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

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

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

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

Arrow President and CEO David S. DeMarco:

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

Acquisition Highlights

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

Third-Quarter Highlights and Key Metrics

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

Income Statement

• Net Income: Net income for the third quarter of 2026 was $5.7 million, decreasing from $11.0 million in the second quarter of 2026.
  • Compared to the prior quarter, net income decreased primarily due to $15.6 million of MRE as well as other non-interest expenses due to the Acquisition, as expected cost savings are not yet fully realized.

• Net Interest Income: Net interest income for the third quarter of 2026 was $48.7 million, increasing 35.6% from the second quarter of 2026.
  • Total interest and dividend income was $68.1 million for the third quarter of 2026, an increase from $53.6 million in the second quarter of 2026. The increase was attributable to higher average earning assets driven by the Acquisition. Interest expense for the third quarter of 2026 was $19.3 million, an increase from $17.7 million in the second quarter of 2026 as the Acquisition generated an increase in overall deposit balances while simultaneously decreasing the cost of funds.

• Net Interest Margin: Net interest margin, on an FTE basis, for the third quarter of 2026 increased to 3.81%, compared to 3.43% for the second quarter of 2026. The increase in net interest margin compared to the second quarter of 2026 was primarily the result of the Acquisition, which included lower costing deposit balances, while loan yields continued to expand. Net interest margin also benefitted by 14bps, comprised of 9bps related to the net accretion of purchase accounting adjustments and 5bps on the accretion of the acquired investment portfolio.

	Three Months Ended
	(Dollars in Thousands)
	September 30, 2026		December 31, 2025		September 30, 2025
Interest and Dividend Income	$ 68,075		$ 54,610		$ 53,598
Interest Expense	19,342		19,467		19,467
Net Interest Income	48,733		35,143		34,131
Average Earning Assets(A)	5,089,406		4,302,305		4,199,115
Average Interest-Bearing Liabilities	3,729,983		3,280,856		3,193,789
Average Yield on Earning Assets(A)	5.31 %		5.04 %		5.06 %
Average Cost of Interest-Bearing Liabilities	2.06		2.35		2.42
Net Interest Spread	3.25		2.69		2.64
Net Interest Margin	3.80		3.24		3.22
Net Interest Margin - FTE	3.81		3.25		3.24
(A) Includes Nonaccrual Loans.

• Provision for Credit Losses: For the third quarter of 2026, the provision for credit losses was $1.5 million compared to $2.8 million in the second quarter of 2026, which included a $1.6 million specific reserve related to a non-performing commercial loan that was subsequently charged-off in the third quarter of 2026. The third quarter provision was driven by loan growth and net charge-offs.
  
  
• Non-Interest Income: Non-interest income for the three months ended September 30, 2026, was $11.4 million, an increase from $8.3 million in the second quarter of 2026. The increase was the result of fee income for services to customers from the Acquisition as well as an increase in insurance commissions. Insurance commissions also included one month of revenue from the Skene Valley Agency, Inc. acquired during the quarter. Other operating income included increased bank-owned life insurance income and a gain on the termination of a portion of the cash flow hedges, as the Acquisition enabled a change to Arrow's asset-liability management strategy.
  
  
• Non-Interest Expense: Non-interest expense for the third quarter of 2026 was $51.8 million, an increase from $27.5 million in the second quarter of 2026. The third quarter of 2026 included approximately $15.6 million of MRE versus $1.0 million in the second quarter of 2026. In addition, other operating expense included $745 thousand in core deposit intangible amortization for the quarter related to the Acquisition.
  
  
• Provision for Income Taxes: The provision for income taxes and effective tax rate were $1.2 million and 16.8%, respectively for the third quarter of 2026, and $2.9 million and 21.1%, respectively for the second quarter of 2026. The effective tax rate for the third quarter of 2026 reflected the impact of closing the Acquisition.

Balance Sheet

• Total Assets: Total assets were $5.5 billion at September 30, 2026, an increase of $1.1 billion, or 23.8%, as compared to June 30, 2026. For the third quarter of 2026, the overall change in assets was primarily driven by the Acquisition, as well as an increase in cash balances.
  
  
• Investments: Total investments were $693.6 million as of September 30, 2026, an increase of $105.6 million, or 18.0%, compared to June 30, 2026. The increase from June 30, 2026 was driven primarily by the Acquisition, partially offset by the subsequent sale of $73 million of investments as well as additional paydowns and maturities. There were no material credit quality issues related to the investment portfolio.
  
  
• Loans: Total loans were $4.1 billion as of September 30, 2026. Loans outstanding increased in the third quarter of 2026 by $648.0 million (net of approximately $21 million of amortizing discount), driven by the Acquisition and approximately $60 million in organic growth. Please see the loan detail included in the Consolidated Financial Information table on page 14.
  
  
• Allowance for Credit Losses: The allowance for credit losses was $41.1 million as of September 30, 2026, which represented 0.99% of loans outstanding, as compared to $36.2 million, or 1.03% of loans outstanding, at June 30, 2026. The increase in the allowance was primarily the result of $5.7 million of additional reserve for the newly acquired loans. Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.21% for the three-month period ended September 30, 2026, as compared to 0.08% for the three-month period ended June 30, 2026. Nonperforming assets were $12.7 million as of September 30, 2026, representing 0.23% of period-end assets, an increase from $8.7 million, or 0.19%, at June 30, 2026.
  
  
• Deposits: At September 30, 2026, deposit balances were $4.7 billion, an increase of $1.1 billion from June 30, 2026. The change from June 30, 2026 was primarily attributable to the acquisition as well as the seasonal inflow of municipal deposits. Please refer to page 7 for further details related to deposits.
  
  
• Capital: Total stockholders' equity was $515.1 million at September 30, 2026, an increase of $68.8 million, or 15.4%, from June 30, 2026. The increase from June 30, 2026 was primarily attributable to the issuance of 1.98 million shares of common stock with a value of approximately $81 million in connection with the Acquisition as well as net income of $5.7 million offset by other comprehensive loss of $12.9 million and dividends of $5.6 million. Arrow's regulatory capital ratios remain strong. As of September 30, 2026, Arrow's Common Equity Tier 1 Capital Ratio was 11.63% and Total Risk-Based Capital Ratio was 13.46%. The capital ratios of Arrow and its subsidiary bank continued to exceed the "well capitalized" regulatory standards. Regulatory capital ratios are preliminary, subject to finalization as part of the current quarter Call Report.

Additional Commentary

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

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

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

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

1	EPS and ROA excluding merger-related expenses are non-GAAP measures. See reconciliation in Note 5 to the Selected Quarterly Information
2	FTE Net interest margin is a non-GAAP measure. See reconciliation on Note 2 to the Selected Quarterly Information
3	Retail deposits exclude wholesale funding sources

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts - Unaudited)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2026		2025		2026		2025
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans		$ 58,896		$ 46,832		$ 153,203		$ 136,982
Interest on Deposits at Banks		1,962		2,245		4,837		5,488
Interest and Dividends on Investment Securities:
Fully Taxable		6,059		4,066		15,305		11,464
Exempt from Federal Taxes		1,158		455		2,141		1,603
Total Interest and Dividend Income		68,075		53,598		175,486		155,537
INTEREST EXPENSE
Interest-Bearing Checking Accounts		2,567		2,160		6,829		5,904
Savings Deposits		9,472		9,534		27,121		28,384
Time Deposits over $250,000		1,612		1,695		3,860		5,232
Other Time Deposits		3,089		5,859		12,829		17,181
Borrowings		2,230		-		3,249		167
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts		326		173		666		513
Interest on Financing Leases		46		46		138		135
Total Interest Expense		19,342		19,467		54,692		57,516
NET INTEREST INCOME		48,733		34,131		120,794		98,021
Provision for Credit Losses		1,467		815		4,842		6,428
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		47,266		33,316		115,952		91,593
NON-INTEREST INCOME
Income From Fiduciary Activities		2,609		2,600		8,028		7,533
Fees for Other Services to Customers		4,243		2,857		9,939		8,244
Insurance Commissions		2,145		1,986		6,232		5,616
Net Gain on Securities		114		392		414		669
Net Gain on Sales of Loans		180		261		624		573
Other Operating Income		2,124		620		3,062		1,529
Total Non-Interest Income		11,415		8,716		28,299		24,164
NON-INTEREST EXPENSE
Salaries and Employee Benefits		19,391		14,339		49,410		41,980
Occupancy Expenses, Net		2,805		1,907		7,365		5,881
Technology and Equipment Expense		6,976		4,963		16,785		15,639
FDIC Assessments		903		634		1,929		1,953
Other Operating Expense		21,753		3,590		30,668		11,677
Total Non-Interest Expense		51,828		25,433		106,157		77,130
INCOME BEFORE PROVISION FOR INCOME TAXES		6,853		16,599		38,094		38,627
Provision for Income Taxes		1,153		3,774		7,947		8,687
NET INCOME		$ 5,700		$ 12,825		$ 30,147		$ 29,940
Average Shares Outstanding:
Basic		18,421		16,402		17,084		16,541
Diluted		18,462		16,406		17,119		16,543
Per Common Share:
Basic Earnings		$ 0.31		$ 0.77		$ 1.75		$ 1.80
Diluted Earnings		0.31		0.77		1.75		1.80

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts - Unaudited)
	September 30, 2026		December 31, 2025
ASSETS
Cash and Due From Banks	$ 53,172		$ 29,132
Interest-Earning Deposits at Banks	325,600		185,051
Investment Securities:
Available-for-Sale at Fair Value	609,085		495,868
Held-to-Maturity (Fair Value of $63,866 at September 30, 2026 and $66,569 at December 31, 2025)	64,258		66,975
Equity Securities	6,011		5,597
Other Investments	14,220		4,372
Loans	4,144,587		3,453,093
Allowance for Credit Losses	(41,131)		(34,322)
Net Loans	4,103,456		3,418,771
Premises and Equipment, Net	76,206		59,433
Goodwill	69,813		23,789
Other Intangible Assets, Net	18,379		1,741
Other Assets	206,854		155,133
Total Assets	$ 5,547,054		$ 4,445,862
LIABILITIES
Noninterest-Bearing Deposits	1,137,492		722,374
Interest-Bearing Checking Accounts	1,154,313		862,192
Savings Deposits	1,839,409		1,557,638
Time Deposits over $250,000	229,694		155,802
Other Time Deposits	377,989		641,463
Total Deposits	4,738,897		3,939,469
Borrowings	185,190		4,265
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	28,248		20,000
Finance Leases	4,866		4,929
Other Liabilities	74,761		45,347
Total Liabilities	5,031,962		4,014,010
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value; 1,000,000 Shares Authorized at September 30, 2026 and December 31, 2025 (none issued)	-		-
Common Stock, $1 Par Value: 30,000,000 Shares Authorized; 22,066,559 Shares Issued; 18,535,102 and 16,445,342 Shares Outstanding at September 30, 2026 and December 31, 2025	22,067		22,067
Additional Paid-in Capital	468,436		414,506
Retained Earnings	116,948		102,271
Accumulated Other Comprehensive Loss	(18,324)		(4,037)
Treasury Stock, at Cost (3,531,457 Shares at September 30, 2026 and 5,621,217 Shares at December 31, 2025)	(74,035)		(102,955)
Total Stockholders' Equity	515,092		431,852
Total Liabilities and Stockholders' Equity	$ 5,547,054		$ 4,445,862

Arrow Financial Corporation Selected Quarterly Information (Dollars In Thousands, Except Per Share Amounts - Unaudited)
Quarter Ended	9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
Net Income	$ 5,700		$ 10,962		$ 13,485		$ 14,013		$ 12,825
Share and Per Share Data:
Period End Shares Outstanding	18,535		16,545		16,527		16,445		16,438
Basic Average Shares Outstanding	18,421		16,428		16,382		16,390		16,402
Diluted Average Shares Outstanding	18,462		16,467		16,403		16,413		16,406
Basic Earnings Per Share	$ 0.31		$ 0.66		$ 0.82		$ 0.85		$ 0.77
Diluted Earnings Per Share	0.31		0.66		0.82		0.85		0.77
Cash Dividend Per Share	0.30		0.30		0.30		0.29		0.29
Selected Quarterly Average Balances:
Interest-Earning Deposits at Banks	$ 211,383		$ 129,628		$ 183,252		$ 260,806		$ 200,251
Investment Securities	770,629		614,771		598,817		596,994		574,080
Loans	4,107,394		3,466,810		3,440,505		3,444,505		3,424,784
Deposits	4,566,546		3,788,961		3,928,761		4,002,221		3,913,721
Other Borrowed Funds	267,225		149,307		29,181		29,203		30,539
Stockholders' Equity	530,861		445,887		438,846		425,042		413,058
Total Assets	5,407,135		4,425,821		4,439,833		4,499,195		4,399,815
Return on Average Assets, annualized	0.42 %		0.99 %		1.23 %		1.24 %		1.16 %
Return on Average Equity, annualized	4.26 %		9.86 %		12.46 %		13.08 %		12.32 %
Return on Average Tangible Equity, annualized 1	5.08 %		10.46 %		13.23 %		13.92 %		13.13 %
Average Earning Assets	$ 5,089,406		$ 4,211,209		$ 4,222,574		$ 4,302,305		$ 4,199,115
Average Paying Liabilities	3,729,983		3,222,939		3,244,709		3,280,856		3,193,789
Interest Income	68,075		53,617		53,794		54,610		53,598
Tax-Equivalent Adjustment 2	148		133		123		114		121
Interest Income, Tax-Equivalent 2	68,223		53,750		53,917		54,724		53,719
Interest Expense	19,342		17,686		17,664		19,467		19,467
Net Interest Income	48,733		35,931		36,130		35,143		34,131
Net Interest Income, Tax-Equivalent 2	48,881		36,064		36,253		35,258		34,252
Net Interest Margin, annualized	3.80 %		3.42 %		3.47 %		3.24 %		3.22 %
Net Interest Margin, Tax-Equivalent, annualized 2	3.81 %		3.43 %		3.48 %		3.25 %		3.24 %
Efficiency Ratio Calculation: 3
Non-Interest Expense	$ 51,828		$ 27,464		$ 26,865		$ 25,804		$ 25,433
Less: Intangible Asset Amortization	812		71		72		74		76
Net Non-Interest Expense	$ 51,016		$ 27,393		$ 26,793		$ 25,730		$ 25,357
Net Interest Income, Tax-Equivalent	$ 48,881		$ 36,064		$ 36,253		$ 35,257		$ 34,252
Non-Interest Income	11,415		8,255		8,628		8,268		8,716
Less: Net Gain (Loss) on Securities	114		155		145		(127)		392
Net Gross Income	$ 60,182		$ 44,165		$ 44,736		$ 43,652		$ 42,576
Efficiency Ratio	84.77 %		62.02 %		59.89 %		58.94 %		59.56 %
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)	$ 515,092		$ 446,306		$ 440,143		$ 431,852		$ 417,687
Book Value per Share	27.79		26.98		26.63		26.26		25.41
Goodwill and Other Intangible Assets, net	88,192		25,401		25,481		25,530		25,594
Tangible Book Value per Share 1	23.03		25.44		25.09		24.71		23.85
Capital Ratios:4
Tier 1 Leverage Ratio	8.93 %		10.19 %		10.02 %		9.68 %		9.66 %
Common Equity Tier 1 Capital Ratio	11.63 %		13.21 %		13.30 %		13.01 %		13.07 %
Tier 1 Risk-Based Capital Ratio	12.35 %		13.83 %		13.93 %		13.64 %		13.71 %
Total Risk-Based Capital Ratio	13.46 %		14.98 %		15.04 %		14.76 %		14.86 %

	Arrow Financial Corporation
	Selected Quarterly Information
	(Dollars In Thousands, Except Per Share Amounts - Unaudited)
	Footnotes:
	1.	Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return on Tangible Equity exclude goodwill and other intangible assets, net from total equity. These are non-GAAP financial measures, which Arrow believes provide investors with information that is useful in understanding its financial performance.
			9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
		Total Stockholders' Equity (GAAP)	$ 515,092		$ 446,306		$ 440,143		$ 431,852		$ 417,687
		Less: Goodwill and Other Intangible assets, net	88,192		25,401		25,481		25,530		25,594
		Tangible Equity (Non-GAAP)	$ 426,900		$ 420,905		$ 414,662		$ 406,322		$ 392,093
		Period End Shares Outstanding	18,535		16,545		16,527		16,445		16,438
		Tangible Book Value per Share (Non-GAAP)	$ 23.03		$ 25.44		$ 25.09		$ 24.71		$ 23.85
		Net Income	5,700		10,962		13,485		14,013		12,825
		Return on Tangible Equity (Net Income/Tangible Equity - Annualized)	5.08 %		10.46 %		13.23 %		13.92 %		13.13 %
	2.	Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure, which Arrow believes provides investors with information that is useful in understanding its financial performance.
			9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
		Interest Income (GAAP)	$ 68,075		$ 53,617		$ 53,794		$ 54,610		$ 53,598
		Add: Tax-Equivalent adjustment (Non-GAAP)	148		133		123		114		121
		Interest Income - Tax Equivalent (Non-GAAP)	$ 68,223		$ 53,750		$ 53,917		$ 54,724		$ 53,719
		Net Interest Income (GAAP)	$ 48,733		$ 35,931		$ 36,130		$ 35,143		$ 34,131
		Add: Tax-Equivalent adjustment (Non-GAAP)	148		133		123		114		121
		Net Interest Income - Tax Equivalent (Non-GAAP)	$ 48,881		$ 36,064		$ 36,253		$ 35,257		$ 34,252
		Average Earning Assets	$ 5,089,406		$ 4,211,209		$ 4,222,574		$ 4,302,305		$ 4,199,115
		Net Interest Margin (Non-GAAP)*	3.81 %		3.43 %		3.48 %		3.25 %		3.24 %
	3.	Non-GAAP Financial Measure Reconciliation: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. Arrow believes the efficiency ratio provides investors with information that is useful in understanding its financial performance. Arrow defines efficiency ratio as the ratio of non-interest expense to net gross income (which equals tax-equivalent net interest income plus non-interest income, as adjusted).
	4.	For the current quarter, all of the regulatory capital ratios as well as the Total Risk-Weighted Assets are calculated in accordance with bank regulatory capital rules. The September 30, 2026 CET1 ratio listed in the tables (i.e., 11.63%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%). Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report.
			9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
		Total Risk Weighted Assets	$ 3,863,576		$ 3,253,881		$ 3,180,782		$ 3,182,240		$ 3,095,225
		Common Equity Tier 1 Capital	449,211		429,971		423,139		414,050		404,426
		Common Equity Tier 1 Ratio	11.63 %		13.21 %		13.30 %		13.01 %		13.07 %
	5.	Non-GAAP Financial Measure Reconciliation: Net Income and Net Non-Interest Expense adjusted for non-core expenses. Non-core expenses include merger-related expenses, which are related to the announced acquisition of Adirondack Bancorp, Inc., and unification expenses, which are related to the system conversion and operational merger of the Company's two banking subsidiaries during the year ended December 31, 2025. EPS, efficiency ratio, and ROA are presented on an adjusted basis to reflect these exclusions. In the third quarter of 2026, Arrow issued approximately 1.98 million shares of common stock. These are non-GAAP financial measures, which Arrow believes provides investors with information that is useful in understanding its financial performance.
			9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
		Net Income	$ 5,700		$ 10,962		$ 13,485		$ 14,013		$ 12,825
		Non-Core Expenses:
		Merger-Related Expenses	15,609		971		790		-		-
		Unification Expenses	-		-		-		-		543
		Less: Tax Benefit	(3,247)		(214)		(174)		-		(119)
		Net Non-Core Expenses (Non-GAAP)	12,362		757		616		-		424
		Core Net Income (Non-GAAP)	$ 18,062		$ 11,719		$ 14,101		$ 14,013		$ 13,249
		Net Non-Interest Expense	$ 51,016		$ 27,393		$ 26,793		$ 25,730		$ 25,357
		Non-Core Expenses:
		Merger-Related Expenses	15,609		971		790		-		-
		Unification Expenses	-		-		-		-		543
		Core Net Non-Interest Expense (Non-GAAP)	$ 35,407		$ 26,422		$ 26,003		$ 25,730		$ 24,814
		Core Earnings Per Share (Non-GAAP)	$ 0.97		$ 0.71		$ 0.85		$ 0.85		$ 0.80
		Core Return on Average Assets (Non-GAAP)	1.33 %		1.06 %		1.29 %		1.24 %		1.20 %
		Core Efficiency Ratio (Non-GAAP)	58.83 %		59.83 %		58.13 %		58.94 %		58.28 %
		* Quarterly ratios have been annualized.

Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited)
Quarter Ended:		September 30, 2026						September 30, 2025
				Interest		Rate				Interest		Rate
		Average		Income/		Earned/		Average		Income/		Earned/
		Balance		Expense		Paid		Balance		Expense		Paid
Interest-Earning Deposits at Banks		$ 211,383		$ 1,962		3.68 %		$ 200,251		$ 2,245		4.45 %
Investment Securities:
Fully Taxable		695,702		6,059		3.46		509,599		4,066		3.17
Exempt from Federal Taxes		74,927		1,158		6.13		64,481		455		2.80
Loans (1)		4,107,394		58,896		5.69		3,424,784		46,832		5.43
Total Earning Assets (1)		5,089,406		68,075		5.31		4,199,115		53,598		5.06
Allowance for Credit Losses		(41,602)						(34,143)
Cash and Due From Banks		40,281						33,984
Other Assets		319,050						200,859
Total Assets		$ 5,407,135						$ 4,399,815
Deposits:
Interest-Bearing Checking Accounts		$ 1,030,495		2,567		0.99		$ 848,622		2,160		1.01
Savings Deposits		1,819,689		9,472		2.07		1,492,204		9,534		2.53
Time Deposits over $250,000		235,470		1,612		2.72		177,826		1,695		3.78
Other Time Deposits		377,104		3,089		3.25		644,598		5,859		3.61
Total Interest-Bearing Deposits		3,462,758		16,740		1.92		3,163,250		19,248		2.41
Borrowings		234,103		2,230		3.78		5,583		-		-
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts		28,248		326		4.58		20,000		173		3.43
Finance Leases		4,874		46		3.74		4,956		46		3.68
Total Interest-Bearing Liabilities		3,729,983		19,342		2.06		3,193,789		19,467		2.42
Noninterest-Bearing Deposits		1,103,788						750,471
Other Liabilities		42,503						42,497
Total Liabilities		4,876,274						3,986,757
Stockholders' Equity		530,861						413,058
Total Liabilities and Stockholders' Equity		$ 5,407,135						$ 4,399,815
Net Interest Income				$ 48,733						$ 34,131
Net Interest Spread						3.25 %						2.64 %
Net Interest Margin						3.80 %						3.22 %

(1) Includes Nonaccrual Loans.

Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited)
Quarter Ended:		September 30, 2026						June 30, 2026
				Interest		Rate				Interest		Rate
		Average		Income/		Earned/		Average		Income/		Earned/
		Balance		Expense		Paid		Balance		Expense		Paid
Interest-Earning Deposits at Banks		$ 211,383		$ 1,962		3.68 %		$ 129,628		$ 1,200		3.71 %
Investment Securities:
Fully Taxable		695,702		6,059		3.46		548,084		4,717		3.45
Exempt from Federal Taxes		74,927		1,158		6.13		66,687		519		3.12
Loans (1)		4,107,394		58,896		5.69		3,466,810		47,181		5.46
Total Earning Assets (1)		5,089,406		68,075		5.31		4,211,209		53,617		5.11
Allowance for Credit Losses		(41,602)						(34,305)
Cash and Due From Banks		40,281						29,874
Other Assets		319,050						219,043
Total Assets		$ 5,407,135						$ 4,425,821
Deposits:
Interest-Bearing Checking Accounts		$ 1,030,495		2,567		0.99		$ 827,385		2,162		1.05
Savings Deposits		1,819,689		9,472		2.07		1,596,055		8,933		2.24
Time Deposits over $250,000		235,470		1,612		2.72		139,256		1,052		3.03
Other Time Deposits		377,104		3,089		3.25		510,936		4,304		3.38
Total Interest-Bearing Deposits		3,462,758		16,740		1.92		3,073,632		16,451		2.15
Borrowings		234,103		2,230		3.78		124,411		1,019		3.29
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts		28,248		326		4.58		20,000		171		3.43
Finance Leases		4,874		46		3.74		4,896		45		3.69
Total Interest-Bearing Liabilities		3,729,983		19,342		2.06		3,222,939		17,686		2.20
Noninterest-Bearing Deposits		1,103,788						715,329
Other Liabilities		42,503						41,666
Total Liabilities		4,876,274						3,979,934
Stockholders' Equity		530,861						445,887
Total Liabilities and Stockholders' Equity		$ 5,407,135						$ 4,425,821
Net Interest Income				$ 48,733						$ 35,931
Net Interest Spread						3.25 %						2.91 %
Net Interest Margin						3.80 %						3.42 %

	(1) Includes Nonaccrual Loans.

Arrow Financial Corporation Average Consolidated Balance Sheets and Net Interest Income Analysis (Dollars in Thousands - Unaudited)
Year to Date Period Ended:		September 30, 2026						September 30, 2025
				Interest		Rate				Interest		Rate
		Average		Income/		Earned/		Average		Income/		Earned/
		Balance		Expense		Paid		Balance		Expense		Paid
Interest-Earning Deposits at Banks		$ 174,857		$ 4,837		3.70 %		$ 164,114		$ 5,488		4.47 %
Investment Securities:
Fully Taxable		593,943		15,305		3.45		502,075		11,464		3.05
Exempt from Federal Taxes		68,091		2,141		4.20		80,628		1,603		2.66
Loans (1)		3,674,013		153,203		5.58		3,415,401		136,982		5.36
Total Earning Assets (1)		4,510,904		175,486		5.20		4,162,218		155,537		5.00
Allowance for Credit Losses		(36,786)						(34,359)
Cash and Due From Banks		33,506						31,598
Other Assets		251,971						193,174
Total Assets		$ 4,759,595						$ 4,352,631
Deposits:
Interest-Bearing Checking Accounts		$ 906,273		6,829		1.01		$ 844,774		5,904		0.93
Savings Deposits		1,663,027		27,121		2.18		1,500,944		28,384		2.53
Time Deposits over $250,000		174,373		3,860		2.96		181,291		5,232		3.86
Other Time Deposits		507,870		12,829		3.38		625,557		17,181		3.67
Total Interest-Bearing Deposits		3,251,543		50,639		2.08		3,152,566		56,701		2.40
Borrowings		121,768		3,249		3.57		12,455		167		1.79
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts		22,780		666		3.91		20,000		513		3.43
Finance Leases		4,895		138		3.77		4,977		135		3.63
Total Interest-Bearing Liabilities		3,400,986		54,692		2.15		3,189,998		57,516		2.41
Noninterest-Bearing Deposits		845,547						710,404
Other Liabilities		40,859						44,203
Total Liabilities		4,287,392						3,944,605
Stockholders' Equity		472,203						408,026
Total Liabilities and Stockholders' Equity		$ 4,759,595						$ 4,352,631
Net Interest Income				$ 120,794						$ 98,021
Net Interest Spread						3.05 %						2.59 %
Net Interest Margin						3.58 %						3.15 %
(1) Includes Nonaccrual Loans.

Arrow Financial Corporation Consolidated Financial Information (Dollars in Thousands - Unaudited)
Quarter Ended:	9/30/2026		12/31/2025
Loan Portfolio
Commercial Loans	$ 256,574		$ 165,729
Commercial Real Estate Loans	1,068,892		818,259
Subtotal Commercial Loan Portfolio	1,325,466		983,988
Consumer Loans	1,100,061		1,076,007
Residential Real Estate Loans	1,719,060		1,393,098
Total Loans	$ 4,144,587		$ 3,453,093
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter	$ 36,183		$ 34,176
Acquisition of Adirondack Bank	5,678		-
Loans Charged-off	(3,093)		(1,477)
Less Recoveries of Loans Previously Charged-off	896		777
Net Loans Charged-off	(2,197)		(700)
Provision for Credit Losses	1,467		846
Allowance for Credit Losses, End of Quarter	$ 41,131		$ 34,322
Nonperforming Assets
Nonaccrual Loans	$ 10,117		$ 6,415
Loans Past Due 90 or More Days and Accruing	2,382		2,040
Loans Restructured and in Compliance with Modified Terms	-		-
Total Nonperforming Loans	12,499		8,455
Repossessed Assets	231		280
Other Real Estate Owned	-		-
Total Nonperforming Assets	$ 12,730		$ 8,735
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Quarter-to-date Annualized	0.21 %		0.08 %
Provision for Credit Losses to Average Loans, Quarter-to-date Annualized	0.14 %		0.10 %
Allowance for Credit Losses to Period-End Loans	0.99 %		0.99 %
Allowance for Credit Losses to Period-End Nonperforming Loans	329.07 %		405.94 %
Nonperforming Loans to Period-End Loans	0.30 %		0.24 %
Nonperforming Assets to Period-End Assets	0.23 %		0.20 %
Year-to-Date Period Ended:	9/30/2026		12/31/2025
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Year	$ 34,322		$ 33,598
Acquisition of Adirondack Bank	5,678		-
Loans Charged-off	(6,437)		(9,554)
Less Recoveries of Loans Previously Charged-off	2,726		3,004
Net Loans Charged-off	(3,711)		(6,550)
Provision for Credit Losses	4,842		7,274
Allowance for Credit Losses, End of Period	$ 41,131		$ 34,322
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans, Annualized	0.14 %		0.19 %
Provision for Credit Losses to Average Loans, Annualized	0.18 %		0.21 %

SOURCE Arrow Financial Corporation