OBT Filings — Orange County Bancorp, Inc. - FilingSpy
OBT
Orange County Bancorp, Inc.
A New York community bank holding company, Orange County Bancorp serves small and mid-sized businesses, professionals, and wealthy families across the Lower Hudson Valley through its banking, trust, and wealth-management arms. It traces its roots to 1892, when fourteen founders opened the Orange County Trust and Safe Deposit Company in Middletown to serve local merchants and families. The bank only shortened its name to Orange Bank & Trust in 2016, and its trust unit keeps a niche focus on Special Needs Trusts for families caring for people with disabilities.
A $4.8M valuation loss on loans moved to held-for-sale pushed noninterest income to a loss, but a tax-allowance reversal lifted Q2 net income 30.6% to $13.7M.
A second large loan participation soured this quarter, pushing non-performing assets to $22.2 million. still rose 30.6% to $13.7 million, as grew 13.1% and a $2.1 million reversal more than offset a $4.8 million loss on loans transferred to . The Valley National Bank lawsuit settled, but credit stress is spreading beyond the single office loan that defined the last two years.
Key takeaways
Non-performing assets nearly doubled to $22.2 million, or 0.79% of total assets, driven by a $14.2 million commercial real estate participation loan that entered bankruptcy during the quarter.
rose 13.1% to $28.4 million as average loan yields increased 3 to 6.03% and deposit costs fell 44 basis points to 1.41%.
Noninterest income swung to a $607,000 loss from $7.3 million a year ago, almost entirely because of a $4.8 million valuation loss on loans transferred to .
Section summaries
Management's Discussion and Analysis
Net income rose 30.6% to $13.7M in Q2 FY2026 driven by net interest income growth and a credit provision recovery.
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grew 13.1% to $28.4M in Q2 FY2026 as average loan yields rose 3 to 6.03% and deposit costs fell 44 bps to 1.41%.
The company reversed its , producing a $2.1 million income tax credit that accounted for the difference between the 20.8% decline in and the 30.6% rise in .
A $1.0 million was recorded, compared to a $2.1 million provision a year ago, reflecting slower loan growth and lower reserves on new loans.
The lawsuit against Valley National Bank over the legacy office CRE loan participation was confidentially settled on May 20, 2026, resolving all claims.
What changed
The Valley National Bank lawsuit, flagged in every filing since Q3 2024, was confidentially settled in May 2026; the financial terms were not disclosed, so the effect on the provision and the carrying value of the legacy office CRE loan remains unknown.
The single-office-loan credit problem that defined 2024 and 2025 has now been joined by a second large troubled credit: a $14.2 million senior living facility participation placed in bankruptcy this quarter, after first appearing as a $14.3 million non-accrual in Q1 2026.
The widened to 4.40% in Q1 2026 and the Q2 2026 drivers point to further expansion, sustaining the trajectory that began in FY2025; the bank's own model now shows a 200-basis-point rate cut would reduce by 9.82%, up from 8.44% last quarter.
Wealth management , which had grown steadily as a capital-light income stream, fell 5.0% in Q1 2026 and the Q2 2026 noninterest income loss suggests the 's contribution was again overshadowed by balance-sheet items.
The $43.4 million equity raise from Q2 2025 has been fully absorbed: all FHLB advances were repaid by year-end 2025, and reached $306.6 million, up 21.4% , but will now depend on how the capital is deployed into earning assets rather than de-leveraging.
What to watch
Resolution of the $14.2 million CRE participation loan in bankruptcy: any charge-off, specific reserve, or recovery will directly affect the provision and non-performing asset levels in Q3 2026.
The financial terms and accounting impact of the confidential Valley National Bank settlement, including any recovery that reduces the carrying value of the legacy office CRE loan.
Whether additional CRE credits migrate to non-accrual status now that two large participations are troubled, particularly given the bank's 75.9% CRE concentration and 370% ratio to risk-based capital.
The deployment of the transferred loans and whether the $4.8 million valuation loss is recovered or followed by additional marks.
A $1.0M credit provision recovery in Q2 FY2026, versus a $2.1M provision a year ago, reflected slower loan growth and lower reserves on new loans.
Noninterest income swung to a $607K loss in Q2 FY2026, mainly from a $4.8M valuation loss on loans transferred to held-for-sale.
nearly doubled to $22.2M (0.79% of assets), driven by a $14.2M commercial real estate participation loan in bankruptcy.
Total deposits grew 5.2% to $2.4B, with a strategic shift from money market and brokered CDs into savings and noninterest-bearing demand accounts.
The company reversed its , resulting in an income tax credit of $2.1M for Q2 FY2026.
As of June 30, 2026, the Company is not currently a named party in a legal proceeding, the outcome of which would have an adverse material effect on the financial condition or results of operations of the Company. On October 25, 2024, the Bank filed a civil complaint in the Unit…
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As of June 30, 2026, the Company is not currently a named party in a legal proceeding, the outcome of which would have an adverse material effect on the financial condition or results of operations of the Company.
On October 25, 2024, the Bank filed a civil complaint in the United States District Court for the District of New Jersey against the lead lender, Valley National Bank, of a non-performing commercial real estate loan participation. This action cited breach of contract and other claims related to the participation agreement with the lead lender. The lawsuit requested damages and demanded repurchase by the lead lender of the participated loan amount in accordance with the rights available under the terms of the participation agreement. On May 20, 2026, the parties entered into a confidential settlement agreement resolving all claims asserted in the action.
There has been no material change to Risk Factors as disclosed in the Company’s 2025 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2026.
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There has been no material change to Risk Factors as disclosed in the Company’s 2025 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2026.