Orange County Bancorp Inc. (OBT)

A. Company Overview

Orange County Bancorp, Inc. is a bank holding company established in 2007 under Delaware law with its headquarters located in Middletown, New York. The organization operates through its wholly owned subsidiaries, primarily Orange Bank & Trust Company, a New York state-chartered trust company, and Hudson Valley Investment Advisors, Inc., a registered investment advisor. The company provides a comprehensive suite of financial products and services that cater to both commercial and consumer banking needs, as well as trust and wealth management services. Its target clientele includes small businesses, middle-market enterprises, local government entities, and individual consumers throughout the Lower Hudson Valley region, the New York metropolitan area, and adjacent markets in Connecticut and New Jersey. As of December 31, 2023, Orange County Bancorp reported total assets of $2.5 billion, total loans of $1.7 billion, total deposits of $2 billion, and total stockholders' equity of $165.4 million.

The company's primary office is situated at 212 Dolson Avenue, Middletown, New York 10940. Orange County Bancorp positions itself as a community-oriented financial institution that aims to blend high-level personal service with a broad array of financial solutions typically offered by larger banking institutions.

B. Business Segments

Business Banking

Orange County Bancorp focuses on serving small to medium-sized businesses, professionals, and high-net-worth individuals through its business banking segment. The bank offers a variety of financial products including checking accounts, savings accounts, certificates of deposit, and treasury management services. The organization's lending strategy is driven by its recruitment of experienced lenders who possess established relationships with local businesses, allowing them to effectively provide tailored financial advice.

The company has demonstrated significant growth in newer markets, such as Rockland and Westchester Counties, which are vital due to their demographic advantages. As of the end of 2023, approximately 43% of the Bank’s deposits originated from Orange County, affirming its established presence in its home market.

Private Banking

Launched in August 2017, the private banking service of the bank offers a "concierge-level" approach that integrates deposits, loans, asset management, and trust services. This initiative is designed to meet the complex banking needs of high-net-worth clients engaged in substantial business activities.

Trust & Wealth Management

Through its trust department and HVIA, Orange County Bancorp provides numerous trust and estate services, with particular expertise in Special Needs Trusts. Established initially as "Orange County Trust and Safe Deposit Company" in 1892, trust services have been a core component of the company’s offerings. The company's commitment to trust services continued post-rebranding to Orange Bank & Trust Company in 2016, emphasizing its ongoing dedication to evolving its capabilities in this sector.

HVIA manages assets for a diverse clientele, which includes institutional investors, high-net-worth individuals, endowments, and nonprofit organizations. As of December 31, 2023, HVIA and the bank’s trust department had combined assets under management totaling $1.6 billion.

C. Historical Context

Orange County Bancorp's roots date back to its founding in May 1892, when the original entity commenced operations as the Orange County Trust and Safe Deposit Company. With a history spanning over a century, the organization rebranded itself in 2016, broadening its ambition to capture market share within the Lower Hudson Valley and New York City metropolitan areas.

D. Market Area

The bank’s activities are concentrated within the Lower Hudson Valley region, primarily servicing Orange, Westchester, Rockland, and Bronx Counties. With fifteen full-service branches and a loan production office, the bank capitalizes on its historical knowledge and community ties. The markets served exhibit favorable demographic and economic characteristics, including stable growth in deposits and populations due to shifting economic conditions, especially during the COVID-19 pandemic.

E. Business Strategy

Orange County Bancorp's primary focus lies in becoming the leading business bank within the Lower Hudson Valley, predominantly through organic growth. It emphasizes quality customer service combined with personalized engagement, aiming to become a trusted advisor to its clients. Recognizing the ongoing shift in banking preferences, especially after economic disruptions, the bank has also aimed to attract customers dissatisfied with larger, less personalized institutions.

F. Lending Activities

The bank's lending portfolio is diverse, comprising various loan types including commercial real estate loans, commercial and industrial loans, construction lending, and consumer loans. As of December 31, 2023, commercial real estate loans constituted the majority (approximately 72.1%) of the portfolio, highlighting the organization’s focus on funding real estate activity within its core markets.

The lending strategy includes disciplined underwriting standards, dynamic credit risk management, and adherence to internal policies, which helps the bank maintain a well-diversified loan portfolio. The bank utilizes independent appraisals for higher-value loans to further manage risk effectively.

G. Deposit Funding

Deposits function as the primary funding source for the bank’s lending operations. As of December 31, 2023, total deposits amounted to approximately $2 billion. A significant portion of these deposits stems from businesses, municipalities, and individual customers. The bank’s core deposit base (excluding time deposits) was substantial, comprising 89.1% of total deposits, offering a stable funding environment at a low cost of 1.26%.

H. Competition

The banking landscape for Orange County Bancorp is competitive, with many regional and national institutions offering similar services. To mitigate competitive disadvantages, the bank focuses on local marketing strategies and bolstering its reputation for exceptional customer service, responsiveness, and personalized banking solutions that larger competitors may not provide.

I. Personnel

As of December 31, 2023, Orange County Bancorp employed approximately 197 full-time equivalent staff members across its operational entities, emphasizing a team-oriented approach to customer service and operational excellence.

J. Subsidiaries

The company's primary operational subsidiaries are Orange Bank & Trust Company and Hudson Valley Investment Advisors, Inc., both of which provide complementary services that bolster the overall client offering of Orange County Bancorp.