Arrow Financial (US:AROW)2024-11-07 16:02Company Overview - Arrow Financial Corporation plans to complete the Unification of its banking subsidiaries by December 31, 2024[142]. - The company operates two banking subsidiaries, GFNB and SNB, with main offices in Glens Falls and Saratoga Springs, New York, respectively[142]. - Arrow's performance is compared with a peer group of 190 domestic bank holding companies with total consolidated assets between $3 billion and $10 billion[141]. Financial Performance - Net income for the quarter ended September 30, 2024, was $8,975,000, an increase from $8,604,000 in the previous quarter[154]. - Basic earnings per share rose to $0.54 from $0.52 in the prior quarter, while diluted earnings per share remained at $0.53[154]. - Total stockholders' equity increased to $393,311,000 from $383,018,000 in the previous quarter[156]. - Loans increased to $3,329,873,000, up from $3,280,285,000 in the previous quarter, reflecting a growth in lending activity[154]. - Interest income for the quarter was $49,443,000, compared to $47,972,000 in the previous quarter, indicating a positive trend in interest earnings[154]. - Net interest income rose to $28,438,000 from $27,152,000 in the prior quarter, showcasing improved profitability from interest-earning assets[154]. - The return on average assets was 0.84%, up from 0.82% in the previous quarter, while the return on average equity increased to 9.20% from 9.15%[154]. - Total assets remained stable at $4,245,597,000, slightly up from $4,237,359,000 in the previous quarter[154]. - The efficiency ratio improved to 65.59%, down from 66.29% in the previous quarter, indicating better cost management[154]. Capital and Liquidity - Common Equity Tier 1 Capital Ratio stood at 12.77% as of September 30, 2024, slightly down from 12.88% in June 2024, but above the regulatory minimum of 7.00%[158]. - Total Risk Weighted Assets increased to $3,110,178 million in Q3 2024, up from $3,072,922 million in Q2 2024, indicating growth in the asset base[158]. - The total primary liquidity was approximately $483 million, with a primary liquidity ratio of about 11.0% of total assets, well above the internal policy limit of 5%[215]. - Arrow's subsidiary banks qualified as "well-capitalized," meeting the highest capital classification standards with CET1, Tier 1, and total risk-based capital ratios of 12.77%, 13.41%, and 14.46%, respectively[208]. Loan and Deposit Trends - Total loans reached $3.3 billion as of September 30, 2024, with loan growth of $24.2 million in Q3 2024 and $201.2 million since September 30, 2023[164]. - Deposit balances were $3.8 billion at September 30, 2024, an increase of $153.8 million from June 30, 2024, and $171.0 million from September 30, 2023[164]. - Total deposits increased by $149.9 million, or 4.1%, from December 31, 2023, reaching $3.8 billion[177]. - Noninterest-bearing deposits accounted for 19.6% of total deposits, a decrease from 22.3% a year ago[196]. Non-Interest Income and Expenses - Non-interest income for Q3 2024 was $8.1 million, up from $7.9 million in Q2 2024 and consistent with Q3 2023[164]. - Salaries and employee benefits increased by $1.458 million, or 12.2%, to $13.446 million in Q3 2024 compared to Q3 2023[221]. - Non-interest expense for the first nine months of 2024 was $71.4 million, an increase of $1.6 million, or 2.3%, from the same period in 2023[228]. Credit Quality and Losses - The provision for credit losses was $0.9 million in Q3 2024, compared to $0.8 million in Q2 2024 and $0.4 million in Q3 2023[164]. - Nonperforming loans reached $21.9 million, representing 0.66% of period-end loans, an increase from 0.20% in the previous year[166]. - The allowance for credit losses was $31,262 thousand at the end of Q3 2024, consistent with $31,009 thousand at the end of Q2 2024, and decreased from $31,112 thousand at the end of Q3 2023[201]. Investment Securities - As of September 30, 2024, the total fair value of available-for-sale securities decreased to $437,067,000 from $497,769,000 as of December 31, 2023, representing a decline of $60,702,000 or approximately 12.2%[181]. - The company held no investment securities related to foreign governments or agencies as of September 30, 2024[182]. - The total fair value of held-to-maturity securities decreased to $103,337,000 as of September 30, 2024, from $128,837,000 as of December 31, 2023[181]. Economic Outlook - The economic forecast indicates a projected negative change of approximately 0.25% in the national unemployment rate and a 0.07% improvement in GDP[200].