To: | All Media |
Date: | July 25, 2006 |
Arrow Announces Second Quarter Results
Arrow Financial Corporation announced operating results for the three and six month periods ended June 30, 2006. Net income for the second quarter of 2006 was $4.3 million which compared with $4.7 million in 2005. This represented diluted earnings per share of $.41 for the 2006 period versus $.44 for the comparable 2005 period, or a decrease of 6.8%. Diluted earnings per share for the first six months of 2006 were $.80 with net income totaling $8.3 million which compared with diluted earnings per share of $.85 when net income was $9.1 million in 2005. Cash dividends paid to shareholders in 2006 totaled $.48 and represented a 7.5% increase over the amount paid last year.
Thomas L. Hoy, Chairman, President and CEO stated, "Continued actions by the Federal Reserve to raise the targeted federal funds rate resulted in further narrowing of our net interest margin. Our funding costs have been more sensitive to the effects of these rate movements than our earning asset yields, resulting in continuing margin compression in the second quarter. This has led to a lower level of net interest income, in both the three and six month periods of 2006, which is the principal source of our earnings. Net interest margin was 3.35% in the second quarter of 2006 as compared with 3.72% for the same quarter last year while the net interest margin for the six month periods was 3.37% for 2006 versus 3.75% for 2005."
Total assets at June 30, 2006 were $1.516 billion, or 4.3% above $1.454 billion reported one year earlier. Deposits rose 4.2% to $1.151 billion which compares with $1.105 billion at June 30, 2005. Loans outstanding at period-end were $995 million, up 4.4% from $953 million one year earlier. Loans to small businesses again demonstrated the most growth, increasing 13.6% to $264 million from $232 million at June 30, 2005. Residential mortgage financings totaled $394 million at quarter-end 2006, or 6.1% above the prior year's balance of $371 million. Indirect loan balances, essentially loans to finance motor vehicles, were $333 million at June 30, 2006, off 1.8% from $340 million one year earlier. Demand for small business loans continues to be relatively strong while residential mortgage financings have recently slowed in reaction to higher rates. The change in indirect loan outstandings reflects moderating demand together with a resurgence in manufacturers' sponsorship of discounted financing programs.
Mr. Hoy added, “Our key credit quality measurements continue to be excellent. Nonperforming loans at June 30, 2006 were $1.3 million and represented just .13% of period-end loans while nonperforming assets were $1.4 million or only .09% of period-end assets. The balances of nonperforming loans and nonperforming assets are at their lowest quarter-end levels in more than ten years. Net loan losses were a low .07% (annualized) for the six month period ending June 30, 2006.”
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Other recent highlights include the Company's inclusion in the NASDAQ® Global Select Market, which has the highest initial listing standards of any exchange in the world based on financial and liquidity requirements. At the local level, Glens Falls National's Community Development Corporation has acquired its first property as part of its support of affordable housing initiatives and expects to place the property early in the fourth quarter. Also, ground breaking is now imminent for our previously announced third office in the greater Plattsburgh market.
Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, NY serving the financial needs of northeastern New York. Arrow is the parent of the 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 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 | Six Months |
| | Ended June 30, | Ended June 30, |
| | 2006 | 2005 | 2006 | 2005 |
Income Statement | | | | |
Interest and Dividend Income | $20,008 | $17,776 | $39,340 | $34,643 |
Interest Expense | 8,512 | 5,621 | 16,362 | 10,684 |
Net Interest Income | 11,496 | 12,155 | 22,978 | 23,959 |
Provision for Loan Losses | 101 | 176 | 374 | 408 |
Net Interest Income After Provision for Loan Losses | 11,395 | 11,979 | 22,604 | 23,551 |
Net (Losses) Gains on Securities Transactions | (118) | 125 | (118) | 189 |
Net Gain on Sales of Loans | 12 | 22 | 55 | 27 |
Gain on Sale of Premises | 227 | --- | 227 | --- |
Income From Fiduciary Activities | 1,307 | 1,181 | 2,610 | 2,288 |
Fees for Other Services to Customers | 2,009 | 1,948 | 3,813 | 3,548 |
Insurance Commissions | 482 | 488 | 904 | 883 |
Other Operating Income | 133 | 118 | 287 | 241 |
Total Other Income | 4,052 | 3,882 | 7,778 | 7,176 |
Salaries and Employee Benefits | 5,480 | 5,288 | 10,951 | 10,343 |
Occupancy Expenses of Premises, Net | 815 | 757 | 1,620 | 1,464 |
Furniture and Equipment Expense | 813 | 746 | 1,570 | 1,511 |
Amortization of Intangible Assets | 106 | 122 | 223 | 142 |
Foreclosed Property Expense | 10 | --- | 10 | --- |
Other Operating Expense | 2,107 | 2,262 | 4,111 | 4,200 |
Total Other Expense | 9,331 | 9,175 | 18,485 | 17,660 |
Income Before Taxes | 6,116 | 6,686 | 11,897 | 13,067 |
Provision for Income Taxes | 1,839 | 2,006 | 3,561 | 3,957 |
Net Income | $ 4,277 | $ 4,680 | $ 8,336 | $ 9,110 |
| | | | | |
Share and Per Share Data1 | | | | |
Period End Shares Outstanding | 10,250 | 10,426 | 10,250 | 10,426 |
Basic Average Shares Outstanding | 10,299 | 10,435 | 10,328 | 10,465 |
Diluted Average Shares Outstanding | 10,436 | 10,613 | 10,473 | 10,659 |
Basic Earnings Per Share | $ 0.42 | $ 0.45 | $ 0.81 | $ 0.87 |
Diluted Earnings Per Share | 0.41 | 0.44 | 0.80 | 0.85 |
Cash Dividends | 0.24 | 0.22 | 0.48 | 0.45 |
Book Value | 11.19 | 11.30 | 11.19 | 11.30 |
Tangible Book Value2 | 9.52 | 9.63 | 9.52 | 9.63 |
| | | | | |
Key Earnings Ratios | | | | |
Return on Average Assets | 1.13% | 1.29% | 1.10% | 1.29% |
Return on Average Equity | 14.84 | 16.06 | 14.43 | 15.65 |
Net Interest Margin3 | 3.35 | 3.72 | 3.37 | 3.75 |
| | | | | |
1Share and Per Shareamounts have been restated for the September 2005 3% stock dividend. |
2Tangible Book Valueper share is the ratio of Total Equity less Intangible Assets to Period End Shares Outstanding. |
3Net Interest Marginincludes a tax equivalent upward adjustment of 18 basis points for all periods presented. |
| |
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Arrow Financial Corporation |
Consolidated Financial Information |
($ in thousands) |
Unaudited |
| | June 30, 2006 | | June 30, 2005 |
| |
Period End | Second Quarter Average | Year-to- Date Average | |
Period End | Second Quarter Average | Year-to- Date Average |
Balance Sheet | | | | | | | |
Cash and Due From Banks | $ 38,244 | $ 33,473 | $ 33,656 | | $ 33,541 | $ 35,705 | $ 35,500 |
Federal Funds Sold | --- | 7,077 | 4,917 | | --- | 5,082 | 3,340 |
Securities Available-for-Sale | 336,167 | 344,275 | 338,262 | | 321,101 | 334,413 | 334,150 |
Securities Held-to-Maturity | 100,432 | 107,451 | 111,077 | | 106,478 | 112,103 | 111,039 |
Loans | 994,838 | 995,594 | 997,566 | | 952,938 | 927,224 | 905,075 |
Allowance for Loan Losses | (12,265) | (12,270) | (12,249) | | (12,168) | (12,102) | (12,074) |
Net Loans | 982,573 | 983,324 | 985,317 | | 940,770 | 915,122 | 893,001 |
Premises and Equipment, Net | 15,746 | 16,075 | 16,016 | | 15,422 | 15,301 | 15,070 |
Goodwill and Intangible Assets, Net | 17,164 | 17,206 | 17,247 | | 17,461 | 17,045 | 14,396 |
Other Assets | 26,008 | 14,283 | 15,004 | | 19,532 | 15,466 | 17,130 |
Total Assets | $1,516,334 | $1,523,164 | $1,521,496 | | $1,454,305 | $1,450,237 | $1,423,626 |
Demand Deposits | $ 183,321 | $ 181,263 | $ 179,341 | | $ 178,708 | $ 173,194 | $ 166,585 |
Nonmaturity Interest-Bearing Deposits | 555,721 | 582,777 | 587,562 | | 612,543 | 623,112 | 607,769 |
Time Deposits of $100,000 or More | 159,549 | 167,761 | 160,785 | | 113,062 | 137,875 | 123,557 |
Other Time Deposits | 252,514 | 245,825 | 239,849 | | 200,925 | 194,692 | 184,763 |
Total Deposits | 1,151,105 | 1,177,626 | 1,167,537 | | 1,105,238 | 1,128,873 | 1,082,674 |
Short-Term Borrowings | 49,817 | 43,289 | 41,081 | | 50,919 | 34,557 | 41,846 |
Federal Home Loan Bank Advances | 163,000 | 147,410 | 157,234 | | 145,000 | 134,341 | 146,105 |
Long-Term Debt | 20,000 | 20,000 | 20,000 | | 20,000 | 20,000 | 20,000 |
Other Liabilities | 17,666 | 19,213 | 19,116 | | 15,281 | 15,586 | 15,637 |
Total Liabilities | 1,401,588 | 1,407,538 | 1,404,968 | | 1,336,438 | 1,333,357 | 1,306,262 |
Common Stock | 13,883 | 13,883 | 13,883 | | 13,479 | 13,479 | 13,479 |
Surplus | 139,952 | 139,845 | 139,789 | | 128,266 | 128,024 | 127,889 |
Undivided Profits | 24,800 | 23,577 | 22,852 | | 27,799 | 26,570 | 25,437 |
Unallocated ESOP Shares | (862) | (862) | (865) | | (1,182) | (1,182) | (1,184) |
Accumulated Other Comprehensive Loss | (7,558) | (6,689) | (5,857) | | (1,540) | (1,767) | (1,111) |
Treasury Stock | (55,469) | (54,128) | (53,274) | | (48,955) | (48,244) | (47,146) |
Total Shareholders’ Equity | 114,746 | 115,626 | 116,528 | | 117,867 | 116,880 | 117,364 |
Total Liabilities and Shareholders’ Equity | $1,516,334 | $1,523,164 | $1,521,496 | | $1,454,305 | $1,450,237 | $1,423,626 |
| | | | | | | | |
Assets Under Trust Administration and Investment Management | $847,260 | | | | $805,964 | | |
| | | | | | | | |
Capital Ratios | | | | | | | |
Leverage Ratio | 8.32% | | | | 8.54% | | |
Tier 1 Risk-Based Capital Ratio | 12.63 | | | | 12.87 | | |
Total Risk-Based Capital Ratio | 13.85 | | | | 14.13 | | |
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Arrow Financial Corporation |
Consolidated Financial Information |
($ in thousands) |
Unaudited |
| | June 30, |
| | 2006 | 2005 |
Loan Portfolio | | |
Commercial, Financial and Agricultural | $ 83,591 | $ 87,663 |
Real Estate – Commercial | 180,452 | 144,769 |
Real Estate – Residential | 387,373 | 363,345 |
Real Estate – Construction | 6,386 | 7,805 |
Indirect Consumer Loans | 333,498 | 339,766 |
Other Loans to Individuals | 3,538 | 9,590 |
Total Loans | $994,838 | $952,938 |
| | | |
Allowance for Loan Losses, Second Quarter | | |
Allowance for Loan Losses, Beginning of Period | $12,253 | $12,091 |
| | | |
Loans Charged-off | (184) | (203) |
Recoveries of Loans Previously Charged-off | 95 | 104 |
Net Loans Charged-off | (89) | (99) |
| | | |
Provision for Loan Losses | 101 | 176 |
Allowance for Loan Losses, End of Period | $12,265 | $12,168 |
| | | |
Allowance for Loan Losses, First Six Months | | |
Allowance for Loan Losses, Beginning of Period | $12,241 | $12,046 |
| | | |
Loans Charged-off | (544) | (450) |
Recoveries of Loans Previously Charged-off | 194 | 164 |
Net Loans Charged-off | (350) | (286) |
| | | |
Provision for Loan Losses | 374 | 408 |
Allowance for Loan Losses, End of Period | $12,265 | $12,168 |
| | | |
Nonperforming Assets | | |
Nonaccrual Loans | $ 968 | $1,761 |
Loans Past Due 90 or More Days and Accruing | 349 | 199 |
Restructured Loans | --- | --- |
Total Nonperforming Loans | 1,317 | 1,960 |
Repossessed Assets | 54 | 10 |
Other Real Estate Owned | --- | 19 |
Total Nonperforming Assets | $1,371 | $1,989 |
| | | |
Key Asset Quality Ratios | | |
Net Loans Charged-off to Average Loans, Second Quarter Annualized | 0.04% | 0.04% |
Net Loans Charged-off to Average Loans, First Six Months Annualized | 0.07 | 0.06 |
Provision for Loan Losses to Average Loans, Second Quarter Annualized | 0.04 | 0.08 |
Provision for Loan Losses to Average Loans, First Six Months Annualized | 0.08 | 0.09 |
Allowance for Loan Losses to Period-End Loans | 1.23 | 1.28 |
Allowance for Loan Losses to Nonperforming Loans | 931.30 | 620.79 |
Nonperforming Loans to Period-End Loans | 0.13 | 0.21 |
Nonperforming Assets to Period-End Assets | 0.09 | 0.14 |
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