Arrow Financial Corporation reported a net income of $10.8 million for the second quarter of 2025, reflecting a 25.6% increase from $8.6 million in the same period last year. This growth was driven by a rise in net interest income, which reached $32.5 million, up 19.8% from $27.2 million in the prior year. The increase in net interest income was attributed to higher interest and fees on loans, which totaled $45.6 million, compared to $42.1 million in the previous year. The company's net interest margin also improved, rising to 3.15% from 2.67% year-over-year, primarily due to yield expansion on earning assets and a decrease in the cost of interest-bearing liabilities.
In terms of overall financial performance, Arrow's total assets increased to $4.4 billion as of June 30, 2025, a 2.5% rise from $4.3 billion at the end of 2024. The growth in assets was largely driven by a $30.2 million increase in the loan portfolio, which reached $3.4 billion. Notably, residential real estate loans saw a significant uptick, contributing to the overall loan growth. However, total investments decreased by 4.4% to $528.4 million, primarily due to paydowns and maturities.
Arrow's deposit balances also experienced growth, totaling $3.9 billion, an increase of 2.6% from the previous period. This growth was supported by a rise in noninterest-bearing deposits and interest-bearing checking accounts. The company maintained a strong liquidity position, with interest-bearing cash balances increasing to $227.5 million, up from $127.1 million at the end of 2024. Arrow's allowance for credit losses stood at $34.2 million, representing 1.00% of total loans, a slight decrease from the previous quarter, reflecting improved asset quality.
Strategically, Arrow Financial Corporation unified its former subsidiary banks into a single entity, Arrow Bank National Association, effective December 31, 2024. This consolidation aims to streamline operations and enhance service delivery. The company continues to focus on managing expenses, with non-interest expenses for the second quarter of 2025 totaling $25.7 million, a 10% increase from the previous year, largely due to unification-related costs. Looking ahead, Arrow remains optimistic about its growth trajectory, supported by strong asset quality and a solid capital position, with stockholders' equity increasing to $408.5 million as of June 30, 2025.
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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