EX-99 2 pressrel.htm To:










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Date:

October 25, 2006





Arrow Announces Third Quarter Results


Arrow Financial Corporation announced operating results for the three and nine month periods ended September 30, 2006.  Net income for the third quarter of 2006 was $4.261 million,  or diluted earnings per share of $.40, and compared with $4.839 million in 2005,  which equaled diluted earnings per share of $.44.  Diluted earnings per share for the first nine months of 2006 were $1.17 with net income totaling $12.597 million, which compared with diluted earnings per share of $1.27 when net income was $13.949 million in 2005.  Cash dividends paid to shareholders in the first three quarters of 2006 totaled $.70, representing a 6.1% increase over the amount paid in the same period last year.


Thomas L. Hoy, Chairman, President and CEO stated, "Our third quarter and nine month operating results again reflect the impact of a lower net interest margin.  Although the Federal Reserve Bank has not changed the targeted federal funds rate in either of the last two meetings of the Federal Open Market Committee, their actions to raise the short-term rate 425 basis points over the prior 27 months have led to significant increases in our funding costs. However, intermediate and longer term rates, which are more likely to influence our earning asset yields, have not risen commensurately.   Net interest margin was 3.32% for the third quarter of 2006 versus 3.35% in the preceding quarter and 3.63% for the same quarter last year, while net interest margin for the nine month period ending September 30, 2006 was 3.35% which compared with 3.71% for the same nine month period in 2005."


Mr. Hoy also stated, "Total assets at September 30, 2006 were $1.523 billion, or 2.6% above $1.484 billion reported one year earlier. Deposits rose 2.1% to $1.163 billion which compares with $1.139 billion at September 30, 2005.  Total shareholders’ equity was $119.4 million, or 2.9% above the comparable 2005 amount of $116.0 million. Arrow's capital adequacy ratios, and those of its bank subsidiaries, continue to exceed the "Well-Capitalized" standard, the highest level established by the bank regulatory agencies."


"Loans outstanding at September 30, 2006 were $993 million,  an increase of $11 million or 1.2% above the total loan balance of $981 million one year earlier.  We are pleased to report that demand for small business credit has continued to be quite strong.   This commercial loan segment of the portfolio increased $29 million, or 12.4%, to $260 million in the year-over-year comparison.  Residential mortgage balances were $398 million at quarter-end, up $20 million or 5.2% from $378 million at September 30, 2005.  Indirect and other consumer loans, consisting primarily of loans to finance motor vehicles, were $334 million at September 30, 2006, down $37 million or 10.0% from the $371 million balance one year earlier.  The decrease reflected a combination of auto manufacturers’ reintroduction of highly subsidized financing programs and a general downturn in industry sales volume, especially in the more expensive lines of SUV’s and trucks."



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Mr. Hoy added, "Arrow's asset quality remains very high. Nonperforming loans were $1.322 million at September 30, 2006, down 36.3% from the September 30, 2005 balance of $2.074 million.  At September 30, 2006, nonperforming assets were $1.6 million and represented just .11% of period-end assets.  Our allowance for loan losses was $12.3 million at September 30, 2006 and equaled 1.24% of period-end loans. Net loan losses were only .07% (annualized) of average loans outstanding for each of the comparable nine month periods ending September 30, 2006 and September 30, 2005."


Mr. Hoy also stated "During the quarter a three percent stock dividend was distributed.  The North Country Funds, which are advised exclusively by our subsidiary, North Country Investment Advisors, Inc., reached another new record quarter-end high of $173 million, including $103 million invested in the North Country Equity Growth Fund and $70 million invested in the North Country Intermediate Bond Fund.  The 27th branch office of Glens Falls National Bank and Trust Company, and the Company's 32nd, is under construction and expected to open around year-end. The office, which is located at the intersection of US Avenue and Route 9 in Plattsburgh, will be our third office in that vibrant community.”  


“Our long-time CFO, Jack Murphy,  will retire at year-end.  He will be succeeded by Terry R. Goodemote, CPA, who has worked with Jack for over 14 years.  We are pleased that Jack will continue as a director of Glens Falls National Bank and Trust Company and consider ourselves fortunate to have an individual as qualified as Terry to assume the CFO position.”


Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, NY with banking locations in Upstate New York.  Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company.


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.  Examples are management’s statements about future economic conditions and anticipated business developments.  These statements are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a degree of uncertainty and attendant risk.  In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast. 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 and Form 10-K/A for the year ended December 31, 2005.




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Arrow Financial Corporation

Consolidated Financial Information

($ in thousands, except per share amounts)

Unaudited

 

Three Months

Nine Months

 

Ended September 30,

Ended September 30,

 

2006

2005

2006

2005

Income Statement

    

Interest and Dividend Income

$20,440 

$18,294 

$59,780 

$52,937 

Interest Expense

   8,893 

   6,158 

 25,255 

 16,842 

  Net Interest Income

11,547 

12,136 

34,525 

36,095 

Provision for Loan Losses

      186 

      218 

      560 

      626 

  Net Interest Income After Provision for Loan Losses

 11,361 

 11,918 

 33,965 

 35,469 

Net (Losses) Gains on Securities Transactions

--- 

151 

(118)

340 

Net Gain on Sales of Loans

8 

81 

63 

108 

Gain on Sale of Premises

--- 

--- 

227 

--- 

Income From Fiduciary Activities

1,196 

1,147 

3,806 

3,435 

Fees for Other Services to Customers

2,163 

2,012 

5,976 

5,560 

Insurance Commissions

458 

449 

1,362 

1,332 

Other Operating Income

       205 

       242 

      492 

      483 

  Total Other Income

    4,030 

    4,082 

 11,808 

 11,258 

Salaries and Employee Benefits

5,546 

5,195 

16,497 

15,538 

Occupancy Expenses of Premises, Net

712 

761 

2,332 

2,225 

Furniture and Equipment Expense

776 

760 

2,346 

2,271 

Amortization of Intangible Assets

106 

116 

329 

258 

Foreclosed Property Expense

64 

--- 

74 

--- 

Other Operating Expense

   1,998 

   2,169 

   6,109 

   6,369 

  Total Other Expense

   9,202 

   9,001 

 27,687 

 26,661 

Income Before Taxes

6,189 

6,999 

18,086 

20,066 

Provision for Income Taxes

   1,928 

   2,160 

   5,489 

   6,117 

  Net Income

$ 4,261 

$ 4,839 

$12,597 

$13,949 

     

Share and Per Share Data 1

    

Period End Shares Outstanding

10,562 

10,672 

10,562 

10,672 

Basic Average Shares Outstanding

10,561 

10,701 

10,612 

10,753 

Diluted Average Shares Outstanding

10,710 

10,880 

10,762 

10,946 

Basic Earnings Per Share

$  0.40 

$  0.45 

$  1.19 

$  1.30 

Diluted Earnings Per Share

0.40 

0.44 

1.17 

1.27 

Cash Dividends

0.23 

0.23 

0.70 

0.66 

Book Value

11.30 

10.87 

11.30 

10.87 

Tangible Book Value 2

9.69 

9.24 

9.69 

9.24 

     

Key Earnings Ratios

    

Return on Average Assets

1.12%

1.31%

1.11%

1.30%

Return on Average Equity

14.49

16.39

14.45

15.90

Net Interest Margin 3

3.32

3.63

3.35

3.71

     

1 Share and Per Share amounts have been restated for the September 2006 3% stock dividend.

2 Tangible Book Value per share is the ratio of Total Equity less Intangible Assets to Period End Shares Outstanding.

3 Net Interest Margin includes a tax equivalent upward adjustment of 15 and 17 basis points for the respective 2006 and 2005 quarterly periods and 17

      and 18 basis points for the respective 2006 and 2005 nine-month periods.

 





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Arrow Financial Corporation

Consolidated Financial Information

($ in thousands)

Unaudited

 

September 30, 2006

 

September 30, 2005

 


Period

End

Third

Quarter

Average

Year-to-

Date

Average

 


Period

End

Third

Quarter

Average

Year-to-

Date

Average

Balance Sheet

       

Cash and Due From Banks

$    41,710 

$    34,076 

$    33,797 

 

$    41,432 

$    38,145 

$     36,391 

Federal Funds Sold

12,000 

7,587 

5,817 

 

--- 

728 

2,460 

Securities Available-for-Sale

339,812 

349,829 

342,160 

 

306,499 

314,252 

327,445 

Securities Held-to-Maturity

91,607 

95,687 

105,891 

 

112,823 

109,995 

110,687 

Loans

992,675 

991,669 

995,578 

 

981,331 

969,212 

926,689 

Allowance for Loan Losses

    (12,274)

    (12,273)

    (12,257)

 

    (12,212)

    (12,176)

    (12,109)

  Net Loans

   980,401 

   979,396 

   983,321 

 

   969,119 

   957,036 

   914,580 

Premises and Equipment, Net

15,935 

15,887 

15,973 

 

15,200 

15,266 

15,136 

Goodwill and Intangible Assets, Net

17,044 

17,112 

17,201 

 

17,380 

17,428 

15,418 

Other Assets

      24,867 

      16,148 

      15,391 

 

      21,658 

      17,587 

       17,284 

    Total Assets

$1,523,376 

$1,515,722 

$1,519,551 

 

$1,484,111 

$1,470,437 

$1,439,401 

Demand Deposits

$   184,773 

$   187,764 

$   182,180 

 

$   184,221 

$   186,055 

$   173,146 

Nonmaturity Interest-Bearing Deposits

566,578 

551,061 

575,260 

 

619,996 

606,223 

607,250 

Time Deposits of $100,000 or More

147,409 

154,929 

158,811 

 

128,933 

123,750 

123,622 

Other Time Deposits

    264,324 

    255,491 

    245,121 

 

    205,857 

    208,232 

    192,671 

  Total Deposits

 1,163,084 

 1,149,245 

 1,161,372 

 

 1,139,007 

 1,124,260 

 1,096,689 

Short-Term Borrowings

55,296 

50,062 

44,107 

 

59,594 

56,288 

46,689 

Federal Home Loan Bank Advances

145,000 

158,595 

157,693 

 

131,500 

134,226 

142,125 

Long-Term Debt

20,000 

20,000 

20,000 

 

20,000 

20,000 

20,000 

Other Liabilities

      20,623 

      21,137 

      19,799 

 

      17,993 

      18,559 

      16,622 

  Total Liabilities

 1,404,003 

 1,399,039 

 1,402,971 

 

 1,368,094 

 1,353,333 

 1,322,125 

Common Stock

14,300 

14,060 

13,943 

 

13,883 

13,646 

13,535 

Surplus

150,356 

144,357 

141,328 

 

139,187 

132,752 

129,528 

Undivided Profits

15,878 

21,046 

22,243 

 

19,195 

24,553 

25,139 

Unallocated ESOP Shares

(862)

(862)

(864)

 

(1,182)

(1,182)

(1,183)

Accumulated Other Comprehensive Loss

(4,870)

(6,496)

(6,073)

 

(3,583)

(2,452)

(1,563)

Treasury Stock

     (55,429)

     (55,422)

     (53,997)

 

     (51,483)

     (50,213)

     (48,180)

  Total Shareholders’ Equity

    119,373 

    116,683 

    116,580 

 

    116,017 

    117,104 

     117,276 

    Total Liabilities and Shareholders’ Equity

$1,523,376 

$1,515,722 

$1,519,551 

 

$1,484,111 

$1,470,437 

$1,439,401 

        

Assets Under Trust Administration

  and Investment Management

$873,565

   

$840,418

  
        

Capital Ratios

       

  Leverage Ratio

8.51%

   

8.46%

  

  Tier 1 Risk-Based Capital Ratio

12.87

   

12.54

  

  Total Risk-Based Capital Ratio

14.10

   

13.78

  



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Arrow Financial Corporation

Consolidated Financial Information

($ in thousands)

Unaudited

 

September 30,

 

2006

2005

Loan Portfolio

  

Commercial, Financial and Agricultural

$ 79,016 

$ 80,133 

Real Estate – Commercial

181,295 

151,430 

Real Estate – Residential

397,879 

378,269 

Indirect and Other Consumer Loans

  334,485 

  371,499 

  Total Loans

$992,675 

$981,331 

   

Allowance for Loan Losses, Third Quarter

  

Allowance for Loan Losses, Beginning of Period

$12,265 

$12,168 

   

Loans Charged-off

(240)

(239)

Recoveries of Loans Previously Charged-off

        63 

         65 

  Net Loans Charged-off

     (177)

      (174)

   

Provision for Loan Losses

       186 

       218 

  Allowance for Loan Losses, End of Period

$12,274 

$12,212 

   

Allowance for Loan Losses, First Nine Months

  

Allowance for Loan Losses, Beginning of Period

$12,241 

$12,046 

   

Loans Charged-off

(784)

(690)

Recoveries of Loans Previously Charged-off

       257 

       230 

  Net Loans Charged-off

      (527)

      (460)

   

Provision for Loan Losses

       560 

       626 

  Allowance for Loan Losses, End of Period

$12,274 

$12,212 

   

Nonperforming Assets

  

Nonaccrual Loans

$1,263 

$1,931 

Loans Past Due 90 or More Days and Accruing

59 

143 

Restructured Loans

       --- 

       --- 

  Total Nonperforming Loans

1,322 

2,074 

Repossessed Assets

82 

99 

Other Real Estate Owned

     200 

     142 

  Total Nonperforming Assets

$1,604 

$2,315 

   

Key Asset Quality Ratios

  

Net Loans Charged-off to Average Loans, Third Quarter Annualized

0.07%

0.07%

Net Loans Charged-off to Average Loans, First Nine Months Annualized

0.07

0.07

Provision for Loan Losses to Average Loans, Third Quarter Annualized

0.07

0.09

Provision for Loan Losses to Average Loans, First Nine Months Annualized

0.08

0.09

Allowance for Loan Losses to Period-End Loans

1.24

1.24

Allowance for Loan Losses to Nonperforming Loans

928.41

588.83

Nonperforming Loans to Period-End Loans

0.13

0.21

Nonperforming Assets to Period-End Assets

0.11

0.16




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