Key Highlights

  • Core EPS of $0.97 in Q3 2026, excluding $15.6 million in merger-related expenses from Adirondack acquisition
  • Net interest Margin expanded to 3.80%, up from 3.42% in Q2, aided by lower-cost deposit base from acquisition
  • Organic Loan growth of approximately $60 million, or 6.8% annualized, complemented $600 million in acquired loans
  • Board declared Q4 Dividend of $0.30 per share; company celebrated 175th anniversary with Nasdaq bell ringing

Arrow Financial Corporation (NASDAQ:AROW), a community banking company headquartered in Glens Falls, New York, reported its first quarter of financial results following the July 1, 2026 Acquisition of Adirondack Bancorp. While reported GAAP Net Income of $5.7 million, or $0.31 per diluted share, reflected $15.6 million in merger-related expenses, the company's core EPS of $0.97 demonstrated the underlying Earnings power of the expanded institution.

Acquisition Integration Proceeds Ahead of Schedule

The Adirondack Bancorp acquisition, which added approximately $600 million in loans and $900 million in deposits, is proceeding on track. Core banking system integration is scheduled for November 7 and 8, 2026, with Arrow expecting to realize approximately 95% of anticipated cost savings by the first quarter of 2027. Purchase accounting adjustments include a loan Fair Value discount of $26.7 million and a core deposit intangible of $16.4 million. Total Goodwill recognized from the transaction stands at $44.7 million. Arrow also acquired Skene Valley Agency, an independent insurance agency in Washington County, New York, during the quarter.

Net Interest Income and Margin Expand Meaningfully

Net interest income of $48.7 million jumped 35.6% from the prior quarter, driven by substantially higher earning asset balances from the Adirondack portfolio. Net interest margin widened to 3.80% from 3.42% in Q2, benefiting from the acquired institution's lower-cost deposit base and 14 basis points from purchase accounting accretion. Interest income totaled $68.1 million, while interest expense of $19.3 million reflected the blended deposit cost structure of the combined entity. Loan yields rose to 5.69% from 5.46% in the preceding quarter, reflecting a more favorable mix and continued repricing.

Organic Growth and Credit Quality Remain Intact

Beyond the acquisition contribution, Arrow generated organic loan growth of approximately $60 million during the quarter, representing a 6.8% annualized rate. Year-to-date net charge-offs remained minimal at 0.14%, reflecting disciplined Underwriting across the expanded portfolio. Return on average Assets of 0.42% would have been 1.33% excluding merger-related expenses, and the Board's declaration of a $0.30 per share quarterly dividend signals confidence in the institution's financial position. Arrow also marked its 175th anniversary during the quarter.

With system conversion on the near-term horizon and cost synergies expected to materialize over the next two quarters, Arrow's management team is focused on completing integration while maintaining the organic growth trajectory and credit discipline that have defined its Franchise over more than 175 years of community banking.