GLENS FALLS, N.Y., Jan. 29, 2026 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® - AROW) ("Arrow") reported net income of $14.0 million, and fully diluted earnings per share ("EPS") of $0.85 for the fourth quarter of 2025, versus $4.5 million and EPS of $0.27, for the same period in 2024. For the year ended December 31, 2025, net income totaled $44.0 million, with EPS of $2.65, versus $29.7 million, and EPS of $1.77, for the prior year.
The Board of Directors of Arrow declared a quarterly cash dividend of $0.30 per share payable February 25, 2026 to shareholders of record as of February 11, 2026. This represents a 3.4% increase from the fourth quarter cash dividend, of $0.29 per share.
This Earnings Release and related commentary should be read in conjunction with our Form 8-K filed January 29, 2026 and related Fourth Quarter 2025 Investor Presentation, which can be found on our website: arrowfinancial.com/documents/investor-presentations.
Arrow President and CEO David S. DeMarco:
"Arrow finished the year by delivering fourth quarter record operating results with record net income of $14 million or $0.85 per share. For the year, Arrow is reporting strong net interest margin expansion, reaching a record 3.19%, and tangible book value growth of over 10%. Return on average assets exceeded 1.20%. Our outstanding team was able to deliver such exceptional results and continue executing on our strategic plan after recently completing the system integration of our former two subsidiary banks transforming Arrow Bank. Our strategy has enabled us to grow EPS 50% in 2025 as we enter 2026 with significant momentum and begin celebrating our 175th anniversary, we look forward to another strong year."
Fourth Quarter Highlights and Key Metrics
- Reported Record Net Income of $14.0 million or $0.85 EPS
- Record Net Interest Income of $35.1 million
- Record Net Interest Margin of 3.24% (3.25% FTE1) versus 3.22% (3.24% FTE) in the prior quarter
- Elevated average municipal deposits negatively impacted FTE NIM by 4bps
- Tangible Book Value2 per share of $24.71, an increase from $23.85 or 3.6% from the prior quarter
- Return on Average Assets of 1.24%, favorably impacted by 9bps from the successful implementation of tax strategies
- Net Charge-Offs remained low at 0.08% (annualized) for the quarter
Select 2025 Highlights and Key Metrics
- Reported Net Income of $44.0 million or $2.65 EPS
- Record Net Interest Margin improved to 3.17% (3.19% FTE3), up from 2.72% (2.74% FTE) in the prior year
- Tangible Book Value4 per share of $24.71, an increase from $22.40 or 10.3% from the prior year
- Return on Average Assets of 1.00%
- Net Charge-Offs were 0.19% for the year
Income Statement
- Net Income: Net income for the fourth quarter of 2025 was $14.0 million, increasing from $12.8 million in the third quarter of 2025. Net income for 2025 was $44.0 million, up from $29.7 million for 2024.
- Compared to the prior quarter, net income benefited from an increase of $1.0 million in net interest income, as interest expense remained flat to the previous quarter. During the fourth quarter of 2025, the Company successfully implemented tax planning strategies that lowered the effective tax rate versus the prior reported quarter.
- Compared to the prior year, the increase in net income was primarily the result of an increase in net interest income of $21.4 million as well as an increase in non-interest income of $4.4 million offset by an increase of non-interest expense of $5.7 million and a $2.1 million increase in the provision for credit losses.
- Net Interest Income: Net interest income for the fourth quarter of 2025 was $35.1 million, an increase of $1.0 million compared to the third quarter of 2025. Net interest income for the year ended December 31, 2025 was $133.2 million, an increase of $21.4 million, or 19.2%, from the prior year.
- Compared to the prior quarter, interest income increased $1.0 million while interest expense remained unchanged as a result of seasonally lower deposit balances and continued pricing discipline.
- Compared to the prior year, the increase was primarily due to the combination of increased interest income and decreased interest expense. Interest and fees on loans were $184.1 million for the year ended December 31, 2025, an increase of 7.4% from the $171.3 million for the year ended December 31, 2024. The increase was primarily driven by loan growth and higher loan rates. Interest expense for the year ended December 31, 2025 was $77.0 million. This represents a decrease of $6.3 million, or 7.5%, from the $83.3 million in interest expense for the prior year. The decrease in the interest expense was driven primarily by lower deposit rates and changes in deposit composition.
- Net Interest Margin: In the fourth quarter of 2025, the net interest margin was 3.24% (3.25% FTE), as compared to 3.22% (3.24% FTE) for the third quarter of 2025. Net interest margin was 3.17% (3.19% FTE) for the year ended December 31, 2025, as compared to 2.72% (2.74% FTE) for the year ended December 31, 2024. The increase in net interest margin compared to the third quarter of 2025 as well as the prior year was primarily the result of continued yield expansion on earning assets combined with the reduced cost of interest-bearing liabilities.
Twelve Months Ended
(dollars in thousands)
December 31,
December 31,
2025 2024
Interest and Dividend Income $210,147 $194,993
Interest Expense 76,983 83,261
Net Interest Income 133,164 111,732
Average Earning Assets(1) 4,197,528 4,102,954
Average Interest-Bearing Liabilities 3,212,900 3,126,495
Yield on Earning Assets(1) 5.01 % 4.75 %
Cost of Interest-Bearing Liabilities 2.40 2.66
Net Interest Spread 2.61 2.09
Net Interest Margin 3.17 2.72
FTE Net Interest Margin(2) 3.19 2.74
(1) Includes Nonaccrual Loans.
(2) FTE Net Interest Margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information
- Provision for Credit Losses: For the year ended December 31, 2025, the provision for credit losses related to the loan portfolio was $7.3 million, compared to $5.2 million in the prior year. The key drivers for the increase in provision for credit losses for 2025 were primarily the charge-off of the previously disclosed commercial loan participation in the second quarter of 2025 and overall loan growth.
- Non-Interest Income: Non-interest income was $8.3 million for the fourth quarter of 2025, a decrease from $8.7 million for the previous quarter. Non-interest income was $32.4 million for the year ended December 31, 2025, an increase of 15.5%, as compared to $28.1 million for the year ended December 31, 2024. The decrease from the prior quarter was primarily driven by a positive valuation adjustment related to an equity position recorded in the third quarter. The increase in non-interest income from the previous year was primarily driven by a 2024 net loss on securities from the repositioning of the investment portfolio as well as increases in 2025 revenue related to wealth management, insurance and interchange fees.
- Non-Interest Expense: Non-interest expense was $25.8 million for the fourth quarter of 2025, consistent with the fourth quarter of 2024. Non-interest expense for the year ended December 31, 2025 increased by $5.7 million, or 5.8%, to $102.9 million, as compared to $97.3 million in 2024. The largest component of non-interest expense is salaries and benefits paid to our employees, which totaled $56.3 million in 2025 and increased $3.6 million, or 6.8%, from the prior year. Salaries and benefits were impacted by inflation-driven wage increases and rising benefit costs.
- Provision for Income Taxes: The provision for income taxes for 2025 was $11.4 million, compared to $7.6 million for 2024. The effective income tax rates for 2025 and 2024 were 20.6% and 20.5%, respectively.
Balance Sheet
- Total Assets: Total assets were $4.4 billion at December 31, 2025, an increase of $139.5 million, or 3.2%, compared to December 31, 2024 and a decrease of $141.3 million, or 3.1%, from September 30, 2025. The increase over the prior year end was primarily driven by loan growth and an overall increase in deposits. The decrease in cash balances in the fourth quarter was primarily driven by the seasonal decrease of municipal deposit balances as of December 31, 2025.
- Investments: Total investments were $572.8 million at December 31, 2025, an increase of $2.0 million, or 0.4%, compared to December 31, 2024. The increase reflected the reinvestment of the cash generated from paydowns and maturities of investments into higher yielding investments. There were no credit quality issues related to the investment portfolio.
- Loans: At December 31, 2025, total loan balances reached $3.5 billion. Loan growth for the fourth quarter was $11 million. Loan growth for the year was $59 million or 1.7%. Please see the loan detail included in the Consolidated Financial Information table.
- Allowance for Credit Losses: The allowance for credit losses was $34.3 million at December 31, 2025, an increase of $0.7 million from December 31, 2024. The allowance for credit losses at December 31, 2025 represented 0.99% of loans outstanding, unchanged from 0.99% at year end 2024. Asset quality remained strong at December 31, 2025. Net loan charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.19% for the year ended December 31, 2025, as compared to 0.09% for the prior year. The increase was the result of a charge-off of a previously reserved commercial loan participation in the second quarter of 2025. Nonperforming assets of $8.7 million at December 31, 2025, represented 0.20% of year end assets, compared to $21.5 million or 0.50% at December 31, 2024.
- Deposits: At December 31, 2025, total deposit balances were $3.9 billion, an increase of $111.5 million, or 2.9%, from the prior-year end level. Deposits decreased in the fourth quarter by $160.6 million. The decrease in the fourth quarter was primarily driven by the seasonality of municipal deposits. Non-municipal deposits, excluding brokered CDs, increased by $131.6 million and municipal deposits decreased by $20.1 million, each as compared to December 31, 2024. Non-interest bearing deposits increased by $19.4 million, or 2.8%, during 2025. At December 31, 2025, total time deposits, excluding brokered CDs, increased $3.2 million from the prior-year end level.
- Capital: Total shareholders' equity was $431.9 million at December 31, 2025, an increase of $31.0 million, or 7.7%, from December 31, 2024 and an increase of $14.2 million in the fourth quarter. The increase from the third quarter was primarily attributable to net income of $14.0 million, other comprehensive income of $4.6 million and various capital items of $0.5 million, partially offset by dividends of $4.8 million. The increase in stockholders' equity from December 31, 2024 was primarily attributable to net income of $44.0 million, other comprehensive income of $14.4 million and various capital items of $1.7 million partially offset by dividends of $18.9 million and stock repurchases of $9.9 million. The change to other comprehensive income is primarily attributable to fair value adjustments on the available for sale investment portfolio. Arrow's regulatory capital ratios remained strong in 2025. At December 31, 2025, Arrow's Common Equity Tier 1 Capital Ratio was 13.10% and Total Risk-Based Capital Ratio was 14.86%. The capital ratios of Arrow and its subsidiary bank, Arrow Bank, continued to significantly exceed the "well capitalized" regulatory standards.
Additional Commentary
- BauerFinancial Ratings: Arrow Bank National Association ("Arrow Bank") received a 5-Star Superior rating from BauerFinancial, Inc., the nation's premier bank rating firm. Arrow Bank has earned this designation for 75 consecutive quarters, securing its prominent position as an "Exceptional Performance Bank."
About Arrow: Arrow Financial Corporation is a holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. The Company is the parent of Arrow Bank, a full-service commercial bank, and Upstate Agency, LLC, a comprehensive insurance agency.
Non-GAAP Financial Measures Reconciliation: 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 book value, tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent net interest margin and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by Arrow from time to time are useful in evaluating Arrow'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. 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 titled "Selected Quarterly Information."
Safe Harbor Statement: The information contained in this earnings 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 can sometimes be identified by Arrow's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." 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 because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, tariffs, cybersecurity risks, changes in FDIC assessments, bank failures, difficulties in managing the Arrow's growth, competition, changes in law or the regulatory environment, and changes in general business and economic trends. Arrow undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This earnings release should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2024, and other filings with the SEC.
(1) FTE (fully taxable equivalent basis) net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.
(2) Tangible book value per share is a non-GAAP measure. See reconciliation Note 3 to the Selected Quarterly Information.
(3) FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.
4 Tangible book value per share is a non-GAAP measure. See reconciliation Note 3 to the Selected Quarterly Information.
ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts - Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2025 2024 2025 2024
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans $47,087 $44,703 $184,069 $171,342
Interest on Deposits at Banks 2,598 2,880 8,086 9,615
Interest and Dividends on Investment Securities:
Fully Taxable 4,500 2,728 15,964 11,579
Exempt from Federal Taxes 425 590 2,028 2,457
Total Interest and Dividend Income 54,610 50,901 210,147 194,993
INTEREST EXPENSE
Interest-Bearing Checking Accounts 2,117 1,932 8,021 7,442
Savings Deposits 9,722 11,144 38,106 42,850
Time Deposits over $250,000 1,562 1,815 6,794 7,460
Other Time Deposits 5,846 5,906 23,027 20,997
Borrowings - 198 167 3,637
Junior Subordinated Obligations Issued to 173 172 686 686
Unconsolidated Subsidiary Trusts
Interest on Financing Leases 47 47 182 189
Total Interest Expense 19,467 21,214 76,983 83,261
NET INTEREST INCOME 35,143 29,687 133,164 111,732
Provision for Credit Losses 846 2,854 7,274 5,180
NET INTEREST INCOME AFTER PROVISION FOR 34,297 26,833 125,890 106,552
CREDIT LOSSES
NONINTEREST INCOME
Income From Fiduciary Activities 2,771 2,615 10,304 9,952
Fees for Other Services to Customers 2,854 2,763 11,098 10,892
Insurance Commissions 2,050 1,848 7,666 7,147
Net (Loss) Gain on Securities (127) (3,072) 542 (2,907)
Net Gain on Sales of Loans 246 75 819 209
Other Operating Income 474 2,003 2,781
Total Noninterest Income 8,268 4,229 32,432 28,074
NONINTEREST EXPENSE
Salaries and Employee Benefits 14,309 13,332 56,289 52,707
Occupancy Expenses, Net 1,881 1,870 7,762 7,169
Technology and Equipment Expense 5,152 5,119 20,791 19,365
FDIC Assessments 563 664 2,516 2,775
Other Operating Expense 3,899 4,853 15,576 15,252
Total Noninterest Expense 25,804 25,838 102,934 97,268
INCOME BEFORE PROVISION FOR INCOME TAXES 16,761 5,224 55,388 37,358
Provision for Income Taxes 2,748 752 11,435 7,649
NET INCOME $14,013 $4,472 $43,953 $29,709
Average Shares Outstanding:
Basic 16,390 16,718 16,503 16,739
Diluted 16,413 16,739 16,514 16,745
Per Common Share:
Basic Earnings $0.85 $0.26 $2.65 $1.77
Diluted Earnings 0.85 0.27 2.65 1.77
ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)
December 31, December 31,
2025 2024
ASSETS
Cash and Due From Banks $29,132 $27,422
Interest-Bearing Deposits at Banks 185,051 127,124
Investment Securities:
Available-for-Sale 495,868 463,111
Held-to-Maturity (Approximate Fair Value of $66,569 at 66,975 98,261
December 31, 2025, and $96,586 at December 31, 2024)
Equity Securities 5,597 5,055
Other Investments 4,372 4,353
Loans 3,453,093 3,394,541
Allowance for Credit Losses (34,322) (33,598)
Net Loans 3,418,771 3,360,943
Premises and Equipment, Net 59,433 59,717
Goodwill 23,789 23,789
Other Intangible Assets, Net 1,741 2,058
Other Assets 155,133 134,515
Total Assets $4,445,862 $4,306,348
LIABILITIES
Noninterest-Bearing Deposits $722,374 $702,978
Interest-Bearing Checking Accounts 862,192 810,834
Savings Deposits 1,557,638 1,520,024
Time Deposits over $250,000 155,802 191,962
Other Time Deposits 641,463 602,132
Total Deposits 3,939,469 3,827,930
Borrowings 4,265 8,600
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 20,000
Finance Leases 4,929 5,005
Other Liabilities 45,347 43,912
Total Liabilities 4,014,010 3,905,447
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value, 1,000,000 Shares Authorized -
Common Stock, $1 Par Value, 30,000,000 Shares Authorized (22,066,559 Shares Issued at December 31, 2025 and December 31, 2024) 22,067 22,067
Additional Paid-in Capital 414,506 413,476
Retained Earnings 102,271 77,215
Accumulated Other Comprehensive Loss (4,037) (18,453)
Treasury Stock, at Cost (5,621,217 Shares at December 31, 2025, and 5,323,638 Shares at December 31, 2024) (102,955) (93,404)
Total Stockholders' Equity 431,852 400,901
Total Liabilities and Stockholders' Equity $4,445,862 $4,306,348
Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended 12/31/2025 9/30/2025 6/30/2025 3/31/2025 12/31/2024
---
Net Income $14,013 $12,825 $10,805 $6,310 $4,470
Share and Per Share Data:
Period End Shares Outstanding 16,445 16,438 16,484 16,670 16,743
Basic Average Shares Outstanding 16,390 16,402 16,545 16,665 16,718
Diluted Average Shares Outstanding 16,413 16,406 16,551 16,673 16,739
Basic Earnings Per Share $0.85 $0.77 $0.65 $0.38 $0.26
Diluted Earnings Per Share 0.85 0.77 0.65 0.38 0.27
Cash Dividend Per Share 0.290 0.290 0.280 0.280 0.280
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks $260,806 $200,251 $145,473 $146,023 $233,469
Investment Securities 596,994 574,080 582,380 591,841 579,107
Loans 3,444,505 3,424,784 3,415,140 3,406,075 3,354,463
Deposits 4,002,221 3,913,721 3,849,093 3,825,124 3,847,691
Other Borrowed Funds 29,203 30,539 33,579 48,375 49,090
Shareholders' Equity 425,042 413,058 406,529 404,394 393,696
Total Assets 4,499,195 4,399,815 4,332,339 4,324,917 4,339,833
Return on Average Assets, annualized 1.24 % 1.16 % 1.00 % 0.59 % 0.41 %
Return on Average Equity, annualized 13.08 % 12.32 % 10.66 % 6.33 % 4.52 %
Return on Average Tangible Equity, annualized (1) 13.92 % 13.13 % 11.38 % 6.76 % 4.84 %
Average Earning Assets 4,302,305 4,199,115 4,142,993 4,143,939 4,167,039
Average Paying Liabilities 3,280,856 3,193,789 3,191,906 3,184,196 3,185,215
Interest Income 54,610 53,598 51,573 50,366 50,901
Tax-Equivalent Adjustment (2) 114 121 148 155 157
Interest Income, Tax-Equivalent (2) 54,724 53,719 51,721 50,521 51,058
Interest Expense 19,467 19,467 19,040 19,009 21,214
Net Interest Income 35,143 34,131 32,533 31,357 29,687
Net Interest Income, Tax-Equivalent (2) 35,257 34,252 32,681 31,512 29,844
Net Interest Margin, annualized 3.24 % 3.22 % 3.15 % 3.07 % 2.83 %
Net Interest Margin, Tax-Equivalent, annualized 2 3.25 % 3.24 % 3.16 % 3.08 % 2.85 %
Efficiency Ratio Calculation: (3)
Noninterest Expense $25,804 $25,433 $25,652 $26,045 $25,838
Less: Intangible Asset Amortization 74 76 80 81 89
Net Noninterest Expense $25,730 $25,357 $25,572 $25,964 $25,749
Net Interest Income, Tax-Equivalent $35,257 $34,252 $32,681 $31,512 $29,844
Noninterest Income 8,268 8,716 7,609 7,839 4,227
Less: Net (Loss) Gain on Securities (127) 392 (40) 317 (3,072)
Net Gross Income $43,652 $42,576 $40,330 $39,034 $37,143
Efficiency Ratio 58.94 % 59.56 % 63.41 % 66.52 % 69.32 %
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value) $431,852 $417,687 $408,506 $404,409 $400,901
Book Value per Share 26.26 25.41 24.78 24.26 23.94
Goodwill and Other Intangible Assets, net 25,530 25,594 25,659 25,743 25,847
Tangible Book Value per Share (1) 24.71 23.85 23.23 22.72 22.40
Capital Ratios:4
Tier 1 Leverage Ratio 9.68 % 9.66 % 9.64 % 9.61 % 9.60 %
Common Equity Tier 1 Capital Ratio 13.10 % 13.07 % 12.73 % 12.59 % 12.71 %
Tier 1 Risk-Based Capital Ratio 13.74 % 13.71 % 13.37 % 13.23 % 13.35 %
Total Risk-Based Capital Ratio 14.86 % 14.86 % 14.51 % 14.48 % 14.47 %
Arrow Financial Corporation
Selected Quarterly Information - Continued
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Footnotes:
1. Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return on Average 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.
12/31/2025 9/30/2025 6/30/2025 3/31/2025 12/31/2024
Total Stockholders' Equity (GAAP) $431,852 $417,687 $408,506 $404,409 $400,901
Less: Goodwill and Other Intangible assets, net 25,530 25,594 25,659 25,743 25,847
Tangible Equity (Non-GAAP) $406,322 $392,093 $382,847 $378,666 $375,054
Period End Shares Outstanding 16,445 16,438 16,484 16,670 16,743
Tangible Book Value per Share (Non-GAAP) $24.71 $23.85 $23.23 $22.72 $22.40
Net Income 14,013 12,825 10,805 6,310 4,470
Return on Average Tangible Equity (Net Income/
Average Tangible Equity -Annualized) 13.92 % 13.13 % 11.38 % 6.76 % 4.84 %
2. Non-GAAP Financial Measure Reconciliation: 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.
12/31/2025 9/30/2025 6/30/2025 3/31/2025 12/31/2024
Interest Income (GAAP) $54,610 $53,598 $51,573 $50,366 $50,901
Add: Tax Equivalent Adjustment (Non-GAAP) 114 121 148 155 157
Interest Income - Tax Equivalent (Non-GAAP) $54,724 $53,719 $51,721 $50,521 $51,058
Net Interest Income (GAAP) $35,143 $34,131 $32,533 $31,357 $29,687
Add: Tax-Equivalent adjustment (Non-GAAP) 114 121 148 155 157
Net Interest Income - Tax Equivalent (Non-
GAAP) $35,257 $34,252 $32,681 $31,512 $29,844
Average Earning Assets 4,302,305 4,199,115 4,142,993 4,143,939 4,167,039
Net Interest Margin (Non-GAAP)* 3.25 % 3.24 % 3.16 % 3.08 % 2.85 %
3. Non-GAAP Financial Measure Reconciliation: 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).
4. 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 December 31, 2025 CET1 ratio listed in the tables (i.e., 13.10%)
exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
12/31/2025 9/30/2025 6/30/2025 3/31/2025 12/31/2024
Total Risk Weighted Assets 3,160,095 3,095,225 3,121,451 3,143,547 3,126,364
Common Equity Tier 1 Capital 414,050 404,426 397,432 395,900 397,285
Common Equity Tier 1 Ratio 13.10 % 13.07 % 12.73 % 12.59 % 12.71 %
* Quarterly ratios have been annualized
Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)
Quarter Ended:
December 31, 2025
December 31, 2024
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
Interest-Bearing Deposits at Banks $260,806 $2,598 3.95 % $233,469 $2,880 4.91 %
Investment Securities:
Fully Taxable 537,088 4,500 3.32 % 484,860 2,728 2.24 %
Exempt from Federal Taxes 59,906 425 2.81 % 94,247 590 2.49 %
Loans (1) 3,444,505 47,087 5.42 % 3,354,463 44,703 5.30 %
Total Earning Assets (1) 4,302,305 54,610 5.04 % 4,167,039 50,901 4.86 %
Allowance for Credit Losses (34,288) (31,529)
Cash and Due From Banks 25,827 30,706
Other Assets 205,351 173,617
Total Assets $4,499,195 $4,339,833
Deposits:
Interest-Bearing Checking Accounts $850,602 2,117 0.99 % $802,808 1,932 0.96 %
Savings Deposits 1,584,844 9,721 2.43 % 1,567,455 11,144 2.83 %
Time Deposits of $250,000 or More 173,996 1,562 3.56 % 183,325 1,815 3.94 %
Other Time Deposits 642,211 5,847 3.61 % 582,537 5,906 4.03 %
Total Interest-Bearing Deposits 3,251,653 19,247 2.35 % 3,136,125 20,797 2.64 %
Borrowings 4,266 - % 24,089 198 3.27 %
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 173 3.43 % 20,000 172 3.42 %
Finance Leases 4,937 47 3.78 % 5,001 47 3.74 %
Total Interest-Bearing Liabilities 3,280,856 19,467 2.35 % 3,185,215 21,214 2.65 %
Noninterest-Bearing Deposits 750,568 711,566
Other Liabilities 42,729 49,356
Total Liabilities 4,074,153 3,946,137
Stockholders' Equity 425,042 393,696
Total Liabilities and Stockholders' Equity $4,499,195 $4,339,833
Net Interest Income $35,143 $29,687
Net Interest Spread 2.69 % 2.21 %
Net Interest Margin 3.24 % 2.83 %
(1) Includes Nonaccrual Loans
Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)
Quarter Ended:
December 31, 2025
September 30, 2025
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
Interest-Bearing Deposits at Banks $260,806 $2,598 3.95 % $200,251 $2,245 4.45 %
Investment Securities:
Fully Taxable 537,088 4,500 3.32 % 509,599 4,066 3.17 %
Exempt from Federal Taxes 59,906 425 2.81 % 64,481 455 2.80 %
Loans (1) 3,444,505 47,087 5.42 % 3,424,784 46,832 5.43 %
Total Earning Assets (1) 4,302,305 54,610 5.04 % 4,199,115 53,598 5.06 %
Allowance for Credit Losses (34,288) (34,143)
Cash and Due From Banks 25,827 33,984
Other Assets 205,351 200,859
Total Assets $4,499,195 $4,399,815
Deposits:
Interest-Bearing Checking Accounts $850,602 2,117 0.99 % $848,622 2,160 1.01 %
Savings Deposits 1,584,844 9,721 2.43 % 1,492,204 9,534 2.53 %
Time Deposits of $250,000 or More 173,996 1,562 3.56 % 177,826 1,695 3.78 %
Other Time Deposits 642,211 5,847 3.61 % 644,598 5,859 3.61 %
Total Interest-Bearing Deposits 3,251,653 19,247 2.35 % 3,163,250 19,248 2.41 %
Borrowings 4,266 - % 5,583 - %
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 173 3.43 % 20,000 173 3.43 %
Finance Leases 4,937 47 3.78 % 4,956 46 3.68 %
Total Interest-Bearing Liabilities 3,280,856 19,467 2.35 % 3,193,789 19,467 2.42 %
Noninterest-Bearing Deposits 750,568 750,471
Other Liabilities 42,729 42,497
Total Liabilities 4,074,153 3,986,757
Stockholders' Equity 425,042 413,058
Total Liabilities and Stockholders' Equity $4,499,195 $4,399,815
Net Interest Income $35,143 $34,131
Net Interest Spread 2.69 % 2.64 %
Net Interest Margin 3.24 % 3.22 %
Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)
Years Ended December 31: 2025 2024
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
Interest-Bearing Deposits at Banks $188,486 $8,086 4.29 % $181,618 $9,615 5.29 %
Investment Securities:
Fully Taxable 510,900 15,964 3.12 % 515,794 11,579 2.24 %
Exempt from Federal Taxes 75,405 2,028 2.69 % 105,196 2,457 2.34 %
Loans 3,422,737 184,069 5.38 % 3,300,346 171,342 5.19 %
Total Earning Assets 4,197,528 210,147 5.01 % 4,102,954 194,993 4.75 %
Allowance for Credit Losses (34,341) (31,387)
Cash and Due From Banks 30,143 30,577
Other Assets 196,243 164,577
Total Assets $4,389,573 $4,266,721
Deposits:
Interest-Bearing Checking Accounts $846,243 8,021 0.95 % $812,634 7,442 0.92 %
Savings Deposits 1,522,092 38,106 2.50 % 1,507,227 42,850 2.84 %
Time Deposits of $250,000 or More 179,453 6,794 3.79 % 176,844 7,460 4.22 %
Other Time Deposits 629,754 23,027 3.66 % 520,658 20,997 4.03 %
Total Interest-Bearing Deposits 3,177,542 75,948 2.39 % 3,017,363 78,749 2.61 %
Borrowings 10,391 167 1.61 % 84,106 3,637 4.32 %
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 686 3.43 % 20,000 686 3.43 %
Finance Leases 4,967 182 3.66 % 5,026 189 3.76 %
Total Interest-Bearing Liabilities 3,212,900 76,983 2.40 % 3,126,495 83,261 2.66 %
Demand Deposits 720,528 705,863
Other Liabilities 43,830 49,505
Total Liabilities 3,977,258 3,881,863
Stockholders' Equity 412,315 384,858
Total Liabilities and Stockholders' Equity $4,389,573 $4,266,721
Net Interest Income $133,164 $111,732
Net Interest Spread 2.61 % 2.09 %
Net Interest Margin 3.17 % 2.72 %
Arrow Financial Corporation
Consolidated Financial Information
(Dollars in Thousands - Unaudited)
Quarter Ended: 12/31/2025 12/31/2024
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Loan Portfolio
Commercial Loans $165,729 $158,991
Commercial Real Estate Loans 818,259 796,365
Subtotal Commercial Loan Portfolio 983,988 955,356
Consumer Loans 1,076,007 1,118,981
Residential Real Estate Loans 1,393,098 1,320,204
Total Loans $3,453,093 $3,394,541
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter $34,176 $31,262
Loans Charged-off (1,477) (1,333)
Recoveries of Loans Previously Charged-off 777 815
Net Loans Charged-off (700) (518)
Provision for Credit Losses 846 2,854
Allowance for Credit Losses, End of Quarter $34,322 $33,598
Nonperforming Assets
Nonaccrual Loans $6,415 $20,621
Loans Past Due 90 or More Days and Accruing 2,040 398
Total Nonperforming Loans 8,455 21,019
Repossessed Assets 280 382
Other Real Estate Owned - 76
Total Nonperforming Assets $8,735 $21,477
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Quarter-to-date 0.08 % 0.06 %
Annualized
Provision for Credit Losses to Average Loans, Quarter-to-date 0.10 % 0.34 %
Annualized
Allowance for Credit Losses to Period-End Loans 0.99 % 0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans 405.94 % 159.69 %
Nonperforming Loans to Period-End Loans 0.24 % 0.62 %
Nonperforming Assets to Period-End Assets 0.20 % 0.50 %
Twelve-Month Period Ended:
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Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Year 33,598 31,265
Loans Charged-off (9,554) (5,895)
Recoveries of Loans Previously Charged-off 3,004 3,048
Net Loans Charged-off (6,550) (2,847)
Provision for Credit Losses 7,274 5,180
Allowance for Credit Losses, End of Year $34,322 $33,598
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans 0.19 % 0.09 %
Provision for Credit Losses to Average Loans 0.21 % 0.16 %
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SOURCE Arrow Financial Corporation
