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Here are 1-2 brief analogies for Arrow Financial (AROW):

• A regional Bank of America for upstate New York.
• The JPMorgan Chase of local communities in New York's Capital Region.

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• Deposit Services: Offering checking, savings, money market, and certificate of deposit accounts for individuals and businesses.
• Lending Services: Providing a range of loans including commercial, residential mortgage, consumer, and home equity lines of credit.
• Wealth Management and Trust Services: Delivering investment management, trust administration, and financial planning solutions to clients.
• Treasury Management Services: Assisting businesses with solutions for efficient cash flow management and payment processing.

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Arrow Financial Corporation (AROW) sells primarily to individuals and local businesses. Its major customer categories include:

1. Individual Consumers and Households: This category encompasses individuals seeking traditional banking services such as checking accounts, savings accounts, money market accounts, certificates of deposit (CDs), as well as consumer loans like mortgages, home equity lines of credit, auto loans, and personal loans. They also serve individuals with wealth management and investment services.
2. Small and Medium-sized Businesses (SMBs): Local businesses constitute a significant customer segment, utilizing services like commercial loans (for real estate, equipment, or working capital), business checking and savings accounts, treasury management services, and merchant services. This also includes specialized lending programs such as Small Business Administration (SBA) loans.
3. Non-profit Organizations and Municipal Entities: Community banks often serve local governmental bodies, schools, religious organizations, and other non-profit entities for their deposit accounts, cash management needs, and sometimes specific financing requirements.

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David S. DeMarco, President and CEO

Mr. DeMarco was appointed President and Chief Executive Officer of Arrow Financial Corporation in May 2023. He has a long tenure with the company, having joined in 1987 as a commercial lender and accumulating 35 years of experience in various roles of increasing responsibility. Prior to his current role, he served as Chief Banking Officer and Senior Executive Vice President. He also continues to hold the positions of President and Chief Executive Officer of Arrow subsidiary Saratoga National Bank and Trust Company.

Penko K. Ivanov, Senior Executive Vice President, CFO, Treasurer and CAO

Mr. Ivanov was appointed Chief Financial Officer, Executive Vice President, Treasurer, and Chief Accounting Officer of Arrow Financial Corporation, and its subsidiary banks and insurance subsidiary, effective February 21, 2023. He brings 30 years of experience in financial planning and analysis, controllership, financial reporting, and treasury functions. Before joining Arrow, Mr. Ivanov served as Executive Vice President and Chief Financial Officer of Bankwell Financial Group, Inc. His prior experience includes various finance positions at Doral Bank, General Electric Company, and PepsiCo, Inc., and he began his career with Ernst & Young GmbH in Munich, Germany. Mr. Ivanov holds an MBA and bachelor's degrees in accounting and finance from the University of South Florida. He has demonstrated confidence in the company through significant purchases of company shares in recent months.

Michael Jacobs, Executive Vice President and CIO

Brooke M. Pancoe, Executive Vice President and CHRO

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The key risks to Arrow Financial (AROW) are primarily concentrated in the areas of interest rate fluctuations, regulatory compliance, and operational challenges.

1. Interest Rate Risk

   Arrow Financial is significantly exposed to interest rate risk, which has a direct impact on its profitability. Fluctuations in interest rates can affect the company's ability to originate loans and attract deposits, as well as influence the fair value of its financial assets and liabilities. For example, increased interest expenses due to higher deposit rates contributed to a slight decrease in net income in 2024.

2. Regulatory Risks

   As a financial institution, Arrow Financial is subject to extensive federal and state banking regulations. Changes in these regulations, particularly those related to capital and liquidity standards, could adversely impact the company's operations and financial condition. Non-compliance with critical laws, such as anti-money laundering regulations and the Community Reinvestment Act, could lead to fines or restrictions on business activities.

3. Operational Risks

   Operational risks for Arrow Financial include the constant threat of cybersecurity breaches and the ongoing need to adapt to technological advancements. The company's reliance on electronic systems and third-party vendors for data processing makes it vulnerable to potential security incidents, which could materially affect its operations and financial stability. Additionally, challenges related to the loss of key personnel and health emergencies could disrupt business activities. Furthermore, the recent merger of its two subsidiary banks into Arrow Bank introduces integration risks, including potential rebranding costs, operational disruptions, and the possibility of customer loss or reduced brand awareness if the anticipated benefits do not materialize.

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The clear emerging threat to Arrow Financial, similar to the historical examples of disruptive innovation, is the ongoing proliferation and increasing market share of **Fintech companies and purely digital banks (neobanks)**.

These entities offer banking services such as deposits, loans, and payment solutions often with lower overhead, more agile technology, and superior digital user experiences compared to traditional, branch-based community banks like Arrow Financial. They can attract customers who prioritize digital convenience and lower fees, thereby eroding market share from established institutions in Arrow Financial's operating regions without needing a physical footprint. This represents a fundamental challenge to the traditional banking model, akin to how Netflix leveraged digital distribution to disrupt Blockbuster's physical store model, or how smartphone apps changed personal communication and service access.

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Expected Drivers of Future Revenue Growth for Arrow Financial (AROW)

Over the next 2-3 years, Arrow Financial (AROW) is expected to drive revenue growth through several key factors:

1. Net Interest Margin Expansion and Loan Repricing: A significant driver of future revenue growth for Arrow Financial is the anticipated expansion of its net interest margin. This is expected to be fueled by the repricing of fixed-rate loans at higher rates. The company's management has expressed optimism regarding further margin expansion due to these upcoming repricing opportunities.
2. Strategic Positioning for Federal Reserve Interest Rate Adjustments: Arrow Financial's liability-sensitive balance sheet strategically positions it to benefit from potential Federal Reserve interest rate cuts. These adjustments are expected to enhance future financial performance by positively impacting the company's net interest income.
3. Growth in Net Interest Income: As a financial holding company, a primary source of Arrow Financial's revenue is interest income earned through its banking subsidiaries. The company reported record net interest income in Q3 2025, and continued growth in this area, supported by favorable interest rate dynamics and lending activities, is a crucial driver for future revenue.
4. Operational Efficiency and Cost Management: While not a direct revenue generator, Arrow Financial's focus on effective cost management and operational efficiency has contributed to its strong financial foundation and consistent revenue growth. Improved efficiency can free up resources for strategic investments, allow for competitive pricing, and ultimately support top-line growth.

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Share Repurchases

• The Board of Directors approved a new stock repurchase program on October 26, 2022, authorizing the repurchase of up to $5 million of common stock for the 2023 calendar year, replacing a similar $5 million program from October 27, 2021.
• Arrow Financial expanded its existing stock repurchase program by $5 million on October 25, 2023, bringing the total available for repurchase to $9.1 million and removing the previous expiration date.
• The company repurchased approximately $3.4 million in shares in the fourth quarter of 2024, $5.1 million in the second quarter of 2025, and $1.4 million in the third quarter of 2025.

Share Issuance

• Arrow Financial resumed its Dividend Reinvestment Plan (DRIP) in October 2023, allowing for the issuance of shares through this program.
• The company also has an Employee Stock Purchase Plan, which, along with its predecessor plans, results in the issuance of shares to participants.

Outbound Investments

• In 2024, Arrow Financial expanded its operations by acquiring a bank branch in Whitehall, New York, and the assets of a local insurance agency.

Capital Expenditures

• Arrow Financial incurred approximately $0.5 million in bank unification expenses and a $0.7 million write-off for legacy branding in the fourth quarter of 2024.
• The company recorded approximately $0.6 million in unification costs in the first quarter of 2025, followed by $1.1 million in the second quarter of 2025, primarily related to a system conversion and operational merger of its two banking subsidiaries.
• An additional $600 thousand in non-core unification costs were incurred in the third quarter of 2025, marking the last expected expenses for this unification effort, which was successfully completed in July 2025.