Arrow Reports 4th Quarter Net Income of $4.5 Million or $0.27 per Share and $29.7 Million or $1.77 per Share for 2024. Declares first quarter dividend of $0.28 per share.

, /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow") reported net income of $4.5 million, and fully diluted earnings per share ("EPS") of $0.27 for the fourth quarter of 2024, versus $7.7 million and EPS of $0.46, for the same period in 2023. For the year ended 2024, net income totaled $29.7 million, with EPS of $1.77, versus $30.1 million, and EPS of $1.77, for the same period in 2023. The Board of Directors of Arrow declared a quarterly cash dividend of $0.28 per share payable February 24, 2025 to shareholders of record as of February 10, 2025. The reported results included several non-core items that impacted the fourth quarter and the 2024 full year results. As previously disclosed in our Form 8-K filed December 26, 2024, the fourth quarter included the following pre-tax non-core items: $3.0 million, or $0.15 per share, loss on sale of repositioning of the securities portfolio $0.7 million, or $0.03 per share, write-off related to legacy branding items $0.5 million, or $0.02 per share, in expenses (legal, consulting, compliance) related to the unification of our two bank subsidiaries into Arrow Bank National Association ("Arrow Bank") Prior to the fourth quarter, Arrow recognized the following pre-tax non-core/non-recurring items: $0.4 million, or $0.02 per share, in expenses related to the acquisition of the Whitehall branch and the assets of A&B Agency, Inc. completed during the third quarter $1.2 million, or $0.06 per share, in residual expenses related to the 2022 Form 10-K filing delay This Earnings Release and related commentary should be read in conjunction with our Form 8-K filed January 30, 2025 and related Fourth Quarter 2024 Investor Presentation, which can also be found on our website: arrowfinancial.com/documents/investor-presentations. Arrow President and CEO David S. DeMarco: "Arrow just completed a transformational year. We completed the unification of our two subsidiary banks under one brand, Arrow Bank. Our exceptional team continues to serve our customers and communities in the same way they have come to expect from us. In addition, we also acquired a bank branch in Whitehall, New York as well the assets of a local insurance agency. We made significant contributions to the communities we serve, both financially and through volunteer efforts, continuing our commitment to giving back. In 2024, we delivered for our shareholders, growing loans by mid-single digits, expanding our net interest margin and actively managing our balance sheet, positioning the Bank for increased profitability in 2025." Fourth-Quarter Highlights and Key Metrics Reported Net Income of $4.5 million or $0.27 EPS Core Net Income of $7.8 million or $0.47 EPS Results included approximately $4.2 million of non-core charges and expenses related to the repositioning of the securities portfolio and efforts related to bank unification Net Interest Margin improved to 2.83% (2.85% FTE1) versus 2.78% (2.79% FTE) in the prior quarter Loan growth of $59 million2 (7.0% annualized) for the quarter Record loan balances — reaching $3.4 billion Provision for Credit Losses was $2.9 million on strong loan growth and changes in portfolio composition Net Charge-Offs remained low at 0.06% (annualized) for the quarter Tangible Book Value improved to $22.40, an increase from $21.06 from the prior year Return on Average Assets 0.41% impacted by 31bps from non-core items as well as 21bps from the provision for credit losses Other Comprehensive Income improved $5.3 million, or 20%, from the prior-quarter, excluding realized loss on the repositioning of the investment portfolio Legal bank unification of our bank subsidiaries completed Increased quarterly dividend by 3.7% to $0.28 per share Select 2024 Highlights and Key Metrics Reported Net Income of $29.7 million or $1.77 EPS Core Net Income of $34.4 million or $2.05 EPS Results included approximately $5.8 million of pre-tax non-core charges and expenses related to the repositioning of the securities portfolio, bank unification, acquisition of the Whitehall branch and A&B Agency, Inc. as well as residual costs related to 2022 Form 10-K filing delay Loan growth of $185 million3, or 5.8%. Net Interest Margin improved to 2.72% (2.74% FTE4), up from 2.65% (2.67% FTE) in the prior year Return on Average Assets of 0.70% reduced by 11bps from non-core items and the provision for credit losses Net Charge-Offs were 0.09% for the year Whitehall branch and A&B Agency, Inc. acquisitions in 3Q24 Enhanced shareholder value via share repurchases and increased cash dividend Named to the prestigious Piper Sandler Sm-All Stars: Class of 2024 list Income Statement Net Income: Net income for the fourth quarter of 2024 was $4.5 million, decreasing from $9.0 million in the third quarter of 2024. Net income for 2024 was $29.7 million, down from $30.1 million for 2023. Compared to the prior quarter, net income benefited from an increase of $1.2 million in net interest income, offset by an increase in non-interest expense of $1.7 million, a decrease in non-interest income of $3.9 million and an increase in the provision for credit losses of $1.9 million. The remaining change was related to the tax impact. Compared to the prior year, the decrease in net income was primarily the result of an increase in net interest income of $6.9 million offset by an increase of non-interest expense of $4.2 million and a $1.8 million increase in the provision for credit losses. The remaining change was related to the tax impact. Net Interest Income: Net interest income for the fourth quarter of 2024 was $29.7 million, an increase of $1.2 million compared to the third quarter of 2024. Net interest income for the year ended December 31, 2024 was $111.7 million, an increase of $6.9 million, or 6.6%, from the prior year. Compared to the prior quarter, interest income increased $1.5 million while interest expense increased by only $0.2 million as a result of reduced deposits and continued pricing discipline. Compared to the prior year, the increase was primarily due to interest income outpacing growth in interest expense. Interest and fees on loans were $171.3 million for the year ended December 31, 2024, an increase of 20.6% from the $142.0 million for the year ended December 31, 2023. The increase was primarily driven by loan growth and higher loan rates. Interest expense for the year ended December 31, 2024 was $83.3 million. This represents an increase of $25.5 million, or 44.2%, from the $57.7 million in interest expense for the prior-year period. The increase in the interest expense was driven primarily by higher deposit rates and changes in deposit composition. Net Interest Margin: Net interest margin was 2.72% (2.74% FTE5) for the year ended December 31, 2024, as compared to 2.65% (2.67% FTE) for the year ended December 31, 2023. In the fourth quarter of 2024, the net interest margin was 2.83% (2.85% FTE), as compared to 2.53% (2.55% FTE) for the fourth quarter of 2023. The increase in net interest margin compared to the third quarter of 2024 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. The increase in net interest margin from the previous year was primarily the result of yield on average earning assets increasing at a faster pace than costs of interest-bearing liabilities. Net interest margin was affected by deposits migrating to higher costing products, such as money market savings and time deposits. Twelve Months Ended (dollars in thousands) December 31, 2024 December 31, 2023 Interest and Dividend Income $ 194,993 $ 162,564 Interest Expense 83,261 57,732 Net Interest Income 111,732 104,832 Average Earning Assets(1) 4,102,954 3,948,708 Average Interest-Bearing Liabilities 3,126,495 2,903,925 Yield on Earning Assets(1) 4.75 % 4.12 % Cost of Interest-Bearing Liabilities 2.66 1.99 Net Interest Spread 2.09 2.13 Net Interest Margin 2.72 2.65 FTE Net Interest Margin 2.74 2.67 (1) Includes Nonaccrual Loans. Provision for Credit Losses: For the year ended December 31, 2024, the provision for credit losses related to the loan portfolio was $5.2 million, compared to $3.4 million in the prior year. The key drivers for the provision for credit losses in 2024 were loan growth, charge-offs, and changes to the portfolio mix/age, due to fourth-quarter commercial loan growth, partially offset by changes to the economic forecast factors embedded in the credit loss allowance model, as well as qualitative factors relating to local and Arrow-specific conditions. Non-Interest Income: Non-interest income was $4.2 million for the fourth quarter of 2024, a decrease from $8.1 million for the previous quarter. Non-interest income was $28.1 million for the year ended December 31, 2024, a decrease of 3.6%, as compared to $29.1 million for the year ended December 31, 2023. The decreases were primarily attributable to the $3.0 million pre-tax loss related to the investment portfolio repositioning as well as the $0.7 million pre-tax charge related to legacy branding, both recognized in the fourth quarter of 2024. Revenue from fee businesses, including wealth management and insurance, both increased compared to the prior year. Non-Interest Expense: Non-interest expense for the year ended December 31, 2024 increased by $4.2 million, or 4.5%, to $97.3 million, as compared to $93.0 million in 2023. The largest component of non-interest expense is salaries and benefits paid to our employees, which totaled $52.7 million in 2024 and increased $5.0 million, or 10.6%, from the prior year. The increase was related to headcount increases to support additional control and compliance initiatives and our growing organization. Salaries and benefits were also impacted by inflation-driven wage increases and rising benefit costs. Provision for Income Taxes: The provision for income taxes for 2024 was $7.6 million, compared to $7.4 million for 2023. The effective income tax rates for 2024 and 2023 were 20.5% and 19.8%, respectively. The increase in the effective tax rate was primarily the result of reduced tax exempt income in 2024. Balance Sheet Total Assets: Total assets were $4.3 billion at December 31, 2024, an increase of $136.5 million, or 3.3%, compared to December 31, 2023 and a decrease of $105.1 million, or 2.4%, from September 30, 2024. The increase over the prior year was primarily driven by loan growth. The decrease in the fourth quarter was primary driven by decreases in municipal cash balances due to seasonality. Investments: Total investments were $570.8 million at December 31, 2024, a decrease of $65.4 million, or 10.3%, compared to December 31, 2023. The decrease was driven primarily by paydowns and maturities, the proceeds of which were used to fund loan growth in 2024. The repositioning of the investment portfolio in the fourth quarter did not materially impact the overall investment balance. There were no credit quality issues related to the investment portfolio. Loans6: At December 31, 2024, total loan balances reached $3.4 billion. Loan growth for the fourth quarter was $59 million. Loan growth for the year was $185 million or 5.8%. Loan growth was spread across all loan products. Please see the loan detail included in the Consolidated Financial Information table on page 14. Allowance for Credit Losses: The allowance for credit losses was $33.6 million at December 31, 2024, an increase of $2.3 million from December 31, 2023. The allowance for credit losses at year-end 2024 represented 0.99% of loans outstanding, an increase from 0.97% at year-end 2023. Asset quality remained solid at December 31, 2024. Net loan charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.09% for the year ended December 31, 2024, as compared to 0.07% for the prior year. Nonperforming assets of $21.5 million at December 31, 2024, represented 0.50% of period-end assets, compared to $21.5 million or 0.51% at December 31, 2023. Deposits: At December 31, 2024, total deposit balances were $3.8 billion, an increase of $140.4 million, or 3.8%, from the prior-year level. Deposits decreased in the fourth quarter by $9.5 million. In the fourth quarter, $95 million of borrowings were replaced with callable brokered CDs with a lower cost of funds. The increase was offset in part by the seasonal behavior of municipal deposits. Non-municipal deposits, excluding brokered CDs, decreased by $57.6 million and municipal deposits decreased by $12.2 million, each as compared to December 31, 2023. Non-interest bearing deposits decreased by $55.4 million, or 7.3%, during 2024, and represented 18.4% of total deposits at year-end, as compared to the prior-year level of 20.6%. At December 31, 2024, total time deposits, excluding brokered CDs, increased $36.0 million from the prior-year level. The change in composition of deposits was primarily due to pressure from competitive rate pricing and the migration from low to higher costing products. Capital: Total shareholders' equity was $400.9 million at December 31, 2024, an increase of $21.1 million, or 5.6%, from December 31, 2023 and an increase of $7.6 million in the fourth quarter. The increase from the third quarter was primarily attributable to net income of $4.5 million, other comprehensive income of $7.5 million and various capital items of $0.3 million, partially offset by dividends of $4.7 million. The increase in stockholders' equity from December 31, 2023 was primarily attributable to net income of $29.7 million, other comprehensive income of $15.0 million and various capital items of $1.5 million partially offset by dividends of $18.3 million and stock repurchases of $6.8 million. The changes to other comprehensive income stem primarily from fair value adjustments relating to the Company's cash flow hedges as well as its available for sale investment portfolio. Arrow's regulatory capital ratios remained strong in 2024. At December 31, 2024, Arrow's Common Equity Tier 1 Capital Ratio was 12.71% and Total Risk-Based Capital Ratio was 14.47%. The capital ratios of Arrow and its subsidiary bank, Arrow Bank, continued to significantly exceed the "well capitalized" regulatory standards. Additional Commentary Piper Sandler Sm-All Stars: In 2024, Arrow was named to the prestigious Piper Sandler Sm-All Stars: Class of 2024, a list of 30 top-performing small-cap banks and thrifts in the country. Arrow is one of just three New York financial institutions on the list and the only bank in Upstate New York. Piper Sandler, an independent investment bank and research firm, evaluated more than 300 institutions that trade on a major exchange, narrowing the field to the top 30. Bauer Financial Ratings: Prior to unification, Arrow's subsidiary banks, continued to maintain their 5-Star Exceptional Performance ratings from Bauer Financial for the 70th and 62nd quarters. _______________________________ 1 FTE (fully taxable equivalent basis) net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information. 2 Excludes both $2.2 million fair value hedge adjustment at December 31, 2024 and $6.5 million fair value hedge adjustment at September 30, 2024. 3 Excludes both $2.2 million fair value hedge adjustment at December 31, 2024 and $5.8 million fair value hedge adjustment at December 31, 2023. 4 FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information. 5 FTE net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information. 6 Excludes both $2.2 million fair value hedge adjustment at December 31, 2024, $6.5 million fair value hedge adjustment at September 30, 2024 and $5.8 million fair value hedge adjustment at December 31, 2023. —————— 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 National Association, 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, 2023, 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 Twelve Months Ended December 31, December 31, 2024 2023 2024 2023 INTEREST AND DIVIDEND INCOME Interest and Fees on Loans $ 44,703 $ 38,813 $ 171,342 $ 142,016 Interest on Deposits at Banks 2,880 1,873 9,615 5,831 Interest and Dividends on Investment Securities: Fully Taxable 2,728 2,941 11,579 11,764 Exempt from Federal Taxes 590 697 2,457 2,953 Total Interest and Dividend Income 50,901 44,324 194,993 162,564 INTEREST EXPENSE Interest-Bearing Checking Accounts 1,932 1,317 7,442 3,663 Savings Deposits 11,144 10,513 42,850 34,343 Time Deposits over $250,000 1,815 1,807 7,460 4,966 Other Time Deposits 5,906 3,406 20,997 7,127 Borrowings 198 1,447 3,637 6,756 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 172 173 686 686 Interest on Financing Leases 47 48 189 191 Total Interest Expense 21,214 18,711 83,261 57,732 NET INTEREST INCOME 29,687 25,613 111,732 104,832 Provision for Credit Losses 2,854 525 5,180 3,381 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 26,833 25,088 106,552 101,451 NONINTEREST INCOME Income From Fiduciary Activities 2,615 2,363 9,952 9,444 Fees for Other Services to Customers 2,762 2,725 10,892 10,798 Insurance Commissions 1,848 1,723 7,147 6,498 Net (Loss) Gain on Securities (3,072) 122 (2,907) (92) Net Gain on Sales of Loans 74 7 209 32 Other Operating Income — 544 2,781 2,437 Total Noninterest Income 4,227 7,484 28,074 29,117 NONINTEREST EXPENSE Salaries and Employee Benefits 13,332 11,693 52,707 47,667 Occupancy Expenses, Net 1,870 1,826 7,169 6,554 Technology and Equipment Expense 5,119 4,458 19,365 17,608 FDIC Assessments 664 572 2,775 2,050 Other Operating Expense 4,853 4,641 15,252 19,169 Total Noninterest Expense 25,838 23,190 97,268 93,048 INCOME BEFORE PROVISION FOR INCOME TAXES 5,222 9,382 37,358 37,520 Provision for Income Taxes 752 1,659 7,649 7,445 NET INCOME $ 4,470 $ 7,723 $ 29,709 $ 30,075 Average Shares Outstanding: Basic 16,718 17,002 16,739 17,037 Diluted 16,739 17,004 16,745 17,037 Per Common Share: Basic Earnings $ 0.27 $ 0.46 $ 1.78 $ 1.77 Diluted Earnings 0.27 0.46 1.77 1.77 ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts - Unaudited) December 31, 2024 December 31, 2023 ASSETS Cash and Due From Banks $ 27,422 $ 36,755 Interest-Bearing Deposits at Banks 127,124 105,781 Investment Securities: Available-for-Sale 463,111 497,769 Held-to-Maturity (Approximate Fair Value of $96,586 at December 31, 2024, and $128,837 at December 31, 2023) 98,261 131,395 Equity Securities 5,055 1,925 Other Investments 4,353 5,049 Loans 3,394,541 3,212,908 Allowance for Credit Losses (33,598) (31,265) Net Loans 3,360,943 3,181,643 Premises and Equipment, Net 59,717 59,642 Goodwill 23,789 21,873 Other Intangible Assets, Net 2,058 1,110 Other Assets 134,515 126,926 Total Assets $ 4,306,348 $ 4,169,868 LIABILITIES Noninterest-Bearing Deposits $ 702,978 $ 758,425 Interest-Bearing Checking Accounts 810,834 799,785 Savings Deposits 1,520,024 1,466,280 Time Deposits over $250,000 191,962 179,301 Other Time Deposits 602,132 483,775 Total Deposits 3,827,930 3,687,566 Borrowings 8,600 26,500 Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 20,000 Finance Leases 5,005 5,066 Other Liabilities 43,912 50,964 Total Liabilities 3,905,447 3,790,096 STOCKHOLDERS' EQUITY Preferred Stock, $1 Par Value, 1,000,000 Shares Authorized — — Common Stock, $1 Par Value; 30,000,000 Shares Authorized (22,066,559 Shares Issued at December 31, 2024 and December 31, 2023) 22,067 22,067 Additional Paid-in Capital 413,476 412,551 Retained Earnings 77,215 65,792 Accumulated Other Comprehensive (Loss) Income (18,453) (33,416) Treasury Stock, at Cost (5,323,638 Shares at December 31, 2024, and 5,124,073 Shares at December 31, 2023) (93,404) (87,222) Total Stockholders' Equity 400,901 379,772 Total Liabilities and Stockholders' Equity $ 4,306,348 $ 4,169,868 Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited) Quarter Ended 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Net Income $ 4,470 $ 8,975 $ 8,604 $ 7,660 $ 7,723 Transactions in Net Income (Net of Tax): Net Changes in Fair Value of Equity Investments (26) 69 39 13 90 Share and Per Share Data: Period End Shares Outstanding 16,743 16,734 16,723 16,710 16,942 Basic Average Shares Outstanding 16,718 16,710 16,685 16,865 17,002 Diluted Average Shares Outstanding 16,739 16,742 16,709 16,867 17,004 Basic Earnings Per Share $ 0.27 $ 0.54 $ 0.52 $ 0.45 $ 0.46 Diluted Earnings Per Share 0.27 0.53 0.52 0.45 0.46 Cash Dividend Per Share 0.280 0.270 0.270 0.270 0.270 Selected Quarterly Average Balances: Interest-Bearing Deposits at Banks $ 233,469 $ 154,937 $ 159,336 $ 178,452 $ 136,026 Investment Securities 579,107 590,352 644,192 671,105 713,144 Loans 3,354,463 3,329,873 3,280,285 3,235,841 3,170,262 Deposits 3,847,691 3,672,128 3,678,957 3,693,325 3,593,949 Other Borrowed Funds 49,090 134,249 131,537 122,033 149,507 Shareholders' Equity 393,696 387,904 378,256 379,446 363,753 Total Assets 4,339,833 4,245,597 4,237,359 4,245,484 4,159,313 Return on Average Assets, annualized 0.41 % 0.84 % 0.82 % 0.73 % 0.74 % Return on Average Equity, annualized 4.52 % 9.20 % 9.15 % 8.12 % 8.42 % Return on Average Tangible Equity, annualized 1 4.84 % 9.79 % 9.74 % 8.64 % 8.99 % Average Earning Assets 4,167,039 4,075,162 4,083,813 4,085,398 4,019,432 Average Paying Liabilities 3,185,215 3,085,066 3,127,417 3,108,093 2,985,717 Interest Income 50,901 49,443 47,972 46,677 44,324 Tax-Equivalent Adjustment 2 157 149 163 176 184 Interest Income, Tax-Equivalent 2 51,058 49,592 48,135 46,853 44,508 Interest Expense 21,214 21,005 20,820 20,222 18,711 Net Interest Income 29,687 28,438 27,152 26,455 25,613 Net Interest Income, Tax-Equivalent 2 29,844 28,587 27,315 26,631 25,797 Net Interest Margin, annualized 2.83 % 2.78 % 2.67 % 2.60 % 2.53 % Net Interest Margin, Tax-Equivalent, annualized 2 2.85 % 2.79 % 2.69 % 2.62 % 2.55 % Efficiency Ratio Calculation: 3 Noninterest Expense $ 25,838 $ 24,100 $ 23,318 $ 24,012 $ 23,190 Less: Intangible Asset Amortization 89 78 40 41 43 Net Noninterest Expense $ 25,749 $ 24,022 $ 23,278 $ 23,971 $ 23,147 Net Interest Income, Tax-Equivalent $ 29,844 $ 28,587 $ 27,315 $ 26,631 $ 25,797 Noninterest Income 4,227 8,133 7,856 7,858 7,484 Less: Net Gain (Loss) on Securities (3,038) 94 54 17 122 Net Gross Income $ 37,109 $ 36,626 $ 35,117 $ 34,472 $ 33,159 Efficiency Ratio 69.39 % 65.59 % 66.29 % 69.54 % 69.81 % Period-End Capital Information: Total Stockholders' Equity (i.e. Book Value) $ 400,901 $ 393,311 $ 383,018 $ 377,986 $ 379,772 Book Value per Share 23.94 23.50 22.90 22.62 22.42 Goodwill and Other Intangible Assets, net 25,847 25,979 22,800 22,891 22,983 Tangible Book Value per Share 1 22.40 21.95 21.54 21.25 21.06 Capital Ratios:4 Tier 1 Leverage Ratio 9.60 % 9.78 % 9.74 % 9.63 % 9.84 % Common Equity Tier 1 Capital Ratio 12.71 % 12.77 % 12.88 % 12.84 % 13.00 % Tier 1 Risk-Based Capital Ratio 13.35 % 13.41 % 13.53 % 13.50 % 13.66 % Total Risk-Based Capital Ratio 14.47 % 14.46 % 14.57 % 14.57 % 14.74 % Assets Under Trust Admin. & Investment Mgmt. $ 2,036,393 $ 1,944,239 $ 1,848,349 $ 1,829,266 $ 1,763,194 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 Average Tangible Equity exclude goodwill and other intangible assets, net from total equity. These are non-GAAP financial measures which we believe provide investors with information that is useful in understanding our financial performance. 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Total Stockholders' Equity (GAAP) $ 400,901 $ 393,311 $ 383,018 $ 377,986 $ 379,772 Less: Goodwill and Other Intangible assets, net 25,847 25,979 22,800 22,891 22,983 Tangible Equity (Non-GAAP) $ 375,054 $ 367,332 $ 360,218 $ 355,095 $ 356,789 Period End Shares Outstanding 16,743 16,734 16,723 16,710 16,942 Tangible Book Value per Share (Non-GAAP) $ 22.40 $ 21.95 $ 21.54 $ 21.25 $ 21.06 Net Income 4,470 8,975 8,604 7,660 7,723 Return on Average Tangible Equity (Net Income/Average Tangible Equity - Annualized) 4.84 % 9.79 % 9.74 % 8.64 % 8.99 % 2. Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of our annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which we believe provides investors with information that is useful in understanding our financial performance. 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Interest Income (GAAP) $ 50,901 $ 49,443 $ 47,972 $ 46,677 $ 44,324 Add: Tax Equivalent Adjustment (Non-GAAP) 157 149 163 176 184 Interest Income - Tax Equivalent (Non-GAAP) $ 51,058 $ 49,592 $ 48,135 $ 46,853 $ 44,508 Net Interest Income (GAAP) $ 29,687 $ 28,438 $ 27,152 $ 26,455 $ 25,613 Add: Tax-Equivalent adjustment (Non-GAAP) 157 149 163 176 184 Net Interest Income - Tax Equivalent (Non-GAAP) $ 29,844 $ 28,587 $ 27,315 $ 26,631 $ 25,797 Average Earning Assets 4,167,039 4,075,162 4,083,813 4,085,398 4,019,432 Net Interest Margin (Non-GAAP)* 2.85 % 2.79 % 2.69 % 2.62 % 2.55 % 3. Non-GAAP Financial Measure Reconciliation: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. We believe the efficiency ratio provides investors with information that is useful in understanding our financial performance. We define our efficiency ratio as the ratio of our noninterest expense to our net gross income (which equals our tax-equivalent net interest income plus noninterest income, as adjusted). 4. For the current quarter, all of the regulatory capital ratios in the table above, as well as the Total Risk-Weighted Assets and Common Equity Tier 1 Capital amounts listed in the table below, are estimates based on, and calculated in accordance with bank regulatory capital rules. All prior quarters reflect actual results. The December 31, 2024 CET1 ratio listed in the tables (i.e., 12.71%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%). 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Total Risk Weighted Assets 3,126,362 3,110,178 3,072,922 3,049,525 3,032,188 Common Equity Tier 1 Capital 397,285 397,122 395,691 391,706 394,166 Common Equity Tier 1 Ratio 12.71 % 12.77 % 12.88 % 12.84 % 13.00 % * Quarterly ratios have been annualized Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited) Quarter Ended: December 31, 2024 December 31, 2023 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 233,469 $ 2,880 4.91 % $ 136,026 1,873 5.46 % Investment Securities: Fully Taxable 484,860 2,728 2.24 % 586,227 2,941 1.99 % Exempt from Federal Taxes 94,247 590 2.49 % 126,917 697 2.18 % Loans (1) 3,354,463 44,703 5.30 % 3,170,262 38,813 4.86 % Total Earning Assets (1) 4,167,039 50,901 4.86 % 4,019,432 44,324 4.38 % Allowance for Credit Losses (31,529) (31,417) Cash and Due From Banks 30,706 30,402 Other Assets 173,617 140,896 Total Assets $ 4,339,833 $ 4,159,313 Deposits: Interest-Bearing Checking Accounts $ 802,808 1,932 0.96 % $ 801,923 1,317 0.65 % Savings Deposits 1,567,455 11,144 2.83 % 1,509,946 10,513 2.76 % Time Deposits of $250,000 or More 183,325 1,815 3.94 % 169,854 1,807 4.22 % Other Time Deposits 582,537 5,906 4.03 % 354,487 3,406 3.81 % Total Interest-Bearing Deposits 3,136,125 20,797 2.64 % 2,836,210 17,043 2.38 % Borrowings 24,089 198 3.27 % 124,445 1,447 4.61 % Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 172 3.42 % 20,000 173 3.43 % Finance Leases 5,001 47 3.74 % 5,062 48 3.76 % Total Interest-Bearing Liabilities 3,185,215 21,214 2.65 % 2,985,717 18,711 2.49 % Noninterest-Bearing Deposits 711,566 757,739 Other Liabilities 49,356 52,104 Total Liabilities 3,946,137 3,795,560 Stockholders' Equity 393,696 363,753 Total Liabilities and Stockholders' Equity $ 4,339,833 $ 4,159,313 Net Interest Income $ 29,687 $ 25,613 Net Interest Spread 2.21 % 1.89 % Net Interest Margin 2.83 % 2.53 % (1) Includes Nonaccrual Loans Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited) Quarter Ended: December 31, 2024 September 30, 2024 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 233,469 $ 2,880 4.91 % $ 154,937 2,103 5.40 % Investment Securities: Fully Taxable 484,860 2,728 2.24 % 497,450 2,656 2.12 % Exempt from Federal Taxes 94,247 590 2.49 % 92,902 562 2.41 % Loans (1) 3,354,463 44,703 5.30 % 3,329,873 44,122 5.27 % Total Earning Assets (1) 4,167,039 50,901 4.86 % 4,075,162 49,443 4.83 % Allowance for Credit Losses (31,529) (31,147) Cash and Due From Banks 30,706 33,159 Other Assets 173,617 168,423 Total Assets $ 4,339,833 $ 4,245,597 Deposits: Interest-Bearing Checking Accounts $ 802,808 1,932 0.96 % $ 785,134 1,966 1.00 % Savings Deposits 1,567,455 11,144 2.83 % 1,492,888 10,905 2.91 % Time Deposits of $250,000 or More 183,325 1,815 3.94 % 174,028 1,803 4.12 % Other Time Deposits 582,537 5,906 4.03 % 498,767 4,934 3.94 % Total Interest-Bearing Deposits 3,136,125 20,797 2.64 % 2,950,817 19,608 2.64 % Borrowings 24,089 198 3.27 % 109,230 1,177 4.29 % Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 172 3.42 % 20,000 173 3.44 % Finance Leases 5,001 47 3.74 % 5,019 47 3.73 % Total Interest-Bearing Liabilities 3,185,215 21,214 2.65 % 3,085,066 21,005 2.71 % Noninterest-Bearing Deposits 711,566 721,311 Other Liabilities 49,356 51,316 Total Liabilities 3,946,137 3,857,693 Stockholders' Equity 393,696 387,904 Total Liabilities and Stockholders' Equity $ 4,339,833 $ 4,245,597 Net Interest Income $ 29,687 $ 28,438 Net Interest Spread 2.21 % 2.12 % Net Interest Margin 2.83 % 2.78 % Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited) Years Ended December 31: 2024 2023 Interest Rate Interest Rate Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-Bearing Deposits at Banks $ 181,618 $ 9,615 5.29 % $ 109,906 5,831 5.31 % Investment Securities: Fully Taxable 515,794 11,579 2.24 % 622,575 11,764 1.89 % Exempt from Federal Taxes 105,196 2,457 2.34 % 141,966 2,953 2.08 % Loans 3,300,346 171,342 5.19 % 3,074,261 142,016 4.62 % Total Earning Assets 4,102,954 194,993 4.75 % 3,948,708 162,564 4.12 % Allowance for Credit Losses (31,387) (30,799) Cash and Due From Banks 30,577 30,640 Other Assets 164,577 135,970 Total Assets $ 4,266,721 $ 4,084,519 Deposits: Interest-Bearing Checking Accounts $ 812,634 7,442 0.92 % $ 855,931 3,663 0.43 % Savings Deposits 1,507,227 42,850 2.84 % 1,498,749 34,343 2.29 % Time Deposits of $250,000 or More 176,844 7,460 4.22 % 137,974 4,966 3.60 % Other Time Deposits 520,658 20,997 4.03 % 241,218 7,127 2.95 % Total Interest-Bearing Deposits 3,017,363 78,749 2.61 % 2,733,872 50,099 1.83 % Borrowings 84,106 3,637 4.32 % 144,971 6,756 4.66 % Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts 20,000 686 3.43 % 20,000 686 3.43 % Finance Leases 5,026 189 3.76 % 5,082 191 3.76 % Total Interest-Bearing Liabilities 3,126,495 83,261 2.66 % 2,903,925 57,732 1.99 % Demand Deposits 705,863 772,889 Other Liabilities 49,505 44,924 Total Liabilities 3,881,863 3,721,738 Stockholders' Equity 384,858 362,781 Total Liabilities and Stockholders' Equity $ 4,266,721 $ 4,084,519 Net Interest Income $ 111,732 $ 104,832 Net Interest Spread 2.09 % 2.13 % Net Interest Margin 2.72 % 2.65 % Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited) Quarter Ended: 12/31/2024 12/31/2023 Loan Portfolio Commercial Loans $ 158,991 $ 156,224 Commercial Real Estate Loans 796,365 745,487 Subtotal Commercial Loan Portfolio 955,356 901,711 Consumer Loans 1,118,981 1,111,667 Residential Real Estate Loans 1,320,204 1,199,530 Total Loans $ 3,394,541 $ 3,212,908 Allowance for Credit Losses Allowance for Credit Losses, Beginning of Quarter $ 31,262 $ 31,112 Loans Charged-off (1,333) (1,366) Recoveries of Loans Previously Charged-off 815 994 Net Loans Charged-off (518) (372) Provision for Credit Losses 2,854 525 Allowance for Credit Losses, End of Quarter $ 33,598 $ 31,265 Nonperforming Assets Nonaccrual Loans $ 20,621 $ 20,645 Loans Past Due 90 or More Days and Accruing 398 452 Loans Restructured and in Compliance with Modified Terms 20 54 Total Nonperforming Loans 21,039 21,151 Repossessed Assets 382 312 Other Real Estate Owned 76 — Total Nonperforming Assets $ 21,497 $ 21,463 Key Asset Quality Ratios Net Loans Charged-off to Average Loans, Quarter-to-date Annualized 0.06 % 0.05 % Provision for Credit Losses to Average Loans, Quarter-to-date Annualized 0.34 % 0.07 % Allowance for Credit Losses to Period-End Loans 0.99 % 0.97 % Allowance for Credit Losses to Period-End Nonperforming Loans 159.69 % 147.82 % Nonperforming Loans to Period-End Loans 0.62 % 0.66 % Nonperforming Assets to Period-End Assets 0.50 % 0.51 % Twelve-Month Period Ended: Allowance for Credit Losses Allowance for Credit Losses, Beginning of Year 31,265 29,952 Loans Charged-off (5,895) (5,177) Recoveries of Loans Previously Charged-off 3,048 3,109 Net Loans Charged-off (2,847) (2,068) Provision for Credit Losses 5,180 3,381 Allowance for Credit Losses, End of Year $ 33,598 $ 31,265 Key Asset Quality Ratios Net Loans Charged-off to Average Loans 0.09 % 0.07 % Provision for Credit Losses to Average Loans 0.16 % 0.11 % 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 4th Quarter Net Income of $4.5 Million or $0.27 per Share and $29.7 Million or $1.77 per Share for 2024. Declares first quarter dividend of $0.28 per share.

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