EX-99 2 ex99-earningsye2021.htm EX-99 Document

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250 Glen Street
Glens Falls, NY 12801
NASDAQ® Symbol: "AROW"
Website: arrowfinancial.com

Media Contact: Dori McDannold
Tel: (518) 415-4313


Arrow Reports Annual Net Income of $49.9 million and Total Assets Over $4 Billion

•Net income for 2021 was $49.9 million, up 22.1% year over year.
•Diluted Earnings Per Share (EPS) grew to $3.10 for the year.
•Return on average equity (ROE) was 14.09% and return on average assets (ROA) was 1.28%.
•Record highs were achieved at year-end for total assets, equity and assets under management by Arrow's Wealth Management Division.

GLENS FALLS, N.Y. (January 27, 2022) – Arrow Financial Corporation (NasdaqGS® – AROW) reported for the year ended December 31, 2021, that net income reached a record $49.9 million, up 22.1% over net income of $40.8 million for 2020. For 2021, revenue increased by $10.9 million and the provision for credit losses decreased by $9.0 million, which was partially offset by higher operating expenses and income taxes. For the fourth quarter of 2021, net income was $10.3 million, a decrease of $2.2 million, or 17.5%, from the fourth quarter of 2020. Diluted EPS was $3.10 for 2021, up 21.2% from $2.56 in 2020, and $0.63 for the fourth quarter of 2021, down 19.2% from $0.78 from the comparable 2020 quarter.

Return on average equity (ROE) and return on average assets (ROA) were 14.09% and 1.28%, respectively, as compared to 12.77% and 1.17%, respectively, for 2020. ROE was 11.22% for the fourth quarter, down from 14.98% from the fourth quarter of 2020. ROA was 1.01% for the fourth quarter, which represents a decrease from 1.34% for the comparable 2020 quarter.

“Arrow Financial Corporation delivered another year of strong financial results in 2021, with exceptional earnings, strong profitability ratios and asset growth to a record $4 billion, all while weathering a second year of pandemic-related issues," said Arrow President and CEO Thomas J. Murphy. “In addition to driving shareholder value in 2021, I am proud to say we advanced many continuous improvement initiatives with key investments in our Team, our branch network and our technology to position us for the future. Arrow also gave back to the communities it serves through increased charitable support to meet increasing and evolving needs. I commend the Arrow Team for their stellar performance, commitment and dedication to our company, our customers and our communities."

In the fourth quarter, Arrow continued its branch optimization initiative. In November, Saratoga National Bank consolidated two smaller branches into one larger, fully renovated branch in nearby Wilton Square. In December, Glens Falls National Bank consolidated two branches within a mile of each other in Fort Edward, allowing our Team to serve the community from one central, updated location. Throughout the year, a combination of renovation, consolidation and relocation has allowed us to deliver an enhanced customer experience while streamlining expenses.

On the technology front, the Team prepared a new online account opening platform, which launched earlier this month for Saratoga National Bank and will be followed later in 2022 at Glens Falls National Bank. Work also began in late 2021 on replacing our core technology in preparation for an upgrade this summer.

The following expands on fourth quarter and 2021 results:

COVID-19 Response: We continue to monitor the impact of the pandemic variants and all the challenges they present on our business and operations and the health and safety of our employees
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and customers are at the forefront of related decisions.

We continue to comply with Federal and New York State guidelines and regulations. All employees and directors are vaccinated, subject to appropriate health and religious exemptions. We continue to encourage remote work and minimize work-related travel and in-person meetings. A pandemic bonus to eligible employees, the second in two years, was awarded in recognition of the Team's enduring and exceptional pandemic performance. Arrow managed to avoid widespread lobby closures for the majority of the year. We are working through the current spike in cases by implementing temporary changes to branch availability by location as needed. On the lending side, we are well under way with the forgiveness process for the second round of Small Business Administration Paycheck Protection Program (PPP) loans, with the first round of loans already forgiven. As of December 31, 2021, $43.6 million of the total $234.2 million PPP loans funded are outstanding.

Loan Growth: At December 31, 2021, total loan balances reached $2.7 billion, up $73 million, or 2.8%, from the prior-year level. Net of $70.1 million of PPP loans forgiven by the Small Business Administration in 2021, loans grew by $143.1 million for the year. Loan growth for the fourth quarter was $13.2 million. Net of $16.4 million PPP loans forgiven in the quarter, loans grew by $29.6 in the fourth quarter. The consumer loan portfolio grew by $60.8 million, or 7.1%, over the balance at December 31, 2020, primarily as a result of continued strength in the indirect automobile lending program. Net of approximately $52.1 million of loans sold in 2021, the residential real estate loan portfolio increased $23.0 million, or 2.5% from the prior year. Commercial loans, including commercial real estate, decreased $10.9 million, or 1.3%, over the balances at December 31, 2020. The decrease in commercial loans includes $70.1 million of PPP loans forgiven by the Small Business Administration in 2021.

Deposit Growth: At December 31, 2021, total deposit balances reached $3.6 billion, up by $315.8 million, or 9.8%, from the prior-year level. Deposits decreased in the fourth quarter by $55.1 million. Non-municipal deposits grew by $53.3 million and municipal deposits seasonally contracted by $108.4 million as compared to September 30, 2021. Noninterest-bearing deposits grew by $108.9 million, or 15.5%, during 2021, and represented 22.8% of total deposits at year-end, as compared to the prior-year level of 21.7%. At December 31, 2021, total time deposits decreased $63.0 million from the prior-year level.

Net Interest Income: Net interest income for the year ending December 31, 2021, was $110.4 million, an increase of $11.2 million, or 11.2%, from the prior year. Interest and fees on loans were $105.0 million, an increase of 4.5% from the $100.5 million for the year ending December 31, 2020. Interest and fees related to PPP loans, included in the $105.0 million, were $7.8 million. Interest expense for the year ending December 31, 2021 was $5.2 million. This is a decrease of $7.5 million, or 59.1%, from the $12.7 million in expense for the prior year period. The net interest margin was 2.97% for the year ending December 31, 2021, as compared to 2.99% for the year ended December 31, 2020. In the fourth quarter of 2021, the net interest margin was 2.77%, as compared to 2.96% for the fourth quarter of 2020.

Noninterest Income: Noninterest income was $32.4 million for the year ending December 31, 2021, a decrease of 0.9% as compared to $32.7 million for the year ending December 31, 2020. Income from fiduciary activities in 2021 was $10.1 million, an increase of $1.3 million from 2020. Fees and other services to customers increased $1.5 million to $11.5 million in 2021. Interchange fees related to increased customer activity of debit card usage was the largest driver of the increase. Gain on sales of loans decreased $1.5 million from 2020 to $2.4 million in 2021 as a result of the strategic decision in the second half of 2021 to retain more newly originated residential real estate loans. The decrease in other operating income from 2020 was primarily driven by a $1.4 million decrease in income related to interest rate swap agreements.

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Noninterest Expense: Noninterest expense for the year ending December 31, 2021, increased by $7.4 million, or 10.5%, to $78.1 million, as compared to $70.7 million in 2020. The largest component of noninterest expense is salaries and benefits paid to our employees, which totaled $44.8 million in 2021. Noninterest expense for the fourth quarter of 2021 increased $2.7 million, or 14.7%, as compared to the fourth quarter of 2020. Other operating expenses increased from the prior comparable quarter as a result of $1.4 million in non-recurring litigation reserve expense.

Provision for Income Taxes: The provision for income taxes for 2021 was $14.5 million, compared to $11.0 million for 2020. The effective income tax rates for 2021 and 2020 were 22.6% and 21.3%, respectively.

Asset Quality: Asset quality remained strong in 2021, as evidenced by low levels of nonperforming assets and charge-offs. Net loan losses for 2021, expressed as an annualized percentage of average loans outstanding, were 0.03% of average loans outstanding, a decrease from 0.05% for 2020. Net loan losses for the fourth quarter of 2021 were 0.03%, a decrease from 0.07% for the fourth quarter of 2020. Nonperforming assets of $11.8 million at December 31, 2021, represented 0.29% of period-end assets, an increase from 0.18% at December 31, 2020. The increase in nonperforming assets from the prior year was primarily the result of two commercial real estate loans being classified as nonaccrual during 2021.

Arrow's allowance for credit losses was $27.3 million at December 31, 2021, which represented 1.02% of loans outstanding, a decrease from 1.13% at year-end 2020. When expressed as a percentage of nonperforming loans, the allowance for credit loss coverage ratio was 233.9% at year-end 2021. Arrow adopted the Current Expected Credit Losses (CECL) accounting standard as of January 1, 2021. The provision of credit losses related to the loan portfolio was $272 thousand and the expense for estimated credit losses on off-balance sheet credit exposures included in other liabilities was $685 thousand for 2021.

Liquidity: Interest-bearing cash balances at December 31, 2021, were $430.7 million. Arrow continues to be well-prepared to address any unexpected volatility, which may affect cash flow and deposit balances. At December 31, 2021, contingent collateralized lines of credit were established and available through the Federal Home Loan Bank of New York and the Federal Reserve Bank of New York, totaling $1.3 billion. Arrow has additional liquidity options currently available, including unsecured lines of credit such as Fed Funds and brokered markets.

Capital: Total shareholders’ equity grew to a record of $371.2 million at period-end, an increase of $36.8 million, or 11.0%, above the year-end 2020 balance. Arrow's regulatory capital ratios remained strong in 2021. At December 31, 2021, Arrow's Common Equity Tier 1 Capital Ratio was 13.77% and Total Risk-Based Capital Ratio was 15.69%. The capital ratios of Arrow and both its subsidiary banks continued to significantly exceed the “well capitalized” regulatory standards.

Cash and Stock Dividends: On December 15, 2021, Arrow distributed a cash dividend of $0.26 per share. The cash dividend was 3% higher than the cash dividend paid by Arrow in the fourth quarter of 2020 when adjusted for the 3% stock dividend distributed on September 24, 2021.

Industry Recognition: In the fourth quarter, both of Arrow's banking subsidiaries, Glens Falls National Bank and Saratoga National Bank, maintained their BauerFinancial, Inc. 5-Star "Exceptional Performance" Bank ratings for the 14th and 12th consecutive years, respectively. Other awards during 2021 included the Raymond James Community Bankers Cup, which recognizes the top 10% of community banks using various profitability, efficiency and balance sheet metrics; and the Piper Sandler Sm-All Stars Class of 2021, which includes the top 35 banks and thrifts.
——————

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About Arrow: Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. The Company is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include North Country Investment Advisers, Inc. and Upstate Agency, LLC.

Non-GAAP Financial Measures Reconciliation: In addition to presenting information in conformity with accounting principles generally accepted in the United States of America (GAAP), this news release contains financial information determined by methods other than GAAP (non-GAAP). The following measures used in this release, which are commonly utilized by financial institutions, have not been specifically exempted by the Securities and Exchange Commission ("SEC") and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. Certain non-GAAP financial measures include: tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by the Company from time to time are useful in evaluating the Company's performance and that such information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Selected Quarterly Information."

Safe Harbor Statement: The information contained in this news release may contain statements that are not historical in nature but rather are based on management’s beliefs, assumptions, expectations, estimates and projections about the future. These statements may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, involving a degree of uncertainty and attendant risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast, explicitly or by implication. The Company undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This News Release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and other filings with the Securities and Exchange Commission.


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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts - Unaudited)

 Three Months EndedTwelve Months Ended
 December 31,December 31,
 2021202020212020
INTEREST AND DIVIDEND INCOME    
Interest and Fees on Loans$25,631 $25,835 $104,985 $100,492 
Interest on Deposits at Banks214 92 565 321 
Interest and Dividends on Investment Securities:
Fully Taxable1,678 1,510 6,487 7,131 
Exempt from Federal Taxes831 935 3,513 3,952 
Total Interest and Dividend Income28,354 28,372 115,550 111,896 
INTEREST EXPENSE    
Interest-Bearing Checking Accounts165 231 731 1,292 
Savings Deposits412 640 1,902 5,090 
Time Deposits over $250,00033 202 261 1,465 
Other Time Deposits123 422 634 2,782 
Federal Funds Purchased and
  Securities Sold Under Agreements to Repurchase		— 5 3 60 
Federal Home Loan Bank Advances197 198 783 1,063 
Junior Subordinated Obligations Issued to
  Unconsolidated Subsidiary Trusts		173 172 686 746 
Interest on Financing Leases49 48 195 196 
Total Interest Expense1,152 1,918 5,195 12,694 
NET INTEREST INCOME27,202 26,454 110,355 99,202 
Provision for Credit Losses558 1,236 272 9,319 
NET INTEREST INCOME AFTER PROVISION FOR
   CREDIT LOSSES		26,644 25,218 110,083 89,883 
NONINTEREST INCOME    
Income From Fiduciary Activities2,604 2,277 10,142 8,890 
Fees for Other Services to Customers2,968 2,655 11,462 10,003 
Insurance Commissions1,645 1,799 6,487 6,876 
Net (Loss) Gain on Securities(139)88 111 (464)
Net Gain on Sales of Loans142 1,696 2,393 3,889 
Other Operating Income369 588 1,774 3,464 
Total Noninterest Income7,589 9,103 32,369 32,658 
NONINTEREST EXPENSE    
Salaries and Employee Benefits11,438 11,058 44,798 42,061 
Occupancy Expenses, Net1,334 1,393 5,814 5,614 
Technology and Equipment Expense3,868 3,169 14,870 12,976 
FDIC Assessments278 293 1,042 1,063 
Other Operating Expense3,942 2,279 11,524 8,964 
Total Noninterest Expense20,860 18,192 78,048 70,678 
INCOME BEFORE PROVISION FOR INCOME TAXES13,373 16,129 64,404 51,863 
Provision for Income Taxes3,064 3,634 14,547 11,036 
NET INCOME$10,309 $12,495 $49,857 $40,827 
Average Shares Outstanding1:
    
Basic16,028 15,964 16,018 15,929 
Diluted16,091 15,981 16,073 15,944 
Per Common Share:    
Basic Earnings$0.64 $0.78 $3.11 $2.56 
Diluted Earnings0.63 0.78 3.10 2.56 
1 Share and per share data have been restated for the September 24, 2021, 3% stock dividend.

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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)
 December 31, 2021December 31, 2020
ASSETS  
Cash and Due From Banks$26,978 $42,116 
Interest-Bearing Deposits at Banks430,718 338,875 
Investment Securities:
Available-for-Sale559,316 365,287 
Held-to-Maturity (Approximate Fair Value of $201,292 at
  December 31, 2021, and $226,576 at December 31, 2020)
196,566 218,405 
Equity Securities1,747 1,636 
Other Investments5,380 5,349 
Loans2,667,941 2,595,030 
Allowance for Credit Losses(27,281)(29,232)
Net Loans2,640,660 2,565,798 
Premises and Equipment, Net46,217 42,612 
Goodwill21,873 21,873 
Other Intangible Assets, Net1,918 1,950 
Other Assets96,579 84,735 
Total Assets$4,027,952 $3,688,636 
LIABILITIES
Noninterest-Bearing Deposits$810,274 $701,341 
Interest-Bearing Checking Accounts994,391 832,434 
Savings Deposits1,531,287 1,423,358 
Time Deposits over $250,00082,811 123,622 
Other Time Deposits131,734 153,971 
Total Deposits3,550,497 3,234,726 
Federal Funds Purchased and
  Securities Sold Under Agreements to Repurchase		— 17,486 
Federal Home Loan Bank Overnight Advances— — 
Federal Home Loan Bank Term Advances45,000 45,000 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 20,000 
Finance Leases5,169 5,217 
Other Liabilities36,100 31,815 
Total Liabilities3,656,766 3,354,244 
STOCKHOLDERS’ EQUITY
Preferred Stock, $1 Par Value, 1,000,000 Shares Authorized
— — 
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (20,800,144 Shares Issued at December 31, 2021, and 20,194,474 Shares Issued at December 31, 2020)
20,800 20,194 
Additional Paid-in Capital377,996 353,662 
Retained Earnings 54,078 41,899 
Accumulated Other Comprehensive Loss347 (816)
Treasury Stock, at Cost (4,759,414 Shares at December 31, 2021, and 4,678,736 Shares at December 31, 2020)
(82,035)(80,547)
Total Stockholders’ Equity371,186 334,392 
Total Liabilities and Stockholders’ Equity$4,027,952 $3,688,636 
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Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended12/31/20219/30/20216/30/20213/31/202112/31/2020
Net Income$10,309 $12,989 $13,279 $13,280 $12,495 
Transactions in Net Income (Net of Tax):     
Net Changes in Fair Value of Equity Investments(104)(79)145 119 66 
Share and Per Share Data:1
     
Period End Shares Outstanding16,041 16,020 16,039 16,009 15,981 
Basic Average Shares Outstanding16,028 16,027 16,024 15,994 15,964 
Diluted Average Shares Outstanding16,091 16,085 16,085 16,030 15,981 
Basic Earnings Per Share$0.64 $0.81 $0.83 $0.83 $0.78 
Diluted Earnings Per Share0.63 0.81 0.83 0.83 0.78 
Cash Dividend Per Share0.260 0.252 0.252 0.252 0.252 
Selected Quarterly Average Balances:     
  Interest-Bearing Deposits at Banks$551,890 $416,500 $369,034 $334,155 $349,430 
  Investment Securities681,732 675,980 668,089 593,822 590,151 
  Loans2,660,665 2,641,726 2,651,449 2,618,362 2,610,834 
  Deposits3,590,766 3,435,933 3,395,271 3,254,815 3,256,238 
  Other Borrowed Funds70,162 72,187 74,957 82,659 95,047 
  Shareholders’ Equity364,409 359,384 350,203 340,708 331,899 
  Total Assets4,060,540 3,902,041 3,851,921 3,712,020 3,721,954 
Return on Average Assets, annualized1.01 %1.32 %1.38 %1.45 %1.34 %
Return on Average Equity, annualized11.22 %14.34 %15.21 %15.81 %14.98 %
Return on Average Tangible Equity, annualized 2
12.01 %15.36 %16.32 %17.00 %16.13 %
Average Earning Assets3,894,287 3,734,206 3,688,572 3,546,339 3,550,415 
Average Paying Liabilities2,841,304 2,705,283 2,721,961 2,639,240 2,674,795 
Interest Income28,354 29,807 29,695 27,694 28,372 
Tax-Equivalent Adjustment 3
285 292 293 235 251 
Interest Income, Tax-Equivalent 3
28,639 30,099 29,988 27,929 28,623 
Interest Expense1,152 1,169 1,335 1,539 1,918 
Net Interest Income27,202 28,638 28,360 26,155 26,454 
Net Interest Income, Tax-Equivalent 3
27,487 28,930 28,653 26,390 26,705 
Net Interest Margin, annualized2.77 %3.04 %3.08 %2.99 %2.96 %
Net Interest Margin, Tax-Equivalent, annualized 3
2.80 %3.07 %3.12 %3.02 %2.99 %
Efficiency Ratio Calculation: 4
     
Noninterest Expense$20,860 $19,423 $19,087 $18,678 $18,192 
Less: Intangible Asset Amortization52 51 5354 56 
Net Noninterest Expense$20,808 $19,372 $19,034 $18,624 $18,136 
Net Interest Income, Tax-Equivalent$27,487 $28,930 $28,653 $26,390 $26,705 
Noninterest Income7,589 7,694 8,478 8,608 9,103 
Less: Net (Loss) Gain on Securities(139)(106)196 160 88 
Net Gross Income$35,215 $36,730 $36,935 $34,838 $35,720 
Efficiency Ratio59.09 %52.74 %51.53 %53.46 %50.77 %
Period-End Capital Information:     
Total Stockholders’ Equity (i.e. Book Value)$371,186 $360,171 $353,033 $342,413 $334,392 
Book Value per Share 1
23.14 22.48 22.01 21.39 20.92 
Goodwill and Other Intangible Assets, net23,791 23,879 23,955 23,922 23,823 
Tangible Book Value per Share 1,2
21.66 20.99 20.52 19.89 19.43 
Capital Ratios:5
     
Tier 1 Leverage Ratio9.20 %9.39 %9.29 %9.37 %9.07 %
Common Equity Tier 1 Capital Ratio
13.77 %13.71 %13.79 %13.56 %13.39 %
Tier 1 Risk-Based Capital Ratio14.55 %14.51 %14.61 %14.39 %14.24 %
Total Risk-Based Capital Ratio15.69 %15.66 %15.78 %15.55 %15.48 %
Assets Under Trust Admin. & Investment Mgmt.$1,851,101 $1,778,659 $1,804,854 $1,725,754 $1,659,029 
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Arrow Financial Corporation
Selected Quarterly Information - Continued
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Footnotes:
1.
Share and per share data have been restated for the September 24, 2021, 3% stock dividend.

2.Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return on Tangible Equity exclude goodwill and other intangible assets, net from total equity.  These are non-GAAP financial measures which we believe provide investors with information that is useful in understanding our financial performance.
12/31/20219/30/20216/30/20213/31/202112/31/2020
Total Stockholders' Equity (GAAP)$371,186 $360,171 $353,033 $342,413 $334,392 
Less: Goodwill and Other Intangible assets, net23,791 23,879 23,955 23,922 23,823 
Tangible Equity (Non-GAAP)$347,395 $336,292 $329,078 $318,491 $310,569 
Period End Shares Outstanding16,041 16,020 16,039 16,009 15,981 
Tangible Book Value per Share (Non-GAAP)$21.66 $20.99 $20.52 $19.89 $19.43 
Net Income10,309 12,989 13,279 13,280 12,495 
Return on Tangible Equity (Net Income/Tangible Equity - Annualized)12.01 %15.36 %16.32 %17.00 %16.13 %
3.Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of our annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which we believe provides investors with information that is useful in understanding our financial performance.
12/31/20219/30/20216/30/20213/31/202112/31/2020
Interest Income (GAAP)$28,354 $29,807 $29,695 $27,694 $28,372 
Add: Tax Equivalent Adjustment (Non-GAAP)285 292 293 235 251 
Interest Income - Tax Equivalent (Non-GAAP)$28,639 $30,099 $29,988 $27,929 $28,623 
Net Interest Income (GAAP)$27,202 $28,638 $28,360 $26,155 $26,454 
Add: Tax-Equivalent adjustment (Non-GAAP)285 292 293 235 251 
Net Interest Income - Tax Equivalent (Non-GAAP)$27,487 $28,930 $28,653 $26,390 $26,705 
Average Earning Assets3,894,287 3,734,206 3,688,572 3,546,339 3,550,415 
Net Interest Margin (Non-GAAP)*2.80 %3.07 %3.12 %3.02 %2.99 %
4.Non-GAAP Financial Measure Reconciliation: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. We believe the efficiency ratio provides investors with information that is useful in understanding our financial performance. We define our efficiency ratio as the ratio of our noninterest expense to our net gross income (which equals our 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 December 31, 2021 CET1 ratio listed in the tables (i.e., 13.77%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
12/31/20219/30/20216/30/20213/31/202112/31/2020
Total Risk Weighted Assets2,552,821 2,511,910 2,438,445 2,404,456 2,357,094 
Common Equity Tier 1 Capital351,497 344,507 336,265 326,039 315,696 
Common Equity Tier 1 Ratio13.77 %13.71 %13.79 %13.56 %13.39 %
 * Quarterly ratios have been annualized

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Arrow Financial Corporation
Consolidated Financial Information
(Dollars in Thousands - Unaudited)
Quarter Ended:12/31/202112/31/2020
Loan Portfolio  
Commercial Loans$172,518 $240,554 
Commercial Real Estate Loans628,929 571,787 
  Subtotal Commercial Loan Portfolio801,447 812,341 
Consumer Loans 920,556 859,768 
Residential Real Estate Loans945,938 922,921 
Total Loans$2,667,941 $2,595,030 
Allowance for Credit Losses  
Allowance for Credit Losses, Beginning of Quarter$26,956 $28,446 
Loans Charged-off(719)(630)
Recoveries of Loans Previously Charged-off486 179 
Net Loans Charged-off(233)(451)
Provision for Credit Losses558 1,237 
Allowance for Credit Losses, End of Quarter$27,281 $29,232 
Nonperforming Assets  
Nonaccrual Loans$10,764 $6,033 
Loans Past Due 90 or More Days and Accruing823 228
Loans Restructured and in Compliance with Modified Terms77 145 
Total Nonperforming Loans11,664 6,406 
Repossessed Assets126 155 
Other Real Estate Owned— — 
Total Nonperforming Assets$11,790 $6,561 
Key Asset Quality Ratios  
Net Loans Charged-off to Average Loans, Quarter-to-date
  Annualized		0.03 %0.07 %
Provision for Credit Losses to Average Loans, Quarter-to-date
  Annualized		0.08 %0.19 %
Allowance for Credit Losses to Period-End Loans1.02 %1.13 %
Allowance for Credit Losses to Period-End Nonperforming Loans233.89 %456.32 %
Nonperforming Loans to Period-End Loans0.44 %0.25 %
Nonperforming Assets to Period-End Assets0.29 %0.18 %
Twelve-Month Period Ended:
Allowance for Credit Losses  
Allowance for Credit Losses, Beginning of Year$29,232 $21,187 
Impact of the Adoption of ASU 2016-13(1,300)— 
Loans Charged-off(2,239)(1,989)
Recoveries of Loans Previously Charged-off1,316 715 
Net Loans Charged-off(923)(1,274)
Provision for Credit Losses272 9,319 
Allowance for Credit Losses, End of Year$27,281 $29,232 
Key Asset Quality Ratios  
Net Loans Charged-off to Average Loans0.03 %0.05 %
Provision for Credit Losses to Average Loans0.01 %0.37 %
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