Arrow Reports $12.0 million in Q2 Net Income, Loan Growth of $108 Million

Rhea-AI Summary

Arrow Financial Corporation (NASDAQ: AROW) reported a net income of $12.0 million for Q2 2022, down from $13.3 million in Q2 2021. The diluted EPS was $0.75. Loan growth was significant, with gross loans increasing by $108 million, excluding a $17 million reduction in PPP loans. The provision for credit losses rose to $905,000, reflecting strong loan growth and economic uncertainties. Total assets stood at $4.0 billion, with total loans reaching a record $2.8 billion. Arrow declared a 7% increase in cash dividends, now at $0.27 per share.

Positive

• Record high total loans of $2.8 billion as of June 30, 2022.
• Strong loan growth of $125 million, excluding PPP loans.
• 7% increase in cash dividends to $0.27 per share.
• Regulatory capital ratios remain strong, exceeding 'well capitalized' standards.

Negative

• Net income declined from $13.3 million in Q2 2021 to $12.0 million in Q2 2022.
• Provision for credit losses increased significantly to $905,000 from $263,000 year-over-year.
• Net gain on sale of loans decreased by $615,000 compared to the previous year.
• Decrease in net interest margin to 3.02% from 3.08% year-over-year.

GLENS FALLS, N.Y., July 27, 2022 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) announced financial results for the three-month period ended June 30, 2022. Net income for the second quarter of 2022 was $12.0 million and diluted earnings per share was $0.75.

Loan growth was strong in the second quarter of 2022, with gross loans increasing by $108 million. Excluding Paycheck Protection Program (PPP) loans, which decreased by $17 million, loans grew by $125 million in the quarter.

"Arrow had a strong second quarter with total loan balances at June 30, 2022 reaching a record high," said Arrow President and CEO Thomas J. Murphy. "I commend the Arrow Team for their outstanding efforts and strong work ethic. While economic challenges are expected this year, I am confident in our direction as a Company and our ability to deliver strong results for our shareholders, our customers and our communities."

For the second quarter of 2022, net income was $12.0 million compared to $13.3 million for the second quarter of 2021. The year-over-year decline in second quarter net income was primarily due to:

• An increase in the provision expense for credit losses to $905 thousand for the second quarter of 2022, as compared to $263 thousand in the second quarter of 2021.
• Net gain on sale of loans was lower by $615 thousand when comparing year-over-year quarters.
• A decrease of $2.6 million in income earned on PPP loans included as part of net interest income in the second quarter of 2022 compared to the second quarter of 2021.

Second Quarter Highlights

Earnings:

• Net income was $12.0 million.
• Net interest margin was 3.02%.
• Return on average assets (ROA) was 1.20%.
• Return on average equity (ROE) was 13.44%.
• Diluted earnings per share (EPS) was $0.75 for the second quarter.
• Second-quarter revenue was consistent to the prior-year comparative quarter.
• Net charge-offs for the second quarter of 2022 were $476 thousand as compared to $93 thousand for the comparable 2021 quarter.

Balance Sheet:

• Total assets were $4.0 billion as of June 30, 2022.
• Total loans were $2.8 billion as of June 30, 2022, a record high for Arrow.
• Total deposits were $3.5 billion as of June 30, 2022.
• Loans to deposits ratio as of June 30, 2022 was 80.2%

Additional Items:

• $17 million of PPP loans were forgiven in the second quarter of 2022.
• $1.5 million of PPP loans remained outstanding as of June 30, 2022.
• Book value per share was $22.25, up by 1.1% over the prior-year level.
• Nonperforming assets of $10.0 million at June 30, 2022 represented 0.25% of period-end assets, up from 0.20% at June 30, 2021.
• A core system upgrade is scheduled for the third quarter of 2022, with the first customer communications expected in early August.

Income Statement

• Net Interest Income: Net interest income for the second quarter was $29.0 million, up 2.4% from $28.4 million in the comparable quarter of 2021. Interest and fees on loans were $26.9 million for the second quarter of 2022, a decrease of 0.4% from $27.0 million for the quarter ending June 30, 2021. Interest and fees related to PPP loans, included in the $26.9 million total, were $439 thousand in the second quarter of 2022, a decrease from $3.1 million for the second quarter of 2021. Interest expense for the second quarter of 2022 was $1.6 million, an increase of $0.2 million, or 16.5%, from $1.3 million in expense for the comparable quarter ending June 30, 2021.
• Net Interest Margin: Net interest margin was 3.02% for the quarter, compared to 3.08% for the second quarter of 2021. The decrease in net interest margin from the prior year was primarily due to the decrease in the amount of PPP loan interest and related fees recognized in the second quarter of 2022 as compared to the comparable quarter of 2021. Net interest margin, excluding PPP income, increased from the comparable prior year quarter from 2.86% to 2.98% The cost of interest-bearing liabilities increased slightly primarily due to the repricing of municipal deposits.

			Three Months Ended
			June 30, 2022						June 30, 2021
Interest and Dividend Income			$	30,593					$	29,695
Interest Expense			1,555						1,335
Net Interest Income			29,038						28,360
Average Earning Assets(1)			3,858,837						3,688,572
Average Interest-Bearing Liabilities			2,808,287						2,721,961
Yield on Earning Assets(1)			3.18		%				3.23		%
Cost of Interest-Bearing Liabilities			0.22						0.20
Net Interest Spread			2.96						3.03
Net Interest Margin			3.02						3.08
Income Earned on PPP Loans included in Net Interest Income			$	438					$	3,086
Net Interest Income excluding PPP loans			28,600						25,274
Net Interest Margin excluding PPP loans			2.98		%				2.86		%
(1) Includes Nonaccrual Loans.

• Provision for Credit Losses: For the second quarter of 2022, the provision for credit losses was $905 thousand compared to $263 thousand in provision expense in the second quarter of 2021. The key drivers for the increase were strong loan growth and a slight deterioration in forecasted economic conditions in the second quarter of 2022.
• Noninterest Income: Noninterest income for the three months ended June 30, 2022 was $7.7 million, compared to $8.5 million in the comparable 2021 quarter. Income from fiduciary activities for the three months ended June 30, 2022, decreased by $72 thousand over the comparable quarter of 2021. Fees and other services to customers increased $131 thousand over the comparable quarter of 2021. Gain on sales of loans decreased $615 thousand from the second quarter of 2021 as a result of a strategic decision to retain more newly originated real estate loans. Other operating income decreased $132 thousand from the comparable quarter of 2021 due to a variety of factors, including, among others, a $99 thousand loss on the disposal of a building.
• Noninterest Expense: Noninterest expense for the second quarter of 2022 was $20.3 million, an increase from $19.1 million for the second quarter of 2021. The largest component of noninterest expense was salaries and benefits paid to our employees, which totaled $11.7 million for the second quarter of 2022. The expense for estimated credit losses on off-balance sheet credit exposures included in other expenses was $110 thousand.
• Provision for Income Taxes: The provision for income taxes was $3.6 million for the second quarter of 2022, compared to $4.2 million for the same quarter of 2021.

Balance Sheet

• Total Assets: Total assets were $4.0 billion at June 30, 2022 an increase of $95.0 million, or 2.4%, compared to June 30, 2021 and a decrease of $165.2 million, or 4.0%, compared to March 31, 2022.
• Investments: Total investments were $766.9 million as of June 30, 2022 an increase of $122.5 million, or 19.0%, compared to June 30, 2021 and a decrease of $14.1 million, or 1.8%, compared to March 31, 2022.
• Loans: Total loans were $2.8 billion as of June 30, 2022. Loan growth for the second quarter of 2022 was $107.5 million and increased $200.7 million, or 7.6%, from June 30, 2021. In the second quarter, total outstanding commercial loans increased $8.0 million, or 1.0%. PPP loans, which are included in the commercial portfolio, decreased $17.2 million in the second quarter as a result of the continued loan forgiveness processed by the Small Business Administration. The consumer loan portfolio grew by $54.5 million, or 5.6% in the second quarter, primarily within the indirect automobile lending program. Total outstanding residential real estate loans increased $45.1 million, or 4.7%, for the second quarter of 2022.
• Allowance for Credit Losses: The allowance for credit losses was $28.1 million on June 30, 2022, which represented 0.99% of loans outstanding, as compared to 1.02% at June 30, 2021. Asset quality remained solid at June 30, 2022. Net loan losses, expressed as an annualized percentage of average loans outstanding, were 0.07% for the three-month period ended June 30, 2022, as compared to 0.01% for the three-month period ended June 30, 2021. Nonperforming assets of $10.0 million at June 30, 2022 represented 0.25% of period-end assets, compared to 0.20% at June 30, 2021.
• Deposits: At June 30, 2022, deposit balances were $3.5 billion. Deposits decreased in the second quarter of 2022 by $169.7 million and increased by $107.6 million, or 3.1%, from the prior-year level. Municipal deposits decreased $112.1 million in the second quarter and increased $4.8 million, or 0.6% from June 30, 2021. Non-municipal deposits decreased $57.6 million for the quarter and increased $102.8 million, or 4.0%, from June 30, 2021. Noninterest-bearing deposits represented 23.3% of total deposits at June 30, 2022, compared to 22.2% of total deposits at June 30, 2021. At June 30, 2022, total time deposits were $169.5 million, a decrease of $57.0 million, or 25.2%, compared to the prior year.
• Capital: Total stockholders' equity was $356.5 million on June 30, 2022, up $3.5 million, or 1.0%, from June 30, 2021. Arrow's regulatory capital ratios remained strong in the second quarter of 2022. As of June 30, 2022, Arrow's Common Equity Tier 1 Capital Ratio was 13.14% and Total Risk-Based Capital Ratio was 14.93%. The capital ratios of Arrow and both its 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

• Cash and Stock Dividends: On June 15, 2022, Arrow distributed a cash dividend of $0.27 per share. The cash dividend was 7% higher than the cash dividend paid by Arrow in the second quarter of 2021 due to a one cent increase in the cash dividend rate and after adjusting for the 3% stock dividend distributed on September 24, 2021.
• Industry Recognition: In the second quarter of 2022, both of Arrow's banking subsidiaries once again earned BauerFinancial, Inc. 5-Star Exceptional Performance Bank ratings.

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, and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by Arrow are useful in evaluating Arrow's performance and that such information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP. Non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Selected Quarterly Information."

Safe Harbor Statement

The information in this document may contain statements based on management's beliefs, assumptions, expectations, estimates and projections about the future. Such "forward-looking statements," as defined in Section 21E of the Securities Exchange Act of 1934, as amended, involve a degree of uncertainty and attendant risk. Actual outcomes and results may differ, explicitly or by implication. We are not obliged to revise or update these statements to reflect unanticipated events. This document should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2021 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,
						2022						2021						2022						2021
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans						$	26,906					$	27,014					$	52,645					$	52,197
Interest on Deposits at Banks						427						103						625						188
Interest and Dividends on Investment Securities:
Fully Taxable						2,444						1,671						4,633						3,177
Exempt from Federal Taxes						816						907						1,637						1,827
Total Interest and Dividend Income						30,593						29,695						59,540						57,389
INTEREST EXPENSE
Interest-Bearing Checking Accounts						199						192						362						411
Savings Deposits						892						501						1,309						1,066
Time Deposits over $250,000						26						69						54						189
Other Time Deposits						111						156						220						378
Federal Funds Purchased and  Securities Sold Under Agreements to Repurchase						—						1						—						3
Federal Home Loan Bank Advances						108						196						295						389
Junior Subordinated Obligations Issued to  Unconsolidated Subsidiary Trusts						171						171						340						340
Interest on Financing Leases						48						49						97						98
Total Interest Expense						1,555						1,335						2,677						2,874
NET INTEREST INCOME						29,038						28,360						56,863						54,515
Provision for Credit Losses						905						263						1,674						(385)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES						28,133						28,097						55,189						54,900
NONINTEREST INCOME
Income From Fiduciary Activities						2,517						2,589						5,113						4,967
Fees for Other Services to Customers						3,050						2,919						5,845						5,528
Insurance Commissions						1,622						1,626						3,133						3,266
Net Gain on Securities						154						196						284						356
Net Gain on Sales of Loans						10						625						62						2,040
Other Operating Income						391						523						1,469						929
Total Noninterest Income						7,744						8,478						15,906						17,086
NONINTEREST EXPENSE
Salaries and Employee Benefits						11,687						10,845						22,973						21,983
Occupancy Expenses, Net						1,602						1,484						3,200						3,077
Technology and Equipment Expense						3,974						3,710						7,753						7,169
FDIC Assessments						291						245						598						515
Other Operating Expense						2,791						2,803						4,766						5,021
Total Noninterest Expense						20,345						19,087						39,290						37,765
INCOME BEFORE PROVISION FOR INCOME TAXES						15,532						17,488						31,805						34,221
Provision for Income Taxes						3,558						4,209						7,256						7,662
NET INCOME						$	11,974					$	13,279					$	24,549					$	26,559
Average Shares Outstanding 1:
Basic						16,014						16,024						16,022						16,009
Diluted						16,054						16,085						16,069						16,056
Per Common Share:
Basic Earnings						$	0.75					$	0.83					$	1.53					$	1.66
Diluted Earnings						0.75						0.83						1.53						1.65
1 2021 Share and Per Share Amounts have been restated for the September 24, 2021, 3% stock dividend.

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)
			June 30, 2022						December 31, 2021						June 30, 2021
ASSETS
Cash and Due From Banks			$	51,549					$	26,978					$	44,760
Interest-Bearing Deposits at Banks			165,705						430,718						433,468
Investment Securities:
Available-for-Sale at Fair Value			582,741						559,316						437,868
Held-to-Maturity (Fair Value of $180,511 at June 30, 2022; $201,292 at December 31, 2021; and $210,916 at June 30, 2021)			182,096						196,566						204,490
Equity Securities			2,031						1,747						1,992
FHLB and Federal Reserve Bank Stock			4,718						5,380						5,380
Loans			2,844,802						2,667,941						2,644,082
Allowance for Credit Losses			(28,090)						(27,281)						(27,010)
Net Loans			2,816,712						2,640,660						2,617,072
Premises and Equipment, Net			50,141						46,217						43,268
Goodwill			21,873						21,873						21,873
Other Intangible Assets, Net			1,710						1,918						2,082
Other Assets			111,929						96,579						83,938
Total Assets			$	3,991,205					$	4,027,952					$	3,896,191
LIABILITIES
Noninterest-Bearing Deposits			824,842						810,274						761,991
Interest-Bearing Checking Accounts			1,046,570						994,391						977,955
Savings Deposits			1,504,791						1,531,287						1,471,591
Time Deposits over $250,000			40,021						82,811						84,357
Other Time Deposits			129,436						131,734						142,139
Total Deposits			3,545,660						3,550,497						3,438,033
Federal Funds Purchased and  Securities Sold Under Agreements to Repurchase			—						—						3,092
Federal Home Loan Bank Term Advances			25,000						45,000						45,000
Junior Subordinated Obligations Issued to Unconsolidated  Subsidiary Trusts			20,000						20,000						20,000
Finance Leases			5,144						5,169						5,193
Other Liabilities			38,903						36,100						31,840
Total Liabilities			3,634,707						3,656,766						3,543,158
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at June 30, 2022, December 31, 2021 and June 30, 2021			—						—						—
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (20,800,144 Shares Issued at June 30, 2022 and December 31, 2021 and 20,194,474 at June 30, 2021)			20,800						20,800						20,194
Additional Paid-in Capital			379,423						377,996						355,195
Retained Earnings			69,980						54,078						60,494
Accumulated Other Comprehensive (Loss) Income			(29,564)						347						(2,658)
Treasury Stock, at Cost (4,777,605 Shares at June 30, 2022; 4,759,414 Shares at December 31, 2021 and 4,622,797 Shares at June 30, 2021)			(84,141)						(82,035)						(80,192)
Total Stockholders' Equity			356,498						371,186						353,033
Total Liabilities and Stockholders' Equity			$	3,991,205					$	4,027,952					$	3,896,191

 

Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended			6/30/2022						3/31/2022						12/31/2021						9/30/2021						6/30/2021
Net Income			$	11,974					$	12,575					$	10,309					$	12,989					$	13,279
Transactions in Net Income (Net of Tax):
Net Changes in Fair Value of Equity Investments			114						96						(104)						(79)						145
Share and Per Share Data:1
Period End Shares Outstanding			16,023						16,013						16,041						16,020						16,039
Basic Average Shares Outstanding			16,014						16,030						16,028						16,027						16,024
Diluted Average Shares Outstanding			16,054						16,083						16,091						16,085						16,085
Basic Earnings Per Share			$	0.75					$	0.78					$	0.64					$	0.81					$	0.83
Diluted Earnings Per Share			0.75						0.78						0.63						0.81						0.83
Cash Dividend Per Share			0.270						0.270						0.260						0.252						0.252
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks			$	232,545					$	410,644					$	551,890					$	416,500					$	369,034
Investment Securities			822,112						797,347						681,732						675,980						668,089
Loans			2,804,180						2,678,796						2,660,665						2,641,726						2,651,449
Deposits			3,569,754						3,582,256						3,590,766						3,435,933						3,395,271
Other Borrowed Funds			50,140						68,596						70,162						72,187						74,957
Shareholders' Equity			357,228						370,264						364,409						359,384						350,203
Total Assets			4,012,999						4,054,943						4,060,540						3,902,041						3,851,921
Return on Average Assets, annualized			1.20		%				1.26		%				1.01		%				1.32		%				1.38		%
Return on Average Equity, annualized			13.44		%				13.77		%				11.22		%				14.34		%				15.21		%
Return on Average Tangible Equity, annualized 2			14.40		%				14.72		%				12.01		%				15.36		%				16.32		%
Average Earning Assets			$	3,858,837					$	3,886,787					$	3,894,287					$	3,734,206					$	3,688,572
Average Paying Liabilities			2,808,287						2,855,884						2,841,304						2,705,283						2,721,961
Interest Income			30,593						28,947						28,354						29,807						29,695
Tax-Equivalent Adjustment 3			269						270						285						292						293
Interest Income, Tax-Equivalent 3			30,862						29,217						28,639						30,099						29,988
Interest Expense			1,555						1,122						1,152						1,169						1,335
Net Interest Income			29,038						27,825						27,202						28,638						28,360
Net Interest Income, Tax-Equivalent 3			29,307						28,095						27,487						28,930						28,653
Net Interest Margin, annualized			3.02		%				2.90		%				2.77		%				3.04		%				3.08		%
Net Interest Margin, Tax-Equivalent, annualized 3			3.05		%				2.93		%				2.80		%				3.07		%				3.12		%
Efficiency Ratio Calculation: 4
Noninterest Expense			$	20,345					$	18,945					$	20,860					$	19,423					$	19,087
Less: Intangible Asset Amortization			48						49						52						51						53
Net Noninterest Expense			$	20,297					$	18,896					$	20,808					$	19,372					$	19,034
Net Interest Income, Tax-Equivalent			$	29,307					$	28,095					$	27,487					$	28,930					$	28,653
Noninterest Income			7,744						8,162						7,589						7,694						8,478
Less: Net (Loss) Gain on Securities			154						130						(139)						(106)						196
Net Gross Income			$	36,897					$	36,127					$	35,215					$	36,730					$	36,935
Efficiency Ratio			55.01		%				52.30		%				59.09		%				52.74		%				51.53		%
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)			$	356,498					$	357,243					$	371,186					$	360,171					$	353,033
Book Value per Share 1			22.25						22.31						23.14						22.48						22.01
Goodwill and Other Intangible Assets, net			23,583						23,691						23,791						23,879						23,955
Tangible Book Value per Share 1,2			20.78						20.83						21.66						20.99						20.52
Capital Ratios:5
Tier 1 Leverage Ratio			9.60		%				9.37		%				9.20		%				9.39		%				9.29		%
Common Equity Tier 1 Capital Ratio			13.14		%				13.48		%				13.77		%				13.71		%				13.79		%
Tier 1 Risk-Based Capital Ratio			13.86		%				14.23		%				14.55		%				14.51		%				14.61		%
Total Risk-Based Capital Ratio			14.93		%				15.33		%				15.69		%				15.66		%				15.78		%
Assets Under Trust Admin. & Investment Mgmt.			$	1,589,178					$	1,793,747					$	1,851,101					$	1,778,659					$	1,804,854

 

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 24, 2021, 3% stock dividend.
2.			Non-GAAP Financial Measures Reconciliation: Tangible Book Value and Tangible Equity exclude goodwill and other intangible assets, net from total equity.  These are non-GAAP financial measures which Arrow believes provides investors with information that is useful in understanding its financial performance.
						6/30/2022						3/31/2022						12/31/2021						9/30/2021						6/30/2021
			Total Stockholders' Equity (GAAP)			$	356,498					$	357,243					$	371,186					$	360,171					$	353,033
			Less: Goodwill and Other Intangible assets, net			23,583						23,691						23,791						23,879						23,955
			Tangible Equity (Non-GAAP)			$	332,915					$	333,552					$	347,395					$	336,292					$	329,078
			Period End Shares Outstanding			16,023						16,013						16,041						16,020						16,039
			Tangible Book Value per Share (Non-GAAP)			$	20.78					$	20.83					$	21.66					$	20.99					$	20.52
			Net Income			11,974						12,575						10,309						12,989						13,279
			Return on Average Tangible Equity (Net Income/Tangible Equity - Annualized)			14.40		%				14.72		%				12.01		%				15.36		%				16.32		%
3.			Non-GAAP Financial Measures Reconciliation: Net Interest Margin, Tax-Equivalent is the ratio of our 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.
						6/30/2022						3/31/2022						12/31/2021						9/30/2021						6/30/2021
			Interest Income (GAAP)			$	30,593					$	28,947					$	28,354					$	29,807					$	29,695
			Add: Tax-Equivalent adjustment  (Non-GAAP)			269						270						285						292						293
			Interest Income - Tax Equivalent  (Non-GAAP)			$	30,862					$	29,217					$	28,639					$	30,099					$	29,988
			Net Interest Income (GAAP)			$	29,038					$	27,825					$	27,202					$	28,638					$	28,360
			Add: Tax-Equivalent adjustment  (Non-GAAP)			269						270						285						292						293
			Net Interest Income - Tax Equivalent  (Non-GAAP)			$	29,307					$	28,095					$	27,487					$	28,930					$	28,653
			Average Earning Assets			$	3,858,837					$	3,886,787					$	3,894,287					$	3,734,206					$	3,688,572
			Net Interest Margin (Non-GAAP)*			3.05		%				2.93		%				2.80		%				3.07		%				3.12		%
4.			Non-GAAP Financial Measures: 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 noninterest expense to net gross income (which equals 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 CET1 ratio at June 30, 2022 listed in the tables (i.e., 13.14%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
						6/30/2022						3/31/2022						12/31/2021						9/30/2021						6/30/2021
			Total Risk Weighted Assets			$	2,790,520					$	2,661,952					$	2,552,812					$	2,511,910					$	2,438,445
			Common Equity Tier 1 Capital			366,798						358,738						351,497						344,507						336,265
			Common Equity Tier 1 Ratio			13.14		%				13.48		%				13.77		%				13.71		%				13.79		%
* 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:					2022																		2021
											Interest						Rate												Interest						Rate
					Average						Income/						Earned/						Average						Income/						Earned/
					Balance						Expense						Paid						Balance						Expense						Paid
Interest-Bearing Deposits at Banks			$			232,545					$	427					0.74		%				$	369,034					$	103					0.11		%
Investment Securities:
Fully Taxable					644,443						2,444						1.52						479,365						1,671						1.40
Exempt from Federal Taxes					177,669						816						1.84						188,724						907						1.93
Loans					2,804,180						26,906						3.85						2,651,449						27,014						4.09
Total Earning Assets					3,858,837						30,593						3.18						3,688,572						29,695						3.23
Allowance for Credit Losses					(27,558)																		(26,862)
Cash and Due From Banks					40,105																		34,976
Other Assets					141,615																		155,235
Total Assets			$			4,012,999																	$	3,851,921
Deposits:
Interest-Bearing Checking Accounts			$			1,048,752					199						0.08						$	924,651					192						0.08
Savings Deposits					1,541,616						892						0.23						1,481,232						501						0.14
Time Deposits of $250,000 or More					37,418						26						0.28						95,673						69						0.29
Other Time Deposits					130,361						111						0.34						145,448						156						0.43
Total Interest-Bearing Deposits					2,758,147						1,228						0.18						2,647,004						918						0.14
Short-Term Borrowings					—						—												4,770						1						0.08
FHLBNY Term Advances & Other Long-Term Debt					45,000						279						2.49						65,000						367						2.26
Finance Leases					5,140						48						3.75						5,187						49						3.79
Total Interest-Bearing Liabilities					2,808,287						1,555						0.22						2,721,961						1,335						0.20
Noninterest-bearing deposits					811,607																		748,267
Other Liabilities					35,877																		31,490
Total Liabilities					3,655,771																		3,501,718
Stockholders' Equity					357,228																		350,203
Total Liabilities and Stockholders' Equity			$			4,012,999																	$	3,851,921
Net Interest Income											$	29,038																	$	28,360
Net Interest Spread																	2.96		%																3.03		%
Net Interest Margin																	3.02		%																3.08		%

 

Arrow Financial Corporation
Consolidated Financial Information
(Dollars in Thousands - Unaudited)
Quarter Ended:			6/30/2022						12/31/2021						6/30/2021
Loan Portfolio
Commercial Loans			$	138,675					$	172,518					$	242,790
Commercial Real Estate Loans			663,234						628,929						598,241
Subtotal Commercial Loan Portfolio			801,909						801,447						841,031
Consumer Loans			1,031,111						920,556						892,549
Residential Real Estate Loans			1,011,782						945,938						910,502
Total Loans			$	2,844,802					$	2,667,941					$	2,644,082
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter			$	27,661					$	26,956					$	26,840
Loans Charged-off			(907)						(719)						(443)
Less Recoveries of Loans Previously Charged-off			431						486						350
Net Loans Charged-off			(476)						(233)						(93)
Provision for Credit Losses			905						558						263
Allowance for Credit Losses, End of Quarter			$	28,090					$	27,281					$	27,010
Nonperforming Assets
Nonaccrual Loans			$	7,999					$	10,764					$	7,102
Loans Past Due 90 or More Days and Accruing			1,641						823						595
Loans Restructured and in Compliance with Modified Terms			77						77						78
Total Nonperforming Loans			9,717						11,664						7,775
Repossessed Assets			297						126						99
Other Real Estate Owned			—						—						99
Total Nonperforming Assets			$	10,014					$	11,790					$	7,973
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans,  Quarter-to-date Annualized			0.07		%				0.03		%				0.01		%
Provision for Credit Losses to Average Loans,  Quarter-to-date Annualized			0.13		%				0.08		%				0.04		%
Allowance for Credit Losses to Period-End Loans			0.99		%				1.02		%				1.02		%
Allowance for Credit Losses to Period-End Nonperforming Loans			289.08		%				233.89		%				347.40		%
Nonperforming Loans to Period-End Loans			0.34		%				0.44		%				0.29		%
Nonperforming Assets to Period-End Assets			0.25		%				0.29		%				0.20		%
Six Month Period Ended:
Allowance for Loan Losses
Allowance for Loan Losses, Beginning of Year			$	27,281											$	29,232
Impact of the Adoption of ASU 2016-13			—												(1,300)
Loans Charged-off			(1,736)												(1,076)
Less Recoveries of Loans Previously Charged-off			871												539
Net Loans Charged-off			(865)												(537)
Provision for Loan Losses			1,674												(385)
Allowance for Loan Losses, End of Period			$	28,090											$	27,010
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Annualized			0.06		%										0.04		%
Provision for Loan Losses to Average Loans, Annualized			0.12		%										(0.03)		%

 

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SOURCE Arrow Financial Corporation

FAQ

What were Arrow Financial's financial results for Q2 2022?

Arrow Financial reported a net income of $12.0 million and diluted earnings per share of $0.75 for Q2 2022.

How much did Arrow Financial's loans grow in Q2 2022?

Loans increased by $108 million in Q2 2022, reaching a record total of $2.8 billion.

What is the provision for credit losses reported by Arrow Financial?

The provision for credit losses was $905,000 in Q2 2022, up from $263,000 in the same quarter the previous year.

How did Arrow Financial's net income compare to Q2 2021?

Net income for Q2 2022 was $12.0 million, a decline from $13.3 million in Q2 2021.

What was the dividend declared by Arrow Financial in Q2 2022?

Arrow Financial declared a cash dividend of $0.27 per share, reflecting a 7% increase from the previous year.