EX-99.1 2 ex99-earningsq32024.htm EX-99.1

| 250 Glen Street Glens Falls, NY 12801
NASDAQ® Symbol: "AROW" Website: arrowfinancial.com Media Contact: Rachael Murray Tel: (518) 742-6505

Arrow Reports 3rd Quarter Net Income of $9.0 Million, or $0.53 per Share
GLENS FALLS, N.Y. (October 31, 2024) – Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or "the Company") announced financial results for the three-month period ended September 30, 2024. Net income for the third quarter of 2024 was $9.0 million and fully diluted earnings per share ("EPS") was $0.53, versus $7.7 million and EPS of $0.46 for the same period in 2023.
This Earnings Release and related commentary should be read in conjunction with the Company's October 31, 2024 Form 8-K and related Third Quarter 2024 Investor Presentation, which can also be found on Arrow's website: arrowfinancial.com/documents/investor-presentations.
Arrow President and CEO David S. DeMarco:
“We delivered a solid third quarter with strong net interest margin expansion, improved core profitability, increased return on average assets and continued strong credit metrics. Stabilizing funding costs, increasing asset yields, and continued expense discipline have positioned us for increased core operating leverage for the upcoming quarters. Our incredible teamwork was recently recognized by being named to the prestigious Piper Sandler Sm-All Stars: Class of 2024, a list of 30 top-performing small-cap banks and thrifts in the country.
Among our third-quarter accomplishments, we completed two small acquisitions. We expanded our insurance business with the strategic acquisition of the assets of A&B Agency, Inc. and acquired a branch in Whitehall, New York. Our team continues to prepare for the unification of our banking subsidiaries, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, into a single entity renamed Arrow Bank National Association, or Arrow Bank, slated for December 31, 2024. Starting in early November, our customers will gain surcharge-free access to the Allpoint ATM Network of more than 55,000 locations. As we continue to strengthen our market position, we also rewarded our shareholders with an increase to the fourth-quarter cash dividend, which we announced in early October.”
Third-Quarter Highlights and Key Metrics
•EPS improved $0.07 to $0.53 versus the same period in 2023 and $0.01 over the previous quarter
•Results included approximately $450 thousand of non-core expenses related to our insurance agency and branch acquisitions as well as unification efforts
•Deposit balances were $3.8 billion, resulting in a Loan-to-Deposit ratio of 87.0%
•Net Interest Margin improved to 2.78% (2.79% FTE 1), up from 2.67% (2.69% FTE) in the prior quarter
•Year-to-date loan growth reached $126.3 million 2 (5.2% annualized)
•Resumed mortgage loan sales into the secondary market
•Average Loan Yields increased to 5.27% for 3Q24, up from 5.17% in the prior quarter
•Net Charge-Offs for the quarter were 8bps on an annualized basis
•Tangible Book Value increased to $21.95
•Accumulated Other Comprehensive Loss improved $5.7 million, or 18%, from the prior quarter
•Return on Average Assets (ROA) improved to 0.84%, up from 0.82% in the previous quarter
1 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.
2 Excludes both $6.5 million fair value hedge adjustment at September 30, 2024 and $5.8 million fair value hedge adjustment at December 31, 2023
1

Income Statement
•Net Income: Net income for the third quarter of 2024 was $9.0 million, increasing from $8.6 million in the second quarter of 2024 and $7.7 million in the third quarter of 2023.
◦Compared to the prior quarter, net income benefited from an increase of $1.3 million in net interest income, partially offset by an increase in non-interest expense of $0.8 million.
◦Compared to the third quarter of 2023, net income growth was driven by an increase in net interest income of $3.1 million, partially offset by an increase in non-interest expense of $0.6 million.
•Net Interest Income: Net interest income for the third quarter of 2024 was $28.4 million, increasing 4.7% from $27.2 million for the second quarter of 2024 and increasing 12.2% from $25.4 million in the third quarter of 2023.
◦Total interest and dividend income was $49.4 million for the third quarter of 2024, an increase from $48.0 million in the second quarter of 2024 and from $42.1 million for the third quarter of 2023. These increases were primarily driven by loan growth and higher loan yields. Interest expense for the third quarter of 2024 was $21.0 million, an increase from $20.8 million for the second quarter of 2024 and from $16.8 million for the third quarter of 2023. The increase from the prior year was driven primarily by higher deposit rates and changes in deposit composition.
•Net Interest Margin: Net interest margin, on an FTE basis, for the third quarter of 2024 was 2.79% compared to 2.69% for the second quarter of 2024 and 2.55% for the third quarter of 2023. The increase in net interest margin compared to the second quarter in 2024 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. As compared to the third quarter of 2023, the increase in net interest margin was primarily the result of yield on average earning assets increasing at a faster pace than costs of interest-bearing liabilities. Net interest margin is affected by deposits continuing to migrate to higher costing products, such as money market savings and time deposits.

| Three Months Ended |  |  |  |
| (Dollars in Thousands) |  |  |  |
| September 30, 2024 |  | June 30, 2024 |  | September 30, 2023 |  |  |  |
Interest and Dividend Income | $ | 49,443 |  |  | $ | 47,972 |  |  | $ | 42,117 |  |  |  |  |
Interest Expense | 21,005 |  |  | 20,820 |  |  | 16,764 |  |  |  |  |
Net Interest Income | 28,438 |  |  | 27,152 |  |  | 25,353 |  |  |  |  |
Average Earning Assets(A) | 4,075,162 |  |  | 4,083,813 |  |  | 3,973,747 |  |  |  |  |
Average Interest-Bearing Liabilities | 3,085,066 |  |  | 3,127,417 |  |  | 2,920,518 |  |  |  |  |
Yield on Earning Assets(A) | 4.83 | % |  | 4.72 | % |  | 4.20 | % |  |  |  |
Cost of Interest-Bearing Liabilities | 2.71 |  |  | 2.68 |  |  | 2.28 |  |  |  |  |
Net Interest Spread | 2.12 |  |  | 2.04 |  |  | 1.92 |  |  |  |  |
Net Interest Margin | 2.78 |  |  | 2.67 |  |  | 2.53 |  |  |  |  |
Net Interest Margin - FTE | 2.79 |  |  | 2.69 |  |  | 2.55 |  |  |  |  |
(A) Includes Nonaccrual Loans. |  |  |  |  |  |  |  |  |

•Provision for Credit Losses: For the third quarter of 2024, the provision for credit losses was $0.9 million compared to $0.8 million in the second quarter of 2024 and $0.4 million in the third quarter of 2023. The key drivers for the provision for credit losses in the third quarter of 2024 were replenishment of the allowance for charge-offs, growth in loan balances and changes to the economic forecast factors embedded in the credit loss allowance model.
2

•Non-Interest Income: Non-interest income for the three months ended September 30, 2024, was $8.1 million, an increase from $7.9 million in the second quarter of 2024 and consistent with the third quarter of 2023. The increases from the prior periods are primarily the result of the resumption of loan sales from current loan originations, higher wealth management fees resulting from improved market valuations of assets under management and increased insurance commissions resulting from the A&B asset acquisition. The third quarter of 2023 included one-time proceeds from bank-owned life insurance in other income.
•Non-Interest Expense: Non-interest expense for the third quarter of 2024 was $24.1 million, an increase from $23.3 million in the second quarter of 2024 and an increase from $23.5 million for the third quarter of 2023. The increase from the prior quarter was primarily attributable to several one-time non-core expenses related to the Whitehall and A&B asset acquisitions.
•Provision for Income Taxes: The provision for income taxes and effective tax rate were $2.6 million and 22.2%, for the third quarter of 2024, $2.3 million and 21.2%, for the second quarter of 2024 and $1.8 million and 19.1%, for the third quarter of 2023. The increase in the effective tax rate from the second quarter of 2024 was primarily attributable to a decrease in the amount of tax advantaged earning assets as a percentage of total earning assets, while the increase in the effective tax rate from the third quarter of 2023 was primarily due to a change in pre-tax income combined with a decrease in the amount of tax advantaged earning assets as a percentage of total earning assets.
Balance Sheet
•Total Assets: Total assets were $4.4 billion at September 30, 2024, an increase of $167.0 million, or 3.9%, as compared to June 30, 2024 and an increase of $138.5 million, or 3.2%, as compared to September 30, 2023. For the third quarter of 2024, overall growth in the balance sheet was attributable to changes in cash balances, primarily seasonal municipal and corporate deposits, as well as growth in the loan portfolio.
•Investments: Total investments were $549.8 million as of September 30, 2024, a decrease of $6.6 million, or 1.2%, compared to June 30, 2024 and a decrease of $117.0 million, or 17.6%, compared to September 30, 2023. The decrease from June 30, 2024 was driven primarily by paydowns and maturities. The decrease from September 30, 2023 was also driven by paydowns and maturities as well as the fourth quarter 2023 repositioning of the investment portfolio, which reduced the portfolio by approximately $25 million at the time of the transaction. There were no credit quality issues related to the investment portfolio.
•Loans 3: Total loans were $3.3 billion as of September 30, 2024. Loan growth for the third quarter of 2024 was $24.2 million, and $201.2 million since September 30, 2023. Loan growth was spread across all loan products. Please see the loan detail included in the Consolidated Financial Information table on page 13.
•Allowance for Credit Losses: The allowance for credit losses was $31.3 million as of September 30, 2024, which represented 0.94% of loans outstanding, as compared to $31.0 million, or 0.94%, at June 30, 2024, and $31.1 million, or 0.99%, at September 30, 2023. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.08% for the three-month period ended September 30, 2024, as compared to 0.16%4 for the three-month period ended June 30, 2024 and 0.05% for the three-month period ended September 30, 2023. Non
3 Includes both $6.5 million fair value hedge adjustment at September 30, 2024 and $0.4 million fair value hedge adjustment at June 30, 2024
4 Charge-offs for 2Q24 included 0.09% related to a previously specifically reserved amount for overdraft balances relating to one customer relationship
3

performing assets were $22.3 million as of September 30, 2024, representing 0.51% of period-end assets, compared to 0.50% at June 30, 2024 and 0.16% at September 30, 2023.
•Deposits: At September 30, 2024, deposit balances were $3.8 billion, an increase of $153.8 million from June 30, 2024 and an increase of $171.0 million from September 30, 2023. The increase from the second quarter was primarily attributable to the seasonality of municipal deposits. The increase from September 30, 2023 was partially attributable to $175 million of brokered CDs, primarily used to reduce borrowings and fund continued loan growth. Please refer to page 7 for further details related to deposits.
•Capital: Total stockholders’ equity was $393.3 million at September 30, 2024, an increase of $10.3 million, or 2.7%, from June 30, 2024 and an increase of $33.3 million, or 9.2%, from the September 30, 2023 level of $360.0 million. The increase from the second quarter was primarily attributable to net income of $9.0 million, other comprehensive income of $5.7 million offset by dividends of $4.5 million. The increase in stockholders' equity from September 30, 2023 was primarily attributable to income for the period of $32.9 million, other comprehensive income of $26.6 million and various capital items of $1.1 million offset by dividends of $18.1 million and stock repurchases of $9.2 million. Arrow's regulatory capital ratios remained strong. As of September 30, 2024, Arrow's Common Equity Tier 1 Capital Ratio was 12.77% and Total Risk-Based Capital Ratio was 14.46%. The capital ratios of Arrow's subsidiary banks, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, continued to exceed the “well capitalized” regulatory standards.
Additional Commentary
•Piper Sandler Sm-All Stars: Arrow was recently named to the prestigious Piper Sandler Sm-All Stars: Class of 2024, a list of 30 top-performing small-cap banks and thrifts in the country. Arrow is one of just three New York financial institutions on the list and the only bank in Upstate New York. Piper Sandler, an independent investment bank and research firm, evaluated more than 300 institutions that trade on a major exchange, narrowing the field to the top 30.
•Bauer Financial Ratings: Both Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company continued to maintain their 5-Star Exceptional Performance ratings from Bauer Financial, for the 69th and 61st quarters, respectively.
•Subsidiary Bank Unification: Arrow received approval from the Office of the Comptroller of the Currency to combine its two subsidiary banks, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, into one bank that will be known as Arrow Bank National Association. The combination will create operational efficiencies, unify branding and enhance Arrow's ability to pursue its strategic growth objectives. The combination of the entities is anticipated to become effective December 31, 2024.
About Arrow
Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include Upstate Agency, LLC and North Country Investment Advisers, Inc.
4

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). Some 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. These non-GAAP financial measures include: tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent, the efficiency ratio and net interest margin (FTE). Management believes that the non-GAAP financial measures disclosed by Arrow 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 "Selected Quarterly Information."
Safe Harbor Statement
The information in this document may contain statements based on management’s beliefs, assumptions, expectations, estimates and projections about the future. Such "forward-looking statements," as defined in Section 21E of the Securities Exchange Act of 1934, as amended, involve a degree of uncertainty and attendant risk. Actual outcomes and results may differ, explicitly or by implication. We are not obligated to revise or update these statements to reflect unanticipated events. This document should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the SEC.
5

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts - Unaudited)

|  | Three Months Ended September 30 |  | Nine Months Ended September 30
|  | 2024 |  |  |  | 2023 |  | 2024 |  | 2023
INTEREST AND DIVIDEND INCOME |  |  |  |  |  |  |  |  |  |
Interest and Fees on Loans |  | $ | 44,122 |  |  |  |  | $ | 36,699 |  |  | $ | 126,639 |  |  | $ | 103,203 |
Interest on Deposits at Banks |  | 2,103 |  |  |  |  | 1,805 |  |  | 6,735 |  |  | 3,958 |
Interest and Dividends on Investment Securities: |  |  |  |  |  |  |  |  |  |
Fully Taxable |  | 2,656 |  |  |  |  | 2,924 |  |  | 8,851 |  |  | 8,823 |
Exempt from Federal Taxes |  | 562 |  |  |  |  | 689 |  |  | 1,867 |  |  | 2,256 |
Total Interest and Dividend Income |  | 49,443 |  |  |  |  | 42,117 |  |  | 144,092 |  |  | 118,240 |
INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |
Interest-Bearing Checking Accounts |  | 1,966 |  |  |  |  | 1,156 |  |  | 5,510 |  |  | 2,346 |
Savings Deposits |  | 10,905 |  |  |  |  | 9,729 |  |  | 31,706 |  |  | 23,830 |
Time Deposits over $250,000 |  | 1,803 |  |  |  |  | 1,466 |  |  | 5,645 |  |  | 3,159 |
Other Time Deposits |  | 4,934 |  |  |  |  | 2,051 |  |  | 15,091 |  |  | 3,721 |
Borrowings |  | 1,177 |  |  |  |  | 2,143 |  |  | 3,439 |  |  | 5,309 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts |  | 173 |  |  |  |  | 173 |  |  | 514 |  |  | 513 |
Interest on Financing Leases |  | 47 |  |  |  |  | 46 |  |  | 142 |  |  | 143 |
Total Interest Expense |  | 21,005 |  |  |  |  | 16,764 |  |  | 62,047 |  |  | 39,021 |
NET INTEREST INCOME |  | 28,438 |  |  |  |  | 25,353 |  |  | 82,045 |  |  | 79,219 |
Provision for Credit Losses |  | 934 |  |  |  |  | 354 |  |  | 2,326 |  |  | 2,856 |
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES |  | 27,504 |  |  |  |  | 24,999 |  |  | 79,719 |  |  | 76,363 |
NON-INTEREST INCOME |  |  |  |  |  |  |  |  |  |
Income From Fiduciary Activities |  | 2,429 |  |  |  |  | 2,378 |  |  | 7,337 |  |  | 7,081 |
Fees for Other Services to Customers |  | 2,881 |  |  |  |  | 2,761 |  |  | 8,130 |  |  | 8,073 |
Insurance Commissions |  | 1,955 |  |  |  |  | 1,695 |  |  | 5,299 |  |  | 4,775 |
Net Gain (Loss) on Securities |  | 94 |  |  |  |  | 71 |  |  | 165 |  |  | (214) |
Net Gain on Sales of Loans |  | 126 |  |  |  |  | 21 |  |  | 135 |  |  | 25 |
Other Operating Income |  | 648 |  |  |  |  | 1,124 |  |  | 2,781 |  |  | 1,893 |
Total Non-Interest Income |  | 8,133 |  |  |  |  | 8,050 |  |  | 23,847 |  |  | 21,633 |
NON-INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |
Salaries and Employee Benefits |  | 13,446 |  |  |  |  | 11,988 |  |  | 39,375 |  |  | 35,974 |
Occupancy Expenses, Net |  | 1,754 |  |  |  |  | 1,517 |  |  | 5,299 |  |  | 4,728 |
Technology and Equipment Expense |  | 4,692 |  |  |  |  | 4,371 |  |  | 14,246 |  |  | 13,150 |
FDIC Assessments |  | 698 |  |  |  |  | 515 |  |  | 2,111 |  |  | 1,478 |
Other Operating Expense |  | 3,510 |  |  |  |  | 5,088 |  |  | 10,399 |  |  | 14,528 |
Total Non-Interest Expense |  | 24,100 |  |  |  |  | 23,479 |  |  | 71,430 |  |  | 69,858 |
INCOME BEFORE PROVISION FOR INCOME TAXES |  | 11,537 |  |  |  |  | 9,570 |  |  | 32,136 |  |  | 28,138 |
Provision for Income Taxes |  | 2,562 |  |  |  |  | 1,827 |  |  | 6,897 |  |  | 5,786 |
NET INCOME |  | $ | 8,975 |  |  |  |  | $ | 7,743 |  |  | $ | 25,239 |  |  | $ | 22,352 |
Average Shares Outstanding: |  |  |  |  |  |  |  |  |  |
Basic |  | 16,710 |  |  |  |  | 17,050 |  |  | 16,746 |  |  | 17,049 |
Diluted |  | 16,742 |  |  |  |  | 17,050 |  |  | 16,772 |  |  | 17,049 |
Per Common Share: |  |  |  |  |  |  |  |  |  |
Basic Earnings |  | $ | 0.54 |  |  |  |  | $ | 0.46 |  |  | $ | 1.51 |  |  | $ | 1.31 |
Diluted Earnings |  | 0.53 |  |  |  |  | 0.46 |  |  | 1.50 |  |  | 1.31 |

6

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

| September 30, 2024 |  | December 31, 2023 |  | September 30, 2023
ASSETS |  |  |  |  |
Cash and Due From Banks | $ | 53,969 |  |  | $ | 36,755 |  |  | $ | 39,778 |
Interest-Bearing Deposits at Banks | 286,119 |  |  | 105,781 |  |  | 254,961 |
Investment Securities: |  |  |  |  |
Available-for-Sale at Fair Value | 437,067 |  |  | 497,769 |  |  | 519,240 |
Held-to-Maturity (Fair Value of $101,929 at September 30, 2024; $128,837 at December 31, 2023; and $134,811 at September 30, 2023) | 103,337 |  |  | 131,395 |  |  | 140,577 |
Equity Securities | 5,089 |  |  | 1,925 |  |  | 1,960 |
Other Investments | 4,352 |  |  | 5,049 |  |  | 5,110 |
Loans | 3,339,937 |  |  | 3,212,908 |  |  | 3,138,617 |
Allowance for Credit Losses | (31,262) |  |  | (31,265) |  |  | (31,112) |
Net Loans | 3,308,675 |  |  | 3,181,643 |  |  | 3,107,505 |
Premises and Equipment, Net | 59,932 |  |  | 59,642 |  |  | 60,311 |
Goodwill | 23,789 |  |  | 21,873 |  |  | 21,873 |
Other Intangible Assets, Net | 2,190 |  |  | 1,110 |  |  | 1,205 |
Other Assets | 126,930 |  |  | 126,926 |  |  | 120,391 |
Total Assets | $ | 4,411,449 |  |  | $ | 4,169,868 |  |  | $ | 4,272,911 |
LIABILITIES |  |  |  |  |
Noninterest-Bearing Deposits | 740,170 |  |  | 758,425 |  |  | 798,392 |
Interest-Bearing Checking Accounts | 875,365 |  |  | 799,785 |  |  | 920,250 |
Savings Deposits | 1,544,868 |  |  | 1,466,280 |  |  | 1,496,193 |
Time Deposits over $250,000 | 177,990 |  |  | 179,301 |  |  | 167,614 |
Other Time Deposits | 499,064 |  |  | 483,775 |  |  | 284,036 |
Total Deposits | 3,837,457 |  |  | 3,687,566 |  |  | 3,666,485 |
Borrowings | 103,600 |  |  | 26,500 |  |  | 174,300 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 |  |  | 20,000 |  |  | 20,000 |
Finance Leases | 5,022 |  |  | 5,066 |  |  | 5,080 |
Other Liabilities | 52,059 |  |  | 50,964 |  |  | 47,032 |
Total Liabilities | 4,018,138 |  |  | 3,790,096 |  |  | 3,912,897 |
STOCKHOLDERS’ EQUITY |  |  |  |  |
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at September 30, 2024, December 31, 2023 and September 30, 2023 | — |  |  | — |  |  | — |
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (22,066,559 Shares Issued at September 30, 2024, December 31, 2023 and September 30, 2023) | 22,067 |  |  | 22,067 |  |  | 22,067 |
Additional Paid-in Capital | 413,065 |  |  | 412,551 |  |  | 412,397 |
Retained Earnings | 77,429 |  |  | 65,792 |  |  | 62,647 |
Accumulated Other Comprehensive Loss | (25,968) |  |  | (33,416) |  |  | (52,584) |
Treasury Stock, at Cost (5,332,907 Shares at September 30, 2024; 5,124,073 Shares at December 31, 2023 and 5,017,063 Shares at September 30, 2023) | (93,282) |  |  | (87,222) |  |  | (84,513) |
Total Stockholders’ Equity | 393,311 |  |  | 379,772 |  |  | 360,014 |
Total Liabilities and Stockholders’ Equity | $ | 4,411,449 |  |  | $ | 4,169,868 |  |  | $ | 4,272,911 |

7

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

Quarter Ended | 9/30/2024 |  | 6/30/2024 |  | 3/31/2024 |  | 12/31/2023 |  | 9/30/2023
Net Income | $ | 8,975 |  |  | $ | 8,604 |  |  | $ | 7,660 |  |  | $ | 7,723 |  |  | $ | 7,743 |
Net Changes in Fair Value of Equity Investments (Net of Tax) | 69 |  |  | 39 |  |  | 13 |  |  | 90 |  |  | 52 |
Share and Per Share Data: |  |  |  |  |  |  |  |  |
Period End Shares Outstanding | 16,734 |  |  | 16,723 |  |  | 16,710 |  |  | 16,942 |  |  | 17,049 |
Basic Average Shares Outstanding | 16,710 |  |  | 16,685 |  |  | 16,865 |  |  | 17,002 |  |  | 17,050 |
Diluted Average Shares Outstanding | 16,742 |  |  | 16,709 |  |  | 16,867 |  |  | 17,004 |  |  | 17,050 |
Basic Earnings Per Share | $ | 0.54 |  |  | $ | 0.52 |  |  | $ | 0.45 |  |  | $ | 0.46 |  |  | $ | 0.46 |
Diluted Earnings Per Share | 0.53 |  |  | 0.52 |  |  | 0.45 |  |  | 0.46 |  |  | 0.46 |
Cash Dividend Per Share | 0.270 |  |  | 0.270 |  |  | 0.270 |  |  | 0.270 |  |  | 0.262 |
Selected Quarterly Average Balances: |  |  |  |  |  |  |  |  |
Interest-Bearing Deposits at Banks | $ | 154,937 |  |  | $ | 159,336 |  |  | $ | 178,452 |  |  | $ | 136,026 |  |  | $ | 131,814 |
Investment Securities | 590,352 |  |  | 644,192 |  |  | 671,105 |  |  | 713,144 |  |  | 745,693 |
Loans | 3,329,873 |  |  | 3,280,285 |  |  | 3,235,841 |  |  | 3,170,262 |  |  | 3,096,240 |
Deposits | 3,672,128 |  |  | 3,678,957 |  |  | 3,693,325 |  |  | 3,593,949 |  |  | 3,491,028 |
Other Borrowed Funds | 134,249 |  |  | 131,537 |  |  | 122,033 |  |  | 149,507 |  |  | 208,527 |
Stockholders' Equity | 387,904 |  |  | 378,256 |  |  | 379,446 |  |  | 363,753 |  |  | 362,701 |
Total Assets | 4,245,597 |  |  | 4,237,359 |  |  | 4,245,484 |  |  | 4,159,313 |  |  | 4,109,995 |
Return on Average Assets, annualized | 0.84 | % |  | 0.82 | % |  | 0.73 | % |  | 0.74 | % |  | 0.75 | %
Return on Average Equity, annualized | 9.20 | % |  | 9.15 | % |  | 8.12 | % |  | 8.42 | % |  | 8.47 | %
Return on Average Tangible Equity, annualized 1 | 9.79 | % |  | 9.74 | % |  | 8.64 | % |  | 8.99 | % |  | 9.05 | %
Average Earning Assets | $ | 4,075,162 |  |  | $ | 4,083,813 |  |  | $ | 4,085,398 |  |  | $ | 4,019,432 |  |  | $ | 3,973,747 |
Average Paying Liabilities | 3,085,066 |  |  | 3,127,417 |  |  | 3,108,093 |  |  | 2,985,717 |  |  | 2,920,518 |
Interest Income | 49,443 |  |  | 47,972 |  |  | 46,677 |  |  | 44,324 |  |  | 42,117 |
Tax-Equivalent Adjustment 2 | 149 |  |  | 163 |  |  | 176 |  |  | 184 |  |  | 183 |
Interest Income, Tax-Equivalent 2 | 49,592 |  |  | 48,135 |  |  | 46,853 |  |  | 44,508 |  |  | 42,117 |
Interest Expense | 21,005 |  |  | 20,820 |  |  | 20,222 |  |  | 18,711 |  |  | 16,764 |
Net Interest Income | 28,438 |  |  | 27,152 |  |  | 26,455 |  |  | 25,613 |  |  | 25,353 |
Net Interest Income, Tax-Equivalent 2 | 28,587 |  |  | 27,315 |  |  | 26,631 |  |  | 25,797 |  |  | 25,536 |
Net Interest Margin, annualized | 2.78 | % |  | 2.67 | % |  | 2.60 | % |  | 2.53 | % |  | 2.53 | %
Net Interest Margin, Tax-Equivalent, annualized 2 | 2.79 | % |  | 2.69 | % |  | 2.62 | % |  | 2.55 | % |  | 2.55 | %
Efficiency Ratio Calculation: 3 |  |  |  |  |  |  |  |  |
Non-Interest Expense | $ | 24,100 |  |  | $ | 23,318 |  |  | $ | 24,012 |  |  | $ | 23,190 |  |  | $ | 23,479 |
Less: Intangible Asset Amortization | 78 |  |  | 40 |  |  | 41 |  |  | 43 |  |  | 43 |
Net Non-Interest Expense | $ | 24,022 |  |  | $ | 23,278 |  |  | $ | 23,971 |  |  | $ | 23,147 |  |  | $ | 23,436 |
Net Interest Income, Tax-Equivalent | $ | 28,587 |  |  | $ | 27,315 |  |  | $ | 26,631 |  |  | $ | 25,797 |  |  | $ | 25,536 |
Non-Interest Income | 8,133 |  |  | 7,856 |  |  | 7,858 |  |  | 7,484 |  |  | 8,050 |
Less: Net Gain on Securities | 94 |  |  | 54 |  |  | 17 |  |  | 122 |  |  | 71 |
Net Gross Income | $ | 36,626 |  |  | $ | 35,117 |  |  | $ | 34,472 |  |  | $ | 33,159 |  |  | $ | 33,515 |
Efficiency Ratio | 65.59 | % |  | 66.29 | % |  | 69.54 | % |  | 69.81 | % |  | 69.93 | %
Period-End Capital Information: |  |  |  |  |  |  |  |  |
Total Stockholders' Equity (i.e. Book Value) | $ | 393,311 |  |  | $ | 383,018 |  |  | $ | 377,986 |  |  | $ | 379,772 |  |  | $ | 360,014 |
Book Value per Share | 23.50 |  |  | 22.90 |  |  | 22.62 |  |  | 22.42 |  |  | 21.12 |
Goodwill and Other Intangible Assets, net | 25,979 |  |  | 22,800 |  |  | 22,891 |  |  | 22,983 |  |  | 23,078 |
Tangible Book Value per Share 1 | 21.95 |  |  | 21.54 |  |  | 21.25 |  |  | 21.06 |  |  | 19.76 |
Capital Ratios:4 |  |  |  |  |  |  |  |  |
Tier 1 Leverage Ratio | 9.78 | % |  | 9.74 | % |  | 9.63 | % |  | 9.84 | % |  | 9.94 | %
Common Equity Tier 1 Capital Ratio | 12.77 | % |  | 12.88 | % |  | 12.84 | % |  | 13.00 | % |  | 13.17 | %
Tier 1 Risk-Based Capital Ratio | 13.41 | % |  | 13.53 | % |  | 13.50 | % |  | 13.66 | % |  | 13.84 | %
Total Risk-Based Capital Ratio | 14.46 | % |  | 14.57 | % |  | 14.57 | % |  | 14.74 | % |  | 14.94 | %
Assets Under Trust Admin. & Investment Mgmt. | $ | 1,944,239 |  |  | $ | 1,848,349 |  |  | $ | 1,829,266 |  |  | $ | 1,763,194 |  |  | $ | 1,627,522 |

8

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 Tangible Equity exclude goodwill and other intangible assets, net from total equity. These are non-GAAP financial measures which Arrow believes provide investors with information that is useful in understanding its financial performance.
|  | 9/30/2024 |  | 6/30/2024 |  | 3/31/2024 |  | 12/31/2023 |  | 9/30/2023
| Total Stockholders' Equity (GAAP) | $ | 393,311 |  |  | $ | 383,018 |  |  | $ | 377,986 |  |  | $ | 379,772 |  |  | $ | 360,014 |
| Less: Goodwill and Other Intangible assets, net | 25,979 |  |  | 22,800 |  |  | 22,891 |  |  | 22,983 |  |  | 23,078 |
| Tangible Equity (Non-GAAP) | $ | 367,332 |  |  | $ | 360,218 |  |  | $ | 355,095 |  |  | $ | 356,789 |  |  | $ | 336,936 |
| Period End Shares Outstanding | 16,734 |  |  | 16,723 |  |  | 16,710 |  |  | 16,942 |  |  | 17,049 |
| Tangible Book Value per Share (Non-GAAP) | $ | 21.95 |  |  | $ | 21.54 |  |  | $ | 21.25 |  |  | $ | 21.06 |  |  | $ | 19.76 |
| Net Income | 8,975 |  |  | 8,604 |  |  | 7,660 |  |  | 7,723 |  |  | 7,743 |
| Return on Tangible Equity (Net Income/Tangible Equity - Annualized) | 9.79 | % |  | 9.74 | % |  | 8.64 | % |  | 8.99 | % |  | 9.05 | %
2. | Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which Arrow believes provides investors with information that is useful in understanding its financial performance.
|  | 9/30/2024 |  | 6/30/2024 |  | 3/31/2024 |  | 12/31/2023 |  | 9/30/2023
| Interest Income (GAAP) | $ | 49,443 |  |  | $ | 47,972 |  |  | $ | 46,677 |  |  | $ | 44,324 |  |  | $ | 42,117 |
| Add: Tax-Equivalent adjustment (Non-GAAP) | 149 |  |  | 163 |  |  | 176 |  |  | 184 |  |  | 183 |
| Interest Income - Tax Equivalent (Non-GAAP) | $ | 49,592 |  |  | $ | 48,135 |  |  | $ | 46,853 |  |  | $ | 44,508 |  |  | $ | 42,300 |
| Net Interest Income (GAAP) | $ | 28,438 |  |  | $ | 27,152 |  |  | $ | 26,455 |  |  | $ | 25,613 |  |  | $ | 25,353 |
| Add: Tax-Equivalent adjustment (Non-GAAP) | 149 |  |  | 163 |  |  | 176 |  |  | 184 |  |  | 183 |
| Net Interest Income - Tax Equivalent (Non-GAAP) | $ | 28,587 |  |  | $ | 27,315 |  |  | $ | 26,631 |  |  | $ | 25,797 |  |  | $ | 25,536 |
| Average Earning Assets | $ | 4,075,162 |  |  | $ | 4,083,813 |  |  | $ | 4,085,398 |  |  | $ | 4,019,432 |  |  | $ | 3,973,747 |
| Net Interest Margin (Non-GAAP)* | 2.79 | % |  | 2.69 | % |  | 2.62 | % |  | 2.55 | % |  | 2.55 | %
3. | Non-GAAP Financial Measure Reconciliation: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. Arrow believes the efficiency ratio provides investors with information that is useful in understanding its financial performance. Arrow defines efficiency ratio as the ratio of non-interest expense to net gross income (which equals tax-equivalent net interest income plus non-interest income, as adjusted).
4. | For the current quarter, all of the regulatory capital ratios as well as the Total Risk-Weighted Assets are calculated in accordance with bank regulatory capital rules. The September 30, 2024 CET1 ratio listed in the tables (i.e., 12.77%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
|  | 9/30/2024 |  | 6/30/2024 |  | 3/31/2024 |  | 12/31/2023 |  | 9/30/2023
| Total Risk Weighted Assets | $ | 3,110,178 |  |  | $ | 3,072,922 |  |  | $ | 3,049,525 |  |  | $ | 3,032,188 |  |  | $ | 2,988,438 |
| Common Equity Tier 1 Capital | 397,122 |  |  | 395,691 |  |  | 391,706 |  |  | 394,166 |  |  | 393,541 |
| Common Equity Tier 1 Ratio | 12.77 | % |  | 12.88 | % |  | 12.84 | % |  | 13.00 | % |  | 13.17 | %
* Quarterly ratios have been annualized. |  |  |  |  |  |  |  |  |

9

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)

Quarter Ended: | September 30, 2024 |  | September 30, 2023
|  |  | Interest |  | Rate |  |  |  | Interest |  | Rate
| Average |  | Income/ |  | Earned/ |  | Average |  | Income/ |  | Earned/
| Balance |  | Expense |  | Paid |  | Balance |  | Expense |  | Paid
Interest-Bearing Deposits at Banks | $ | 154,937 |  |  | $ | 2,103 |  |  | 5.40 | % |  | $ | 131,814 |  |  | $ | 1,805 |  |  | 5.43 | %
Investment Securities: |  |  |  |  |  |  |  |  |  |  |
Fully Taxable | 497,450 |  |  | 2,656 |  |  | 2.12 |  |  | 616,020 |  |  | 2,924 |  |  | 1.88 |
Exempt from Federal Taxes | 92,902 |  |  | 562 |  |  | 2.41 |  |  | 129,673 |  |  | 689 |  |  | 2.11 |
Loans (1) | 3,329,873 |  |  | 44,122 |  |  | 5.27 |  |  | 3,096,240 |  |  | 36,699 |  |  | 4.70 |
Total Earning Assets (1) | 4,075,162 |  |  | 49,443 |  |  | 4.83 |  |  | 3,973,747 |  |  | 42,117 |  |  | 4.20 |
Allowance for Credit Losses | (31,147) |  |  |  |  |  |  | (31,386) |  |  |  |  |
Cash and Due From Banks | 33,159 |  |  |  |  |  |  | 32,874 |  |  |  |  |
Other Assets | 168,423 |  |  |  |  |  |  | 134,760 |  |  |  |  |
Total Assets | $ | 4,245,597 |  |  |  |  |  |  | $ | 4,109,995 |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |
Interest-Bearing Checking Accounts | $ | 785,134 |  |  | 1,966 |  |  | 1.00 |  |  | $ | 795,627 |  |  | 1,156 |  |  | 0.58 |
Savings Deposits | 1,492,888 |  |  | 10,905 |  |  | 2.91 |  |  | 1,505,916 |  |  | 9,729 |  |  | 2.56 |
Time Deposits of $250,000 or More | 174,028 |  |  | 1,803 |  |  | 4.12 |  |  | 152,738 |  |  | 1,466 |  |  | 3.81 |
Other Time Deposits | 498,767 |  |  | 4,934 |  |  | 3.94 |  |  | 257,710 |  |  | 2,051 |  |  | 3.16 |
Total Interest-Bearing Deposits | 2,950,817 |  |  | 19,608 |  |  | 2.64 |  |  | 2,711,991 |  |  | 14,402 |  |  | 2.11 |
Borrowings | 109,230 |  |  | 1,177 |  |  | 4.29 |  |  | 183,452 |  |  | 2,143 |  |  | 4.63 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 |  |  | 173 |  |  | 3.44 |  |  | 20,000 |  |  | 173 |  |  | 3.43 |
Finance Leases | 5,019 |  |  | 47 |  |  | 3.73 |  |  | 5,075 |  |  | 46 |  |  | 3.60 |
Total Interest-Bearing Liabilities | 3,085,066 |  |  | 21,005 |  |  | 2.71 |  |  | 2,920,518 |  |  | 16,764 |  |  | 2.28 |
Noninterest-Bearing Deposits | 721,311 |  |  |  |  |  |  | 779,037 |  |  |  |  |
Other Liabilities | 51,316 |  |  |  |  |  |  | 47,739 |  |  |  |  |
Total Liabilities | 3,857,693 |  |  |  |  |  |  | 3,747,294 |  |  |  |  |
Stockholders’ Equity | 387,904 |  |  |  |  |  |  | 362,701 |  |  |  |  |
Total Liabilities and Stockholders’ Equity | $ | 4,245,597 |  |  |  |  |  |  | $ | 4,109,995 |  |  |  |  |
Net Interest Income |  |  | $ | 28,438 |  |  |  |  |  |  | $ | 25,353 |  |  |
Net Interest Spread |  |  |  |  | 2.12 | % |  |  |  |  |  | 1.92 | %
Net Interest Margin |  |  |  |  | 2.78 | % |  |  |  |  |  | 2.53 | %

(1) Includes Nonaccrual Loans.
10

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)

Quarter Ended: | September 30, 2024 |  | June 30, 2024
|  |  | Interest |  | Rate |  |  |  | Interest |  | Rate
| Average |  | Income/ |  | Earned/ |  | Average |  | Income/ |  | Earned/
| Balance |  | Expense |  | Paid |  | Balance |  | Expense |  | Paid
Interest-Bearing Deposits at Banks | $ | 154,937 |  |  | $ | 2,103 |  |  | 5.40 | % |  | $ | 159,336 |  |  | $ | 2,185 |  |  | 5.52 | %
Investment Securities: |  |  |  |  |  |  |  |  |  |  |
Fully Taxable | 497,450 |  |  | 2,656 |  |  | 2.12 |  |  | 530,869 |  |  | 3,009 |  |  | 2.28 |
Exempt from Federal Taxes | 92,902 |  |  | 562 |  |  | 2.41 |  |  | 113,323 |  |  | 637 |  |  | 2.26 |
Loans (1) | 3,329,873 |  |  | 44,122 |  |  | 5.27 |  |  | 3,280,285 |  |  | 42,141 |  |  | 5.17 |
Total Earning Assets (1) | 4,075,162 |  |  | 49,443 |  |  | 4.83 |  |  | 4,083,813 |  |  | 47,972 |  |  | 4.72 |
Allowance for Credit Losses | (31,147) |  |  |  |  |  |  | (31,459) |  |  |  |  |
Cash and Due From Banks | 33,159 |  |  |  |  |  |  | 28,611 |  |  |  |  |
Other Assets | 168,423 |  |  |  |  |  |  | 156,394 |  |  |  |  |
Total Assets | $ | 4,245,597 |  |  |  |  |  |  | $ | 4,237,359 |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |
Interest-Bearing Checking Accounts | $ | 785,134 |  |  | 1,966 |  |  | 1.00 |  |  | $ | 832,087 |  |  | 1,903 |  |  | 0.92 |
Savings Deposits | 1,492,888 |  |  | 10,905 |  |  | 2.91 |  |  | 1,487,062 |  |  | 10,571 |  |  | 2.86 |
Time Deposits of $250,000 or More | 174,028 |  |  | 1,803 |  |  | 4.12 |  |  | 172,655 |  |  | 1,869 |  |  | 4.35 |
Other Time Deposits | 498,767 |  |  | 4,934 |  |  | 3.94 |  |  | 504,076 |  |  | 5,074 |  |  | 4.05 |
Total Interest-Bearing Deposits | 2,950,817 |  |  | 19,608 |  |  | 2.64 |  |  | 2,995,880 |  |  | 19,417 |  |  | 2.61 |
Borrowings | 109,230 |  |  | 1,177 |  |  | 4.29 |  |  | 106,502 |  |  | 1,186 |  |  | 4.48 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 |  |  | 173 |  |  | 3.44 |  |  | 20,000 |  |  | 170 |  |  | 3.42 |
Finance Leases | 5,019 |  |  | 47 |  |  | 3.73 |  |  | 5,035 |  |  | 47 |  |  | 3.75 |
Total Interest-Bearing Liabilities | 3,085,066 |  |  | 21,005 |  |  | 2.71 |  |  | 3,127,417 |  |  | 20,820 |  |  | 2.68 |
Noninterest-Bearing Deposits | 721,311 |  |  |  |  |  |  | 683,077 |  |  |  |  |
Other Liabilities | 51,316 |  |  |  |  |  |  | 48,609 |  |  |  |  |
Total Liabilities | 3,857,693 |  |  |  |  |  |  | 3,859,103 |  |  |  |  |
Stockholders’ Equity | 387,904 |  |  |  |  |  |  | 378,256 |  |  |  |  |
Total Liabilities and Stockholders’ Equity | $ | 4,245,597 |  |  |  |  |  |  | $ | 4,237,359 |  |  |  |  |
Net Interest Income |  |  | $ | 28,438 |  |  |  |  |  |  | $ | 27,152 |  |  |
Net Interest Spread |  |  |  |  | 2.12 | % |  |  |  |  |  | 2.04 | %
Net Interest Margin |  |  |  |  | 2.78 | % |  |  |  |  |  | 2.67 | %

(1) Includes Nonaccrual Loans.
11

Average Consolidated Balance Sheets and Net Interest Income Analysis
(GAAP Basis)
(Dollars In Thousands)
Nine Months Ended September 30: | 2024 |  | 2023
|  |  | Interest |  | Rate |  |  |  | Interest |  | Rate
| Average |  | Income/ |  | Earned/ |  | Average |  | Income/ |  | Earned/
| Balance |  | Expense |  | Paid |  | Balance |  | Expense |  | Paid
Interest-Bearing Deposits at Banks | $ | 164,208 |  |  | $ | 6,735 |  |  | 5.48 | % |  | $ | 101,104 |  |  | $ | 3,958 |  |  | 5.23 | %
Investment Securities: |  |  |  |  |  |  |  |  |  |  |
Fully Taxable | 526,181 |  |  | 8,851 |  |  | 2.25 |  |  | 635,126 |  |  | 8,823 |  |  | 1.86 |
Exempt from Federal Taxes | 108,872 |  |  | 1,867 |  |  | 2.29 |  |  | 146,736 |  |  | 2,256 |  |  | 2.06 |
Loans (1) | 3,282,175 |  |  | 126,639 |  |  | 5.15 |  |  | 3,041,909 |  |  | 103,203 |  |  | 4.54 |
Total Earning Assets (1) | 4,081,436 |  |  | 144,092 |  |  | 4.72 |  |  | 3,924,875 |  |  | 118,240 |  |  | 4.03 |
Allowance for Credit Losses | (31,340) |  |  |  |  |  |  | (30,591) |  |  |  |  |
Cash and Due From Banks | 30,534 |  |  |  |  |  |  | 30,720 |  |  |  |  |
Other Assets | 162,194 |  |  |  |  |  |  | 134,310 |  |  |  |  |
Total Assets | $ | 4,242,824 |  |  |  |  |  |  | $ | 4,059,314 |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |
Interest-Bearing Checking Accounts | $ | 815,933 |  |  | 5,510 |  |  | 0.90 |  |  | $ | 874,132 |  |  | 2,346 |  |  | 0.36 |
Savings Deposits | 1,487,005 |  |  | 31,706 |  |  | 2.85 |  |  | 1,494,976 |  |  | 23,830 |  |  | 2.13 |
Time Deposits of $250,000 or More | 174,668 |  |  | 5,645 |  |  | 4.32 |  |  | 127,230 |  |  | 3,159 |  |  | 3.32 |
Other Time Deposits | 499,881 |  |  | 15,091 |  |  | 4.03 |  |  | 203,047 |  |  | 3,721 |  |  | 2.45 |
Total Interest-Bearing Deposits | 2,977,487 |  |  | 57,952 |  |  | 2.60 |  |  | 2,699,385 |  |  | 33,056 |  |  | 1.64 |
Borrowings | 104,257 |  |  | 3,439 |  |  | 4.41 |  |  | 151,887 |  |  | 5,309 |  |  | 4.67 |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 |  |  | 514 |  |  | 3.43 |  |  | 20,000 |  |  | 513 |  |  | 3.43 |
Finance Leases | 5,034 |  |  | 142 |  |  | 3.77 |  |  | 5,088 |  |  | 143 |  | 3.76 |
Total Interest-Bearing Liabilities | 3,106,778 |  |  | 62,047 |  |  | 2.67 |  |  | 2,876,360 |  |  | 39,021 |  |  | 1.81 |
Noninterest-Bearing Deposits | 703,948 |  |  |  |  |  |  | 777,994 |  |  |  |  |
Other Liabilities | 50,207 |  |  |  |  |  |  | 42,506 |  |  |  |  |
Total Liabilities | 3,860,933 |  |  |  |  |  |  | 3,696,860 |  |  |  |  |
Stockholders’ Equity | 381,891 |  |  |  |  |  |  | 362,454 |  |  |  |  |
Total Liabilities and Stockholders’ Equity | $ | 4,242,824 |  |  |  |  |  |  | $ | 4,059,314 |  |  |  |  |
Net Interest Income |  |  | $ | 82,045 |  |  |  |  |  |  | $ | 79,219 |  |  |
Net Interest Spread |  |  |  |  | 2.05 | % |  |  |  |  |  | 2.22 | %
Net Interest Margin |  |  |  |  | 2.69 | % |  |  |  |  |  | 2.70 | %

(1) Includes Nonaccrual Loans.
12

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

Quarter Ended: | 9/30/2024 |  | 12/31/2023 |  | 9/30/2023
Loan Portfolio |  |  |  |  |
Commercial Loans | $ | 169,884 |  |  | $ | 156,224 |  |  | $ | 148,066 |
Commercial Real Estate Loans | 756,420 |  |  | 745,487 |  |  | 734,604 |
Subtotal Commercial Loan Portfolio | 926,304 |  |  | 901,711 |  |  | 882,670 |
Consumer Loans | 1,120,241 |  |  | 1,111,667 |  |  | 1,107,638 |
Residential Real Estate Loans | 1,293,392 |  |  | 1,199,530 |  |  | 1,148,309 |
Total Loans | $ | 3,339,937 |  |  | $ | 3,212,908 |  |  | $ | 3,138,617 |
Allowance for Credit Losses |  |  |  |  |
Allowance for Credit Losses, Beginning of Quarter | $ | 31,009 |  |  | $ | 31,112 |  |  | $ | 31,170 |
Loans Charged-off | (1,429) |  |  | (1,366) |  |  | (1,204) |
Less Recoveries of Loans Previously Charged-off | 748 |  |  | 994 |  |  | 792 |
Net Loans Charged-off | (681) |  |  | (372) |  |  | (412) |
Provision for Credit Losses | 934 |  |  | 525 |  |  | 354 |
Allowance for Credit Losses, End of Quarter | $ | 31,262 |  |  | $ | 31,265 |  |  | $ | 31,112 |
Nonperforming Assets |  |  |  |  |
Nonaccrual Loans | $ | 21,047 |  |  | $ | 20,645 |  |  | $ | 6,023 |
Loans Past Due 90 or More Days and Accruing | 816 |  |  | 452 |  |  | 251 |
Loans Restructured and in Compliance with Modified Terms | 30 |  |  | 54 |  |  | 60 |
Total Nonperforming Loans | 21,893 |  |  | 21,151 |  |  | 6,334 |
Repossessed Assets | 322 |  |  | 312 |  |  | 344 |
Other Real Estate Owned | 76 |  |  | — |  |  | 182 |
Total Nonperforming Assets | $ | 22,291 |  |  | $ | 21,463 |  |  | $ | 6,860 |
Key Asset Quality Ratios |  |  |  |  |
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized | 0.08 | % |  | 0.05 | % |  | 0.05 | %
Provision for Credit Losses to Average Loans, Quarter-to-date Annualized | 0.11 | % |  | 0.07 | % |  | 0.05 | %
Allowance for Credit Losses to Period-End Loans | 0.94 | % |  | 0.97 | % |  | 0.99 | %
Allowance for Credit Losses to Period-End Nonperforming Loans | 142.79 | % |  | 147.82 | % |  | 491.19 | %
Nonperforming Loans to Period-End Loans | 0.66 | % |  | 0.66 | % |  | 0.20 | %
Nonperforming Assets to Period-End Assets | 0.51 | % |  | 0.51 | % |  | 0.16 | %
Year-to-Date Period Ended: | 9/30/2024 |  | 12/31/2023 |  | 9/30/2023
Allowance for Credit Losses |  |  |  |  |
Allowance for Credit Losses, Beginning of Year | $ | 31,265 |  |  | $ | 29,952 |  |  | $ | 29,952 |
Loans Charged-off | (4,562) |  |  | (5,177) |  |  | (3,812) |
Less Recoveries of Loans Previously Charged-off | 2,233 |  |  | 3,109 |  |  | 2,116 |
Net Loans Charged-off | (2,329) |  |  | (2,068) |  |  | (1,696) |
Provision for Credit Losses | 2,326 |  |  | 3,381 |  |  | 2,856 |
Allowance for Credit Losses, End of Period | $ | 31,262 |  |  | $ | 31,265 |  |  | $ | 31,112 |
Key Asset Quality Ratios |  |  |  |  |
Net Loans Charged-off to Average Loans, Annualized | 0.09 | % |  | 0.07 | % |  | 0.07 | %
Provision for Loan Losses to Average Loans, Annualized | 0.09 | % |  | 0.11 | % |  | 0.13 | %

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