Arrow Reports a Significant Increase in Earnings and Strong Asset Quality Ratios.GLENS FALLS Glens Falls, city (1990 pop. 15,023), Warren co., E central N.Y., in the foothills of the Adirondack Mts. and on the Hudson River; settled 1762, inc. as a city 1908. Major industries include lumber, paper, and electronics. A navy training center is there. , N.Y., July July: see month. 15 /PRNewswire-FirstCall/ -- Arrow Financial Corporation announced operating results for the three and six-month periods ended June 30, 2008. Net income for the second quarter ended June 30, 2008 was $5.4 million, representing diluted earnings per share diluted earnings per shareAn earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $.51, up $.12 or 30.8% from $.39 per share amount earned in the second quarter of 2007, when net income was $4.2 million. For the first six months of 2008, net income of $10.4 million increased 25% from the $8.3 million earned for 2007. Diluted earnings per share equaled $.98 for the first six months of 2008, up from $.77 per share earned during the comparative period in 2007. Thomas L. Hoy Hoy, island, 13 mi (21 km) long and 6 mi (9.7 km) wide, off N Scotland, second largest of the Orkney Islands. It is located at the southwestern side of the Scapa Flow anchorage. , Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "We are pleased to report a significant increase in earnings while asset and credit quality ratios remain strong. The favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. quarterly and six month earnings performances were primarily attributable to significant increases in net interest income as a result of a wider net interest margin and growth in average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin . Average earning assets were $1.548 billion in the second quarter of 2008 versus $1.469 billion for the same quarter last year, an increase of 5.4%. Net interest income was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by a rising net interest margin, which increased 60 basis points to 3.92% for the second quarter of 2008 versus the 2007 comparative period and increased 36 basis points as compared to the margin of 3.56% for the first quarter of 2008. Lower funding costs and a more positively sloped yield curve, a result of Federal Reserve Bank actions to lower the targeted federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. 325 basis points since the beginning of September September: see month. 2007, were principally responsible for the expansion in net interest margin. In essence, the volume of our interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities that repriced to lower rates during the quarter significantly exceeded the volume of our earning assets that repriced to lower yields. As we previously reported, Visa successfully completed an initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ) during the first quarter of 2008 which included a mandatory partial redemption of our holdings in Visa shares. This transaction resulted in a positive impact on our net income of $637 thousand after-tax, or $.06 diluted earnings per share, both in the first quarter of 2008 and for the six-month 2008 period. Total assets at June 30, 2008 reached a record high of $1.631 billion, up $89.0 million, or 5.8%, over the June 30, 2007 balance of $1.542 billion. Loan balances outstanding reached a record level of $1.063 billion at June 30, 2008, representing an increase of $45.0 million, or 4.4%, from the balance at June 30, 2007. In addition, deposit balances at June 30, 2008 reached a record $1.249 billion, representing an increase of $43.9 million, or 3.6%, from the June 30, 2007 level of $1.205 billion. In the first half of 2008, the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the residential real estate market nationally, and of so-called subprime mortgage loan portfolios, continued to have a negative impact on many financial institutions and indirectly on the national and world economies. We have not engaged in the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of subprime mortgage loans or in subprime lending  This article or section may deal primarily with the U.S. and may not present a worldwide view. as a business line, nor do we hold mortgage-backed
securities Mortgage-backed securities (MSBs)Securities backed by a pool of mortgage loans. backed by subprime mortgages in our investment portfolio. Asset quality remained high at quarter-end 2008, with nonperforming loans of $2.5 million, which represented .24% of period-end loans, down from .29% at the end of the first quarter. Gross loan charge-offs in the second quarter of 2008 were fully offset by recoveries, due to an unexpected recovery from our former Vermont Vermont (vərmŏnt`) [Fr.,=green mountain], New England state of the NE United States. It is bordered by New Hampshire, across the Connecticut R. operations. Expressed as an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. percentage of average loans outstanding, net loans charged-off for the six months ended June 30, 2008 were a very low .04%. Arrow's allowance for loan losses amounted to $12.7 million at June 30, 2008, which represented 1.20% of loans outstanding, an increase from 1.19% as of December December: see month. 31, 2007. Many of our operating ratios in recent periods have been well above those of our peer group, consisting of all U.S. bank holding companies having $1.0 to $3.0 billion in assets as identified in the Federal Reserve Bank's 'Bank Holding Company Performance Report.' Most notably, our return on average equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) for the quarter ended March 31, 2008 was 16.07% as compared to 8.59% for our peer group. Our ROE for the second quarter of 2008 increased to 17.33%. Our loan quality ratios also compare very favorably to our peer group. At the end of the 2008 second quarter our ratio of nonperforming loans to period-end loans was .24% which compares to a ratio of 1.37% for our peer group as of March 31, 2008. The Company has maintained a higher total risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. than the average for our peer group. Arrow and our subsidiary banks continue to be "well-capitalized" under the standards established by the FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). Improvement Act. As of June 30, 2008, assets under trust administration and investment management were $897.7 million, a decrease of $63.6 million, or 6.6%, from June 30, 2007. This decrease was the result of a general decline in the equity markets, which also led to a 1.6% decrease in fee income from fiduciary fiduciary (fĭd  `shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. activities for the second quarter of 2008 compared
to the second quarter of 2007. Included in assets under trust
administration and investment management are our proprietary mutual
funds, the North Country Funds, advised exclusively by our subsidiary,
North Country Investment Advisers, Inc., with a combined balance of $203
million at June 30, 2008.
Arrow was recently added to the Russell 2000(R) Index. Membership in the Russell 2000 is based on membership in the Broad-Market Russell 3000(R) Index, which also serves as the U.S. component to the Russell Global Index which was launched last year. Russell indexes Russell Indexes US equity index widely used by pension and mutual fund investors that are weighted by market capitalization and published by the Frank Russell Company of Tacoma, Washington. are widely used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies. Membership in the Russell Indexes, which are reconstituted annually in June, is determined based on the company's market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . On July 1, 2008 we acquired the key operating assets Operating Assets Another term for working capital. , two employees and the trade name from U.S. Benefits, Inc., a provider of administrative and record keeping services for more complex retirement plans. This acquisition will allow us to offer enhanced and broadened services to retirement plan clients and will complement the fiduciary services currently offered by the Company through its trust administrative and investment management activities. The acquisition reflects the Company's intent to develop new sources of service-based revenues and to provide an expanded menu of services to our customers. Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, NY serving the financial needs of northeastern New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include North Country Investment Advisers, Inc. and Capital Financial Group, Inc., an insurance agency specializing in the sale and servicing of group health plans. The information contained in this News Release may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , involving a degree of uncertainty and attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast, explicitly or by implication. The Company undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This News Release should be read in conjunction with the company's Annual Report on Form 10-K for the year ended December 31, 2007.
Arrow Financial Corporation
Consolidated Financial Information
($ in thousands, except per share amounts)
Unaudited
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Income Statement
Interest and Dividend Income $22,115 $21,409 $44,197 $42,225
Interest Expense 7,751 9,984 17,046 19,598
Net Interest Income 14,364 11,425 27,151 22,627
Provision for Loan Losses 248 92 538 186
Net Interest Income After Provision
for Loan Losses 14,116 11,333 26,613 22,441
Net Loss on Securities Transactions (35) --- (35) ---
Net Gain on Sales of Loans 32 23 41 28
Gain on Sale of Premises --- --- 115 ---
Gain on Visa Stock Redemption --- --- 749 ---
Income From Fiduciary Activities 1,396 1,419 2,835 2,872
Fees for Other Services to Customers 2,195 2,062 4,076 3,944
Insurance Commissions 499 462 1,047 963
Other Operating Income 94 205 200 376
Total Noninterest Income 4,181 4,171 9,028 8,183
Salaries and Employee Benefits 5,996 5,439 12,028 10,756
Occupancy Expenses of Premises, Net 882 831 1,775 1,643
Furniture and Equipment Expense 765 786 1,565 1,541
Amortization of Intangible Assets 86 96 182 202
Reversal of Visa Related
Litigation Exposure --- --- (306) ---
Other Operating Expense 2,680 2,421 5,344 4,792
Total Noninterest Expense 10,409 9,573 20,588 18,934
Income Before Taxes 7,888 5,931 15,053 11,690
Provision for Income Taxes 2,452 1,721 4,636 3,349
Net Income $ 5,436 $ 4,210 $10,417 $ 8,341
Share and Per Share Data (1)
Period End Shares Outstanding 10,516 10,689 10,516 10,689
Basic Average Shares Outstanding 10,593 10,732 10,619 10,806
Diluted Average Shares Outstanding 10,650 10,804 10,673 10,885
Basic Earnings Per Share $ 0.51 $ 0.39 $ 0.98 $ 0.77
Diluted Earnings Per Share 0.51 0.39 0.98 0.77
Cash Dividends 0.24 0.23 0.48 0.47
Book Value 11.80 10.84 11.80 10.84
Tangible Book Value (2) 10.23 9.27 10.23 9.27
Key Earnings Ratios
Return on Average Assets 1.35% 1.10% 1.30% 1.10%
Return on Average Equity 17.33 14.43 16.7 14.28
Return on Tangible Equity (2) 19.94 16.87 19.24 16.68
Net Interest Margin (3) 3.92 3.32 3.74 3.32
(1) Share and Per Share amounts have been restated for the September 2007
3% stock dividend.
(2) Tangible Book Value and Tangible Equity excludes intangible assets
from total equity.
(3) Net Interest Margin includes a tax equivalent upward adjustment of 19
and 20 basis points for the respective quarterly and six-month 2008
periods and 20 basis points for the 2007 periods.
Arrow Financial Corporation
Consolidated Financial Information
($ in thousands)
Unaudited
June 30, 2008
Second Year-to-
Period Quarter Date
End Average Average
Balance Sheet
Cash and Due From Banks $39,013 $33,378 $33,105
Interest-bearing Balances --- --- 541
Federal Funds Sold --- 17,845 29,771
Securities Available-for-Sale 372,843 364,466 349,272
Securities Held-to-Maturity 111,289 113,251 113,772
Loans 1,062,999 1,052,803 1,045,857
Allowance for Loan Losses (12,725) (12,570) (12,489)
Net Loans 1,050,274 1,040,233 1,033,368
Premises and Equipment, Net 16,492 16,399 16,438
Goodwill and Intangible
Assets, Net 16,495 16,552 16,583
Other Assets 24,575 22,969 22,742
Total Assets $1,630,981 $1,625,093 $1,615,592
Demand Deposits $194,188 $188,949 $185,533
Nonmaturity Interest-Bearing
Deposits 637,270 655,153 630,082
Time Deposits of $100,000
or More 177,472 156,850 172,230
Other Time Deposits 240,122 238,297 243,383
Total Deposits 1,249,052 1,239,249 1,231,228
Short-Term Borrowings 55,757 55,798 53,789
Federal Home Loan Bank
Advances 160,000 161,949 160,975
Other Long-Term Debt 20,000 20,000 20,000
Other Liabilities 22,092 21,920 24,164
Total Liabilities 1,506,901 1,498,916 1,490,156
Common Stock 14,729 14,729 14,729
Surplus 162,085 161,946 161,847
Undivided Profits 20,675 19,385 17,848
Unallocated ESOP Shares (2,572) (2,137) (1,854)
Accumulated Other
Comprehensive Loss (5,936) (4,264) (4,049)
Treasury Stock (64,901) (63,482) (63,085)
Total Shareholders' Equity 124,080 126,177 125,436
Total Liabilities and
Shareholders' Equity $1,630,981 $1,625,093 $1,615,592
Assets Under Trust
Administration and
Investment Management $897,729
Capital Ratios
Leverage Ratio 8.45%
Tier 1 Risk-Based
Capital Ratio 12.77
Total Risk-Based
Capital Ratio 13.96
June 30, 2007
Second Year-to-
Period Quarter Date
End Average Average
Balance Sheet
Cash and Due From Banks $33,403 $32,297 $32,183
Interest-bearing Balances --- --- ---
Federal Funds Sold 2,000 18,346 18,859
Securities Available-for-Sale 333,015 327,396 322,693
Securities Held-to-Maturity 111,683 108,831 108,476
Loans 1,017,989 1,014,487 1,012,546
Allowance for Loan Losses (12,315) (12,315) (12,307)
Net Loans 1,005,674 1,002,172 1,000,239
Premises and Equipment, Net 16,000 16,077 15,932
Goodwill and Intangible
Assets, Net 16,808 16,871 16,911
Other Assets 23,350 17,288 17,096
Total Assets $1,541,933 $1,539,278 $1,532,389
Demand Deposits $187,306 $181,282 $180,536
Nonmaturity Interest-Bearing
Deposits 563,724 574,232 567,370
Time Deposits of $100,000
or More 191,809 175,550 178,884
Other Time Deposits 262,328 265,056 262,500
Total Deposits 1,205,167 1,196,120 1,189,290
Short-Term Borrowings 49,164 49,317 47,773
Federal Home Loan Bank
Advances 130,000 134,489 134,135
Other Long-Term Debt 20,000 20,000 20,000
Other Liabilities 21,691 22,354 23,430
Total Liabilities 1,426,022 1,422,280 1,414,628
Common Stock 14,300 14,300 14,300
Surplus 151,688 151,316 151,276
Undivided Profits 20,944 19,767 19,037
Unallocated ESOP Shares (2,042) (2,042) (1,486)
Accumulated Other
Comprehensive Loss (8,664) (7,371) (7,578)
Treasury Stock (60,315) (58,972) (57,788)
Total Shareholders' Equity 115,911 116,998 117,761
Total Liabilities and
Shareholders' Equity $1,541,933 $1,539,278 $1,532,389
Assets Under Trust
Administration and
Investment Management $961,298
Capital Ratios
Leverage Ratio 8.51%
Tier 1 Risk-Based
Capital Ratio 12.87
Total Risk-Based
Capital Ratio 14.08
Arrow Financial Corporation
Consolidated Financial Information
($ in thousands)
Unaudited
June 30,
2008 2007
Second Quarter Ended June 30:
Loan Portfolio
Commercial, Financial and Agricultural $86,933 $77,661
Real Estate - Commercial 195,486 181,076
Real Estate - Residential 444,259 419,750
Indirect and Other Consumer Loans 336,321 339,502
Total Loans $1,062,999 $1,017,989
Allowance for Loan Losses, Second Quarter
Allowance for Loan Losses, Beginning of
Quarter $12,480 $12,298
Loans Charged-off, Quarter-to-Date (268) (214)
Recoveries of Loans Previously Charged-off,
Quarter-to-Date 265 139
Net Loans Charged-off, Quarter-to-Date (3) (75)
Provision for Loan Losses, Quarter-to-Date 248 92
Allowance for Loan Losses, End of Quarter $12,725 $12,315
Nonperforming Assets
Nonaccrual Loans $1,941 $1,883
Loans Past Due 90 or More Days and Accruing 593 122
Total Nonperforming Loans 2,534 2,005
Repossessed Assets 53 62
Other Real Estate Owned 242 200
Total Nonperforming Assets $2,829 $2,267
Key Asset Quality Ratios
Allowance for Loan Losses to Period-End Loans 1.20 1.21
Allowance for Loan Losses to Nonperforming
Loans 502.17 614.22
Nonperforming Loans to Period-End Loans 0.24 0.20
Nonperforming Assets to Period-End Assets 0.17 0.15
June 30,
Six-Month Period Ended June 30: 2008 2007
Allowance for Loan Losses, Six Months
Allowance for Loan Losses, Beginning of Year $12,401 $12,278
Loans Charged-off, Year-to-Date (563) (426)
Recoveries of Loans Previously Charged-off,
Year-to-Date 349 277
Net Loans Charged-off, Year-to-Date (214) (149)
Provision for Loan Losses, Year-to-Date 538 186
Allowance for Loan Losses, End of Period $12,725 $12,315
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Six
Months Annualized 0.04% 0.03%
Provision for Loan Losses to Average Loans,
Six Months Annualized 0.10 0.04
CONTACT: Tim Badger badger, name for several related members of the weasel family. Most badgers are large, nocturnal, burrowing animals, with broad, heavy bodies, long snouts, large, sharp claws, and long, grizzled fur. of Arrow Financial Corporation, +1-518-745-1000, ext. 306 Web site: http://www.arrowfinancial.com/ |
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