Orange County Bancorp, Inc. /DE/

Previous wording

The following discussion and analysis of our financial condition and results of operations at June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025 and 2024 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, 2024. 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.

Current wording

The following discussion and analysis of our financial condition and results of operations at September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024 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, 2024. 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.

Previous wording

** ** 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 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 15 offices and one loan production office, continue to produce a stable source of low- 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, which combined had $1.8 billion in assets under management at June 30, 2025. As of June 30, 2025, our assets, loans, deposits and stockholders’ equity totaled $2.6 billion, $1.9 billion, $2.3 billion and $252.6 million, respectively.

Current wording

** ** 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, formally 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- 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 $1.9 billion in assets under management at September 30, 2025. As of September 30, 2025, our assets, loans, deposits and stockholders’ equity totaled $2.6 billion, $1.9 billion, $2.3 billion and $270.1 million, respectively.

Previous wording

At June 30, 2025, we operate from our main office and 14 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 eleven branch offices located in Middletown, Goshen, Cortlandt Manor, White Plains, Mamaroneck, New City, Mt. Pleasant, Mount Vernon, Bronx, Nanuet, and Yonkers, New York. The branches are leased under agreements that may be renewed for various periods. In addition, HVIA operates from leased offices located in Goshen, New York. At June 30, 2025 and December 31, 2024, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $14.9 million and $15.8 million, respectively.

Current wording

At September 30, 2025, 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 September 30, 2025 and December 31, 2024, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $15.2 million and $15.8 million, respectively.

Previous wording

Considering the impact of the FRB’s rate reduction during the second half of 2024 and 2025 economic conditions, it is possible that interest rates may be reduced during 2025. Although our asset sensitivity is relatively neutral, this movement could have a beneficial impact on our net interest income.

Current wording

Considering the impact of the FRB’s rate reduction during the second half of 2025 and 2025 economic conditions, it is possible that interest rates may be reduced further this year and during 2026. Although our asset sensitivity remains relatively neutral, this movement could have a beneficial impact on our net interest income.

Previous wording

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 HVIA 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, 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.

Current wording

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, 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.

Previous wording

Department of Financial Services (the “NYSDFS”) may revise the laws and regulations applicable to us, may impose new laws and regulations, increase the level of scrutiny of our business in the supervisory process, and pursue additional enforcement actions against financial institutions. Future legislative and regulatory changes such as these may increase our costs and have an adverse effect on our business, financial condition and results of operations. The legislative and regulatory trends that will affect us in the future are impossible to predict with any certainty.

Current wording

Regulatory Trends. We operate in a highly regulated environment and nearly all of our operations are subject to extensive regulation and supervision. Bank or securities regulators, Congress, the State of New York, the FRB and the New York State Department of Financial Services (the “NYSDFS”) may revise the laws and regulations applicable to us, may impose new laws and regulations, increase the level of scrutiny of our business in the supervisory process, and pursue additional enforcement actions against financial institutions. Future legislative and regulatory changes such as these may increase our costs and have an adverse effect on our business, financial condition and results of operations. The legislative and regulatory trends that will affect us in the future are impossible to predict with any certainty.

Previous wording

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 2024. 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 June 30, 2025, and as disclosed in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 2025 A summary of our accounting policies, including the Allowance for Credit Losses, is included in the Company’s Annual Report on Form 10-K.

Current wording

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 2024. 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 nine months ended September 30, 2025, and as disclosed in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 2025 A summary of our accounting policies, including the Allowance for Credit Losses, is included in the Company’s Annual Report on Form 10-K.

Previous wording

Assets. Our total assets were $2.6 billion at June 30, 2025, an increase of $96.3 million, or 3.8%, from December 31, 2024. The increase was primarily driven by increases of $99.7 million in loans, net and $25.3 million in cash and due from banks, while investment securities, available for sale, decreased by $33.0 million during the six months ended June 30, 2025.

Current wording

Assets. Our total assets were $2.6 billion at September 30, 2025, an increase of $126.5 million, or 5.0%, from December 31, 2024. The increase was primarily driven by increases of $116.7 million in loans, net and $39.6 million in cash and due from banks, while investment securities, available for sale, decreased by $17.1 million during the nine months ended September 30, 2025.

Previous wording

Cash and due from banks. Cash and due from banks increased $25.3 million, or 16.8%, to $175.6 million at June 30, 2025, from $150.3 million at December 31, 2024. The increase was mainly the result of the completion of a $46.0 million common stock follow-

Current wording

Cash and due from banks. Cash and due from banks increased $39.6 million, or 26.3%, to $189.9 million at September 30, 2025, from $150.3 million at December 31, 2024. The increase was mainly the result of the completion of a $46.0 million common stock follow-on offering during the second quarter combined with management’s focus on using deposit growth during the nine months ended September 30, 2025 to maintain a strong liquidity position while paying down borrowings.

Previous wording

Net loans increased $99.7 million, or 5.6%, and reached $1.9 billion at June 30, 2025 as compared to $1.8 billion at December 31, 2024. The growth was primarily due to an increase of $72.4 million related to commercial real estate loans as well as a $30.5 million increase in commercial real estate construction loans and an increase of $6.5 million in commercial and industrial loans offset by decreases in the residential real estate and consumer categories. Home equity loans also increased by $1.8 million during the six months ended June 30, 2025. Commercial real estate loans increased by $72.4 million, or 5.3%, to $1.4 billion at June 30, 2025. Construction loans increased $30.5 million, or 37.6%, to $111.5 million at June 30, 2025 from $81.0 million at December 31, 2024. Commercial and industrial loans experienced an increase of $6.5 million, or 2.7%, to $248.7 million at June 30, 2025 from $242.2 million at December 31, 2024. Consumer loans decreased $5.2 million, or 13.8%, to $32.8 million at June 30, 2025 from $38.0 million at December 31, 2024. Residential real estate loans decreased $3.8 million, or 5.1%, to $71.2 million at June 30, 2025 from $75.0 million at December 31, 2024. The overall diversification within the commercial real estate portfolio continues to provide stability while we remained focused on loan originations to new and existing customers during the three months and six months ended June 30, 2025 as well as our continued commitment to geographic expansion in our market area.

Current wording

Net loans increased $116.7 million, or 6.5%, and reached $1.9 billion at September 30, 2025 as compared to $1.8 billion at December 31, 2024. The growth was primarily due to an increase of $90.5 million related to commercial real estate loans as well as a $34.1 million increase in commercial real estate construction loans and an increase of $2.2 million in commercial and industrial loans as well as an increase of $2.7 million in home equity loans offset by decreases in the residential real estate and consumer loan categories. Commercial real estate loans increased by $90.5 million, or 6.6%, to $1.5 billion at September 30, 2025. Construction loans increased $34.1 million, or 42.0%, to $115.0 million at September 30, 2025 from $81.0 million at December 31, 2024. Commercial and industrial loans experienced an increase of $2.2 million, or 0.9%, to $244.5 million at September 30, 2025 from $242.2 million at December 31, 2024. Consumer loans decreased $2.9 million, or 7.7%, to $35.1 million at September 30, 2025 from $38.0 million at December 31, 2024. Residential real estate loans decreased $6.6 million, or 8.8%, to $68.4 million at September 30, 2025 from $75.0 million at December 31, 2024. The overall diversification within the commercial real estate portfolio continues to provide stability while we remained focused on loan originations to new and existing customers during the nine months ended September 30, 2025 as well as our continued commitment to geographic expansion in our market area.

Previous wording

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. Management will consider a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due, when it is deemed appropriate based on individual borrower conditions. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.

Current wording

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. Management will consider a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due, when it is deemed appropriate based on

Previous wording

The following table sets forth information regarding our non-performing assets. Non-performing loans aggregated approximately $11.7 million at June 30, 2025 as compared to $6.3 million at December 31, 2024.

Current wording

The following table sets forth information regarding our non-performing assets. Non-performing loans aggregated approximately $12.2 million at September 30, 2025 as compared to $6.3 million at December 31, 2024.

Previous wording

Non-performing loans at June 30, 2025 totaled $11.7 million and consisted of $8.4 million related to commercial real estate loans, $2.4 million associated with commercial and industrial loans, $100 thousand of residential real estate loans, and $828 thousand of home equity loans. Although there were increases in other loan segments, the level of non-performing loans was still mainly related to one non-accrual commercial real estate office space loan participation which was classified as non-accrual during the second quarter of 2024. During the third quarter of 2024, this loan was written down by approximately $8.7 million from its principal balance of $14.7 million and remains at $6.0 million as of June 30, 2025. The other loans designated as non-accrual were based upon individual analysis and payment performance. We had no other real estate owned at June 30, 2025 and December 31, 2024.

Current wording

Non-performing loans at September 30, 2025 totaled $12.2 million and consisted of $8.4 million related to commercial real estate loans, $2.9 million associated with commercial and industrial loans, $2 thousand of residential real estate loans, and $828 thousand of home equity loans. Although there were increases in other loan segments, the level of non-performing loans was still mainly related to one non-accrual commercial real estate office space loan participation which was classified as non-accrual during the second quarter of 2024. During 2024, this loan was written down by approximately $8.7 million from its principal balance of $14.7 million and remains at $6.0 million as of September 30, 2025. The other loans designated as non-accrual were based upon individual analysis and payment performance. We had no other real estate owned at September 30, 2025 and December 31, 2024.

Previous wording

Non-performing assets increased $5.4 million, or 86.0%, to $11.7 million, or 0.45% of total assets, at June 30, 2025 from $6.3 million, or 0.25% of total assets, at December 31, 2024 due to the increase in non-performing loans. Although an increase, the overall level of non-performing assets remains relatively stable at June 30, 2025. Management continues to focus on credit quality and attention to assets with potential concerns.

Current wording

Non-performing assets increased $5.9 million, or 93.1%, to $12.2 million, or 0.46% of total assets, at September 30, 2025 from $6.3 million, or 0.25% of total assets, at December 31, 2024 due to the increase in non-performing loans. Although reflecting an increase, the overall level of non-performing assets remains relatively stable at September 30, 2025. Management continues to focus on credit quality and attention to assets with potential concerns.

Previous wording

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 three months or six months ended June 30, 2025.

Current wording

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 three months or nine months ended September 30, 2025.

Previous wording

Classified Assets. Federal regulations provide that loans and other assets of lesser quality should be classified as “substandard”, “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that we will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the

Current wording

Classified Assets. Federal regulations provide that loans and other assets of lesser quality should be classified as “substandard”, “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that we will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the

Previous wording

On the basis of management’s review of our assets, we have classified $71.7 million of our assets at June 30, 2025 as substandard compared to $44.0 million at December 31, 2024, with the increase due to a combination of risk ratings resulting from certain trends and delinquencies within those loans. There were no doubtful assets as of June 30, 2025 and December 31, 2024. We designated $26.0 million of our assets at June 30, 2025 as special mention compared to $20.9 million designated as special mention at December 31, 2024.

Current wording

On the basis of management’s review of our assets, we have classified $69.8 million of our assets at September 30, 2025 as substandard compared to $44.0 million at December 31, 2024, with the increase 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 September 30, 2025 and December 31, 2024. We designated $36.0 million of our assets at September 30, 2025 as special mention compared to $20.9 million designated as special mention at December 31, 2024.

Previous wording

As presented below, the allowance for credit losses increased by $593 thousand, or 2.1%, to $28.4 million, or 1.48% of total loans at June 30, 2025, from $27.8 million, or 1.60% of total loans at June 30, 2024. The increase in the allowance was primarily due to

Current wording

As presented below, the allowance for credit losses decreased by $1.7 million, or 5.6%, to $29.3 million, or 1.51% of total loans at September 30, 2025, from $31.0 million, or 1.73% of total loans at September 30, 2024. The decrease in the allowance was

Previous wording

reserves associated with loan growth during the period combined with specific reserves on certain loans. The six months ended June 30, 2025 also included net charge-offs of approximately $148 thousand.

Current wording

primarily due to charge-offs during 2025. The nine months ended September 30, 2025 also included net charge-offs of approximately $3.0 million.

Previous wording

For the six months ended June 30, 2025 and 2024, respectively, no category of loans had a net charge-off ratio which exceeded 0.01% either individually, or in the aggregate.

Current wording

For the nine months ended September 30, 2025, the commercial and industrial segment of the loan portfolio had a net charge-off amount of $3.1 million, or a net charge-off ratio of 1.28% due mainly to a $2.1 million charge-off recognized during third quarter 2025 related to a participation loan. For the nine months ended September 30, 2025 and 2024, respectively, no other category of loans had a net charge-off ratio which exceeded 0.01% either individually, or in the aggregate.

Previous wording

Available for sale securities decreased $33.0 million, or 7.4%, to $410.8 million at June 30, 2025, due primarily to the sale of approximately $15 million of investment securities combined with limited purchases as well as continued declines for all investment categories due to normal amortization and cash flow during the six month period ended June 30, 2025.

Current wording

Available for sale securities decreased $17.1 million, or 3.9%, to $426.6 million at September 30, 2025, due primarily to the sale of approximately $15 million of investment securities combined with limited purchases as well as continued declines for all investment categories due to normal amortization and cash flow during the nine month period ended September 30, 2025.

Previous wording

Total deposits increased $123.4 million, or 5.7%, to $2.3 billion at June 30, 2025 from $2.2 billion at December 31, 2024 driven by continued deposit growth focused on maintaining strong liquidity and commercial transaction accounts during the first six months of 2025. Non-interest-bearing demand deposits increased $36.0 million due to normal business activity and continued focus on transactional accounts during the first six months of 2025. Interest bearing demand deposits experienced a $98.2 million, or 29.7%, increase and money market deposits increased $14.1 million, while savings deposits increased by $51.8 million during the first six months of 2025 primarily related to our continued strategic focus on business account activity. At June 30, 2025, our core deposits (which includes all deposits except for certificates of deposit) totaled $2.1 billion, or 93.7% of our total deposits. Certificates of deposit decreased by $76.7 million, or 34.7%, mainly from payoffs of brokered deposits during the six months ended June 30, 2025. We held approximately $106.5 million of brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at June 30, 2025 as compared to $180.0 million at December 31, 2024. This decrease represents a strategic initiative to reduce short term brokered deposits during the period as a result of increased core deposits and allow for replacement of maturing brokered deposits with transactional customer deposits and lower interest expense. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $6.6 million and $83.8 million, respectively, at June 30, 2025 and the CDARS and ICS networks totaled $6.9 million and $92.5 million, respectively, at December 31, 2024. Uninsured deposits, net of fully collateralized municipal relationships, remained stable and represent approximately 43% of total deposits as of June 30, 2025 and 39% of total deposits as of December 31, 2024.

Current wording

Total deposits increased $125.5 million, or 5.8%, to $2.3 billion at September 30, 2025 from $2.2 billion at December 31, 2024 driven by continued deposit growth focused on maintaining strong liquidity and commercial transaction accounts during the first nine months of 2025. Non-interest-bearing demand deposits increased $60.8 million due to normal business activity and continued focus on transactional accounts during the first nine months of 2025. Interest bearing demand deposits experienced a $112.1 million, or 33.9%, increase while money market deposits decreased $2.5 million, and savings deposits increased by $61.8 million during the first nine months of 2025 primarily related to our continued strategic focus on business account activity. At September 30, 2025, our core deposits (which includes all deposits except for certificates of deposit) totaled $2.2 billion, or 95.0% of our total deposits. Certificates of deposit decreased by $106.7 million, or 48.3%, mainly from non-renewals of brokered deposits during the nine months ended September 30, 2025. We held approximately $80.0 million of brokered deposits (excluding reciprocal deposits obtained through the Certificate Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) networks) at September 30, 2025 as compared to $180.0 million at December 31, 2024. This decrease represents a strategic initiative to reduce short term brokered deposits during the period as a result of increased core deposits and allow for replacement of maturing brokered deposits with transactional customer deposits and lower interest expense. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $5.2 million and $87.4 million, respectively, at September 30, 2025 and the CDARS and ICS networks totaled $6.9 million and $92.5 million, respectively, at December 31, 2024. Uninsured deposits, net of fully collateralized municipal relationships, remained stable and represent approximately 45% of total deposits as of September 30, 2025 and 39% of total deposits as of December 31, 2024.

Previous wording

Total borrowings from the Federal Home Loan Bank of New York were $31.0 million at June 30, 2025 and $123.5 million at December 31, 2024 as we made the strategic decision to pay down Federal Home Loan Bank advances, short term, by approximately $92.5 million. This decrease 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 $541.8 million from the Federal Home Loan Bank of New York as of June 30, 2025.

Current wording

Total borrowings from the Federal Home Loan Bank of New York were $32.5 million at September 30, 2025 and $123.5 million at December 31, 2024 as we made the strategic decision to pay down Federal Home Loan Bank advances, short term, by approximately $91.0 million. This decrease 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 $557.0 million from the Federal Home Loan Bank of New York as of September 30, 2025.

Previous wording

In September 2020, we issued $20.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of September 30, 2030, and bear interest at a fixed rate of 4.25% per year until September 30, 2025. From September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month SOFR plus 413 basis points, payable quarterly in arrears.

Current wording

In September 2025, we issued $25.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2025 Notes”) to certain institutional investors. The 2025 Notes are non-callable for five years, have a stated maturity of September 30, 2035, and bear interest at a fixed rate of 6.50% per year until September 30, 2030. From September 30, 2030 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month SOFR plus 320.5 basis points, payable quarterly in arrears.

Previous wording

Stockholders’ equity increased $67.1 million, or 36.1%, to $252.6 million at June 30, 2025 from $185.5 million at December 31, 2024. The increase was due to the combination of the completion of a follow-on common stock offering during the second quarter of 2025 with net proceeds of $43.0 million coupled with $10.5 million in net income and a decrease in unrealized losses of approximately $6.3 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 six months of 2025 offset by dividends of $3.0 million during the period.

Current wording

Stockholders’ equity increased $84.6 million, or 45.6%, to $270.1 million at September 30, 2025 from $185.5 million at December 31, 2024. The increase was due to the combination of the completion of a follow-on common stock offering during the second quarter of 2025 with net proceeds of $43.6 million coupled with $29.2 million in net income and a decrease in unrealized losses of approximately $15.6 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 nine months of 2025 offset by dividends of $4.7 million during the period.

Previous wording

The following tables present 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 June 30, 2025 and 2024. 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 $4.9 million and $4.6 million for the three months ended June 30, 2025 and 2024, respectively. Average deferred loan fees totaled $4.9 million and $4.7 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and nine month periods ended September 30, 2025 and 2024. 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 $4.9 million and $4.5 million for the three months ended September 30, 2025 and 2024, respectively. Average deferred loan fees totaled $4.9 million and $4.7 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest-bearing liabilities for the periods indicated. The table distinguishes between: (1) changes attributable to volume (changes in volume multiplied by the prior period’s rate); (2) changes attributable to rate (change in rate

Current wording

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest-bearing liabilities for the periods indicated. The table distinguishes between: (1) changes attributable to volume (changes in volume multiplied by the prior period’s rate); (2) changes attributable to rate (change in rate multiplied by the prior year’s volume) and (3) total increase (decrease) (the sum of the previous columns). Changes attributable to both volume and rate are allocated ratably between the volume and rate categories.

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Previous wording

General. Net income increased $2.2 million, or 27.4%, to $10.5 million for the three months ended June 30, 2025 from $8.2 million for the three months ended June 30, 2024. The increase was driven primarily by an increase of $1.0 million related to net interest income growth and an increase of $3.5 million in noninterest income, partially offset by an increase in noninterest expense of $1.3 million during the second quarter of 2025 as compared to the same quarter in 2024. Net income for the six months ended June 30, 2025 was $19.2 million, as compared to $17.5 million for the same period in 2024. The overall increase was driven by $3.1 million of net interest income growth combined with increased noninterest income of $4.2 million partially offset by an increase in noninterest expense of $2.5 million during the first six months of 2025 as compared to the same prior year period. The increase in

Current wording

General. Net income increased $6.8 million, or 211.5%, to $10.0 million for the three months ended September 30, 2025 from $3.2 million for the three months ended September 30, 2024. The increase was driven primarily by an increase of $4.0 million related to net interest income growth, an increase of $2.6 million in noninterest income, and a reduction in provision for credit losses of $3.3 million, partially offset by an increase in noninterest expense of $893 thousand during the third quarter of 2025 as compared to the same quarter in 2024. Net income for the nine months ended September 30, 2025 was $29.2 million, as compared to $20.7 million for the same period in 2024. The overall increase was driven by $7.0 million of net interest income growth combined with increased noninterest income of $6.8 million and a reduction in provision for net credit losses of $1.6 million partially offset by an increase in noninterest expense of $3.3 million during the first nine months of 2025 as compared to the same prior year period. The increase in non-interest income includes the recognition of gain associated with the sale of a branch location coupled with a Bank Owned Life Insurance gain related to policy proceeds from a death benefit.

Previous wording

Interest Income. Interest income increased $712 thousand, or 2.2%, to $33.2 million for the three months ended June 30, 2025 from $32.5 million for the three months ended June 30, 2024. This increase was driven by a $124.6 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 receivable (net of PPP loans) grew $151.4 million, or 8.8%, between the three months ended June 30, 2025 and June 30, 2024. During the period, the average yield of interest-earning assets decreased by 16 basis points from 5.52% for the three months ended June 30, 2024 to 5.36% for the three months ended June 30, 2025 as a result of the lower interest rate environment.

Current wording

Interest Income. Interest income increased $3.1 million, or 9.8%, to $34.5 million for the three months ended September 30, 2025 from $31.4 million for the three months ended September 30, 2024. This increase was driven by a $116.1 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 receivable (excluding PPP loans) grew $170.9 million, or 9.7%, between the three months ended September 30, 2025 and September 30, 2024. During the current period, the average yield of interest-earning assets increased by 25 basis points from 5.21% for the three months ended September 30, 2024 to 5.46% for the three months ended September 30, 2025 as a result of increased yields and fees associated with loans originated in 2025.

Previous wording

Interest income increased $1.5 million, or 2.4%, for the six months ended June 30, 2025 reaching $65.1 million from $63.6 million for the six months ended June 30, 2024. This increase was driven by an $85.5 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 receivable (net of PPP loans) grew $121.7 million, or 7.0%, between the six months ended June 30, 2025 and June 30, 2024. During the period, the average yield of interest-earning assets decreased by three basis points from 5.38% for the six months ended June 30, 2024 to 5.35% for the six months ended June 30, 2025 as a result of the lower interest rate environment.

Current wording

Interest income increased $4.6 million, or 4.9%, for the nine months ended September 30, 2025 reaching $99.7 million from $95.0 million for the nine months ended September 30, 2024. This increase was driven by a $95.9 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 receivable (excluding PPP loans) grew $138.3 million, or 7.9%, between the nine months ended September 30, 2025 and September 30, 2024. During the current period, the average yield of interest-earning assets increased by seven basis points from 5.32% for the nine months ended September 30, 2024 to 5.39% for the nine months ended September 30, 2025 as a result of increased yields and fees associated with loans originated in 2025.

Previous wording

Interest income on loans, net of PPP loans, increased by $1.3 million, or 4.9%, to $28.1 million during the three months ended June 30, 2025 from $26.8 million during the three months ended June 30, 2024. The increase in interest income on loans was primarily due to the increase in the average balance of loans (net of PPP loans). The average balance of these loans increased by $151.4 million, or 8.8%, to $1.9 billion for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase in the average balance of loans was due to growth in commercial real estate loan balances, including commercial real estate construction, as well as growth in our commercial and industrial loan portfolio. The average yield on loans, excluding PPP loans, decreased by 21 basis points to 6.00% for the three months ended June 30, 2025 from 6.21% for the three months ended June 30, 2024 as a result of the lower interest rate environment and competitive rate pressure within the market.

Current wording

Interest income on loans, net of PPP loans, increased by $3.5 million, or 13.1%, to $29.8 million during the three months ended September 30, 2025 from $26.4 million during the three months ended September 30, 2024. The increase in interest income on loans was primarily due to the increase in the average balance of loans (net of PPP loans) combined with higher yields during the current period. The average balance of these loans increased by $170.9 million, or 9.7%, to $1.9 billion for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in the average balance of loans was due to growth in commercial real estate loan balances, including commercial real estate construction, as well as growth in our commercial and industrial loan portfolio. The average yield on loans, excluding PPP loans, increased by 19 basis points to 6.13% for the three months ended September 30, 2025 from 5.94% for the three months ended September 30, 2024 as a result of focused loan pricing during 2025.

Previous wording

For the six months ended June 30, 2025, interest income on loans, net of PPP loans, increased by $3.0 million, or 5.8%, reaching $55.4 million as compared to $52.4 million for the six months ended June 30, 2024. The increase in interest income on loans represents the impact of growth in average loan balances (net of PPP loans) of $121.7 million between the six months ended June 30, 2025 and June 30, 2024. The increase in average loans outstanding was due to increases in commercial real estate balances, commercial real estate construction loans, and in the commercial and industrial segment of the loan portfolio. This increase in production was offset by a decrease in average yield on loans, excluding PPP loans, for the six month periods from 6.06% in 2024 to 6.02% in 2025. The decrease in the average yield on loans was driven by the effect of the lower interest rate environment during 2025 and competitive rate pressure within the market.

Current wording

For the nine months ended September 30, 2025, interest income on loans, net of PPP loans, increased by $6.5 million, or 8.2%, reaching $85.3 million as compared to $78.8 million for the nine months ended September 30, 2024. The increase in interest income on loans represents the impact of growth in average loan balances (net of PPP loans) of $138.3 million between the nine months ended September 30, 2025 and September 30, 2024. The increase in average loans outstanding was due to increases in commercial real estate balances, commercial real estate construction loans, and in the commercial and industrial segment of the loan portfolio. This increase in production was combined with an increase in average yield on loans, excluding PPP loans, for the nine month periods from 6.02% in 2024 to 6.06% in 2025. The increase in the average yield on loans was the result of focused loan pricing during 2025.

Previous wording

Interest income on securities decreased by $281 thousand to $3.1 million during the three months ended June 30, 2025 from $3.4 million during the three months ended June 30, 2024. The decrease in interest income on securities was driven primarily by a decrease in the average balance of securities outstanding during the current period due to certain maturities and securities sales. The average balance of securities decreased by $34.7 million, or 7.4%, to $432.7 million for the three months ended June 30, 2025 compared to $467.3 million for the three months ended June 30, 2024. The average yield on investment securities decreased by three basis points overall from 2.89% for the three months ended June 30, 2024 to 2.86% for the three months ended June 30, 2025. The decrease in the average yield reflected the continued maturity of lower yielding investments as well as the impact of $15.0 million in securities sold at the end of the current period.

Current wording

Interest income on securities decreased by $213 thousand to $3.0 million during the three months ended September 30, 2025 from $3.3 million during the three months ended September 30, 2024. The decrease in interest income on securities was driven primarily by a decrease in the average balance of securities outstanding during the current period due to certain maturities and securities sales. The average balance of securities decreased by $47.5 million, or 10.2%, to $415.9 million for the three months ended September 30, 2025 compared to $463.4 million for the three months ended September 30, 2024. The average yield on investment securities increased by twelve basis points overall from 2.78% for the three months ended September 30, 2024 to 2.90% for the three months ended September 30, 2025. The increase in the average yield reflected the continued maturity of lower yielding investments as well as the impact of the sale of $15.0 million of lower yielding securities in an investment portfolio repositioning which was executed at the end of the second quarter in 2025.

Previous wording

For the six months ended June 30, 2025, interest income on securities decreased by $591 thousand, or 8.7%, to $6.2 million during the period from $6.8 million during the six months ended June 30, 2024. The decrease in interest income on securities was due to a decrease in the average balance of securities during the current period. The average balance of securities decreased by $37.2 million, or 7.8%, to $437.2 million for the six months ended June 30, 2025 compared to $474.4 million for the six months ended June 30, 2024 due to certain maturities as well as a result of securities sold at the end of the current period. The average yield on investment securities decreased by one basis point overall from 2.87% for the six months ended June 30, 2024 to 2.86% for the six months ended June 30, 2025. The decrease in the average yield on securities was related to the maturity of lower yielding securities during the first half of 2025 and the impact of the securities sold at period end.

Current wording

For the nine months ended September 30, 2025, interest income on securities decreased by $804 thousand, or 8.0%, to $9.2 million during the current period from $10.0 million during the nine months ended September 30, 2024. The decrease in interest income on securities was due to a decrease in the average balance of securities during the current period. The average balance of securities decreased by $40.7 million, or 8.7%, to $430.0 million for the nine months ended September 30, 2025 compared to $470.7 million for the nine months ended September 30, 2024 due to certain maturities and securities sales. The average yield on investment securities increased by three basis points overall from 2.84% for the nine months ended September 30, 2024 to 2.87% for the nine months ended September 30, 2025. The increase in the average yield on securities was related to the maturity of lower yielding securities during the first nine months of 2025 combined with the impact of the sale of $15.0 million of lower yielding securities in an investment portfolio repositioning which was executed at the end of the second quarter in 2025.

Previous wording

Interest Expense. Interest expense decreased $309 thousand, or 3.7%, to $8.1 million for the three months ended June 30, 2025 from $8.4 million for the three months ended June 30, 2024. The decreased interest expense was primarily the result of the lower interest rate environment and the effect of increased core deposits on overall interest costs. The average rate paid on interest-bearing liablities decreased nine basis points to 1.85% during the three months ended June 30, 2025 as compared to 1.94% for the three month period ended June 30, 2024. The average balance of interest-bearing liabilities increased by $80.8 million, or 5.1%, reaching $1.7 billion for the three months ended June 30, 2025 from $1.6 billion for the three months ended June 30, 2024.

Current wording

Interest Expense. Interest expense decreased $887 thousand, or 10.5%, to $7.6 million for the three months ended September 30, 2025 from $8.5 million for the three months ended September 30, 2024. The decreased interest expense was primarily the result of the lower interest rate environment and the effect of increased core deposits on overall interest costs. The average rate paid on interest-bearing liablities decreased twenty-six basis points to 1.86% during the three months ended September 30, 2025 as compared to 2.12% for the three month period ended September 30, 2024. The average balance of interest-bearing liabilities increased by $34.5 million, or 2.2%, exceeding $1.6 billion for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Previous wording

Interest expense decreased $1.5 million, or 8.4%, to $16.4 million for the six months ended June 30, 2025 from $17.9 million for the six months ended June 30, 2024. The decrease in interest expense reflects the lower interest rate environment combined with the continuing effect of increased core deposits on overall deposit and funding costs during the period. The average rate paid on interest-bearing liabilities decreased 24 basis points to 1.99% during the six months ended June 30, 2025 as compared to 2.23% for the six month period ended June 30, 2024. The average balance of interest-bearing liabilities increased by $53.9 million, or 3.4%, to $1.7 billion for the six months ended June 30, 2025 as compared to $1.6 billion for the six months ended June 30, 2024.

Current wording

Interest expense decreased $2.4 million, or 9.1%, to $23.9 million for the nine months ended September 30, 2025 from $26.3 million for the nine months ended September 30, 2024. The decrease in interest expense reflects the lower interest rate environment combined with the continuing effect of increased core deposits on overall interest costs during the period. The average rate paid on interest-bearing liabilities decreased 24 basis points to 1.95% during the nine months ended September 30, 2025 as compared to 2.19% for the nine month period ended September 30, 2024. The average balance of interest-bearing liabilities increased by $47.3 million, or 3.0%, to $1.7 billion for the nine months ended September 30, 2025 as compared to $1.6 billion for the nine months ended September 30, 2024.

Previous wording

Interest expense on interest-bearing deposits increased by $206 thousand to $7.5 million for the three months ended June 30, 2025 from $7.3 million for the three months ended June 30, 2024. The increase in interest expense on interest-bearing deposits was due mainly to the increase in the average balance of interest bearing deposits. The average balance of interest-bearing deposits increased by $123.3 million, or 8.2%, to $1.6 billion for the three months ended June 30, 2025 as compared to $1.5 billion for the three months ended June 30, 2024 as a result of the increases in the average balances of all categories, but primarily due to the combination of increases in money market accounts, savings accounts, and certificates of deposit. The average cost of interest-bearing deposits decreased nine basis points to 1.85% during the three months ended June 30, 2025 as compared to 1.94% for the three months ended June 30, 2024.

Current wording

Interest expense on interest-bearing deposits decreased by $297 thousand to $6.4 million for the three months ended September 30, 2025 from $6.7 million for the three months ended September 30, 2024. The decrease in interest expense on interest-bearing deposits was due mainly to the increase in the average balance of interest bearing deposits combined with an average lower rate during the current period. The average balance of interest-bearing deposits increased by $105.6 million, or 7.3%, to $1.6 billion for the three months ended September 30, 2025 as compared to $1.4 billion for the three months ended September 30, 2024 as a result of the increases in the average balances of all deposit categories except certificates of deposit, which included brokered deposits at higher rates. The average cost of interest-bearing deposits decreased twenty basis points to 1.63% during the three months ended September 30, 2025 as compared to 1.83% for the three months ended September 30, 2024 as a result of the lower interest rate environment.

Previous wording

During the six months ended June 30, 2025, interest expense on interest-bearing deposits increased by $333 thousand, or 2.3%, to $14.6 million during the six months ended June 30, 2025 from $14.3 million during the six months ended June 30, 2024. The increase in interest expense on interest-bearing deposits for the six month period ended June 30, 2025 as compared to the same prior year period represents the effect of higher average balances of interest bearing deposits. The average balance of interest-bearing deposits increased by $116.5 million, or 8.0%, to $1.6 billion for the six months ended June 30, 2025 as compared to $1.5 billion for the six months ended June 30, 2024 primarily as a result of the increases in the average balances of certificates of deposit, money market accounts, and savings accounts. The average cost of interest-bearing deposits decreased 10 basis points to 1.86% for the six months ended June 30, 2025 as compared to 1.96% for the six months ended June 30, 2024.

Current wording

During the nine months ended September 30, 2025, interest expense on interest-bearing deposits increased by $36 thousand, or 0.2%, to just over $20.9 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The slight increase in interest expense on interest-bearing deposits for the nine month period ended September 30, 2025 as compared to the same prior year period represents the effect of higher average balances of interest bearing deposits offset by lower rates paid on those deposits. The average balance of interest-bearing deposits increased by $112.8 million, or 7.8%, to $1.6 billion for the nine months ended September 30, 2025 as compared to $1.5 billion for the nine months ended September 30, 2024 primarily as a result of the increases in the average balances of all deposit categories. The average cost of interest-bearing deposits decreased 12 basis points to 1.79% for the nine months ended September 30, 2025 as compared to 1.91% for the nine months ended September 30, 2024 as a result of the lower interest rate environment.

Previous wording

We also expensed a level amount of approximately $231 thousand in interest expense for both the three months ended June 30, 2025 and 2024 related to the issuance in September 2020 of $20.0 million in outstanding subordinated notes, which carries an interest rate of 4.25%. In addition, we expensed $461 thousand in interest expense for both the six months ended June 30, 2025 and June 30, 2024. These flat interest costs represent the debt service required as part of the 2020 subordinated notes.

Current wording

We also recorded interest expense of $617 thousand during the three months ended September 30, 2025 related to subordinated debt which was redeemed during the period as compared to $230 thousand in interest expense for the three months ended September 30, 2024 related to the issuance in September 2020 of $20.0 million in outstanding subordinated notes, which carries an interest rate of 4.25%. In addition, we expensed $1.1 million of interest expense for the nine months ended September 30, 2025 as compared to $691 thousand for the nine months ended September 30, 2024. The costs recorded during the 2025 period included interest costs associated with the debt service required as part of the 2020 subordinated notes as well as costs recorded as part of the redemption of the notes during third quarter 2025 which were replaced with the newly issued 2025 suborindated notes.