GLENS FALLS, N.Y.,
July 25,
2024 /PRNewswire/ -- Arrow Financial Corporation
(NasdaqGS® – AROW) ("Arrow" or "the Company") announced
financial results for the three-month period ended June 30, 2024. Net income for the second quarter
of 2024 was $8.6 million and fully
diluted earnings per share ("EPS") was $0.52, versus $6.0
million and EPS of $0.35, for
the same period in 2023.
The Board of Directors of Arrow declared a quarterly cash
dividend of $0.27 per share payable
August 23, 2024 to shareholders of
record as of August 12, 2024. This is
Arrow's 45th consecutive quarterly cash dividend.
This Earnings Release and related commentary should be read
in conjunction with the Company's July 25, 2024 Form 8-K and
related Second 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:
"We are pleased to report another quarter of solid performance,
demonstrating the hard work and dedication of our team. We recently
expanded our insurance business with the strategic acquisition of
the assets of A&B Agency, Inc. We are also looking forward to
the close of our branch acquisition in Whitehall, New York scheduled for early
August.
In addition, on July 22nd, we
received regulatory approval to combine our banking subsidiaries,
Glens Falls National Bank and Trust Company and Saratoga National
Bank and Trust Company, into a single entity renamed Arrow Bank
National Association, or Arrow Bank. This positions us to enhance
our strategic growth while ensuring stability with the same
dedicated leadership team, staff and branch locations. We are
confident these initiatives will further strengthen our market
position and drive long-term value for our shareholders."
Second-Quarter Highlights and Key Metrics
- Gross loans grew $57.6
million1, or 7.1% on an annualized basis.
- Net interest margin improved to 2.67% (2.69% FTE2),
up from 2.60% (2.62% FTE) in the prior quarter
- Average loan yields increased to 5.17% for 2Q24, up from 5.02%
in the prior quarter
- Deposit balances were $3.7
billion
- Tangible Book Value increased to $21.54
- Return on Average Assets (ROA) improved to 0.82%, up from 0.73%
in the previous quarter
- Received regulatory approval to acquire a branch in
Whitehall, New York with
approximately $35 million in
deposits; transaction expected to close in August 2024
|
____________________________________
|
|
1 Excludes
both $0.4 million fair value hedge adjustment at June 30, 2024 and
$1.2 million fair value hedge adjustment at March 31,
2024
|
|
2 FTE Net
interest margin is a non-GAAP measure. See reconciliation on Note 3
to the Selected Quarterly Information.
|
Income Statement
- Net Income: Net income for the second quarter of 2024
was $8.6 million, increasing from
$7.7 million in the first quarter of
2024 and $6.0 million in the second
quarter of 2023.
- As compared to the prior quarter, net income benefited from an
increase of $0.7 million in net
interest income as well as a decrease in non-interest expense of
$0.7 million.
- As compared to the second quarter of 2023, net interest income
increased $1.4 million. Non-interest
income increased $1.0 million and
non-interest expense decreased $0.8
million.
- Net Interest Income: Net interest income for the second
quarter of 2024 was $27.2 million,
increasing 2.6% from $26.5 million
for the first quarter of 2024 and increasing 5.4% from $25.8 million in the second quarter of 2023.
- Total interest and dividend income was $48.0 million for the second quarter of 2024, an
increase from $46.7 million in the
first quarter of 2024 and from $40.0
million for the second quarter of 2023. These increases were
primarily driven by loan growth and higher loan rates. Interest
expense for the second quarter of 2024 was $20.8 million, an increase from $20.2 million for the first quarter of 2024 and
from $14.2 million for the second
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, on an FTE
basis, for the second quarter of 2024 was 2.69% compared to 2.62%
for the first quarter of 2024 and 2.63% for the second quarter of
2023. The increase in net interest margin compared to the first
quarter in 2024 was primarily the result of continued yield
expansion on earning assets combined with moderating increase in
the cost of interest-bearing liabilities. As compared to the second
quarter of 2023, the increase in net interest margin was primarily
the result of yield on average earning assets increasing at a
faster pace than costs of interest-bearing liabilities. Net
interest margin is affected by deposits continuing to migrate to
higher costs products, such as money market savings and time
deposits.
|
Three Months
Ended
|
|
(Dollars in
Thousands)
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
Interest and Dividend
Income
|
$
47,972
|
|
$
46,677
|
|
$
40,013
|
|
Interest
Expense
|
20,820
|
|
20,222
|
|
14,241
|
|
Net Interest
Income
|
27,152
|
|
26,455
|
|
25,772
|
|
Average Earning
Assets(A)
|
4,083,813
|
|
4,085,398
|
|
3,953,642
|
|
Average
Interest-Bearing Liabilities
|
3,127,417
|
|
3,108,093
|
|
2,924,743
|
|
|
|
|
|
|
|
Yield on Earning
Assets(A)
|
4.72 %
|
|
4.60 %
|
|
4.06 %
|
|
Cost of
Interest-Bearing Liabilities
|
2.68
|
|
2.62
|
|
1.95
|
|
Net Interest
Spread
|
2.04
|
|
1.98
|
|
2.11
|
|
Net Interest
Margin
|
2.67
|
|
2.60
|
|
2.61
|
|
Net Interest Margin -
FTE
|
2.69
|
|
2.62
|
|
2.63
|
|
|
|
|
|
|
|
(A) Includes
Nonaccrual Loans.
|
|
|
|
|
|
- Provision for Credit Losses: For the second quarter of
2024, the provision for credit losses was $0.8 million compared to $0.6 million in the first quarter of 2024 and
$0.9 million in the second quarter of
2023. The key drivers for the provision for credit losses in the
second quarter of 2024 were loan growth and replenishment of the
allowance for charge-offs, partially offset by changes to the
economic forecast factors embedded in the credit loss allowance
model.
- Non-Interest Income: Non-interest income for the three
months ended June 30, 2024, was
$7.9 million consistent with the
first quarter of 2024 and an increase from $6.9 million in the second quarter of 2023 due to
the other investment income and a small gain on a sale leaseback
transaction.
- Non-Interest Expense: Non-interest expense for the
second quarter of 2024 was $23.3
million, a decrease from $24.0
million in the first quarter of 2024 and from $24.1 million for the second quarter of 2023. The
decrease from the prior quarter and year was primarily due to
elimination of elevated legal and professional expenses related to
the delayed filings in 2023.
- Provision for Income Taxes: The provision for income
taxes was 21.2%, or $2.3 million, for
the second quarter of 2024, 20.9%, or $2.0
million, for the first quarter of 2024 and 20.9%, or
$1.6 million, for the second quarter
of 2023.
Balance Sheet
- Total Assets: Total assets were $4.2 billion at June 30,
2024, a decrease of $89.2
million, or 2.1%, as compared to March 31, 2024 and an increase of $140.8 million, or 3.4%, as compared to
June 30, 2023. For the second quarter
of 2024, overall change in balance sheet was attributable to
seasonal changes of cash balances offset by growth in the loan
portfolio.
- Investments: Total investments were $556.4 million as of June
30, 2024, a decrease of $63.6
million, or 10.3%, compared to March
31, 2024 and a decrease of $137.6
million, or 19.8%, compared to June
30, 2023. The decrease from March 31,
2024 was driven primarily by paydowns and maturities. The
change from June 30, 2023 was also
driven by paydowns and maturities as well as 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 June 30, 2024. Loan growth for the second quarter
of 2024 was $57.6 million, and
$245.3 million since June 30, 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 $31.0 million as of
June 30, 2024, which represented
0.94% of loans outstanding, as compared to $31.6 million, or 0.97%, at March 31, 2024 and $31.2
million, or 1.02%, at June 30,
2023. Net charge-offs, expressed as an annualized percentage
of average loans outstanding, were 0.16% for the three-month period
ended June 30, 20244, as
compared to 0.04% for the three-month period ended March 31, 2024 and 0.07% for the three-month
period ended June 30,
2023. Nonperforming assets were $21.3
million as of June 30, 2024,
representing 0.50% of period-end assets, compared to 0.50% at
March 31, 2024 and 0.17% at
June 30, 2023. The increase from the
second 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 June 30,
2024, deposit balances were $3.7
billion, a decrease of $95.4
million from March 31, 2024
and an increase of $181.4 million
from June 30, 2023. The decrease from
the first quarter was primarily attributable to the seasonality of
municipal deposits, expected to normalize in the third quarter. The
increase from June 30, 2023 was
partially attributable to $175
million of brokered CDs, primarily used to reduce borrowings
by $160 million. Arrow simultaneously
entered into three-year interest rate swaps to strategically manage
its asset-liability profile and cost of funds. Please refer to page
7 for further details related to deposits.
- Capital: Total stockholders' equity was $383.0 million at June 30,
2024, an increase of $5.0
million, or 1.3%, from March 31,
2024 and an increase of $21.6
million, or 6.0%, from the June 30,
2023 level of $361.4 million.
The increase in capital from June 30,
2023, was primarily attributable to net income of
$32 million, other comprehensive
income of $16 million offset by
dividends and stock repurchases of $27
million. Arrow's regulatory capital ratios remained strong.
As of June 30, 2024, Arrow's Common
Equity Tier 1 Capital Ratio was 12.88% 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 68th
and 60th quarters, respectively.
- Subsidiary Bank Unification: On July 22 2024, Arrow received approval from the
Office of the Comptroller of the Currency to combine its two
subsidiary banks, Glens Falls National Bank and Trust Company and
Saratoga National Bank and Trust Company, into one bank that will
be known as Arrow Bank National Association. The combination will
create operational efficiencies, unify branding and enhance Arrow's
ability to pursue its strategic growth objectives. The combination
of the entities is anticipated to become effective December 31, 2024.
|
___________________________________________
3 Excludes both $0.4 million fair value hedge adjustment at
June 30, 2024 and $1.2 million fair value hedge adjustment at March
31, 2024
|
|
4
Charge-offs for 2Q24 included 0.09% related to a previously
specifically reserved amount for overdraft balances relating to one
customer relationship
|
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 (FTE). 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.
|
ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, Except
Per Share Amounts - Unaudited)
|
|
|
|
Three Months
Ended June 30
|
|
Six Months Ended June
30
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
INTEREST AND
DIVIDEND INCOME
|
|
|
|
|
|
|
|
|
|
Interest and Fees on
Loans
|
|
$
42,141
|
|
$
34,618
|
|
$
82,517
|
|
$
66,504
|
|
Interest on Deposits at
Banks
|
|
2,185
|
|
1,674
|
|
4,632
|
|
2,153
|
|
Interest and Dividends
on Investment Securities:
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
|
3,009
|
|
2,951
|
|
6,195
|
|
5,899
|
|
Exempt from Federal
Taxes
|
|
637
|
|
770
|
|
1,305
|
|
1,567
|
|
Total Interest and
Dividend Income
|
|
47,972
|
|
40,013
|
|
94,649
|
|
76,123
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
|
1,903
|
|
820
|
|
3,544
|
|
1,190
|
|
Savings
Deposits
|
|
10,571
|
|
8,514
|
|
20,801
|
|
14,101
|
|
Time Deposits over
$250,000
|
|
1,869
|
|
1,119
|
|
3,842
|
|
1,693
|
|
Other Time
Deposits
|
|
5,074
|
|
1,196
|
|
10,157
|
|
1,670
|
|
Borrowings
|
|
1,186
|
|
2,373
|
|
2,262
|
|
3,166
|
|
Junior Subordinated
Obligations Issued to
Unconsolidated
Subsidiary Trusts
|
|
170
|
|
171
|
|
341
|
|
340
|
|
Interest on Financing
Leases
|
|
47
|
|
48
|
|
95
|
|
97
|
|
Total Interest
Expense
|
|
20,820
|
|
14,241
|
|
41,042
|
|
22,257
|
|
NET INTEREST
INCOME
|
|
27,152
|
|
25,772
|
|
53,607
|
|
53,866
|
|
Provision for Credit
Losses
|
|
775
|
|
948
|
|
1,392
|
|
2,502
|
|
NET INTEREST INCOME
AFTER PROVISION
FOR CREDIT LOSSES
|
|
26,377
|
|
24,824
|
|
52,215
|
|
51,364
|
|
NON-INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
Income From Fiduciary
Activities
|
|
2,451
|
|
2,428
|
|
4,908
|
|
4,703
|
|
Fees for Other Services
to Customers
|
|
2,706
|
|
2,717
|
|
5,249
|
|
5,312
|
|
Insurance
Commissions
|
|
1,662
|
|
1,560
|
|
3,344
|
|
3,080
|
|
Net Gain (Loss) on
Securities
|
|
54
|
|
(181)
|
|
71
|
|
(285)
|
|
Net Gain on Sales of
Loans
|
|
5
|
|
—
|
|
9
|
|
4
|
|
Other Operating
Income
|
|
978
|
|
382
|
|
2,133
|
|
769
|
|
Total Non-Interest
Income
|
|
7,856
|
|
6,906
|
|
15,714
|
|
13,583
|
|
NON-INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
Salaries and Employee
Benefits
|
|
13,036
|
|
12,039
|
|
25,929
|
|
23,986
|
|
Occupancy Expenses,
Net
|
|
1,774
|
|
1,583
|
|
3,545
|
|
3,211
|
|
Technology and
Equipment Expense
|
|
4,734
|
|
4,362
|
|
9,554
|
|
8,779
|
|
FDIC
Assessments
|
|
698
|
|
484
|
|
1,413
|
|
963
|
|
Other Operating
Expense
|
|
3,076
|
|
5,615
|
|
6,889
|
|
9,440
|
|
Total Non-Interest
Expense
|
|
23,318
|
|
24,083
|
|
47,330
|
|
46,379
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
10,915
|
|
7,647
|
|
20,599
|
|
18,568
|
|
Provision for Income
Taxes
|
|
2,311
|
|
1,600
|
|
4,335
|
|
3,959
|
|
NET
INCOME
|
|
$
8,604
|
|
$
6,047
|
|
$
16,264
|
|
$
14,609
|
|
Average Shares
Outstanding 1:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
16,685
|
|
17,050
|
|
16,764
|
|
17,050
|
|
Diluted
|
|
16,709
|
|
17,050
|
|
16,789
|
|
17,050
|
|
Per Common
Share:
|
|
|
|
|
|
|
|
|
|
Basic
Earnings
|
|
$
0.52
|
|
$
0.35
|
|
$
0.97
|
|
$
0.85
|
|
Diluted
Earnings
|
|
0.52
|
|
0.35
|
|
0.97
|
|
0.85
|
|
1
June 30, 2023 Share and Per Share Amounts have been
restated for the September 26, 2023, 3% stock
dividend.
|
|
ARROW FINANCIAL
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In Thousands, Except
Share and Per Share Amounts - Unaudited)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
June 30,
2023
|
|
ASSETS
|
|
|
|
|
|
|
Cash and Due From
Banks
|
$
30,372
|
|
$
36,755
|
|
$
33,803
|
|
Interest-Bearing
Deposits at Banks
|
169,826
|
|
105,781
|
|
139,798
|
|
Investment
Securities:
|
|
|
|
|
|
|
Available-for-Sale at
Fair Value
|
450,786
|
|
497,769
|
|
543,708
|
|
Held-to-Maturity (Fair
Value of $96,454 at June 30, 2024;
$128,837 at December 31, 2023; and $139,143 at
June 30,
2023)
|
99,348
|
|
131,395
|
|
143,460
|
|
Equity
Securities
|
1,996
|
|
1,925
|
|
1,889
|
|
Other
Investments
|
4,274
|
|
5,049
|
|
4,932
|
|
Loans
|
3,315,523
|
|
3,212,908
|
|
3,069,897
|
|
Allowance for Credit
Losses
|
(31,009)
|
|
(31,265)
|
|
(31,170)
|
|
Net Loans
|
3,284,514
|
|
3,181,643
|
|
3,038,727
|
|
Premises and Equipment,
Net
|
59,243
|
|
59,642
|
|
59,773
|
|
Goodwill
|
21,873
|
|
21,873
|
|
21,873
|
|
Other Intangible
Assets, Net
|
927
|
|
1,110
|
|
1,302
|
|
Other Assets
|
121,248
|
|
126,926
|
|
114,388
|
|
Total
Assets
|
$
4,244,407
|
|
$
4,169,868
|
|
$
4,103,653
|
|
LIABILITIES
|
|
|
|
|
|
|
Noninterest-Bearing
Deposits
|
704,707
|
|
758,425
|
|
759,495
|
|
Interest-Bearing
Checking Accounts
|
856,788
|
|
799,785
|
|
856,016
|
|
Savings
Deposits
|
1,446,821
|
|
1,466,280
|
|
1,517,937
|
|
Time Deposits over
$250,000
|
173,526
|
|
179,301
|
|
140,694
|
|
Other Time
Deposits
|
501,797
|
|
483,775
|
|
228,082
|
|
Total
Deposits
|
3,683,639
|
|
3,687,566
|
|
3,502,224
|
|
Borrowings
|
106,500
|
|
26,500
|
|
171,800
|
|
Junior Subordinated
Obligations Issued to Unconsolidated
Subsidiary
Trusts
|
20,000
|
|
20,000
|
|
20,000
|
|
Finance
Leases
|
5,038
|
|
5,066
|
|
5,093
|
|
Other
Liabilities
|
46,212
|
|
50,964
|
|
43,093
|
|
Total
Liabilities
|
3,861,389
|
|
3,790,096
|
|
3,742,210
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Preferred Stock, $1 Par
Value and 1,000,000 Shares
Authorized at June 30, 2024, December 31, 2023
and
June 30, 2023
|
—
|
|
—
|
|
—
|
|
Common Stock, $1 Par
Value; 30,000,000 Shares Authorized
(22,066,559 Shares Issued at June 30, 2024 and
December 31, 2023 and 21,423,992 Shares Issued at
June 30, 2023)
|
22,067
|
|
22,067
|
|
21,424
|
|
Additional Paid-in
Capital
|
412,917
|
|
412,551
|
|
401,069
|
|
Retained
Earnings
|
72,980
|
|
65,792
|
|
71,076
|
|
Accumulated Other
Comprehensive Loss
|
(31,632)
|
|
(33,416)
|
|
(47,613)
|
|
Treasury Stock, at Cost
(5,343,295 Shares at June 30, 2024;
5,124,073 Shares at December 31, 2023 and 4,870,934
Shares at June 30, 2023)
|
(93,314)
|
|
(87,222)
|
|
(84,513)
|
|
Total Stockholders'
Equity
|
383,018
|
|
379,772
|
|
361,443
|
|
Total Liabilities and
Stockholders' Equity
|
$
4,244,407
|
|
$
4,169,868
|
|
$
4,103,653
|
|
Arrow Financial
Corporation
Selected Quarterly
Information
(Dollars In Thousands,
Except Per Share Amounts - Unaudited)
|
|
|
Quarter
Ended
|
6/30/2024
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
Net Income
|
$
8,604
|
|
$
7,660
|
|
$
7,723
|
|
$
7,743
|
|
$
6,047
|
|
|
|
|
|
|
|
|
|
|
|
Net Changes in Fair
Value of Equity Investments
(Net of Tax)
|
39
|
|
13
|
|
90
|
|
52
|
|
(133)
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data:1
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,723
|
|
16,710
|
|
16,942
|
|
17,049
|
|
17,050
|
|
Basic Average Shares
Outstanding
|
16,685
|
|
16,865
|
|
17,002
|
|
17,050
|
|
17,050
|
|
Diluted Average Shares
Outstanding
|
16,709
|
|
16,867
|
|
17,004
|
|
17,050
|
|
17,050
|
|
Basic Earnings Per
Share
|
$
0.52
|
|
$
0.45
|
|
$
0.46
|
|
$
0.46
|
|
$
0.35
|
|
Diluted Earnings Per
Share
|
0.52
|
|
0.45
|
|
0.46
|
|
0.46
|
|
0.35
|
|
Cash Dividend Per
Share
|
0.270
|
|
0.270
|
|
0.270
|
|
0.262
|
|
0.262
|
|
|
|
|
|
|
|
|
|
|
|
Selected Quarterly
Average Balances:
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Deposits at Banks
|
$ 159,336
|
|
$
178,452
|
|
$ 136,026
|
|
$
131,814
|
|
$
130,057
|
|
Investment
Securities
|
644,192
|
|
671,105
|
|
713,144
|
|
745,693
|
|
787,175
|
|
Loans
|
3,280,285
|
|
3,235,841
|
|
3,170,262
|
|
3,096,240
|
|
3,036,410
|
|
Deposits
|
3,678,957
|
|
3,693,325
|
|
3,593,949
|
|
3,491,028
|
|
3,460,711
|
|
Other Borrowed
Funds
|
131,537
|
|
122,033
|
|
149,507
|
|
208,527
|
|
220,616
|
|
Stockholders'
Equity
|
378,256
|
|
379,446
|
|
363,753
|
|
362,701
|
|
365,070
|
|
Total
Assets
|
4,237,359
|
|
4,245,484
|
|
4,159,313
|
|
4,109,995
|
|
4,087,653
|
|
Return on Average
Assets, annualized
|
0.82 %
|
|
0.73 %
|
|
0.74 %
|
|
0.75 %
|
|
0.59 %
|
|
Return on Average
Equity, annualized
|
9.15 %
|
|
8.12 %
|
|
8.42 %
|
|
8.47 %
|
|
6.64 %
|
|
Return on Average
Tangible Equity, annualized 2
|
9.74 %
|
|
8.64 %
|
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
Average Earning
Assets
|
$ 4,083,813
|
|
$ 4,085,398
|
|
$ 4,019,432
|
|
$ 3,973,747
|
|
$ 3,953,642
|
|
Average Paying
Liabilities
|
3,127,417
|
|
3,108,093
|
|
2,985,717
|
|
2,920,518
|
|
2,924,743
|
|
Interest
Income
|
47,972
|
|
46,677
|
|
44,324
|
|
42,117
|
|
40,013
|
|
Tax-Equivalent
Adjustment 3
|
163
|
|
176
|
|
184
|
|
183
|
|
196
|
|
Interest Income,
Tax-Equivalent 3
|
48,135
|
|
46,853
|
|
44,508
|
|
42,117
|
|
40,013
|
|
Interest
Expense
|
20,820
|
|
20,222
|
|
18,711
|
|
16,764
|
|
14,241
|
|
Net Interest
Income
|
27,152
|
|
26,455
|
|
25,613
|
|
25,353
|
|
25,772
|
|
Net Interest Income,
Tax-Equivalent 3
|
27,315
|
|
26,631
|
|
25,797
|
|
25,536
|
|
25,968
|
|
Net Interest Margin,
annualized
|
2.67 %
|
|
2.60 %
|
|
2.53 %
|
|
2.53 %
|
|
2.61 %
|
|
Net Interest Margin,
Tax-Equivalent, annualized 3
|
2.69 %
|
|
2.62 %
|
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency Ratio
Calculation: 4
|
|
|
|
|
|
|
|
|
|
|
Non-Interest
Expense
|
$
23,318
|
|
$ 24,012
|
|
$
23,190
|
|
$ 23,479
|
|
$ 24,083
|
|
Less: Intangible Asset
Amortization
|
40
|
|
41
|
|
43
|
|
43
|
|
44
|
|
Net Non-Interest
Expense
|
$
23,278
|
|
$ 23,971
|
|
$
23,147
|
|
$ 23,436
|
|
$ 24,039
|
|
Net Interest Income,
Tax-Equivalent
|
$
27,315
|
|
$ 26,631
|
|
$
25,797
|
|
$ 25,536
|
|
$ 25,968
|
|
Non-Interest
Income
|
7,856
|
|
7,858
|
|
7,484
|
|
8,050
|
|
6,906
|
|
Less: Net Gain (Loss)
on Securities
|
54
|
|
17
|
|
122
|
|
71
|
|
(181)
|
|
Net Gross
Income
|
$
35,117
|
|
$ 34,472
|
|
$
33,159
|
|
$ 33,515
|
|
$ 33,055
|
|
Efficiency
Ratio
|
66.29 %
|
|
69.54 %
|
|
69.81 %
|
|
69.93 %
|
|
72.72 %
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Capital
Information:
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity (i.e. Book Value)
|
$ 383,018
|
|
$
377,986
|
|
$ 379,772
|
|
$
360,014
|
|
$
361,443
|
|
Book Value per Share
1
|
22.90
|
|
22.62
|
|
22.42
|
|
21.12
|
|
21.20
|
|
Goodwill and Other
Intangible Assets, net
|
22,800
|
|
22,891
|
|
22,983
|
|
23,078
|
|
23,175
|
|
Tangible Book Value per
Share 1,2
|
21.54
|
|
21.25
|
|
21.06
|
|
19.76
|
|
19.84
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:5
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage
Ratio
|
9.74 %
|
|
9.63 %
|
|
9.84 %
|
|
9.94 %
|
|
9.92 %
|
|
Common Equity Tier 1
Capital Ratio
|
12.88 %
|
|
12.84 %
|
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
Tier 1 Risk-Based
Capital Ratio
|
13.53 %
|
|
13.50 %
|
|
13.66 %
|
|
13.84 %
|
|
13.96 %
|
|
Total Risk-Based
Capital Ratio
|
14.57 %
|
|
14.57 %
|
|
14.74 %
|
|
14.94 %
|
|
15.08 %
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Trust
Admin. & Investment Mgmt.
|
$ 1,848,349
|
|
$ 1,829,266
|
|
$ 1,763,194
|
|
$ 1,627,522
|
|
$ 1,711,460
|
|
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.
|
|
|
6/30/2024
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
Total Stockholders'
Equity (GAAP)
|
$
383,018
|
|
$
377,986
|
|
$
379,772
|
|
$
360,014
|
|
$
361,443
|
|
Less: Goodwill
and Other Intangible
assets, net
|
22,800
|
|
22,891
|
|
22,983
|
|
23,078
|
|
23,175
|
|
Tangible Equity
(Non-GAAP)
|
$
360,218
|
|
$
355,095
|
|
$
356,789
|
|
$
336,936
|
|
$
338,268
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,723
|
|
16,710
|
|
16,942
|
|
17,049
|
|
17,050
|
|
Tangible Book Value per
Share (Non-
GAAP)
|
$
21.54
|
|
$
21.25
|
|
$
21.06
|
|
$
19.76
|
|
$
19.84
|
|
Net Income
|
8,604
|
|
7,660
|
|
7,723
|
|
7,743
|
|
6,047
|
|
Return on Tangible
Equity (Net
Income/Tangible Equity - Annualized)
|
9.74 %
|
|
8.64 %
|
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
Non-GAAP Financial
Measure Reconciliation: Net Interest Margin is the ratio of
annualized tax-equivalent netinterest 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.
|
|
|
6/30/2024
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
Interest Income
(GAAP)
|
$ 47,972
|
|
$ 46,677
|
|
$ 44,324
|
|
$ 42,117
|
|
$ 40,013
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
163
|
|
176
|
|
184
|
|
183
|
|
196
|
|
Interest Income - Tax
Equivalent
(Non-GAAP)
|
$ 48,135
|
|
$ 46,853
|
|
$ 44,508
|
|
$ 42,300
|
|
$ 40,209
|
|
Net Interest Income
(GAAP)
|
$ 27,152
|
|
$ 26,455
|
|
$ 25,613
|
|
$ 25,353
|
|
$ 25,772
|
|
Add:
Tax-Equivalent adjustment
(Non-GAAP)
|
163
|
|
176
|
|
184
|
|
183
|
|
196
|
|
Net Interest Income -
Tax Equivalent
(Non-GAAP)
|
$ 27,315
|
|
$ 26,631
|
|
$ 25,797
|
|
$ 25,536
|
|
$ 25,968
|
|
Average Earning
Assets
|
$
4,083,813
|
|
$
4,085,398
|
|
$
4,019,432
|
|
$
3,973,747
|
|
$
3,953,642
|
|
Net Interest Margin
(Non-GAAP)*
|
2.69 %
|
|
2.62 %
|
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2024 CET1
ratio listed in the tables (i.e., 12.88%) exceeds the sum of
the required minimum
CET1 ratio plus the fully phased-in Capital Conservation Buffer
(i.e., 7.00%).
|
|
|
6/30/2024
|
|
3/31/2024
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
Total Risk Weighted
Assets
|
$
3,072,922
|
|
$
3,049,525
|
|
$
3,032,188
|
|
$
2,988,438
|
|
$
2,937,837
|
|
Common Equity Tier 1
Capital
|
395,691
|
|
391,706
|
|
394,166
|
|
393,541
|
|
389,966
|
|
Common Equity Tier 1
Ratio
|
12.88 %
|
|
12.84 %
|
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
|
|
|
|
|
|
|
|
|
|
|
* Quarterly ratios have
been annualized.
|
|
|
|
|
|
|
|
|
|
|
Arrow Financial
Corporation
Average Consolidated
Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
June 30,
2024
|
|
June 30,
2023
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Interest-Bearing
Deposits at Banks
|
$
159,336
|
|
$
2,185
|
|
5.52 %
|
|
$
130,057
|
|
$
1,674
|
|
5.16 %
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
530,869
|
|
3,009
|
|
2.28
|
|
637,018
|
|
2,951
|
|
1.86
|
|
Exempt from Federal
Taxes
|
113,323
|
|
637
|
|
2.26
|
|
150,157
|
|
770
|
|
2.06
|
|
Loans
|
3,280,285
|
|
42,141
|
|
5.17
|
|
3,036,410
|
|
34,618
|
|
4.57
|
|
Total Earning
Assets
|
4,083,813
|
|
47,972
|
|
4.72
|
|
3,953,642
|
|
40,013
|
|
4.06
|
|
Allowance for Credit
Losses
|
(31,459)
|
|
|
|
|
|
(30,577)
|
|
|
|
|
|
Cash and Due From
Banks
|
28,611
|
|
|
|
|
|
28,742
|
|
|
|
|
|
Other Assets
|
156,394
|
|
|
|
|
|
135,846
|
|
|
|
|
|
Total
Assets
|
$
4,237,359
|
|
|
|
|
|
$
4,087,653
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
$
832,087
|
|
1,903
|
|
0.92
|
|
$
863,892
|
|
820
|
|
0.38
|
|
Savings
Deposits
|
1,487,062
|
|
10,571
|
|
2.86
|
|
1,504,412
|
|
8,514
|
|
2.27
|
|
Time Deposits of
$250,000 or More
|
172,655
|
|
1,869
|
|
4.35
|
|
133,897
|
|
1,119
|
|
3.35
|
|
Other Time
Deposits
|
504,076
|
|
5,074
|
|
4.05
|
|
201,926
|
|
1,196
|
|
2.38
|
|
Total Interest-Bearing
Deposits
|
2,995,880
|
|
19,417
|
|
2.61
|
|
2,704,127
|
|
11,649
|
|
1.73
|
|
Borrowings
|
106,502
|
|
1,186
|
|
4.48
|
|
195,527
|
|
2,373
|
|
4.87
|
|
Junior Subordinated
Obligations Issued to
Unconsolidated Subsidiary Trusts
|
20,000
|
|
170
|
|
3.42
|
|
20,000
|
|
171
|
|
3.43
|
|
Finance
Leases
|
5,035
|
|
47
|
|
3.75
|
|
5,089
|
|
48
|
|
3.78
|
|
Total Interest-Bearing
Liabilities
|
3,127,417
|
|
20,820
|
|
2.68
|
|
2,924,743
|
|
14,241
|
|
1.95
|
|
Noninterest-Bearing
Deposits
|
683,077
|
|
|
|
|
|
756,584
|
|
|
|
|
|
Other
Liabilities
|
48,609
|
|
|
|
|
|
41,256
|
|
|
|
|
|
Total
Liabilities
|
3,859,103
|
|
|
|
|
|
3,722,583
|
|
|
|
|
|
Stockholders'
Equity
|
378,256
|
|
|
|
|
|
365,070
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
4,237,359
|
|
|
|
|
|
$
4,087,653
|
|
|
|
|
|
Net Interest
Income
|
|
|
$ 27,152
|
|
|
|
|
|
$ 25,772
|
|
|
|
Net Interest
Spread
|
|
|
|
|
2.04 %
|
|
|
|
|
|
2.11 %
|
|
Net Interest
Margin
|
|
|
|
|
2.67 %
|
|
|
|
|
|
2.61 %
|
|
Arrow Financial
Corporation
Average Consolidated
Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
June 30,
2024
|
|
March 31,
2024
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Interest-Bearing
Deposits at Banks
|
$
159,336
|
|
$
2,185
|
|
5.52 %
|
|
$
178,452
|
|
$
2,447
|
|
5.52 %
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
530,869
|
|
3,009
|
|
2.28
|
|
550,538
|
|
3,186
|
|
2.33
|
|
Exempt from Federal
Taxes
|
113,323
|
|
637
|
|
2.26
|
|
120,567
|
|
668
|
|
2.23
|
|
Loans
|
3,280,285
|
|
42,141
|
|
5.17
|
|
3,235,841
|
|
40,376
|
|
5.02
|
|
Total Earning
Assets
|
4,083,813
|
|
47,972
|
|
4.72
|
|
4,085,398
|
|
46,677
|
|
4.60
|
|
Allowance for Credit
Losses
|
(31,459)
|
|
|
|
|
|
(31,416)
|
|
|
|
|
|
Cash and Due From
Banks
|
28,611
|
|
|
|
|
|
29,804
|
|
|
|
|
|
Other Assets
|
156,394
|
|
|
|
|
|
161,698
|
|
|
|
|
|
Total
Assets
|
$
4,237,359
|
|
|
|
|
|
$
4,245,484
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
$
832,087
|
|
1,903
|
|
0.92
|
|
$
830,918
|
|
1,641
|
|
0.79
|
|
Savings
Deposits
|
1,487,062
|
|
10,571
|
|
2.86
|
|
1,481,001
|
|
10,230
|
|
2.78
|
|
Time Deposits of
$250,000 or More
|
172,655
|
|
1,869
|
|
4.35
|
|
177,328
|
|
1,973
|
|
4.47
|
|
Other Time
Deposits
|
504,076
|
|
5,074
|
|
4.05
|
|
496,813
|
|
5,083
|
|
4.11
|
|
Total Interest-Bearing
Deposits
|
2,995,880
|
|
19,417
|
|
2.61
|
|
2,986,060
|
|
18,927
|
|
2.55
|
|
Borrowings
|
106,502
|
|
1,186
|
|
4.48
|
|
96,984
|
|
1,076
|
|
4.46
|
|
Junior Subordinated
Obligations Issued to
Unconsolidated Subsidiary Trusts
|
20,000
|
|
170
|
|
3.42
|
|
20,000
|
|
171
|
|
3.44
|
|
Finance
Leases
|
5,035
|
|
47
|
|
3.75
|
|
5,049
|
|
48
|
|
3.82
|
|
Total Interest-Bearing
Liabilities
|
3,127,417
|
|
20,820
|
|
2.68
|
|
3,108,093
|
|
20,222
|
|
2.62
|
|
Noninterest-bearing
deposits
|
683,077
|
|
|
|
|
|
707,265
|
|
|
|
|
|
Other
Liabilities
|
48,609
|
|
|
|
|
|
50,680
|
|
|
|
|
|
Total
Liabilities
|
3,859,103
|
|
|
|
|
|
3,866,038
|
|
|
|
|
|
Stockholders'
Equity
|
378,256
|
|
|
|
|
|
379,446
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
4,237,359
|
|
|
|
|
|
$
4,245,484
|
|
|
|
|
|
Net Interest
Income
|
|
|
$ 27,152
|
|
|
|
|
|
$ 26,455
|
|
|
|
Net Interest
Spread
|
|
|
|
|
2.04 %
|
|
|
|
|
|
1.98 %
|
|
Net Interest
Margin
|
|
|
|
|
2.67 %
|
|
|
|
|
|
2.60 %
|
|
Arrow Financial
Corporation
Consolidated
Financial Information
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
6/30/2024
|
|
12/31/2023
|
|
6/30/2023
|
|
Loan
Portfolio
|
|
|
|
|
|
|
Commercial
Loans
|
$
163,832
|
|
$
156,224
|
|
$
147,518
|
|
Commercial Real Estate
Loans
|
757,478
|
|
745,487
|
|
723,948
|
|
Subtotal
Commercial Loan Portfolio
|
921,310
|
|
901,711
|
|
871,466
|
|
Consumer
Loans
|
1,138,813
|
|
1,111,667
|
|
1,087,765
|
|
Residential Real Estate
Loans
|
1,255,400
|
|
1,199,530
|
|
1,110,666
|
|
Total Loans
|
$
3,315,523
|
|
$
3,212,908
|
|
$
3,069,897
|
|
Allowance for Credit
Losses
|
|
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Quarter
|
$
31,561
|
|
$
31,112
|
|
$
30,784
|
|
Loans
Charged-off
|
(1,850)
|
|
(1,366)
|
|
(1,280)
|
|
Less Recoveries of
Loans Previously Charged-off
|
523
|
|
994
|
|
718
|
|
Net Loans
Charged-off
|
(1,327)
|
|
(372)
|
|
(562)
|
|
Provision for Credit
Losses
|
775
|
|
525
|
|
948
|
|
Allowance for Credit
Losses, End of Quarter
|
$
31,009
|
|
$
31,265
|
|
$
31,170
|
|
Nonperforming
Assets
|
|
|
|
|
|
|
Nonaccrual
Loans
|
$
20,118
|
|
$
20,645
|
|
$
5,997
|
|
Loans Past Due 90 or
More Days and Accruing
|
915
|
|
452
|
|
467
|
|
Loans Restructured and
in Compliance with Modified Terms
|
36
|
|
54
|
|
67
|
|
Total Nonperforming
Loans
|
21,069
|
|
21,151
|
|
6,531
|
|
Repossessed
Assets
|
239
|
|
312
|
|
342
|
|
Other Real Estate
Owned
|
34
|
|
—
|
|
182
|
|
Total Nonperforming
Assets
|
$
21,342
|
|
$
21,463
|
|
$
7,055
|
|
|
|
|
|
|
|
Key Asset Quality
Ratios
|
|
|
|
|
|
|
Net Loans Charged-off
to Average Loans,
Quarter-to-date Annualized
|
0.16 %
|
|
0.05 %
|
|
0.07 %
|
|
Provision for Credit
Losses to Average Loans,
Quarter-to-date Annualized
|
0.10 %
|
|
0.07 %
|
|
0.13 %
|
|
Allowance for Credit
Losses to Period-End Loans
|
0.94 %
|
|
0.97 %
|
|
1.02 %
|
|
Allowance for Credit
Losses to Period-End Nonperforming Loans
|
147.18 %
|
|
147.82 %
|
|
477.26 %
|
|
Nonperforming Loans to
Period-End Loans
|
0.64 %
|
|
0.66 %
|
|
0.21 %
|
|
Nonperforming Assets to
Period-End Assets
|
0.50 %
|
|
0.51 %
|
|
0.17 %
|
|
|
|
|
|
|
|
Year-to-Date Period
Ended:
|
6/30/2024
|
|
12/31/2023
|
|
6/30/2023
|
|
Allowance for Credit
Losses
|
|
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Year
|
$
31,265
|
|
$
29,952
|
|
$
29,952
|
|
Loans
Charged-off
|
(3,133)
|
|
(5,177)
|
|
(2,608)
|
|
Less Recoveries of
Loans Previously Charged-off
|
1,485
|
|
3,109
|
|
1,324
|
|
Net Loans
Charged-off
|
(1,648)
|
|
(2,068)
|
|
(1,284)
|
|
Provision for Credit
Losses
|
1,392
|
|
3,381
|
|
2,502
|
|
Allowance for Credit
Losses, End of Period
|
$
31,009
|
|
$
31,265
|
|
$
31,170
|
|
|
|
|
|
|
|
Key Asset Quality
Ratios
|
|
|
|
|
|
|
Net Loans Charged-off
to Average Loans, Annualized
|
0.10 %
|
|
0.07 %
|
|
0.09 %
|
|
Provision for Loan
Losses to Average Loans, Annualized
|
0.09 %
|
|
0.11 %
|
|
0.17 %
|
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SOURCE Arrow Financial Corporation