The earnings miss and credit event are near-term negatives, but the Adirondack acquisition provides a tangible catalyst for 2027 EPS accretion. Monitor Q3 for integration progress and whether the CRE bankruptcy proves isolated. The stock may sell off initially, but the long-term accretion story and strong capital ratios (CET1 13.21%) provide a floor.
Price Chart
Executive Summary
Arrow Financial reported Q2 2026 EPS of $0.66 ($0.71 adjusted for merger expenses), a significant miss vs the $0.85 consensus, driven by a $1.6M specific reserve for a CRE bankruptcy and elevated provision expenses. Net income fell to $11.0M from $13.5M in Q1, while NIM contracted to 3.43% from 3.48%. The Adirondack Bancorp acquisition closed on July 1, adding ~$1B in assets, but the quarter's credit event and earnings miss overshadow the long-term strategic benefits.
Key Financial Metrics
Key Facts
- Q2 2026 GAAP EPS of $0.66 vs consensus $0.85 (miss of ~22%)
- Net income $11.0M, down 18.5% from Q1 2026's $13.5M
- Recorded a $1.6M specific reserve for a single CRE loan bankruptcy ($0.08/share impact)
- Provision for credit losses surged to $2.8M from $0.5M in Q1
- Net interest margin (FTE) contracted to 3.43% from 3.48% in Q1
- Adirondack Bancorp acquisition closed July 1, adding ~$1.0B in assets and 19 branches
- Quarterly dividend maintained at $0.30/share
Financial Impact
Q2 EPS of $0.66 missed consensus by $0.19 (22% miss); net income declined $2.5M QoQ; provision for credit losses increased $2.3M QoQ
Risk Factors
- Further credit deterioration from the CRE portfolio
- Integration risk from the Adirondack Bancorp acquisition
- NIM compression if deposit costs do not continue to decline
- Potential for additional specific reserves on other commercial loans
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000717538-26-000110 |
| Document: q22026investorpresentati.htm | 0000717538-26-000110 |
| Document: arow-20260722.htm | 0000717538-26-000110 |
| Document: 0000717538-26-000110-index-headers.html | 0000717538-26-000110 |
| Document: 0000717538-26-000110-index.html | 0000717538-26-000110 |
| Document: 0000717538-26-000110.txt | 0000717538-26-000110 |
| 8-K Data (Synthetic) | 0000717538-26-000110 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 10, 2026 22d ago | 8-K | $39.07 $38.12 | ▼ −2.43% | ▼ −1.93% | $37.79 (−3.28%) |
Jul 23, 2026 10w ago | 8-K | $39.14 $39.94 | ▼ −2.04% | ▼ −1.57% | $37.79 (+3.45%) |
Jul 1, 2026 13w ago | 8-K | $42.07 $40.82 | ▼ −2.97% | ▼ −3.23% | $37.79 (−10.17%) |
Jun 3, 2026 17w ago | 8-K | $35.78 $38.07 | ▲ +6.40% | ▲ +10.22% | $37.79 (+5.62%) |
May 8, 2026 21w ago | EFFECT | $36.84 $35.73 | ▼ −3.02% | ▼ −4.49% | $37.79 (+2.57%) |
Apr 30, 2026 22w ago | 8-K | $36.55 $36.97 | ▲ +1.16% | ▼ −0.57% | $37.79 (+3.40%) |
Apr 23, 2026 23w ago | DEFA14A | $36.24 $36.06 | ▼ −0.49% | ▼ −1.97% | $37.79 (+4.28%) |
Mar 27, 2026 27w ago | 10-K/A | $32.75 $34.63 | ▲ +5.75% | ▲ +1.89% | $37.79 (+15.40%) |
Feb 26, 2026 31w ago | 8-K | $34.02 $32.99 | ▼ −3.02% | ▼ −1.89% | $37.79 (+11.09%) |
US Market Status
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