Arrow Financial Corporation (NasdaqGS® – AROW) announced operating results for the three-month period ended March 31, 2012. Net income for the first quarter of 2012 was $5.3 million, representing diluted earnings per share (EPS) of $0.45, essentially unchanged from the first quarter of 2011. The cash dividend paid to shareholders in the first quarter of 2012 was $.25 per share, or 3% higher than the first quarter of 2011. All per share amounts have been adjusted to reflect the effect of the 3% stock dividend distributed on September 29, 2011.
Thomas L. Hoy, Chairman, President and CEO stated, “We are pleased to report solid earnings for the first quarter while continuing to maintain both strong asset quality and capital adequacy ratios. Our 2012 earnings results featured an increase in our noninterest income for the first quarter, reflecting primarily growth in insurance commissions and an increase in fee income from fiduciary activities. The Company again experienced modest growth in several key balance sheet categories, resulting in record levels in period-end amounts for both total assets and deposits, as well as assets under trust administration and investment management. We are pleased with these results during this extended period of a challenging low interest rate environment.”
Insurance commission income rose from $1.5 million in the first quarter of 2011 to nearly $1.9 million, as a result of our acquisitions of two strategically located insurance agencies in 2011. On February 1, we acquired Upstate Agency and on August 1, we acquired the McPhillips Insurance Agencies, all of which were longstanding property and casualty insurance agencies with offices located in our service area.
Assets under trust administration and investment management at March 31, rose to a record level of $1.038 billion, an increase of $26.6 million, or 2.63%, from the prior year. Over sixty percent of these assets are equity investments and the growth in balances was generally attributable to a recovery within the equity markets during the first quarter of 2012.
The Company’s key profitability ratios continue to be strong. Asset quality remained strong at March 31, 2012 as measured by our low level of nonperforming assets and very low level of charge-offs.
Total assets at March 31, 2012 reached a record high of $2.020 billion, an increase of $42.0 million, or 2.12%. Our loan portfolio was $1.138 billion, up $1.8 million, or 0.2%. During the first quarter of 2012, we originated over $20.1 million of residential real estate loans. However, we continued selling into the secondary market most of the residential real estate loans we originated, primarily to the Federal Home Loan Mortgage Corporation. We continue to retain servicing rights on the mortgages that we sell, generating servicing fee income on these loans.
We experienced an increase in the volume of new automobile loans in the first three months of 2012, reflecting an improvement in region-wide automobile sales. We also experienced modest growth in our commercial loan portfolio, which, combined with the increase in automobile loans, more than offset the decrease in our residential real estate loan portfolio.
Arrow’s capital ratios, which were strong to begin 2011, strengthened further through March 31, 2012. Our operating results and asset quality ratios have withstood the economic stress of recent years better than most banks in our national peer group.
Mr. Hoy further added, “We continue to believe that our conservative business model which emphasizes a strong capital position, high loan quality, knowledge of our market and responsiveness to our customers has positioned us well for the future. Nonetheless, we, like all banks, face challenges, particularly the threat to earnings posed by the Federal Reserve’s determination to maintain interest rates at historically low levels for an extended period of time.”
Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, NY serving the financial needs of northeastern New York. The Company is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. For information: www.arrowfinancial.com.