GLENS
FALLS, N.Y., April 30,
2024 /PRNewswire/ -- Arrow Financial Corporation
(NasdaqGS® – AROW) ("Arrow" or "the Company") announced
financial results for the three-month period ended March 31, 2024. Net income for the first quarter
of 2024 was $7.7 million and fully
diluted earnings per share ("EPS") was $0.45, versus $8.6
million and EPS of $0.50, for
the same period in 2023.
The Board of Directors of Arrow declared a quarterly cash
dividend of $0.27 per share payable
May 24, 2024 to shareholders of
record as of May 13, 2024. This is
Arrow's 44th consecutive quarterly cash dividend.
This Earnings Release and related commentary should be read
in conjunction with the Company's April 30,
2024 Form 8-K and related First Quarter 2024 Investor
Presentation, which can also be found on Arrow's website:
arrowfinancial.com/documents/investor-presentations.
Arrow President and CEO David S.
DeMarco:
"Arrow delivered a solid quarter with healthy loan growth and
strong credit performance in a challenging interest rate and
overall unsettled economic environment. I am very excited about our
growth prospects in the Capital Region of New York, having recently added several
experienced loan and deposit team members in the region. This comes
on the heels of our recently announced branch acquisition in
Whitehall, NY which we hope to
finalize in the third quarter pending regulatory approval. I
would also like to note that we returned approximately $6.0 million to our shareholders in the form of
share repurchases in addition to our normal quarterly
dividend."
First-Quarter Highlights and Key Metrics
- Gross loans grew $50.5
million1 or 6.1% on an annualized basis.
- Deposit balances increased to $3.8
billion, growing $91.5
million, or 2.5%
- Net charge-offs to average loans were 0.04% as compared to
0.05% for the previous quarter
- Net interest margin improved to 2.60% (2.62% on a
FTE2 basis), up from 2.53% (2.55% on a FTE basis) from
the prior quarter
- Loan-to-deposit ratio of approximately 86%
- Strong on-balance sheet liquidity of $450 million, or 10.4% of total assets
- Repurchased 244,387 shares for $6.0
million during the first quarter
- On March 4, Arrow announced the
acquisition of a branch in Whitehall,
NY with approximately $40
million in deposits; transaction expected to close in
3Q24, subject to regulatory approval
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1
Excludes both $1.2 million fair value hedge adjustment at March 31,
2024 and $5.8 million fair value hedge adjustment at December 31,
2023
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2
Full tax equivalent
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Other Highlights
- On April 27, Arrow reached an
agreement in principle to settle a class action complaint (the
"Ashe Lawsuit"), fully described in Arrow's 2023 Form 10-K and 2024
Proxy filing, subject to final documentation and court approval.
The terms of the settlement do not have a material impact on the
financial results.
Income Statement
- Net Income: Net income for the first quarter of 2024 was
$7.7 million, consistent with
$7.7 million in the fourth quarter of
2023, while decreasing from $8.6
million in the first quarter of 2023.
- As compared to the prior quarter, net income benefited from an
increase of $0.8 million in net
interest income as well as an increase in non-interest income of
$0.4 million, offset by an increase
in non-interest expense of $0.8
million.
- As compared to the first quarter of 2023, net interest income
decreased $1.6 million primarily on
higher deposit costs. Non-interest income increased $1.2 million and non-interest expense increased
$1.7 million.
- Net Interest Income: Net interest income for the first
quarter of 2024 was $26.5 million,
increasing 3.3% from $25.6 million
for the fourth quarter of 2023 and decreasing 5.8% from
$28.1 million in the comparable
quarter of 2023.
- Total interest and dividend income was $46.7 million for the first quarter of 2024, an
increase from $44.3 million in the
fourth quarter of 2023 and from $36.1
million for the first quarter of 2023. These increases were
primarily driven by loan growth and higher loan rates. Interest
expense for the first quarter of 2024 was $20.2 million, an increase from $18.7 million for the fourth quarter of 2023 and
from $8.0 million for the first
quarter of 2023. The increases for both comparison periods
were driven primarily by higher deposit rates and changes in
deposit composition.
- Net Interest Margin: Net interest margin was 2.60% for
the first quarter of 2024, compared to 2.53% for the fourth quarter
of 2023 and 2.96% for the first quarter of 2023. The increase in
net interest margin compared to the fourth quarter in 2023 was
primarily the result of the continued expansion on the yield of
earning assets combined with the moderating increase in the cost of
interest-bearing liabilities. As compared to the first
quarter of 2023, the decline in net interest margin was primarily
the result of costs of interest-bearing liabilities increasing at a
faster pace than the yield on average earning assets. In addition,
deposits have continued to migrate to higher costs products, such
as money market savings and time deposits.
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Three Months
Ended
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(Dollars in
Thousands)
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March 31,
2024
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December 31,
2023
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March 31,
2023
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Interest and Dividend
Income
|
$
46,677
|
|
$
44,324
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|
$
36,110
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Interest
Expense
|
20,222
|
|
18,711
|
|
8,016
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Net Interest
Income
|
26,455
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25,613
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28,094
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Average Earning
Assets(A)
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4,085,398
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4,019,432
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3,845,825
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Average
Interest-Bearing Liabilities
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3,108,093
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2,985,717
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2,782,299
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Yield on Earning
Assets(A)
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4.60 %
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4.38 %
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3.81 %
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Cost of
Interest-Bearing Liabilities
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2.62
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2.49
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1.17
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Net Interest
Spread
|
1.98
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1.89
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2.64
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Net Interest
Margin
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2.60
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2.53
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2.96
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Net Interest Margin -
FTE
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2.62
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2.55
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2.98
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(A)
Includes Nonaccrual Loans.
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- Provision for Credit Losses: For the first quarter of
2024, the provision for credit losses was $0.6 million compared to $0.5 million in the fourth quarter of 2023 and
$1.6 million in the first quarter of
2023. The key drivers for the provision for credit losses in the
first quarter of 2024 were an increase in specific reserves and
loan growth, partially offset by changes to the economic forecast
factors embedded in the credit loss allowance model. The increase
in specific reserves of $0.7 million
is tied to overdraft balances from an isolated instance of check
fraud from one customer relationship.
- Non-Interest Income: Non-interest income for the three
months ended March 31, 2024, was
$7.9 million, compared to
$7.5 million in the fourth quarter of
2023 and $6.7 million in the first
quarter of 2023. The increase was primarily driven by gains on
other equity investments as well as income from fiduciary
activities, which includes Wealth Management services, which
benefited from strong equity markets.
- Non-Interest Expense: Non-interest expense for the first
quarter of 2024 was $24.0 million, an
increase from $23.2 million in
the fourth quarter of 2023 and an increase from $22.3 million for the first quarter of 2023. The
increase from the prior year was primarily due to increased
salaries and benefits related to new employees hired to support
growth initiatives, increased legal and professional expenses
associated with the finalization of the 2023 audit, and costs
incurred to reach a settlement in the Ashe Lawsuit.
- Provision for Income Taxes: The provision for income
taxes was 20.9% or $2.0 million for
the first quarter of 2024, 17.7% or $1.7 million for the fourth quarter of 2023 and
21.6% or $2.4 million for the first
quarter of 2023. The change in the effective tax rate from the
previous quarter was primarily due to a change in pre-tax income
combined with decreases in tax advantaged items.
Balance Sheet
- Total Assets: Total assets were $4.3 billion at March 31, 2024, an increase
of $163.8 million, or 3.9%, as
compared to December 31, 2023 and an increase of $219.0 million, or 5.3%, as compared to
March 31, 2023. For the first quarter of 2024, overall
balance sheet growth was attributable to growth in the loan
portfolio and an increase in cash balances.
- Investments: Total investments were $620.0 million as of March 31, 2024, a
decrease of $16.0 million, or 2.5%,
compared to December 31, 2023 and a decrease of $125.1 million, or 16.8%, compared to
March 31, 2023. The decrease from December 31, 2023 was
driven primarily by paydowns and maturities. The change from
March 31, 2023 was also impacted by the fourth quarter 2023
repositioning of the investment portfolio, reducing the portfolio
by approximately $25 million at the
time of the transaction. There were no credit quality issues
related to the investment portfolio.
- Loans3: Total loans reached
$3.3 billion as of March 31,
2024. Loan growth for the first quarter of 2024 was $50.5 million, and $252.2
million compared to March 31, 2023. Loan growth was
spread across all loan products. Please see the loan detail
included in the Consolidated Financial Information table on
page 12.
- Allowance for Credit Losses: The allowance for credit
losses was $31.6 million as of
March 31, 2024, which represented 0.97% of loans outstanding,
as compared to $31.3 million, or
0.97%, at December 31, 2023 and $30.8
million, or 1.02%, at March 31, 2023. Net charge-offs,
expressed as an annualized percentage of average loans outstanding,
were 0.04% for the three-month period ended March 31, 2024, as
compared to 0.05% for the three-month period ended
December 31, 2023 and 0.10% for the three-month period ended
March 31, 2023. Nonperforming assets were $21.8 million as of March 31, 2024,
representing 0.50% of period-end assets, compared to 0.51% at
December 31, 2023 and 0.27% at March 31, 2023. The
increase from the first quarter of 2023 was primarily due to one
large, well collateralized loan relationship of approximately
$15 million, which moved into
non-performing status during the fourth quarter of 2023.
- Deposits: At March 31, 2024, deposit balances were
$3.8 billion, an increase of
$91.5 million from December 31,
2023 and $232.7 million from
March 31, 2023. The increase from March 31, 2023 was
partially attributable to $175
million of brokered CDs, primarily used to reduce borrowings
by $160 million. Arrow simultaneously
entered into three-year swaps to strategically manage its
asset-liability profile and cost of funds. Please refer to page 6
for further details related to deposits.
- Capital: Total stockholders' equity was $378.0 million at March 31, 2024, a decrease
of $1.8 million, or 0.5%, from
December 31, 2023 and an increase of $14.6 million, or 4.0%, from the March 31,
2023 level of $363.4 million. The net
decrease in equity in the first quarter of 2024 was attributable to
dividends paid ($4.6 million) and
share repurchases ($6.0 million)
exceeding the net income for the quarter. Arrow's
regulatory capital ratios remained strong. As of March 31,
2024, Arrow's Common Equity Tier 1 Capital Ratio was 12.84% and
Total Risk-Based Capital Ratio was 14.57%. The capital ratios of
Arrow's subsidiary banks, Glens Falls National Bank and Trust
Company and Saratoga National Bank and Trust Company, continued to
exceed the "well capitalized" regulatory standards.
Additional Commentary
- Bauer Financial Ratings: Both Glens Falls National Bank
and Saratoga National Bank continued to maintain their 5-Star
Exceptional Performance ratings from Bauer Financial, for the 67th
and 59th quarters, respectively.
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3
Excludes both $1.2 million fair value hedge adjustment at March 31,
2024 and $5.8 million fair value hedge adjustment at December 31,
2023
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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
Glens Falls National Bank and Trust Company and Saratoga
National Bank and Trust Company. 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, the
efficiency ratio and net interest margin. 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 obligated to revise or update these statements to reflect
unanticipated events. This document should be read in conjunction
with Arrow's 2023 Form 10-K and other filings with the SEC.
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ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
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CONSOLIDATED
STATEMENTS OF INCOME
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(In Thousands, Except
Per Share Amounts - Unaudited)
|
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Three Months
Ended:
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March 31,
2024
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December 31,
2023
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March 31,
2023
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INTEREST AND
DIVIDEND INCOME
|
|
|
|
|
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Interest and Fees on
Loans
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|
$
40,376
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|
$
38,813
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$
31,886
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Interest on Deposits at
Banks
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|
2,447
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|
1,873
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|
479
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Interest and Dividends
on Investment Securities:
|
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|
|
|
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Fully
Taxable
|
|
3,186
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|
2,941
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|
2,948
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Exempt from Federal
Taxes
|
|
668
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|
697
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|
797
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Total Interest and
Dividend Income
|
|
46,677
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|
44,324
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|
36,110
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INTEREST
EXPENSE
|
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|
|
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|
Interest-Bearing
Checking Accounts
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|
1,641
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|
1,317
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|
370
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Savings
Deposits
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|
10,230
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|
10,513
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|
5,587
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Time Deposits over
$250,000
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|
1,973
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|
1,807
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|
574
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Other Time
Deposits
|
|
5,083
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|
3,406
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|
474
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Borrowings
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|
1,076
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|
1,447
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|
793
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Junior Subordinated
Obligations Issued to
Unconsolidated
Subsidiary Trusts
|
|
171
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173
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169
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Interest on Financing
Leases
|
|
48
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|
48
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|
49
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|
Total Interest
Expense
|
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20,222
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|
18,711
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|
8,016
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NET INTEREST
INCOME
|
|
26,455
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|
25,613
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|
28,094
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|
Provision for Credit
Losses
|
|
617
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|
525
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|
1,554
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NET INTEREST INCOME
AFTER PROVISION FOR CREDIT LOSSES
|
|
25,838
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|
25,088
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|
26,540
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NON-INTEREST
INCOME
|
|
|
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Income From Fiduciary
Activities
|
|
2,457
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|
2,363
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|
2,275
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Fees for Other Services
to Customers
|
|
2,543
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|
2,725
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|
2,595
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|
Insurance
Commissions
|
|
1,682
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|
1,723
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|
1,520
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Net Gain (Loss) on
Securities
|
|
17
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|
122
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|
(104)
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Net Gain on Sales of
Loans
|
|
4
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|
7
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|
4
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Other Operating
Income
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|
1,155
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|
544
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|
387
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Total Non-Interest
Income
|
|
7,858
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|
7,484
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|
6,677
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NON-INTEREST
EXPENSE
|
|
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|
|
|
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|
Salaries and Employee
Benefits
|
|
12,893
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|
11,693
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|
11,947
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Occupancy Expenses,
Net
|
|
1,771
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|
1,826
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|
1,628
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Technology and
Equipment Expense
|
|
4,820
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|
4,458
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|
4,417
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FDIC
Assessments
|
|
715
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|
572
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|
479
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Other Operating
Expense
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3,813
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4,641
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|
3,825
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Total Non-Interest
Expense
|
|
24,012
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|
23,190
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|
22,296
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INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
9,684
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|
9,382
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10,921
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Provision for Income
Taxes
|
|
2,024
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|
1,659
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|
2,359
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NET
INCOME
|
|
$
7,660
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$
7,723
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$
8,562
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Average Shares
Outstanding 1:
|
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Basic
|
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16,865
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17,002
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17,048
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Diluted
|
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16,867
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17,004
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17,060
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Per Common
Share:
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Basic
Earnings
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$
0.45
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$
0.46
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$
0.50
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Diluted
Earnings
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0.45
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0.46
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0.50
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1
March 31, 2023 Share and Per Share
Amounts have been restated for the September 26, 2023, 3%
stock dividend.
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ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE
SHEETS
|
|
(In Thousands, Except
Share and Per Share Amounts - Unaudited)
|
|
|
March 31,
2024
|
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December 31,
2023
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March 31,
2023
|
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ASSETS
|
|
|
|
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Cash and Due From
Banks
|
$
27,356
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$
36,755
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$
25,107
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Interest-Bearing
Deposits at Banks
|
255,109
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|
105,781
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|
178,365
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|
Investment
Securities:
|
|
|
|
|
|
|
Available-for-Sale at
Fair Value
|
485,833
|
|
497,769
|
|
565,693
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|
Held-to-Maturity (Fair
Value of $124,861 at March 31, 2024; $128,837 at
December 31, 2023; and $164,439 at March 31,
2023)
|
128,051
|
|
131,395
|
|
167,347
|
|
Equity
Securities
|
1,942
|
|
1,925
|
|
2,070
|
|
Other
Investments
|
4,208
|
|
5,049
|
|
10,027
|
|
Loans
|
3,258,758
|
|
3,212,908
|
|
3,005,352
|
|
Allowance for Credit
Losses
|
(31,561)
|
|
(31,265)
|
|
(30,784)
|
|
Net Loans
|
3,227,197
|
|
3,181,643
|
|
2,974,568
|
|
Premises and Equipment,
Net
|
59,494
|
|
59,642
|
|
58,233
|
|
Goodwill
|
21,873
|
|
21,873
|
|
21,873
|
|
Other Intangible
Assets, Net
|
1,018
|
|
1,110
|
|
1,400
|
|
Other Assets
|
121,542
|
|
126,926
|
|
109,947
|
|
Total
Assets
|
$
4,333,623
|
|
$
4,169,868
|
|
$
4,114,630
|
|
LIABILITIES
|
|
|
|
|
|
|
Noninterest-Bearing
Deposits
|
696,519
|
|
758,425
|
|
788,690
|
|
Interest-Bearing
Checking Accounts
|
908,453
|
|
799,785
|
|
958,490
|
|
Savings
Deposits
|
1,497,466
|
|
1,466,280
|
|
1,497,326
|
|
Time Deposits over
$250,000
|
173,976
|
|
179,301
|
|
122,827
|
|
Other Time
Deposits
|
502,607
|
|
483,775
|
|
179,016
|
|
Total
Deposits
|
3,779,021
|
|
3,687,566
|
|
3,546,349
|
|
Borrowings
|
106,500
|
|
26,500
|
|
142,800
|
|
Junior Subordinated
Obligations Issued to Unconsolidated
Subsidiary
Trusts
|
20,000
|
|
20,000
|
|
20,000
|
|
Finance
Leases
|
5,053
|
|
5,066
|
|
5,106
|
|
Other
Liabilities
|
45,063
|
|
50,964
|
|
37,004
|
|
Total
Liabilities
|
3,955,637
|
|
3,790,096
|
|
3,751,259
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Preferred Stock, $1 Par
Value and 1,000,000 Shares Authorized at March 31, 2024,
December 31, 2023 and March 31, 2023
|
—
|
|
—
|
|
—
|
|
Common Stock, $1 Par
Value; 30,000,000 Shares Authorized (22,066,559 Shares Issued
at March 31, 2024 and 21,423,992 Shares Issued at
December 31, 2023 and March 31,
2023)
|
22,067
|
|
22,067
|
|
21,424
|
|
Additional Paid-in
Capital
|
412,823
|
|
412,551
|
|
400,944
|
|
Retained
Earnings
|
68,887
|
|
65,792
|
|
69,499
|
|
Accumulated Other
Comprehensive Loss
|
(32,714)
|
|
(33,416)
|
|
(43,983)
|
|
Treasury Stock, at Cost
(5,356,335 Shares at March 31, 2024; 5,124,073 Shares at
December 31, 2023 and 4,870,935 Shares at March 31,
2023)
|
(93,077)
|
|
(87,222)
|
|
(84,513)
|
|
Total Stockholders'
Equity
|
377,986
|
|
379,772
|
|
363,371
|
|
Total Liabilities and
Stockholders' Equity
|
$
4,333,623
|
|
$
4,169,868
|
|
$
4,114,630
|
|
Arrow Financial
Corporation
|
|
Selected Quarterly
Information
|
|
(Dollars In Thousands,
Except Per Share Amounts - Unaudited)
|
|
|
Quarter
Ended
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
Net Income
|
$
7,660
|
|
$
7,723
|
|
$
7,743
|
|
$
6,047
|
|
$
8,562
|
|
Transactions in Net
Income (Net of Tax):
|
|
|
|
|
|
|
|
|
|
|
Net Changes in Fair
Value of Equity Investments
|
13
|
|
90
|
|
52
|
|
(133)
|
|
(76)
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data:1
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,710
|
|
16,942
|
|
17,049
|
|
17,050
|
|
17,050
|
|
Basic Average Shares
Outstanding
|
16,865
|
|
17,002
|
|
17,050
|
|
17,050
|
|
17,048
|
|
Diluted Average Shares
Outstanding
|
16,867
|
|
17,004
|
|
17,050
|
|
17,050
|
|
17,060
|
|
Basic Earnings Per
Share
|
$
0.45
|
|
$
0.46
|
|
$
0.46
|
|
$
0.35
|
|
$
0.50
|
|
Diluted Earnings Per
Share
|
0.45
|
|
0.46
|
|
0.46
|
|
0.35
|
|
0.50
|
|
Cash Dividend Per
Share
|
0.270
|
|
0.270
|
|
0.262
|
|
0.262
|
|
0.262
|
|
|
|
|
|
|
|
|
|
|
|
Selected Quarterly
Average Balances:
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Deposits at Banks
|
$ 178,452
|
|
$
136,026
|
|
$ 131,814
|
|
$
130,057
|
|
$ 40,436
|
|
Investment
Securities
|
671,105
|
|
713,144
|
|
745,693
|
|
787,175
|
|
813,461
|
|
Loans
|
3,235,841
|
|
3,170,262
|
|
3,096,240
|
|
3,036,410
|
|
2,991,928
|
|
Deposits
|
3,693,325
|
|
3,593,949
|
|
3,491,028
|
|
3,460,711
|
|
3,480,279
|
|
Other Borrowed
Funds
|
122,033
|
|
149,507
|
|
208,527
|
|
220,616
|
|
100,596
|
|
Stockholders'
Equity
|
379,446
|
|
363,753
|
|
362,701
|
|
365,070
|
|
359,556
|
|
Total
Assets
|
4,245,484
|
|
4,159,313
|
|
4,109,995
|
|
4,087,653
|
|
3,978,851
|
|
Return on Average
Assets, annualized
|
0.73 %
|
|
0.74 %
|
|
0.75 %
|
|
0.59 %
|
|
0.87 %
|
|
Return on Average
Equity, annualized
|
8.12 %
|
|
8.42 %
|
|
8.47 %
|
|
6.64 %
|
|
9.66 %
|
|
Return on Average
Tangible Equity, annualized 2
|
8.64 %
|
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
10.33 %
|
|
Average Earning
Assets
|
$ 4,085,398
|
|
$ 4,019,432
|
|
$ 3,973,747
|
|
$ 3,953,642
|
|
$ 3,845,825
|
|
Average Paying
Liabilities
|
3,108,093
|
|
2,985,717
|
|
2,920,518
|
|
2,924,743
|
|
2,782,299
|
|
Interest
Income
|
46,677
|
|
44,324
|
|
42,117
|
|
40,013
|
|
36,110
|
|
Tax-Equivalent
Adjustment 3
|
176
|
|
184
|
|
183
|
|
196
|
|
202
|
|
Interest Income,
Tax-Equivalent 3
|
46,853
|
|
44,508
|
|
42,117
|
|
40,013
|
|
36,110
|
|
Interest
Expense
|
20,222
|
|
18,711
|
|
16,764
|
|
14,241
|
|
8,016
|
|
Net Interest
Income
|
26,455
|
|
25,613
|
|
25,353
|
|
25,772
|
|
28,094
|
|
Net Interest Income,
Tax-Equivalent 3
|
26,631
|
|
25,797
|
|
25,536
|
|
25,968
|
|
28,296
|
|
Net Interest Margin,
annualized
|
2.60 %
|
|
2.53 %
|
|
2.53 %
|
|
2.61 %
|
|
2.96 %
|
|
Net Interest Margin,
Tax-Equivalent, annualized 3
|
2.62 %
|
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
2.98 %
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency Ratio
Calculation: 4
|
|
|
|
|
|
|
|
|
|
|
Non-Interest
Expense
|
$
24,012
|
|
$ 23,190
|
|
$
23,479
|
|
$ 24,083
|
|
$ 22,296
|
|
Less: Intangible Asset
Amortization
|
41
|
|
43
|
|
43
|
|
44
|
|
45
|
|
Net Non-Interest
Expense
|
$
23,971
|
|
$ 23,147
|
|
$
23,436
|
|
$ 24,039
|
|
$ 22,251
|
|
Net Interest Income,
Tax-Equivalent
|
$
26,631
|
|
$ 25,797
|
|
$
25,536
|
|
$ 25,968
|
|
$ 28,296
|
|
Non-Interest
Income
|
7,858
|
|
7,484
|
|
8,050
|
|
6,906
|
|
6,677
|
|
Less: Net Gain (Loss)
on Securities
|
17
|
|
122
|
|
71
|
|
(181)
|
|
(104)
|
|
Net Gross
Income
|
$
34,472
|
|
$ 33,159
|
|
$
33,515
|
|
$ 33,055
|
|
$ 35,077
|
|
Efficiency
Ratio
|
69.54 %
|
|
69.81 %
|
|
69.93 %
|
|
72.72 %
|
|
63.43 %
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Capital
Information:
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity (i.e. Book Value)
|
$ 377,986
|
|
$
379,772
|
|
$ 360,014
|
|
$
361,443
|
|
$
363,371
|
|
Book Value per Share
1
|
22.62
|
|
22.42
|
|
21.12
|
|
21.20
|
|
21.31
|
|
Goodwill and Other
Intangible Assets, net
|
22,891
|
|
22,983
|
|
23,078
|
|
23,175
|
|
23,273
|
|
Tangible Book Value per
Share 1,2
|
21.25
|
|
21.06
|
|
19.76
|
|
19.84
|
|
19.95
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:5
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage
Ratio
|
9.63 %
|
|
9.84 %
|
|
9.94 %
|
|
9.92 %
|
|
10.13 %
|
|
Common Equity Tier 1
Capital Ratio
|
12.84 %
|
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
13.34 %
|
|
Tier 1 Risk-Based
Capital Ratio
|
13.50 %
|
|
13.66 %
|
|
13.84 %
|
|
13.96 %
|
|
14.03 %
|
|
Total Risk-Based
Capital Ratio
|
14.57 %
|
|
14.74 %
|
|
14.94 %
|
|
15.08 %
|
|
15.15 %
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Trust
Admin. & Investment Mgmt.
|
$ 1,829,266
|
|
$ 1,763,194
|
|
$ 1,627,522
|
|
$ 1,711,460
|
|
$ 1,672,117
|
|
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 26, 2023, 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 provide investors with information
that is useful in understanding its financial
performance.
|
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
Total Stockholders'
Equity (GAAP)
|
$
377,986
|
|
$
379,772
|
|
$
360,014
|
|
$
361,443
|
|
$
363,371
|
|
Less: Goodwill
and Other Intangible assets, net
|
22,891
|
|
22,983
|
|
23,078
|
|
23,175
|
|
23,273
|
|
Tangible Equity
(Non-GAAP)
|
$
355,095
|
|
$
356,789
|
|
$
336,936
|
|
$
338,268
|
|
$
340,098
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,710
|
|
16,942
|
|
17,049
|
|
17,050
|
|
17,050
|
|
Tangible Book Value per
Share (Non-GAAP)
|
$
21.25
|
|
$
21.06
|
|
$
19.76
|
|
$
19.84
|
|
$
19.95
|
|
Net Income
|
7,660
|
|
7,723
|
|
7,743
|
|
6,047
|
|
8,562
|
|
Return on Tangible
Equity (Net Income/Tangible Equity - Annualized)
|
8.64 %
|
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
10.33 %
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
Interest Income
(GAAP)
|
$ 46,677
|
|
$ 44,324
|
|
$ 42,117
|
|
$ 40,013
|
|
$ 36,110
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
176
|
|
184
|
|
183
|
|
196
|
|
202
|
|
Interest Income - Tax
Equivalent
(Non-GAAP)
|
$ 46,853
|
|
$ 44,508
|
|
$ 42,300
|
|
$ 40,209
|
|
$ 36,312
|
|
Net Interest Income
(GAAP)
|
$ 26,455
|
|
$ 25,613
|
|
$ 25,353
|
|
$ 25,772
|
|
$ 28,094
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
176
|
|
184
|
|
183
|
|
196
|
|
202
|
|
Net Interest Income -
Tax Equivalent
(Non-GAAP)
|
$ 26,631
|
|
$ 25,797
|
|
$ 25,536
|
|
$ 25,968
|
|
$ 28,296
|
|
Average Earning
Assets
|
$
4,085,398
|
|
$
4,019,432
|
|
$
3,973,747
|
|
$
3,953,642
|
|
$
3,845,825
|
|
Net Interest Margin
(Non-GAAP)*
|
2.62 %
|
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
2.98 %
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2024 CET1 ratio
listed in the tables (i.e., 12.84%) exceeds the sum of the required
minimum CET1 ratio plus the fully phased-in Capital Conservation
Buffer (i.e., 7.00%).
|
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
Total Risk Weighted
Assets
|
$
3,049,525
|
|
$
3,032,188
|
|
$
2,988,438
|
|
$
2,937,837
|
|
$
2,909,610
|
|
Common Equity Tier 1
Capital
|
391,706
|
|
394,166
|
|
393,541
|
|
389,966
|
|
388,228
|
|
Common Equity Tier 1
Ratio
|
12.84 %
|
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
13.34 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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,
2024
|
|
March 31,
2023
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Interest-Bearing
Deposits at Banks
|
$
178,452
|
|
$
2,447
|
|
5.52 %
|
|
$ 40,436
|
|
$
479
|
|
4.80 %
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
550,538
|
|
3,186
|
|
2.33
|
|
652,743
|
|
2,948
|
|
1.83
|
|
Exempt from Federal
Taxes
|
120,567
|
|
668
|
|
2.23
|
|
160,718
|
|
797
|
|
2.01
|
|
Loans
|
3,235,841
|
|
40,376
|
|
5.02
|
|
2,991,928
|
|
31,886
|
|
4.32
|
|
Total Earning
Assets
|
4,085,398
|
|
46,677
|
|
4.60
|
|
3,845,825
|
|
36,110
|
|
3.81
|
|
Allowance for Credit
Losses
|
(31,416)
|
|
|
|
|
|
(29,792)
|
|
|
|
|
|
Cash and Due From
Banks
|
29,804
|
|
|
|
|
|
30,518
|
|
|
|
|
|
Other Assets
|
161,698
|
|
|
|
|
|
132,300
|
|
|
|
|
|
Total
Assets
|
$
4,245,484
|
|
|
|
|
|
$
3,978,851
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
$
830,918
|
|
1,641
|
|
0.79
|
|
$
964,735
|
|
370
|
|
0.16
|
|
Savings
Deposits
|
1,481,001
|
|
10,230
|
|
2.78
|
|
1,474,251
|
|
5,587
|
|
1.54
|
|
Time Deposits of
$250,000 or More
|
177,328
|
|
1,973
|
|
4.47
|
|
94,415
|
|
574
|
|
2.47
|
|
Other Time
Deposits
|
496,813
|
|
5,083
|
|
4.11
|
|
148,302
|
|
474
|
|
1.30
|
|
Total Interest-Bearing
Deposits
|
2,986,060
|
|
18,927
|
|
2.55
|
|
2,681,703
|
|
7,005
|
|
1.06
|
|
Borrowings
|
96,984
|
|
1,076
|
|
4.46
|
|
40,138
|
|
490
|
|
4.95
|
|
Junior Subordinated
Obligations Issued to Unconsolidated Subsidiary Trusts
|
20,000
|
|
171
|
|
3.44
|
|
55,356
|
|
472
|
|
3.46
|
|
Finance
Leases
|
5,049
|
|
48
|
|
3.82
|
|
5,102
|
|
49
|
|
3.89
|
|
Total Interest-Bearing
Liabilities
|
3,108,093
|
|
20,222
|
|
2.62
|
|
2,782,299
|
|
8,016
|
|
1.17
|
|
Noninterest-Bearing
Deposits
|
707,265
|
|
|
|
|
|
798,576
|
|
|
|
|
|
Other
Liabilities
|
50,680
|
|
|
|
|
|
38,420
|
|
|
|
|
|
Total
Liabilities
|
3,866,038
|
|
|
|
|
|
3,619,295
|
|
|
|
|
|
Stockholders'
Equity
|
379,446
|
|
|
|
|
|
359,556
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
4,245,484
|
|
|
|
|
|
$
3,978,851
|
|
|
|
|
|
Net Interest
Income
|
|
|
$ 26,455
|
|
|
|
|
|
$ 28,094
|
|
|
|
Net Interest
Spread
|
|
|
|
|
1.98 %
|
|
|
|
|
|
2.64 %
|
|
Net Interest
Margin
|
|
|
|
|
2.60 %
|
|
|
|
|
|
2.96 %
|
|
Arrow Financial
Corporation
|
|
Average Consolidated
Balance Sheets and Net Interest Income Analysis
|
|
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
March 31,
2024
|
|
December 31,
2023
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Interest-Bearing
Deposits at Banks
|
$
178,452
|
|
$
2,447
|
|
5.52 %
|
|
$
136,026
|
|
$
1,873
|
|
5.46 %
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
550,538
|
|
3,186
|
|
2.33
|
|
586,227
|
|
2,941
|
|
1.99
|
|
Exempt from Federal
Taxes
|
120,567
|
|
668
|
|
2.23
|
|
126,917
|
|
697
|
|
2.18
|
|
Loans
|
3,235,841
|
|
40,376
|
|
5.02
|
|
3,170,262
|
|
38,813
|
|
4.86
|
|
Total Earning
Assets
|
4,085,398
|
|
46,677
|
|
4.60
|
|
4,019,432
|
|
44,324
|
|
4.38
|
|
Allowance for Credit
Losses
|
(31,416)
|
|
|
|
|
|
(31,417)
|
|
|
|
|
|
Cash and Due From
Banks
|
29,804
|
|
|
|
|
|
30,402
|
|
|
|
|
|
Other Assets
|
161,698
|
|
|
|
|
|
140,896
|
|
|
|
|
|
Total
Assets
|
$
4,245,484
|
|
|
|
|
|
$
4,159,313
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
$
830,918
|
|
1,641
|
|
0.79
|
|
$
801,923
|
|
1,317
|
|
0.65
|
|
Savings
Deposits
|
1,481,001
|
|
10,230
|
|
2.78
|
|
1,509,946
|
|
10,513
|
|
2.76
|
|
Time Deposits of
$250,000 or More
|
177,328
|
|
1,973
|
|
4.47
|
|
169,854
|
|
1,807
|
|
4.22
|
|
Other Time
Deposits
|
496,813
|
|
5,083
|
|
4.11
|
|
354,487
|
|
3,406
|
|
3.81
|
|
Total Interest-Bearing
Deposits
|
2,986,060
|
|
18,927
|
|
2.55
|
|
2,836,210
|
|
17,043
|
|
2.38
|
|
Borrowings
|
96,984
|
|
1,076
|
|
4.46
|
|
124,445
|
|
1,447
|
|
4.61
|
|
Junior Subordinated
Obligations Issued to Unconsolidated Subsidiary Trusts
|
20,000
|
|
171
|
|
3.44
|
|
20,000
|
|
173
|
|
3.43
|
|
Finance
Leases
|
5,049
|
|
48
|
|
3.82
|
|
5,062
|
|
48
|
|
3.76
|
|
Total Interest-Bearing
Liabilities
|
3,108,093
|
|
20,222
|
|
2.62
|
|
2,985,717
|
|
18,711
|
|
2.49
|
|
Noninterest-bearing
deposits
|
707,265
|
|
|
|
|
|
757,739
|
|
|
|
|
|
Other
Liabilities
|
50,680
|
|
|
|
|
|
52,104
|
|
|
|
|
|
Total
Liabilities
|
3,866,038
|
|
|
|
|
|
3,795,560
|
|
|
|
|
|
Stockholders'
Equity
|
379,446
|
|
|
|
|
|
363,753
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
4,245,484
|
|
|
|
|
|
$
4,159,313
|
|
|
|
|
|
Net Interest
Income
|
|
|
$ 26,455
|
|
|
|
|
|
$ 25,613
|
|
|
|
Net Interest
Spread
|
|
|
|
|
1.98 %
|
|
|
|
|
|
1.89 %
|
|
Net Interest
Margin
|
|
|
|
|
2.60 %
|
|
|
|
|
|
2.53 %
|
|
Arrow Financial
Corporation
|
|
Consolidated
Financial Information
|
|
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
3/31/2024
|
|
12/31/2023
|
|
3/31/2023
|
|
Loan
Portfolio
|
|
|
|
|
|
|
Commercial
Loans
|
$
162,389
|
|
$
156,224
|
|
$
135,917
|
|
Commercial Real Estate
Loans
|
750,969
|
|
745,487
|
|
715,357
|
|
Subtotal
Commercial Loan Portfolio
|
913,358
|
|
901,711
|
|
851,274
|
|
Consumer
Loans
|
1,125,754
|
|
1,111,667
|
|
1,073,369
|
|
Residential Real Estate
Loans
|
1,219,646
|
|
1,199,530
|
|
1,080,709
|
|
Total Loans
|
$
3,258,758
|
|
$
3,212,908
|
|
$
3,005,352
|
|
Allowance for Credit
Losses
|
|
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Quarter
|
$
31,265
|
|
$
31,112
|
|
$
29,952
|
|
Loans
Charged-off
|
(1,283)
|
|
(1,366)
|
|
(1,328)
|
|
Less Recoveries of
Loans Previously Charged-off
|
962
|
|
994
|
|
606
|
|
Net Loans
Charged-off
|
(321)
|
|
(372)
|
|
(722)
|
|
Provision for Credit
Losses
|
617
|
|
525
|
|
1,554
|
|
Allowance for Credit
Losses, End of Quarter
|
$
31,561
|
|
$
31,265
|
|
$
30,784
|
|
Nonperforming
Assets
|
|
|
|
|
|
|
Nonaccrual
Loans
|
$
20,244
|
|
$
20,645
|
|
$
10,852
|
|
Loans Past Due 90 or
More Days and Accruing
|
1,147
|
|
452
|
|
241
|
|
Loans Restructured and
in Compliance with Modified Terms
|
49
|
|
54
|
|
62
|
|
Total Nonperforming
Loans
|
21,440
|
|
21,151
|
|
11,155
|
|
Repossessed
Assets
|
312
|
|
312
|
|
144
|
|
Other Real Estate
Owned
|
—
|
|
—
|
|
—
|
|
Total Nonperforming
Assets
|
$
21,752
|
|
$
21,463
|
|
$
11,299
|
|
|
|
|
|
|
|
Key Asset Quality
Ratios
|
|
|
|
|
|
|
Net Loans Charged-off
to Average Loans,
Quarter-to-date Annualized
|
0.04 %
|
|
0.05 %
|
|
0.10 %
|
|
Provision for Credit
Losses to Average Loans,
Quarter-to-date Annualized
|
0.08 %
|
|
0.07 %
|
|
0.21 %
|
|
Allowance for Credit
Losses to Period-End Loans
|
0.97 %
|
|
0.97 %
|
|
1.02 %
|
|
Allowance for Credit
Losses to Period-End Nonperforming Loans
|
147.21 %
|
|
147.82 %
|
|
275.97 %
|
|
Nonperforming Loans to
Period-End Loans
|
0.66 %
|
|
0.66 %
|
|
0.37 %
|
|
Nonperforming Assets to
Period-End Assets
|
0.50 %
|
|
0.51 %
|
|
0.27 %
|
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SOURCE Arrow Financial Corporation