Orange County Bancorp, Inc. /DE/

Previous 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.

Current wording

The following discussion and analysis of our financial condition and results of operations at March 31, 2026 and December 31, 2025 and for the three months ended March 31, 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.

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 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.

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 $1.6 billion in assets under management at March 31, 2026. As of March 31, 2026, our assets, loans, deposits and stockholders’ equity totaled $2.7 billion, $1.9 billion, $2.4 billion and $291.7 million, respectively.

Previous 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.

Current wording

At March 31, 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 March 31, 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.

Previous 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.

Current wording

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

Previous wording

Competition. The industry and businesses in which we operate are highly competitive. We may see increased competition in different areas including interest rates, underwriting standards and product offerings and structure. While we seek to maintain an appropriate return on our investments, we anticipate that we will experience continued pressure on our net interest margins as we operate in this competitive environment.

Current wording

Competition. The industry and businesses in which we operate are highly competitive. We may see increased competition in different areas including interest rates, underwriting standards and product offerings and structure. While we seek to maintain an appropriate return on our investments, we anticipate that we will experience continued pressure on our net interest margin as we operate in this competitive environment.

Previous wording

Economic Conditions. Our business and financial performance are affected by economic conditions generally in the United States and more directly in the market of the Lower Hudson Valley region, the New York metropolitan area and nearby markets in Connecticut and New Jersey where we primarily operate. The significant economic factors that are most relevant to our business and our financial performance include, but are not limited to, real estate values, interest rates and unemployment rates.

Current wording

Economic Conditions. Our business and financial performance are affected by economic conditions generally in the United States and more directly in the market of the Lower Hudson Valley region, the New York metropolitan area and nearby markets in Connecticut and New Jersey where we primarily operate. The significant economic factors that are most relevant and impactful to our business and our financial performance include, but are not limited to, real estate values, interest rates and unemployment rates.

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 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.

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 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 months ended March 31, 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.

Previous 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.

Current wording

Assets. Our total assets were $2.7 billion at March 31, 2026, an increase of $46.2 million, or 1.7%, from December 31, 2025. The increase was primarily driven by increases of $53.3 million in cash and due from banks and $2.2 million in loans, while investment securities, available for sale, decreased by $11.9 million during the three months ended March 31, 2026.

Previous 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.

Current wording

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

Previous 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.

Current wording

Net loans increased $2.2 million, or 0.1%, and remained relatively level at approximately $2.0 billion at March 31, 2026 and December 31, 2025. The slight increase included growth within the CRE construction category, home equity segment, and consumer sector offset by a decrease in commercial and industrial loans. Commercial real estate construction loans increased by $7.6 million, or 7.7%, to $106.9 million at March 31, 2026 from $99.3 million at December 31, 2025. Home equity loans increased $4.3 million, or 18.9%, reaching $26.9 million at March 31, 2026 from $22.6 million at December 31, 2025. Consumer loans grew $7.2 million, or 21.4%, to $40.6 million at March 31, 2026 from $33.4 million at December 31, 2025. Commercial and industrial loans decreased $18.7 million, or 7.5%, to $231.0 million at March 31, 2026 from $249.6 million at December 31, 2025. Commercial real estate and residential real estate loans remained level between March 31, 2026 and December 31, 2025. 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 ended March 31, 2026 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

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 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.

Previous 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.

Current wording

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

Previous 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.

Current wording

Non-performing loans at March 31, 2026 totaled $26.1 million and consisted of $23.0 million related to commercial real estate loans, $2.3 million associated with commercial and industrial loans, and $833 thousand of 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 million participation related to a senior living facility and the continued non-performance of a non-accrual commercial real estate office space loan participation which was classified as non-accrual during the second quarter of 2024. The office space loan remained at $6.0 million as of March 31, 2026. The other loans designated as non-accrual were based upon individual analysis and payment performance. We had no other real estate owned at March 31, 2026 and December 31, 2025.

Previous 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.

Current wording

Led by the increase in non-accrual loans, non-performing assets increased $15.0 million, or 134.4%, to $26.1 million, or 0.96% of total assets, at March 31, 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.

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 nine months ended September 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 ended March 31, 2026.

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

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 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

Previous wording

weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. We designate an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention.

Current wording

classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. We designate an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention.

Previous 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.

Current wording

On the basis of management’s review of our assets, we have classified $80.9 million of our assets at March 31, 2026 as substandard compared to $73.7 million at December 31, 2025, 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 March 31, 2026 and December 31, 2025. We designated $47.2 million of our assets at March 31, 2026 as special mention compared to $58.4 million designated as special mention at December 31, 2025.

Previous 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

Current wording

As presented below, the allowance for credit losses increased by $1.4 million, or 5.6%, to $27.8 million, or 1.43% of total loans at March 31, 2026, from $26.4 million, or 1.42% of total loans at March 31, 2025. The increase in the allowance was primarily due to

Previous 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.

Current wording

For the three months ended March 31, 2026, the commercial and industrial segment of the loan portfolio had a net charge-off amount of $17 thousand, or a net charge-off ratio of 0.74%. The consumer loan portfolio experienced net recoveries during the quarter of approximately $19 thousand related to collection of certain loans. For the three months ended March 31, 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.

Previous 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.

Current wording

Available for sale securities decreased $11.9 million, or 2.8%, to $407.5 million at March, 31, 2026 due mainly to limited purchases combined with continued declines for all investment categories, except corporate securities, due to normal amortization and cash flow during the three month period ended March 31, 2026.

Previous 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.

Current wording

Total deposits increased $39.4 million, or 1.7%, to $2.4 billion at March 31, 2026 from $2.3 billion at December 31, 2025 driven by continued deposit growth focused on commercial transaction accounts during the first quarter of 2026. This growth allows for continued stability and strength of liquidity levels for the Bank. Non-interest-bearing demand deposits increased $1.7 million due to normal business activity and continued focus on transactional accounts during the first three months of 2026. Interest bearing demand deposits experienced a $53.4 million, or 12.7%, increase while money market deposits decreased $369.7 million, and savings deposits increased by $447.0 million during the first three 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. At March 31, 2026, our core deposits (which includes all deposits except for certificates of deposit) totaled $2.3 billion, or 97.2% of our total deposits. Certificates of deposit decreased by $93.1 million, or 58.6%, mainly from non-renewals of brokered deposits during the three months ended March 31, 2026. We held approximately $30.0 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 million at March 31, 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% of total deposits as of March 31, 2026 and 46% of total deposits as of December 31, 2025.

Previous 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.

Current wording

Total borrowings from the Federal Home Loan Bank of New York were $10.0 million at March 31, 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 million from the Federal Home Loan Bank of New York as of March 31, 2026.

Previous 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.

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. A portion of these notes was used to redeem the September 2020 subordinated notes.

Previous 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.

Current wording

Stockholders’ equity increased $7.3 million, or 2.6%, to $291.7 million at March 31, 2026 from $284.4 million at December 31, 2025. The increase was due to the combination of $11.3 million in net income offset by an increase in unrealized losses of approximately $2.8 million on the market value of investment securities within the Company’s equity as accumulated other

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 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.

Current wording

The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three month periods ended March 31, 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 March 31, 2026 and March 31, 2025, respectively.

Previous wording

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

Current wording

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Previous 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.

Current wording

interest income growth and a reduction in provision for credit losses of $638 thousand partially offset by an increase in noninterest expense of $1.4 million as well as a reduction in noninterest income of $179 thousand during the first quarter of 2026 as compared to the same quarter in 2025.

Previous 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.

Current wording

Interest Income. Interest income increased $2.5 million, or 7.9%, to $34.4 million for the three months ended March 31, 2026 from $31.9 million for the three months ended March 31, 2025. This increase was driven by a $142.6 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 grew $125.4 million, or 6.9%, between the three months ended March 31, 2026 and March 31, 2025. During the current period, the average yield of interest-earning assets increased by 10 basis points from 5.33% for the three months ended March 31, 2025 to 5.43% for the three months ended March 31, 2026 as a result primarily of increased yields and fees associated with loans originated in 2025 and the early part of 2026.

Previous 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.

Current wording

Interest income on loans increased by $2.5 million, or 9.1%, to $29.8 million during the three months ended March 31, 2026 from $27.3 million during the three months ended March 31, 2025. The increase in interest income on loans was primarily due to the increase in the average balance of loans combined with higher yields during the current period. The average balance of these loans increased by $125.4 million, or 6.9%, to $2.0 billion for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in the average balance of loans was due to growth in commercial real estate construction loan balances as well as growth in our home equity loan portfolio. The average yield on loans increased by 13 basis points to 6.18% for the three months ended March 31, 2026 from 6.05% for the three months ended March 31, 2025 as a result of focused loan pricing during 2025 and the first quarter of 2026.

Previous 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.

Current wording

Interest income on securities decreased by $232 thousand to $2.9 million during the three months ended March 31, 2026 from $3.1 million during the three months ended March 31, 2025. 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 $24.6 million, or 5.6%, to $417.2 million for the three months ended March 31, 2026 compared to $441.8 million for the three months ended March 31, 2025. The average yield on investment securities decreased by six basis points overall to 2.81% for the three months ended March 31, 2026 from 2.87% for the three months ended March 31, 2025. The decrease in the average yield reflected the continued maturity of investments coupled with the effect of lower yields.

Previous 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.

Current wording

Interest expense on interest-bearing deposits decreased by $1.1 million to $6.0 million for the three months ended March 31, 2026 from $7.1 million for the three months ended March 31, 2025. The decrease in interest expense on interest-bearing deposits was due mainly to a decrease in the average rate on interest-bearing deposits during the current period. The average balance of interest-bearing deposits increased by $59.8 million, or 3.9%, to $1.6 billion for the three months ended March 31, 2026 as compared to $1.5 billion for the three months ended March 31, 2025 as a result of the increases in the average balances 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.

Previous 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.

Current wording

We also recorded interest expense of $430 thousand during the three months ended March 31, 2026 related to subordinated debt as compared to $230 thousand in interest expense for the three months ended March 31, 2025. The increase is related to the issuance in September 2025 of $25.0 million in outstanding subordinated notes.

Previous wording

The interest expense related to the FHLB and other borrowings for the first nine months of 2025 decreased to $1.9 million as compared to $4.7 million for the first nine months of 2024. For the nine months ended September 30, 2025, average FHLB and other borrowings decreased to $58.0 million with an average cost of 4.43% compared to $123.9 million of average FHLB and other borrowings with an average cost of 5.09% for the same period in 2024. The decrease in average borrowings was the direct result of paydowns driven by increased deposits during the current period.

Current wording

The interest expense related to borrowings in the first quarter of 2026 decreased to $98 thousand at an average cost of 3.97% as compared to interest expense of $931 thousand at an average cost of 4.44% for the same period in 2025. The first quarter 2026 average FHLB and other borrowings decreased to $10.0 million compared to $85.0 million of average FHLB and other borrowings in the same quarter of 2025. The decrease in average borrowings was the direct result of paydowns driven by increased deposits during

Previous wording

The interest expense related to borrowings in the third quarter of 2025 decreased to $616 thousand at an average cost of 4.44% as compared to interest expense of $1.6 million at an average cost of 4.97% for the same period in 2024. The third quarter 2025 average FHLB and other borrowings decreased to $55.1 million compared to $127.2 million of average FHLB and other borrowings in the same quarter of 2024. The decrease in average borrowings was the direct result of paydowns driven by increased deposits during the current period. Management was 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.

Current wording

the current period. Management was 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.

Previous wording

Net Interest Income. Net interest income increased $4.0 million, or 17.3%, to $27.0 million for the three months ended September 30, 2025 from $23.0 million for the three months ended September 30, 2024 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 51 basis points to 3.61% for the three months ended September 30, 2025 from 3.10% for the three months ended September 30, 2024, reflecting a 25 basis points increase in the average yield on interest-earning assets combined with a 26 basis points decrease in the average rate paid on interest-bearing liabilities. The net interest margin rose by forty-five basis points to 4.26% for the three months ended September 30, 2025 from 3.81% for the three months ended September 30, 2024 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 and investment portfolios during the current period.

Current wording

Net Interest Income. Net interest income increased $4.3 million, or 18.1%, to $27.9 million for the three months ended March 31, 2026 from $23.6 million for the three months ended March 31, 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 53 basis points to 3.81% for the three months ended March 31, 2026 from 3.28% for the three months ended March 31, 2025, reflecting a 10 basis points increase in the average yield on interest-earning assets combined with a 43 basis points decrease in the average rate paid on interest-bearing liabilities. The net interest margin rose by forty-five basis points to 4.40% for the three months ended March 31, 2026 from 3.95% for the three months ended March 31, 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.

Previous wording

Provision for Credit Losses. The Company recognized a provision for credit losses of $3.9 million for the three months ended September 30, 2025, compared to $7.2 million for the three months ended September 30, 2024. The decreased provision for the three months ended September 30, 2025 as compared to the same period in 2024 reflected lower levels of specific reserves associated with certain loans during the third quarter of 2025 as compared to the third quarter of 2024 offset by loan portfolio growth during the current period. The allowance for credit losses to total loans was 1.51% as of September 30, 2025, an increase of seven basis points, or 4.9%, versus 1.44% as of December 31, 2024.

Current wording

Provision for Credit Losses. The Company recognized a net recovery of $436 thousand in the provision for credit losses during the three months ended March 31, 2026, compared to a provision of $202 thousand for the three months ended March 31, 2025. The decreased provision for the three months ended March 31, 2026 as compared to the same period in 2025 reflected slower loan growth during the first quarter of 2026 combined with the effect of lower levels of reserves associated with certain types of loans closed during 2026. The allowance for credit losses to total loans was 1.43% as of March 31, 2026, a decrease of two basis points, or 1.4%, versus 1.45% as of December 31, 2025.

Previous wording

Noninterest income increased by $2.6 million, or 62.6%, reaching $6.8 million for the three months ended September 30, 2025 as compared to $4.2 million for the three months ended September 30, 2024. Our Wealth Management division revenues, which include our Trust and Asset Management businesses also experienced growth and represented a 13.3% increase quarter-over-quarter, to $3.5 million for the third quarter of 2025 as compared to $3.1 million for the third quarter of 2024 as a result of continued growth in asset values during the current period. During the same period, assets-under-management increased to $1.9 billion at September 30, 2025 from $1.8 billion at September 30, 2024. Additionally, the third quarter of 2025 included approximately $1.2 million of income associated with BOLI payments related to death benefit proceeds and the recognition of approximately $932 thousand associated with insurance proceeds from a fraud claim filed with the insurance carrier.

Current wording

Noninterest income decreased by $179 thousand, or 4.1%, reaching $4.2 million for the three months ended March 31, 2026 as compared to $4.4 million for the three months ended March 31, 2025. Our Wealth Management division revenues, which include our Trust and Asset Management businesses also experienced a decrease and represented a 5.0% decrease quarter-over-quarter, to $3.3 million for the first quarter of 2026 as compared to $3.4 million for the first 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 March 31, 2025.

Previous wording

Non-interest expense was $16.8 million for the third quarter of 2025, reflecting an increase of approximately $893 thousand, or 5.6%, as compared to $16.0 million for the same period in 2024. 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, computer software expense, FDIC insurance costs, and advertising expense. Our efficiency ratio was 49.9% for the three months ended September 30, 2025, from 58.8% for the same period in 2024.

Current wording

Non-interest expense was $17.9 million for the first quarter of 2026, reflecting an increase of approximately $1.4 million, or 8.7%, as compared to $16.5 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, professional fees, and advertising expense. Our efficiency ratio improved to 55.9% for the three months ended March 31, 2026, from 58.9% for the same period in 2025.

Previous wording

Provision for Income Tax. Our provision for income taxes for the three months ended September 30, 2025 was $3.0 million, compared to $788 thousand for the same period in 2024. The increase was directly related to provisions associated with higher levels of pre-tax income as well as the effect of certain tax adjustments for the quarter. Our effective tax rate for the three-month period ended September 30, 2025 was 23.0%, as compared to 19.7% for the same period in 2024. For the nine months ended September 30, 2025, our provision for income taxes was $8.7 million, as compared to $5.1 million for the nine months ended September 30, 2024. The increase for the current period was due to the increase in income before income taxes during the current nine month period. Our effective tax rate for the nine-month period ended September 30, 2025 was 23.0%, as compared to 19.9% for the same period in 2024. The growth of the effective tax rates for the 2025 third quarter and nine month periods was due to a reclassification of state tax expense and the increase in proportion of pre-tax income compared with non-taxable revenue (tax-exempt interest income and earnings on bank owned life insurance) during 2025 as compared to 2024.

Current wording

Provision for Income Tax. Our provision for income taxes for the three months ended March 31, 2026 was $3.3 million, compared to $2.6 million for the same period in 2025. The increase was directly related to provisions associated with higher levels of pre-tax income as well as the effect of certain tax adjustments for the quarter. Our effective tax rate for the three month period ended March 31, 2026 was 22.7%, as compared to 22.9% for the same period in 2025.