0000717538FALSE00007175382025-04-302025-04-30


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report: April 30, 2025
(Date of earliest event reported)

ARROW FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
New York0-1250722-2448962
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
250 Glen StreetGlens FallsNew York12801
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:518 745-1000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, Par Value $1.00 per shareAROWNASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act☐






Item 2.02.     Results of Operations and Financial Condition.

On May 1, 2025, Arrow Financial Corporation (the "Company") issued a press release containing unaudited financial information and accompanying discussion for the quarter ended March 31, 2025.  A copy of this press release is furnished as Exhibit 99.1 to this report on Form 8-K.

Item 7.01.     Regulation FD Disclosure.

On May 1, 2025, the Company made available certain presentation material (the "First Quarter 2025 Investor Presentation"), which includes among other things, a review of financial results and trends through the period ended March 31, 2025. The furnished First Quarter 2025 Investor Presentation should be read in conjunction with our Earnings Release for the quarter ended March 31, 2025.
A copy of the presentation material is included as Exhibit 99.2 to this current report on Form 8-K and is incorporated herein by reference.

The information furnished under this Report, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.

Item 8.01.     Other Events.
On April 30, 2025, the Board of Directors (the “Board”) of the Company declared a quarterly cash dividend of $0.28 per share payable May 23, 2025 to shareholders of record on May 13, 2025.

Additionally on April 30, 2025, the Board authorized management, in its discretion, to repurchase from time to time, in the open market or in privately negotiated transactions, up to an additional $5 million of Arrow common stock.

Item 9.01.    Financial Statements and Exhibits.

Exhibits:

Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
    



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




ARROW FINANCIAL CORPORATION
                       Registrant
Date:May 1, 2025/s/ Penko Ivanov
 Penko Ivanov
Chief Financial Officer



newsreleaselogo20250101.jpg
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 1st Quarter Net Income of $6.3 Million, or $0.38 per Share, and Declares 2nd Quarter Dividend of $0.28 per Share

GLENS FALLS, N.Y. (May 1, 2025) – 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
1

•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.

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.
2

Three Months Ended
(Dollars in Thousands)
March 31, 2025December 31, 2024March 31, 2024
Interest and Dividend Income$50,366 $50,901 $46,677 
Interest Expense19,009 21,214 20,222 
Net Interest Income31,357 29,687 26,455 
Average Earning Assets(A)
4,143,939 4,167,039 4,085,398 
Average Interest-Bearing Liabilities3,184,196 3,185,215 3,108,093 
Yield on Earning Assets(A)
4.93 %4.86 %4.60 %
Cost of Interest-Bearing Liabilities2.42 2.65 2.62 
Net Interest Spread2.51 2.21 1.98 
Net Interest Margin3.07 2.83 2.60 
Net Interest Margin - FTE3.08 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.

3

•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.”
——————

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
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.
4

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.
5


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 Banks1,621 2,880 2,447 
Interest and Dividends on Investment Securities:
Fully Taxable3,608 2,728 3,186 
Exempt from Federal Taxes587 590 668 
Total Interest and Dividend Income50,366 50,901 46,677 
INTEREST EXPENSE  
Interest-Bearing Checking Accounts1,803 1,932 1,641 
Savings Deposits9,483 11,144 10,230 
Time Deposits over $250,0001,811 1,815 1,973 
Other Time Deposits5,529 5,906 5,083 
Borrowings167 198 1,076 
Junior Subordinated Obligations Issued to
  Unconsolidated Subsidiary Trusts		169 172 171 
Interest on Financing Leases47 47 48 
Total Interest Expense19,009 21,214 20,222 
NET INTEREST INCOME31,357 29,687 26,455 
Provision for Credit Losses5,019 2,854 617 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES26,338 26,833 25,838 
NON-INTEREST INCOME  
Income From Fiduciary Activities2,535 2,615 2,457 
Fees for Other Services to Customers2,600 2,762 2,543 
Insurance Commissions1,826 1,848 1,682 
Net Gain (Loss) on Securities 317 (3,072)17 
Net Gain on Sales of Loans101 74 4 
Other Operating Income460 — 1,155 
Total Non-Interest Income7,839 4,227 7,858 
NON-INTEREST EXPENSE  
Salaries and Employee Benefits13,555 13,332 12,893 
Occupancy Expenses, Net2,022 1,870 1,771 
Technology and Equipment Expense5,087 5,119 4,820 
FDIC Assessments670 664 715 
Other Operating Expense4,711 4,853 3,813 
Total Non-Interest Expense26,045 25,838 24,012 
INCOME BEFORE PROVISION FOR INCOME TAXES8,132 5,222 9,684 
Provision for Income Taxes1,822 752 2,024 
NET INCOME$6,310 $4,470 $7,660 
Average Shares Outstanding:  
Basic16,665 16,718 16,865 
Diluted16,673 16,739 16,867 
Per Common Share:  
Basic Earnings$0.38 $0.26 $0.45 
Diluted Earnings0.38 0.27 0.45 

6


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 Banks268,481 127,124 
Investment Securities:
Available-for-Sale at Fair Value445,744 463,111 
Held-to-Maturity (Fair Value of $96,335 at March 31, 2025 and $96,586 at December 31, 2024)
97,492 98,261 
Equity Securities5,372 5,055 
Other Investments4,353 4,353 
Loans3,416,868 3,394,541 
Allowance for Credit Losses(37,771)(33,598)
Net Loans3,379,097 3,360,943 
Premises and Equipment, Net59,919 59,717 
Goodwill23,789 23,789 
Other Intangible Assets, Net1,954 2,058 
Other Assets129,719 134,515 
Total Assets$4,448,885 $4,306,348 
LIABILITIES 
Noninterest-Bearing Deposits697,374 702,978 
Interest-Bearing Checking Accounts924,200 810,834 
Savings Deposits1,532,385 1,520,024 
Time Deposits over $250,000182,552 191,962 
Other Time Deposits631,654 602,132 
Total Deposits3,968,165 3,827,930 
Borrowings8,600 8,600 
Junior Subordinated Obligations Issued to Unconsolidated
  Subsidiary Trusts		20,000 20,000 
Finance Leases4,979 5,005 
Other Liabilities42,732 43,912 
Total Liabilities4,044,476 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 Capital413,469 413,476 
Retained Earnings78,827 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’ Equity404,409 400,901 
Total Liabilities and Stockholders’ Equity$4,448,885 $4,306,348 
7


Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended3/31/202512/31/20249/30/20246/30/20243/31/2024
Net Income$6,310 $4,470 $8,975 $8,604 $7,660 
     
Share and Per Share Data:    
Period End Shares Outstanding16,670 16,743 16,734 16,723 16,710 
Basic Average Shares Outstanding16,665 16,718 16,710 16,685 16,865 
Diluted Average Shares Outstanding16,673 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 Share0.38 0.27 0.53 0.52 0.45 
Cash Dividend Per Share0.280 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 Securities591,841 579,107 590,352 644,192 671,105 
  Loans3,406,075 3,354,463 3,329,873 3,280,285 3,235,841 
  Deposits3,825,124 3,847,691 3,672,128 3,678,957 3,693,325 
  Other Borrowed Funds48,375 49,090 134,249 131,537 122,033 
  Stockholders' Equity
404,394 393,696 387,904 378,256 379,446 
  Total Assets4,324,917 4,339,833 4,245,597 4,237,359 4,245,484 
Return on Average Assets, annualized0.59 %0.41 %0.84 %0.82 %0.73 %
Return on Average Equity, annualized6.33 %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 Liabilities3,184,196 3,185,215 3,085,066 3,127,417 3,108,093 
Interest Income50,366 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 Expense19,009 21,214 21,005 20,820 20,222 
Net Interest Income31,357 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, annualized3.07 %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 Amortization81 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 Income7,839 4,227 8,133 7,856 7,858 
Less: Net Gain(loss) on Securities317 (3,072)94 54 17 
Net Gross Income$39,034 $37,143 $36,626 $35,117 $34,472 
Efficiency Ratio66.52 %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, net25,743 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 Ratio9.61 %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 Ratio13.23 %13.35 %13.41 %13.53 %13.50 %
Total Risk-Based Capital Ratio14.48 %14.47 %14.46 %14.57 %14.57 %


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.
3/31/202512/31/20249/30/20246/30/20243/31/2024
Total Stockholders' Equity (GAAP)$404,409 $400,901 $393,311 $383,018 $377,986 
Less: Goodwill and Other Intangible assets, net25,743 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 Outstanding16,670 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 Income6,310 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.
3/31/202512/31/20249/30/20246/30/20243/31/2024
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%).
3/31/202512/31/20249/30/20246/30/20243/31/2024
Total Risk Weighted Assets$3,143,547 $3,126,364 $3,110,178 $3,072,922 $3,049,525 
Common Equity Tier 1 Capital395,900 397,285 397,122 395,691 391,706 
Common Equity Tier 1 Ratio12.59 %12.71 %12.77 %12.88 %12.84 %
* Quarterly ratios have been annualized.

9


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

Quarter Ended:March 31, 2025March 31, 2024
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Bearing Deposits at Banks$146,023 $1,621 4.50 %$178,452 $2,447 5.52 %
Investment Securities:
Fully Taxable499,903 3,608 2.93 550,538 3,186 2.33 
Exempt from Federal Taxes91,938 587 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 Banks31,515 29,804 
Other Assets183,154 161,698 
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 Deposits1,515,961 9,483 2.54 1,481,001 10,230 2.78 
Time Deposits of $250,000 or More186,159 1,811 3.95 177,328 1,973 4.47 
Other Time Deposits593,130 5,529 3.78 496,813 5,083 4.11 
Total Interest-Bearing Deposits3,135,821 18,626 2.41 2,986,060 18,927 2.55 
Borrowings23,378 167 2.90 96,984 1,076 4.46 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 169 3.43 20,000 171 3.44 
Finance Leases4,997 47 3.81 5,049 48 3.82 
Total Interest-Bearing Liabilities3,184,196 19,009 2.42 3,108,093 20,222 2.62 
Noninterest-Bearing Deposits689,303 707,265 
Other Liabilities47,024 50,680 
Total Liabilities3,920,523 3,866,038 
Stockholders’ Equity404,394 379,446 
Total Liabilities and Stockholders’ Equity$4,324,917 $4,245,484 
Net Interest Income$31,357 $26,455 
Net Interest Spread2.51 %1.98 %
Net Interest Margin3.07 %2.60 %

(1) Includes Nonaccrual Loans.






10



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



Quarter Ended:March 31, 2025December 31, 2024
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Bearing Deposits at Banks$146,023 $1,621 4.50 %$233,469 $2,880 4.91 %
Investment Securities:
Fully Taxable499,903 3,608 2.93 484,860 2,728 2.24 
Exempt from Federal Taxes91,938 587 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 Banks31,515 30,706 
Other Assets183,154 173,617 
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 Deposits1,515,961 9,483 2.54 1,567,455 11,144 2.83 
Time Deposits of $250,000 or More186,159 1,811 3.95 183,325 1,815 3.94 
Other Time Deposits593,130 5,529 3.78 582,537 5,906 4.03 
Total Interest-Bearing Deposits3,135,821 18,626 2.41 3,136,125 20,797 2.64 
Borrowings23,378 167 2.90 24,089 198 3.27 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts20,000 169 3.43 20,000 172 3.42 
Finance Leases4,997 47 3.81 5,001 47 3.74 
Total Interest-Bearing Liabilities3,184,196 19,009 2.42 3,185,215 21,214 2.65 
Noninterest-Bearing Deposits689,303 711,566 
Other Liabilities47,024 49,356 
Total Liabilities3,920,523 3,946,137 
Stockholders’ Equity404,394 393,696 
Total Liabilities and Stockholders’ Equity$4,324,917 $4,339,833 
Net Interest Income$31,357 $29,687 
Net Interest Spread2.51 %2.21 %
Net Interest Margin3.07 %2.83 %

(1) Includes Nonaccrual Loans.






11


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

Quarter Ended:3/31/202512/31/2024
Loan Portfolio 
Commercial Loans$154,275 $158,991 
Commercial Real Estate Loans804,015 796,365 
  Subtotal Commercial Loan Portfolio958,290 955,356 
Consumer Loans1,118,735 1,118,981 
Residential Real Estate Loans1,339,843 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-off704 815 
Net Loans Charged-off(846)(518)
Provision for Credit Losses5,019 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 Accruing405 398 
Loans Restructured and in Compliance with Modified Terms16 20 
Total Nonperforming Loans19,033 21,039 
Repossessed Assets426 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 Loans1.11 %0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans198.45 %159.69 %
Nonperforming Loans to Period-End Loans0.56 %0.62 %
Nonperforming Assets to Period-End Assets0.44 %0.50 %
12
1Q 2025 Investor Presentation May 1, 2025

 
2 Safe Harbor This presentation may contain certain forward-looking statements about Arrow Financial Corporation (“Arrow” or the “Company”). Forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the banking industry or securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged. We are not obligated to revise or update these statements to reflect unanticipated events. This document should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 10-K”), other filings with the SEC, and the first quarter 2025 earnings release issued May 1, 2025 (the “1Q Earnings Release”).

 
3 Table of Contents • 1Q 2025 Results and Performance Metrics • Non-Interest Income/Expense • Loans • Deposits/Funding Sources • Credit Quality • Investments • Capital Actions & Strategy • Overview and History

 
1Q 2025 Results

 
5 Highlights  Net Income of $6.3 million (EPS of $0.38) • Includes non-core unification related expenses of $0.6M ($0.03/share)  Record Net Interest Income of $31.4 million  FTE NIM of 3.08% vs. 2.85% for the 4th quarter of 2024 • Cost of interest-bearing deposits decreased by 23 bps in the quarter  Loan growth ~$22M (2.5% annualized), despite increase in pay-offs / loan sale activity • Full-year 2025 loan growth expected to be low single digits  Repurchased $3.4 million shares (128,047 shares at an avg. cost of $26.48 per share)  Tangible Book Value of $22.72/share – increase of $0.32/share from year-end  Return on Average Assets (ROA) improved to 0.59%, up from 0.41% in the previous quarter  Excluding specific reserve and non-core unification related expenses, ROA was 0.91% Headwinds  CRE participation resulting in $3.75M specific reserve ($0.17/share); 8-K – filed on 4/16/25 • Allowance for credit losses (ACL) coverage ratio to 1.11 (1.00 excluding specific reserve) Other  In April 2025, increased share repurchase authority by $5.0M; total availability of $6.6M  Added Director of Wealth Management with focus on growth (organic and M&A) Financial information provided in this document is unaudited. Please refer to the 1Q25 Earnings Release for a reconciliation of any non-GAAP measures.

 
6 1Q 2025 – Discrete Items ($ in Millions, except EPS) Pre-Tax $ After-Tax $ EPS ROA Reported Income 8.13 6.31 0.38$ 0.59% Non-Core Items Unification Expenses 0.63 0.49 0.03$ 0.05% Core Income 8.76 6.80 0.41$ 0.64% 1Q 2025 Discrete Items Commercial Loan Specific Reserve 3.75 2.91 0.17$ 0.27% Core Income excl. Specific Reserve 12.51 9.71 0.58$ 0.91% 1Q25

 
7 Investment Rationale • Continued expansion of Net Interest Margin • ROA on path to return to/exceed 1% • Looking for M&A Opportunities • Absent M&A, committed to Return of Capital to Investors  Share repurchases (subject to Price/TBV target)  Potential dividend increase in 2H 2025 • Focus on Diversified Revenue Sources  Core Banking (including expansion of loan sale activity resumed in 2H24)  Wealth Management  Insurance • Tailwinds  Liability Sensitive Balance Sheet (one or more rate cuts expected)  Positive Core Operating Leverage; non-core items in rear-view mirror or winding down (unification)

 
8 1Q 2025 Consolidated Financial Statements 1 Variances are rounded based on actual whole dollar amounts 2 Pre-tax, pre-provision net revenue per share is a non-GAAP metric and excludes provision for loan losses and income tax expense UNAUDITED Dollars in millions, except per share data Linked Quarter Income Statement 1Q25 4Q24 Fav/(Unfav) Var1 Total Interest Income $ 50.4 $ 50.9 (0.5) Total Interest Expense 19.0 21.2 2.2 Net Interest Income 31.4 29.7 1.7 Non-Interest Income 7.8 4.2 3.6 Non-Interest Expense 26.0 25.8 (0.2) Pre-Tax, Pre-Provision Net Revenue2 $ 13.2 $ 8.1 5.1 Provision for Credit Losses $ 5.0 $ 2.9 (2.1) Pre-Tax Income $ 8.1 $ 5.2 2.9 Income Tax Expense $ 1.8 $ 0.7 (1.1) Net Income $ 6.3 $ 4.5 1.8 EPS $ 0.38 $ 0.27 0.11 Balance Sheet 1Q25 4Q24 1Q25 vs 4Q24 Cash & Cash Equivalents $ 301.4 $ 154.5 146.9 Investment Securities 553.0 570.8 (17.8) Loans Receivable, net 3,379.1 3,360.9 18.2 All Other Assets 215.4 220.1 (4.7) Total Assets $ 4,448.9 $ 4,306.3 142.6 Total Deposits $ 3,968.2 $ 3,827.9 140.3 Total Borrowings 33.6 33.6 (0.0) Other Liabilities 42.7 43.9 (1.2) Total Liabilities $ 4,044.5 $ 3,905.4 139.1 Equity $ 404.4 $ 400.9 3.5 Total Liabilities & Equity $ 4,448.9 $ 4,306.3 142.6

 
9 Net Interest Margin 1 1Yield includes the impact of deferred fees and amortization of loan origination costs 2.98% 2.63% 2.55% 2.55% 2.62% 2.69% 2.79% 2.85% 3.08% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 All NIM for 2024 and beyond presented as FTE 2.67% 2.62% 2.69% 2.79% 2.85% 3.08% 4.62% 5.01% 5.17% 5.27% 5.30% 5.30% 1.43% 2.06% 2.12% 2.12% 2.15% 1.96% 2023 1Q24 2Q24 3Q24 4Q24 1Q25 NIM Average Loan Yield for the Period Shown Cost of Deposits Strong NIM expansion in Q1 – further expansion expected …but moderating absent additional rate cuts

 
10 YTD 2025 EPS $ 0.38 FTE Net Interest Margin 3.08% Profitability Net Revenue $39.2 million Return on Average Assets (ROA) 0.59% Return on Average Equity (ROE) 6.33% $3.4 billion of gross loans 86.1% loan-to-deposit ratio Balance Sheet $4.0 billion of deposits 6.94% wholesale funding ratio 1.11% Allowance for Credit Losses (ACL) 0% digital deposits $22.72 Fully Diluted Tangible Book Value per Share Capital 8.56% Tangible Common Equity (TCE) Ratio 2025 Reported Results & Key Metrics Specific Reserve impacted ACL by 11bps and TCE by 6bps

 
11 Performance Trends $2.41 $2.92 $2.86 $1.77 $2.05 $0.38 2020 2021 2022 2023 2024 1Q25 Reported EPS $1.77 $18.32 $20.42 $19.37 $21.06 $22.40 $22.72 2020 2021 2022 2023 2024 1Q25 Fully Diluted Tangible Book Value 12.77% 14.09% 13.55% 8.29% 8.93% 6.33% 2020 2021 2022 2023 2024 1Q25 ROE (Annualized) 1.17% 1.28% 1.21% 0.74% 0.81% 0.59% 2020 2021 2022 2023 2024 1Q25 ROA (Annualized) 2024 included several noncore items - bank unification charges, loss on sale of AFS securities repositioning, acquisition-related expenses and carryover expenses related to the prior SEC filing delays History of strong earnings and performance metrics 1 7.72% 0.70% 1 1 1 1

 
Non-Interest Income/Expense

 
13 1Q 2025 Non-Interest Income • Non-core items impacting “Other Operating Income” in 4Q24 versus 1Q25:  $3.0M loss on securities sale repositioning and $0.7M write-off related to legacy branding items • Wealth Management assets under management (AUM) decreased by ~$71M in 1Q25  Net account activity – new business less closed accounts – increased AUM by ~$21.5M  Market performance decreased AUM by ~$92.5M • Insurance revenue up YoY due to rising premiums and prior year A&B acquisition  100% retention of acquired A&B book of business through 1Q25 Dollars in thousands March 31, 2025 December 31, 2024 March 31, 2024 Fees for Other Services to Customers $ 2,600 $ 2,762 $ 2,543 Fiduciary Activities/Wealth Management 2,535 2,615 2,457 Insurance Commissions 1,826 1,848 1,682 Other Operating Income 878 (2,998) 1,176 Total Non-Interest Income $ 7,839 $ 4,227 $ 7,858 Three Months Ended

 
14 1Q 2025 Non-Interest Expense • 1Q 2025 included unification expenses of ~$600k • Unification expenses were primarily comprised of project management (legal & professional) and information technology costs related to the planned July 2025 system conversion • Legal and professional expenses also impacted by timing of audit services performed Dollars in thousands March 31, 2025 December 31, 2024 March 31, 2024 Compensation & Benefits $ 13,555 $ 13,332 $ 12,893 Occupancy & Equipment 2,022 1,870 1,771 Data Processing & Technology 5,087 5,119 4,820 Advertising & Contributions 376 578 205 Legal & Professional 2,007 1,526 2,210 FDIC Assessment 670 664 715 Fraud Expenses 387 130 50 All Other Expenses 1,941 2,619 1,348 Total Non-Interest Expense $ 26,045 $ 25,838 $ 24,012 Three Months Ended

 
15 Operating Expenses — Efficiency Trends 52.8% 54.2% 54.3% 68.8% 67.7% 66.5% 2020 2021 2022 2023 2024 1Q 2025 2020 2021 2022 2023 2024 1Q 2025 • 2023 impacted by margin compression and elevated expenses (audit, professional, legal) due to the prior SEC filing delays • 2024 negatively impacted by the non-core items noted on page 11 and overall higher costs due to investments in people and infrastructure to support growth, control and compliance initiatives; starting to benefit from margin expansion • Excluding non-core items noted on page 11, 2024 Efficiency Ratio would be ~65.9% • Excluding unification expenses in 1Q25, Efficiency Ratio would be ~64.9%

 
Loans

 
17 Loan Portfolio Composition Commercial (C&I)1 10.3% Commercial Real Estate (CRE) 17.7% Consumer 32.8% Residential Real Estate (RRE) 39.2% • No single relationship represents more than ~1.75% of total loans as of March 31, 2025 • CRE concentration ratio of ~135% of risk-based capital • CRE loans not in major metropolitan areas • C&I portfolio can be a source of deposit growth Total Loan Portfolio ~ $3.4 billion 1Commercial (C&I) includes owner-occupied real estate loans. RRE and total loans do not include fair value (“FV”) hedge mark of $3.3M in 1Q25.

 
18 Loan Balances $316 $350 $357 $359 $353 $442 $497 $544 $596 $606 $921 $1,065 $1,112 $1,119 $1,119 $946 $1,071 $1,194 $1,318 $1,336 2021 2022 2023 2024 1Q 2025 Residential Real Estate (RRE) Consumer Commercial Real Estate (CRE) Commercial (C&I) $2,624 $2,983 $3,207 $3,392 $3,414 Dollars in millions Loan Growth Across All Portfolios Balances exclude all Paycheck Protection Plan loans. CRE excludes owner-occupied real estate loans. Owner-occupied real estate loans shown as part of the C&I portfolio. RRE and total loans do not include FV hedge mark of $5.8M, $2.2M, and $3.3M in 2023, 2024, and 2025, respectively. YTD loan growth of ~$22M or 2.5% (annualized) ~8.9% CAGR

 
19 • Indirect loan rates continue positive trajectory – current average origination rate(s) still above exit rate • C&I and CRE rates are affected by the variability of volume and repricing • RRE rates trending higher despite increased loan sales from current originations Loan Exit Rate Trends 1 Loan exit rate is the point in time rate in effect at the end of the reporting period 1 1Q24 2Q24 3Q24 4Q24 1Q25 Consumer 5.70% 5.99% 6.19% 6.32% 6.44% Commercial Real Estate 5.34% 5.38% 5.36% 5.31% 5.32% C&I 5.14% 5.27% 5.36% 5.36% 5.37% Residential Real Estate 4.41% 4.51% 4.61% 4.66% 4.70% Total Loans 5.14% 5.25% 5.35% 5.40% 5.45%

 
20 Loan Yields $2.67 $2.74 $2.85 $2.93 $2.98 $3.01 $3.07 $3.14 $3.21 $3.26 $3.32 $3.33 $3.39 $3.41 3.82% 3.90% 3.85% 4.09% 4.13% 4.32% 4.57% 4.70% 4.86% 5.02% 5.17% 5.27% 5.30% 5.30% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Loan Balance Average Loan Portfolio Yield for the Periods Shown Dollars in billions Pre 2021 4.66% 2021 3.80% 2022 4.61% 2023 6.66% 2024 7.13% 2025 7.02% Rate by Vintage ~43% of balances are 2023-2025 vintages 1Yield includes the impact of deferred fees and loan origination costs amortization Portfolio exit rate was 5.45% as of March 31, 2025 1 1

 
21 Consumer Loan Portfolio $921 $977 $1,031 $1,056 $1,065 $1,073 $1,088 $1,108 $1,112 $1,126 $1,139 $1,120 $1,119 $1,119 3.87% 3.84% 3.83% 4.10% 4.02% 4.26% 4.61% 4.83% 5.11% 5.36% 5.61% 5.79% 6.08% 6.06% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Period-End Loan Balance Average Loan Portfolio Yield for the Period Shown Dollars in millions • ~99.6% of the portfolio are collateralized auto loans; only $4 million in unsecured personal loans • Auto loans sourced through a network of >490 dealers in New York and Vermont with customers extending beyond those states • Loans are underwritten/credit scored by Arrow • Nearly 100% of auto loans are fully amortizing, fixed-rate loans • >73% of auto loan balances have customers with FICO scores >700 • Average portfolio FICO score is 741; Average debt to income ratio ~31%; average LTV is 88% • Less than 5% of indirect loans have FICO scores <620 • Annual losses over last 5 years were 9-20 bps • ~26% new, ~74% used vehicles exposure 2 1Yield includes the impact of deferred fees and loan origination costs amortization 2 Based on MSRP or used National Automobile Dealers Association (NADA) retail value at time of origination 1 Portfolio rates at March 31, 2025 - 6.44% Average origination rate for 1Q25 - 7.05% Rate excludes the impact of deferred fees/loan origination costs ~$35M of portfolio turns over each month

 
22 Commercial Real Estate Portfolio $442 $441 $455 $468 $497 $507 $519 $529 $543 $555 $561 $562 $596 $606 4.90% 5.08% 5.19% 4.88% 5.07% 5.18% 5.25% 5.18% 5.15% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Period-End Loan Balance Average Loan Portfolio Yield for the Period Shown Dollars in millions • CRE excludes owner-occupied real estate loans • CRE loans extended to businesses / borrowers primarily located in our regional market area • No CRE exposure to large metropolitan areas – e.g., no NYC exposure • As of March 31, 2025: – ~$184 million, or ~30%, of CRE loans are variable- rate loans or are fixed-rate loans that reprice within 12 months – Non-owner occupied Office exposure accounted for ~10% of CRE and <2% of total loans – Non-owner occupied Retail exposure accounted for ~13% of CRE and ~2% of total loans outstanding – Total Hotels and Motels exposure accounted for ~24% of CRE and ~4% of total loans outstanding – The majority of the remaining CRE exposure is comprised of multi-family and other residential investment properties – Loan participations make up ~28% of portfolio – Average loan participation size at origination ~$2.5M 1 Yield includes the impact of deferred fees and loan origination costs amortization 1 Portfolio rates at March 31, 2025 - 5.32% Rate excludes the impact of deferred fees/loan origination costs

 
23 C&I Portfolio $316 $334 $346 $350 $350 $344 $352 $354 $359 $358 $360 $365 $359 $353 4.35% 4.57% 4.89% 5.38% 5.53% 5.66% 5.81% 5.88% 5.71% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Period-End Loan Balance Average Loan Portfolio Yield for the Period Shown Dollars in millions • C&I includes owner-occupied real estate loans • C&I loans extended to businesses/ borrowers primarily located in our regional market area • C&I portfolio a potential source for deposit acquisition • As of March 31, 2025: • ~$51 million, or ~14%, of C&I loans are either variable-rate loans or fixed-rate loans that reprice within 12 months 1Yield includes the impact of deferred fees and loan origination costs amortization 1 Portfolio rates reflect pricing discipline 1Q25 exit rates at 5.37% vs 4Q24 at 5.36% Rate excludes the impact of deferred fees/loan origination costs 1Q25 balances and yields impacted by pay-off activity

 
24 Residential Real Estate Loans $946 $967 $1,012 $1,051 $1,071 $1,081 $1,111 $1,148 $1,194 $1,218 $1,255 $1,287 $1,318 $1,336 3.73% 3.71% 3.70% 3.78% 3.80% 4.10% 4.17% 4.25% 4.52% 4.57% 4.67% 4.77% 4.66% 4.71% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Period-End Loan Balance Average Loan Portfolio Yield for the Period Shown Dollars in millions • RRE loan balances exclude FV hedge mark • One-to-four family RRE secured by first or second mortgages on residences and home equity lines located in our market area • LTV generally does not exceed 80% at time of origination (lower of purchase price or appraised value) • Loans exceeding 80% LTV at origination require private mortgage insurance or other guarantees • ~ $39MM, or 3%, of RRE loan portfolio is for construction purposes • ~9% of the portfolio are home equity lines • As of March 31, 2025: • ~$113 million, or ~8%, of RRE loans are either variable-rate loans or fixed-rate loans that reprice within 12 months 1Yield includes the impact of deferred fees and loan origination costs amortization. 1 As of March 31, 2025, the average rate in the Residential Mortgage portfolio was ~4.48% and the Home Equity Line portfolio rate was ~6.90%, resulting in overall portfolio rate of ~4.70% Rates exclude the impact of deferred fees/loan origination costs

 
Deposits/Funding Sources

 
26 Deposit Balances – Excl. Brokered CDs 27.0% 27.2% 28.0% 26.4% 24.3% 23.3% 22.7% 25.2% 48.7% 49.5% 49.3% 48.4% 2022 2023 2024 1Q 2025 Non-Municipal Municipal Business Dollars in billions $3.50 $3.51 $3.56 $3.67 1Q 2025 deposit balances reflect seasonal surge of municipal deposits

 
27 Deposit Balances – Excl. Brokered CDs 23.9% 21.5% 19.8% 19.0% 28.5% 22.8% 22.8% 25.2% 41.6% 41.8% 42.7% 41.8% 6.0% 13.9% 14.7% 14.0% 2022 2023 2024 1Q 2025 Deposit Balances Time Deposits Savings Deposits Interest-Bearing Checking Noninterest-Bearing Dollars in billions $3.50 $3.51 $3.56 $3.67 Interest-bearing checking reflects the impact of seasonal municipal deposits

 
28 Funding Sources and 1Q 2025 Exit Rates • In mid-February, executed a new $125M brokered CD tied to a 2-year swap with an all-in cost of ~3.3% • Retail CD pricing (6, 14 and 23-month offerings) lower than the average maturing CD specials • Approximately $150M of CDs maturing/repricing by end of 2Q25 Dollars in millions Balance Rate Balance Rate Balance Rate Balance Rate Demand (Non-Interest Bearing) $ 295 0.00% $ 396 0.00% $ 7 0.00% $ 697 0.00% Interest Bearing Checking 325 0.08% 259 2.95% 340 0.44% 924 1.02% Savings and Money Market 731 1.28% 272 3.06% 530 3.98% 1,532 2.53% Time Deposits 424 3.51% 42 3.22% 48 3.06% 514 3.44% Core Deposits $ 1,774 1.38% $ 969 1.79% $ 925 2.60% $ 3,668 1.80% Brokered CDs - Net of Swap Effect 300 3.95% Total Deposits $ 1,774 1.38% $ 969 1.79% $ 925 2.60% $ 3,968 1.96% Other Borrowings 14 1.35% Junior Subordinated Obligations - TRUPS 20 3.43% Total Deposits and Borrowings $ 1,774 1.38% $ 969 1.79% $ 925 2.60% $ 4,002 1.96% Consumer Business Municipal Total

 
29 Core Deposit Analysis Balance Exit Rate Balance Exit Rate Balance Exit Rate Demand (Non-Interest Bearing) $697 0.00% $703 0.00% -$6 0.00% Interest Bearing Checking $924 1.02% $811 1.12% $113 -0.10% Savings and Money Market $1,532 2.53% $1,520 2.65% $12 -0.12% Time Deposits $514 3.44% $524 3.60% -$10 -0.16% Total $3,668 1.80% $3,558 1.92% $110 -0.12% 1Q 2025 4Q 2024 Variance Disciplined pricing continues to favorably impact core deposit rates

 
Credit Quality

 
31 Credit Quality 0.66% 0.64% 0.66% 0.62% 0.56% 1Q24 2Q24 3Q24 4Q24 1Q25 Non-Performing Loans (NPL) / Gross Loans Dollars in millions  Specific reserve of $3.75 recorded in 1Q25 related to $15M commercial loan participation  New appraisal resulted in significantly reduced valuation (-42% compared to Jan 2024 appraisal)  Property currently generates positive cash flow and a majority of it is tenant occupied  Subsequent to 1Q25, subject property was foreclosed  YTD Annualized charge-offs were 10bps  Allowance for credit losses to loans is 1.11% (1.00 excl. specific reserve) $21.4 $21.1 $21.9 $21.0 $19.0 0.44% - $15M CRE Relationship 0.12% - All Other

 
32 Delinquent Loan Trends 0.43% 0.45% 0.51% 0.68% 0.57% 0.58% 0.62% 0.76% 0.56% 0.61% 0.60% 0.60% 0.53% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Delinquent Loans to Total Loans – Excl. $15M CRE Loan Participation Delinquency trends remain benign

 
33 Allowance for Credit Losses $33,598 ($846) $846 $282 $141 $3,750 $37,771 4Q 2024 Net Charge-Offs Net Charge-Offs Loan Growth Result of Model Calculation (e.g. Mix/Aging) Specific Reserve 1Q 2025 YTD 2025 Allowance for Credit Loss Walk Provision for Credit Losses $5.0M

 
Investments

 
35 • During 1Q25 book yield increased 5bps to 2.96% while duration decreased from 3.16 to 3.08 years • AFS additions of ~$34.6MM in April at avg. yield of ~4.90% • $70M of investment run-off expected in 2Q25 Investment Portfolio – AFS and HTM 1 1 Unrealized Gain/(Loss) on HTM for informational purposes only – not reflected in Other Comprehensive Income Dollars in thousands March 31, 2025 1.61 0.96 0.60 0.90 3.08 Duration 3.38 0.91 4.04 3.45 2.52 3.75 3.53 1.30 1,419$ 4.48% 3.76 25,000$ (508) Agency CMO Municipal - Local Other Total AFS US Treasuries 7.02% 7.34% 2.92% 0 (9) (27,917)$ Market Value 54,492 67,911 23,793 2,128 2,058 23,793 240 991 445,744$ 3,562$ 98,080$ 99,499$ Category 131,222$ 6,604 6,394 (210) 3.49% 312,737 284,128 (28,609) 2.30% Unrealized Gain / (Loss)1 Book Yield 3.51% Current Book Value 55,000 Total Investments US Agencies 240 1,000 473,661$ 3,660$ Agency MBS (29,074)$ 2.39% 2.59% 96,335$ Agency MBS Agency CMO Municipal Municipal - Local Total HTM 66,922 97,492$ (98)$ (70) Expected Run-Off by EOY 30,000 36,766 450 3.58 Wtd Avg Remaining Life 0.96 4.80 3.89 34,065 3,114 38,970$ 2.52 4.50 4.13 1.37 1.74 1.00 0.60 0.93 36 0 92,252$ 1,147$ 644 571,153$ 542,079$ 2.61% 4.92% 3.16% 2.96% (989) 0 (1,157)$

 
Capital Actions and Strategy

 
37 Equity and Ownership Dividends and Return of Capital • Declared 2Q25 dividend of $0.28 per share • 47th consecutive quarter of dividends • 2025 Share Repurchase Activity  ~$3.4M of stock repurchases in 1Q25  128K shares at an average price of $26.48 Capital Strategy – M&A Dependent • New $5M buyback authorization resulting in $6.6M total available funds for share repurchases • Evaluating potential dividend increase in 2H 2025 Ownership • Directors, Management and Employees (through equity incentives and/or employee ownership plans) currently own ~6% of Arrow

 
38 $22.40 $0.38 ($0.28) ($0.08) $0.30 $22.72 4Q 2024 Net Income Dividends AOCI Stock Repurchases 1Q 2025 2025 TBV / Share Walk Fully Diluted Tangible Book Value (TBV)

 
39 Capital Position 9.61% 12.59% 13.23% 14.48% 8.56% 9.60% 12.71% 13.35% 14.47% 8.78% 4.00% 4.50% 6.00% 8.00% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% Tier 1 Leverage Ratio Common Equity Tier 1 Capital Tier 1 Risk-Based Capital Total Risk-Based Capital Tangible Common Equity Capital Ratios – Arrow Minimum Regulatory Capital Ratios 2024 1Q 2025

 
Overview and History

 
41 Financial Snapshot 2019 2020 2021 2022 2023 2024 1Q 2025 Total assets $3,184,275 $3,688,636 $4,027,952 $3,969,509 $4,169,868 $4,306,348 $4,448,885 Loans $2,386,120 $2,595,030 $2,667,941 $2,983,207 $3,212,908 $3,394,541 $3,416,868 Loan-to-deposit ratio 91.2% 80.2% 75.1% 85.3% 87.1% 88.7% 86.1% ROA 1.24% 1.17% 1.28% 1.21% 0.74% 0.70% 0.59% Efficiency ratio 57.08% 52.80% 54.16% 54.26% 68.81% 67.68% 66.52% Net non-interest expense/avg. assets 2.22% 2.02% 2.00% 2.01% 2.28% 2.27% 2.43% NIM 3.05% 2.99% 2.97% 3.03% 2.65% 2.72% 3.07% Tier 1 Leverage Ratio 9.98% 9.07% 9.20% 9.80% 9.84% 9.60% 9.61% ROE 13.17% 12.77% 14.09% 13.55% 8.29% 7.72% 6.33% TBV per share $16.48 $18.32 $20.41 $19.37 $21.06 $22.40 $22.72 Net interest income $88,049 $99,202 $110,355 $118,343 $104,832 $111,732 $31,357 Net income $37,475 $40,827 $49,857 $48,799 $30,075 $29,711 $6,310 EPS $2.23 $2.41 $2.92 $2.86 $1.77 $1.77 $0.38 Dollars in thousands, except per share amounts

 
42 Our Profile • Bank holding company • Arrow Bank National Association • Upstate Agency, LLC • Wealth Management Services • $4.5 billion in assets • 580 plus employees • Primary service area population of more than 1.1 million Insurance Offices Bank Branches 938

 
43 Our History 1851 Glens Falls Bank opened for business in a newly constructed building on Ridge Street 1932 Changed name to Glens Falls National Bank and Trust Company 1949 Broke ground at 250 Glen Street — our current headquarters 1981 Glens Falls National Bank went public on NASDAQ as GFAL 1983 Formed Arrow Bank Corporation (now Arrow Financial Corporation) and trading began on NASDAQ as AROW

 
44 Our History 1988 Formed Saratoga National Bank and Trust Company and expanded footprint 1999 Surpassed $1 billion in assets 2004 Bought first insurance agency 2001 Added to the Russell 2000 Index 2021 Topped $4 billion in assets 2018 Consolidated our insurance business into the Upstate Agency brand 2012 Reached $2 billion in assets 2024 Unified banking subsidiaries to form Arrow Bank National Association

 
45 President and Chief Executive Officer Mr. DeMarco joined the Company in 1987 as a commercial lender and since that time has served in positions of increasing responsibility within the organization. In 2012, he was named President and CEO of Saratoga National Bank, now named Arrow Bank. In May 2023, he was named President and CEO of Arrow Financial Corporation and Glens Falls National Bank, now named Arrow Bank. He holds a bachelor’s degree in finance from the University of Texas at Austin. Mr. DeMarco is a graduate of the Adirondack Regional Chamber of Commerce’s Leadership Program and the Stonier Graduate School of Banking. He serves as a Director of the Company and Arrow Bank and sits on the boards of various non-profits dedicated to healthcare and economic development. David S. DeMarco, President and CEO

 
46 Experienced Leadership Team Mr. Kaiser joined the Company in 2001 as Vice President and Commercial Loan Officer. He served as Corporate Banking Manager and was later promoted to Senior Vice President, before being named Chief Credit Officer in 2011, followed by promotions to Executive Vice President and Senior Executive Vice President. Prior to joining the Company, he spent 15 years in the Capital Region as a Commercial Loan Officer. Mr. Kaiser has a bachelor’s degree in business administration from Siena College. Mr. Kaiser actively serves on boards of numerous community organizations. Mr. Kaiser has recently announced his retirement effective June 30th, 2025. David D. Kaiser, Senior Executive Vice President and CCO Mr. Ivanov joined the Company in 2023 with more than 30 years of experience in Financial Planning & Analysis, Controllership, SOX, Financial Reporting and Treasury. Mr. Ivanov previously served as CFO for Bankwell Financial Group, helping it almost double in size over six-plus years to $3.3 billion. He has held CFO positions at Darien Rowayton Bank and for Doral Bank’s U.S. Operations. He began his career with Ernst & Young and held accounting/ finance positions at PepsiCo, GE Capital and Bridgewater Associates. Mr. Ivanov holds an MBA and bachelor’s degree in accounting and finance from the University of South Florida. He is also Six Sigma Black Belt certified. Penko Ivanov, Senior Executive Vice President, CFO, Treasurer and CAO Mr. Wise joined the Company in 2016 as Senior Vice President of Administration for Glens Falls National Bank, now named Arrow Bank. He has since been promoted to Senior Executive Vice President and Chief Risk Officer of the Company. He has more than 30 years of experience building and leading both community banks and bank-owned insurance agencies. Mr. Wise previously served as Vice President and CISO for The Adirondack Trust Company and acted as Executive Vice President, COO for Wise Insurance Brokers, Inc. He has extensive experience in designing, implementing and managing workflows and delivering operational efficiency. He holds a bachelor’s degree from Boston University’s School of Management. Andrew J. Wise, Senior Executive Vice President and CRO

 
47 Experienced Leadership Team Ms. Pancoe joined the Company in 2018 as Director of Human Resources. In her current role as Chief Human Resources Officer, she has executive oversight of the Company’s human resource strategies, which includes organizational design and succession planning, talent acquisition and retention, performance management, professional development and compensation and benefits. Prior to joining the Company, Ms. Pancoe held various human resource management roles within the power generation and engineering services industry. Ms. Pancoe holds a bachelor’s degree in psychology from Clark University in Worcester, MA, and an MBA from the University at Albany. In addition, she maintains a certified professional human resources designation. Brooke Pancoe, Executive Vice President, Chief Human Resources Officer Mr. Yrsha joined the Company in 2015. He currently is the Chief Banking Officer and oversees the strategic direction of the Retail Banking unit, which includes retail deposits and lending, business development, consumer payments, business services, municipal banking, as well as small business and retail lending. In addition, Marc oversees the Wealth Management division and Marketing. Prior to joining our Company, Mr. Yrsha spent time in retail leadership, retail and commercial lending at large regional and community banks within the Arrow footprint. Mr. Yrsha is active in the community serving in leadership roles on a variety of boards. He is a graduate of Castleton University in Vermont and the Adirondack Regional Chamber of Commerce’s Leadership Adirondack Program. Marc Yrsha, Senior Executive Vice President, Chief Banking Officer Mr. Jacobs joined the Company in 2003 as Information Systems Manager. He was later promoted to Senior Vice President and then Executive Vice President. As Chief Information Officer, Mr. Jacobs guides the Company’s strategic technology plans. He has more than 30 years of experience in the community banking industry, having previously served as Operations Manager at Cohoes Savings Bank and Item Processing Manager at Hudson River Bank and Trust. Mr. Jacobs earned a bachelor’s degree in finance from Siena College and an associate degree in business administration from Hudson Valley Community College. Michael Jacobs, Executive Vice President, Chief Information Officer

 
Thank you!

 
v3.25.1
Cover Page
Apr. 30, 2025
Cover [Abstract]  
Document Type 8-K
Entity Registrant Name ARROW FINANCIAL CORPORATION
Entity Incorporation, State or Country Code NY
Entity File Number 0-12507
Entity Tax Identification Number 22-2448962
Entity Address, Address Line One 250 Glen Street
Entity Address, City or Town Glens Falls
Entity Address, State or Province NY
Entity Address, Postal Zip Code 12801
City Area Code 518
Local Phone Number 745-1000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, Par Value $1.00 per share
Trading Symbol AROW
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000717538
Amendment Flag false
Document Period End Date Apr. 30, 2025
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