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., 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
- Loan fair value discount of $26.7 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 | ||||||||
Three Months Ended | Nine Months Ended | |||||||
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 | |||
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, | 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 | — | — | |
Common Stock, $1 Par Value: 30,000,000 Shares Authorized; | 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, | (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 | |||||||||
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 | ||||||||||||
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 | 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 | ||||||||||||
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 | 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 | ||||||||||||
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 | 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 | |||
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
Share this article