Breaking Down Arrow Financial Corporation (AROW) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and wondering how Arrow Financial Corporation (AROW) is performing? With total assets reaching $4.24 billion and net income available to common shareholders at $37.9 million in 2024, understanding the financial drivers behind AROW's stability and growth is more crucial than ever. Want to explore how key metrics like a Return on Average Assets of 0.90% and a Return on Average Common Equity of 9.17% could influence your investment strategy? Keep reading to unlock essential insights into Arrow Financial Corporation's financial health and make informed decisions.

Arrow Financial Corporation (AROW) Revenue Analysis

Understanding Arrow Financial Corporation's revenue streams is crucial for investors seeking to assess the company's financial health and growth potential. AROW operates primarily as a community bank, deriving its revenue from various sources related to banking activities.

The primary revenue sources for Arrow Financial Corporation include:

• Net Interest Income: This represents the difference between the revenue generated from interest-earning assets, such as loans and investments, and the interest expenses paid on liabilities like deposits. Net interest income is a significant driver of AROW's overall revenue.
• Non-Interest Income: This includes income from services such as fees for deposit accounts, wealth management services, and other banking-related activities. Non-interest income provides diversification to AROW's revenue streams.

Analyzing year-over-year revenue growth rates provides insights into AROW's performance and trends. While specific figures require up-to-date financial reports, examining historical data reveals patterns of growth or contraction. Investors should consider both percentage increases/decreases and the underlying factors driving these changes.

To gain a comprehensive understanding of AROW's revenue, it's essential to assess the contribution of different business segments. As a community bank, AROW's primary business segments revolve around:

• Commercial Banking: Revenue generated from loans, deposits, and other services offered to businesses.
• Retail Banking: Revenue derived from individual customers through products like mortgages, personal loans, and deposit accounts.
• Wealth Management: Fees and commissions earned from providing wealth management and trust services.

Significant changes in revenue streams may indicate shifts in AROW's strategic focus, market conditions, or competitive landscape. Investors should closely monitor any such changes and evaluate their potential impact on the company's financial performance. Here is more information about Mission Statement, Vision, & Core Values of Arrow Financial Corporation (AROW).

For example, a table illustrating revenue contributions from different segments might look like this (Note: This is a hypothetical example and not actual data):

Note: The table above contains hypothetical data for illustrative purposes only and does not reflect actual financial figures for Arrow Financial Corporation.

Arrow Financial Corporation (AROW) Profitability Metrics

Analyzing Arrow Financial Corporation's (AROW) profitability involves examining several key metrics to understand its financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins, as well as trends in these figures over time. Additionally, comparing these profitability ratios with industry averages provides valuable insights.

For the year 2024, Arrow Financial Corporation reported a net income of $29.7 million, or $1.77 per share. While this indicates overall profitability, it's crucial to delve deeper into the various components that contribute to this figure.

Here's a breakdown of Arrow Financial Corporation's (AROW) profitability metrics:

• Gross Profit: While specific gross profit figures are not detailed, Arrow Financial Corporation reported total revenue of $223.067 million and cost of revenue of $78.749 million for 2024.
• Operating Income: The Earnings Before Interest and Tax (EBIT) was $41.870 million in 2024.
• Net Income: For 2024, the net income was reported as $29.709 million.

To provide a clearer picture of profitability, we can calculate the profit margins:

• Gross Profit Margin: Calculated as (Revenue - Cost of Revenue) / Revenue.
• Operating Profit Margin: Calculated as Operating Income / Revenue.
• Net Profit Margin: Calculated as Net Income / Revenue.

Based on the available data for 2024:

• Net Interest Margin: 2.72% (2.74% FTE).
• Profit Margin: 22%.

A comparison of quarterly net profits shows:

• December 2024: $4 million (down 42.1% year-over-year).

Below is a table summarizing key financial figures for Arrow Financial Corporation:

Arrow Financial Corporation's net interest income for 2024 was $111.7 million, an increase from $104.8 million in 2023. This was primarily attributed to higher interest income outpacing the growth in interest expense. However, it is important to note that Arrow's net income decreased slightly compared to 2023 due to increased interest expenses from higher deposit rates.

Furthermore, the return on average assets was 0.70%, which was reduced by 11bps due to non-core items and the provision for credit losses. Net charge-offs for the year were 0.09%.

To gain more insights into the company's guiding principles, refer to Mission Statement, Vision, & Core Values of Arrow Financial Corporation (AROW).

Arrow Financial Corporation (AROW) Debt vs. Equity Structure

Understanding how Arrow Financial Corporation finances its operations and growth is crucial for investors. This involves examining the company's debt levels, debt-to-equity ratio, and recent financing activities.

As of December 31, 2024, Arrow Financial Corporation had a total debt of $164.941 million. This includes both short-term and long-term obligations. Specifically, the company reported short-term debt of $7.132 million and long-term debt of $157.809 million.

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. As of December 31, 2024, Arrow Financial Corporation's debt-to-equity ratio stood at 0.44. This ratio is calculated by dividing the total liabilities by shareholders equity. A debt-to-equity ratio of 0.44 suggests that Arrow Financial Corporation has a balanced approach to financing, relying on both debt and equity.

Here's a breakdown of Arrow Financial Corporation's debt components:

• Short-term debt: $7.132 million
• Long-term debt: $157.809 million
• Total debt: $164.941 million

A comparison to industry standards can provide further insight. The financial services industry is diverse, and typical debt-to-equity ratios can vary. However, a ratio of 0.44 generally indicates a moderate level of financial risk. This level suggests that the company isn't overly reliant on debt, which can be a positive sign for investors.

Recent activities such as debt issuances, credit ratings, or refinancing can significantly impact a company's financial structure. However, specific details on these activities for Arrow Financial Corporation were not available in the provided data. Monitoring these activities is essential for a comprehensive understanding of the company's financial strategy.

Balancing debt and equity is a strategic decision for any company. Debt financing can provide capital for growth and operational activities, but it also introduces financial risk through interest payments and the obligation to repay the principal. Equity funding, on the other hand, doesn't require repayment but dilutes ownership. Arrow Financial Corporation's current debt-to-equity ratio suggests a balanced approach, leveraging debt to enhance returns without excessive risk.

For further insights into Arrow Financial Corporation's values and objectives, you might find this link helpful: Mission Statement, Vision, & Core Values of Arrow Financial Corporation (AROW).

Arrow Financial Corporation (AROW) Liquidity and Solvency

Assessing Arrow Financial Corporation's (AROW) financial health requires a close look at its liquidity and solvency positions. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations. Here's a breakdown of key metrics and trends:

Assessing Arrow Financial Corporation's Liquidity:

Understanding Arrow Financial Corporation's (AROW) liquidity is crucial for assessing its short-term financial health. Here's an overview:

• Current and Quick Ratios: These ratios provide insights into AROW's ability to cover its short-term liabilities with its current assets. While specific current and quick ratios for 2024 are not available in the search results, these metrics are essential for evaluating AROW's liquidity position.
• Analysis of Working Capital Trends: Examining the trends in AROW's working capital (current assets minus current liabilities) helps to understand its operational efficiency and short-term financial stability.
• Cash Flow Statements Overview: AROW's cash flow statements reveal the trends in operating, investing, and financing cash flows, offering a comprehensive view of its liquidity management.
• Potential Liquidity Concerns or Strengths: Analyzing these factors helps identify any potential liquidity concerns or strengths for AROW.

Liquidity Position

Arrow Financial Corporation maintains a strong on-balance sheet liquidity position. As of the first quarter of 2024, the company reported $450 million in on-balance sheet liquidity, which represents 10.4% of its total assets. The company also tests the contingent liquidity plan to ensure that an adequate amount of available funds can be generated to meet a wide variety of potential liquidity crises, including a severe crisis.

Cash Flow Statement Overview

The cash flow statement for Arrow Financial Corporation provides insights into the company's cash generation and usage. Here's a summary of the key trends based on the 2024 data:

• Cash from Operations: In 2024, Arrow Financial Corporation reported $34.5 million in cash from operations, a significant increase compared to $20.6 million in 2023.
• Cash from Investing: The company used $89.0 million in cash for investing activities in 2024, which is higher than the $82.7 million used in 2023.
• Cash from Financing: Arrow Financial Corporation generated $66.5 million in cash from financing activities in 2024, a decrease from $139.9 million in 2023.
• Net Income: The Net income to Stockholders was $29.7 million in 2024, compared to $30.1 million in 2023.

Here is a table summarizing the cash flow activities for Arrow Financial Corporation:

Other Factors Affecting Liquidity

It is important to note that Arrow's liquidity can be significantly and negatively impacted by factors outside the Company's control, including general disruptions in the financial markets, governmental fiscal and monetary policies, regulatory changes, negative investor perceptions of Arrow's creditworthiness, unexpected increases in cash or collateral requirements and the consequent inability to monetize available liquidity resources.

More information on Arrow Financial Corporation can be found here: Breaking Down Arrow Financial Corporation (AROW) Financial Health: Key Insights for Investors

Arrow Financial Corporation (AROW) Valuation Analysis

Assessing whether Arrow Financial Corporation (AROW) is overvalued or undervalued involves examining several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios, and analyst consensus.

Based on the latest available information, here's a breakdown:

• Price-to-Earnings (P/E) Ratio: As of February 1, 2024, Arrow Financial Corporation's P/E ratio stood at 9.9x, compared to the industry average of 12.7x. This suggests that the stock might be undervalued relative to its peers.
• Price-to-Book (P/B) Ratio: The P/B ratio, a key indicator of how the market values the company's net assets, was at 0.9x.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: As of December 31, 2023, the EV/EBITDA ratio was 7.4x.

Analyzing stock price trends provides additional insights:

• Stock Price Trends: Over the past year, Arrow Financial Corporation (AROW) has shown some volatility. As of April 19, 2024, AROW was trading at $26.44.

Dividend yield and payout ratios are also critical for investors seeking income:

• Dividend Yield: Arrow Financial Corporation has a dividend yield of approximately 4.76%, offering an attractive income stream for investors.
• Payout Ratio: The dividend payout ratio is around 47.2%, indicating that the company distributes a moderate portion of its earnings as dividends.

Here’s a summary of Arrow Financial Corporation's valuation metrics:

For further insights into the investors of Arrow Financial Corporation, consider reading: Exploring Arrow Financial Corporation (AROW) Investor Profile: Who’s Buying and Why?

Arrow Financial Corporation (AROW) Risk Factors

Understanding the risks that Arrow Financial Corporation (AROW) faces is crucial for investors. These risks can be both internal and external, significantly impacting the company’s financial health. External factors include industry competition, regulatory changes, and overall market conditions. Internal risks often involve operational, financial, and strategic challenges which are usually highlighted in the company's earnings reports and filings.

Here’s a look at some key risk areas for Arrow Financial Corporation:

• Industry Competition: The financial services industry is highly competitive. Arrow Financial Corporation competes with other banks, credit unions, and non-bank financial institutions. Increased competition can pressure profit margins and limit growth opportunities.
• Regulatory Changes: Banks are subject to extensive regulation. Changes in laws and regulations can increase compliance costs, restrict certain activities, and impact profitability. For example, changes in capital requirements or lending regulations could affect Arrow Financial Corporation's operations.
• Market Conditions: Economic downturns, changes in interest rates, and other market factors can significantly impact a bank’s performance. Rising interest rates can reduce demand for loans, while an economic recession can increase loan defaults.
• Credit Risk: There is a risk that borrowers will default on their loans, which would have a direct impact on the company’s financial health.
• Interest Rate Risk: Fluctuations in interest rates can affect a bank’s earnings. Changes in the interest rate environment can impact net interest margin, which is a key driver of profitability.

To mitigate these risks, Arrow Financial Corporation likely has strategies and plans in place. These could include diversifying their loan portfolio, closely monitoring credit quality, and implementing hedging strategies to manage interest rate risk. Investors can often find details about these strategies in the company's annual reports and SEC filings.

For further insights into the guiding principles of Arrow Financial Corporation, explore: Mission Statement, Vision, & Core Values of Arrow Financial Corporation (AROW).

Arrow Financial Corporation (AROW) Growth Opportunities

Arrow Financial Corporation's (AROW) growth hinges on several factors, including strategic initiatives, market conditions, and competitive positioning. Understanding these elements is crucial for investors assessing the company's future potential. Exploring Arrow Financial Corporation (AROW) Investor Profile: Who’s Buying and Why?

Analysis of key growth drivers:

• Product Innovations: Arrow Financial Corporation focuses on enhancing its existing suite of financial products and services to meet the evolving needs of its customer base. This includes digital banking solutions, wealth management services, and tailored loan products.
• Market Expansions: The company strategically expands its footprint within the New York region, targeting areas with strong economic growth and demographic trends. This expansion includes opening new branches and increasing its presence in existing markets.
• Acquisitions: Arrow Financial Corporation may pursue strategic acquisitions to complement its existing business lines and expand its market share. These acquisitions can provide access to new technologies, customer segments, or geographic areas.

Future revenue growth projections and earnings estimates are influenced by several factors. For example, according to the research report produced on 2024-01-22, analysts estimated that Arrow Financial Corp. would post $172.20 million in revenue for the current fiscal year.

Strategic initiatives and partnerships that may drive future growth:

• Technology Investments: Arrow Financial Corporation is investing in technology to enhance its digital banking capabilities, improve operational efficiency, and strengthen cybersecurity. These investments are expected to drive customer acquisition, improve customer satisfaction, and reduce costs.
• Community Engagement: The company actively engages with the communities it serves through philanthropic initiatives, sponsorships, and volunteer programs. These efforts enhance the company's reputation and foster customer loyalty.
• Strategic Partnerships: Arrow Financial Corporation may form strategic partnerships with other financial institutions, technology providers, or community organizations to expand its reach and offer new products and services.

Competitive advantages that position the company for growth include:

• Strong Local Presence: Arrow Financial Corporation has a strong local presence in the New York region, which allows it to build close relationships with its customers and communities. This local presence provides a competitive advantage over larger national banks.
• Experienced Management Team: The company has an experienced management team with a proven track record of success. This management team provides strong leadership and strategic direction.
• Conservative Financial Management: Arrow Financial Corporation follows a conservative approach to financial management, which has allowed it to maintain a strong capital position and weather economic downturns. This financial strength provides a competitive advantage over less financially stable institutions.

To provide a clearer picture of Arrow Financial Corporation's financial standing, here's a summary of key financial data based on the most recent reports: