Arrow Financial (US:AROW)2024-05-10 12:32Financial Performance - Arrow Financial Corporation reported a net interest income of $15 million for the quarter, reflecting a 5% increase compared to the previous quarter[149]. - Net income for the quarter ended March 31, 2024, was $7,660 million, a slight decrease from $7,723 million in the previous quarter[150]. - Basic and diluted earnings per share for the quarter were both $0.45, compared to $0.46 in the previous quarter[150]. - Net income for Q1 2024 was $7.7 million, consistent with Q4 2023 but down from $8.6 million in Q1 2023[161]. - Net interest income for Q1 2024 was $26.5 million, a 3.3% increase from $25.6 million in Q4 2023, but a 5.8% decrease from $28.1 million in Q1 2023[161]. - Return on average assets for Q1 2024 was 0.73%, down from 0.87% in Q1 2023, indicating a decline in profitability[219]. - Return on average equity decreased to 8.12% in Q1 2024 from 9.66% in Q1 2023, reflecting reduced efficiency in generating profits[219]. - Total non-interest income for Q1 2024 was $7.9 million, an increase of $1.2 million or 17.7% from Q1 2023, driven by an 8.0% increase in income from fiduciary activities[224]. Asset and Equity Growth - Arrow's total assets reached $4.5 billion, a growth of 4% year-over-year[149]. - Total assets increased to $4,245,484 million from $4,159,313 million in the previous quarter, reflecting a growth of approximately 2.06%[150]. - Total Assets as of March 31, 2024, were $4,245,484 million, compared to $3,978,851 million as of March 31, 2023, showing a year-over-year increase of 6.7%[158]. - Total stockholders' equity at the end of the quarter was $377,986 million, down from $379,772 million in the previous quarter[150]. - Stockholders' equity was $378.0 million at March 31, 2024, a decrease of $1.8 million, or 0.5%, from December 31, 2023[162]. - Arrow's book value per share increased by 6.1% to $22.62 as of March 31, 2024[162]. Loan and Deposit Activity - The company reported a 10% increase in customer deposits, totaling $3.2 billion, driven by competitive interest rates[149]. - Total loans reached $3.3 billion as of March 31, 2024, with a growth of $50.5 million in Q1 2024 and $252.2 million compared to March 31, 2023[161]. - Total deposits reached $3.8 billion, an increase of $232.7 million, or 6.6%, from the prior-year level[172]. - The loan portfolio increased by $45.9 million, or 1.4%, from December 31, 2023, and up by $253.4 million, or 8.4%, from March 31, 2023[171]. - Total Interest-Bearing Deposits for Q1 2024 were $2,986,060 million, up from $2,681,703 million in Q4 2023, reflecting an increase of 11.3%[158]. - Noninterest-bearing deposits represented 18.4% of total deposits as of March 31, 2024, down from 22.2% a year earlier[172]. Credit Quality and Losses - The allowance for credit losses was maintained at $10 million, representing 1.2% of total loans, consistent with industry standards[149]. - The allowance for credit losses was $31.6 million, representing 0.97% of loans outstanding as of March 31, 2024, unchanged from December 31, 2023[163]. - Nonperforming assets were $21.8 million, or 0.50% of period-end assets, compared to 0.27% at March 31, 2023[163]. - The provision for loan losses for Q1 2024 was $617 thousand, down from $1.6 million in Q1 2023, indicating improved asset quality[222]. - Loans past due 90 or more days and still accruing interest amounted to $1,147 thousand, up from $452 thousand at December 31, 2023[202]. Operational Efficiency - The efficiency ratio improved to 65%, down from 68% in the prior quarter, indicating better expense control[145]. - Non-interest expense rose to $24,012 million from $23,190 million in the previous quarter[150]. - The cost of total deposits rose to 2.06% for the quarter ended March 31, 2024, an increase of 18 basis points from the previous quarter and 124 basis points from the same quarter last year[196]. - The effective tax rate for Q1 2024 decreased to 20.9% from 21.6% in Q1 2023, primarily due to a reduction in pretax income[226]. Strategic Initiatives - The company plans to expand its market presence by opening two new branches in the next fiscal year[137]. - Arrow is investing in a new core banking system, with an expected implementation cost of $2 million[139]. - Arrow entered into an agreement to acquire a branch office from Berkshire Bank, which includes approximately $39 million in deposits and $3 million in loans[168]. - The company added $175 million of brokered CDs in Q1 2024, primarily to reduce borrowings by $160 million, indicating a strategic move to optimize funding sources[192].