ARROW FINANCIAL CORP

ARROW FINANCIAL CORP: Key Insights from the Annual Report

This summary offers a concise look at ARROW FINANCIAL CORP's financial position and key operations for the fiscal years 2024 and 2025, drawing from its annual report.

1. Business Overview ARROW FINANCIAL CORP is a financial institution that focuses on lending and managing an investment portfolio. It originates and services a variety of loans—commercial, commercial real estate, consumer, and residential. The company also invests in diverse securities, including U.S. Treasury, government, municipal, and mortgage-backed securities. Through these activities, ARROW FINANCIAL CORP generates income while maintaining a strong financial position and carefully managing credit risk.

2. Financial Performance

• Retained Earnings Growth: ARROW FINANCIAL CORP grew its retained earnings from $261 million at year-end 2024 to $268 million at year-end 2025. This shows the company's consistent ability to retain profits and reinvest them.

3. Management Discussion & Analysis (MD&A Highlights) ARROW FINANCIAL CORP's management focused on maintaining a stable financial position, growing its loan portfolio, expanding strategic investments, and returning value to shareholders.

• Balance Sheet Strength: The company showed a stable financial position, with growth in key balance sheet components. Its Accumulated Other Comprehensive Income (AOCI) improved from a negative $18 million in 2024 to a negative $16 million in 2025. This suggests a reduction in unrealized losses or an increase in unrealized gains within its investment portfolio.
• Loan Portfolio Performance: A key strength lies in the exceptionally healthy loan portfolio, which reflects successful lending operations and effective credit risk management.
  • Significant Loan Growth: Performing loans expanded by $100 million, from $2.966 billion in 2024 to $3.066 billion in 2025.
  • Outstanding Credit Quality: The company reported zero loans 60 days or more past due, and zero loans 90 days or more past due in both 2024 and 2025. Only $1 million in loans were 30-59 days past due in both years.
  • No Troubled Debt Restructurings: ARROW FINANCIAL CORP reported no troubled loan restructurings in 2025, further underscoring the high quality of its loan book.
  • Strong Loan Classifications: The company classified the vast majority of loans across all categories (Commercial, Commercial Real Estate, Consumer, and Residential) as "Pass." "Substandard" or "Doubtful" loans remained at zero.
• Strategic Investment Growth: ARROW FINANCIAL CORP strategically expanded its investment holdings. It increased investments in:
  • US Treasury and Government securities by $10 million, reaching $140 million in 2025.
  • US States and Political Subdivisions by $10 million, reaching $120 million.
  • Mortgage-Backed Securities by $10 million, reaching $110 million. This expansion indicates a strategy to optimize asset utilization and generate income.
• Shareholder Value Initiatives: ARROW FINANCIAL CORP actively returned value to shareholders through share repurchases, spending approximately $1 million in both 2024 and 2025, signaling management's confidence in the company's valuation.

4. Financial Health Based on the available information, ARROW FINANCIAL CORP appears to be a financially sound institution.

• Equity: Retained earnings grew from $261 million to $268 million. AOCI also improved from negative $18 million to negative $16 million, both strengthening the company's equity base.
• Asset Quality: The loan portfolio shows exceptional credit quality, with minimal delinquencies and no troubled debt restructurings—a critical component of any financial institution's health. The investment portfolio remains diversified across government, municipal, and mortgage-backed securities.