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

Provided by PR Newswire Oct 29, 2026, 12:00:00 PM

PR Newswire

GLENS FALLS, N.Y., Oct. 29, 2026

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.

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

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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

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

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