Arrow Financial (AROW) - 2024 Q2 - Quarterly Report

Financial Performance - Arrow Financial Corporation reported a significant increase in net interest income, reaching $15 million for the quarter, a 10% increase compared to the previous year[161]. - Net income for the quarter ended June 30, 2024, was $8,604 million, an increase from $7,660 million in the previous quarter[162]. - Basic and diluted earnings per share both increased to $0.52 from $0.45 in the previous quarter[162]. - Net income for Q2 2024 was $8.6 million, up from $7.7 million in Q1 2024 and $6.0 million in Q2 2023, reflecting a 11.7% increase from the previous quarter and a 43.3% increase year-over-year[176]. - Net interest income for Q2 2024 was $27.2 million, a 2.6% increase from $26.5 million in Q1 2024 and a 5.4% increase from $25.8 million in Q2 2023[176]. - Net income for the first six months of 2024 was $16.3 million, an increase of $1.7 million or 11.3% from the same period in 2023[245]. - Diluted earnings per share for the first six months of 2024 rose to $0.97, up from $0.85 in the first six months of 2023[245]. Asset and Equity Growth - Arrow's total assets grew to $3.5 billion, representing a 7% increase from the previous quarter[161]. - Total assets as of June 30, 2024, were $4,237,359 million, slightly down from $4,245,484 million at the end of the previous quarter[162]. - Total stockholders' equity increased to $383,018 million from $377,986 million in the previous quarter[165]. - Stockholders' equity increased to $383.0 million at June 30, 2024, reflecting a 0.9% increase from $379.8 million at December 31, 2023[178]. - Book value per share was $22.90, an 8.0% increase over the prior-year level, with a tangible book value per share of $21.54, up 8.6% year-over-year[178]. Loan and Deposit Activity - The company experienced a 12% increase in loan originations, totaling $200 million for the quarter[161]. - Total loans reached $3.3 billion as of June 30, 2024, with loan growth of $57.6 million in Q2 2024 and $245.3 million since June 30, 2023[176]. - Total deposits were $3.7 billion at June 30, 2024, a decrease of $95.4 million from March 31, 2024, but an increase of $181.4 million from June 30, 2023[176]. - Total loans increased to $3,280,285 thousand as of June 30, 2024, up from $3,235,841 thousand in the previous quarter, representing a growth of 1.4%[200]. - Total deposits decreased slightly to $3,678,957 thousand in Q2 2024 from $3,693,325 thousand in Q1 2024, a decline of 0.4%[208]. Credit Quality and Risk Management - Arrow's allowance for credit losses was maintained at 1.2% of total loans, indicating a stable risk management approach[161]. - The allowance for credit losses was $31.0 million, representing 0.94% of loans outstanding, down from 0.97% at March 31, 2024, and 1.02% at June 30, 2023[176]. - Nonperforming loans reached $21.1 million, representing 0.64% of period-end loans, an increase from 0.21% in June 2023[179]. - The ratio of allowance for credit losses to total loans was 0.94% at June 30, 2024, down from 0.97% at March 31, 2024[218]. Operational Efficiency - The efficiency ratio improved to 60%, indicating better expense control compared to 65% in the same quarter last year[157]. - Non-interest expense decreased by $0.8 million, or 3.2%, to $23.3 million in Q2 2024 compared to Q2 2023[242]. - The efficiency ratio improved slightly to 67.90% from 67.94% in the prior year[250]. Investment and Securities - Total investments were $556.4 million as of June 30, 2024, a decrease of $63.6 million (10.3%) from March 31, 2024, and a decrease of $137.6 million (19.8%) from June 30, 2023[176]. - The total held-to-maturity securities decreased to $96,454,000 from $128,837,000, reflecting a decline of $32,383,000 or approximately 25.2%[194]. - The company held no investment securities related to foreign governments or agencies as of June 30, 2024[195]. Future Outlook - The management anticipates a continued growth trajectory, projecting a 5% increase in net income for the next quarter[151]. - The economic forecast projects a 0.17% improvement in GDP and a 2.62% increase in HPI from the previous quarter[216].