty-five38 basis points to 4.40%4.44% for the three months ended MarchJune 31,30, 2026 from 3.95%4.06% for the three months ended MarchJune 31,30, 2025 due to the lower interest rate environment for short term funding, the impact of managed funding and deposit cost, and increased yields on the lending portfolio during the current period.

Provision for Credit Losses. The Company recognized a net recovery of $436$1.0 thousandmillion in the provision for credit losses during the three months ended MarchJune 31,30, 2026, compared to a provision of $202$2.1 thousandmillion for the three months ended MarchJune 31,30, 2025. The decreased provision for the three months ended MarchJune 31,30, 2026 aswas comparedprimarily toa theresult same period in 2025 reflectedof slower loan growth during the first quarter of 2026 combined with the effect of lower levels of reserves associated with certainthe typescomposition of loans closed during the second quarter of 2026. The allowance for credit losses to total loans was 1.43%1.38% as of MarchJune 31,30, 2026, a decrease of twoseven basis points, or 1.4%,4.83%, versus 1.45% as of December 31, 2025.

Noninterest income decreased by $179$7.9 thousand,million, or 4.1%,108.3%, reachingto $4.2a $607 thousand loss for the three months ended June 30, 2026 as compared to $7.3 million for the three months ended MarchJune 31,30, 2025. The decrease of $7.9 million in noninterest income was largely related to a valuation loss of $4.8 million related to loans classified as held-for-sale during the second quarter of 2026 asand comparedthe recognition of gain associated with the sale of a branch location of $1.2 million coupled with a Bank Owned Life Insurance gain of $2.4 million related to $4.4policy millionproceeds forfrom a death benefit during the threeprior monthsyear ended March 31, 2025.period. Our Wealth Management division revenues, which include our Trust and Asset Management businesses also experienced a decrease in income of $178 thousand and represented a 5.0%5.2% decrease quarter-over-quarter, to $3.3$3.2 million for the firstsecond quarter of 2026 as compared to $3.4 million for the firstsecond quarter of 2025 as a result of an overall net decrease in assets-under-management. During the same period, assets-under-management decreased to $1.6 billion at March 31, 2026 from $1.7 billion at MarchJune 31,30, 2026 from $1.8 billion at June 30, 2025.

Non-interest expense was $17.9$17.3 million for the firstsecond quarter of 2026, reflecting an increase of approximately $1.4$515 million,thousand, or 8.7%,3.1%, as compared to $16.5$16.8 million for the same period in 2025. The increase in non-interest expense for the current three month period was due primarily to continued investment in overall Company growth, including salaries and benefits, Director’s fees and expenses, professional fees, and advertising expense. Our efficiency ratio improvedincreased to 55.9%62.1% for the three months ended MarchJune 31,30, 2026, from 58.9%51.6% for the same period in 2025.

Provision for Income Tax. Our provision for income taxes for the three months ended MarchJune 31,30, 2026 wasreflected $3.3a credit of $2.1 million, compared to $2.6a provision of $3.1 million for the same period in 2025. The increasedecrease in provision was directly related to provisionsthe associatedCompany’s with higher levelsreversal of pre-taxthe incomedeferred astax wellvaluation asallowance. The reversal was based on the effectfinancial strength of certainthe Company and sustained history of profitability which demonstrates the likelihood of realizing the benefits of the deferred tax adjustments for the quarter.asset. Our effective tax rate for the three month period ended MarchJune 31,30, 2026 was 22.7%,(18.2%), as compared to 22.9%23.0% for the same period in 2025.

The following tabletables presentspresent the statements of income and total assets for our reportable business segments for the periods indicated:

The market value of assets under management and/or administration at March 31, 2026 was $1.6 billion as compared to $1.7 billion and $1.8 billion at MarchJune 31,30, 2025.2026 and 2025, respectively. This includes assets held at both Orange Bank & Trust Company and OIA at MarchJune 31,30, 2026 and 2025.

Our income related to our wealth management business segment, which we record as noninterest income, decreased $171$178 thousand or 5.0%,5.2%, to $3.3$3.2 million for the three months ended MarchJune 31,30, 2026 compared to $3.4 million for the three months ended MarchJune 31,30, 2025. The decrease was mainly due to the impact of equity markets combined with lower levels of assets under management. Our income related to our wealth management business segment decreased $349 thousand, or 5.1%, to $6.5 million for the six months ended June 30, 2026 compared to $6.8 million for the six months ended June 30, 2025. The decrease was the result of a reduction in AUM, primarily due to residual effects from last year's divisional restructuring.

Our expenses related to our wealth management business segment, which we record as noninterest expense, decreased $159$45 thousand, or 6.7%,1.9%, to $2.2$2.3 million for the three months ended MarchJune 31,30, 2026. The decrease in expenses was primarily due to lower staffing levels during the current period associated with the reorganization of the division during 2025. For the six months ended June 30, 2026, our expenses related to our wealth management business segment decreased $365 thousand, or 7.9%, to $4.3 million for the six months ended June 30, 2026 compared to $2.4$4.6 million for the threesix months ended MarchJune 31,30, 2025. The decrease in expenses was primarily due to lower staffing levels during the current period associated with the reorganization of the division during 2025.

Our most liquid assets are cash and due from banks. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At MarchJune 31,30, 2026 and December 31, 2025, cash and due from banks totaled $257.5$334.9 million and $204.2 million, respectively. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $407.5$395.9 million at MarchJune 31,30, 2026 and $419.4 million at December 31, 2025.

Certificates of deposit due within one year of MarchJune 31,30, 2026 totaled $55.3$25.6 million, or 83.9%71.1% of total certificates of deposit. TheAt June 30, 2026, the largest concentration of certificates of depositdeposits at March 31, 2026 represented brokered depositswas in theconsumer amount of $30.0 million for diversified funding purposes.certificates.

We participate in IntraFi Network, allowing us to provide access to multi-million-dollar FDIC deposit insurance protection on deposits for customers, businesses and public entities. We can elect to sell or repurchase this funding as reciprocal deposits from other IntraFi Network banks depending on our funding needs. At MarchJune 31,30, 2026, we had a total of $128.8$144.5 million of IntraFi Network deposits, all of which were repurchased as reciprocal deposits from the IntraFi Network.