Arrow Financial (AROW) investor relations material

Executive summary

• Net income for Q2 2026 was $11.0 million ($0.66 EPS), with YTD net income at $24.4 million ($1.48 EPS); results were impacted by merger-related expenses and a $1.6 million specific commercial credit reserve.

• Adjusted EPS excluding merger-related expenses was $0.71.

• The acquisition of Adirondack Bancorp, Inc. closed July 1, 2026, adding ~$1.0 billion in assets and 19-20 branches, expanding market presence and deposit base.

• Strong loan growth in Q2 2026 ($57.6 million, 6.7% annualized), with commercial loans as a key driver.

• Board declared a Q3 dividend of $0.30 per share, payable August 25, 2026.

Financial highlights

• Net interest income for Q2 2026 was $35.9 million, with net interest margin (FTE) at 3.43%; YTD net interest income was $72.0 million, up $8.1 million year-over-year.

• Non-interest income for Q2 2026 was $8.3 million; YTD $16.9 million, up year-over-year.

• Non-interest expense rose to $27.5 million in Q2 2026, including $1.0 million in merger-related expenses.

• Provision for credit losses increased to $2.8 million in Q2 2026, mainly due to a $1.6 million specific reserve for a non-performing commercial loan.

• Diluted EPS for Q2 2026 was $0.66 (down $0.16 sequentially); YTD EPS was $1.48 (up $0.45 year-over-year).

Outlook and guidance

• Management expects the Adirondack acquisition to provide significant EPS accretion and TBV per share earn-back of 2.9 years, with NIM expected to expand in 2H26.

• Full-year loan growth is expected to be mid-single digits, excluding acquisition impact.

• Integration of Adirondack Bank is underway, with systems conversion expected to complete later in 2026.