Arrow Financial (AROW) in Glens Falls, N.Y., posted higher earnings in the fourth quarter as it benefited from lower expenses related interest-earning deposits.

The company reported a profit of $5.8 million, up 4.2% from the fourth quarter of 2012. At 47 cents per share, Arrow beat by 4 cents the average estimates of analysts polled by Bloomberg.

Net interest income was $14.7 million, up 3.5% from the same period a year earlier. A downtick in interest income from loans was offset by lower expenses on NOW accounts and time deposits. The company's net interest margin fell 7 basis points, to 3.13%.

Arrow's noninterest income held steady at $6.9 million. Gains from the sale of loans fell, but revenue from fiduciary activities, insurance commissions and other customer service fees increased. Noninterest expenses rose 2.3% due to higher costs for salaries and employee benefits, as well as occupancy costs.

Low loan delinquency rates allowed the company to forego a loan-loss provision in the fourth quarter. Arrow had a $175,000 loan-loss provision in the fourth quarter of 2012. it reported $150,000 in net loan chargeoffs, a 20% increase from the same period a year ago.

Arrow has $2.2 billion of assets.

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