Arrow Financial Corporation (NasdaqGS® – AROW) announced operating results for the three and six-month periods ended June 30, 2021. Net income for the second quarter of 2021 was $13.3 million, compared to $9.2 million in the second quarter of 2020. Net interest income increased to $28.4 million in the second quarter of 2021, compared to $24.8 million for the comparable quarter of 2020. For the six-months ended June 30, 2021, net income and net interest income were $26.6 million and $54.5 million, respectively as compared to $17.3 million and $47.8 million for the six-months ended June 30, 2020.
Annualized key profitability ratios remained strong, as measured by a return on average equity (ROE) of 15.21% and a return on average assets (ROA) of 1.38% for the second quarter, compared to 11.64% and 1.07%, respectively, for the prior year quarter.
"Arrow delivered another solid quarter marked by both strong core earnings and profitability ratios," said Arrow President and CEO Thomas J. Murphy. "As the economy improves and pandemic-related restrictions are lifted, Arrow is well-positioned to provide both traditional banking for those eager to return to it, as well as digital banking for the growing group of customers who embraced our digital platform over the past year. We continue to make strategic investments in our digital customer experience and branch network to support changing customer needs."
Arrow announced plans to renovate a large portion of its Glens Falls headquarters, including workspace for support teams and the Main Office branch. Additionally, Saratoga National Bank announced plans to consolidate its Jones Road and Ballard Road Wilton branches this fall into a nearby office in a high-traffic commercial district. The new location and design will provide efficiencies and enhance our ability to develop relationships, even as routine transactions continue to migrate online.
Finally, Arrow's two banks rolled out digital enhancements in the second quarter, including a mobile app for business customers and SecureLOCKTM Equip, an addition to our consumer mobile apps that allows users to freeze their debit cards.
The following expands on our second-quarter financial results:
COVID-19 Response: In the second quarter, as restrictions were lifted by the state and CDC, Arrow likewise lifted the face covering requirement at its banking and insurance offices. Vaccination was and continues to be strongly encouraged for team members, and Arrow is monitoring vaccination rates of its employees. Personal protective equipment, including shields and hand sanitizing stations remain in place and our Business Continuity Task Force continues to meet regularly to address the latest guidance and to monitor the impact of the Delta variant of COVID-19.
In the second quarter, the Arrow lending team accelerated the forgiveness process for PPP borrowers, with about half of loans forgiven as of quarter-end.
Loan Growth: Total loans were $2.6 billion as of June 30, 2021. Loan growth for the second quarter of 2021 was $4.8 million and increased $82.2 million, or 3.2%, from June 30, 2020. Total outstanding commercial loans decreased $29.0 million, or 3.3%, in the second quarter. PPP loans, included in the commercial portfolio, decreased $46.0 million in the second quarter. The consumer loan portfolio grew by $31.4 million, or 3.6%, in the second quarter, primarily within the indirect automobile lending program. Total outstanding residential real estate loans, net of approximately $15.9 millionof loans sold, increased $2.5 million for the second quarter of 2021.
Deposit Growth: At June 30, 2021, deposit balances were $3.4 billion. Deposits decreased in the second quarter of 2021 by $15.6 million and increased by $369.3 million, or 12.0%, from the prior-year level. Municipal deposits decreased $49.0 million in the second quarter consistent with seasonal municipal behavior. Non-municipal deposits increased $33.4 million for the quarter. Noninterest-bearing deposits represented 22.2% of total deposits at June 30, 2021, compared to 21.8% of total deposits at June 30, 2020....
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