250 Glen Street Glens Falls, NY 12801
			NASDAQ® Symbol: "AROW" Website: arrowfinancial.com Media Contact: Dori McDannold Tel: (518) 415-4313

Arrow Reports $12.6 million in Q1 Net Income, Loan Growth of $69.3 Million

GLENS FALLS, N.Y. (April 26, 2022) – Arrow Financial Corporation (NasdaqGS® – AROW) announced financial results for the three-month period ended March 31, 2022. Net income for the first quarter of 2022 was $12.6 million and diluted earnings per share was $0.78.

Loan growth was strong in the first quarter of 2022, with gross loans increasing by $69 million. Excluding Paycheck Protection Program (PPP) loans, which decreased by $24 million, loans grew by $93 million in the quarter.

“We are pleased to start 2022 with another exceptional quarter with both strong earnings and notable organic loan growth,” said Arrow President and CEO Thomas J. Murphy. “I thank the entire Arrow Team for their dedication and hard work. We expect another challenging year, yet I am confident in our ability to meet these challenges and deliver strong results for our customers, our shareholders and our communities.”

For the first quarter of 2022, net income was $12.6 million compared to $13.3 million for the first quarter of 2021. The year-over-year change in first quarter net income was primarily due to:

•A provision expense of $769 thousand for the first quarter of 2022 compared to a credit to the provision of $648 thousand in the first quarter of 2021.

•Secondary market loan sale transactions were strategically curtailed in 2021, which reduced gain-on-sale income by $1.4 million when comparing year-over-year quarters.

Even with the reduction in loan sales, total revenue for Q1 2022 of nearly $36.0 million was still higher by $1.2 million, or 3.5%, when compared to Q1 2021 total revenue of $34.8 million. Net Interest Income increased by 6.4% in Q1 2022, when compared to Q1 2021.

First Quarter Highlights

Earnings:

•Net income was $12.6 million.

•Net interest margin was 2.90%.

•Return on average assets (ROA) was 1.26%.

•Return on average equity (ROE) was 13.77%.

•Diluted earnings per share (EPS) was $0.78 for the first quarter.

•First-quarter revenue increased $1.2 million, or 3.5%, over the prior-year comparative quarter.

•Net charge-offs for the first quarter of 2022 were $389 thousand as compared to $444 thousand for the comparable 2021 quarter.

Balance Sheet:

•Total assets were $4.2 billion as of March 31, 2022 representing a record high for Arrow.

•Total loans were $2.7 billion as of March 31, 2022, also a record high for Arrow.

•Deposit growth in the first quarter of 2022 was $164.9 million.

•A Federal Home Loan Bank (FHLB) term advance of $20 million was prepaid during Q1 2022.

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Additional Items:

•$24 million of PPP loans were forgiven in the first quarter of 2022.

•Book value per share was $22.31, up by 4.3% over the prior-year level.

•Nonperforming assets of $10.1 million at March 31, 2022 represented 0.24% of period-end assets, up from 0.22% at March 31, 2021.

•Following New York State guidelines, COVID-19 restrictions, including New York HERO safety protocols were lifted in the first quarter of 2022.

•Arrow continued to respond in a socially-conscious manner, while meeting the needs of the low-to-moderate income population with the launch of our nationally certified Bank On Smart Steps checking account with no overdraft fees.

•Arrow continues to advance its focus on technology enhancement with preparations for upgrading its core platform system later in 2022.

Income Statement

•Net Interest Income: Net interest income for the first quarter was $27.8 million, up 6.4% from $26.2 million in the comparable quarter of 2021. Interest and fees on loans were $25.7 million for the first quarter of 2022, an increase of 2.2% from $25.2 million for the quarter ending March 31, 2021. Interest and fees related to PPP loans, included in the $25.7 million, were $1.1 million in the first quarter of 2022. Interest expense for the first quarter of 2022 was $1.1 million, a decrease of $0.4 million, or 27.1%, from the $1.5 million in expense for the comparable quarter ending March 31, 2021.

•Net Interest Margin: Net interest margin was 2.90% for the quarter, compared to 2.99% for the first quarter of 2021. The decrease in net interest margin from the prior year was due to a variety of factors including an increase in cash and investments which impacted the yield of earning assets and a decrease in the amount of PPP loan interest and related fees. The cost of interest-bearing liabilities was favorably impacted by the mix of deposits and lower deposit rates.

			Three Months Ended
			March 31, 2022						March 31, 2021
Interest and Dividend Income			$	28,947					$	27,694
Interest Expense			1,122						1,539
Net Interest Income			27,825						26,155
Average Earning Assets(1)			3,886,787						3,546,339
Average Interest-Bearing Liabilities			2,855,884						2,639,240
Yield on Earning Assets(1)			3.02		%				3.17		%
Cost of Interest-Bearing Liabilities			0.16						0.24
Net Interest Spread			2.86						2.93
Net Interest Margin			2.90						2.99
Net Interest Income excluding PPP loans			$	26,759					$	24,814
Net Interest Margin excluding PPP loans			2.81		%				2.94		%
(1) Includes Nonaccrual Loans.

•Provision for Credit Losses: For the first quarter of 2022, the provision for credit losses was $769 thousand compared to a credit of $648 thousand in provision expense in the first quarter of 2021. The key drivers for the changes were strong loan growth and current forecasted economic conditions in Q1 2022 as compared to the economic conditions forecasted at the implementation of the current expected credit loss (CECL) model as of January 1, 2021.

•Noninterest Income: Noninterest income for the three months ended March 31, 2022 was $8.2 million, compared to $8.6 million in the comparable 2021 quarter. Income from fiduciary activities

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for the three months ended March 31, 2022, increased by $218 thousand over the comparable quarter of 2021. Fees and other services to customers increased $186 thousand over the comparable quarter of 2021. Gain on sales of loans decreased $1.4 million from the first quarter of 2021 as a result of the strategic decision to retain more newly originated real estate loans. Other operating income increased $672 thousand over the comparable quarter of 2021 due to a variety of factors including bank-owned life insurance proceeds and gains on other assets.

•Noninterest Expense: Noninterest expense for the first quarter of 2022 was $18.9 million, an increase from $18.7 million for the first quarter of 2021. The largest component of noninterest expense was salaries and benefits paid to our employees, which totaled $11.3 million for the first quarter of 2022. The expense for estimated credit losses on off-balance sheet credit exposures included in other expenses was a credit of $316 thousand.

•Provision for Income Taxes: The provision for income taxes was $3.7 million for the first quarter of 2022, compared to $3.5 million for the same quarter of 2021. The effective income tax rates for the three-month periods ended March 31, 2022 and 2021, were 22.7% and 20.6%, respectively. The increase in the effective tax rate in the first quarter of 2022 compared to the first quarter of 2021 was primarily due to the reduction of tax exempt investments held and the related investment income.

Balance Sheet

•Total Assets: Total assets were $4.2 billion at March 31, 2022 an increase of $252.7 million, or 6.5%, from March 31, 2021.

•Investments: Total investments increased by $100.5 million, or 14.8%, compared to March 31, 2021.

•Loans: Total loans were $2.7 billion as of March 31, 2022. Loan growth for the first quarter of 2022 was $69.3 million and increased $98.0 million, or 3.7%, from March 31, 2021. In the first quarter, total outstanding commercial loans decreased $7.5 million, or 0.9%. PPP loans, which are included in the commercial portfolio, decreased $24.9 million in the first quarter as a result of the continued loan forgiveness processed by the Small Business Administration. The consumer loan portfolio grew by $56.1 million, or 6.1% in the first quarter, primarily within the indirect automobile lending program. Total outstanding residential real estate loans increased $20.8 million, or 2.2%, for the first quarter of 2022.

•Allowance for Credit Losses: The allowance for credit losses was $27.7 million on March 31, 2022, which represented 1.01% of loans outstanding, as compared to 1.02% at March 31, 2021. Asset quality remained solid at March 31, 2022, as evidenced by low levels of nonperforming assets and charge-offs. Net loan losses, expressed as an annualized percentage of average loans outstanding, were 0.06% for the three-month period ended March 31, 2022, a decrease from 0.07% for the three-month period ended March 31, 2021. Nonperforming assets of $10.1 million at March 31, 2022 represented 0.24% of period-end assets compared to 0.22% at March 31, 2021.

•Deposit Growth: At March 31, 2022, deposit balances were $3.7 billion. Deposits increased in the first quarter of 2022 by $164.9 million and increased by $261.8 million, or 7.6%, from the prior-year level. Municipal deposits increased $107.0 million in the first quarter and $68.0 million, or 7.4% from March 31, 2021. Non-municipal deposits increased $57.9 million for the quarter and $193.8 million, or 7.6% from March 31, 2021. Noninterest-bearing deposits represented 21.9% of total deposits at March 31, 2022, compared to 21.8% of total deposits at March 31, 2021. At

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March 31, 2022, total time deposits were $177.0 million, a decrease of $69.0 million, or 28.1%, compared to the prior year.

•Capital: Total stockholders’ equity was $357.2 million on March 31, 2022, up $14.8 million, or 4.3%, from March 31, 2021. Arrow's regulatory capital ratios remained strong in the first quarter of 2022. As of March 31, 2022, Arrow's Common Equity Tier 1 Capital Ratio was 13.48% and Total Risk-Based Capital Ratio was 15.33%. The capital ratios of Arrow and both its subsidiary banks continued to exceed the “well capitalized” regulatory standards.

Additional Commentary

•Cash and Stock Dividends: On March 15, 2022, Arrow distributed a cash dividend of $0.27 per share. The cash dividend was 7% higher than the cash dividend paid by Arrow in the first quarter of 2021 due to a one cent increase in the cash dividend rate and after adjusting for the 3% stock dividend distributed on September 24, 2021.

•Industry Recognition: In the first quarter of 2022, both of Arrow's banking subsidiaries, Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, earned BauerFinancial, Inc. 5-Star Exceptional Performance Bank ratings.

About Arrow

Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. Arrow is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include Upstate Agency, LLC and North Country Investment Advisers, Inc.

Non-GAAP Financial Measures Reconciliation

In addition to presenting information in conformity with accounting principles generally accepted in the United States of America (GAAP), this news release contains financial information determined by methods other than GAAP (non-GAAP). Some measures used in this release, which are commonly utilized by financial institutions, have not been specifically exempted by the Securities and Exchange Commission (SEC) and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules. These non-GAAP financial measures include: tangible equity, return on tangible equity, tax-equivalent adjustment and related net interest income, tax-equivalent, and the efficiency ratio. Management believes that the non-GAAP financial measures disclosed by Arrow are useful in evaluating Arrow's performance and that such information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP. Non-GAAP financial measures may differ from similar measures presented by other companies. See the reconciliation of GAAP to non-GAAP measures in the section "Selected Quarterly Information."

Safe Harbor Statement

The information in this document may contain statements based on management’s beliefs, assumptions, expectations, estimates and projections about the future. Such "forward-looking statements," as defined in Section 21E of the Securities Exchange Act of 1934, as amended, involve a degree of uncertainty and attendant risk. Actual outcomes and results may differ, explicitly or by implication. We are not obliged to revise or update these statements to reflect unanticipated events. This document should be read in conjunction with Arrow’s Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the SEC.

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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts - Unaudited)

						Three Months Ended March 31
						2022						2021
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans						$	25,739					$	25,183
Interest on Deposits at Banks						198						85
Interest and Dividends on Investment Securities:
Fully Taxable						2,189						1,506
Exempt from Federal Taxes						821						920
Total Interest and Dividend Income						28,947						27,694
INTEREST EXPENSE
Interest-Bearing Checking Accounts						163						219
Savings Deposits						417						565
Time Deposits over $250,000						28						120
Other Time Deposits						109						222
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase						—						2
Federal Home Loan Bank Advances						187						193
Junior Subordinated Obligations Issued to   Unconsolidated Subsidiary Trusts						169						169
Interest on Financing Leases						49						49
Total Interest Expense						1,122						1,539
NET INTEREST INCOME						27,825						26,155
Provision for Credit Losses						769						(648)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES						27,056						26,803
NONINTEREST INCOME
Income From Fiduciary Activities						2,596						2,378
Fees for Other Services to Customers						2,795						2,609
Insurance Commissions						1,511						1,640
Net Gain on Securities						130						160
Net Gain on Sales of Loans						52						1,415
Other Operating Income						1,078						406
Total Noninterest Income						8,162						8,608
NONINTEREST EXPENSE
Salaries and Employee Benefits						11,286						11,138
Occupancy Expenses, Net						1,598						1,593
Technology and Equipment Expense						3,779						3,459
FDIC Assessments						307						270
Other Operating Expense						1,975						2,218
Total Noninterest Expense						18,945						18,678
INCOME BEFORE PROVISION FOR INCOME TAXES						16,273						16,733
Provision for Income Taxes						3,698						3,453
NET INCOME						$	12,575					$	13,280
Average Shares Outstanding 1:
Basic						16,030						15,994
Diluted						16,083						16,030
Per Common Share:
Basic Earnings						$	0.78					$	0.83
Diluted Earnings						0.78						0.83
1 2021 Share and Per Share Amounts have been restated for the September 24, 2021, 3% stock dividend.

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ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts - Unaudited)

			March 31, 2022						December 31, 2021						March 31, 2021
ASSETS
Cash and Due From Banks			$	38,964					$	26,978					$	45,602
Interest-Bearing Deposits at Banks			448,614						430,718						406,605
Investment Securities:
Available-for-Sale at Fair Value			582,428						559,316						464,089
Held-to-Maturity (Approximate Fair Value of $195,862 at March 31, 2022; $201,292 at December 31, 2021; and $221,360 at March 31, 2021)			196,661						196,566						214,561
Equity Securities			1,877						1,747						1,796
FHLB and Federal Reserve Bank Stock			4,491						5,380						5,360
Loans			2,737,267						2,667,941						2,639,243
Allowance for Credit Losses			(27,661)						(27,281)						(26,840)
Net Loans			2,709,606						2,640,660						2,612,403
Premises and Equipment, Net			48,481						46,217						43,057
Goodwill			21,873						21,873						21,873
Other Intangible Assets, Net			1,818						1,918						2,049
Other Assets			101,589						96,579						86,316
Total Assets			$	4,156,402					$	4,027,952					$	3,903,711
LIABILITIES
Noninterest-Bearing Deposits			813,066						810,274						751,884
Interest-Bearing Checking Accounts			1,154,068						994,391						992,486
Savings Deposits			1,571,274						1,531,287						1,463,229
Time Deposits over $250,000			48,288						82,811						100,212
Other Time Deposits			128,677						131,734						145,777
Total Deposits			3,715,373						3,550,497						3,453,588
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase			—						—						6,795
Federal Home Loan Bank Term Advances			25,000						45,000						45,000
Junior Subordinated Obligations Issued to Unconsolidated   Subsidiary Trusts			20,000						20,000						20,000
Finance Leases			5,156						5,169						5,205
Other Liabilities			33,630						36,100						30,710
Total Liabilities			3,799,159						3,656,766						3,561,298
STOCKHOLDERS’ EQUITY
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at March 31, 2022, December 31, 2021 and March 31, 2021			—						—						—
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (20,800,144 Shares Issued at March 31, 2022 and December 31, 2021 and 20,194,474 at March 31, 2021)			20,800						20,800						20,194
Additional Paid-in Capital			378,758						377,996						354,358
Retained Earnings			62,328						54,078						51,263
Accumulated Other Comprehensive Loss			(20,797)						347						(3,096)
Treasury Stock, at Cost (4,787,183 Shares at March 31, 2022; 4,759,414 Shares at December 31, 2021 and 4,651,719 Shares at March 31, 2021)			(83,846)						(82,035)						(80,306)
Total Stockholders’ Equity			357,243						371,186						342,413
Total Liabilities and Stockholders’ Equity			$	4,156,402					$	4,027,952					$	3,903,711

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Arrow Financial Corporation

Selected Quarterly Information

(Dollars In Thousands, Except Per Share Amounts - Unaudited)

Quarter Ended			3/31/2022						12/31/2021						9/30/2021						6/30/2021						3/31/2021
Net Income			$	12,575					$	10,309					$	12,989					$	13,279					$	13,280
Transactions in Net Income (Net of Tax):
Net Changes in Fair Value of Equity Investments			96						(104)						(79)						145						119
Share and Per Share Data:1
Period End Shares Outstanding			16,013						16,041						16,020						16,039						16,009
Basic Average Shares Outstanding			16,030						16,028						16,027						16,024						15,994
Diluted Average Shares Outstanding			16,083						16,091						16,085						16,085						16,030
Basic Earnings Per Share			$	0.78					$	0.64					$	0.81					$	0.83					$	0.83
Diluted Earnings Per Share			0.78						0.63						0.81						0.83						0.83
Cash Dividend Per Share			0.270						0.260						0.252						0.252						0.252
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks			$	410,644					$	551,890					$	416,500					$	369,034					$	334,155
Investment Securities			797,347						681,732						675,980						668,089						593,822
Loans			2,678,796						2,660,665						2,641,726						2,651,449						2,618,362
Deposits			3,582,256						3,590,766						3,435,933						3,395,271						3,254,815
Other Borrowed Funds			68,596						70,162						72,187						74,957						82,659
Shareholders' Equity			370,264						364,409						359,384						350,203						340,708
Total Assets			4,054,943						4,060,540						3,902,041						3,851,921						3,712,020
Return on Average Assets, annualized			1.26		%				1.01		%				1.32		%				1.38		%				1.45		%
Return on Average Equity, annualized			13.77		%				11.22		%				14.34		%				15.21		%				15.81		%
Return on Average Tangible Equity, annualized 2			14.72		%				12.01		%				15.36		%				16.32		%				17.00		%
Average Earning Assets			$	3,886,787					$	3,894,287					$	3,734,206					$	3,688,572					$	3,546,339
Average Paying Liabilities			2,855,884						2,841,304						2,705,283						2,721,961						2,639,240
Interest Income			28,947						28,354						29,807						29,695						27,694
Tax-Equivalent Adjustment 3			270						285						292						293						235
Interest Income, Tax-Equivalent 3			29,217						28,639						30,099						29,988						27,929
Interest Expense			1,122						1,152						1,169						1,335						1,539
Net Interest Income			27,825						27,202						28,638						28,360						26,155
Net Interest Income, Tax-Equivalent 3			28,095						27,487						28,930						28,653						26,390
Net Interest Margin, annualized			2.90		%				2.77		%				3.04		%				3.08		%				2.99		%
Net Interest Margin, Tax-Equivalent, annualized 3			2.93		%				2.80		%				3.07		%				3.12		%				3.02		%
Efficiency Ratio Calculation: 4
Noninterest Expense			$	18,945					$	20,860					$	19,423					$	19,087					$	18,678
Less: Intangible Asset Amortization			49						52						51						53						54
Net Noninterest Expense			$	18,896					$	20,808					$	19,372					$	19,034					$	18,624
Net Interest Income, Tax-Equivalent			$	28,095					$	27,487					$	28,930					$	28,653					$	26,390
Noninterest Income			8,162						7,589						7,694						8,478						8,608
Less: Net (Loss) Gain on Securities			130						(139)						(106)						196						160
Net Gross Income			$	36,127					$	35,215					$	36,730					$	36,935					$	34,838
Efficiency Ratio			52.30		%				59.09		%				52.74		%				51.53		%				53.46		%
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)			$	357,243					$	371,186					$	360,171					$	353,033					$	342,413
Book Value per Share 1			22.31						23.14						22.48						22.01						21.39
Goodwill and Other Intangible Assets, net			23,691						23,791						23,879						23,955						23,922
Tangible Book Value per Share 1,2			20.83						21.66						20.99						20.52						19.89
Capital Ratios:5
Tier 1 Leverage Ratio			9.37		%				9.20		%				9.39		%				9.29		%				9.37		%
Common Equity Tier 1 Capital Ratio			13.48		%				13.77		%				13.71		%				13.79		%				13.56		%
Tier 1 Risk-Based Capital Ratio			14.23		%				14.55		%				14.51		%				14.61		%				14.39		%
Total Risk-Based Capital Ratio			15.33		%				15.69		%				15.66		%				15.78		%				15.55		%
Assets Under Trust Admin. & Investment Mgmt.			$	1,793,747					$	1,851,101					$	1,778,659					$	1,804,854					$	1,725,754

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Arrow Financial Corporation

Selected Quarterly Information - Continued

(Dollars In Thousands, Except Per Share Amounts - Unaudited)

Footnotes:
1.			Share and Per Share Data have been restated for the September 24, 2021, 3% stock dividend.
2.			Non-GAAP Financial Measures Reconciliation: Tangible Book Value and Tangible Equity exclude goodwill and other intangible assets, net from total equity.  These are non-GAAP financial measures which Arrow believes provides investors with information that is useful in understanding its financial performance.
						3/31/2022						12/31/2021						9/30/2021						6/30/2021						3/31/2021
			Total Stockholders' Equity (GAAP)			$	357,243					$	371,186					$	360,171					$	353,033					$	342,413
			Less: Goodwill and Other Intangible assets, net			23,691						23,791						23,879						23,955						23,922
			Tangible Equity (Non-GAAP)			$	333,552					$	347,395					$	336,292					$	329,078					$	318,491
			Period End Shares Outstanding			16,013						16,041						16,020						16,039						16,009
			Tangible Book Value per Share (Non-GAAP)			$	20.83					$	21.66					$	20.99					$	20.52					$	19.89
			Net Income			12,575						10,309						12,989						13,279						13,280
			Return on Average Tangible Equity (Net Income/Tangible Equity - Annualized)			14.72		%				12.01		%				15.36		%				16.32		%				17.00		%
3.			Non-GAAP Financial Measures Reconciliation: Net Interest Margin, Tax-Equivalent is the ratio of our annualized tax-equivalent net interest income to average earning assets. This is also a non-GAAP financial measure which Arrow believes provides investors with information that is useful in understanding its financial performance.
						3/31/2022						12/31/2021						9/30/2021						6/30/2021						3/31/2021
			Interest Income (GAAP)			$	28,947					$	28,354					$	29,807					$	29,695					$	27,694
			Add: Tax-Equivalent adjustment      (Non-GAAP)			270						285						292						293						235
			Interest Income - Tax Equivalent      (Non-GAAP)			$	29,217					$	28,639					$	30,099					$	29,988					$	27,929
			Net Interest Income (GAAP)			$	27,825					$	27,202					$	28,638					$	28,360					$	26,155
			Add: Tax-Equivalent adjustment      (Non-GAAP)			270						285						292						293						235
			Net Interest Income - Tax Equivalent      (Non-GAAP)			$	28,095					$	27,487					$	28,930					$	28,653					$	26,390
			Average Earning Assets			$	3,886,787					$	3,894,287					$	3,734,206					$	3,688,572					$	3,546,339
			Net Interest Margin (Non-GAAP)*			2.93		%				2.80		%				3.07		%				3.12		%				3.02		%
4.			Non-GAAP Financial Measures: Financial Institutions often use the "efficiency ratio", a non-GAAP ratio, as a measure of expense control. Arrow believes the efficiency ratio provides investors with information that is useful in understanding its financial performance. Arrow defines efficiency ratio as the ratio of noninterest expense to net gross income (which equals tax-equivalent net interest income plus noninterest income, as adjusted).
5.			For the current quarter, all of the regulatory capital ratios in the table above, as well as the Total Risk-Weighted Assets and Common Equity Tier 1 Capital amounts listed in the table below, are estimates based on, and calculated in accordance with, bank regulatory capital rules. All prior quarters reflect actual results. The CET1 ratio at March 31, 2022 listed in the tables (i.e., 13.48%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
						3/31/2022						12/31/2021						9/30/2021						6/30/2021						3/31/2021
			Total Risk Weighted Assets			$	2,661,952					$	2,552,812					$	2,511,910					$	2,438,445					$	2,404,456
			Common Equity Tier 1 Capital			358,738						351,497						344,507						336,265						326,039
			Common Equity Tier 1 Ratio			13.48		%				13.77		%				13.71		%				13.79		%				13.56		%
* Quarterly ratios have been annualized.

8

Arrow Financial Corporation

Average Consolidated Balance Sheets and Net Interest Income Analysis

(Dollars in Thousands - Unaudited)

Quarter Ended March 31:			2022																		2021
									Interest						Rate												Interest						Rate
			Average						Income/						Earned/						Average						Income/						Earned/
			Balance						Expense						Paid						Balance						Expense						Paid
Interest-Bearing Deposits at Banks			$	410,644					$	198					0.20		%				$	334,155					$	85					0.10		%
Investment Securities:
Fully Taxable			618,806						2,189						1.43						403,340						1,506						1.51
Exempt from Federal Taxes			178,541						821						1.86						190,482						920						1.96
Loans			2,678,796						25,739						3.90						2,618,362						25,183						3.90
Total Earning Assets			3,886,787						28,947						3.02						3,546,339						27,694						3.17
Allowance for Credit Losses			(27,165)																		(27,811)
Cash and Due From Banks			37,654																		35,779
Other Assets			157,667																		157,713
Total Assets			$	4,054,943																	$	3,712,020
Deposits:
Interest-Bearing Checking Accounts			$	1,027,740					163						0.06						$	859,972					219						0.10
Savings Deposits			1,557,855						417						0.11						1,435,555						565						0.16
Time Deposits of $250,000 or More			70,101						28						0.16						109,644						120						0.44
Other Time Deposits			131,592						109						0.34						151,410						222						0.59
Total Interest-Bearing Deposits			2,787,288						717						0.10						2,556,581						1,126						0.18
Short-Term Borrowings			—						—												12,458						2						0.07
FHLBNY Term Advances & Other Long-Term Debt			63,444						356						2.28						65,000						362						2.26
Finance Leases			5,152						49						3.86						5,201						49						3.82
Total Interest-Bearing Liabilities			2,855,884						1,122						0.16						2,639,240						1,539						0.24
Noninterest-bearing deposits			794,968																		698,234
Other Liabilities			33,827																		33,838
Total Liabilities			3,684,679																		3,371,312
Stockholders’ Equity			370,264																		340,708
Total Liabilities and Stockholders’ Equity			$	4,054,943																	$	3,712,020
Net Interest Income									$	27,825																	$	26,155
Net Interest Spread															2.86		%																2.93		%
Net Interest Margin															2.90		%																2.99		%

9

Arrow Financial Corporation

Consolidated Financial Information

(Dollars in Thousands - Unaudited)

Quarter Ended:			3/31/2022						12/31/2021						3/31/2021
Loan Portfolio
Commercial Loans			$	155,467					$	172,518					$	288,551
Commercial Real Estate Loans			638,437						628,929						581,507
Subtotal Commercial Loan Portfolio			793,904						801,447						870,058
Consumer Loans			976,648						920,556						861,171
Residential Real Estate Loans			966,715						945,938						908,014
Total Loans			$	2,737,267					$	2,667,941					$	2,639,243
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter			$	27,281					$	26,956					$	29,232
Impact of the Adoption of ASU 2016-13			—						—						(1,300)
Loans Charged-off			(829)						(719)						(633)
Less Recoveries of Loans Previously Charged-off			440						486						189
Net Loans Charged-off			(389)						(233)						(444)
Provision for Credit Losses			769						558						(648)
Allowance for Credit Losses, End of Quarter			$	27,661					$	27,281					$	26,840
Nonperforming Assets
Nonaccrual Loans			$	9,750					$	10,764					$	8,087
Loans Past Due 90 or More Days and Accruing			55						823						242
Loans Restructured and in Compliance with Modified Terms			74						77						97
Total Nonperforming Loans			9,879						11,664						8,426
Repossessed Assets			180						126						242
Other Real Estate Owned			—						—						—
Total Nonperforming Assets			$	10,059					$	11,790					$	8,668
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans,    Quarter-to-date Annualized			0.06		%				0.03		%				0.07		%
Provision for Credit Losses to Average Loans,   Quarter-to-date Annualized			0.12		%				0.08		%				(0.10)		%
Allowance for Credit Losses to Period-End Loans			1.01		%				1.02		%				1.02		%
Allowance for Credit Losses to Period-End Nonperforming Loans			280.00		%				233.89		%				318.54		%
Nonperforming Loans to Period-End Loans			0.36		%				0.44		%				0.32		%
Nonperforming Assets to Period-End Assets			0.24		%				0.29		%				0.22		%

10