Glens Falls Chronicle Serving the Glens Falls/Lake George region; Warren, Washington and northern Saratoga counties since 1980
By Mark Frost, Chronicle Editor
Is the bank in trouble?, we asked. “Absolutely not,” Mr. DeMarco replied. “We are so strong.” He cited “strong capital, strong liquidity, strong history of a great company.”
“I’ve been with the company for 35 years, the company itself has been here for 172 years,” said Mr. DeMarco, who was, and still is, president of the Arrow subsidiary Saratoga National. Mr. DeMarco took over as CEO from Tom Murphy, who, in a surprise to many, “terminated” his employment in May after leading the company since 2012.
This came as Arrow had received NASDAQ non-compliance notices for failure to file “its Annual Report on Form 10-K” and “Quarterly report on Form 10-Q.” NASDAQ warned that the stock could be delisted if the situation wasn’t corrected.
New CFO Penko Ivanov told The Chronicle last month that Arrow expected to fulfill its obligations as required by June 2. We followed up now with Mr. DeMarco.
The NASDAQ notice required Arrow to provide a plan for coming into compliance.
“Yes, we filed that by the date of June 2,” Mr. DeMarco said. “As a publicly traded company, I can’t say much, but I can say that we’re very close to filing the 10-K. And then the 10-Q, our first quarter, will come probably literally days after that.”
Mr. DeMarco said the annual meeting will be scheduled right after they “file the K.” “We have to work with our corporate auditor for their sign off…we’re almost at the finish line. So it should be happening quickly.”
The Chronicle asked: What was the problem? Why the delay? Mr. DeMarco replied, “Well, so we had a [technology] conversion. We have internal controls….and with the conversion, those same internal controls were being done with a different system. So we had to review those internal controls, and make sure that they were functioning properly, which is what we’ve been working on during this time, during this delay and identifying any issues we might have for that.
“The good news, as we’ve reported previously, publicly, is we don’t anticipate any changes in the financials that were reported for last year.”
How is Arrow’s business doing? “Obviously, these are somewhat challenging times,” replied Mr. DeMarco. “We’ve had some bank failures back earlier in the year, interest rates are, while they’re not at record highs, it sure feels that way, a 5% increase in the Fed funds rate in a year or so.
“But we’ve been through the good and the bad, the ups and the downs…And we’re such a strong company with our capital and our liquidity, our loan portfolio quality. We’re a conservative organization…We’ve been through, quite frankly, tougher times than this, and survived.”
Mr. DeMarco touted Arrow’s top management. “This leadership change,” he said. “We didn’t bring somebody in from somewhere else. I know this company. Not everything I’ve learned, but a lot of what I learned — from folks like [former CEOs] Tom Hoy and Mike Massiano.”
Mr. DeMarco lauded Mr. Ivanov. “I’ve worked with many, many CFO’s in my career. He’s the best I’ve ever seen. He’s battle tested. He’s come from some banks that have had some challenges, which we never thought would be an issue, but it’s certainly nice to know. And he understands community banking.”
Mr. DeMarco also credited Arrow’s “great Chief Operating Officer in Andy Wise, he’s been with us a while. Dave Kaiser is our Chief Credit Officer — Dave took my old job 20 years ago. Our executive team is as solid as they come.”
Arrow’s stock price has fallen sharply, briefly below $18 a share in recent weeks, half its year high above $36. Tuesday’s share price closed at $20.78. Mr. DeMarco downplayed the swoon. “In my 35 years here, I’ve come to find out that there’s not a lot we can do about it. We’ve had years where we set records in profits and Bank of America and Citibank and JP Morgan didn’t. Their stocks went down so our stock went down. We’ve had years where they’ve had great years and we were doing fine, but nothing special and our stock went through the roof. We get broad brushed into that category. Very little impact on our price from our performance,” he said.
Mr. DeMarco referenced “a chapter in our history where we bought some banks in Vermont. And it was messy, and we lost about $30 million that year. And our stock fell to $5 a share.” Here’s where he cited “strong capital, strong liquidity, strong history of a great company. We fought through that and got back to low 30s.”
He asks, “Do I like the fact that it’s trading in the mid 21, I think it hit 22? No, but not much we can do about it….I’m confident when the industry swings back, we’ll swing back with them.”
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