GLENS
FALLS, N.Y., Feb 1, 2024
/PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® –
AROW) ("Arrow") reported net income of $7.7
million, and fully diluted earnings per share ("EPS") of
$0.46 per share for the fourth
quarter of 2023, versus $12.1 million
and EPS of $0.71, for the same period
in 2022. For the year ended 2023, net income totaled $30.1 million, with EPS of $1.77, versus $48.8
million, and EPS of $2.86, for
the same period in 2022.
The Board of Directors of Arrow declared a quarterly cash
dividend of $0.27 per share payable
February 23, 2024 to shareholders of
record as of February 12, 2024. This
marks the 43rd consecutive quarterly cash dividend declared by
Arrow.
This Earnings Release and related commentary should be read
in conjunction with our February 1,
2024 Form 8-K and related Fourth Quarter 2023 Investor
Presentation, which can also be found on our website:
arrowfinancial.com/documents/investor-presentations.
Arrow President and CEO David S.
DeMarco:
"As we reflect on a challenging year, I want to thank our
employees who continued to diligently serve the needs of our
customers, communities and shareholders. Arrow finished the year
with robust loan growth, posting record high loan balances while
maintaining strong credit, capital and liquidity positions. We also
expanded our existing stock repurchase program by $5 million and reinstated our dividend
reinvestment program. Our solid finish to the year is directly
attributable to the hard work and dedication of our exceptional
team."
Highlights and Key Metrics
- Loans reached a record of $3.2
billion, an increase of $224
million (7.5%) for the year and $68
million (9% annualized growth) during the fourth
quarter1
- Fourth-quarter loan yields increased by 16bps from the prior
quarter to 4.86%, while loan rates reached 5.01% at December 31, 2023
- Retail deposit balances of $3.5
billion, slightly ahead of year-end 2022
- Net interest margin was 2.53% for the quarter, and 2.65% for
the full year (2.55% and 2.67% on a full tax equivalent basis,
respectively)
- Sold all 27,771 of Visa Class B shares for a pre-tax gain of
$9.3 million; Recognized a pre-tax
loss of $9.2 million on repositioning
of investment portfolio (sale of ~$110
million of securities); Reinvestment of proceeds resulted in
annual interest income run-rate improvement of over $3 million
- Net charge-offs remained low at 0.05% for the quarter
- Tangible Book Value at year-end was $21.06, an increase from $19.37 from the prior year
- Nonperforming assets increased to $21.5
million or 0.51% of period-end assets, primarily due to one
large loan relationship of approximately $15
million, which is well collateralized
1 Excludes $5.8 million
Fair Value hedge adjustment
Please see below for further quarter- and year-end detail.
Income Statement
- Net Income: Net income for 2023 was $30.1 million, down from $48.8 million for 2022. The decrease from the
prior year was primarily the result of a decrease in net interest
income of $13.5 million and an
increase of non-interest expense of $11.5
million, partially offset by a $1.4
million decrease in the provision for credit loss and a
$6.7 million decrease in the
provision for income taxes.
- Net Interest Income: Net interest income for the
year ended December 31, 2023 was
$104.8 million, a decrease of
$13.5 million, or 11.4%, from the
prior year, primarily due to an increase in interest expense.
Interest and fees on loans were $142.0
million, an increase of 25.7% from the $113.0 million for the year ended December 31, 2022. The increase was primarily
driven by loan growth and higher loan rates. Interest expense for
the year ended December 31, 2023 was
$57.7 million. This represents an
increase of $46.4 million, or 410.5%,
from the $11.3 million in expense for
the prior-year period. The increase was driven primarily by higher
deposit rates and changes in deposit composition.
- Net Interest Margin: Net interest margin was 2.65%
for the year ended December 31, 2023, as compared to 3.03% for
the year ended December 31, 2022. In the fourth quarter of
2023, the net interest margin was 2.53%, as compared to 3.08% for
the fourth quarter of 2022. The decrease in net interest margin
compared to the fourth quarter of 2022 and the full year 2022 was
primarily the result of the cost 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
cost products, such as money market savings and time deposits.
|
Twelve Months
Ended
(dollars in
thousands)
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Interest and Dividend
Income
|
$
162,564
|
|
$
129,651
|
|
Interest
Expense
|
57,732
|
|
11,308
|
|
Net Interest
Income
|
104,832
|
|
118,343
|
|
Average Earning
Assets(1)
|
3,948,708
|
|
3,902,077
|
|
Average
Interest-Bearing Liabilities
|
2,903,925
|
|
2,834,266
|
|
|
|
|
|
Yield on Earning
Assets(1)
|
4.12 %
|
|
3.32 %
|
|
Cost of
Interest-Bearing Liabilities
|
1.99
|
|
0.40
|
|
Net Interest
Spread
|
2.13
|
|
2.92
|
|
Net Interest
Margin
|
2.65
|
|
3.03
|
|
|
|
|
|
Income Earned on PPP
Loans included in Net Interest Income
|
$
—
|
|
$
1,589
|
|
Net Interest Income
excluding PPP loans
|
104,832
|
|
116,754
|
|
Net Interest Margin
excluding PPP loans
|
2.65 %
|
|
3.00 %
|
|
|
|
|
|
(1) Includes
Nonaccrual Loans.
|
|
|
|
|
|
|
|
- Provision for Credit Losses: For 2023, the provision for
credit losses related to the loan portfolio was $3.4 million, compared to $4.8 million in 2022. The key drivers for the
provision for credit losses in 2023 were loan growth and
charge-offs, offset by changes to the economic forecast factors
embedded in the credit loss allowance model as well as qualitative
factors relating to local and Arrow specific conditions.
- Noninterest Income: Noninterest income was
$29.1 million for the year ended
December 31, 2023, a decrease of 5.8%, as compared to
$30.9 million for the year ended
December 31, 2022. Income from fiduciary activities, which
includes Wealth Management services, was fairly consistent to the
prior year. Fees and other services to customers declined compared
to the prior year, primarily due to lower interchange fees.
- Noninterest Expense: Noninterest expense for the
year ended December 31, 2023 increased by $11.4 million, or 14.0%, to $93.0 million, as compared to $81.6 million in 2022. The largest component of
noninterest expense is salaries and benefits paid to our employees,
which totaled $47.7 million in 2023.
Salaries and benefits increased $0.7
million, or 1.4%, from the prior year. The overall
increase from the prior year was primarily related to $4.8 million of additional legal and professional
fees incurred in 2023 associated with the delay in the filing of
the Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K"), and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as well as an increase in costs
related to technology and Federal Deposit Insurance Corporation
insurance.
- Provision for Income Taxes: The provision for
income taxes for 2023 was $7.4
million, compared to $14.1
million for 2022. The effective income tax rates for 2023
and 2022 were 19.8% and 22.4%, respectively. The reduction in the
effective tax rate was the result of substantially similar
permanent favorable tax benefits in each year while pre-tax income
decreased in 2023.
Balance Sheet
- Total Assets: Total assets were $4.17 billion at December
31, 2023, an increase of $200.4
million, or 5.0%, compared to December 31, 2022.
- Cash and Cash Equivalents: Total cash and cash
equivalents were $142.5 million at
December 31, 2023, an increase of
$77.9 million, or 120.4%, compared to
December 31, 2022.
- Investments: Total investments were $636.1 million at December 31, 2023, a
decrease of $121.0 million, or 16.0%,
compared to December 31, 2022. The decrease was driven
primarily by paydowns and maturities of approximately $119 million and the net decrease from the
repositioning of investment portfolio of approximately $25 million, partially offset by an improvement
in the mark-to-market adjustments of $23
million. The proceeds were primarily used to fund loan
growth and for general corporate purposes. There were no credit
quality issues related to the investment portfolio.
- Balance Sheet Management: In the fourth quarter of 2023,
Arrow entered into balance sheet transactions to improve
profitability and its asset-liability management position.
Arrow sold all 27,771 of its previously held Visa Class B shares
for a pre-tax gain of $9.3 million
while recognizing a pre-tax loss of $9.2
million on the repositioning of the investment portfolio,
resulting in an annual interest income run-rate improvement of over
$3 million in pre-tax earnings.
- Loans2: At December 31, 2023, total loan balances reached
$3.2 billion, up $224 million, or 7.5%, from the prior-year level.
Loan growth for the fourth quarter was $67.7
million. The consumer loan portfolio grew by $46.5 million, or 4.4%, over the balance at
December 31, 2022. The residential
real estate loan portfolio increased $123.0
million, or 11.55%, from the prior year primarily as a
result of the continued strength of the housing market within
Arrow's service area. Commercial loans, including commercial real
estate, increased $54.4 million, or
6.4%, over the balances at December 31,
2022.
- Allowance for Credit Losses: The allowance for credit
losses was $31.3 million at
December 31, 2023, an increase of $1.3
million from December 31, 2022. The allowance for
credit losses represents 0.97% of loans outstanding, a decrease
from 1.00% at year-end 2022. Asset quality remained solid at
December 31, 2023. Net loan losses, expressed as an annualized
percentage of average loans outstanding, were 0.07% for the year
ended December 31, 2023, as compared to 0.08% for the prior
year. Nonperforming assets of $21.5
million at December 31, 2023, represented 0.51% of
period-end assets, compared to $12.6
million or 0.32% at December 31, 2022. As stated
above, the increase is primarily due to one large loan relationship
of approximately $15 million, which
is well collateralized.
- Deposits: At December 31, 2023, total deposit
balances were $3.7 billion, an
increase of $189.2 million, or 5.4%,
from the prior-year level. Arrow obtained $175 million of brokered CDs with corresponding
three-year swaps as part of a funding hedge to strategically manage
its asset-liability profile and cost of funds. Non-municipal
deposits, excluding brokered CDs, increased by $45.3 million and municipal deposits decreased by
$31.1 million as compared to
December 31, 2022. Noninterest-bearing deposits decreased by
$78.4 million, or 9.4%, during 2023,
and represented 20.6% of total deposits at year-end, as compared to
the prior-year level of 23.9%. At December
31, 2023, total time deposits, excluding brokered CDs,
increased $278.6 million from the
prior-year level. The change in composition of deposits was
primarily pressure from competitive rate pricing and the migration
from low to higher costing products.
- Capital: Total shareholders' equity was
$379.8 million at December 31,
2023, an increase of $26.2 million,
or 7.4%, from the year-end 2022 balance. Arrow's regulatory capital
ratios remained strong in 2023. At December 31, 2023, Arrow's
Common Equity Tier 1 Capital Ratio was 13.00% and Total Risk-Based
Capital Ratio was 14.74%. The capital ratios of Arrow and both of
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.
2 Excludes $5.8 million
Fair Value hedge adjustment
Additional Commentary
- Industry Recognition: Both GFNB and SNB continue
to maintain their Bauer Financial 5-Star "Exceptional Performance"
ratings for the 16th and 14th consecutive years, respectively.
——————
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
North Country Investment Advisers, Inc. and Upstate Agency,
LLC.
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). The following 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. Certain 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 from time to time 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 contained in
this news release may contain statements that are not historical in
nature but rather are based on management's beliefs, assumptions,
expectations, estimates and projections about the future. These
statements may be "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended,
involving a degree of uncertainty and attendant risk. In the case
of all forward-looking statements, actual outcomes and results may
differ materially from what the statements predict or forecast,
explicitly or by implication. Arrow undertakes no obligation to
revise or update these forward-looking statements to reflect the
occurrence of unanticipated events. This News Release 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
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
INTEREST AND
DIVIDEND INCOME
|
|
|
|
|
|
|
|
|
Interest and Fees on
Loans
|
$ 38,813
|
|
$ 30,719
|
|
$
142,016
|
|
$
112,982
|
|
Interest on Deposits at
Banks
|
1,873
|
|
1,274
|
|
5,831
|
|
3,100
|
|
Interest and Dividends
on Investment Securities:
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
2,941
|
|
3,121
|
|
11,764
|
|
10,357
|
|
Exempt from Federal
Taxes
|
697
|
|
790
|
|
2,953
|
|
3,212
|
|
Total Interest and
Dividend Income
|
44,324
|
|
35,904
|
|
162,564
|
|
129,651
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Interest-Bearing
Checking Accounts
|
1,317
|
|
344
|
|
3,663
|
|
973
|
|
Savings
Deposits
|
10,513
|
|
4,101
|
|
34,343
|
|
7,879
|
|
Time Deposits over
$250,000
|
1,807
|
|
226
|
|
4,966
|
|
369
|
|
Other Time
Deposits
|
3,406
|
|
234
|
|
7,127
|
|
604
|
|
Borrowings
|
1,447
|
|
200
|
|
6,756
|
|
605
|
|
Junior Subordinated
Obligations Issued to
Unconsolidated
Subsidiary Trusts
|
173
|
|
172
|
|
686
|
|
685
|
|
Interest on Financing
Leases
|
48
|
|
48
|
|
191
|
|
193
|
|
Total Interest
Expense
|
18,711
|
|
5,325
|
|
57,732
|
|
11,308
|
|
NET INTEREST
INCOME
|
25,613
|
|
30,579
|
|
104,832
|
|
118,343
|
|
Provision for Credit
Losses
|
525
|
|
1,409
|
|
3,381
|
|
4,798
|
|
NET INTEREST INCOME
AFTER PROVISION FOR
CREDIT
LOSSES
|
25,088
|
|
29,170
|
|
101,451
|
|
113,545
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
Income From Fiduciary
Activities
|
2,363
|
|
2,257
|
|
9,444
|
|
9,711
|
|
Fees for Other Services
to Customers
|
2,725
|
|
2,710
|
|
10,798
|
|
11,626
|
|
Insurance
Commissions
|
1,723
|
|
1,680
|
|
6,498
|
|
6,463
|
|
Net Gain (Loss) on
Securities
|
122
|
|
48
|
|
(92)
|
|
427
|
|
Net Gain on Sales of
Loans
|
7
|
|
3
|
|
32
|
|
83
|
|
Other Operating
Income
|
544
|
|
467
|
|
2,437
|
|
2,588
|
|
Total Noninterest
Income
|
7,484
|
|
7,165
|
|
29,117
|
|
30,898
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Salaries and Employee
Benefits
|
11,693
|
|
11,603
|
|
47,667
|
|
47,003
|
|
Occupancy Expenses,
Net
|
1,826
|
|
1,481
|
|
6,554
|
|
6,202
|
|
Technology and
Equipment Expense
|
4,458
|
|
4,316
|
|
17,608
|
|
16,118
|
|
FDIC
Assessments
|
572
|
|
283
|
|
2,050
|
|
1,176
|
|
Other Operating
Expense
|
4,641
|
|
3,109
|
|
19,169
|
|
11,031
|
|
Total Noninterest
Expense
|
23,190
|
|
20,792
|
|
93,048
|
|
81,530
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
9,382
|
|
15,543
|
|
37,520
|
|
62,913
|
|
Provision for Income
Taxes
|
1,659
|
|
3,456
|
|
7,445
|
|
14,114
|
|
NET
INCOME
|
$
7,723
|
|
$ 12,087
|
|
$ 30,075
|
|
$ 48,799
|
|
Average Shares
Outstanding1:
|
|
|
|
|
|
|
|
|
Basic
|
17,002
|
|
17,031
|
|
17,037
|
|
17,008
|
|
Diluted
|
17,004
|
|
17,087
|
|
17,037
|
|
17,059
|
|
Per Common
Share:
|
|
|
|
|
|
|
|
|
Basic
Earnings
|
$
0.46
|
|
$
0.70
|
|
$
1.77
|
|
$
2.86
|
|
Diluted
Earnings
|
0.46
|
|
0.71
|
|
1.77
|
|
2.86
|
|
|
|
|
|
1 Share and
per share data 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)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
Cash and Due From
Banks
|
$
36,755
|
|
$
31,886
|
|
Interest-Bearing
Deposits at Banks
|
105,781
|
|
32,774
|
|
Investment
Securities:
|
|
|
|
|
Available-for-Sale
|
497,769
|
|
573,495
|
|
Held-to-Maturity
(Approximate Fair Value of $128,837 at
December 31, 2023, and $171,623 at
December 31, 2022)
|
131,395
|
|
175,364
|
|
Equity
Securities
|
1,925
|
|
2,174
|
|
Other
Investments
|
5,049
|
|
6,064
|
|
Loans
|
3,212,908
|
|
2,983,207
|
|
Allowance for Credit
Losses
|
(31,265)
|
|
(29,952)
|
|
Net Loans
|
3,181,643
|
|
2,953,255
|
|
Premises and Equipment,
Net
|
59,642
|
|
56,491
|
|
Goodwill
|
21,873
|
|
21,873
|
|
Other Intangible
Assets, Net
|
1,110
|
|
1,500
|
|
Other Assets
|
126,926
|
|
114,633
|
|
Total
Assets
|
$
4,169,868
|
|
$
3,969,509
|
|
LIABILITIES
|
|
|
|
|
Noninterest-Bearing
Deposits
|
$
758,425
|
|
$
836,871
|
|
Interest-Bearing
Checking Accounts
|
799,785
|
|
997,694
|
|
Savings
Deposits
|
1,466,280
|
|
1,454,364
|
|
Time Deposits over
$250,000
|
179,301
|
|
76,224
|
|
Other Time
Deposits
|
483,775
|
|
133,211
|
|
Total
Deposits
|
3,687,566
|
|
3,498,364
|
|
Borrowings
|
26,500
|
|
54,800
|
|
Junior Subordinated
Obligations Issued to Unconsolidated Subsidiary Trusts
|
20,000
|
|
20,000
|
|
Finance
Leases
|
5,066
|
|
5,119
|
|
Other
Liabilities
|
50,964
|
|
37,688
|
|
Total
Liabilities
|
3,790,096
|
|
3,615,971
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Preferred Stock, $1 Par
Value, 1,000,000 Shares Authorized
|
—
|
|
—
|
|
Common Stock, $1 Par
Value; 30,000,000 Shares Authorized (22,066,559
Shares Issued at December 31, 2023, and 21,423,992 Shares
Issued at
December 31, 2022)
|
22,067
|
|
21,424
|
|
Additional Paid-in
Capital
|
412,551
|
|
400,270
|
|
Retained
Earnings
|
65,792
|
|
65,401
|
|
Accumulated Other
Comprehensive (Loss) Income
|
(33,416)
|
|
(49,655)
|
|
Treasury Stock, at Cost
(5,124,073 Shares at December 31, 2023, and
4,872,355 Shares at December 31, 2022)
|
(87,222)
|
|
(83,902)
|
|
Total Stockholders'
Equity
|
379,772
|
|
353,538
|
|
Total Liabilities and
Stockholders' Equity
|
$
4,169,868
|
|
$
3,969,509
|
|
Arrow Financial
Corporation
Selected Quarterly Information
(Dollars In Thousands, Except
Per Share Amounts - Unaudited)
|
|
|
Quarter
Ended
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
Net Income
|
$ 7,723
|
|
$ 7,743
|
|
$ 6,047
|
|
$ 8,562
|
|
$
12,087
|
|
Transactions in Net
Income (Net of Tax):
|
|
|
|
|
|
|
|
|
|
|
Net Changes in Fair
Value of Equity Investments
|
90
|
|
52
|
|
(133)
|
|
(76)
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data:1
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,942
|
|
17,049
|
|
17,050
|
|
17,050
|
|
17,048
|
|
Basic Average Shares
Outstanding
|
17,002
|
|
17,050
|
|
17,050
|
|
17,048
|
|
17,031
|
|
Diluted Average Shares
Outstanding
|
17,004
|
|
17,050
|
|
17,050
|
|
17,060
|
|
17,087
|
|
Basic Earnings Per
Share
|
$
0.46
|
|
$
0.46
|
|
$
0.35
|
|
$
0.50
|
|
$
0.70
|
|
Diluted Earnings Per
Share
|
0.46
|
|
0.46
|
|
0.35
|
|
0.50
|
|
0.71
|
|
Cash Dividend Per
Share
|
0.270
|
|
0.262
|
|
0.262
|
|
0.262
|
|
0.262
|
|
|
|
|
|
|
|
|
|
|
|
Selected Quarterly
Average Balances:
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing
Deposits at Banks
|
$ 136,026
|
|
$ 131,814
|
|
$ 130,057
|
|
$
40,436
|
|
$ 143,499
|
|
Investment
Securities
|
713,144
|
|
745,693
|
|
787,175
|
|
813,461
|
|
845,859
|
|
Loans
|
3,170,262
|
|
3,096,240
|
|
3,036,410
|
|
2,991,928
|
|
2,951,547
|
|
Deposits
|
3,593,949
|
|
3,491,028
|
|
3,460,711
|
|
3,480,279
|
|
3,614,945
|
|
Other Borrowed
Funds
|
149,507
|
|
208,527
|
|
220,616
|
|
100,596
|
|
63,304
|
|
Shareholders'
Equity
|
363,753
|
|
362,701
|
|
365,070
|
|
359,556
|
|
351,402
|
|
Total
Assets
|
4,159,313
|
|
4,109,995
|
|
4,087,653
|
|
3,978,851
|
|
4,074,028
|
|
Return on Average
Assets, annualized
|
0.74 %
|
|
0.75 %
|
|
0.59 %
|
|
0.87 %
|
|
1.18 %
|
|
Return on Average
Equity, annualized
|
8.42 %
|
|
8.47 %
|
|
6.64 %
|
|
9.66 %
|
|
13.65 %
|
|
Return on Average
Tangible Equity, annualized 2
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
10.33 %
|
|
14.62 %
|
|
Average Earning
Assets
|
4,019,432
|
|
3,973,747
|
|
3,953,642
|
|
3,845,825
|
|
3,940,905
|
|
Average Paying
Liabilities
|
2,985,717
|
|
2,920,518
|
|
2,924,743
|
|
2,782,299
|
|
2,891,092
|
|
Interest
Income
|
44,324
|
|
42,117
|
|
40,013
|
|
36,110
|
|
35,904
|
|
Tax-Equivalent
Adjustment 3
|
184
|
|
183
|
|
196
|
|
202
|
|
279
|
|
Interest Income,
Tax-Equivalent 3
|
44,508
|
|
42,300
|
|
40,209
|
|
36,312
|
|
36,183
|
|
Interest
Expense
|
18,711
|
|
16,764
|
|
14,241
|
|
8,016
|
|
5,325
|
|
Net Interest
Income
|
25,613
|
|
25,353
|
|
25,772
|
|
28,094
|
|
30,579
|
|
Net Interest Income,
Tax-Equivalent 3
|
25,797
|
|
25,536
|
|
25,968
|
|
28,296
|
|
30,858
|
|
Net Interest Margin,
annualized
|
2.53 %
|
|
2.53 %
|
|
2.61 %
|
|
2.96 %
|
|
3.08 %
|
|
Net Interest Margin,
Tax-Equivalent, annualized 3
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
2.98 %
|
|
3.11 %
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency Ratio
Calculation: 4
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
$
23,190
|
|
$
23,479
|
|
$
24,083
|
|
$
22,296
|
|
$
20,792
|
|
Less: Intangible Asset
Amortization
|
43
|
|
43
|
|
44
|
|
45
|
|
47
|
|
Net Noninterest
Expense
|
$
23,147
|
|
$
23,436
|
|
$
24,039
|
|
$
22,251
|
|
$
20,745
|
|
Net Interest Income,
Tax-Equivalent
|
$
25,797
|
|
$
25,536
|
|
$
25,968
|
|
$
28,296
|
|
$
30,858
|
|
Noninterest
Income
|
7,484
|
|
8,050
|
|
6,906
|
|
6,677
|
|
7,165
|
|
Less: Net Gain (Loss)
on Securities
|
158
|
|
71
|
|
(181)
|
|
(104)
|
|
48
|
|
Net Gross
Income
|
$
33,123
|
|
$
33,515
|
|
$
33,055
|
|
$
35,077
|
|
$
37,975
|
|
Efficiency
Ratio
|
69.88 %
|
|
69.93 %
|
|
72.72 %
|
|
63.43 %
|
|
54.63 %
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Capital
Information:
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity (i.e. Book Value)
|
$ 379,772
|
|
$ 360,014
|
|
$ 361,443
|
|
$ 363,371
|
|
$ 353,538
|
|
Book Value per Share
1
|
22.42
|
|
21.12
|
|
21.20
|
|
21.31
|
|
20.74
|
|
Goodwill and Other
Intangible Assets, net
|
22,983
|
|
23,078
|
|
23,175
|
|
23,273
|
|
23,373
|
|
Tangible Book Value per
Share 1,2
|
21.06
|
|
19.76
|
|
19.84
|
|
19.95
|
|
19.37
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:5
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage
Ratio
|
9.84 %
|
|
9.94 %
|
|
9.92 %
|
|
10.13 %
|
|
9.80 %
|
|
Common Equity Tier 1
Capital Ratio
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
13.34 %
|
|
13.32 %
|
|
Tier 1 Risk-Based
Capital Ratio
|
13.66 %
|
|
13.84 %
|
|
13.96 %
|
|
14.03 %
|
|
14.01 %
|
|
Total Risk-Based
Capital Ratio
|
14.74 %
|
|
14.94 %
|
|
15.08 %
|
|
15.15 %
|
|
15.11 %
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Trust
Admin. & Investment Mgmt.
|
$
1,763,194
|
|
$
1,627,522
|
|
$
1,711,460
|
|
$
1,672,117
|
|
$
1,606,132
|
|
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 Average Tangible
Equity exclude goodwill and other intangible assets, net from total
equity. These are non-GAAP financial measures
which we believe provide investors with information that is useful
in understanding our financial performance.
|
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
Total Stockholders'
Equity (GAAP)
|
$
379,772
|
|
$
360,014
|
|
$
361,443
|
|
$
363,371
|
|
$
353,538
|
|
Less: Goodwill
and Other Intangible assets, net
|
22,983
|
|
23,078
|
|
23,175
|
|
23,273
|
|
23,373
|
|
Tangible Equity
(Non-GAAP)
|
$
356,789
|
|
$
336,936
|
|
$
338,268
|
|
$
340,098
|
|
$
330,165
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Shares
Outstanding
|
16,942
|
|
17,049
|
|
17,050
|
|
17,050
|
|
17,048
|
|
Tangible Book Value per
Share (Non-GAAP)
|
$
21.06
|
|
$
19.76
|
|
$
19.84
|
|
$
19.95
|
|
$
19.37
|
|
Net Income
|
7,723
|
|
7,743
|
|
6,047
|
|
8,562
|
|
12,087
|
|
Return on Average
Tangible Equity (Net Income/Average Tangible Equity -
Annualized)
|
8.99 %
|
|
9.05 %
|
|
7.10 %
|
|
10.33 %
|
|
14.62 %
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
Non-GAAP Financial
Measure Reconciliation: Net Interest Margin is the ratio of our
annualized tax-equivalent net
interest income to average earning assets. This is also a
non-GAAP financial measure which we believe provides
investors with information that is useful in understanding our
financial performance.
|
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
Interest Income
(GAAP)
|
$ 44,324
|
|
$ 42,117
|
|
$ 40,013
|
|
$ 36,110
|
|
$ 35,904
|
|
Add: Tax Equivalent
Adjustment (Non-GAAP)
|
184
|
|
183
|
|
196
|
|
202
|
|
279
|
|
Interest Income - Tax
Equivalent (Non-GAAP)
|
$ 44,508
|
|
$ 42,300
|
|
$ 40,209
|
|
$ 36,312
|
|
$ 36,183
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
(GAAP)
|
$ 25,613
|
|
$ 25,353
|
|
$ 25,772
|
|
$ 28,094
|
|
$ 30,579
|
|
Add:
Tax-Equivalent adjustment (Non-GAAP)
|
184
|
|
183
|
|
196
|
|
202
|
|
279
|
|
Net Interest Income -
Tax Equivalent (Non-GAAP)
|
$ 25,797
|
|
$ 25,536
|
|
$ 25,968
|
|
$ 28,296
|
|
$ 30,858
|
|
Average Earning
Assets
|
4,019,432
|
|
3,973,747
|
|
3,953,642
|
|
3,845,825
|
|
3,940,905
|
|
Net Interest Margin
(Non-GAAP)*
|
2.55 %
|
|
2.55 %
|
|
2.63 %
|
|
2.98 %
|
|
3.11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
Non-GAAP Financial
Measure Reconciliation: Financial Institutions often use the
"efficiency ratio", a non-GAAP
ratio, as a measure of expense control. We believe the
efficiency ratio provides investors with information that
is useful in understanding our financial performance. We
define our efficiency ratio as the ratio of our
noninterest expense to our net gross income (which equals our
tax-equivalent net interest income plus
noninterest income, as adjusted).
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
For the current
quarter, all of the regulatory capital ratios in the table above,
as well as the Total Risk-Weighted
Assets and Common Equity Tier 1 Capital amounts listed in the table
below, are estimates based on, and
calculated in accordance with bank regulatory capital rules.
All prior quarters reflect actual results. The
December 31, 2023 CET1 ratio listed in the tables (i.e.,
13.00%) exceeds the sum of the required minimum
CET1 ratio plus the fully phased-in Capital Conservation Buffer
(i.e., 7.00%).
|
|
|
12/31/2023
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
Total Risk Weighted
Assets
|
3,032,188
|
|
2,988,438
|
|
2,937,837
|
|
2,909,610
|
|
2,883,902
|
|
Common Equity Tier 1
Capital
|
394,166
|
|
393,541
|
|
389,966
|
|
388,228
|
|
384,003
|
|
Common Equity Tier 1
Ratio
|
13.00 %
|
|
13.17 %
|
|
13.27 %
|
|
13.34 %
|
|
13.32 %
|
|
|
|
|
|
|
|
|
|
|
|
|
* Quarterly
ratios have been annualized
|
|
|
|
|
|
|
|
|
|
|
Arrow Financial
Corporation
Average Consolidated Balance Sheets and Net
Interest Income Analysis
(Dollars in Thousands -
Unaudited)
|
|
|
Years Ended December
31:
|
2023
|
|
2022
|
|
|
|
Interest
|
|
Rate
|
|
|
|
Interest
|
|
Rate
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Average
|
|
Income/
|
|
Earned/
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Balance
|
|
Expense
|
|
Paid
|
|
Interest-Bearing
Deposits at Banks
|
$
109,906
|
|
$
5,831
|
|
5.31 %
|
|
$
252,835
|
|
3,100
|
|
1.23 %
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
Taxable
|
622,575
|
|
11,764
|
|
1.89 %
|
|
648,540
|
|
10,357
|
|
1.60 %
|
|
Exempt
from Federal Taxes
|
141,966
|
|
2,953
|
|
2.08 %
|
|
173,184
|
|
3,212
|
|
1.85 %
|
|
Loans
|
3,074,261
|
|
142,016
|
|
4.62 %
|
|
2,827,518
|
|
112,982
|
|
4.00 %
|
|
Total Earning
Assets
|
3,948,708
|
|
162,564
|
|
4.12 %
|
|
3,902,077
|
|
129,651
|
|
3.32 %
|
|
Allowance for Credit
Losses
|
(30,799)
|
|
|
|
|
|
(27,954)
|
|
|
|
|
|
Cash and Due From
Banks
|
30,640
|
|
|
|
|
|
30,462
|
|
|
|
|
|
Other Assets
|
135,970
|
|
|
|
|
|
142,895
|
|
|
|
|
|
Total
Assets
|
$
4,084,519
|
|
|
|
|
|
$
4,047,480
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Checking Accounts
|
$
855,931
|
|
3,663
|
|
0.43 %
|
|
$
1,038,751
|
|
973
|
|
0.09 %
|
|
Savings
Deposits
|
1,498,749
|
|
34,343
|
|
2.29 %
|
|
1,549,278
|
|
7,879
|
|
0.51 %
|
|
Time Deposits of
$250,000 or More
|
137,974
|
|
4,966
|
|
3.60 %
|
|
55,690
|
|
369
|
|
0.66 %
|
|
Other Time
Deposits
|
241,218
|
|
7,127
|
|
2.95 %
|
|
132,541
|
|
604
|
|
0.46 %
|
|
Total Interest-Bearing Deposits
|
2,733,872
|
|
50,099
|
|
1.83 %
|
|
2,776,260
|
|
9,825
|
|
0.35 %
|
|
Borrowings
|
144,971
|
|
6,756
|
|
4.66 %
|
|
32,874
|
|
605
|
|
1.84 %
|
|
Junior Subordinated
Obligations Trusts
|
20,000
|
|
686
|
|
3.43 %
|
|
20,000
|
|
685
|
|
3.43 %
|
|
Finance
Leases
|
5,082
|
|
191
|
|
3.76 %
|
|
5,132
|
|
193
|
|
3.76 %
|
|
Total
Interest-Bearing Liabilities
|
2,903,925
|
|
57,732
|
|
1.99 %
|
|
2,834,266
|
|
11,308
|
|
0.40 %
|
|
Demand
Deposits
|
772,889
|
|
|
|
|
|
815,218
|
|
|
|
|
|
Other
Liabilities
|
44,924
|
|
|
|
|
|
37,901
|
|
|
|
|
|
Total
Liabilities
|
3,721,738
|
|
|
|
|
|
3,687,385
|
|
|
|
|
|
Stockholders'
Equity
|
362,781
|
|
|
|
|
|
360,095
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
4,084,519
|
|
|
|
|
|
$
4,047,480
|
|
|
|
|
|
Net Interest
Income
|
|
|
$
104,832
|
|
|
|
|
|
118,343
|
|
|
|
Net Interest
Spread
|
|
|
|
|
2.13 %
|
|
|
|
|
|
2.92 %
|
|
Net Interest
Margin
|
|
|
|
|
2.65 %
|
|
|
|
|
|
3.03 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arrow Financial
Corporation
Consolidated Financial Information
(Dollars in Thousands -
Unaudited)
|
|
|
Quarter
Ended:
|
12/31/2023
|
|
12/31/2022
|
|
Loan
Portfolio
|
|
|
|
|
Commercial
Loans
|
$ 156,224
|
|
$ 140,293
|
|
Commercial Real Estate
Loans
|
745,487
|
|
707,022
|
|
Subtotal
Commercial Loan Portfolio
|
901,711
|
|
847,315
|
|
Consumer
Loans
|
1,111,667
|
|
1,065,135
|
|
Residential Real Estate
Loans
|
1,199,530
|
|
1,070,757
|
|
Total Loans
|
$
3,212,908
|
|
$
2,983,207
|
|
Allowance for Credit
Losses
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Quarter
|
$
31,112
|
|
$
29,232
|
|
Loans
Charged-off
|
(1,366)
|
|
(1,261)
|
|
Recoveries of Loans
Previously Charged-off
|
994
|
|
572
|
|
Net Loans
Charged-off
|
(372)
|
|
(689)
|
|
Provision for Credit
Losses
|
525
|
|
1,409
|
|
Allowance for Credit
Losses, End of Quarter
|
$
31,265
|
|
$
29,952
|
|
Nonperforming
Assets
|
|
|
|
|
Nonaccrual
Loans
|
$
20,645
|
|
$
10,757
|
|
Loans Past Due 90 or
More Days and Accruing
|
452
|
|
1,157
|
|
Loans Restructured and
in Compliance with Modified Terms
|
54
|
|
69
|
|
Total Nonperforming
Loans
|
21,151
|
|
11,983
|
|
Repossessed
Assets
|
312
|
|
593
|
|
Other Real Estate
Owned
|
—
|
|
—
|
|
Total Nonperforming
Assets
|
$
21,463
|
|
$
12,576
|
|
Key Asset Quality
Ratios
|
|
|
|
|
Net Loans Charged-off
to Average Loans, Quarter-to-date
Annualized
|
0.05 %
|
|
0.09 %
|
|
Provision for Credit
Losses to Average Loans, Quarter-to-date
Annualized
|
0.07 %
|
|
0.19 %
|
|
Allowance for Credit
Losses to Period-End Loans
|
0.97 %
|
|
1.00 %
|
|
Allowance for Credit
Losses to Period-End Nonperforming Loans
|
147.82 %
|
|
249.95 %
|
|
Nonperforming Loans to
Period-End Loans
|
0.66 %
|
|
0.40 %
|
|
Nonperforming Assets to
Period-End Assets
|
0.51 %
|
|
0.32 %
|
|
Twelve-Month Period
Ended:
|
|
|
|
|
Allowance for Credit
Losses
|
|
|
|
|
Allowance for Credit
Losses, Beginning of Year
|
29,952
|
|
27,281
|
|
Loans
Charged-off
|
(5,177)
|
|
(4,143)
|
|
Recoveries of Loans
Previously Charged-off
|
3,109
|
|
2,016
|
|
Net Loans
Charged-off
|
(2,068)
|
|
(2,127)
|
|
Provision for Credit
Losses
|
3,381
|
|
4,798
|
|
Allowance for Credit
Losses, End of Year
|
$
31,265
|
|
$
29,952
|
|
Key Asset Quality
Ratios
|
|
|
|
|
Net Loans Charged-off
to Average Loans
|
0.07 %
|
|
0.08 %
|
|
Provision for Credit
Losses to Average Loans
|
0.11 %
|
|
0.17 %
|
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SOURCE Arrow Financial Corporation