Arrow Financial Corporation (AROW) Stock Analysis

Why this analysis is different

• A 9-signal quantitative MoonshotScore built from filings, insider activity, and market data — computed from the numbers, not from opinion.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

Arrow Financial Corporation (AROW) Financial Services Profile

Arrow Financial Corporation, a regional bank holding company, specializes in providing comprehensive commercial and consumer banking services, alongside financial products and investment advisory services, primarily in the northeastern New York market.

What Is the Investment Thesis for AROW?

With a market capitalization of $644M and a P/E ratio of 12.52, the company exhibits a profit margin of 20.7% and a gross margin of 68.2%, indicating strong operational efficiency. The bank's diversified product offerings, including commercial and consumer loans, alongside investment advisory services, position it well to capitalize on regional economic growth. Key growth catalysts include the expansion of its lending portfolio and increased demand for financial advisory services, particularly as the market continues to recover post-pandemic. Additionally, Arrow's commitment to maintaining a strong dividend yield of 3.12% enhances its attractiveness to income-focused investors. However, potential risks include regulatory challenges and market competition, which could impact profitability and growth trajectories. Overall, Arrow Financial's strong operational foundation and strategic positioning within its regional market provide a solid basis for future growth.

Based on FMP financials and quantitative analysis

AROW Key Highlights

Market capitalization of $644M reflects a stable financial position in the regional banking sector.

• P/E ratio of 12.52 indicates a valuation that is competitive within the industry.
• Profit margin of 20.7% demonstrates effective cost management and operational efficiency.
• Gross margin of 68.2% exceeds many peers, highlighting strong revenue generation capabilities.
• Dividend yield of 3.12% offers attractive returns for income-focused investors.

Who Are AROW's Competitors?

AROW is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are AROW's Key Strengths?

Long-standing history and reputation in the banking industry.

• Strong financial performance metrics, including high profit margins.
• Diverse range of products and services catering to various customer needs.
• Established presence in a growing regional market.

What Are AROW's Weaknesses?

Limited geographic diversification compared to larger national banks.

• Potential vulnerability to economic downturns affecting regional markets.
• Dependence on local economic conditions for growth.
• Challenges in scaling operations without compromising service quality.

What Could Drive AROW Stock Higher?

Expansion of commercial lending services to capture growing demand in the regional market.

• Implementation of digital banking initiatives to enhance customer experience and operational efficiency.
• Continued growth in consumer lending as economic conditions improve and demand rises.

What Are the Key Risks for AROW?

Financial-distress signal — its Altman Z-Score of -0.85 sits in the distress zone (elevated bankruptcy risk).

• Regulatory challenges that may affect operational costs and compliance requirements.
• Intense competition from larger regional and national banks impacting market share.
• Economic fluctuations that could influence loan demand and credit quality.

What Are the Growth Opportunities for AROW?

• Expansion of Commercial Lending: Arrow Financial Corporation is well-positioned to increase its commercial lending portfolio, targeting small to medium-sized enterprises in its service areas. The regional market for commercial loans is projected to grow at a CAGR of 5% over the next five years, driven by economic recovery and business expansions. By enhancing its lending capabilities and offering tailored financial solutions, Arrow can capture a larger market share and drive revenue growth.
• Consumer Lending Growth: The demand for consumer loans, particularly personal and home equity loans, is expected to rise as consumers seek financing for home improvements and debt consolidation. With a growing market size estimated at $200 billion in the northeastern U.S., Arrow Financial can capitalize on this trend by expanding its product offerings and marketing efforts to attract more individual borrowers.
• Investment Advisory Services: As individuals and corporations increasingly seek professional guidance in managing their investments, Arrow's investment advisory services present a significant growth opportunity. The investment management industry is projected to grow at a CAGR of 6% over the next five years, and Arrow can leverage its existing client relationships to expand its advisory services, enhancing revenue streams.
• Insurance Services Expansion: Arrow Financial's insurance agency services, including life and property insurance, represent a growing segment of its business. The U.S. insurance market is expected to grow by 4% annually, and Arrow can enhance its offerings by introducing new products and targeting underserved customer segments, thereby increasing its market presence.
• Digital Banking Initiatives: The shift towards digital banking continues to reshape the financial services landscape. Arrow Financial has the opportunity to invest in technology to enhance its digital banking capabilities, improving customer experience and operational efficiency. As consumers increasingly prefer online banking solutions, this investment could significantly boost customer acquisition and retention.

What Are AROW's Competitive Advantages?

• Established brand presence and trust built over 170 years of operation.
• Strong local market knowledge and relationships with community stakeholders.
• Diverse product offerings that cater to a wide range of financial needs.
• Commitment to customer service and personalized banking experiences.
• Robust network of branch locations enhancing accessibility for customers.

What Does AROW Do?

Arrow Financial Corporation, established in 1851, is a prominent bank holding company headquartered in Glens Falls, New York. With a rich history spanning over 170 years, the company has developed a robust portfolio of banking and financial services tailored to meet the diverse needs of its customers. Arrow Financial operates primarily in the northeastern region of New York State, serving counties including Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady, among others. The company has strategically positioned itself with a network of 26 owned branch banking offices and 12 leased branches, complemented by two residential loan origination offices. Arrow Financial offers a wide array of deposit products, such as demand deposits, interest-bearing checking accounts, savings accounts, and time deposits. Its lending activities encompass commercial loans, including term loans, lines of credit, and commercial real estate loans aimed at financing property purchases and expansions. Additionally, Arrow provides various consumer lending options, including personal installment loans, home equity loans, and automobile loans. Beyond traditional banking, the company also offers retirement planning, trust administration, and insurance services, showcasing its commitment to comprehensive financial solutions. Arrow Financial's evolution reflects its adaptability in a competitive financial landscape, focusing on customer-centric services that cater to both individual and corporate clients.

What Products and Services Does AROW Offer?

• Provide a range of commercial banking services including loans and deposit accounts.
• Offer consumer banking products such as personal loans, home equity loans, and credit lines.
• Deliver investment advisory services to individuals and corporations.
• Administer retirement planning, trust, and estate services.
• Facilitate insurance services, including life and property insurance.
• Operate a network of branch offices to serve local communities.

How Does AROW Make Money?

• Generate revenue through interest income from loans and fees from banking services.
• Offer investment advisory services that contribute to asset management fees.
• Provide insurance products, earning commissions and premiums.
• Engage in secondary market activities for residential real estate loans.
• Leverage a diversified portfolio to mitigate risks and enhance profitability.

What Industry Does AROW Operate In?

The regional banking industry is characterized by its focus on local markets and community relationships, with banks like Arrow Financial Corporation playing a crucial role in supporting local economies. The sector has been experiencing gradual recovery following economic disruptions, with an increasing demand for both commercial and consumer banking services. As interest rates stabilize, regional banks are positioned to benefit from improved lending margins and a resurgence in loan demand. Arrow Financial's focus on the northeastern New York market allows it to leverage local economic growth, particularly in real estate and small business financing, making it a key player within this competitive landscape.

Who Are AROW's Key Customers?

• Individuals seeking personal banking and lending solutions.
• Small to medium-sized businesses requiring commercial loans and banking services.
• Corporations looking for investment management and employee benefit services.
• Local residents in need of insurance products and retirement planning.
• Community organizations seeking financial partnerships and services.

Arrow Financial Corporation (AROW) Valuation Context

Valued at $644M, AROW is classified as a small-cap stock. Analyst price targets span from $44.00 to $46.00, with a consensus of $45.00. At the current price of $38.95, that implies approximately 16% upside potential. Relative to its peer group, AROW's quantitative score of 54/100 is below the peer average of 84/100.

AROW Revenue & Earnings Trend

In Q2 FY2026, AROW generated $24.2M in top-line revenue, marking a sequential decrease of 61.2%. The company recorded net income of $11.0M, with diluted EPS of $0.67. Revenue has contracted over three consecutive quarters, which investors in this small-cap Financial Services stock should monitor closely. Across the four most recent quarters, AROW averaged $0.78 in diluted EPS.

Company Profile

Arrow Financial Corporation operates in the Banks - Regional industry within the Financial Services sector. It is headquartered in Glens Falls, US. The company is led by CEO David S. DeMarco. AROW has traded publicly since 1980.

Return on equity for Arrow Financial Corporation stands at 12.0%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 1.1%, showing how much profit it generates from its asset base. AROW trades at a trailing price-to-earnings ratio of 12.52, below the Financial Services sector average of ~17.50x. Its free cash flow yield is 6.6%, a gauge of the cash the business throws off relative to its market value. Its earnings yield is 8.2%, the inverse of the P/E and a quick read on earnings relative to price.

Arrow Financial Corporation's Piotroski F-Score is 6/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of -0.85 places it in the distress zone, a signal of elevated financial risk.

Arrow Financial Corporation has beaten Wall Street's EPS estimate in 4 of its last 8 reported quarters — more hits than misses. Reported results have landed about 0.9% below estimates on average.

Over the past six months, Arrow Financial Corporation insiders filed 72 SEC Form 4 transactions — 30 sales and 42 purchases. On net that is roughly 12K shares disposed (about $490K), a signal worth weighing alongside the fundamentals.

AROW Financials

AROW Latest News

AROW Analyst Consensus

AROW MoonshotScore

Arrow Financial Corporation Financial Services Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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