EX-99 2 ex99-earningsq22015.htm EXHIBIT 99

| 250 Glen Street Glens Falls, NY 12801
NASDAQ® Symbol: "AROW" Website: arrowfinancial.com Media Contact: Timothy C. Badger Tel: (518) 415-4307 Fax: (518) 745-1976

Arrow's Second-Quarter Net Income Up 14.1%, Asset Quality Remains Strong

• | Second-quarter net income rose $781 thousand, or 14.1%, year over year.

• | Diluted earnings per share (EPS) rose $0.06, or 13.6%, from the prior-year quarter.

• | Record high period-end loan portfolio balances - growth of $135.5 million, or 10.1%, year over year.

• | Continued strong ratios for asset quality and capital.

GLENS FALLS, N.Y. (July 21, 2015) -- Arrow Financial Corporation (NasdaqGS® – AROW) announced operating results for the three- and six-month periods ended June 30, 2015. Net income for the second quarter of 2015 was $6.31 million, an increase of $781 thousand, or 14.1%, from net income of $5.52 million for the second quarter of 2014. Diluted earnings per share (EPS) for the quarter were $0.50, a 13.6% increase from the comparable 2014 quarter, when diluted EPS was $0.44. Return on average assets was 1.09%, and return on average equity was 12.23% for the 2015 second quarter, representing increases of 7.9% and 8.4%, respectively, from the prior-year second quarter.
Arrow President and CEO Thomas J. Murphy stated, "We are pleased to report a double-digit increase in net income for the second quarter, driven in part by continued strong loan growth. Our lending team has experienced increased activity and opportunities, especially in our southern market, producing results across all major loan segments: commercial, consumer, and residential real estate. At the same time, we have continued to maintain strong ratios for asset quality and capital. I am very proud of our team for achieving these excellent results."
The following list expands upon our second-quarter results:
Net Interest Income and Margin: In the second quarter of 2015, on a tax-equivalent basis, our net interest income increased $976 thousand, or 6.0%, compared to the second quarter of 2014. Our tax-equivalent net interest margin decreased by 2 basis points, from 3.17% in the second quarter of 2014 to 3.15% for the second quarter of 2015. The decrease in net interest margin reflected the fact that the average yield on our loan portfolio decreased more rapidly than the average cost of our interest-bearing liabilities.
Trust Assets and Related Noninterest Income: Assets under trust administration and investment management at June 30, 2015, were $1.25 billion, an increase of $32.0 million, or 2.6%, from the June 30, 2014, balance of $1.21 billion. The growth in asset balances was generally attributable to a rise in the equity markets between the periods and the addition of new accounts. Income from fiduciary activities increased by $205 thousand, or 5.4%, from $3.78 million for the first six months of 2014, to $3.98 million for the first six months of 2015.
Loan Growth: Over the six-month period ended June 30, 2015, our total loans increased by $66.4 million, or 4.7%, with increases in all three of our major loan segments: commercial, consumer, and residential real estate. At June 30, 2015, our total loan balance was up 10.1% as compared to June 30, 2014.
During the second quarter of 2015, our residential real estate loan portfolio grew $21.0 million, or 3.8%. We originated approximately $34 million of residential real estate loans during the quarter, nearly $6 million more than our originations in the comparable quarter of 2014. We also experienced continuing growth
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during the quarter in our consumer loan portfolio, reaching a record-high balance at period-end of $454.9 million, exceeding the June 30, 2014 balance, by $37.7 million, or 9.0%. This was primarily a result of our indirect automobile lending program. In the second quarter, we extended $52.7 million in new loans for new and used automobiles. Total outstanding commercial loans continued to grow, reaching a balance of $449.1 million on June 30, 2015, an increase of $15.9 million, or 3.7% from June 30, 2014.
Asset Quality and Loan Loss Provision: Asset quality remained strong at June 30, 2015, as measured by our comparatively low levels of nonperforming assets and net charge-offs. Nonperforming assets at June 30, 2015 were $9.1 million, an increase of $819 thousand, or 9.9%, from the prior year level. However, our nonperforming assets represented only 0.39% of total assets at period-end, versus 0.38% at June 30, 2014. Net loan losses expressed as an annualized percentage of average loans outstanding, were just 0.03% for the three-month period ended June 30, 2015, unchanged from the 2014 three-month period.
Our allowance for loan losses was $15.6 million at June 30, 2015, which represented 1.05% of loans outstanding, seven basis points below our ratio one year earlier and five basis points below our ratio at December 31, 2014. Our provision for loan losses for the second quarter of 2015 was $70 thousand, down by $435 thousand from the provision for the comparable 2014 quarter. The decreased size of our provision and reduction in our coverage ratio reflect the strong quality of our loan portfolio.
Cash and Stock Dividends: We distributed a cash dividend of $0.25 per share to stockholders in the second quarter of 2015. The cash dividend was 2% higher than the cash dividend paid in the second quarter of 2014, as adjusted for our 2% stock dividend distributed in September 2014.
Insurance Agency Operations: Insurance commission income increased from $2.3 million for the second quarter of 2014 to $2.4 million for the second quarter of 2015, or 4.3%.
Capital: Total stockholders’ equity was a record $206.9 million at period-end, an increase of $9.3 million, or 4.7%, above the June 30, 2014, amount. Effective January 1, 2015, the new bank regulatory capital standards for U.S. banking organizations revised the risk weighting of certain assets and added a new risk-weighted capital measure Common Equity Tier 1 (CET1). These new regulatory standards did not have a material impact on our capital ratios, which remained strong at quarter-end. We estimate that Arrow's regulatory capital ratios at June 30, 2015, calculated under the new standards were as follows: Tier 1 leverage ratio 9.41%; CET1 ratio 13.12%; Tier 1 risk-based capital ratio 14.46%; and total risk-based capital ratio 15.51%. All of our regulatory capital ratios, at the holding company and subsidiary bank levels, as calculated under the new standards, continue to significantly exceed the new regulatory thresholds for “well capitalized” institutions, which is the highest current regulatory category.
Industry Recognition: The Company was recently included on American Banker’s “Midtier Performers” list, ranking 31st out of almost 200 financial institutions based on three-year return on average equity (ROAE). Arrow had a three-year ROAE of 12.26% and was the only New York State Capital Region bank to appear in the top 40. The list included 191 public and private financial institutions with assets between $2 billion and $10 billion.
In addition, Arrow's two banking subsidiaries were each recognized again as a 5-Star Superior Bank by BauerFinancial, Inc., a national bank rating and research firm, based on March 31, 2015, financial data. Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company have each earned this designation for the past 33 and 25 quarters, respectively.
Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, New York, 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. Other subsidiaries include North Country Investment Advisers, Inc.; three property and casualty insurance agencies: Loomis & LaPann, Inc., Upstate Agency, LLC, and McPhillips Insurance Agency, a division of Glens Falls National Insurance
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Agencies, LLC; and Capital Financial Group, Inc., an insurance agency specializing in the sale and servicing of group health plans.
In addition to presenting information in conformity with accounting principles generally accepted in the United States of America (GAAP), this news release contains financial information determined by methods other than GAAP (non-GAAP). The following measures used in this release, which are commonly utilized by financial institutions, have not been specifically exempted by the Securities and Exchange Commission ("SEC") and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. Certain non-GAAP financial measures include: tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income - tax equivalent, and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by the Company from time to time are useful in evaluating the Company's performance and that such information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Our non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Select Quarterly Information."
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 may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, involving 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, explicitly or by implication. 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, 2014, and our other filings with the Securities and Exchange Commission.
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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts - Unaudited)
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
INTEREST AND DIVIDEND INCOME |  |  |  |  |  |  |  |
Interest and Fees on Loans |  | $ | 13,939 |  |  | $ | 13,202 |  |  | $ | 27,589 |  |  | $ | 25,976 |
Interest on Deposits at Banks |  | 26 |  |  | 16 |  |  | 47 |  |  | 29 |
Interest and Dividends on Investment Securities: |  |  |  |  |  |  |  |
Fully Taxable |  | 2,013 |  |  | 2,041 |  |  | 3,957 |  |  | 4,049 |
Exempt from Federal Taxes |  | 1,429 |  |  | 1,436 |  |  | 2,804 |  |  | 2,907 |
Total Interest and Dividend Income |  | 17,407 |  |  | 16,695 |  |  | 34,397 |  |  | 32,961 |
INTEREST EXPENSE |  |  |  |  |  |  |  |
NOW Accounts |  | 338 |  |  | 495 |  |  | 668 |  |  | 959 |
Savings Deposits |  | 182 |  |  | 226 |  |  | 349 |  |  | 445 |
Time Deposits of $100,000 or More |  | 88 |  |  | 201 |  |  | 178 |  |  | 431 |
Other Time Deposits |  | 185 |  |  | 359 |  |  | 387 |  |  | 750 |
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase |  | 5 |  |  | 5 |  |  | 10 |  |  | 9 |
Federal Home Loan Bank Advances |  | 301 |  |  | 127 |  |  | 451 |  |  | 272 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts |  | 144 |  |  | 142 |  |  | 286 |  |  | 283 |
Total Interest Expense |  | 1,243 |  |  | 1,555 |  |  | 2,329 |  |  | 3,149 |
NET INTEREST INCOME |  | 16,164 |  |  | 15,140 |  |  | 32,068 |  |  | 29,812 |
Provision for Loan Losses |  | 70 |  |  | 505 |  |  | 345 |  |  | 963 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  | 16,094 |  |  | 14,635 |  |  | 31,723 |  |  | 28,849 |
NONINTEREST INCOME |  |  |  |  |  |  |  |
Income From Fiduciary Activities |  | 2,051 |  |  | 1,906 |  |  | 3,984 |  |  | 3,779 |
Fees for Other Services to Customers |  | 2,334 |  |  | 2,377 |  |  | 4,573 |  |  | 4,571 |
Insurance Commissions |  | 2,367 |  |  | 2,293 |  |  | 4,506 |  |  | 4,737 |
Net Gain (loss) on Securities Transactions |  | 16 |  |  | (27 | ) |  | 106 |  |  | (27 | )
Net Gain on Sales of Loans |  | 120 |  |  | 166 |  |  | 252 |  |  | 289 |
Other Operating Income |  | 556 |  |  | 304 |  |  | 879 |  |  | 556 |
Total Noninterest Income |  | 7,444 |  |  | 7,019 |  |  | 14,300 |  |  | 13,905 |
NONINTEREST EXPENSE |  |  |  |  |  |  |  |
Salaries and Employee Benefits |  | 8,186 |  |  | 7,880 |  |  | 15,878 |  |  | 15,522 |
Occupancy Expenses, Net |  | 2,344 |  |  | 2,316 |  |  | 4,831 |  |  | 4,657 |
FDIC Assessments |  | 296 |  |  | 282 |  |  | 576 |  |  | 555 |
Other Operating Expense |  | 3,557 |  |  | 3,259 |  |  | 7,053 |  |  | 6,469 |
Total Noninterest Expense |  | 14,383 |  |  | 13,737 |  |  | 28,338 |  |  | 27,203 |
INCOME BEFORE PROVISION FOR INCOME TAXES |  | 9,155 |  |  | 7,917 |  |  | 17,685 |  |  | 15,551 |
Provision for Income Taxes |  | 2,850 |  |  | 2,393 |  |  | 5,525 |  |  | 4,707 |
NET INCOME |  | $ | 6,305 |  |  | $ | 5,524 |  |  | $ | 12,160 |  |  | $ | 10,844 |
Average Shares Outstanding 1: |  |  |  |  |  |  |  |
Basic |  | 12,633 |  |  | 12,595 |  |  | 12,633 |  |  | 12,599 |
Diluted |  | 12,669 |  |  | 12,616 |  |  | 12,670 |  |  | 12,621 |
Per Common Share: |  |  |  |  |  |  |  |
Basic Earnings |  | $ | 0.50 |  |  | $ | 0.44 |  |  | $ | 0.96 |  |  | $ | 0.86 |
Diluted Earnings |  | 0.50 |  |  | 0.44 |  |  | 0.96 |  |  | 0.86 |
1 Share and per share data have been restated for the September 29, 2014, 2% stock dividend. |  |  |  |

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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts - Unaudited)
| June 30, 2015 |  | December 31, 2014 |  | June 30, 2014
ASSETS |  |  |  |  |
Cash and Due From Banks | $ | 31,438 |  |  | $ | 35,081 |  |  | $ | 35,351 |
Interest-Bearing Deposits at Banks | 13,699 |  |  | 11,214 |  |  | 16,459 |
Investment Securities: |  |  |  |  |
Available-for-Sale | 391,817 |  |  | 366,139 |  |  | 366,848 |
Held-to-Maturity (Approximate Fair Value of $328,361 at June 30, 2015; $308,566 at December 31, 2014; and $304,259 at June 30, 2014) | 324,116 |  |  | 302,024 |  |  | 297,437 |
Other Investments | 6,470 |  |  | 4,851 |  |  | 4,583 |
Loans | 1,479,670 |  |  | 1,413,268 |  |  | 1,344,124 |
Allowance for Loan Losses | (15,574 | ) |  | (15,570 | ) |  | (15,036 | )
Net Loans | 1,464,096 |  |  | 1,397,698 |  |  | 1,329,088 |
Premises and Equipment, Net | 28,570 |  |  | 28,488 |  |  | 28,465 |
Goodwill | 22,003 |  |  | 22,003 |  |  | 22,003 |
Other Intangible Assets, Net | 3,369 |  |  | 3,625 |  |  | 3,865 |
Other Assets | 47,793 |  |  | 46,297 |  |  | 48,952 |
Total Assets | $ | 2,333,371 |  |  | $ | 2,217,420 |  |  | $ | 2,153,051 |
LIABILITIES |  |  |  |  |
Noninterest-Bearing Deposits | $ | 325,046 |  |  | $ | 300,786 |  |  | $ | 286,735 |
NOW Accounts | 904,893 |  |  | 871,671 |  |  | 820,589 |
Savings Deposits | 547,706 |  |  | 524,648 |  |  | 523,626 |
Time Deposits of $100,000 or More | 58,284 |  |  | 61,797 |  |  | 70,600 |
Other Time Deposits | 136,555 |  |  | 144,046 |  |  | 159,116 |
Total Deposits | 1,972,484 |  |  | 1,902,948 |  |  | 1,860,666 |
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase | 24,273 |  |  | 19,421 |  |  | 16,896 |
Federal Home Loan Bank Overnight Advances | 29,500 |  |  | 41,000 |  |  | 24,000 |
Federal Home Loan Bank Term Advances | 55,000 |  |  | 10,000 |  |  | 10,000 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 |  |  | 20,000 |  |  | 20,000 |
Other Liabilities | 25,167 |  |  | 23,125 |  |  | 23,873 |
Total Liabilities | 2,126,424 |  |  | 2,016,494 |  |  | 1,955,435 |
STOCKHOLDERS’ EQUITY |  |  |  |  |
Preferred Stock, $5 Par Value; 1,000,000 Shares Authorized |  |  |  |  |  |  |
Common Stock, $1 Par Value; 20,000,000 Shares Authorized (17,079,376 Shares Issued at June 30, 2015 and at December 31, 2014 and 16,744,486 Shares Issued June 30, 2014) | 17,079 |  |  | 17,079 |  |  | 16,744 |
Additional Paid-in Capital | 240,243 |  |  | 239,721 |  |  | 230,131 |
Retained Earnings | 35,303 |  |  | 29,458 |  |  | 32,132 |
Unallocated ESOP Shares (58,606 Shares at June 30, 2015; 71,748 Shares at December 31, 2014; and 74,845 Shares at June 30, 2014) | (1,200 | ) |  | (1,450 | ) |  | (1,550 | )
Accumulated Other Comprehensive Loss | (7,171 | ) |  | (7,166 | ) |  | (3,489 | )
Treasury Stock, at Cost (4,397,740 Shares at June 30, 2015; 4,386,001 Shares at December 31, 2014; and 4,319,587 Shares at June 30, 2014) | (77,307 | ) |  | (76,716 | ) |  | (76,352 | )
Total Stockholders’ Equity | 206,947 |  |  | 200,926 |  |  | 197,616 |
Total Liabilities and Stockholders’ Equity | $ | 2,333,371 |  |  | $ | 2,217,420 |  |  | $ | 2,153,051 |

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Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended | 6/30/2015 |  |  | 3/31/2015 |  |  | 12/31/2014 |  |  | 9/30/2014 |  |  | 6/30/2014 |
Net Income | $ | 6,305 |  |  | $ | 5,855 |  |  | $ | 6,369 |  |  | $ | 6,147 |  |  | $ | 5,524 |
Transactions Recorded in Net Income (Net of Tax): |  |  |  |  |  |  |  |  |
Net Gain (Loss) on Securities Transactions | 10 |  |  | 55 |  |  | — |  |  | 83 |  |  | (16 | )
Share and Per Share Data:1 |  |  |  |  |  |  |  |  |
Period End Shares Outstanding | 12,623 |  |  | 12,635 |  |  | 12,622 |  |  | 12,605 |  |  | 12,597 |
Basic Average Shares Outstanding | 12,633 |  |  | 12,633 |  |  | 12,614 |  |  | 12,606 |  |  | 12,595 |
Diluted Average Shares Outstanding | 12,669 |  |  | 12,671 |  |  | 12,655 |  |  | 12,621 |  |  | 12,616 |
Basic Earnings Per Share | $ | 0.50 |  |  | $ | 0.46 |  |  | $ | 0.50 |  |  | $ | 0.49 |  |  | $ | 0.44 |
Diluted Earnings Per Share | 0.50 |  |  | 0.46 |  |  | 0.50 |  |  | 0.49 |  |  | 0.44 |
Cash Dividend Per Share | 0.25 |  |  | 0.25 |  |  | 0.25 |  |  | 0.25 |  |  | 0.25 |
Selected Quarterly Average Balances: |  |  |  |  |  |  |  |  |
Interest-Bearing Deposits at Banks | 37,303 |  |  | 30,562 |  |  | 58,048 |  |  | 15,041 |  |  | 22,486 |
Investment Securities | 701,329 |  |  | 673,753 |  |  | 664,334 |  |  | 653,702 |  |  | 712,088 |
Loans | 1,456,534 |  |  | 1,422,005 |  |  | 1,401,601 |  |  | 1,361,347 |  |  | 1,328,639 |
Deposits | 1,983,647 |  |  | 1,949,776 |  |  | 1,962,698 |  |  | 1,861,115 |  |  | 1,900,399 |
Other Borrowed Funds | 99,994 |  |  | 69,034 |  |  | 56,185 |  |  | 67,291 |  |  | 60,900 |
Shareholders’ Equity | 206,831 |  |  | 202,552 |  |  | 202,603 |  |  | 199,518 |  |  | 196,478 |
Total Assets | 2,316,427 |  |  | 2,248,054 |  |  | 2,247,576 |  |  | 2,154,307 |  |  | 2,183,611 |
Return on Average Assets, annualized | 1.09 | % |  | 1.06 | % |  | 1.12 | % |  | 1.13 | % |  | 1.01 | %
Return on Average Equity, annualized | 12.23 | % |  | 11.72 | % |  | 12.47 | % |  | 12.22 | % |  | 11.28 | %
Return on Tangible Equity, annualized 2 | 13.94 | % |  | 13.42 | % |  | 14.28 | % |  | 14.04 | % |  | 12.99 | %
Average Earning Assets | $ | 2,195,166 |  |  | $ | 2,126,320 |  |  | $ | 2,123,983 |  |  | $ | 2,030,090 |  |  | $ | 2,063,213 |
Average Paying Liabilities | 1,770,023 |  |  | 1,713,253 |  |  | 1,716,699 |  |  | 1,626,327 |  |  | 1,680,149 |
Interest Income, Tax-Equivalent 3 | 18,501 |  |  | 18,073 |  |  | 18,213 |  |  | 17,834 |  |  | 17,837 |
Interest Expense | 1,243 |  |  | 1,086 |  |  | 1,219 |  |  | 1,399 |  |  | 1,555 |
Net Interest Income, Tax-Equivalent 3 | 17,258 |  |  | 16,987 |  |  | 16,994 |  |  | 16,435 |  |  | 16,282 |
Tax-Equivalent Adjustment 3 | 1,094 |  |  | 1,083 |  |  | 1,073 |  |  | 1,074 |  |  | 1,142 |
Net Interest Margin, annualized 3 | 3.15 | % |  | 3.24 | % |  | 3.17 | % |  | 3.21 | % |  | 3.17 | %
Efficiency Ratio Calculation: 4 |  |  |  |  |  |  |  |  |
Noninterest Expense | $ | 14,383 |  |  | $ | 13,955 |  |  | $ | 13,299 |  |  | $ | 13,526 |  |  | $ | 13,737 |
Less: Intangible Asset Amortization | (80 | ) |  | (91 | ) |  | (94 | ) |  | (94 | ) |  | (94 | )
Net Noninterest Expense | $ | 14,303 |  |  | $ | 13,864 |  |  | $ | 13,205 |  |  | $ | 13,432 |  |  | $ | 13,643 |
Net Interest Income, Tax-Equivalent | $ | 17,258 |  |  | $ | 16,987 |  |  | $ | 16,994 |  |  | $ | 16,435 |  |  | $ | 16,282 |
Noninterest Income | 7,444 |  |  | 6,856 |  |  | 7,060 |  |  | 7,351 |  |  | 7,019 |
Less: Net Securities (Gain) Loss | (16 | ) |  | (90 | ) |  | — |  |  | (137 | ) |  | 27 |
Net Gross Income | $ | 24,686 |  |  | $ | 23,753 |  |  | $ | 24,054 |  |  | $ | 23,649 |  |  | $ | 23,328 |
Efficiency Ratio | 57.94 | % |  | 58.37 | % |  | 54.90 | % |  | 56.80 | % |  | 58.48 | %
Period-End Capital Information: |  |  |  |  |  |  |  |  |
Total Stockholders’ Equity (i.e. Book Value) | $ | 206,947 |  |  | $ | 204,965 |  |  | $ | 200,926 |  |  | $ | 200,089 |  |  | $ | 197,616 |
Book Value per Share | 16.39 |  |  | 16.22 |  |  | 15.92 |  |  | 15.87 |  |  | 15.69 |
Goodwill and Other Intangible Assets, net | 25,372 |  |  | 25,492 |  |  | 25,628 |  |  | 25,747 |  |  | 25,868 |
Tangible Book Value per Share 2 | 14.38 |  |  | 14.20 |  |  | 13.89 |  |  | 13.83 |  |  | 13.63 |
Capital Ratios:5 |  |  |  |  |  |  |  |  |
Tier 1 Leverage Ratio | 9.41 | % |  | 9.57 | % |  | 9.44 | % |  | 9.68 | % |  | 9.39 | %
Common Equity Tier 1 Capital Ratio | 13.12 | % |  | 13.27 | % |  | N/A |  |  | N/A |  |  | N/A |
Tier 1 Risk-Based Capital Ratio | 14.46 | % |  | 14.65 | % |  | 14.47 | % |  | 14.41 | % |  | 14.49 | %
Total Risk-Based Capital Ratio | 15.51 | % |  | 15.73 | % |  | 15.54 | % |  | 15.48 | % |  | 15.57 | %
Assets Under Trust Administration and Investment Management | $ | 1,246,849 |  |  | $ | 1,254,823 |  |  | $ | 1,227,179 |  |  | $ | 1,199,930 |  |  | $ | 1,214,841 |

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Arrow Financial Corporation
Selected Quarterly Information - Continued
(Dollars In Thousands, Except Per Share Amounts - Unaudited)

Footnotes: |  |  |  |  |  |  |  |
1. | Share and Per Share Data have been restated for the September 29, 2014, 2% stock dividend.
2. | Tangible Book Value and Tangible Equity exclude goodwill and other intangible assets, net from total equity. These are non-GAAP financial measures which we believe provide investors with information that is useful in understanding our financial performance.
|  | 6/30/2015 |  | 3/31/2015 |  | 12/31/2014 |  | 9/30/2014 |  | 6/30/2014
| Total Stockholders' Equity (GAAP) | $ | 206,947 |  |  | $ | 204,965 |  |  | $ | 200,926 |  |  | $ | 200,089 |  |  | $ | 197,616 |
| Less: Goodwill and Other Intangible assets, net | 25,372 |  |  | 25,492 |  |  | 25,628 |  |  | 25,747 |  |  | 25,868 |
| Tangible Equity (Non-GAAP) | $ | 181,575 |  |  | $ | 179,473 |  |  | $ | 175,298 |  |  | $ | 174,342 |  |  | $ | 171,748 |
| Period End Shares Outstanding | 12,623 |  |  | 12,635 |  |  | 12,622 |  |  | 12,605 |  |  | 12,597 |
| Tangible Book Value per Share (Non-GAAP) | $ | 14.38 |  |  | $ | 14.20 |  |  | $ | 13.89 |  |  | $ | 13.83 |  |  | $ | 13.63 |
3. | Net Interest Margin is the ratio of our annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which we believe provides investors with information that is useful in understanding our financial performance.
|  | 6/30/2015 |  | 3/31/2015 |  | 12/31/2014 |  | 9/30/2014 |  | 6/30/2014
| Net Interest Income (GAAP) | $ | 16,164 |  |  | $ | 15,904 |  |  | $ | 15,921 |  |  | $ | 15,361 |  |  | $ | 15,140 |
| Add: Tax-Equivalent adjustment (Non-GAAP) | 1,094 |  |  | 1,083 |  |  | 1,073 |  |  | 1,074 |  |  | 1,142 |
| Net Interest Income - Tax Equivalent (Non-GAAP) | $ | 17,258 |  |  | $ | 16,987 |  |  | $ | 16,994 |  |  | $ | 16,435 |  |  | $ | 16,282 |
| Average Earning Assets | 2,195,166 |  |  | 2,126,320 |  |  | 2,123,983 |  |  | 2,030,090 |  |  | 2,063,213 |
| Net Interest Margin (Non-GAAP)* | 3.15 | % |  | 3.24 | % |  | 3.17 | % |  | 3.21 | % |  | 3.17 | %
4. | Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. We believe the efficiency ratio provides investors with information that is useful in understanding our financial performance. We define our efficiency ratio as the ratio of our noninterest expense to our net gross income (which equals our tax-equivalent net interest income plus noninterest income, as adjusted).
5. | Common Equity Tier 1 Capital Ratio (CET1) is a new regulatory capital measure applicable to financial institutions, effective January 1, 2015. For the current quarter, all of the regulatory capital ratios in the table above, as well as the Total Risk-Weighted Assets and Common Equity Tier 1 Capital amounts listed in the table below, are estimates based on, and calculated in accordance with, these new bank regulatory capital rules. All prior quarters reflect actual results. The June 30, 2015 CET1 ratio listed in the tables (i.e., 13.12%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
|  | 6/30/2015 |  | 3/31/2015 |  | 12/31/2014 |  | 9/30/2014 |  | 6/30/2014
| Total Risk Weighted Assets | $ | 1,492,284 |  |  | $ | 1,452,975 |  |  | N/A |  |  | N/A |  |  | N/A |
| Common Equity Tier 1 Capital | $ | 195,800 |  |  | $ | 192,865 |  |  | N/A |  |  | N/A |  |  | N/A |
| Common Equity Tier 1 Ratio | 13.12 | % |  | 13.27 | % |  | N/A |  |  | N/A |  |  | N/A |

* Quarterly ratios have been annualized
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Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudite d)
Quarter Ended: | 6/30/2015 |  | 12/31/2014 |  | 6/30/2014
Loan Portfolio |  |  |  |  |
Commercial Loans | $ | 112,022 |  |  | $ | 118,326 |  |  | $ | 123,592 |
Commercial Real Estate Loans | 337,106 |  |  | 321,297 |  |  | 309,646 |
Subtotal Commercial Loan Portfolio | 449,128 |  |  | 439,623 |  |  | 433,238 |
Consumer Loans | 454,879 |  |  | 437,041 |  |  | 417,164 |
Residential Real Estate Loans | 575,663 |  |  | 536,604 |  |  | 493,722 |
Total Loans | $ | 1,479,670 |  |  | $ | 1,413,268 |  |  | $ | 1,344,124 |
Allowance for Loan Losses |  |  |  |  |
Allowance for Loan Losses, Beginning of Quarter | $ | 15,625 |  |  | $ | 15,293 |  |  | $ | 14,636 |
Loans Charged-off | 165 |  |  | 251 |  |  | 168 |
Less Recoveries of Loans Previously Charged-off | 44 |  |  | 87 |  |  | 63 |
Net Loans Charged-off | 121 |  |  | 164 |  |  | 105 |
Provision for Loan Losses | 70 |  |  | 441 |  |  | 505 |
Allowance for Loan Losses, End of Quarter | $ | 15,574 |  |  | $ | 15,570 |  |  | $ | 15,036 |
Nonperforming Assets |  |  |  |  |
Nonaccrual Loans | $ | 6,931 |  |  | $ | 6,899 |  |  | $ | 6,185 |
Loans Past Due 90 or More Days and Accruing | 1,570 |  |  | 537 |  |  | 1,325 |
Loans Restructured and in Compliance with Modified Terms | 283 |  |  | 333 |  |  | 398 |
Total Nonperforming Loans | 8,784 |  |  | 7,769 |  |  | 7,908 |
Repossessed Assets | 75 |  |  | 81 |  |  | 40 |
Other Real Estate Owned | 234 |  |  | 312 |  |  | 326 |
Total Nonperforming Assets | $ | 9,093 |  |  | $ | 8,162 |  |  | $ | 8,274 |
Key Asset Quality Ratios |  |  |  |  |
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized | 0.03 | % |  | 0.05 | % |  | 0.03 | %
Provision for Loan Losses to Average Loans, Quarter-to-date Annualized | 0.02 | % |  | 0.12 | % |  | 0.15 | %
Allowance for Loan Losses to Period-End Loans | 1.05 | % |  | 1.10 | % |  | 1.12 | %
Allowance for Loan Losses to Period-End Nonperforming Loans | 177.30 | % |  | 200.41 | % |  | 190.14 | %
Nonperforming Loans to Period-End Loans | 0.59 | % |  | 0.55 | % |  | 0.59 | %
Nonperforming Assets to Period-End Assets | 0.39 | % |  | 0.37 | % |  | 0.38 | %
Six-Month Period Ended: |  |  |  |  |
Allowance for Loan Losses |  |  |  |  |
Allowance for Loan Losses, Beginning of Year | $ | 15,570 |  |  |  |  | $ | 14,434 |
Loans Charged-off | 455 |  |  |  |  | 504 |
Less Recoveries of Loans Previously Charged-off | 114 |  |  |  |  | 143 |
Net Loans Charged-off | 341 |  |  |  |  | 361 |
Provision for Loan Losses | 345 |  |  |  |  | 963 |
Allowance for Loan Losses, End of Period | $ | 15,574 |  |  |  |  | $ | 15,036 |
Key Asset Quality Ratios |  |  |  |  |
Net Loans Charged-off to Average Loans, Annualized | 0.05 | % |  |  |  | 0.06 | %
Provision for Loan Losses to Average Loans, Annualized | 0.05 | % |  |  |  | 0.15 | %

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