ARROW FINANCIAL CORP
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
AROW$39.11+1.7%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000717538-26-000117
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0000717538-26-000138
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 186 previous paragraphs and 188 current paragraphs.
113 unchanged; 58 reworded; 16 added; 12 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 33 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Adirondack Bancorp, Inc. Merger: On July 1, 2026, the Company completed its acquisition of Adirondack Bancorp, Inc. (“Adirondack”), the holding company of Adirondack Bank, a New York state-chartered financial institution with branch locations spanning Oneida, Franklin, Essex, Herkimer and Clinton counties, and a loan production office in Onondaga County. As a result of the transaction, Adirondack merged with and into Arrow and Adirondack Bank merged with and into Arrow Bank (the "Acquisition").. The Acquisition expanded the Company's presence across the Upstate and Central New York area, with the addition of 20 locations.
Current report
On the Acquisition date, each share of Adirondack’s common stock was converted into the right to receive 1.8610 shares of the Company’s common stock and $18.72 in cash. Arrow issued approximately 1.98 million shares of its common stock with an acquisition-date fair value of approximately $81.2 million and paid approximately $19.9 million in cash. The fair value of the common stock issued was determined using Arrow’s opening common-stock price of $41.06 per share on July, 1 2026. In total the Company issued 1.98 million shares of its common stock, representing 9.65% of the Company’s outstanding shares of common stock subsequent to the issuance of the shares related to the Acquisition.
Current report
The merger was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair values. The excess of consideration paid over the estimated fair value of the net assets acquired totaled $44.7 million and was recorded as goodwill.
Current report
USE OF FINANCIAL MEASURES
Current report
Net interest income for the quarter increased by $14.6 million, or 42.8%, from the third quarter of 2025. Interest and fees on loans were $58.9 million for the third quarter of 2026, an increase from $46.8 million for the quarter ended September 30, 2025, primarily due to loan growth, including acquired loans, and higher loan yields. Interest expense for the third quarter of 2026 was $19.3 million, a decrease of $0.1 million versus the comparable quarter ended September 30, 2025, primarily due a decrease in the average cost of interest-bearing liabilities of 36 basis points offset by an increase in the average balance of interest-bearing liabilities of $536.2 million.
Current report
Total non-interest income in the current quarter was $11.4 million, an increase of $2.7 million from the third quarter of 2025. Fee income increased $1.4 million compared to the third quarter of 2025, primarily a result of services to customers from the Acquisition. Other operating income increased $1.5 million compared to the third quarter of 2025, primarily due to an increase in 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.
Current report
Total loans were $4.1 billion as of September 30, 2026, an increase of $691.5 million, or 20.0%, compared to December 31, 2025. The increase was driven by $608.0 million of gross new loans from the Acquisition, reduced by a $21.0 million non-credit related discount, and approximately $104.5 million in organic loan growth.
Current report
As part of the Acquisition, Arrow acquired junior subordinated debentures. On July 31, 2001, Adirondack participated, at an amount of $3,000,000, in a pooled offering of trust preferred securities. Adirondack formed Adirondack Statutory Trust I, a wholly owned statutory trust subsidiary for the purpose of issuing the trust preferred securities. Arrow now owns all of the $93,000 in common equity of Trust I. The Trust used the proceeds from the issuance of the trust preferred securities and common equity to acquire subordinated debentures of Adirondack. The trust preferred securities essentially mirror the debt securities, carrying a cumulative preferred dividend at a variable rate equal to the 3 month SOFR + 3.58% interest rate on the debt securities. The trust preferred securities and the debt securities were fully redeemed on October 31, 2026.
Current report
On September 17, 2003, Adirondack participated, at an amount of $5,000,000, in an additional pooled offering of trust preferred securities. Adirondack formed Adirondack Statutory Trust II, a wholly-owned statutory trust subsidiary for the purpose of issuing the trust preferred securities. Arrow now owns all of the $155,000 in common equity of Trust II. The Trust used the proceeds from the issuance of the trust preferred securities and common equity to acquire subordinated debentures of Adirondack. The trust preferred securities essentially mirror the debt securities, carrying a cumulative preferred dividend at a variable rate equal to the 3 month SOFR + 3.05% interest rate on the debt securities. The debt securities and the trust preferred securities each have 30 year lives. The trust preferred securities and the debt securities are callable by Arrow or the Trust, at their respective option after 5 years, and at varying premiums and sooner in specific events, subject to prior approval by the Federal Reserve Board, if then required.
Current report
Net interest income for the quarter increased by $14.6 million, or 42.8%, from the third quarter of 2025. Interest and fees on loans were $58.9 million for the third quarter of 2026, an increase from $46.8 million for the quarter ended September 30, 2025, primarily due to loan growth, including acquired loans, and higher loan yields. Interest expense for the third quarter of 2026 was $19.3 million, a decrease of $0.1 million versus the comparable quarter ended September 30, 2025, primarily due a decrease in the average cost of interest-bearing liabilities of 36 basis points offset by an increase in the average balance of interest-bearing liabilities of $536.2 million.
Current report
Net interest margin increased 58 basis points in the third quarter of 2026 to 3.80%, from 3.22% during the third quarter of 2025. Average earning asset yields were 25 basis points higher as compared to the third quarter of 2025. The average cost of interest-bearing liabilities decreased 36 basis points from the quarter ended September 30, 2025. The increase in net interest margin compared to the third quarter of 2025 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 14 basis points, comprised of 9 basis points related to the net accretion of purchase accounting adjustments and 5 basis points on the accretion of the acquired investment portfolio.
Current report
Total non-interest income in the current quarter was $11.4 million, an increase of $2.7 million from the third quarter of 2025. Fee income increased $1.4 million compared to the third quarter of 2025, primarily a result of services to customers from the Acquisition. Other operating income increased $1.5 million compared to the third quarter of 2025, primarily due to an increase in 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.
Current report
The provision for income taxes and effective tax rate were $1.2 million and 16.8%, respectively, for the third quarter of 2026, and $3.8 million and 22.7%, respectively, for the third quarter of 2025. The effective tax rate for the third quarter of 2026 reflects tax credits recognized from energy production tax credit purchases and the impact of closing the Acquisition.
Current report
Nine Months Ended September 30, 2025
Current report
Net interest income for the first nine months of 2026 increased by $22.8 million, or 23.2%, from the first nine months of 2025. Interest and fees on loans were $175.5 million for the first nine months of 2026, an increase from $155.5 million for the first nine months of 2025, primarily due to loan growth and higher loan yields. Interest expense for the first nine months of 2026 was $54.7million, a decrease of $2.8 million versus the comparable period ended September 30, 2025, primarily due to a decrease in the average cost of interest-bearing liabilities of 26 basis points offset by an increase in the average balance of interest-bearing liabilities of $211.0 million.
Current report
Total non-interest income for the first nine months of 2026 was $28.3 million, an increase of $4.1 million from the first nine months of 2025. Fee income increased $1.7 million compared to the nine months ended September 30, 2025, primarily as a result of services to customers from the Acquisition. Other operating income increased $1.5 million compared to the nine months ended September 30, 2025, primarily due to an increase in 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. Insurance commissions increased during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 due to the combination of the increase in average premiums and onboarding of new, larger commercial insurance relationships.
Removed paragraphs (12)
Previous report
Adirondack Bancorp, Inc. Merger: On February 25, 2026, Arrow and Adirondack, the parent company of Adirondack Bank, entered into a definitive agreement pursuant to which Adirondack and Adirondack Bank merged with and into Arrow and Arrow Bank, respectively.
Previous report
Prior to the merger, Adirondack Bank was a New York state-chartered financial institution headquartered in Utica, New York. Adirondack Bank operated 19 branch locations spanning Oneida, Herkimer, Franklin, Essex and Clinton counties, and a loan production office in Onondaga County. As of December 31, 2025, Adirondack reported total consolidated assets of $942 million, total deposits of $848 million, total loans of $624 million and total equity of $67 million.
Previous report
The transaction was completed on July 1, 2026 and therefore, this Quarterly Report on Form 10-Q does not include the assets, liabilities or operating results of Adirondack. Under the terms of the merger agreement, Arrow acquired 100% of the outstanding voting equity interests of Adirondack. At the effective date, each share of Adirondack common stock outstanding immediately prior to the effective date, was converted into the right to receive 1.8610 shares of Arrow common stock and $18.72 in cash. Total consideration paid was $101 million.
Previous report
•The market price of Arrow’s common stock may decline as a result of the acquisition of Adirondack.
Previous report
•Combining Arrow and Adirondack may be more difficult, costly or time-consuming than expected, and Arrow may fail to realize the anticipated benefits of the acquisition of Adirondack.
Previous report
Net interest income for the quarter increased by $3.4 million, or 10.4%, from the second quarter of 2025. Interest and fees on loans were $47.2 million for the second quarter of 2026, an increase from $45.6 million for the quarter ended June 30, 2025, primarily due to loan growth and higher loan yields. Interest expense for the second quarter of 2026 was $17.7 million, a decrease of $1.4 million versus the comparable quarter ended June 30, 2025, primarily due to active management of rates on interest-bearing deposits.
Previous report
Total non-interest income in the current quarter was $8.3 million, an increase of $647 thousand from the second quarter of 2025. Insurance commissions increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 due to the combination of the increase in average premiums and onboarding of new, larger commercial insurance relationships. Income from fiduciary activity increased primarily due to additions of new wealth management accounts as well as improved market performance. Net gain on security transactions of $155 thousand for the three months ended June 30, 2026, resulted from the increase in the fair value of equity securities.
Previous report
Total loans were $3.5 billion as of June 30, 2026, an increase of $43.4 million, or 1.3%, compared to December 31, 2025. The increase was primarily due to growth in commercial loans.
Previous report
(1) Includes Nonaccrual Loans.
Previous report
Total non-interest income in the current quarter was $8.3 million, an increase of $647 thousand from the second quarter of 2025. Fiduciary activity income increased primarily due to additions of new wealth management accounts as well as improved market performance. Net gain on security transactions of $155 thousand for the three months ended June 30, 2026, resulted from the increase in the fair value of equity securities. Insurance commissions increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 due to the combination of the increase in average premiums and onboarding of new, larger commercial insurance relationships.
Previous report
Six Months Ended June 30, 2025
Previous report
Total non-interest income for the first six months of 2026 was $16.9 million, an increase of $1.4 million from the first six months of 2025. Income from fiduciary activities increased from the prior year period as a result of improved market performance as well as growth in assets under management. . Insurance commissions increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 due to the combination of the increase in average premiums and onboarding of new, larger commercial insurance relationships. Net gain on security transactions of $300 thousand for the first six months of 2026 resulted from the increase in the fair value of equity securities.
Reworded paragraphs (58)
Previous wording
Effective December 31, 2024, the Company unified its former subsidiary banks, Glens Falls National Bank and Trust Company ("GFNB") and Saratoga National Bank and Trust Company ("SNB"), and became a single bank holding company headquartered in Glens Falls, New York. The post-unification banking subsidiary is Arrow Bank National Association® ("Arrow Bank™") whose main office is located in Glens Falls, New York. Active subsidiaries of Arrow Bank include Upstate Agency, LLC (an insurance agency that sells property and casualty insurance and also specializes in selling and servicing group health care policies and life insurance), North Country Investment Advisers, Inc. (a registered investment adviser that provides investment advice to Arrow's proprietary mutual fund) and Arrow Properties, Inc. (a real estate investment trust, or REIT). Arrow also directly owns two subsidiary business trusts, organized in 2003 and 2004 to issue trust preferred securities (TRUPs), which are still outstanding.
Current wording
The banking subsidiary is Arrow Bank National Association® ("Arrow Bank™") whose main office is located in Glens Falls, New York. Active subsidiaries of Arrow Bank include Upstate Agency, LLC (an insurance agency that sells property and casualty insurance and also specializes in selling and servicing group health care policies and life insurance), North Country Investment Advisers, Inc. (a registered investment adviser that provided investment advice to Arrow's proprietary mutual fund until the fund was transferred to a new investment advisor in the first half of 2025), Adirondack Insurance Services, Inc., which operates as an independent insurance agency that represents several different insurance companies to offer competitive personal and business insurance products and Arrow Properties, Inc. (a real estate investment trust, or REIT). Arrow also directly owns four subsidiary business trust to issue trust preferred securities (TRUPs), a portion of which are still outstanding.
Previous wording
•Arrow operates in a highly regulated industry and face risks associated with noncompliance. Federal banking statutes and regulations could change in the future, which may adversely affect Arrow.
Current wording
•Arrow operates in a highly regulated industry and faces risks associated with noncompliance. Federal banking statutes and regulations could change in the future, which may adversely affect Arrow.
Previous wording
The Securities and Exchange Commission ("SEC") has adopted Regulation G, which applies to all public disclosures made by registered companies that contain “non-GAAP financial measures.” "GAAP" refers to generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. The Company believes that the non-GAAP financial measures disclosed 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. Arrow's non-GAAP financial measures may differ from similar measures presented by other companies. A reconciliation of non-GAAP financial measures to the closest comparable GAAP financial measures is included on page 41 of this Report. Non-GAAP measures used in this release, which are commonly utilized by financial institutions, include the following.
Current wording
The SEC has adopted Regulation G, which applies to all public disclosures made by registered companies that contain “non-GAAP financial measures.” "GAAP" refers to generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. The Company believes that the non-GAAP financial measures disclosed 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. Arrow's non-GAAP financial measures may differ from similar measures presented by other companies. A reconciliation of non-GAAP financial measures to the closest comparable GAAP financial measures is included on page 44 of this Report. Non-GAAP measures used in this Report, which are commonly utilized by financial institutions, include the following.
Previous wording
Tangible Book Value per Share: Tangible equity is total stockholders’ equity less intangible assets. Tangible book value per share is tangible equity divided by total shares issued and outstanding. Tangible book value per share is often regarded as a more meaningful comparative ratio than book value per share as calculated under GAAP, that is, total stockholders’ equity including intangible assets divided by total shares issued and outstanding.
Current wording
Tangible Equity and Book Value per Share: Tangible equity is total stockholders’ equity less intangible assets. Tangible book value per share is tangible equity divided by total shares issued and outstanding. Tangible book value per share is often regarded as a more meaningful comparative ratio than book value per share as calculated under GAAP, that is, total stockholders’ equity including intangible assets divided by total shares issued and outstanding.
Previous wording
Adjustments for Certain Items of Income or Expense: In addition to our regular use in our public filings and disclosures of the various non-GAAP measures commonly utilized by financial institutions discussed above, we also may elect from time to time, in connection with our presentation of various financial measures prepared in accordance with GAAP, such as net income, earnings per share (i.e., EPS), return on average assets (i.e., ROA), and return on average equity (i.e., ROE), to additionally provide certain comparative disclosures that adjust these GAAP financial measures, typically by removing therefrom the impact of certain transactions or other material items of income or expense that are unusual or unlikely to be repeated. The Company does so only if it believes that inclusion of the resulting non-GAAP financial measures may improve the average investor's understanding of Arrow's results of operations by separating out items that have a disproportional positive or negative impact on the particular period in question or by otherwise permitting a better comparison from period-to-period in the results of operations with respect to the Company's fundamental lines of business, including the commercial banking business.
Current wording
Adjustments for Certain Items of Income or Expense: In addition to our regular use in our public filings and disclosures of the various non-GAAP measures commonly utilized by financial institutions discussed above, we also may elect from time to time, in connection with our presentation of various financial measures prepared in accordance with GAAP, such as net income, earnings per share (i.e., EPS), return on average assets (i.e., ROA), and return on average equity (i.e., ROE), to additionally provide certain comparative disclosures that adjust these GAAP financial measures, typically by removing therefrom the impact of certain transactions or other material items of income or expense that are unusual or unlikely to be repeated. Arrow does so only if it believes that inclusion of the resulting non-GAAP financial measures may improve the average investor's understanding of Arrow's results of operations by separating out items that have a disproportional positive or negative impact on the particular period in question or by otherwise permitting a better comparison from period-to-period in the results of operations with respect to Arrow's fundamental lines of business, including the commercial banking business.
Previous wording
Summary of Q2 2026 Financial Results: Net income for the second quarter of 2026 was $11.0 million, increasing from $10.8 million in the second quarter of 2025. Compared to the second quarter of 2025, net income increased primarily due to an increase in net interest income offset by an increase in the provision for credit losses on loans.
Current wording
Summary of Q3 2026 Financial Results: Net income for the third quarter of 2026 was $5.7 million compared to $12.8 million in the third quarter of 2025. Compared to the third quarter of 2025, net income decreased primarily due to an increase in non-interest expense of $26.4 million, which included merger-related expenses of $15.6 million, partially offset by an increase in net interest income of $14.6 million and an increase of non-interest income of $2.7 million.
Previous wording
Net interest margin increased 27 basis points in the second quarter of 2026 to 3.42%, from 3.15% during the second quarter of 2025. On an FTE basis, net interest margin increased to 3.43% in the second quarter of 2026 from 3.16% during the second quarter of 2025. Average earning asset yields were 12 basis points higher as compared to the second quarter of 2025. The average cost of interest-bearing liabilities decreased 19 basis points from the quarter ended June 30, 2025. The increase in net interest margin compared to the second quarter of 2025 was primarily the result of continued yield expansion on earning assets combined with the moderating cost of interest-bearing liabilities. See the disclosure on page 39 related to the use of non-GAAP financial measures.
Current wording
Net interest margin increased 58 basis points in the third quarter of 2026 to 3.80%, from 3.22% during the third quarter of 2025. On an FTE basis, net interest margin increased to 3.81% in the third quarter of 2026 from 3.24% during the third quarter of 2025. Average earning asset yields were 25 basis points higher as compared to the third quarter of 2025. The average cost of interest-bearing liabilities decreased 36 basis points from the quarter ended September 30, 2025. The increase in net interest margin compared to the third quarter of 2025 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 14 basis points, comprised of 9 basis points related to the net accretion of purchase accounting adjustments and 5 basis points on the accretion of the acquired investment portfolio. See the disclosure on page 42 related to the use of non-GAAP financial measures.
Previous wording
Non-interest expense for the second quarter of 2026 was $27.5 million, an increase of $1.8 million, or 7.1%, from the second quarter of 2025. Salaries and benefit expenses increased $1.0 million, or 7.2%, from the prior year comparable quarter as a result of overall growth in the organization, increased benefits cost and a competitive labor market. Technology expenses in the second quarter decreased $832 thousand, or 14.9%, from the second quarter of 2025. Occupancy expenses increased $149 thousand due to increases in utility and building maintenance costs. The second quarter of 2026 included approximately $1.0 million of expenses related to the acquisition of Adirondack Bancorp, Inc. The second quarter of 2025 had no expenses related to the acquisition of Adirondack Bancorp, Inc.
Current wording
Non-interest expense for the third quarter of 2026 was $51.8 million, an increase of $26.4 million, or 103.8%, from the third quarter of 2025. Salaries and benefit expenses increased $5.1 million, or 35.2%, from the prior year comparable quarter as a result of overall growth in the organization, including an increase in headcount from the Acquisition, and annual merit increases. Technology expenses in the third quarter increased $2.0 million, or 40.6%, from the third quarter of 2025, primarily due to the cost of operating two core systems after the Acquisition. The core system conversion is scheduled for November 7 and 8, 2026. Occupancy expenses increased $898 thousand due to utility and building maintenance costs for 20 new locations from the Acquisition. Other operating expense increased $18.2 million from the prior year comparable quarter primarily as a result of $15.6 million of merger-related expenses, core deposit intangible amortization, and other operating expenses due to the Acquisition.
Previous wording
The provision for income taxes and effective tax rate were $2.9 million and 21.1%, respectively, for the second quarter of 2026, and $3.1 million and 22.2%, respectively, for the second quarter of 2025. The effective tax rate for the second quarter of 2026 reflects the impact of tax credits recognized from energy production tax credit purchases made in June 2026.
Current wording
The provision for income taxes and effective tax rate were $1.2 million and 16.8%, respectively, for the third quarter of 2026, and $3.8 million and 22.7%, respectively, for the third quarter of 2025. The effective tax rate for the third quarter of 2026 reflects tax credits recognized from energy production tax credit purchases and the impact of closing the Acquisition.
Previous wording
Total assets were $4.5 billion at June 30, 2026, an increase of $36.5 million, or 0.8%, as compared to December 31, 2025. For the second quarter of 2026, the increase in the balance sheet total assets was primarily attributable to loan growth and an increase in other investments.
Current wording
Total assets were $5.5 billion at September 30, 2026, an increase of $1.1 billion, or 24.8%, as compared to December 31, 2025. For the third quarter of 2026, the increase in total assets was primarily attributable to the Acquisition and organic loan growth.
Previous wording
Total investments were $587.9 million as of June 30, 2026, an increase of $15.1 million, or 2.6%, compared to December 31, 2025. The increase from December 31, 2025 was driven primarily by a $14 million purchase of FHLB stock. There were no material credit quality issues related to the investment portfolio.
Current wording
Total investments were $693.6 million as of September 30, 2026, an increase of $120.8 million, or 21.1%, compared to December 31, 2025. The increase from December 31, 2025 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.
Previous wording
At June 30, 2026, deposit balances were $3.7 billion, a decrease of $284.3 million from December 31, 2025. The decrease was primarily attributable to $300 million of brokered CDs, being replaced by lower costing FHLB borrowings.
Current wording
At September 30, 2026, deposit balances were $4.7 billion, an increase of $799.4 million from December 31, 2025. The increase was primarily attributable to $926.9 million of new deposits from the Acquisition and growth in municipal deposits due to seasonality, offset by $300 million of brokered CDs replaced by lower costing FHLB borrowings.
Previous wording
The changes in net income, net interest income and net interest margin between the three and six month periods are discussed in detail under the heading "RESULTS OF OPERATIONS," beginning on page 57.
Current wording
The changes in net income, net interest income and net interest margin between the three and nine month periods are discussed in detail under the heading "RESULTS OF OPERATIONS," beginning on page 61.
Previous wording
Stockholders’ equity was $446.3 million at June 30, 2026, an increase of $14.5 million, or 3.3%, from the December 31, 2025 level of $431.9 million. The increase in stockholders' equity over the first six months of 2026 principally reflected the following factors: the addition of (i) $24.4 million of net income for the period and (ii) the issuance of $1.8 million of common stock through employee benefit plans, reduced by (iii) other comprehensive loss of $1.4 million and (iv) cash dividends of $9.9 million. The components of the change in stockholders’ equity since year-end 2025 are presented in the Consolidated Statements of Changes in Stockholders’ Equity on page 6, and are discussed in more detail in the next section.
Current wording
Stockholders’ equity was $515.1 million at September 30, 2026, an increase of $83.2 million, or 19.3%, from the December 31, 2025 level of $431.9 million. The increase in stockholders' equity over the first nine months of 2026 principally reflected the following factors: the addition of (i) $81.2 million of treasury shares issued related to the Acquisition., (ii) $30.1 million of net income for the period and (iii) the issuance of $3.2 million of common stock through employee benefit plans, reduced by (iv) other comprehensive loss of $14.3 million, (v) cash dividends of $15.5 million and (vi) $1.5 million in other treasury stock purchases related to stock based compensation. The components of the change in stockholders’ equity since year-end 2025 are presented in the Consolidated Statements of Changes in Stockholders’ Equity on page 6, and are discussed in more detail in the next section.
Previous wording
At June 30, 2026, book value per share was $26.98, up 2.7% from year-end 2025. Tangible book value per share was $25.44, an increase of $0.73, or 2.95%, from December 31, 2025. See the disclosure on page 39 related to the use of non-GAAP financial measures.
Current wording
At September 30, 2026, book value per share was $27.79, up 5.8% from year-end 2025. Tangible book value per share was $23.03, a decrease of $1.68, or 6.80%, from December 31, 2025. See the disclosure on page 42 related to the use of non-GAAP financial measures.
Previous wording
In the second quarter of 2026, Arrow paid a quarterly cash dividend of $0.30 per share.
Current wording
In the third quarter of 2026, Arrow paid a quarterly cash dividend of $0.30 per share.
Previous wording
Loan Quality: Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.08% for the three-month period ended June 30, 2026, consistent with the three-month period ended December 31, 2025.
Current wording
Loan Quality: Net charge-offs, expressed as an annualized percentage of average loans outstanding, were 0.21% for the three-month period ended September 30, 2026, an increase from 0.08% for the three-month period ended December 31, 2025.
Previous wording
The allowance for credit losses was $36.2 million as of June 30, 2026, which represented 1.03% of loans outstanding, as compared to $34.3 million, or 0.99%, at December 31, 2025.
Current wording
The allowance for credit losses was $41.1 million as of September 30, 2026, which represented 0.99% of loans outstanding, as compared to $34.3 million, or 0.99% of loans outstanding, at December 31, 2025. .
Previous wording
Nonperforming loans were $8.3 million at June 30, 2026, representing 0.24% of period-end loans, consistent with December 31, 2025 non performing loans of $8.5 million, representing 0.24% of period-end loans. Nonperforming assets of $8.7 million at June 30, 2026 represented 0.19% of period-end assets, down from 0.20% of period-end assets at December 31, 2025.
Current wording
Nonperforming loans were $12.5 million at September 30, 2026, representing 0.30% of period-end loans, an increase from $8.5 million at December 31, 2025, representing 0.24% of period-end loans. Nonperforming assets of $12.7 million at September 30, 2026 represented 0.23% of period-end assets, up from 0.20% of period-end assets at December 31, 2025.
Previous wording
Loan Segments: As of June 30, 2026, including the fair value marks associated with derivatives, total loans increased by $43.4 million, or 1.3%, as compared to the balance at December 31, 2025. The largest increase was in the commercial and commercial real estate loans portfolio which increased by $26.5 million, or 2.7%, from December 31, 2025. Consumer loans, primarily comprised of automobile loans, increased $7.2 million. The residential real estate loan portfolio increased $9.8 million, or 0.7%.
Current wording
Loan Segments: As of September 30, 2026, including the fair value adjustments associated with derivatives and purchase accounting, total loans increased by $691.5 million, or 20.0%, as compared to the balance at December 31, 2025. The increase included approximately $587 million of acquired loans. The largest increase was in the commercial and commercial real estate loans portfolio which increased by $341.5 million, or 34.7%, from December 31, 2025. Consumer loans, primarily comprised of automobile loans, increased $24.1 million. The residential real estate loan portfolio increased $326.0 million, or 23.4%.
Previous wording
•Commercial and Commercial Real Estate Loans: Combined, these loans comprise 28.9% of the total loan portfolio at June 30, 2026. Commercial loans are extended to businesses primarily located in Arrow's regional market area. There are no commercial real estate loans in major metropolitan areas. In addition, only approximately 2% of the total loan portfolio is composed of office related property at June 30, 2026. Retail loans were approximately 3% of the total loan portfolio and hotels and motels were approximately 4% of the total loan portfolio at June 30, 2026. Commercial property values in Arrow's region have largely remained stable. Appraisals on nonperforming and watched commercial real estate loan properties are updated as necessary, usually when the loan is downgraded or when there has been significant market deterioration since the last appraisal.
Current wording
•Commercial and Commercial Real Estate Loans: Combined, these loans comprised 32.0% of the total loan portfolio at September 30, 2026. Commercial loans are extended to businesses primarily located in Arrow's regional market area. There are no commercial real estate loans in major metropolitan areas. In addition, only approximately 2% of the total loan portfolio is composed of office related property at September 30, 2026. Retail loans were approximately 3% of the total loan portfolio and hotels and motels were approximately 4% of the total loan portfolio at September 30, 2026. Commercial property values in Arrow's region have largely remained stable. Appraisals on nonperforming and watched commercial real estate loan properties are updated as necessary, usually when the loan is downgraded or when there has been significant market deterioration since the last appraisal.
Previous wording
•Consumer Loans: These loans comprised 31.1% of the total loan portfolio at period-end. Consumer automobile loans at June 30, 2026, were 99.6% of this portfolio segment. The vast majority of automobile loans are initiated through automobile dealers. Inflation and the uncertain economic environment may limit the potential growth in this category.
Current wording
•Consumer Loans: These loans comprised 26.6% of the total loan portfolio at period-end. Consumer automobile loans at September 30, 2026, were 99.2% of this portfolio segment. The vast majority of automobile loans are initiated through automobile dealers. Inflation and the uncertain economic environment may limit the potential growth in this category.
Previous wording
•Residential Real Estate Loans: These loans, including home equity loans, made up 40.1% of the total loan portfolio at June 30, 2026. Demand for residential real estate has continued to remain strong. Arrow originated nearly all of the residential real estate loans currently held in the loan portfolio and applies conservative underwriting standards. Arrow may sell a portion of the residential real estate mortgage originations into the secondary market. The ratio of the sales of originations to total originations tends to fluctuate from period to period based on market conditions and other factors such as prevailing mortgage rates, other lending opportunities, capital and liquidity needs, and the availability of a market for such transactions.
Current wording
•Residential Real Estate Loans: These loans, including home equity loans, made up 41.5% of the total loan portfolio at September 30, 2026. Demand for residential real estate has continued to remain strong. Arrow originated nearly all of the residential real estate loans currently held in the loan portfolio and applies conservative underwriting standards. Arrow may sell a portion of the residential real estate mortgage originations into the secondary market. The ratio of the sales of originations to total originations tends to fluctuate from period to period based on market conditions and other factors such as prevailing mortgage rates, other lending opportunities, capital and liquidity needs, and the availability of a market for such transactions.
Previous wording
Liquidity and Access to Credit Markets: Arrow has not experienced, nor is it currently experiencing, any liquidity events. Arrow’s liquidity position should provide the necessary flexibility to address any unexpected near-term liquidity needs. Interest-earning cash balances at June 30, 2026 were $155.9 million compared to $185.1 million at December 31, 2025. Contingent lines of credit are also available. Operating collateralized lines of credit are established and available through the FHLBNY, FRB and other bank lines totaling approximately $1.1 billion. The general terms of Arrow's lines of credit have not changed significantly in recent periods (see the general liquidity discussion on page 55). Historically, Arrow has principally relied on asset-based liquidity (i.e., funds in overnight investments and cash flow from maturing investments and loans) with liability-based liquidity as a secondary source of funds (the main liability-based sources are an overnight borrowing arrangement with correspondent banks, an arrangement for overnight borrowing and term credit advances from the FHLBNY, and an additional arrangement for short-term advances at the FRB discount window). Regular liquidity stress tests and tests of the contingent liquidity plan are performed to ensure that an adequate amount of available funds can be generated to meet a wide variety of potential liquidity crises.
Current wording
Liquidity and Access to Credit Markets: Arrow has not experienced, nor is it currently experiencing, any liquidity events. Arrow’s liquidity position should provide the necessary flexibility to address any unexpected near-term liquidity needs. Interest-earning cash balances at September 30, 2026 were $325.6 million compared to $185.1 million at December 31, 2025. Contingent lines of credit are also available. Operating collateralized lines of credit are established and available through the FHLBNY, FRB and other bank lines totaling approximately $1.5 billion. The general terms of Arrow's lines of credit have not changed significantly in recent periods (see the general liquidity discussion on page 59). Historically, Arrow has principally relied on asset-based liquidity (i.e., funds in overnight investments and cash flow from maturing investments and loans) with liability-based liquidity as a secondary source of funds (the main liability-based sources are an overnight borrowing arrangement with correspondent banks, an arrangement for overnight borrowing and term credit advances from the FHLBNY, and an additional arrangement for short-term advances at the FRB discount window). Regular liquidity stress tests and tests of the contingent liquidity plan are performed to ensure that an adequate amount of available funds can be generated to meet a wide variety of potential liquidity crises.
Previous wording
Changes in Earning Assets: The loan portfolio at June 30, 2026, was $3.5 billion, an increase of $43.4 million, or 1.3%, from December 31, 2025. The following trends were experienced in our largest segments:
Current wording
Changes in Earning Assets: The change in earning assets was primarily due to an increase in the loan portfolio. The loan portfolio at September 30, 2026, was $4.1 billion, an increase of $691.5 million, or 20.0%, from December 31, 2025. The following trends were experienced in our largest segments:
Previous wording
•Commercial and commercial real estate loans: This segment of the loan portfolio increased by $26.5 million, or 2.7%, during the first six months of 2026. In the first six months of 2026, loans increased due to various factors including the strength of the local economy and expanding customer relationships.
Current wording
•Commercial and commercial real estate loans: This segment of the loan portfolio increased by $341.5 million, or 34.7%, during the first nine months of 2026. In the first nine months of 2026, loans primarily increased due to $310 million of loans acquired from the Acquisition. as well as other factors including the strength of the local economy and expanding customer relationships.
Previous wording
•Consumer loans: As of June 30, 2026, these loans, primarily auto loans originated through dealerships in New York and Vermont, increased by $7.2 million, or 0.7%, from the December 31, 2025 balance. Inflation, high interest rates and prepayment/refinancing activity may continue to slow demand.
Current wording
•Consumer loans: As of September 30, 2026, these loans, primarily auto loans originated through dealerships in New York and Vermont, increased by $24.1 million, or 2.2%, from the December 31, 2025 balance. Inflation, high interest rates and prepayment/refinancing activity may slow demand.
Previous wording
•Residential real estate loans: This segment increased during the first six months of 2026 by $9.8 million, or 0.7%. Overall economic conditions, including the level of interest rates may impact future origination levels.
Current wording
•Residential real estate loans: This segment increased during the first nine months of 2026 by $326.0 million, or 23.4%. The Acquisition added $271 million of residential real estate loans. Overall economic conditions, including the level of interest rates may impact future origination levels.
Previous wording
Changes in Sources of Funds: Deposit balances reached $3.7 billion, a decrease of $284.3 million, or 7.2% from December 31, 2025. The decrease from December 31, 2025 was primarily due to the replacement of $300 million of brokered CDs with lower-costing FHLB term advances. The borrowings are used with the cash flow hedge to lower the overall cost of funds for the Bank. In addition, balances were affected by seasonality of municipal deposits in the first quarter. Noninterest-bearing deposits represented 20.1% of total deposits at June 30, 2026, compared to 18.3% of total deposits on December 31, 2025. At June 30, 2026, total time deposits were $456.5 million. Municipal deposits increased $131.5 million, or 16.7% from December 31, 2025.
Current wording
Changes in Sources of Funds: Deposit balances reached $4.7 billion, an increase of $799.4 million, or 20.3% from December 31, 2025. The increase from December 31, 2025 was primarily due to $930 million of deposits acquired as part of the Acquisition. The net increase was offset by the replacement of $300 million of brokered CDs with lower-costing FHLB term advances. The borrowings are used with the cash flow hedge to lower the overall cost of funds for the Bank. In addition, balances were affected by seasonality of municipal deposits. Noninterest-bearing deposits represented 24.0% of total deposits at September 30, 2026, compared to 18.3% of total deposits on December 31, 2025. At September 30, 2026, total time deposits were $607.7 million. Municipal deposits increased $131.5 million, or 16.7% from December 31, 2025.
Previous wording
Arrow uses reciprocal deposits for a select group of municipalities to reduce the amount of investment securities required to be pledged as collateral for municipal deposits where municipal deposits in excess of the FDIC insurance coverage limits were transferred to other participating banks, divided into portions so as to qualify for FDIC insurance coverage at each transferee bank. In return, reciprocal amounts are transferred to Arrow in equal amounts of deposits from the participant banks. The balances of reciprocal deposits were $678.8 million and $614.9 million at June 30, 2026 and December 31, 2025, respectively.
Current wording
Arrow uses reciprocal deposits for a select group of municipalities to reduce the amount of investment securities required to be pledged as collateral for municipal deposits where municipal deposits in excess of the FDIC insurance coverage limits were transferred to other participating banks, divided into portions so as to qualify for FDIC insurance coverage at each transferee bank. In return, reciprocal amounts are transferred to Arrow in equal amounts of deposits from the participant banks. The balances of reciprocal deposits were $718.5 million and $614.9 million at September 30, 2026 and December 31, 2025, respectively.
Previous wording
Uninsured Deposits: Arrow's deposit base includes both insured and uninsured deposits. Arrow continually monitors levels and composition of uninsured deposits. Uninsured deposit balances were estimated to be $1.1 billion and $917.6 million at June 30, 2026 and December 31, 2025, respectively.
Current wording
Uninsured Deposits: Arrow's deposit base includes both insured and uninsured deposits. Arrow continually monitors levels and composition of uninsured deposits. Uninsured deposit balances were estimated to be $1.6 billion and $917.6 million at September 30, 2026 and December 31, 2025, respectively.
Previous wording
There were no sales of investment securities during the six month periods ended June 30, 2026 or 2025.
Current wording
In the three and nine months ended September 30, 2026, Arrow sold $73.3 million of investment securities. There were no sales of investment securities during the nine month periods ended September 30, 2025.
Previous wording
The following table summarizes purchases of investment securities within the AFS and HTM portfolios for the three and six month periods ended June 30, 2026 and 2025, as well as proceeds from the maturity and calls of investment securities within each portfolio for the respective periods presented:
Current wording
The following table summarizes purchases of investment securities within the AFS and HTM portfolios for the three and nine month periods ended September 30, 2026 and 2025, as well as proceeds from the maturity and calls of investment securities within each portfolio for the respective periods presented:
Previous wording
The table below shows the maturity schedule of loans outstanding as of June 30, 2026 classified by loan category and according to fixed interest rates and variable interest rates (in thousands):
Current wording
The table below shows the maturity schedule of loans outstanding as of September 30, 2026 classified by loan category (in thousands):
Previous wording
The following table presents an analysis of the interest rate sensitivity of our commercial, commercial real estate, consumer and residential real estate loan portfolios due after one year as of June 30, 2026
Current wording
The following table presents an analysis of the interest rate sensitivity of our commercial, commercial real estate, consumer and residential real estate loan portfolios due after one year as of September 30, 2026 and according to fixed interest rates and variable interest rates:
Previous wording
Consumer Loans: At June 30, 2026, consumer loans continue to be a significant component of Arrow's business, comprising approximately one third of the total loan portfolio.
Current wording
Consumer Loans: At September 30, 2026, consumer loans continue to be a significant component of Arrow's business, comprising approximately 27% of the total loan portfolio.
Previous wording
In the fourth quarter of 2025, the targeted Federal Funds rate fell 25 basis points. The Federal Funds rate has not changed subsequently. Future rate cuts are difficult to determine. See Part I, Item 3, entitled "Quantitative and Qualitative Disclosures About Market Risk," on page 61 for further discussion.
Current wording
In the third quarter of 2026, the targeted Federal Funds rate rose 25 basis points. Future rate increases or cuts are difficult to determine. See Part I, Item 3, entitled "Quantitative and Qualitative Disclosures About Market Risk," on page 65 for further discussion.
Previous wording
$20 million of Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts listed on the consolidated balance sheet as of June 30, 2026 (i.e., previously issued TRUPs) will, subject to certain limits, continue to qualify as Tier 1 regulatory capital for Arrow until such TRUPs mature or are redeemed. This is further discussed under "Capital Resources" beginning on page 54 of this Report.
Current wording
$28 million of Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts listed on the consolidated balance sheet as of September 30, 2026 (i.e., previously issued TRUPs) will, subject to certain limits, continue to qualify as Tier 1 regulatory capital for Arrow until such TRUPs mature or are redeemed. This is further discussed under "Capital Resources" beginning on page 58 of this Report.
Previous wording
The allowance for credit losses was $36.2 million as of June 30, 2026, which represented 1.03% of loans outstanding, as compared to $34.3 million, or 0.99%, at December 31, 2025. The overall change in the allowance from December 31, 2025 was primarily the result of a $1.6 million specific reserve related to a non-performing commercial loan due to a sudden personal and corporate bankruptcy declared in June 2026 as well as growth in the loan portfolio.
Current wording
The allowance for credit losses was $41.1 million as of September 30, 2026, which represented 0.99% of loans outstanding, as compared to $34.3 million, or 0.99% of loans outstanding, at December 31, 2025. The overall change in the allowance from December 31, 2025 was primarily driven by $5.7 million related to the Acquisition , $3.7 million in net charge-offs and $1.1 million attributable to loan growth and model calculation.
Previous wording
See Note 2. Accounting Policies to the Consolidated Financial Statements for additional discussion related to CECL.
Current wording
See Note 3. Accounting Policies for additional discussion related to CECL.
Showing the first 40 of 58 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Nine Months Ended September 30, 2026 Compared With
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USE OF NON-GAAP FINANCIAL MEASURES
Previous report — wording carried elsewhere
The decrease in the effective tax rate for the second quarter of 2026 compared to the second quarter of 2025 reflects the impact of tax credits recognized from energy production tax credit purchases made in June 2026 partially offset by nondeductible expenses related to the acquisition of Adirondack Bank.
Previous report — wording carried elsewhere
Six Months Ended June 30, 2026 Compared With