Arrow Announces First Quarter Results
Arrow Financial Corporation announced operating results for the quarter ended March 31, 2003. Net income for the quarter was $4.8 million, representing diluted earnings per share of $.59, or 9.3% above the diluted per share amount of $.54 earned in the first quarter of 2002, when net income was $4.5 million. The results for 2002 have been retroactively restated as required by Financial Accounting Standard No. 147, which the Company adopted in the third quarter of 2002. The quarterly cash dividend paid to shareholders in the first quarter of 2003 was $.25, or 14.1% higher than was paid in last year's first quarter.
Thomas L. Hoy, President and CEO stated, "Our quarterly results are highlighted by improved asset quality and significant balance sheet growth, particularly in the areas of loans and deposits, as well as continued strong earnings. In light of the weak domestic economy and international turmoil, we are very pleased with the Company's first quarter performance."
Mr. Hoy added, "Arrow's key earnings ratios reflected a very successful first quarter, although the prior year's ratios were even stronger. Return on average assets (ROA) was 1.51% as compared with 1.57% for the first quarter of last year while return on average equity (ROE) was 19.12% in 2003 versus 19.48% for 2002. ROE has exceeded 15% for twenty three consecutive quarters."
Total assets were $1.320 billion at quarter end 2003, up $166 million, or 14.4% from the prior year quarter end balance of $1.154 billion. Loans outstanding increased $83 million, or 10.9%, to a record $841 million from a level of $758 million at March 31, 2002. All key categories of the loan portfolio experienced growth in outstandings. The highest percentage change was in small business loan outstandings, which increased 17.1%, or $27 million, to $185 million from $158 million last year. Extremely attractive financing rates continued to drive strong residential mortgage demand, with outstandings rising to $317 million, an increase of 14.9%, or $41 million, from the $276 million balance at March 31, 2002. Indirect consumer loan balances, essentially automobile financings, were $325 million at March 31, 2003 as compared with $307 million one year earlier and represented growth of 6.1% or $18 million. The modest growth in indirect consumer loans reflected continued strong competition from manufacturers' own low-rate financing programs. Total deposits were $1.015 billion at March 31, 2003, a new high. This represented growth of $119 million, or 13.3%, over last year's quarter end balance of $896 million.
Mr. Hoy further added, "Our principal challenge over the past several quarters has been margin compression brought about by exceptionally low prevailing interest rates. Net interest margin (tax equivalent) was 4.29% for the first quarter of 2003, down 45 basis points from the 4.74% margin in last year's first quarter. Strong year over year earning asset growth offset the negative effect of the lower net interest margin, generating a slight increase in net interest income. Also, a partial restructure of the investment portfolio in this year's first quarter produced both an increased yield on the reinvested proceeds and transactional gains of $364 thousand. Average earning assets were $1.230 billion in the 2003 quarter versus $1.095 billion for the same quarter last year, an increase of 12.4%."
Mr. Hoy also stated, "Arrow's asset quality again improved. At March 31, 2003, nonperforming loans totaled $2.0 million, down 42.4% from a balance of $3.4 million one year earlier, and represented a very low .23% of period end loans outstanding. We experienced a comparable decrease in the level of nonperforming assets, as the balance fell 40.4% to $2.2 million at March 31, 2003 from $3.7 million at March 31, 2002. Net loan losses were just .10% of average loans outstanding for the first quarter of 2003, down from 0.13% for the comparable quarter in 2002.
Arrow Financial Corporation is a multi bank holding company headquartered in Glens Falls, NY with 26 banking locations in Northeastern Upstate New York. Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company.
The information contained in this News Release may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a degree of uncertainty and attendant risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast. The Company undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This News Release should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
| Arrow Financial Corporation |
| Consolidated Financial Information |
| ($ in thousands, except per share amounts) |
| Unaudited |
| Three Months |
| Ended March 31, |
| 2003 | 2002 |
| Income Statement | | |
| Interest and Dividend Income | $18,095 | $18,422 |
| Interest Expense | 5,626 | 6,151 |
| Net Interest Income | 12,469 | 12,271 |
| Provision for Loan Losses | 405 | 615 |
| Net Interest Income After Provision for Loan Losses | 12,064 | 11,656 |
| | |
| Net Gain on Securities Transactions | 368 | 20 |
| Net Gain on Sales of Loans | 28 | 1 |
| Net Gain on Sales of Real Estate Acquired Through Foreclosure | 12 | 20 |
| Income From Fiduciary Activities | 867 | 1,063 |
| Fees for Other Services to Customers | 1,617 | 1,345 |
| Other Operating Income | 139 | 200 |
| Total Other Income | 3,031 | 2,649 |
| | |
| Salaries and Employee Benefits | 4,750 | 4,514 |
| Occupancy Expense of Premises, Net | 639 | 603 |
| Furniture and Equipment Expense | 671 | 612 |
| Amortization of Intangible Assets | 9 | 9 |
| Foreclosed Property Expense | 2 | 15 |
| Other Operating Expense | 1,944 | 2,019 |
| Total Other Expense | 8,015 | 7,772 |
| | |
| Income Before Taxes | 7,080 | 6,533 |
| Provision for Income Taxes | 2,274 | 2,066 |
| Net Income | $ 4,806 | $ 4,467 |
| | |
| Share and Per Share Data 1 | | |
| Period Ending Shares Outstanding | 7,895 | 7,992 |
| Basic Average Shares Outstanding | 7,916 | 8,011 |
| Diluted Average Shares Outstanding | 8,087 | 8,202 |
| | |
| Basic Earnings Per Share | $ 0.61 | $ 0.56 |
| Diluted Earnings Per Share | 0.59 | 0.54 |
| | |
| Cash Dividends | 0.25 | 0.22 |
| | |
| Book Value | 12.97 | 11.56 |
| Tangible Book Value 2 | 11.75 | 10.31 |
| | |
| Key Earnings Ratios | | |
| Return on Average Assets | 1.51% | 1.57% |
| Return on Average Equity | 19.12 | 19.48 |
| Net Interest Margin 3 | 4.29 | 4.74 |
| | |
| 1 Share & Per Share amounts have been restated for the November 2002 five percent stock dividend. |
| 2 Tangible Book Value excludes from total equity intangible assets, primarily goodwill associated with branch purchases. |
| 3 Net Interest Margin includes a tax equivalent adjustment of 18 basis points 2003 and 19 basis points in 2002. |
| Arrow Financial Corporation |
| Consolidated Financial Information |
| ($ in thousands) |
| Unaudited |
| March 31, 2003 | | March 31, 2002 |
| | First | | | First |
| Period | Quarter | | Period | Quarter |
| Balance Sheet | End | Average | | End | Average |
| Cash and Due From Banks | $ 24,423 | $ 30,980 | | $ 25,495 | $ 30,211 |
| Federal Funds Sold | 19,500 | 9,980 | | 5,000 | 7,946 |
| Securities Available-for-Sale | 331,583 | 319,356 | | 262,615 | 255,000 |
| Securities Held-to-Maturity | 75,943 | 75,195 | | 75,415 | 75,509 |
| | | | | |
| Loans | 841,161 | 825,378 | | 758,258 | 756,075 |
| Allowance for Loan Losses | (11,388) | (11,311) | | (10,100) | (9,901) |
| Net Loans | 829,773 | 814,067 | | 748,158 | 746,174 |
| | | | | |
| Premises and Equipment, Net | 13,676 | 13,738 | | 13,214 | 13,201 |
| Goodwill and Intangible Assets, Net | 9,706 | 9,711 | | 9,978 | 9,923 |
| Other Assets | 15,254 | 14,213 | | 14,349 | 13,388 |
| Total Assets | $1.319.858 | $1.287,240 | | $1.154.224 | $1.151.352 |
| | | | | |
| Demand Deposits | $ 133,519 | $ 133,446 | | $ 125,702 | $ 124,543 |
| Nonmaturity Interest-Bearing Deposits | 602,936 | 587,506 | | 487,383 | 465,264 |
| Time Deposits of $100,000 or More | 81,640 | 65,816 | | 85,104 | 98,382 |
| Other Time Deposits | 196,628 | 198,715 | | 197,381 | 196,718 |
| Total Deposits | 1,014,723 | 985,483 | | 895,570 | 884,907 |
| | | | | |
| Short-Term Borrowings | 33,279 | 38,616 | | 32,262 | 36,049 |
| Federal Home Loan Bank Advances | 145,000 | 141,556 | | 115,000 | 115,000 |
| Other Long-Term Debe | 5,000 | 5,000 | | 5,000 | 5,000 |
| Other Liabilities | 19,421 | 14,642 | | 14,007 | 17,401 |
| Total Liabilities | 1,217,423 | 1,185,297 | | 1,061,839 | 1,058,357 |
| | | | | |
| Common Stock | 10,469 | 10,469 | | 9,970 | 9,970 |
| Surplus | 115,365 | 115,224 | | 99,712 | 99,557 |
| Undivided Profits | 16,441 | 15,255 | | 19,977 | 18,740 |
| Unallocated ESOP Shares | (1,822) | (1,822) | | (1,914) | (1,940) |
| Accumulated Other Comprehensive Income | 2,883 | 2,918 | | 529 | 1,795 |
| Treasury Stock | (40,901) | (40,101) | | (35,889) | (35,127) |
| Total Shareholders' Equity | 102,435 | 101,943 | | 92,385 | 92,995 |
| | | | | |
| Total Liabilities and Shareholders' Equity | $1,319,858 | $1,287,240 | | $1,154,224 | $1,151,352 |
| | | | | |
| Assets Under Trust Administration and Investment Management | $605,867 | | | $696,431 | |
| | | | | |
| Regulatory Capital Ratios | | | | | |
| Leverage Ratio | 7.44% | | | 7.61% | |
| Tier 1 Risk-Based Capital Ratio | 11.31 | | | 11.51 | |
| Total Risk-Based Capital Ratio | 12.56 | | | 12.76 | |
| Arrow Financial Corporation |
| Consolidated Financial Information |
| ($ in thousands) |
| Unaudited |
| March 31, |
| 2003 | 2002 |
| Loan Portfolio | $ 83,314 | $ 75,752 |
| Commercial, Financial and Agricultural | 101,585 | 82,130 |
| Real Estate - Commercial | 305,674 | 267,621 |
| Real Estate - Residential | 10,886 | 7,939 |
| Real Estate - Construction | 325,166 | 306,600 |
| Indirect Consumer Loans | 14,536 | 18,216 |
| Other Loans to Individuals | $841,161 | $758,258 |
| Total Loans | | |
| | |
| Allowance for Loan Losses, First Quarter | | |
| Allowance for Loans Losses, Beginning of Period | $11,193 | $ 9,720 |
| | |
| Loans Charged-off | (288) | (304) |
| Recoveries of Loans Previously Charged-off | 78 | 69 |
| Net Loans Charged-off | (210) | (235) |
| | |
| Provision for Loan Losses | 405 | 615 |
| Allowance for Loan Losses, End of Period | $11,388 | $10,100 |
| | |
| Nonperforming Loans | | |
| Nonaccrual Loans | $1,967 | $3,414 |
| Loans Past Due 90 or More Days and Accruing | --- | --- |
| Restructured Loans | --- | --- |
| Total Nonperforming Loans | 1,967 | 3,414 |
| Repossessed Assets | 231 | 273 |
| Other Real Estate Owned | --- | --- |
| Total Nonperforming Assets | $2,198 | $3,687 |
| | |
| Key Asset Quality Ratios | | |
| Net Loans Charged-off to Average Loans, First Quarter Annualized | 0.10% | 0.13% |
| Provision for Loan Losses to Average Loans, First Quarter Annualized | 0.20 | 0.33 |
| Allowance for Loan Losses to Period-End Loans | 1.35 | 1.33 |
| Allowance for Loan Losses to Nonperforming Loans | 578.95 | 295.84 |
| Nonperforming Loans to Period-End Loans | 0.23 | 0.45 |
| Nonperforming Assets to Period-End Assets | 0.17 | 0.32 |
