Updated 2/25/26
Arrow Financial Corporation (AROW) is a regional bank headquartered in upstate New York, operating through Glens Falls National Bank and Saratoga National Bank. It offers a full range of traditional banking services to both individual and business customers across its local markets. The company has built a reputation for conservative management, steady financials, and a reliable dividend track record that has continued to inch higher quarter after quarter. Backed by a leadership team with deep institutional knowledge, Arrow maintains a disciplined approach to lending and capital allocation. With a dividend yield of 3.39%, a payout ratio of just over 43%, and a stock price that has climbed sharply over the past year, AROW has delivered meaningful total return for income-focused investors. Earnings have recovered substantially, with EPS now sitting at $2.65 and net income near $44 million. The one analyst covering the stock carries a price target of $34.50, essentially in line with where shares are trading today at $34.43.
Key Dividend Metrics
📈 Forward Dividend Yield: 3.39%
💵 Annual Dividend: $1.20
📆 Dividend Payout Ratio: 43.02%
📅 Most Recent Quarterly Dividend: $0.30
🎯 Last Ex-Dividend Date: February 11, 2026
📊 EPS (TTM): $2.65
Dividend Overview
Arrow’s dividend story continues to be defined by quiet consistency with a gradual upward trajectory. The most recent quarterly payment, made on February 11, 2026, was $0.30 per share, which marks another step up in a dividend that has been climbing steadily over the past several years. The annual dividend now stands at $1.20 per share, and the yield of 3.39% reflects a stock price that has appreciated meaningfully, pulling the yield lower even as the absolute payment has grown.
The payout ratio has improved considerably compared to prior periods. At 43.02%, it is well within a comfortable range for a community bank, giving management meaningful room to continue raising the dividend without stretching the balance sheet. This is a notable improvement from the 62% payout ratio reported in early 2025, and it reflects the recovery in earnings that has taken place over the past several quarters.
Arrow’s approach to its dividend remains measured and conservative, which is consistent with how the bank manages everything else. There are no dramatic hikes or special distributions. What investors get instead is a predictable quarterly payment that has moved higher through incremental raises, supported by a business that continues to generate solid returns on equity and assets.
Dividend Growth and Safety
The dividend history over the past three years tells a clear story of gradual progression. Starting at $0.27 per quarter through most of 2023 and into early 2024, Arrow moved to $0.28 in October 2024, then to $0.29 in August 2025, and finally reached $0.30 in February 2026. Each step has been small, but the direction has been unambiguous. That kind of steady march higher is exactly what dividend growth investors tend to value in a community bank with a long operating history.
Safety of the dividend is in a considerably better position today than it was a year ago. The payout ratio has dropped from roughly 62% to 43%, driven by the recovery in earnings. With EPS at $2.65 and the annual dividend at $1.20, there is substantial coverage, and management would have to absorb a dramatic earnings decline before the dividend would face any real pressure. Return on equity of 10.56% and return on assets of 1.00% confirm that the bank is generating adequate profitability to support both its capital base and its shareholder distributions.
Institutional ownership continues to provide a stable shareholder base, and insider ownership keeps management aligned with long-term outcomes rather than short-term performance. Arrow’s conservative lending standards and regional focus mean it is unlikely to be caught up in the kind of credit quality deterioration that can rapidly erode a bank’s dividend capacity. The combination of improving earnings, a moderate payout ratio, and a disciplined operating culture makes the current dividend look well-anchored.
Looking ahead, modest continued growth in the quarterly payout is a reasonable expectation. Arrow is not a bank that makes bold promises, but the trajectory of the past two years suggests that management is comfortable delivering incremental raises as earnings support it. For income investors who prize reliability over rapid growth, that pattern is precisely the point.
Chart Analysis
Arrow Financial has staged a remarkable recovery over the past twelve months, climbing from a 52-week low of $22.81 to its current price of $34.43, a gain of nearly 51% from trough to present. That kind of price appreciation is unusual for a community bank of this size and speaks to a meaningful rerating of the stock as the rate environment stabilized and regional bank sentiment broadly improved. The shares are now trading within striking distance of their 52-week high of $35.74, sitting just 3.68% below that level, which suggests the bulk of the recovery move is already priced in at current levels.
The moving average picture is constructive for income-oriented holders. AROW is trading above both its 50-day moving average of $33.03 and its 200-day moving average of $28.75, and the 50-day has crossed above the 200-day to form what technicians call a golden cross. This configuration typically signals that near-term momentum is aligned with the longer-term trend, and in this case the spread between those two averages is wide enough to suggest the uptrend has had time to mature rather than just flash into existence. For dividend investors, trading above a rising 200-day average is a meaningful indicator that the underlying business confidence has been restored.
The RSI reading of 37.76 introduces a nuance worth sitting with. Despite the strong year-over-year price recovery, the current RSI is approaching oversold territory, indicating that the stock has pulled back from recent highs and short-term momentum has cooled considerably. This divergence between a structurally bullish trend and a softening RSI often reflects a stock consolidating gains near resistance, in this case the 52-week high ceiling around $35.74, rather than a signal of fundamental deterioration. The pullback in momentum, absent any negative fundamental catalyst, is typically the kind of setup that income investors can use to their advantage.
For dividend investors, the overall technical picture is one of a stock in a healthy uptrend that is currently taking a breath near its highs. The golden cross formation and the commanding distance above the 200-day average provide a reasonable technical foundation for long-term holders, while the softening RSI suggests there is no urgency to chase the stock at the moment. Investors focused on locking in yield relative to cost basis may find the current consolidation phase a more patient entry point than the highs of the past few weeks, particularly given that AROW’s dividend story is built on consistency rather than capital gain acceleration.
Cash Flow Statement
Arrow Financial’s operating cash flow has followed a choppy path over the past four years, sliding from $68.2 million in 2021 to a trough of $20.6 million in 2023 before recovering to $34.5 million in 2024. Free cash flow tracked in lockstep, compressing from $61.1 million in 2021 down to just $13.5 million in 2023, then rebounding to $28.9 million last year. That 2023 trough deserves scrutiny from dividend investors, as the company was generating free cash flow that, while still technically sufficient to cover its dividend obligations, left considerably less margin for error than the robust levels seen in 2021. The 2024 recovery is encouraging, and it suggests the earnings pressure that weighed on cash generation through 2022 and 2023 may be easing as the rate environment stabilizes and net interest income finds firmer footing.
The broader trend over this four-year window reflects the operational reality many community banks faced as interest rates rose sharply and deposit costs climbed faster than asset yields could reprice. Arrow’s capital expenditure requirements have remained modest, averaging roughly $7 million annually, which speaks to the asset-light nature of its branch-based model and leaves the majority of operating cash flow available for dividends and retained capital. For shareholders, the key takeaway is that even in the worst year of this cycle, Arrow did not cut its dividend, which signals management’s commitment to income continuity. The path back toward 2021-level cash generation will depend heavily on margin stabilization and loan growth, but the directional improvement from 2023 to 2024 provides a reasonable foundation for confidence that dividend coverage will continue to strengthen.
Analyst Ratings
Coverage of Arrow Financial Corporation remains sparse, with a single analyst currently publishing a price target on the stock. That target is set at $34.50, which sits just barely above the current share price of $34.43. The proximity of the target to the market price implies a neutral stance, suggesting the analyst views the stock as fairly valued at current levels rather than meaningfully over or undervalued.
The $34.50 price target reflects how much has changed over the past year. When the prior report was written in April 2025, the consensus target was $30.00 against a share price of $24.13. The stock has since rallied more than 42%, closing much of the gap between price and intrinsic value that existed at that time. The current target, effectively at parity with the market, implies that the re-rating has largely played out and that further upside will depend on continued earnings growth rather than multiple expansion.
With only one analyst covering the stock, the rating landscape is thin, and investors should treat the single data point with appropriate caution. Arrow’s small market capitalization of approximately $566 million means it falls outside the coverage universe of most major brokerages. The absence of multiple competing views makes it more important for investors to evaluate the fundamentals directly, rather than relying on a broad analyst consensus that simply does not exist here.
Earning Report Summary
Earnings Recovery Takes Hold
Arrow Financial’s most recent full-year results reflect a meaningful turnaround from the pressure that weighed on earnings in 2024. Net income came in at $43.95 million, a sharp improvement from the $29.7 million reported for the prior year. On a per-share basis, earnings reached $2.65, compared to $1.77 the year before. That recovery has been the dominant story for Arrow over the past twelve months, and it helps explain why the stock has moved so far off its lows.
Revenue and Margin Improvement
Total revenue for the trailing period stands at $158.32 million, and the profit margin of 27.76% reflects improved operating leverage as the bank’s interest income environment stabilized. Return on equity improved to 10.56%, and return on assets reached 1.00%, both metrics moving in the direction that signals a healthier operating posture. The combination of higher net interest income and better cost management appears to have driven the bulk of the earnings recovery.
Balance Sheet and Capital Position
Book value per share has grown to $26.26, and the price-to-book ratio of 1.31 reflects the market’s willingness to assign a modest premium to Arrow’s equity as profitability has improved. The bank continues to operate with a beta of 0.79, meaning it tends to exhibit less volatility than the broader market, which is consistent with its conservative operating profile and regionally focused business model. Short interest of approximately 110,000 shares is minimal relative to the float, suggesting there is no meaningful bearish positioning against the stock at current levels.
Management Team
Arrow Financial Corporation is led by President and CEO David S. DeMarco, who has been with the company since 1987. DeMarco brings a deep understanding of Arrow’s operations, having served in multiple leadership roles including as President and CEO of Saratoga National Bank, one of the company’s key subsidiaries. His long tenure reflects a stable leadership approach and strong alignment with the bank’s regional mission, and the earnings recovery of the past year suggests the management team has navigated the interest rate and credit environment with characteristic steadiness.
Supporting him is a seasoned executive team. CFO Penko K. Ivanov brings decades of experience in financial services, while Chief Information Officer Michael Jacobs focuses on keeping the company’s technology infrastructure current and secure. Chief Credit Officer David D. Kaiser oversees credit risk and underwriting standards, which are crucial for a bank that prioritizes steady, disciplined lending practices. Together, this team has guided Arrow through both expansion and more turbulent financial periods with a focus on long-term consistency.
Arrow’s board of directors includes professionals from various industries, giving it a broad perspective. Members like Tenée Casaccio, an architectural firm president, and Dr. Kristine Duffy, a college president, help root the bank’s decision-making in community needs. The board’s makeup reinforces Arrow’s focus on stable, regionally centered growth and long-term value for shareholders.
Valuation and Stock Performance
Arrow Financial’s stock has had a strong run over the past year, trading between a 52-week low of $22.72 and a high of $36.44. The current price of $34.43 places it near the upper end of that range, reflecting the significant re-rating that has accompanied the bank’s earnings recovery. Investors who were following the stock when it traded near $24 in early 2025 have seen meaningful appreciation in addition to the dividend income collected along the way.
In terms of valuation, the stock carries a price-to-earnings ratio of 12.99 and a price-to-book ratio of 1.31. The P/E of roughly 13 is a reasonable multiple for a well-run community bank with improving profitability, and the price-to-book of 1.31 against a book value of $26.26 per share suggests the market is assigning a modest but not excessive premium to Arrow’s equity. A year ago, the stock was trading near book value, and the current premium reflects greater confidence in the earnings trajectory.
The beta of 0.79 continues to confirm Arrow’s profile as a lower-volatility holding that tends to move less aggressively than the broader market in either direction. With the single analyst price target sitting at $34.50, essentially at the current market price, the near-term upside from valuation alone is limited. Continued dividend growth and earnings stability would be the primary drivers of total return from this level.
Risks and Considerations
Arrow’s conservative operating approach, while a source of stability, also limits its ability to accelerate growth during more favorable economic periods. The bank is not positioned to deliver outsized earnings gains or rapid dividend hikes, and investors expecting either should look elsewhere. That deliberate posture works well when credit conditions deteriorate, but it can mean underperformance relative to more aggressive peers when the cycle turns positive.
Geographic concentration in upstate New York remains a meaningful consideration. Arrow’s business is closely tied to the economic health of a specific regional market, and a localized downturn driven by industry disruption, demographic shifts, or regional employer weakness could have a more direct and immediate impact than would be felt at a larger, nationally diversified bank. There is limited ability to offset regional softness through exposure to other markets.
Technology and compliance costs continue to present a structural challenge for smaller community banks. As customer expectations around digital banking evolve and regulatory requirements around cybersecurity and data privacy grow more demanding, Arrow must invest in infrastructure that larger institutions can spread across a much bigger revenue base. If these costs rise faster than revenue, margin pressure could follow, which would slow the dividend growth trajectory.
Interest rate sensitivity remains a relevant risk. While the current rate environment has been supportive of net interest margin improvement, any sharp reversal in rates or a flattening of the yield curve could compress margins and weigh on earnings. Arrow’s loan portfolio and deposit mix determine how quickly these dynamics flow through to the income statement, and the bank’s conservative approach to credit does not fully insulate it from rate-driven earnings volatility.
Final Thoughts
Arrow Financial has had a notably better year than the one that preceded it. Earnings have recovered strongly, the dividend has continued to grow in small but consistent increments, and the stock has rewarded patient investors with meaningful appreciation. The bank is now generating $2.65 in earnings per share, covering a $1.20 annual dividend with a payout ratio of just 43%, and doing so from a balance sheet that remains conservatively managed and well-capitalized.
The current valuation, with the stock near $34.43 and the lone analyst price target sitting at $34.50, suggests the easy money from the re-rating has largely been made. From here, total return will depend more on the continued growth of the dividend and steady earnings performance than on further multiple expansion. That is a perfectly acceptable setup for income investors who purchased the stock at lower prices and are now collecting a growing dividend on a well-appreciated cost basis.
Arrow Financial does not chase trends, and it does not generate headlines. What it does is compound quietly, raise its dividend in measured steps, and serve its regional customers with a consistency that has held up across multiple economic cycles. For investors who value that kind of predictability and are comfortable with a stock that may not move dramatically in either direction, Arrow remains a credible long-term income holding.