Arrow Financial Corporation · NASDAQ:AROW
Arrow Financial — Q2 2026 Earnings Presentation
54 slides from Arrow Financial's earnings presentation, Jul 23, 2026
Slide 1: 2Q 2026 Investor Presentation
—=\RROW Financial Corporation 2Q 2026 INVESTOR PRESENTATION July 23, 2026
Slide 2: Safe Harbor
The information contained in this investor presentation 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
Slide 3: Glossary of Terms and Non-GAAP Measures
This presentation makes use of certain financial terms and non-GAAP measures, described below, commonly accepted and widely used within the banking industry. Please refer to the Appendix to this presentation for a reconciliation of any non-GAAP measures. • Tangible Book Value per Share (TBV/Share) •
Slide 4: Table of Contents
• 2Q26 Results and Performance Metrics • Non-Interest Income/Expense • Loans • Deposits/Funding Sources • Credit Quality & Provision for Credit Losses • Investments • Capital • M&A Update (Acquisition of Adirondack Bancorp, Inc.) • Overview and History 4 Table of Contents
Slide 5: Results
—=\RROW Financial Corporation RESULTS
Slide 6: 2Q26 and YTD Highlights
2Q26 and YTD Highlights 2Q26 Net Income of $11.0 million, or $0.66 EPS; YTD Net Income of $24.4 million or $1.48 EPS • 2Q26 included $971K of merger related expenses; lowering reported EPS by $0.05 • YTD 2026 included $1.8M of merger related expenses; lowering reported EPS by $0.08 Strong 2Q26 l
Slide 7: 2Q26 Summary
2Q26 Summary 7 EPS of $0.66 $0.71 excl. MRE(1) ROAA of 0.99% 1.06% excl. MRE FTE NIM 3.43% vs 3.48% (1Q26) TBV of $25.44 Net Charge-Offs 0.08% ROAE of 9.86% 10.59% excl. MRE NPLs $8.3M; 0.24% of Total Loans TCE of 9.44% Financial information provided in this document is unaudited. (1) MRE represents
Slide 8: YTD June 2026 Summary
YTD June 2026 Summary 8 Financial information provided in this document is unaudited. (1) MRE represents merger related expenses of $1.8M YTD June 2026. YTD EPS of $1.48 $1.56 excl. MRE(1) YTD ROAA of 1.11% 1.17% excl. MRE YTD FTE NIM 3.46% YTD ROAE of 11.14% 11.79% excl. MRE • YTD impact of CRE ban
Slide 9: Net Interest Margin
Net Interest Margin 9 1 Yield includes the impact of deferred fees and amortization of loan origination costs 2 FTE has historically been 1-2 bps higher than NIM reported under GAAP 3.08% 3.16% 3.24% 3.25% 3.48% 3.43% 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 3.08% 3.16% 3.24% 3.25% 3.48% 3.43% 5.30% 5.36% 5.43
Slide 10: 2Q 2026 Consolidated Financial Statements
2Q 2026 Consolidated Financial Statements 101 Variances are rounded based on actual whole-dollar amounts UNAUDITED Dollars in millions, except per share data Linked Quarter Income Statement 2Q26 1Q26 Fav/(Unfav) Var1 Total Interest Income $53.6 $53.8 ($0.2) Total Interest Expense 17.7 17.7 0.0 Net I
Slide 11: YTD 2026 Consolidated Financial Statements
YTD 2026 Consolidated Financial Statements 11 1 Variances are rounded based on actual whole-dollar amounts 2 Non-core expenses include merger-related expenses and unification expenses UNAUDITED Dollars in millions, except per share data Linked Quarter Income Statement YTD 2Q26 YTD 2Q25 Fav/(Unfav) V
Slide 12: 2Q 2026 Consolidated Financial Statements: Balance Sheet
2Q 2026 Consolidated Financial Statements 121 Variances are rounded based on actual whole-dollar amounts 1 Variances are rounded based on actual whole-dollar amounts Linked Quarter and Prior Year Period UNAUDITED Dollars in millions, except per share data Balance Sheet 2Q26 1Q26 2Q25 2Q26 vs 1Q261 2
Slide 13: Non-Interest Income/Expense
NON-INTEREST INCOME/EXPENSE 13
Slide 14: 2Q 2026 Non-Interest Income
2Q 2026 Non-Interest Income 14 Dollars in thousands • Insurance Revenue 1H26 vs 1H25 up 12.6% • 2Q decrease in insurance commissions due to seasonal fluctuations • Wealth management revenue 1H26 vs 1H25 up 9.9% • Wealth management AUM of $2.2B; $150M increase in 2Q26 driven by market performance • N
Slide 15: 2Q 2026 Non-Interest Expense
2Q 2026 Non-Interest Expense 15 • Compensation and benefits cost reflect increased benefits costs as well as competitive labor market • Technology expenses benefited from renegotiated vendor contracts • Other expenses included one-time maintenance costs related to properties held for future use Doll
Slide 16: Operating Expenses – Efficiency Trends
Operating Expenses – Efficiency Trends 16 67.7% 62.0% 61.0% 2024 2025 YTD 2Q 2026 Excluding MRE 2Q26 Efficiency Ratio would be 59.8%
Slide 17: Loans
—=\RROW Financial Corporation LOANS
Slide 18: Loan Portfolio ~ $3.49 billion
Commercial (C&I)1 11.8% Commercial Real Estate (CRE) 17.1% Consumer 31.0% Residential Real Estate (RRE) 40.1%3 Loans 18 Loan Portfolio ~ $3.49 billion As of June 30, 2026 • 2Q26 portfolio exit rates2 up ~4bps from 1Q26 • Average origination rate exceeded portfolio exit rate in 2Q26 • No single relat
Slide 19: Loan Portfolios – Key Attributes
Loan Portfolios – Key Attributes 19 As of June 30, 2026 Consumer Residential Real Estate CRE & C&I • Auto loans sourced through a network of >515 dealers in NY and VT • Loans are underwritten/credit scored by Arrow • >75% of auto loan balances have FICO scores >700 • Less than 4% have FICO scores <6
Slide 20: Deposits/Funding Sources
DEPOSITS/FUNDING SOURCES 20
Slide 21: Deposit Balances – Excl. Brokered CDs
Deposit Balances – Excl. Brokered CDs 21 Deposit mix (growth in business deposits) improving against comparable prior periods Dollars in billions $3.51 $3.56 $3.64 26.2% 27.4% 29.8% 24.3% 23.6% 22.9% 49.5% 49.0% 47.3% 2Q24 2Q25 2Q26 $3.51 $3.63 $3.66
Slide 22: Deposit Balances – Excl. Brokered CDs
Deposit Balances – Excl. Brokered CDs 22 21.5% 19.8% 19.8% 22.8% 22.8% 23.7% 41.8% 42.7% 42.8% 13.9% 14.7% 13.7% 2023 2024 2025 Time Deposits Savings Deposits Interest-Bearing Checking Noninterest-Bearing 20.1% 20.3% 20.1% 24.4% 24.4% 23.9% 41.3% 40.9% 43.5% 14.2% 14.4% 12.5% 2Q24 2Q25 2Q26 Reducing
Slide 23: Retail Deposit Cost Trend
Retail Deposit Cost Trend 23 1.94% 2.01% 2.01% 1.98% 1.81% 1.79% 1.79% 1.73% 1.62% 1.61% 1.98% 1.98% 1.97% 1.92% 1.80% 1.77% 1.68% 1.60% 1.60% 1.54% 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 Quarterly Cost of Retail Deposits End of Quarter Exit Rate of Retail Deposits
Slide 24: 2Q 2026 Funding Sources and Exit Rates
2Q 2026 Funding Sources and Exit Rates 24 As of June 30, 2026 Dollars in millions • Overall retail deposit costs down 6bp vs 1Q26 • Municipal costs retreating 18bps from 1Q26 • Decline in overall exit rates on retail deposits on track to continue with ADK Merger Balance Rate Balance Rate Balance Rat
Slide 25: Retail Deposit Analysis
Retail Deposit Analysis 25 • Disciplined pricing continues to favorably impact retail deposit (exit) rates • Negative impact of seasonal change in municipal deposit mix toward higher costing deposits offsetting rate reductions • Exit rates expected to decline in 2H26 as a result of ADK Merger Dollar
Slide 26: Credit Quality & Provision for Credit Losses
CREDIT QUALITY & PROVISION FOR CREDIT LOSSES 26
Slide 27: Credit Quality
Credit Quality 27 Dollars in millions 0.56% 0.19% 0.18% 0.25% 0.13% 0.24% 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 Non-Performing Loans (NPL) / Gross Loans $19.0 $6.4 $6.3 $8.5 $4.4 $8.3 • 2Q26 annualized charge-offs were 8bps • Allowance for credit losses to loans is 1.03% • Allowance to NPL coverage of 436%
Slide 28: Credit Quality – CRE Bankruptcy
Credit Quality – CRE Bankruptcy $3.8M CRE loan for office building in Albany, NY migrated to non-performing loan status in June 2026 Loan had been on the books as a performing loan for 8 years Borrower/Guarantors (2) filed for personal and corporate bankruptcy (early June 2026) Borrower/Guar
Slide 29: Delinquent Loan Trends
Delinquent Loan Trends 29 Delinquent loans are defined as being past due no more than 89 days and still accruing interest 0.56% 0.61% 0.60% 0.60% 0.53% 0.58% 0.69% 0.84% 0.73% 0.67% 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 Delinquent Loans to Total Loans • Year-over-year uptick driven by co
Slide 30: Allowance for Credit Losses – 2Q26 Walk
Allowance for Credit Losses 30 $34,055 ($699) $699 $514 $1,614 $36,183 1Q 2026 Net Charge-Offs Net Charge-Offs Loan Growth & Model Calculation Specific Reserve on Comm Loan 2Q 2026 Provision for Credit Losses $2.8M Dollars in thousands 2Q26 Allowance for Credit Loss Walk • Specific Reserve of $1.6 m
Slide 31: Allowance for Credit Losses – YTD 2026 Walk
Allowance for Credit Losses 31 $34,322 ($1,514) $1,514 $247 $1,614 $36,183 4Q 2025 Net Charge-Offs Net Charge-Offs Loan Growth & Model Calculation Specific Reserve on Comm Loan 2Q 2026 Provision for Credit Losses $3.4M Dollars in thousands YTD 2026 Allowance for Credit Loss Walk • Specific reserve o
Slide 32: Investments
—=\RROW Financial Corporation INVESTMENTS
Slide 33: Investment Portfolio – AFS and HTM
Investment Portfolio – AFS and HTM 331 Unrealized Gain/(Loss) on HTM for informational purposes only – not reflected in OCI Book yield increased 9bps to 3.56% from 1Q26 while duration increased from 3.12 years to 3.23 years Dollars in thousands June 30, 2026 263 585,127$ 563,472$ 2.95% 4.83% 4.23%
Slide 34: Capital
—=\RROW Financial Corporation CAPITAL
Slide 35: Fully Diluted Tangible Book Value – 2Q26 Walk
Fully Diluted Tangible Book Value (TBV) 35 $25.09 $0.66 ($0.30) ($0.01) $25.44 1Q 2026 Net Income Dividends AOCI 2Q 2026 2Q 2026 TBV / Share Walk • Excluding MRE, 2Q26 TBV of $25.49
Slide 36: Fully Diluted Tangible Book Value – YTD Walk
Fully Diluted Tangible Book Value (TBV) 36 $24.71 $1.48 ($0.60) ($0.15) $25.44 4Q 2025 Net Income Dividends AOCI 2Q 2026 YTD 2026 TBV / Share Walk • TBV growth driven by strong earnings • Excluding MRE, 2Q26 TBV of $25.49
Slide 37: Capital Position – Arrow Financial Corporation
Capital Position 37 1 Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report 2 Non-GAAP measure. See reconciliation in Appendix 10.19% 13.21% 13.83% 14.98% 9.44% 10.02% 13.30% 13.93% 15.04% 9.22% 4.00% 4.50% 6.00% 8.00% 0% 1% 2% 3% 4% 5% 6% 7% 8%
Slide 38: Capital Position – Arrow Bank
Capital Position 38 1 Regulatory capital ratios are estimated, subject to finalization as part of the current quarter Call Report • Strong Regulatory Capital Ratios • Reduction in capital levels reflects dividend to parent company for cash portion of ADK Merger acquisition 9.33% 12.71% 12.71% 13.87%
Slide 39: M&A: Acquisition of Adirondack Bancorp, Inc.
M&A Acquisition of Adirondack Bancorp, Inc. 39
Slide 40: M&A – Adirondack Bancorp, Inc.
M&A – Adirondack Bancorp, Inc. Acquisition of Adirondack Bancorp, Inc. closed on July 1, 2026 Market expansion with high quality, low-cost deposit franchise (~$1 billion balance sheet) Combined pro-forma assets of $5.4 billion, deposits of $4.8 billion and loans of $4.1 billion TCE/TA ~8.0%
Slide 41: Our Profile – As of July 1, 2026
Our Profile – As of July 1, 2026 19 new branches added for a total of 57 branches Added loan production office in Syracuse, NY 41 Refer to the 8-K filed July 1, 2026, announcing the completion of the strategic acquisition of Adirondack Bancorp, Inc. • Arrow Bank National Association (38) • Adiro
Slide 42: Overview and History
—=\RROW Financia | Corporation OVERVIEW AND HISTORY
Slide 43: Financial Snapshot
Financial Snapshot 43 1 Non-GAAP measure. See reconciliation in Appendix Dollars in thousands, except per share amounts 2020 2021 2022 2023 2024 2025 YTD 2026 Total assets $3,688,636 $4,027,952 $3,969,509 $4,169,868 $4,306,348 $4,445,862 $4,482,359 Loans $2,595,030 $2,667,941 $2,983,207 $3,212,908 $
Slide 44: Our Profile – As of June 30, 2026
Our Profile – As of June 30, 2026 • Bank holding company • Arrow Bank National Association • Upstate Agency, LLC • Wealth Management Services • $4.5 billion in assets • ~575 employees • Primary service area population of more than 1.1 million 44 Insurance Offices Bank Branches 938
Slide 45: Our History
Our History 45 Glens Falls Bank opened for business in a newly constructed building on Ridge Street 1851 1932 Changed name to Glens Falls National Bank and Trust Company 1949 Broke ground at 250 Glen Street — our current headquarters 1981 Glens Falls National Bank went public on NASDAQ as GFAL 1983
Slide 46: Our History
Our History 46 Bought first insurance agency 2004 Reached $2 billion in assets 2012 Consolidated our insurance business into the Upstate Agency brand 2018 2021 Topped $4 billion in assets 2024 Unified banking subsidiaries to form Arrow Bank, NA 2026 Celebrating 175th Anniversary v July 1, 2026, acqu
Slide 47: President and Chief Executive Officer
President and Chief Executive Officer 47 Mr. DeMarco joined the Company in 1987 as a commercial lender and since that time has served in positions of increasing responsibility within the organization. In 2012, he was named President and CEO of Saratoga National Bank, now named Arrow Bank. In 2023, h
Slide 48: Experienced Leadership Team
Experienced Leadership Team 48 Penko Ivanov Senior Executive Vice President, Chief Financial Officer, Treasurer and Chief Accounting Officer Andrew J. Wise Senior Executive Vice President, Chief Risk Officer Marc Yrsha Senior Executive Vice President, Chief Banking Officer Mr. Ivanov joined the Comp
Slide 49: Experienced Leadership Team
49 Michael Jacobs Executive Vice President, Chief Information Officer Brooke Pancoe Executive Vice President, Chief Human Resources Officer Mr. Jacobs joined the Company in 2003 as Information Systems Manager. He was later promoted to Senior Vice President and then Executive Vice President. As Chief
Slide 50: Appendix
—=\RROW Financial Corporation APPENDIX
Slide 51: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 51 Three months ended June 30, 2026 Six months ended June 30, 2026 Interest Income (GAAP) $ 53,617 $ 107,411 Add: Tax-Equivalent adjustment (Non-GAAP) 133 256 Interest Income - Tax Equivalent (Non-GAAP) $ 53,750 $ 107,667 Net Interest Income (GAAP) $ 35,
Slide 52: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 52 Three months ended June 30, 2026 Six months ended June 30, 2026 Non-Interest Expense $ 27,464 $ 54,329 Less: Intangible Asset Amortization 71 143 Net Non-Interest Expense $ 27,393 $ 54,186 Net Interest Income, Tax-Equivalent $ 36,064 $ 72,317 Non-Inte
Slide 53: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 53 June 30, 2026 Total Stockholders' Equity (GAAP) $ 446,306 Less: Goodwill and Other Intangible assets, net 25,401 Tangible Equity (Non-GAAP) $ 420,905 Total Assets (GAAP) $ 4,482,359 Less: Goodwill and Other Intangible assets, net 25,401 Tangible Asset
Slide 54: Thank You!
—=\RROW Financial Corporation THANK YOU!