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Arrow Financial Corporation's Financial Performance in Q2 2025

Arrow Financial Corporation (NasdaqGS® – AROW), headquartered in Glens Falls, New York, has recently reported its financial results for the second quarter ended June 30, 2025. The company's earnings have demonstrated a remarkable upward trajectory, showcasing its resilience and operational efficiency in a competitive banking landscape.

Financial Highlights

In the second quarter, Arrow reported a net income of $10.8 million, which translates to $0.65 per share. This figure represents a significant growth compared to $6.3 million or $0.38 per share achieved in the previous quarter. This increase reflects a solid return on average assets of 1.00%, marking a notable improvement in their financial performance metrics.

Additionally, the Board of Directors has declared a quarterly cash dividend of $0.29 per share, reflecting a 3.6% increase from the previous quarter's dividend. This dividend will be payable on August 25, 2025, to shareholders on record by August 11, 2025.

Operational Milestones

The second quarter results were influenced by approximately $1.1 million of non-core expenses associated with Arrow's system conversion and the operational merger of its banking subsidiaries. This pivotal integration, which was completed successfully in July 2025, is expected to enhance customer experience and operational efficiency as Arrow continues its rebranding strategy towards becoming a singular recognized entity under the name of Arrow Bank.

Key Metrics

• - Net Interest Income: Arrow generated record net interest income of $32.5 million, showcasing a 3.8% increase from the prior quarter.
• - Net Interest Margin: The net interest margin improved to 3.15% (3.16% FTE), a rise from 3.07% in the previous quarter.
• - Return on Assets: The return on average assets reached 1.00%, with a more favorable figure of 1.08% when excluding unification-related expenses.
• - Loan-to-Deposit Ratio: The loan-to-deposit ratio stood at 87.2%, reflecting strong loan growth during the quarter.

Arrow’s positive financial trajectory is further evidenced by its tangible book value per share, which increased to $23.23. Share repurchases also occurred, with the company repurchasing 196,497 shares for a total of $5.1 million.

Comprehensive Financial Analysis

The income statement reflects that Arrow’s net interest income was bolstered by a $1.2 million increase from the previous quarter. Furthermore, a significant decrease in the provision for credit losses—falling from $5.0 million to $0.6 million—also contributed to the positive earnings outcome.

The company continues to maintain a robust financial position with total assets amounting to $4.4 billion and total stockholders' equity at $408.5 million at the end of June 2025. Regulatory capital ratios remain strong, with the Common Equity Tier 1 Capital Ratio reported at 12.73%, exceeding the