Arrow Financial Corporation · NASDAQ:AROW
Arrow Financial — Q2 2025 Earnings Presentation
49 slides from Arrow Financial's earnings presentation, Jul 24, 2025
Slide 1: 2Q 2025 Investor Presentation
2Q 2025 Investor Presentation July 24, 2025
Slide 2: Safe Harbor
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
Slide 3: Table of Contents
Table of Contents • 2Q 2025 Results and Performance Metrics • Non-Interest Income/Expense • Loans • Deposits/Funding Sources • Credit Quality • Investments • Capital Actions and Strategy • Overview and History 3
Slide 4: 2Q 2025 Results
2Q 2025 Results ~ =\RROW Financial Corporation
Slide 5: 2Q25 Summary
2Q25 Summary Earnings Return on FTE NIM Return on Per Share Average Assets 3.16% Average Equity $0.65 1.00% vs. 10.66% 3.08% in 1Q 3Q Dividend Tangible Book Continued, but Low NPLs post increase to $0.29 Value per Share slower NIM 1Q credit event1 – per share $23.23 expansion in no further signs (+3
Slide 6: Highlights
Highlights Net income of $10.8 million, or $0.65 per share FTE 2Q25 NIM of 3.16% vs. 3.08% for 1Q25 ROA of 1.00%; trending higher absent unification spend Excluding 1Q credit event, net charge-offs were 0.04% for 2Q25 and 0.07% YTD Efficiency Ratio lowered to 63.4%; Excluding non-core unif
Slide 7: Investment Rationale
Investment Rationale • Continued expansion of Net Interest Margin • ROA on sustainable path to exceed 1% • Seeking M&A Opportunities • Absent M&A, committed to Return of Capital to Investors Share repurchases (significant YTD activity and future purchases subject to Price/TBV target) Announced d
Slide 8: 2Q 2025 Consolidated Financial Statements
2Q 2025 Consolidated Financial Statements UNAUDITED Linked Quarter and Comparative YTD Dollars in millions, except per share data Fav/(Unfav) YTD YTD Fav/(Unfav) Income Statement 2Q25 1Q25 Income Statement Var1 2Q25 2Q24 Var1 Total Interest Income $ 51.6 $ 50.4 1.2 Total Interest Income $ 101.9 $ 94
Slide 9: 2Q 2025 Consolidated Financial Statements
2Q 2025 Consolidated Financial Statements Linked Quarter UNAUDITED Dollars in millions, except per share data 2Q25 vs 2Q25 vs Balance Sheet 2Q25 1Q25 4Q24 1Q251 4Q241 Cash & Cash Equivalents $ 268.4 $ 301.4 $ 154.5 (33.0) 113.9 Investment Securities 528.4 553.0 570.8 (24.6) (42.4) Loans Receivable,
Slide 10: Net Interest Margin
Net Interest Margin 3.16% 2.69% 2.79% 2.85% 3.08% 3.16% 3.08% 2.67% 2.62% 2.98% 5.27% 5.30% 5.30% 5.36% 5.01% 5.17% 4.62% 2.85% 2.79% 2.15% 2.69% 2.06% 2.12% 2.12% 1.96% 1.96% 2.63% 2.62% 1.43% 2.55%2.55% 2023 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 NIM 1 Aver
Slide 11: 2025 Reported Results & Key Metrics
2025 Reported Results & Key Metrics 2Q 2025 YTD 2025 EPS $0.65 $1.03 FTE Net Interest Margin 3.16% 3.12% Profitability Net Revenue $40.1 million $79.3 million Return on Average Assets (ROA) 1.00% 0.80% Return on Average Equity (ROE) 10.66% 8.51% $3.4 billion of gross loans 87.2% loan-to-deposit rati
Slide 12: Non-Interest Income/Expense
Non-Interest Income/Expense
Slide 13: 2Q 2025 Non-Interest Income
2Q 2025 Non-Interest Income Dollars in thousands Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024 Fees for Other Services to Customers $ 2,787 $ 2,600 $ 2,706 Fiduciary Activities/Wealth Management 2,398 2,535 2,451 Insurance Commissions 1,804 1,826 1,662 Other Operating Income 620 878
Slide 14: 2Q 2025 Non-Interest Expense
2Q 2025 Non-Interest Expense Dollars in thousands Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024 Compensation & Benefits $ 14,086 $ 13,555 $ 13,036 Occupancy & Equipment 1,952 2,022 1,774 Data Processing & Technology 5,589 5,087 4,734 Advertising & Contributions 419 376 278 Legal & Pr
Slide 15: Operating Expenses — Efficiency Trends
Operating Expenses — Efficiency Trends 68.8% 67.7% 66.5% 63.4% 2023 2024 1Q 2025 2Q 2025 Operating efficiency trends on the right track Ongoing expense reviews Non-core items in rear-view mirror or winding down (Unification) Operating expenses to benefit (cost reduction/avoidance) from post-
Slide 16: Loans
Loans ~ =\rRow Financial Corporation
Slide 17: Loan Portfolio Composition
Loan Portfolio Composition Total Loan Portfolio ~ $3.4 billion Commercial (C&I)1 10.6% • No single relationship represents more than ~1.75% of Residential Commercial total loans as of June 30, 2025 Real Estate Real Estate (RRE) (CRE) 39.2% 17.8% • CRE concentration ratio of ~135% of risk-based capit
Slide 18: Loan Balances
Loan Balances Dollars in millions Loan Growth Across All Portfolios RRE Consumer CRE C&I ~8.9% CAGR $3,392 $3,422 $3,207 $2,983 $2,624 $1,318 $1,342 $1,194 $1,071 $946 $1,119 $1,109 $1,112 $1,065 $921 $497 $544 $596 $609 $442 $316 $350 $357 $359 $361 2021 2022 2023 2024 2Q 2025 • YTD loan growth of
Slide 19: Loan Exit Rate Trends
Loan Exit Rate Trends 1 2Q24 3Q24 4Q24 1Q25 2Q25 Consumer 5.99% 6.19% 6.32% 6.44% 6.55% CRE 5.38% 5.38% 5.31% 5.32% 5.29% C&I 5.27% 5.36% 5.36% 5.37% 5.42% RRE 4.51% 4.61% 4.66% 4.70% 4.77% Total Loans 5.25% 5.35% 5.40% 5.45% 5.51% Consumer CRE C&I RRE June Avg. Origination Rates 6.77% 6.57% 6.57% 6
Slide 20: Loan Yields
Loan Yields Dollars in billions 5.17% 5.27% 5.30% 5.30% 5.36% 5.02% 4.86% 4.70% $3.42 4.57% $3.39 $3.41 4.09% 4.13% 4.32% $3.26 $3.32 $3.33 Rate by Vintage 3.82% 3.90% 3.85% $3.21 $3.14 $3.07 $2.98 $3.01 2025 $2.93 6.83% $2.85 Pre 2021 4.60% $2.74 2024 $2.67 7.01% 2021 3.71% 2023 6.55% 2022 4.55% ~4
Slide 21: Consumer Loan Portfolio
Consumer Loan Portfolio• ~99.6% of the portfolio are collateralized auto Dollars in millions loans; only $4 million in unsecured personal loans 6.08% 6.06% 6.17% 5.79% 5.36% 5.61% • Auto loans sourced through a network of 5.11% 4.83% ~500 dealers in New York and Vermont with 4.61% 4.26% customers ex
Slide 22: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio • CRE excludes owner-occupied real estate loans Dollars in millions 5.08% 5.19% 5.07% 5.18% 5.25% 5.18% 5.15% 5.26% • CRE loans extended to businesses/borrowers 4.90% 4.88% primarily located in our regional market area $606 $609 $596 $555 $561 $562 • No CRE exposure
Slide 23: C&I Portfolio
C&I Portfolio Dollars in millions • C&I includes owner-occupied real estate 5.81% 5.88% 5.71% 5.74% loans 5.53% 5.66% 5.38% 4.89% • C&I loans extended to businesses/ 4.57% 4.35% borrowers primarily located in our regional $350 $350 $352 $354 $359 $358 $360 $365 $359 $353 $361 market area $346 $344 $
Slide 24: Residential Real Estate Loans
Residential Real Estate Loans Dollars in millions • RRE loan balances exclude FV hedge mark 4.67% 4.77% 4.66% 4.71% 4.70% 4.52% 4.57% • One-to-four family RRE secured by first or 4.17% 4.25% 4.10% $1,336 $1,342 second mortgages on residences and home 3.73% 3.71% 3.70% 3.78% 3.80% $1,287 $1,318 equit
Slide 25: Deposits/Funding Sources
Deposits/Funding Sources ~ =\RROW Financial Corporation
Slide 26: Deposit Balances – Excl. Brokered CDs
Deposit Balances – Excl. Brokered CDs Dollars in billions Non-Municipal Municipal Business $3.50 $3.51 $3.56 $3.67 $3.63 48.7% 49.5% 49.3% 48.4% 49.0% 24.3% 23.3% 22.7% 25.2% 23.6% 27.0% 27.2% 28.0% 26.4% 27.4% 2022 2023 2024 1Q 2025 2Q 2025 1Q25 deposit balances reflect seasonal surge of municipal
Slide 27: Deposit Balances – Excl. Brokered CDs
Deposit Balances – Excl. Brokered CDs Dollars in billions Time Deposits Savings Deposits Interest-Bearing Checking Deposit Balances Noninterest-Bearing $3.50 $3.51 $3.56 $3.67 $3.63 6.0% 13.9% 14.7% 14.0% 14.4% 41.6% 41.8% 42.7% 41.8% 40.9% 28.5% 22.8% 22.8% 25.2% 24.4% 23.9% 21.5% 20.3% 19.8% 19.0%
Slide 28: Funding Sources and 2Q 2025 Exit Rates
Funding Sources and 2Q 2025 Exit Rates Dollars in millions Consumer Business Municipal Total Balance Rate Balance Rate Balance Rate Balance Rate Demand (Non-Interest Bearing) $ 301 0.00% $ 425 0.00% $ 10 0.00% $ 736 0.00% Interest Bearing Checking 317 0.09% 279 3.00% 289 0.38% 884 1.10% Savings and
Slide 29: Core Deposit Analysis
Core Deposit Analysis 2Q 2025 1Q 2025 Variance Balance Exit Rate Balance Exit Rate Balance Exit Rate Demand (Non-Interest Bearing) $736 0.00% $697 0.00% $39 0.00% Interest Bearing Checking $884 1.10% $924 1.02% -$40 0.08% Savings and Money Market $1,485 2.48% $1,532 2.53% -$47 -0.05% Time Deposits $
Slide 30: Credit Quality
Credit Quality ~ =\RROW Financial Corporation
Slide 31: Credit Quality
Credit Quality Dollars in millions Non-Performing Loans (NPL) / Gross Loans 0.66% 0.64% 0.66% 0.62% 0.56% 0.19% 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 $21.4 $21.1 $21.9 $21.0 $19.0 $6.4 $15M commercial loan participation removed from loan balances as a result of foreclosure and partial charge-off in 2Q25 (
Slide 32: Delinquent Loan Trends
Delinquent Loan Trends Delinquent Loans to Total Loans – Excl. 1Q25 Credit Event 0.76% 0.68% 0.62% 0.61% 0.58% 0.60% 0.60% 0.57% 0.56% 0.58% 0.53% 0.51% 0.45% 0.43% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Delinquency trends remain benign 32
Slide 33: Allowance for Credit Losses
Allowance for Credit Losses YTD 2025 Allowance for Credit Loss Walk Provision for Credit Losses $5.6M $300 $34,191 $293 $33,598 $5,020 ($5,020) 4Q 2024 Net Charge-Offs Net Charge-Offs Loan Growth & Specific Reserve 2Q 2025 Model Calculation In 2Q25, CECL model was updated for latest loss history a
Slide 34: Investments
Investments ~ =\RROW Financial Corporation
Slide 35: Investment Portfolio – AFS and HTM
Investment Portfolio – AFS and HTM Dollars in thousands June 30, 2025 Wtd Avg Expected Current Book Unrealized Category Market Value Book Yield Remaining Life Duration Run-Off by Value Gain / (Loss)1 EOY 1 US Treasuries $ 98,179 $ 100,114 $ 1,935 4.48% 3.51 3.14 $ 25,000 US Agencies 25,000 24,620 (3
Slide 36: Capital Actions and Strategy
Capital Actions and Strategy
Slide 37: Capital & Ownership
Capital & Ownership • Declared 3Q25 Dividend of $0.29 per share; 48th consecutive quarter of dividends • Additional $5.0 million authorized for potential future share repurchases • YTD 2025 Share Repurchase Activity YTD, ~$8.5M of stock repurchases o ~324.5K shares at an average price of $26.23
Slide 38: Fully Diluted Tangible Book Value (TBV)
Fully Diluted Tangible Book Value (TBV) 2025 TBV/Share Walk $1.03 $0.46 $23.23 ($0.10) ($0.56) $22.40 4Q 2024 Net Income Dividends AOCI Stock Repurchases 2Q 2025 38
Slide 39: Capital Position
Capital Position Capital Ratios – Arrow Financial Corporation1 Tangible Common Equity 8.56% 8.72% 8.00% Total Risk-Based Capital 14.48% 14.51% 6.00% Tier 1 Risk-Based Capital 13.23% 13.37% 4.50% Common Equity Tier 1 Capital 12.59% 12.73% 4.00% Tier 1 Leverage Ratio 9.61% 9.64% 0% 1% 2% 3% 4% 5% 6% 7
Slide 40: Capital Position
Capital Position Capital Ratios – Arrow Bank1 8.00% Total Risk-Based Capital 14.00% 14.07% 6.00% Tier 1 Risk-Based Capital 12.75% 12.93% 4.50% Common Equity Tier 1 Capital 12.75% 12.93% 4.00% Tier 1 Leverage Ratio 9.24% 9.26% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% Minimum Regulato
Slide 41: Overview and History
y “al Overview and History ~ =\RROW Financial Corporation
Slide 42: Financial Snapshot
Financial Snapshot Dollars in thousands, except per share amounts 2019 2020 2021 2022 2023 2024 YTD 2025 Total assets $3,184,275 $3,688,636 $4,027,952 $3,969,509 $4,169,868 $4,306,348 $4,414,719 Loans $2,386,120 $2,595,030 $2,667,941 $2,983,207 $3,212,908 $3,394,541 $3,424,754 Loan-to-deposit ratio
Slide 43: Our Profile
Our Profile • Bank holding company • Arrow Bank National Association • Upstate Agency, LLC • Wealth Management Services • $4.4 billion in assets • 550 plus employees • Primary service area population of more than 1.1 million 38 Bank Branches 9 Insurance Offices 43
Slide 44: Our History
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 For
Slide 45: Our History
Our History 1988 Formed Saratoga National Bank and Trust Company and expanded footprint 1999 Surpassed $1 billion in assets 2001 Added to the Russell 2000 Index 2004 Bought first insurance agency 2012 Reached $2 billion in assets 2018 Consolidated our insurance business into the Upstate Agency brand
Slide 46: President and Chief Executive Officer
President and Chief Executive Officer David S. DeMarco, President and CEO 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,
Slide 47: Experienced Leadership Team
Experienced Leadership Team Penko Ivanov, Andrew J. Wise, Marc Yrsha, Senior Executive Vice President, Senior Executive Vice President, Senior Executive Vice President, Chief Financial Officer, Treasurer and Chief Risk Officer Chief Banking Officer Chief Accounting Officer Mr. Ivanov joined the Comp
Slide 48: Experienced Leadership Team
Experienced Leadership Team Michael Jacobs, Brooke Pancoe, Executive Vice President, Executive Vice President, Chief Information Officer Chief Human Resources Officer Mr. Jacobs joined the Company in 2003 Ms. Pancoe joined the Company in 2018 as Information Systems Manager. He as Director of Human R
Slide 49: Thank you!
Thank you! ~ =\RROW Financial Corporation