250 Glen Street, PO Box 307, Glens Falls, NY 12801 | (518) 745-1000 | arrowfinancial.com
Performance Comparisons
$2.10
$1.91
$1.80
$2,760
$2,605
$2,164
$2,217
$2,446
$1.71
$1.60
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
DILUTED EARNINGS PER SHARE
For the 12 Months Ended December 31*
ASSETS
As of December 31
($ in Millions)
$.91
$.93
$.89
$.98
$.95
$1,842
$1,903
$2,030
$2,117
$2,245
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
CASH DIVIDENDS PAID PER SHARE
DEPOSITS
For the 12 Months Ended December 31*
As of December 31
($ in Millions)
$17.92
$16.77
$14.72
$15.58
$14.08
$214
$201
$192
$250
$233
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
BOOK VALUE PER SHARE
SHAREHOLDERS’ EQUITY
As of December 31*
As of December 31
($ in Millions)
*Per share amounts have been restated for stock dividends distributed.
Fellow Shareholders:
2017 FINANCIAL HIGHLIGHTS
I am proud to report
that 2017 was another
outstanding year of
record financial perfor-
mance and remarkable
accomplishments for
Arrow Financial
Corporation.
Through hard work, we were again able
to deliver growth in key markets, while
maintaining strong profitability ratios and
asset quality.
Some of the highlights from this past year
included:
Double-digit growth in our loan
portfolio for the fourth consecutive year,
reaching a record high of $1.95 billion in
total loan balances at year-end.
New records for net income, year-
end total assets and total equity, as well
as assets under trust administration and
investment management as of December
31, 2017.
Our Company was named one of
America’s “Most Trustworthy” financial
companies by Forbes for the sixth con-
secutive year and made Bank Director
Magazine’s top-performer list for the
third year in a row.
Both Glens Falls National Bank and
Saratoga National Bank maintained 5-Star
Superior ratings from BauerFinancial.
Saratoga National continued to expand
its footprint into the Capital Region with
the opening of its 10th location, in Sche-
nectady.
And the Company combined decades
of expertise in the property and casualty in-
surance industry by bringing its insurance
agencies together under the Upstate
Agency brand.
Net income: $29.3 million, up 10.5%
Total Loans: $1.95 billion, up 11.3%
Total Deposits: $2.25 billion, up 6.1%
Total Assets: $2.76 billion, up 5.9%
Return on Average Equity: 12.1%
Return on Average Assets: 1.09%
Return on Tangible Equity: 13.5%
Stock Dividend: 3% distributed in Sept.
Quarterly Cash Dividend: $0.25
Book Value Per Share: Increase of 6.8%
Shareholders’ Equity: Increase of 7.2%
None of these accomplishments would
have been possible without the efforts
of our Arrow Team. I’d like to personally
share my thanks for their continued dedi-
cation and efforts.
As we look ahead, we remain committed
to driving our business forward. We will
do that by focusing on strategic growth
priorities in target markets and advancing
our brand, with the long-term mission of
delivering value to our customers, our
communities, our employees and our
shareholders.
Thank you for your continued trust, sup-
port and partnership. You are the reason
we are Arrow Strong.
Sincerely,
Tom Murphy
President and Chief Executive Officer
Consolidated Statements of Income (Unaudited)
Years Ended December 31
(in thousands, except per share amounts)
2013
2014
2015
2016
2017
Interest and Dividend Income
Interest Expense
$ 64,138
7,922
$ 66,861
5,767
$ 70,738
4,813
$ 76,915
5,356
$ 84,657
7,006
Net Interest Income
Provision for Loan Losses
Net Interest Income after
Provision for Loan Losses
Total Noninterest Income
Total Noninterest Expense
Income Before Taxes
Provision for Income Taxes
56,216
200
56,016
28,061
53,203
30,874
9,079
61,094
1,848
59,246
28,316
54,028
33,534
10,174
65,925
1,347
64,578
28,124
57,430
35,272
10,610
71,559
2,033
69,526
27,832
59,609
37,749
11,215
77,651
2,736
74,915
27,645
62,705
39,855
10,529
Net Income
$ 21,795
$ 23,360
$ 24,662
$ 26,534
$ 29,326
Share and Per Share Data
Diluted Average Shares
Outstanding
Diluted Earnings Per Share
Cash Dividends Per Share
Book Value Per Share
Tangible Book Value Per Share
Key Earnings Ratios
Return on Average Assets
Return on Average Equity
Return on Tangible Equity
Net Interest Margin
Capital Ratios
Tier 1 Leverage Ratio
Total Risk-Based Capital Ratio
Asset Quality Ratios
Nonperforming Assets to
Period-End Assets
Allowance for Loan Losses to
Period-End Loans
13,606
$ 1.60
$ .89
$ 14.08
$ 12.1 7
13,670
$ 1 . 7 1
$ .91
$ 14.72
$ 12.83
13,730
$ 1.80
$ .93
$ 15.58
$ 13.77
13,880
$ 1.91
$ .95
$ 16.77
$ 15.00
13,986
$ 2.10
$ .98
$ 17.92
$ 16.18
1.04%
12.11%
14.19%
3.06%
1.07%
11.79%
13.56%
3.17%
1.05%
11.86%
13.50%
3. 1 7%
1.06%
11.79%
13.25%
3.15%
1.09%
12.14%
13.51%
3.17%
9.24%
15.77%
9.44%
15.54%
9.25%
15.09%
9.47%
15.15%
9.49%
14.98%
0.37%
0.37%
0.36%
0.28%
0.28%
1.14%
1.10%
1.02%
0.97%
0.95%
The Tax Cuts and Jobs Act reduced tax expense by $1.1 million in 2017.
Share and per share amounts have been restated for stock dividends distributed.
Consolidated Balance Sheets (Unaudited)
As of December 31
(in thousands)
2013
2014
2015
2016
2017
Assets
Cash and Due from Banks
Interest-Bearing Deposits
at Banks
Investment Securities
Loans
Allowance for Loan Losses
Net Loans
Premises and Equipment, Net
Goodwill and Intangible
Assets, Net
Other Assets
$ 37,275
$ 35,081
$ 34,816
$ 43,024
$ 42,562
12,705
763,148
1,266,472
(14,434)
11,214
673,014
1,413,268
(15,570)
16,252
731,759
1,573,952
(16,038)
14,331
703,335
1,753,268
(17,012)
30,276
646,056
1,950,770
(18,586)
1,252,038
29,154
1,397,698
28,488
1,557,914
27,440
1,736,256
26,938
1,932,184
27,619
26,143
43,235
25,628
46,297
24,980
53,027
24,569
56,789
24,162
57,606
Total Assets
$ 2,163,698
$2,217,420
$2,446,188
$2,605,242
$2,760,465
Liabilities and
Shareholders’ Equity
Noninterest-Bearing Deposits
Interest-Bearing Checking
and Savings Deposits
$ 278,958
$ 300,786
$ 358,751
$ 387,280
$ 441,945
1,316,145
1,396,319
1,481,855
1,529,953
1,601,888
Time Deposits
247,227
205,843
189,817
199,313
201,283
Total Deposits
1,842,330
1,902,948
2,030,423
2,116,546
2,245,116
Short-Term Borrowings
Federal Home Loan
Bank Term Advances
Other Long-Term Debt
Other Liabilities
64,777
60,421
105,173
158,836
169,966
20,000
20,000
24,437
10,000
20,000
23,125
55,000
20,000
21,621
55,000
20,000
22,008
55,000
20,000
20,780
Total Liabilities
1,971,544
2,016,494
2,232,217
2,372,390
2,510,862
Total Shareholders’ Equity
192,154
200,926
213,971
232,852
249,603
Total Liabilities and
Shareholders’ Equity
$2,163,698
$2,217,420
$2,446,188
$2,605,242
$2,760,465
Total Return Performance
Comparison of Five-Year Cumulative Total Return • Assumes Initial Investment of $100
Arrow Financial Corporation
NASDAQ Banks Index
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
2012
100.00
100.00
100.00
100.00
2013
112.83
143.13
138.82
130.65
2014
123.65
150.40
145.62
138.51
2015
129.28
163.81
139.19
150.87
2016
204.86
221.79
168.85
214.90
2017
182.13
236.29
193.58
228.54
Comparison of 15-Year Cumulative Total Return • Assumes Initial Investment of $100
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 2017
Arrow
Financial
Corporation
NASDAQ
Banks Index
Russell 2000
Index
100.00 116.64 138.31 124.30 126.20 118.13 144.56 154.31 182.46 167.25 189.09 213.35 233.81 244.45 387.37 344.38
100.00 128.64 147.32 143.90 161.58 127.88 93.23
77.58
92.25 82.51
98.71 141.28 148.46 161.69 218.92 233.24
100.00 147.25 174.40 182.27 215.75 212.37 140.62 178.82 226.85 217.37 252.91 351.10 368.29 352.03 427.04 489.59
Zacks $1B-$5B
Bank Assets
Index
100.00 135.63 158.83 152.55 171.18 141.30 125.61 100.29 115.98 110.87 134.99 176.37 186.98 203.66 290.10 308.52
Source: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980–2018.
Arrow Financial Corporation
Board of Directors
Thomas L. Hoy (Chairman)
Retired President and CEO
Arrow/Glens Falls National Bank
David G. Kruczlnicki
Retired President and CEO
Glens Falls Hospital
Mark L. Behan
President
Behan Communications, Inc.
Elizabeth A. Miller
President and CEO
Miller Mechanical Services, Inc.
Tenée R. Casaccio, AIA
President
JMZ Architects and Planners, P.C.
David L. Moynehan
Retired President
Riverside Gas & Oil Company, Inc.
Michael B. Clarke
Retired President and CEO
Lone Star Industries
Thomas J. Murphy
President and CEO
Arrow/Glens Falls National Bank
Gary C. Dake
President
Stewart’s Shops Corp.
Raymond F. O’Conor
Chairman and Retired President
and CEO
Saratoga National Bank
William L. Owens, Esq.
Partner
Stafford, Owens, Piller, Murnane,
Kelleher & Trombley, PLLC
Colin L. Read, PhD
Mayor, City of Plattsburgh
Professor of Economics
and Finance
SUNY Plattsburgh
Richard J. Reisman, DMD
Chairman - Section of Dentistry
Glens Falls Hospital
Director Emeriti
Herbert O. Carpenter
John J. Carusone, Jr.
Mary-Elizabeth T. FitzGerald
Herbert A. Heineman, Jr.
Elizabeth O’Connor Little
Corporate Officers
Thomas J. Murphy
President and CEO
Michael F. Massiano
(Chairman Emeritus)
John J. Murphy
Doris E. Ornstein
In Memoriam:
George C. Frost
Dr. Edward F. Huntington
David S. DeMarco
Senior Vice President
and Chief Banking Officer
Andrew J. Wise
Senior Vice President
and Chief Operating Officer
Edward J. Campanella
Senior Vice President, Treasurer
and Chief Financial Officer
David D. Kaiser
Senior Vice President
Shareholder Information
Arrow Stock
Arrow’s common stock trades on the NASDAQ Global Select MarketSM under the symbol “AROW.”
Dividend Reinvestment Plan
The Arrow Financial Corporation Dividend
Reinvestment Plan offers participants a
convenient and economical way to acquire
common stock of Arrow Financial Corporation
without payment of any brokerage
commission or service charge.
Participants may reinvest all cash dividends in
additional shares as well as make optional cash
contributions to buy shares.
Since the Plan is entirely voluntary, you may
join at any time and terminate whenever
you wish.
For more information, please contact:
American Stock Transfer and Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Tel: (888) 444-0058 or astfinancial.com
Source: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980–2018.
250 Glen Street, PO Box 307, Glens Falls, NY 12801 (518) 745-1000 arrowfinancial.com