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Arrow Financial (Arrow Financial) Probability of Financial Distress (%) : 0.07% (As of Jun. 05, 2024)


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What is Arrow Financial Probability of Financial Distress (%)?

Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Arrow Financial's Probability of Financial Distress (%) is 0.07%.

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Competitive Comparison of Arrow Financial's Probability of Financial Distress (%)

For the Banks - Regional subindustry, Arrow Financial's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Arrow Financial's Probability of Financial Distress (%) Distribution in the Banks Industry

For the Banks industry and Financial Services sector, Arrow Financial's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Arrow Financial's Probability of Financial Distress (%) falls into.



Arrow Financial Probability of Financial Distress (%) Calculation

Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.

The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:

LPFD= -20.12 * NIMTAAVG + 1.60 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 * CASHMTA + 0.070 * MB - 0.09 * PRICE -8.87
=-7.31

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD=1/(1 + e^(-LPFD))*100%
=0.07%

The eight explanatory variables are:

1. NIMTAAVG = Net Income to Market Total Assets

NIMTAAVG=Net Income / Market Total Assets
=Net Income / (Market Cap + Total Liabilities)

*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.

2. TLMTA = Total liabilities to Market Total Assets

TLMTA=Total Liabilities / Market Total Assets

3. CASHMTA = Cash to Market Total Assets

For banks, CASHMTA is measured as:


4. EXRETAVG = Excess Return compared to the S&P 500

EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.

5. SIGMA = Standard Deviation of Daily Returns

For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).

6. RSIZE = Relative Size

RSIZE=log (Market Cap / Total Market Cap of S&P 500 companies)

7. MB = Market to Adjusted Book Equity Ratio


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


Arrow Financial  (NAS:AROW) Probability of Financial Distress (%) Explanation

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Arrow Financial Probability of Financial Distress (%) Related Terms

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Arrow Financial (Arrow Financial) Business Description

Industry
Traded in Other Exchanges
Address
250 Glen Street, Glens Falls, NY, USA, 12801
Arrow Financial Corp is a holding company. The company provides various advisory and administrative services and coordinates the general policies and operations of the banks. It provides financial products, including online and mobile banking, mortgages, commercial loans, investments, and others. The company also provides lending services including commercial and industrial lending primarily to small and mid-sized companies; mortgage lending for residential and commercial properties; and consumer installment and home equity financing. The key source of company's revenue is interest income, fees, commission earned through its subsidiaries.
Executives
Andrew J Wise officer: SVP, Chief Operating Officer 250 GLEN STREET, GLENS FALLS NY 12801
David D Kaiser officer: SVP AMETHYST DRIVE, QUEENSBURY NY 12804
Read Colin L director 81 BLAIR ROAD, PLATTSBURGH NY 12901
William L Owens director 42 BLUE HERRON WAY, PLATTSBURGH NY 12901
Elizabeth Miller director 250 GLEN STREET, GLENS FALLS NY 12801
Gary C Dake director 514 LOCUST GROVE ROAD, GREENFIELD CENTER NY 12833
Mark Behan director 250 GLEN STREET, GLENS FALLS NY 12801
Penko Krassimir Ivanov officer: EVP, Treasurer and CFO C/O ARROW FINANCIAL CORPORATION, 250 GLEN STREET, GLENS FALLS NY 12801
David S. Demarco officer: Senior Vice President 7 INGERSOL ROAD, SARATOGA SPRINGS NY 12866
Raymond F O'conor officer: Senior Vice President 7 ROLLING GREEN DRIVE, WILTON NY 12831
Gregory J Champion director 250 GLEN STREET, GLENS FALLS NY 12801
Thomas L Hoy director ARROW FINANCIAL CORPORATION, 250 GLEN STREET, GLENS FALLS NY 12801
Reisman Richard J Dmd director 9 ST. ANDREWS DRIVE, QUEENSBURY NY 12804
Edward J Campanella officer: SVP, Treasurer & CFO 42 MAXWELL ROAD, LATHAM NY 12110
Michael B Clarke director 58 CHRISTIANA COURT, LAKE GEORGE NY 12845

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