Arrow Financial Corporation reported a significant increase in financial performance for the first quarter of 2026, with net income rising to $13.5 million, a 113.7% increase from $6.3 million in the same period last year. This growth was primarily driven by a 15.2% increase in net interest income, which reached $36.1 million, compared to $31.4 million in the first quarter of 2025. Total interest and dividend income also rose to $53.8 million, up from $50.4 million, while interest expense decreased to $17.7 million from $19.0 million, contributing to an improved net interest margin of 3.47%, compared to 3.07% a year earlier.
In terms of operational metrics, Arrow's total assets increased by $76.2 million, or 1.7%, to $4.5 billion as of March 31, 2026. The growth in assets was attributed to a seasonal surge in municipal deposits and fluctuations in cash balances. Total loans decreased slightly by $14.1 million to $3.4 billion, impacted by severe winter weather that slowed loan originations, particularly in the indirect auto and residential sectors. Conversely, total deposits rose by $74.5 million, or 1.9%, to $4.0 billion, largely due to seasonal municipal deposits.
Arrow's strategic developments include the announcement of a merger agreement with Adirondack Bancorp, expected to close in the third quarter of 2026, pending regulatory and shareholder approvals. This merger will expand Arrow's footprint, as Adirondack Bank operates 19 branches across several counties in New York. The merger is anticipated to enhance Arrow's market presence and operational capabilities.
The company maintained a strong capital position, with stockholders' equity increasing to $440.1 million, up 1.9% from the previous quarter. The allowance for credit losses was $34.1 million, representing 0.99% of total loans, consistent with the previous quarter. Nonperforming loans decreased to $4.4 million, or 0.13% of total loans, reflecting effective credit quality management. Arrow's liquidity position remains robust, with interest-earning cash balances rising to $256.5 million, providing flexibility to meet potential liquidity needs.
Looking ahead, Arrow Financial Corporation expressed optimism about its growth trajectory, supported by its strong financial performance and strategic initiatives. The company is well-positioned to navigate potential market challenges, including interest rate fluctuations and economic conditions, while continuing to focus on enhancing shareholder value through prudent financial management and operational efficiency.
About ARROW FINANCIAL CORP
Arrow Financial Corporation is a New York-based bank holding company focused on providing a range of commercial and consumer banking services through its unified subsidiary, Arrow Bank. With total assets of approximately $4.6 billion, Arrow targets small to mid-sized businesses and consumers in upstate New York and Vermont. The company emphasizes community engagement, financial literacy, and sustainable practices, while also offering investment advisory and insurance services through its subsidiaries.
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