Arrow Reports $48.8 million in Net Income, Record Loan Growth of $315 million in 2022

Rhea-AI Summary

Arrow Financial Corporation (NasdaqGS – AROW) reported a net income of $48.8 million for fiscal year 2022, down 2.1% from 2021. Diluted earnings per share decreased 2.0% to $2.95. In Q4 2022, net income rose 17.2% to $12.1 million, with diluted EPS increasing 17.7% to $0.73. Total revenue for 2022 was $149.2 million, while total assets were $3.97 billion. Key metrics included a 1.21% return on assets and 13.55% return on equity. The company also achieved significant loan growth of 11.8%, but faced challenges with a $4.5 million rise in the provision for credit losses and a 4.5% increase in noninterest expenses.

Positive

• Net income for Q4 2022 rose 17.2% to $12.1 million.
• Diluted EPS for Q4 2022 increased 17.7% to $0.73.
• Significant loan growth of 11.8% in 2022, totaling $3.0 billion.
• Total revenue for 2022 reached $149.2 million.
• Strong regulatory capital ratios, with Common Equity Tier 1 at 13.32%.

Negative

• Fiscal year 2022 net income decreased $1.1 million, or 2.1%, from 2021.
• Diluted earnings per share fell 2.0% to $2.95.
• Provision for credit losses increased by $4.5 million compared to 2021.
• Book value per share declined 4.9% to $21.36 due to unrealized losses.
• Total assets decreased 1.5%, or $58.4 million, compared to the prior year.

GLENS FALLS, N.Y., Jan. 30, 2023 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS^® – AROW) reported net income for fiscal year 2022 of $48.8 million, a decrease of $1.1 million, or 2.1%, compared to fiscal year 2021. Diluted earnings per share was $2.95 for the year ended December 31, 2022, as compared to $3.01 for the year ended December 31, 2021, a decrease of 2.0%.  For the fourth quarter of 2022, net income was $12.1 million, an increase of $1.8 million, or 17.2%, from the fourth quarter of 2021. Diluted EPS was $0.73 for the fourth quarter of 2022, an increase of 17.7% from $0.62 from the comparable 2021 quarter.

2022 Annual Highlights

Earnings:

• Diluted earnings per Share (EPS) was $2.95.
• Net income was $48.8 million.
• Revenue for 2022 was $149.2 million.
• Return on average assets (ROA) was 1.21%.
• Return on average equity (ROE) was 13.55%.
• Net interest margin was 3.03%.

Balance Sheet:

• Total assets were $3.97 billion as of December 31, 2022.
• Total cash and cash equivalents were $64.7 million as of December 31, 2022.
• Total loans were $2.98 billion as of December 31, 2022.
• Total deposits were $3.50 billion as of December 31, 2022.
• Total borrowings were $74.8 million as of December 31, 2022.
• Loans to deposits and borrowings as of December 31, 2022 was 83.49%.

Additional Items:

• Book value per share was $21.36, down 4.9% from the prior-year level, primarily as a result of unrealized losses within the available-for-sale investment portfolio due to higher interest rates.
• Nonperforming assets of $12.6 million at December 31, 2022, represented 0.32% of period-end assets, an increase from 0.29% at December 31, 2021.

Net income for 2022 was $48.8 million, down from $49.9 million for 2021. The decrease from the prior year was primarily the result of an increase in net interest income of $8.0 million, offset by a $4.5 million increase in the provision for credit loss, a decrease in Paycheck Protection Program (PPP) revenue earned of $6.2 million and a $2.3 million decrease in the gain on the sale of loans.

"Arrow Financial Corporation delivered another year of strong performance in 2022, with record loan growth, excellent earnings and sustained profitability. During 2022, we made key investments in our technology and our Team, with the upgrade of our core banking system and the payment of a special employee bonus for outstanding performance, respectively," said Arrow President and CEO Thomas J. Murphy. "With the economic headwinds anticipated for 2023, we will continue to focus on what we do best: organic growth, expense management, and deepening and growing relationships. Thank you to the Arrow Team for their continued commitment to our customers and the communities we serve."

The 2022 system upgrade reflects our strategic focus on a strong technology foundation and this investment paves the way for customer-facing enhancements and more efficient and improved internal operations as we continue to work toward fully leveraging the capabilities of our new bank core system.

Additionally in 2022, Arrow further optimized its branch network with the December consolidation of Glens Falls National Bank's Aviation Road Office into nearby Queensbury locations. Meanwhile, construction on our downtown Glens Falls headquarters advanced; once completed later this year, the energy-efficient space will improve both the employee and customer experience.

Please see below for further quarter- and year-end detail.

Income Statement

• Net Interest Income: Net interest income for the year ended December 31, 2022 was $118.3 million, an increase of $8.0 million, or 7.2%, from the prior year. Interest and fees on loans were $113.0 million, an increase of 7.6% from the $105.0 million for the year ended December 31, 2021. Interest and fees related to PPP loans, included in the $113.0 million, were $1.6 million. In 2021, $7.8 million of income was earned on PPP loans. Interest expense for the year ended December 31, 2022 was $11.3 million. This is an increase of $6.1 million, or 117.7%, from the $5.2 million in expense for the prior-year period.
• Net Interest Margin: Net interest margin was 3.03% for the year ended December 31, 2022, as compared to 2.97% for the year ended December 31, 2021. In the fourth quarter of 2022, the net interest margin was 3.08%, as compared to 2.77% for the fourth quarter of 2021. The increase in net interest margin was due to a variety of factors, including higher market rates impacting asset yields and a reduction in cash balances. Net interest margin in 2022, excluding PPP income, increased to 3.00% from 2.84% in the prior year. The cost of interest-bearing liabilities increased primarily due to the repricing of time deposits and municipal deposits.

	Twelve Months Ended
	December 31, 2022		December 31, 2021
Interest and Dividend Income	$          129,651		$          115,550
Interest Expense	11,308		5,195
Net Interest Income	118,343		110,355
Average Earning Assets(1)	3,902,077		3,716,856
Average Interest-Bearing Liabilities	2,834,266		2,727,441
Yield on Earning Assets(1)	3.32 %		3.11 %
Cost of Interest-Bearing Liabilities	0.40		0.19
Net Interest Spread	2.92		2.92
Net Interest Margin	3.03		2.97
Income Earned on PPP Loans included in Net Interest Income	$              1,589		$              7,811
Net Interest Income excluding PPP loans	116,754		102,544
Net Interest Margin excluding PPP loans	3.00 %		2.84 %
(1) Includes Nonaccrual Loans.

 

• Provision for Credit Losses: For 2022, the provision for credit losses related to the loan portfolio was $4.8 million, compared to $272 thousand in 2021. The key drivers affecting the provision were strong loan growth, increase in net charge-offs and a deterioration in forecasted economic conditions.
• Noninterest Income: Noninterest income was $30.9 million for the year ended December 31, 2022, a decrease of 4.5%, as compared to $32.4 million for the year ended December 31, 2021. Income from fiduciary activities in 2022 was $9.7 million, a decrease of $431 thousand from 2021, driven by market conditions. Fees and other services to customers increased $164 thousand to $11.6 million in 2022. Gain on sales of loans decreased $2.3 million from 2021 to $83 thousand in 2022. Other operating income increased $814 thousand from 2021 due to gains related to other investments and bank-owned life insurance proceeds.
• Noninterest Expense: Noninterest expense for the year ended December 31, 2022 increased by $3.5 million, or 4.5%, to $81.5 million, as compared to $78.0 million in 2021. The largest component of noninterest expense is salaries and benefits paid to our employees, which totaled $47.0 million in 2022. Salaries and benefits increased $2.2 million, or 4.9%, from the prior year. Technology and and equipment expense were $16.1 million, an increase of $1.2 million or 8.4%, from the prior year reflects our continued commitment to innovation. Noninterest expense for the fourth quarter of 2022 decreased $68 thousand, or 0.3%, as compared to the fourth quarter of 2021.
• Provision for Income Taxes: The provision for income taxes for 2022 was $14.1 million, compared to $14.5 million for 2021. The effective income tax rates for 2022 and 2021 were 22.4% and 22.6%, respectively.

Balance Sheet

• Total Assets: Total assets were $3.97 billion at December 31, 2022, a decrease of $58.4 million, or 1.5%, compared to December 31, 2021.
• Cash and Cash Equivalents: Total cash and cash equivalents were $64.7 million at December 31, 2022, a decrease of $393.0 million, or 85.9%, compared to December 31, 2021.
• Investments: Total investments were $757.1 million at December 31, 2022, a decrease of $5.9 million, or 0.8%, compared to December 31, 2021. In 2022, the rising interest rate environment resulted in an increase of unrealized losses versus the prior year.
• Loans: At December 31, 2022, total loan balances reached $3.0 billion, up $315 million, or 11.8%, from the prior-year level. Loan growth for the fourth quarter was $58.4 million. The consumer loan portfolio grew by $144.6 million, or 15.7%, over the balance at December 31, 2021, primarily as a result of continued strength in the indirect automobile lending program. The residential real estate loan portfolio increased $124.8 million, or 13.2%, from the prior year. Commercial loans, including commercial real estate, increased $45.9 million, or 5.7%, over the balances at December 31, 2021.
• Allowance for Credit Losses: The allowance for credit losses was $30.0 million at December 31, 2022, an increase of $2.7 million from December 31, 2021. The allowance for credit losses represents 1.00% of loans outstanding, a decrease from 1.02% at year-end 2021. When expressed as a percentage of nonperforming loans, the allowance for credit loss coverage ratio was 250.0% at year-end 2022 as compared to 233.9% at year-end 2021. Asset quality remained solid at December 31, 2022. Net loan losses, expressed as an annualized percentage of average loans outstanding, were 0.08% for the year ended December 31, 2022, as compared to 0.03% for the prior year. Nonperforming assets of $12.6 million at December 31, 2022, represented 0.32% of period-end assets, compared to $11.8 million or 0.29% at December 31, 2021.
• Deposits: At December 31, 2022, total deposit balances were $3.5 billion, a decrease of $52.1 million, or 1.5%, from the prior-year level. Non-municipal deposits decreased by $26.6 million and municipal deposits decreased by $25.5 million as compared to December 31, 2021. Noninterest-bearing deposits grew by $26.6 million, or 3.3%, during 2022, and represented 23.9% of total deposits at year-end, as compared to the prior-year level of 22.8%. At December 31, 2022, total time deposits decreased $5.1 million from the prior-year level. Deposits decreased in the fourth quarter by $296.7 million. Non-municipal and municipal deposits decreased by $149.0 million and $147.7 million, respectively in the fourth quarter. The decline is deposits was primarily the result of both increased consumer spending and pressure from competitive rate pricing.
• Borrowings: Total borrowings were $74.8 million at December 31, 2022, an increase of $9.8 million, or 15.1%, compared to December 31, 2021.
• Capital: Total shareholders' equity was $353.5 million at period-end, a decrease of $17.6 million, or 4.8%, from the year-end 2021 balance. Arrow's regulatory capital ratios remained strong in 2022. At December 31, 2022, Arrow's Common Equity Tier 1 Capital Ratio was 13.32% and Total Risk-Based Capital Ratio was 15.11%. The capital ratios of Arrow and both its subsidiary banks continued to significantly exceed the "well capitalized" regulatory standards.

Additional Commentary

• Cash and Stock Dividends: On December 15, 2022, Arrow distributed a cash dividend of $0.27 per share. Additionally, a 3% stock dividend was distributed on September 23, 2022.
• Industry Recognition: In the fourth quarter, both of Arrow's banking subsidiaries, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, maintained their BauerFinancial, Inc. 5-Star "Exceptional Performance" Bank ratings for the 15th and 13th 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. The Company is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. 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 the Company from time to time are useful in evaluating the Company'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. The Company 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2021, and other filings with the Securities and Exchange Commission.

 

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,
	2022		2021		2022		2021
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans	$     30,719		$     25,631		$   112,982		$   104,985
Interest on Deposits at Banks	1,274		214		3,100		565
Interest and Dividends on Investment Securities:
Fully Taxable	3,121		1,678		10,357		6,487
Exempt from Federal Taxes	790		831		3,212		3,513
Total Interest and Dividend Income	35,904		28,354		129,651		115,550
INTEREST EXPENSE
Interest-Bearing Checking Accounts	344		165		973		731
Savings Deposits	4,101		412		7,879		1,904
Time Deposits over $250,000	226		33		369		261
Other Time Deposits	234		123		604		632
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase	—		—		—		3
Federal Home Loan Bank Advances	200		197		605		783
Junior Subordinated Obligations Issued to   Unconsolidated Subsidiary Trusts	172		173		685		686
Interest on Financing Leases	48		49		193		195
Total Interest Expense	5,325		1,152		11,308		5,195
NET INTEREST INCOME	30,579		27,202		118,343		110,355
Provision for Credit Losses	1,409		558		4,798		272
NET INTEREST INCOME AFTER PROVISION FOR    CREDIT LOSSES	29,170		26,644		113,545		110,083
NONINTEREST INCOME
Income From Fiduciary Activities	2,257		2,604		9,711		10,142
Fees for Other Services to Customers	2,710		2,968		11,626		11,462
Insurance Commissions	1,680		1,645		6,463		6,487
Net Gain (Loss) on Securities	48		(139)		427		111
Net Gain on Sales of Loans	3		142		83		2,393
Other Operating Income	467		369		2,588		1,774
Total Noninterest Income	7,165		7,589		30,898		32,369
NONINTEREST EXPENSE
Salaries and Employee Benefits	11,603		11,438		47,003		44,798
Occupancy Expenses, Net	1,481		1,334		6,202		5,814
Technology and Equipment Expense	4,316		3,868		16,118		14,870
FDIC Assessments	283		278		1,176		1,042
Other Operating Expense	3,109		3,942		11,031		11,524
Total Noninterest Expense	20,792		20,860		81,530		78,048
INCOME BEFORE PROVISION FOR INCOME TAXES	15,543		13,373		62,913		64,404
Provision for Income Taxes	3,456		3,064		14,114		14,547
NET INCOME	$     12,087		$     10,309		$     48,799		$     49,857
Average Shares Outstanding1:
Basic	16,535		16,509		16,513		16,499
Diluted	16,589		16,574		16,562		16,555
Per Common Share:
Basic Earnings	$         0.73		$         0.62		$         2.95		$         3.02
Diluted Earnings	0.73		0.62		2.95		3.01
1 Share and per share data have been restated for the September 23, 2022, 3% stock dividend.

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts - Unaudited)
	December 31, 2022		December 31, 2021
ASSETS
Cash and Due From Banks	$              31,886		$              26,978
Interest-Bearing Deposits at Banks	32,774		430,718
Investment Securities:
Available-for-Sale	573,495		559,316
Held-to-Maturity (Approximate Fair Value of $171,623 at   December 31, 2022, and $201,292 at December 31, 2021)	175,364		196,566
Equity Securities	2,174		1,747
Other Investments	6,064		5,380
Loans	2,983,207		2,667,941
Allowance for Credit Losses	(29,952)		(27,281)
Net Loans	2,953,255		2,640,660
Premises and Equipment, Net	56,491		46,217
Goodwill	21,873		21,873
Other Intangible Assets, Net	1,500		1,918
Other Assets	114,633		96,579
Total Assets	$        3,969,509		$        4,027,952
LIABILITIES
Noninterest-Bearing Deposits	$           836,871		$           810,274
Interest-Bearing Checking Accounts	997,694		994,391
Savings Deposits	1,454,364		1,531,287
Time Deposits over $250,000	76,224		82,811
Other Time Deposits	133,211		131,734
Total Deposits	3,498,364		3,550,497
Federal Home Loan Bank Overnight Advances	27,000		—
Federal Home Loan Bank Term Advances	27,800		45,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		20,000
Finance Leases	5,119		5,169
Other Liabilities	37,688		36,100
Total Liabilities	3,615,971		3,656,766
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value, 1,000,000 Shares Authorized	—		—
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (21,423,992 Shares Issued at December 31, 2022, and 20,800,144 Shares Issued at December 31, 2021)	21,424		20,800
Additional Paid-in Capital	400,270		377,996
Retained Earnings	65,401		54,078
Accumulated Other Comprehensive (Loss) Income	(49,655)		347
Treasury Stock, at Cost (4,872,355 Shares at December 31, 2022, and 4,759,414 Shares at December 31, 2021)	(83,902)		(82,035)
Total Stockholders' Equity	353,538		371,186
Total Liabilities and Stockholders' Equity	$        3,969,509		$        4,027,952

 

Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended	12/31/2022		9/30/2022		6/30/2022		3/31/2022		12/31/2021
Net Income	$   12,087		$   12,163		$   11,974		$   12,575		$   10,309
Transactions in Net Income (Net of Tax):
Net Changes in Fair Value of Equity Investments	35		70		114		96		(104)
Share and Per Share Data:1
Period End Shares Outstanding	16,552		16,523		16,503		16,493		16,522
Basic Average Shares Outstanding	16,535		16,512		16,494		16,511		16,509
Diluted Average Shares Outstanding	16,589		16,558		16,535		16,566		16,574
Basic Earnings Per Share	$        0.73		$        0.74		$        0.72		$        0.76		$        0.62
Diluted Earnings Per Share	0.73		0.74		0.72		0.76		0.62
Cash Dividend Per Share	0.270		0.262		0.262		0.262		0.252
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks	$  143,499		$  209,001		$  232,545		$  410,644		$  551,890
Investment Securities	845,859		821,052		822,112		797,347		681,732
Loans	2,951,547		2,872,066		2,804,180		2,678,796		2,660,665
Deposits	3,614,945		3,598,519		3,569,754		3,582,256		3,590,766
Other Borrowed Funds	63,304		50,125		50,140		68,596		70,162
Shareholders' Equity	351,402		361,675		357,228		370,264		364,409
Total Assets	4,074,028		4,047,738		4,012,999		4,054,943		4,060,540
Return on Average Assets, annualized	1.18 %		1.19 %		1.20 %		1.26 %		1.01 %
Return on Average Equity, annualized	13.65 %		13.34 %		13.44 %		13.77 %		11.22 %
Return on Average Tangible Equity, annualized 2	14.62 %		14.27 %		14.40 %		14.72 %		12.01 %
Average Earning Assets	3,940,905		3,902,119		3,858,837		3,886,787		3,894,287
Average Paying Liabilities	2,891,092		2,781,985		2,808,287		2,855,884		2,841,304
Interest Income	35,904		34,207		30,593		28,947		28,354
Tax-Equivalent Adjustment 3	279		268		269		270		285
Interest Income, Tax-Equivalent 3	36,183		34,475		30,862		29,217		28,639
Interest Expense	5,325		3,306		1,555		1,122		1,152
Net Interest Income	30,579		30,901		29,038		27,825		27,202
Net Interest Income, Tax-Equivalent 3	30,858		31,169		29,307		28,095		27,487
Net Interest Margin, annualized	3.08 %		3.14 %		3.02 %		2.90 %		2.77 %
Net Interest Margin, Tax-Equivalent, annualized 3	3.11 %		3.17 %		3.05 %		2.93 %		2.80 %
Efficiency Ratio Calculation: 4
Noninterest Expense	$   20,792		$   21,448		$   20,345		$   18,945		$   20,860
Less: Intangible Asset Amortization	47		48		48		49		52
Net Noninterest Expense	$   20,745		$   21,400		$   20,297		$   18,896		$   20,808
Net Interest Income, Tax-Equivalent	$   30,858		$   31,169		$   29,307		$   28,095		$   27,487
Noninterest Income	7,165		7,827		7,744		8,162		7,589
Less: Net Gain (Loss) on Securities	48		95		154		130		(139)
Net Gross Income	$   37,975		$   38,901		$   36,897		$   36,127		$   35,215
Efficiency Ratio	54.63 %		55.01 %		55.01 %		52.30 %		59.09 %
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)	$ 353,538		$ 345,550		$  56,498		$ 357,243		$  71,186
Book Value per Share 1	21.36		20.91		21.60		21.66		22.47
Goodwill and Other Intangible Assets, net	23,373		23,477		23,583		23,691		23,791
Tangible Book Value per Share 1,2	19.95		19.49		20.17		20.22		21.03
Capital Ratios:5
Tier 1 Leverage Ratio	9.80 %		9.71 %		9.60 %		9.37 %		9.20 %
Common Equity Tier 1 Capital Ratio	13.32 %		13.14 %		13.14 %		13.48 %		13.77 %
Tier 1 Risk-Based Capital Ratio	14.01 %		13.85 %		13.86 %		14.23 %		14.55 %
Total Risk-Based Capital Ratio	15.11 %		14.93 %		14.93 %		15.33 %		15.69 %
Assets Under Trust Admin. & Investment Mgmt.	$  1,606,132		$  1,515,994		$  1,589,178		$  1,793,747		$  1,851,101

 

 

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 23, 2022, 3% stock dividend.
2.	Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return  on Tangible Equity exclude goodwill and other intangible assets, net from total equity.  These are non-GAAP  financial measures which we believe provide investors with information that is useful in understanding our financial performance.
		12/31/2022		9/30/2022		6/30/2022		3/31/2022		12/31/2021
	Total Stockholders' Equity (GAAP)	$   353,538		$   345,550		$   356,498		$   357,243		$   371,186
	Less:  Goodwill and Other Intangible assets, net	23,373		23,477		23,583		23,691		23,791
	Tangible Equity (Non-GAAP)	$   330,165		$   322,073		$   332,915		$   333,552		$   347,395
	Period End Shares Outstanding	16,552		16,523		16,503		16,493		16,522
	Tangible Book Value per Share (Non-GAAP)	$       19.95		$       19.49		$       20.17		$       20.22		$       21.03
	Net Income	12,087		12,163		11,974		12,575		10,309
	Return on Tangible Equity (Net Income/Tangible Equity - Annualized)	14.62 %		14.27 %		14.40 %		14.72 %		12.01 %
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.
		12/31/2022		9/30/2022		6/30/2022		3/31/2022		12/31/2021
	Interest Income (GAAP)	$     35,904		$     34,207		$     30,593		$     28,947		$     28,354
	Add: Tax Equivalent Adjustment (Non-GAAP)	279		268		269		270		285
	Interest Income - Tax Equivalent (Non-GAAP)	$     36,183		$     34,475		$     30,862		$     29,217		$     28,639
	Net Interest Income (GAAP)	$     30,579		$     30,901		$     29,038		$     27,825		$     27,202
	Add:  Tax-Equivalent adjustment (Non-GAAP)	279		268		269		270		285
	Net Interest Income - Tax Equivalent (Non-GAAP)	$     30,858		$     31,169		$     29,307		$     28,095		$     27,487
	Average Earning Assets	3,940,905		3,902,119		3,858,837		3,886,787		3,894,287
	Net Interest Margin (Non-GAAP)*	3.11 %		3.17 %		3.05 %		2.93 %		2.80 %
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, 2022 CET1 ratio listed in the tables (i.e., 13.32%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
		12/31/2022		9/30/2022		6/30/2022		3/31/2022		12/31/2021
	Total Risk Weighted Assets	2,883,902		2,856,224		2,790,520		2,661,952		2,552,812
	Common Equity Tier 1 Capital	384,003		375,394		366,798		358,738		351,497
	Common Equity Tier 1 Ratio	13.32 %		13.14 %		13.14 %		13.48 %		13.77 %
* 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:	2022						2021
			Interest		Rate				Interest		Rate
	Average		Income/		Earned/		Average		Income/		Earned/
	Balance		Expense		Paid		Balance		Expense		Paid
Interest-Bearing Deposits at Banks	$   252,835		$       3,100		1.23 %		$   418,488		565		0.14 %
Investment Securities:
Fully Taxable	648,540		10,357		1.60 %		470,133		6,487		1.38 %
Exempt from Federal Taxes	173,184		3,212		1.85 %		185,072		3,513		1.90 %
Loans	2,827,518		112,982		4.00 %		2,643,163		104,985		3.97 %
Total Earning Assets	3,902,077		129,651		3.32 %		3,716,856		115,550		3.11 %
Allowance for Credit Losses	(27,954)						(27,187)
Cash and Due From Banks	30,462						36,464
Other Assets	142,895						156,509
Total Assets	$  4,047,480						$  3,882,642
Deposits:
Interest-Bearing Checking Accounts	$  1,038,751		973		0.09 %		$   926,875		731		0.08 %
Savings Deposits	1,549,278		7,879		0.51 %		1,496,906		1,904		0.13 %
Time Deposits of $250,000 or More	55,690		369		0.66 %		87,033		261		0.30 %
Other Time Deposits	132,541		604		0.46 %		141,677		632		0.45 %
Total Interest-Bearing Deposits	2,776,260		9,825		0.35 %		2,652,491		3,528		0.13 %
Short-Term Borrowings	2,124		92		4.33 %		4,768		3		0.06 %
FHLBNY Term Advances and Other Long-Term Debt	50,750		1,198		2.36 %		65,000		1,469		2.26 %
Finance Leases	5,132		193		3.76 %		5,182		195		3.76 %
Total Interest-Bearing Liabilities	2,834,266		11,308		0.40 %		2,727,441		5,195		0.19 %
Demand Deposits	815,218						767,671
Other Liabilities	37,901						33,773
Total Liabilities	3,687,385						3,528,885
Stockholders' Equity	360,095						353,757
Total Liabilities and Stockholders' Equity	$  4,047,480						$  3,882,642
Net Interest Income			$   118,343						$   110,355
Net Interest Spread					2.92 %						2.92 %
Net Interest Margin					3.03 %						2.97 %

 

Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited)
Quarter Ended:	12/31/2022		12/31/2021
Loan Portfolio
Commercial Loans	$      140,293		$      172,518
Commercial Real Estate Loans	707,022		628,929
Subtotal Commercial Loan Portfolio	847,315		801,447
Consumer Loans	1,065,135		920,556
Residential Real Estate Loans	1,070,757		945,938
Total Loans	$   2,983,207		$   2,667,941
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter	$        29,232		$        26,956
Loans Charged-off	(1,261)		(719)
Recoveries of Loans Previously Charged-off	572		486
Net Loans Charged-off	(689)		(233)
Provision for Credit Losses	1,409		558
Allowance for Credit Losses, End of Quarter	$        29,952		$        27,281
Nonperforming Assets
Nonaccrual Loans	$        10,757		$        10,764
Loans Past Due 90 or More Days and Accruing	1,157		823
Loans Restructured and in Compliance with Modified Terms	69		77
Total Nonperforming Loans	11,983		11,664
Repossessed Assets	593		126
Other Real Estate Owned	—		—
Total Nonperforming Assets	$        12,576		$        11,790
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Quarter-to-date  Annualized	0.09 %		0.03 %
Provision for Credit Losses to Average Loans, Quarter-to-date  Annualized	0.19 %		0.08 %
Allowance for Credit Losses to Period-End Loans	1.00 %		1.02 %
Allowance for Credit Losses to Period-End Nonperforming Loans	249.95 %		233.89 %
Nonperforming Loans to Period-End Loans	0.40 %		0.44 %
Nonperforming Assets to Period-End Assets	0.32 %		0.29 %
Twelve-Month Period Ended:
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Year	$        27,281		$        29,232
Impact of the Adoption of ASU 2016-13	—		(1,300)
Loans Charged-off	(4,143)		(2,239)
Recoveries of Loans Previously Charged-off	2,016		1,316
Net Loans Charged-off	(2,127)		(923)
Provision for Credit Losses	4,798		272
Allowance for Credit Losses, End of Year	$        29,952		$        27,281
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans	0.08 %		0.03 %
Provision for Credit Losses to Average Loans	0.17 %		0.01 %

 

View original content:https://www.prnewswire.com/news-releases/arrow-reports-48-8-million-in-net-income-record-loan-growth-of-315-million-in-2022--301733332.html

SOURCE Arrow Financial Corporation

FAQ

What were Arrow Financial Corporation's earnings for 2022?

Arrow reported a net income of $48.8 million for fiscal year 2022.

How did Arrow's diluted earnings per share change in 2022?

Diluted earnings per share decreased by 2.0% to $2.95.

What was the loan growth percentage for Arrow Financial in 2022?

The company achieved a loan growth of 11.8%, reaching a total of $3.0 billion.

What are Arrow Financial's total assets as of December 31, 2022?

Total assets were reported at $3.97 billion.

How much did Arrow Financial's net income increase in Q4 2022?

Net income for Q4 2022 increased by 17.2%, totaling $12.1 million.