Arrow Financial (AROW) investor relations material

Executive summary

• 2Q26 net income was $11.0M ($0.66 EPS), down from $13.5M ($0.82 EPS) in 1Q26, impacted by merger-related expenses and a specific commercial credit reserve.

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

• Adirondack Bancorp acquisition closed July 1, 2026, adding ~$1B in assets, 19 branches, and a low-cost deposit base.

• Strong loan growth in 2Q26 ($57.6M, 6.7% annualized); YTD loan growth $43.5M (2.6% annualized).

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

Financial highlights

• 2Q26 net interest income was $35.9M, down 0.6% sequentially; YTD net interest income $72.0M, up $8.1M year-over-year.

• 2Q26 non-interest income was $8.3M; YTD $16.9M, up $1.5M year-over-year.

• 2Q26 operating expenses $27.5M, including $1.0M merger-related expenses; YTD $52.5M.

• 2Q26 provision for credit losses $2.8M, driven by a $1.6M specific reserve and loan growth.

• 2Q26 reported EPS $0.66 (down $0.16 sequentially); YTD EPS $1.48 (up $0.45 year-over-year).

Outlook and guidance

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

• NIM expected to expand in 2H26 from ADK Merger; exit rates on retail deposits expected to decline.

• Management expects significant EPS accretion from the Adirondack Bank acquisition in 2027 and beyond, with TBV per share earn-back of 2.9 years.

• The company remains focused on growth opportunities and executing strategic initiatives.