Categories: Press-Releases

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

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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



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