Arrow Financial (AROW) - 2020 Q4 - Annual Report

Financial Performance - Net income for the quarter ended December 31, 2020, was $12,495 million, an increase from $11,046 million in the previous quarter[92]. - Basic earnings per share (EPS) rose to $0.81, compared to $0.71 in the prior quarter, reflecting a 14.08% increase[92]. - Net income for the period was $40,827,000, an increase from $37,475,000 in the previous period, representing a growth of 6.0%[95]. - Basic earnings per share (EPS) rose to $2.64, up from $2.44, reflecting an increase of 8.2%[95]. - Net income for Q4 reached $12,495, up from $11,046 in Q3, representing a 13.1% quarter-over-quarter growth[207]. - Diluted earnings per share for Q4 2020 were $0.81, up from $0.63 in Q4 2019[202]. Asset and Equity Growth - Total assets increased to $3,721,954 million, up from $3,583,322 million in the previous quarter, representing a growth of 3.86%[92]. - Total stockholders' equity reached $334,392 million, up from $325,660 million in the previous quarter, indicating a growth of 2.24%[92]. - Total stockholders' equity increased to $334,392,000 from $301,728,000, a rise of 10.8%[95]. - Total stockholders' equity increased by $32.7 million, or 10.8%, to $334.4 million as of December 31, 2020, primarily due to net income of $40.83 million[192]. Loan and Deposit Activity - Loans amounted to $2,610,834 million, an increase from $2,582,253 million in the previous quarter, showing a growth of 1.00%[92]. - Deposits reached $3,256,238 million, up from $3,082,499 million in the prior quarter, indicating a growth of 5.65%[92]. - Total loan balances reached $2.6 billion, an increase of $209 million, or 8.8%, from the prior year[106]. - Total deposit balances increased to $3.2 billion, up by $618.7 million, or 23.6%, from the previous year[106]. - Total loans outstanding increased to $2,595,030 thousand in 2020, up from $2,386,120 thousand in 2019, representing an 8.8% growth[152]. Income and Expense Analysis - Net interest income for the quarter was $26,454 million, compared to $24,900 million in the previous quarter, marking a 6.24% increase[92]. - Noninterest income increased to $9,103 million, up from $8,697 million in the prior quarter, reflecting a growth of 4.66%[92]. - Net interest income reached $99,202,000, up from $88,049,000, indicating a growth of 12.3%[95]. - The efficiency ratio improved to 55.69%, down from 57.08%, showing enhanced operational efficiency[95]. - Total noninterest income for 2020 was $32.7 million, an increase of $4.1 million, or 14.4%, from $28.6 million in 2019[130]. - Total noninterest expense for 2020 was $70.7 million, an increase of $3.2 million, or 4.8%, from $67.5 million in 2019[132]. Capital Adequacy and Regulatory Compliance - Common equity tier 1 capital ratio improved to 13.39%, compared to 13.20% in the prior quarter[92]. - The common equity tier 1 ratio improved to 13.39%, up from 13.20%, indicating stronger capital adequacy[100]. - As of December 31, 2020, Arrow and its subsidiary banks exceeded all applicable minimum capital ratios, qualifying as "well-capitalized" under regulatory standards[30]. - The minimum Common Equity Tier 1 (CET1) ratio is set at 4.5%, with a capital conservation buffer of 2.5%, resulting in a total minimum CET1 ratio requirement of 7.0%[29]. Loan Quality and Risk Management - Nonperforming loans as a percentage of period-end loans remained stable at 0.25%[95]. - The allowance for loan losses was $29.2 million at December 31, 2020, representing 1.13% of loans outstanding, an increase from 0.89% at year-end 2019[107]. - Nonperforming loans were $6.4 million at December 31, 2020, an increase of $2.0 million, or 45.6%, from year-end 2019[109]. - The provision for loan losses increased to $9.3 million in 2020 from $2.1 million in 2019, reflecting loan growth and uncertainty related to the COVID-19 pandemic[127]. COVID-19 Impact and Response - Arrow originated over $142.7 million in loans under the Paycheck Protection Program (PPP) in 2020, supporting local businesses during the pandemic[21]. - As of December 31, 2020, $15.3 million in eligible loans, or 0.6% of the loan portfolio, were deferred due to the COVID-19 pandemic[42]. - The company has implemented measures to mitigate COVID-19 risks, including limiting facility access and promoting digital banking[48]. Employee and Operational Insights - The company has 517 full-time equivalent employees, including 42 in its insurance agency affiliate, as of December 31, 2020[19]. - Arrow's executive leadership includes Thomas J. Murphy as President and CEO since January 1, 2013, and Edward J. Campanella as CFO since September 5, 2017[49][50].