Arrow Financial Corp. kicked off the local banking industry’s third quarter financial reporting period Thursday by providing a glimpse at how area banks are faring amid the global financial crisis.
The initial view shows community banks are still able to turn a profit, even if they get clipped by Wall Street’s problems. Arrow, the parent of Saratoga National Bank & Trust Co. and Glens Falls National Bank, posted a third quarter net income of $5 million, up 11 percent from the same period of 2007.
In announcing the quarterly results, Thomas Hoy, Arrow's chairman, president and chief executive officer, stressed his bank holding company’s “conservative posture,” which kept it from issuing subprime mortgages or taking on securities backed by those loans for borrowers with poor credit.
But Arrow also revealed its balance sheet will take a hit because of a $2 million unsecured bond issued by Lehman Brothers Holdings Co., the New York investment bank whose heavy dealings in the subprime market drove it to file for bankruptcy protection Sept. 15.
“Our concentration on fundamentals has allowed the company to achieve new record totals for assets, deposits and loans outstanding in spite of historic trauma in the financial markets. Strong capital ratios and excellent loan quality position the company well to withstand the stress of a weak economy and financial market turmoil,” Hoy said.
Arrow’s Lehman connection did not frighten away investors, who sent the bank holding company’s stock price up 11.6 percent to $27.83 per share this afternoon.
Among the bank holding companies slated to post their third quarter results next week are KeyCorp in Cleveland, First Niagara Financial Group in Lockport and Berkshire Hills Bancorp in Pittsfield, Mass.