On July 25, 2024, Arrow Financial Corp (AROW, Financial) released its 8-K filing for the second quarter of 2024. Arrow Financial Corp, a holding company providing various financial services, reported a net income of $8.6 million, or $0.52 per share, for the three-month period ended June 30, 2024. This compares to $6.0 million, or $0.35 per share, for the same period in 2023. Despite the year-over-year improvement, the reported EPS fell short of the analyst estimate of $0.54.
Company Overview
Arrow Financial Corp is a multi-bank holding company headquartered in Glens Falls, New York. The company provides a range of financial products and services, including online and mobile banking, mortgages, commercial loans, investments, and various lending services. The primary revenue sources are interest income, fees, and commissions earned through its subsidiaries.
Performance and Challenges
Arrow Financial Corp's performance in Q2 2024 highlights both achievements and challenges. The net income of $8.6 million represents a significant increase from the $6.0 million reported in Q2 2023. However, the EPS of $0.52 fell short of the analyst estimate of $0.54, indicating potential areas for improvement in operational efficiency or cost management.
Financial Achievements
Key financial achievements for Arrow Financial Corp in Q2 2024 include:
- Gross loans grew by $57.6 million, or 7.1% on an annualized basis.
- Net interest margin improved to 2.67%, up from 2.60% in the prior quarter.
- Average loan yields increased to 5.17%, up from 5.02% in the prior quarter.
- Deposit balances stood at $3.7 billion.
- Tangible Book Value increased to $21.54.
- Return on Average Assets (ROA) improved to 0.82%, up from 0.73% in the previous quarter.
Income Statement Highlights
Arrow Financial Corp reported net interest income of $27.2 million for Q2 2024, a 2.6% increase from $26.5 million in Q1 2024 and a 5.4% increase from $25.8 million in Q2 2023. The total interest and dividend income was $48.0 million, driven by loan growth and higher loan rates. Interest expense for the quarter was $20.8 million, reflecting higher deposit rates and changes in deposit composition.
| Three Months Ended | June 30, 2024 | March 31, 2024 | June 30, 2023 |
|---|---|---|---|
| Interest and Dividend Income | $47,972 | $46,677 | $40,013 |
| Interest Expense | $20,820 | $20,222 | $14,241 |
| Net Interest Income | $27,152 | $26,455 | $25,772 |
Balance Sheet and Cash Flow
Arrow Financial Corp's total assets were $4.2 billion as of June 30, 2024, a decrease of $89.2 million from March 31, 2024, but an increase of $140.8 million from June 30, 2023. The decrease in total assets from the previous quarter was primarily due to seasonal changes in cash balances, offset by loan portfolio growth. Total loans reached $3.3 billion, with loan growth spread across all loan products.
Commentary
"We are pleased to report another quarter of solid performance, demonstrating the hard work and dedication of our team. We recently expanded our insurance business with the strategic acquisition of the assets of A&B Agency, Inc. We are also looking forward to the close of our branch acquisition in Whitehall, New York scheduled for early August." - Arrow President and CEO David S. DeMarco
Analysis
Arrow Financial Corp's Q2 2024 performance reflects a robust growth trajectory, with significant improvements in net income and net interest margin. However, the shortfall in EPS compared to analyst estimates suggests that there may be underlying challenges in cost management or operational efficiency. The company's strategic initiatives, including acquisitions and the unification of its subsidiary banks, are expected to drive long-term value for shareholders.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Arrow Financial Corp for further details.
