Arrow Reports 1st Quarter Net Income of $6.3 Million, or $0.38 per Share, and Declares 2nd Quarter Dividend of $0.28 per Share

Rhea-AI Summary

Arrow Financial Corporation (AROW) reported Q1 2025 net income of $6.3 million ($0.38 per share), up from $4.5 million ($0.27 per share) in Q4 2024. The quarter was impacted by a $3.75 million specific reserve related to a commercial real estate loan participation and $0.6 million in unification costs. Key highlights include record net interest income of $31.4 million, improved net interest margin to 3.07%, and deposit growth to $4.0 billion. The company declared a quarterly dividend of $0.28 per share payable May 23, 2025. Notable metrics include loan growth of $22 million (2.5% annualized), tangible book value increase to $22.72, and share repurchases of $3.4 million. The bank maintained strong capital ratios with Common Equity Tier 1 at 12.59% and received a 5-Star Superior rating from BauerFinancial for the 72nd consecutive quarter.

Positive

• Net income increased to $6.3 million from $4.5 million in previous quarter
• Record net interest income of $31.4 million, up 5.6% from previous quarter
• Net interest margin improved to 3.07% from 2.83%
• Cost of interest-bearing deposits decreased by 23 bps to 2.41%
• Strong capital ratios with Common Equity Tier 1 at 12.59%

Negative

• $3.75 million specific reserve required for troubled $15 million commercial real estate loan
• $0.6 million in non-core unification costs impacted earnings
• Foreclosure on commercial real estate loan collateral after quarter end
• Increase in net charge-offs to 0.10% from 0.06% in previous quarter

GLENS FALLS, N.Y., May 1, 2025 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS^® – AROW) ("Arrow" or "the Company") announced financial results for the three-month period ended March 31, 2025. Reported net income for the first quarter of 2025 was $6.3 million and fully diluted earnings per share ("EPS") was $0.38, versus $4.5 million and EPS of $0.27 for the fourth quarter of 2024.

The Board of Directors of Arrow declared a quarterly cash dividend of $0.28 per share payable May 23, 2025 to shareholders of record as of May 13, 2025.

The quarter was adversely impacted by the recognition of a specific reserve of $3.75 million ($0.17 per share) related to a $15 million commercial real estate loan participation secured by properties in two office parks in upstate New York, where Arrow is a 22% participant in a $67 million multi-bank lending facility as previously reported in a Form 8-K filed April 16, 2025.

This quarter's results also reflect approximately $0.6 million ($0.03 per share) of non-core unification costs related to Arrow's planned July 2025 system conversion and operational merger of its two banking subsidiaries.

This Earnings Release and related commentary should be read in conjunction with the Company's May 1, 2025 Form 8-K and related First 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: 

"We delivered another quarter of strong margin expansion along with continued loan growth, further improving core profitability during these volatile economic times. We continue to execute on our strategic initiatives for continued growth, including expanding our Corporate Banking Team in the Capital Region of New York state. Our overall credit quality remains extremely strong, despite the recent development in one of our larger commercial credit exposures. We believe this to be an isolated incident as all credit metrics outside of this particular exposure are trending favorably. Furthermore, we are moving closer to finalizing our bank unification efforts to better serve our growing market and drive stronger operating performance under one brand."

First-Quarter Highlights and Key Metrics

• Net Income of $6.3 million (EPS of $0.38)
• Record Net Interest Income of $31.4 million
• Net Interest Margin improved to 3.07% (3.08% FTE¹), up from 2.83% (2.85% FTE) in the prior quarter
• Deposit balances increased to $4.0 billion, resulting in a Loan-to-Deposit ratio of 86.1%
• Cost of interest-bearing deposits decreased by 23 bps in the quarter to 2.41%
• Year-to-date loan growth of approximately $22 million² (2.5% annualized), despite an increase in loan pay-offs and sale activity
• Quarter-end loan exit rates increased to 5.45% at March 31, 2025 vs. 5.40% at December 31, 2024
• Tangible Book Value increased to $22.72
• Repurchased $3.4 million shares (128,047 shares at an average cost of $26.48 per share)
• Increased share repurchase authority by $5.0 million, resulting in a total of $6.6 million available
• Return on Average Assets (ROA) improved to 0.59%, up from 0.41% in the previous quarter
• Excluding the impact of the specific reserve and unification related expenses, ROA was 0.91%

Income Statement

• Net Income: Net income for the first quarter of 2025 was $6.3 million, increasing from $4.5 million in the fourth quarter of 2024.
  • Compared to the prior quarter, net income benefited from an increase of $1.7 million in net interest income and an increase in non-interest income of $3.6 million, partially offset by an increase in the provision for credit losses of $2.2 million and a slight increase in non-interest expense of $207 thousand.
• Net Interest Income: Net interest income for the first quarter of 2025 was $31.4 million, increasing 5.6% from $29.7 million for the fourth quarter of 2024.
  • Total interest and dividend income was $50.4 million for the first quarter of 2025, a decrease from $50.9 million in the fourth quarter of 2024. Interest expense for the first quarter of 2025 was $19.0 million, a decrease from $21.2 million for the fourth quarter of 2024. The decrease in interest expense from the prior quarter was driven primarily by active management of deposit rates, partially offset by changes in deposit composition.
• Net Interest Margin: Net interest margin, on an FTE basis, for the first quarter of 2025 increased to 3.08%, compared to 2.85% for the fourth quarter of 2024. The increase in net interest margin compared to the fourth quarter in 2024 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. Net interest margin is negatively affected by deposits continuing to migrate to higher cost products, such as money market savings and time deposits, while being positively impacted by repricing of higher cost time deposits.

 

	Three Months Ended
	(Dollars in Thousands)
	March 31, 2025		December 31, 2024		March 31, 2024
Interest and Dividend Income	$                 50,366		$                 50,901		$                 46,677
Interest Expense	19,009		21,214		20,222
Net Interest Income	31,357		29,687		26,455
Average Earning Assets(A)	4,143,939		4,167,039		4,085,398
Average Interest-Bearing Liabilities	3,184,196		3,185,215		3,108,093
Yield on Earning Assets(A)	4.93 %		4.86 %		4.60 %
Cost of Interest-Bearing Liabilities	2.42		2.65		2.62
Net Interest Spread	2.51		2.21		1.98
Net Interest Margin	3.07		2.83		2.60
Net Interest Margin - FTE	3.08		2.85		2.62
(A) Includes Nonaccrual Loans.

 

• Provision for Credit Losses: For the first quarter of 2025, the provision for credit losses was $5.0 million compared to $2.9 million in the fourth quarter of 2024. The primary driver of the increase was Arrow's recognition of a $3.75 million specific reserve on a $15 million commercial real estate loan. Other drivers for the provision for credit losses in the first quarter of 2025 were charge-offs, growth in loan balances and changes to the economic forecast factors embedded in the credit loss allowance model. Subsequent to March 31, 2025, the bank group foreclosed on the collateral related to the above referenced commercial real estate loan.
  
  
• Non-Interest Income: Non-interest income for the three months ended March 31, 2025, was $7.8 million, an increase from $4.2 million in the fourth quarter of 2024. The increase from the prior quarter was primarily attributable to the absence of a $3.0 million pre-tax loss related to the investment portfolio repositioning as well as a $0.7 million pre-tax charge related to legacy branding, both recognized in the fourth quarter of 2024.
  
  
• Non-Interest Expense: Non-interest expense for the first quarter of 2025 was $26.0 million, an increase from $25.8 million in the fourth quarter of 2024. The first quarter of 2025 included unification expenses of approximately $0.6 million. 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 management.
  
  
• Provision for Income Taxes: The provision for income taxes and effective tax rate were $1.8 million and 22.4%, for the first quarter of 2025, and $0.8 million and 14.4%, for the fourth quarter of 2024. The increase in the effective tax rate from the fourth quarter of 2024 was primarily attributable to the change in pre-tax income combined with a change 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 March 31, 2025, an increase of $142.5 million, or 3.3%, as compared to December 31, 2024. For the first quarter of 2025, overall growth in the balance sheet was attributable to changes in cash balances, primarily from seasonal municipal and corporate deposits, as well as growth in the loan portfolio. 
  
  
• Investments: Total investments were $553.0 million as of March 31, 2025, a decrease of $17.8 million, or 3.1%, compared to December 31, 2024. The decrease from December 31, 2024 was driven primarily by paydowns and maturities. There were no credit quality issues related to the investment portfolio.
  
  
• Loans³: Total loans were $3.4 billion as of March 31, 2025. Loan growth for the first quarter of 2025 was $22.3 million. Loan growth was primarily driven by an increase in residential real estate 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 $37.8 million as of March 31, 2025, which represented 1.11% of loans outstanding, as compared to $33.6 million, or 0.99%, at December 31, 2024. The increase in the allowance for credit losses was primarily driven by the recognition of the specific reserve of $3.75 million. Excluding the specific reserve, the coverage ratio for the allowance for credit loses was 1.00%. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.10% for the three-month period ended March 31, 2025, as compared to 0.06% for the three-month period ended December 31, 2024. Nonperforming assets were $19.5 million as of March 31, 2025, representing 0.44% of period-end assets, compared to 0.50% at December 31, 2024.
  
  
• Deposits: At March 31, 2025, deposit balances were $4.0 billion, an increase of $140.2 million from December 31, 2024. The increase from December 31, 2024 was primarily attributable to the seasonality of municipal deposits as well as an additional $125.0 million of brokered CDs. The brokered CDs partially replaced previous wholesale funding sources and are part of a cash flow hedge using interest rate swaps to reduce overall funding costs. Please refer to page 7 for further details related to deposits.
  
  
• Capital: Total stockholders' equity was $404.4 million at March 31, 2025, an increase of $3.5 million, or 0.9%, from December 31, 2024. The increase from December 31, 2024 was primarily attributable to net income of $6.3 million and other comprehensive income of $4.9 million offset by dividends of $4.7 million and share repurchases of $3.4 million. Arrow's regulatory capital ratios remain strong. As of March 31, 2025, Arrow's Common Equity Tier 1 Capital Ratio was 12.59% and Total Risk-Based Capital Ratio was 14.48%. 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 72 consecutive quarters, securing its prominent position as an "Exceptional Performance Bank."

 

——————

1 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.

2 Includes both $3.3 million fair value hedge adjustment at March 31, 2025 and $2.2 million fair value hedge adjustment at December 31, 2024.

3 Excludes both $3.3 million fair value hedge adjustment at March 31, 2025 and $2.2 million fair value hedge adjustment at December 31, 2024.

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. Other subsidiaries include North Country Investment Advisers, Inc.

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 news release may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, involving a degree of uncertainty and attendant risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast, explicitly or by implication. Arrow undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This News Release should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2024, and other filings with the SEC.

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts - Unaudited)
		Three Months Ended:
		March 31, 2025		December 31, 2024		March 31, 2024
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans		$            44,550		$            44,703		$            40,376
Interest on Deposits at Banks		1,621		2,880		2,447
Interest and Dividends on Investment Securities:
Fully Taxable		3,608		2,728		3,186
Exempt from Federal Taxes		587		590		668
Total Interest and Dividend Income		50,366		50,901		46,677
INTEREST EXPENSE
Interest-Bearing Checking Accounts		1,803		1,932		1,641
Savings Deposits		9,483		11,144		10,230
Time Deposits over $250,000		1,811		1,815		1,973
Other Time Deposits		5,529		5,906		5,083
Borrowings		167		198		1,076
Junior Subordinated Obligations Issued to   Unconsolidated Subsidiary Trusts		169		172		171
Interest on Financing Leases		47		47		48
Total Interest Expense		19,009		21,214		20,222
NET INTEREST INCOME		31,357		29,687		26,455
Provision for Credit Losses		5,019		2,854		617
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		26,338		26,833		25,838
NON-INTEREST INCOME
Income From Fiduciary Activities		2,535		2,615		2,457
Fees for Other Services to Customers		2,600		2,762		2,543
Insurance Commissions		1,826		1,848		1,682
Net Gain (Loss) on Securities		317		(3,072)		17
Net Gain on Sales of Loans		101		74		4
Other Operating Income		460		—		1,155
Total Non-Interest Income		7,839		4,227		7,858
NON-INTEREST EXPENSE
Salaries and Employee Benefits		13,555		13,332		12,893
Occupancy Expenses, Net		2,022		1,870		1,771
Technology and Equipment Expense		5,087		5,119		4,820
FDIC Assessments		670		664		715
Other Operating Expense		4,711		4,853		3,813
Total Non-Interest Expense		26,045		25,838		24,012
INCOME BEFORE PROVISION FOR INCOME TAXES		8,132		5,222		9,684
Provision for Income Taxes		1,822		752		2,024
NET INCOME		$              6,310		$              4,470		$              7,660
Average Shares Outstanding:
Basic		16,665		16,718		16,865
Diluted		16,673		16,739		16,867
Per Common Share:
Basic Earnings		$                0.38		$                0.26		$                0.45
Diluted Earnings		0.38		0.27		0.45

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)
	March 31, 2025		December 31, 2024
ASSETS
Cash and Due From Banks	$                32,965		$                27,422
Interest-Bearing Deposits at Banks	268,481		127,124
Investment Securities:
Available-for-Sale at Fair Value	445,744		463,111
Held-to-Maturity (Fair Value of $96,335 at March 31, 2025 and $96,586 at December 31, 2024)	97,492		98,261
Equity Securities	5,372		5,055
Other Investments	4,353		4,353
Loans	3,416,868		3,394,541
Allowance for Credit Losses	(37,771)		(33,598)
Net Loans	3,379,097		3,360,943
Premises and Equipment, Net	59,919		59,717
Goodwill	23,789		23,789
Other Intangible Assets, Net	1,954		2,058
Other Assets	129,719		134,515
Total Assets	$          4,448,885		$          4,306,348
LIABILITIES
Noninterest-Bearing Deposits	697,374		702,978
Interest-Bearing Checking Accounts	924,200		810,834
Savings Deposits	1,532,385		1,520,024
Time Deposits over $250,000	182,552		191,962
Other Time Deposits	631,654		602,132
Total Deposits	3,968,165		3,827,930
Borrowings	8,600		8,600
Junior Subordinated Obligations Issued to Unconsolidated   Subsidiary Trusts	20,000		20,000
Finance Leases	4,979		5,005
Other Liabilities	42,732		43,912
Total Liabilities	4,044,476		3,905,447
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at March 31, 2025 and December 31, 2024	—		—
Common Stock, $1 Par Value; 30,000,000 Shares Authorized  (22,066,559 Shares Issued at March 31, 2025 and December 31, 2024)	22,067		22,067
Additional Paid-in Capital	413,469		413,476
Retained Earnings	78,827		77,215
Accumulated Other Comprehensive Loss	(13,520)		(18,453)
Treasury Stock, at Cost (5,397,029 Shares at March 31, 2025 and 5,323,638 Shares at December 31, 2024)	(96,434)		(93,404)
Total Stockholders' Equity	404,409		400,901
Total Liabilities and Stockholders' Equity	$          4,448,885		$          4,306,348

 

Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
Net Income	$         6,310		$        4,470		$         8,975		$         8,604		$        7,660
Share and Per Share Data:
Period End Shares Outstanding	16,670		16,743		16,734		16,723		16,710
Basic Average Shares Outstanding	16,665		16,718		16,710		16,685		16,865
Diluted Average Shares Outstanding	16,673		16,739		16,742		16,709		16,867
Basic Earnings Per Share	$           0.38		$           0.26		$           0.54		$           0.52		$           0.45
Diluted Earnings Per Share	0.38		0.27		0.53		0.52		0.45
Cash Dividend Per Share	0.280		0.280		0.270		0.270		0.270
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks	$     146,023		$    233,469		$     154,937		$    159,336		$    178,452
Investment Securities	591,841		579,107		590,352		644,192		671,105
Loans	3,406,075		3,354,463		3,329,873		3,280,285		3,235,841
Deposits	3,825,124		3,847,691		3,672,128		3,678,957		3,693,325
Other Borrowed Funds	48,375		49,090		134,249		131,537		122,033
Stockholders' Equity	404,394		393,696		387,904		378,256		379,446
Total Assets	4,324,917		4,339,833		4,245,597		4,237,359		4,245,484
Return on Average Assets, annualized	0.59 %		0.41 %		0.84 %		0.82 %		0.73 %
Return on Average Equity, annualized	6.33 %		4.52 %		9.20 %		9.15 %		8.12 %
Return on Average Tangible Equity, annualized 1	6.76 %		4.84 %		9.79 %		9.74 %		8.64 %
Average Earning Assets	$ 4,143,939		$ 4,167,039		$ 4,075,162		$ 4,083,813		$ 4,085,398
Average Paying Liabilities	3,184,196		3,185,215		3,085,066		3,127,417		3,108,093
Interest Income	50,366		50,901		49,443		47,972		46,677
Tax-Equivalent Adjustment 2	155		157		149		163		176
Interest Income, Tax-Equivalent 2	50,521		51,058		49,592		48,135		46,853
Interest Expense	19,009		21,214		21,005		20,820		20,222
Net Interest Income	31,357		29,687		28,438		27,152		26,455
Net Interest Income, Tax-Equivalent 2	31,512		29,844		28,587		27,315		26,631
Net Interest Margin, annualized	3.07 %		2.83 %		2.78 %		2.67 %		2.60 %
Net Interest Margin, Tax-Equivalent, annualized 2	3.08 %		2.85 %		2.79 %		2.69 %		2.62 %
Efficiency Ratio Calculation: 3
Non-Interest Expense	$       26,045		$      25,838		$       24,100		$      23,318		$      24,012
Less: Intangible Asset Amortization	81		89		78		40		41
Net Non-Interest Expense	$       25,964		$      25,749		$       24,022		$      23,278		$      23,971
Net Interest Income, Tax-Equivalent	$       31,512		$      29,844		$       28,587		$      27,315		$      26,631
Non-Interest Income	7,839		4,227		8,133		7,856		7,858
Less: Net Gain(loss) on Securities	317		(3,072)		94		54		17
Net Gross Income	$       39,034		$      37,143		$       36,626		$      35,117		$      34,472
Efficiency Ratio	66.52 %		69.32 %		65.59 %		66.29 %		69.54 %
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)	$     404,409		$    400,901		$     393,311		$    383,018		$    377,986
Book Value per Share	24.26		23.94		23.50		22.90		22.62
Goodwill and Other Intangible Assets, net	25,743		25,847		25,979		22,800		22,891
Tangible Book Value per Share 1	22.72		22.40		21.95		21.54		21.25
Capital Ratios:4
Tier 1 Leverage Ratio	9.61 %		9.60 %		9.78 %		9.74 %		9.63 %
Common Equity Tier 1 Capital Ratio	12.59 %		12.71 %		12.77 %		12.88 %		12.84 %
Tier 1 Risk-Based Capital Ratio	13.23 %		13.35 %		13.41 %		13.53 %		13.50 %
Total Risk-Based Capital Ratio	14.48 %		14.47 %		14.46 %		14.57 %		14.57 %

 

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.
		3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
	Total Stockholders' Equity (GAAP)	$   404,409		$   400,901		$   393,311		$   383,018		$   377,986
	Less:  Goodwill and Other Intangible assets, net	25,743		25,847		25,979		22,800		22,891
	Tangible Equity (Non-GAAP)	$   378,666		$   375,054		$   367,332		$   360,218		$   355,095
	Period End Shares Outstanding	16,670		16,743		16,734		16,723		16,710
	Tangible Book Value per Share (Non-GAAP)	$        22.72		$        22.40		$        21.95		$        21.54		$        21.25
	Net Income	6,310		4,470		8,975		8,604		7,660
	Return on Tangible Equity (Net Income/Tangible Equity - Annualized)	6.76 %		4.84 %		9.79 %		9.74 %		8.64 %
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.
		3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
	Interest Income (GAAP)	$     50,366		$     50,901		$     49,443		$     47,972		$     46,677
	Add:  Tax-Equivalent adjustment      (Non-GAAP)	155		157		149		163		176
	Interest Income - Tax Equivalent      (Non-GAAP)	$     50,521		$     51,058		$     49,592		$     48,135		$     46,853
	Net Interest Income (GAAP)	$     31,357		$     29,687		$     28,438		$     27,152		$     26,455
	Add:  Tax-Equivalent adjustment      (Non-GAAP)	155		157		149		163		176
	Net Interest Income - Tax Equivalent      (Non-GAAP)	$     31,512		$     29,844		$     28,587		$     27,315		$     26,631
	Average Earning Assets	$  4,143,939		$  4,167,039		$  4,075,162		$  4,083,813		$  4,085,398
	Net Interest Margin (Non-GAAP)*	3.08 %		2.85 %		2.79 %		2.69 %		2.62 %
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 March 31, 2025 CET1 ratio listed in the tables (i.e., 12.59%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
		3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
	Total Risk Weighted Assets	$  3,143,547		$  3,126,364		$  3,110,178		$  3,072,922		$  3,049,525
	Common Equity Tier 1 Capital	395,900		397,285		397,122		395,691		391,706
	Common Equity Tier 1 Ratio	12.59 %		12.71 %		12.77 %		12.88 %		12.84 %
* Quarterly ratios have been annualized.

 

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)
Quarter Ended:	March 31, 2025						March 31, 2024
			Interest		Rate				Interest		Rate
	Average		Income/		Earned/		Average		Income/		Earned/
	Balance		Expense		Paid		Balance		Expense		Paid
Interest-Bearing Deposits at Banks	$   146,023		$       1,621		4.50 %		$  178,452		$       2,447		5.52 %
Investment Securities:
Fully Taxable	499,903		3,608		2.93		550,538		3,186		2.33
Exempt from Federal Taxes	91,938		587		2.59		120,567		668		2.23
Loans (1)	3,406,075		44,550		5.30		3,235,841		40,376		5.02
Total Earning Assets (1)	4,143,939		50,366		4.93		4,085,398		46,677		4.60
Allowance for Credit Losses	(33,691)						(31,416)
Cash and Due From Banks	31,515						29,804
Other Assets	183,154						161,698
Total Assets	$  4,324,917						$  4,245,484
Deposits:
Interest-Bearing Checking Accounts	$   840,571		1,803		0.87		$  830,918		1,641		0.79
Savings Deposits	1,515,961		9,483		2.54		1,481,001		10,230		2.78
Time Deposits of $250,000 or More	186,159		1,811		3.95		177,328		1,973		4.47
Other Time Deposits	593,130		5,529		3.78		496,813		5,083		4.11
Total Interest-Bearing Deposits	3,135,821		18,626		2.41		2,986,060		18,927		2.55
Borrowings	23,378		167		2.90		96,984		1,076		4.46
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		169		3.43		20,000		171		3.44
Finance Leases	4,997		47		3.81		5,049		48		3.82
Total Interest-Bearing Liabilities	3,184,196		19,009		2.42		3,108,093		20,222		2.62
Noninterest-Bearing Deposits	689,303						707,265
Other Liabilities	47,024						50,680
Total Liabilities	3,920,523						3,866,038
Stockholders' Equity	404,394						379,446
Total Liabilities and Stockholders' Equity	$  4,324,917						$  4,245,484
Net Interest Income			$     31,357						$     26,455
Net Interest Spread					2.51 %						1.98 %
Net Interest Margin					3.07 %						2.60 %

(1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)
Quarter Ended:	March 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	$   146,023		$       1,621		4.50 %		$  233,469		$       2,880		4.91 %
Investment Securities:
Fully Taxable	499,903		3,608		2.93		484,860		2,728		2.24
Exempt from Federal Taxes	91,938		587		2.59		94,247		590		2.49
Loans (1)	3,406,075		44,550		5.30		3,354,463		44,703		5.30
Total Earning Assets (1)	4,143,939		50,366		4.93		4,167,039		50,901		4.86
Allowance for Credit Losses	(33,691)						(31,529)
Cash and Due From Banks	31,515						30,706
Other Assets	183,154						173,617
Total Assets	$  4,324,917						$  4,339,833
Deposits:
Interest-Bearing Checking Accounts	$   840,571		1,803		0.87		$  802,808		1,932		0.96
Savings Deposits	1,515,961		9,483		2.54		1,567,455		11,144		2.83
Time Deposits of $250,000 or More	186,159		1,811		3.95		183,325		1,815		3.94
Other Time Deposits	593,130		5,529		3.78		582,537		5,906		4.03
Total Interest-Bearing Deposits	3,135,821		18,626		2.41		3,136,125		20,797		2.64
Borrowings	23,378		167		2.90		24,089		198		3.27
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		169		3.43		20,000		172		3.42
Finance Leases	4,997		47		3.81		5,001		47		3.74
Total Interest-Bearing Liabilities	3,184,196		19,009		2.42		3,185,215		21,214		2.65
Noninterest-Bearing Deposits	689,303						711,566
Other Liabilities	47,024						49,356
Total Liabilities	3,920,523						3,946,137
Stockholders' Equity	404,394						393,696
Total Liabilities and Stockholders' Equity	$  4,324,917						$  4,339,833
Net Interest Income			$     31,357						$     29,687
Net Interest Spread					2.51 %						2.21 %
Net Interest Margin					3.07 %						2.83 %

(1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation
Consolidated Financial Information
(Dollars in Thousands - Unaudited)
Quarter Ended:	3/31/2025		12/31/2024
Loan Portfolio
Commercial Loans	$       154,275		$       158,991
Commercial Real Estate Loans	804,015		796,365
Subtotal Commercial Loan Portfolio	958,290		955,356
Consumer Loans	1,118,735		1,118,981
Residential Real Estate Loans	1,339,843		1,320,204
Total Loans	$   3,416,868		$   3,394,541
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter	$         33,598		$         31,262
Loans Charged-off	(1,550)		(1,333)
Less Recoveries of Loans Previously Charged-off	704		815
Net Loans Charged-off	(846)		(518)
Provision for Credit Losses	5,019		2,854
Allowance for Credit Losses, End of Quarter	$         37,771		$         33,598
Nonperforming Assets
Nonaccrual Loans	$         18,612		$         20,621
Loans Past Due 90 or More Days and Accruing	405		398
Loans Restructured and in Compliance with Modified Terms	16		20
Total Nonperforming Loans	19,033		21,039
Repossessed Assets	426		382
Other Real Estate Owned	—		76
Total Nonperforming Assets	$         19,459		$         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	0.60 %		0.34 %
Allowance for Credit Losses to Period-End Loans	1.11 %		0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans	198.45 %		159.69 %
Nonperforming Loans to Period-End Loans	0.56 %		0.62 %
Nonperforming Assets to Period-End Assets	0.44 %		0.50 %

 

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SOURCE Arrow Financial Corporation

FAQ

What was Arrow Financial's (AROW) earnings per share in Q1 2025?

Arrow Financial reported earnings of $0.38 per share in Q1 2025, compared to $0.27 per share in Q4 2024.

What is the dividend amount and payment date for Arrow Financial (AROW)?

Arrow Financial declared a quarterly cash dividend of $0.28 per share, payable May 23, 2025, to shareholders of record as of May 13, 2025.

How much was Arrow Financial's (AROW) net interest income in Q1 2025?

Arrow Financial reported record net interest income of $31.4 million in Q1 2025, a 5.6% increase from $29.7 million in Q4 2024.

What was the impact of the commercial real estate loan issue on Arrow Financial's (AROW) Q1 2025 results?

The commercial real estate loan issue required a specific reserve of $3.75 million ($0.17 per share) related to a $15 million loan participation in two office parks in upstate New York.

What was Arrow Financial's (AROW) net interest margin in Q1 2025?

Arrow Financial's net interest margin improved to 3.07% (3.08% FTE) in Q1 2025, up from 2.83% (2.85% FTE) in the previous quarter.