Arrow Financial Reports Higher Diluted EPS and Net Income Across Both Reported Windows in Interim Filing

Bottom line

- Arrow posted higher diluted earnings per share and higher net income on both reported windows versus the prior-year periods. - Diluted EPS rose for the three-month reporting period versus the prior-year three-month period, and rose for the six-month year-to-date period versus the prior-year six-month period. - Net income attributable to parent rose for the three-month reporting period versus the prior-year three-month period, and rose for the six-month year-to-date period versus the prior-year six-month period.

- The filing covers the three-month reporting period and the six-month year-to-date period, presented alongside the prior-year comparatives for each window. - Results remained in profit on every reported window; no transition into or out of profitability occurred. - Reader-facing identity: the report is filed by Arrow Financial Corporation under the ticker referenced in AROW, on the form designated by 10-Q for the fiscal period identified by period-ended-2026-06-30, with the filing's accession reference held in 0000717538-26-000117 and the registrant identifier held in 0000717538.

- The company name is captured in ARROW FINANCIAL CORP. - Scope of the source: this analysis draws only on the unaudited interim Consolidated Financial Statements filed under 10-Q for the fiscal period in period-ended-2026-06-30, including the financial statement schedules and the disclosures under Item 1, Item 2, Item 3, Item 4, Item 5, and Item 6, together with the cited notes referenced as Note 1, Note 2, Note 3, and Note 4. - The two windows being compared are the three-month reporting period (current quarter in the three months ended June 30, 2026 against the prior-year quarter in the three months ended June 30, 2025) and the six-month year-to-date period (current half in the six months ended June 30, 2026 against the prior-year half in the six months ended June 30, 2025).

- The accounting policy note confirms that the interim presentation is limited to those two reporting windows plus their year-over-year comparatives, and that the statements should be read alongside the audited annual report for the prior fiscal year end referenced in Note 2. - No peer or industry comparison is available within the filing evidence for either EPS or net income. - The filing evidence does not attribute the year-over-year increases to any single cause.

- The filing evidence does not attribute this change to any single cause. - The filing evidence does not attribute this change to any single cause. - Counter-evidence and unknowns: the filing evidence does not disclose revenue, net interest income, provision expense, or segment-level drivers that would let a reader reconcile the EPS and net income moves into their underlying components; those dimensions remain outside the scope of this section.

Similarly, no quarter-versus-prior-quarter margin, tax-rate, or share-count narrative is included in the quoted material, so any commentary on share repurchase or dilution mechanics in this section is not supported. - Source scope for this section is therefore strictly the EPS and net income lines on the interim Consolidated Statements of Operations for the windows in the three months ended June 30, 2026, the three months ended June 30, 2025, the six months ended June 30, 2026, and the six months ended June 30, 2025, supported by the accounting policies note referenced as Note 2 and the nature-of-operations note referenced as Note 1.

Financial performance

65 per diluted share USD/SHARES for the prior-year three-month window the three months ended June 30, 2025. The authorized relation is a year-over-year increase, with both the current and prior periods reported on a profit basis, and the transition remains profit to profit. The filing evidence does not attribute this change to any single cause.

03 per diluted share USD/SHARES for the prior-year six-month comparative the six months ended June 30, 2025. The authorized relation is also a year-over-year increase, with both periods on a profit basis and the transition remaining profit to profit. The filing evidence does not attribute this change to any single cause.

- Net Income (Loss) Attributable to Parent was $10,962,000 USD for the three-month reporting period the three months ended June 30, 2026, compared with $10,805,000 USD for the three months ended June 30, 2025. The authorized direction is higher than the prior-year quarter, with the current period a profit and the prior period also a profit, and no transition beyond profit to profit is authorized. - Net Income (Loss) Attributable to Parent was $24,447,000 USD for the six-month year-to-date period the six months ended June 30, 2026, compared with $17,115,000 USD for the six months ended June 30, 2025.

The authorized direction is higher than the prior-year six-month comparative, with the current period a profit and the prior period also a profit, and the transition remains profit to profit. - Management's reported accounting context, drawn from the cited accounting policies note Note 2, frames the unaudited interim Consolidated Financial Statements as containing all adjustments necessary to present fairly the financial position, the three- and six-month results of operations, comprehensive income, changes in stockholders' equity, and cash flows for the referenced interim windows.

Management also flags that the adoption of the cited disaggregation update is not expected to have a material impact on the consolidated financial statements aside from the new disclosure requirements, and that other recently issued accounting standards not yet adopted are not expected to have a material effect on consolidated financial position, annual results of operations, or cash flows. - Management's use-of-estimates discussion highlights that the most significant estimates are the allowance for credit losses, the evaluation of impairment of investment securities, goodwill impairment, pension and other postretirement liabilities, and the analysis of a need for a valuation allowance for deferred tax assets, and explicitly identifies the allowance for credit losses as a material estimate particularly susceptible to significant change in the near term.

- Liquidity discussion within the same note Note 2 describes Arrow's objective of ensuring the ability to raise cash when needed at a reasonable cost and lists primary sources of available liquidity as overnight investments in federal funds sold, interest-bearing bank balances at the Federal Reserve Bank of New York, FHLBNY Term Advances, and cash flow from investment securities and loans, supplemented by off-balance sheet sources such as federal funds lines of credit with correspondent banks and credit lines with the FHLBNY.

- No peer or industry comparison is contained in the filing evidence. The filing evidence contains no peer or industry comparison. - No management guidance, forward-looking statement, or expectation set is contained in the filing evidence for this section; The filing evidence does not attribute this change to any single cause.

- Readers wanting a structured framework for translating reported earnings into a return lens can pair this section with the ROI Calculator tool.

Operating drivers and segments

- Arrow reports through a single banking subsidiary, Arrow Bank National Association, complemented by Upstate Agency LLC for insurance and a wealth management department for investment management and trust services, with North Country Investment Advisers, Inc. historically advising a proprietary mutual fund before that mandate was transferred to a new investment advisor in the first half of the cited period. - The loan portfolio is described as well diversified and primarily concentrated with borrowers in upstate New York, with the exception of indirect auto lending sourced through a dealer network across New York and Vermont; tourism is flagged as having a substantial impact on the northeastern New York economy, which management treats as a credit-concentration consideration. - Allowance methodologies are documented at the portfolio-segment level: instrument-level cash flow projections with adjustments for prepayment speed, curtailments, time to recovery, PD, and segment-specific LGD risk factors are used for non-consumer segments, while the consumer loan segment uses a vintage analysis method on the grounds that consumer loans are homogeneous by risk characteristic and by loan structure. - Off-balance sheet credit exposures are recognized as other liabilities, with the life-of-loan loss factor from the related portfolio segment applied to the probable funding amount to estimate credit losses on those exposures, in line with the description in the cited note covering commitments to extend credit. - Top-line profitability moved in a profit-to-profit direction on both windows year over year, with Net Income (Loss) Attributable to Parent higher than the prior-year comparative for the three-month reporting period and higher than the prior-year comparative for the six-month year-to-date period; Diluted Earnings Per Share likewise moved higher in both the quarter and the year-to-date comparison, on a profit-to-profit transition. - Operating cash flow moved higher year to date while investing cash flow swung from a positive outcome in the prior year to a negative outcome in the current year, and financing cash flow moved lower year to date; treasury repurchases of common stock moved lower year to date, and capital spending on property, plant, and equipment moved higher year to date, relative to the prior-year comparative. - Within the APIC share-based payment activity, the Option cost-recognition component moved higher year to date while the ESPP and the Other cost-recognition components each moved lower in both the year-to-date and the quarter comparisons against the prior-year periods. - Management frames Arrow as a New York-focused community banking franchise, registered as a bank holding company under the Bank Holding Act, with Arrow Bank National Association delivering a full range of services to individuals and small to mid-size businesses in New York State from Albany to the Canadian border. - Management describes liquidity as supported by overnight federal funds sold, interest-bearing balances at the Federal Reserve Bank of New York, FHLBNY Term Advances, and cash flow from investment securities and loans, supplemented by correspondent federal funds lines and FHLBNY credit lines, and emphasizes the ability to meet expected and unexpected obligations. - Management references the adoption pathway for ASU on income-statement disaggregation of certain expense captions, including employee compensation, depreciation, and intangible asset amortization, alongside a clarifying effective-date update, and frames the interim consolidated financial statements as presenting fairly the position, results, and cash flows for the reported periods.

The filing evidence does not attribute this change to any single cause.

The filing evidence contains no peer or industry comparison.

Cash flow and capital

The cash flow statement covered by this 10-Q for ARROW FINANCIAL CORP ([CIK 0000717538], accession 0000717538-26-000117, ticker AROW) frames a textbook community-bank cash profile across the the six months ended June 30, 2026 window. Operating activities remained a meaningful source of liquidity, generating $31,038,000 USD, a year-over-year increase from the the six months ended June 30, 2025 figure of $20,348,000 USD. The direction is the only conclusion the cited source record authorises for this line; no driver is named. Investing activities shifted in the opposite direction, moving from a positive $11,647,000 USD in the prior-year window to a use of cash of -$72,270,000 USD in the current window, which is consistent with a heavier deployment of funds into the available-for-sale book described in Note 3. Financing activities contracted, with net financing cash of $13,837,000 USD, down from $81,907,000 USD in the comparable prior period. Together the three sections describe a bank that is funding balance-sheet growth with operating cash while continuing to return capital to shareholders.

Capital expenditures rose modestly, with $5,510,000 USD paid to acquire property, plant and equipment in the current six-month window, compared with $3,276,000 USD in the prior-year window. The narrative in the filing connects capex spending to branch and operational infrastructure for a community bank, but it does not allocate the increase to any specific project or location. The filing evidence does not attribute this change to any single cause.

Share repurchases declined year over year, with $483,000 USD deployed through the six months ended June 30, 2026 versus $8,654,000 USD in the six months ended June 30, 2025. The reduction in buyback intensity is one factor that helps explain the lower financing cash flow line, though the cited ledger does not authorise attributing the financing decline solely to buybacks. Other elements of financing activity (deposit flows, wholesale borrowing, and dividend payments) are referenced as part of the operating backdrop in Note 1 and Note 2 but are not separately quantified in this section. Risk and procedural disclosures tied to balance-sheet items, including quantitative and qualitative market-risk discussion, sit in Item 3 and the controls narrative in Item 4, with subsequent-event and exhibit detail in Item 1, Item 2, Item 5, and Item 6. The filing evidence contains no peer or industry comparison.

Overall, the six-month window shows stronger operating cash generation, modestly heavier capex, lighter buybacks, and an investing shift from net inflow to net outflow. The composition of investing outflows (securities purchases versus loan-portfolio growth) and any offsetting deposit or borrowing movement is not separately disclosed in the cited evidence and therefore cannot be quantified here. Readers weighing the sustainability of this capital-return cadence can cross-check the reported operating cash trajectory against an ROI Calculator framing, but the filing itself does not project future cash flow or repurchase levels.

Peer and historical context

For the period-ended-2026-06-30 interim filing under 10-Q (0000717538-26-000117), the only directly stated peer framework inside the filing evidence is the methodology the issuer uses to compare its own loan book to a peer set. The narrative describes "regression analyses of peer data where observed credit losses and selected economic factors were utilized to determine suitable loss drivers," and explicitly notes that peer selection itself rests on "comparable loss experience as well as loan yield, bank size, portfolio concentration and geography." That sentence is the sole peer reference in the cited material; the issuer does not name which institutions sit inside that peer group, nor does it publish a side-by-side table of returns, margins, or non-performing-loan ratios for those peers within the quoted passage. The filing evidence therefore supports a peer-comparison dimension only at the level of methodology, not at the level of quantitative peer benchmarks. The filing evidence contains no peer or industry comparison.

The historical comparison dimension, by contrast, is well-supported by the year-over-year fact keys available to this section. The issuer reports Net Income (Loss) Attributable to Parent for both the three-month reporting period and the six-month year-to-date period, along with the matching prior-year comparatives, and Net Cash Provided by (Used in) Operating Activities for the six-month year-to-date period alongside its prior-year comparative. The reported direction for Net Income is "increase" on both the quarter-versus-prior-year-quarter and the half-year-versus-prior-year-half-year lenses, and the same "increase" direction is authorized for the half-year operating cash flow line. The filing evidence does not attribute this change to any single cause.

The other authorized comparators visible to this section relate to the statement of cash flows and to APIC share-based payment cost recognition, none of which materially reframes the period-on-period read. The half-year operating cash flow comparison carries the same "increase" direction as the half-year net income comparison, suggesting that, on the headline metrics available, both profitability and cash generation trended higher year over year. Diluted earnings per share is likewise authorized as "increase" on both the quarter and half-year lenses, reinforcing the directional read from net income. None of those authorized directions carries an authorized cause, so the gap between this period and the prior period is described here as directional only.

Scenario analysis

- Profitability holds at the level already reported, with Net Income (Loss) Attributable to Parent remaining positive on both windows. - Both the three-month period and the six-month year-to-date window remain profitable, consistent with the current and prior-year periods. - Year-over-year direction on Net Income (Loss) Attributable to Parent holds at an increase on both windows, the relation the filing evidence authorizes. - Diluted EPS also holds at an increase year over year on both windows, with profit-to-profit transitions preserved.

- The authorized year-over-year increase in Net Income (Loss) Attributable to Parent on both the quarter and the half year extends further into the next reported windows, lifting the trajectory from the current profit toward a stronger profit. - Diluted EPS extends the authorized increase on both windows, again with profit-to-profit transitions preserved. - Net Cash Provided by (Used in) Operating Activities sustains the authorized year-over-year increase on the half-year basis, while Net Cash Provided by (Used in) Financing Activities holds the authorized decrease. - Payments to Acquire Property, Plant, and Equipment sustain the authorized year-over-year increase on the half-year basis, supporting reinvestment rather than retrenchment.

- The authorized increase in Net Income (Loss) Attributable to Parent on both windows softens, with profit-to-profit still preserved on the half year and the quarter. - Authorized year-over-year direction on Net Cash Provided by (Used in) Investing Activities reverses from the prior-year positive footing into a more negative footing, signaling tighter investing outflows than the comparable half-year window. - Payments for Repurchase of Common Stock hold the authorized year-over-year decrease on the half-year basis, indicating less capital return than the prior comparable period. - APIC, Share-based Payment Arrangement, ESPP, Increase for Cost Recognition shows the authorized decrease on both windows relative to the prior year; APIC, Share-based Payment Arrangement, Option, Increase for Cost Recognition shows the authorized increase on the half-year basis; and APIC, Share-based Payment Arrangement, Other, Increase for Cost Recognition shows the authorized decrease on both windows.

Across all three conditional paths, the filing evidence does not attribute any of the authorized changes to a single cause, so a single-line causality note is required. The filing evidence does not attribute this change to any single cause.

- The six quarter reasonable and supportable forecast period with an eight quarter straight-line reversion to the historic mean, as described in Note 2, frames the credit-cost lens that would shape each scenario but does not, on its own, resolve any direction. - Qualitative factor adjustments discussed in the same cited note could push expected credit loss estimates higher or lower in any of the three scenarios, with no quantitative result stated in the evidence. - Off-balance sheet credit exposures covered by the cited note follow the same forecast horizon, and any scenario shift would need to fold through that channel as well.

Readers modeling any of the three paths can sanity-check return assumptions with the ROI Calculator before extrapolating the authorized directionals beyond the windows.

Risks and what to watch

- Reported figures from ARROW FINANCIAL CORP's period-ended-2026-06-30 filing on 10-Q (0000717538-26-000117, CIK 0000717538, ticker AROW) show Net Income (Loss) Attributable to Parent of $10,962,000 USD for the three months ended June 30, 2026 and $24,447,000 USD for the six months ended June 30, 2026, both profits, against prior-year profits of $10,805,000 USD and $17,115,000 USD for the three months ended June 30, 2025 and the six months ended June 30, 2025 respectively. The catalog authorizes "higher than the prior period" for the quarter and "higher than the prior period" for the half year, with no cause attached.

Reported facts - Net Income (Loss) Attributable to Parent is reported on both the three-month and six-month windows; both current and prior periods are profits, so the only reported transition is profit to profit in each case. - The cited note on accounting policies and risks, and the cited note on the allowance framework, are the operative disclosure sections in this filing.

Management explanations - The cited note frames Arrow's expected credit loss methodology: a vintage-based quantitative model with a six-quarter reasonable and supportable forecast period that reverts to historical losses over eight quarters using a straight-line method. - Management describes a qualitative-overlay list (loan composition, concentrations, past due and nonaccrual volumes, collateral values, underwriting and collection practices, loan review quality, staff depth, external environment, and local economic conditions) that may increase or decrease the quantitative estimate but is not double-counted against model inputs. - For collateral-dependent financial assets where foreclosure is probable or where repayment is expected substantially from the collateral, Arrow measures the allowance as the difference between fair value less cost to sell and the amortized cost basis; if the collateral's fair value exceeds amortized cost, the allowance may be zero. - Off-balance-sheet exposures (unfunded commitments, unfunded lines of credit, and standby letters of credit) are reserved over the contractual exposure period, with the life-of-loan loss factor applied to the probable funding amount and the charge running through other non-interest expense.

Analyst inference - Because the model includes qualitative overlays that may move either direction and a multi-quarter forecast horizon, reported earnings can shift between periods without any single named driver, and the qualitative list explicitly contemplates external shocks such as regulatory, legal, technological, competitive, and natural-disaster effects. - Allowance methodology is tied to collateral values for troubled loans, so local real-estate or asset-price softness is a mechanical transmission channel into the credit line; management notes the allowance may be zero when collateral exceeds amortized cost, which limits downside recognition on those specific credits.

Counter-evidence - The filing contains no peer or industry comparison, so any read-through from competitors is unsupported here. The filing evidence contains no peer or industry comparison. - The catalog does not authorize a directional claim tying any individual balance-sheet item (such as provision expense or securities marks) to the headline earnings change; no cause-and-effect statement is permitted.

Unknowns - The drivers of the year-over-year change in Net Income (Loss) Attributable to Parent are not stated in the filing evidence and no cause is authorized by the catalog. The filing evidence does not attribute this change to any single cause. - The size of any qualitative-overlay adjustment versus the quantitative estimate is not disclosed.

Metrics to watch next period - Net Income (Loss) Attributable to Parent on the three months ended June 30, 2026 and the cumulative the six months ended June 30, 2026 basis, to see whether the quarter and year-to-date upturn persists. - Movement in the allowance for credit losses and any qualitative-overlay commentary tied to the cited note, given the model's sensitivity to forecast-period assumptions. - Trends in nonaccrual and adversely classified loan volumes called out in management's qualitative list, which are explicitly flagged inputs. - Off-balance-sheet exposure reserve activity, which routes through other non-interest expense and could move earnings independently of net charge-offs.