Arrow Financial Corp 8-K, filed Oct 29, 2026
Arrow Financial Corp (AROW)
8-K
2026-10-29
For: 2026-10-28
View Original
Added on
October 29, 2026
About this 8-K
Arrow Financial Corp filed this 8-K on October 29, 2026, reporting on events of October 28, 2026.
Arrow Financial Corporation reported net income of $5.7 million, or $0.31 per share, and core EPS of $0.97 for the quarter ended September 30, 2026. It completed the Adirondack Bancorp, Inc. acquisition and declared a $0.30 per share dividend. AI summary
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: October 28, 2026
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
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| Registrant’s telephone number, including area code: | ||||||||||||||
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of each exchange on which registered | ||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||||||
| Emerging growth company | ||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act | ☐ | |||||||
Item 2.02. Results of Operations and Financial Condition.
On October 29, 2026, Arrow Financial Corporation (the "Company") issued a press release containing unaudited financial information and accompanying discussion for the quarter ended September 30, 2026. A copy of this press release is furnished as Exhibit 99.1 to this report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On October 29, 2026, the Company made available certain presentation material (the "Third Quarter 2026 Investor Presentation"), which includes among other things, a review of financial results and trends through the period ended September 30, 2026. The furnished Third Quarter 2026 Investor Presentation should be read in conjunction with our Earnings Release for the quarter ended September 30, 2026.
A copy of the presentation material is included as Exhibit 99.2 to this current report on Form 8-K and is incorporated herein by reference.
The information furnished under this Report, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.
Item 8.01. Other Events.
On October 28, 2026 , the Board of Directors (the “Board”) of the Company declared a quarterly cash dividend of $0.30 per share payable November 23, 2026 to shareholders of record on November 11, 2026.
Item 9.01. Financial Statements and Exhibits.
Exhibits:
Exhibit No. Description
Exhibit 99.2 Arrow Financial Corporation Third Quarter 2026 Investor Presentation dated October 29, 2026
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARROW FINANCIAL CORPORATION | ||||||||
| Registrant | ||||||||
| Date: | October 29, 2026 | /s/ Penko Ivanov | ||||||
| Penko Ivanov | ||||||||
| Chief Financial Officer | ||||||||
 | 250 Glen Street | ||||
| Glens Falls, NY 12801 | |||||
| NASDAQ® Symbol: “AROW“ | |||||
| Website: arrowfinancial.com | |||||
| Media Contact: Rachael Murray | |||||
| P: (518) 742-6505 | |||||
| E: rachael.murray@arrowbank.com | |||||
| FOR IMMEDIATE RELEASE | |||||
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
Completes Acquisition of Adirondack Bancorp Inc. and Recognizes $15.6 Million in Merger Related Expenses
GLENS FALLS, N.Y. (October 29, 2026) – 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
1 EPS and ROA excluding merger-related expenses are non-GAAP measures. See reconciliation in Note 5 to the Selected Quarterly Information
1
•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.
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
2
| 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.
3
•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
4
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.
5
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 | ||||||||||||||||||||||||||||
6
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 | |||||||||||||
7
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 | % | |||||||||||||||||||
8
| 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). | |||||||||||||||||||||||||||||||||||||
9
| Arrow Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Selected Quarterly Information | ||||||||||||||||||||||||||||||||||||||
| (Dollars In Thousands, Except Per Share Amounts - Unaudited) | ||||||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||
10
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.
11
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.
12
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. | |||||||||||||||||||||||||||||||||||
13
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 | % | |||||||||||||
14
3Q 2026 October 29, 2026 1
The information contained in this investor presentation 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 related 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 document should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 10-K”), other filings with the SEC and the third quarter 2026 earnings release issued October 29, 2026. This presentation makes use of certain non-GAAP terms and metrics commonly accepted and widely used within the banking industry, including, but not limited to, Tangible Book Value per Share (TBV/Share), Full Tax Equivalent (FTE), Tangible Common Equity (TCE), and Efficiency Ratio. Please refer to the Appendix to this presentation for a reconciliation of certain non-GAAP measures. 2 Safe Harbor
This presentation makes use of certain financial terms and non-GAAP measures, described below, commonly accepted and widely used within the banking industry. Please refer to the Appendix to this presentation for a reconciliation of certain non-GAAP measures. • Earnings per Share (EPS) • Tangible Book Value per Share (TBV/Share) • Full Tax Equivalent (FTE) • Tangible Common Equity (TCE) • Efficiency Ratio • Net Interest Margin (NIM) • Effective Tax Rate (ETR) • Merger-Related Expenses (MRE) • Return on Average Assets (ROA) • Return on Average Equity (ROE) • Allowance for Credit Losses (ACL) • Assets Under Management (AUM) • Available for Sale (AFS) • Held-to-Maturity (HTM) • Non-Performing Loans (NPL) 3 Glossary of Terms and Non-GAAP Measures
• M&A (Acquisition of Adirondack Bancorp, Inc., “ADK”) • 3Q26 Results and Performance Metrics • Non-Interest Income/Expense • Loans • Deposits/Funding Sources • Credit Quality & Provision for Credit Losses • Investments • Capital • Company Profile & Management Bios • Appendix 4 Table of Contents
M&A UPDATE 5
Acquisition Highlights Closed Adirondack Bancorp, Inc. acquisition on July 1, 2026 Added ~$600M in loans and ~$900M in deposits Purchase accounting substantially complete • Loan FV Purchase Accounting (Non-Credit) Discount ~$21M, 3.5%; Amortizes over ~4.5 years • Allowance for Credit Loss of $5.7M or 0.93% on acquired loans • Core Deposit Intangible ~$16M, 2.6%; Amortizes over 10 years • TBV Dilution at close ~ 9.4% (substantially in line with February deal announcement) • Goodwill ~$44.7M Key Ratios at close (July 1, 2026) – in line with deal announcement • TCE – 8.06%; TBV – $23.58; Leverage Ratio – 8.35% Combined entity delivering on Net Interest Margin, core EPS and core ROA expansion Cost savings on track with 95% expected to be in place by 1Q27 Core system conversion scheduled for November 7-8 6
Acquisition – Arrow/ADK Opening Balance Sheet 7 1 Variances are rounded based on actual whole-dollar amounts UNAUDITED Dollars in millions Balance Sheet Day 1 July 1, 2026 Cash & Cash Equivalents $238.4 Investment Securities 868.2 Loans Receivable, net 4,041.7 All Other Assets 367.3 Total Assets $5,515.6 Total Deposits $4,583.8 Total Borrowings 343.3 Other Liabilities 61.7 Total Liabilities $4,988.8 Stockholders' Equity $526.8 Total Liabilities & Stockholders' Equity $5,515.6
3Q26 & YTD RESULTS 8
3Q26 and YTD Highlights 3Q26 Net Income of $5.7 million, or $0.31 EPS; YTD $30.1 million or $1.75 EPS • 3Q26 included $15.6M of merger-related expenses; lowering reported EPS by $0.66 • YTD 2026 included $17.4M of merger-related expenses; lowering reported EPS by $0.80 Core EPS of $0.97 for 3Q26; YTD $2.55 FTE 3Q26 NIM of 3.81%; YTD 3.59% Strong 3Q26 organic loan growth of ~$60 million, or 6.8% (annualized) • YTD loan growth of ~$103M, or 4.0% (annualized) Continued strong credit metrics with 3Q NPLs at 0.30% and YTD NCOs of 0.14% • NCOs include $1.6M, or 6bps, for previously reserved CRE exposure disclosed in 2Q26 • Allowance to NPL coverage of 329% Branch optimization • Closed one branch in 3Q, one closing in Nov. 2026 and two more under review for 1H27 Rising rates/shift in yield curve negatively impacted TCE & TBV in 3Q • TBV reduction of ~$0.69 • TCE reduction of ~0.24% 3Q efficiency ratio at 58.8% excluding merger-related expenses • Cost savings from acquisition not yet fully realized; 95% to be realized/in place by 1Q27 9
3Q26 Summary 10 (1) MRE represents merger-related expenses of $15.6M in 3Q26 EPS of $0.31 $0.97 excl. MRE(1) ROAA of 0.42% 1.33% excl. MRE ROAE of 4.26% 13.50% excl. MRE Organic Loan Growth of ~$60M, 6.8% annualized FTE NIM 3.81% TCE of 7.82% TBV of $23.03 Net Charge-Offs 0.21% NPLs $12.5M; 0.30% of Total Loans • TCE/TBV impacted by 3Q rate environment
YTD September 2026 Summary 11 (1) MRE represents merger-related expenses of $17.4M YTD 2026 Organic Loan Growth of ~$103M, 4.0% annualized ROAA of 0.85% 1.23% excl. MRE ROAE of 8.54% 12.43% excl. MRE Loan-To-Deposit Ratio of 87.45% Wholesale Funding Ratio of 3.34% Allowance for Credit Loss 0.99% EPS of $1.75 $2.55 excl. MRE(1) Net Charge-Offs 0.14%
Net Interest Margin 12 1 Yield includes the impact of deferred fees and amortization of loan origination costs 2 FTE has historically been 1-2 bps higher than NIM reported under GAAP 3.24% 3.25% 3.48% 3.43% 3.81% 3Q25 4Q25 1Q26 2Q26 3Q26 3.24% 3.25% 3.48% 3.43% 3.81% 5.43% 5.45% 5.55% 5.46% 5.69% 1.95% 1.93% 1.80% 1.74% 1.45% 3Q25 4Q25 1Q26 2Q26 3Q26 NIM Average Loan Yield¹ for the Period Shown Cost of Deposits NIM benefitted from: • Lower average cost of funds from ADK acquisition • 14bps from merger-related accretion/amortization All NIM presented on a fully taxable equivalent basis (FTE2)
Adirondack Bank Acquisition Accounting Impact 13 Net Interest Income Accretion Non-Interest Expense Amortization $ in millions 3Q26 Loans $1.3 Securities AFS 0.7 Asset Accretion 2.0 Time Deposits (0.2) Liability Accretion (0.2) Total Accretion $1.8 $ in millions 3Q26 Core Deposit Intangible $(0.7) Total Amortization $(0.7) Projected Future Impact • 3Q Income Accretion/Expense Amortization run-rate expected to continue into 2027 • Fair Value Interest Rate mark on loans at end of 3Q at ~$19.1 million • Core Deposit Intangible at end of 3Q at ~$15.6 million
3Q 2026 Consolidated Financial Statements 141 Variances are rounded based on actual whole-dollar amounts 1 Variances are rounded based on actual whole-dollar amounts Linked Quarter and Prior Year Period UNAUDITED Dollars in millions Balance Sheet 3Q26 2Q26 3Q25 3Q26 vs 2Q261 3Q26 vs 3Q251 Cash & Cash Equivalents $378.8 $186.8 $397.4 $192.0 ($18.6) Investment Securities 693.6 588.0 558.4 105.6 135.2 Loans Receivable, net 4,103.5 3,460.4 3,407.9 643.1 695.6 All Other Assets 371.2 247.2 223.4 124.0 147.8 Total Assets $5,547.1 $4,482.4 $4,587.1 $1,064.7 $960.0 Total Deposits $4,738.9 $3,655.2 $4,100.0 $1,083.7 $638.9 Total Borrowings 218.3 330.2 29.2 (111.9) 189.1 Other Liabilities 74.8 50.7 40.2 24.1 34.6 Total Liabilities $5,032.0 $4,036.1 $4,169.4 $995.9 $862.6 Stockholders' Equity $515.1 $446.3 $417.7 $68.8 $97.4 Total Liabilitie & Stockholders' Equity $5,547.1 $4,482.4 $4,587.1 $1,064.7 $960.0
3Q 2026 Consolidated Financial Statements 151 Variances are rounded based on actual whole-dollar amounts UNAUDITED Dollars in millions, except per share data Linked Quarter Income Statement 3Q26 2Q26 Fav/(Unfav) Var1 Total Interest Income $68.0 $53.6 $14.4 Total Interest Expense 19.3 17.7 (1.6) Net Interest Income $48.7 $35.9 $12.8 Non-Interest Income $11.4 $8.3 $3.1 Operating Expenses $36.2 $26.5 ($9.7) Merger Related Expenses 15.6 1.0 (14.6) Non-Interest Expense 51.8 27.5 (24.3) Pre-Tax, Pre-Provision Net Revenue $8.3 $16.7 ($8.4) Provision for Credit Losses $1.5 $2.8 $1.3 Pre-Tax Income $6.8 $13.9 ($7.1) Income Tax Expense $1.1 $2.9 $1.8 Reported Net Income $5.7 $11.0 ($5.3) EPS $0.31 $0.66 ($0.35)
YTD 2026 Consolidated Financial Statements 16 1 Variances are rounded based on actual whole-dollar amounts 2 Non-core expenses include merger-related expenses and unification expenses UNAUDITED Dollars in millions, except per share data YTD Comparative Income Statement YTD 3Q26 YTD 3Q25 Fav/(Unfav) Var1 Total Interest Income $175.5 $155.5 $20.0 Total Interest Expense 54.7 57.5 2.8 Net Interest Income $120.8 $98.0 $22.8 Non-Interest Income $28.3 $24.1 $4.2 Operating Expenses $88.8 $74.8 ($14.0) Non-Core Expenses2 17.4 2.3 (15.1) Non-Interest Expense 106.2 77.1 (29.1) Pre-Tax, Pre-Provision Net Revenue $42.9 $45.0 ($2.1) Provision for Credit Losses $4.8 $6.4 $1.6 Pre-Tax Income $38.1 $38.6 ($0.5) Income Tax Expense $8.0 $8.7 $0.7 Reported Net Income $30.1 $29.9 $0.2 EPS $1.75 $1.80 ($0.05)
NON-INTEREST INCOME/EXPENSE 17
3Q 2026 Non-Interest Income 18 Dollars in thousands • Positive variance in fee income driven by acquisition of ADK • Wealth Management revenue up ~$500K or 7%, over same period for prior year • 3Q impacted by market performance, AUM up 7% YoY, but down 1% for 3Q26 • Insurance revenue up ~$600K or 11%, over same period for prior year • M&A supplementing organic growth • Skene Valley Insurance agency acquisition added ~$50K in September; expected to add ~$150K for 4Q26 • Other Operating Income benefitting from ADK acquisition September 30, 2026 June 30, 2026 September 30, 2026 September 30, 2025 Fees for Other Services to Customers $ 4,243 $ 2,969 $ 9,939 $ 8,244 Fiduciary Activities/Wealth Management 2,609 2,706 8,028 7,533 Insurance Commissions 2,145 1,974 6,232 5,616 Other Operating Income 2,418 607 4,100 2,771 Total Non-Interest Income $ 11,415 $ 8,256 $ 28,299 $ 24,164 Three Months Ended Nine Months Ended
3Q 2026 Non-Interest Expense 19 • Majority of 3Q variance to 2Q driven by addition of ADK expenses (non-MRE) • Compensation increase driven by ADK head count (permanent & temporary ~$3M) • Technology & Equipment includes temporary cost of two operating systems and duplicate IT (Network) charges, etc. • Other Expenses includes $700k of CDI amortization and higher expense run-rate of the combined entities Dollars in thousands September 30, 2026 June 30, 2026 September 30, 2025 Compensation & Benefits $ 19,391 $ 15,097 $ 14,339 Occupancy Expense 2,805 2,101 1,907 Technology & Equipment 6,976 4,757 4,963 Advertising & Contributions 489 477 438 Legal & Professional 1,691 1,139 1,030 FDIC Assessment 903 441 634 All Other Expenses 3,964 2,481 2,122 Operating Expenses 36,219 26,493 25,433 Merger-Related Expenses 15,609 971 0 Total Non-Interest Expense $ 51,828 $ 27,464 $ 25,433 Three Months Ended
LOANS 20
Loans 21 Loan Portfolio ~ $4.14 billion As of September 30, 2026 • 3Q26 portfolio exit rates2 up ~2bps from 2Q26 • Average origination rate exceeded portfolio exit rate in 3Q26 • No single relationship represents > ~1.75% of total loans 1 Commercial (C&I) includes owner-occupied real estate loans 2 Loan exit rate is the point in time rate in effect at the end of the reporting period 3Portfolio exit rates and originations calculated on a weighted-average basis 4Variable-rate loans or loans that reprice within 12 months 3Q Exit Rate2 3Q Originations Consumer 6.72% 6.73% Commercial Real Estate (CRE) 5.41% 6.03% Commercial (C&I) 5.67% 6.15% Residential Real Estate (RRE) 5.00% 6.12% Total Portfolio3 5.62% 6.44% Consumer CRE and C&I • Auto loans sourced through a network of ~520 dealers in NY, VT and NH • Loans are underwritten/credit scored by Arrow • >75% of auto loan balances have FICO scores >700 • Less than 4% have FICO scores <620 • Average portfolio FICO score is 742 • ~28% new, ~72% used vehicles exposure • Portfolio turns in less than 36 months, or ~$40M per month • CRE concentration ratio of ~130% of risk-based capital • No major concentration in Office, Retail, Hotels/Motels Amount ($) % of Segment % of Total Portfolio RRE $184 million 11% 4% CRE $197 million 26% 5% C&I $105 million 18% 3% Total Portfolio $486 million N/A 12% Loan Repricing over next 12 months4 C&I1 13.7% CRE 18.3% Consumer 26.5% RRE 41.5% $1.7B C&I1 25.6% CRE 27.3% Consumer 1.0% $6M RRE 46.2% Day 1 ADK ~ $587 million (incl. ~($21M) discount) $0.6B $0.7B $1.1B $271M $150M $160M
DEPOSITS/FUNDING SOURCES 22
Deposit Balances – Excl. Brokered CDs 23 19.8% 20.1% 23.4% 24.0% 23.7% 23.9% 23.3% 24.3% 42.8% 43.5% 39.8% 38.9% 13.7% 12.5% 13.5% 12.8% 2025 2Q26 Day 1 Combined 3Q26 Time Deposits Savings Deposits Interest-Bearing Checking Noninterest-Bearing 36.4% 19.2% 26.9% 17.5% Day 1 - ADK $3.64 $3.66 $4.58 $4.74 $0.93 Dollars in billions
Deposit Analysis 24 • Addition of ADK deposits has lowered deposit exit rates • Disciplined pricing continues to offset market pressure for higher rates • 3Q26 includes negative impact of seasonal change in municipal deposit mix toward higher- costing deposits Dollars in millions Balance Exit Rate Balance Exit Rate Balance Exit Rate Demand (Non-Interest Bearing) $1,138 0.00% $736 0.00% $402 0.00% Interest Bearing Checking $1,154 0.94% $872 1.19% $282 -0.25% Savings and Money Market $1,839 2.13% $1,591 2.07% $248 0.06% Time Deposits $608 2.74% $456 2.81% $152 -0.07% Total $4,739 1.41% $3,655 1.54% $1,084 -0.13% 3Q 2026 2Q 2026 Variance
CREDIT QUALITY & PROVISION FOR CREDIT LOSSES 25
Credit Quality 26 Dollars in millions 0.18% 0.24% 0.13% 0.24% 0.30% 3Q25 4Q25 1Q26 2Q26 3Q26 Non-Performing Loans (NPL) / Gross Loans $6.3 $8.5 $4.4 $8.3 $12.5 • YTD 2026 annualized charge-offs were 14bps • Allowance for credit losses to loans is 0.99% • Allowance to NPL coverage of 329% 0.10% 0.05% 0.15% • Legacy Arrow portfolio • Acquired ADK loan portfolio • Remainder of partially charged-off commercial credit
Delinquent Loan Trends 27 Delinquent loans are defined as being greater than 30 days and less than 89 days past due and still accruing interest 0.58% 0.62% 0.76% 0.56% 0.61% 0.60% 0.60% 0.53% 0.58% 0.69% 0.84% 0.73% 0.67% 0.59% 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 3Q26 Delinquent Loans to Total Loans • 3Q delinquency rate includes acquired ADK portfolio • Overall level of loan delinquencies near lows for last three years • Expecting seasonal increase in 4Q
Allowance for Credit Losses 28 $34,322 ($3,711) $3,711 $1,131 $5,678 $41,131 4Q 2025 Net Charge-Offs Net Charge-Offs Loan Growth & Model Calculation Acquisition of ADK* 3Q 2026 Provision for Credit Losses $4.8M Dollars in thousands YTD 2026 Allowance for Credit Loss Walk • Net charge-offs include ~$1.6M for previously (2Q) reserved CRE loan • Overall ACL at 0.99% • ACL for acquired portfolio at 0.93% *Includes $1.7M purchase accounting credit mark
INVESTMENTS 29
Investment Portfolio – AFS and HTM 301 Unrealized Gain/(Loss) on HTM for informational purposes only – not reflected in OCI Book yield reflects accretion impact Book yield increased 26bps from 2Q Unrealized loss at ~5.6% (incl. HTM) – driven by rising rates/shift in interest rate environment in 3Q Duration decreased from 3.23 years to 3.17 years Dollars in thousands September 30, 2026 SBA (475) 5.01% 4.32 3.52 0 1.56 0.85 0.54 0.63 2.34% 2.50% 77 3.17 Duration 3.31 0.85 3.72 3.02 1.77 4.98 3.42 0.80 1.97 (1,778)$ 4.39% 3.69 0$ (342) Agency CMO Municipal - Local Other Total AFS US Treasuries 7.02% 6.53% 3.77% 0 (170) (39,206)$ Municipal 10,748 10,442 (306) 4.21% 2.10 485 39,400 Market Value 44,187 15,454 46,294 910 866 46,292 160 26,081 609,085$ 1,567$ 78,704$ 76,926$ 38,925 Category 24,888$ 58,205 56,691 (1,514) 4.66% 390,294 355,673 (34,621) 3.22% Unrealized Gain / (Loss)1 Book Yield 3.46% Current Book Value 44,529 Total Investments US Agencies 160 26,251 648,291$ 1,600$ Agency MBS (39,598)$ Agency MBS Agency CMO Municipal Municipal - Local Total HTM 15,141 64,258$ (33)$ (44) Expected Run-Off by EOY 2026 0 14,408 3,832 3.87 Wtd Avg Remaining Life 0.88 4.51 3.51 4,090 1,717 6,163$ 1.77 8.81 4.19 0.84 1.70 0.90 0.54 0.65 0 0 18,725$ 279$ 712,549$ 672,951$ 2.92% 4.85% 4.29% 3.82% (313) (2) (392)$ 63,866$
CAPITAL 31
Fully Diluted Tangible Book Value (TBV) 32 $25.44 ($0.69) $0.66 ($0.66) $1.55 $0.31 ($0.30) ($3.28) $23.03 2Q 2026 Net Inc. - Reported Dividends AOCI Add. Core Net Inc MRE Equity Raised Acq - GW & Intang 3Q 2026 3Q 2026 TBV / Share Walk TBV Dilution from Acquisition - $2.39 / 9.4%
Capital Position 33 1 Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report 2 Non-GAAP measure. See reconciliation in Appendix 8.93% 11.63% 12.35% 13.46% 7.82% 10.19% 13.21% 13.83% 14.98% 9.44% 4.00% 4.50% 6.00% 8.00% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% Tier 1 Leverage Ratio Common Equity Tier 1 Capital Tier 1 Risk-Based Capital Total Risk-Based Capital Tangible Common Equity² Capital Ratios – Arrow Financial Corporation1 Minimum Regulatory Capital Ratios 2Q 2026 3Q 2026
Capital Position 34 1 Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report Maintaining strong regulatory capital ratios post acquisition 8.38% 11.64% 11.64% 12.75% 9.33% 12.71% 12.71% 13.87% 4.00% 4.50% 6.00% 8.00% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% Tier 1 Leverage Ratio Common Equity Tier 1 Capital Tier 1 Risk-Based Capital Total Risk-Based Capital Capital Ratios – Arrow Bank1 Minimum Regulatory Capital Ratios 2Q 2026 3Q 2026
COMPANY PROFILE & MANAGEMENT BIOS 35
Our Profile – As of September 30, 2026 • Expanded footprint from Acquisition • $5.5 billion in assets • Approximately 725 employees • Primary service area population of more than 1.4 million 36 Insurance Offices Bank Branches 956
President and Chief Executive Officer 37 Mr. DeMarco joined the Company in 1987 as a commercial lender and since that time has served in positions of increasing responsibility within the organization. In 2012, he was named President and CEO of Saratoga National Bank, now named Arrow Bank. In 2023, he was named President and CEO of Arrow Financial Corporation and Glens Falls National Bank, now named Arrow Bank. He holds a bachelor’s degree in finance from the University of Texas at Austin. Mr. DeMarco is a graduate of the Adirondack Regional Chamber of Commerce’s Leadership Program and the Stonier Graduate School of Banking. He serves as a Director of the Company and Arrow Bank and sits on the boards of various non-profits dedicated to healthcare and economic development. David S. DeMarco President and CEO
Experienced Leadership Team 38 Penko Ivanov Senior Executive Vice President, Chief Financial Officer, Treasurer and Chief Accounting Officer Andrew J. Wise Senior Executive Vice President, Chief Risk Officer Marc Yrsha Senior Executive Vice President, Chief Banking Officer Mr. Ivanov joined the Company in 2023 with more than 30 years of experience in Financial Planning & Analysis, Controllership, SOX, Financial Reporting and Treasury. Mr. Ivanov previously served as CFO for Bankwell Financial Group, helping it almost double in size over six-plus years to $3.3 billion. He has held CFO positions at Darien Rowayton Bank and for Doral Bank’s U.S. Operations. He began his career with Ernst & Young and held accounting/ finance positions at PepsiCo, GE Capital and Bridgewater Associates. Mr. Ivanov holds an MBA and bachelor’s degree in accounting and finance from the University of South Florida. He is also Six Sigma Black Belt certified. Mr. Wise joined the Company in 2016 as Senior Vice President of Administration for Glens Falls National Bank, now named Arrow Bank. He has since been promoted to Senior Executive Vice President and Chief Risk Officer of the Company. He has more than 30 years of experience building and leading both community banks and bank-owned insurance agencies. Mr. Wise previously served as Vice President and CISO for The Adirondack Trust Company and acted as Executive Vice President, COO for Wise Insurance Brokers, Inc. He has extensive experience in designing, implementing and managing workflows and delivering operational efficiency. He holds a bachelor’s degree from Boston University’s School of Management. Mr. Yrsha joined the Company in 2015. He currently is the Chief Banking Officer and oversees the strategic direction of the Retail Banking unit, which includes retail deposits and lending, business development, consumer payments, business services, municipal banking, as well as small business and retail lending. In addition, he oversees the Wealth Management division and Marketing. Prior to joining our Company, Mr. Yrsha spent time in retail and commercial lending at large regional and community banks within the Arrow footprint. Mr. Yrsha is active in the community serving in leadership roles on a variety of boards. He is a graduate of Castleton University in Vermont and the Stonier School of Banking, with a Wharton Leadership certificate, and has completed the Adirondack Regional Chamber of Commerce’s Leadership Adirondack Program.
39 Michael Jacobs Executive Vice President, Chief Information Officer Brooke Pancoe Executive Vice President, Chief Human Resources Officer Mr. Jacobs joined the Company in 2003 as Information Systems Manager. He was later promoted to Senior Vice President and then Executive Vice President. As Chief Information Officer, Mr. Jacobs guides the Company’s strategic technology plans. He has more than 30 years of experience in the community banking industry, having previously served as Operations Manager at Cohoes Savings Bank and Item Processing Manager at Hudson River Bank and Trust. Mr. Jacobs earned a bachelor’s degree in finance from Siena College and an associate degree in business administration from Hudson Valley Community College. Ms. Pancoe joined the Company in 2018 as Director of Human Resources. In her current role as Chief Human Resources Officer, she has executive oversight of the Company’s human resource strategies, which includes organizational design and succession planning, talent acquisition and retention, performance management, professional development and compensation and benefits. Prior to joining the Company, Ms. Pancoe held various human resource management roles within the power generation and engineering services industry. Ms. Pancoe holds a bachelor’s degree in psychology from Clark University in Worcester, MA, and an MBA from the University at Albany. In addition, she maintains a certified professional human resources designation. Experienced Leadership Team
APPENDIX 40
Financial Snapshot 41 1 Non-GAAP measure. See reconciliation in Appendix Dollars in thousands, except per share amounts 2020 2021 2022 2023 2024 2025 YTD 2026 Total assets $3,688,636 $4,027,952 $3,969,509 $4,169,868 $4,306,348 $4,445,862 $5,547,054 Loans $2,595,030 $2,667,941 $2,983,207 $3,212,908 $3,394,541 $3,453,093 $4,144,587 Loan-to-deposit ratio 80.2% 75.1% 85.3% 87.1% 88.7% 87.7% 87.5% ROA 1.17% 1.28% 1.21% 0.74% 0.70% 1.00% 0.85% Efficiency ratio1 52.80% 54.16% 54.26% 68.81% 67.68% 61.97% 70.57% Net non-interest expense/avg assets 2.02% 2.00% 2.01% 2.28% 2.27% 2.34% 2.98% NIM 2.99% 2.97% 3.03% 2.65% 2.72% 3.19% 3.58% AFC Tier 1 Leverage Ratio 9.07% 9.20% 9.80% 9.84% 9.60% 9.68% 8.93% ROE 12.77% 14.09% 13.55% 8.29% 7.72% 10.66% 8.54% TBV1 per share $18.32 $20.41 $19.37 $21.06 $22.40 $24.71 $23.03 Net interest income $99,202 $110,355 $118,343 $104,832 $111,732 $133,164 $120,794 Net income $40,827 $49,857 $48,799 $30,075 $29,711 $43,953 $30,147 EPS $2.41 $2.92 $2.86 $1.77 $1.77 $2.65 $1.75
Reconciliation of Non-GAAP Financial Measures 42 Three months ended September 30, 2026 Nine months ended September 30, 2026 Interest Income (GAAP) $ 68,075 $ 175,486 Add: Tax-Equivalent adjustment (Non-GAAP) 148 404 Interest Income - Tax Equivalent (Non-GAAP) $ 68,223 $ 175,890 Net Interest Income (GAAP) $ 48,733 $ 120,794 Add: Tax-Equivalent adjustment (Non-GAAP) 148 404 Net Interest Income - Tax Equivalent (Non-GAAP) $ 48,881 $ 121,198 Average Earning Assets 5,089,406 4,510,904 Net Interest Margin (Non-GAAP) 3.81% 3.59% 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.
Reconciliation of Non-GAAP Financial Measures 43 Three months ended September 30, 2026 Nine months ended September 30, 2026 Non-Interest Expense $ 51,828 $ 106,157 Less: Intangible Asset Amortization 812 955 Net Non-Interest Expense $ 51,016 $ 105,202 Net Interest Income, Tax-Equivalent $ 48,881 $ 121,198 Non-Interest Income 11,415 28,299 Less: Net Gain (Loss) on Securities 114 414 Net Gross Income $ 60,182 $ 149,083 Efficiency Ratio 84.77% 70.57% 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).
Reconciliation of Non-GAAP Financial Measures 44 September 30, 2026 Total Stockholders' Equity (GAAP) $ 515,092 Less: Goodwill and Other Intangible assets, net 88,192 Tangible Equity (Non-GAAP) $ 426,900 Total Assets (GAAP) $ 5,547,054 Less: Goodwill and Other Intangible assets, net 88,192 Tangible Assets (Non-GAAP) $ 5,458,862 Tangible Equity to Tangible Assets (Non-GAAP) (TCE) 7.82% Period End Shares Outstanding 18,535 Tangible Book Value per Share (Non-GAAP) $ 23.03 Net Income 5,700 Return on Tangible Equity (Net Income/Tangible Equity - Annualized) 5.08% 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.
Reconciliation of Non-GAAP Financial Measures 45 Three months ended September 30, 2026 Net Income $ 5,700 Non-Core Expenses: Merger-Related Expenses 15,609 Less: Tax Benefit (3,247) Net Non-Core Expenses (Non-GAAP) 12,362 Core Net Income (Non-GAAP) $ 18,062 Net Non-Interest Expense $ 51,016 Non-Core Expenses: Merger-Related Expenses 15,609 Core Net Non-Interest Expense (Non-GAAP) $ 35,407 Core Earnings Per Share (Non-GAAP) $ 0.97 Core Return on Average Assets (Non-GAAP) 1.33% Core Efficiency Ratio (Non-GAAP) 58.83% * Quarterly ratios have been annualized. 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. 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.
THANK YOU! 46