OBT · Orange County Bancorp, Inc.

Orange County Bancorp delivered solid Q1 2026 results, with net income of $11.3 million marking a 29.6% increase from $8.7 million in the prior year quarter. This performance stemmed from the increase in interest income on loans, primarily driven by higher average loan balances combined with elevated yields. Management highlighted growth in commercial real estate construction loan balances alongside expansion in the home equity loan portfolio as key contributors to this volume-driven revenue uplift.

Diluted EPS advanced 10.4% to $0.85 from $0.77, underscoring earnings momentum that exceeded modest share count growth. Expense control played a supportive role, with decreases primarily attributable to lower staffing levels following the 2025 division reorganization. This discipline helped preserve profitability amid a competitive operating environment.

Cash generation strengthened significantly, as net cash provided by operating activities surged to $10.2 million from $4.8 million year-over-year. After accounting for $563 thousand in capital expenditures—up slightly from $494 thousand—free cash flow totaled $9.7 million. This robust liquidity position reflects management's focused efforts on deposit growth during the quarter, complemented by loan repayments, which elevated available funds.

Strategically, management continued to prioritize lower-cost deposit funding over higher-cost FHLB borrowings, successfully replacing such debt to reduce interest expense. This shift not only optimized the cost of funds but also represented a deliberate strategy to curtail borrowings and associated expenses. Available borrowing capacity remains a key contingent liquidity source, ensuring flexibility to meet funding commitments.

Looking forward, while the company anticipates sufficient funds for current obligations, it expects ongoing pressure on net interest margins in this competitive landscape. The emphasis on maintaining appropriate investment returns, alongside loan portfolio growth in targeted segments, positions Orange County Bancorp to navigate these dynamics while sustaining balance sheet strength.