Arrow Financial Corporation Reports Q1 2025 Results with $6.3 Million Net Income

Arrow Financial Corporation reported its financial results for the first quarter of 2025, revealing a net income of $6.3 million, a decrease of 17.6% from $7.7 million in the same period last year. The diluted earnings per share also fell to $0.38 from $0.45. The decline in profitability was attributed to a higher provision for credit losses, which rose to $5.0 million from $0.6 million a year earlier, reflecting increased charge-offs and adjustments in economic forecasts. Despite the drop in net income, the company experienced a 5.6% increase in net interest income, which reached $31.4 million, driven by a rise in average earning assets and a favorable shift in net interest margin to 3.07%.

Total assets for Arrow Financial increased to $4.4 billion as of March 31, 2025, up 3.3% from the previous quarter. This growth was primarily fueled by a significant rise in cash and interest-bearing deposits, which surged to $301.4 million, compared to $154.5 million at the end of 2024. The loan portfolio also expanded, with total loans reaching $3.4 billion, marking a 0.7% increase from the previous quarter, largely due to growth in residential real estate loans. However, the company’s investment securities decreased by 3.1%, reflecting principal paydowns and maturities.

Arrow's total deposits rose to $4.0 billion, an increase of 3.7% from the previous quarter, driven by seasonal municipal deposits and the addition of $125 million in brokered CDs. The composition of deposits shifted, with noninterest-bearing deposits accounting for 17.6% of total deposits, down from 18.4% a year earlier. The company maintained a strong liquidity position, with significant borrowing capacity available through various lines of credit, totaling approximately $1.4 billion.

In terms of operational developments, Arrow Financial's strategic unification of its former subsidiary banks into a single entity, Arrow Bank National Association, is expected to enhance operational efficiency and streamline services. The company also reported an increase in stockholders' equity to $404.4 million, reflecting net income and other comprehensive gains, despite cash dividends and stock repurchases. Looking ahead, Arrow Financial remains focused on managing its credit quality and maintaining its capital ratios, which continue to exceed regulatory requirements, positioning the company for future growth amid evolving market conditions.