Arrow Financial (AROW) Q3 2025 earnings summary

Executive summary

• Net income for Q3 2025 was $12.8 million ($0.77 EPS), up 18.7% sequentially and 42.9% year-over-year, driven by higher net interest and non-interest income, and lower non-interest expense.

• Return on average assets (ROA) was 1.16% and return on average equity (ROE) was 12.32% for Q3 2025.

• Tangible book value per share increased 2.7% sequentially to $23.85, up 6.47% year-to-date.

• Successfully completed the operational merger and system conversion of two bank subsidiaries in July 2025, incurring $600,000 in non-core unification costs.

• Quarterly cash dividend of $0.29 per share declared, marking 48 consecutive quarters of dividends.

Financial highlights

• Net interest margin (NIM) expanded to 3.24% (FTE) in Q3 2025, up from 3.16% in Q2 2025 and 2.78% in Q3 2024.

• Net interest income reached a record $34.1 million, up 4.9% sequentially and 20% year-over-year.

• Non-interest income rose to $8.7 million in Q3 2025, up from $7.6 million in Q2 2025 and 7.2% year-over-year.

• Efficiency ratio improved to 59.56% in Q3 2025 from 63.41% in Q2 2025 and 65.59% in Q3 2024.

• Total assets reached $4.6 billion at September 30, 2025, with loans at $3.44 billion and deposits at $4.1 billion.

Outlook and guidance

• Management expects continued strong asset quality, liquidity, and capital, with a focus on expense control and further NIM expansion following recent Federal Reserve rate cuts.

• Liability-sensitive balance sheet positions the company to benefit from both rising and falling interest rates.

• Post-unification cost savings anticipated to benefit future operating expenses.

• TCE ratio temporarily impacted by seasonal municipal deposit growth, expected to reverse in Q4 2025.