AROW · Arrow Financial Corporation

Arrow Financial Corporation delivered solid Q1 2026 results with net income of $13.5 million and diluted EPS of $0.82, down slightly from Q4 2025's $14.0 million and $0.85 due to higher income tax expense and non-interest expenses, partially offset by net interest income growth and higher non-interest income. Key drivers included net interest income expansion to $36.1 million, fueled by a 23 basis point increase in fully tax-equivalent net interest margin to 3.48%, driven by higher earning asset yields (5.17%) and lower interest-bearing liability costs (2.21%). Provision for credit losses declined to $548 thousand amid low net charge-offs (10bps annualized) and stable loan growth. Non-interest income rose to $8.6 million, supported by insurance commissions, interchange fees, and a positive equity valuation adjustment, while non-interest expense increased to $26.9 million, including $800 thousand in merger-related expenses for the Adirondack Bancorp acquisition. Balance sheet growth featured total assets at $4.5 billion, driven by seasonal municipal deposits lifting total deposits to $4.0 billion, with a healthy 85.7% loan-to-deposit ratio. Credit quality strengthened with non-performing loans at 13bps and non-performing assets at 0.11% of total assets. CEO David S. DeMarco highlighted NIM expansion, ROA near 1.30% on an operating basis, and the strategic Adirondack acquisition, expected to add $950 million in assets and 19 branches early in Q3 2026, with significant EPS accretion anticipated in 2027. The board's $0.30 quarterly dividend declaration underscores confidence in sustained performance, with strong capital ratios (CET1 13.30%, Total RBC 15.04%) supporting growth initiatives.