Arrow Financial Corp. has a market cap of $277.9 million; its shares were traded at around $24.68 with a P/E ratio of 12.7 and P/S ratio of 2.6. The dividend yield of Arrow Financial Corp. stocks is 4%. Arrow Financial Corp. had an annual average earning growth of 4.5% over the past 10 years.
Highlight of Business Operations: At certain points in this Report, our performance is compared with that of our “peer group” of financial institutions. Unless otherwise specifically stated, this peer group is comprised of the group of 296 domestic bank holding companies with $1 to $3 billion in total consolidated assets as identified in the Federal Reserve Board s “Bank Holding Company Performance Report” for December 31, 2010, and peer group data has been derived from such Report. This peer group is not, however, identical to either of the peer groups comprising the two bank indices included in the stock performance graphs on pages 15 and 16 of this Report.
In April 2010, we acquired all the outstanding shares of Loomis & LaPann, Inc. (Loomis), a property and casualty insurance agency. The acquisition was structured as a tax-free exchange of Arrow s common stock for Loomis common stock. Loomis two principal officers and staff continued with Loomis after the acquisition. Including the present value of expected contingent payments, we recorded the following intangible assets as a result of the acquisition (none of which are deductible for income tax purposes): goodwill ($514 thousand) and portfolio expirations ($126 thousand). The value of the expirations is being amortized over twenty years. Under the acquisition agreement, we issued 27,027 shares of Arrow s common stock at the closing. The agreement also provided for the possibility of annual contingent post-closing payments, also payable in the form of Arrow common stock, based upon earnings of Loomis, adjusted as provided in the agreement, and satisfaction of certain other requirements over the three-year period following the closing. Maximum contingent payments are capped at $330 thousand of common stock.
In April 2005, we acquired from HSBC Bank USA, N.A. (“HSBC”) three bank branches located within our service area. Our subsidiary Glens Falls National acquired two HSBC branches located in Argyle and Salem, New York, and our subsidiary Saratoga National acquired a branch located in Corinth, New York. The banks acquired substantially all deposit liabilities, the physical facilities and certain loans related to the branches. At the closing of the acquisitions, total deposits of the three branches were approximately $62 million and the related loans were approximately $8 million. The acquisition resulted in total intangible assets, including goodwill, of approximately $5.9 million.
In November 2004, we acquired all of the outstanding shares of common stock of Capital Financial Group, Inc. (“CFG”), an insurance agency headquartered in South Glens Falls, New York, which specializes in group health and life insurance products. The acquisition was structured as a tax-free exchange of Arrow s common stock for CFG s common stock. CFG s president and staff continued with CFG after the acquisition. As adjusted for cumulative contingent payments, we recorded the following intangible assets as a result of the acquisition (none of which are deductible for income tax purposes): goodwill ($1.735 million), covenant not to compete ($117 thousand) and portfolio expirations ($686 thousand). The value of the covenant is being amortized over five years and the value of the expirations is being amortized over twenty years. Under the acquisition agreement, we issued 70,688 shares of Arrow s common stock at the closing. The agreement also provided for annual contingent post-closing payments of Arrow common stock, based upon earnings of CFG, adjusted as provided in the agreement, over the five-year period following the closing. These contingent payments were recorded as additional goodwill at the time of payment. Total contingent payments, for the now completed five-year period, amounted to $898 thousand (36,174 shares).
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