Arrow Net Income Up 8.4%; Loans Increase 12.3%

- Second-quarter net income increased 8.4% year over year to $7.2 million.

- Second-quarter diluted earnings per share (EPS) rose 8.2% to $0.53.

- Period-end total loans reached a record high of $1.9 billion, up 12.3% year over year.

- Record high for period-end total assets of $2.7 billion.

- Continued strong ratios for profitability, asset quality and capital.

News provided by

Jul 20, 2017, 11:51 ET

GLENS FALLS, N.Y., July 20, 2017 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS: AROW) announced operating results for the three-month period ended June 30, 2017. Net income for the second quarter of 2017 was $7.2 million, an increase of $561 thousand, or 8.4%, from net income of $6.6 million a year earlier. Diluted earnings per share (EPS) for the second quarter was $0.53, an increase from $0.49 during the comparable 2016 quarter.

Our annualized key profitability ratios continue to remain strong, as measured by a return on average equity (ROE) of 12.08% and a return on average assets (ROA) of 1.08% for the second quarter, compared to 11.98% and 1.07% a year earlier.

Arrow President and CEO Thomas J. Murphy stated, "We're proud to again report a strong quarter for Arrow, including: loan growth; record highs for equity and assets; and healthy profitability and asset quality ratios. Our approach to community banking and insurance continues to deliver great results in the markets we serve, thanks to the efforts and commitment of our team."

The following expands upon our second-quarter results:

Net Interest Income: In the second quarter of 2017, our net interest income on a GAAP basis increased 7.1% to $19.2 million, compared to $18.0 million in the comparable quarter of 2016. On a tax-equivalent (non-GAAP) basis, our net interest income increased 6.9%, compared to the second quarter of 2016. Our net interest margin, measured on a tax-equivalent (non-GAAP) basis, decreased slightly to 3.17% from 3.20% in the prior-year quarter.

Loan Growth: Over the 12 months ended June 30, 2017, our total loan balance increased to a record high of $1.9 billion, up $206.1 million, or 12.3%, from a year earlier. Over the six-month period ended June 30, 2017, total loans grew $125.4 million, or 7.2%. During the second quarter of 2017, total loans grew by $67.8 million, or 3.7% as compared to the first quarter of 2017. We experienced growth in all three of our major loan segments: commercial, consumer and residential real estate.

During the second quarter of 2017, our consumer loan portfolio grew $26.8 million, or 4.9%, to $579 million at period-end. This balance exceeded the balance at June 30, 2016 by $70.2 million, or 13.8%. The increase was primarily a result of growth in our indirect automobile lending program, which generated $85.4 million in new originations in the second quarter of 2017. Total outstanding commercial loans increased 2.5% during the second quarter to $568.1 million on June 30, 2017, up $43.8 million, or 8.4%, from the balance at June 30, 2016. Our residential real estate loan portfolio increased $27.1 million, or 3.8%, during the second quarter of 2017 to $731.8 million, up $92.1 million, or 14.4% over the balance at June 30, 2016. We originated approximately $44.6 million of residential real estate loans during the second quarter of 2017, up $6.5 million, or 17.2%, over the comparable 2016 quarter.

Deposit Growth: At June 30, 2017, deposit balances reached $2.2 billion, an increase of $147.7 million, or 7.1%, from the year-earlier level. Noninterest-bearing demand deposits increased $65.1 million, or 17.7%, from the year-earlier level, which had a positive impact on net interest margin. Noninterest-bearing demand deposits represented 19.5% of total deposits at June 30, 2017, a record high and an increase of 9.6% from the June 30, 2016 level. This deposit growth is due, in part, to the strategic expansion of our branch network to the Capital District in recent years.

Assets Under Management and Related Noninterest Income: Assets under trust administration and investment management reached a record high of $1.4 billion at June 30, 2017. Assets under trust administration increased of $105.5 million, or 8.4%, from the balance at June 30, 2016, was primarily due to the performance of the equity markets. The related income from fiduciary activities between the respective six month periods increased $237 thousand, or 6.0% to $4.2 million.

Asset Quality: Asset quality remained strong at June 30, 2017, as measured by our comparatively low levels of nonperforming assets and net charge-offs. Nonperforming assets at June 30, 2017, were $8.8 million, up $0.6 million, or 6.7%, from the year-earlier level, following the 7.1% increase in total assets over the period. The period end total was up $1.6 million, or 21.9%, from the year-end 2016 level as certain categories of our portfolio, particularly automobile loans, continued to experience modest fluctuations in nonperforming loans, which, however, remain at very low levels. Our nonperforming assets remain very low, representing only 0.32% of total assets at period-end, equal to the year-earlier ratio. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.04% for the three-month period ended June 30, 2017, the same ratio as the prior-year quarter.

Our allowance for loan losses was $17.4 million at June 30, 2017, which represented 0.93% of loans outstanding. Our provision for loan losses for the second quarter of 2017 was $422 thousand, down $247 thousand from the provision for the comparable 2016 quarter.

Noninterest Income: Our noninterest income for the three-month period ended June 30, 2017 declined by 1.9% from the comparable 2016 quarter. This decline was partially driven by a write-down in the 2017 period on Other Real Estate Owned of $84 thousand. In addition, net gain on the sale of securities for the second quarter of 2017 decreased by $144 thousand. Due to strategic planning reasons, we did not sell any securities in the second quarter of 2017.

Noninterest Expense: Consistent with the 2016 period, salaries and employee benefits were the largest components of noninterest expense in the second quarter of 2017. Salaries and employee benefits increased 8.0% over the same 2016 quarter primarily as a result of a $409 thousand, or 6.5% increase in the salary expense. The increase in salary increase expense was due in part to staffing expansion and normal increases. Employee benefit expenses increased by $229 thousand or 13.6% primarily due to increases in medical plan claims.

Cash and Stock Dividends: We distributed a cash dividend of $0.25 per share to shareholders in the second quarter of 2017. The cash dividend was 3% higher than the cash dividend paid in the second quarter of 2016 when adjusted for our 3% stock dividend distributed on September 29, 2016.

Capital: Total stockholders' equity was a record $240.8 million at period-end, up $15.4 million, or 6.8%, above the prior-year amount. This increase matched the 7.1% increase in total assets over the same period. Our capital ratios remained strong in 2017. At June 30, 2017, the Company's Common Equity Tier 1 Ratio was estimated to be 12.68% and the Total Risk-Based Capital Ratio was estimated to be 14.77%. The capital levels at the Company and both its subsidiary banks continue to significantly exceed the "well capitalized" regulatory standard.

Provision for Income Taxes: The effective income tax rates for the six month periods ended June 30, 2017 and 2016 were 29.2% and 30.8%, respectively. The decrease in the 2017 period relates primarily to current accounting standards for equity compensation under which income tax benefits from stock options exercised in the period reduced our effective tax rate from the prior year period. The year to date impact on earnings per share was less than $0.01. Under the previous accounting standards, the tax benefits would have impacted equity directly.

Industry Recognition: Arrow was again named by Forbes as one of "America's 50 Most Trustworthy Financial Companies" for its accounting and governance practices in 2017. This is the sixth year Arrow has received a "Most Trustworthy" designation from Forbes.

Both of the Company's two banking subsidiaries maintained their BauerFinancial, Inc. 5-Star Superior Bank rating. Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company have continued to earn this designation for the last 41 and 33 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.; two property and casualty insurance agencies: Upstate Agency, LLC, and McPhillips Insurance Agency, a division of Glens Falls National Insurance 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 "Selected 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, 2016, and our other filings with the Securities and Exchange Commission.

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,
	2017		2016		2017		2016
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans	$	17,295	$	15,708	$	33,697	$	30,732
Interest on Deposits at Banks	78		34		138		66
Interest and Dividends on Investment Securities:
Fully Taxable	2,013		2,018		4,003		4,105
Exempt from Federal Taxes	1,540		1,477		3,085		2,960
Total Interest and Dividend Income	20,926		19,237		40,923		37,863
INTEREST EXPENSE
Interest-Bearing Checking Accounts	381		311		712		621
Savings Deposits	316		224		607		446
Time Deposits over $250,000	66		49		121		72
Other Time Deposits	233		213		461		446
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	9		10		16		15
Federal Home Loan Bank Advances	506		314		951		623
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	188		163		367		324
Total Interest Expense	1,699		1,284		3,235		2,547
NET INTEREST INCOME	19,227		17,953		37,688		35,316
Provision for Loan Losses	422		669		780		1,070
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	18,805		17,284		36,908		34,246
NONINTEREST INCOME
Income From Fiduciary Activities	2,150		2,000		4,168		3,931
Fees for Other Services to Customers	2,413		2,417		4,670		4,654
Insurance Commissions	2,115		2,133		4,313		4,341
Net Gain on Securities Transactions	—		144		—		144
Net Gain on Sales of Loans	204		159		250		338
Other Operating Income	175		341		351		662
Total Noninterest Income	7,057		7,194		13,752		14,070
NONINTEREST EXPENSE
Salaries and Employee Benefits	9,084		8,408		18,092		16,530
Occupancy Expenses, Net	2,494		2,335		5,038		4,798
FDIC Assessments	228		314		454		627
Other Operating Expense	3,831		3,827		7,528		7,300
Total Noninterest Expense	15,637		14,884		31,112		29,255
INCOME BEFORE PROVISION FOR INCOME TAXES	10,225		9,594		19,548		19,061
Provision for Income Taxes	3,017		2,947		5,709		5,865
NET INCOME	$	7,208	$	6,647	$	13,839	$	13,196
Average Shares Outstanding ¹:
Basic	13,485		13,372		13,485		13,357
Diluted	13,568		13,429		13,581		13,405
Per Common Share:
Basic Earnings	$	0.53	$	0.50	$	1.03	$	0.99
Diluted Earnings	0.53		0.49		1.02		0.98
¹ Share and per share data have been restated for the September 29, 2016, 3% stock dividend.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts - Unaudited)

	June 30, 2017		December 31, 2016		June 30, 2016
ASSETS
Cash and Due From Banks	$	39,105	$	43,024	$	46,139
Interest-Bearing Deposits at Banks	26,972		14,331		16,976
Investment Securities:
Available-for-Sale	327,392		346,996		362,929
Held-to-Maturity (Approximate Fair Value of $350,355 at June 30, 2017; $343,751 at December 31, 2016; and $354,778 at June 30, 2016)	348,018		345,427		343,814
Other Investments	11,035		10,912		9,961
Loans	1,878,632		1,753,268		1,672,490
Allowance for Loan Losses	(17,442)		(17,012)		(16,798)
Net Loans	1,861,190		1,736,256		1,655,692
Premises and Equipment, Net	26,565		26,938		26,775
Goodwill	21,873		21,873		21,873
Other Intangible Assets, Net	2,482		2,696		2,885
Other Assets	57,089		56,789		53,198
Total Assets	$	2,721,721	$	2,605,242	$	2,540,242
LIABILITIES
Noninterest-Bearing Deposits	$	433,480	$	387,280	$	368,378
Interest-Bearing Checking Accounts	905,624		877,988		900,974
Savings Deposits	679,320		651,965		600,513
Time Deposits over $250,000	33,630		32,878		37,297
Other Time Deposits	167,984		166,435		165,223
Total Deposits	2,220,038		2,116,546		2,072,385
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	40,892		35,836		41,497
Federal Home Loan Bank Overnight Advances	122,000		123,000		102,000
Federal Home Loan Bank Term Advances	55,000		55,000		55,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		20,000		20,000
Other Liabilities	23,039		22,008		23,987
Total Liabilities	2,480,969		2,372,390		2,314,869
STOCKHOLDERS' EQUITY
Preferred Stock, $5 Par Value; 1,000,000 Shares Authorized	—		—		—
Common Stock, $1 Par Value; 20,000,000 Shares Authorized (17,943,201 Shares Issued and Outstanding at June 30, 2017; 17,943,201 at December 31, 2016 and 17,420,776 at June 30, 2016)	17,943		17,943		17,421
Additional Paid-in Capital	272,187		270,880		252,511
Retained Earnings	35,739		28,644		38,852
Unallocated ESOP Shares (19,466 Shares at June 30, 2017; 19,466 Shares at December 31, 2016 and 28,671 Shares at June 30, 2016)	(400)		(400)		(850)
Accumulated Other Comprehensive Loss	(6,200)		(6,834)		(4,742)
Treasury Stock, at Cost (4,428,713 Shares at June 30, 2017; 4,441,093 Shares at December 31, 2016 and 4,380,736 Shares at June 30, 2016)	(78,517)		(77,381)		(77,819)
Total Stockholders' Equity	240,752		232,852		225,373
Total Liabilities and Stockholders' Equity	$	2,721,721	$	2,605,242	$	2,540,242

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

Quarter Ended	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Net Income	7,208			6,631			6,600			6,738			6,647
Transactions Recorded in Net Income (Net of Tax):
Net (Loss) Gain on Securities Transactions	—			—			(101)			—			88

Share and Per Share Data:¹
Period End Shares Outstanding	13,495			13,481			13,483			13,426			13,388
Basic Average Shares Outstanding	13,485			13,484			13,441			13,407			13,372
Diluted Average Shares Outstanding	13,568			13,594			13,565			13,497			13,429
Basic Earnings Per Share	$	0.53		$	0.49		$	0.49		$	0.50		$	0.50
Diluted Earnings Per Share	0.53			0.49			0.49			0.50			0.49
Cash Dividend Per Share	0.250			0.250			0.250			0.243			0.243

Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks	24,480			23,565			34,731			21,635			22,195
Investment Securities	684,570			695,615			684,906			696,712			701,526
Loans	1,842,543			1,781,113			1,726,738			1,680,850			1,649,401
Deposits	2,206,365			2,161,798			2,160,156			2,063,832			2,082,449
Other Borrowed Funds	207,270			205,436			157,044			209,946			165,853
Shareholders' Equity	239,396			235,257			230,198			228,048			223,234
Total Assets	2,677,843			2,626,470			2,572,425			2,528,124			2,496,795
Return on Average Assets, annualized	1.08		%	1.02		%	1.02		%	1.06		%	1.07		%
Return on Average Equity, annualized	12.08		%	11.43		%	11.41		%	11.75		%	11.98		%
Return on Tangible Equity, annualized ²	13.45		%	12.76		%	12.77		%	13.18		%	13.47		%
Average Earning Assets	2,551,593			2,500,293			2,446,375			2,399,197			2,373,122
Average Paying Liabilities	2,005,421			1,977,628			1,933,974			1,892,583			1,891,017
Interest Income, Tax-Equivalent³	21,875			20,945			20,709			20,222			20,154
Interest Expense	1,699			1,536			1,404			1,405			1,284
Net Interest Income, Tax-Equivalent³	20,176			19,409			19,305			18,817			18,870
Tax-Equivalent Adjustment³	949			948			939			940			917
Net Interest Margin, annualized³	3.17		%	3.15		%	3.14		%	3.12		%	3.20		%

Efficiency Ratio Calculation: ⁴
Noninterest Expense	15,637			15,475			15,272			15,082			14,884
Less: Intangible Asset Amortization	70			71			73			74			74
Net Noninterest Expense	15,567			15,404			15,199			15,008			14,810
Net Interest Income, Tax-Equivalent	20,176			19,409			19,305			18,817			18,870
Noninterest Income	7,057			6,695			6,648			7,114			7,194
Less: Net Securities (Loss) Gain	—			—			(166)			—			144
Net Gross Income	27,233			26,104			26,119			25,931			25,920
Efficiency Ratio	57.16		%	59.01		%	58.19		%	57.88		%	57.14		%

Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)	240,752			236,111			232,852			229,208			225,373
Book Value per Share¹	17.84			17.51			17.27			17.07			16.83
Goodwill and Other Intangible Assets, net	24,355			24,448			24,569			24,675			24,758
Tangible Book Value per Share ^1,2	16.04			15.70			15.45			15.23			14.98

Capital Ratios:⁵
Tier 1 Leverage Ratio	9.35		%	9.37		%	9.47		%	9.44		%	9.37		%
Common Equity Tier 1 Capital Ratio	12.68		%	12.84		%	12.97		%	12.80		%	12.74		%
Tier 1 Risk-Based Capital Ratio	13.79		%	13.99		%	14.14		%	13.98		%	13.95		%
Total Risk-Based Capital Ratio	14.77		%	14.98		%	15.15		%	14.99		%	14.96		%

Assets Under Trust Administration and Investment Management	$	1,356,262		$	1,333,690		$	1,301,408		$	1,284,051		$	1,250,770

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, 2016, 3% 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.

		6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
	Total Stockholders' Equity (GAAP)	240,752			236,111			232,852			229,208			225,373
	Less: Goodwill and Other Intangible assets, net	24,355			24,448			24,569			24,675			24,758
	Tangible Equity (Non-GAAP)	$	216,397		$	211,663		$	208,283		$	204,533		$	200,615

	Period End Shares Outstanding	13,495			13,481			13,483			13,426			13,388
	Tangible Book Value per Share (Non-GAAP)	$	16.04		$	15.70		$	15.45		$	15.23		$	14.98

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.

		6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
	Net Interest Income (GAAP)	19,227			18,461			18,366			17,877			17,953
	Add: Tax-Equivalent adjustment (Non-GAAP)	949			948			939			940			917
	Net Interest Income - Tax Equivalent (Non-GAAP)	$	20,176		$	19,409		$	19,305		$	18,817		$	18,870
	Average Earning Assets	2,551,593			2,500,293			2,446,375			2,399,197			2,373,122
	Net Interest Margin (Non-GAAP)*	3.17		%	3.15		%	3.14		%	3.12		%	3.20		%

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.	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, bank regulatory capital rules. All prior quarters reflect actual results. The June 30, 2017 CET1 ratio listed in the tables (i.e., 12.68%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).

		6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
	Total Risk Weighted Assets	1,802,455			1,747,318			1,707,829			1,690,646			1,662,381
	Common Equity Tier 1 Capital	228,586			224,369			221,472			216,382			211,801
	Common Equity Tier 1 Ratio	12.68		%	12.84		%	12.97		%	12.80		%	12.74		%

	* Quarterly ratios have been annualized

Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited)

Quarter Ended:	06/30/2017			12/31/2016			6/30/2016
Loan Portfolio
Commercial Loans	$	126,259		$	105,155		$	106,651
Commercial Real Estate Loans	441,809			431,646			417,612
Subtotal Commercial Loan Portfolio	568,068			536,801			524,263
Consumer Loans	578,754			537,361			508,538
Residential Real Estate Loans	731,810			679,106			639,689
Total Loans	$	1,878,632		$	1,753,268		$	1,672,490
Allowance for Loan Losses
Allowance for Loan Losses, Beginning of Quarter	$	17,216		$	16,975		$	16,287
Loans Charged-off	(305)			(486)			(201)
Less Recoveries of Loans Previously Charged-off	109			40			43
Net Loans Charged-off	(196)			(446)			(158)
Provision for Loan Losses	422			483			669
Allowance for Loan Losses, End of Quarter	$	17,442		$	17,012		$	16,798
Nonperforming Assets
Nonaccrual Loans	$	5,222		$	4,193		$	6,705
Loans Past Due 90 or More Days and Accruing	1,821			1,201			456
Loans Restructured and in Compliance with Modified Terms	101			106			111
Total Nonperforming Loans	7,144			5,500			7,272
Repossessed Assets	90			101			47
Other Real Estate Owned	1,523			1,585			885
Total Nonperforming Assets	$	8,757		$	7,186		$	8,204
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized	0.04		%	0.10		%	0.04		%
Provision for Loan Losses to Average Loans, Quarter-to-date Annualized	0.09		%	0.11		%	0.16		%
Allowance for Loan Losses to Period-End Loans	0.93		%	0.97		%	1.00		%
Allowance for Loan Losses to Period-End Nonperforming Loans	244.15		%	309.31		%	231.00		%
Nonperforming Loans to Period-End Loans	0.38		%	0.31		%	0.43		%
Nonperforming Assets to Period-End Assets	0.32		%	0.28		%	0.32		%
Six-Month Period Ended:
Allowance for Loan Losses
Allowance for Loan Losses, Beginning of Year	$	17,012					$	16,038
Loans Charged-off	(574)						(417)
Less Recoveries of Loans Previously Charged-off	224						107
Net Loans Charged-off	(350)						(310)
Provision for Loan Losses	780						1,070
Allowance for Loan Losses, End of Period	$	17,442					$	16,798
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Annualized	0.04		%				0.04		%
Provision for Loan Losses to Average Loans, Annualized	0.09		%				0.13		%