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Glens Falls National Bank declines bailout money

GLENS FALLS - Arrow Financial Corporation, parent company of Glens Falls National Bank and Saratoga National Bank, was invited to join the U.S. Treasury Department's TARP bailout program, but the firm's officers decided they didn't need it.

Arrow Financial announced this week that it had received preliminary approval for the sale of $20 million of preferred stock and related common stock warrants to the U.S. Treasury Department under the Troubled Asset Relief Program.

However, Arrow has decided not to participate in this program, its top executive said in a statement to the media.

Thomas Hoy, Chairman, President and C.E.O. of Arrow Financial Corporation, indicated that there were a number of factors influencing the decision by the Board of Directors not to participate in the program.

"Our balance sheet is strong, we are well capitalized and our business operations have consistently generated very good earnings," he said. "

Hoy said Arrow's banks have continued to meet the needs of consumer and commercial loan customers in our five-county market area.

Also, Arrow's loan portfolio has expanded in recent periods and its asset quality remains strong, he said.

"We have never engaged in the origination of subprime mortgage loans as a business line, nor do we hold mortgage-backed securities backed by subprime mortgages in our investment portfolio," he said. "Consequently, we do not believe participation in this program is in the best interests of our shareholders, given Arrow's strong financial and liquidity positions."

Arrow recently released its operating results for the three- and twelve-month periods ending Dec. 31, 2008. The Company achieved record level earnings for the year as well as record levels for loans outstanding and capital balances as of Dec. 31, 2008. The Company's total shareholders' equity at year-end 2008 was $125.8 million, total risk-based capital ratio was 14.27 percent and its leverage ratio was 8.45 percent, which financial analysts consider to be remarkably healthy.

Hoy also indicated that Arrow recently elected to participate in the FDIC's Transaction Account Guarantee Program, which provides that all non-interest bearing transaction accounts at its subsidiary banks to be fully guaranteed by the FDIC, regardless of the amount, through Dec. 31, 2009. Coverage under this program is in addition to and is separate from insurance coverage from the FDIC's general deposit coverage which has been temporarily increased to $250,000 per account through Dec. 31, 2009.

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