10/26/2021 | Press release | Distributed by Public on 10/26/2021 09:50
Three Months Ended September 30 |
Nine Months Ended September 30 |
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2021 | 2020 | 2021 | 2020 | |||||
INTEREST AND DIVIDEND INCOME | ||||||||
Interest and Fees on Loans | $ | 27,157 | $ | 24,706 | $ | 79,354 | $ | 74,657 |
Interest on Deposits at Banks | 163 | 64 | 351 | 229 | ||||
Interest and Dividends on Investment Securities: | ||||||||
Fully Taxable | 1,632 | 1,557 | 4,809 | 5,621 | ||||
Exempt from Federal Taxes | 855 | 969 | 2,682 | 3,017 | ||||
Total Interest and Dividend Income | 29,807 | 27,296 | 87,196 | 83,524 | ||||
INTEREST EXPENSE | ||||||||
Interest-Bearing Checking Accounts | 155 | 264 | 566 | 1,061 | ||||
Savings Deposits | 424 | 806 | 1,490 | 4,450 | ||||
Time Deposits over $250,000 | 39 | 292 | 228 | 1,263 | ||||
Other Time Deposits | 133 | 576 | 511 | 2,360 | ||||
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase |
- | 17 | 3 | 55 | ||||
Federal Home Loan Bank Advances | 197 | 219 | 586 | 865 | ||||
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts |
173 | 173 | 513 | 574 | ||||
Interest on Financing Leases | 48 | 49 | 146 | 148 | ||||
Total Interest Expense | 1,169 | 2,396 | 4,043 | 10,776 | ||||
NET INTEREST INCOME | 28,638 | 24,900 | 83,153 | 72,748 | ||||
Provision for Credit Losses | 99 | 2,271 | (286) | 8,083 | ||||
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 28,539 | 22,629 | 83,439 | 64,665 | ||||
NONINTEREST INCOME | ||||||||
Income From Fiduciary Activities | 2,571 | 2,265 | 7,538 | 6,613 | ||||
Fees for Other Services to Customers | 2,966 | 2,619 | 8,494 | 7,348 | ||||
Insurance Commissions | 1,576 | 1,713 | 4,842 | 5,077 | ||||
Net (Loss) Gain on Securities | (106) | (72) | 250 | (552) | ||||
Net Gain on Sales of Loans | 211 | 1,433 | 2,251 | 2,193 | ||||
Other Operating Income | 476 | 739 | 1,405 | 2,876 | ||||
Total Noninterest Income | 7,694 | 8,697 | 24,780 | 23,555 | ||||
NONINTEREST EXPENSE | ||||||||
Salaries and Employee Benefits | 11,377 | 10,408 | 33,360 | 31,003 | ||||
Occupancy Expenses, Net | 1,403 | 1,427 | 4,480 | 4,221 | ||||
Technology and Equipment Expense | 3,833 | 3,228 | 11,002 | 9,807 | ||||
FDIC Assessments | 249 | 309 | 764 | 770 | ||||
Other Operating Expense | 2,561 | 2,115 | 7,582 | 6,685 | ||||
Total Noninterest Expense | 19,423 | 17,487 | 57,188 | 52,486 | ||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 16,810 | 13,839 | 51,031 | 35,734 | ||||
Provision for Income Taxes | 3,821 | 2,793 | 11,483 | 7,402 | ||||
NET INCOME | $ | 12,989 | $ | 11,046 | $ | 39,548 | $ | 28,332 |
Average Shares Outstanding 1:
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Basic | 16,027 | 15,936 | 16,015 | 15,917 | ||||
Diluted | 16,085 | 15,946 | 16,072 | 15,931 | ||||
Per Common Share: | ||||||||
Basic Earnings | $ | 0.81 | $ | 0.69 | $ | 2.47 | $ | 1.78 |
Diluted Earnings | 0.81 | 0.69 | 2.46 | 1.78 | ||||
1 2020 Share and Per Share Amounts have been restated for the September 24, 2021, 3% stock dividend.
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September 30, 2021 |
December 31, 2020 |
September 30, 2020 |
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ASSETS | ||||||
Cash and Due From Banks | $ | 49,430 | $ | 42,116 | $ | 54,286 |
Interest-Bearing Deposits at Banks | 548,936 | 338,875 | 396,380 | |||
Investment Securities: | ||||||
Available-for-Sale at Fair Value | 486,900 | 365,287 | 374,928 | |||
Held-to-Maturity (Approximate Fair Value of $203,936 at September 30, 2021; $226,576 at December 31, 2020; and $233,501 at September 30, 2020)
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198,337 | 218,405 | 224,799 | |||
Equity Securities | 1,886 | 1,636 | 1,511 | |||
FHLB and Federal Reserve Bank Stock | 5,380 | 5,349 | 5,574 | |||
Loans | 2,654,751 | 2,595,030 | 2,592,455 | |||
Allowance for Credit Losses | (26,956) | (29,232) | (28,446) | |||
Net Loans | 2,627,795 | 2,565,798 | 2,564,009 | |||
Premises and Equipment, Net | 44,003 | 42,612 | 42,075 | |||
Goodwill | 21,873 | 21,873 | 21,873 | |||
Other Intangible Assets, Net | 2,006 | 1,950 | 1,789 | |||
Other Assets | 84,558 | 84,735 | 90,460 | |||
Total Assets | $ | 4,071,104 | $ | 3,688,636 | $ | 3,777,684 |
LIABILITIES | ||||||
Noninterest-Bearing Deposits | 841,910 | 701,341 | 690,232 | |||
Interest-Bearing Checking Accounts | 1,035,358 | 832,434 | 912,980 | |||
Savings Deposits | 1,515,692 | 1,423,358 | 1,354,956 | |||
Time Deposits over $250,000 | 73,889 | 123,622 | 112,555 | |||
Other Time Deposits | 138,714 | 153,971 | 194,135 | |||
Total Deposits | 3,605,563 | 3,234,726 | 3,264,858 | |||
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase |
2,426 | 17,486 | 73,949 | |||
Federal Home Loan Bank Term Advances | 45,000 | 45,000 | 50,000 | |||
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts |
20,000 | 20,000 | 20,000 | |||
Finance Leases | 5,181 | 5,217 | 5,228 | |||
Other Liabilities | 32,763 | 31,815 | 37,989 | |||
Total Liabilities | 3,710,933 | 3,354,244 | 3,452,024 | |||
STOCKHOLDERS' EQUITY | ||||||
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at September 30, 2021, December 31, 2020 and September 30, 2020
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- | - | - | |||
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (20,800,144 Shares Issued at September 30, 2021 and December 31, 2020 and 20,194,474 at September 30, 2020)
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20,800 | 20,194 | 20,194 | |||
Additional Paid-in Capital | 377,349 | 353,662 | 353,062 | |||
Retained Earnings | 47,936 | 41,899 | 33,434 | |||
Accumulated Other Comprehensive Loss | (3,719) | (816) | (253) | |||
Treasury Stock, at Cost (4,780,496 Shares at September 30, 2021; 4,678,736 Shares at December 31, 2020 and 4,705,102 Shares at September 30, 2020)
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(82,195) | (80,547) | (80,777) | |||
Total Stockholders' Equity | 360,171 | 334,392 | 325,660 | |||
Total Liabilities and Stockholders' Equity | $ | 4,071,104 | $ | 3,688,636 | $ | 3,777,684 |
Quarter Ended | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | |||||
Net Income | $ | 12,989 | $ | 13,279 | $ | 13,280 | $ | 12,495 | $ | 11,046 |
Transactions in Net Income (Net of Tax): | ||||||||||
Net Changes in Fair Value of Equity Investments | (79) | 145 | 119 | 66 | (53) | |||||
Share and Per Share Data:1
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Period End Shares Outstanding | 16,020 | 16,039 | 16,009 | 15,981 | 15,954 | |||||
Basic Average Shares Outstanding | 16,027 | 16,024 | 15,994 | 15,964 | 15,936 | |||||
Diluted Average Shares Outstanding | 16,085 | 16,085 | 16,030 | 15,981 | 15,946 | |||||
Basic Earnings Per Share | $ | 0.81 | $ | 0.83 | $ | 0.83 | $ | 0.78 | $ | 0.69 |
Diluted Earnings Per Share | 0.81 | 0.83 | 0.82 | 0.78 | 0.69 | |||||
Cash Dividend Per Share | 0.252 | 0.252 | 0.252 | 0.252 | 0.245 | |||||
Selected Quarterly Average Balances: | ||||||||||
Interest-Bearing Deposits at Banks | $ | 416,500 | $ | 369,034 | $ | 334,155 | $ | 349,430 | $ | 242,928 |
Investment Securities | 675,980 | 668,089 | 593,822 | 590,151 | 592,457 | |||||
Loans | 2,641,726 | 2,651,449 | 2,618,362 | 2,610,834 | 2,582,253 | |||||
Deposits | 3,435,933 | 3,395,271 | 3,254,815 | 3,256,238 | 3,082,499 | |||||
Other Borrowed Funds | 72,187 | 74,957 | 82,659 | 95,047 | 136,117 | |||||
Shareholders' Equity | 359,384 | 350,203 | 340,708 | 331,899 | 324,269 | |||||
Total Assets | 3,902,041 | 3,851,921 | 3,712,020 | 3,721,954 | 3,583,322 | |||||
Return on Average Assets, annualized | 1.32 | % | 1.38 | % | 1.45 | % | 1.34 | % | 1.23 | % |
Return on Average Equity, annualized | 14.34 | % | 15.21 | % | 15.81 | % | 14.98 | % | 13.55 | % |
Return on Average Tangible Equity, annualized 2
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15.36 | % | 16.32 | % | 17.00 | % | 16.13 | % | 14.61 | % |
Average Earning Assets | $ | 3,734,206 | $ | 3,688,572 | $ | 3,546,339 | $ | 3,550,415 | $ | 3,417,638 |
Average Paying Liabilities | 2,705,283 | 2,721,961 | 2,639,240 | 2,674,795 | 2,545,435 | |||||
Interest Income | 29,807 | 29,695 | 27,694 | 28,372 | 27,296 | |||||
Tax-Equivalent Adjustment 3
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292 | 293 | 235 | 251 | 284 | |||||
Interest Income, Tax-Equivalent 3
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30,099 | 29,988 | 27,929 | 28,623 | 27,580 | |||||
Interest Expense | 1,169 | 1,335 | 1,539 | 1,918 | 2,396 | |||||
Net Interest Income | 28,638 | 28,360 | 26,155 | 26,454 | 24,900 | |||||
Net Interest Income, Tax-Equivalent 3
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28,930 | 28,653 | 26,390 | 26,705 | 25,184 | |||||
Net Interest Margin, annualized | 3.04 | % | 3.08 | % | 2.99 | % | 2.96 | % | 2.90 | % |
Net Interest Margin, Tax-Equivalent, annualized 3
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3.07 | % | 3.12 | % | 3.02 | % | 2.99 | % | 2.93 | % |
Efficiency Ratio Calculation: 4
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Noninterest Expense | $ | 19,423 | $ | 19,087 | $ | 18,678 | $ | 18,192 | $ | 17,487 |
Less: Intangible Asset Amortization | 51 | 53 | 54 | 56 | 56 | |||||
Net Noninterest Expense | $ | 19,372 | $ | 19,034 | $ | 18,624 | $ | 18,136 | $ | 17,431 |
Net Interest Income, Tax-Equivalent | $ | 28,930 | $ | 28,653 | $ | 26,390 | $ | 26,705 | $ | 25,184 |
Noninterest Income | 7,694 | 8,478 | 8,608 | 9,103 | 8,697 | |||||
Less: Net (Loss) Gain on Securities | (106) | 196 | 160 | 88 | (72) | |||||
Net Gross Income | $ | 36,730 | $ | 36,935 | $ | 34,838 | $ | 35,720 | $ | 33,953 |
Efficiency Ratio | 52.74 | % | 51.53 | % | 53.46 | % | 50.77 | % | 51.34 | % |
Period-End Capital Information: | ||||||||||
Total Stockholders' Equity (i.e. Book Value) | $ | 360,171 | $ | 353,033 | $ | 342,413 | $ | 334,392 | $ | 325,660 |
Book Value per Share 1
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22.48 | 22.01 | 21.39 | 20.91 | 20.41 | |||||
Goodwill and Other Intangible Assets, net | 23,879 | 23,955 | 23,922 | 23,823 | 23,662 | |||||
Tangible Book Value per Share 1,2
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20.99 | 20.52 | 19.89 | 19.43 | 18.93 | |||||
Capital Ratios:5
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Tier 1 Leverage Ratio | 9.39 | % | 9.29 | % | 9.37 | % | 9.07 | % | 9.17 | % |
Common Equity Tier 1 Capital Ratio
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13.71 | % | 13.79 | % | 13.56 | % | 13.39 | % | 13.20 | % |
Tier 1 Risk-Based Capital Ratio | 14.51 | % | 14.61 | % | 14.39 | % | 14.24 | % | 14.06 | % |
Total Risk-Based Capital Ratio | 15.66 | % | 15.78 | % | 15.55 | % | 15.48 | % | 15.28 | % |
Assets Under Trust Admin. & Investment Mgmt. | $ | 1,778,659 | $ | 1,804,854 | $ | 1,725,754 | $ | 1,659,029 | $ | 1,537,128 |
Footnotes: | ||||||||||
1. |
Share and Per Share Data have been restated for the September 24, 2021, 3% stock dividend.
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2. | Non-GAAP Financial Measures Reconciliation: Tangible Book Value and Tangible Equity exclude goodwill and other intangible assets, net from total equity. These are non-GAAP financial measures which Arrow believes provides investors with information that is useful in understanding its financial performance. | |||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||
Total Stockholders' Equity (GAAP) | $ | 360,171 | $ | 353,033 | $ | 342,413 | $ | 334,392 | $ | 325,660 |
Less: Goodwill and Other Intangible assets, net | 23,879 | 23,955 | 23,922 | 23,823 | 23,662 | |||||
Tangible Equity (Non-GAAP) | $ | 336,292 | $ | 329,078 | $ | 318,491 | $ | 310,569 | $ | 301,998 |
Period End Shares Outstanding | 16,020 | 16,039 | 16,009 | 15,981 | 15,954 | |||||
Tangible Book Value per Share (Non-GAAP) | $ | 20.99 | $ | 20.52 | $ | 19.89 | $ | 19.43 | $ | 18.93 |
Net Income | 12,989 | 13,279 | 13,280 | 12,495 | 11,046 | |||||
Return on Average Tangible Equity (Net Income/Tangible Equity - Annualized) | 15.36 | % | 16.32 | % | 17.00 | % | 16.13 | % | 14.61 | % |
3. |
Non-GAAP Financial Measures Reconciliation: Net Interest Margin, Tax-Equivalent is the ratio of our annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which Arrow believes provides investors with information that is useful in understanding its financial performance. |
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9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||
Interest Income (GAAP) | $ | 29,807 | $ | 29,695 | $ | 27,694 | $ | 28,372 | $ | 27,296 |
Add: Tax-Equivalent adjustment (Non-GAAP) |
292 | 293 | 235 | 251 | 284 | |||||
Interest Income - Tax Equivalent (Non-GAAP) |
$ | 30,099 | $ | 29,988 | $ | 27,929 | $ | 28,623 | $ | 27,580 |
Net Interest Income (GAAP) | $ | 28,638 | $ | 28,360 | $ | 26,155 | $ | 26,454 | $ | 24,900 |
Add: Tax-Equivalent adjustment (Non-GAAP) |
292 | 293 | 235 | 251 | 284 | |||||
Net Interest Income - Tax Equivalent (Non-GAAP) |
$ | 28,930 | $ | 28,653 | $ | 26,390 | $ | 26,705 | $ | 25,184 |
Average Earning Assets | $ | 3,734,206 | $ | 3,688,572 | $ | 3,546,339 | $ | 3,550,415 | $ | 3,417,638 |
Net Interest Margin (Non-GAAP)* | 3.07 | % | 3.12 | % | 3.02 | % | 2.99 | % | 2.93 | % |
4. | Non-GAAP Financial Measures: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. Arrow believes the efficiency ratio provides investors with information that is useful in understanding its financial performance. Arrow defines efficiency ratio as the ratio of noninterest expense to net gross income (which equals 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 CET1 ratio at September 30, 2021 listed in the tables (i.e., 13.71%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
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9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||
Total Risk Weighted Assets | $ | 2,511,910 | $ | 2,438,445 | $ | 2,404,456 | $ | 2,357,094 | $ | 2,321,637 |
Common Equity Tier 1 Capital | 344,507 | 336,265 | 326,039 | 315,696 | 306,356 | |||||
Common Equity Tier 1 Ratio | 13.71 | % | 13.79 | % | 13.56 | % | 13.39 | % | 13.20 | % |
* Quarterly ratios have been annualized. |
Quarter Ended: | 9/30/2021 | 12/31/2020 | 9/30/2020 | |||
Loan Portfolio | ||||||
Commercial Loans | $ | 188,191 | $ | 240,554 | $ | 275,921 |
Commercial Real Estate Loans | 615,080 | 571,787 | 541,233 | |||
Subtotal Commercial Loan Portfolio | 803,271 | 812,341 | 817,154 | |||
Consumer Loans | 921,189 | 859,768 | 849,526 | |||
Residential Real Estate Loans | 930,291 | 922,921 | 925,775 | |||
Total Loans | $ | 2,654,751 | $ | 2,595,030 | $ | 2,592,455 |
Allowance for Credit Losses | ||||||
Allowance for Credit Losses, Beginning of Quarter | $ | 27,010 | $ | 28,446 | $ | 26,300 |
Loans Charged-off | (444) | (630) | (392) | |||
Less Recoveries of Loans Previously Charged-off | 291 | 179 | 267 | |||
Net Loans Charged-off | (153) | (451) | (125) | |||
Provision for Credit Losses | 99 | 1,237 | 2,271 | |||
Allowance for Credit Losses, End of Quarter | $ | 26,956 | $ | 29,232 | $ | 28,446 |
Nonperforming Assets | ||||||
Nonaccrual Loans | $ | 10,723 | $ | 6,033 | $ | 6,004 |
Loans Past Due 90 or More Days and Accruing | 555 | 228 | 121 | |||
Loans Restructured and in Compliance with Modified Terms | 67 | 145 | 157 | |||
Total Nonperforming Loans | 11,345 | 6,406 | 6,282 | |||
Repossessed Assets | 272 | 155 | 126 | |||
Other Real Estate Owned | 79 | - | - | |||
Total Nonperforming Assets | $ | 11,696 | $ | 6,561 | $ | 6,408 |
Key Asset Quality Ratios | ||||||
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized |
0.02 | % | 0.07 | % | 0.02 | % |
Provision for Credit Losses to Average Loans, Quarter-to-date Annualized |
0.01 | % | 0.19 | % | 0.35 | % |
Allowance for Credit Losses to Period-End Loans | 1.02 | % | 1.13 | % | 1.10 | % |
Allowance for Credit Losses to Period-End Nonperforming Loans | 237.60 | % | 456.32 | % | 452.82 | % |
Nonperforming Loans to Period-End Loans | 0.43 | % | 0.25 | % | 0.24 | % |
Nonperforming Assets to Period-End Assets | 0.29 | % | 0.18 | % | 0.17 | % |
Nine Month Period Ended: | ||||||
Allowance for Loan Losses | ||||||
Allowance for Loan Losses, Beginning of Year | $ | 29,232 | $ | 21,187 | ||
Impact of the Adoption of ASU 2016-13 | (1,300) | - | ||||
Loans Charged-off | (1,520) | (1,360) | ||||
Less Recoveries of Loans Previously Charged-off | 830 | 536 | ||||
Net Loans Charged-off | (690) | (824) | ||||
Provision for Loan Losses | (286) | 8,083 | ||||
Allowance for Loan Losses, End of Period | $ | 26,956 | $ | 28,446 | ||
Key Asset Quality Ratios | ||||||
Net Loans Charged-off to Average Loans, Annualized | 0.03 | % | 0.04 | % | ||
Provision for Loan Losses to Average Loans, Annualized | (0.01) | % | 0.43 | % |