Orange County Bancorp OBT Form 10-Q filing Q3 FY2025

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Exhibit Index ​ ​ ​ 55

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Signatures ​ ​ ​ 56

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(UNAUDITED)

(Dollar amounts in thousands except per share data)

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See accompanying notes to unaudited condensed consolidated financial statements.

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ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollar amounts in thousands except per share data)

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See accompanying notes to unaudited condensed consolidated financial statements.

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See accompanying notes to unaudited condensed consolidated financial statements.

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ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(Dollar amounts in thousands except per share data)

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See accompanying notes to unaudited condensed consolidated financial statements.

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ORANGE COUNTY BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollar amounts in thousands except per share data)

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See accompanying notes to unaudited condensed consolidated financial statements.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Note 1 — Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Principles of Consolidation: The unaudited consolidated financial statements include Orange County Bancorp, Inc., a Delaware bank holding company (“Orange County Bancorp”) and its wholly owned subsidiaries: Orange Bank & Trust Company, a New York trust company (the “Bank”) and Orange Investment Advisors (“OIA”), formally known as Hudson Valley Investment Advisors (“HVIA”), a Registered Investment Advisor, together referred to as the “Company.” Intercompany transactions and balances are eliminated in consolidation.

The Company provides commercial and consumer banking services to individuals, small businesses and local municipal governments as well as trust and investment services through the Bank and OIA. The Company is headquartered in Middletown, New York, with seven locations in Orange County, New York, seven in Westchester County, New York, two in Rockland County, New York, and two in Bronx County, New York. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial real estate, commercial and residential mortgage loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the areas in which they operate.

Assets held by the Company in an agency or fiduciary capacity for its customers are excluded from the consolidated financial statements since they do not constitute assets of the Company. Assets held by the Company in an agency or fiduciary capacity for its customers amounted to $1.9 billion and $1.8 billion at September 30, 2025 and December 31, 2024.

Certain information and footnote disclosures normally included in the audited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2024 for Orange County Bancorp contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 2025. In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal and recurring accruals) necessary to present fairly the financial position as of September 30, 2025, the results of operations, comprehensive income, and changes in stockholders’ equity for the three and nine months ended September 30, 2025 and 2024 and cash flow statements for the nine months ended September 30, 2025 and 2024. The results of operations for any interim period are not necessarily indicative of the results that may be expected for the full year or for any future period. Certain reclassifications have been made to the financial statements to conform with prior period presentations.

Use of Estimates: To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Recent Accounting Pronouncements: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, enhancing disclosure requirements for reportable segments, focusing on significant segment expenses, the identification of a segment's chief decision making officer, and the metrics used by the chief decision making officer in evaluating segment-level operating performance.

In December 2023, the FASB issued ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, intended to enhance the transparency of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Specifically, the amendments in this ASU require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the amount determined by multiplying pretax income from continuing operations by the applicable statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The ASU also includes other amendments to improve the effectiveness of income tax disclosures.

ASU 2023-09 became effective for the Company on January 1, 2025 for annual reporting periods, on a prospective basis and is not anticipated to have a material effect on the Company’s consolidated financial statements.

Allowance for Credit Losses on Loans Receivable

The allowance for credit losses on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective, or pooled, basis for those loans which share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Individually evaluated loans are primarily non-accrual and collateral dependent loans. Periodically, certain substandard loans may be downgraded according to policy guidelines but will exhibit characteristics which do not require individual evaluation. The related allowance for those loans would be based on the pooling methodology in determining the appropriate reserve. Furthermore, the Company evaluates the pooling methodology at least annually to ensure that loans with similar risk characteristics are pooled appropriately. Loans are charged off against the allowance for credit losses when the Company believes the balances to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off. The Company does not estimate expected losses on accrued interest receivable on loans, as accrued interest receivable is reversed or written off when the full collection of the accrued interest receivable related to a loan becomes doubtful.

The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. The Company calculates estimated credit losses for these loan segments using quantitative models and qualitative factors. Further information on loan segmentation and the credit loss estimation is included in Note 3 – Loans and Allowance for Credit Losses.

During the quarter ended March 31, 2025, the Company updated and enhanced its Allowance for Credit Losses (“ACL”) estimation methodology related to the observed loss histories across its peer group and the evaluation of qualitative factors under the CECL framework. Specifically, the Company expanded its comparative peer group and the associated loss history for these institutions to include observations through December 31, 2024 and separately, adopted a scorecard-based approach to assess qualitative adjustments applied to the modeled credit loss estimates.

These updates were made to enhance forecasting accuracy based on current economic data and to improve consistency, transparency, and documentation in the evaluation of qualitative factors across the Company’s loan portfolios. The scorecard incorporates a structured assessment of various internal and external indicators, including changes in credit underwriting standards, economic and business conditions, probability of loss estimates, and portfolio composition among other criteria. These indicators are based on predefined criteria, with the results used to determine directional adjustments to the modeled loss rates.

Neither the model calibration employed to update loss drivers, nor the adoption of the scorecard represented a change in accounting principle; but rather a refinement in estimation technique within the existing CECL framework. The net impact of this methodological revision was not material to the Company’s consolidated financial statements for the nine month period ended September 30, 2025.

The Company believes this enhancement better aligns the quantitative and qualitative framework with regulatory expectations and internal risk management practices, and supports more consistent application over time.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Individually Evaluated Loans

On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. If the fair value of the collateral is less than the amortized cost basis of the loan, the Company will charge off the difference between the fair value of the collateral, less costs to sell at the reporting date and the amortized cost basis of the loan.

Allowance for Credit Losses on Off-Balance Sheet Commitments

The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancelable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. As noted above, the allowance for credit losses on unfunded loan commitments is included in other liabilities on the consolidated statement of financial condition and the related credit expense is recorded as provisions for credit losses in the consolidated statements of income.

Allowance for Credit Losses on Available for Sale Securities

For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more than likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available for sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of tax.

Changes in the allowance for credit losses are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. The Company does not estimate expected losses on accrued interest receivable on investments, as accrued interest receivable is reversed or written off when the full collection of the accrued interest receivable related to an investment becomes doubtful.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Note 2 — Investment Securities

The amortized cost and fair value of investment securities at September 30, 2025 and December 31, 2024:

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Proceeds from sales of securities and associated gains and losses for the three and nine months ended September 30, 2025 and 2024.

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For the three months ended September 30, 2025, the amount represents settlement adjustments associated with the sale of investment securities which took place at the end of the three months ended June 30, 2025.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The amortized cost and fair value of debt securities as of September 30, 2025 are shown below by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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Securities pledged at September 30, 2025 and December 31, 2024 had a carrying amount of $324,652 and $299,507 and were pledged to secure public deposits.

At September 30, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the US Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The following tables summarize those securities with unrealized losses for which an allowance for credit losses has not been recorded at September 30, 2025 and December 31, 2024, aggregated by major security types and length of time in a continuous unrealized loss position:

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As of September 30, 2025, the Company’s securities portfolio consisted of 248 securities, 215 of which were in an unrealized loss position. As of December 31, 2024, the Company’s securities portfolio consisted of 270 securities, 244 of which were in an unrealized

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

loss position. Unrealized losses are primarily related to the Company’s mortgage backed securities, U.S. government agency securities, and investments in obligations of states and political subdivisions as discussed below.

Available for sale securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the Consolidated Statements of Income when management intends to sell, or may be required to sell, the securities before they recover in value. Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely given the lack of historical credit losses and governmental backing. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality.

The Company’s available for sale debt securities portfolio includes U.S. government agencies and treasuries, mortgage-backed securities, corporate bonds, and obligations of states and political subdivisions, as well as other securities. These types of securities may include a risk of future impairment charges as a result of the changes in market interest rates, unpredictable nature of the U.S. economy and their potential negative effect on the future performance of the security issuers. Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. Management reviewed the collectability of these securities, taking into consideration such factors as financial condition of the issuers, credit ratings when available, reported capital ratios of the issuers, among other pertinent factors. Management also evaluated the credit quality, the ability and intent to hold these securities to maturity, and the impact of interest rates on the respective fair values of the securities. Based on that review and evaluation, it was determined that any change in fair value was temporary and did not result in impairment. Accordingly, no impairment was recognized during the three and nine months ended September 30, 2025. Accrued interest on investments, which is excluded from the amortized cost of available for sale debt securities, totaled $2.2 million and $2.2 million at September 30, 2025 and December 31, 2024, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

The Company does not intend to sell any of its available for sale debt securities in an unrealized loss position prior to recovery of their amortized cost basis, and it is more likely than not that the Company will not be required to sell any of its securities prior to recovery of their amortized cost basis.

The following table presents the activity in the allowance for credit losses associated with investment securities for the nine months ended September 30, 2025 and 2024:

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The recovery reflected in the table above represents the sale of the Signature Bank subordinated debt during the nine months ended September 30, 2024. At September 30, 2025 management evaluated the requirement for an allowance for credit losses associated with the corporate securities portfolio. It was determined that ACL-investments was not required.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Note 3 — Loans

Loans at September 30, 2025 and December 31, 2024 were as follows:

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Included in commercial and industrial loans as of September 30, 2025 and December 31, 2024 were loans issued under the SBA’s Paycheck Protection Program (“PPP”) of $136 and $170, respectively.

Allowance for Credit Losses

The Company engaged a third-party vendor to assist in the CECL calculation and internal governance framework to oversee the quarterly estimation process for the allowance for credit losses (“ACL”). The ACL calculation methodology relies on regression-based discounted cash flow (“DCF”) models that correlate relationships between certain financial metrics and external market and macroeconomic variables. The Company uses Probability of Default (“PD”) and Loss Given Default (“LGD”) with quantitative factors and qualitative considerations in the calculation of the allowance for credit losses for collectively evaluated loans. The Company uses a reasonable and supportable period of one year, at which point loss assumptions revert back to historical loss information by means of a one-year reversion period. Following are some of the key factors and assumptions that are used in the Company’s CECL calculations:

• methods based on probability of default and loss given default which are modeled based on macroeconomic scenarios;
• a reasonable and supportable forecast period determined based on management’s current review of macroeconomic environment;
• a reversion period after the reasonable and supportable forecast period;
• estimated prepayment rates based on the Company’s historical experience and future macroeconomic environment;
• estimated credit utilization rates based on the Company’s historical experience and future macroeconomic environment; and
• incorporation of qualitative factors not captured within the modeled results. The qualitative factors include but are not limited to

changes in lending policies, business conditions, changes in the nature and size of the portfolio, portfolio concentrations, and

external factors such as competition.

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Allowance for Credit Losses are aggregated for the major loan segments, with similar risk characteristics, summarized below. However, for the purposes of calculating the reserves, these segments may be further broken down into loan classes by risk characteristics that include but are not limited to regulatory call codes, industry type, geographic location, and collateral type.

Residential real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential real estate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying properties may be adversely affected by

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower.

Commercial and multi-family real estate lending entails additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as general economic conditions.

Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence.

Commercial and industrial lending, including lines of credit, is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In many cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the collateral value securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Bank’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.

Consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness and personal bankruptcy. In many cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

The following tables present the activity in the allowance by portfolio segment for each of the three and nine months ended September 30, 2025 and 2024: (Note: The activity presented does not include provisions recorded to support the reserve associated with off balance sheet commitments.)

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• The provision for credit losses on the income statement also includes approximately $108 associated with off balance sheet ACL.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

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• The provision for credit losses on the income statement also includes approximately ($56) associated with off balance sheet ACL.

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• The provision for credit losses on the income statement also includes approximately ($0) associated with off balance sheet ACL.

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• The provision for credit losses on the income statement also includes approximately ($200) associated with off balance sheet ACL.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The following tables present the balance in the allowance for credit losses and the amortized cost in loans by portfolio segment and based on impairment method as of September 30, 2025 and December 31, 2024:

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Included in the commercial and industrial loans collectively evaluated for impairment are PPP loans of $136 and $170 as of September 30, 2025 and December 31, 2024, respectively. PPP loans receivable are guaranteed by the SBA and have no allocation in the allowance.

Individually Analyzed Loans

Effective January 1, 2023, the Company began analyzing loans on an individual basis when management determined that the loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designated pool of loans, under the Company's CECL methodology. Loans individually analyzed include certain nonaccrual commercial, as well as certain accruing loans previously identified under prior troubled debt restructuring (TDR) guidance.

As of September 30, 2025, the amortized cost basis of individually analyzed loans was $58.4 million, of which $50.1 million were considered collateral dependent. As of December 31, 2024, the amortized cost basis of individually analyzed loans was $37.6 million, of which $29.8 million were considered collateral dependent. For collateral dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the ACL is

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan, at measurement date. Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage.

The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral dependent as of September 30, 2025 and December 31, 2024:

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(1) Commercial real estate – secured by various types of commercial real estate.

(2) Residential real estate – secured by residential real estate.

The following table presents the amortized cost in non-accrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2025 and December 31, 2024.

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As of September 30, 2025, the Company held $12.2 million in non-accrual balances and a related ACL of approximately $3.1 million. Within the non-accrual balances, $8.3 million of these loans had no ACL associated to them. As of December 31, 2024, the Company had $6.3 million in non-accrual loans and related ACL of approximately $186 thousand. Within the non-accrual balances, $6.0 million of these loans had no ACL associated related to them.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed within the scope of the Company’s internal underwriting policy.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The following table presents the aging of the amortized cost in past-due loans as of September 30, 2025 and December 31, 2024 by class of loans:

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As of September 30, 2025 and December 31, 2024, loans in the process of foreclosure were $12,839 and $6,533 respectively, of which $244 and $0 respectively, were secured by residential real estate.

Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater than $350 thousand and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well- defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The following tables summarize the Company’s loans by year of origination and internally assigned credit risk at September 30, 2025 and December 31, 2024 and gross charge-offs for the nine months ended September 30, 2025 and the year ended December 31, 2024:

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

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Loans to certain directors and principal officers of the Company, including their immediate families and companies in which they are affiliated, amounted to $13,502 at September 30, 2025 and December 31, 2024.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Note 4 — Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Individually Evaluated, or Collateral Dependent Loans and Other Real Estate Owned: The fair value of collateral dependent loans that are individually evaluated for impairment is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach and resulted in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Collateral dependent loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy.

Appraisals are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by a third-party appraisal management company that the Company has engaged in accordance with internal vendor management policies and approval of the Company’s Board of Directors. Once received, the appraisal review function is conducted by the appraisal management company and consists of a review of the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Through this review, the appraisal management company evaluates the validity of the appraised value and the strength of the conclusions; which are subsequently confirmed by a member of the Credit Department. Discounts to the appraised value are then applied to recognize the carrying costs incurred until disposition, realtor fees, deterioration in the quality of the asset, and the age of the appraisal. The net effect of these adjustments were included in the charge-off to the allowance upon acquisition of the foreclosed property and/or upon partial charge-off of the collateral dependent loan. The most recent analysis of property appraisals including the appropriate discount rates are incorporated into the allowance methodology for the respective loan portfolio segments.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Assets and liabilities measured at fair value on a recurring basis are summarized below:

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There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2025. The Level 3 amount reflects the fair value of certain subordinated notes with limited availability of market pricing and determined based on discounted cash flows and other market value indicators.

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There were no transfers between Level 1 and Level 2 during 2024. The Level 3 amount reflects the fair value of certain subordinated notes with limited availability of market pricing and determined based on discounted cash flows and other market value indicators.

Assets measured at fair value on a non-recurring basis as of September 30, 2025 and December 31, 2024 are summarized below:

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• (Level 2)
• (Level 3)_

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• (Level 2)
• (Level 3)_

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The fair value amounts shown in the above table are individually evaluated loans net of reserves allocated to said loans. The total reserves allocated to these loans were $740 thousand and $563 thousand at September 30, 2025 and December 31, 2024, respectively.

The following table presents additional quantitative information about level 3 fair value measured at fair value on a non-recurring basis at September 30, 2025 and December 31, 2024:

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(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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The carrying amounts and estimated fair values of the Company’s financial instruments not carried at fair value are as follows at September 30, 2025 and December 31, 2024:

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

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Note 5 — Deposits

A summarized analysis of the Bank’s deposits at September 30, 2025 and December 31, 2024:

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Time deposits that meet or exceed the FDIC insurance limit of $250 thousand at September 30, 2025 and December 31, 2024 were $10.4 million and $11.6 million, respectively.

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Scheduled maturities of time deposits for the next five years as of September 30, 2025, are as follows:

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Deposits of executive officers, directors and principal officers of the Company, including their immediate families and companies in which they are affiliated, amounted to $9.5 million and $19.4 million at September 30, 2025 and December 31, 2024, respectively.

Note 6 — Pension Plan and Stock Compensation

The Bank has a funded noncontributory defined benefit pension plan that covers substantially all employees meeting certain eligibility requirements. The pension plan was closed to new participants and benefit accruals were frozen as of December 31, 2015. The plan provides defined benefits based on years of service and final average salary.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The components of net periodic benefit cost for the Company’s noncontributory defined benefit pension plan for the three and nine months ended September 30, 2025 and 2024 are as follows:

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On March 16, 2023, the Board of Directors approved the Orange County Bancorp, Inc. 2023 Equity Incentive Plan (the “2023 Plan”), which provided for the issuance of 500,000 shares of Common Stock, plus the remaining shares under the 2019 plan. The restricted stock units granted, generally, will vest over three years in approximately 33% increments on the first, second and third anniversary of the date of grant.

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For the three months ended September 30, 2025 and 2024, the Company’s recognized stock-based compensation costs were $553 thousand and $666 thousand, respectively. For the nine months ended September 30, 2025 and 2024 the Company’s recognized stock-based compensation costs of $1.6 million and $1.9 million, respectively. The Company uses the fair value of the common stock on the date of award to measure compensation cost for restricted stock awards. Compensation cost is recognized over the vesting period of the award using the straight line method. There were no restricted stock awards granted during the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024, respectively. The grants generally vest at the rate of 33% per year with full vesting on the third anniversary date of the grant.

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The following table summarizes the activity of Restricted Stock Units, or RSUs during the nine months ended September 30, 2025:

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Note 7 — Accumulated Other Comprehensive Income

The following is changes in the accumulated other comprehensive income (loss) by component, net of tax, for the three and nine months ended September 30, 2025 and 2024.

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

The following reflects significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024:

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Note 8 — Revenue from Contracts with Customers

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income. The following table presents the Company’s gross sources of noninterest income for the three and nine months ended September 30, 2025 and 2024.

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(a) Not within the scope of ASC 606.

(b) The Other category includes safe deposit income, checkbook fees, and debit card fee income, totaling $290 and $272 for the three months ended September 30, 2025 and 2024, respectively, and $843 and $807 for the nine months ended September 30, 2025 and 2024 that are within the scope of ASC 606 and loan related fee income and miscellaneous income, totaling $1,045 and $473 for the three months ended September 30, 2025 and 2024, respectively, and $1,303 and $606 for the nine months ended September 30, 2025 and 2024 which are outside the scope of ASC 606.

The Company earns wealth management fees, which includes trust income and investment advisory income, from its contracts with trust and brokerage customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of the assets under management at month-end or quarter-end.

Note 9 — Segment Information

The Company's reportable segments are determined by the Chief Financial Officer, who is the designated Chief Operating Decision Maker (“CODM”), based upon information provided about the Company's products and services offered, primarily distinguished between banking and wealth management services provided by the Bank's wealth management division. They are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business. Financial performance of the Company's business segments is evaluated by the CODM through evaluation of revenue sources, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in determining the allocation of resources. The CODM reviews revenue sources to evaluate product pricing and significant expense to assess performance of each segment to evaluate compensation of certain employees. Segment pretax profit or loss is used to assess the performance of the banking segment by monitoring the margin between interest revenue and interest expense. Segment pretax profit or loss is used to assess the performance of the Wealth Management Division by monitoring wealth management fee income and AUM. Loans, investments, and deposits primarily provide the revenues in the banking operation and wealth management fee income provide the revenues for the Wealth Management Division. Interest expense, provision for credit losses, salaries and benefits expense, occupancy costs, and technology expense provide the significant expenses in the banking

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

segment, while salaries and benefits, occupancy, and technology costs are the significant expenses in the Wealth Management Division. All operations are domestic.

Management uses certain methodologies to allocate income and expense to the business segments. Certain expenses are allocated to segments based on proportionate use of services and related expenses. These include support unit expenses such as technology fees, administrative costs, operational expenses, and other charges associated with support functions. Taxes are allocated to each segment based on the effective rate for the period shown.

Banking

The Banking segment includes: commercial real estate, commercial real estate construction, commercial and industrial, multifamily, residential real estate, home equity, and consumer lending activities; cash management services; escrow management; deposit gathering; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support and sales.

Wealth Management

The Wealth Management Division, which includes our trust department and OIA, consists of: investment management services provided for individual and institutional customers; personal trust services, including but not limited to, trustee, administrator, and custodian; as well as other planning and advisory services.

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The following tables present the statements of income and total assets for the Company’s reportable segments at or for the three and nine months ended September 30, 2025 and 2024:

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ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

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Note 10 — Regulatory Capital Matters

The Bank is subject to regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and prompt corrective regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgements by regulators. Failure to meet the minimum capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks, (Basel III rules), became effective for the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer.” The capital conservation buffer is 2.5%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.

During June 2025, the Company completed a follow-on common stock offering with gross proceeds of approximately $46.0 million before discounts and expenses with net proceeds estimated at approximately $43.6 million. The Company downstreamed $41 million to the Bank. The offering issued approximately 2.0 million shares of common stock priced at $23.25.

In September 2025, the Company 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.

ORANGE COUNTY BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands except per share data)

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion and capital restoration plans are required. Capital levels at September 30, 2025 and at December 31, 2024 exceeded the regulatory minimum levels for the Bank to be considered well capitalized under the prompt corrective action regulations.

Actual and required capital amounts and ratios are presented below at September 30, 2025 and December 31, 2024 for the Bank.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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Overview

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.

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.

Key Factors Affecting Our Business

Net Interest Income. Net interest income is the most significant contributor to our net income and is the difference between the interest and fees earned on interest-earning assets and the interest expense incurred in connection with interest-bearing liabilities. Net interest income is primarily a function of the average balances and yields/rates of these interest-earning assets and interest-bearing liabilities. These factors are influenced by internal considerations such as product mix and risk appetite as well as external influences such as economic conditions, competition for loans and deposits and market interest rates.

The cost of our deposits and short-term borrowings is primarily based on short-term interest rates, which are largely driven by the Board of Governors of the Federal Reserve System’s (the “FRB”) actions and market competition. The yields generated by our loans and securities are typically affected by short-term and long-term interest rates, which are driven by market competition and market rates often impacted by the FRB’s actions. The level of net interest income is influenced by movements in such interest rates and the pace at which such movements occur.

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.

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.

Noninterest Expense. Noninterest expense includes salaries, employee benefits, occupancy, professional fees, directors’ fees and expenses, computer software expense, federal deposit insurance assessment, advertising expenses, advisor expenses related to trust income and other expenses. In evaluating our level of noninterest expense, we closely monitor our efficiency ratio. The efficiency ratio is calculated by dividing noninterest expense to net interest income plus noninterest income. We continue to seek to identify ways to streamline our business and operate more efficiently.

Credit Quality. We have well established loan policies and underwriting practices that have resulted in relatively low levels of loan charge-offs and nonperforming assets in recent periods. We strive to originate quality loans that will maintain the credit quality of our loan portfolio. However, credit trends in the markets in which we operate are largely impacted by economic conditions beyond our control and can adversely impact our financial condition.

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.

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.

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.

Critical Accounting Estimates

Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. These critical estimates, policies and their application are periodically reviewed with the Audit Committee and the board of directors. Management believes that the most critical accounting estimates, which involve the most complex or subjective decisions or assessments, are as follows:

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.

Discussion and Analysis of Financial Condition

Summary Financial Condition**.** The following table sets forth a summary of the material categories of our balance sheet at the dates indicated:

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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.

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.

Loans. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

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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.

Non-performing Assets

Management reviews a loan for individual evaluation when it is non-performing or when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When a loan is determined to be non-performing, the measurement of the loan in the allowance for credit losses is based on the fair value of the collateral for all collateral-dependent loans. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at the lower of carrying amount or fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for credit losses, or, if the existing allowance is inadequate, charged to expense of the current period. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. 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.

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.

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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.

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.

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.

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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 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.

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The following table summarizes classified assets of all portfolio types at the dates indicated:

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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.

Allowance for Credit Losses

On January 1, 2023, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. The allowance for credit losses is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio. The process to determine expected credit losses utilizes analytic tools and judgement and is reviewed on a quarterly basis. When management is reasonably certain that a loan balance is not fully collectable, an analysis is completed and a specific reserve may be established or a full or partial charge off could be recorded against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts. Management evaluates a variety of factors including available published economic information in arriving at its forecast. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the allowance for credit losses are qualitative reserves that are expected, but, in management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors may include changes in lending policies and procedures, size and composition of the portfolio, experience and depth of management and the effect of external factors such as competition, legal and regulatory requirements, among others. The allowance is available for any loan that, in management’s judgment, should be charged off. Although management uses the best information available, the level of the allowance for credit losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for credit losses. Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. Furthermore, the majority of the Bank’s loans are secured by real estate in the State of New York. Accordingly, the collectability of a substantial portion of the carrying value of the Bank’s loan portfolio is susceptible to changes in local market conditions and any adverse economic conditions. Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control.

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

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

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.

Investment Securities

The following table sets forth the estimated fair value of our available-for-sale securities portfolio at the dates indicated.

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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.

We did not have held-to-maturity securities at September 30, 2025 and December 31, 2024.

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Deposits

The following table sets forth our total deposit account balances, by account type, at the dates indicated:

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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.

Borrowings

Our borrowings consist of both short-term and long-term borrowings and provide us with one of our sources of funding. Maintaining available borrowing capacity provides us with a contingent source of liquidity.

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.

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. These notes were redeemed during September 2025 with a portion of the proceeds from the 2025 Notes as described below.

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.

Stockholders’ Equity

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.

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Average Balance Sheets and Related Yields and Rates

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.

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(1) Annualized.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

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(1) Annualized.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

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.

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

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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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For the nine months ended September 30, 2025, net interest income increased $7.0 million, or 10.2%, to $75.7 million from $68.7 million for the nine months ended September 30, 2024 due to an increase in net interest margin combined with increased average interest earning assets for the current period. The net interest margin increased 24 basis points to 4.09% for the nine months ended September 30, 2025 from 3.85% for the nine months ended September 30, 2024. Net interest rate spread grew by 31 basis points to 3.44% for the nine months ended September 30, 2025 from 3.13% for the nine months ended September 30, 2024.

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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.

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For the nine months ended September 30, 2025, the provision for credit losses totaled $6.2 million as compared to $7.8 million for the nine months ended September 30, 2024. The decreased provision for the nine months ended September 30, 2025 represented the effect of lower levels of specific reserves associated with certain loans during the period as compared to the nine months ended September 30, 2024 partially offset by loan portfolio growth during 2025. Additionally, the provision for the nine months ended September 30, 2024 included the recognition of a $1.9 million recovery associated with the 2023 write off of the Signature Bank subordinated debt in the amount of $5.0 million as well as the additional provision related to a nonaccrual commercial real estate loan participation identified during the second quarter of 2024.

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Noninterest Income. Noninterest income information is as follows:

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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.

For the nine months ended September 30, 2025, noninterest income increased by $6.8 million, or 58.2%, to $18.5 million as compared to $11.7 million for the nine months ended September 30, 2024. Our Wealth Management division revenues increased and represented a 15.7% increase reaching $10.4 million for the nine month period ended September 30, 2025 from $9.0 million for the nine month period ended September 30, 2024 as a result of continued growth in asset values and related fees during the current period. The nine months ended September 30, 2025 also included the impact associated with the $1.2 million gain on the branch location sale, the BOLI proceeds, and insurance claim proceeds, offset by a net loss of $568 thousand recorded on the sale of certain securities to reposition a portion of the investment portfolio and replace with higher yielding securities.

Noninterest Expense. Noninterest expense information is as follows:

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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.

Non-interest expense was $50.1 million for the first nine months of 2025, reflecting an increase of approximately $3.3 million, or 7.2%, as compared to $46.7 million for the same period in 2024. The increase in non-interest expense for the current nine month period was also due to continued investment in overall Company growth, primarily, increases in salaries and benefits, computer software expense, occupancy expense, and advertising expenses. For the nine months ended September 30, 2025, our efficiency ratio was 53.2% as compared to 58.2% for the same period in 2024.

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.

Financial Position and Results of Operations of our Wealth Management Business Segment

We conduct our business through two business segments: (1) our banking business segment, which involves the delivery of loan and deposit products to our customers through Orange Bank & Trust Company; and (2) our wealth management business segment, which includes asset management and trust services to individuals and institutions through OIA and Orange Bank & Trust Company that provides trust and investment management fee income.

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

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The market value of assets under management and/or administration at September 30, 2025 was $1.9 billion as compared to $1.8 billion at September 30, 2024. This includes assets held at both Orange Bank & Trust Company and OIA at September 30, 2025 and 2024.

Our income related to our wealth management business segment, which we record as noninterest income, increased $415 thousand or 13.30%, to $3.5 million for the three months ended September 30, 2025 compared to $3.1 million for the three months ended September 30, 2024. The increase was mainly due to the impact of equity markets and growth of the assets under management. Our income related to our wealth management business segment increased $1.4 million, or 15.7%, to $10.4 million for the nine months ended September 30, 2025 compared to $9.0 million for the nine months ended September 30, 2024. The increase was mainly due to the impact of equity markets.

Our expenses related to our wealth management business segment, which we record as noninterest expense, increased $127 thousand, or 5.8%, to $2.3 million for the three months ended September 30, 2025 compared to $2.2 million for the three months ended September 30, 2024. The increase in expenses was primarily due to continued growth of the business unit and continued investment in technology during the period. For the nine months ended September 30, 2025, our expenses related to our wealth management business segment increased $294 thousand, or 4.5%, to $6.8 million for the nine months ended September 30, 2025 compared to $6.6 million for the nine months ended September 30, 2024. The increase in expenses was primarily due to staffing costs during the period.

Liquidity and Capital Resources

Liquidity*.* Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and maturities and sales of securities. While maturities and scheduled amortization

of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

Our most liquid assets are cash and due from banks. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At September 30, 2025 and December 31, 2024, cash and due from banks totaled $189.9 million and $150.3 million, respectively. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $426.6 million at September 30, 2025 and $443.8 million at December 31, 2024.

Certificates of deposit due within one year of September 30, 2025 totaled $104.1 million, or 91.2% of total certificates of deposit. The largest concentration of certificates of deposit at September 30, 2025 represented brokered deposits in the amount of $80.0 million for diversified funding purposes.

We participate in IntraFi Network, allowing us to provide access to multi-million-dollar FDIC deposit insurance protection on deposits for customers, businesses and public entities. We can elect to sell or repurchase this funding as reciprocal deposits from other IntraFi Network banks depending on our funding needs. At September 30, 2025, we had a total of $92.6 million of IntraFi Network deposits, all of which were repurchased as reciprocal deposits from the IntraFi Network.

Although customer deposits remain our preferred source of funds, maintaining back up sources of liquidity is part of our prudent liquidity risk management practices. We have the ability to borrow from the Federal Home Loan Bank of New York and the Federal Reserve Bank of New York as well as other correspondent banks. At September 30, 2025, we had a total capacity of $643.4 million at the Federal Home Loan Bank of New York, of which $76.4 million was used to collateralize municipal deposits, and $10.0 million was utilized for long-term advances. At September 30, 2025, we also held $66.8 million of collateral at the Federal Reserve Bank of New York which could be utilized to provide additional funding through the discount window and an additional $171.1 million was available in borrowings through the Federal Reserve Bank’s Borrower-In-Custody (“BIC”) program. We also maintain additional borrowing capacity of $20.0 million of discretionary lines of credit with correspondent banks at September 30, 2025 with no outstanding balance. We also have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $5.0 million at September 30, 2025. There were no outstanding borrowings with ACBB at September 30, 2025.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash used in operating activities was $30.1 million and $21.8 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash used by investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $68.8 million for the nine months ended September 30, 2025 and net cash used in investing activities was $12.7 million for the nine months ended September 30, 2024. Net cash provided by financing activities, consisting of activity in deposit accounts and borrowings, was $78.2 million for the nine months ended September 30, 2025 and net cash from financing activities was $4.4 million for the nine months ended September 30, 2024.

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

Capital Resources*.* We are subject to various regulatory capital requirements administered by the FRB and the NYSDFS. At September 30, 2025 and December 31, 2024, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. See Note 10 to the Notes to the Unaudited Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q for actual and required capital amounts and ratios at September 30, 2025 and December 31, 2024.

Off-Balance Sheet Arrangements

Off-Balance Sheet Arrangements. We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments.

At September 30, 2025, we had $432.6 million in loan commitments outstanding. We also had $18.6 million in standby letters of credit at September 30, 2025.

Effect of Inflation and Changing Prices

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

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