250 Glen Street Glens Falls, NY 12801
			NASDAQ® Symbol: "AROW" Website: arrowfinancial.com Media Contact: Rachael Murray Tel: (518) 742-6505

Arrow Reports $8.6 million in Q1 2023 Net Income and Grew Deposits by $48.0 Million

GLENS FALLS, N.Y. (July 24, 2023) – Arrow Financial Corporation (NasdaqGS® – AROW) announced financial results for the three-month period ended March 31, 2023. Net income for the first quarter of 2023 was $8.6 million and diluted earnings per share was $0.52.

First-Quarter Highlights and Key Metrics

•Total assets were $4.1 billion.

•Total deposits were $3.5 billion.

•Total loans reached a record high of $3.0 billion as of March 31, 2023, an increase of $22.1 million from December 31, 2022.

•Loan-to-deposit ratio was 85%.

•Tangible book value per share was $20.55, an increase of $0.60, or 3.01% compared to December 31, 2022.

•On-balance sheet liquidity of $409 million, or 10%, of total assets; 5% cash and 5% unencumbered readily marketable securities.

•Additional $1.3 billion of immediately available liquidity with FHLB, FRB and other bank lines.

•Immediately available liquidity provides in excess of 150% coverage of uninsured deposits.

•Nonperforming assets decreased to $11.3 million at March 31, 2023, represented 0.27% of period-end assets.

•Net charge-offs to average loans for the first quarter of 2023 were 0.10% as compared to 0.09% for the previous quarter.

•Revenue was $34.8 million.

•Net income was $8.6 million.

•Non-interest expenses of $22.3 million included $1.0 million in incremental expenses related to the delayed filing of the Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K").

•Net interest margin was 2.96%.

•Return on average assets (ROA) was 0.87%.

•Return on average equity (ROE) was 9.66%.

"In the face of a challenging banking environment, Arrow continued to add to its deposit base and maintained a strong liquidity position while meeting the credit needs of our customers and communities," said Arrow President and CEO David S. DeMarco. "We remain committed to our long-term strategic initiatives of investing in our technology and our team so we can continue to enhance the customer experience and optimize operations. We look forward to continuing to focus on our customers and communities.”

Arrow remains dedicated to developing its team and recently celebrated graduates from Arrow Leadership Academy and Upskill University, internal courses designed to support our culture of collaboration and continuous improvement. Our banks are working toward realizing operational efficiencies and customer-facing enhancements made possible by the completion of our core conversion in September 2022. Our team has returned to our completely renovated downtown Glens Falls, New York headquarters and we look forward to welcoming our customers back to our newly renovated campus. The renovated Glens Falls campus now offers an energy-efficient, flexible and collaborative environment for our team and customers. This investment is important to our team culture, is a key part of the

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revitalization of downtown Glens Falls, and is a centerpiece of what community banking means to us -- accessible, long-lasting and friendly.

Net income for the first quarter of 2023 was $8.6 million, down from $12.6 million for the same period in the prior year. The year-over-year decline was primarily due to an increase in non-interest expense of $3.4 million, a decrease in non-interest income of $1.5 million and an increase in the provision for credit loss of $785 thousand.

Please see below for further detail.

Income Statement

•Net Interest Income: Net interest income for the first quarter was $28.1 million, up 1.0% from $27.8 million in the comparable quarter of 2022. Interest and fees on loans were $31.9 million for the first quarter of 2023, an increase of 23.9% from $25.7 million (29.23% excluding Paycheck Protection Program ("PPP") revenue) for the first quarter of 2022 primarily due to loan growth and higher market rates. PPP loans contributed $1.1 million in the first quarter of 2022. The PPP program ended in 2022. Interest expense for the first quarter of 2023 was $8.0 million, an increase of $6.9 million versus the comparable quarter ending March 31, 2022, primarily due to higher deposit rates and changes in deposit composition.

•Net Interest Margin: Net interest margin was 2.96% for the quarter, compared to 2.90% for the first quarter of 2022 and 3.08% for the fourth quarter of 2022. The year-over-year increase in net interest margin was primarily due to growth in loan balances with higher yields partially offset with higher costs of interest bearing liabilities. The decrease in net interest margin compared to the fourth quarter of 2022 was primarily the result of the cost of interest bearing liabilities increasing at a faster pace than the yield on average earning assets.

			Three Months Ended
			March 31, 2023						December 31, 2022						March 31, 2022
Interest and Dividend Income			$	36,110					$	35,904					$	28,947
Interest Expense			8,016						5,325						1,122
Net Interest Income			28,094						30,579						27,825
Average Earning Assets(1)			3,845,825						3,940,904						3,886,787
Average Interest Bearing Liabilities			2,782,299						2,891,092						2,855,884
Yield on Earning Assets(1)			3.81		%				3.61		%				3.02		%
Cost of Interest Bearing Liabilities			1.17						0.73						0.16
Net Interest Spread			2.64						2.88						2.86
Net Interest Margin			2.96						3.08						2.90
Income Earned on PPP Loans included in Net Interest Income			$	—					$	—					$	1,066
Net Interest Income excluding PPP loans			28,094						30,579						26,759
Net Interest Margin excluding PPP loans			2.96		%				3.08		%				2.81		%
(1) Includes Nonaccrual Loans.

•Provision for Credit Losses: For the first quarter of 2023, the provision for credit losses was $1.6 million, compared to $769 thousand in the prior-year quarter. The key drivers for the increase were higher loan charge-offs and a more challenging economic forecast.

•Non-Interest Income: Non-interest income for the three months ended March 31, 2023, was $6.7 million, compared to $8.2 million in the comparable 2022 quarter. Income from fiduciary activities decreased by $321 thousand over the comparable quarter of 2022, driven primarily by market

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conditions. Fees and other services to customers decreased $200 thousand over the comparable quarter of 2022 driven primarily by lower volume of interchange transactions. Other operating income decreased $691 thousand from the comparable quarter of 2022, primarily due to a decline in the gain on other assets of $463 thousand and a decrease in income earned on bank-owned life insurance of $181 thousand.

•Non-Interest Expense: Non-interest expense for the first quarter of 2023 was $22.3 million, an increase of 17.7% from $18.9 million for the first quarter of 2022. The increase was primarily due to $1.0 million of additional legal and professional fees associated with the delay in the filing of the 2022 Form 10-K. In addition, other operating expenses included a credit for estimated credit losses on off-balance sheet exposures of $68 thousand for the first quarter of 2023 versus a larger credit of $316 thousand recognized in the first quarter of 2022. Technology and equipment spending increased $638 thousand from the first quarter of 2022, driven primarily by management's commitment to invest in new technology to enhance the customer experience and optimize operations. Salaries and benefits have increased compared to the first quarter of 2022 as a result of pension and other benefit expenses. In the first quarter of 2023, non-interest expenses increased $1.5 million from the fourth quarter of 2022. In addition to the factors described above, there was a charge for estimated credit losses on off-balance sheet exposures of $197 thousand for the fourth quarter.

•Provision for Income Taxes: The provision for income taxes was $2.4 million for the first quarter of 2023, compared to $3.7 million for the same quarter of 2022, primarily the result of lower pre-tax income.

Balance Sheet

•Total Assets: Total assets were $4.1 billion at March 31, 2023, a decrease of $41.8 million, or 1.0%, compared to March 31, 2022. This decrease was primarily driven by lower cash balances as pandemic era excess deposits decreased. Assets increased $145.1 million, or 3.7%, compared to December 31, 2022 driven by an increase in on-balance sheet liquidity as evidenced by our higher cash balances.

•Investments: Total investments were $745.1 million as of March 31, 2023, a decrease of $40.3 million, or 5.1%, compared to March 31, 2022, and a decrease of $5.9 million, or 0.8%, compared to December 31, 2022. While the rising rate environment led to an increase in unrealized losses within the available-for-sale portfolio versus the same period last year, unrealized losses within the available-for-sale portfolio decreased by $8.2 million versus December 31, 2022, as interest rates declined in the first quarter of 2023. The decrease in investments in the first quarter, as compared to the same period last year, was primarily driven by Arrow's decision to fund loan growth from cash flows from amortizing and maturing investments.

•Loans: Total loans reached a record high of $3.0 billion as of March 31, 2023. Loan growth for the first quarter of 2023 was $22.1 million, as compared to December 31, 2022, and $268.1 million, or 9.8%, from March 31, 2022. Residential real estate loan growth for the first quarter of 2023 was $10.0 million, or 0.9%, as compared to December 31, 2022 and $114.0 million, or 11.8%, as compared to March 31, 2022. The consumer loan portfolio grew by $8.2 million, or 0.8%, in the first quarter, primarily within the indirect automobile lending program. Total outstanding commercial loans increased $4.0 million, or 0.5%, in the first quarter of 2023, driven primarily by commercial real estate loans.

•Allowance for Credit Losses: The allowance for credit losses was $30.8 million on March 31, 2023, which represented 1.02% of loans outstanding, as compared to 1.01% at March 31, 2022. Asset quality remained stable at March 31, 2023. Net charge-offs, expressed as an annualized

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percentage of average loans outstanding, were 0.10% for the quarter ended March 31, 2023, as compared to 0.09% for the quarter ended December 31, 2022 and 0.06% for the three-month period ended March 31, 2022. Nonperforming assets of $11.3 million at March 31, 2023, represented 0.27% of period-end assets, compared to 0.32% at December 31, 2022.

•Deposits: At March 31, 2023, deposit balances were $3.5 billion. Deposits in the first quarter of 2023 increased by $48.0 million from the prior quarter and decreased by $169.0 million, or 4.5%, from the prior-year level as pandemic era excess deposits exited the system and due to competitive pressures from the rising rate environment. Municipal deposits increased $110.5 million in the first quarter, as compared to December 31, 2022, and decreased $22.1 million from March 31, 2022. Non-municipal deposits decreased $62.5 million for the quarter and $147.0 million from March 31, 2022. Non-interest bearing deposits represented 22.2% of total deposits at March 31, 2023, compared to 23.9% at December 31 ,2022, and 21.9% at March 31, 2022. At March 31, 2023, total time deposits were $301.8 million compared to $209.4 million at December 31, 2022 and $177.0 million at March 31, 2022, as a result of successful campaigns to grow certificate of deposit balances.

•Capital: Total stockholders’ equity was $363.4 million at March 31, 2023, an increase of $9.8 million, or 2.8%, from the December 31, 2022 level of $353.5 million, and an increase of $6.1 million, or 1.7%, from the prior-year level. The increase in stockholders' equity over the first three months of 2023 principally reflected the following factors: the addition of $8.6 million of net income for the period, gains in other comprehensive income of $5.7 million from favorable mark-to-market activity within the available for sale securities portfolio and issuance of $0.9 million of common stock through employee benefit and dividend reinvestment plans reduced by cash dividends of $4.5 million and repurchases of common stock of $0.8 million. Arrow's regulatory capital ratios remained strong in the first quarter of 2023. As of March 31, 2023, Arrow's Common Equity Tier 1 Capital Ratio was 13.34% and Total Risk-Based Capital Ratio was 15.15%. The capital ratios of Arrow and both its subsidiary banks, Glens Falls National Bank and Trust Company ("GFNB") and Saratoga National Bank and Trust Company ("SNB"), continued to significantly exceed the “well capitalized” regulatory standards.

Additional Commentary

•Leadership Change: Effective May 13, 2023, Arrow's board of directors appointed David S. DeMarco to serve as President and CEO.

•Cash and Stock Dividends: On March 15, 2023 and June 15, 2023, Arrow distributed quarterly cash dividends of $0.27 per share.

•Industry Recognition: In the first quarter of 2023, both of Arrow's banking subsidiaries earned BauerFinancial, Inc. 5-Star Exceptional Performance Bank rating for the 57th consecutive quarter.

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 GFNB and SNB. 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

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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 2022 Form 10-K 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, 2023						December 31, 2022						March 31, 2022
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans						$	31,886					$	30,719					$	25,739
Interest on Deposits at Banks						479						1,274						198
Interest and Dividends on Investment Securities:
Fully Taxable						2,948						3,121						2,189
Exempt from Federal Taxes						797						790						821
Total Interest and Dividend Income						36,110						35,904						28,947
INTEREST EXPENSE
Interest Bearing Checking Accounts						370						344						163
Savings Deposits						5,587						4,101						417
Time Deposits over $250,000						574						226						28
Other Time Deposits						474						234						109
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase						—						—						—
Federal Home Loan Bank Advances						793						200						187
Junior Subordinated Obligations Issued to   Unconsolidated Subsidiary Trusts						169						172						169
Interest on Financing Leases						49						48						49
Total Interest Expense						8,016						5,325						1,122
NET INTEREST INCOME						28,094						30,579						27,825
Provision for Credit Losses						1,554						1,409						769
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES						26,540						29,170						27,056
NON-INTEREST INCOME
Income From Fiduciary Activities						2,275						2,257						2,596
Fees for Other Services to Customers						2,595						2,710						2,795
Insurance Commissions						1,520						1,680						1,511
Net (Loss) Gain on Securities						(104)						48						130
Net Gain on Sales of Loans						4						3						52
Other Operating Income						387						467						1,078
Total Non-interest Income						6,677						7,165						8,162
NON-INTEREST EXPENSE
Salaries and Employee Benefits						11,947						11,603						11,286
Occupancy Expenses, Net						1,628						1,481						1,598
Technology and Equipment Expense						4,417						4,316						3,779
FDIC Assessments						479						283						307
Other Operating Expense						3,825						3,109						1,975
Total Non-interest Expense						22,296						20,792						18,945
INCOME BEFORE PROVISION FOR INCOME TAXES						10,921						15,543						16,273
Provision for Income Taxes						2,359						3,456						3,698
NET INCOME						$	8,562					$	12,087					$	12,575
Average Shares Outstanding 1:
Basic						16,552						16,535						16,511
Diluted						16,564						16,589						16,566
Per Common Share:
Basic Earnings						$	0.52					$	0.73					$	0.76
Diluted Earnings						0.52						0.73						0.76
1 2022 Share and Per Share Amounts have been restated for the September 23, 2022, 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, 2023						December 31, 2022						March 31, 2022
ASSETS
Cash and Due From Banks			$	25,107					$	31,886					$	38,964
Interest Bearing Deposits at Banks			178,365						32,774						448,614
Investment Securities:
Available-for-Sale at Fair Value			565,693						573,495						582,428
Held-to-Maturity (Fair Value of $164,439 at March 31, 2023; $171,623 at December 31, 2022; and $195,862 at March 31, 2022)			167,347						175,364						196,661
Equity Securities			2,070						2,174						1,877
FHLB and Federal Reserve Bank Stock			10,027						6,064						4,491
Loans			3,005,352						2,983,207						2,737,267
Allowance for Credit Losses			(30,784)						(29,952)						(27,661)
Net Loans			2,974,568						2,953,255						2,709,606
Premises and Equipment, Net			58,233						56,491						48,481
Goodwill			21,873						21,873						21,873
Other Intangible Assets, Net			1,400						1,500						1,818
Other Assets			109,947						114,633						101,589
Total Assets			$	4,114,630					$	3,969,509					$	4,156,402
LIABILITIES
Non-interest Bearing Deposits			788,690						836,871						813,066
Interest Bearing Checking Accounts			958,490						997,694						1,154,068
Savings Deposits			1,497,326						1,454,364						1,571,274
Time Deposits over $250,000			122,827						76,224						48,288
Other Time Deposits			179,016						133,211						128,677
Total Deposits			3,546,349						3,498,364						3,715,373
Federal Home Loan Bank Overnight Advances			35,000						27,000						—
Federal Home Loan Bank Term Advances			107,800						27,800						25,000
Junior Subordinated Obligations Issued to Unconsolidated   Subsidiary Trusts			20,000						20,000						20,000
Finance Leases			5,106						5,119						5,156
Other Liabilities			37,004						37,688						33,630
Total Liabilities			3,751,259						3,615,971						3,799,159
STOCKHOLDERS’ EQUITY
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at March 31, 2023, December 31, 2022 and March 31, 2022			—						—						—
Common Stock, $1 Par Value; 30,000,000 Shares Authorized (21,423,992 Shares Issued at March 31, 2023 and December 31, 2022 and 20,800,144 Shares Issued at March 31, 2022)			21,424						21,424						20,800
Additional Paid-in Capital			400,944						400,270						378,758
Retained Earnings			69,499						65,401						62,328
Accumulated Other Comprehensive Loss			(43,983)						(49,655)						(20,797)
Treasury Stock, at Cost (4,870,935 Shares at March 31, 2023; 4,872,355 Shares at December 31, 2022 and 4,787,183 Shares at March 31, 2022)			(84,513)						(83,902)						(83,846)
Total Stockholders’ Equity			363,371						353,538						357,243
Total Liabilities and Stockholders’ Equity			$	4,114,630					$	3,969,509					$	4,156,402

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Arrow Financial Corporation

Selected Quarterly Information

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

Quarter Ended			3/31/2023						12/31/2022						9/30/2022						6/30/2022						3/31/2022
Net Income			$	8,562					$	12,087					$	12,163					$	11,974					$	12,575
Transactions in Net Income (Net of Tax):
Net Changes in Fair Value of Equity Investments			(76)						35						70						114						96
Share and Per Share Data:1
Period End Shares Outstanding			16,553						16,552						16,523						16,503						16,493
Basic Average Shares Outstanding			16,552						16,535						16,512						16,494						16,511
Diluted Average Shares Outstanding			16,564						16,589						16,558						16,535						16,566
Basic Earnings Per Share			$	0.52					$	0.73					$	0.74					$	0.72					$	0.76
Diluted Earnings Per Share			0.52						0.73						0.74						0.72						0.76
Cash Dividend Per Share			0.270						0.270						0.262						0.262						0.262
Selected Quarterly Average Balances:
Interest Bearing Deposits at Banks			$	40,436					$	143,499					$	209,001					$	232,545					$	410,644
Investment Securities			813,461						845,859						821,052						822,112						797,347
Loans			2,991,928						2,951,547						2,872,066						2,804,180						2,678,796
Deposits			3,480,279						3,614,945						3,598,519						3,569,754						3,582,256
Other Borrowed Funds			100,596						63,304						50,125						50,140						68,596
Shareholders' Equity			359,556						351,402						361,675						357,228						370,264
Total Assets			3,978,851						4,074,028						4,047,738						4,012,999						4,054,943
Return on Average Assets, annualized			0.87		%				1.18		%				1.19		%				1.20		%				1.26		%
Return on Average Equity, annualized			9.66		%				13.65		%				13.34		%				13.44		%				13.77		%
Return on Average Tangible Equity, annualized 2			10.33		%				14.62		%				14.27		%				14.40		%				14.72		%
Average Earning Assets			$	3,845,825					$	3,940,905					$	3,902,119					$	3,858,837					$	3,886,787
Average Paying Liabilities			2,782,299						2,891,092						2,781,985						2,808,287						2,855,884
Interest Income			36,110						35,904						34,207						30,593						28,947
Tax-Equivalent Adjustment 3			202						279						268						269						270
Interest Income, Tax-Equivalent 3			36,312						36,183						34,475						30,862						29,217
Interest Expense			8,016						5,325						3,306						1,555						1,122
Net Interest Income			28,094						30,579						30,901						29,038						27,825
Net Interest Income, Tax-Equivalent 3			28,296						30,858						31,169						29,307						28,095
Net Interest Margin, annualized			2.96		%				3.08		%				3.14		%				3.02		%				2.90		%
Net Interest Margin, Tax-Equivalent, annualized 3			2.98		%				3.11		%				3.17		%				3.05		%				2.93		%
Efficiency Ratio Calculation: 4
Non-interest Expense			$	22,296					$	20,792					$	21,448					$	20,345					$	18,945
Less: Intangible Asset Amortization			45						47						48						48						49
Net Non-interest Expense			$	22,251					$	20,745					$	21,400					$	20,297					$	18,896
Net Interest Income, Tax-Equivalent			$	28,296					$	30,858					$	31,169					$	29,307					$	28,095
Non-interest Income			6,677						7,165						7,827						7,744						8,162
Less: Net (Loss) Gain on Securities			(104)						48						95						154						130
Net Gross Income			$	35,077					$	37,975					$	38,901					$	36,897					$	36,127
Efficiency Ratio			63.43		%				54.63		%				55.01		%				55.01		%				52.30		%
Period-End Capital Information:
Total Stockholders' Equity (i.e. Book Value)			$	363,371					$	353,538					$	345,550					$	356,498					$	357,243
Book Value per Share 1			21.95						21.36						20.91						21.60						21.66
Goodwill and Other Intangible Assets, net			23,273						23,373						23,477						23,583						23,691
Tangible Book Value per Share 1,2			20.55						19.95						19.49						20.17						20.22
Capital Ratios:5
Tier 1 Leverage Ratio			10.13		%				9.80		%				9.71		%				9.60		%				9.37		%
Common Equity Tier 1 Capital Ratio			13.34		%				13.32		%				13.14		%				13.14		%				13.48		%
Tier 1 Risk-Based Capital Ratio			14.03		%				14.01		%				13.85		%				13.86		%				14.23		%
Total Risk-Based Capital Ratio			15.15		%				15.11		%				14.93		%				14.93		%				15.33		%
Assets Under Trust Admin. & Investment Mgmt.			$	1,672,117					$	1,606,132					$	1,515,994					$	1,589,178					$	1,793,747

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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 23, 2022, 3% stock dividend.
2.			Non-GAAP Financial Measure Reconciliation: Tangible Book Value, Tangible Equity, and Return on 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.
						3/31/2023						12/31/2022						9/30/2022						6/30/2022						3/31/2022
			Total Stockholders' Equity (GAAP)			$	363,371					$	353,538					$	345,550					$	356,498					$	357,243
			Less: Goodwill and Other Intangible assets, net			23,273						23,373						23,477						23,583						23,691
			Tangible Equity (Non-GAAP)			$	340,098					$	330,165					$	322,073					$	332,915					$	333,552
			Period End Shares Outstanding			16,553						16,552						16,523						16,503						16,493
			Tangible Book Value per Share (Non-GAAP)			$	20.55					$	19.95					$	19.49					$	20.17					$	20.22
			Net Income			8,562						12,087						12,163						11,974						12,575
			Return on Average Tangible Equity (Net Income/Tangible Equity - Annualized)			10.33		%				14.62		%				14.27		%				14.40		%				14.72		%
3.			Non-GAAP Financial Measure Reconciliation: Net Interest Margin is the ratio of 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.
						3/31/2023						12/31/2022						9/30/2022						6/30/2022						3/31/2022
			Interest Income (GAAP)			$	36,110					$	35,904					$	34,207					$	30,593					$	28,947
			Add: Tax-Equivalent adjustment      (Non-GAAP)			202						279						268						269						270
			Interest Income - Tax Equivalent      (Non-GAAP)			$	36,312					$	36,183					$	34,475					$	30,862					$	29,217
			Net Interest Income (GAAP)			$	28,094					$	30,579					$	30,901					$	29,038					$	27,825
			Add: Tax-Equivalent adjustment      (Non-GAAP)			202						279						268						269						270
			Net Interest Income - Tax Equivalent      (Non-GAAP)			$	28,296					$	30,858					$	31,169					$	29,307					$	28,095
			Average Earning Assets			$	3,845,825					$	3,940,905					$	3,902,119					$	3,858,837					$	3,886,787
			Net Interest Margin (Non-GAAP)*			2.98		%				3.11		%				3.17		%				3.05		%				2.93		%
4.			Non-GAAP Financial Measure Reconciliation: 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 non-interest expense to net gross income (which equals tax-equivalent net interest income plus non-interest income, as adjusted).
5.			For the current quarter, all of the regulatory capital ratios as well as the Total Risk-Weighted Assets are calculated in accordance with bank regulatory capital rules. The March 31, 2023 CET1 ratio listed in the tables (i.e., 13.34%) exceeds the sum of the required minimum CET1 ratio plus the fully phased-in Capital Conservation Buffer (i.e., 7.00%).
						3/31/2023						12/31/2022						9/30/2022						6/30/2022						3/31/2022
			Total Risk Weighted Assets			$	2,909,610					$	2,883,902					$	2,856,224					$	2,790,520					$	2,661,952
			Common Equity Tier 1 Capital			388,228						384,003						375,394						366,798						358,738
			Common Equity Tier 1 Ratio			13.34		%				13.32		%				13.14		%				13.14		%				13.48		%
* Quarterly ratios have been annualized.

9

Arrow Financial Corporation

Average Consolidated Balance Sheets and Net Interest Income Analysis

(Dollars in Thousands - Unaudited)

Quarter Ended:			March 31, 2023																		March 31, 2022
									Interest						Rate												Interest						Rate
			Average						Income/						Earned/						Average						Income/						Earned/
			Balance						Expense						Paid						Balance						Expense						Paid
Interest Bearing Deposits at Banks			$	40,436					$	479					4.80		%				$	410,644					$	198					0.20		%
Investment Securities:
Fully Taxable			652,743						2,948						1.83						618,806						2,189						1.43
Exempt from Federal Taxes			160,718						797						2.01						178,541						821						1.86
Loans			2,991,928						31,886						4.32						2,678,796						25,739						3.90
Total Earning Assets			3,845,825						36,110						3.81						3,886,787						28,947						3.02
Allowance for Credit Losses			(29,792)																		(27,165)
Cash and Due From Banks			30,518																		37,654
Other Assets			132,300																		157,667
Total Assets			$	3,978,851																	$	4,054,943
Deposits:
Interest Bearing Checking Accounts			$	964,735					370						0.16						$	1,027,740					163						0.06
Savings Deposits			1,474,251						5,587						1.54						1,557,855						417						0.11
Time Deposits of $250,000 or More			94,415						574						2.47						70,101						28						0.16
Other Time Deposits			148,302						474						1.30						131,592						109						0.34
Total Interest Bearing Deposits			2,681,703						7,005						1.06						2,787,288						717						0.10
Short-Term Borrowings			40,138						490						4.95						—						—
FHLBNY Term Advances & Other Long-Term Debt			55,356						472						3.46						63,444						356						2.28
Finance Leases			5,102						49						3.89						5,152						49						3.86
Total Interest Bearing Liabilities			2,782,299						8,016						1.17						2,855,884						1,122						0.16
Non-interest bearing deposits			798,576																		794,968
Other Liabilities			38,420																		33,827
Total Liabilities			3,619,295																		3,684,679
Stockholders’ Equity			359,556																		370,264
Total Liabilities and Stockholders’ Equity			$	3,978,851																	$	4,054,943
Net Interest Income									$	28,094																	$	27,825
Net Interest Spread															2.64		%																2.86		%
Net Interest Margin															2.96		%																2.90		%

10

Arrow Financial Corporation

Average Consolidated Balance Sheets and Net Interest Income Analysis

(Dollars in Thousands - Unaudited)

Quarter Ended:			March 31, 2023																		December 31, 2022
									Interest						Rate												Interest						Rate
			Average						Income/						Earned/						Average						Income/						Earned/
			Balance						Expense						Paid						Balance						Expense						Paid
Interest Bearing Deposits at Banks			$	40,436					$	479					4.80		%				$	143,499					$	1,274					3.52		%
Investment Securities:
Fully Taxable			652,743						2,948						1.83						679,390						3,121						1.82
Exempt from Federal Taxes			160,718						797						2.01						166,468						790						1.88
Loans			2,991,928						31,886						4.32						2,951,547						30,719						4.13
Total Earning Assets			3,845,825						36,110						3.81						3,940,904						35,904						3.61
Allowance for Credit Losses			(29,792)																		(29,069)
Cash and Due From Banks			30,518																		30,736
Other Assets			132,300																		131,457
Total Assets			$	3,978,851																	$	4,074,028
Deposits:
Interest Bearing Checking Accounts			$	964,735					370						0.16						$	1,082,267					344						0.13
Savings Deposits			1,474,251						5,587						1.54						1,548,293						4,101						1.05
Time Deposits of $250,000 or More			94,415						574						2.47						65,897						226						1.36
Other Time Deposits			148,302						474						1.30						131,331						234						0.71
Total Interest Bearing Deposits			2,681,703						7,005						1.06						2,827,788						4,905						0.69
Short-Term Borrowings			40,138						490						4.95						8,424						92						4.33
FHLBNY Term Advances & Other Long-Term Debt			55,356						472						3.46						49,767						280						2.23
Finance Leases			5,102						49						3.89						5,113						48						3.72
Total Interest Bearing Liabilities			2,782,299						8,016						1.17						2,891,092						5,325						0.73
Non-interest bearing deposits			798,576																		787,157
Other Liabilities			38,420																		44,377
Total Liabilities			3,619,295																		3,722,626
Stockholders’ Equity			359,556																		351,402
Total Liabilities and Stockholders’ Equity			$	3,978,851																	$	4,074,028
Net Interest Income									$	28,094																	$	30,579
Net Interest Spread															2.64		%																2.88		%
Net Interest Margin															2.96		%																3.08		%

11

Arrow Financial Corporation

Consolidated Financial Information

(Dollars in Thousands - Unaudited)

Quarter Ended:			3/31/2023						12/31/2022						3/31/2022
Loan Portfolio
Commercial Loans			$	135,917					$	140,293					$	155,467
Commercial Real Estate Loans			715,357						707,022						638,437
Subtotal Commercial Loan Portfolio			851,274						847,315						793,904
Consumer Loans			1,073,369						1,065,135						976,648
Residential Real Estate Loans			1,080,709						1,070,757						966,715
Total Loans			$	3,005,352					$	2,983,207					$	2,737,267
Allowance for Credit Losses
Allowance for Credit Losses, Beginning of Quarter			$	29,952					$	29,232					$	27,281
Loans Charged-off			(1,328)						(1,261)						(829)
Less Recoveries of Loans Previously Charged-off			606						572						440
Net Loans Charged-off			(722)						(689)						(389)
Provision for Credit Losses			1,554						1,409						769
Allowance for Credit Losses, End of Quarter			$	30,784					$	29,952					$	27,661
Nonperforming Assets
Nonaccrual Loans			$	10,852					$	10,757					$	9,750
Loans Past Due 90 or More Days and Accruing			241						1,157						55
Loans Restructured and in Compliance with Modified Terms			62						69						74
Total Nonperforming Loans			11,155						11,983						9,879
Repossessed Assets			144						593						180
Other Real Estate Owned			—						—						—
Total Nonperforming Assets			$	11,299					$	12,576					$	10,059
Key Asset Quality Ratios
Net Loans Charged-off to Average Loans,    Quarter-to-date Annualized			0.10		%				0.09		%				0.06		%
Provision for Credit Losses to Average Loans,   Quarter-to-date Annualized			0.21		%				0.19		%				0.12		%
Allowance for Credit Losses to Period-End Loans			1.02		%				1.00		%				1.01		%
Allowance for Credit Losses to Period-End Nonperforming Loans			275.97		%				249.95		%				280.00		%
Nonperforming Loans to Period-End Loans			0.37		%				0.40		%				0.36		%
Nonperforming Assets to Period-End Assets			0.27		%				0.32		%				0.24		%

12