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Orange County Bancorp, Inc. /DE/ (OBT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 EPS was $0.63, down 11.8% year over year primarily on higher non-interest expense; consensus EPS was ~$0.68, implying a miss of $0.05 and modest negative surprise .
  • Net interest income rose 4.2% YoY to $23.1M; quarterly NIM was 3.78%, and efficiency ratio rose to 67.4% on compensation, technology, professional fees, and costs tied to a non-performing participation loan and a branch fraud incident .
  • Balance sheet trends were constructive: deposits +$114.6M YoY to $2.15B, loans +$68.7M YoY to $1.82B, FHLB short-term borrowings down $111.0M YoY; uninsured deposits ~39% and stable .
  • Wealth Management was a bright spot: trust + advisory income up 16.7% YoY to $3.3M in Q4; AUM/AUA ended at $1.78B (+12.9% YoY); Orange Wealth Management realignment announced Jan 29, 2025 is intended to deepen cross-sell across business banking .

What Went Well and What Went Wrong

What Went Well

  • Net interest income grew to $23.1M (+4.2% YoY) on higher loan interest and lower brokered/borrowing costs; quarterly NIM of 3.78% remained healthy versus industry averages .
  • Deposit-gathering and liquidity management: deposits +$114.6M YoY (money market +$94.1M) with stable uninsured deposits (~39%); FHLB short-term borrowings reduced to $113.5M from $224.5M YoY .
  • Wealth Management momentum: trust income $1.51M and investment advisory income $1.77M in Q4 (+16.7% YoY combined), and AUM/AUA reached $1.78B; CEO: “Orange Bank closed out 2024 with another solid quarter… deposit growth was robust…” .

What Went Wrong

  • EPS declined to $0.63 from $0.72 YoY on a sharp rise in non-interest expense to $18.5M (+25.4% YoY); efficiency ratio worsened to 67.4% (from 56.9%) .
  • Credit quality mixed: non-performing loans rose to $6.3M (0.35% of loans) due to a non-performing CRE participation loan, though Q4 provision showed a small net recovery of $51K .
  • Fraud-related costs and increased technology/professional fees pressured Opex, contributing to the EPS miss versus consensus .

Financial Results

Core P&L and Profitability (Quarterly progression)

MetricQ2 2024Q3 2024Q4 2024
Interest income ($M)$32.512 $31.436 $32.206
Interest expense ($M)$8.393 $8.468 $9.128
Net interest income ($M)$24.119 $22.968 $23.078
Provision for credit losses ($M)$2.210 $7.191 $(0.051)
Noninterest income ($M)$3.807 $4.174 $4.305
Noninterest expense ($M)$15.487 $15.947 $18.466
Net income ($M)$8.213 $3.216 $7.164
Diluted EPS ($)$1.46 $0.57 $0.63
NIM (%)4.10% 3.81% 3.78%
Efficiency ratio (%)55.5% 58.8% 67.4%

Year-over-Year (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024
Interest income ($M)$31.567 $32.206
Net interest income ($M)$22.149 $23.078
Noninterest income ($M)$3.743 $4.305
Noninterest expense ($M)$14.728 $18.466
Net income ($M)$8.124 $7.164
Diluted EPS ($)$0.72 $0.63
NIM (%)3.72% 3.78%
ROA (%)1.32% 1.14%
ROE (%)22.16% 15.09%
Efficiency ratio (%)56.9% 67.4%

Segment/Noninterest Breakdown and Wealth Management

MetricQ2 2024Q3 2024Q4 2024
Trust income ($M)$1.309 $1.379 $1.511
Investment advisory income ($M)$1.650 $1.741 $1.772
Combined trust + advisory ($M)$2.959 $3.120 $3.283
Service charges ($M)$0.232 $0.270 $0.278
AUM/AUA total ($M)$1,715.057 $1,792.119 $1,782.866

Balance Sheet & Credit KPIs (End of period)

KPIQ2 2024Q3 2024Q4 2024
Total assets ($M)$2,481.157 $2,519.099 $2,509.927
Loans ($M)$1,733.833 $1,796.094 $1,815.751
Deposits ($M)$2,199.281 $2,140.023 $2,153.359
FHLB short-term borrowings ($M)$0.000 $82.000 $113.500
Non-performing loans ($M)$15.990 $11.169 $6.299
NPL ratio (% of loans)0.92% 0.62% 0.35%
Uninsured deposits (% of total)~40% ~39% ~39%
Tier 1 leverage ratio (%)10.04% 10.06% 10.23%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quantitative guidance (revenue, margins, tax rate, etc.)FY/Q4 2024None providedNone providedMaintained (no formal guidance)
Cash dividend per shareQ4 2024$0.23 prior quarter$0.25 declared Nov 22, 2024Raised
Cash dividend per share (split-adjusted)Q1 2025$0.25 pre-split baseline$0.13 declared Feb 21, 2025Mechanically lowered due to 2-for-1 split
Capital actionsQ4 2024—2-for-1 forward stock split (record 1/9/2025; payable 1/10/2025; trading 1/13/2025)Liquidity/float enhanced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Interest rate/macro & NIMNIM expanded to 4.10% in Q2 on deposit mix and lower borrowings; Q3 NIM 3.81% NIM 3.78%; net interest income up 4.2% YoY Stable-to-slightly lower quarterly NIM, resilient YoY
Deposits & liquidityQ2: +$160.5M deposits; paid down FHLB to $0; Q3: seasonal deposit dip; BTFP use and strong FHLB capacity YoY deposits +$114.6M; FHLB short-term at $113.5M; brokered deposits ~$180M Core growth with opportunistic non-core funding
Credit quality & CRE office exposureQ2: specific non-accrual drove provision; Q3: $5.6M specific reserve; civil complaint vs lead lender (Valley National) NPLs $6.3M (0.35%); provision net recovery $51K; ACL/loans 1.44% Specific issue contained; ratios improved
Wealth Management strategyQ2–Q3: trust/advisory growth; cross-sell of idle deposits into HVIA Q4: trust+advisory +16.7% YoY; Orange Wealth Management realignment announced Strengthening fee income and integration
Operating costs/efficiencyQ2: efficiency ~55.5%; Q3: 58.8% with growth investments Q4: 67.4% on fraud-related costs, non-performing loan participation costs, tech/pro fees Cost pressure near term, expected to normalize

Management Commentary

  • “Orange Bank closed out 2024 with another solid quarter… Earnings of $7.2 million… Though below our record $29.5 million in earnings the prior year, I am pleased by the results given challenges in the current interest rate environment and significant charges related to a non-performing participation loan.” – President & CEO Michael Gilfeather .
  • “Deposit growth was also robust during 2024… majority of these new deposits were sourced internally as the result of a very targeted and strategic initiative.” .
  • “Our Wealth Management business… contributed $3.3 million… a 16.7% increase over the same period last year… promotion of David Dineen… further aligning and expanding the capabilities of the Bank with the needs of our customers.” .
  • On liquidity: cash $150.3M; AFS securities $453.5M with $104.7M unpledged; FHLB overnight capacity $512.2M with $398.7M unused borrowing capacity .

Q&A Highlights

  • No public transcript accessible; MarketBeat lists a conference call on Feb 5, 2025 at 7:00 AM ET, but Q&A details were not available through our sources .
  • Clarifications from the press release: effective tax rate in Q4 was 20.1% vs 24.1% YoY; non-interest expense drivers included fraud-related costs and participation loan charges; provision in Q4 was a net recovery due to slower loan growth and loan mix .

Estimates Context

  • S&P Global consensus via our tool was unavailable for Q4 2024. Third-party aggregation indicates consensus EPS ~$0.68 vs actual $0.63 (miss ~$0.05); revenue/“total interest income” consensus not reliably accessible through S&P feed in this session .
  • Expect estimate revisions to reflect higher Opex run-rate and credit costs (despite Q4 provision recovery), offset by stable NIM and deposit trends .

EPS vs Consensus

MetricQ4 2024
EPS Actual ($)$0.63
EPS Consensus ($)$0.68
Surprise ($)-$0.05

Key Takeaways for Investors

  • Near-term: EPS miss was driven by transitory Opex (fraud incident, participation loan-related costs); watch ensuing quarters for normalization in the efficiency ratio and any further charges tied to the non-performing CRE participation .
  • Core banking trends are solid: NIM resilience, NII growth, stable uninsured deposits, and improved funding profile via reduced FHLB dependence year over year .
  • Credit risk appears contained: NPL ratio declined to 0.35%, provision swung to net recovery; monitor resolution of the participation loan and any legal developments referenced in Q3 .
  • Fee-income diversification is working: sustained growth in trust/advisory and strategic realignment into Orange Wealth Management enhances cross-sell with business banking .
  • Capital returns and float: dividend maintained/increased across Q4 and split-adjusted Q1; 2-for-1 split improves liquidity, potentially broadening the shareholder base .
  • Medium term: Thesis hinges on disciplined deposit gathering, NIM stability, cost control post one-off events, and continued Wealth Management growth to buffer spread income cyclicality .