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

, /PRNewswire/ -- 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 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. Three Months Ended (Dollars in Thousands) March 31, 2025 December 31, 2024 March 31, 2024 Interest and Dividend Income $ 50,366 $ 50,901 $ 46,677 Interest Expense 19,009 21,214 20,222 Net Interest Income 31,357 29,687 26,455 Average Earning Assets(A) 4,143,939 4,167,039 4,085,398 Average Interest-Bearing Liabilities 3,184,196 3,185,215 3,108,093 Yield on Earning Assets(A) 4.93 % 4.86 % 4.60 % Cost of Interest-Bearing Liabilities 2.42 2.65 2.62 Net Interest Spread 2.51 2.21 1.98 Net Interest Margin 3.07 2.83 2.60 Net Interest Margin - FTE 3.08 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. 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." —————— 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. 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. 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 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. 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 Banks 1,621 2,880 2,447 Interest and Dividends on Investment Securities: Fully Taxable 3,608 2,728 3,186 Exempt from Federal Taxes 587 590 668 Total Interest and Dividend Income 50,366 50,901 46,677 INTEREST EXPENSE Interest-Bearing Checking Accounts 1,803 1,932 1,641 Savings Deposits 9,483 11,144 10,230 Time Deposits over $250,000 1,811 1,815 1,973 Other Time Deposits 5,529 5,906 5,083 Borrowings 167 198 1,076 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 169 172 171 Interest on Financing Leases 47 47 48 Total Interest Expense 19,009 21,214 20,222 NET INTEREST INCOME 31,357 29,687 26,455 Provision for Credit Losses 5,019 2,854 617 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 26,338 26,833 25,838 NON-INTEREST INCOME Income From Fiduciary Activities 2,535 2,615 2,457 Fees for Other Services to Customers 2,600 2,762 2,543 Insurance Commissions 1,826 1,848 1,682 Net Gain (Loss) on Securities 317 (3,072) 17 Net Gain on Sales of Loans 101 74 4 Other Operating Income 460 — 1,155 Total Non-Interest Income 7,839 4,227 7,858 NON-INTEREST EXPENSE Salaries and Employee Benefits 13,555 13,332 12,893 Occupancy Expenses, Net 2,022 1,870 1,771 Technology and Equipment Expense 5,087 5,119 4,820 FDIC Assessments 670 664 715 Other Operating Expense 4,711 4,853 3,813 Total Non-Interest Expense 26,045 25,838 24,012 INCOME BEFORE PROVISION FOR INCOME TAXES 8,132 5,222 9,684 Provision for Income Taxes 1,822 752 2,024 NET INCOME $ 6,310 $ 4,470 $ 7,660 Average Shares Outstanding: Basic 16,665 16,718 16,865 Diluted 16,673 16,739 16,867 Per Common Share: Basic Earnings $ 0.38 $ 0.26 $ 0.45 Diluted Earnings 0.38 0.27 0.45 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 Banks 268,481 127,124 Investment Securities: Available-for-Sale at Fair Value 445,744 463,111 Held-to-Maturity (Fair Value of $96,335 at March 31, 2025 and $96,586 at December 31, 2024) 97,492 98,261 Equity Securities 5,372 5,055 Other Investments 4,353 4,353 Loans 3,416,868 3,394,541 Allowance for Credit Losses (37,771) (33,598) Net Loans 3,379,097 3,360,943 Premises and Equipment, Net 59,919 59,717 Goodwill 23,789 23,789 Other Intangible Assets, Net 1,954 2,058 Other Assets 129,719 134,515 Total Assets $ 4,448,885 $ 4,306,348 LIABILITIES Noninterest-Bearing Deposits 697,374 702,978 Interest-Bearing Checking Accounts 924,200 810,834 Savings Deposits 1,532,385 1,520,024 Time Deposits over $250,000 182,552 191,962 Other Time Deposits 631,654 602,132 Total Deposits 3,968,165 3,827,930 Borrowings 8,600 8,600 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 20,000 Finance Leases 4,979 5,005 Other Liabilities 42,732 43,912 Total Liabilities 4,044,476 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 Capital 413,469 413,476 Retained Earnings 78,827 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' Equity 404,409 400,901 Total Liabilities and Stockholders' Equity $ 4,448,885 $ 4,306,348 Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited) Quarter Ended 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 Net Income $ 6,310 $ 4,470 $ 8,975 $ 8,604 $ 7,660 Share and Per Share Data: Period End Shares Outstanding 16,670 16,743 16,734 16,723 16,710 Basic Average Shares Outstanding 16,665 16,718 16,710 16,685 16,865 Diluted Average Shares Outstanding 16,673 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 Share 0.38 0.27 0.53 0.52 0.45 Cash Dividend Per Share 0.280 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 Securities 591,841 579,107 590,352 644,192 671,105 Loans 3,406,075 3,354,463 3,329,873 3,280,285 3,235,841 Deposits 3,825,124 3,847,691 3,672,128 3,678,957 3,693,325 Other Borrowed Funds 48,375 49,090 134,249 131,537 122,033 Stockholders' Equity 404,394 393,696 387,904 378,256 379,446 Total Assets 4,324,917 4,339,833 4,245,597 4,237,359 4,245,484 Return on Average Assets, annualized 0.59 % 0.41 % 0.84 % 0.82 % 0.73 % Return on Average Equity, annualized 6.33 % 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 Liabilities 3,184,196 3,185,215 3,085,066 3,127,417 3,108,093 Interest Income 50,366 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 Expense 19,009 21,214 21,005 20,820 20,222 Net Interest Income 31,357 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, annualized 3.07 % 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 Amortization 81 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 Income 7,839 4,227 8,133 7,856 7,858 Less: Net Gain(loss) on Securities 317 (3,072) 94 54 17 Net Gross Income $ 39,034 $ 37,143 $ 36,626 $ 35,117 $ 34,472 Efficiency Ratio 66.52 % 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, net 25,743 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 Ratio 9.61 % 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 Ratio 13.23 % 13.35 % 13.41 % 13.53 % 13.50 % Total Risk-Based Capital Ratio 14.48 % 14.47 % 14.46 % 14.57 % 14.57 % 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. 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 Total Stockholders' Equity (GAAP) $ 404,409 $ 400,901 $ 393,311 $ 383,018 $ 377,986 Less: Goodwill and Other Intangible assets, net 25,743 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 Outstanding 16,670 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 Income 6,310 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. 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 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%). 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 Total Risk Weighted Assets $ 3,143,547 $ 3,126,364 $ 3,110,178 $ 3,072,922 $ 3,049,525 Common Equity Tier 1 Capital 395,900 397,285 397,122 395,691 391,706 Common Equity Tier 1 Ratio 12.59 % 12.71 % 12.77 % 12.88 % 12.84 % * 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, 2025 March 31, 2024 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 146,023 $ 1,621 4.50 % $ 178,452 $ 2,447 5.52 % Investment Securities: Fully Taxable 499,903 3,608 2.93 550,538 3,186 2.33 Exempt from Federal Taxes 91,938 587 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 Banks 31,515 29,804 Other Assets 183,154 161,698 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 Deposits 1,515,961 9,483 2.54 1,481,001 10,230 2.78 Time Deposits of $250,000 or More 186,159 1,811 3.95 177,328 1,973 4.47 Other Time Deposits 593,130 5,529 3.78 496,813 5,083 4.11 Total Interest-Bearing Deposits 3,135,821 18,626 2.41 2,986,060 18,927 2.55 Borrowings 23,378 167 2.90 96,984 1,076 4.46 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 169 3.43 20,000 171 3.44 Finance Leases 4,997 47 3.81 5,049 48 3.82 Total Interest-Bearing Liabilities 3,184,196 19,009 2.42 3,108,093 20,222 2.62 Noninterest-Bearing Deposits 689,303 707,265 Other Liabilities 47,024 50,680 Total Liabilities 3,920,523 3,866,038 Stockholders' Equity 404,394 379,446 Total Liabilities and Stockholders' Equity $ 4,324,917 $ 4,245,484 Net Interest Income $ 31,357 $ 26,455 Net Interest Spread 2.51 % 1.98 % Net Interest Margin 3.07 % 2.60 % (1) Includes Nonaccrual Loans. Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited) Quarter Ended: March 31, 2025 December 31, 2024 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 146,023 $ 1,621 4.50 % $ 233,469 $ 2,880 4.91 % Investment Securities: Fully Taxable 499,903 3,608 2.93 484,860 2,728 2.24 Exempt from Federal Taxes 91,938 587 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 Banks 31,515 30,706 Other Assets 183,154 173,617 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 Deposits 1,515,961 9,483 2.54 1,567,455 11,144 2.83 Time Deposits of $250,000 or More 186,159 1,811 3.95 183,325 1,815 3.94 Other Time Deposits 593,130 5,529 3.78 582,537 5,906 4.03 Total Interest-Bearing Deposits 3,135,821 18,626 2.41 3,136,125 20,797 2.64 Borrowings 23,378 167 2.90 24,089 198 3.27 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 169 3.43 20,000 172 3.42 Finance Leases 4,997 47 3.81 5,001 47 3.74 Total Interest-Bearing Liabilities 3,184,196 19,009 2.42 3,185,215 21,214 2.65 Noninterest-Bearing Deposits 689,303 711,566 Other Liabilities 47,024 49,356 Total Liabilities 3,920,523 3,946,137 Stockholders' Equity 404,394 393,696 Total Liabilities and Stockholders' Equity $ 4,324,917 $ 4,339,833 Net Interest Income $ 31,357 $ 29,687 Net Interest Spread 2.51 % 2.21 % Net Interest Margin 3.07 % 2.83 % (1) Includes Nonaccrual Loans. Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited) Quarter Ended: 3/31/2025 12/31/2024 Loan Portfolio Commercial Loans $ 154,275 $ 158,991 Commercial Real Estate Loans 804,015 796,365 Subtotal Commercial Loan Portfolio 958,290 955,356 Consumer Loans 1,118,735 1,118,981 Residential Real Estate Loans 1,339,843 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-off 704 815 Net Loans Charged-off (846) (518) Provision for Credit Losses 5,019 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 Accruing 405 398 Loans Restructured and in Compliance with Modified Terms 16 20 Total Nonperforming Loans 19,033 21,039 Repossessed Assets 426 382 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 Loans 1.11 % 0.99 % Allowance for Credit Losses to Period-End Nonperforming Loans 198.45 % 159.69 % Nonperforming Loans to Period-End Loans 0.56 % 0.62 % Nonperforming Assets to Period-End Assets 0.44 % 0.50 % SOURCE Arrow Financial Corporation WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

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

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