EX-99.1 2 ex99-earningsq32025.htm EX-99.1 Document

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250 Glen Street
Glens Falls, NY 12801
NASDAQ® Symbol: “AROW“
Website: arrowfinancial.com
Media Contact: Rachael Murray
P: (518) 742-6505
E: rachael.murray@arrowbank.com
FOR IMMEDIATE RELEASE

Arrow Reports 3rd Quarter Net Income of $12.8 Million, or $0.77 per Share, and Declares 4th Quarter Dividend of $0.29 per Share

GLENS FALLS, N.Y. (October 30, 2025) – Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or "the Company") announced financial results for the three-month period ended September 30, 2025. Reported net income for the third quarter of 2025 was $12.8 million and fully diluted earnings per share ("EPS") was $0.77, versus net income of $10.8 million and EPS of $0.65 for the second quarter of 2025.

The Board of Directors of Arrow declared a quarterly cash dividend of $0.29 per share; payable November 24, 2025 to shareholders of record as of November 12, 2025.

This quarter's results include approximately $600 thousand ($0.03 per share) of non-core unification costs related to Arrow’s system conversion and operational merger of its two banking subsidiaries, which were successfully completed in July 2025. Arrow does not expect to incur additional costs related to the unification effort.

This Earnings Release and related commentary should be read in conjunction with the Company's October 30, 2025 Form 8-K and related Third Quarter 2025 Investor Presentation, which can also be found on Arrow's website: arrowfinancial.com/documents/investor-presentations.

Arrow President and CEO David S. DeMarco:

"I am proud to report that on the heels of our unification effort, the Arrow team delivered a great financial quarter. EPS increased by almost 20% from the prior quarter and ROA improved by 16 bps to 1.16%, despite recognizing the last remaining unification expenses. Our third quarter delivered record net interest income, solid net interest margin expansion and more than 10% annualized growth in tangible book value. With the Federal Reserve enacting a first round of interest rate cuts late in the third quarter and again in late October, Arrow is well-positioned with our near-term liability sensitive balance sheet to deliver another great quarter to end the year. We are delighted that we can use our improved financial performance to continue to support our communities while delivering strong results to our shareholders."

Third-Quarter Highlights and Key Metrics

•Net Income of $12.8 million (EPS of $0.77)
•Record Net Interest Income of $34.1 million
•Net Interest Margin improved to 3.22% (3.24% FTE1), from 3.15% (3.16% FTE1) in the prior quarter
•Return on Average Assets (ROA) improved to 1.16%, an increase from 1.00% for the prior quarter
•Loan-to-Deposit ratio of 84.0%
1 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 2 to the Selected Quarterly Information.
1

•Quarter-end loan exit rates2 increased to 5.56% at September 30, 2025 vs. 5.51% at June 30, 2025
•Cost of retail deposits3 decreased by 9 bps to 1.68% from the prior quarter
•Approximately $2 billion of deposits subject to repricing with additional federal reserve rate cuts
•Tangible Book Value per share increased to $23.85, an increase of 2.7% from the prior quarter
•Repurchased $1.4 million of shares (52,947 shares at an average cost of $26.87 per share)
•$5.1 million remaining under current repurchase authorization
•Recently received preliminary court approval of the negotiated settlement in the Shareholder Derivative Complaint described in previous SEC filings. The preliminary approval has no material financial impact to the results of operations or financial position.

Income Statement

•Net Income: Net income for the third quarter of 2025 was $12.8 million, increasing from $10.8 million in the second quarter of 2025.
◦Compared to the prior quarter, net income benefited from an increase of $1.6 million in net interest income, an increase in non-interest income of $1.1 million and a slight decrease in non-interest expense of $0.2 million.

•Net Interest Income: Net interest income for the third quarter of 2025 was $34.1 million, increasing 4.9% from the second quarter of 2025.
◦Total interest and dividend income was $53.6 million for the third quarter of 2025, an increase from $51.6 million in the second quarter of 2025. Interest expense for the third quarter of 2025 was $19.5 million, an increase from $19.0 million in the second quarter of 2025.

•Net Interest Margin: Net interest margin, on an FTE basis, for the third quarter of 2025 increased to 3.24%, compared to 3.16% for the second quarter of 2025. The increase in net interest margin compared to the second quarter of 2025 was primarily the result of continued yield expansion on earning assets combined with the stabilizing cost of interest-bearing liabilities.

Three Months Ended
(Dollars in Thousands)
September 30, 2025June 30, 2025September 30, 2024
Interest and Dividend Income$53,598 $51,573 $49,443 
Interest Expense19,467 19,040 21,005 
Net Interest Income34,131 32,533 28,438 
Average Earning Assets(A)
4,199,115 4,142,993 4,075,162 
Average Interest-Bearing Liabilities3,193,789 3,191,906 3,085,066 
Average Yield on Earning Assets(A)
5.06 %4.99 %4.83 %
Average Cost of Interest-Bearing Liabilities2.42 2.39 2.71 
Net Interest Spread2.64 2.60 2.12 
Net Interest Margin3.22 3.15 2.78 
Net Interest Margin - FTE3.24 3.16 2.79 
(A) Includes Nonaccrual Loans.

•Provision for Credit Losses: For the third quarter of 2025, the provision for credit losses was $815 thousand compared to $594 thousand in the second quarter of 2025, primarily driven by third quarter 2025 charge-offs.
2 The “loan exit rate” is the point in time interest rate in effect at the end of the reporting period.
3 Retail deposits exclude wholesale funding sources
2


•Non-Interest Income: Non-interest income for the three months ended September 30, 2025, was $8.7 million, an increase from $7.6 million in the second quarter of 2025. Revenue related to wealth management increased from the prior quarter as a result of overall market performance. Interchange fees improved in the third quarter from the linked quarter. The third quarter of 2025 included a positive valuation adjustment related to an equity position.

•Non-Interest Expense: Non-interest expense for the third quarter of 2025 was $25.4 million, a decrease from $25.7 million in the second quarter of 2025. The third quarter of 2025 included unification expenses of approximately $600 thousand as compared to $1.1 million in the second quarter of 2025. The unification expenses were primarily comprised of project management and information technology costs related to the July 2025 system conversion. Arrow continues to focus on overall expense control.

•Provision for Income Taxes: The provision for income taxes and effective tax rate were $3.8 million and 22.7%, respectively for the third quarter of 2025, and $3.1 million and 22.4%, respectively for the second quarter of 2025.

Balance Sheet

•Total Assets: Total assets were $4.6 billion at September 30, 2025, an increase of $172.4 million, or 3.9%, as compared to June 30, 2025. For the third quarter of 2025, the overall change in the balance sheet was primarily attributable to the seasonal surge in municipal deposits as well as fluctuations in cash balances, maturities of investments and growth in the loan portfolio.

•Investments: Total investments were $558.4 million as of September 30, 2025, an increase of $30.0 million, or 5.7%, compared to June 30, 2025. The increase from June 30, 2025 was driven primarily by $48 million of additional investments offset by paydowns and maturities. There were no credit quality issues related to the investment portfolio.

•Loans4: Total loans were $3.4 billion as of September 30, 2025. Loan growth for the third quarter of 2025 was $17.3 million. Loan growth was primarily driven by an increase in residential real estate loans and commercial loans. Please see the loan detail included in the Consolidated Financial Information table on page 12.

•Allowance for Credit Losses: The allowance for credit losses was $34.2 million as of September 30, 2025, which represented 0.99% of loans outstanding, as compared to $34.2 million, or 1.00% of loans outstanding, at June 30, 2025. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.10% for the three-month period ended September 30, 2025, as compared to 0.49% for the three-month period ended June 30, 2025. The decrease was the result of a charge-off of a previously reserved commercial loan participation in the second quarter of 2025. Nonperforming assets were $6.7 million as of September 30, 2025, representing 0.15% of period-end assets, compared to $6.8 million, or 0.15%, at June 30, 2025.

•Deposits: At September 30, 2025, deposit balances were $4.1 billion, an increase of $170.7 million from June 30, 2025. The change from June 30, 2025 was primarily attributable to the seasonality of municipal deposits. Please refer to page 6 for further details related to deposits.

•Capital: Total stockholders’ equity was $417.7 million at September 30, 2025, an increase of $9.2 million, or 2.2%, from June 30, 2025. The increase from June 30, 2025 was primarily attributable to net income of $12.8 million and other comprehensive income of $2.2 million offset by dividends
4 Excludes $3.0 million and $3.2 million fair value hedge adjustments at September 30, 2025 and June 30, 2025, respectively.
3

of $4.8 million and share repurchases of $1.4 million and other stock-based activity. Arrow's regulatory capital ratios remain strong. As of September 30, 2025, Arrow's Common Equity Tier 1 Capital Ratio was 13.07% and Total Risk-Based Capital Ratio was 14.86%. Regulatory capital ratios are preliminary, subject to finalization as part of the current quarter Call Report. The capital ratios of Arrow and its subsidiary bank continued to 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 74 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 "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.
4


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,
 2025202420252024
INTEREST AND DIVIDEND INCOME    
Interest and Fees on Loans$46,832 $44,122 $136,982 $126,639 
Interest on Deposits at Banks2,245 2,103 5,488 6,735 
Interest and Dividends on Investment Securities: 
Fully Taxable4,066 2,656 11,464 8,851 
Exempt from Federal Taxes455 562 1,603 1,867 
Total Interest and Dividend Income53,598 49,443 155,537 144,092 
INTEREST EXPENSE   
Interest-Bearing Checking Accounts2,160 1,966 5,904 5,510 
Savings Deposits9,534 10,905 28,384 31,706 
Time Deposits over $250,0001,695 1,803 5,232 5,645 
Other Time Deposits5,859 4,934 17,181 15,091 
Borrowings— 1,177 167 3,439 
Junior Subordinated Obligations Issued to
  Unconsolidated Subsidiary Trusts		173 173 513 514 
Interest on Financing Leases46 47 135 142 
Total Interest Expense19,467 21,005 57,516 62,047 
NET INTEREST INCOME34,131 28,438 98,021 82,045 
Provision for Credit Losses815 934 6,428 2,326 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES33,316 27,504 91,593 79,719 
NON-INTEREST INCOME   
Income From Fiduciary Activities2,600 2,429 7,533 7,337 
Fees for Other Services to Customers2,857 2,881 8,244 8,130 
Insurance Commissions1,986 1,955 5,616 5,299 
Net Gain on Securities 392 94 669 165 
Net Gain on Sales of Loans259 126 573 135 
Other Operating Income622 648 1,529 2,781 
Total Non-Interest Income8,716 8,133 24,164 23,847 
NON-INTEREST EXPENSE   
Salaries and Employee Benefits14,339 13,446 41,980 39,375 
Occupancy Expenses, Net1,907 1,754 5,881 5,299 
Technology and Equipment Expense4,963 4,692 15,639 14,246 
FDIC Assessments634 698 1,953 2,111 
Other Operating Expense3,590 3,510 11,677 10,399 
Total Non-Interest Expense25,433 24,100 77,130 71,430 
INCOME BEFORE PROVISION FOR INCOME TAXES16,599 11,537 38,627 32,136 
Provision for Income Taxes3,774 2,562 8,687 6,897 
NET INCOME$12,825 $8,975 $29,940 $25,239 
Average Shares Outstanding:    
Basic16,402 16,710 16,541 16,746 
Diluted16,406 16,742 16,543 16,772 
Per Common Share:    
Basic Earnings$0.77 $0.54 $1.80 $1.51 
Diluted Earnings0.77 0.53 1.80 1.50 

5


ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)
 September 30,
2025		December 31, 2024
ASSETS 
Cash and Due From Banks$45,925 $27,422 
Interest-Earning Deposits at Banks
351,512 127,124 
Investment Securities:
Available-for-Sale at Fair Value485,583 463,111 
Held-to-Maturity (Fair Value of $62,251 at September 30, 2025 and $96,586 at December 31, 2024)
62,744 98,261 
Equity Securities5,724 5,055 
Other Investments4,369 4,353 
Loans3,442,009 3,394,541 
Allowance for Credit Losses(34,176)(33,598)
Net Loans3,407,833 3,360,943 
Premises and Equipment, Net60,002 59,717 
Goodwill23,789 23,789 
Other Intangible Assets, Net1,805 2,058 
Other Assets137,829 134,515 
Total Assets$4,587,115 $4,306,348 
LIABILITIES 
Noninterest-Bearing Deposits771,014 702,978 
Interest-Bearing Checking Accounts977,871 810,834 
Savings Deposits1,526,055 1,520,024 
Time Deposits over $250,000178,843 191,962 
Other Time Deposits646,268 602,132 
Total Deposits4,100,051 3,827,930 
Borrowings4,265 8,600 
Junior Subordinated Obligations Issued to Unconsolidated
  Subsidiary Trusts		20,000 20,000 
Finance Leases4,928 5,005 
Other Liabilities40,184 43,912 
Total Liabilities4,169,428 3,905,447 
STOCKHOLDERS’ EQUITY
Preferred Stock, $1 Par Value; 1,000,000 Shares Authorized at September 30, 2025 and December 31, 2024
— — 
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (22,066,559 Shares Issued at September 30, 2025 and December 31, 2024)
22,067 22,067 
Additional Paid-in Capital414,133 413,476 
Retained Earnings93,027 77,215 
Accumulated Other Comprehensive Loss(8,640)(18,453)
Treasury Stock, at Cost (5,628,864 Shares at September 30, 2025 and 5,323,638 Shares at December 31, 2024)
(102,900)(93,404)
Total Stockholders’ Equity417,687 400,901 
Total Liabilities and Stockholders’ Equity$4,587,115 $4,306,348 
6


Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended9/30/20256/30/20253/31/202512/31/20249/30/2024
Net Income$12,825 $10,805 $6,310 $4,470 $8,975 
     
Share and Per Share Data:    
Period End Shares Outstanding16,438 16,484 16,670 16,743 16,734 
Basic Average Shares Outstanding16,402 16,545 16,665 16,718 16,710 
Diluted Average Shares Outstanding16,406 16,551 16,673 16,739 16,742 
Basic Earnings Per Share$0.77 $0.65 $0.38 $0.26 $0.54 
Diluted Earnings Per Share0.77 0.65 0.38 0.27 0.53 
Cash Dividend Per Share0.29 0.28 0.28 0.28 0.27 
Selected Quarterly Average Balances:    
  Interest-Earning Deposits at Banks
$200,251 $145,473 $146,023 $233,469 $154,937 
  Investment Securities574,080 582,380 591,841 579,107 590,352 
  Loans3,424,784 3,415,140 3,406,075 3,354,463 3,329,873 
  Deposits3,913,721 3,849,093 3,825,124 3,847,691 3,672,128 
  Other Borrowed Funds30,539 33,579 48,375 49,090 134,249 
  Stockholders' Equity
413,058 406,529 404,394 393,696 387,904 
  Total Assets4,399,815 4,332,339 4,324,917 4,339,833 4,245,597 
Return on Average Assets, annualized1.16 %1.00 %0.59 %0.41 %0.84 %
Return on Average Equity, annualized12.32 %10.66 %6.33 %4.52 %9.20 %
Return on Average Tangible Equity, annualized 1
13.13 %11.38 %6.76 %4.84 %9.79 %
Average Earning Assets$4,199,115 $4,142,993 $4,143,939 $4,167,039 $4,075,162 
Average Paying Liabilities3,193,789 3,191,906 3,184,196 3,185,215 3,085,066 
Interest Income53,598 51,573 50,366 50,901 49,443 
Tax-Equivalent Adjustment 2
121 148 155 157 149 
Interest Income, Tax-Equivalent 2
53,719 51,721 50,521 51,058 49,592 
Interest Expense19,467 19,040 19,009 21,214 21,005 
Net Interest Income34,131 32,533 31,357 29,687 28,438 
Net Interest Income, Tax-Equivalent 2
34,252 32,681 31,512 29,844 28,587 
Net Interest Margin, annualized3.22 %3.15 %3.07 %2.83 %2.78 %
Net Interest Margin, Tax-Equivalent, annualized 2
3.24 %3.16 %3.08 %2.85 %2.79 %
Efficiency Ratio Calculation: 3
    
Non-Interest Expense$25,433 $25,652 $26,045 $25,838 $24,100 
Less: Intangible Asset Amortization76 80 81 89 78 
Net Non-Interest Expense$25,357 $25,572 $25,964 $25,749 $24,022 
Net Interest Income, Tax-Equivalent$34,252 $32,681 $31,512 $29,844 $28,587 
Non-Interest Income8,716 7,609 7,839 4,227 8,133 
Less: Net Gain (Loss) on Securities392 (40)317 (3,072)94 
Net Gross Income$42,576 $40,330 $39,034 $37,143 $36,626 
Efficiency Ratio59.56 %63.41 %66.52 %69.32 %65.59 %
Period-End Capital Information:     
Total Stockholders' Equity (i.e. Book Value)$417,687 $408,506 $404,409 $400,901 $393,311 
Book Value per Share
25.41 24.78 24.26 23.94 23.50 
Goodwill and Other Intangible Assets, net25,594 25,659 25,743 25,847 25,979 
Tangible Book Value per Share 1
23.85 23.23 22.72 22.40 21.95 
Capital Ratios:4
  
Tier 1 Leverage Ratio9.66 %9.64 %9.61 %9.60 %9.78 %
Common Equity Tier 1 Capital Ratio
13.07 %12.73 %12.59 %12.71 %12.77 %
Tier 1 Risk-Based Capital Ratio13.71 %13.37 %13.23 %13.35 %13.41 %
Total Risk-Based Capital Ratio14.86 %14.51 %14.48 %14.47 %14.46 %


7


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.
9/30/20256/30/202512/31/202412/31/20249/30/2024
Total Stockholders' Equity (GAAP)$417,687 $408,506 $404,409 $400,901 $393,311 
Less: Goodwill and Other Intangible assets, net25,594 25,659 25,743 25,847 25,979 
Tangible Equity (Non-GAAP)$392,093 $382,847 $378,666 $375,054 $367,332 
Period End Shares Outstanding16,438 16,484 16,670 16,743 16,734 
Tangible Book Value per Share (Non-GAAP)$23.85 $23.23 $22.72 $22.40 $21.95 
Net Income12,825 10,805 6,310 4,470 8,975 
Return on Tangible Equity (Net Income/Tangible Equity - Annualized)13.13 %11.38 %6.76 %4.84 %9.79 %
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.
9/30/20256/30/202512/31/202412/31/20249/30/2024
Interest Income (GAAP)$53,598 $51,573 $50,366 $50,901 $49,443 
Add: Tax-Equivalent adjustment
     (Non-GAAP)		121 148 155 157 149 
Interest Income - Tax Equivalent
     (Non-GAAP)		$53,719 $51,721 $50,521 $51,058 $49,592 
Net Interest Income (GAAP)$34,131 $32,533 $31,357 $29,687 $28,438 
Add: Tax-Equivalent adjustment
     (Non-GAAP)		121 148 155 157 149 
Net Interest Income - Tax Equivalent
     (Non-GAAP)		$34,252 $32,681 $31,512 $29,844 $28,587 
Average Earning Assets$4,199,115 $4,142,993 $4,143,939 $4,167,039 $4,075,162 
Net Interest Margin (Non-GAAP)*3.24 %3.16 %3.08 %2.85 %2.79 %
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, 2025 CET1 ratio listed in the tables (i.e., 13.07%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%). Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report.
9/30/20256/30/202512/31/202412/31/20249/30/2024
Total Risk Weighted Assets$3,095,225 $3,121,451 $3,143,547 $3,126,364 $3,110,178 
Common Equity Tier 1 Capital404,426 397,432 395,900 397,285 397,122 
Common Equity Tier 1 Ratio13.07 %12.73 %12.59 %12.71 %12.77 %
* Quarterly ratios have been annualized.

8


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

Quarter Ended:September 30, 2025September 30, 2024
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks
$200,251 $2,245 4.45 %$154,937 $2,103 5.40 %
Investment Securities:
Fully Taxable509,599 4,066 3.17 497,450 2,656 2.12 
Exempt from Federal Taxes64,481 455 2.80 92,902 562 2.41 
Loans (1)
3,424,784 46,832 5.43 3,329,873 44,122 5.27 
Total Earning Assets (1)
4,199,115 53,598 5.06 4,075,162 49,443 4.83 
Allowance for Credit Losses(34,143)(31,147)
Cash and Due From Banks33,984 33,159 
Other Assets200,859 168,423 
Total Assets$4,399,815 $4,245,597 
Deposits:
Interest-Bearing Checking Accounts$848,622 2,160 1.01 $785,134 1,966 1.00 
Savings Deposits1,492,204 9,534 2.53 1,492,888 10,905 2.91 
Time Deposits of $250,000 or More177,826 1,695 3.78 174,028 1,803 4.12 
Other Time Deposits644,598 5,859 3.61 498,767 4,934 3.94 
Total Interest-Bearing Deposits3,163,250 19,248 2.41 2,950,817 19,608 2.64 
Borrowings5,583 — — 109,230 1,177 4.29 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 173 3.43 20,000 173 3.44 
Finance Leases4,956 46 3.68 5,019 47 3.73 
Total Interest-Bearing Liabilities3,193,789 19,467 2.42 3,085,066 21,005 2.71 
Noninterest-Bearing Deposits750,471 721,311 
Other Liabilities42,497 51,316 
Total Liabilities3,986,757 3,857,693 
Stockholders’ Equity413,058 387,904 
Total Liabilities and Stockholders’ Equity$4,399,815 $4,245,597 
Net Interest Income$34,131 $28,438 
Net Interest Spread2.64 %2.12 %
Net Interest Margin3.22 %2.78 %

(1) Includes Nonaccrual Loans.






9



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

Quarter Ended:September 30, 2025June 30, 2025
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks
$200,251 $2,245 4.45 %$145,473 $1,622 4.47 %
Investment Securities:
Fully Taxable509,599 4,066 3.17 496,614 3,790 3.06 
Exempt from Federal Taxes64,481 455 2.80 85,766 561 2.62 
Loans (1)
3,424,784 46,832 5.43 3,415,140 45,600 5.36 
Total Earning Assets (1)
4,199,115 53,598 5.06 4,142,993 51,573 4.99 
Allowance for Credit Losses(34,143)(35,238)
Cash and Due From Banks33,984 29,267 
Other Assets200,859 195,317 
Total Assets$4,399,815 $4,332,339 
Deposits:
Interest-Bearing Checking Accounts$848,622 2,160 1.01 $845,041 1,941 0.92 
Savings Deposits1,492,204 9,534 2.53 1,494,930 9,367 2.51 
Time Deposits of $250,000 or More177,826 1,695 3.78 179,980 1,726 3.85 
Other Time Deposits644,598 5,859 3.61 638,376 5,793 3.64 
Total Interest-Bearing Deposits3,163,250 19,248 2.41 3,158,327 18,827 2.39 
Borrowings5,583 — — 8,601 — — 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 173 3.43 20,000 171 3.43 
Finance Leases4,956 46 3.68 4,978 42 3.38 
Total Interest-Bearing Liabilities3,193,789 19,467 2.42 3,191,906 19,040 2.39 
Noninterest-Bearing Deposits750,471 690,766 
Other Liabilities42,497 43,138 
Total Liabilities3,986,757 3,925,810 
Stockholders’ Equity413,058 406,529 
Total Liabilities and Stockholders’ Equity$4,399,815 $4,332,339 
Net Interest Income$34,131 $32,533 
Net Interest Spread2.64 %2.60 %
Net Interest Margin3.22 %3.15 %

(1) Includes Nonaccrual Loans.














10

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

Year to Date Period Ended:September 30, 2025September 30, 2024
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks$164,114 $5,488 4.47 %$164,208 $6,735 5.48 %
Investment Securities:
Fully Taxable502,075 11,464 3.05 526,181 8,851 2.25 
Exempt from Federal Taxes80,628 1,603 2.66 108,872 1,867 2.29 
Loans (1)
3,415,401 136,982 5.36 3,282,175 126,639 5.15 
Total Earning Assets (1)
4,162,218 155,537 5.00 4,081,436 144,092 4.72 
Allowance for Credit Losses(34,359)(31,340)
Cash and Due From Banks31,598 30,534 
Other Assets193,174 162,194 
Total Assets$4,352,631 $4,242,824 
Deposits:
Interest-Bearing Checking Accounts$844,774 5,904 0.93 $815,933 5,510 0.90 
Savings Deposits1,500,944 28,384 2.53 1,487,005 31,706 2.85 
Time Deposits of $250,000 or More181,291 5,232 3.86 174,668 5,645 4.32 
Other Time Deposits625,557 17,181 3.67 499,881 15,091 4.03 
Total Interest-Bearing Deposits3,152,566 56,701 2.40 2,977,487 57,952 2.60 
 Borrowings12,455 167 1.79 104,257 3,439 4.41 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 513 3.43 20,000 514 3.43 
Finance Leases4,977 135 3.63 5,034 142 3.77 
Total Interest-Bearing Liabilities3,189,998 57,516 2.41 3,106,778 62,047 2.67 
Noninterest-Bearing Deposits710,404 703,948 
Other Liabilities44,203 50,207 
Total Liabilities3,944,605 3,860,933 
Stockholders’ Equity408,026 381,891 
Total Liabilities and Stockholders’ Equity$4,352,631 $4,242,824 
Net Interest Income$98,021 $82,045 
Net Interest Spread2.59 %2.05 %
Net Interest Margin3.15 %2.69 %
(1) Includes Nonaccrual Loans.










11


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

Quarter Ended:9/30/202512/31/2024
Loan Portfolio 
Commercial Loans$170,330 $158,991 
Commercial Real Estate Loans809,696 796,365 
  Subtotal Commercial Loan Portfolio980,026 955,356 
Consumer Loans1,089,233 1,118,981 
Residential Real Estate Loans1,372,750 1,320,204 
Total Loans$3,442,009 $3,394,541 
Allowance for Credit Losses  
Allowance for Credit Losses, Beginning of Quarter$34,191 $31,262 
Loans Charged-off(1,464)(1,333)
Less Recoveries of Loans Previously Charged-off634 815 
Net Loans Charged-off(830)(518)
Provision for Credit Losses815 2,854 
Allowance for Credit Losses, End of Quarter$34,176 $33,598 
Nonperforming Assets  
Nonaccrual Loans$5,615 $20,621 
Loans Past Due 90 or More Days and Accruing685 398 
Loans Restructured and in Compliance with Modified Terms6 20 
Total Nonperforming Loans6,306 21,039 
Repossessed Assets361 382 
Other Real Estate Owned— 76 
Total Nonperforming Assets$6,667 $21,497 
Key Asset Quality Ratios  
Net Loans Charged-off to Average Loans,
   Quarter-to-date Annualized		0.10 %0.06 %
Provision for Credit Losses to Average Loans,
  Quarter-to-date Annualized		0.09 %0.34 %
Allowance for Credit Losses to Period-End Loans0.99 %0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans541.96 %159.69 %
Nonperforming Loans to Period-End Loans0.18 %0.62 %
Nonperforming Assets to Period-End Assets0.15 %0.50 %
Year-to-Date Period Ended:9/30/202512/31/2024
Allowance for Credit Losses 
Allowance for Credit Losses, Beginning of Year$33,598 $31,265 
Loans Charged-off(8,077)(5,895)
Less Recoveries of Loans Previously Charged-off2,227 3,048 
Net Loans Charged-off(5,850)(2,847)
Provision for Credit Losses6,428 5,180 
Allowance for Credit Losses, End of Period$34,176 $33,598 
Key Asset Quality Ratios 
Net Loans Charged-off to Average Loans, Annualized0.23 %0.09 %
Provision for Loan Losses to Average Loans, Annualized0.25 %0.16 %
12