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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-12507

ARROW FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


New York						22-2448962
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

250 Glen Street

Glens Falls

New York

12801

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

518

745-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, Par Value $1.00 per share	AROW	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding as of April 30, 2026
Common Stock, par value $1.00 per share						16,529,019

ARROW FINANCIAL CORPORATION

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			37
Item 3. Quantitative and Qualitative Disclosures About Market Risk			57
Item 4. Controls and Procedures			59


PART II - OTHER INFORMATION
Item 1. Legal Proceedings			60
Item 1.A. Risk Factors			60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60
Item 3. Defaults Upon Senior Securities			60
Item 4. Mine Safety Disclosures			60
Item 5. Other Information			60
Item 6. Exhibits			62

SIGNATURES			63

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


	March 31, 2026		December 31, 2025
ASSETS
Cash and Due From Banks	$	29,102	$	29,132
Interest-Earning Deposits at Banks	256,504		185,051
Investment Securities:
Available-for-Sale at Fair Value	518,803		495,868
Held-to-Maturity (Fair Value of $65,321 at March 31, 2026 and $66,569 at December 31, 2025)	65,646		66,975
Equity Securities	5,742		5,597
Other Investments	4,375		4,372
Loans	3,438,966		3,453,093
Allowance for Credit Losses	(34,055)		(34,322)
Net Loans	3,404,911		3,418,771
Premises and Equipment, Net	59,561		59,433
Goodwill	23,789		23,789
Other Intangible Assets, Net	1,692		1,741
Other Assets	151,894		155,133
Total Assets	$	4,522,019	$	4,445,862
LIABILITIES
Noninterest-Bearing Deposits	$	721,734	$	722,374
Interest-Bearing Checking Accounts	898,168		862,192
Savings Deposits	1,618,309		1,557,638
Time Deposits over $250	140,899		155,802
Other Time Deposits	634,829		641,463
Total Deposits	4,013,939		3,939,469
Borrowings	4,265		4,265


Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		20,000
Finance Leases	4,908		4,929
Other Liabilities	38,764		45,347
Total Liabilities	4,081,876		4,014,010
STOCKHOLDERS’ EQUITY
Preferred Stock, $1 Par Value; 1,000,000 Shares Authorized at March 31, 2026 and December 31, 2025 (none issued)	—		—
Common Stock, $1 Par Value: 30,000,000 Shares Authorized; 22,066,559 Shares Issued and 16,526,929 and 16,445,342 outstanding at March 31, 2026 and December 31, 2025	22,067		22,067
Additional Paid-in Capital	414,431		414,506
Retained Earnings	110,804		102,271

Accumulated Other Comprehensive Loss	(4,764)		(4,037)
Treasury Stock, at Cost (5,539,630 Shares at March 31, 2026 and 5,621,217 Shares at December 31, 2025)	(102,395)		(102,955)
Total Stockholders’ Equity	440,143		431,852
Total Liabilities and Stockholders’ Equity	$	4,522,019	$	4,445,862

See Notes to Unaudited Interim Consolidated Financial Statements.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts)

(Unaudited)


	Three Months Ended March 31,
	2026		2025
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans	$	47,126	$	44,550
Interest on Deposits at Banks	1,675		1,621
Interest and Dividends on Investment Securities:
Fully Taxable	4,529		3,608
Exempt from Federal Taxes	464		587
Total Interest and Dividend Income	53,794		50,366
INTEREST EXPENSE
Interest-Bearing Checking Accounts	2,100		1,803
Savings Deposits	8,716		9,483
Time Deposits over $250	1,196		1,811
Other Time Deposits	5,436		5,529

Borrowings	—		167
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	169		169
Interest on Financing Leases	47		47
Total Interest Expense	17,664		19,009
NET INTEREST INCOME	36,130		31,357
Provision for Credit Losses on Loans	548		5,019
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	35,582		26,338
NON-INTEREST INCOME
Income From Fiduciary Activities	2,713		2,535
Fees for Other Services to Customers	2,727		2,600
Insurance Commissions	2,113		1,826
Net Gain on Securities	145		317
Net Gain on Sales of Loans	290		101
Other Operating Income	640		460
Total Non-Interest Income	8,628		7,839
NON-INTEREST EXPENSE
Salaries and Employee Benefits	14,922		13,555
Occupancy Expenses, Net	2,459		2,022
Technology and Equipment Expense	5,052		5,087
FDIC Assessments	585		670
Other Operating Expense	3,847		4,711
Total Non-Interest Expense	26,865		26,045
INCOME BEFORE PROVISION FOR INCOME TAXES	17,345		8,132
Provision for Income Taxes	3,860		1,822
NET INCOME	$	13,485	$	6,310
Average Shares Outstanding:
Basic	16,382		16,665
Diluted	16,403		16,673
Per Common Share:
Basic Earnings	$	0.82	$	0.38
Diluted Earnings	0.82		0.38

See Notes to Unaudited Interim Consolidated Financial Statements.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

(Unaudited)


	Three Months Ended March 31,
	2026		2025
Net Income	$	13,485	$	6,310
Other Comprehensive (Loss) Income, Net of Tax:
Net Unrealized Securities Holding (Loss) Gain Arising During the Period	(1,810)		6,416

Net Unrealized Gain (Loss) on Cash Flow Hedge Agreements	902		(1,154)
Reclassification of Net Unrealized Loss (Gain) on Cash Flow Hedge Agreements to Interest Expense	216		(319)


Amortization of Net Retirement Plan Actuarial (Gain)	(87)		(71)
Amortization of Net Retirement Plan Prior Service Cost	52		61
Other Comprehensive (Loss) Income	(727)		4,933
Comprehensive Income	$	12,758	$	11,243

See Notes to Unaudited Interim Consolidated Financial Statements.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


	Three Months Ended March 31, 2026
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumu-lated Other Com- prehensive Loss		Treasury Stock		Total
Balance at December 31, 2025	$	22,067	$	414,506	$	102,271	$	(4,037)	$	(102,955)	$	431,852


Net Income	—		—		13,485		—		—		13,485
Other Comprehensive Loss	—		—		—		(727)		—		(727)



Cash Dividends Paid, $.30 per Share	—		—		(4,952)		—		—		(4,952)
Stock Options Exercised, Net (7,325 Shares)	—		107		—		—		58		165
Shares Issued Under the Directors’ Stock Plan (3,925 Shares)	—		94		—		—		31		125
Shares Issued Under the Employee Stock Purchase Plan (2,684 Shares)	—		58		—		—		22		80

Shares Issued Related to Restricted Share Awards (71,111 Shares)	—		(562)		—		—		562		—
Compensation expense related to Employee Stock Purchase Plan	—		8		—		—		—		8
Stock-Based Compensation Expense	—		220		—		—		—		220
Purchase of Treasury Stock (3,458 Shares) related to vesting or exercise of stock based compensation awards	—		—		—		—		(113)		(113)




Balance at March 31, 2026	$	22,067	$	414,431	$	110,804	$	(4,764)	$	(102,395)	$	440,143





























	Three Months Ended March 31, 2025
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumu-lated Other Com- prehensive Loss		Treasury Stock		Total
Balance at December 31, 2024	$	22,067	$	413,476	$	77,215	$	(18,453)	$	(93,404)	$	400,901


Net Income	—		—		6,310		—		—		6,310
Other Comprehensive Income	—		—		—		4,933		—		4,933



Cash Dividends Paid, $.28 per Share	—		—		(4,698)		—		—		(4,698)
Stock Options Exercised, Net (5,144 Shares)	—		62		—		—		40		102
Shares Issued Under the Directors’ Stock Plan (4,989 Shares)	—		92		—		—		40		132
Shares Issued Under the Employee Stock Purchase Plan (3,327 Shares)	—		56		—		—		27		83

Shares Issued Related to Restricted Share Awards (43,250 Shares)	—		(342)		—		—		342		—
Compensation expense related to Employee Stock Purchase Plan	—		9		—		—		—		9
Stock-Based Compensation Expense	—		116		—		—		—		116

Purchase of Treasury Stock (130,101 Shares) 1	—		—		—		—		(3,479)		(3,479)


Balance at March 31, 2025	$	22,067	$	413,469	$	78,827	$	(13,520)	$	(96,434)	$	404,409

1 Cost of Treasury Stock includes the Stock Buyback Tax Under the Inflation Reduction Act of 2022.

See Notes to Unaudited Interim Consolidated Financial Statements.

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)


	Three Months Ended March 31,
Cash Flows from Operating Activities:	2026		2025
Net Income	$	13,485	$	6,310
Provision for Credit Losses	548		5,019
Depreciation and Amortization	1,246		1,206
Net gain on equity securities	(145)		(317)
Loans originated and held-for-sale	(7,420)		(5,591)
Proceeds from the sale of loans held-for-sale	10,605		4,135
Net gain on the sale of loans	(290)		(101)
Net loss on the sale of premises and equipment, other real estate owned and repossessed assets	39		37
Contributions to retirement benefit plans	(157)		(177)
Deferred income tax benefit	(1,530)		(854)
Settlement of Energy Production Tax Credits	(4,070)		—
Shares issued under the Directors’ Stock Plan	125		132
Stock-based compensation expense	228		125
Tax benefit from exercise of stock options	109		8

Net increase in Other Assets	4,482		3,089
Net decrease in Other Liabilities	(2,012)		(2,951)
Net Cash Provided By Operating Activities	15,243		10,070
Cash Flows from Investing Activities:
Proceeds from maturities, calls, and principal repayments of securities AFS	17,945		26,172
Purchases of securities AFS	(43,152)		—
Proceeds from maturities, calls, and principal repayments of securities HTM	2,070		3,629
Purchases of securities HTM	(752)		(2,899)

Net decrease (increase) in loans	9,617		(21,168)

Proceeds from sales of premises and equipment, OREO and repos	468		623
Purchases of premises and equipment	(1,302)		(1,274)
Purchase of FHLB stock	(3)		—

Net Cash (Used) Provided By Investing Activities	(15,109)		5,083
Cash Flows from Financing Activities:
Net increase in deposits	74,470		140,235

Finance lease payments	(21)		(26)


Net cash collateral received from (paid to) derivative counterparties	1,660		(470)

Purchase of treasury stock	(113)		(3,479)
Stock options exercised, net	165		102
Shares issued under ESPP	80		83
Cash dividends paid	(4,952)		(4,698)
Net Cash Provided By Financing Activities	71,289		131,747
Net Increase in Cash and Cash Equivalents	71,423		146,900
Cash and Cash Equivalents at Beginning of Period	214,183		154,546
Cash and Cash Equivalents at End of Period	$	285,606	$	301,446

Supplemental Disclosures to Statements of Cash Flow Information:
Interest on deposits and borrowings	$	18,101	$	18,718
Income taxes	603		507

Transfer of loans to other real estate owned and repossessed assets	749		624

See Notes to Unaudited Interim Consolidated Financial Statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.RISKS AND UNCERTAINTIES

Nature of Operations - Arrow Financial Corporation ("Arrow"), a New York corporation, was incorporated on March 21, 1983 and is registered as a bank holding company within the meaning of the Bank Holding Company Act of 1956. Arrow's banking subsidiary is Arrow Bank National Association® ("Arrow Bank™") whose main office is located in Glens Falls, New York. Arrow Bank provides a full range of services to individuals and small to mid-size businesses in New York State from Albany to the Canadian border. In addition, through an indirect lending program, Arrow sources consumer loans from an extensive network of automobile dealers that operate throughout New York and Vermont. An active subsidiary of Arrow Bank is Upstate Agency LLC, offering insurance services including property, and casualty insurance, group health insurance and individual life insurance products. Arrow Bank has a wealth management department which provides investment management and trust services. 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, and Arrow Properties, Inc., a real estate investment trust, or REIT, are subsidiaries of Arrow Bank. Arrow also directly owns two subsidiary business trusts, organized in 2003 and 2004 to issue trust preferred securities (TRUPs), which are still outstanding.

Concentrations of Credit - With the exception of some indirect auto lending, Arrow's loans are primarily with borrowers in upstate New York. Although the loan portfolio of Arrow Bank is well diversified, tourism has a substantial impact on the northeastern New York economy. The commitments to extend credit are fairly consistent with the distribution of loans presented in Note 4. Loans to the Consolidated Financial Statements, generally have the same credit risk and are subject to normal credit policies. Generally, the loans are secured by assets and are expected to be repaid from cash flow or the sale of selected assets of the borrowers. Arrow evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Arrow upon extension of credit, is based upon Management's credit evaluation of the counterparty. The nature of the collateral varies with the type of loan and may include: residential real estate, cash and securities, inventory, accounts receivable, property, plant and equipment, income producing commercial properties and automobiles.

Liquidity - The objective of effective liquidity management is to ensure that Arrow has the ability to raise cash when needed at a reasonable cost. This includes the capability of meeting expected and unexpected obligations to Arrow's customers at any time. Given the uncertain nature of customer demands and the need to maximize earnings, Arrow must have available reasonably priced sources of funds, both on- and off-balance sheet, that can be accessed quickly in times of need. Arrow’s liquidity position should provide the Company with the necessary flexibility to address any unexpected near-term disruptions such as reduced cash flows from the investment and loan portfolio, unexpected deposit runoff, or increased loan originations.

Arrow's primary sources of available liquidity are overnight investments in federal funds sold, interest bearing bank balances at the Federal Reserve Bank of New York, and cash flow from investment securities and loans.

In addition to liquidity from cash, short-term investments, investment securities and borrowings, Arrow has supplemented available operating liquidity with additional off-balance sheet sources such as a federal funds lines of credit with correspondent banks and credit lines with the FHLBNY.

Note 2. ACCOUNTING POLICIES

The accompanying unaudited interim Consolidated Financial Statements contain all of the adjustments necessary to present fairly the financial position as of March 31, 2026 and December 31, 2025; the results of operations for the three month periods ended March 31, 2026 and 2025; the consolidated statements of comprehensive income for the three month periods ended March 31, 2026 and 2025; the changes in stockholders' equity for the three month periods ended March 31, 2026 and 2025; and the cash flows for the three month periods ended March 31, 2026 and 2025. All such adjustments are of a normal recurring nature. The unaudited interim Consolidated Financial Statements should be read in conjunction with the audited annual Consolidated Financial Statements of Arrow for the year ended December 31, 2025 included in Arrow's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K").

Accounting Standards Pending Adoption

ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", requires new financial statement disclosures, disaggregating information for certain expense captions presented on the face of the income statements, including employee compensation, depreciation, and intangible asset amortization. Arrow is required to adopt this ASU prospectively for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. Arrow is currently evaluating the potential impact of ASU 2024-03 on our Consolidated Financial Statements.

Other ASUs issued but not effective until after March 31, 2026, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations and/or cash flows.

Management’s Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reporting period. Our most significant estimates are the allowance for credit losses, the evaluation of impairment of investment securities, goodwill impairment, pension and other postretirement liabilities and an analysis of a need for a valuation allowance for deferred tax assets. Actual results could differ from those estimates.

A material estimate that is particularly susceptible to significant change in the near term is the allowance for credit losses. In connection with the determination of the allowance for credit losses, management obtains appraisals for properties. The allowance for credit losses is management’s best estimate of expected credit losses as of the balance sheet date. While management uses available information to recognize losses on loans, future adjustments to the allowance for credit losses may be necessary based on changes in economic conditions.

Allowance for Credit Losses – Loans

Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net lifetime amount expected to be collected on the loans. Credit losses are charged off against the allowance when management believes a loan balance to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.

Management estimates the allowance using relevant available information from internal and external sources related to past events, current conditions, and a reasonable and supportable single economic forecast. Historical credit loss experience provides the basis for the estimation of expected credit losses. Arrow's historical loss experience is supplemented with peer information when there is insufficient loss data for Arrow. Peer selection is based on a review of institutions with comparable loss experience as well as loan yield, bank size, portfolio concentration and geography. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in credit concentrations, delinquency level, collateral values and underwriting standards as well as changes in economic conditions or other relevant factors. Management judgment is required at each point in the measurement process.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Management developed portfolio segments for estimating loss based on type of borrower and collateral as follows:

Commercial Loans

Commercial Real Estate Loans

Consumer Loans

Residential Loans

Further details related to loan portfolio segments are included in Note 4. Loans to the Consolidated Financial Statements of this Form 10-Q.

Arrow utilized regression analyses of peer data where observed credit losses and selected economic factors were utilized to determine suitable loss drivers for modeling lifetime probability of default (PD) rates. Arrow uses the discounted cash flow (DCF) method to estimate expected credit losses for the commercial, commercial real estate, and residential segments. For each of these loan segments, Arrow generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, PD, and segment-specific loss given default (LGD) risk factors. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data and adjusted, if necessary, based on the reasonable and supportable forecast of economic conditions.

For the loan segments utilizing the DCF method (commercial, commercial real estate, and residential) management utilizes externally developed economic forecast of the following economic factors as loss drivers: national unemployment, gross domestic product and Case-Shiller U.S. National Home Price Index (HPI). The economic forecast is applied over a reasonable and supportable forecast period. Arrow utilizes a six quarter reasonable and supportable forecast period with an eight quarter reversion to the historic mean on a straight-line basis.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (NPV). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis.

Arrow uses the vintage analysis method to estimate expected credit losses for the consumer loan segment. The vintage method was selected since the loans within the consumer loan segment are homogeneous, not just by risk characteristic, but by loan structure. Under the vintage analysis method, a loss rate is calculated based on the quarterly net charge-offs to the outstanding loan balance for each vintage year over the lookback period. Once this periodic loss rate is calculated for each quarter in the lookback period, the periodic rates are averaged into the loss rate. The loss rate is then applied to the outstanding loan balances based on the loan's vintage year. Arrow maintains, over the life of the loan, the loss curve by vintage year. If estimated losses computed by the vintage method need to be adjusted based on current conditions and the reasonable and supportable economic forecast, these adjustments would be incorporated over a six quarter reasonable and supportable forecast period, reverting to historical losses using a straight-line method over an eight quarter period.

Arrow considers the need to qualitatively adjust expected credit loss estimates for information not already captured in the loss estimation process. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments are not made for information that has already been considered and included in the loss estimation process.

Arrow considers the qualitative factors that are relevant to Arrow as of the reporting date, which may include, but are not limited to the following factors:

•The nature and volume of Arrow's financial assets;

•The existence, growth, and effect of any concentrations of credit;

•The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

•The value of the underlying collateral for loans that are not collateral-dependent;

•Arrow's lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries;

•The quality of Arrow's loan review function;

•The experience, ability, and depth of Arrow's lending, investment, collection, and other relevant management/staff;

•The effect of other external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters;

•Actual and expected changes in international, national, regional, and local economic and business conditions and developments in which the institution operates that affect the collectability of financial assets; and

•Other qualitative factors not reflected in quantitative loss rate calculations.

All loans that exceed $250 thousand which are on nonaccrual, are evaluated on an individual basis. For collateral dependent financial assets where Arrow has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and Arrow expects repayment of the financial asset to be provided substantially through the sale of the collateral, Arrow has elected to measure the allowance for credit loss as the difference between the fair value of the collateral less cost to sell, and the amortized cost basis of the asset as of the measurement date. In the event the repayment of a collateral dependent financial asset is expected to be provided substantially through the operation of the collateral, Arrow will use fair value of the collateral at the reporting date when recording the net carrying amount of the asset and determining the allowance for credit losses. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.

Arrow evaluates whether a modification represents a new loan or a continuation of an existing loan, consistent with the current GAAP treatment for other loan modifications. In addition, Arrow evaluates and if necessary, discloses if loan modifications made to borrowers experiencing financial difficulty contain a financial concession

Estimated Credit Losses on Off-Balance Sheet Credit Exposures Recognized as Other Liabilities - Arrow estimates expected credit losses over the contractual period in which Arrow has exposure to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by Arrow. The allowance for credit losses on off-balance sheet credit exposures recognized in other liabilities, is adjusted as an expense in other non-interest expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. Estimating credit losses on unfunded commitments requires Arrow to consider the following categories of off-balance sheet credit exposure: unfunded commitments to extend credit, unfunded lines of credit, and standby letters of credit. Each of these unfunded commitments is then analyzed for a probability of funding to calculate a probable funding amount. The life of loan loss factor by related portfolio segment from the loan allowance for credit loss calculation is then applied to the probable funding amount to calculate the estimated credit losses on off-balance sheet credit exposures recognized as other liabilities.

Note 3. INVESTMENT SECURITIES (In Thousands)

The following table is the schedule of Available-For-Sale Securities at March 31, 2026 and December 31, 2025:


Available-For-Sale Securities
	U.S. Treasuries		U.S. Government & Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities		Corporate and Other Debt Securities		Total Available- For-Sale Securities
March 31, 2026
Available-For-Sale Securities, at Amortized Cost	$	78,523	$	25,000	$	200	$	408,303	$	26,250	$	538,276
Gross Unrealized Gains	1,352		—		—		1,203		331		2,886
Gross Unrealized Losses	(73)		(198)		—		(22,031)		(57)		(22,359)
Available-For-Sale Securities, at Fair Value	79,802		24,802		200		387,475		26,524		518,803
Available-For-Sale Securities, Pledged as Collateral, at Fair Value											264,016

Maturities of Debt Securities, at Amortized Cost:
Within One Year	$	—	$	15,000	$	—	$	111	$	—	$	15,111
From 1 - 5 Years	73,465		10,000		200		39,288		1,000		123,953
From 5 - 10 Years	5,058		—		—		64,801		25,250		95,109
Over 10 Years	—		—		—		304,103		—		304,103

Maturities of Debt Securities, at Fair Value:
Within One Year	$	—	$	14,856	$	—	$	111	$	—	$	14,967
From 1 - 5 Years	74,817		9,946		200		38,856		980		124,799
From 5 - 10 Years	4,985		—		—		60,630		25,544		91,159
Over 10 Years	—		—		—		287,878		—		287,878

Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	4,985	$	—	$	—	$	75,348	$	9,213	$	89,546
12 Months or Longer	—		24,802		—		184,721		980		210,503
Total	$	4,985	$	24,802	$	—	$	260,069	$	10,193	$	300,049
Number of Securities in a Continuous Loss Position	1		3		—		90		8		102

Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	73	$	—	$	—	$	896	$	37	$	1,006
12 Months or Longer	—		198		—		21,135		20		21,353
Total	$	73	$	198	$	—	$	22,031	$	57	$	22,359















December 31, 2025
Available-For-Sale Securities, at Amortized Cost	$	78,436	$	25,000	$	200	$	385,766	$	23,500	$	512,902
Gross Unrealized Gains	2,139		—		—		2,153		194		4,486
Gross Unrealized Losses	(12)		(184)		—		(21,238)		(86)		(21,520)
Available-For-Sale Securities, at Fair Value	80,563		24,816		200		366,681		23,608		495,868
Available-For-Sale Securities, Pledged as Collateral, at Fair Value											234,933

Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	5,047	$	—	$	—	$	13,154	$	4,436	$	22,637


Available-For-Sale Securities
	U.S. Treasuries		U.S. Government & Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities		Corporate and Other Debt Securities		Total Available- For-Sale Securities
12 Months or Longer	—		24,816		—		193,635		979		219,430
Total	$	5,047	$	24,816	$	—	$	206,789	$	5,415	$	242,067
Number of Securities in a Continuous Loss Position	1		3		—		83		4		91

Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	12	$	—	$	—	$	8	$	64	$	84
12 Months or Longer	—		184		—		21,230		22		21,436
Total	$	12	$	184	$	—	$	21,238	$	86	$	21,520

There was no allowance for credit losses for the AFS debt securities portfolio at either March 31, 2026 or December 31, 2025.

The following table is the schedule of Held-To-Maturity Securities at March 31, 2026 and December 31, 2025:


Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities		Total Held-To Maturity Securities
March 31, 2026
Held-To-Maturity Securities, at Amortized Cost	$	62,081	$	3,565	$	65,646

Gross Unrealized Losses	(246)		(79)		(325)
Held-To-Maturity Securities, at Fair Value	61,835		3,486		65,321
Held-To-Maturity Securities, Pledged as Collateral, at Carrying Value					33,703
Held-To-Maturity Securities, Pledged as Collateral, at Fair Value					33,378

Maturities of Debt Securities, at Amortized Cost:
Within One Year	$	46,161	$	—	$	46,161
From 1 - 5 Years	14,560		2,261		16,821
From 5 - 10 Years	1,360		—		1,360
Over 10 Years	—		1,304		1,304

Maturities of Debt Securities, at Fair Value:
Within One Year	$	46,095	$	—	$	46,095
From 1 - 5 Years	14,385		2,222		16,607
From 5 - 10 Years	1,355		—		1,355
Over 10 Years	—		1,264		1,264

Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	792	$	—	$	792
12 Months or Longer	31,058		3,485		34,543
Total	$	31,850	$	3,485	$	35,335


Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities		Total Held-To Maturity Securities
Number of Securities in a Continuous Loss Position	109		16		125

Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	3	$	—	$	3
12 Months or Longer	243		79		322
Total	$	246	$	79	$	325









December 31, 2025
Held-To-Maturity Securities, at Amortized Cost	$	62,870	$	4,105	$	66,975

Gross Unrealized Losses	(324)		(82)		(406)
Held-To-Maturity Securities, at Fair Value	62,546		4,023		66,569
Held-To-Maturity Securities, Pledged as Collateral, at Carrying Value					35,078
Held-To-Maturity Securities, Pledged as Collateral, at Fair Value					34,672

Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	400	$	—	$	400
12 Months or Longer	32,138		4,023		36,161
Total	$	32,538	$	4,023	$	36,561
Number of Securities in a Continuous Loss Position	109		16		125

Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	—	$	—	$	—
12 Months or Longer	324		82		406
Total	$	324	$	82	$	406

In the tables above, maturities of mortgage-backed securities are included based on their contractual lives. Actual maturities will differ because issuers may have the right to call or prepay obligations with or without prepayment penalties.

Securities in a continuous loss position, in the tables above for March 31, 2026 and December 31, 2025 do not reflect any material deterioration of the credit worthiness of the issuing entities.

Arrow evaluates AFS debt securities in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or non-credit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized within the allowance for credit losses on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings via credit loss expense. Arrow determined that at March 31, 2026 and December 31, 2025, gross unrealized losses were attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. Arrow does not intend to sell, nor is it more likely than not that Arrow will be required to sell, any securities before recovery of its amortized cost basis, which may be at maturity. Therefore, Arrow carried no allowance for credit loss at March 31, 2026 or December 31, 2025 and there was no credit loss expense recognized by Arrow with respect to the securities portfolio during the three months ended March 31, 2026 or the year ended December 31, 2025.

Arrow's HTM debt securities are comprised of U.S. government-sponsored enterprises (GSEs) or state and municipal obligations. GSE securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Arrow determined that the expected credit loss on its HTM debt portfolio was immaterial and therefore no allowance for credit loss was recorded as of March 31, 2026.

The following table is the schedule of Equity Securities at March 31, 2026 and December 31, 2025:

Equity Securities

March 31, 2026

December 31, 2025

Equity Securities, at Fair Value

$5,742

$5,597

The following is a summary of realized and unrealized gains and losses recognized in income on equity securities during the three month periods ended March 31, 2026 and 2025:


	Three Months Ended March 31,
	2026		2025
Net Gain on Equity Securities	$	145	$	317
Less: Net gain recognized during the reporting period on equity securities sold during the period	—		—
Unrealized net gain recognized during the reporting period on equity securities still held at the reporting date	$	145	$	317

Note 4. LOANS (In Thousands)

Loan Categories and Past Due Loans

The following two tables present loan balances outstanding as of March 31, 2026 and December 31, 2025 and an analysis of the recorded investment in loans that are past due at these dates. Generally, Arrow considers a loan past due 30 or more days when the borrower is two payments past due. Loans held-for-sale of $490 thousand and $3.4 million as of March 31, 2026 and December 31, 2025, respectively, are included in the residential real estate balances for current loans.


Schedule of Past Due Loans by Loan Category
			Commercial
	Commercial		Real Estate		Consumer		Residential		Total
March 31, 2026
Loans past due 30-59 days	$	514	$	—	$	13,620	$	5,233	$	19,367
Loans past due 60-89 days	175		—		4,606		1,059		5,840
Loans past due 90 or more days	304		—		1,290		1,960		3,554
Total loans past due	993		—		19,516		8,252		28,761
Current loans	168,606		811,770		1,052,027		1,377,802		3,410,205
Total Loans	$	169,599	$	811,770	$	1,071,543	$	1,386,054	$	3,438,966

December 31, 2025
Loans past due 30-59 days	$	584	$	—	$	13,476	$	808	$	14,868
Loans past due 60-89 days	255		2,888		7,495		3,503		14,141
Loans past due 90 or more days	195		—		1,886		3,517		5,598
Total loans past due	1,034		2,888		22,857		7,828		34,607
Current loans	164,695		815,371		1,053,150		1,385,270		3,418,486
Total loans	$	165,729	$	818,259	$	1,076,007	$	1,393,098	$	3,453,093


Schedule of Nonaccrual Loans by Category
			Commercial
March 31, 2026	Commercial		Real Estate		Consumer		Residential		Total
Loans 90 or more days past due and Still Accruing Interest	$	—	$	—	$	—	$	621	$	621
Nonaccrual loans	304		—		1,355		2,143		3,802
Nonaccrual with no allowance for credit loss	—		—		—		1,027		1,027


December 31, 2025
Loans 90 or more days past due and Still Accruing Interest	$	27	$	—	$	31	$	1,983	$	2,040
Nonaccrual loans	168		—		1,879		4,368		6,415
Nonaccrual with no allowance for credit loss	168		—		1,879		4,368		6,415

The Company recognized $0 of interest income on nonaccrual loans during the three months ended March 31, 2026.

Arrow disaggregates its loan portfolio into the following four categories:

Commercial - Arrow offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. In the event of default by the borrower, Arrow may be required to liquidate collateral at deeply discounted values. To reduce the risk, management usually obtains personal guarantees to support the borrowing, as permitted by applicable law.

Commercial Real Estate - Arrow offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are typically secured by first liens on the real estate, which may include apartments, hotels, commercial structures, housing businesses, healthcare facilities, and both owner- and non-owner-occupied facilities. Arrow also offers commercial construction and land development loans to finance projects. Many projects will ultimately be used by the borrowers' businesses, while others are developed for resale. These real estate loans are also typically secured by first liens on the real estate, which may include apartments, hotels, commercial structures, housing businesses, healthcare facilities and both owner-occupied and non-owner-occupied facilities. There is elevated risk during the construction period, since the loan is secured by an incomplete project. Arrow’s commercial real estate loans are primarily located within the footprint of the Company’s branch network, with some loans extending into the greater upstate New York area. Arrow does not provide commercial real estate loans in major metropolitan areas such as New York City, Boston, etc.

Consumer Loans - This category is primarily comprised of automobile loans. Arrow primarily finances the purchases of automobiles indirectly through dealer relationships located throughout upstate New York and Vermont. Most automobile loans carry a fixed rate of interest with principal repayment terms typically ranging from three to seven years. Automobile loans are underwritten on a secured basis using the underlying collateral being financed. Arrow also offers a variety of consumer installment loans to finance personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to five years, based upon the nature of the collateral and the size of the loan. In addition to installment loans, Arrow also offers personal lines of credit and overdraft protection. Several of these consumer loans are unsecured, which carry a higher risk of loss.

Residential - Residential real estate loans consist primarily of loans secured by first or second mortgages on primary residences. Arrow originates fixed-rate and adjustable-rate one-to-four-family residential real estate loans for the construction, purchase of real estate or refinancing of an existing mortgage. These loans are collateralized primarily by owner-occupied properties generally located in Arrow's market area. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 80% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance. Arrow’s underwriting analysis for residential mortgage loans typically includes credit verification, independent appraisals, and a review of the borrower’s financial condition. Mortgage title insurance and hazard insurance are normally required. It is Arrow's general practice to underwrite residential real estate loans to secondary market standards. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. In addition, Arrow offers fixed home equity loans, as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses. Arrow originates home equity lines of credit and second mortgage loans (loans secured by a second junior lien position on one-to-four-family residential real estate). Risk is generally reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.

Allowance for Credit Losses

Loan segments were selected by class code and application code to ensure each segment is comprised of loans with homogenous loan characteristics and similar risk profiles. The resulting loan segments are commercial, commercial real estate, consumer and residential real estate loans. Please see Note 2. Accounting Policies to the Consolidated Financial Statements for additional detail on our Allowance for Credit Losses.

The following table details activity in the allowance for credit losses on loans for the three months ended March 31, 2026 and March 31, 2025:


Allowance for Credit Losses
	Commercial		Commercial Real Estate		Consumer		Residential		Total
December 31, 2025	$	2,954	$	15,260	$	4,090	$	12,018	$	34,322
Charge-offs	$	—	$	—	$	(1,560)	$	(14)	$	(1,574)
Recoveries	$	—	$	—	$	759	$	—	$	759
Provision	$	(499)	$	(703)	$	1,221	$	529	$	548
March 31, 2026	$	2,455	$	14,557	$	4,510	$	12,533	$	34,055








December 31, 2024	$	1,925	$	14,507	$	3,882	$	13,284	$	33,598
Charge-offs	$	—	$	—	$	(1,519)	$	(31)	$	(1,550)
Recoveries	$	—	$	—	$	704	$	—	$	704
Provision	$	(124)	$	3,729	$	1,080	$	334	$	5,019
March 31, 2025	$	1,801	$	18,236	$	4,147	$	13,587	$	37,771

Estimated Credit Losses on Off-Balance Sheet Credit Exposures Recognized as Other Liabilities

As of March 31, 2026 and December 31, 2025, estimated credit losses on unfunded off-balance sheet credit exposures were $1.1 million and $1.3 million, respectively, and were included in other liabilities on the consolidated balance sheets.

Individually Evaluated Loans

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2026 and December 31, 2025:


March 31, 2026	Collateral Type -Residential Real Estate		Collateral Type - Commercial Real Estate		Total Loans
Commercial	$	—	$	—	$	—
Commercial Real Estate	—		—		—
Consumer	—		—		—
Residential	1,027		—		1,027
Total	$	1,027	$	—	$	1,027


December 31, 2025	Collateral Type -Residential Real Estate		Collateral Type - Commercial Real Estate		Total Loans
Commercial	$	—	$	—	$	—
Commercial Real Estate	—		—		—
Consumer	—		—		—
Residential	3,172		—		3,172
Total	$	3,172	$	—	$	3,172

Through the provision for credit losses, an allowance for credit losses is maintained that reflects the best estimate of the calculated expected credit losses in Arrow's loan portfolio as of the balance sheet date. Additions are made to the allowance for credit losses through a periodic provision for credit losses. Actual credit losses are charged against the allowance for credit losses when loans are deemed uncollectible and recoveries of amounts previously charged off are recorded as credits to the allowance for credit losses.

Arrow's loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with certain criticized and classified commercial-related relationships. In addition, the independent internal loan review department performs periodic reviews of the credit quality indicators on individual loans in the commercial loan portfolio.

process.

Arrow considers the qualitative factors that are relevant as of the reporting date, which may include, but are not limited to the following factors:

•The nature and volume of Arrow's financial assets;

•The existence, growth, and effect of any concentrations of credit;

•The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

•The value of the underlying collateral for loans that are not collateral-dependent;

•Arrow's lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries;

•The quality of Arrow's loan review function;

•The experience, ability, and depth of Arrow's lending, investment, collection, and other relevant management/staff;

•The effect of other external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters;

•Other qualitative factors not reflected in quantitative loss rate calculations.

Loan Credit Quality Indicators and Modifications

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. In some cases, the Company provides multiple types of concession on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, may be granted. The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company did not modify loans to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025.

The following table presents the amortized cost basis of loans at March 31, 2026 that were both experiencing financial difficulty and modified during the trailing 12 months ended March 31, 2026, by class and by type of modification.


March 31, 2026
	Current		Loans Past Due 30-59 Days		Loans Past Due 60-89 Days		Loans Past Due 90 or more Days		Total Loans Past Due
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate	—		—		—		—		—
Consumer	—		—		—		—		—
Residential	348		—		—		—		—
Total	$	348	$	—	$	—	$	—	$	—

There were no defaults during the three months ended March 31, 2026.

The following tables present credit quality indicators by total loans amortized cost basis by origination year as of March 31, 2026 and December 31, 2025:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
March 31, 2026	2026		2025		2024		2023		2022		Prior
Commercial:
Risk rating
Satisfactory	$	12,197	$	39,452	$	39,302	$	18,748	$	15,402	$	28,085	$	11,114	$	—	$	164,300
Special mention	—		132		—		25		—		—		—		—		157
Substandard	—		—		88		293		745		2,861		1,155		—		5,142
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Loans	$	12,197	$	39,584	$	39,390	$	19,066	$	16,147	$	30,946	$	12,269	$	—	$	169,599

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate:
Risk rating
Satisfactory	$	8,157	$	93,054	$	113,161	$	77,881	$	133,042	$	345,620	$	3,286	$	—	$	774,201
Special mention	—		301		6,317		778		7,449		7,653		—		—		22,498
Substandard	—		2,527		—		141		2,960		9,179		264		—		15,071
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	8,157	$	95,882	$	119,478	$	78,800	$	143,451	$	362,452	$	3,550	$	—	$	811,770

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer:
Risk rating
Performing	$	114,168	$	349,748	$	250,442	$	169,275	$	122,322	$	63,771	$	462	$	—	$	1,070,188
Nonperforming	—		264		342		214		331		204		—		—		1,355
Total Consumer Loans	$	114,168	$	350,012	$	250,784	$	169,489	$	122,653	$	63,975	$	462	$	—	$	1,071,543

Current-period gross charge-offs	$	—	$	135	$	469	$	341	$	293	$	322	$	—	$	—	$	1,560

Residential:
Risk rating
Performing	$	17,463	$	151,890	$	166,240	$	156,001	$	201,232	$	554,780	$	135,684	$	—	$	1,383,290
Nonperforming	—		204		475		285		—		1,548		252		—		2,764
Total Residential Loans	$	17,463	$	152,094	$	166,715	$	156,286	$	201,232	$	556,328	$	135,936	$	—	$	1,386,054

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	14	$	—	$	—	$	14

Total Loans	$	151,985	$	637,572	$	576,367	$	423,641	$	483,483	$	1,013,701	$	152,217	$	—	$	3,438,966

Total gross charge-offs	$	—	$	135	$	469	$	341	$	293	$	336	$	—	$	—	$	1,574


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
December 31, 2025	2025		2024		2023		2022		2021		Prior
Commercial:
Risk rating
Satisfactory	$	40,855	$	41,908	$	20,671	$	15,915	$	12,070	$	19,917	$	9,765	$	—	$	161,101
Special mention	196		—		25		—		—		—		—		—		221
Substandard	—		—		410		92		—		2,896		1,009		—		4,407
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Loans	$	41,051	$	41,908	$	21,106	$	16,007	$	12,070	$	22,813	$	10,774	$	—	$	165,729

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate:
Risk rating
Satisfactory	$	90,358	$	113,616	$	78,723	$	128,103	$	96,305	$	264,374	$	2,112	$	—	$	773,591
Special mention	302		6,348		275		7,504		4,749		3,808		473		—		23,459
Substandard	2,127		—		341		4,104		304		14,069		264		—		21,209
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	92,787	$	119,964	$	79,339	$	139,711	$	101,358	$	282,251	$	2,849	$	—	$	818,259

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	1,656	$	2,162	$	—	$	—	$	3,818

Consumer:
Risk rating
Performing	$	370,436	$	281,349	$	194,467	$	144,210	$	62,395	$	20,796	$	444	$	—	$	1,074,097
Nonperforming	121		502		363		421		375		128		—		—		1,910
Total Consumer Loans	$	370,557	$	281,851	$	194,830	$	144,631	$	62,770	$	20,924	$	444	$	—	$	1,076,007

Current-period gross charge-offs	$	291	$	1,472	$	1,380	$	1,367	$	904	$	271	$	—	$	—	$	5,685

Residential:
Risk rating
Performing	$	144,618	$	172,965	$	160,802	$	206,858	$	170,889	$	395,132	$	135,483	$	—	$	1,386,747
Nonperforming	204		1,041		337		1,966		342		2,291		170		—		6,351
Total Residential Loans	$	144,822	$	174,006	$	161,139	$	208,824	$	171,231	$	397,423	$	135,653	$	—	$	1,393,098

Current-period gross charge-offs	$	—	$	—	$	—	$	20	$	—	$	31	$	—	$	—	$	51

Total Loans	$	649,217	$	617,729	$	456,414	$	509,173	$	347,429	$	723,411	$	149,720	$	—	$	3,453,093

Total gross charge-offs	$	291	$	1,472	$	1,380	$	1,387	$	2,560	$	2,464	$	—	$	—	$	9,554

For the purposes of the table above, nonperforming consumer and residential loans were those loans on nonaccrual status or were 90 days or more past due and still accruing interest.

As of March 31, 2026 and December 31, 2025, the amortized cost of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $776 thousand and $795 thousand, respectively.

For the allowance calculation, an internally developed system of five credit quality indicators is used to rate the credit worthiness of each commercial loan defined as follows:

1) Satisfactory - "Satisfactory" borrowers have acceptable financial condition with satisfactory record of earnings and sufficient historical and projected cash flow to service the debt. Borrowers have satisfactory repayment histories and primary and secondary sources of repayment can be clearly identified;

2) Special Mention - Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit

position at some future date. "Special mention" assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Loans which might be assigned this credit quality indicator include loans to borrowers with deteriorating financial strength and/or earnings record and loans with potential for problems due to weakening economic or market conditions;

3) Substandard - Loans classified as “substandard” are inadequately protected by the current net worth or paying capacity of the borrower or the collateral pledged, if any. Loans in this category have well defined weaknesses that jeopardize the repayment. They are characterized by the distinct possibility that Arrow will sustain some loss if the deficiencies are not corrected. “Substandard” loans may include loans which are likely to require liquidation of collateral to effect repayment, and other loans where character or ability to repay has become suspect. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard;

4) Doubtful - Loans classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable. Although possibility of loss is extremely high, classification of these loans as “loss” has been deferred due to specific pending factors or events which may strengthen the value (e.g. possibility of additional collateral, injection of capital, collateral liquidation, debt restructure, economic recovery, etc.). Loans classified as “doubtful” need to be placed on nonaccrual; and

5) Loss - Loans classified as “loss” are considered uncollectible with collateral of such little value that their continuance as bankable assets is not warranted. As of the date of the balance sheet, all loans in this category have been charged-off to the allowance for loan losses.

Commercial loans are generally evaluated on an annual basis depending on the size and complexity of the loan relationship, unless the credit related quality indicator falls to a level of "special mention" or below, when the loan is evaluated quarterly. The credit quality indicator is one of the factors used in assessing the level of incurred risk of loss in our commercial related loan portfolios.

Note 5. DEBT (Dollars in Thousands)

Schedule of Borrowings:


	March 31, 2026		December 31, 2025
Balance:

FHLBNY Overnight Advances	$	—	$	—
FHLBNY Term Advances	4,265		4,265
Total Borrowings	$	4,265	$	4,265

Maximum Borrowing Capacity:
Federal Funds Purchased	$	23,000	$	23,000
Federal Home Loan Bank of New York	753,393		756,968
Federal Reserve Bank of New York	717,806		707,839

Available Borrowing Capacity:
Federal Funds Purchased	$	23,000	$	23,000
Federal Home Loan Bank of New York	719,128		722,703
Federal Reserve Bank of New York	717,806		707,839

Arrow Bank has in place unsecured federal funds lines of credit with two correspondent banks. As a member of the FHLBNY, Arrow participates in the advance program which allows for overnight and term advances up to the limit of pledged collateral, including FHLBNY stock and any loans secured by real estate such as commercial real estate, residential real estate and home equity loans (see Note 3. Investment Securities to the Consolidated Financial Statements, and Note 4. Loans to the Consolidated Financial Statements). The maximum borrowing capacities at the FHLBNY and FRB are determined based on the fair value of the collateral pledged, subject to discounts determined by the respective lenders. As of March 31, 2026, the carrying cost for the FHLBNY collateral was approximately $1.1 billion and approximately $951 million for the FRB, and $1.1 billion and $939 million as of December 31, 2025, respectively. As of March 31, 2026, the fair value for the FHLBNY collateral was approximately $943 million and approximately $718 million for the FRB, and $948 million and $707 million as of December 31, 2025, respectively. The investment in FHLBNY stock is proportional to the total of Arrow's overnight and term advances (see the schedule of FRB and FHLB Stock in Note 3. Investment Securities to the Consolidated Financial Statements). Arrow Bank has also established borrowing facilities with the FRB of New York for potential “discount window” advances, pledging certain consumer loans as collateral (see Note 4. Loans to the Consolidated Financial Statements).

Long Term Debt - FHLBNY Term Advances

In addition to overnight advances, Arrow Bank also borrows longer-term funds from the FHLBNY.

Maturity Schedule of FHLBNY Term Advances:


	Balances				Weighted Average Rate 1

Final Maturity	3/31/2026		12/31/2025			3/31/2026		12/31/2025
First Year	$	—	$	—		—	%	—	%
Second Year	4,265		4,265			4.32	%	4.32	%
Third Year	—		—			—	%	—	%
Fourth Year	—		—			—	%	—	%
Total	$	4,265	$	4,265		4.32	%	4.32	%

1The effective rate on the FHLBNY Advances is 0% due to subsidized funding in the form of interest rate credits.

Long Term Debt - Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Debentures

At March 31, 2026, Arrow had two classes of financial instruments issued by two separate subsidiary business trusts of Arrow, Arrow Capital Statutory Trust II ("ACST II") and Arrow Capital Statutory Trust III ("ACST III" and, together with ACST II, the "Trusts"), identified as “Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts” on the Consolidated Balance Sheets and the Consolidated Statements of Income.

The first of the two classes of trust-issued instruments outstanding at March 31, 2026 was issued by ACST II, a Delaware business trust established on July 16, 2003, upon the filing of a certificate of trust with the Delaware Secretary of State. In July 2003, ACST II issued all of its voting (common) stock to Arrow and issued and sold to an unaffiliated purchaser 30-year guaranteed preferred beneficial interests in the trust's assets ("ACST II TRUPS"). The rate on the securities is variable and tied to the 3-month Secured Overnight Financing Rate (SOFR) plus 3.15%. ACST II used the proceeds of the sale of the ACST II TRUPS to purchase an identical amount of junior subordinated debentures issued by Arrow that bear an interest rate identical at all times to the rate payable on the ACST II TRUPS. The ACST II TRUPS became redeemable after July 23, 2008 and mature on July 23, 2033.

The second of the two classes of trust-issued instruments outstanding at year-end was issued by ACST III, a Delaware business trust established on December 23, 2004, upon the filing of a certificate of trust with the Delaware Secretary of State. On December 28, 2004, the ACST III issued all of its voting (common) stock to Arrow and issued and sold to an unaffiliated purchaser 30-year guaranteed preferred beneficial interests in the trust's assets ("ACST III TRUPS"). The rate on the ACST III TRUPS is a variable rate, adjusting quarterly to the 3-month SOFR plus 2.00%. ACST III used the proceeds of the sale of the ACST III TRUPS to purchase an identical amount of junior subordinated debentures issued by Arrow that bear an interest rate identical at all times to the rate payable on the ACST III TRUPS. The ACST III TRUPS became redeemable on or after March 31, 2010 and mature on December 28, 2034.

Arrow has entered into interest rate swaps to synthetically fix the variable rate interest payments associated with $20 million in outstanding subordinated trust securities attributable to the Trusts. These agreements are designated as cash flow hedges.

The primary assets of the Trusts are Arrow's junior subordinated debentures discussed above, and the sole revenues of the Trusts are payments received by them from Arrow with respect to the junior subordinated debentures. The trust preferred securities issued by the Trusts are non-voting. All common voting securities of the Trusts are owned by Arrow. Arrow used the net proceeds from its sale of junior subordinated debentures to the Trusts, facilitated by the Trusts' sale of their trust preferred securities to the purchasers thereof, for general corporate purposes. The trust preferred securities and underlying junior subordinated debentures, with associated expense that is tax deductible, qualify as Tier I capital under regulatory definitions.

Arrow's primary source of funds to pay interest on the debentures that are held by the Trusts are current dividends received by Arrow from Arrow Bank. Accordingly, Arrow's ability to make payments on the debentures, and the ability of the Trusts to make payments on their trust preferred securities, are dependent upon the continuing ability of Arrow Bank to pay dividends to Arrow. Since the trust preferred securities issued by the subsidiary trusts and the underlying junior subordinated debentures issued by Arrow at March 31, 2026 and December 31, 2025 are classified as debt for financial statement purposes, the expense associated with these securities is recorded as interest expense in the Consolidated Statements of Income.

Schedule of Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Debentures


	March 31, 2026			December 31, 2025
ACST II
Balance	$	10,000		$	10,000
Period End:
Variable Interest Rate	7.11		%	7.08		%
Fixed Interest Rate resulting from cash flow hedge agreement	4.00		%	4.00		%

ACST III
Balance	$	10,000		$	10,000
Period End:
Variable Interest Rate	5.96		%	5.93		%
Fixed Interest Rate resulting from cash flow hedge agreement	2.86		%	2.86		%

Note 6. COMMITMENTS AND CONTINGENCIES (In Thousands)

The following table presents the notional amount and fair value of Arrow's off-balance sheet commitments to extend credit and commitments under standby letters of credit as of March 31, 2026 and December 31, 2025:


Commitments to Extend Credit and Letters of Credit
	March 31, 2026		December 31, 2025
Notional Amount:
Commitments to Extend Credit	$	478,249	$	462,855
Standby Letters of Credit	3,106		3,562
Fair Value:
Commitments to Extend Credit	$	—	$	—
Standby Letters of Credit	(4)		(2)

Arrow is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Commitments to extend credit include home equity lines of credit, commitments for residential and commercial construction loans and other personal and commercial lines of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of the involvement Arrow has in particular classes of financial instruments.

Arrow's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. Arrow uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are not expected to be fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Arrow evaluates each customer's creditworthiness on a case-by-case basis. Home equity lines of credit are secured by residential real estate. Construction lines of credit are secured by underlying real estate. For other lines of credit, the amount of collateral obtained, if deemed necessary by Arrow upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Most of the commitments are variable rate instruments.

Arrow does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit. Arrow has issued conditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. Standby letters of credit generally arise in connection with commercial lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit at March 31, 2026 and December 31, 2025 represent the maximum potential future payments Arrow could be required to make. Typically, these instruments have terms of 12 months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance sheet instruments. Arrow's policies governing loan collateral apply to standby letters of credit at the time of credit extension. Loan-to-value ratios will generally range from 50% for movable assets, such as inventory, to 100% for liquid assets, such as bank CDs. Fees for standby letters of credit range from 1% to 3% of the notional amount. Fees are collected upfront and amortized over the life of the commitment. The carrying amount and fair value of Arrow's standby letters of credit at March 31, 2026 and December 31, 2025, were insignificant. The fair value of standby letters of credit is based on the fees currently charged for similar agreements or the cost to terminate the arrangement with the counterparties.

The fair value of commitments to extend credit is determined by estimating the fees to enter into similar agreements, taking into account the remaining terms and present creditworthiness of the counterparties, and for fixed rate loan commitments, the difference between the current and committed interest rates. Arrow provides several types of commercial lines of credit and standby letters of credit to its commercial customers. The pricing of these services is not isolated as Arrow considers the customer's complete deposit and borrowing relationship in pricing individual products and services. The commitments to extend credit also include commitments under home equity lines of credit, for which Arrow charges no fee. The carrying value and fair value of commitments to extend credit are not material and Arrow does not expect to incur any material loss as a result of these commitments.

In the normal course of business, Arrow and Arrow Bank become involved in a variety of routine legal proceedings. At March 31, 2026, there were no legal proceedings pending or threatened, which in the opinion of management and counsel, would result in a material loss to Arrow. Legal expenses incurred in connection with loss contingencies are expensed as incurred.

Note 7. COMPREHENSIVE INCOME (In Thousands)

The following table presents the components of other comprehensive income (loss) for the three month periods ended March 31, 2026 and 2025:


Schedule of Comprehensive Income (Loss)
	Three Months Ended March 31
			Tax
	Before-Tax		(Expense)		Net-of-Tax
	Amount		Benefit		Amount
2026
Net Unrealized Securities Holding (Loss) on Securities Available-for-Sale Arising During the Period	$	(2,439)	$	629	$	(1,810)
Net Unrealized Gain on Cash Flow Swap	1,216		(314)		902



Reclassification of Net Unrealized Loss on Cash Flow Hedge Agreements to Interest Expense	291		(75)		216
Amortization of Net Retirement Plan Actuarial (Gain)	(117)		30		(87)
Amortization of Net Retirement Plan Prior Service Cost	71		(19)		52
Other Comprehensive (Loss)	$	(978)	$	251	$	(727)

2025
Net Unrealized Securities Holding Gain on Securities Available-for-Sale Arising During the Period	$	8,645	$	(2,229)	$	6,416
Net Unrealized (Loss) on Cash Flow Swap	(1,554)		400		(1,154)
Reclassification of Net Unrealized (Gain) on Cash Flow Hedge Agreements to Interest Expense	(430)		111		(319)


Amortization of Net Retirement Plan Actuarial (Gain)	(96)		25		(71)
Amortization of Net Retirement Plan Prior Service Cost	83		(22)		61
Other Comprehensive Income	$	6,648	$	(1,715)	$	4,933

The following table presents the changes in accumulated other comprehensive (loss) income by component:


Changes in Accumulated Other Comprehensive (Loss) Income by Component (1)

	Unrealized Loss on Available-for-Sale Securities		Unrealized Gain on Cash Flow Swap		Defined Benefit Plan Items				Total
					Net Actuarial Gain		Net Prior Service Cost


For the quarter-to-date periods ended:
December 31, 2025	$	(12,799)	$	2,475	$	6,807	$	(520)	$	(4,037)
Other comprehensive income or loss before reclassifications	(1,810)		902		—		—		(908)
Amounts reclassified from accumulated other comprehensive income or loss	—		216		(87)		52		181
Net current-period other comprehensive income or loss	(1,810)		1,118		(87)		52		(727)

March 31, 2026	$	(14,609)	$	3,593	$	6,720	$	(468)	$	(4,764)

December 31, 2024	$	(27,292)	$	4,677	$	4,927	$	(765)	$	(18,453)
Other comprehensive income or loss before reclassifications	6,416		(1,154)		—		—		5,262
Amounts reclassified from accumulated other comprehensive income or loss	—		(319)		(71)		61		(329)
Net current-period other comprehensive income or loss	6,416		(1,473)		(71)		61		4,933

March 31, 2025	$	(20,876)	$	3,204	$	4,856	$	(704)	$	(13,520)

(1) All amounts are net of tax.

The following table presents the reclassifications out of accumulated other comprehensive income or loss:


Reclassifications Out of Accumulated Other Comprehensive Income or Loss

Details about Accumulated Other Comprehensive Income or Loss Components	Amounts Reclassified from Accumulated Other Comprehensive Income or Loss			Affected Line Item in the Statement Where Net Income Is Presented

For the quarter-to-date periods ended:
March 31, 2026





Reclassification of Net Unrealized Loss on Cash Flow Hedge Agreements to Interest Expense	$	(291)		Interest expense
Amortization of defined benefit pension items:
Prior-service costs	(71)		(1)	Salaries and Employee Benefits
Actuarial gain	117		(1)	Salaries and Employee Benefits
	(245)			Total before Tax
	64			Provision for Income Taxes
Total reclassifications for the period	$	(181)		Net of Tax


March 31, 2025
Reclassification of Net Unrealized Gain on Cash Flow Hedge Agreements to Interest Expense	$	430		Interest expense
Amortization of defined benefit pension items:
Prior-service costs	$	(83)	(1)	Salaries and Employee Benefits
Actuarial gain	96		(1)	Salaries and Employee Benefits
	443			Total before Tax
	(114)			Provision for Income Taxes
Total reclassifications for the period	$	329		Net of Tax




















(1) These accumulated other comprehensive gain or loss components are included in the computation of net periodic pension cost.

Note 8. STOCK-BASED COMPENSATION (Dollars In Thousands, Except Share and Per Share Amounts)

Arrow has established three stock-based compensation plans: a Long Term Incentive Plan (LTIP), an Employee Stock Purchase Plan (ESPP) and an Employee Stock Ownership Plan (ESOP).

Long Term Incentive Plan

The LTIP provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, performance units and performance shares. The Compensation Committee of the Board of Directors administers the LTIP.

Restricted Stock Awards - In the three months ended March 31, 2026, the Company granted restricted stock awards which will generally vest over a three to four-year period. Unvested restricted stock will generally be forfeited if the recipient ceases to be employed by the Company, with limited exceptions. Grantees of restricted stock awards are entitled to receive all dividends and distributions declared and paid on restricted stock, or cash payments equivalent to such dividends or distributions, including those declared and paid during the vesting period.

The following table summarizes information about restricted stock awards for the year to date period ended March 31, 2026:


	Restricted Stock Awards	Weighted Average Grant Date Fair Value

Outstanding at January 1, 2026	53,564	$	26.68

Granted	71,111	32.57
Vested	(10,266)	27.50
Forfeited	(1,114)	25.92
Outstanding at March 31, 2026	113,295	$	30.31

The following table presents information on the amounts expensed related to restricted stock for the three month periods ended March 31, 2026 and 2025:


	Three Months Ended March 31,
	2026		2025
Amount expensed	$	199	$	82

Stock Options - Options may be granted at a price no less than the greater of the par value or fair market value of such shares on the date on which such option is granted, and generally expire ten years from the date of grant. The options usually vest over a four-year period.

The following table summarizes information about stock option activity for the three month period ended March 31, 2026:


	Shares		Weighted Average Exercise Price

Outstanding at January 1, 2026	$	229,155	$	29.83

Exercised	(7,325)		22.50
Forfeited	(2,536)		20.41
Outstanding at March 31, 2026	219,294		30.18

Vested at Period-End	210,932		30.13
Expected to Vest	8,362		31.44

The following table presents information on the amounts expensed related to stock options for the three month periods ended March 31, 2026 and 2025:


	Three Months Ended March 31,
	2026		2025
Amount expensed	$	21	$	33

Employee Stock Purchase Plan

In October 2023, the Board of Directors approved the adoption of the 2023 ESPP, which is intended to satisfy the requirements of Section 423 of the Internal Revenue Code. Under this plan, the amount of the discount is 10%. The Qualified ESPP was approved by Arrow shareholders at the 2024 annual meeting of shareholders.

Director Stock Plan

Arrow maintains a director stock plan, pursuant to which a portion of the directors’ fees, as determined by the Board in its sole discretion, is paid to the directors in shares of Company common stock, as opposed to cash or any other form of compensation, subject to applicable law. Each director may elect to receive a greater amount or percentage of his or her directors’ fees payable in common stock from the portion that would otherwise have been payable in cash to the director.

Employee Stock Ownership Plan

Arrow maintains an ESOP, pursuant to which substantially all employees of Arrow and its subsidiaries are eligible to participate upon satisfaction of applicable service requirements. The Company may make, and historically has made, a cash contribution to the ESOP each year.

Note 9. RETIREMENT BENEFIT PLANS (Dollars in Thousands)

Arrow sponsors qualified and non-qualified defined benefit pension plans and other postretirement benefit plans for its employees. Arrow maintains a non-contributory pension plan, which covers substantially all employees. Arrow also maintains a supplemental non-qualified unfunded retirement plan to provide eligible employees of Arrow and its subsidiaries with benefits in excess of qualified plan limits imposed by federal tax law.

Arrow has multiple non-pension postretirement benefit plans. The health care, dental and life insurance plans are contributory, with participants’ contributions adjusted annually. Arrow’s policy is to fund the cost of postretirement benefits based on the current cost of the underlying policies. However, the health care plan provision allows for grandfathered participants to receive automatic increases of Company contributions each year based on the increase in inflation, limited to a maximum of 5%.

The following tables provide the components of net periodic benefit costs for the three-month periods ended March 31, 2026 and 2025:


	Employees'		Select Executive		Postretirement
	Pension		Retirement		Benefit
	Plan		Plan		Plans





















Net Periodic Benefit Cost
For the Three Months Ended March 31, 2026:
Service Cost (1)	$	447	$	25	$	8
Interest Cost (2)	590		65		67
Expected Return on Plan Assets (2)	(1,065)		—		—
Amortization of Prior Service Cost (2)	46		10		15
Amortization of Net (Gain) (2)	—		—		(117)
Net Periodic Cost (Benefit)	$	18	$	100	$	(27)

Plan Contributions During the Period	$	—	$	116	$	41

Estimated Future Contributions in the Current Fiscal Year	$	—	$	349	$	123

For the Three Months Ended March 31, 2025:
Service Cost (1)	$	400	$	26	$	11
Interest Cost (2)	584		72		79
Expected Return on Plan Assets (2)	(1,009)		—		—
Amortization of Prior Service Cost (2)	47		10		26
Amortization of Net (Gain) (2)	—		—		(96)
Net Periodic Cost	$	22	$	108	$	20

Plan Contributions During the Period	$	—	$	120	$	57

(1) Included in Salaries and Employee Benefits on the Consolidated Statements of Income

(2) Included in Other Operating Expense on the Consolidated Statements of Income

A contribution to the qualified pension plan was not required during the three month period ended March 31, 2026 and currently, additional contributions in 2026 are not expected. Arrow makes contributions to its other post-retirement benefit plans in an amount equal to benefit payments for the year.

Note 10. EARNINGS PER COMMON SHARE (In Thousands, Except Per Share Amounts)

The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per common share ("EPS") for the three month periods ended March 31, 2026 and 2025.


Earnings Per Share
	Three Months Ended
	March 31, 2026		March 31, 2025
Earnings Per Share - Basic:
Net Income	$	13,485	$	6,310
Less: income attributable to unvested stock based compensation awards	(93)		(24)
Net earnings allocated to common shareholders	13,392		6,286
Weighted Average Shares - Basic	16,381,922		16,665,138
Earnings Per Share - Basic	$	0.82	$	0.38

Earnings Per Share - Diluted:
Net earnings allocated to common shareholders	$	13,392	$	6,286
Weighted Average Shares - Basic	16,381,922		16,665,138
Dilutive Average Shares attributable to stock based compensation awards	20,689		7,714
Weighted Average Shares - Diluted	16,402,611		16,672,852
Earnings Per Share - Diluted	$	0.82	$	0.38

Note 11. FAIR VALUES (Dollars In Thousands)

FASB defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. There are no nonfinancial assets or liabilities measured at fair value on a recurring basis. The only assets or liabilities that Arrow measured at fair value on a recurring basis at March 31, 2026 and December 31, 2025 were AFS securities, equity securities and derivatives. Arrow held no securities or liabilities for trading on such dates.

The table below presents the financial instrument's fair value and the amounts within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement:


Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis
			Fair Value Measurements at Reporting Date Using:
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Fair Value of Assets and Liabilities Measured on a Recurring Basis:
March 31, 2026
Assets:
Securities Available-for-Sale:
U.S. Treasuries	$	79,802	$	79,802	$	—	$	—
U.S. Government & Agency Obligations	24,802		—		24,802		$	—
State and Municipal Obligations	200		—		200		—
Mortgage-Backed Securities	387,475		—		387,475		—
Corporate and Other Debt Securities	26,524		—		26,524		—
Total Securities Available-for-Sale	518,803		79,802		439,001		—
Equity Securities	5,742		—		5,742		—
Total Securities Measured on a Recurring Basis	524,545		79,802		444,743		—
Derivative Assets	8,996		—		8,996		—
Total Measured on a Recurring Basis	$	533,541	$	79,802	$	453,739	$	—
Liabilities:
Derivative Liabilities	3,341		—		3,341		—
Total Measured on a Recurring Basis	$	3,341	$	—	$	3,341	$	—
December 31, 2025
Assets:
Securities Available-for Sale:
U.S. Treasuries	$	80,563	$	80,563	$	—	$	—
U.S. Government & Agency Obligations	24,816		—		24,816		—
State and Municipal Obligations	200		—		200		—
Mortgage-Backed Securities	366,681		—		366,681		—
Corporate and Other Debt Securities	23,608		—		23,608		—
Total Securities Available-for-Sale	495,868		80,563		415,305		—
Equity Securities	5,597		—		5,597		—
Total Securities Measured on a Recurring Basis	501,465		80,563		420,902		—
Derivative Assets	7,935		—		7,935		—
Total Measured on a Recurring Basis	$	509,400	$	80,563	$	428,837	$	—
Liabilities:
Derivative Liabilities	3,484		—		3,484		—
Total Measured on a Recurring Basis	$	3,484	$	—	$	3,484	$	—

Fair Value

Quoted Prices
In Active Markets for Identical Assets
(Level 1)

ARROW FINANCIAL CORP 10-Q