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
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 event
Slide 3: Table of Contents
3 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
Slide 4: 2Q 2025 Results
2Q 2025 Results - =\RROW Financial Corporation
Slide 5: 2Q25 Summary
5 2Q25 Summary Financial information provided in this document is unaudited. Please refer to the 2Q25 Earnings Release for a reconciliation of any non-GAAP measures. 1Refer to 1Q25 Investor Presentation for more information on 1Q credit event Return on Average Assets 1.00% Earnings Per Share $0.65 F
Slide 6: Highlights
6 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 un
Slide 7: Investment Rationale
7 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
Slide 8: 2Q 2025 Consolidated Financial Statements
8 2Q 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 Quart
Slide 9: 2Q 2025 Consolidated Financial Statements - Balance Sheet
9 2Q 2025 Consolidated Financial Statements 1 Variances rounded based on actual whole dollar amounts UNAUDITED Dollars in millions, except per share data Linked Quarter Balance Sheet 2Q25 1Q25 4Q24 2Q25 vs 1Q251 2Q25 vs 4Q241 Cash & Cash Equivalents $ 268.4 $ 301.4 $ 154.5 (33.0) 113.9 Investment Se
Slide 10: Net Interest Margin
10 Net Interest Margin 1 1Yield includes the impact of deferred fees and amortization of loan origination costs 2FTE NIM has historically been 1-2 bps higher than NIM reported under GAAP 2.98% 2.63% 2.55%2.55% 2.62% 2.69% 2.79% 2.85% 3.08% 3.16% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 All
Slide 11: 2025 Reported Results & Key Metrics
11 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 ratio Balance Sheet $3.9 billion of d
Slide 12: Non-Interest Income/Expense
Non-Interest Income/Expense
Slide 13: 2Q 2025 Non-Interest Income
13 2Q 2025 Non-Interest Income • Wealth Management assets under management (AUM) increased by ~$36M YTD Net account activity – new business less closed accounts – increased YTD AUM by ~$22M Market performance increased YTD AUM by ~$14M • Insurance revenue up YoY due to rising premiums and prior
Slide 14: 2Q 2025 Non-Interest Expense
14 2Q 2025 Non-Interest Expense • 2Q25 included Unification expenses of ~$1.1 million • Unification expenses were primarily comprised of project management (legal & professional) and information technology costs related to the July 2025 system conversion and operational merger Dollars in thousands J
Slide 15: Operating Expenses — Efficiency Trends
15 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 po
Slide 16: Loans
Loans - =\RROW Financial Corporation
Slide 17: Loan Portfolio Composition
17 Loan Portfolio Composition Commercial (C&I)1 10.6% Commercial Real Estate (CRE) 17.8% Consumer 32.4% Residential Real Estate (RRE) 39.2% • No single relationship represents more than ~1.75% of total loans as of June 30, 2025 • CRE concentration ratio of ~135% of risk-based capital • CRE loans not
Slide 18: Loan Growth Across All Portfolios
18 $2,624 $2,983 $3,207 $3,392 $3,422 Loan Balances $316 $350 $357 $359 $361 $442 $497 $544 $596 $609 $921 $1,065 $1,112 $1,119 $1,109 $946 $1,071 $1,194 $1,318 $1,342 2021 2022 2023 2024 2Q 2025 RRE Consumer CRE C&I Dollars in millions Loan Growth Across All Portfolios 1Refer to 1Q25 Investor Prese
Slide 19: Loan Exit Rate Trends
19 • Loan origination rates exceed portfolio rates • Consumer (Indirect Auto) main driver of future NIM expansion absent rate cuts • C&I and CRE rates are affected by “lumpiness” of origination volume & pay downs • RRE rates trending higher despite increased loan sales from current originations Loan
Slide 20: Loan Yields
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 $3.42 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% 5.36% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Loan Balance Average Loan Port
Slide 21: Consumer Loan Portfolio
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 $1,109 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% 6.17% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Period-
Slide 22: Commercial Real Estate Portfolio
22 Commercial Real Estate Portfolio $442 $441 $455 $468 $497 $507 $519 $529 $543 $555 $561 $562 $596 $606 $609 4.90% 5.08% 5.19% 4.88% 5.07% 5.18% 5.25% 5.18% 5.15% 5.26% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Period-End Loan Balance Average Loan Portfolio Yield f
Slide 23: C&I Portfolio
23 C&I Portfolio $316 $334 $346 $350 $350 $344 $352 $354 $359 $358 $360 $365 $359 $353 $361 4.35% 4.57% 4.89% 5.38% 5.53% 5.66% 5.81% 5.88% 5.71% 5.74% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Period-End Loan Balance Average Loan Portfolio Yield for the Period Shown
Slide 24: Residential Real Estate Loans
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 $1,342 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% 4.70% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 P
Slide 25: Deposits/Funding Sources
Deposits/Funding Sources - =\RROW Financial Corporation
Slide 26: Deposit Balances – Excl. Brokered CDs
26 Deposit Balances – Excl. Brokered CDs 27.0% 27.2% 28.0% 26.4% 27.4% 24.3% 23.3% 22.7% 25.2% 23.6% 48.7% 49.5% 49.3% 48.4% 49.0% 2022 2023 2024 1Q 2025 2Q 2025 Non-Municipal Municipal Business Dollars in billions $3.50 $3.51 $3.56 $3.67 $3.63 1Q25 deposit balances reflect seasonal surge of municip
Slide 27: Deposit Balances by Type – Excl. Brokered CDs
27 Deposit Balances – Excl. Brokered CDs 23.9% 21.5% 19.8% 19.0% 20.3% 28.5% 22.8% 22.8% 25.2% 24.4% 41.6% 41.8% 42.7% 41.8% 40.9% 6.0% 13.9% 14.7% 14.0% 14.4% 2022 2023 2024 1Q 2025 2Q 2025 Deposit Balances Time Deposits Savings Deposits Interest-Bearing Checking Noninterest-Bearing Dollars in bill
Slide 28: Funding Sources and 2Q 2025 Exit Rates
28 Funding Sources and 2Q 2025 Exit Rates • Continue strong pricing discipline • 6-month CD special repriced to 3.85% APR / 3.89% APY in July • ~$365 million of CDs maturing/repricing over next 6 months – but impact is averaging less than 10bps based on current CD special vs. portfolio rates Dollars
Slide 29: Core Deposit Analysis
29 Core Deposit Analysis 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 $524 3.36% $514 3.44% $
Slide 30: Credit Quality
Credit Quality - =\RROW Financial Corporation
Slide 31: Credit Quality
31 Credit Quality 0.66% 0.64% 0.66% 0.62% 0.56% 0.19% 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Non-Performing Loans (NPL) / Gross Loans Dollars in millions $15M commercial loan participation removed from loan balances as a result of foreclosure and partial charge-off in 2Q25 (reserved in 1Q25)1 YTD annuali
Slide 32: Delinquent Loan Trends
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% 0.58% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Delinquent Loans to Total Loans – Excl. 1Q25 Credit Event Delinquency trends remain benign
Slide 33: Allowance for Credit Losses
33 Allowance for Credit Losses $33,598 ($5,020) $5,020 $293 $300 $34,191 4Q 2024 Net Charge-Offs Net Charge-Offs Loan Growth & Model Calculation Specific Reserve 2Q 2025 YTD 2025 Allowance for Credit Loss Walk Provision for Credit Losses $5.6M In 2Q25, CECL model was updated for latest loss histor
Slide 34: Investments
Investments - =\RROW Financial Corporation
Slide 35: Investment Portfolio – AFS and HTM
35 • During 2Q25 book yield increased 15bps to 3.11% while duration increased from 3.08 to 3.36 years • AFS additions of ~$39.6M in 2Q25 at average yield of ~5.31% Investment Portfolio – AFS and HTM 1 1 Unrealized Gain/(Loss) on HTM for informational purposes only – not reflected in OCI Dollars in t
Slide 36: Capital Actions and Strategy
Capital Actions and Strategy
Slide 37: Capital & Ownership
37 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: 2025 TBV/Share Walk
38 $22.40 $1.03 ($0.56) ($0.10) $0.46 $23.23 4Q 2024 Net Income Dividends AOCI Stock Repurchases 2Q 2025 2025 TBV/Share Walk Fully Diluted Tangible Book Value (TBV)
Slide 39: Capital Position
39 Capital Position 9.64% 12.73% 13.37% 14.51% 8.72% 9.61% 12.59% 13.23% 14.48% 8.56% 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
Slide 40: Capital Position – Arrow Bank
40 Capital Position 9.26% 12.93% 12.93% 14.07% 9.24% 12.75% 12.75% 14.00% 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 Capital Ratios – Arrow Bank1 Minimum Regul
Slide 41: Overview and History
Overview and History - =\RROW Financial Corporation
Slide 42: Financial Snapshot
42 Financial Snapshot 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 91.2% 80.2% 75.1% 85.3% 87.1% 88.7% 87.2% RO
Slide 43: Our Profile
43 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 Insurance Offices Bank Branches 938
Slide 44: Our History
44 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
Slide 45: Our History
45 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 bra
Slide 46: President and Chief Executive Officer
46 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 202
Slide 47: Experienced Leadership Team
47 Experienced Leadership Team 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
Slide 48: Experienced Leadership Team
48 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 acqu
Slide 49: Thank you!
Thank you! - =\RROW Financial Corporation