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To Our Shareholders,
Customers and Friends:
The year 2006 was both an exciting and
challenging year for Orange County Trust Company. On June 30, 2006 we
wished a fond farewell to our longtime President and C.E.O., Mr. John
Borland. John served the Bank for 25 years, with 15 of those years as
President and C.E.O. He has agreed to remain on our Board of
Directors and we are pleased to continue to have his knowledge,
experience
and insight to
help guide us into the future. I feel very fortunate to have had the
opportunity to work closely with John and to learn from his vast knowledge of the banking industry. His years at the helm
brought the Bank unprecedented growth and prosperity. We are all beneficiaries of his legacy.
Stepping into the role of President and C.E.O. on July 1, 2006, I knew I
had some pretty big shoes to fill. With the help of the Board, Senior
Management and the entire Staff, we can be proud of the results at
the end of the Trust Company's 115th year. Like so many in our industry,
we were challenged with a difficult banking
environment. Industry wide, net interest margins were at a 17 year low and we
were faced with a steeply inverted yield curve. Despite this unfriendly
climate, the Bank prospered by ending the year with earnings of $6,746,616,
a 6.37% increase over 2005.
We ended
the year with $211,724,718 in loans, an increase of $19,851,251. The credit
quality of
our loan portfolio continued to be
strong and collateral values stable.
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Several substandard loans were either paid out or stabilized and
upgraded. Our criticized and classified loans were reduced by
$2,872,135, or 37%, during 2006. We feel our loan portfolio is sound and
that we are in a position to manage changes in the economy should they
occur.
We were pleased to introduce two
new products to the market. We developed a
suite of banking services tailored to fit the
needs of the medical profession. Our "Med-Banking" product was rolled out in
October and has been very well received. With
a rapidly growing medical industry in our
region, we are excited about the opportunities
this product brings to our community and to
us. We also partnered with Vanguard to bring
a simple, yet intelligent, way to build and monitor retirement assets to
those who lack the time
or expertise to manage their own assets. Life
Strategy and Target Retirement Funds, created
by Vanguard, are designed to fit specific life
stages and personal tolerance for risk.
In October we entered into a lease
agreement for a parcel of land in the Town of Newburgh. We will be expanding
our franchise
to six branches. We believe we can better serve
the Newburgh market by offering full banking
services in two strategically placed locations
on Route 32, with our existing Branch in Vails
Gate and the second in the north end.
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January, 2007
FINANCIAL HIGHLIGHTS 2006:
Net income for the year was $6,746,616. This compares favorably to net
income in 2005 of $6,342,752. Total assets at year-end were $450,695,972, an
increase of $28,293,485 over the $422,402,487 reported
in 2005. Total
deposits were $261,452,788 at
year-end, compared to $258,385,775 the
previous year.
The allowance for loan losses
increased by $266,541 during the year. The
year-end allowance is 1.28% of outstanding loans, an amount Management has
determined
is adequate. Non-accruing loans totaled $1,578,920 at year-end compared to
$1,303,681 at year-end last year. The net
charge-offs for the year were $71,541.
Total equity capital in 2006 was $68,499,488 compared to $61,368,462 last
year. Our capital ratio of 15.11% is one of the strongest for commercial
banks in New York State.
In December, the Directors
increased the quaterly dividend to $.20 per share from $.104 for the previous period,
a 92% increase. The dividend for 2006 was $.512, a 42% increase over the
previous year. The Directors appreciate the Shareholders' confidence in
our Bank and view the increase as a means to enhance shareholder value.
As the new President and C.E.O. of Orange County Trust Company, I am
committed to the unique role of a
community bank.
I will hold true to our principles of integrity in all matters, community
involvement and investment, and enhanced stakeholder value.
I would like to thank our Board of Directors, our Officers and Employees,
and you, our community, for our continued success.
Sincerely,
Terry R.
Saturno
President and Chief Executive Officer
an
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