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Arrow Reports 3rd Quarter Net Income of $9.0 Million, or $0.53 per Share

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Arrow Financial reported net income of $9.0 million and EPS of $0.53 for Q3 2024, up from $7.7 million and $0.46 in Q3 2023. Key highlights include improved net interest margin to 2.78%, total deposits of $3.8 billion, and year-to-date loan growth of $126.3 million (5.2% annualized). The company completed two acquisitions: A&B Agency assets and a Whitehall branch. Arrow plans to unify its banking subsidiaries into Arrow Bank National Association by December 31, 2024. The company was named to Piper Sandler's Sm-All Stars: Class of 2024, among 30 top-performing small-cap banks.

Arrow Financial ha riportato un utile netto di 9,0 milioni di dollari e un utile per azione (EPS) di 0,53 dollari per il Q3 2024, in aumento rispetto ai 7,7 milioni di dollari e 0,46 dollari nel Q3 2023. I punti salienti includono un margine di interesse netto migliorato al 2,78%, depositi totali di 3,8 miliardi di dollari e una crescita dei prestiti anno su anno di 126,3 milioni di dollari (5,2% annualizzato). L'azienda ha completato due acquisizioni: beni dell'A&B Agency e una filiale di Whitehall. Arrow prevede di unificare le sue sussidiarie bancarie sotto Arrow Bank National Association entro il 31 dicembre 2024. L'azienda è stata nominata tra gli Sm-All Stars di Piper Sandler: Classe del 2024, tra le 30 banche a piccola capitalizzazione con le migliori performance.

Arrow Financial reportó un ingreso neto de 9,0 millones de dólares y un BPA de 0,53 dólares para el Q3 2024, en comparación con 7,7 millones de dólares y 0,46 dólares en el Q3 2023. Los aspectos destacados incluyen un margen de interés neto mejorado del 2,78%, depósitos totales de 3,8 mil millones de dólares y un crecimiento de préstamos hasta la fecha de 126,3 millones de dólares (5,2% anualizado). La compañía completó dos adquisiciones: los activos de A&B Agency y una sucursal de Whitehall. Arrow planea unificar sus subsidiarias bancarias en Arrow Bank National Association antes del 31 de diciembre de 2024. La empresa fue nombrada en el Sm-All Stars de Piper Sandler: Clase de 2024, entre los 30 bancos de pequeña capitalización con mejor desempeño.

애로 파이낸셜(Arrow Financial)은 2024년 3분기 순이익 900만 달러와 주당 순이익(EPS) 0.53달러를 보고했으며, 이는 2023년 3분기의 770만 달러 및 0.46달러에서 증가한 수치입니다. 주요 하이라이트로는 순이자마진이 2.78%로 개선되었고, 총 예금은 38억 달러, 연초부터 지금까지 대출 성장률은 1억 2,630만 달러(연환산 5.2%)에 달합니다. 이 회사는 A&B 에이전시 자산과 화이트홀 지점을 포함한 두 건의 인수를 완료했습니다. 애로는 2024년 12월 31일까지 자회사를 애로 은행 국가 협회(Arrow Bank National Association)로 통합할 계획입니다. 이 회사는 2024년 클래스에 대해 파이퍼 샌들러의 Sm-All Stars에 선정되었으며, 이는 30개의 최고의 소형 자본 은행 중 하나입니다.

Arrow Financial a rapporté un revenu net de 9,0 millions de dollars et un BPA de 0,53 dollar pour le troisième trimestre 2024, en hausse par rapport à 7,7 millions de dollars et 0,46 dollar au troisième trimestre 2023. Les points clés incluent une marge d'intérêt nette améliorée à 2,78%, des dépôts totaux de 3,8 milliards de dollars, et une croissance des prêts depuis le début de l'année de 126,3 millions de dollars (5,2% annualisé). L'entreprise a achevé deux acquisitions : les actifs de l'agence A&B et une succursale de Whitehall. Arrow prévoit de regrouper ses filiales bancaires sous Arrow Bank National Association d'ici le 31 décembre 2024. L'entreprise a été nommée dans les Sm-All Stars de Piper Sandler : Classe de 2024, parmi les 30 banques à petite capitalisation les plus performantes.

Arrow Financial berichtete für das dritte Quartal 2024 einen Nettogewinn von 9,0 Millionen Dollar und einen Gewinn pro Aktie (EPS) von 0,53 Dollar, im Vergleich zu 7,7 Millionen Dollar und 0,46 Dollar im dritten Quartal 2023. Zu den wichtigsten Punkten gehören ein verbesserter Nettozinsspread von 2,78%, Gesamteinlagen von 3,8 Milliarden Dollar und ein Kreditwachstum von 126,3 Millionen Dollar seit Jahresbeginn (annualisiert 5,2%). Das Unternehmen hat zwei Akquisitionen abgeschlossen: die Vermögenswerte der A&B Agency und eine Filiale in Whitehall. Arrow plant, seine Banktochtergesellschaften bis zum 31. Dezember 2024 in die Arrow Bank National Association zu integrieren. Das Unternehmen wurde in die Sm-All Stars: Klasse 2024 von Piper Sandler aufgenommen, unter den 30 leistungsstärksten Small-Cap-Banken.

Positive
  • Net income increased to $9.0M in Q3 2024 from $7.7M in Q3 2023
  • Net interest margin improved to 2.78% from 2.67% in previous quarter
  • Year-to-date loan growth reached $126.3M (5.2% annualized)
  • Total deposits increased by $171.0M from Q3 2023
  • Tangible Book Value increased to $21.95
Negative
  • Non-interest expense increased to $24.1M from $23.5M in Q3 2023
  • Nonperforming assets increased to 0.51% of assets vs 0.16% in Q3 2023
  • $450K in non-core expenses related to acquisitions and unification efforts

Insights

Arrow Financial's Q3 2024 results demonstrate solid financial performance with $9.0 million in net income, up from $7.7 million year-over-year. Key highlights include:

  • Net interest margin expansion to 2.79% (FTE), showing improved profitability
  • Strong loan growth of 5.2% annualized year-to-date
  • Stable asset quality with low net charge-offs of 0.08%
  • Healthy capital position with Common Equity Tier 1 ratio at 12.77%

The planned unification of subsidiary banks and recent acquisitions position Arrow for improved operational efficiency. The 12.2% increase in net interest income year-over-year and stabilizing funding costs suggest positive momentum for future quarters, though deposit migration to higher-cost products remains a challenge.

The strategic moves to enhance operational infrastructure are noteworthy. The acquisition of A&B Agency and the Whitehall branch, combined with the upcoming bank subsidiary unification, should create meaningful synergies. The addition of surcharge-free access to 55,000+ Allpoint ATMs significantly expands customer convenience. The $450 thousand in non-core expenses related to acquisitions and unification efforts represent a reasonable investment for long-term efficiency gains. The bank's recognition in the Piper Sandler Sm-All Stars validates its operational excellence among small-cap banks.

GLENS FALLS, N.Y., Oct. 31, 2024 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or "the Company") announced financial results for the three-month period ended September 30, 2024. Net income for the third quarter of 2024 was $9.0 million and fully diluted earnings per share ("EPS") was $0.53, versus $7.7 million and EPS of $0.46 for the same period in 2023.

This Earnings Release and related commentary should be read in conjunction with the Company's October 31, 2024 Form 8-K and related Third 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 delivered a solid third quarter with strong net interest margin expansion, improved core profitability, increased return on average assets and continued strong credit metrics. Stabilizing funding costs, increasing asset yields, and continued expense discipline have positioned us for increased core operating leverage for the upcoming quarters. Our incredible teamwork was recently recognized by being named to the prestigious Piper Sandler Sm-All Stars: Class of 2024, a list of 30 top-performing small-cap banks and thrifts in the country.

Among our third-quarter accomplishments, we completed two small acquisitions. We expanded our insurance business with the strategic acquisition of the assets of A&B Agency, Inc. and acquired a branch in Whitehall, New York. Our team continues to prepare for the unification of 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, slated for December 31, 2024. Starting in early November, our customers will gain surcharge-free access to the Allpoint ATM Network of more than 55,000 locations. As we continue to strengthen our market position, we also rewarded our shareholders with an increase to the fourth-quarter cash dividend, which we announced in early October."

Third-Quarter Highlights and Key Metrics

  • EPS improved $0.07 to $0.53 versus the same period in 2023 and $0.01 over the previous quarter
  • Results included approximately $450 thousand of non-core expenses related to our insurance agency and branch acquisitions as well as unification efforts
  • Deposit balances were $3.8 billion, resulting in a Loan-to-Deposit ratio of 87.0%
  • Net Interest Margin improved to 2.78% (2.79% FTE1), up from 2.67% (2.69% FTE) in the prior quarter
  • Year-to-date loan growth reached $126.3 million2 (5.2% annualized)
  • Resumed mortgage loan sales into the secondary market
  • Average Loan Yields increased to 5.27% for 3Q24, up from 5.17% in the prior quarter
  • Net Charge-Offs for the quarter were 8bps on an annualized basis
  • Tangible Book Value increased to $21.95
  • Accumulated Other Comprehensive Loss improved $5.7 million, or 18%, from the prior quarter
  • Return on Average Assets (ROA) improved to 0.84%, up from 0.82% in the previous quarter

__________________________________

1 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.

2 Excludes both $6.5 million fair value hedge adjustment at September 30, 2024 and $5.8 million fair value hedge adjustment at December 31, 2023


Income Statement

  • Net Income: Net income for the third quarter of 2024 was $9.0 million, increasing from $8.6 million in the second quarter of 2024 and $7.7 million in the third quarter of 2023.
    • Compared to the prior quarter, net income benefited from an increase of $1.3 million in net interest income, partially offset by an increase in non-interest expense of $0.8 million.
    • Compared to the third quarter of 2023, net income growth was driven by an increase in net interest income of $3.1 million, partially offset by an increase in non-interest expense of $0.6 million.

  • Net Interest Income: Net interest income for the third quarter of 2024 was $28.4 million, increasing 4.7% from $27.2 million for the second quarter of 2024 and increasing 12.2% from $25.4 million in the third quarter of 2023.
    • Total interest and dividend income was $49.4 million for the third quarter of 2024, an increase from $48.0 million in the second quarter of 2024 and from $42.1 million for the third quarter of 2023. These increases were primarily driven by loan growth and higher loan yields. Interest expense for the third quarter of 2024 was $21.0 million, an increase from $20.8 million for the second quarter of 2024 and from $16.8 million for the third quarter of 2023. The increase from the prior year was driven primarily by higher deposit rates and changes in deposit composition.

  • Net Interest Margin: Net interest margin, on an FTE basis, for the third quarter of 2024 was 2.79% compared to 2.69% for the second quarter of 2024 and 2.55% for the third quarter of 2023. The increase in net interest margin compared to the second quarter in 2024 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. As compared to the third 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 costing products, such as money market savings and time deposits.

Three Months Ended


(Dollars in Thousands)


September 30, 2024


June 30, 2024


September 30, 2023

Interest and Dividend Income

$                 49,443


$                 47,972


$                 42,117

Interest Expense

21,005


20,820


16,764

Net Interest Income

28,438


27,152


25,353

Average Earning Assets(A)

4,075,162


4,083,813


3,973,747

Average Interest-Bearing Liabilities

3,085,066


3,127,417


2,920,518







Yield on Earning Assets(A)

4.83 %


4.72 %


4.20 %

Cost of Interest-Bearing Liabilities

2.71


2.68


2.28

Net Interest Spread

2.12


2.04


1.92

Net Interest Margin

2.78


2.67


2.53

Net Interest Margin - FTE

2.79


2.69


2.55







(A) Includes Nonaccrual Loans.












  • Provision for Credit Losses: For the third quarter of 2024, the provision for credit losses was $0.9 million compared to $0.8 million in the second quarter of 2024 and $0.4 million in the third quarter of 2023. The key drivers for the provision for credit losses in the third quarter of 2024 were replenishment of the allowance for charge-offs, growth in loan balances and changes to the economic forecast factors embedded in the credit loss allowance model.

  • Non-Interest Income: Non-interest income for the three months ended September 30, 2024, was $8.1 million, an increase from $7.9 million in the second quarter of 2024 and consistent with the third quarter of 2023. The increases from the prior periods are primarily the result of the resumption of loan sales from current loan originations, higher wealth management fees resulting from improved market valuations of assets under management and increased insurance commissions resulting from the A&B asset acquisition. The third quarter of 2023 included one-time proceeds from bank-owned life insurance in other income.

  • Non-Interest Expense: Non-interest expense for the third quarter of 2024 was $24.1 million, an increase from $23.3 million in the second quarter of 2024 and an increase from $23.5 million for the third quarter of 2023. The increase from the prior quarter was primarily attributable to several one-time non-core expenses related to the Whitehall and A&B asset acquisitions.

  • Provision for Income Taxes: The provision for income taxes and effective tax rate were $2.6 million and 22.2%, for the third quarter of 2024, $2.3 million and 21.2%, for the second quarter of 2024 and $1.8 million and 19.1%, for the third quarter of 2023. The increase in the effective tax rate from the second quarter of 2024 was primarily attributable to a decrease in the amount of tax advantaged earning assets as a percentage of total earning assets, while the increase in the effective tax rate from the third quarter of 2023 was primarily due to a change in pre-tax income combined with a decrease in the amount of tax advantaged earning assets as a percentage of total earning assets.

Balance Sheet

  • Total Assets: Total assets were $4.4 billion at September 30, 2024, an increase of $167.0 million, or 3.9%, as compared to June 30, 2024 and an increase of $138.5 million, or 3.2%, as compared to September 30, 2023. For the third quarter of 2024, overall growth in the balance sheet was attributable to changes in cash balances, primarily seasonal municipal and corporate deposits, as well as growth in the loan portfolio.

  • Investments: Total investments were $549.8 million as of September 30, 2024, a decrease of $6.6 million, or 1.2%, compared to June 30, 2024 and a decrease of $117.0 million, or 17.6%, compared to September 30, 2023. The decrease from June 30, 2024 was driven primarily by paydowns and maturities. The decrease from September 30, 2023 was also driven by paydowns and maturities as well as the fourth quarter 2023 repositioning of the investment portfolio, which reduced 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 were $3.3 billion as of September 30, 2024. Loan growth for the third quarter of 2024 was $24.2 million, and $201.2 million since September 30, 2023. Loan growth was spread across all loan products. Please see the loan detail included in the Consolidated Financial Information table on page 13.

  • Allowance for Credit Losses: The allowance for credit losses was $31.3 million as of September 30, 2024, which represented 0.94% of loans outstanding, as compared to $31.0 million, or 0.94%, at June 30, 2024, and $31.1 million, or 0.99%, at September 30, 2023. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.08% for the three-month period ended September 30, 2024, as compared to 0.16%4 for the three-month period ended June 30, 2024 and 0.05% for the three-month period ended September 30, 2023. Nonperforming assets were $22.3 million as of September 30, 2024, representing 0.51% of period-end assets, compared to 0.50% at June 30, 2024 and 0.16% at September 30, 2023.

  • Deposits: At September 30, 2024, deposit balances were $3.8 billion, an increase of $153.8 million from June 30, 2024 and an increase of $171.0 million from September 30, 2023. The increase from the second quarter was primarily attributable to the seasonality of municipal deposits. The increase from September 30, 2023 was partially attributable to $175 million of brokered CDs, primarily used to reduce borrowings and fund continued loan growth. Please refer to page 7 for further details related to deposits.

  • Capital: Total stockholders' equity was $393.3 million at September 30, 2024, an increase of $10.3 million, or 2.7%, from June 30, 2024 and an increase of $33.3 million, or 9.2%, from the September 30, 2023 level of $360.0 million. The increase from the second quarter was primarily attributable to net income of $9.0 million, other comprehensive income of $5.7 million offset by dividends of $4.5 million. The increase in stockholders' equity from September 30, 2023 was primarily attributable to income for the period of $32.9 million, other comprehensive income of $26.6 million and various capital items of $1.1 million offset by dividends of $18.1 million and stock repurchases of $9.2 million. Arrow's regulatory capital ratios remained strong. As of September 30, 2024, Arrow's Common Equity Tier 1 Capital Ratio was 12.77% and Total Risk-Based Capital Ratio was 14.46%. 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.

______________________________________

3 Includes both $6.5 million fair value hedge adjustment at September 30, 2024 and $0.4 million fair value hedge adjustment at June 30, 2024

4 Charge-offs for 2Q24 included 0.09% related to a previously specifically reserved amount for overdraft balances relating to one customer relationship


Additional Commentary

  • Piper Sandler Sm-All Stars: Arrow was recently named to the prestigious Piper Sandler Sm-All Stars: Class of 2024, a list of 30 top-performing small-cap banks and thrifts in the country. Arrow is one of just three New York financial institutions on the list and the only bank in Upstate New York. Piper Sandler, an independent investment bank and research firm, evaluated more than 300 institutions that trade on a major exchange, narrowing the field to the top 30.

  • Bauer Financial Ratings: Both Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company continued to maintain their 5-Star Exceptional Performance ratings from Bauer Financial, for the 69th and 61st quarters, respectively.

  • Subsidiary Bank Unification: 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.

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 Annual Report on Form 10-K for the year ended December 31, 2023 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
September 30


Nine Months Ended
September 30



2024


2023


2024


2023

INTEREST AND DIVIDEND INCOME









Interest and Fees on Loans


$            44,122


$            36,699


$     126,639


$     103,203

Interest on Deposits at Banks


2,103


1,805


6,735


3,958

Interest and Dividends on Investment Securities:









Fully Taxable


2,656


2,924


8,851


8,823

Exempt from Federal Taxes


562


689


1,867


2,256

Total Interest and Dividend Income


49,443


42,117


144,092


118,240

INTEREST EXPENSE









Interest-Bearing Checking Accounts


1,966


1,156


5,510


2,346

Savings Deposits


10,905


9,729


31,706


23,830

Time Deposits over $250,000


1,803


1,466


5,645


3,159

Other Time Deposits


4,934


2,051


15,091


3,721

Borrowings


1,177


2,143


3,439


5,309

Junior Subordinated Obligations Issued to

  Unconsolidated Subsidiary Trusts


173


173


514


513

Interest on Financing Leases


47


46


142


143

Total Interest Expense


21,005


16,764


62,047


39,021

NET INTEREST INCOME


28,438


25,353


82,045


79,219

Provision for Credit Losses


934


354


2,326


2,856

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES


27,504


24,999


79,719


76,363

NON-INTEREST INCOME









Income From Fiduciary Activities


2,429


2,378


7,337


7,081

Fees for Other Services to Customers


2,881


2,761


8,130


8,073

Insurance Commissions


1,955


1,695


5,299


4,775

Net Gain (Loss) on Securities


94


71


165


(214)

Net Gain on Sales of Loans


126


21


135


25

Other Operating Income


648


1,124


2,781


1,893

Total Non-Interest Income


8,133


8,050


23,847


21,633

NON-INTEREST EXPENSE









Salaries and Employee Benefits


13,446


11,988


39,375


35,974

Occupancy Expenses, Net


1,754


1,517


5,299


4,728

Technology and Equipment Expense


4,692


4,371


14,246


13,150

FDIC Assessments


698


515


2,111


1,478

Other Operating Expense


3,510


5,088


10,399


14,528

Total Non-Interest Expense


24,100


23,479


71,430


69,858

INCOME BEFORE PROVISION FOR INCOME TAXES


11,537


9,570


32,136


28,138

Provision for Income Taxes


2,562


1,827


6,897


5,786

NET INCOME


$              8,975


$              7,743


$       25,239


$       22,352

Average Shares Outstanding:









Basic


16,710


17,050


16,746


17,049

Diluted


16,742


17,050


16,772


17,049

Per Common Share:









Basic Earnings


$                0.54


$                0.46


$           1.51


$           1.31

Diluted Earnings


0.53


0.46


1.50


1.31

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts - Unaudited)



September 30,
2024


December 31, 2023


September 30,
2023

ASSETS






Cash and Due From Banks

$                53,969


$                36,755


$                39,778

Interest-Bearing Deposits at Banks

286,119


105,781


254,961

Investment Securities:






Available-for-Sale at Fair Value

437,067


497,769


519,240

Held-to-Maturity (Fair Value of $101,929 at September 30, 2024; $128,837 at December 31, 2023; and $134,811 at September 30, 2023)

103,337


131,395


140,577

Equity Securities

5,089


1,925


1,960

Other Investments

4,352


5,049


5,110

Loans

3,339,937


3,212,908


3,138,617

Allowance for Credit Losses

(31,262)


(31,265)


(31,112)

Net Loans

3,308,675


3,181,643


3,107,505

Premises and Equipment, Net

59,932


59,642


60,311

Goodwill

23,789


21,873


21,873

Other Intangible Assets, Net

2,190


1,110


1,205

Other Assets

126,930


126,926


120,391

Total Assets

$          4,411,449


$          4,169,868


$          4,272,911

LIABILITIES






Noninterest-Bearing Deposits

740,170


758,425


798,392

Interest-Bearing Checking Accounts

875,365


799,785


920,250

Savings Deposits

1,544,868


1,466,280


1,496,193

Time Deposits over $250,000

177,990


179,301


167,614

Other Time Deposits

499,064


483,775


284,036

Total Deposits

3,837,457


3,687,566


3,666,485

Borrowings

103,600


26,500


174,300

Junior Subordinated Obligations Issued to Unconsolidated

  Subsidiary Trusts

20,000


20,000


20,000

Finance Leases

5,022


5,066


5,080

Other Liabilities

52,059


50,964


47,032

Total Liabilities

4,018,138


3,790,096


3,912,897

STOCKHOLDERS' EQUITY






Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at September 30, 2024, December 31, 2023 and September 30, 2023

—


—


—

Common Stock, $1 Par Value; 30,000,000 Shares Authorized  (22,066,559 Shares Issued at September 30, 2024, December 31, 2023 and  September 30, 2023)

22,067


22,067


22,067

Additional Paid-in Capital

413,065


412,551


412,397

Retained Earnings

77,429


65,792


62,647

Accumulated Other Comprehensive Loss

(25,968)


(33,416)


(52,584)

Treasury Stock, at Cost (5,332,907 Shares at September 30, 2024; 5,124,073 Shares at December 31, 2023 and 5,017,063 Shares at September 30, 2023)

(93,282)


(87,222)


(84,513)

Total Stockholders' Equity

393,311


379,772


360,014

Total Liabilities and Stockholders' Equity

$          4,411,449


$          4,169,868


$          4,272,911

 

Arrow Financial Corporation

Selected Quarterly Information

(Dollars In Thousands, Except Per Share Amounts - Unaudited)


Quarter Ended

9/30/2024


6/30/2024


3/31/2024


12/31/2023


9/30/2023

Net Income

$         8,975


$        8,604


$         7,660


$         7,723


$        7,743











Net Changes in Fair Value of Equity Investments (Net of Tax)

69


39


13


90


52











Share and Per Share Data:










Period End Shares Outstanding

16,734


16,723


16,710


16,942


17,049

Basic Average Shares Outstanding

16,710


16,685


16,865


17,002


17,050

Diluted Average Shares Outstanding

16,742


16,709


16,867


17,004


17,050

Basic Earnings Per Share

$           0.54


$           0.52


$           0.45


$           0.46


$           0.46

Diluted Earnings Per Share

0.53


0.52


0.45


0.46


0.46

Cash Dividend Per Share

0.270


0.270


0.270


0.270


0.262











Selected Quarterly Average Balances:










  Interest-Bearing Deposits at Banks

$     154,937


$    159,336


$     178,452


$    136,026


$    131,814

  Investment Securities

590,352


644,192


671,105


713,144


745,693

  Loans

3,329,873


3,280,285


3,235,841


3,170,262


3,096,240

  Deposits

3,672,128


3,678,957


3,693,325


3,593,949


3,491,028

  Other Borrowed Funds

134,249


131,537


122,033


149,507


208,527

  Stockholders' Equity

387,904


378,256


379,446


363,753


362,701

  Total Assets

4,245,597


4,237,359


4,245,484


4,159,313


4,109,995

Return on Average Assets, annualized

0.84 %


0.82 %


0.73 %


0.74 %


0.75 %

Return on Average Equity, annualized

9.20 %


9.15 %


8.12 %


8.42 %


8.47 %

Return on Average Tangible Equity, annualized 1

9.79 %


9.74 %


8.64 %


8.99 %


9.05 %

Average Earning Assets

$ 4,075,162


$ 4,083,813


$ 4,085,398


$ 4,019,432


$ 3,973,747

Average Paying Liabilities

3,085,066


3,127,417


3,108,093


2,985,717


2,920,518

Interest Income

49,443


47,972


46,677


44,324


42,117

Tax-Equivalent Adjustment 2

149


163


176


184


183

Interest Income, Tax-Equivalent 2

49,592


48,135


46,853


44,508


42,117

Interest Expense

21,005


20,820


20,222


18,711


16,764

Net Interest Income

28,438


27,152


26,455


25,613


25,353

Net Interest Income, Tax-Equivalent 2

28,587


27,315


26,631


25,797


25,536

Net Interest Margin, annualized

2.78 %


2.67 %


2.60 %


2.53 %


2.53 %

Net Interest Margin, Tax-Equivalent, annualized 2

2.79 %


2.69 %


2.62 %


2.55 %


2.55 %











Efficiency Ratio Calculation: 3










Non-Interest Expense

$       24,100


$      23,318


$       24,012


$      23,190


$      23,479

Less: Intangible Asset Amortization

78


40


41


43


43

Net Non-Interest Expense

$       24,022


$      23,278


$       23,971


$      23,147


$      23,436

Net Interest Income, Tax-Equivalent

$       28,587


$      27,315


$       26,631


$      25,797


$      25,536

Non-Interest Income

8,133


7,856


7,858


7,484


8,050

Less: Net Gain on Securities

94


54


17


122


71

Net Gross Income

$       36,626


$      35,117


$       34,472


$      33,159


$      33,515

Efficiency Ratio

65.59 %


66.29 %


69.54 %


69.81 %


69.93 %











Period-End Capital Information:










Total Stockholders' Equity (i.e. Book Value)

$     393,311


$    383,018


$     377,986


$    379,772


$    360,014

Book Value per Share 

23.50


22.90


22.62


22.42


21.12

Goodwill and Other Intangible Assets, net

25,979


22,800


22,891


22,983


23,078

Tangible Book Value per Share 1

21.95


21.54


21.25


21.06


19.76











Capital Ratios:4










Tier 1 Leverage Ratio

9.78 %


9.74 %


9.63 %


9.84 %


9.94 %

Common Equity Tier 1 Capital Ratio 

12.77 %


12.88 %


12.84 %


13.00 %


13.17 %

Tier 1 Risk-Based Capital Ratio

13.41 %


13.53 %


13.50 %


13.66 %


13.84 %

Total Risk-Based Capital Ratio

14.46 %


14.57 %


14.57 %


14.74 %


14.94 %











Assets Under Trust Admin. & Investment Mgmt.

$ 1,944,239


$ 1,848,349


$ 1,829,266


$ 1,763,194


$ 1,627,522

 

Arrow Financial Corporation

Selected Quarterly Information - Continued

(Dollars In Thousands, Except Per Share Amounts - Unaudited)


Footnotes:




















1.

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.



9/30/2024


6/30/2024


3/31/2024


12/31/2023


9/30/2023


Total Stockholders' Equity (GAAP)

$   393,311


$   383,018


$   377,986


$   379,772


$   360,014


Less:  Goodwill and Other Intangible assets, net

25,979


22,800


22,891


22,983


23,078


Tangible Equity (Non-GAAP)

$   367,332


$   360,218


$   355,095


$   356,789


$   336,936













Period End Shares Outstanding

16,734


16,723


16,710


16,942


17,049


Tangible Book Value per Share (Non-GAAP)

$        21.95


$        21.54


$        21.25


$        21.06


$        19.76


Net Income

8,975


8,604


7,660


7,723


7,743


Return on Tangible Equity (Net Income/Tangible Equity - Annualized)

9.79 %


9.74 %


8.64 %


8.99 %


9.05 %












2.

Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of annualized tax-equivalent net interest income to average earning assets.  This is also a non-GAAP financial measure which Arrow believes provides investors with information that is useful in understanding its financial performance.



9/30/2024


6/30/2024


3/31/2024


12/31/2023


9/30/2023


Interest Income (GAAP)

$     49,443


$     47,972


$     46,677


$     44,324


$     42,117


Add:  Tax-Equivalent adjustment

     (Non-GAAP)

149


163


176


184


183


Interest Income - Tax Equivalent

     (Non-GAAP)

$     49,592


$     48,135


$     46,853


$     44,508


$     42,300


Net Interest Income (GAAP)

$     28,438


$     27,152


$     26,455


$     25,613


$     25,353


Add:  Tax-Equivalent adjustment

     (Non-GAAP)

149


163


176


184


183


Net Interest Income - Tax Equivalent

     (Non-GAAP)

$     28,587


$     27,315


$     26,631


$     25,797


$     25,536


Average Earning Assets

$  4,075,162


$  4,083,813


$  4,085,398


$  4,019,432


$  3,973,747


Net Interest Margin (Non-GAAP)*

2.79 %


2.69 %


2.62 %


2.55 %


2.55 %












3.

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).












4.

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 September 30, 2024 CET1 ratio listed in the tables (i.e., 12.77%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).



9/30/2024


6/30/2024


3/31/2024


12/31/2023


9/30/2023


Total Risk Weighted Assets

$  3,110,178


$  3,072,922


$  3,049,525


$  3,032,188


$  2,988,438


Common Equity Tier 1 Capital

397,122


395,691


391,706


394,166


393,541


Common Equity Tier 1 Ratio

12.77 %


12.88 %


12.84 %


13.00 %


13.17 %












* Quarterly ratios have been annualized.










 

Arrow Financial Corporation

Average Consolidated Balance Sheets and Net Interest Income Analysis

(Dollars in Thousands - Unaudited)


Quarter Ended:

September 30, 2024


September 30, 2023




Interest


Rate




Interest


Rate


Average


Income/


Earned/


Average


Income/


Earned/


Balance


Expense


Paid


Balance


Expense


Paid

Interest-Bearing Deposits at Banks

$   154,937


$       2,103


5.40 %


$  131,814


$       1,805


5.43 %

Investment Securities:












Fully Taxable

497,450


2,656


2.12


616,020


2,924


1.88

Exempt from Federal Taxes

92,902


562


2.41


129,673


689


2.11

Loans (1)

3,329,873


44,122


5.27


3,096,240


36,699


4.70

Total Earning Assets (1)

4,075,162


49,443


4.83


3,973,747


42,117


4.20

Allowance for Credit Losses

(31,147)






(31,386)





Cash and Due From Banks

33,159






32,874





Other Assets

168,423






134,760





Total Assets

$  4,245,597






$  4,109,995





Deposits:












Interest-Bearing Checking Accounts

$   785,134


1,966


1.00


$  795,627


1,156


0.58

Savings Deposits

1,492,888


10,905


2.91


1,505,916


9,729


2.56

Time Deposits of $250,000 or More

174,028


1,803


4.12


152,738


1,466


3.81

Other Time Deposits

498,767


4,934


3.94


257,710


2,051


3.16

Total Interest-Bearing Deposits

2,950,817


19,608


2.64


2,711,991


14,402


2.11

Borrowings

109,230


1,177


4.29


183,452


2,143


4.63

Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts

20,000


173


3.44


20,000


173


3.43

Finance Leases

5,019


47


3.73


5,075


46


3.60

Total Interest-Bearing Liabilities

3,085,066


21,005


2.71


2,920,518


16,764


2.28

Noninterest-Bearing Deposits

721,311






779,037





Other Liabilities

51,316






47,739





Total Liabilities

3,857,693






3,747,294





Stockholders' Equity

387,904






362,701





Total Liabilities and Stockholders' Equity

$  4,245,597






$  4,109,995





Net Interest Income



$     28,438






$     25,353



Net Interest Spread





2.12 %






1.92 %

Net Interest Margin





2.78 %






2.53 %


(1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation

Average Consolidated Balance Sheets and Net Interest Income Analysis

(Dollars in Thousands - Unaudited)


Quarter Ended:

September 30, 2024


June 30, 2024




Interest


Rate




Interest


Rate


Average


Income/


Earned/


Average


Income/


Earned/


Balance


Expense


Paid


Balance


Expense


Paid

Interest-Bearing Deposits at Banks

$   154,937


$       2,103


5.40 %


$  159,336


$       2,185


5.52 %

Investment Securities:












Fully Taxable

497,450


2,656


2.12


530,869


3,009


2.28

Exempt from Federal Taxes

92,902


562


2.41


113,323


637


2.26

Loans (1)

3,329,873


44,122


5.27


3,280,285


42,141


5.17

Total Earning Assets (1)

4,075,162


49,443


4.83


4,083,813


47,972


4.72

Allowance for Credit Losses

(31,147)






(31,459)





Cash and Due From Banks

33,159






28,611





Other Assets

168,423






156,394





Total Assets

$  4,245,597






$  4,237,359





Deposits:












Interest-Bearing Checking Accounts

$   785,134


1,966


1.00


$  832,087


1,903


0.92

Savings Deposits

1,492,888


10,905


2.91


1,487,062


10,571


2.86

Time Deposits of $250,000 or More

174,028


1,803


4.12


172,655


1,869


4.35

Other Time Deposits

498,767


4,934


3.94


504,076


5,074


4.05

Total Interest-Bearing Deposits

2,950,817


19,608


2.64


2,995,880


19,417


2.61

Borrowings

109,230


1,177


4.29


106,502


1,186


4.48

Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts

20,000


173


3.44


20,000


170


3.42

Finance Leases

5,019


47


3.73


5,035


47


3.75

Total Interest-Bearing Liabilities

3,085,066


21,005


2.71


3,127,417


20,820


2.68

Noninterest-Bearing Deposits

721,311






683,077





Other Liabilities

51,316






48,609





Total Liabilities

3,857,693






3,859,103





Stockholders' Equity

387,904






378,256





Total Liabilities and Stockholders' Equity

$  4,245,597






$  4,237,359





Net Interest Income



$     28,438






$     27,152



Net Interest Spread





2.12 %






2.04 %

Net Interest Margin





2.78 %






2.67 %


(1) Includes Nonaccrual Loans.

 

Average Consolidated Balance Sheets and Net Interest Income Analysis

(GAAP Basis)

(Dollars In Thousands)


Nine Months Ended September 30:

2024


2023




Interest


Rate




Interest


Rate


Average


Income/


Earned/


Average


Income/


Earned/


Balance


Expense


Paid


Balance


Expense


Paid

Interest-Bearing Deposits at Banks

$   164,208


$       6,735


5.48 %


$   101,104


$       3,958


5.23 %

Investment Securities:












Fully Taxable

526,181


8,851


2.25


635,126


8,823


1.86

Exempt from Federal Taxes

108,872


1,867


2.29


146,736


2,256


2.06

Loans (1)

3,282,175


126,639


5.15


3,041,909


103,203


4.54

Total Earning Assets (1)

4,081,436


144,092


4.72


3,924,875


118,240


4.03

Allowance for Credit Losses

(31,340)






(30,591)





Cash and Due From Banks

30,534






30,720





Other Assets

162,194






134,310





Total Assets

$  4,242,824






$  4,059,314





Deposits:












Interest-Bearing Checking Accounts

$   815,933


5,510


0.90


$   874,132


2,346


0.36

Savings Deposits

1,487,005


31,706


2.85


1,494,976


23,830


2.13

Time Deposits of $250,000 or More

174,668


5,645


4.32


127,230


3,159


3.32

Other Time Deposits

499,881


15,091


4.03


203,047


3,721


2.45

Total Interest-Bearing Deposits

2,977,487


57,952


2.60


2,699,385


33,056


1.64

 Borrowings

104,257


3,439


4.41


151,887


5,309


4.67

Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts

20,000


514


3.43


20,000


513


3.43

Finance Leases

5,034


142


3.77


5,088


143


3.76

Total Interest-Bearing Liabilities

3,106,778


62,047


2.67


2,876,360


39,021


1.81

Noninterest-Bearing Deposits

703,948






777,994





Other Liabilities

50,207






42,506





Total Liabilities

3,860,933






3,696,860





Stockholders' Equity

381,891






362,454





Total Liabilities and Stockholders' Equity

$  4,242,824






$  4,059,314





Net Interest Income



$     82,045






$     79,219



Net Interest Spread





2.05 %






2.22 %

Net Interest Margin





2.69 %






2.70 %


(1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation

Consolidated Financial Information

(Dollars in Thousands - Unaudited)


Quarter Ended:

9/30/2024


12/31/2023


9/30/2023

Loan Portfolio






Commercial Loans

$       169,884


$       156,224


$       148,066

Commercial Real Estate Loans

756,420


745,487


734,604

  Subtotal Commercial Loan Portfolio

926,304


901,711


882,670

Consumer Loans

1,120,241


1,111,667


1,107,638

Residential Real Estate Loans

1,293,392


1,199,530


1,148,309

Total Loans

$   3,339,937


$   3,212,908


$   3,138,617

Allowance for Credit Losses






Allowance for Credit Losses, Beginning of Quarter

$         31,009


$         31,112


$         31,170

Loans Charged-off

(1,429)


(1,366)


(1,204)

Less Recoveries of Loans Previously Charged-off

748


994


792

Net Loans Charged-off

(681)


(372)


(412)

Provision for Credit Losses

934


525


354

Allowance for Credit Losses, End of Quarter

$         31,262


$         31,265


$         31,112

Nonperforming Assets






Nonaccrual Loans

$         21,047


$         20,645


$           6,023

Loans Past Due 90 or More Days and Accruing

816


452


251

Loans Restructured and in Compliance with Modified Terms

30


54


60

Total Nonperforming Loans

21,893


21,151


6,334

Repossessed Assets

322


312


344

Other Real Estate Owned

76


—


182

Total Nonperforming Assets

$         22,291


$         21,463


$           6,860







Key Asset Quality Ratios






Net Loans Charged-off to Average Loans,

   Quarter-to-date Annualized

0.08 %


0.05 %


0.05 %

Provision for Credit Losses to Average Loans,

  Quarter-to-date Annualized

0.11 %


0.07 %


0.05 %

Allowance for Credit Losses to Period-End Loans

0.94 %


0.97 %


0.99 %

Allowance for Credit Losses to Period-End Nonperforming Loans

142.79 %


147.82 %


491.19 %

Nonperforming Loans to Period-End Loans

0.66 %


0.66 %


0.20 %

Nonperforming Assets to Period-End Assets

0.51 %


0.51 %


0.16 %







Year-to-Date Period Ended:

9/30/2024


12/31/2023


9/30/2023

Allowance for Credit Losses






Allowance for Credit Losses, Beginning of Year

$         31,265


$         29,952


$         29,952

Loans Charged-off

(4,562)


(5,177)


(3,812)

Less Recoveries of Loans Previously Charged-off

2,233


3,109


2,116

Net Loans Charged-off

(2,329)


(2,068)


(1,696)

Provision for Credit Losses

2,326


3,381


2,856

Allowance for Credit Losses, End of Period

$         31,262


$         31,265


$         31,112







Key Asset Quality Ratios






Net Loans Charged-off to Average Loans, Annualized

0.09 %


0.07 %


0.07 %

Provision for Loan Losses to Average Loans, Annualized

0.09 %


0.11 %


0.13 %

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/arrow-reports-3rd-quarter-net-income-of-9-0-million-or-0-53-per-share-302292561.html

SOURCE Arrow Financial Corporation

FAQ

What was Arrow Financial's (AROW) earnings per share in Q3 2024?

Arrow Financial reported earnings per share of $0.53 in Q3 2024, an increase from $0.46 in Q3 2023.

What was Arrow Financial's (AROW) net interest margin in Q3 2024?

Arrow Financial's net interest margin was 2.78% (2.79% FTE) in Q3 2024, up from 2.67% in the previous quarter.

When will Arrow Financial (AROW) complete its banking subsidiaries unification?

Arrow Financial plans to complete the unification of its banking subsidiaries into Arrow Bank National Association by December 31, 2024.

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Arrow Financial Corp

NASDAQ:AROW

AROW Rankings

#3048 Ranked by Market Cap
#894 Ranked by Dividends

AROW Latest News

Oct 10, 2024
Arrow Named to Piper Sandler Sm-All Stars: Class of 2024
Oct 3, 2024
Arrow Declares October 2024 Cash Dividend
Aug 6, 2024
Arrow Completes Acquisition of Whitehall, N.Y. Branch
Jul 25, 2024
Arrow Reports 2nd Quarter Net Income of $8.6 Million, or $0.52 per Share, Declares Dividend of $0.27 per Share
Jul 23, 2024
Arrow to Unify Bank Subsidiaries into One Entity Renamed Arrow Bank

AROW Stock Data

551.21M
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2.81%
50.65%
0.84%
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