SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 27, 1997
ARROW FINANCIAL CORPORATION
A New York Corporation
0-12507 22-2448962
Commission File Number I.R.S. Employer
Identification No.
250 Glen Street
GLENS FALLS, NEW YORK 12801
Registrant's telephone number: (518) 745-1000
Item 2. Acquisition or Disposition of Assets.
On June 27, 1997, Glens Falls National Bank and Trust
Company, Glens Falls, New York ("GFNB"), a national
banking association and the principal banking subsidiary of the
Registrant, Arrow Financial Corporation, completed its
acquisition of six bank branches and related deposits and loans
from Fleet Bank, Albany, New York ("Fleet"), a subsidiary of Fleet
Financial Group, Providence, Rhode Island. The six branches (the
"Branches") are located in northeastern New York state, in the
communities of Plattsburgh (2), Port Henry, Ticonderoga, Lake
Luzerne and Warrensburg.
The transaction was effected pursuant to a Purchase and
Assumption Agreement, dated as of March 21, 1997 (the
"Agreement"). Under the Agreement, GFNB purchased from
Fleet substantially all the assets of the Branches, consisting of
virtually all loans relating to the Branches (having an aggregate
principal value at closing of approximately $34 million), and
approximately $1.6 million in other Branch-related assets,
including the personal property of the Branches and Fleet's real
property interests in the Branches (five owned in fee and one
leased). Also in the transaction, GFNB acquired from Fleet
approximately $10 million of additional residential real estate
loans not relating to the Branches. GFNB assumed from Fleet
at closing all customer deposit liabilities maintained at the
Branches, totalling approximately $140 million, and certain
other liabilities relating to the Branches. GFNB paid to Fleet
a premium of 8.5% on the deposits transferred. In
consideration for its assumption of the deposits and other
liabilities, GFNB received the assets set forth above and a total
net cash payment equal to approximately $81 million.
The amount of consideration paid by GFNB in the transaction
was determined by arms-length negotiation between the parties
and was based upon, among other factors, the market value of
the real property and the book value of the other assets being
transferred and the liabilities being assumed.
The following two tables provide additional information on the
deposit liabilities assumed and loans acquired:
Deposit Liabilities Assumed (Dollars In Thousands)
As of June 27, 1997
Weighted
Average
Balance Rate
Demand Deposits $ 17,302 --- %
N.O.W. & Super N.O.W. 23,621 1.46
Savings & Money Market Accounts 42,672 3.02
Time Deposits of $100,000 or More --- ---
Other Time Deposits 56,199 5.01
Total Deposit Liabilities Assumed $139,794 3.13%
Loans Acquired (Dollars In Thousands)
As of June 27, 1997
Weighted
Average
Balance Rate
Consumer Loans $16,644 9.69%
Home Equity Loans 7,102 9.35
Commercial Loans 10,366 9.61
Residential Real Estate Loans 10,078 8.76
Total Loans Acquired $44,190 9.35%
Item 7. Financial Statements and Exhibits.
The following unaudited pro forma consolidated balance sheet
of Registrant gives effect to the acquisition of assets and
assumption of liabilities by the Registrant's subsidiary, GFNB,
and related purchase accounting adjustments as though the
transaction had occurred on March 31, 1997.
For informational purposes only, an unaudited pro forma
consolidated balance sheet has been provided.
Unaudited Pro Forma Balance Sheet
The following unaudited pro forma consolidated balance sheet
gives effect to the acquisition of assets and assumption of
liabilities by the Company and related purchase accounting
adjustments as though the transaction had occurred on March
31, 1997.
Assets Arrow
Arrow Acquired & Purchase Financial
Financial Liabilities Deposit Accounting Corporation
Corporation Assumed Premium Adjustments Pro Forma
Assets (1) (2) (3)
Cash and Due From Banks $ 21,488 $ 1,071 $ --- $ (653) $ 21,906
Federal Funds Sold 12,500 93,324 (12,086) --- 93,738
Securities Available-for-Sale 159,456 --- --- --- 159,456
Securities Held-to-Maturity 42,915 --- --- --- 42,915
Loans (4) 398,581 44,190 --- --- 442,771
Less: Allowance for
Loan Losses (5,625) --- --- (700) (6,355)
Net Loans 392,956 44,190 --- (700) 436,446
Premises and Equipment 9,365 1,338 --- --- 10,703
Other Real Estate Owned 340 --- --- --- 340
Goodwill 341 --- 12,086 1,067 13,494
Other Assets 15,002 289 --- 286 15,557
Total Assets $654,363 $140,212 $ --- $ --- $794,575
Liabilities &
Shareholders' Equity
Deposits:
Demand $ 65,955 $17,302 $ --- $ --- $ 83,297
Regular Savings, NOW &
Money Market 248,341 66,293 --- --- 314,634
Time Deposits of $100,000
or More 93,145 --- --- --- 93,145
Other Time Deposits 142,185 56,199 --- --- 198,384
Total Deposits 549,666 139,794 --- --- 689,460
Short Term Borrowings 21,053 --- --- --- 21,053
Other Liabilities 12,230 418 --- --- 12,648
Total Liabilities 582,949 140,212 --- --- 723,161
Shareholder's Equity 71,414 --- --- --- 71,414
Total Liabilities &
Shareholders' Equity $654,363 $140,212 $ --- $ --- $794,575
See notes to unaudited pro forma
consolidated balance sheet.
Notes to Unaudited Pro Forma
Consolidated Balance Sheet
(1) Represents the assets acquired and
liabilities assumed in the Acquisition.
Net cash received in the settlement of
the transaction is shown as Federal
funds sold in the unaudited pro forma
balance sheet.
(2) Represents the tax deductible
deposit premium of 8.5% of deposit
liabilities assumed, including accrued
interest
payable, calculated on the basis of the
average amount of deposits (including
accrued interest payable) outstanding
over the 30 day period ending on June
24, 1997.
(3) The purchase accounting adjustments
incorporated in this unaudited pro forma
consolidated balance sheet are
as follows:
Debit Credit
Goodwill 653
Cash and Due from Banks 653
Represents capitalized direct
acquisition costs, principally legal,
financial and other professional fees
included in the cost of the Acquisition.
Goodwill 414
Deferred Tax Asset 286
Allowance for Loan Losses 700
Represents the allowance for
loan losses established for inherent
risk of loss in the loans acquired in an
amount the Company believes is
materially consistent with the general
loss reserve on the books of Fleet
applicable to these loans.
(4) Unused lines of credit, primarily
home equity loans, were approximately
$6.3 million at June 27, 1997.
(c) Exhibits.
Exhibit No. Document
2.1 Purchase and Assumption Agreement, dated as of March 21, 1997, between
Fleet Bank ("Fleet") and Glens Falls National Bank and Trust Company
("GFN").
2.2 Letter Agreement, dated May 20, 1997, between Fleet and GFN, relating
to GFN's election to purchase certain residential real estate loans as
part of the transaction.
99 Press Release dated June 30, 1997.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: July 9, 1997
ARROW FINANCIAL CORPORATION
By: /s/ Thomas L. Hoy
Thomas L. Hoy
President and Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Document
2.1 Purchase and Assumption Agreement, dated as of March 21, 1997, between
Fleet Bank ("Fleet") and Glens Falls National Bank and Trust Company
("GFN").
2.2 Letter Agreement, dated May 20, 1997, between Fleet and GFN, relating
to GFN's election to purchase certain residential real estate loans as
part of the transaction.
99 Press Release dated June 30, 1997.