Arrow Financial Q3 profit falls on merger costs

Overview

• U.S. regional bank's Q3 net income fell sharply due to $15.6 mln merger expenses

• Core EPS for Q3 was $0.97, reflecting underlying performance excluding merger costs

• Company completed Adirondack Bancorp acquisition, adding $600 mln in loans and $900 mln in deposits

Outlook

• Company expects to complete core banking system integration in the next few weeks

• Arrow remains on track to realize about 95% of anticipated cost savings by Q1 2027

Result Drivers

• ACQUISITION IMPACT - Co said Q3 results were shaped by the Adirondack Bancorp acquisition, which drove increases in loans, deposits and earning assets

• LOAN GROWTH - Co said organic loan growth was about $60 mln in Q3, 6.8% annualized

• NET INTEREST MARGIN EXPANSION - Co said net interest margin rose to 3.81% in Q3, mainly due to lower-cost deposits and higher loan yields from the acquisition

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "buy"

• Wall Street's median 12-month price target for Arrow Financial Corp is $43.00, about 13.1% above its October 28 closing price of $38.03

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 11 three months ago

Reuters Recommended Reads

• Oct 28 - Stock Yards Bancorp Q3 profit rises 20% on merger boost

• Oct 27 - NBT Bancorp Q3 profit rises on loan growth, higher net interest income

• Oct 27 - UMB Financial Q3 profit rises on record loans

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)