newsreleaselogo20250101a.jpg
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, 2026December 31, 2025September 30, 2025
Interest and Dividend Income$68,075 $54,610 $53,598 
Interest Expense19,342 19,467 19,467 
Net Interest Income48,733 35,143 34,131 
Average Earning Assets(A)
5,089,406 4,302,305 4,199,115 
Average Interest-Bearing Liabilities3,729,983 3,280,856 3,193,789 
Average Yield on Earning Assets(A)
5.31 %5.04 %5.06 %
Average Cost of Interest-Bearing Liabilities2.06 2.35 2.42 
Net Interest Spread3.25 2.69 2.64 
Net Interest Margin3.80 3.24 3.22 
Net Interest Margin - FTE3.81 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,
2026202520262025
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans$58,896 $46,832 $153,203 $136,982 
Interest on Deposits at Banks1,962 2,245 4,837 5,488 
Interest and Dividends on Investment Securities:
Fully Taxable6,059 4,066 15,305 11,464 
Exempt from Federal Taxes1,158 455 2,141 1,603 
Total Interest and Dividend Income68,075 53,598 175,486 155,537 
INTEREST EXPENSE
Interest-Bearing Checking Accounts2,567 2,160 6,829 5,904 
Savings Deposits9,472 9,534 27,121 28,384 
Time Deposits over $250,0001,612 1,695 3,860 5,232 
Other Time Deposits3,089 5,859 12,829 17,181 
Borrowings2,230 — 3,249 167 
Junior Subordinated Obligations Issued to
  Unconsolidated Subsidiary Trusts		326 173 666 513 
Interest on Financing Leases46 46 138 135 
Total Interest Expense19,342 19,467 54,692 57,516 
NET INTEREST INCOME48,733 34,131 120,794 98,021 
Provision for Credit Losses1,467 815 4,842 6,428 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES47,266 33,316 115,952 91,593 
NON-INTEREST INCOME
Income From Fiduciary Activities2,609 2,600 8,028 7,533 
Fees for Other Services to Customers4,243 2,857 9,939 8,244 
Insurance Commissions2,145 1,986 6,232 5,616 
Net Gain on Securities 114 392 414 669 
Net Gain on Sales of Loans180 261 624 573 
Other Operating Income2,124 620 3,062 1,529 
Total Non-Interest Income11,415 8,716 28,299 24,164 
NON-INTEREST EXPENSE
Salaries and Employee Benefits19,391 14,339 49,410 41,980 
Occupancy Expenses, Net2,805 1,907 7,365 5,881 
Technology and Equipment Expense6,976 4,963 16,785 15,639 
FDIC Assessments903 634 1,929 1,953 
Other Operating Expense21,753 3,590 30,668 11,677 
Total Non-Interest Expense51,828 25,433 106,157 77,130 
INCOME BEFORE PROVISION FOR INCOME TAXES6,853 16,599 38,094 38,627 
Provision for Income Taxes1,153 3,774 7,947 8,687 
NET INCOME$5,700 $12,825 $30,147 $29,940 
Average Shares Outstanding:
Basic18,421 16,402 17,084 16,541 
Diluted18,462 16,406 17,119 16,543 
Per Common Share:
Basic Earnings$0.31 $0.77 $1.75 $1.80 
Diluted Earnings0.31 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, 2026December 31, 2025
ASSETS
Cash and Due From Banks$53,172 $29,132 
Interest-Earning Deposits at Banks325,600 185,051 
Investment Securities:
Available-for-Sale at Fair Value609,085 495,868 
Held-to-Maturity (Fair Value of $63,866 at September 30, 2026 and $66,569 at December 31, 2025)
64,258 66,975 
Equity Securities6,011 5,597 
Other Investments14,220 4,372 
Loans4,144,587 3,453,093 
Allowance for Credit Losses(41,131)(34,322)
Net Loans4,103,456 3,418,771 
Premises and Equipment, Net76,206 59,433 
Goodwill69,813 23,789 
Other Intangible Assets, Net18,379 1,741 
Other Assets206,854 155,133 
Total Assets$5,547,054 $4,445,862 
LIABILITIES
Noninterest-Bearing Deposits1,137,492 722,374 
Interest-Bearing Checking Accounts1,154,313 862,192 
Savings Deposits1,839,409 1,557,638 
Time Deposits over $250,000229,694 155,802 
Other Time Deposits377,989 641,463 
Total Deposits4,738,897 3,939,469 
Borrowings185,190 4,265 
Junior Subordinated Obligations Issued to Unconsolidated
  Subsidiary Trusts		28,248 20,000 
Finance Leases4,866 4,929 
Other Liabilities74,761 45,347 
Total Liabilities5,031,962 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 Capital468,436 414,506 
Retained Earnings116,948 102,271 
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’ Equity515,092 431,852 
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 Ended9/30/20266/30/20263/31/202612/31/20259/30/2025
Net Income$5,700 $10,962 $13,485 $14,013 $12,825 
Share and Per Share Data:
Period End Shares Outstanding18,535 16,545 16,527 16,445 16,438 
Basic Average Shares Outstanding18,421 16,428 16,382 16,390 16,402 
Diluted Average Shares Outstanding18,462 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 Share0.31 0.66 0.82 0.85 0.77 
Cash Dividend Per Share0.30 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 Securities770,629 614,771 598,817 596,994 574,080 
  Loans4,107,394 3,466,810 3,440,505 3,444,505 3,424,784 
  Deposits4,566,546 3,788,961 3,928,761 4,002,221 3,913,721 
  Other Borrowed Funds267,225 149,307 29,181 29,203 30,539 
  Stockholders' Equity530,861 445,887 438,846 425,042 413,058 
  Total Assets5,407,135 4,425,821 4,439,833 4,499,195 4,399,815 
Return on Average Assets, annualized0.42 %0.99 %1.23 %1.24 %1.16 %
Return on Average Equity, annualized4.26 %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 Liabilities3,729,983 3,222,939 3,244,709 3,280,856 3,193,789 
Interest Income68,075 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 Expense19,342 17,686 17,664 19,467 19,467 
Net Interest Income48,733 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, annualized3.80 %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 Amortization812 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 Income11,415 8,255 8,628 8,268 8,716 
Less: Net Gain (Loss) on Securities114 155 145 (127)392 
Net Gross Income$60,182 $44,165 $44,736 $43,652 $42,576 
Efficiency Ratio84.77 %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, net88,192 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 Ratio8.93 %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 Ratio12.35 %13.83 %13.93 %13.64 %13.71 %
Total Risk-Based Capital Ratio13.46 %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.
9/30/20266/30/20263/31/202612/31/20259/30/2025
Total Stockholders' Equity (GAAP)$515,092 $446,306 $440,143 $431,852 $417,687 
Less: Goodwill and Other Intangible assets, net88,192 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 Outstanding18,535 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 Income5,700 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.
9/30/20266/30/20263/31/202612/31/20259/30/2025
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.
9/30/20266/30/20263/31/202612/31/20259/30/2025
Total Risk Weighted Assets$3,863,576 $3,253,881 $3,180,782 $3,182,240 $3,095,225 
Common Equity Tier 1 Capital449,211 429,971 423,139 414,050 404,426 
Common Equity Tier 1 Ratio11.63 %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.

9/30/20266/30/20263/31/202612/31/20259/30/2025
Net Income$5,700 $10,962 $13,485 $14,013 $12,825 
Non-Core Expenses:
Merger-Related Expenses15,609 971 790 — — 
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 Expenses15,609 971 790 — — 
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, 2026September 30, 2025
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks$211,383 $1,962 3.68 %$200,251 $2,245 4.45 %
Investment Securities:
Fully Taxable695,702 6,059 3.46 509,599 4,066 3.17 
Exempt from Federal Taxes74,927 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 Banks40,281 33,984 
Other Assets319,050 200,859 
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 Deposits1,819,689 9,472 2.07 1,492,204 9,534 2.53 
Time Deposits over $250,000235,470 1,612 2.72 177,826 1,695 3.78 
Other Time Deposits377,104 3,089 3.25 644,598 5,859 3.61 
Total Interest-Bearing Deposits3,462,758 16,740 1.92 3,163,250 19,248 2.41 
Borrowings234,103 2,230 3.78 5,583 — — 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts28,248 326 4.58 20,000 173 3.43 
Finance Leases4,874 46 3.74 4,956 46 3.68 
Total Interest-Bearing Liabilities3,729,983 19,342 2.06 3,193,789 19,467 2.42 
Noninterest-Bearing Deposits1,103,788 750,471 
Other Liabilities42,503 42,497 
Total Liabilities4,876,274 3,986,757 
Stockholders’ Equity530,861 413,058 
Total Liabilities and Stockholders’ Equity$5,407,135 $4,399,815 
Net Interest Income$48,733 $34,131 
Net Interest Spread3.25 %2.64 %
Net Interest Margin3.80 %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, 2026June 30, 2026
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks$211,383 $1,962 3.68 %$129,628 $1,200 3.71 %
Investment Securities:
Fully Taxable695,702 6,059 3.46 548,084 4,717 3.45 
Exempt from Federal Taxes74,927 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 Banks40,281 29,874 
Other Assets319,050 219,043 
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 Deposits1,819,689 9,472 2.07 1,596,055 8,933 2.24 
Time Deposits over $250,000235,470 1,612 2.72 139,256 1,052 3.03 
Other Time Deposits377,104 3,089 3.25 510,936 4,304 3.38 
Total Interest-Bearing Deposits3,462,758 16,740 1.92 3,073,632 16,451 2.15 
Borrowings234,103 2,230 3.78 124,411 1,019 3.29 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts28,248 326 4.58 20,000 171 3.43 
Finance Leases4,874 46 3.74 4,896 45 3.69 
Total Interest-Bearing Liabilities3,729,983 19,342 2.06 3,222,939 17,686 2.20 
Noninterest-Bearing Deposits1,103,788 715,329 
Other Liabilities42,503 41,666 
Total Liabilities4,876,274 3,979,934 
Stockholders’ Equity530,861 445,887 
Total Liabilities and Stockholders’ Equity$5,407,135 $4,425,821 
Net Interest Income$48,733 $35,931 
Net Interest Spread3.25 %2.91 %
Net Interest Margin3.80 %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, 2026September 30, 2025
InterestRateInterestRate
AverageIncome/Earned/AverageIncome/Earned/
BalanceExpensePaidBalanceExpensePaid
Interest-Earning Deposits at Banks$174,857 $4,837 3.70 %$164,114 $5,488 4.47 %
Investment Securities:
Fully Taxable593,943 15,305 3.45 502,075 11,464 3.05 
Exempt from Federal Taxes68,091 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 Banks33,506 31,598 
Other Assets251,971 193,174 
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 Deposits1,663,027 27,121 2.18 1,500,944 28,384 2.53 
Time Deposits over $250,000174,373 3,860 2.96 181,291 5,232 3.86 
Other Time Deposits507,870 12,829 3.38 625,557 17,181 3.67 
Total Interest-Bearing Deposits3,251,543 50,639 2.08 3,152,566 56,701 2.40 
 Borrowings121,768 3,249 3.57 12,455 167 1.79 
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts22,780 666 3.91 20,000 513 3.43 
Finance Leases4,895 138 3.77 4,977 135 3.63 
Total Interest-Bearing Liabilities3,400,986 54,692 2.15 3,189,998 57,516 2.41 
Noninterest-Bearing Deposits845,547 710,404 
Other Liabilities40,859 44,203 
Total Liabilities4,287,392 3,944,605 
Stockholders’ Equity472,203 408,026 
Total Liabilities and Stockholders’ Equity$4,759,595 $4,352,631 
Net Interest Income$120,794 $98,021 
Net Interest Spread3.05 %2.59 %
Net Interest Margin3.58 %3.15 %
(1) Includes Nonaccrual Loans.










13


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

Quarter Ended:9/30/202612/31/2025
Loan Portfolio
Commercial Loans$256,574 $165,729 
Commercial Real Estate Loans1,068,892 818,259 
  Subtotal Commercial Loan Portfolio1,325,466 983,988 
Consumer Loans1,100,061 1,076,007 
Residential Real Estate Loans1,719,060 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 Bank5,678 — 
Loans Charged-off(3,093)(1,477)
Less Recoveries of Loans Previously Charged-off896 777 
Net Loans Charged-off(2,197)(700)
Provision for Credit Losses1,467 846 
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 Accruing2,382 2,040 
Loans Restructured and in Compliance with Modified Terms— — 
Total Nonperforming Loans12,499 8,455 
Repossessed Assets231 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 Loans0.99 %0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans329.07 %405.94 %
Nonperforming Loans to Period-End Loans0.30 %0.24 %
Nonperforming Assets to Period-End Assets0.23 %0.20 %
Year-to-Date Period Ended:9/30/202612/31/2025
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Year$34,322 $33,598 
Acquisition of Adirondack Bank5,678 — 
Loans Charged-off(6,437)(9,554)
Less Recoveries of Loans Previously Charged-off2,726 3,004 
Net Loans Charged-off(3,711)(6,550)
Provision for Credit Losses4,842 7,274 
Allowance for Credit Losses, End of Period$41,131 $34,322 
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Annualized0.14 %0.19 %
Provision for Credit Losses to Average Loans, Annualized0.18 %0.21 %
14