Arrow reports q2 net income of $10.8 million, increases dividend

GLENS FALLS, N.Y. - Arrow Financial Corporation (NASDAQ:AROW), a regional bank with a market capitalization of $451 million, announced Thursday that its second-quarter net income reached $10.8 million, or $0.65 per diluted share, a significant improvement from $6.3 million, or $0.38 per share, in the first quarter of 2025. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimates.

The company’s board of directors declared a quarterly cash dividend of $0.29 per share, representing a 3.6% increase from the previous quarter. The dividend will be payable August 25 to shareholders of record as of August 11. InvestingPro data reveals Arrow has raised its dividend for 32 consecutive years, with the current yield at 4.19%. This impressive dividend track record is one of several key insights available to Pro subscribers.

Arrow reported record net interest income of $32.5 million for the quarter, up 3.8% from the first quarter. Net interest margin improved to 3.15%, compared to 3.07% in the prior quarter, primarily due to continued yield expansion on earning assets and moderating costs of interest-bearing liabilities.

The provision for credit losses decreased significantly to $0.6 million from $5.0 million in the first quarter, reflecting the recognition of a specific reserve on a large commercial loan participation in the previous quarter.

"We delivered strong second-quarter results, including return on average assets reaching 1.00%, with net interest margin and other key metrics approaching our strong historic levels," said David S. DeMarco, Arrow President and CEO, according to the press release.

The company recently completed its bank unification by consolidating its multi-bank systems into a single core banking platform, which it described as the last major milestone in its rebrand to Arrow Bank.

Total assets were $4.4 billion at quarter-end, a decrease of $34.2 million from March 31. The loan-to-deposit ratio stood at 87.2%, while tangible book value per share increased to $23.23. The stock currently trades at 1.13 times book value, with a P/E ratio of 15.8. InvestingPro analysis indicates a FAIR overall Financial Health Score of 2.16, suggesting stable fundamentals.

During the quarter, Arrow repurchased $5.1 million of its shares at an average cost of $26.06 per share and authorized an additional $5.0 million for potential future share repurchases.

In other recent news, Arrow Financial Corporation has entered into a six-month professional services agreement with David D. Kaiser, its former Senior Executive Vice President and Chief Credit Officer. Kaiser, who retired on June 30, 2025, will provide services as directed by the company’s CEO and will receive a monthly compensation of $2,500. Additionally, Arrow Financial Corporation held its 2025 Annual Meeting of Shareholders, where several significant resolutions were passed. Shareholders representing 77.06% of the company’s outstanding shares participated in the meeting. Key decisions included the election of board members, with Tenée R. Casaccio, James M. Dawsey, Philip C. Morris, and Colin L. Read, Ph.D., elected as Class C directors for terms ending in 2028. Daniel J. White was elected as a Class A director for a term ending in 2026, and Kristine D. Duffy, Ed.D., was elected as a Class B director for a term ending in 2027. These developments reflect recent activities and decisions within Arrow Financial Corporation.

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