Did Arrow Financial beat earnings in Q4 2025?

Yes. Arrow reported EPS of $0.85 vs $0.72 consensus (beat by 12.5%) and revenue of $43.4M vs $41.0M expected (beat by 4.5%). This was a record quarter.

What was Arrow Financial's net interest margin in Q4 2025?

Arrow achieved a record FTE net interest margin of 3.25% in Q4 2025, up from 2.85% in Q4 2024, driven by loan repricing and deposit cost reductions.

Did Arrow Financial raise its dividend?

Yes. Arrow declared a Q1 2026 dividend of $0.30 per share, a 3.4% increase from the prior quarter's $0.29, marking the 49th consecutive quarter of dividends.

ARROW FINANCIAL (AROW)·Q4 2025 Earnings Summary

Arrow Financial Posts Record Quarter as EPS Soars 215% YoY

January 29, 2026 · by Fintool AI Agent

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Arrow Financial Corporation (NASDAQ: AROW) delivered record Q4 2025 results, with EPS of $0.85 crushing both consensus of $0.72 and the year-ago $0.27 by a wide margin. The regional bank's full-year EPS of $2.65 represents a 50% increase over 2024's $1.77, driven by aggressive net interest margin expansion and disciplined expense management.

The stock is up 1.8% to $33.00 in regular trading following the announcement, hitting its highest level since mid-December.

Did Arrow Financial Beat Earnings?

Yes — convincingly. Arrow beat on both EPS and revenue:

Metric	Actual	Consensus	Surprise
EPS	$0.85	$0.72*	+18.1%
Revenue	$43.4M	$41.0M*	+5.9%
Net Income	$14.0M	—	Record

*Values retrieved from S&P Global

This marks Arrow's third consecutive quarterly beat after a challenging stretch in early 2024-2025. The turnaround has been dramatic:

Quarter	EPS Actual	EPS Est.*	Result
Q4 2025	$0.85	$0.72	Beat
Q3 2025	$0.77	$0.60	Beat
Q2 2025	$0.65	$0.43	Beat
Q1 2025	$0.38	$0.59	Miss
Q4 2024	$0.27	$0.53	Miss

*Values retrieved from S&P Global

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What Drove the Record Quarter?

Net Interest Margin Hits All-Time High

The standout metric: 3.25% FTE net interest margin, a record for the company. This compares to 3.19% for full-year 2025 — reflecting continued sequential improvement throughout the year.

The margin expansion was driven by:

Loan repricing — Average loan yield of 5.42% with Q4 originations at higher rates than portfolio exit rates
Deposit cost discipline — Retail deposit rates decreased 8bps to 1.60% in Q4
Mix improvement — Business deposits growing as a share of total, municipal deposits declining

CEO David DeMarco highlighted the strong finish: "Record 4Q25 Net Income of $14.0 million, or $0.85 EPS" with the quarter completing the unification project.

Full Year 2025 Performance

Metric	FY 2025	FY 2024	Change
Net Income	$44.0M	$29.7M	+48%
EPS	$2.65	$1.77	+50%
Net Interest Income	$133.2M	$111.7M	+19%
FTE NIM	3.19%	2.72%*	+47 bps
ROA	1.00%	0.70%*	+30 bps
TBV/Share	$24.71	$22.40	+10.3%

*Values retrieved from S&P Global

How Did the Stock React?

AROW is up 1.8% to $33.00 following the earnings release, hitting its highest level since mid-December. The stock has been on a tear, up 45% from its 52-week low of $22.72.

Metric	Value
Current price	$33.00
Change	+1.8%
Day range	$32.63 - $33.05
52-week high	$34.57
52-week low	$22.72
Market cap	~$543M

What Changed From Last Quarter?

Key quarter-over-quarter changes (Q4 vs Q3 2025):

Metric	Q4 2025	Q3 2025	Change
Net Income	$14.0M	$12.8M	+9.3%
EPS	$0.85	$0.77	+10.4%
NIM (FTE)	3.25%	3.24%	+1 bp
ROA	1.24%	1.16%*	+8 bps
Efficiency Ratio	59.0%	59.6%	-60 bps

*Values retrieved from S&P Global

Notable changes:

Tax strategies implemented in Q4 lowered the effective tax rate, adding ~9bps to ROA
Unification project (merger of subsidiary banks into Arrow Bank) completed — no more related expenses
Efficiency ratio dropped below 60% for the first time, showing operating leverage

Efficiency Ratio Progression:

Period	Efficiency Ratio
2023	68.8%
2024	67.7%
Q1 2025	66.5%
Q2 2025	63.4%
Q3 2025	59.6%
Q4 2025	59.0%

The trend shows consistent quarterly improvement as Arrow generates positive operating leverage. Excluding unification expenses, the 2025 full-year efficiency ratio would be 60.6%.

Balance Sheet Highlights

Metric	Dec 31, 2025	Dec 31, 2024	Change
Total Assets	$4.45B	$4.31B	+3.2%
Total Loans	$3.45B	$3.39B	+1.7%
Total Deposits	$3.94B	$3.83B	+2.9%
Shareholders' Equity	$432M	$401M	+7.7%

Credit quality remains pristine:

Nonperforming loans: 0.24% of total loans ($8.5M)
Net charge-offs: 0.08% annualized for Q4
Allowance coverage: 406% of nonperforming loans

Loan Portfolio Quality

Arrow's underwriting discipline shows in its portfolio metrics:

Consumer Auto Loans:

Sourced through network of >510 dealers in NY and VT
75% of balances have FICO scores >700; <4% below 620
Average FICO: 742 | Average DTI: ~31% | Average LTV: 87%
Mix: ~28% new vehicles, ~72% used
Portfolio turns in <36 months (~$40M/month)

Commercial Real Estate (CRE):

CRE concentration: ~130% of risk-based capital
No exposure to large metro areas (e.g., NYC)
Non-owner occupied Office: <7% of CRE, ~1% of total loans
Non-owner occupied Retail: ~13% of CRE, ~2% of total loans
Hotels/Motels: ~26% of CRE, <5% of total loans

Deposit Composition

Favorable mix shift toward business deposits:

Customer Type	Q4 2025	Q3 2025	Trend
Non-Municipal	49.2%	46.8%	↑
Business	29.2%	27.9%	↑
Municipal	21.6%	25.3%	↓

Retail deposit rates decreased 8bps from 1.68% to 1.60% in Q4, with rate cuts implemented in November and December.

Capital Return

Arrow continues its shareholder-friendly capital allocation:

Dividend:

Q1 2026 dividend declared: $0.30/share
49th consecutive quarter of dividends
~3.6% annualized yield at current prices

Buybacks:

$9.9M of shares repurchased in 2025
~377,500 shares at average price of $26.32
$5.1M remaining under current authorization

Insider Buying:

Management and Directors added ~~27K shares (~~$750K) in 2H 2025
Management owns ~0.6%, Directors ~1.4%, Employees ~5.2% (via ESOP, ESPP, equity incentives)

Capital ratios remain well above "well capitalized" thresholds:

CET1 Ratio: 13.10%
Total Risk-Based Capital: 14.86%
Tangible Common Equity: 9.19%

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What Did Management Say About 2026?

Arrow enters 2026 celebrating its 175th anniversary, with strong momentum from the record quarter:

Key forward-looking commentary:

NIM expansion expected to continue in 2026 (excluding FRB rate cuts)
NIM expansion increasingly driven by lower deposit pricing vs loan repricing
Post-unification cost savings to benefit operating expenses
Future Fed rate cuts would accelerate NIM expansion further
Generating positive operating leverage with efficiency trending below 60%

The slide presentation noted that 2025 saw "strong growth in EPS, ROA, NIM and TBV" and positioned the company as "well positioned for 2026."

Risks and Concerns

Items to monitor:

Municipal deposit seasonality — Elevated municipal deposits in Q3 negatively impacted NIM by 4bps; this will continue to create quarterly volatility
Delinquency uptick — Q4 delinquencies rose to 0.84% of loans (seasonal pattern), including one $2.6M commercial loan expected to pay off in Q1 2026
Credit normalization — While pristine now, net charge-offs increased to 0.19% for full year (vs 0.09% in 2024) due to one commercial relationship
Rate sensitivity — Further Fed cuts could eventually compress yields faster than deposits reprice

Key Takeaways

Record quarter — $0.85 EPS beat consensus by 18%, driven by record 3.25% NIM
Full-year transformation — 50% EPS growth ($2.65 vs $1.77) shows successful execution
Operating leverage — Efficiency ratio improved from 68.8% (2023) to 59.0% (Q4 2025), unification complete
Strong underwriting — Auto loan portfolio has 742 average FICO; CRE has no NYC exposure
Capital return — Dividend at $0.30/share, insiders buying, buybacks ongoing

The bottom line: Arrow Financial delivered a blowout quarter that validates its strategic repositioning. The NIM expansion story has further room to run, and with the bank merger integration complete and strong loan portfolio quality, 2026 should see cleaner earnings growth with positive operating leverage.

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Data sources: Arrow Financial 8-K filed January 29, 2026; Q4 2025 Investor Presentation; S&P Global estimates