GLENS
FALLS, N.Y., July 24,
2023 /PRNewswire/ -- Arrow Financial Corporation
(NasdaqGS® – AROW) announced financial results for the
three-month period ended March 31, 2023. Net income for the
first quarter of 2023 was $8.6
million and diluted earnings per share was $0.52.
First-Quarter Highlights and Key Metrics
- Total assets were $4.1
billion.
- Total deposits were $3.5
billion.
- Total loans reached a record high of $3.0 billion as of March
31, 2023, an increase of $22.1
million from December 31,
2022.
- Loan-to-deposit ratio was 85%.
- Tangible book value per share was $20.55, an increase of $0.60, or 3.01% compared to December 31, 2022.
- On-balance sheet liquidity of $409
million, or 10%, of total assets; 5% cash and 5%
unencumbered readily marketable securities.
- Additional $1.3 billion of
immediately available liquidity with FHLB, FRB and other bank
lines.
- Immediately available liquidity provides in excess of 150%
coverage of uninsured deposits.
- Nonperforming assets decreased to $11.3
million at March 31, 2023,
represented 0.27% of period-end assets.
- Net charge-offs to average loans for the first quarter of 2023
were 0.10% as compared to 0.09% for the previous quarter.
- Revenue was $34.8 million.
- Net income was $8.6 million.
- Non-interest expenses of $22.3
million included $1.0 million
in incremental expenses related to the delayed filing of the Annual
Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K").
- Net interest margin was 2.96%.
- Return on average assets (ROA) was 0.87%.
- Return on average equity (ROE) was 9.66%.
"In the face of a challenging banking environment, Arrow
continued to add to its deposit base and maintained a strong
liquidity position while meeting the credit needs of our customers
and communities," said Arrow President and CEO David S. DeMarco. "We remain committed to our
long-term strategic initiatives of investing in our technology and
our team so we can continue to enhance the customer experience and
optimize operations. We look forward to continuing to focus
on our customers and communities."
Arrow remains dedicated to developing its team and recently
celebrated graduates from Arrow Leadership Academy and Upskill
University, internal courses designed to support our culture of
collaboration and continuous improvement. Our banks are working
toward realizing operational efficiencies and customer-facing
enhancements made possible by the completion of our core conversion
in September 2022. Our team has
returned to our completely renovated downtown Glens Falls, New York headquarters and we look
forward to welcoming our customers back to our newly renovated
campus. The renovated Glens Falls
campus now offers an energy-efficient, flexible and collaborative
environment for our team and customers. This investment is
important to our team culture, is a key part of the revitalization
of downtown Glens Falls, and is a
centerpiece of what community banking means to us -- accessible,
long-lasting and friendly.
Net income for the first quarter of 2023 was $8.6 million, down from $12.6 million for the same period in the prior
year. The year-over-year decline was primarily due to an increase
in non-interest expense of $3.4
million, a decrease in non-interest income of $1.5 million and an increase in the provision for
credit loss of $785 thousand.
Please see below for further detail.
Income Statement
- Net Interest Income: Net interest income for the
first quarter was $28.1 million, up
1.0% from $27.8 million in the
comparable quarter of 2022. Interest and fees on loans were
$31.9 million for the first quarter
of 2023, an increase of 23.9% from $25.7
million (29.23% excluding Paycheck Protection Program
("PPP") revenue) for the first quarter of 2022 primarily due to
loan growth and higher market rates. PPP loans contributed
$1.1 million in the first quarter of
2022. The PPP program ended in 2022. Interest expense for the first
quarter of 2023 was $8.0 million, an
increase of $6.9 million versus the
comparable quarter ending March 31, 2022, primarily due to
higher deposit rates and changes in deposit composition.
- Net Interest Margin: Net interest margin was 2.96%
for the quarter, compared to 2.90% for the first quarter of 2022
and 3.08% for the fourth quarter of 2022. The year-over-year
increase in net interest margin was primarily due to growth in loan
balances with higher yields partially offset with higher costs of
interest bearing liabilities. The decrease in net interest margin
compared to the fourth quarter of 2022 was primarily the result of
the cost of interest bearing liabilities increasing at a faster
pace than the yield on average earning assets.
|
Three Months
Ended
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Interest and Dividend
Income
|
$
36,110
|
|
$
35,904
|
|
$
28,947
|
Interest
Expense
|
8,016
|
|
5,325
|
|
1,122
|
Net Interest
Income
|
28,094
|
|
30,579
|
|
27,825
|
Average Earning
Assets(1)
|
3,845,825
|
|
3,940,904
|
|
3,886,787
|
Average Interest
Bearing Liabilities
|
2,782,299
|
|
2,891,092
|
|
2,855,884
|
|
|
|
|
|
|
Yield on Earning
Assets(1)
|
3.81 %
|
|
3.61 %
|
|
3.02 %
|
Cost of Interest
Bearing Liabilities
|
1.17
|
|
0.73
|
|
0.16
|
Net Interest
Spread
|
2.64
|
|
2.88
|
|
2.86
|
Net Interest
Margin
|
2.96
|
|
3.08
|
|
2.90
|
|
|
|
|
|
|
Income Earned on PPP
Loans included in Net Interest Income
|
$
—
|
|
$
—
|
|
$
1,066
|
Net Interest Income
excluding PPP loans
|
28,094
|
|
30,579
|
|
26,759
|
Net Interest Margin
excluding PPP loans
|
2.96 %
|
|
3.08 %
|
|
2.81 %
|
|
|
|
|
|
|
(1) Includes
Nonaccrual Loans.
|
|
|
|
|
|
|
|
|
|
|
|
- Provision for Credit Losses: For the first quarter
of 2023, the provision for credit losses was $1.6 million, compared to $769 thousand in the prior-year quarter. The key
drivers for the increase were higher loan charge-offs and a more
challenging economic forecast.
- Non-Interest Income: Non-interest income for the three
months ended March 31, 2023, was $6.7
million, compared to $8.2
million in the comparable 2022 quarter. Income from
fiduciary activities decreased by $321
thousand over the comparable quarter of 2022, driven
primarily by market conditions. Fees and other services to
customers decreased $200 thousand
over the comparable quarter of 2022 driven primarily by lower
volume of interchange transactions. Other operating income
decreased $691 thousand from the
comparable quarter of 2022, primarily due to a decline in the gain
on other assets of $463 thousand and
a decrease in income earned on bank-owned life insurance of
$181 thousand.
- Non-Interest Expense: Non-interest expense for the first
quarter of 2023 was $22.3 million, an
increase of 17.7% from $18.9 million
for the first quarter of 2022. The increase was primarily due to
$1.0 million of additional legal and
professional fees associated with the delay in the filing of the
2022 Form 10-K. In addition, other operating expenses included a
credit for estimated credit losses on off-balance sheet exposures
of $68 thousand for the first quarter
of 2023 versus a larger credit of $316
thousand recognized in the first quarter of 2022. Technology
and equipment spending increased $638
thousand from the first quarter of 2022, driven primarily by
management's commitment to invest in new technology to enhance the
customer experience and optimize operations. Salaries and benefits
have increased compared to the first quarter of 2022 as a result of
pension and other benefit expenses. In the first quarter of 2023,
non-interest expenses increased $1.5
million from the fourth quarter of 2022. In addition to the
factors described above, there was a charge for estimated credit
losses on off-balance sheet exposures of $197 thousand for the fourth quarter.
- Provision for Income Taxes: The provision for
income taxes was $2.4 million for the
first quarter of 2023, compared to $3.7
million for the same quarter of 2022, primarily the result
of lower pre-tax income.
Balance Sheet
- Total Assets: Total assets were $4.1 billion at March 31, 2023, a decrease
of $41.8 million, or 1.0%, compared
to March 31, 2022. This decrease was primarily driven by lower
cash balances as pandemic era excess deposits decreased.
Assets increased $145.1 million, or
3.7%, compared to December 31, 2022 driven by an increase in
on-balance sheet liquidity as evidenced by our higher cash
balances.
- Investments: Total investments were $745.1 million as of March 31, 2023, a
decrease of $40.3 million, or 5.1%,
compared to March 31, 2022, and a decrease of $5.9 million, or 0.8%, compared to
December 31, 2022. While the rising rate environment led to an
increase in unrealized losses within the available-for-sale
portfolio versus the same period last year, unrealized losses
within the available-for-sale portfolio decreased by $8.2 million versus December 31, 2022, as interest rates declined in
the first quarter of 2023. The decrease in investments in the first
quarter, as compared to the same period last year, was primarily
driven by Arrow's decision to fund loan growth from cash flows from
amortizing and maturing investments.
- Loans: Total loans reached a record high of $3.0 billion as of March 31, 2023. Loan
growth for the first quarter of 2023 was $22.1 million, as compared to December 31, 2022, and $268.1 million, or 9.8%, from March 31,
2022. Residential real estate loan growth for the first quarter of
2023 was $10.0 million, or 0.9%, as
compared to December 31, 2022 and
$114.0 million, or 11.8%, as compared
to March 31, 2022. The consumer loan portfolio grew by
$8.2 million, or 0.8%, in the first
quarter, primarily within the indirect automobile lending program.
Total outstanding commercial loans increased $4.0 million, or 0.5%, in the first quarter of
2023, driven primarily by commercial real estate loans.
- Allowance for Credit Losses: The allowance for credit
losses was $30.8 million on
March 31, 2023, which represented
1.02% of loans outstanding, as compared to 1.01% at March 31, 2022. Asset quality remained stable at
March 31, 2023. Net charge-offs,
expressed as an annualized percentage of average loans outstanding,
were 0.10% for the quarter ended March 31,
2023, as compared to 0.09% for the quarter ended
December 31, 2022 and 0.06% for the
three-month period ended March 31,
2022. Nonperforming assets of $11.3
million at March 31, 2023,
represented 0.27% of period-end assets, compared to 0.32% at
December 31, 2022.
- Deposits: At March 31, 2023, deposit balances
were $3.5 billion. Deposits in the
first quarter of 2023 increased by $48.0
million from the prior quarter and decreased by $169.0 million, or 4.5%, from the prior-year
level as pandemic era excess deposits exited the system and due to
competitive pressures from the rising rate environment. Municipal
deposits increased $110.5 million in
the first quarter, as compared to December
31, 2022, and decreased $22.1
million from March 31, 2022. Non-municipal
deposits decreased $62.5 million for
the quarter and $147.0 million from
March 31, 2022. Non-interest bearing deposits
represented 22.2% of total deposits at March 31, 2023,
compared to 23.9% at December 31
,2022, and 21.9% at March 31, 2022. At March 31,
2023, total time deposits were $301.8
million compared to $209.4
million at December 31, 2022 and $177.0 million at March 31, 2022, as a
result of successful campaigns to grow certificate of deposit
balances.
- Capital: Total stockholders' equity was $363.4 million at March 31, 2023, an
increase of $9.8 million, or 2.8%,
from the December 31, 2022 level of $353.5 million, and an increase of $6.1 million, or 1.7%, from the prior-year level.
The increase in stockholders' equity over the first three months of
2023 principally reflected the following factors: the addition of
$8.6 million of net income for the
period, gains in other comprehensive income of $5.7 million from favorable mark-to-market
activity within the available for sale securities portfolio and
issuance of $0.9 million of common
stock through employee benefit and dividend reinvestment plans
reduced by cash dividends of $4.5
million and repurchases of common stock of $0.8 million. Arrow's regulatory capital ratios
remained strong in the first quarter of 2023. As of March 31,
2023, Arrow's Common Equity Tier 1 Capital Ratio was 13.34% and
Total Risk-Based Capital Ratio was 15.15%. The capital ratios of
Arrow and both its subsidiary banks, Glens Falls National Bank and
Trust Company ("GFNB") and Saratoga National Bank and Trust Company
("SNB"), continued to significantly exceed the "well capitalized"
regulatory standards.
Additional Commentary
- Leadership Change: Effective May 13, 2023, Arrow's board of directors
appointed David S. DeMarco to serve
as President and CEO.
- Cash and Stock Dividends: On March 15, 2023 and June
15, 2023, Arrow distributed quarterly cash dividends of
$0.27 per share.
- Industry Recognition: In the first quarter of 2023,
both of Arrow's banking subsidiaries earned BauerFinancial, Inc.
5-Star Exceptional Performance Bank rating for the 57th consecutive
quarter.
About Arrow
Arrow Financial Corporation is a multi-bank holding company
headquartered in Glens Falls, New
York, serving the financial needs of northeastern
New York. Arrow is the parent of
GFNB and SNB. Other subsidiaries include Upstate Agency, LLC and
North Country Investment Advisers, Inc.
Non-GAAP Financial Measures Reconciliation
In addition to presenting information in conformity with
accounting principles generally accepted in the United States of America ("GAAP"), this
news release contains financial information determined by methods
other than GAAP ("non-GAAP"). Some measures used in this release,
which are commonly utilized by financial institutions, have not
been specifically exempted by the Securities and Exchange
Commission ("SEC") and may constitute "non-GAAP financial measures"
within the meaning of the SEC's rules. These non-GAAP financial
measures include: tangible equity, return on tangible equity,
tax-equivalent adjustment and related net interest income,
tax-equivalent, and the efficiency ratio. Management believes that
the non-GAAP financial measures disclosed by Arrow are useful in
evaluating Arrow's performance and that such information should be
considered as supplemental in nature and not as a substitute for,
or superior to, the related financial information prepared in
accordance with GAAP. Non-GAAP financial measures may differ from
similar measures presented by other companies. See the
reconciliation of GAAP to non-GAAP measures in the section
"Selected Quarterly Information."
Safe Harbor Statement
The information in this document may contain statements based on
management's beliefs, assumptions, expectations, estimates and
projections about the future. Such "forward-looking statements," as
defined in Section 21E of the Securities Exchange Act of 1934, as
amended, involve a degree of uncertainty and attendant risk. Actual
outcomes and results may differ, explicitly or by implication. We
are not obliged to revise or update these statements to reflect
unanticipated events. This document should be read in conjunction
with Arrow's 2022 Form 10-K and other filings with the SEC.
ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, Except
Per Share Amounts - Unaudited)
|
|
|
|
|
|
Three Months
Ended:
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
INTEREST AND
DIVIDEND INCOME
|
|
|
|
|
|
|
Interest and Fees on
Loans
|
|
$
31,886
|
|
$
30,719
|
|
$
25,739
|
Interest on Deposits at
Banks
|
|
479
|
|
1,274
|
|
198
|
Interest and Dividends
on Investment Securities:
|
|
|
|
|
|
|
Fully
Taxable
|
|
2,948
|
|
3,121
|
|
2,189
|
Exempt from Federal
Taxes
|
|
797
|
|
790
|
|
821
|
Total Interest and
Dividend Income
|
|
36,110
|
|
35,904
|
|
28,947
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
Interest Bearing
Checking Accounts
|
|
370
|
|
344
|
|
163
|
Savings
Deposits
|
|
5,587
|
|
4,101
|
|
417
|
Time Deposits over
$250,000
|
|
574
|
|
226
|
|
28
|
Other Time
Deposits
|
|
474
|
|
234
|
|
109
|
Federal Funds Purchased
and
Securities Sold
Under Agreements to Repurchase
|
|
—
|
|
—
|
|
—
|
Federal Home Loan Bank
Advances
|
|
793
|
|
200
|
|
187
|
Junior Subordinated
Obligations Issued to
Unconsolidated
Subsidiary Trusts
|
|
169
|
|
172
|
|
169
|
Interest on Financing
Leases
|
|
49
|
|
48
|
|
49
|
Total Interest
Expense
|
|
8,016
|
|
5,325
|
|
1,122
|
NET INTEREST
INCOME
|
|
28,094
|
|
30,579
|
|
27,825
|
Provision for Credit
Losses
|
|
1,554
|
|
1,409
|
|
769
|
NET INTEREST INCOME
AFTER PROVISION FOR CREDIT
LOSSES
|
|
26,540
|
|
29,170
|
|
27,056
|
NON-INTEREST
INCOME
|
|
|
|
|
|
|
Income From Fiduciary
Activities
|
|
2,275
|
|
2,257
|
|
2,596
|
Fees for Other Services
to Customers
|
|
2,595
|
|
2,710
|
|
2,795
|
Insurance
Commissions
|
|
1,520
|
|
1,680
|
|
1,511
|
Net (Loss) Gain on
Securities
|
|
(104)
|
|
48
|
|
130
|
Net Gain on Sales of
Loans
|
|
4
|
|
3
|
|
52
|
Other Operating
Income
|
|
387
|
|
467
|
|
1,078
|
Total Non-interest
Income
|
|
6,677
|
|
7,165
|
|
8,162
|
NON-INTEREST
EXPENSE
|
|
|
|
|
|
|
Salaries and Employee
Benefits
|
|
11,947
|
|
11,603
|
|
11,286
|
Occupancy Expenses,
Net
|
|
1,628
|
|
1,481
|
|
1,598
|
Technology and
Equipment Expense
|
|
4,417
|
|
4,316
|
|
3,779
|
FDIC
Assessments
|
|
479
|
|
283
|
|
307
|
Other Operating
Expense
|
|
3,825
|
|
3,109
|
|
1,975
|
Total Non-interest
Expense
|
|
22,296
|
|
20,792
|
|
18,945
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
10,921
|
|
15,543
|
|
16,273
|
Provision for Income
Taxes
|
|
2,359
|
|
3,456
|
|
3,698
|
NET
INCOME
|
|
$
8,562
|
|
$
12,087
|
|
$
12,575
|
Average Shares
Outstanding 1:
|
|
|
|
|
|
|
Basic
|
|
16,552
|
|
16,535
|
|
16,511
|
Diluted
|
|
16,564
|
|
16,589
|
|
16,566
|
Per Common
Share:
|
|
|
|
|
|
|
Basic
Earnings
|
|
$
0.52
|
|
$
0.73
|
|
$
0.76
|
Diluted
Earnings
|
|
0.52
|
|
0.73
|
|
0.76
|
1 2022 Share
and Per Share Amounts have been restated for the September 23,
2022, 3% stock dividend.
|
ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In Thousands, Except
Share and Per Share Amounts - Unaudited)
|
|
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
ASSETS
|
|
|
|
|
|
Cash and Due From
Banks
|
$
25,107
|
|
$
31,886
|
|
$
38,964
|
Interest Bearing
Deposits at Banks
|
178,365
|
|
32,774
|
|
448,614
|
Investment
Securities:
|
|
|
|
|
|
Available-for-Sale at
Fair Value
|
565,693
|
|
573,495
|
|
582,428
|
Held-to-Maturity (Fair
Value of $164,439 at March 31, 2023;
$171,623 at December 31, 2022; and $195,862 at
March 31,
2022)
|
167,347
|
|
175,364
|
|
196,661
|
Equity
Securities
|
2,070
|
|
2,174
|
|
1,877
|
FHLB and Federal
Reserve Bank Stock
|
10,027
|
|
6,064
|
|
4,491
|
Loans
|
3,005,352
|
|
2,983,207
|
|
2,737,267
|
Allowance for Credit
Losses
|
(30,784)
|
|
(29,952)
|
|
(27,661)
|
Net Loans
|
2,974,568
|
|
2,953,255
|
|
2,709,606
|
Premises and Equipment,
Net
|
58,233
|
|
56,491
|
|
48,481
|
Goodwill
|
21,873
|
|
21,873
|
|
21,873
|
Other Intangible
Assets, Net
|
1,400
|
|
1,500
|
|
1,818
|
Other Assets
|
109,947
|
|
114,633
|
|
101,589
|
Total
Assets
|
$
4,114,630
|
|
$
3,969,509
|
|
$
4,156,402
|
LIABILITIES
|
|
|
|
|
|
Non-interest Bearing
Deposits
|
788,690
|
|
836,871
|
|
813,066
|
Interest Bearing
Checking Accounts
|
958,490
|
|
997,694
|
|
1,154,068
|
Savings
Deposits
|
1,497,326
|
|
1,454,364
|
|
1,571,274
|
Time Deposits over
$250,000
|
122,827
|
|
76,224
|
|
48,288
|
Other Time
Deposits
|
179,016
|
|
133,211
|
|
128,677
|
Total
Deposits
|
3,546,349
|
|
3,498,364
|
|
3,715,373
|
Federal Home Loan Bank
Overnight Advances
|
35,000
|
|
27,000
|
|
—
|
Federal Home Loan Bank
Term Advances
|
107,800
|
|
27,800
|
|
25,000
|
Junior Subordinated
Obligations Issued to Unconsolidated
Subsidiary
Trusts
|
20,000
|
|
20,000
|
|
20,000
|
Finance
Leases
|
5,106
|
|
5,119
|
|
5,156
|
Other
Liabilities
|
37,004
|
|
37,688
|
|
33,630
|
Total
Liabilities
|
3,751,259
|
|
3,615,971
|
|
3,799,159
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Preferred Stock, $1 Par
Value and 1,000,000 Shares
Authorized at March 31, 2023, December 31, 2022 and
March 31, 2022
|
—
|
|
—
|
|
—
|
Common Stock, $1 Par
Value; 30,000,000 Shares
Authorized (21,423,992 Shares Issued at March 31,2023 and
December 31, 2022 and 20,800,144 Shares Issued at
March 31, 2022)
|
21,424
|
|
21,424
|
|
20,800
|
Additional Paid-in
Capital
|
400,944
|
|
400,270
|
|
378,758
|
Retained
Earnings
|
69,499
|
|
65,401
|
|
62,328
|
Accumulated Other
Comprehensive Loss
|
(43,983)
|
|
(49,655)
|
|
(20,797)
|
Treasury Stock, at Cost
(4,870,935 Shares at March 31, 2023;
4,872,355 Shares at December 31, 2022 and 4,787,183 Shares
at March 31, 2022)
|
(84,513)
|
|
(83,902)
|
|
(83,846)
|
Total Stockholders'
Equity
|
363,371
|
|
353,538
|
|
357,243
|
Total Liabilities and
Stockholders' Equity
|
$
4,114,630
|
|
$
3,969,509
|
|
$
4,156,402
|
Arrow Financial
Corporation
Selected Quarterly
Information
(Dollars In Thousands,
Except Per Share Amounts - Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
Net Income
|
$
8,562
|
|
$ 12,087
|
|
$ 12,163
|
|
$ 11,974
|
|
$ 12,575
|
Transactions in Net
Income (Net of Tax):
|
|
|
|
|
|
|
|
|
|
Net Changes in Fair
Value of Equity Investments
|
(76)
|
|
35
|
|
70
|
|
114
|
|
96
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data:1
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,553
|
|
16,552
|
|
16,523
|
|
16,503
|
|
16,493
|
Basic Average Shares
Outstanding
|
16,552
|
|
16,535
|
|
16,512
|
|
16,494
|
|
16,511
|
Diluted Average Shares
Outstanding
|
16,564
|
|
16,589
|
|
16,558
|
|
16,535
|
|
16,566
|
Basic Earnings Per
Share
|
$
0.52
|
|
$
0.73
|
|
$
0.74
|
|
$
0.72
|
|
$
0.76
|
Diluted Earnings Per
Share
|
0.52
|
|
0.73
|
|
0.74
|
|
0.72
|
|
0.76
|
Cash Dividend Per
Share
|
0.270
|
|
0.270
|
|
0.262
|
|
0.262
|
|
0.262
|
|
|
|
|
|
|
|
|
|
|
Selected Quarterly
Average Balances:
|
|
|
|
|
|
|
|
|
|
Interest Bearing
Deposits at Banks
|
$ 40,436
|
|
$
143,499
|
|
$
209,001
|
|
$
232,545
|
|
$
410,644
|
Investment
Securities
|
813,461
|
|
845,859
|
|
821,052
|
|
822,112
|
|
797,347
|
Loans
|
2,991,928
|
|
2,951,547
|
|
2,872,066
|
|
2,804,180
|
|
2,678,796
|
Deposits
|
3,480,279
|
|
3,614,945
|
|
3,598,519
|
|
3,569,754
|
|
3,582,256
|
Other Borrowed
Funds
|
100,596
|
|
63,304
|
|
50,125
|
|
50,140
|
|
68,596
|
Shareholders'
Equity
|
359,556
|
|
351,402
|
|
361,675
|
|
357,228
|
|
370,264
|
Total
Assets
|
3,978,851
|
|
4,074,028
|
|
4,047,738
|
|
4,012,999
|
|
4,054,943
|
Return on Average
Assets, annualized
|
0.87 %
|
|
1.18 %
|
|
1.19 %
|
|
1.20 %
|
|
1.26 %
|
Return on Average
Equity, annualized
|
9.66 %
|
|
13.65 %
|
|
13.34 %
|
|
13.44 %
|
|
13.77 %
|
Return on Average
Tangible Equity, annualized 2
|
10.33 %
|
|
14.62 %
|
|
14.27 %
|
|
14.40 %
|
|
14.72 %
|
Average Earning
Assets
|
$ 3,845,825
|
|
$ 3,940,905
|
|
$ 3,902,119
|
|
$ 3,858,837
|
|
$ 3,886,787
|
Average Paying
Liabilities
|
2,782,299
|
|
2,891,092
|
|
2,781,985
|
|
2,808,287
|
|
2,855,884
|
Interest
Income
|
36,110
|
|
35,904
|
|
34,207
|
|
30,593
|
|
28,947
|
Tax-Equivalent
Adjustment 3
|
202
|
|
279
|
|
268
|
|
269
|
|
270
|
Interest Income,
Tax-Equivalent 3
|
36,312
|
|
36,183
|
|
34,475
|
|
30,862
|
|
29,217
|
Interest
Expense
|
8,016
|
|
5,325
|
|
3,306
|
|
1,555
|
|
1,122
|
Net Interest
Income
|
28,094
|
|
30,579
|
|
30,901
|
|
29,038
|
|
27,825
|
Net Interest Income,
Tax-Equivalent 3
|
28,296
|
|
30,858
|
|
31,169
|
|
29,307
|
|
28,095
|
Net Interest Margin,
annualized
|
2.96 %
|
|
3.08 %
|
|
3.14 %
|
|
3.02 %
|
|
2.90 %
|
Net Interest Margin,
Tax-Equivalent, annualized 3
|
2.98 %
|
|
3.11 %
|
|
3.17 %
|
|
3.05 %
|
|
2.93 %
|
|
|
|
|
|
|
|
|
|
|
Efficiency Ratio
Calculation: 4
|
|
|
|
|
|
|
|
|
|
Non-interest
Expense
|
$ 22,296
|
|
$ 20,792
|
|
$ 21,448
|
|
$ 20,345
|
|
$ 18,945
|
Less: Intangible Asset
Amortization
|
45
|
|
47
|
|
48
|
|
48
|
|
49
|
Net Non-interest
Expense
|
$ 22,251
|
|
$ 20,745
|
|
$ 21,400
|
|
$ 20,297
|
|
$ 18,896
|
Net Interest Income,
Tax-Equivalent
|
$ 28,296
|
|
$ 30,858
|
|
$ 31,169
|
|
$ 29,307
|
|
$ 28,095
|
Non-interest
Income
|
6,677
|
|
7,165
|
|
7,827
|
|
7,744
|
|
8,162
|
Less: Net (Loss) Gain
on Securities
|
(104)
|
|
48
|
|
95
|
|
154
|
|
130
|
Net Gross
Income
|
$ 35,077
|
|
$ 37,975
|
|
$ 38,901
|
|
$ 36,897
|
|
$ 36,127
|
Efficiency
Ratio
|
63.43 %
|
|
54.63 %
|
|
55.01 %
|
|
55.01 %
|
|
52.30 %
|
|
|
|
|
|
|
|
|
|
|
Period-End Capital
Information:
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity (i.e. Book Value)
|
$
363,371
|
|
$
353,538
|
|
$
345,550
|
|
$
356,498
|
|
$
357,243
|
Book Value per Share
1
|
21.95
|
|
21.36
|
|
20.91
|
|
21.60
|
|
21.66
|
Goodwill and Other
Intangible Assets, net
|
23,273
|
|
23,373
|
|
23,477
|
|
23,583
|
|
23,691
|
Tangible Book Value per
Share 1,2
|
20.55
|
|
19.95
|
|
19.49
|
|
20.17
|
|
20.22
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:5
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage
Ratio
|
10.13 %
|
|
9.80 %
|
|
9.71 %
|
|
9.60 %
|
|
9.37 %
|
Common Equity Tier 1
Capital Ratio
|
13.34 %
|
|
13.32 %
|
|
13.14 %
|
|
13.14 %
|
|
13.48 %
|
Tier 1 Risk-Based
Capital Ratio
|
14.03 %
|
|
14.01 %
|
|
13.85 %
|
|
13.86 %
|
|
14.23 %
|
Total Risk-Based
Capital Ratio
|
15.15 %
|
|
15.11 %
|
|
14.93 %
|
|
14.93 %
|
|
15.33 %
|
|
|
|
|
|
|
|
|
|
|
Assets Under Trust
Admin. & Investment Mgmt.
|
$ 1,672,117
|
|
$ 1,606,132
|
|
$ 1,515,994
|
|
$ 1,589,178
|
|
$ 1,793,747
|
Arrow Financial
Corporation
Selected Quarterly
Information - Continued
(Dollars In Thousands,
Except Per Share Amounts - Unaudited)
|
|
|
|
|
|
|
|
|
|
Footnotes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Share and Per Share
Data have been restated for the September 23, 2022, 3% stock
dividend.
|
|
|
2.
|
Non-GAAP Financial
Measure Reconciliation: Tangible Book Value, Tangible Equity, and
Return on Tangible Equity
exclude goodwill and other intangible assets, net from total
equity. These are non-GAAP financial measures which
Arrow believes provides investors with information that is useful
in understanding its financial performance.
|
|
|
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
Total Stockholders'
Equity (GAAP)
|
$
363,371
|
|
$
353,538
|
|
$
345,550
|
|
$
356,498
|
|
$
357,243
|
|
Less: Goodwill
and Other Intangible
assets, net
|
23,273
|
|
23,373
|
|
23,477
|
|
23,583
|
|
23,691
|
|
Tangible Equity
(Non-GAAP)
|
$
340,098
|
|
$
330,165
|
|
$
322,073
|
|
$
332,915
|
|
$
333,552
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,553
|
|
16,552
|
|
16,523
|
|
16,503
|
|
16,493
|
|
Tangible Book Value per
Share (Non-GAAP)
|
$
20.55
|
|
$
19.95
|
|
$
19.49
|
|
$
20.17
|
|
$
20.22
|
|
Net Income
|
8,562
|
|
12,087
|
|
12,163
|
|
11,974
|
|
12,575
|
|
Return on Average
Tangible Equity
(Net Income/Tangible Equity - Annualized)
|
10.33 %
|
|
14.62 %
|
|
14.27 %
|
|
14.40 %
|
|
14.72 %
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
Non-GAAP Financial
Measure Reconciliation: Net Interest Margin is the ratio of
annualized tax-equivalent net
interest income to average earning assets. This is also a
non-GAAP financial measure which Arrow believes
provides investors with information that is useful in understanding
its financial performance.
|
|
|
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
Interest Income
(GAAP)
|
$ 36,110
|
|
$ 35,904
|
|
$ 34,207
|
|
$ 30,593
|
|
$ 28,947
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
202
|
|
279
|
|
268
|
|
269
|
|
270
|
|
Interest Income - Tax
Equivalent
(Non-GAAP)
|
$ 36,312
|
|
$ 36,183
|
|
$ 34,475
|
|
$ 30,862
|
|
$ 29,217
|
|
Net Interest Income
(GAAP)
|
$ 28,094
|
|
$ 30,579
|
|
$ 30,901
|
|
$ 29,038
|
|
$ 27,825
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
202
|
|
279
|
|
268
|
|
269
|
|
270
|
|
Net Interest Income -
Tax Equivalent
(Non-GAAP)
|
$ 28,296
|
|
$ 30,858
|
|
$ 31,169
|
|
$ 29,307
|
|
$ 28,095
|
|
Average Earning
Assets
|
$
3,845,825
|
|
$
3,940,905
|
|
$
3,902,119
|
|
$
3,858,837
|
|
$
3,886,787
|
|
Net Interest Margin
(Non-GAAP)*
|
2.98 %
|
|
3.11 %
|
|
3.17 %
|
|
3.05 %
|
|
2.93 %
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
Non-GAAP Financial
Measure Reconciliation: Financial Institutions often use the
"efficiency ratio", a non-GAAP
ratio, as a measure of expense control. Arrow believes the
efficiency ratio provides investors with information
that is useful in understanding its financial performance.
Arrow defines efficiency ratio as the ratio of non-interest
expense to net gross income (which equals tax-equivalent net
interest income plus non-interest income, as adjusted).
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
For the current
quarter, all of the regulatory capital ratios as well as the Total
Risk-Weighted Assets are calculated
in accordance with bank regulatory capital rules. The
March 31, 2023 CET1 ratio listed in the tables (i.e.,
13.34%)
exceeds the sum of the required minimum CET1 ratio plus the fully
phased-in Capital Conservation Buffer (i.e., 7.00%).
|
|
|
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
Total Risk Weighted
Assets
|
$
2,909,610
|
|
$
2,883,902
|
|
$
2,856,224
|
|
$
2,790,520
|
|
$
2,661,952
|
|
Common Equity Tier 1
Capital
|
388,228
|
|
384,003
|
|
375,394
|
|
366,798
|
|
358,738
|
|
Common Equity Tier 1
Ratio
|
13.34 %
|
|
13.32 %
|
|
13.14 %
|
|
13.14 %
|
|
13.48 %
|
|
|
|
|
|
|
|
|
|
|
|
* Quarterly ratios have
been annualized.
|
|
|
|
|
|
|
|
|
|
Arrow Financial
Corporation
Average Consolidated
Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands -
Unaudited)
|
|
|
|
|
Quarter
Ended:
|
March 31,
2023
|
|
March 31,
2022
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
Interest Bearing
Deposits at Banks
|
$ 40,436
|
|
$
479
|
|
4.80 %
|
|
$
410,644
|
|
$
198
|
|
0.20 %
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
652,743
|
|
2,948
|
|
1.83
|
|
618,806
|
|
2,189
|
|
1.43
|
Exempt from Federal
Taxes
|
160,718
|
|
797
|
|
2.01
|
|
178,541
|
|
821
|
|
1.86
|
Loans
|
2,991,928
|
|
31,886
|
|
4.32
|
|
2,678,796
|
|
25,739
|
|
3.90
|
Total Earning
Assets
|
3,845,825
|
|
36,110
|
|
3.81
|
|
3,886,787
|
|
28,947
|
|
3.02
|
Allowance for Credit
Losses
|
(29,792)
|
|
|
|
|
|
(27,165)
|
|
|
|
|
Cash and Due From
Banks
|
30,518
|
|
|
|
|
|
37,654
|
|
|
|
|
Other Assets
|
132,300
|
|
|
|
|
|
157,667
|
|
|
|
|
Total
Assets
|
$
3,978,851
|
|
|
|
|
|
$
4,054,943
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
Interest Bearing
Checking Accounts
|
$
964,735
|
|
370
|
|
0.16
|
|
$
1,027,740
|
|
163
|
|
0.06
|
Savings
Deposits
|
1,474,251
|
|
5,587
|
|
1.54
|
|
1,557,855
|
|
417
|
|
0.11
|
Time Deposits of
$250,000 or More
|
94,415
|
|
574
|
|
2.47
|
|
70,101
|
|
28
|
|
0.16
|
Other Time
Deposits
|
148,302
|
|
474
|
|
1.30
|
|
131,592
|
|
109
|
|
0.34
|
Total Interest Bearing
Deposits
|
2,681,703
|
|
7,005
|
|
1.06
|
|
2,787,288
|
|
717
|
|
0.10
|
Short-Term
Borrowings
|
40,138
|
|
490
|
|
4.95
|
|
—
|
|
—
|
|
|
FHLBNY Term
Advances & Other Long-Term Debt
|
55,356
|
|
472
|
|
3.46
|
|
63,444
|
|
356
|
|
2.28
|
Finance
Leases
|
5,102
|
|
49
|
|
3.89
|
|
5,152
|
|
49
|
|
3.86
|
Total Interest Bearing
Liabilities
|
2,782,299
|
|
8,016
|
|
1.17
|
|
2,855,884
|
|
1,122
|
|
0.16
|
Non-interest bearing
deposits
|
798,576
|
|
|
|
|
|
794,968
|
|
|
|
|
Other
Liabilities
|
38,420
|
|
|
|
|
|
33,827
|
|
|
|
|
Total
Liabilities
|
3,619,295
|
|
|
|
|
|
3,684,679
|
|
|
|
|
Stockholders'
Equity
|
359,556
|
|
|
|
|
|
370,264
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
3,978,851
|
|
|
|
|
|
$
4,054,943
|
|
|
|
|
Net Interest
Income
|
|
|
$ 28,094
|
|
|
|
|
|
$ 27,825
|
|
|
Net Interest
Spread
|
|
|
|
|
2.64 %
|
|
|
|
|
|
2.86 %
|
Net Interest
Margin
|
|
|
|
|
2.96 %
|
|
|
|
|
|
2.90 %
|
Arrow Financial
Corporation
Average Consolidated
Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands -
Unaudited)
|
|
|
|
|
Quarter
Ended:
|
March 31,
2023
|
|
December 31,
2022
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
Interest Bearing
Deposits at Banks
|
$ 40,436
|
|
$
479
|
|
4.80 %
|
|
$
143,499
|
|
$
1,274
|
|
3.52 %
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
652,743
|
|
2,948
|
|
1.83
|
|
679,390
|
|
3,121
|
|
1.82
|
Exempt from Federal
Taxes
|
160,718
|
|
797
|
|
2.01
|
|
166,468
|
|
790
|
|
1.88
|
Loans
|
2,991,928
|
|
31,886
|
|
4.32
|
|
2,951,547
|
|
30,719
|
|
4.13
|
Total Earning
Assets
|
3,845,825
|
|
36,110
|
|
3.81
|
|
3,940,904
|
|
35,904
|
|
3.61
|
Allowance for Credit
Losses
|
(29,792)
|
|
|
|
|
|
(29,069)
|
|
|
|
|
Cash and Due From
Banks
|
30,518
|
|
|
|
|
|
30,736
|
|
|
|
|
Other Assets
|
132,300
|
|
|
|
|
|
131,457
|
|
|
|
|
Total
Assets
|
$
3,978,851
|
|
|
|
|
|
$
4,074,028
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
Interest Bearing
Checking Accounts
|
$
964,735
|
|
370
|
|
0.16
|
|
$
1,082,267
|
|
344
|
|
0.13
|
Savings
Deposits
|
1,474,251
|
|
5,587
|
|
1.54
|
|
1,548,293
|
|
4,101
|
|
1.05
|
Time Deposits of
$250,000 or More
|
94,415
|
|
574
|
|
2.47
|
|
65,897
|
|
226
|
|
1.36
|
Other Time
Deposits
|
148,302
|
|
474
|
|
1.30
|
|
131,331
|
|
234
|
|
0.71
|
Total Interest Bearing
Deposits
|
2,681,703
|
|
7,005
|
|
1.06
|
|
2,827,788
|
|
4,905
|
|
0.69
|
Short-Term
Borrowings
|
40,138
|
|
490
|
|
4.95
|
|
8,424
|
|
92
|
|
4.33
|
FHLBNY Term
Advances & Other Long-Term Debt
|
55,356
|
|
472
|
|
3.46
|
|
49,767
|
|
280
|
|
2.23
|
Finance
Leases
|
5,102
|
|
49
|
|
3.89
|
|
5,113
|
|
48
|
|
3.72
|
Total Interest Bearing
Liabilities
|
2,782,299
|
|
8,016
|
|
1.17
|
|
2,891,092
|
|
5,325
|
|
0.73
|
Non-interest bearing
deposits
|
798,576
|
|
|
|
|
|
787,157
|
|
|
|
|
Other
Liabilities
|
38,420
|
|
|
|
|
|
44,377
|
|
|
|
|
Total
Liabilities
|
3,619,295
|
|
|
|
|
|
3,722,626
|
|
|
|
|
Stockholders'
Equity
|
359,556
|
|
|
|
|
|
351,402
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
3,978,851
|
|
|
|
|
|
$
4,074,028
|
|
|
|
|
Net Interest
Income
|
|
|
$ 28,094
|
|
|
|
|
|
$ 30,579
|
|
|
Net Interest
Spread
|
|
|
|
|
2.64 %
|
|
|
|
|
|
2.88 %
|
Net Interest
Margin
|
|
|
|
|
2.96 %
|
|
|
|
|
|
3.08 %
|
Arrow Financial
Corporation
Consolidated
Financial Information
(Dollars in Thousands -
Unaudited)
|
|
|
|
|
|
|
Quarter
Ended:
|
3/31/2023
|
|
12/31/2022
|
|
3/31/2022
|
Loan
Portfolio
|
|
|
|
|
|
Commercial
Loans
|
$
135,917
|
|
$
140,293
|
|
$
155,467
|
Commercial Real Estate
Loans
|
715,357
|
|
707,022
|
|
638,437
|
Subtotal
Commercial Loan Portfolio
|
851,274
|
|
847,315
|
|
793,904
|
Consumer
Loans
|
1,073,369
|
|
1,065,135
|
|
976,648
|
Residential Real Estate
Loans
|
1,080,709
|
|
1,070,757
|
|
966,715
|
Total Loans
|
$
3,005,352
|
|
$
2,983,207
|
|
$
2,737,267
|
Allowance for Credit
Losses
|
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Quarter
|
$
29,952
|
|
$
29,232
|
|
$
27,281
|
Loans
Charged-off
|
(1,328)
|
|
(1,261)
|
|
(829)
|
Less Recoveries of
Loans Previously Charged-off
|
606
|
|
572
|
|
440
|
Net Loans
Charged-off
|
(722)
|
|
(689)
|
|
(389)
|
Provision for Credit
Losses
|
1,554
|
|
1,409
|
|
769
|
Allowance for Credit
Losses, End of Quarter
|
$
30,784
|
|
$
29,952
|
|
$
27,661
|
Nonperforming
Assets
|
|
|
|
|
|
Nonaccrual
Loans
|
$
10,852
|
|
$
10,757
|
|
$
9,750
|
Loans Past Due 90 or
More Days and Accruing
|
241
|
|
1,157
|
|
55
|
Loans Restructured and
in Compliance with Modified Terms
|
62
|
|
69
|
|
74
|
Total Nonperforming
Loans
|
11,155
|
|
11,983
|
|
9,879
|
Repossessed
Assets
|
144
|
|
593
|
|
180
|
Other Real Estate
Owned
|
—
|
|
—
|
|
—
|
Total Nonperforming
Assets
|
$
11,299
|
|
$
12,576
|
|
$
10,059
|
|
|
|
|
|
|
Key Asset Quality
Ratios
|
|
|
|
|
|
Net Loans Charged-off
to Average Loans,
Quarter-to-date Annualized
|
0.10 %
|
|
0.09 %
|
|
0.06 %
|
Provision for Credit
Losses to Average Loans,
Quarter-to-date Annualized
|
0.21 %
|
|
0.19 %
|
|
0.12 %
|
Allowance for Credit
Losses to Period-End Loans
|
1.02 %
|
|
1.00 %
|
|
1.01 %
|
Allowance for Credit
Losses to Period-End Nonperforming Loans
|
275.97 %
|
|
249.95 %
|
|
280.00 %
|
Nonperforming Loans to
Period-End Loans
|
0.37 %
|
|
0.40 %
|
|
0.36 %
|
Nonperforming Assets to
Period-End Assets
|
0.27 %
|
|
0.32 %
|
|
0.24 %
|
View original
content:https://www.prnewswire.com/news-releases/arrow-reports-8-6-million-in-q1-2023-net-income-and-grew-deposits-by-48-0-million-301883917.html
SOURCE Arrow Financial Corporation