the second step of the goodwill impairment test , used to measure the amount of impairment loss , compares the implied fair value of a reporting unit 's goodwill with the carrying amount of that goodwill . other than temporary decline in the value of debt and equity securities : accounting standards require that , for individual securities classified as either available-for-sale or held-to-maturity , an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary . when an other-than-temporary impairment has occurred , the amount of the other-than-temporary impairment recognized in earnings depends on whether we intend to sell the security or whether or not it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss . if we intend to sell the security or if it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss , the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment ' s amortized cost basis and its fair value at the balance sheet date . if we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss , the other-than-temporary impairment is separated into the amount representing the credit loss and the amount related to all other factors . the amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings . any significant economic downturn might result , and historically have on occasion resulted , in an other-than-temporary impairment in securities held in our portfolio . valuation methods for securities : most of the securities portfolio , which includes u.s. treasury and agency securities , mortgage-backed securities , collateralized mortgage obligations , municipal securities , corporate debt and equity securities are priced using industry-standard models that consider various assumptions that include time value , yield curves , volatility factors , prepayment speeds , default rates , loss severity , current market and contractual prices for the underlying financial instruments , as well as other relevant economic measures . substantially all of these assumptions are either observable in the marketplace , derived from observable data or are supported by observable levels at which transactions are executed in the marketplace . municipal and corporate securities are valued using a type of matrix , or grid , pricing in which securities are benchmarked against the treasury rate based on credit rating . these model and matrix measurements are classified as level 2 in the fair value hierarchy . # 24 the following discussion and analysis focuses on and reviews our results of operations for each of the years in the three-year period ended december 31 , 2012 and our financial condition as of december 31 , 2012 and 2011 . the discussion below should be read in conjunction with the selected quarterly and annual information set forth above and the consolidated financial statements and other financial data presented elsewhere in this report . when necessary , prior-year financial information has been reclassified to conform to the current-year presentation . a. overview summary of 2012 financial results we reported net income for 2012 of $ 22.2 million , representing diluted earnings per share ( `` eps `` ) of $ 1.85 , an increase of two cents , or 1.1 % from our 2011 result . return on average equity ( `` roe `` ) for the 2012 year continued to be strong at 12.88 % , although down from the roe of 13.45 % for the 2011 year . return on average assets ( `` roa `` ) for 2012 continued to be strong at 1.11 % , although down from roa of 1.13 % for 2011 . both decreases were principally due to our shrinking net interest margin , which led to a slight decrease , 0.6 % , in our net interest income , despite the fact that our earning assets grew and our asset quality remained strong . the decrease in net interest income was more than offset by a 4.5 % increase in our noninterest income . total assets were $ 2.023 billion at december 31 , 2012 , which represented an increase of $ 60.1 million , or 3.1 % , above the $ 1.963 billion level at december 31 , 2011 . stockholders ' equity was $ 175.8 million at december 31 , 2012 , an increase of $ 9.44 million or 5.7 % , from the year earlier level . the components of the change in stockholders ' equity since year-end 2011 are presented in the consolidated statement of changes in stockholders ' equity on page 59 , and are discussed in more detail in the last section of this overview on page 27 entitled , “ increase in stockholder equity . ” regulatory capital : at period-end , we continue to exceed all current regulatory minimum capital requirements at both the holding company and bank levels , by a substantial amount . as of december 31 , 2012 both of our banks , as well as our holding company , qualified as `` well-capitalized `` under federal bank regulatory guidelines . our regulatory capital levels have consistently remained well in excess of required minimums during recent years , despite the economic downturn , because of our continued profitability and strong asset quality . even if the new enhanced capital requirements as set forth in the june 2012 joint bank regulatory release , `` basel iii notices of proposed rulemaking , `` were to go into effect as they were proposed , arrow and its banks would meet all of these enhanced standards . story_separator_special_tag the modest up-tick in loan demand and in the u.s. economy generally experienced during 2012 may prove transitory , in light of continuing economic and financial woes across the rest of the developed world and stubborn fiscal pressures in the u.s. # 30 recent pressure on our net interest margin . from mid-2008 into 2009 , our net interest margin held steady at around 3.90 % , but the margin began to narrow in the last three quarters of 2009 and throughout 2010 and 2011 as the downward repricing of paying liabilities slowed while interest earning assets continued to reprice downward at a steady rate . currently , our net interest margin continues to be under pressure . during the last five quarters , our margin ranged from 3.33 % to 3.13 % . even if new assets do not continue to price downward , our average yield on assets may continue to decline in future periods as our older , higher-priced assets continue to mature and pay off at a faster rate than newer , lower-priced assets . thus , we may continue to experience additional margin compression in upcoming periods . that is , our average yield on assets may decline in upcoming periods at a slightly higher rate than our average cost of deposits . in this light , no assurances can be given that our net interest income will resume the growth it experienced in 2010 and prior years , even if asset growth continues or increases , or that net earnings will continue to grow , if net interest income decreases more rapidly than other sources of operating income increase . potential inflation ; effect on interest rates and margins . currently , there is considerable discussion , and some disagreement , about the possible emergence of meaningful inflation across some or all asset classes in the u.s. or other world economies . to the extent that such inflation may occur , it is likely to be the result of persistent efforts by the federal reserve and other central banks , including the european central bank , to significantly increase the money supply in the u.s. and western world economies , which in the u.s. started at the onset of the crisis in 2008 and continues . the fed has increased the u.s. money supply by setting and maintaining the fed funds rate at historically low levels ( with consequent downward pressure on all rates ) , and by purchasing massive amounts of u.s. treasuries and other debt securities through the federal reserve bank ( i.e . , `` quantitative easing `` ) , which is intended in part to have the identical effect of lowering and reinforcing already low interest rates in addition to directly expanding the supply of credit . when the second round of quantitative easing expired on june 30 , 2011 , the fed elected not to continue the program , for a variety of reasons including some concern over inflation . instead , the fed announced it would support economic recovery through a new series of interest rate manipulations , dubbed `` operation twist `` , under which it would reinvest the proceeds from maturing short-term ( and long-term ) securities in its substantial u.s. treasury and mortgage-backed securities portfolios into longer-dated securities , thereby seeking to lower long-term rates ( and mortgage rates ) , as a priority over further reductions in short-term rates . however , in the ensuing summer months of 2012 , the underlying inflation rate in the u.s. , exclusive of the historically volatile categories of fuel and food purchases , remained quite low , and the u.s. economy , though slowly improving , remained sluggish . as a result , in september 2012 , the fed announced that it would resume quantitative easing , by embarking on a program of purchasing $ 40 billion of mortgage-backed securities on a monthly basis in the market until the economy regained suitable momentum ( so-called `` infinite qe `` ) , while at the same time monitoring inflation in the economy , with a view toward taking appropriate corrective measures if inflation increased beyond acceptable levels . as the u.s. economy continued to demonstrate weakness in the second half of 2012 , the fed increased the level of its fixed monthly purchases of debt securities to $ 85 billion , approximately half treasury bonds and the rest in mortgage-backed securities . however , there has now emerged a certain level of concern not only about the weak u.s. economy , but also that at some point prevailing interest rates may begin to rise , along with inflation , perhaps significant inflation , potentially damaging u.s. financial markets . for the present , management does not anticipate near-term substantial increases in prevailing rates , short- or long-term . if modest rate increases should occur , there is some expectation that the impact on our margins , as well as on our net interest income and earnings , may be somewhat negative in the short run but possibly positive in the long run . given the extraordinary forces currently in play in the financial markets , any speculation on the likelihood of significant inflation in the near future , or the impact of such inflation on prevailing interest rates , short- or long-term , or on the net interest margins or the net interest income of banks such as ours , must be regarded as highly subjective . a discussion of the models we use in projecting the impact on net interest income resulting from possible changes in interest rates vis-à-vis the repricing patterns of our earning assets and interest-bearing liabilities is included later in this report . a discussion of the models we use in projecting the impact on net interest income resulting from possible changes in interest rates vis-à-vis the repricing patterns of our earning assets and interest-bearing liabilities is included later in this report under item

liquidity and access to credit markets : we did not experience any liquidity problems or special concerns during 2012 , nor did we during 2011 or 2010. the terms of our lines of credit with our correspondent banks , the fhlbny and the federal reserve bank have not changed ( see our general liquidity discussion on page 46 ) . in general , we rely on asset-based liquidity ( i.e. , funds in overnight investments and cash flow from maturing investments and loans ) with liability-based liquidity as a secondary source ( our main liability-based sources are overnight borrowing arrangements with our correspondent banks , term credit arrangement advances from the fhlbny and the federal reserve bank discount window ) . during the recent financial crisis , many financial institutions , small and large , relied extensively on the fed 's discount window to support their liquidity positions , but we did not . we maintain , and periodically test , a contingent liquidity plan to ensure that we can generate an adequate amount of available funds to meet a wide variety of potential liquidity crises , including a severe crisis . fdic shift from deposit-based to asset-based insurance premiums ; reduction in premiums : the dodd-frank act changed the basis on which insured banks would be assessed deposit insurance premiums , which has had a beneficial effect on the rates we pay and our overall premiums . beginning with the second quarter of 2011 , the calculation of regular fdic insurance premiums for insured institutions changed so as to be based on adjusted assets ( as defined ) rather than deposits . this had the effect of imposing fdic insurance fees not only on deposits but on other sources of funding as well , including short-term borrowings and repurchase agreements . the rate , however , given the significantly larger base on which premiums would be assessed ( total assets versus insured deposits ) , was set at a lower percentage than the rate applicable under the old formula .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and access to credit markets : we did not experience any liquidity problems or special concerns during 2012 , nor did we during 2011 or 2010. the terms of our lines of credit with our correspondent banks , the fhlbny and the federal reserve bank have not changed ( see our general liquidity discussion on page 46 ) . in general , we rely on asset-based liquidity ( i.e. , funds in overnight investments and cash flow from maturing investments and loans ) with liability-based liquidity as a secondary source ( our main liability-based sources are overnight borrowing arrangements with our correspondent banks , term credit arrangement advances from the fhlbny and the federal reserve bank discount window ) . during the recent financial crisis , many financial institutions , small and large , relied extensively on the fed 's discount window to support their liquidity positions , but we did not . we maintain , and periodically test , a contingent liquidity plan to ensure that we can generate an adequate amount of available funds to meet a wide variety of potential liquidity crises , including a severe crisis . fdic shift from deposit-based to asset-based insurance premiums ; reduction in premiums : the dodd-frank act changed the basis on which insured banks would be assessed deposit insurance premiums , which has had a beneficial effect on the rates we pay and our overall premiums . beginning with the second quarter of 2011 , the calculation of regular fdic insurance premiums for insured institutions changed so as to be based on adjusted assets ( as defined ) rather than deposits . this had the effect of imposing fdic insurance fees not only on deposits but on other sources of funding as well , including short-term borrowings and repurchase agreements . the rate , however , given the significantly larger base on which premiums would be assessed ( total assets versus insured deposits ) , was set at a lower percentage than the rate applicable under the old formula .
```    
 Suspicious Activity Report : the second step of the goodwill impairment test , used to measure the amount of impairment loss , compares the implied fair value of a reporting unit 's goodwill with the carrying amount of that goodwill . other than temporary decline in the value of debt and equity securities : accounting standards require that , for individual securities classified as either available-for-sale or held-to-maturity , an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary . when an other-than-temporary impairment has occurred , the amount of the other-than-temporary impairment recognized in earnings depends on whether we intend to sell the security or whether or not it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss . if we intend to sell the security or if it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss , the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment ' s amortized cost basis and its fair value at the balance sheet date . if we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss , the other-than-temporary impairment is separated into the amount representing the credit loss and the amount related to all other factors . the amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings . any significant economic downturn might result , and historically have on occasion resulted , in an other-than-temporary impairment in securities held in our portfolio . valuation methods for securities : most of the securities portfolio , which includes u.s. treasury and agency securities , mortgage-backed securities , collateralized mortgage obligations , municipal securities , corporate debt and equity securities are priced using industry-standard models that consider various assumptions that include time value , yield curves , volatility factors , prepayment speeds , default rates , loss severity , current market and contractual prices for the underlying financial instruments , as well as other relevant economic measures . substantially all of these assumptions are either observable in the marketplace , derived from observable data or are supported by observable levels at which transactions are executed in the marketplace . municipal and corporate securities are valued using a type of matrix , or grid , pricing in which securities are benchmarked against the treasury rate based on credit rating . these model and matrix measurements are classified as level 2 in the fair value hierarchy . # 24 the following discussion and analysis focuses on and reviews our results of operations for each of the years in the three-year period ended december 31 , 2012 and our financial condition as of december 31 , 2012 and 2011 . the discussion below should be read in conjunction with the selected quarterly and annual information set forth above and the consolidated financial statements and other financial data presented elsewhere in this report . when necessary , prior-year financial information has been reclassified to conform to the current-year presentation . a. overview summary of 2012 financial results we reported net income for 2012 of $ 22.2 million , representing diluted earnings per share ( `` eps `` ) of $ 1.85 , an increase of two cents , or 1.1 % from our 2011 result . return on average equity ( `` roe `` ) for the 2012 year continued to be strong at 12.88 % , although down from the roe of 13.45 % for the 2011 year . return on average assets ( `` roa `` ) for 2012 continued to be strong at 1.11 % , although down from roa of 1.13 % for 2011 . both decreases were principally due to our shrinking net interest margin , which led to a slight decrease , 0.6 % , in our net interest income , despite the fact that our earning assets grew and our asset quality remained strong . the decrease in net interest income was more than offset by a 4.5 % increase in our noninterest income . total assets were $ 2.023 billion at december 31 , 2012 , which represented an increase of $ 60.1 million , or 3.1 % , above the $ 1.963 billion level at december 31 , 2011 . stockholders ' equity was $ 175.8 million at december 31 , 2012 , an increase of $ 9.44 million or 5.7 % , from the year earlier level . the components of the change in stockholders ' equity since year-end 2011 are presented in the consolidated statement of changes in stockholders ' equity on page 59 , and are discussed in more detail in the last section of this overview on page 27 entitled , “ increase in stockholder equity . ” regulatory capital : at period-end , we continue to exceed all current regulatory minimum capital requirements at both the holding company and bank levels , by a substantial amount . as of december 31 , 2012 both of our banks , as well as our holding company , qualified as `` well-capitalized `` under federal bank regulatory guidelines . our regulatory capital levels have consistently remained well in excess of required minimums during recent years , despite the economic downturn , because of our continued profitability and strong asset quality . even if the new enhanced capital requirements as set forth in the june 2012 joint bank regulatory release , `` basel iii notices of proposed rulemaking , `` were to go into effect as they were proposed , arrow and its banks would meet all of these enhanced standards . story_separator_special_tag the modest up-tick in loan demand and in the u.s. economy generally experienced during 2012 may prove transitory , in light of continuing economic and financial woes across the rest of the developed world and stubborn fiscal pressures in the u.s. # 30 recent pressure on our net interest margin . from mid-2008 into 2009 , our net interest margin held steady at around 3.90 % , but the margin began to narrow in the last three quarters of 2009 and throughout 2010 and 2011 as the downward repricing of paying liabilities slowed while interest earning assets continued to reprice downward at a steady rate . currently , our net interest margin continues to be under pressure . during the last five quarters , our margin ranged from 3.33 % to 3.13 % . even if new assets do not continue to price downward , our average yield on assets may continue to decline in future periods as our older , higher-priced assets continue to mature and pay off at a faster rate than newer , lower-priced assets . thus , we may continue to experience additional margin compression in upcoming periods . that is , our average yield on assets may decline in upcoming periods at a slightly higher rate than our average cost of deposits . in this light , no assurances can be given that our net interest income will resume the growth it experienced in 2010 and prior years , even if asset growth continues or increases , or that net earnings will continue to grow , if net interest income decreases more rapidly than other sources of operating income increase . potential inflation ; effect on interest rates and margins . currently , there is considerable discussion , and some disagreement , about the possible emergence of meaningful inflation across some or all asset classes in the u.s. or other world economies . to the extent that such inflation may occur , it is likely to be the result of persistent efforts by the federal reserve and other central banks , including the european central bank , to significantly increase the money supply in the u.s. and western world economies , which in the u.s. started at the onset of the crisis in 2008 and continues . the fed has increased the u.s. money supply by setting and maintaining the fed funds rate at historically low levels ( with consequent downward pressure on all rates ) , and by purchasing massive amounts of u.s. treasuries and other debt securities through the federal reserve bank ( i.e . , `` quantitative easing `` ) , which is intended in part to have the identical effect of lowering and reinforcing already low interest rates in addition to directly expanding the supply of credit . when the second round of quantitative easing expired on june 30 , 2011 , the fed elected not to continue the program , for a variety of reasons including some concern over inflation . instead , the fed announced it would support economic recovery through a new series of interest rate manipulations , dubbed `` operation twist `` , under which it would reinvest the proceeds from maturing short-term ( and long-term ) securities in its substantial u.s. treasury and mortgage-backed securities portfolios into longer-dated securities , thereby seeking to lower long-term rates ( and mortgage rates ) , as a priority over further reductions in short-term rates . however , in the ensuing summer months of 2012 , the underlying inflation rate in the u.s. , exclusive of the historically volatile categories of fuel and food purchases , remained quite low , and the u.s. economy , though slowly improving , remained sluggish . as a result , in september 2012 , the fed announced that it would resume quantitative easing , by embarking on a program of purchasing $ 40 billion of mortgage-backed securities on a monthly basis in the market until the economy regained suitable momentum ( so-called `` infinite qe `` ) , while at the same time monitoring inflation in the economy , with a view toward taking appropriate corrective measures if inflation increased beyond acceptable levels . as the u.s. economy continued to demonstrate weakness in the second half of 2012 , the fed increased the level of its fixed monthly purchases of debt securities to $ 85 billion , approximately half treasury bonds and the rest in mortgage-backed securities . however , there has now emerged a certain level of concern not only about the weak u.s. economy , but also that at some point prevailing interest rates may begin to rise , along with inflation , perhaps significant inflation , potentially damaging u.s. financial markets . for the present , management does not anticipate near-term substantial increases in prevailing rates , short- or long-term . if modest rate increases should occur , there is some expectation that the impact on our margins , as well as on our net interest income and earnings , may be somewhat negative in the short run but possibly positive in the long run . given the extraordinary forces currently in play in the financial markets , any speculation on the likelihood of significant inflation in the near future , or the impact of such inflation on prevailing interest rates , short- or long-term , or on the net interest margins or the net interest income of banks such as ours , must be regarded as highly subjective . a discussion of the models we use in projecting the impact on net interest income resulting from possible changes in interest rates vis-à-vis the repricing patterns of our earning assets and interest-bearing liabilities is included later in this report . a discussion of the models we use in projecting the impact on net interest income resulting from possible changes in interest rates vis-à-vis the repricing patterns of our earning assets and interest-bearing liabilities is included later in this report under item

