Arrow Reports 2nd Quarter Net Income of $10.8 Million, or $0.65 per Share, and Declares 3rd Quarter Dividend of $0.29 per Share

, /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or "the Company") announced financial results for the three-month period ended June 30, 2025. Reported net income for the second quarter of 2025 was $10.8 million and fully diluted earnings per share ("EPS") was $0.65, versus net income of $6.3 million and EPS of $0.38 for the first quarter of 2025. The Board of Directors of Arrow declared a quarterly cash dividend of $0.29 per share, an increase of $0.01 or 3.6% from the prior quarter, payable August 25, 2025 to shareholders of record as of August 11, 2025. This quarter's results include approximately $1.1 million ($0.05 per share) of non-core unification costs related to Arrow's system conversion and operational merger of its two banking subsidiaries, which were successfully completed in July 2025. This Earnings Release and related commentary should be read in conjunction with the Company's July 24, 2025 Form 8-K and related Second 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 strong second-quarter results, including return on average assets reaching 1.00%, with net interest margin and other key metrics approaching our strong historic levels. Simultaneously, we recently successfully completed our bank unification by consolidating our multi-bank systems and bank software applications into a single core banking platform, the last major milestone in our rebrand to Arrow Bank. This was an important step on our path toward improving customer experience and gaining operational efficiencies, further solidifying our position as a premier community bank under a strong, single recognizable brand. Our amazing team worked incredibly hard to make this transition as easy as possible for our customers, and I want to extend my deepest appreciation for their unwavering commitment and care. As we look ahead, Arrow is poised to advance our strategic priorities and continue to deliver value for our communities and shareholders." Second-Quarter Highlights and Key Metrics Net Income of $10.8 million (EPS of $0.65) Record Net Interest Income of $32.5 million Net Interest Margin improved to 3.15% (3.16% FTE1), up from 3.07% (3.08% FTE) in the prior quarter Return on Average Assets (ROA) improved to 1.00% Excluding unification related expenses, ROA was 1.08% Loan-to-Deposit ratio of 87.2% Quarter-end loan exit rates2 increased to 5.51% at June 30, 2025 vs. 5.45% at March 31, 2025 Tangible Book Value per share increased to $23.23 Repurchased $5.1 million of shares (196,497 shares at an average cost of $26.06 per share) Additional $5.0 million authorized for potential future share repurchases Income Statement Net Income: Net income for the second quarter of 2025 was $10.8 million, increasing from $6.3 million in the first quarter of 2025. Compared to the prior quarter, net income benefited from an increase of $1.2 million in net interest income, a decrease in the provision for credit losses of $4.4 million and a slight decrease in non-interest expense of $0.4 million. Net Interest Income: Net interest income for the second quarter of 2025 was $32.5 million, increasing 3.8% from the first quarter of 2025. Total interest and dividend income was $51.6 million for the second quarter of 2025, an increase from $50.4 million in the first quarter of 2025. Interest expense for the second quarter of 2025 was $19.0 million, consistent with the first quarter of 2025. Net Interest Margin: Net interest margin, on an FTE basis, for the second quarter of 2025 increased to 3.16%, compared to 3.08% for the first quarter of 2025. The increase in net interest margin compared to the first quarter of 2025 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. Three Months Ended (Dollars in Thousands) June 30, 2025 March 31, 2025 June 30, 2024 Interest and Dividend Income $ 51,573 $ 50,366 $ 47,972 Interest Expense 19,040 19,009 20,820 Net Interest Income 32,533 31,357 27,152 Average Earning Assets(A) 4,142,993 4,143,939 4,083,813 Average Interest-Bearing Liabilities 3,191,906 3,184,196 3,127,417 Yield on Earning Assets(A) 4.99 % 4.93 % 4.72 % Cost of Interest-Bearing Liabilities 2.39 2.42 2.68 Net Interest Spread 2.60 2.51 2.04 Net Interest Margin 3.15 3.07 2.67 Net Interest Margin - FTE 3.16 3.08 2.69 (A) IncludesNonaccrual Loans Provision for Credit Losses: For the second quarter of 2025, the provision for credit losses was $0.6 million compared to $5.0 million in the first quarter of 2025. The sizeable quarter-over-quarter decrease in the second quarter provision reflects the recognition of a specific reserve on a large commercial loan participation in the first quarter of 2025. Non-Interest Income: Non-interest income for the three months ended June 30, 2025, was $7.6 million, a decrease from $7.8 million in the first quarter of 2025. Revenue related to wealth management decreased from the prior quarter as a result of weaker overall market performance. Interchange fees improved in the second quarter from the linked quarter. Other operating income was negatively affected by small valuation adjustments to other assets. Non-Interest Expense: Non-interest expense for the second quarter of 2025 was $25.7 million, a decrease from $26.0 million in the first quarter of 2025. The second quarter of 2025 included unification expenses of approximately $1.1 million as compared to $0.6 million in the first quarter of 2025. 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 $3.1 million and 22.2%, respectively, for the second quarter of 2025, and $1.8 million and 22.4%, respectively, for the first quarter of 2025. Balance Sheet Total Assets: Total assets were $4.4 billion at June 30, 2025, a decrease of $34.2 million, or 0.8%, as compared to March 31, 2025. For the second quarter of 2025, overall change in the balance sheet was primarily attributable to fluctuations in cash balances, maturities of investments and growth in the loan portfolio. Investments: Total investments were $528.4 million as of June 30, 2025, a decrease of $24.6 million, or 4.4%, compared to March 31, 2025. The decrease from March 31, 2025 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 June 30, 2025. Loan growth for the second quarter of 2025 was $7.9 million. Loan growth was primarily driven by an increase in residential real estate loans and to a lesser extent by commercial loan relationships. 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 $34.2 million as of June 30, 2025, which represented 1.00% of loans outstanding, as compared to $37.8 million, or 1.11%, at March 31, 2025. The decrease in the allowance for credit losses was primarily driven by the recognition of a specific reserve of $3.75 million in the first quarter of 2025 and subsequent charge-off of the reserved loan balances during the second quarter. The remaining loan balance has been reclassified to Other Assets after the participating banks assumed control of the collateral properties and appointed a property manager to manage the day-to-day activities while exploring further options. The properties itself are being held in an unconsolidated LLC in which Arrow has an ownership interest equivalent to its rights under the former loan participation. As previously disclosed, the properties are generating positive cash flow and a majority is tenant occupied. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.49% for the three-month period ended June 30, 2025, as compared to 0.10% for the three-month period ended March 31, 2025. The increase was the result of the charge-off of the previously reserved commercial loan participation. Nonperforming assets were $7.0 million as of June 30, 2025, representing 0.16% of period-end assets, compared to 0.44% at March 31, 2025. Deposits: At June 30, 2025, deposit balances were $3.9 billion, a decrease of $38.8 million from March 31, 2025. The change from March 31, 2025 was primarily attributable to the seasonality of municipal deposits. Please refer to page 7 for further details related to deposits. Capital: Total stockholders' equity was $408.5 million at June 30, 2025, an increase of $4.1 million, or 1.0%, from March 31, 2025. The increase from March 31, 2025 was primarily attributable to net income of $10.8 million and other comprehensive income of $2.6 million offset by dividends of $4.7 million and share repurchases of $5.1 million and other stock-based activity. Arrow's regulatory capital ratios remain strong. As of June 30, 2025, Arrow's Common Equity Tier 1 Capital Ratio was 12.73% and Total Risk-Based Capital Ratio was 14.51%. Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report. 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 73 consecutive quarters, securing its prominent position as an "Exceptional Performance Bank." 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. 1 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.2 The "loan exit rate" is the point in time interest rate in effect at the end of the reporting period.3 Excludes both $3.2 million fair value hedge adjustment at June 30, 2025 and $3.3 million fair value hedge adjustment at March 31, 2025. ARROW FINANCIAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In Thousands, Except Per Share Amounts - Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 INTEREST AND DIVIDEND INCOME Interest and Fees on Loans $ 45,600 $ 42,141 $ 90,150 $ 82,517 Interest on Deposits at Banks 1,622 2,185 3,243 4,632 Interest and Dividends on Investment Securities: Fully Taxable 3,790 3,009 7,398 6,195 Exempt from Federal Taxes 561 637 1,148 1,305 Total Interest and Dividend Income 51,573 47,972 101,939 94,649 INTEREST EXPENSE Interest-Bearing Checking Accounts 1,941 1,903 3,744 3,544 Savings Deposits 9,367 10,571 18,850 20,801 Time Deposits over $250,000 1,726 1,869 3,537 3,842 Other Time Deposits 5,793 5,074 11,322 10,157 Borrowings — 1,186 167 2,262 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 171 170 340 341 Interest on Financing Leases 42 47 89 95 Total Interest Expense 19,040 20,820 38,049 41,042 NET INTEREST INCOME 32,533 27,152 63,890 53,607 Provision for Credit Losses 594 775 5,613 1,392 NET INTEREST INCOME AFTER PROVISION FORCREDIT LOSSES 31,939 26,377 58,277 52,215 NON-INTEREST INCOME Income From Fiduciary Activities 2,398 2,451 4,933 4,908 Fees for Other Services to Customers 2,787 2,706 5,387 5,249 Insurance Commissions 1,804 1,662 3,630 3,344 Net (Loss) Gain on Securities (40) 54 277 71 Net Gain on Sales of Loans 213 5 314 9 Other Operating Income 447 978 907 2,133 Total Non-Interest Income 7,609 7,856 15,448 15,714 NON-INTEREST EXPENSE Salaries and Employee Benefits 14,086 13,036 27,641 25,929 Occupancy Expenses, Net 1,952 1,774 3,974 3,545 Technology and Equipment Expense 5,589 4,734 10,676 9,554 FDIC Assessments 649 698 1,319 1,413 Other Operating Expense 3,376 3,076 8,087 6,889 Total Non-Interest Expense 25,652 23,318 51,697 47,330 INCOME BEFORE PROVISION FOR INCOME TAXES 13,896 10,915 22,028 20,599 Provision for Income Taxes 3,091 2,311 4,913 4,335 NET INCOME $ 10,805 $ 8,604 $ 17,115 $ 16,264 Average Shares Outstanding: Basic 16,545 16,685 16,611 16,764 Diluted 16,551 16,709 16,618 16,789 Per Common Share: Basic Earnings $ 0.65 $ 0.52 $ 1.03 $ 0.97 Diluted Earnings 0.65 0.52 1.03 0.97 ARROW FINANCIAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In Thousands, Except Share and Per Share Amounts - Unaudited) June 30,2025 December 31,2024 ASSETS Cash and Due From Banks $ 40,976 $ 27,422 Interest-Bearing Deposits at Banks 227,472 127,124 Investment Securities: Available-for-Sale at Fair Value 447,678 463,111 Held-to-Maturity (Fair Value of $70,027 at June 30, 2025 and$96,586 at December 31, 2024) 70,828 98,261 Equity Securities 5,332 5,055 Other Investments 4,557 4,353 Loans 3,424,754 3,394,541 Allowance for Credit Losses (34,191) (33,598) Net Loans 3,390,563 3,360,943 Premises and Equipment, Net 60,701 59,717 Goodwill 23,789 23,789 Other Intangible Assets, Net 1,870 2,058 Other Assets 140,953 134,515 Total Assets $ 4,414,719 $ 4,306,348 LIABILITIES Noninterest-Bearing Deposits 736,535 702,978 Interest-Bearing Checking Accounts 884,130 810,834 Savings Deposits 1,484,666 1,520,024 Time Deposits over $250,000 179,254 191,962 Other Time Deposits 644,745 602,132 Total Deposits 3,929,330 3,827,930 Borrowings 8,600 8,600 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 20,000 Finance Leases 4,969 5,005 Other Liabilities 43,314 43,912 Total Liabilities 4,006,213 3,905,447 STOCKHOLDERS' EQUITY Preferred Stock, $1 Par Value and 1,000,000 SharesAuthorized at June 30, 2025 and December 31, 2024 — — Common Stock, $1 Par Value; 30,000,000 Shares Authorized(22,066,559 Shares Issued at June 30, 2025 andDecember 31, 2024) 22,067 22,067 Additional Paid-in Capital 413,880 413,476 Retained Earnings 84,970 77,215 Accumulated Other Comprehensive Loss (10,889) (18,453) Treasury Stock, at Cost (5,582,833 Shares at June 30, 2025 and 5,323,638 Shares at December 31, 2024) (101,522) (93,404) Total Stockholders' Equity 408,506 400,901 Total Liabilities and Stockholders' Equity $ 4,414,719 $ 4,306,348 Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited) Quarter Ended 6/30/2025 3/31/2025 12/31/2024 9/30/2024 6/30/2024 Net Income $ 10,805 $ 6,310 $ 4,470 $ 8,975 $ 8,604 Share and Per Share Data: Period End Shares Outstanding 16,484 16,670 16,743 16,734 16,723 Basic Average Shares Outstanding 16,545 16,665 16,718 16,710 16,685 Diluted Average Shares Outstanding 16,551 16,673 16,739 16,742 16,709 Basic Earnings Per Share $ 0.65 $ 0.38 $ 0.26 $ 0.54 $ 0.52 Diluted Earnings Per Share 0.65 0.38 0.27 0.53 0.52 Cash Dividend Per Share 0.28 0.28 0.28 0.27 0.27 Selected Quarterly Average Balances: Interest-Bearing Deposits at Banks $ 145,473 $ 146,023 $ 233,469 $ 154,937 $ 159,336 Investment Securities 582,380 591,841 579,107 590,352 644,192 Loans 3,415,140 3,406,075 3,354,463 3,329,873 3,280,285 Deposits 3,849,093 3,825,124 3,847,691 3,672,128 3,678,957 Other Borrowed Funds 33,579 48,375 49,090 134,249 131,537 Stockholders' Equity 406,529 404,394 393,696 387,904 378,256 Total Assets 4,332,339 4,324,917 4,339,833 4,245,597 4,237,359 Return on Average Assets, annualized 1.00 % 0.59 % 0.41 % 0.84 % 0.82 % Return on Average Equity, annualized 10.66 % 6.33 % 4.52 % 9.20 % 9.15 % Return on Average Tangible Equity, annualized 1 11.38 % 6.76 % 4.84 % 9.79 % 9.74 % Average Earning Assets $ 4,142,993 $ 4,143,939 $ 4,167,039 $ 4,075,162 $ 4,083,813 Average Paying Liabilities 3,191,906 3,184,196 3,185,215 3,085,066 3,127,417 Interest Income 51,573 50,366 50,901 49,443 47,972 Tax-Equivalent Adjustment 2 148 155 157 149 163 Interest Income, Tax-Equivalent 2 51,721 50,521 51,058 49,592 48,135 Interest Expense 19,040 19,009 21,214 21,005 20,820 Net Interest Income 32,533 31,357 29,687 28,438 27,152 Net Interest Income, Tax-Equivalent 2 32,681 31,512 29,844 28,587 27,315 Net Interest Margin, annualized 3.15 % 3.07 % 2.83 % 2.78 % 2.67 % Net Interest Margin, Tax-Equivalent, annualized 2 3.16 % 3.08 % 2.85 % 2.79 % 2.69 % Efficiency Ratio Calculation:3 Non-Interest Expense $ 25,652 $ 26,045 $ 25,838 $ 24,100 $ 23,318 Less: Intangible Asset Amortization 80 81 89 78 40 Net Non-Interest Expense $ 25,572 $ 25,964 $ 25,749 $ 24,022 $ 23,278 Net Interest Income, Tax-Equivalent $ 32,681 $ 31,512 $ 29,844 $ 28,587 $ 27,315 Non-Interest Income 7,609 7,839 4,227 8,133 7,856 Less: Net Gain(loss) on Securities (40) 317 (3,072) 94 54 Net Gross Income $ 40,330 $ 39,034 $ 37,143 $ 36,626 $ 35,117 Efficiency Ratio 63.41 % 66.52 % 69.32 % 65.59 % 66.29 % Period-End Capital Information: Total Stockholders' Equity (i.e. Book Value) $ 408,506 $ 404,409 $ 400,901 $ 393,311 $ 383,018 Book Value per Share 24.78 24.26 23.94 23.50 22.90 Goodwill and Other Intangible Assets, net 25,659 25,743 25,847 25,979 22,800 Tangible Book Value per Share 1 23.23 22.72 22.40 21.95 21.54 Capital Ratios:4 Tier 1 Leverage Ratio 9.64 % 9.61 % 9.60 % 9.78 % 9.74 % Common Equity Tier 1 Capital Ratio 12.73 % 12.59 % 12.71 % 12.77 % 12.88 % Tier 1 Risk-Based Capital Ratio 13.37 % 13.23 % 13.35 % 13.41 % 13.53 % Total Risk-Based Capital Ratio 14.51 % 14.48 % 14.47 % 14.46 % 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 6/30/2025 3/31/2025 12/31/2024 9/30/2024 6/30/2024 Total Stockholders' Equity (GAAP) $ 408,506 $ 404,409 $ 400,901 $ 393,311 $ 383,018 Less: Goodwill and Other Intangible assets, net 25,659 25,743 25,847 25,979 22,800 Tangible Equity (Non-GAAP) $ 382,847 $ 378,666 $ 375,054 $ 367,332 $ 360,218 Period End Shares Outstanding 16,484 16,670 16,743 16,734 16,723 Tangible Book Value per Share (Non-GAAP) $ 23.23 $ 22.72 $ 22.40 $ 21.95 $ 21.54 Net Income 10,805 6,310 4,470 8,975 8,604 Return on Tangible Equity (Net Income/Tangible Equity - Annualized) 11.38 % 6.76 % 4.84 % 9.79 % 9.74 % 2 Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of annualized tax-equivalent net interest income to average earning assets. his is also a non-GAAP financial measure, which Arrow believes provides investors with information that is useful in understanding its financial performance 6/30/2025 3/31/2025 12/31/2024 9/30/2024 6/30/2024 Interest Income (GAAP) $ 51,573 $ 50,366 $ 50,901 $ 49,443 $ 47,972 Add: Tax-Equivalent adjustment (Non-GAAP) 148 155 157 149 163 Interest Income - Tax Equivalent (Non-GAAP) $ 51,721 $ 50,521 $ 51,058 $ 49,592 $ 48,135 Net Interest Income (GAAP) $ 32,533 $ 31,357 $ 29,687 $ 28,438 $ 27,152 Add: Tax-Equivalent adjustment (Non-GAAP) 148 155 157 149 163 Net Interest Income - Tax Equivalent (Non-GAAP) $ 32,681 $ 31,512 $ 29,844 $ 28,587 $ 27,315 Average Earning Assets $ 4,142,993 $ 4,143,939 $ 4,167,039 $ 4,075,162 $ 4,083,813 Net Interest Margin (Non-GAAP)* 3.16 % 3.08 % 2.85 % 2.79 % 2.69 % 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 June 30, 2025 CET1 ratio listed in the tables (i.e., 12.73%) 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 6/30/2025 3/31/2025 12/31/2024 9/30/2024 6/30/2024 Total Risk Weighted Assets $ 3,121,451 $ 3,143,547 $ 3,126,364 $ 3,110,178 $ 3,072,922 Common Equity Tier 1 Capital 397,432 395,900 397,285 397,122 395,691 Common Equity Tier 1 Ratio 12.73 % 12.59 % 12.71 % 12.77 % 12.88 % * Quarterly ratios have been annualized Arrow Financial CorporationAverage Consolidated Balance Sheets and Net Interest Income Analysis(Dollars in Thousands - Unaudited) Quarter Ended: June 30, 2025 June 30, 2024 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 145,473 $ 1,622 4.47 % $ 159,336 $ 2,185 5.52 % Investment Securities: Fully Taxable 496,614 3,790 3.06 530,869 3,009 2.28 Exempt from Federal Taxes 85,766 561 2.62 113,323 637 2.26 Loans (1) 3,415,140 45,600 5.36 3,280,285 42,141 5.17 Total Earning Assets (1) 4,142,993 51,573 4.99 4,083,813 47,972 4.72 Allowance for Credit Losses (35,238) (31,459) Cash and Due From Banks 29,267 28,611 Other Assets 195,317 156,394 Total Assets $ 4,332,339 $ 4,237,359 Deposits: Interest-Bearing Checking Accounts $ 845,041 1,941 0.92 $ 832,087 1,903 0.92 Savings Deposits 1,494,930 9,367 2.51 1,487,062 10,571 2.86 Time Deposits of $250,000 or More 179,980 1,726 3.85 172,655 1,869 4.35 Other Time Deposits 638,376 5,793 3.64 504,076 5,074 4.05 Total Interest-Bearing Deposits 3,158,327 18,827 2.39 2,995,880 19,417 2.61 Borrowings 8,601 — — 106,502 1,186 4.48 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 171 3.43 20,000 170 3.42 Finance Leases 4,978 42 3.38 5,035 47 3.75 Total Interest-Bearing Liabilities 3,191,906 19,040 2.39 3,127,417 20,820 2.68 Noninterest-Bearing Deposits 690,766 683,077 Other Liabilities 43,138 48,609 Total Liabilities 3,925,810 3,859,103 Stockholders' Equity 406,529 378,256 Total Liabilities and Stockholders' Equity $ 4,332,339 $ 4,237,359 Net Interest Income $ 32,533 $ 27,152 Net Interest Spread 2.60 % 2.04 % Net Interest Margin 3.15 % 2.67 % (1) Includes Nonaccrual Loans. Arrow Financial CorporationAverage Consolidated Balance Sheets and Net Interest Income Analysis(Dollars in Thousands - Unaudited) Quarter Ended: June 30, 2025 March 31, 2025 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 145,473 $ 1,622 4.47 % $ 146,023 $ 1,621 4.50 % Investment Securities: Fully Taxable 496,614 3,790 3.06 499,903 3,608 2.93 Exempt from Federal Taxes 85,766 561 2.62 91,938 587 2.59 Loans (1) 3,415,140 45,600 5.36 3,406,075 44,550 5.30 Total Earning Assets (1) 4,142,993 51,573 4.99 4,143,939 50,366 4.93 Allowance for Credit Losses (35,238) (33,691) Cash and Due From Banks 29,267 31,515 Other Assets 195,317 183,154 Total Assets $ 4,332,339 $ 4,324,917 Deposits: Interest-Bearing Checking Accounts $ 845,041 1,941 0.92 $ 840,571 1,803 0.87 Savings Deposits 1,494,930 9,367 2.51 1,515,961 9,483 2.54 Time Deposits of $250,000 or More 179,980 1,726 3.85 186,159 1,811 3.95 Other Time Deposits 638,376 5,793 3.64 593,130 5,529 3.78 Total Interest-Bearing Deposits 3,158,327 18,827 2.39 3,135,821 18,626 2.41 Borrowings 8,601 — — 23,378 167 2.90 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 171 3.43 20,000 169 3.43 Finance Leases 4,978 42 3.38 4,997 47 3.81 Total Interest-Bearing Liabilities 3,191,906 19,040 2.39 3,184,196 19,009 2.42 Noninterest-Bearing Deposits 690,766 689,303 Other Liabilities 43,138 47,024 Total Liabilities 3,925,810 3,920,523 Stockholders' Equity 406,529 404,394 Total Liabilities and Stockholders' Equity $ 4,332,339 $ 4,324,917 Net Interest Income $ 32,533 $ 31,357 Net Interest Spread 2.60 % 2.51 % Net Interest Margin 3.15 % 3.07 % (1) Includes Nonaccrual Loans. Arrow Financial CorporationAverage Consolidated Balance Sheets and Net Interest Income Analysis(Dollars in Thousands - Unaudited) Year to Date Period Ended: June 30, 2025 June 30, 2024 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 145,746 $ 3,243 4.49 % $ 168,894 $ 4,632 5.52 % Investment Securities: Fully Taxable 498,250 7,398 2.99 540,704 6,195 2.30 Exempt from Federal Taxes 88,835 1,148 2.61 116,945 1,305 2.24 Loans (1) 3,410,632 90,150 5.33 3,258,063 82,517 5.09 Total Earning Assets (1) 4,143,463 101,939 4.96 4,084,606 94,649 4.66 Allowance for Credit Losses (34,469) (31,437) Cash and Due From Banks 30,385 29,207 Other Assets 189,269 159,046 Total Assets $ 4,328,648 $ 4,241,422 Deposits: Interest-Bearing Checking Accounts $ 842,818 3,744 0.90 $ 831,502 3,544 0.86 Savings Deposits 1,505,387 18,850 2.53 1,484,031 20,801 2.82 Time Deposits of $250,000 or More 183,053 3,537 3.90 174,991 3,842 4.42 Other Time Deposits 615,878 11,322 3.71 500,444 10,157 4.08 Total Interest-Bearing Deposits 3,147,136 37,453 2.40 2,990,968 38,344 2.58 Borrowings 15,949 167 2.11 101,743 2,262 4.47 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 340 3.43 20,000 341 3.43 Finance Leases 4,987 89 3.60 5,042 95 3.79 Total Interest-Bearing Liabilities 3,188,072 38,049 2.41 3,117,753 41,042 2.65 Noninterest-Bearing Deposits 690,039 695,171 Other Liabilities 45,069 49,648 Total Liabilities 3,923,180 3,862,572 Stockholders' Equity 405,468 378,850 Total Liabilities and Stockholders' Equity $ 4,328,648 $ 4,241,422 Net Interest Income $ 63,890 $ 53,607 Net Interest Spread 2.55 % 2.01 % Net Interest Margin 3.11 % 2.64 % (1) Includes Nonaccrual Loans Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited) Quarter Ended: 6/30/2025 12/31/2024 Loan Portfolio Commercial Loans $ 162,203 $ 158,991 Commercial Real Estate Loans 808,166 796,365 Subtotal Commercial Loan Portfolio 970,369 955,356 Consumer Loans 1,109,272 1,118,981 Residential Real Estate Loans 1,345,113 1,320,204 Total Loans $ 3,424,754 $ 3,394,541 Allowance for Credit Losses Allowance for Credit Losses, Beginning of Quarter $ 37,771 $ 31,262 Loans Charged-off (5,062) (1,333) Less Recoveries of Loans Previously Charged-off 888 815 Net Loans Charged-off (4,174) (518) Provision for Credit Losses 594 2,854 Allowance for Credit Losses, End of Quarter $ 34,191 $ 33,598 Nonperforming Assets Nonaccrual Loans $ 5,550 $ 20,621 Loans Past Due 90 or More Days and Accruing 855 398 Loans Restructured and in Compliance with Modified Terms 12 20 Total Nonperforming Loans 6,417 21,039 Repossessed Assets 590 382 Other Real Estate Owned — 76 Total Nonperforming Assets $ 7,007 $ 21,497 Key Asset Quality Ratios Net Loans Charged-off to Average Loans, Quarter-to-date Annualized 0.49 % 0.06 % Provision for Credit Losses to Average Loans, Quarter-to-date Annualized 0.07 % 0.34 % Allowance for Credit Losses to Period-End Loans 1.00 % 0.99 % Allowance for Credit Losses to Period-End Nonperforming Loans 532.82 % 159.69 % Nonperforming Loans to Period-End Loans 0.19 % 0.62 % Nonperforming Assets to Period-End Assets 0.16 % 0.50 % Year-to-Date Period Ended: 6/30/2025 12/31/2024 Allowance for Credit Losses Allowance for Credit Losses, Beginning of Year $ 33,598 $ 31,265 Loans Charged-off (6,613) (5,895) Less Recoveries of Loans Previously Charged-off 1,593 3,048 Net Loans Charged-off (5,020) (2,847) Provision for Credit Losses 5,613 5,180 Allowance for Credit Losses, End of Period $ 34,191 $ 33,598 Key Asset Quality Ratios Net Loans Charged-off to Average Loans, Annualized 0.30 % 0.09 % Provision for Loan Losses to Average Loans, Annualized 0.33 % 0.16 % 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 2nd Quarter Net Income of $10.8 Million, or $0.65 per Share, and Declares 3rd Quarter Dividend of $0.29 per Share

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