Arrow Reports 1st Quarter Net Income of $13.5 Million, or $0.82 per Share, and Declares 2nd Quarter Dividend of $0.30 per Share
GLENS FALLS, N.Y., April 30, 2026 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or the "Company") announced financial results for the three-month period ended March 31, 2026. Reported net income for the first quarter of 2026 was $13.5 million and fully diluted earnings per share ("EPS") was $0.82, versus net income of $14.0 million and EPS of $0.85 for the fourth quarter of 2025.
The Board of Directors of Arrow declared a quarterly cash dividend of $0.30 per share; payable May 26, 2026 to shareholders of record as of May 12, 2026.
This quarter's results include approximately $790 thousand ($0.03 per share) of non-core merger expenses related to the announced acquisition of Adirondack Bancorp, Inc. based in Utica, New York. Excluding the merger expenses, Arrow achieved record operating results of $0.85 for the first quarter of 2026. Pending regulatory approvals, the transaction is expected to close early in the third quarter of 2026 and will add approximately $950 million in assets and 19 new branch locations.
This Earnings Release and related commentary should be read in conjunction with the Company's April 30, 2026 Form 8-K and related First Quarter 2026 Investor Presentation, which can also be found on Arrow's website: arrowfinancial.com/documents/investor-presentations.
Arrow President and CEO David S. DeMarco:
"As we celebrate our 175th anniversary, building on the strong year-end momentum, the Arrow team delivered exceptional financial results for the first quarter of 2026. We achieved strong net interest margin expansion as well as a return on average assets close to 1.30% on an operating basis. Credit performance was even better with non-performing loans dipping to 13 basis points. During the first quarter, we also announced the acquisition of Adirondack Bank, which is expected to close in the third quarter of 2026. We look forward to expanding our market with this high-quality, low-cost deposit franchise, adding approximately $950 million to our balance sheet. We expect the transaction to provide significant EPS accretion in 2027 and beyond. Arrow is well positioned to continue to deliver strong results for its shareholders while continuing to execute on its strategic initiatives to build a premier banking franchise for its customers and the communities it serves."
First-Quarter Highlights and Key Metrics
- Net Income of $13.5 million (EPS of $0.82); $0.85 adjusted for merger-related expenses ("MRE")1
- Efficiency ratio of 59.89%; 58.13% excluding MRE1
- Net Interest Income of $36.1 million
- Net Interest Margin improved to 3.47% (3.48% FTE2), from 3.24% (3.25% FTE) in the prior quarter
- Return on Average Assets (ROA) of 1.23%; 1.29% adjusted for MRE1
- Strong credit metrics: annualized charge-offs of 10bps and non-performing loans of 13bps
- Loan-to-Deposit ratio of 85.7%
- Cost of retail deposits3 decreased by 11bps to 1.62% from the prior quarter
Income Statement
- Net Income: Net income for the first quarter of 2026 was $13.5 million, decreasing from $14.0 million in the fourth quarter of 2025.
- Compared to the prior quarter, net income decreased due to an increase in income tax expense of $1.1 million and an increase in non-interest expense of $1.1 million offset by an increase in net interest income of $1.0 million and an increase in non-interest income of $0.4 million.
- Net Interest Income: Net interest income for the first quarter of 2026 was $36.1 million, increasing 2.8% from the fourth quarter of 2025.
- Total interest and dividend income was $53.8 million for the first quarter of 2026, a decrease from $54.6 million in the fourth quarter of 2025. Interest expense for the first quarter of 2026 was $17.7 million, a decrease from $19.5 million in the fourth quarter of 2025.
- Net Interest Margin: Net interest margin, on an FTE basis, for the first quarter of 2026 increased to 3.48%, compared to 3.25% for the fourth quarter of 2025. The increase in net interest margin compared to the fourth quarter of 2025 was primarily the result of continued yield expansion on earning assets combined with the reduced cost of interest-bearing liabilities.
Three Months Ended | |||||
(Dollars in Thousands) | |||||
March 31, 2026 | December 31, 2025 | March 31, 2025 | |||
Interest and Dividend Income | $ 53,794 | $ 54,610 | $ 50,366 | ||
Interest Expense | 17,664 | 19,467 | 19,009 | ||
Net Interest Income | 36,130 | 35,143 | 31,357 | ||
Average Earning Assets(A) | 4,222,574 | 4,302,305 | 4,143,939 | ||
Average Interest-Bearing Liabilities | 3,244,709 | 3,280,856 | 3,184,196 | ||
Average Yield on Earning Assets(A) | 5.17 % | 5.04 % | 4.93 % | ||
Average Cost of Interest-Bearing Liabilities | 2.21 | 2.35 | 2.42 | ||
Net Interest Spread | 2.96 | 2.69 | 2.51 | ||
Net Interest Margin | 3.47 | 3.24 | 3.07 | ||
Net Interest Margin - FTE | 3.48 | 3.25 | 3.08 | ||
(A) Includes Nonaccrual Loans. | |||||
- Provision for Credit Losses: For the first quarter of 2026, the provision for credit losses was $548 thousand compared to $846 thousand in the fourth quarter of 2025, primarily driven by low net charge-offs and lower loan growth in the first quarter of 2026.
- Non-Interest Income: Non-interest income for the three months ended March 31, 2026, was $8.6 million, an increase from $8.3 million in the fourth quarter of 2025. Revenue related to wealth management was consistent with the prior quarter, while insurance commissions and interchange fees improved in the first quarter from the linked quarter. The first quarter of 2026 included a positive valuation adjustment related to an equity position.
- Non-Interest Expense: Non-interest expense for the first quarter of 2026 was $26.9 million, an increase from $25.8 million in the fourth quarter of 2025. The first quarter of 2026 included approximately $800 thousand of expenses related to the announced acquisition of Adirondack Bancorp, Inc. which is expected to close early in the third quarter of 2026.
- Provision for Income Taxes: The provision for income taxes and effective tax rate were $3.9 million and 22.3%, respectively for the first quarter of 2026, and $2.7 million and 22.2%, respectively for the fourth quarter of 2025. The effective tax rate does not reflect the anticipated implementation of certain tax strategies that are expected to lower the tax rate for the rest of 2026.
Balance Sheet
- Total Assets: Total assets were $4.5 billion at March 31, 2026, an increase of $76.2 million, or 1.7%, as compared to December 31, 2025. For the first quarter of 2026, the overall change in the balance sheet was primarily attributable to the seasonal surge in municipal deposits.
- Investments: Total investments were $594.6 million as of March 31, 2026, an increase of $21.8 million, or 3.8%, compared to December 31, 2025. The increase from December 31, 2025 was driven primarily by $46 million of additional investments, partially offset by paydowns and maturities. There were no credit quality issues related to the investment portfolio.
- Loans: Total loans were $3.4 billion as of March 31, 2026. Loans outstanding decreased in the first quarter of 2026 by $14.1 million. Loan growth was negatively impacted by severe winter weather, which slowed indirect auto and residential loan originations. Volume is expected to rebound in the second quarter. Please see the loan detail included in the Consolidated Financial Information table on page 12.
- Allowance for Credit Losses: The allowance for credit losses was $34.1 million as of March 31, 2026, which represented 0.99% of loans outstanding, as compared to $34.3 million, or 0.99% of loans outstanding, at December 31, 2025. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.10% for the three-month period ended March 31, 2026, as compared to 0.08% for the three-month period ended December 31, 2025. Nonperforming assets were $5.1 million as of March 31, 2026, representing 0.11% of period-end assets, a decrease from $8.7 million, or 0.20%, at December 31, 2025. Nonperforming assets decreased to the payoff of a $2.6 million nonperforming loan in the first quarter.
- Deposits: At March 31, 2026, deposit balances were $4.0 billion, an increase of $74.5 million from December 31, 2025. The change from December 31, 2025 was primarily attributable to the seasonality of municipal deposits. Please refer to page 6 for further details related to deposits.
- Capital: Total stockholders' equity was $440.1 million at March 31, 2026, an increase of $8.3 million, or 1.9%, from December 31, 2025. The increase from December 31, 2025 was primarily attributable to net income of $13.5 million offset by other comprehensive loss of $0.7 million and dividends of $5.0 million and other stock-based activity. Arrow's regulatory capital ratios remain strong. As of March 31, 2026, Arrow's Common Equity Tier 1 Capital Ratio was 13.30% and Total Risk-Based Capital Ratio was 15.04%. The capital ratios of Arrow and its subsidiary bank continued to exceed the "well capitalized" regulatory standards. Regulatory capital ratios are preliminary, subject to finalization as part of the current quarter Call Report.
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 76 consecutive quarters, securing its prominent position as an "Exceptional Performance Bank."
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About Arrow: Arrow Financial Corporation is a holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. The Company is the parent of Arrow Bank, a full-service commercial bank, and Upstate Agency, LLC, a comprehensive insurance agency.
Non-GAAP Financial Measures Reconciliation: In addition to presenting information in conformity with accounting principles generally accepted in the United States of America (GAAP), this news release contains financial information determined by methods other than GAAP (non-GAAP). The following measures used in this release, which are commonly utilized by financial institutions, have not been specifically exempted by the Securities and Exchange Commission ("SEC") and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. Certain non-GAAP financial measures include: tangible book value, tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent net interest margin and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by Arrow from time to time are useful in evaluating Arrow's performance and that such information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Selected Quarterly Information."
Safe Harbor Statement: The information contained in this earnings release may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements can sometimes be identified by Arrow's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." These statements may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, involving a degree of uncertainty and attendant risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast, explicitly or by implication because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, tariffs, cybersecurity risks, changes in FDIC assessments, bank failures, geopolitical events, difficulties in managing the Arrow's growth, competition, changes in law or the regulatory environment, risks relating to the announced merger with Adirondack Bancorp, Inc. and changes in general business and economic trends. Arrow undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This earnings release should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2025, and other filings with the SEC.
____________________ | |
1 | EPS, efficiency ratio and ROA excluding merger-related expenses are non-GAAP measures. See reconciliation on Note 5 to the Selected Quarterly Information |
2 | FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 2 to the Selected Quarterly Information. |
3 | Retail deposits exclude wholesale funding sources |
ARROW FINANCIAL CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||
(In Thousands, Except Per Share Amounts - Unaudited) | ||||||
Three Months Ended | ||||||
March 31, | December 31, | March 31, | ||||
INTEREST AND DIVIDEND INCOME | ||||||
Interest and Fees on Loans | $ 47,126 | $ 47,087 | $ 44,550 | |||
Interest on Deposits at Banks | 1,675 | 2,598 | 1,621 | |||
Interest and Dividends on Investment Securities: | ||||||
Fully Taxable | 4,529 | 4,500 | 3,608 | |||
Exempt from Federal Taxes | 464 | 425 | 587 | |||
Total Interest and Dividend Income | 53,794 | 54,610 | 50,366 | |||
INTEREST EXPENSE | ||||||
Interest-Bearing Checking Accounts | 2,100 | 2,117 | 1,803 | |||
Savings Deposits | 8,716 | 9,722 | 9,483 | |||
Time Deposits over $250,000 | 1,196 | 1,562 | 1,811 | |||
Other Time Deposits | 5,436 | 5,846 | 5,529 | |||
Borrowings | — | — | 167 | |||
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 169 | 173 | 169 | |||
Interest on Financing Leases | 47 | 47 | 47 | |||
Total Interest Expense | 17,664 | 19,467 | 19,009 | |||
NET INTEREST INCOME | 36,130 | 35,143 | 31,357 | |||
Provision for Credit Losses | 548 | 846 | 5,019 | |||
NET INTEREST INCOME AFTER PROVISION FOR | 35,582 | 34,297 | 26,338 | |||
NON-INTEREST INCOME | ||||||
Income From Fiduciary Activities | 2,713 | 2,771 | 2,535 | |||
Fees for Other Services to Customers | 2,727 | 2,854 | 2,600 | |||
Insurance Commissions | 2,113 | 2,050 | 1,826 | |||
Net Gain (Loss) on Securities | 145 | (127) | 317 | |||
Net Gain on Sales of Loans | 290 | 246 | 101 | |||
Other Operating Income | 640 | 474 | 460 | |||
Total Non-Interest Income | 8,628 | 8,268 | 7,839 | |||
NON-INTEREST EXPENSE | ||||||
Salaries and Employee Benefits | 14,922 | 14,309 | 13,555 | |||
Occupancy Expenses, Net | 2,459 | 1,881 | 2,022 | |||
Technology and Equipment Expense | 5,052 | 5,152 | 5,087 | |||
FDIC Assessments | 585 | 563 | 670 | |||
Other Operating Expense | 3,847 | 3,899 | 4,711 | |||
Total Non-Interest Expense | 26,865 | 25,804 | 26,045 | |||
INCOME BEFORE PROVISION FOR INCOME TAXES | 17,345 | 16,761 | 8,132 | |||
Provision for Income Taxes | 3,860 | 2,748 | 1,822 | |||
NET INCOME | $ 13,485 | $ 14,013 | $ 6,310 | |||
Average Shares Outstanding: | ||||||
Basic | 16,382 | 16,390 | 16,665 | |||
Diluted | 16,403 | 16,413 | 16,673 | |||
Per Common Share: | ||||||
Basic Earnings | $ 0.82 | $ 0.85 | $ 0.38 | |||
Diluted Earnings | 0.82 | 0.85 | 0.38 | |||
ARROW FINANCIAL CORPORATION AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
(In Thousands, Except Share and Per Share Amounts - Unaudited) | |||
March 31, | December 31, | ||
ASSETS | |||
Cash and Due From Banks | $ 29,102 | $ 29,132 | |
Interest-Earning Deposits at Banks | 256,504 | 185,051 | |
Investment Securities: | |||
Available-for-Sale at Fair Value | 518,803 | 495,868 | |
Held-to-Maturity (Fair Value of $65,321 at March 31, 2026 | 65,646 | 66,975 | |
Equity Securities | 5,742 | 5,597 | |
Other Investments | 4,375 | 4,372 | |
Loans | 3,438,966 | 3,453,093 | |
Allowance for Credit Losses | (34,055) | (34,322) | |
Net Loans | 3,404,911 | 3,418,771 | |
Premises and Equipment, Net | 59,561 | 59,433 | |
Goodwill | 23,789 | 23,789 | |
Other Intangible Assets, Net | 1,692 | 1,741 | |
Other Assets | 151,894 | 155,133 | |
Total Assets | $ 4,522,019 | $ 4,445,862 | |
LIABILITIES | |||
Noninterest-Bearing Deposits | 721,734 | 722,374 | |
Interest-Bearing Checking Accounts | 898,168 | 862,192 | |
Savings Deposits | 1,618,309 | 1,557,638 | |
Time Deposits over $250,000 | 140,899 | 155,802 | |
Other Time Deposits | 634,829 | 641,463 | |
Total Deposits | 4,013,939 | 3,939,469 | |
Borrowings | 4,265 | 4,265 | |
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts | 20,000 | 20,000 | |
Finance Leases | 4,908 | 4,929 | |
Other Liabilities | 38,764 | 45,347 | |
Total Liabilities | 4,081,876 | 4,014,010 | |
STOCKHOLDERS' EQUITY | |||
Preferred Stock, $1 Par Value; 1,000,000 Shares Authorized | — | — | |
Common Stock, $1 Par Value: 30,000,000 Shares Authorized; | 22,067 | 22,067 | |
Additional Paid-in Capital | 414,431 | 414,506 | |
Retained Earnings | 110,804 | 102,271 | |
Accumulated Other Comprehensive Loss | (4,764) | (4,037) | |
Treasury Stock, at Cost (5,539,630 Shares at March 31, 2026 | (102,395) | (102,955) | |
Total Stockholders' Equity | 440,143 | 431,852 | |
Total Liabilities and Stockholders' Equity | $ 4,522,019 | $ 4,445,862 | |
Arrow Financial Corporation | |||||||||
Selected Quarterly Information | |||||||||
(Dollars In Thousands, Except Per Share Amounts - Unaudited) | |||||||||
Quarter Ended | 3/31/2026 | 12/31/2025 | 9/30/2025 | 6/30/2025 | 3/31/2025 | ||||
Net Income | $ 13,485 | $ 14,013 | $ 12,825 | $ 10,805 | $ 6,310 | ||||
Share and Per Share Data: | |||||||||
Period End Shares Outstanding | 16,527 | 16,445 | 16,438 | 16,484 | 16,670 | ||||
Basic Average Shares Outstanding | 16,382 | 16,390 | 16,402 | 16,545 | 16,665 | ||||
Diluted Average Shares Outstanding | 16,403 | 16,413 | 16,406 | 16,551 | 16,673 | ||||
Basic Earnings Per Share | $ 0.82 | $ 0.85 | $ 0.77 | $ 0.65 | $ 0.38 | ||||
Diluted Earnings Per Share | 0.82 | 0.85 | 0.77 | 0.65 | 0.38 | ||||
Cash Dividend Per Share | 0.30 | 0.29 | 0.29 | 0.28 | 0.28 | ||||
Selected Quarterly Average Balances: | |||||||||
Interest-Earning Deposits at Banks | $ 183,252 | $ 260,806 | $ 200,251 | $ 145,473 | $ 146,023 | ||||
Investment Securities | 598,817 | 596,994 | 574,080 | 582,380 | 591,841 | ||||
Loans | 3,440,505 | 3,444,505 | 3,424,784 | 3,415,140 | 3,406,075 | ||||
Deposits | 3,928,761 | 4,002,221 | 3,913,721 | 3,849,093 | 3,825,124 | ||||
Other Borrowed Funds | 29,181 | 29,203 | 30,539 | 33,579 | 48,375 | ||||
Stockholders' Equity | 438,846 | 425,042 | 413,058 | 406,529 | 404,394 | ||||
Total Assets | 4,439,833 | 4,499,195 | 4,399,815 | 4,332,339 | 4,324,917 | ||||
Return on Average Assets, annualized | 1.23 % | 1.24 % | 1.16 % | 1.00 % | 0.59 % | ||||
Return on Average Equity, annualized | 12.46 % | 13.08 % | 12.32 % | 10.66 % | 6.33 % | ||||
Return on Average Tangible Equity, annualized 1 | 13.23 % | 13.92 % | 13.13 % | 11.38 % | 6.76 % | ||||
Average Earning Assets | $ 4,222,574 | $ 4,302,305 | $ 4,199,115 | $ 4,142,993 | $ 4,143,939 | ||||
Average Paying Liabilities | 3,244,709 | 3,280,856 | 3,193,789 | 3,191,906 | 3,184,196 | ||||
Interest Income | 53,794 | 54,610 | 53,598 | 51,573 | 50,366 | ||||
Tax-Equivalent Adjustment 2 | 123 | 114 | 121 | 148 | 155 | ||||
Interest Income, Tax-Equivalent 2 | 53,917 | 54,724 | 53,719 | 51,721 | 50,521 | ||||
Interest Expense | 17,664 | 19,467 | 19,467 | 19,040 | 19,009 | ||||
Net Interest Income | 36,130 | 35,143 | 34,131 | 32,533 | 31,357 | ||||
Net Interest Income, Tax-Equivalent 2 | 36,253 | 35,258 | 34,252 | 32,681 | 31,512 | ||||
Net Interest Margin, annualized | 3.47 % | 3.24 % | 3.22 % | 3.15 % | 3.07 % | ||||
Net Interest Margin, Tax-Equivalent, annualized 2 | 3.48 % | 3.25 % | 3.24 % | 3.16 % | 3.08 % | ||||
Efficiency Ratio Calculation: 3 | |||||||||
Non-Interest Expense | $ 26,865 | $ 25,804 | $ 25,433 | $ 25,652 | $ 26,045 | ||||
Less: Intangible Asset Amortization | 72 | 74 | 76 | 80 | 81 | ||||
Net Non-Interest Expense | $ 26,793 | $ 25,730 | $ 25,357 | $ 25,572 | $ 25,964 | ||||
Net Interest Income, Tax-Equivalent | $ 36,253 | $ 35,257 | $ 34,252 | $ 32,681 | $ 31,512 | ||||
Non-Interest Income | 8,628 | 8,268 | 8,716 | 7,609 | 7,839 | ||||
Less: Net Gain (Loss) on Securities | 145 | (127) | 392 | (40) | 317 | ||||
Net Gross Income | $ 44,736 | $ 43,652 | $ 42,576 | $ 40,330 | $ 39,034 | ||||
Efficiency Ratio | 59.89 % | 58.94 % | 59.56 % | 63.41 % | 66.52 % | ||||
Period-End Capital Information: | |||||||||
Total Stockholders' Equity (i.e. Book Value) | $ 440,143 | $ 431,852 | $ 417,687 | $ 408,506 | $ 404,409 | ||||
Book Value per Share | 26.63 | 26.26 | 25.41 | 24.78 | 24.26 | ||||
Goodwill and Other Intangible Assets, net | 25,481 | 25,530 | 25,594 | 25,659 | 25,743 | ||||
Tangible Book Value per Share 1 | 25.09 | 24.71 | 23.85 | 23.23 | 22.72 | ||||
Capital Ratios:4 | |||||||||
Tier 1 Leverage Ratio | 10.02 % | 9.68 % | 9.66 % | 9.64 % | 9.61 % | ||||
Common Equity Tier 1 Capital Ratio | 13.30 % | 13.01 % | 13.07 % | 12.73 % | 12.59 % | ||||
Tier 1 Risk-Based Capital Ratio | 13.93 % | 13.64 % | 13.71 % | 13.37 % | 13.23 % | ||||
Total Risk-Based Capital Ratio | 15.04 % | 14.76 % | 14.86 % | 14.51 % | 14.48 % | ||||
Arrow Financial Corporation | ||||||||||||
Selected Quarterly Information | ||||||||||||
(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. | |||||||||||
3/31/2026 | 12/31/2025 | 9/30/2025 | 6/30/2025 | 3/31/2025 | ||||||||
Total Stockholders' Equity (GAAP) | $ 440,143 | $ 431,852 | $ 417,687 | $ 408,506 | $ 404,409 | |||||||
Less: Goodwill and Other Intangible assets, net | 25,481 | 25,530 | 25,594 | 25,659 | 25,743 | |||||||
Tangible Equity (Non-GAAP) | $ 414,662 | $ 406,322 | $ 392,093 | $ 382,847 | $ 378,666 | |||||||
Period End Shares Outstanding | 16,527 | 16,445 | 16,438 | 16,484 | 16,670 | |||||||
Tangible Book Value per Share (Non-GAAP) | $ 25.09 | $ 24.71 | $ 23.85 | $ 23.23 | $ 22.72 | |||||||
Net Income | 13,485 | 14,013 | 12,825 | 10,805 | 6,310 | |||||||
Return on Tangible Equity (Net Income/Tangible | 13.23 % | 13.92 % | 13.13 % | 11.38 % | 6.76 % | |||||||
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. | |||||||||||
3/31/2026 | 12/31/2025 | 9/30/2025 | 6/30/2025 | 3/31/2025 | ||||||||
Interest Income (GAAP) | $ 53,794 | $ 54,610 | $ 53,598 | $ 51,573 | $ 50,366 | |||||||
Add: Tax-Equivalent adjustment (Non-GAAP) | 123 | 114 | 121 | 148 | 155 | |||||||
Interest Income - Tax Equivalent (Non-GAAP) | $ 53,917 | $ 54,724 | $ 53,719 | $ 51,721 | $ 50,521 | |||||||
Net Interest Income (GAAP) | $ 36,130 | $ 35,143 | $ 34,131 | $ 32,533 | $ 31,357 | |||||||
Add: Tax-Equivalent adjustment (Non-GAAP) | 123 | 114 | 121 | 148 | 155 | |||||||
Net Interest Income - Tax Equivalent (Non-GAAP) | $ 36,253 | $ 35,257 | $ 34,252 | $ 32,681 | $ 31,512 | |||||||
Average Earning Assets | $ 4,222,574 | $ 4,302,305 | $ 4,199,115 | $ 4,142,993 | $ 4,143,939 | |||||||
Net Interest Margin (Non-GAAP)* | 3.48 % | 3.25 % | 3.24 % | 3.16 % | 3.08 % | |||||||
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, 2026 CET1 ratio listed in the tables (i.e., 13.30%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%). Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report. | |||||||||||
3/31/2026 | 12/31/2025 | 9/30/2025 | 6/30/2025 | 3/31/2025 | ||||||||
Total Risk Weighted Assets | $ 3,180,782 | $ 3,182,240 | $ 3,095,225 | $ 3,121,451 | $ 3,143,547 | |||||||
Common Equity Tier 1 Capital | 423,139 | 414,050 | 404,426 | 397,432 | 395,900 | |||||||
Common Equity Tier 1 Ratio | 13.30 % | 13.01 % | 13.07 % | 12.73 % | 12.59 % | |||||||
5. | Non-GAAP Financial Measure Reconciliation: Net Income and Net Non-Interest Expense adjusted for non-core expenses. Non-core expenses include merger-related expenses, which are related to the announced acquisition of Adirondack Bancorp, Inc., and unification expenses, which are related to the system conversion and operational merger of the Company's two banking subsidiaries during the year ended December 31, 2025. EPS, efficiency ratio, and ROA are presented on an adjusted basis to reflect these exclusions. These are non-GAAP financial measures, which Arrow believes provides investors with information that is useful in understanding its financial performance. | |||||||||||
3/31/2026 | 12/31/2025 | 9/30/2025 | 6/30/2025 | 3/31/2025 | ||||||||
Net Income | $ 13,485 | $ 14,013 | $ 12,825 | $ 10,805 | $ 6,310 | |||||||
Non-Core Expenses: | ||||||||||||
Merger-Related Expenses | 790 | — | — | — | — | |||||||
Unification Expenses | — | — | 543 | 1,134 | 600 | |||||||
Less: Tax Benefit | (174) | — | (119) | (249) | (132) | |||||||
Net Non-Core Expenses (Non-GAAP) | 616 | — | 424 | 885 | 468 | |||||||
Core Net Income (Non-GAAP) | $ 14,101 | $ 14,013 | $ 13,249 | $ 11,690 | $ 6,778 | |||||||
Net Non-Interest Expense | $ 26,793 | $ 25,730 | $ 25,357 | $ 25,572 | $ 25,964 | |||||||
Non-Core Expenses: | ||||||||||||
Merger-Related Expenses | 790 | — | — | — | — | |||||||
Unification Expenses | — | — | 543 | 1,134 | 600 | |||||||
Core Net Non-Interest Expense (Non-GAAP) | $ 26,003 | $ 25,730 | $ 24,814 | $ 24,438 | $ 25,364 | |||||||
Core Earnings Per Share (Non-GAAP) | $ 0.85 | $ 0.85 | $ 0.80 | $ 0.70 | $ 0.41 | |||||||
Core Return on Average Assets (Non-GAAP) | 1.29 % | 1.24 % | 1.20 % | 1.08 % | 0.64 % | |||||||
Core Efficiency Ratio (Non-GAAP) | 58.13 % | 58.94 % | 58.28 % | 60.60 % | 64.98 % | |||||||
* 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, 2026 | March 31, 2025 | |||||||||
Interest | Rate | Interest | Rate | ||||||||
Average | Income/ | Earned/ | Average | Income/ | Earned/ | ||||||
Balance | Expense | Paid | Balance | Expense | Paid | ||||||
Interest-Earning Deposits at Banks | $ 183,252 | $ 1,675 | 3.71 % | $ 146,023 | $ 1,621 | 4.50 % | |||||
Investment Securities: | |||||||||||
Fully Taxable | 536,293 | 4,529 | 3.42 | 499,903 | 3,608 | 2.93 | |||||
Exempt from Federal Taxes | 62,524 | 464 | 3.01 | 91,938 | 587 | 2.59 | |||||
Loans (1) | 3,440,505 | 47,126 | 5.56 | 3,406,075 | 44,550 | 5.30 | |||||
Total Earning Assets (1) | 4,222,574 | 53,794 | 5.17 | 4,143,939 | 50,366 | 4.93 | |||||
Allowance for Credit Losses | (34,370) | (33,691) | |||||||||
Cash and Due From Banks | 30,253 | 31,515 | |||||||||
Other Assets | 221,376 | 183,154 | |||||||||
Total Assets | $ 4,439,833 | $ 4,324,917 | |||||||||
Deposits: | |||||||||||
Interest-Bearing Checking Accounts | $ 859,054 | 2,100 | 0.99 | $ 840,571 | 1,803 | 0.87 | |||||
Savings Deposits | 1,570,598 | 8,716 | 2.25 | 1,515,961 | 9,483 | 2.54 | |||||
Time Deposits of $250,000 or More | 147,425 | 1,196 | 3.29 | 186,159 | 1,811 | 3.95 | |||||
Other Time Deposits | 638,451 | 5,436 | 3.45 | 593,130 | 5,529 | 3.78 | |||||
Total Interest-Bearing Deposits | 3,215,528 | 17,448 | 2.20 | 3,135,821 | 18,626 | 2.41 | |||||
Borrowings | 4,265 | — | — | 23,378 | 167 | 2.90 | |||||
Junior Subordinated Obligations Issued to | 20,000 | 169 | 3.43 | 20,000 | 169 | 3.43 | |||||
Finance Leases | 4,916 | 47 | 3.88 | 4,997 | 47 | 3.81 | |||||
Total Interest-Bearing Liabilities | 3,244,709 | 17,664 | 2.21 | 3,184,196 | 19,009 | 2.42 | |||||
Noninterest-Bearing Deposits | 713,233 | 689,303 | |||||||||
Other Liabilities | 43,045 | 47,024 | |||||||||
Total Liabilities | 4,000,987 | 3,920,523 | |||||||||
Stockholders' Equity | 438,846 | 404,394 | |||||||||
Total Liabilities and Stockholders' Equity | $ 4,439,833 | $ 4,324,917 | |||||||||
Net Interest Income | $ 36,130 | $ 31,357 | |||||||||
Net Interest Spread | 2.96 % | 2.51 % | |||||||||
Net Interest Margin | 3.47 % | 3.07 % | |||||||||
(1) Includes Nonaccrual Loans. |
Arrow Financial Corporation | |||||||||||
Average Consolidated Balance Sheets and Net Interest Income Analysis | |||||||||||
(Dollars in Thousands - Unaudited) | |||||||||||
Quarter Ended: | March 31, 2026 | December 31, 2025 | |||||||||
Interest | Rate | Interest | Rate | ||||||||
Average | Income/ | Earned/ | Average | Income/ | Earned/ | ||||||
Balance | Expense | Paid | Balance | Expense | Paid | ||||||
Interest-Earning Deposits at Banks | $ 183,252 | $ 1,675 | 3.71 % | $ 260,806 | $ 2,598 | 3.95 % | |||||
Investment Securities: | |||||||||||
Fully Taxable | 536,293 | 4,529 | 3.42 | 537,088 | 4,500 | 3.32 | |||||
Exempt from Federal Taxes | 62,524 | 464 | 3.01 | 59,906 | 425 | 2.81 | |||||
Loans (1) | 3,440,505 | 47,126 | 5.56 | 3,444,505 | 47,087 | 5.42 | |||||
Total Earning Assets (1) | 4,222,574 | 53,794 | 5.17 | 4,302,305 | 54,610 | 5.04 | |||||
Allowance for Credit Losses | (34,370) | (34,288) | |||||||||
Cash and Due From Banks | 30,253 | 25,827 | |||||||||
Other Assets | 221,376 | 205,351 | |||||||||
Total Assets | $ 4,439,833 | $ 4,499,195 | |||||||||
Deposits: | |||||||||||
Interest-Bearing Checking Accounts | $ 859,054 | 2,100 | 0.99 | $ 850,602 | 2,117 | 0.99 | |||||
Savings Deposits | 1,570,598 | 8,716 | 2.25 | 1,584,844 | 9,721 | 2.43 | |||||
Time Deposits of $250,000 or More | 147,425 | 1,196 | 3.29 | 173,996 | 1,562 | 3.56 | |||||
Other Time Deposits | 638,451 | 5,436 | 3.45 | 642,211 | 5,847 | 3.61 | |||||
Total Interest-Bearing Deposits | 3,215,528 | 17,448 | 2.20 | 3,251,653 | 19,247 | 2.35 | |||||
Borrowings | 4,265 | — | — | 4,266 | — | — | |||||
Junior Subordinated Obligations Issued to | 20,000 | 169 | 3.43 | 20,000 | 173 | 3.43 | |||||
Finance Leases | 4,916 | 47 | 3.88 | 4,937 | 47 | 3.78 | |||||
Total Interest-Bearing Liabilities | 3,244,709 | 17,664 | 2.21 | 3,280,856 | 19,467 | 2.35 | |||||
Noninterest-Bearing Deposits | 713,233 | 750,568 | |||||||||
Other Liabilities | 43,045 | 42,729 | |||||||||
Total Liabilities | 4,000,987 | 4,074,153 | |||||||||
Stockholders' Equity | 438,846 | 425,042 | |||||||||
Total Liabilities and Stockholders' Equity | $ 4,439,833 | $ 4,499,195 | |||||||||
Net Interest Income | $ 36,130 | $ 35,143 | |||||||||
Net Interest Spread | 2.96 % | 2.69 % | |||||||||
Net Interest Margin | 3.47 % | 3.24 % | |||||||||
(1) Includes Nonaccrual Loans. |
Arrow Financial Corporation | |||
Consolidated Financial Information | |||
(Dollars in Thousands - Unaudited) | |||
Quarter Ended: | 3/31/2026 | 12/31/2025 | |
Loan Portfolio | |||
Commercial Loans | $ 169,599 | $ 165,729 | |
Commercial Real Estate Loans | 811,770 | 818,259 | |
Subtotal Commercial Loan Portfolio | 981,369 | 983,988 | |
Consumer Loans | 1,071,543 | 1,076,007 | |
Residential Real Estate Loans | 1,386,054 | 1,393,098 | |
Total Loans | $ 3,438,966 | $ 3,453,093 | |
Allowance for Credit Losses | |||
Allowance for Credit Losses, Beginning of Quarter | $ 34,322 | $ 34,176 | |
Loans Charged-off | (1,574) | (1,477) | |
Less Recoveries of Loans Previously Charged-off | 759 | 777 | |
Net Loans Charged-off | (815) | (700) | |
Provision for Credit Losses | 548 | 846 | |
Allowance for Credit Losses, End of Quarter | $ 34,055 | $ 34,322 | |
Nonperforming Assets | |||
Nonaccrual Loans | $ 3,802 | $ 6,415 | |
Loans Past Due 90 or More Days and Accruing | 621 | 2,040 | |
Loans Restructured and in Compliance with Modified Terms | — | — | |
Total Nonperforming Loans | 4,423 | 8,455 | |
Repossessed Assets | 657 | 280 | |
Other Real Estate Owned | — | — | |
Total Nonperforming Assets | $ 5,080 | $ 8,735 | |
Key Asset Quality Ratios | |||
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized | 0.10 % | 0.08 % | |
Provision for Credit Losses to Average Loans, Quarter-to-date Annualized | 0.06 % | 0.10 % | |
Allowance for Credit Losses to Period-End Loans | 0.99 % | 0.99 % | |
Allowance for Credit Losses to Period-End Nonperforming Loans | 769.95 % | 405.94 % | |
Nonperforming Loans to Period-End Loans | 0.13 % | 0.24 % | |
Nonperforming Assets to Period-End Assets | 0.11 % | 0.20 % | |
SOURCE Arrow Financial Corporation
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