AROW 10-K & 10-Q changes, risk factors and insider trading
Arrow Financial Corp. · Nasdaq · National Commercial Banks · CIK 717538 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “RISKS RELATED TO MERGER WITH ADIRONDACK”
New heading “LOAN PORTFOLIO RISKS”
Largest changes
“In particular the use or implementation of artificial intelligence (AI) applications and generative AI technologies are a recent example of an emerging technology providing significant value to operations and service that also present additional risks for consideration. AI models may rely on complex algorithms and vast datasets. Errors, biases, or generating false information in these models, or unexpected system failures, could lead to flawed decisions, financial losses, compliance failures, or degraded customer experiences, impacting profitability and client retention. …”see in full comparison
“Applicable laws and regulations restrict our lending practices, require us to expend substantial additional resources to ensure compliance, and subject Arrow Bank to minimum capital requirements which, in the long run, may serve as a drag on its earnings, growth and ultimately on our dividends and stock price. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the adequacy of the level of our allowance for loan losses. …”see in full comparison
Arrow’s financial condition and the results of its operations could be negatively impacted by changes in its liquidity position. Arrow’s liquidity can be significantly and negatively impacted by factors outside the Company’s control, including general disruptions in the financial markets, governmental fiscal and monetary policies, regulatory changes, negative investor perceptions of Arrow’s creditworthiness, unexpected increases in cash or collateral requirements and the consequent inability to monetize available liquidity resources.see in full comparisonFurther, competition for deposits has continued to increase in recent years, including as a result of online banks and digital banking and fixed income alternatives for customer funds. Continued or increased competition for deposits in the current higher interest rate environment could negatively impact Arrow’s liquidity going forward.
“Arrow Bank is subject to risks and losses resulting from fraudulent activities that could adversely impact its financial performance and results of operations. As a bank, we are susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation. …”see in full comparison
“Arrow Bank’s indirect and consumer lending involves risk elements in addition to normal credit risk. At December 31, 2025, Arrow Bank’s consumer loans totaled $1,076 million, or 33% of total loans. A portion of such lending involves the purchase of consumer automobile installment sales contracts from automobile dealers located throughout New York and Vermont. These loans are for the purchase of new or used automobiles. Arrow Bank serves customers that cover a range of creditworthiness, and the required terms and rates are reflective of those risk profiles. …”see in full comparison
“The Company relies on the operations of its subsidiaries to provide liquidity, which, if limited, could impact Arrow's ability to pay dividends to its shareholders or to repurchase its common stock. Arrow is a single bank holding company, a separate legal entity from its subsidiaries. The bank holding company does not have significant operations of its own. The ability of the subsidiaries, including Arrow Bank and the insurance subsidiary, to pay dividends is limited by various statutes and regulations. …”see in full comparison
Full comparison: every changed paragraph (30)
Arrow remains subject to inflationary risk which could adversely impact our business and our customers. Beginning in the first half of 2022, the FRB steadily increased in benchmark interest rates in response to signs of growing inflation. Although the FRB cut certain benchmark interest rates twice in the second half of 2024,2024 and again in 2025, the inflationary outlook remains uncertain. Should interest rates rise, the value of our investment securities, particularly those with longer maturities, would likely decrease (although this effect may be mitigated for floating rate instruments). Further, continued inflation increases the cost of operational expenses which increases our noninterest expenses. Additionally, our customers may be affected by inflation, which could have a negative impact on their ability to repay loans. Finally, a return to a higher inflationary environment may discourage our customers from pursuing new loans.
The financial services industry is faced with technological advances and changes on a continuing basis, and failure to adapt to these advances and changes could have a material adverse impact on Arrow's business. Technological advances and changes in the financial services industry are pervasive and constant. The retail financial services sector, like many other retail goods and services sectors, is constantly evolving, involving new delivery and communications systems and technologies that are extraordinarily far-reaching and impactful. For Arrow to remain competitive, Arrow must adapt to these systems and technologies. Proper implementation of new technologies can increase efficiency, decrease costs and help to meet customer demand. However, many competitors have greater resources to invest in technological advances and changes. Arrow may not always be successful in utilizing the latest technological advances in offering its products and services or in otherwise conducting its business. Failure to identify, consider, adapt to and implement technological advances and changes could have a material adverse effect on business. In particular the use or implementation of AI and generative AI technologies can have a significant impact. Arrow is still evaluating the potential threats and uses of this technology.
In particular the use or implementation of artificial intelligence (AI) applications and generative AI technologies are a recent example of an emerging technology providing significant value to operations and service that also present additional risks for consideration. AI models may rely on complex algorithms and vast datasets. Errors, biases, or generating false information in these models, or unexpected system failures, could lead to flawed decisions, financial losses, compliance failures, or degraded customer experiences, impacting profitability and client retention. AI systems also may process sensitive customer data, and security breaches or unauthorized access to these systems could result in data theft, loss of intellectual property, and significant penalties and damages to customer trust. In addition to risks associated with direct adoption of AI applications by us, we face the risk of associates utilizing unauthorized publicly sourced AI tools to complete business functions. Unauthorized use of AI tools could lead to the unintended exposure of confidential data, use of inaccurate results, and a number of other risks. Additionally, third-party service providers are quickly embedding AI capabilities in their technology to provide more robust and efficient services. Some embedded AI capabilities could risk the exposure of confidential company data if being used in a multi-tenant environment or being used to train AI systems. Arrow is still evaluating the potential threats and uses of this technology.
Geopolitical and other external events, such as severe weather, natural disasters, public health emergencies and pandemics, acts of war or terrorism, and other external events could impact Arrow Bank’s ability to conduct business. Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems. Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue. Arrow Bank may also be affected by severe weather events or public health emergencies. While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition. Additionally, financial markets may be adversely affected by the actual or anticipated impact of military conflict, terrorism or other geopolitical events, including trade disputes.
RISKS RELATED TO MERGER WITH ADIRONDACK
The market price of Arrow’s common stock may decline as a result of the Merger. The market price of Arrow’s common stock may decline as a result of the Merger if Arrow does not achieve the perceived benefits of the Merger or the effect of the Merger on Arrow’s financial results is not consistent with the expectations of financial or industry analysts.
In addition, the consummation of the Merger will result in the combination of two companies that currently operate as independent companies. While Arrow expects to benefit from certain synergies following the Merger, Arrow may also encounter new risks and liabilities associated with these differences. Following the Merger, shareholders of Arrow and Adirondack will own interests in a combined company operating an expanded business and may not wish to continue to invest in Arrow, or for other reasons may wish to dispose of some or all of Arrow’s common stock. If, following the effective time of the Merger, large amounts of Arrow’s common stock are sold, the price of Arrow’s common stock could decline.
Combining Arrow and Adirondack may be more difficult, costly or time-consuming than expected, and Arrow may fail to realize the anticipated benefits of the Merger. The benefits and synergies expected to result from the proposed Merger will depend in part on whether the operations of Adirondack can be integrated in a timely and efficient manner with those of Arrow. Arrow will face challenges and costs in consolidating its functions with those of Adirondack, and integrating the organizations, procedures and operations of the two businesses. The integration of Arrow and Adirondack will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it. Failure to successfully integrate the operations of Arrow and Adirondack could result in the failure to achieve some of the anticipated benefits from the transaction, including cost savings and other operating efficiencies.
The Agreement may be terminated in accordance with its terms and the Merger may not be completed. The Agreement is subject to a number of conditions which must be fulfilled in order to complete the Merger. Those conditions include, among other things: (i) approval of the Agreement by the requisite vote of the shareholders of Adirondack (ii) authorization for listing on Nasdaq of the shares of Arrow’s common stock to be issued in the Merger, (iii) receipt of required regulatory approvals, including the approval of the Federal Reserve Board, the OCC and the New York State Department of Financial Services, without the imposition of any condition or restriction that would be reasonably expected to have a material adverse effect on the continuing corporation and its subsidiaries, taken as a whole, after giving effect to the Merger and the Bank Merger, (iv) effectiveness of the registration statement on Form S-4 for Arrow’s common stock to be issued in the Merger, and (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the Merger, the Bank Merger or any of the other transactions contemplated by the Merger agreement or making the completion of the Merger, the Bank Merger or any of the other transactions contemplated by the Merger agreement illegal. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (a) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (b) performance in all material respects by the other party of its obligations under the Merger agreement, and (c) receipt by such party of an opinion from its counsel to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. In addition, Arrow’s obligation to complete the Merger is also subject to holders of fewer than 5% of the outstanding shares of Adirondack’s common stock perfecting their appraisal rights under appliable New York law.
These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may not be completed. In addition, the parties can mutually decide to terminate the Merger agreement at any time, before or after the requisite vote of the shareholders of Adirondack or Arrow, Arrow Merger Sub, Inc., or Adirondack Inc. may elect to terminate the Merger agreement in certain other circumstances.
Additionally, Arrow has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger agreement, as well as the costs and expenses of preparing, filing, printing and mailing of a joint proxy statement/prospectus in connection with the Merger, and all filing and other fees paid in connection with the Merger. If the Merger is not completed, Arrow would have to pay these expenses without realizing the expected benefits of the Merger.
Arrow Bank is subject to risks and losses resulting from fraudulent activities that could adversely impact its financial performance and results of operations. As a bank, we are susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation. Arrow Bank is most subject to fraud and compliance risk in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, checking transactions, and debit cards that we have issued to customers and through online banking portals.
Health emergencies may adversely affect Arrow’s business activities, financial condition and results of operations. The business of Arrow and its subsidiaries depends on the willingness and ability of its customers to conduct financial transactions. Health emergencies could disrupt the business, activities, and operations of Arrow’s customers, as well as Arrow's business and operations.
Arrow has taken steps to mitigate the risk of harm to its employees and customers and to its operations from health emergencies or other events through its business continuity plan. If a health emergency has an adverse effect on (i) customer deposits, (ii) the ability of borrowers to satisfy their obligations, (iii) the demand for loans or other financial products and services, (iv) the ability of Arrow’s personnel and third party service providers to perform effectively, (v) financial markets, real estate markets, or economic growth, or (vi) other aspects of operations, then Arrow’s liquidity, financial condition and/or results of operations may be materially and adversely affected.
Arrow may not realize the anticipated benefits of unifying its two former subsidiary banks into one bank. On December 31, 2024, Arrow merged its two former subsidiary banks into one subsidiary bank, and changed the name of the unified institution to Arrow Bank. Arrow anticipates the unification will simplify the bank’s brand identity, strengthen its market presence, create operational efficiencies, and enhance Arrow's ability to pursue its strategic growth objectives; however, Arrow could experience additional costs associated with rebranding and integrating operations, disruptions to company operations, or a loss of customers or brand awareness, any of which could have a material impact on our operations.
Arrow Bank's allowance for possibleexpected credit losses may be insufficient, and an increase in the allowance would reduce earnings. Arrow Bank's loan quality is affected by the condition of the economy. Like other financial institutions, Arrow Bank maintains an allowance for credit losses to provide for probableexpected credit losses at the balance sheet date. While Arrow Bank has continued to enjoy a very high level of quality in its loan portfolio generally and very low levels of loan charge-offs and non-performing loans, if the economy in Arrow Bank's geographic market area should deteriorate to the point that recessionary conditions return, or if the regional or national economy experiences a protracted period of stagnation, the quality of our loan portfolio may weaken so significantly that its allowance for loan losses may not be adequate to cover actual or expected loan losses. In such events, Arrow Bank may be required to increase its provisions for credit losses and this could materially and adversely affect financial results. The allowance for credit losses is established through a provision for credit losses based on management’s evaluation of the risks inherent in the loan portfolio and the general economy. The allowance for credit losses is based upon a number of factors, including the size of the loan portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, historical loss experience and loan underwriting policies. In addition, Arrow Bank evaluates all loans identified as problem loans and augments the allowance based upon an estimation of the potential loss associated with those problem loans. Additions to the allowance for credit losses decrease net income through provisions for credit losses. Arrow Bank's regulators, in reviewing the loan portfolio as part of a regulatory examination, may from time to time require Arrow Bank to increase the allowance for credit losses, thereby negatively affecting earnings, financial condition and capital ratios at that time. Moreover, additions to the allowance may be necessary based on changes in economic and real estate market conditions, new information regarding existing loans and leases, identification of additional problem loans and other factors, both within and outside of Arrow's control. Additions to the allowance could have a negative impact on Arrow Bank's results of operations, which would impact the Company's results of operations.
Arrow’s financial condition and the results of its operations could be negatively impacted by changes in its liquidity position. Arrow’s liquidity can be significantly and negatively impacted by factors outside the Company’s control, including general disruptions in the financial markets, governmental fiscal and monetary policies, regulatory changes, negative investor perceptions of Arrow’s creditworthiness, unexpected increases in cash or collateral requirements and the consequent inability to monetize available liquidity resources. Further, competition for deposits has continued to increase in recent years, including as a result of online banks and digital banking and fixed income alternatives for customer funds. Continued or increased competition for deposits in the current higher interest rate environment could negatively impact Arrow’s liquidity going forward.
In addition, asAs a holding company, Arrow relies on interest, dividends, distributions and other payments from Arrow Bank to fund dividends as well as to satisfy its debt and other obligations. Limitations on the payments that Arrow receives from Arrow Bank could also impact Arrow’s liquidity. A bank holding company is required by law to act as a source of financial and managerial strength for Arrow Bank. As a result, Arrow may be required to commit resources to Arrow Bank, even if doing so is not otherwise in the interests of the Company, its shareholders or its creditors, which could reduce the amount of funds available to meet its obligations.
In addition, Arrow Bank must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds for use in lending and investment activities. Arrow Bank also receives funds from loan repayments, investment maturities and income on other interest-earning assets. While we emphasize generating transaction accounts, we cannot guarantee if and when this will occur. Further, the considerable competition for deposits in our market area also has made, and may continue to make, it difficult for us to obtain reasonably priced deposits.
LOAN PORTFOLIO RISKS
Arrow Bank’s commercial and commercial real estate loans increase its exposure to credit risks. At December 31, 2025, Arrow’s commercial and commercial real estate loans totaled $984 million, or 29% of total loans. We plan to continue to emphasize the origination of these types of loans, which generally expose us to a greater risk of nonpayment and loss than residential real estate or consumer loans because repayment of such loans often depends on the successful business operations and income stream of the borrowers and are generally more sensitive to economic conditions. Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to consumer loans or residential real estate loans, and the collateral securing such loans often cannot be liquidated as easily as residential real estate. A sudden downturn in the economy, or a prolonged downturn for specific industries, could result in borrowers being unable to repay their loans, thus exposing Arrow to increased credit risk.
Arrow Bank’s indirect and consumer lending involves risk elements in addition to normal credit risk. At December 31, 2025, Arrow Bank’s consumer loans totaled $1,076 million, or 33% of total loans. A portion of such lending involves the purchase of consumer automobile installment sales contracts from automobile dealers located throughout New York and Vermont. These loans are for the purchase of new or used automobiles. Arrow Bank serves customers that cover a range of creditworthiness, and the required terms and rates are reflective of those risk profiles. While these loans have higher yields than many of our other loans, such loans involve risk elements in addition to normal credit risk. Additional risk elements associated with indirect lending include the limited personal contact with the borrower as a result of indirect lending through non-bank channels, namely automobile dealers. While indirect automobile loans are secured, such loans are secured by depreciating assets and characterized by loan-to-value ratios that could result in us not recovering the full value of an outstanding loan upon default by the borrower. State and federal laws may further limit our ability to recover outstanding principal balances on such loans. If the losses from our indirect loan portfolio are higher than anticipated, it could have a material adverse effect on Arrow Bank’s financial condition and results of operations.
Arrow may not pay or may reduce the dividends paid on shares of its common stock, and its ability to pay dividends is subject to certain restrictions. Holders of Arrow common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments. In addition, Arrow is a bank holding company, and its ability to declare and pay dividends is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends. Although we have historically declared cash dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future. Any change in the level of our dividends or the suspension of the payment thereof could have an adverse effect on the market price of our common stock.
The Company relies on the operations of its subsidiaries to provide liquidity, which, if limited, could impact Arrow's ability to pay dividends to its shareholders or to repurchase its common stock. Arrow is a single bank holding company, a separate legal entity from its subsidiaries. The bank holding company does not have significant operations of its own. The ability of the subsidiaries, including Arrow Bank and the insurance subsidiary, to pay dividends is limited by various statutes and regulations. It is possible, depending upon the financial condition of Arrow's subsidiaries and other factors, that the subsidiaries might be restricted at some point in the ability to pay dividends to Arrow, including by a bank regulator asserting that the payment of such dividends or other payments would constitute an unsafe or unsound practice. In addition, under federal banking law, Arrow is subject to consolidated capital requirements at the holding company level. If Arrow or Arrow Bank is required to retain or increase capital, Arrow may not be able to maintain the cash dividends or pay dividends at all, or to repurchase shares of Arrow's common stock.
Arrow operates in a highly regulated industry and face risks associated with noncompliance. Federal banking statutes and regulations could change in the future, which may adversely affect Arrow. Arrow and Arrow Bank isare subject to extensive federal and state banking regulations and supervision. Banking laws and regulations are intended primarily to protect bank depositors’ funds (and indirectly the Federal Deposit Insurance Fund) as well as bank retail customers, who may lack the sophistication to understand or appreciate bank products and services. These laws and regulations generally are not, however, aimed at protecting or enhancing the returns on investment enjoyed by bank shareholders.
Applicable laws and regulations restrict our lending practices, require us to expend substantial additional resources to ensure compliance, and subject Arrow Bank to minimum capital requirements which, in the long run, may serve as a drag on its earnings, growth and ultimately on our dividends and stock price. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the adequacy of the level of our allowance for loan losses. If, as a result of an examination, a federal banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth or merger activity, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance or to place Arrow Bank into receivership or conservatorship.
Arrow Bank's depositor/customer awareness of the changing regulatory environment is particularly true of the set of laws and regulations under Dodd-Frank, which were passed in the aftermath of the 2008-09 financial crisis and in large part were intended to better protect bank customers (and to some degree, banks) against a wide variety of lending products and aggressive lending practices that pre-dated the crisis and are seen as having contributed to its severity. Although not all banks offered such products or engaged in such practices, all banks are affected by these laws and regulations to some degree.
Dodd-Frank restricts Arrow Bank's lending practices, requires us to expend substantial additional resources to safeguard customers, significantly increases its regulatory burden, and subjects Arrow Bank to significantly higher minimum capital requirements which, in the long run, may serve as a drag on its earnings, growth and ultimately on its dividends and stock price (the Dodd-Frank capital standards are separately addressed in a previous risk factor).
Although the Economic Growth Act and similar initiatives may mitigate the impact of Dodd-Frank, otherFuture statutory and regulatory changeschanges, including additional guidance and interpretations of existing rules and requirementsrequirements, are difficult to predict and could add to the existing regulatory burden imposed on banking organizations like Arrow Bank, resulting in a potential material adverse effect on Arrow's financial condition and results of operations.
Capital and liquidity standards require banks and bank holding companies to maintain more and higher quality capital and greater liquidity than has historically been the case. Capital standards, particularly those adopted as a result of Dodd-Frank, continue to have a significant effect on banks and bank holding companies, including Arrow. The need to maintain more and higher quality capital, as well as greater liquidity, and generally increased regulatory scrutiny with respect to liquidity and capital levels, may at some point limit business activities, including lending, and our ability to expand. It could also result in Arrow being required to take steps to increase regulatory capital and may dilute shareholder value or limit the ability to pay dividends or otherwise return capital to investors through stock repurchases. The Capital Rules promulgated under Dodd-Frank will remain applicable to Arrow.
Management's Discussion & Analysis (MD&A)
Removed heading “NET INTEREST MARGIN”
Removed heading “The following accounting standard have been issued and become effective for Arrow at a future date:”
Largest changes
“The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (NPV). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis. …”see in full comparison
“Historical credit loss experience for both Arrow and segment-specific peers provides the basis for the estimation of expected credit losses. Arrow utilizes regression analyses of peer data where observed credit losses and selected economic factors are utilized to determine suitable loss drivers for modeling lifetime probability of default (PD) rates. Arrow uses the discounted cash flow (DCF) method to estimate expected credit losses for the commercial, commercial real estate, and residential segments. …”see in full comparison
“Arrow uses the discounted cash flow ("DCF") method to estimate expected credit losses for the commercial, commercial real estate, and residential segments. For each of these loan segments, Arrow generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default ("PD"), and segment-specific loss given default ("LGD") risk factors. …”see in full comparison
“The following accounting standard have been issued and become effective for Arrow at a future date:”see in full comparison
“On December 20, 2024, Arrow sold approximately $75 million of lower-yielding available-for-sale investments with an average book yield of approximately 0.6% and weighted average remaining life of 1.3 years, recognizing a pre-tax loss on the sale of approximately $3.0 million. Proceeds from the sale have been redeployed into higher-yielding available-for-sale investments with an average book yield of approximately 4.4% and weighted average remaining life of 4.5 years. The expected earn-back period of these investment transactions is approximately 1.1 years. …”see in full comparison
Full comparison: every changed paragraph (129)
Selected Twelve-MonthFinancial Information
2022 share and per share amounts have been restated for the September 2023 3% stock dividend
CRITICAL ACCOUNTING POLICIESESTIMATES
The significant accounting policies, as described in Note 2 -2. Summary of Significant Accounting Policies to the Consolidated Financial Statements are essential in understanding the Management Discussion and Analysis. Many of the significant accounting policies require complex judgments to estimate the values of assets and liabilities. Arrow has procedures and processes in place to facilitate making these judgments. The more judgmental estimates are summarized in the following discussion. In many cases, there are numerous alternative judgments that could be used in the process of determining the inputs to the models. Where alternatives exist, Arrow has used the factors that are believed to represent the most reasonable value in developing the inputs. Actual performance that differs from estimates of the key variables could impact the results of operations.
Allowance for credit losses: The allowance for credit losses consists of the allowance for credit losses on loans and unfunded loan commitments. The Current Expected Credit Loss ("CECL") approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. Arrow then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, Arrow considers forecasts about future economic conditions that are reasonable and supportable.
Arrow uses the discounted cash flow ("DCF") method to estimate expected credit losses for the commercial, commercial real estate, and residential segments. For each of these loan segments, Arrow generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default ("PD"), and segment-specific loss given default ("LGD") risk factors. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data and adjusted, if necessary, based on the reasonable and supportable forecast of economic conditions. An allowance for credit loss is established for the difference between the instrument’s net present value of expected cash flows and amortized cost basis.
Arrow utilized regression analyses of peer data where observed credit losses and selected economic factors were utilized to determine suitable loss drivers for modeling lifetime PD rates. For the loan segments utilizing the DCF method, management utilizes externally developed economic forecasts for the selected loss drivers.
Arrow uses the vintage analysis method to estimate expected credit losses for the consumer loan segment. Under the vintage analysis method, an average loss rate is calculated based on the quarterly net charge-offs to the outstanding loan balance for each vintage year and applied to the outstanding loan balances based on the loan's vintage year.
Arrow considers the need to qualitatively adjust expected credit loss estimates for information not already captured in the loss estimation process. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments are not made for information that has already been considered and included in the loss estimation process.
The allowance for losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by Arrow. The allowance for losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws.
Allowance for credit losses: The allowance for credit losses consists of the allowance for credit losses and the allowance for losses on unfunded commitments. Arrow adopted on January 1, 2021, Accounting Standards Updates (‘‘ASU’’) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘CECL’’) and its related amendments. The CECL approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. Arrow then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, Arrow considers forecasts about future economic conditions that are reasonable and supportable. The allowance for losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by Arrow. The allowance for losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws. Arrow considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover Arrow's estimate of all expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate at this time, the allowance may need to be adjusted in the future due to changes in conditions or assumptions. The impact of utilizing the CECL approach to calculate the reserve for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the reserve for credit losses, and therefore, greater volatility to our reported earnings. Arrow's policy on the allowance for credit losses is disclosed in Note 2 to the consolidated financial statements of this Form 10-K.
One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. The quantitative model utilizes a six-quarter economic forecast sourced from reputable third-parties that projects an increase of approximately 0.17% in the forecasted national unemployment rate and projects forecasted GDP to improve by approximately 0.05% from the previous year economic forecast.
To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast assumptions, the Company increased the projected rate of unemployment and reduced projected GDP growth by an additional 25, 50 and 100 bps causing a 3%, 6% and 13% increase in the overall estimated allowance for credit losses, respectively.
Arrow's policy on the allowance for credit losses is disclosed in Note 2. Summary of Significant Accounting Policies to the consolidated financial statements of this Form 10-K.
The following discussion and analysis focuses on and reviews Arrow's results of operations for each of the years in the three-year period ended December 31, 20242025 and the financial condition as of December 31, 20242025 and 2023.2024. The discussion below should be read in conjunction with the selected quarterlyannual and annualfinancial information set forth above and the Consolidated Financial Statements and other financial data presented elsewhere in this Report. When necessary, prior-year financial information has been reclassified to conform to the current-year presentation.
Summary of 20242025 Financial Results: Net income for 20242025 was $29.7$44.0 million, downup from $30.1$29.7 million for 2023.2024.
Diluted earnings per share (EPS) was $2.65 for 2025, up from $1.77 for 2024, unchanged from 2023.2024. ROE and ROA for 2025 were 10.66% and 1.00%, respectively, as compared to 7.72% and 0.70%, respectively, as compared to 8.29% and 0.74%, respectively, for 2023.2024.
Net interest income for the year ended December 31, 20242025 was $111.7$133.2 million, an increase of $6.9$21.4 million, or 6.6%,19.2%, from the prior year. Compared to the prior year, the increase was primarily due to the combination of increased interest income outpacingand growth indecreased interest expense. Interest and fees on loans were $184.1 million for the year ended December 31, 2025, an increase of 7.4% from $171.3 million for the year ended December 31, 2024, an increase of 20.6% from $142.0 million for the year ended December 31, 2023.2024. The increase was primarily driven by loan growth and higher average loan rates. Interest expense for the year ended December 31, 20242025 was $83.3$77.0 million. This represents ana increasedecrease of $25.5$6.3 million, or 44.2%,7.5%, from $57.7the $83.3 million in interest expense for the prior-yearprior period.year. The increasedecrease in interest expense was driven primarily by higherlower average deposit rates and changes in deposit composition.composition to lower-cost core deposits.
Net interest margin was 3.17% (3.19% FTE) for the year ended December 31, 2025, as compared to 2.72% (2.74% FTE) for the year ended December 31, 2024. The increase in net interest margin compared to the prior year was primarily the result of continued yield expansion on earning assets combined with the reduced cost of interest-bearing liabilities.
For the year ended December 31, 2025, the provision for credit losses related to the loan portfolio was $7.3 million, compared to $5.2 million in the prior year. The key drivers for the increase in provision for credit losses for 2025 were primarily the second quarter charge-off of the specific reserve of $3.75 million related to the CRE Participation and overall loan growth. The aforementioned CRE Participation was reclassified to Other Assets after the participating banks assumed control of the collateral properties and appointed a property manager to manage the day-to-day activities while exploring further options. The properties are being held in an unconsolidated limited liability company (LLC) in which Arrow has an ownership interest equivalent to its rights under the former CRE Participation. As previously disclosed, the properties are generating positive net operating income and the majority is tenant occupied.
Non-interest income was $32.4 million for the year ended December 31, 2025, an increase of 15.5%, as compared to $28.1 million for the year ended December 31, 2024. The increase in non-interest income from the previous year was primarily driven by a 2024 net loss on securities from the repositioning of the investment portfolio which reduced the 2024 non-interest income as well as increases in 2025 revenue related to wealth management, insurance and interchange fees.
Net interest margin was 2.72% (2.74% FTE1) for the year ended December 31, 2024, as compared to 2.65% (2.67% FTE) for the year ended December 31, 2023.
For the year ended December 31, 2024, the provision for credit losses 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 expense for the year ended December 31, 20242025 increased by $4.2$5.7 million, or 4.5%,5.8%, to $97.3$102.9 million, as compared to $93.0$97.3 million in 2023.2024. The largest component of non-interest expense is salaries and benefits paid to our employees, which totaled $52.7$56.3 million in 20242025 and increased $5.0$3.6 million, or 10.6%,6.8%, 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.
1 FTE net interest margin is a non-GAAP measure. See reconciliation on Note 3 to the Selected Quarterly Information.
The provision for income taxes for 20242025 was $7.6$11.4 million, compared to $7.4$7.6 million for 2023.2024. The effective income tax rates for 20242025 and 20232024 were 20.5%20.6% and 19.8%,20.5%, respectively. The increase in the effective tax rate was primarily the result of reduced tax exempt income in 2024.
Total assets were $4.3$4.4 billion at December 31, 2024,2025, an increase of $136.5$139.5 million, or 3.3%,3.2%, compared to December 31, 2023.2024. The increase over the prior year end was primarily driven by loan growth.growth and an overall increase in interest-earning deposits at banks.
Total investments were $570.8$572.8 million at December 31, 2024,2025, aan decreaseincrease of $65.4$2.0 million, or 10.3%,0.4%, compared to December 31, 2023.2024. The decreaseincrease wasreflected driventhe primarilyreinvestment byof the cash generated from paydowns and maturities, the proceedsmaturities of whichinvestments wereinto primarilyhigher usedyielding toinvestments, fundand loannet growthunrealized in 2024. The minor repositioninggains of the$19.5 investment portfolio in the fourth quarter did not materially impact the overall investment balance.million. There were no credit quality issues identified related to the investment portfolio.
On December 20, 2024, Arrow sold approximately $75 million of lower-yielding available-for-sale investments with an average book yield of approximately 0.6% and weighted average remaining life of 1.3 years, recognizing a pre-tax loss on the sale of approximately $3.0 million. Proceeds from the sale have been redeployed into higher-yielding available-for-sale investments with an average book yield of approximately 4.4% and weighted average remaining life of 4.5 years. The expected earn-back period of these investment transactions is approximately 1.1 years. Based on current market interest rates, the transaction is expected to improve Arrow's net interest income by approximately $2.7 million for 2025 and beyond, due to increased duration within the portfolio. Year end regulatory capital ratios were not materially impacted as the new investments carry a lower risk weighting than the securities that were sold. Year-end tangible common equity and tangible book value were not impacted.
At December 31, 2024, total loan balances reached $3.4 billion. Loan growth for the fourth quarter was $59 million2. Loan growth for the year was $185 million3 or 5.8%. Loan growth was spread across all loan products.
At December 31, 2025, total loan balances reached $3.5 billion. Loan growth for the year was $59 million or 1.7%. The allowance for credit losses was $33.6$34.3 million at December 31, 2024,2025, an increase of $2.3$0.7 million from December 31, 2023.2024. The allowance for credit losses at year-endDecember 202431, 2025 represented 0.99% of loans outstanding, an increaseunchanged from 0.97%0.99% at year-endyear 2023.end 2024. Asset quality remained solidstrong at December 31, 2024.2025. Net loan charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.09%0.19% for the year ended December 31, 2024,2025, as compared to 0.07%0.09% for the prior year. The increase was the result of a charge-off of a previously reserved commercial loan participation in the second quarter of 2025. Nonperforming assets of $21.5$8.7 million at December 31, 2024,2025, represented 0.50%0.20% of period-endyear end assets, compared to $21.5 million or 0.51%0.50% at December 31, 2023.2024.
At December 31, 2024,2025, total deposit balances were $3.8$3.9 billion, an increase of $140.4$111.5 million, or 3.8%,2.9%, from the prior-year end level. Non-municipal deposits, excluding brokered CDs, decreasedincreased by $57.6$131.6 million and municipal deposits decreased by $12.2$20.1 million, each as compared to December 31, 2023.2024. Non-interest bearing deposits decreasedincreased by $55.4$19.4 million, or 7.3%,2.8%, during 2024, and represented 18.4% of total deposits at year-end, as compared to the prior-year level of 20.6%.2025. At December 31, 2024,2025, total time deposits, excluding brokered CDs, increased $36.0$3.2 million from the prior-year end 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.
Regulatory Capital and Stockholders' Equity: As of December 31, 2024,2025, Arrow continued to exceed all required minimum capital ratios under the current bank regulatory capital rules as implemented under Dodd-Frank (the "Capital Rules") at both the holding company and bank levels. At that date, both Arrow, as well asdate Arrow Bank, continued to qualify as "well-capitalized" under the capital classification guidelines as defined by the Capital Rules. Because of continued profitability and strong asset quality, the regulatory capital levels throughout recent years have consistently remained well in excess of the various required regulatory minimums in effect.
Total stockholders' equity was $400.9$431.9 million at December 31, 2024,2025, an increase of $21.1$31.0 million, or 5.6%,7.7%, from December 31, 2023.2024. The components of the change in stockholders' equity since year-end 20232024 are presented in the Consolidated Statement of Changes in Stockholders' Equity on page 50.49. Total book value per share increased by 6.8%17.1% over the prior yearyear-end level. The net increase in total stockholders' equity during 20242025 principally reflected the following factors: (i) $29.7$44.0 million of net income for the year, (ii) other comprehensive income of $15.0$14.4 million and (iii) $1.5$1.7 million of equity related to various stock-based compensation plans, reduced by (iv) cash dividends of $18.3$18.9 million and (v) repurchases of common stock of $6.810.0 million. As of December 31, 2024, Arrow's closing stock price was $28.71, resulting in a trading multiple of 1.28 to Arrow's tangible book value. The Board of Directors declared and Arrow paid a cash dividend of $0.27$0.28 per share for the first threeand second quarters of 2024,2025, a cash dividend of $0.28$0.29 per share for the third and fourth quarterquarters of 2024,2025 and a $0.28$0.30 per share cash dividend for the first quarter of 2025.2026.
Loan quality: Nonperforming loans were $21.0$8.5 million at December 31, 2024,2025, a decrease of $0.1$12.6 million, or 0.5%,59.8%, from year-end 2023.2024. The ratio of nonperforming loans to period-endyear-end loans at December 31, 20242025 was 0.62%,0.24%, a decrease from 0.66%0.62% at December 31, 2023.2024. Nonperforming loans are in various stages of work-out activities including, but not limited to, ongoing negotiations with the borrowers, borrowers looking to refinance with other lenders, potential foreclosures, as well as periodic 2updates Excludesto bothappraisals $2.2and millioncash fairflow valueanalyses hedgegenerated adjustmentby the underlying collateral. Any future developments related to such activities may have a potential impact on financial results, however, the impact cannot be determined at Decemberthis 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.time.
updates to appraisals and cash flow analyses generated by the underlying collateral. Any future developments related to such activities may have a potential impact on financial results, however, the impact cannot be determined at this time.
Loans charged-off (net of recoveries) against the allowance for credit losses was $2.8$6.6 million for 2024,2025, an increase of $779$3.7 thousandmillion from 2023.2024. The ratio of net charge-offs to average loans was 0.19% for 2025 and 0.09% for 2024 and 0.07% for 2023.2024. At December 31, 2024,2025, the allowance for credit losses was $33.6$34.3 million, representing 0.99% of total loans, anwas increase of 2 basis pointsunchanged from the December 31, 20232024 ratio.
◦ Commercial and Commercial Real Estate Loans: Combined, these loans comprised 28.1%28.5% of the total loan portfolio at period-end.year-end. Commercial loans are extended to businesses primarily located in Arrow's regional market area. There are no commercial real estate loans in major metropolitan areas. In addition, only approximately 2%1% of the total loan portfolio is comprised of office related property. Retail loans were approximately 3%2% of the total loan portfolio and hotels and motels were approximately 4%5% of the total loan portfolio. Overall, Arrow has minimal exposure to highly sensitive areas where large commercial and retail vacancies exist. Commercial property values in Arrow's region have largely remained stable. Appraisals on nonperforming and watched CRE loan properties are updated as deemed necessary, usually when the loan is downgraded or when there has been significant market deterioration since the last appraisal.
◦ Consumer Loans: These loans (primarily automobile loans) comprised approximately 33.0%31.2% of the total loan portfolio at period-end. Consumer automobile loans at December 31, 2024,2025, were $1.1 billion, or 99.6% of this portfolio segment. The vast majority of automobile loans are initiated through the purchase of vehicles by consumers with automobile dealers. InflationCompetition and another elevatedmacro rateeconomic environmentfactors may limit the potential growth in this category.
◦ Residential Real Estate Loans: These loans, including home equity loans, made up 38.9%40.3% of the total loan portfolio at period-end.year-end. Demand for residential real estate has continued to remain strong. Arrow originated nearly all of the residential real estate loans currently held in the loan portfolio and applies conservative underwriting standards. Arrow has historically sold a portion of the residential real estate mortgage originations into the secondary market. The ratio of the sales of originations to total originations tends to fluctuate from period to period based on market conditions and other factors. The rate at which mortgage loan originations are sold in future periods will depend on various circumstances, including prevailing mortgage rates, other lending opportunities, capital and liquidity needs, and the availability of a market for such transactions.
Liquidity and access to credit markets: Arrow didhas not experienceexperienced any liquidity issuesconcerns in recent years or in 2024.2025. Arrow’s liquidity position provides the Company with the necessary flexibility to address any unexpected near-term disruptions. Interest-bearingInterest-earning cash balances at December 31, 20242025 were $127.1$185.1 million which represents a significant increase as compared to $105.8$127.1 million at December 31, 2023.2024. Deposit balances of Arrow Bank are Arrow's primary funding source. Additionally, contingent lines of credit are also available. Arrow has collateralized lines of credit established and available through the FHLBNY and FRB, totaling $1.2$1.4 billion. The terms of Arrow's lines of credit have not changed significantly in recent periods (see the general liquidity discussion on page 3940). Arrow has principally relied on asset-based liquidity (i.e., funds in overnight investments and cash flow from maturing investments and loans) with liability-based liquidity as a secondary source of fundsfunds. (theThe mainprimary liability-based sources are an overnight borrowing arrangementarrangements with correspondent banks, an arrangement for overnight borrowing and term credit advances from the FHLBNY, and an additional arrangement for short-term advances at the Federal Reserve Bank discount window. Regular liquidity stress tests and tests of the contingent liquidity plan are performed to ensure that an adequate amount of available funds can be generated to meet a wide variety of potential liquidity crises.
Visa Class B Common Stock: In the fourth quarter of 2023, Arrow Bank, formerly GFNB, sold all 27,771 shares of Visa Class B common stock it previously held for a pre-tax gain of $9.3 million. The gain was used to offset a pre-tax loss of $9.2 million related to the sale of securities with a amortized cost basis of approximately $110 million. The sale of securities was driven by the strategic decision to reposition the investment portfolio to higher yielding investments producing an improved interest income run-rate.
Branch Acquisition: On August 2, 2024 Arrow Bank, formerly GFNB, completed the previously announced acquisition of the Whitehall Branch from Berkshire Bank, a subsidiary of Berkshire Hills Bancorp, Inc. The acquisition includes the branch premises and substantially all of the personal property and equipment used in the operation of the Whitehall Branch. All employees associated with the Whitehall Branch were offered employment with Arrow Bank. See footnote 23 for additional details of the acquisition.
Subsidiary Bank Unification: On December 31, 2024, Arrow merged its two subsidiary banks, GFNB and SNB, into one bank, with GFNB as the survivor, and renamed the unified institution Arrow Bank. The Unificationunification ishas expected to create long termcreated operational efficiencies, unifyunified branding and enhanceenhanced Arrow's ability to pursue its strategic growth objectives.
A&B Acquisition: On July 1, 2024, Arrow's subsidiary, Upstate Agency, LLC, expanded its insurance business with the strategic acquisition of the assets of A&B Agency, Inc.
Net interest income was $133.2 million in 2025, an increase of $21.4 million, or 19.2%, from $111.7 million in 2024,2024. This is in comparison with an increase of $6.9 million, or 6.6%, from $104.8 million in 2023. This is in comparison with a decrease of $13.5 million, or 11.4%, from 20222023 to 2023.2024. Factors contributing to year-to-year changes in net interest income over the three-year period are discussed in the following portions of this Section B.I.
NET INTEREST MARGIN
The provision for credit losses for 2025 was $7.3 million, compared to the $5.2 million provision for 2024. The key drivers for the increase in provision for credit losses for 2025 were primarily net charge-offs of $6.6 million, which includes the $3.75 million charge-off of the previously disclosed commercial loan participation in the second quarter of 2025, and overall loan growth. Arrow's allowance for credit losses was $34.3 million at December 31, 2025, which represented 0.99% of loans outstanding, unchanged from 0.99% at year-end 2024.
Arrow considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy, given the uncertainty involved in evaluating the level of the allowance required to cover credit losses inherent in the loan portfolio, and the material effect that such judgments may have on the results of operations. The provision for credit losses for 2024 was $5.2 million, compared to the $3.4 million provision for 2023. The analysis of the method employed for determining the amount of the credit loss provision is explained in detail in Notes 2, Summary of Significant Accounting Policies, and 5, Loans, to the Consolidated Financial Statements.
SUMMARY OF THE ALLOWANCE AND PROVISION FOR CREDIT LOSSES (Dollars In Thousands) (Loans, Net of Unearned Income)
Arrow adopted CECL on January 1, 2021. The CECL approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a valuation account that is deducted from, or added to, the loans’ amortized cost basis to reflect the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when Arrow believes a loan balance is confirmed to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Loans with similar risk characteristics are pooled. Portfolio segments for estimating loss based on type of borrower and collateral are as follows:
Commercial Loans
Commercial Real Estate Loans
Consumer Loans
Residential Loans
Further details related to loan portfolio segments are included in Note 5, Loans, to the Consolidated Financial Statements.
Historical credit loss experience for both Arrow and segment-specific peers provides the basis for the estimation of expected credit losses. Arrow utilizes regression analyses of peer data where observed credit losses and selected economic factors are utilized to determine suitable loss drivers for modeling lifetime probability of default (PD) rates. Arrow uses the discounted cash flow (DCF) method to estimate expected credit losses for the commercial, commercial real estate, and residential segments. For each of these loan segments, Arrow generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, PD, and segment-specific loss given default (LGD) risk factors. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data and adjusted, if necessary, based on the reasonable and supportable forecast of economic conditions.
For the loan segments utilizing the DCF method, (commercial, commercial real estate, and residential) Management utilizes externally developed economic forecasts of the following economic factors as loss drivers: national unemployment, gross domestic product and home price index (HPI). The economic forecast is applied over a reasonable and supportable forecast period. Arrow utilizes a six quarter reasonable and supportable forecast period with an eight quarter reversion to the historic mean on a straight-line basis.
The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (NPV). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: Management has a reasonable expectation at the reporting date that a debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by Arrow.
What changed in the latest 10-Q
Risk Factors
There have been no material changes in the risk factors set forth in Arrow's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission. Additional risks not presently known to us, or that we currently deem immaterial, may adversely affect our business, financial condition, or results of operations.
Item 2.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
New heading “RESULTS OF OPERATIONS”
New heading “Six Months Ended June 30, 2026 Compared With”
New heading “Six Months Ended June 30, 2025”
New heading “Net Interest Income”
New heading “Summary of Net Interest Income”
New heading “Non-interest Income”
New heading “Summary of Non-interest Income”
New heading “Non-interest Expense”
New heading “Summary of Non-interest Expense”
New heading “Summary of Income Taxes”
Largest changes
The allowance for credit losses wassee in full comparison$34.1$36.2 million as ofMarchJune31,30, 2026, which represented0.99%1.03% of loans outstanding, as compared to $34.3 million, or 0.99%, at December 31, 2025. The overall change in the allowance from December 31, 2025 was primarilydriven by charge-offs,thedecreaseresult of a $1.6 million specific reserve related to a non-performing commercial loan due to a sudden personal and corporate bankruptcy declared inloanJunebalances2026andaschangeswelltoasthe economic forecast factors embeddedgrowth in thecreditloanloss allowance model. Further, during the first quarter of 2026, the Company performed an annual update to its prepayment and curtailment model assumptions.portfolio.
The provision for credit losses for thesee in full comparisonfirstsecond quarter of 2026 was$0.5$2.8 million, compared to a provision of$5.0$0.6 million for thefirstsecond quarter of 2025. Thedecreaseincrease was primarily driven by a $1.6 million specific reserve related to the non-performing commercial loan loan due to aspecificsuddenreservepersonalofand$3.75corporatemillionbankruptcyondeclaredain$15Junemillion2026commercialasrealwellestateas an increase to the provision due to loanparticipationgrowth in thefirstsecond quarter of2025.2026.
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In this Report, the terms "Arrow," "the registrant," "the Company," "we," "us," and "our" generally refer to Arrow Financial Corporation and its subsidiaries as a group, except where the context indicates otherwise. At certain points in this Report, Arrow's performance is compared with that of the Company's "peer group" of financial institutions. Unless otherwise specifically stated, the peer group for the purposes of this Report is comprised of the group of 200207 domestic bank holding companies with $3 to $10 billion in total consolidated assets as identified in the FRB’s "Bank Holding Company Performance Report" for DecemberMarch 31, 20252026 (the most recent such report currently available), and peer group data contained herein has been derived from such report.
Adirondack Bancorp, Inc. Merger: On February 25, 2026, Arrow and Adirondack, the parent company of Adirondack Bank, entered into a definitive agreement pursuant to which Adirondack and Adirondack Bank will mergemerged with and into into Arrow and Arrow Bank, respectively.
Prior to the merger, Adirondack Bank iswas a New York state-chartered financial institution headquartered in Utica, New York. Adirondack Bank operatesoperated 19 branch locations spanning Oneida, Herkimer, Franklin, Essex and Clinton counties, and a loan production office in Onondaga County. As of December 31, 2025, Adirondack reported total consolidated assets of $942 million, total deposits of $848 million, total loans of $624 million and total equity of $67 million.
The transaction was completed on July 1, 2026 and therefore, this Quarterly Report on Form 10-Q does not include the assets, liabilities or operating results of Adirondack. Under the terms of the merger agreement, Arrow acquired 100% of the outstanding voting equity interests of Adirondack. At the effective date, each share of Adirondack common stock outstanding immediately prior to the effective date, was converted into the right to receive 1.8610 shares of Arrow common stock and $18.72 in cash. Total consideration paid was $101 million.
Upon the terms and subject to the conditions of the Agreement, Adirondack shareholders will receive a combination of stock and cash upon closing of the Merger with Arrow. Each outstanding share of Adirondack common stock will be converted into 1.8610 shares of Arrow common stock plus $18.72 in cash.
Closing of the transaction is expected early in the third quarter of 2026 following receipt of approvals from regulatory authorities, the approval of Adirondack shareholders, and the satisfaction of other customary closing conditions.
•The market price of Arrow’s common stock may decline as a result of the Merger.acquisition of Adirondack.
•Combining Arrow and Adirondack may be more difficult, costly or time-consuming than expected, and Arrow may fail to realize the anticipated benefits of the Merger.acquisition of Adirondack.
•The Agreement may be terminated in accordance with its terms and the Merger may not be completed.
The following discussion and analysis focuses on and reviews the results of operations for the three-monththree periodsmonths ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 and the financial conditions as of MarchJune 31,30, 2026 and December 31, 2025. The discussion below should be read in conjunction with the selected quarterly and annual information set forth above and the Unaudited Interim Consolidated Financial Statements and other financial data presented elsewhere in this Report. When necessary, prior-year financial information has been reclassified to conform to the current-year presentation.
Summary of Q1Q2 2026 Financial Results: Net income for the firstsecond quarter of 2026 was $13.5$11.0 million, increasing from $6.3$10.8 million in the firstsecond quarter of 2025. Compared to the firstsecond quarter of 2025, net income increased primarily due to an increase in net interest income andoffset aby decreasean increase in the provision for credit losses on loans.
Net interest income for the first quarter ofincreased 2026by was $36.1$3.4 million, increasing $4.8 million or 15.2%10.4%, from the firstsecond quarter of 2025. Total interestInterest and dividendfees incomeon wasloans $53.8were $47.2 million for the firstsecond quarter of 2026, an increase from $50.4$45.6 million infor the first quarter ofended 2025.June 30, 2025, primarily due to loan growth and higher loan yields. Interest expense for the firstsecond quarter of 2026 was $17.7 million, a decrease fromof $19.0$1.4 million inversus the firstcomparable quarter ended June 30, 2025, primarily due to active management of 2025.rates on interest-bearing deposits.
Net interest margin,margin onincreased 27 basis points in the second quarter of 2026 to 3.42%, from 3.15% during the second quarter of 2025. On an FTE basis, fornet interest margin increased to 3.43% in the firstsecond quarter of 2026 increasedfrom to3.16% 3.48%,during the second quarter of 2025. Average earning asset yields were 12 basis points higher as compared to 3.08% for the firstsecond quarter of 2025. The average cost of interest-bearing liabilities decreased 19 basis points from the quarter ended June 30, 2025. The increase in net interest margin compared to the firstsecond quarter of 2025 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. See the disclosure on page 3839 related to the use of non-GAAP financial measures.
Total non-interest income in the current quarter was $8.3 million, an increase of $647 thousand from the second quarter of 2025. Insurance commissions increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 due to the combination of the increase in average premiums and onboarding of new, larger commercial insurance relationships. Income from fiduciary activity increased primarily due to additions of new wealth management accounts as well as improved market performance. Net gain on security transactions of $155 thousand for the three months ended June 30, 2026, resulted from the increase in the fair value of equity securities.
Non-interest expense for the second quarter of 2026 was $27.5 million, an increase of $1.8 million, or 7.1%, from the second quarter of 2025. Salaries and benefit expenses increased $1.0 million, or 7.2%, from the prior year comparable quarter as a result of overall growth in the organization, increased benefits cost and a competitive labor market. Technology expenses in the second quarter decreased $832 thousand, or 14.9%, from the second quarter of 2025. Occupancy expenses increased $149 thousand due to increases in utility and building maintenance costs. The second quarter of 2026 included approximately $1.0 million of expenses related to the acquisition of Adirondack Bancorp, Inc.
Non-interest income for the three months ended March 31, 2026, was $8.6 million, an increase from $7.8 million in the first quarter of 2025. Revenue related to wealth management and insurance commissions increased in the first quarter of 2026 compared to the first quarter of 2025. The first quarter of 2026 included a positive valuation adjustment of $145 thousand related to equity positions.
Non-interest expense for the first quarter of 2026 was $26.9 million, an increase from $26.0 million in the first quarter of 2025. The first quarter of 2026 included approximately $800 thousand of expenses related to the announced acquisition of Adirondack Bancorp, Inc. which is expected to close early in the third quarter of 2026.
The provision for income taxes and effective tax rate were $3.9$2.9 million and 22.3%,21.1%, respectively, for the firstsecond quarter of 2026, and $1.8$3.1 million and 22.4%,22.2%, respectively, for the firstsecond quarter of 2025. The effective tax rate does not reflect the anticipated implementation of certain tax strategies that are expected to lower the tax rate for the restsecond quarter of 2026. The March 31, 2026 Consolidated Statements of Cash Flows reflects the settlementimpact of thetax remainingcredits $4recognized million balance on thefrom energy production tax creditscredit whichpurchases had been purchasedmade in 2025June and reflected in the 2025 tax rate.2026.
Total assets were $4.5 billion at MarchJune 31,30, 2026, an increase of $76.2$36.5 million, or 1.7%,0.8%, as compared to December 31, 2025. For the firstsecond quarter of 2026, the overall changeincrease in the balance sheet total assets was primarily attributable to theloan seasonalgrowth surgeand an increase in municipal deposits as well as fluctuations in cash balances and maturities ofother investments.
Total investments were $594.6$587.9 million as of MarchJune 31,30, 2026, an increase of $21.8$15.1 million, or 3.8%,2.6%, compared to December 31, 2025. The increase from December 31, 2025 was driven primarily by $46a $14 million of purchasespurchase of additionalFHLB investments offset by paydowns and maturities.stock. There were no material credit quality issues related to the investment portfolio.
Total loans were $3.4 billion as of March 31, 2026. Loans outstanding decreased in the first quarter of 2026 by $14.1 million. Loan growth was negatively impacted by severe winter weather, which slowed indirect auto and residential loan originations.
AtTotal March 31, 2026, deposit balancesloans were $4.0$3.5 billion,billion as of June 30, 2026, an increase of $74.5$43.4 millionmillion, fromor 1.3%, compared to December 31, 2025. The change from December 31, 2025increase was primarily attributabledue to thegrowth seasonalityin ofcommercial municipal deposits.loans.
At June 30, 2026, deposit balances were $3.7 billion, a decrease of $284.3 million from December 31, 2025. The decrease was primarily attributable to $300 million of brokered CDs, being replaced by lower costing FHLB borrowings.
The changes in net income, net interest income and net interest margin between the three-monththree and six month periods are discussed in detail under the heading "RESULTS OF OPERATIONS," beginning on page 55.57.
Regulatory Capital and Change in Stockholders' Equity: At MarchJune 31,30, 2026, Arrow continued to exceed all required minimum capital ratios under the current bank regulatory capital rules as implemented under Dodd-Frank (the "Capital Rules") at both the holding company and bank levels. At that date, Arrow Bank continues to qualify as "well-capitalized" under the capital classification guidelines as defined by the Capital Rules. Because of continued profitability and strong asset quality, the regulatory capital levels throughout recent years have consistently remained well in excess of the various required regulatory minimums in effect.
Stockholders’ equity was $440.1$446.3 million at MarchJune 31,30, 2026, an increase of $8.3$14.5 million, or 1.9%,3.3%, from the December 31, 2025 level of $431.9 million. The increase in stockholders' equity over the first threesix months of 2026 principally reflected the following factors: the addition of (i) $13.5$24.4 million of net income for the period,period and (ii) the issuance of $0.6$1.8 million of common stock through employee benefit and dividend reinvestment plans, reduced by (iii) other comprehensive loss of $0.7$1.4 million,million and (iv) cash dividends of $5.0$9.9 million. The components of the change in stockholders’ equity since year-end 2025 are presented in the Consolidated Statements of Changes in Stockholders’ Equity on page 6, and are discussed in more detail in the next section.
At MarchJune 31,30, 2026, book value per share was $26.63,$26.98, up 1.4%2.7% from year-end 2025. Tangible book value per share was $25.09,$25.44, an increase of $0.38,$0.73, or 1.54%,2.95%, from December 31, 2025. See the disclosure on page 3839 related to the use of non-GAAP financial measures.
In the firstsecond quarter of 2026, Arrow paid a quarterly cash dividend of $0.30 per share.
Loan Quality: Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.10%0.08% for the three-month period ended MarchJune 31,30, 2026, asconsistent compared to 0.08% forwith the three-month period ended December 31, 2025.
The allowance for credit losses was $34.1$36.2 million as of MarchJune 31,30, 2026, which represented 0.99%1.03% of loans outstanding, as compared to $34.3 million, or 0.99%, at December 31, 2025.
Nonperforming loans were $4.4$8.3 million at MarchJune 31,30, 2026, representing 0.13%0.24% of period-end loans, aconsistent decrease from thewith December 31, 2025 non performing loans of $8.5 million, representing 0.24% of period-end loans. Nonperforming assets of $4.9$8.7 million at MarchJune 31,30, 2026 represented 0.11%0.19% of period-end assets, down from 0.20% of period-end assets at December 31, 2025.
Loan Segments: As of MarchJune 31,30, 2026, including the fair value marks associated with derivatives, total loans decreasedincreased by $14.1$43.4 million, or 0.4%,1.3%, as compared to the balance at December 31, 2025. The largest decreaseincrease was in the residentialcommercial and commercial real estate loanloans portfolio which decreasedincreased $7.0by $26.5 million, or 0.5%.2.7%, from December 31, 2025. Consumer loans, primarily comprised of automobile loans, decreasedincreased $4.5$7.2 million. CommercialThe and commercialresidential real estate loansloan decreasedportfolio byincreased $2.6$9.8 million, or 0.3%, from December 31, 2025. Loan balances were negatively impacted by severe winter weather, which slowed indirect auto and residential loan originations.0.7%.
•Commercial and Commercial Real Estate Loans: Combined, these loans comprise 28.5%28.9% of the total loan portfolio at MarchJune 31,30, 2026. Commercial loans are extended to businesses primarily located in Arrow's regional market area. There are no commercial real estate loans in major metropolitan areas. In addition, only approximately 2% of the total loan portfolio is composed of office related property at MarchJune 31,30, 2026. Retail loans were approximately 3% of the total loan portfolio and hotels and motels were approximately 4% of the total loan portfolio at MarchJune 31,30, 2026. Commercial property values in Arrow's region have largely remained stable. Appraisals on nonperforming and watched commercial real estate loan properties are updated as necessary, usually when the loan is downgraded or when there has been significant market deterioration since the last appraisal.
•Consumer Loans: These loans comprised 31.3%31.1% of the total loan portfolio at period-end. Consumer automobile loans at MarchJune 31,30, 2026, were 99.6% of this portfolio segment. The vast majority of automobile loans are initiated through automobile dealers. Inflation and the uncertain economic environment may limit the potential growth in this category.
•Residential Real Estate Loans: These loans, including home equity loans, made up 40.3%40.1% of the total loan portfolio at MarchJune 31,30, 2026. Demand for residential real estate has continued to remain strong. Arrow originated nearly all of the residential real estate loans currently held in the loan portfolio and applies conservative underwriting standards. Arrow may sell a portion of the residential real estate mortgage originations into the secondary market. The ratio of the sales of originations to total originations tends to fluctuate from period to period based on market conditions and other factors such as prevailing mortgage rates, other lending opportunities, capital and liquidity needs, and the availability of a market for such transactions.
Liquidity and Access to Credit Markets: Arrow has not experienced, nor is it currently experiencing, any liquidity events. Arrow’s liquidity position should provide the necessary flexibility to address any unexpected near-term liquidity needs. Interest-earning cash balances at MarchJune 31,30, 2026 were $256.5$155.9 million compared to $185.1 million at December 31, 2025. Contingent lines of credit are also available. Operating collateralized lines of credit are established and available through the FHLBNY, FRB and other bank lines totaling approximately $1.4$1.1 billion. The general terms of Arrow's lines of credit have not changed significantly in recent periods (see the general liquidity discussion on page 5355). Historically, Arrow has principally relied on asset-based liquidity (i.e., funds in overnight investments and cash flow from maturing investments and loans) with liability-based liquidity as a secondary source of funds (the main liability-based sources are an overnight borrowing arrangement with correspondent banks, an arrangement for overnight borrowing and term credit advances from the FHLBNY, and an additional arrangement for short-term advances at the FRB discount window). Regular liquidity stress tests and tests of the contingent liquidity plan are performed to ensure that an adequate amount of available funds can be generated to meet a wide variety of potential liquidity crises.
(1) Includes Nonaccrual Loans.
(1) Includes Nonaccrual Loans.
Changes in Earning Assets: The loan portfolio at MarchJune 31,30, 2026, was $3.4$3.5 billion, aan decreaseincrease of $14.1$43.4 million, or 0.4%,1.3%, from December 31, 2025. The following trends were experienced in our largest segments:
•Commercial and commercial real estate loans: This segment of the loan portfolio decreasedincreased by $2.6$26.5 million, or 0.3%,2.7%, during the first threesix months of 2026. In the first threesix months of 2026, loans decreasedincreased due to various factors including,including generalthe ratestrength environment,of the local economy and pricingexpanding discipline.customer relationships.
•Consumer loans: As of MarchJune 31,30, 2026, these loans, primarily auto loans originated through dealerships in New York and Vermont, decreasedincreased by $4.5$7.2 million, or 0.4%,0.7%, from the December 31, 2025 balance. Loan growth was negatively impacted by severe winter weather, which slowed indirect auto originations. Inflation, high interest rates and prepayment/refinancing activity may continue to slow demand.
•Residential real estate loans: This segment decreasedincreased during the first threesix months of 2026 by $7.0$9.8 million, or 0.5%.0.7%. Loan growth was negatively impacted by severe winter weather, which slowed residential loan originations.OverallOverall economic conditions, including the level of interest rates may impact future origination levels.
Changes in Sources of Funds: Deposit balances reached $4.0$3.7 billion, ana increasedecrease of $74.5$284.3 million.million, or 1.9%7.2% from December 31, 2025. The increasedecrease from December 31, 2025 was primarily due to the replacement of $300 million of brokered CDs with lower-costing FHLB term advances. The borrowings are used with the cash flow hedge to lower the overall cost of funds for the Bank. In addition, balances were affected by seasonality of municipal deposits in the first quarter. Noninterest-bearing deposits represented 18.0%20.1% of total deposits at MarchJune 31,30, 2026, compared to 18.3% of total deposits on December 31, 2025. At MarchJune 31,30, 2026, total time deposits were $775.7$456.5 million. Municipal deposits increased $131.5 million, or 16.7% from December 31, 2025.
Arrow uses reciprocal deposits for a select group of municipalities to reduce the amount of investment securities required to be pledged as collateral for municipal deposits where municipal deposits in excess of the FDIC insurance coverage limits were transferred to other participating banks, divided into portions so as to qualify for FDIC insurance coverage at each transferee bank. In return, reciprocal amounts are transferred to Arrow in equal amounts of deposits from the participant banks. The balances of reciprocal deposits were $709.3$678.8 million and $614.9 million at MarchJune 31,30, 2026 and December 31, 2025, respectively.
Uninsured Deposits: Arrow's deposit base includes both insured and uninsured deposits. Arrow continually monitors levels and composition of uninsured deposits. Uninsured deposit balances at March 31, 2026 and December 31, 2025 were estimated to be $1.1 billion and $917.6 million,million at June 30, 2026 and December 31, 2025, respectively.
The maturities of time deposits of $250,000 or more at June 30, 2026 are presented below. (Dollars in Thousands)
The table below presents the changes in the period-end balances for AFS and HTM securities from December 31, 2025 to MarchJune 31,30, 2026 (in thousands):
The table below presents the weighted average yield for AFS and HTM securities, at amortized cost, as of MarchJune 31,30, 2026 (in thousands).
At MarchJune 31,30, 2026, Arrow's securities portfolios did not include, directly or indirectly, obligations of foreign governments or governmental agencies of foreign issuers.
U.S. Government & Agency Obligations consisted solely of agency bonds issued by GSEs. These securities generally pay fixed semi-annual coupons with principal payments at maturity. For some, callable options are included that may impact the timing of these principal payments. Arrow's practice has been to purchase agency securities that are issued or guaranteed by GSEs with limited embedded optionality (call features). Final maturities are generally less than 5 years.
There were no sales of investment securities during the threesix month periods ended MarchJune 31,30, 2026 or 2025.
The following table summarizes purchases of investment securities within the AFS and HTM portfolios for the three and six month periods ended MarchJune 31,30, 2026 and 2025, as well as proceeds from the maturity and calls of investment securities within each portfolio for the respective periods presented:
The table below shows the maturity schedule of loans outstanding as of MarchJune 31,30, 2026 classified by loan category and according to fixed interest rates and variable interest rates (in thousands):
The following table presents an analysis of the interest rate sensitivity of our commercial, commercial real estate, consumer and residential real estate loan portfolios due after one year as of June 30, 2026
Commercial Loans and Commercial Real Estate Loans: Commercial and commercial real estate loans in the loan portfolio were extended to businesses or borrowers primarily located in Arrow's regional markets. There are no commercial real estate loans in major metropolitan areas. Approximately 2% of the loan portfolio are comprised of office related property. Retail loans were approximately 3% of the loan portfolio and hotels and motels were approximately 4% of the portfolio as of MarchJune 31,30, 2026. A portion of the loans in the commercial portfolio have variable rates tied to market indices, such as Prime, SOFR or FHLBNY.
Consumer Loans: At MarchJune 31,30, 2026, consumer loans continue to be a significant component of Arrow's business, comprising approximately one third of the total loan portfolio.
In the fourth quarter of 2025, the targeted Federal Funds rate fell 25 basis points. The Federal Funds rate has not changed subsequently. Future rate cuts are difficult to determine. However, Arrow believes it is well positioned for a variety of rate environments, seeSee Part I, Item 3, entitled "Quantitative and Qualitative Disclosures About Market Risk," on page 5761 for further discussion.
$20 million of Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts listed on the consolidated balance sheet as of MarchJune 31,30, 2026 (i.e., previously issued TRUPs) will, subject to certain limits, continue to qualify as Tier 1 regulatory capital for Arrow until such TRUPs mature or are redeemed. This is further discussed under "Capital Resources" beginning on page 5254 of this Report.
The allowance for credit losses was $34.1$36.2 million as of MarchJune 31,30, 2026, which represented 0.99%1.03% of loans outstanding, as compared to $34.3 million, or 0.99%, at December 31, 2025. The overall change in the allowance from December 31, 2025 was primarily driven by charge-offs, the decreaseresult of a $1.6 million specific reserve related to a non-performing commercial loan due to a sudden personal and corporate bankruptcy declared in loanJune balances2026 andas changeswell toas the economic forecast factors embeddedgrowth in the creditloan loss allowance model. Further, during the first quarter of 2026, the Company performed an annual update to its prepayment and curtailment model assumptions.portfolio.
Nonperforming assets at MarchJune 31,30, 2026 amounted to $4.9$8.7 million, aconsistent decrease from $8.7 million atwith December 31, 2025 and an increase from $19.5$6.8 million at MarchJune 31,30, 2025. Historically, ratios of nonperforming assets to total assets have remained fairly consistent to the average ratios for our peer group (see page 37 for a discussion of the peer group). At DecemberMarch 31, 2025,2026, the ratio of loans past due 90 or more days plus nonaccrual loans plus other real estate owned to total assets was 0.20%0.11% as compared to the 0.56%0.60% ratio of theour peer group (the latest date for which peer group information is available). At MarchJune 31,30, 2026 the ratio was 0.11%.0.19%.
AROW insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 4,110 shares, about $158.6K). Net open-market shares: -4,110 (purchases minus sales); net value about -$158.6K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-23 | Morris Philip C |
Other | 203 | $36.97 | $7.5K |
| 2026-09-23 | O'conor Raymond F |
Other | 203 | $36.97 | $7.5K |
| 2026-09-23 | Behan Mark |
Other | 211 | $36.97 | $7.8K |
| 2026-09-23 | Casaccio Tenee R |
Other | 304 | $36.97 | $11.2K |
| 2026-09-23 | Champion Gregory J |
Other | 423 | $36.97 | $15.6K |
| 2026-09-23 | Jahnel Darrin |
Other | 298 | $36.97 | $11.0K |
| 2026-09-23 | Dawsey James M |
Other | 389 | $36.97 | $14.4K |
| 2026-09-23 | Duffy Kristine D |
Other | 203 | $36.97 | $7.5K |
| 2026-09-23 | Kruczlnicki David G |
Other | 228 | $36.97 | $8.4K |
| 2026-09-23 | Read Colin L |
Other | 194 | $36.97 | $7.2K |
| 2026-09-23 | White Daniel James |
Other | 228 | $36.97 | $8.4K |
| 2026-09-23 | Arcuri Rocco F Sr. |
Other | 186 | $36.97 | $6.9K |
| 2026-09-04 | Demarco David S. |
Option exercise | 1,771 | $30.26 | $53.6K |
| 2026-09-04 | Demarco David S. |
Shares withheld for tax | 1,504 | $39.57 | $59.5K |
| 2026-09-03 | O'conor Raymond F |
Gift | 140 | — | — |
| 2026-08-28 | Demarco David S. |
Option exercise | 4,379 | $30.26 | $132.5K |
| 2026-08-28 | Demarco David S. |
Shares withheld for tax | 3,752 | $38.16 | $143.2K |
| 2026-08-17 | Behan Mark |
Shares withheld for tax | 760 | $38.86 | $29.5K |
| 2026-08-17 | Behan Mark |
Option exercise | 1,093 | $27.04 | $29.6K |
| 2026-08-17 | Demarco David S. |
Option exercise | 3,346 | $27.04 | $90.5K |
| 2026-08-17 | Demarco David S. |
Shares withheld for tax | 2,596 | $39.25 | $101.9K |
| 2026-08-12 | Behan Mark |
Option exercise | 1,126 | $31.34 | $35.3K |
| 2026-08-12 | Behan Mark |
Shares withheld for tax | 901 | $39.13 | $35.3K |
| 2026-08-06 | Behan Mark |
Option exercise | 773 | $31.47 | $24.3K |
| 2026-08-06 | Behan Mark |
Shares withheld for tax | 608 | $39.97 | $24.3K |
| 2026-08-04 | O'conor Raymond F |
Option exercise | 1,061 | $33.78 | $35.8K |
| 2026-08-04 | O'conor Raymond F |
Shares withheld for tax | 878 | $40.79 | $35.8K |
| 2026-08-04 | Behan Mark |
Option exercise | 1,195 | $27.47 | $32.8K |
| 2026-08-04 | Behan Mark |
Shares withheld for tax | 777 | $40.79 | $31.7K |
| 2026-08-04 | Behan Mark |
Option exercise | 1,160 | $27.35 | $31.7K |
| 2026-08-04 | Behan Mark |
Shares withheld for tax | 804 | $40.79 | $32.8K |
| 2026-06-24 | O'conor Raymond F |
Shares withheld for tax | 874 | $40.36 | $35.3K |
| 2026-06-24 | O'conor Raymond F |
Option exercise | 1,126 | $31.34 | $35.3K |
| 2026-06-18 | Behan Mark |
Option exercise | 1,061 | $33.78 | $35.8K |
| 2026-06-18 | Behan Mark |
Shares withheld for tax | 923 | $38.80 | $35.8K |
| 2026-06-17 | Behan Mark |
Open-market sale | 4,110 | $38.59 | $158.6K |
| 2026-06-17 | Behan Mark |
Other | 203 | $38.49 | $7.8K |
| 2026-06-17 | Champion Gregory J |
Other | 406 | $38.49 | $15.6K |
| 2026-06-17 | Dawsey James M |
Other | 373 | $38.49 | $14.4K |
| 2026-06-17 | Casaccio Tenee R |
Other | 292 | $38.49 | $11.2K |
| 2026-06-17 | Duffy Kristine D |
Other | 195 | $38.49 | $7.5K |
| 2026-06-17 | Jahnel Darrin |
Other | 286 | $38.49 | $11.0K |
| 2026-06-17 | Kruczlnicki David G |
Other | 219 | $38.49 | $8.4K |
| 2026-06-17 | Morris Philip C |
Other | 195 | $38.49 | $7.5K |
| 2026-06-17 | O'conor Raymond F |
Other | 195 | $38.49 | $7.5K |
| 2026-06-17 | Read Colin L |
Other | 187 | $38.49 | $7.2K |
| 2026-06-17 | White Daniel James |
Other | 219 | $38.49 | $8.4K |
| 2026-06-10 | O'conor Raymond F |
Gift | 300 | — | — |
| 2026-05-26 | Read Colin L |
Gift | 119 | — | — |
| 2026-05-26 | Read Colin L |
Gift | 119 | — | — |
| 2026-05-20 | Read Colin L |
Gift | 500 | — | — |
| 2026-05-20 | Read Colin L |
Gift | 500 | — | — |
| 2026-05-19 | Morris Philip C |
Option exercise | 386 | $31.47 | $12.1K |
| 2026-05-18 | Read Colin L |
Gift | 525 | — | — |
| 2026-05-18 | Read Colin L |
Gift | 525 | — | — |
| 2026-05-11 | Read Colin L |
Gift | 1,876 | — | — |
| 2026-05-11 | Read Colin L |
Gift | 1,876 | — | — |
| 2026-05-11 | Morris Philip C |
Other | 27 | $36.69 | $991 |
| 2026-05-11 | Morris Philip C |
Option exercise | 546 | $27.04 | $14.8K |
| 2026-04-13 | Morris Philip C |
Other | 28 | $36.33 | $1.0K |
Well-known investors holding AROW (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 186,721 | $7.7M | 0.01% | Reduced 19% |
| Two Sigma Investments | 2026-06-30 | 144,861 | $5.9M | 0.0% | Added 67% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 116,804 | $4.8M | 0.0% | Added 20% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 59,188 | $2.4M | 0.0% | Added 211% |
| Millennium Management (Israel Englander) | 2026-06-30 | 49,794 | $1.7M | — | Sold out |