AROW Arrow Financial Corporation

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Arrow Financial Beat Consensus Estimates

Thursday, October 29, 2026 · 8:00 AM ET

Arrow Financial (AROW) reported earnings of $0.97 per share on revenue of $79.49 million for the third quarter ended September 2026. The consensus earnings estimate was $0.94 per share on revenue of $58.70 million. The company beat consensus estimates by 3.19% while revenue grew 27.56% on a year-over-year basis.

Arrow Financial Corporation through its holding Glens Falls National and Saratoga National Bank provides commercial and consumer banking and financial products.

Earnings Whisper Grade —
Power Rating—
Reported Earnings
$0.97
Earnings Whisper®
—
Consensus Estimate
$0.94
Earnings Surprise
Earnings Growth26.0 %
Reported Revenue
$79.49M
Revenue Estimate
$58.70M

Consensus estimates for banks and some financial institutions are for net interest income, which may not be comparable to reported revenue.

Revenue Surprise
Revenue Growth27.6 %

Arrow Reports 3rd Quarter Net Income of $5.7 Million, or $0.31 per Share, and Declares 4th Quarter Dividend of $0.30 per Share

Thursday, October 29, 2026 · 8:00 AM ET PR Newswire

 Completes Acquisition of Adirondack Bancorp Inc. and Recognizes $15.6 Million in Merger Related Expenses

GLENS FALLS, N.Y., Oct. 29, 2026 /PRNewswire/ -- Arrow Financial Corporation (NasdaqGS® – AROW) ("Arrow" or the "Company") announced financial results for the three-month period ended September 30, 2026. Reported net income for the third quarter of 2026 was $5.7 million and fully diluted earnings per share ("EPS") was $0.31, versus net income of $11.0 million and EPS of $0.66 for the second quarter of 2026.

Arrow Financial Corporation

The Board of Directors of Arrow declared a quarterly cash dividend of $0.30 per share; payable November 23, 2026 to shareholders of record as of November 11, 2026.

Arrow posted core EPS of $0.97 for the third quarter of 2026. Core results exclude approximately $15.6 million ($0.66 per share) of merger-related expenses ("MRE"1) related to the July 1, 2026 acquisition of Adirondack Bancorp, Inc. and Adirondack Bank based in Utica, New York ("Acquisition").

This earnings release and related commentary should be read in conjunction with the Company's October 29, 2026 Form 8-K and related Third Quarter 2026 Investor Presentation, which can also be found on Arrow's website: arrowfinancial.com/documents/investor-presentations. 

Arrow President and CEO David S. DeMarco: 

"We are excited to report our third-quarter financial results, marking the first quarter of financial performance following our acquisition of Adirondack Bancorp. Reflecting the collaboration and commitment of our combined team, Arrow is already delivering on expected benefits from the strategic acquisition with strong loan growth, net interest margin expansion, significant increase in non-interest income, core earnings of $0.97 per share and core ROA growth. We expect to complete the core banking system integration over the next few weeks and remain on track to realize approximately 95 percent of the anticipated cost savings by the first quarter of 2027. We also continued to celebrate our bank's 175th anniversary year by ringing the Nasdaq closing bell in late September. I would like to thank all of our valued team members, both past and present, for their dedication and hard work to mark this milestone as Arrow continues to grow to better serve our expanding communities."

Acquisition Highlights

  • Successfully closed Adirondack Bancorp, Inc. acquisition on July 1, 2026
  • Added approximately $600 million in loans and approximately $900 million in deposits
  • Key purchase accounting items:
    • Loan fair value discount of $26.7 million
      • $21 million, or 3.46%, is expected to amortize over approximately 4.5 years
      • Allowance for credit losses of $5.7 million, or 0.93%, on acquired loans
    • Core deposit intangible of $16.4 million, or 2.62%; expected to amortize over 10 years
    • Goodwill of $44.7 million
  • Core system conversion scheduled for November 7 and 8

Third-Quarter Highlights and Key Metrics

  • Net Income of $5.7 million (GAAP EPS of $0.31; Core EPS of $0.97 excluding MRE1)
  • Strong organic loan growth of approximately $60 million, 6.8% annualized
  • Net Interest Income of $48.7 million
  • Net Interest Margin of 3.80% (3.81% fully taxable equivalent ("FTE"2)), versus 3.42% (3.43% FTE2) in the prior quarter
  • Return on Average Assets ("ROA") of 0.42%; 1.33% excluding MRE1
  • YTD Net Charge-offs of 0.14%
  • Loan yield of 5.69% versus 5.46% for the previous quarter
  • Cost of retail deposits3 was 1.45% versus 1.61% in the second quarter, benefitting from the Acquisition
  • Purchased Skene Valley Agency, Inc., an independent insurance agency in Washington County, NY

Income Statement

  • Net Income: Net income for the third quarter of 2026 was $5.7 million, decreasing from $11.0 million in the second quarter of 2026.
    • Compared to the prior quarter, net income decreased primarily due to $15.6 million of MRE as well as other non-interest expenses due to the Acquisition, as expected cost savings are not yet fully realized.
  • Net Interest Income: Net interest income for the third quarter of 2026 was $48.7 million, increasing 35.6% from the second quarter of 2026.
    • Total interest and dividend income was $68.1 million for the third quarter of 2026, an increase from $53.6 million in the second quarter of 2026. The increase was attributable to higher average earning assets driven by the Acquisition. Interest expense for the third quarter of 2026 was $19.3 million, an increase from $17.7 million in the second quarter of 2026 as the Acquisition generated an increase in overall deposit balances while simultaneously decreasing the cost of funds.
  • Net Interest Margin: Net interest margin, on an FTE basis, for the third quarter of 2026 increased to 3.81%, compared to 3.43% for the second quarter of 2026. The increase in net interest margin compared to the second quarter of 2026 was primarily the result of the Acquisition, which included lower costing deposit balances, while loan yields continued to expand. Net interest margin also benefitted by 14bps, comprised of 9bps related to the net accretion of purchase accounting adjustments and 5bps on the accretion of the acquired investment portfolio.

Three Months Ended

(Dollars in Thousands)

September 30, 2026

December 31, 2025

September 30, 2025

Interest and Dividend Income

$           68,075

$           54,610

$           53,598

Interest Expense

19,342

19,467

19,467

Net Interest Income

48,733

35,143

34,131

Average Earning Assets(A)

5,089,406

4,302,305

4,199,115

Average Interest-Bearing Liabilities

3,729,983

3,280,856

3,193,789






Average Yield on Earning Assets(A)

5.31 %

5.04 %

5.06 %

Average Cost of Interest-Bearing Liabilities

2.06

2.35

2.42

Net Interest Spread

3.25

2.69

2.64

Net Interest Margin

3.80

3.24

3.22

Net Interest Margin - FTE

3.81

3.25

3.24






(A) Includes Nonaccrual Loans.




  • Provision for Credit Losses: For the third quarter of 2026, the provision for credit losses was $1.5 million compared to $2.8 million in the second quarter of 2026, which included a $1.6 million specific reserve related to a non-performing commercial loan that was subsequently charged-off in the third quarter of 2026. The third quarter provision was driven by loan growth and net charge-offs.

  • Non-Interest Income: Non-interest income for the three months ended September 30, 2026, was $11.4 million, an increase from $8.3 million in the second quarter of 2026. The increase was the result of fee income for services to customers from the Acquisition as well as an increase in insurance commissions. Insurance commissions also included one month of revenue from the Skene Valley Agency, Inc. acquired during the quarter. Other operating income included increased bank-owned life insurance income and a gain on the termination of a portion of the cash flow hedges, as the Acquisition enabled a change to Arrow's asset-liability management strategy.

  • Non-Interest Expense: Non-interest expense for the third quarter of 2026 was $51.8 million, an increase from $27.5 million in the second quarter of 2026. The third quarter of 2026 included approximately $15.6 million of MRE versus $1.0 million in the second quarter of 2026. In addition, other operating expense included $745 thousand in core deposit intangible amortization for the quarter related to the Acquisition.

  • Provision for Income Taxes: The provision for income taxes and effective tax rate were $1.2 million and 16.8%, respectively for the third quarter of 2026, and $2.9 million and 21.1%, respectively for the second quarter of 2026. The effective tax rate for the third quarter of 2026 reflected the impact of closing the Acquisition.

Balance Sheet

  • Total Assets: Total assets were $5.5 billion at September 30, 2026, an increase of $1.1 billion, or 23.8%, as compared to June 30, 2026. For the third quarter of 2026, the overall change in assets was primarily driven by the Acquisition, as well as an increase in cash balances.

  • Investments: Total investments were $693.6 million as of September 30, 2026, an increase of $105.6 million, or 18.0%, compared to June 30, 2026. The increase from June 30, 2026 was driven primarily by the Acquisition, partially offset by the subsequent sale of $73 million of investments as well as additional paydowns and maturities. There were no material credit quality issues related to the investment portfolio.

  • Loans: Total loans were $4.1 billion as of September 30, 2026. Loans outstanding increased in the third quarter of 2026 by $648.0 million (net of approximately $21 million of amortizing discount), driven by the Acquisition and approximately $60 million in organic growth. Please see the loan detail included in the Consolidated Financial Information table on page 14.

  • Allowance for Credit Losses: The allowance for credit losses was $41.1 million as of September 30, 2026, which represented 0.99% of loans outstanding, as compared to $36.2 million, or 1.03% of loans outstanding, at June 30, 2026. The increase in the allowance was primarily the result of $5.7 million of additional reserve for the newly acquired loans. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.21% for the three-month period ended September 30, 2026, as compared to 0.08% for the three-month period ended June 30, 2026. Nonperforming assets were $12.7 million as of September 30, 2026, representing 0.23% of period-end assets, an increase from $8.7 million, or 0.19%, at June 30, 2026.

  • Deposits: At September 30, 2026, deposit balances were $4.7 billion, an increase of $1.1 billion from June 30, 2026. The change from June 30, 2026 was primarily attributable to the acquisition as well as the seasonal inflow of municipal deposits. Please refer to page 7 for further details related to deposits.

  • Capital: Total stockholders' equity was $515.1 million at September 30, 2026, an increase of $68.8 million, or 15.4%, from June 30, 2026. The increase from June 30, 2026 was primarily attributable to the issuance of 1.98 million shares of common stock with a value of approximately $81 million in connection with the Acquisition as well as net income of $5.7 million offset by other comprehensive loss of $12.9 million and dividends of $5.6 million. Arrow's regulatory capital ratios remain strong. As of September 30, 2026, Arrow's Common Equity Tier 1 Capital Ratio was 11.63% and Total Risk-Based Capital Ratio was 13.46%. The capital ratios of Arrow and its subsidiary bank continued to exceed the "well capitalized" regulatory standards. Regulatory capital ratios are preliminary, subject to finalization as part of the current quarter Call Report.

Additional Commentary

  • BauerFinancial Ratings: Arrow Bank National Association ("Arrow Bank") received a 5-Star Superior rating from BauerFinancial, Inc., the nation's premier bank rating firm. Arrow Bank has earned this designation for 78 consecutive quarters, securing its prominent position as an "Exceptional Performance Bank."

About Arrow:  Arrow Financial Corporation is a holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern and central New York. The Company is the parent of Arrow Bank, a full-service commercial bank, and Upstate Agency, LLC, a comprehensive insurance agency.

Non-GAAP Financial Measures Reconciliation:  In addition to presenting information in conformity with accounting principles generally accepted in the United States of America (GAAP), this news release contains financial information determined by methods other than GAAP (non-GAAP). The following measures used in this release, which are commonly utilized by financial institutions, have not been specifically exempted by the Securities and Exchange Commission ("SEC") and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules: tangible book value, tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent net interest margin and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by Arrow from time to time are useful in evaluating Arrow's performance and that such information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Selected Quarterly Information."

Safe Harbor Statement:  The information contained in this earnings release may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements can sometimes be identified by Arrow's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." These statements may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, involving a degree of uncertainty and attendant risk. In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast, explicitly or by implication because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, tariffs, cybersecurity risks, changes in FDIC assessments, bank failures, geopolitical events, difficulties in managing Arrow's growth, competition, changes in law or the regulatory environment, risks relating to the integration of Adirondack Bancorp, Inc. and Adirondack Bank, and changes in general business and economic trends. Arrow undertakes no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This earnings release should be read in conjunction with Arrow's Annual Report on Form 10-K for the year ended December 31, 2025, and other filings with the SEC.




1

 EPS and ROA excluding merger-related expenses are non-GAAP measures. See reconciliation in Note 5 to the Selected Quarterly Information

2

FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 2 to the Selected Quarterly Information

3

Retail deposits exclude wholesale funding sources

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts - Unaudited)



Three Months Ended
September 30,

Nine Months Ended
September 30,


2026

2025

2026

2025

INTEREST AND DIVIDEND INCOME







Interest and Fees on Loans

$      58,896

$      46,832

$    153,203

$    136,982

Interest on Deposits at Banks

1,962

2,245

4,837

5,488

Interest and Dividends on Investment Securities:







Fully Taxable

6,059

4,066

15,305

11,464

Exempt from Federal Taxes

1,158

455

2,141

1,603

Total Interest and Dividend Income

68,075

53,598

175,486

155,537

INTEREST EXPENSE







Interest-Bearing Checking Accounts

2,567

2,160

6,829

5,904

Savings Deposits

9,472

9,534

27,121

28,384

Time Deposits over $250,000

1,612

1,695

3,860

5,232

Other Time Deposits

3,089

5,859

12,829

17,181

Borrowings

2,230

—

3,249

167

Junior Subordinated Obligations Issued to

  Unconsolidated Subsidiary Trusts

326

173

666

513

Interest on Financing Leases

46

46

138

135

Total Interest Expense

19,342

19,467

54,692

57,516

NET INTEREST INCOME

48,733

34,131

120,794

98,021

Provision for Credit Losses

1,467

815

4,842

6,428

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

47,266

33,316

115,952

91,593

NON-INTEREST INCOME







Income From Fiduciary Activities

2,609

2,600

8,028

7,533

Fees for Other Services to Customers

4,243

2,857

9,939

8,244

Insurance Commissions

2,145

1,986

6,232

5,616

Net Gain on Securities


114

392

414

669

Net Gain on Sales of Loans

180

261

624

573

Other Operating Income

2,124

620

3,062

1,529

Total Non-Interest Income

11,415

8,716

28,299

24,164

NON-INTEREST EXPENSE







Salaries and Employee Benefits

19,391

14,339

49,410

41,980

Occupancy Expenses, Net

2,805

1,907

7,365

5,881

Technology and Equipment Expense

6,976

4,963

16,785

15,639

FDIC Assessments

903

634

1,929

1,953

Other Operating Expense

21,753

3,590

30,668

11,677

Total Non-Interest Expense

51,828

25,433

106,157

77,130

INCOME BEFORE PROVISION FOR INCOME TAXES

6,853

16,599

38,094

38,627

Provision for Income Taxes

1,153

3,774

7,947

8,687

NET INCOME

$       5,700

$      12,825

$      30,147

$      29,940

Average Shares Outstanding:







Basic

18,421

16,402

17,084

16,541

Diluted

18,462

16,406

17,119

16,543

Per Common Share:







Basic Earnings

$         0.31

$         0.77

$         1.75

$         1.80

Diluted Earnings

0.31

0.77

1.75

1.80

 

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts - Unaudited)


September 30, 2026

December 31, 2025

ASSETS


Cash and Due From Banks

$              53,172

$              29,132

Interest-Earning Deposits at Banks

325,600

185,051

Investment Securities:


Available-for-Sale at Fair Value

609,085

495,868

Held-to-Maturity (Fair Value of $63,866 at September 30,
2026 and $66,569 at December 31, 2025)

64,258

66,975

Equity Securities

6,011

5,597

Other Investments

14,220

4,372

Loans

4,144,587

3,453,093

Allowance for Credit Losses

(41,131)

(34,322)

Net Loans

4,103,456

3,418,771

Premises and Equipment, Net

76,206

59,433

Goodwill

69,813

23,789

Other Intangible Assets, Net

18,379

1,741

Other Assets

206,854

155,133

Total Assets

$          5,547,054

$          4,445,862

LIABILITIES


Noninterest-Bearing Deposits

1,137,492

722,374

Interest-Bearing Checking Accounts

1,154,313

862,192

Savings Deposits

1,839,409

1,557,638

Time Deposits over $250,000

229,694

155,802

Other Time Deposits

377,989

641,463

Total Deposits

4,738,897

3,939,469

Borrowings

185,190

4,265

Junior Subordinated Obligations Issued to Unconsolidated

  Subsidiary Trusts

28,248

20,000

Finance Leases

4,866

4,929

Other Liabilities

74,761

45,347

Total Liabilities

5,031,962

4,014,010

STOCKHOLDERS' EQUITY


Preferred Stock, $1 Par Value; 1,000,000 Shares Authorized
at September 30, 2026 and December 31, 2025 (none issued)

—

—

Common Stock, $1 Par Value: 30,000,000 Shares Authorized;
22,066,559 Shares Issued; 18,535,102 and 16,445,342
Shares Outstanding at September 30, 2026 and
December 31, 2025

22,067

22,067

Additional Paid-in Capital

468,436

414,506

Retained Earnings

116,948

102,271

Accumulated Other Comprehensive Loss

(18,324)

(4,037)

Treasury Stock, at Cost (3,531,457 Shares at September 30,
2026 and 5,621,217 Shares at December 31, 2025)

(74,035)

(102,955)

Total Stockholders' Equity

515,092

431,852

Total Liabilities and Stockholders' Equity

$          5,547,054

$          4,445,862

 

Arrow Financial Corporation
Selected Quarterly Information
(Dollars In Thousands, Except Per Share Amounts - Unaudited)

Quarter Ended

9/30/2026

6/30/2026

3/31/2026

12/31/2025

9/30/2025

Net Income

$      5,700

$    10,962

$    13,485

$    14,013

$    12,825




















Share and Per Share Data:








Period End Shares Outstanding

18,535

16,545

16,527

16,445

16,438

Basic Average Shares Outstanding

18,421

16,428

16,382

16,390

16,402

Diluted Average Shares Outstanding

18,462

16,467

16,403

16,413

16,406

Basic Earnings Per Share

$       0.31

$       0.66

$       0.82

$       0.85

$       0.77

Diluted Earnings Per Share

0.31

0.66

0.82

0.85

0.77

Cash Dividend Per Share

0.30

0.30

0.30

0.29

0.29










Selected Quarterly Average Balances:








  Interest-Earning Deposits at Banks

$   211,383

$  129,628

$   183,252

$   260,806

$  200,251

  Investment Securities

770,629

614,771

598,817

596,994

574,080

  Loans

4,107,394

3,466,810

3,440,505

3,444,505

3,424,784

  Deposits

4,566,546

3,788,961

3,928,761

4,002,221

3,913,721

  Other Borrowed Funds

267,225

149,307

29,181

29,203

30,539

  Stockholders' Equity

530,861

445,887

438,846

425,042

413,058

  Total Assets

5,407,135

4,425,821

4,439,833

4,499,195

4,399,815

Return on Average Assets, annualized

0.42 %

0.99 %

1.23 %

1.24 %

1.16 %

Return on Average Equity, annualized

4.26 %

9.86 %

12.46 %

13.08 %

12.32 %

Return on Average Tangible Equity, annualized 1

5.08 %

10.46 %

13.23 %

13.92 %

13.13 %

Average Earning Assets

$ 5,089,406

$ 4,211,209

$ 4,222,574

$ 4,302,305

$ 4,199,115

Average Paying Liabilities

3,729,983

3,222,939

3,244,709

3,280,856

3,193,789

Interest Income

68,075

53,617

53,794

54,610

53,598

Tax-Equivalent Adjustment 2

148

133

123

114

121

Interest Income, Tax-Equivalent 2

68,223

53,750

53,917

54,724

53,719

Interest Expense

19,342

17,686

17,664

19,467

19,467

Net Interest Income

48,733

35,931

36,130

35,143

34,131

Net Interest Income, Tax-Equivalent 2

48,881

36,064

36,253

35,258

34,252

Net Interest Margin, annualized

3.80 %

3.42 %

3.47 %

3.24 %

3.22 %

Net Interest Margin, Tax-Equivalent, annualized 2

3.81 %

3.43 %

3.48 %

3.25 %

3.24 %










Efficiency Ratio Calculation: 3








Non-Interest Expense

$    51,828

$    27,464

$    26,865

$    25,804

$    25,433

Less: Intangible Asset Amortization

812

71

72

74

76

Net Non-Interest Expense

$    51,016

$    27,393

$    26,793

$    25,730

$    25,357

Net Interest Income, Tax-Equivalent

$    48,881

$    36,064

$    36,253

$    35,257

$    34,252

Non-Interest Income

11,415

8,255

8,628

8,268

8,716

Less: Net Gain (Loss) on Securities

114

155

145

(127)

392

Net Gross Income

$    60,182

$    44,165

$    44,736

$    43,652

$    42,576

Efficiency Ratio

84.77 %

62.02 %

59.89 %

58.94 %

59.56 %










Period-End Capital Information:








Total Stockholders' Equity (i.e. Book Value)

$   515,092

$  446,306

$   440,143

$   431,852

$  417,687

Book Value per Share 

27.79

26.98

26.63

26.26

25.41

Goodwill and Other Intangible Assets, net

88,192

25,401

25,481

25,530

25,594

Tangible Book Value per Share 1

23.03

25.44

25.09

24.71

23.85










Capital Ratios:4








Tier 1 Leverage Ratio

8.93 %

10.19 %

10.02 %

9.68 %

9.66 %

Common Equity Tier 1 Capital Ratio 

11.63 %

13.21 %

13.30 %

13.01 %

13.07 %

Tier 1 Risk-Based Capital Ratio

12.35 %

13.83 %

13.93 %

13.64 %

13.71 %

Total Risk-Based Capital Ratio

13.46 %

14.98 %

15.04 %

14.76 %

14.86 %

 

Arrow Financial Corporation

Selected Quarterly Information

(Dollars In Thousands, Except Per Share Amounts - Unaudited)














Footnotes:






















1.

Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return on Tangible Equity exclude goodwill and other intangible assets, net from total equity.  These are non-GAAP financial measures, which Arrow believes provide investors with information that is useful in understanding its financial performance.







9/30/2026

6/30/2026

3/31/2026

12/31/2025

9/30/2025


Total Stockholders' Equity (GAAP)

$  515,092

$  446,306

$  440,143

$  431,852

$  417,687


Less:  Goodwill and Other Intangible assets, net

88,192

25,401

25,481

25,530

25,594


Tangible Equity (Non-GAAP)

$  426,900

$  420,905

$  414,662

$  406,322

$  392,093















Period End Shares Outstanding

18,535

16,545

16,527

16,445

16,438


Tangible Book Value per Share (Non-GAAP)

$     23.03

$     25.44

$     25.09

$     24.71

$     23.85


Net Income

5,700

10,962

13,485

14,013

12,825


Return on Tangible Equity (Net Income/Tangible Equity - Annualized)

5.08 %

10.46 %

13.23 %

13.92 %

13.13 %














2.

Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of annualized tax-equivalent net interest income to average earning assets.  This is also a non-GAAP financial measure, which Arrow believes provides investors with information that is useful in understanding its financial performance.







9/30/2026

6/30/2026

3/31/2026

12/31/2025

9/30/2025


Interest Income (GAAP)

$   68,075

$   53,617

$   53,794

$   54,610

$   53,598


Add:  Tax-Equivalent adjustment (Non-GAAP)

148

133

123

114

121


Interest Income - Tax Equivalent (Non-GAAP)

$   68,223

$   53,750

$   53,917

$   54,724

$   53,719


Net Interest Income (GAAP)

$   48,733

$   35,931

$   36,130

$   35,143

$   34,131


Add:  Tax-Equivalent adjustment  (Non-GAAP)

148

133

123

114

121


Net Interest Income - Tax Equivalent (Non-GAAP)

$   48,881

$   36,064

$   36,253

$   35,257

$   34,252


Average Earning Assets

$              5,089,406

$              4,211,209

$              4,222,574

$              4,302,305

$              4,199,115


Net Interest Margin (Non-GAAP)*

3.81 %

3.43 %

3.48 %

3.25 %

3.24 %














3.

Non-GAAP Financial Measure Reconciliation: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control.  Arrow believes the efficiency ratio provides investors with information that is useful in understanding its financial performance.  Arrow defines efficiency ratio as the ratio of non-interest expense to net gross income (which equals tax-equivalent net interest income plus non-interest income, as adjusted).



























4.

For the current quarter, all of the regulatory capital ratios as well as the Total Risk-Weighted Assets are calculated in accordance with bank regulatory capital rules.  The September 30, 2026 CET1 ratio listed in the tables (i.e., 11.63%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%). Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report.







9/30/2026

6/30/2026

3/31/2026

12/31/2025

9/30/2025


Total Risk Weighted Assets

$              3,863,576

$              3,253,881

$              3,180,782

$              3,182,240

$              3,095,225


Common Equity Tier 1 Capital

449,211

429,971

423,139

414,050

404,426


Common Equity Tier 1 Ratio

11.63 %

13.21 %

13.30 %

13.01 %

13.07 %














5.

Non-GAAP Financial Measure Reconciliation: Net Income and Net Non-Interest Expense adjusted for non-core expenses. Non-core expenses include merger-related expenses, which are related to the announced acquisition of Adirondack Bancorp, Inc., and unification expenses, which are related to the system conversion and operational merger of the Company's two banking subsidiaries during the year ended December 31, 2025.  EPS, efficiency ratio, and ROA are presented on an adjusted basis to reflect these exclusions. In the third quarter of 2026, Arrow issued approximately 1.98 million shares of common stock. These are non-GAAP financial measures, which Arrow believes provides investors with information that is useful in understanding its financial performance.







9/30/2026

6/30/2026

3/31/2026

12/31/2025

9/30/2025


Net Income

$     5,700

$   10,962

$   13,485

$   14,013

$   12,825


Non-Core Expenses:











Merger-Related Expenses

15,609

971

790

—

—


Unification Expenses

—

—

—

—

543


Less:  Tax Benefit

(3,247)

(214)

(174)

—

(119)


Net Non-Core Expenses (Non-GAAP)

12,362

757

616

—

424


Core Net Income (Non-GAAP)

$   18,062

$   11,719

$   14,101

$   14,013

$   13,249















Net Non-Interest Expense

$   51,016

$   27,393

$   26,793

$   25,730

$   25,357


Non-Core Expenses:











Merger-Related Expenses

15,609

971

790

—

—


Unification Expenses

—

—

—

—

543


Core Net Non-Interest Expense (Non-GAAP)

$   35,407

$   26,422

$   26,003

$   25,730

$   24,814















Core Earnings Per Share (Non-GAAP)

$      0.97

$      0.71

$      0.85

$      0.85

$      0.80


Core Return on Average Assets (Non-GAAP)

1.33 %

1.06 %

1.29 %

1.24 %

1.20 %


Core Efficiency Ratio (Non-GAAP)

58.83 %

59.83 %

58.13 %

58.94 %

58.28 %


* Quarterly ratios have been annualized.








 

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)

Quarter Ended:

September 30, 2026

September 30, 2025

















Interest

Rate


Interest

Rate


Average

Income/

Earned/

Average

Income/

Earned/


Balance

Expense

Paid

Balance

Expense

Paid

Interest-Earning Deposits at Banks

$  211,383

$    1,962

3.68 %

$  200,251

$    2,245

4.45 %

Investment Securities:











Fully Taxable

695,702

6,059

3.46

509,599

4,066

3.17

Exempt from Federal Taxes

74,927

1,158

6.13

64,481

455

2.80

Loans (1)

4,107,394

58,896

5.69

3,424,784

46,832

5.43

Total Earning Assets (1)

5,089,406

68,075

5.31

4,199,115

53,598

5.06

Allowance for Credit Losses

(41,602)




(34,143)



Cash and Due From Banks

40,281




33,984



Other Assets

319,050




200,859



Total Assets

$            5,407,135




$            4,399,815



Deposits:











Interest-Bearing Checking Accounts

$            1,030,495

2,567

0.99

$  848,622

2,160

1.01

Savings Deposits

1,819,689

9,472

2.07

1,492,204

9,534

2.53

Time Deposits over $250,000

235,470

1,612

2.72

177,826

1,695

3.78

Other Time Deposits

377,104

3,089

3.25

644,598

5,859

3.61

Total Interest-Bearing Deposits

3,462,758

16,740

1.92

3,163,250

19,248

2.41

Borrowings

234,103

2,230

3.78

5,583

—

—

Junior Subordinated Obligations Issued to
Unconsolidated Subsidiary Trusts

28,248

326

4.58

20,000

173

3.43

Finance Leases

4,874

46

3.74

4,956

46

3.68

Total Interest-Bearing Liabilities

3,729,983

19,342

2.06

3,193,789

19,467

2.42

Noninterest-Bearing Deposits

1,103,788




750,471



Other Liabilities

42,503




42,497



Total Liabilities

4,876,274




3,986,757



Stockholders' Equity

530,861




413,058



Total Liabilities and Stockholders' Equity

$            5,407,135




$            4,399,815



Net Interest Income


$   48,733




$   34,131

Net Interest Spread




3.25 %




2.64 %

Net Interest Margin




3.80 %




3.22 %

    (1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)

Quarter Ended:

September 30, 2026

June 30, 2026

















Interest

Rate


Interest

Rate


Average

Income/

Earned/

Average

Income/

Earned/


Balance

Expense

Paid

Balance

Expense

Paid

Interest-Earning Deposits at Banks

$  211,383

$    1,962

3.68 %

$ 129,628

$    1,200

3.71 %

Investment Securities:











Fully Taxable

695,702

6,059

3.46

548,084

4,717

3.45

Exempt from Federal Taxes

74,927

1,158

6.13

66,687

519

3.12

Loans (1)

4,107,394

58,896

5.69

3,466,810

47,181

5.46

Total Earning Assets (1)

5,089,406

68,075

5.31

4,211,209

53,617

5.11

Allowance for Credit Losses

(41,602)




(34,305)



Cash and Due From Banks

40,281




29,874



Other Assets

319,050




219,043



Total Assets

$            5,407,135




$            4,425,821



Deposits:











Interest-Bearing Checking Accounts

$            1,030,495

2,567

0.99

$ 827,385

2,162

1.05

Savings Deposits

1,819,689

9,472

2.07

1,596,055

8,933

2.24

Time Deposits over $250,000

235,470

1,612

2.72

139,256

1,052

3.03

Other Time Deposits

377,104

3,089

3.25

510,936

4,304

3.38

Total Interest-Bearing Deposits

3,462,758

16,740

1.92

3,073,632

16,451

2.15

Borrowings

234,103

2,230

3.78

124,411

1,019

3.29

Junior Subordinated Obligations Issued to
Unconsolidated Subsidiary Trusts

28,248

326

4.58

20,000

171

3.43

Finance Leases

4,874

46

3.74

4,896

45

3.69

Total Interest-Bearing Liabilities

3,729,983

19,342

2.06

3,222,939

17,686

2.20

Noninterest-Bearing Deposits

1,103,788




715,329



Other Liabilities

42,503




41,666



Total Liabilities

4,876,274




3,979,934



Stockholders' Equity

530,861




445,887



Total Liabilities and Stockholders' Equity

$            5,407,135




$            4,425,821



Net Interest Income


$   48,733




$   35,931

Net Interest Spread




3.25 %




2.91 %

Net Interest Margin




3.80 %




3.42 %


(1) Includes Nonaccrual Loans.

 

Arrow Financial Corporation
Average Consolidated Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands - Unaudited)

Year to Date Period Ended:

September 30, 2026

September 30, 2025

















Interest

Rate


Interest

Rate


Average

Income/

Earned/

Average

Income/

Earned/


Balance

Expense

Paid

Balance

Expense

Paid

Interest-Earning Deposits at Banks

$  174,857

$    4,837

3.70 %

$  164,114

$    5,488

4.47 %

Investment Securities:











Fully Taxable

593,943

15,305

3.45

502,075

11,464

3.05

Exempt from Federal Taxes

68,091

2,141

4.20

80,628

1,603

2.66

Loans (1)

3,674,013

153,203

5.58

3,415,401

136,982

5.36

Total Earning Assets (1)

4,510,904

175,486

5.20

4,162,218

155,537

5.00

Allowance for Credit Losses

(36,786)




(34,359)



Cash and Due From Banks

33,506




31,598



Other Assets

251,971




193,174



Total Assets

$            4,759,595




$            4,352,631



Deposits:











Interest-Bearing Checking Accounts

$  906,273

6,829

1.01

$  844,774

5,904

0.93

Savings Deposits

1,663,027

27,121

2.18

1,500,944

28,384

2.53

Time Deposits over $250,000

174,373

3,860

2.96

181,291

5,232

3.86

Other Time Deposits

507,870

12,829

3.38

625,557

17,181

3.67

Total Interest-Bearing Deposits

3,251,543

50,639

2.08

3,152,566

56,701

2.40

 Borrowings

121,768

3,249

3.57

12,455

167

1.79

Junior Subordinated Obligations Issued to
Unconsolidated Subsidiary Trusts

22,780

666

3.91

20,000

513

3.43

Finance Leases

4,895

138

3.77

4,977

135

3.63

Total Interest-Bearing Liabilities

3,400,986

54,692

2.15

3,189,998

57,516

2.41

Noninterest-Bearing Deposits

845,547




710,404



Other Liabilities

40,859




44,203



Total Liabilities

4,287,392




3,944,605



Stockholders' Equity

472,203




408,026



Total Liabilities and Stockholders' Equity

$            4,759,595




$            4,352,631





























Net Interest Income


$  120,794




$   98,021

Net Interest Spread




3.05 %




2.59 %

Net Interest Margin




3.58 %




3.15 %













(1) Includes Nonaccrual Loans.
























 

Arrow Financial Corporation
Consolidated Financial Information
(Dollars in Thousands - Unaudited)

Quarter Ended:

9/30/2026

12/31/2025

Loan Portfolio


Commercial Loans

$    256,574

$    165,729

Commercial Real Estate Loans

1,068,892

818,259

  Subtotal Commercial Loan Portfolio

1,325,466

983,988

Consumer Loans

1,100,061

1,076,007

Residential Real Estate Loans

1,719,060

1,393,098

Total Loans

$  4,144,587

$  3,453,093

Allowance for Credit Losses


Allowance for Credit Losses, Beginning of Quarter

$     36,183

$     34,176

Acquisition of Adirondack Bank

5,678

—

Loans Charged-off

(3,093)

(1,477)

Less Recoveries of Loans Previously Charged-off

896

777

Net Loans Charged-off

(2,197)

(700)

Provision for Credit Losses

1,467

846

Allowance for Credit Losses, End of Quarter

$     41,131

$     34,322

Nonperforming Assets


Nonaccrual Loans

$     10,117

$       6,415

Loans Past Due 90 or More Days and Accruing

2,382

2,040

Loans Restructured and in Compliance with Modified Terms

—

—

Total Nonperforming Loans

12,499

8,455

Repossessed Assets

231

280

Other Real Estate Owned

—

—

Total Nonperforming Assets

$     12,730

$       8,735




Key Asset Quality Ratios


Net Loans Charged-off to Average Loans,

   Quarter-to-date Annualized

0.21 %

0.08 %

Provision for Credit Losses to Average Loans,

  Quarter-to-date Annualized

0.14 %

0.10 %

Allowance for Credit Losses to Period-End Loans

0.99 %

0.99 %

Allowance for Credit Losses to Period-End Nonperforming Loans

329.07 %

405.94 %

Nonperforming Loans to Period-End Loans

0.30 %

0.24 %

Nonperforming Assets to Period-End Assets

0.23 %

0.20 %




Year-to-Date Period Ended:

9/30/2026

12/31/2025

Allowance for Credit Losses


Allowance for Credit Losses, Beginning of Year

$     34,322

$     33,598

Acquisition of Adirondack Bank

5,678

—

Loans Charged-off

(6,437)

(9,554)

Less Recoveries of Loans Previously Charged-off

2,726

3,004

Net Loans Charged-off

(3,711)

(6,550)

Provision for Credit Losses

4,842

7,274

Allowance for Credit Losses, End of Period

$     41,131

$     34,322




Key Asset Quality Ratios


Net Loans Charged-off to Average Loans, Annualized

0.14 %

0.19 %

Provision for Credit Losses to Average Loans, Annualized

0.18 %

0.21 %

 

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SOURCE Arrow Financial Corporation