Here are 1-3 brief analogies to describe Arrow Financial (AROW):

• It's like a highly localized version of M&T Bank, serving specific communities in upstate New York.
• Think of it as a community-focused bank, similar to a smaller Citizens Bank, but concentrating its services on specific counties in northeastern New York.

• Deposit Products: Provides various types of accounts including checking, savings, and time deposits for individuals and businesses.
• Commercial Loans: Offers term loans, lines of credit, and commercial real estate loans to businesses.
• Consumer Loans: Furnishes installment loans, personal lines of credit, auto loans, and residential real estate loans to individuals.
• Indirect Lending Program: Operates a program where loans are provided through third-party channels.
• Residential Real Estate Loan Origination & Secondary Market Sales: Originates residential real estate loans and sells them into the secondary market.
• Trust and Estate Administration: Delivers services for managing trusts and estates for individuals.
• Employee Benefit Plan Administration: Administers pension, profit-sharing, and other employee benefit plans for corporations.
• Insurance Agency Services: Provides group health care, life, property, and casualty insurance products.
• Investment Advisory Services: Offers investment advice, including to its proprietary mutual funds.

Arrow Financial (AROW) serves a diversified customer base, primarily consisting of individuals and businesses within its operating region in northeastern New York State. As a bank holding company, it does not have a concentrated list of major corporate customers. Instead, its customer base can be categorized as follows:

• Consumer Banking Customers: Individuals are a major customer group, utilizing a wide array of products and services. These include various deposit accounts (demand, interest-bearing checking, savings, time deposits), consumer installment loans, personal lines of credit, automobile loans, and residential real estate loans (mortgages, fixed home equity loans, and home equity lines of credit).
• Commercial Banking Customers: Businesses and corporations form another significant customer segment. Arrow Financial provides them with commercial loans (term loans, time notes, lines of credit), commercial real estate loans for various purposes (purchases, refinancing, expansions, improvements, construction, and land development), and potentially business deposit accounts.
• Wealth Management and Trust Clients: This category includes individuals seeking retirement planning, trust, and estate administration services. It also encompasses corporations that utilize the company's services for pension, profit-sharing, and employee benefit plan administration. Additionally, investors utilizing its investment advisory services for proprietary mutual funds fall into this segment.

David S. DeMarco, President and CEO

David S. DeMarco was appointed President and Chief Executive Officer of Arrow Financial Corporation and Arrow Bank in May 2023. He joined the company in 1987 as a commercial lender and has since held positions of increasing responsibility within the organization. In 2012, he was named President and CEO of Saratoga National Bank, which is now known as Arrow Bank. Mr. DeMarco holds a bachelor's degree in finance from the University of Texas at Austin and is a graduate of the Adirondack Regional Chamber of Commerce's Leadership Program and the Stonier Graduate School of Banking.

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

Penko K. Ivanov joined Arrow Financial Corporation in 2023 and was appointed Chief Financial Officer, Executive Vice President, Treasurer, and Chief Accounting Officer, effective February 21, 2023. He brings over 30 years of experience in financial planning and analysis, controllership, financial reporting, and treasury. Prior to joining Arrow, Mr. Ivanov served as Executive Vice President and Chief Financial Officer of Bankwell Financial Group, Inc., and also held CFO positions at Darien Rowayton Bank and for Doral Bank's U.S. Operations. He began his career with Ernst & Young GmbH and has held finance positions at General Electric Company and PepsiCo, Inc., as well as accounting/finance positions at GE Capital and Bridgewater Associates. Mr. Ivanov holds an MBA and bachelor's degrees in accounting and finance from the University of South Florida.

Michael Jacobs, Executive Vice President and CIO

Michael Jacobs serves as the Executive Vice President and Chief Information Officer for Arrow Financial Corporation.

Brooke M. Pancoe, Executive Vice President and CHRO

Brooke M. Pancoe is an Executive Vice President and the Chief Human Resources Officer at Arrow Financial Corporation.

Key Risks to Arrow Financial (AROW)

1. Interest Rate Fluctuations: As a bank holding company, Arrow Financial Corporation's profitability is significantly exposed to changes in interest rates. Fluctuations can impact the company's net interest margin, its ability to originate loans and attract deposits, and the fair value of its financial assets and liabilities. For example, increased interest expenses due to higher deposit rates presented a challenge in 2024.
2. Regulatory Compliance and Changes: Arrow Financial operates within a heavily regulated environment at both federal and state levels. The company faces significant risks from evolving banking regulations, particularly those related to capital and liquidity standards, anti-money laundering laws, and the Community Reinvestment Act. Increased scrutiny on mid-sized banks following recent industry events also contributes to heightened regulatory risk and potential compliance costs.
3. Credit Risk and Economic Conditions: Given its extensive lending activities across commercial, residential real estate, and consumer segments, Arrow Financial is inherently exposed to credit risk, which is the risk of borrowers defaulting on their loans. While asset quality showed improvements in 2025, a downturn in the U.S. economy or within its concentrated operating region in northeastern New York State could negatively impact loan quality, increase non-performing assets, and affect overall earnings.

The clear emerging threat to Arrow Financial, a regional, branch-based bank, is the rapid advancement and widespread adoption of digital-first banking models. This phenomenon encompasses:

1. The emergence and growth of **digital-only banks and specialized fintech companies** that operate with minimal physical infrastructure, offering highly competitive rates and superior digital user experiences for deposits, loans, and other financial services. These players can attract customers without geographical constraints, directly challenging Arrow Financial's traditional branch network and regional focus.
2. The significant **investment by larger national banks into advanced digital banking platforms**, enabling them to deliver sophisticated online and mobile services that can appeal to customers even within Arrow Financial's localized markets. This diminishes the competitive advantage of Arrow's physical presence and community ties.

Collectively, these trends undermine the traditional value proposition of regional, brick-and-mortar banking by providing more convenient, often cheaper, and broadly accessible alternatives, threatening Arrow Financial's customer base, deposit acquisition, and loan origination volumes across its core banking and lending activities.

For Arrow Financial (AROW), the expected drivers of future revenue growth over the next 2-3 years include:

1. Strategic Acquisitions and Geographic Expansion: Arrow Financial is focused on expanding its market presence through strategic acquisitions, such as the recent acquisition of Adirondack Bancorp, Inc., which extends its footprint into new counties in the Adirondack region and Mohawk Valley. This builds on previous moves like the acquisition of the Whitehall Branch from Berkshire Bank. The company also aims to expand into additional areas like Rensselaer and Columbia counties, the Hudson Valley, and potentially western Vermont and Massachusetts. These expansions directly increase the customer base, deposits, and loan opportunities.
2. Expansion and Cross-selling of Wealth Management and Insurance Services: The company is diversifying its revenue streams by expanding its insurance business, as demonstrated by the acquisition of A&B Agency, Inc. Furthermore, the acquisition of Adirondack Bancorp, Inc. is expected to enable Arrow to complement existing product offerings with its wealth management and insurance services, thereby increasing non-interest income.
3. Growth in Core Lending Activities: With an increased asset base resulting from acquisitions, Arrow Financial is positioned to grow its primary banking revenue through an expanded portfolio of commercial, residential, and consumer loans. The strategic unification and broader market presence provide a larger platform to expand these core lending activities.
4. Enhanced Operational Efficiency and Strengthened Market Presence from Bank Unification: The unification of its subsidiary banks into "Arrow Bank" is a strategic move designed to simplify brand identity, strengthen market presence, and achieve operational efficiencies. This streamlining is intended to better position the bank for future growth by optimizing resource allocation and enhancing competitive capabilities, which indirectly supports revenue generation.

Capital Allocation Decisions for Arrow Financial (AROW)

Share Repurchases

• Arrow Financial expanded its existing stock repurchase program by $5 million in 2023.
• The company repurchased $9.9 million in stock during 2025.
• A new stock repurchase program authorizing up to $5 million of common stock was approved in January 2021, replacing prior authorizations.

Share Issuance

• Arrow Financial issues an annual stock dividend, which it has done for 15 consecutive years as of 2023.
• The company reinstated its dividend reinvestment program (DRIP) in 2023.
• As part of the proposed acquisition of Adirondack Bancorp, Inc., Arrow will file a registration statement to issue Arrow common stock to Adirondack shareholders.

Outbound Investments

• Arrow Financial Corporation announced the strategic acquisition of Adirondack Bancorp, Inc. on February 26, 2026, which is expected to expand its presence into new counties.
• The aggregate implied transaction value for the acquisition of Adirondack Bancorp, Inc. is approximately $89.1 million, based on AROW's stock price as of February 25, 2026.
• Adirondack shareholders will receive 1.8610 shares of Arrow common stock plus $18.72 in cash for each outstanding share as part of the merger consideration.

Capital Expenditures

• Capital Expenditures (CapEx) were reported as $13 million in 2022, $4.37 million in 2023, and $2.27 million in 2024.
• Arrow invested heavily in a remediation plan to address internal control weaknesses in 2023.
• By 2023, the company completed a multi-year renovation project on its downtown Glens Falls, New York headquarters.