PR Newswire | Apr 27, 2021 07:06AM EDT

04/27 06:05 CDT

Arrow Reports $13.3 million in Net Income and Diluted EPS of $0.85 in Q1-- Key profitability ratios were strong in the first quarter with return on average assets (ROA) of 1.45% and return on average equity (ROE) of 15.81%.-- First-quarter provision for credit losses was ($648) thousand, due to improving economic forecasts.-- Deposits were $3.5 billion on March 31, 2021, up $218.9 million from the previous quarter.-- Over $70 million of additional Small Business Administration Paycheck Protection Program loans were funded in the first quarter of 2021, with over $210 million from inception of the program. GLENS FALLS, N.Y., April 27, 2021

GLENS FALLS, N.Y., April 27, 2021 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS(r) - AROW) announced operating results for the three-month period ended March 31, 2021. Net income for the first quarter of 2021 was $13.3 million, compared to $8.1 million in the first quarter of 2020. Net interest income increased to $26.2 million in the first quarter of 2021, compared to $23.0 million for the comparable quarter of 2020.

Annualized key profitability ratios remained strong, as measured by a return on average equity (ROE) of 15.81% and a return on average assets (ROA) of 1.45% for the first quarter, compared to 10.66% and 1.03%, respectively, for the prior year quarter.

"Arrow delivered a very strong first quarter. We continue to grow core deposits and provide support for our small business community with another $70 million in Paycheck Protection Program (PPP) loans," said Arrow President and CEO Thomas J. Murphy. "While the COVID-19 pandemic is ongoing, we had a very positive start to 2021 coupled with signs of broader economic improvement. Looking ahead, I believe our business and team are well-positioned to meet the changing needs of our customers and communities."

The following expands on our first quarter financial results:

COVID-19 Response:In the first quarter, Arrow's banking and insurance locations temporarily paused walk-in access to lobbies in response to a rise in community COVID-19 cases. Full access was restored in mid-March and we continue to use safety measures such as required face coverings, social distancing and personal protective equipment, including shields and hand sanitizing stations, along with frequent cleanings.

Also in the first quarter, Arrow reopened its PPP online portal for a new round of funding and saw continued demand from our customers. As of March 31, 2021, we had originated more than $212.8 million in PPP loans for more than 1,600 small businesses, $70.1 million of which occurred in the first quarter of 2021.

Arrow continues to monitor the impact of the pandemic on our business and closely watch local COVID-19 levels. Currently, remote work is encouraged whenever feasible for our employees, work- related travel remains paused and in-person meetings have been minimized.

Finally, Arrow is proud to share that its two banks were recently recognized as "Top Pandemic Performers" in a Rivel Banking Benchmark study of the Northeastern United States. Glens Falls National Bank ranked eighth in the state and Saratoga National Bank was in the top 25 based on customer feedback about 2020 pandemic performance.

Loan Growth:Total loans reached $2.6 billion as of March 31, 2021. Loan growth for the first quarter of 2021 was $44.2 million and increased $225.1 million, or 9.3%, from March 31, 2020. Total outstanding commercial loans increased $196.8 million, or 29.2%, as compared to March 31, 2020. The increase in commercial loans includes $162.8 million in outstanding PPP loans. The consumer loan portfolio grew by $36.5 million, or 4.4%, as compared to March 31, 2020, primarily within the indirect automobile lending program. Total outstanding residential real estate loans, net of approximately $28.8 million of loans sold, decreased $14.9 million for the first quarter of 2021. Residential real estate loans decreased $8.2 million, or 0.9%, as compared to March 31, 2020.

Deposit Growth:At March 31, 2021, deposit balances reached $3.5 billion. Deposit growth for the first quarter of 2021 was $218.9 million and increased $642.6 million, or 22.9%, from the prior-year level. Noninterest-bearing deposits represented 21.8% of total deposits at March 31, 2021, compared to 17.4% of total deposits at March 31, 2020. At March 31, 2021, other time deposits were $145.8 million, a decrease of $100.1 million compared to the prior year. Municipal deposits increased $119.5 million, or 15.0% from March 31, 2020.

Net Interest Income:Net interest income for the first quarter increased to $26.2 million, up 13.7% from $23.0 million in the comparable quarter of 2020. Loan growth generated $25.2 million in interest and fees on loans for the first quarter of 2021, an increase of 1.3% from the $24.9 million from the quarter ending March 31, 2020. Interest and fees related to PPP loans produced $1.3 million in revenue in the first quarter of 2021. Interest expense for the first quarter of 2021 was $1.5 million, a decrease of $3.7 million, or 70.5%, from the $5.2 million in expense for the comparable quarter ending March 31, 2020. The net interest margin was 2.99% for the quarter, compared to 3.05% for the first quarter of 2020. The decrease in net interest margin from the prior year was due to a variety of factors, including lower interest rates and increased cash balances.

Noninterest Income:Noninterest income for the three months ended March 31, 2021 was $8.6 million, compared to $7.7 million in the comparable 2020 quarter. Favorable market conditions contributed to the net gain on the sale of loans of $1.4 million for the first quarter of 2021, an increase from $213 thousand for the comparable prior year quarter. In addition, income from fiduciary activities and fees for other services for the three months ended March 31, 2021 increased over the comparable quarter of 2020. Other operating income decreased in the first quarter of 2021 as compared to the first quarter of 2020 as a result of several factors, including the reduction of income related to interest rate swap agreements and the net difference of gains and losses from the sale of other real estate owned and fixed assets; partially offset by an increase in income related to bank-owned life insurance.

Noninterest Expense:Noninterest expense for the first quarter of 2021 increased 5.2% to $18.7 million, from $17.8 million for the first quarter of 2020. The largest component of noninterest expense is salaries and benefits paid to our employees, which totaled $11.1 million for the first quarter of 2021.

Provision for Income Taxes:The provision for income taxes was $3.5 million for the first quarter of 2021, compared to $2.0 million for the same quarter of 2020. The effective income tax rates for the three- month periods ended March 31, 2021 and 2020 were 20.6% and 20.1%, respectively.

Asset Quality:Asset quality remained solid at March 31, 2021, as evidenced by low levels of nonperforming assets and charge-offs. Net loan losses, expressed as an annualized percentage of average loans outstanding, were 0.07% for the three-month period ended March 31, 2021, an increase from 0.05% for the three-month period ended March 31, 2020. Nonperforming loans at March 31, 2021, were $8.4 million, up $2.9 million from the year-over-year level at March 31, 2020. Nonperforming assets of $8.7 million at March 31, 2021 represented 0.22% of period-end assets, an increase from 0.20% at March 31, 2020.

Arrow adopted the Current Expected Credit Losses (CECL) methodology effective January 1, 2021. Arrow recorded a net increase to retained earnings of $120 thousand upon adoption of the new accounting standard. The transition adjustment at January 1, 2021 included a $1.30 million decrease in the allowance for credit losses on loans, and a $1.14 million establishment of an allowance for estimated credit losses on off-balance sheet credit exposures, net of the corresponding $41 thousand increase in deferred tax liabilities. For the first quarter of 2021, the provision for credit losses was ($648) thousand reflecting improving economic forecasts. The allowance for loan losses was $26.8 million on March 31, 2021, which represented 1.02% of loans outstanding, as compared to 0.98% on March 31, 2020.

Liquidity:As of March 31, 2021, Arrow's liquidity position was strong. Deposit growth for the first quarter of 2021 was $218.9 million and interest-bearing cash balances at March 31, 2021 were $406.6 million. Arrow continues to be positioned to address any unexpected volatility, which may affect cash flow and deposit balances. At March 31, 2021, contingent collateralized lines of credit were in place and available through the Federal Home Loan Bank of New York and Federal Reserve Bank (Fed), totaling $1.4 billion. Arrow has additional liquidity options currently available, including access to unsecured lines of credit such as Fed funds and brokered markets.

Capital:Total stockholders' equity was $342.4 million on March 31, 2021, up $33.0 million, or 10.7%, from March 31, 2020. Arrow's regulatory capital ratios remained strong in the first quarter of 2021. As of March 31, 2021, Arrow's Common Equity Tier 1 Capital Ratio was 13.56% and Total Risk-Based Capital Ratio was 15.49%. The capital ratios of Arrow and both its subsidiary banks continued to significantly exceed the "well capitalized" regulatory standards.

Cash and Stock Dividends:On March 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 first quarter of 2020 when adjusted for the 3% stock dividend distributed on September 25, 2020.

Industry Recognition:Both of Arrow's banking subsidiaries, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, continue to hold BauerFinancial, Inc. 5-Star Superior Bank ratings.

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. Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include Upstate Agency, LLC and North Country Investment Advisers, Inc.

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 Arrow from time to time are useful in evaluating Arrow'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, including, in particular, statements regarding the uncertainty surrounding the COVID-19 pandemic. 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. Arrow 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 Arrow's Annual Report on Form 10-K for the year ended December 31, 2020, and other filings with the Securities and Exchange Commission.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts - Unaudited)

Three Months Ended March 31

2021 2020

INTEREST AND DIVIDEND INCOME

Interest and Fees on Loans $ 25,183 $ 24,874

Interest on Deposits at Banks 85 124

Interest and Dividends on InvestmentSecurities:

Fully Taxable 1,506 2,193

Exempt from Federal Taxes 920 1,035

Total Interest and Dividend Income 27,694 28,226

INTEREST EXPENSE

Interest-Bearing Checking Accounts 219 487

Savings Deposits 565 2,471

Time Deposits over $250,000 120 533

Other Time Deposits 222 1,000

Federal Funds Purchased and

Securities Sold Under Agreements to 2 22Repurchase

Federal Home Loan Bank Advances 193 429

Junior Subordinated ObligationsIssued to

Unconsolidated Subsidiary Trusts 169 228

Interest on Financing Leases 49 50

Total Interest Expense 1,539 5,220

NET INTEREST INCOME 26,155 23,006

Provision for Credit Losses (648) 2,772

NET INTEREST INCOME AFTER PROVISION 26,803 20,234FOR CREDIT LOSSES

NONINTEREST INCOME

Income From Fiduciary Activities 2,378 2,213

Fees for Other Services to Customers 2,609 2,451

Insurance Commissions 1,640 1,632

Net Gain (Loss) on Securities 160 (374)

Net Gain on Sales of Loans 1,415 213

Other Operating Income 406 1,559

Total Noninterest Income 8,608 7,694

NONINTEREST EXPENSE

Salaries and Employee Benefits 11,138 10,383

Occupancy Expenses, Net 1,593 1,449

Technology and Equipment Expense 3,459 3,352

FDIC Assessments 270 219

Other Operating Expense 2,218 2,351

Total Noninterest Expense 18,678 17,754

INCOME BEFORE PROVISION FOR INCOME 16,733 10,174TAXES

Provision for Income Taxes 3,453 2,047

NET INCOME $ 13,280 $ 8,127

Average Shares Outstanding ^1:

Basic 15,528 15,446

Diluted 15,563 15,476

Per Common Share:

Basic Earnings $ 0.86 $ 0.53

Diluted Earnings 0.85 0.53

^1 2020 Share and Per Share Amounts have been restated for the September 25,2020, 3% stock dividend.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts - Unaudited)

March 31, December 31, March 31, 2021 2020 2020

ASSETS

Cash and Due From $ 45,602 $ 42,116 $ 32,525Banks

Interest-Bearing 406,605 338,875 106,004Deposits at Banks

InvestmentSecurities:

Available-for-Sale 464,089 365,287 378,186at Fair Value

Held-to-Maturity(Approximate FairValue of $221,360at

March 31, 2021;$226,576 atDecember 31, 2020;and

$242,804 at March 214,561 218,405 238,52031, 2020)

Equity Securities 1,796 1,636 1,689

FHLB and Federal 5,360 5,349 5,379Reserve Bank Stock

Loans 2,639,243 2,595,030 2,414,193

Allowance for (26,840) (29,232) (23,637)Credit Losses

Net Loans 2,612,403 2,565,798 2,390,556

Premises and 43,057 42,612 40,987Equipment, Net

Goodwill 21,873 21,873 21,873

Other Intangible 2,049 1,950 1,640Assets, Net

Other Assets 86,316 84,735 73,973

Total Assets $ 3,903,711 $ 3,688,636 $ 3,291,332

LIABILITIES

Noninterest-Bearing 751,884 701,341 489,151Deposits

Interest-Bearing 992,486 832,434 793,425Checking Accounts

Savings Deposits 1,463,229 1,423,358 1,146,683

Time Deposits over 100,212 123,622 135,854$250,000

Other Time Deposits 145,777 153,971 245,892

Total Deposits 3,453,588 3,234,726 2,811,005

Federal FundsPurchased and

Securities SoldUnder Agreements to 6,795 17,486 57,909Repurchase

Federal Home Loan 45,000 45,000 50,000Bank Term Advances

Junior SubordinatedObligations Issuedto Unconsolidated

Subsidiary Trusts 20,000 20,000 20,000

Finance Leases 5,205 5,217 5,249

Other Liabilities 30,710 31,815 37,771

Total Liabilities 3,561,298 3,354,244 2,981,934

STOCKHOLDERS'EQUITY

Preferred Stock, $1Par Value and1,000,000 Shares

Authorized at March31, 2021, December31, 2020 and March

31, 2020 - - -

Common Stock, $1Par Value;30,000,000 SharesAuthorized

(20,194,474 SharesIssued at March 31,2021 and December

31, 2020 and19,606,449 at March 20,194 20,194 19,60631, 2020)

Additional Paid-in 354,358 353,662 336,021Capital

Retained Earnings 51,263 41,899 37,441

Accumulated Other (3,096) (816) (2,412)Comprehensive Loss

Treasury Stock, atCost (4,651,719Shares at March 31,2021;

4,678,736 Shares atDecember 31, 2020and 4,624,348

Shares at March 31, (80,306) (80,547) (81,258)2020)

Total Stockholders' 342,413 334,392 309,398Equity

Total Liabilitiesand Stockholders' $ 3,903,711 $ 3,688,636 $ 3,291,332Equity

Arrow Financial Corporation

Selected Quarterly Information

(Dollars In Thousands, Except Per Share Amounts - Unaudited)

Quarter Ended 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020

Net Income $ 13,280 $ 12,495 $ 11,046 $ 9,159 $ 8,127

Transactions inNet Income (Netof Tax):

Net Changes inFair Value of 119 66 (53) (80) (279)EquityInvestments

Share and PerShare Data:^1

Period EndShares 15,543 15,516 15,489 15,461 15,432Outstanding

Basic AverageShares 15,528 15,499 15,472 15,441 15,446Outstanding

Diluted AverageShares 15,563 15,515 15,481 15,448 15,476Outstanding

Basic Earnings $ 0.86 $ 0.81 $ 0.71 $ 0.59 $ 0.53Per Share

Diluted Earnings 0.85 0.81 0.71 0.59 0.53Per Share

Cash Dividend 0.260 0.260 0.252 0.252 0.252Per Share

SelectedQuarterlyAverageBalances:

Interest-BearingDeposits at $ 334,155 $ 349,430 $ 242,928 $ 155,931 $ 32,787Banks

Investment 593,822 590,151 592,457 607,094 603,748Securities

Loans 2,618,362 2,610,834 2,582,253 2,518,198 2,394,346

Deposits 3,254,815 3,256,238 3,082,499 2,952,432 2,670,009

Other Borrowed 82,659 95,047 136,117 129,383 170,987Funds

Shareholders' 340,708 331,899 324,269 316,380 306,527Equity

Total Assets 3,712,020 3,721,954 3,583,322 3,437,155 3,180,857

Return onAverage Assets, 1.45 % 1.34 % 1.23 % 1.07 % 1.03 %annualized

Return onAverage Equity, 15.81 % 14.98 % 13.55 % 11.64 % 10.66 %annualized

Return onAverage Tangible 17.00 % 16.13 % 14.61 % 12.58 % 11.55 %Equity,annualized ^2

Average Earning $ 3,546,339 $ 3,550,415 $ 3,417,638 $ 3,281,223 $ 3,030,881Assets

Average Paying 2,639,240 2,674,795 2,545,435 2,457,690 2,362,515Liabilities

Interest Income 27,694 28,372 27,296 28,002 28,226

Tax-Equivalent 235 251 284 281 288Adjustment ^3

Interest Income,Tax-Equivalent ^ 27,929 28,623 27,580 28,283 28,5143

Interest Expense 1,539 1,918 2,396 3,160 5,220

Net Interest 26,155 26,454 24,900 24,842 23,006Income

Net InterestIncome, 26,390 26,705 25,184 25,123 23,294Tax-Equivalent ^3

Net InterestMargin, 2.99 % 2.96 % 2.90 % 3.05 % 3.05 %annualized

Net InterestMargin, 3.02 % 2.99 % 2.93 % 3.08 % 3.09 %Tax-Equivalent,annualized ^3

Efficiency RatioCalculation: ^4

Noninterest $ 18,678 $ 18,192 $ 17,487 $ 17,245 $ 17,754Expense

Less: IntangibleAsset 54 56 56 57 58Amortization

Net Noninterest $ 18,624 $ 18,136 $ 17,431 $ 17,188 $ 17,696Expense

Net InterestIncome, $ 26,390 $ 26,705 $ 25,184 $ 25,123 $ 23,294Tax-Equivalent

Noninterest 8,608 9,103 8,697 7,164 7,694Income

Less: Net Gain(Loss) on 160 88 (72) (106) (374)Securities

Net Gross Income $ 34,838 $ 35,720 $ 33,953 $ 32,393 $ 31,362

Efficiency Ratio 53.46 % 50.77 % 51.34 % 53.06 % 56.42 %

Period-EndCapitalInformation: $ 342,413 $ 334,392 $ 325,660 $ 317,687 $ 309,398TotalStockholders'Equity (i.e.Book Value)

Book Value per 22.03 21.55 21.02 20.55 20.05Share ^1

Goodwill andOther Intangible 23,922 23,823 23,662 23,535 23,513Assets, net

Tangible BookValue per Share 20.49 20.02 19.50 19.03 18.53^1,2

Capital Ratios:^5

Tier 1 Leverage 9.37 % 9.07 % 9.17 % 9.32 % 9.87 %Ratio

Common EquityTier 1 Capital 13.56 % 13.39 % 13.20 % 13.07 % 12.84 %Ratio

Tier 1Risk-Based 14.39 % 14.24 % 14.06 % 13.94 % 13.72 %Capital Ratio

Total Risk-Based 15.49 % 15.48 % 15.28 % 15.10 % 14.76 %Capital Ratio

Assets UnderTrust Admin. & $ 1,725,754 $ 1,659,029 $ 1,537,128 $ 1,502,866 $ 1,342,531Investment Mgmt.

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 25, 2020, 3% stock dividend.

Non-GAAP Financial Measures Reconciliation: Tangible Book Value and Tangible Equity exclude goodwill and other intangible assets, net from total equity.2. These are non-GAAP financial measures which Arrow believes provides investors with information that is useful in understanding its financial performance.

3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020

TotalStockholders' $ 342,413 $ 334,392 $ 325,660 $ 317,687 $ 309,398Equity (GAAP)

Less:Goodwill andOther 23,922 23,823 23,662 23,535 23,513Intangibleassets, net

TangibleEquity $ 318,491 $ 310,569 $ 301,998 $ 294,152 $ 285,885(Non-GAAP)

Period EndShares 15,543 15,516 15,489 15,461 15,432Outstanding

Tangible BookValue perShare (Non-

GAAP) $ 20.49 $ 20.02 $ 19.50 $ 19.03 $ 18.53

Net Income 13,280 12,495 11,046 9,159 8,127

Return onAverageTangibleEquity (Net 17.00 % 16.13 % 14.61 % 12.58 % 11.55 %Income/TangibleEquity -Annualized)

Non-GAAP Financial Measures Reconciliation: Net Interest Margin, Tax-Equivalent is the ratio of our annualized tax-equivalent net interest3. 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.

3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020

Interest $ 27,694 $ 28,372 $ 27,296 $ 28,002 $ 28,226Income (GAAP)

Add:Tax-Equivalent 235 251 284 281 288adjustment(Non-GAAP)

InterestIncome - Tax $ 27,929 $ 28,623 $ 27,580 $ 28,283 $ 28,514Equivalent(Non-GAAP)

Net Interest $ 26,155 $ 26,454 $ 24,900 $ 24,842 $ 23,006Income (GAAP)

Add:Tax-Equivalent 235 251 284 281 288adjustment(Non-GAAP)

Net InterestIncome - Tax $ 26,390 $ 26,705 $ 25,184 $ 25,123 $ 23,294Equivalent(Non-GAAP)

Average $3,546,339 $3,550,415 $3,417,638 $3,281,223 $3,030,881Earning Assets

Net InterestMargin 3.02 % 2.99 % 2.93 % 3.08 % 3.09 %(Non-GAAP)*

Non-GAAP Financial Measures: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. Arrow4. 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).

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, and5. calculated in accordance with, bank regulatory capital rules. All prior quarters reflect actual results. The CET1 ratio at March 31, 2021 listed in the tables (i.e., 13.56%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).

3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020

Total Risk Weighted $2,404,456 $2,357,094 $2,321,637 $2,283,430 $2,275,902Assets

Common Equity Tier 1 326,039 315,696 306,356 298,362 292,165Capital

Common Equity Tier 1 13.56 % 13.39 % 13.20 % 13.07 % 12.84 %Ratio

* Quarterly ratios have been annualized

Arrow Financial Corporation

Consolidated Financial Information

(Dollars in Thousands - Unaudited)

Quarter Ended: 3/31/2021 12/31/2020 3/31/2020Loan Portfolio

Commercial Loans $ 288,551 $ 240,554 $ 147,100

Commercial Real Estate 581,507 571,787 526,130Loans

Subtotal Commercial Loan 870,058 812,341 673,230Portfolio

Consumer Loans 861,171 859,768 824,709

Residential Real Estate 908,014 922,921 916,254Loans

Total Loans $ 2,639,243 $ 2,595,030 $ 2,414,193

Allowance for CreditLosses

Allowance for CreditLosses, Beginning of $ 29,232 $ 28,446 $ 21,187Quarter

Impact of the Adoption of (1,300) - -ASU 2016-13

Loans Charged-off (633) (630) (481)

Less Recoveries of Loans 189 179 159Previously Charged-off

Net Loans Charged-off (444) (451) (322)

Provision for Credit (648) 1,237 2,772Losses

Allowance for Credit $ 26,840 $ 29,232 $ 23,637Losses, End of Quarter

Nonperforming Assets

Nonaccrual Loans $ 8,087 $ 6,033 $ 4,943

Loans Past Due 90 or More 242 228 437Days and Accruing

Loans Restructured and inCompliance with Modified 97 145 136Terms

Total Nonperforming Loans 8,426 6,406 5,516

Repossessed Assets 242 155 160

Other Real Estate Owned - - 782

Total Nonperforming $ 8,668 $ 6,561 $ 6,458Assets

Key Asset Quality Ratios

Net Loans Charged-off toAverage Loans,

Quarter-to-date 0.07 % 0.07 % 0.05 %Annualized

Provision for CreditLosses to Average Loans, (0.10)% 0.19 % 0.47 %Quarter-to-dateAnnualized

Allowance for CreditLosses to Period-End 1.02 % 1.13 % 0.98 %Loans

Allowance for CreditLosses to Period-End 318.54 % 456.32 % 428.52 %Nonperforming Loans

Nonperforming Loans to 0.32 % 0.25 % 0.23 %Period-End Loans

Nonperforming Assets to 0.22 % 0.18 % 0.20 %Period-End Assets

View original content: http://www.prnewswire.com/news-releases/arrow-reports-13-3-million-in-net-income-and-diluted-eps-of-0-85-in-q1--301277722.html

SOURCE Arrow Financial Corporation