Arrow Financial combines a 1.61%-cost deposit franchise, disciplined credit and Adirondack-driven expansion to support a compelling regional-bank compounding case, tempered by integration execution and interest-rate risk.
Overview
Arrow Financial is a Glens Falls-based multi-bank holding company with a continuous operating history dating to 1851, serving Upstate New York through community banking, wealth management, insurance and trust services. Its core model gathers retail, municipal and commercial deposits to fund loans and securities; net interest income supplies approximately 80%–85% of revenue, with fee businesses contributing the balance. Local decision-making, municipal ties and a dense branch network distinguish the franchise, while the unified Arrow Bank brand and Adirondack Bancorp acquisition extend its reach into Central New York. **The central financial strength is low-cost funding:** retail deposit costs were 1.61% in Q2 2026, and FTE NIM was 3.43%, up from 3.16% a year earlier. Yet Q2 revenue of $44.19 million missed consensus by $1.32 million and diluted EPS of $0.66 missed the $0.85 estimate, partly due to merger costs and seasonal municipal deposits. FY2025 net income rose 50% to $44.0 million, and tangible book value per share increased 10.3% to $24.71. At $36.58, the stock traded at 11.8x trailing earnings and yielded 3.27%; analyst targets averaged $43.50. The report’s probability-weighted five-year share target is $53.08, with merger integration and Q3 NIM trends as near-term catalysts.