2 0 1 9
ANNUAL REVIEW
Performance Comparisons
$2.43
$2.50
$2,605
$2,760
$2,446
$3,184
$2,988
$1.69
$1.81
$1.98
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
DILUTED EARNINGS PER SHARE
ASSETS
For the 12 Months Ended December 31*
As of December 31
($ in Millions)
$1.02
$.97
$2,030
$2,117
$2,245
$2,346
$2,616
$.92
$.89
$.87
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
CASH DIVIDENDS PAID PER SHARE
DEPOSITS
For the 12 Months Ended December 31*
As of December 31
($ in Millions)
$16.89
$18.08
$20.12
$233
$250
$214
$14.69
$15.81
$302
$270
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
BOOK VALUE PER SHARE
SHAREHOLDERS’ EQUITY
As of December 31*
As of December 31
($ in Millions)
*Per share amounts have been restated for stock dividends distributed.
Fellow Shareholders:
2019 FINANCIAL HIGHLIGHTS
Like most financial
institutions, we navigated
a challenging interest rate
environment and other
economic pressures in
2019. Yet I am proud to
share that we once again
delivered record earnings,
steady growth, sustained
profitability and excellent credit quality. We
remain committed to living our mission for our
customers, employees, shareholders and the
communities we serve. Our measured and
thoughtful approach keeps us focused on long-
term opportunities that will help us continue to
grow in the future.
Some highlights from 2019 include:
Surpassed $3 billion in assets for the
first time
Net income reached a record high of
$37.5 million
Total loan balances grew to a record
$2.4 billion
Total deposits grew to a record $2.6 billion
Wealth Management Division reached a
record $1.5 billion in assets under management
Continued to optimize our Glens Falls National
Bank branch network in Plattsburgh and
Queensbury
Expanded the Saratoga National Bank Capital
Region footprint by opening a Rotterdam location,
and announced plans for a Latham branch
Wealth Management Division and Upstate
Agency moved into new and updated
headquarters
Enhanced our customer experience, including
upgrades for online loan payments and Business
Online Banking
Net Income: $37.5 million, up 3.3%
Total Loans: $2.4 billion, up 8.6%
Total Deposits: $2.6 billion, up 11.5%
Total Assets: $3.18 billion, up 6.6%
Return on Average Equity: 13.17%
Return on Average Assets: 1.24%
Return on Tangible Equity: 14.36%
Stock Dividend: 3% distributed in Sept.
Current Quarterly Cash Dividend: $0.26
Book Value Per Share: Increase of 11.2%
Shareholders’ Equity: Increase of 11.9%
Glens Falls National and Saratoga National
maintained 5-Star “Superior” ratings from
BauerFinancial
Saratoga National Bank was named “Top Small
Community Lender” by the U.S. Small Business
Administration in the Capital Region for the sixth
consecutive year
The Arrow team’s dedication is the driving force
behind our accomplishments, and I want to thank
our employees for everything they do. Their com-
mitment to improving our customer experience,
serving our communities, and delivering value for
the organization keeps us competitive and strong.
Additionally, our commitment to giving back
helps our communities remain strong. We are
proud to share that the Arrow Family of Com-
panies contributed more than $4 million and
countless volunteer hours over the past decade
to nonprofit organizations that make our region a
great place to live.
Thank you for your continued investment in
Arrow Financial Corporation. We value your trust,
support and partnership.
Named to top-performing lists by American
Banker magazine, Bank Director magazine and
Seifried & Brew, LLC
Tom Murphy
President and Chief Executive Officer
Consolidated Statements of Income (Unaudited)
Years Ended December 31
(in thousands, except per-share amounts)
2015
2016
2017
2018
2019
Interest and Dividend Income
Interest Expense
$ 70,738
4,813
$ 76,915
5,356
$ 84,657
7,006
$ 96,503
12,485
$ 109,759
21,710
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
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
84,018
2,607
81, 4 1 1
28,949
65,055
45,305
9,026
88,049
2,079
85,970
28,555
67,450
47,075
9,600
Net Income
$ 24,662
$ 26,534
$ 29,326
$ 36,279
$ 37,475
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
14,566
$ 1.69
$ .87
$ 14.69
$ 12.98
14,725
$ 1 .81
$ .89
$ 15.81
$ 14.14
14,838
$ 1.98
$ .92
$ 16.89
$ 15.26
14,922
$ 2.43
$ . 97
$ 18.08
$ 16.49
14,983
$ 2 .50
$ 1 .02
$ 20. 1 2
$ 1 8 .55
1.05%
11.86%
13.50%
2.97%
1.06%
11.79%
13.25%
3.00%
1.09%
12.14%
13.51%
3.02%
1 .27%
13.96%
15.38%
3.07%
1.24%
13.17%
14.36%
3.05%
9.25%
15.09%
9.47%
15.15%
9.49%
14.98%
9. 6 1 %
14.86%
9.98%
14.78%
0.36%
0.28%
0.28%
0.23%
0.18%
1.02%
0.97%
0.95%
0.92%
0.89%
Consolidated Balance Sheets (Unaudited)
As of December 31
(in thousands)
2015
2016
2017
2018
2019
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
$ 34,816
$ 43,024
$ 42,562
$ 56,529
$ 47,035
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)
27,710
618,291
2,196,215
(20,196)
23,186
614,779
2,386,120
(21,187)
1,557,914
27,440
1,736,256
26,938
1,932,184
27,619
2,176,019
30,446
2,364,933
40,629
24,980
53,027
24,569
56,789
24,162
57,606
23,725
55,614
23,534
70,179
Total Assets
$2,446,188
$2,605,242
$2,760,465
$2,988,334
$3,184,275
Liabilities and
Shareholders’ Equity
Noninterest-Bearing Deposits
Interest-Bearing Checking
and Savings Deposits
Time Deposits
Total Deposits
Short-Term Borrowings
Federal Home Loan
Bank Term Advances
Other Long-Term Debt
Other Liabilities
$ 358,751
$ 387,280
$ 441,945
$ 472,768
$ 484,944
1,481,855
1,529,953
1,601,888
1,608,829
1,735,789
189,817
199,313
201,283
263,987
395,321
2,030,423
2,116,546
2,245,116
2,345,584
2,616,054
105,173
158,836
169,966
288,659
181,099
55,000
20,000
21,621
55,000
20,000
22,008
55,000
20,000
20,780
45,000
20,000
19,507
30,000
20,000
35,394
Total Liabilities
2,232,217
2,372,390
2,510,862
2,718,750
2,882,547
Total Shareholders’ Equity
213,971
232,852
249,603
269,584
301,728
Total Liabilities and
Shareholders’ Equity
$2,446,188
$2,605,242
$2,760,465
$2,988,334
$3,184,275
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
2014
100.00
100.00
100.00
100.00
2015
104.55
108.91
95.59
108.06
2016
165.68
147.47
115.95
149.08
2017
147.29
157.10
132.94
161.73
2018
147.21
130.44
118.30
143.59
2019
184.59
163.99
148.49
170.48
Comparison of 15-Year Cumulative Total Return • Assumes Initial Investment of $100
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Arrow
Financial
Corporation
NASDAQ
Banks Index
Russell 2000
Index
100.00
89.88 91.25
85.41 104.52 111.57 131.92 120.93 136.71 154.26 169.05 176.74 280.07 249.00 248.87 312.06
100.00
97.68 109.68
86.80 63.28
52.66 62.62
56.01
67.00 95.90 100.77 109.75 148.60 158.31 131.45 165.25
100.00 104.51 123.71 121.77 80.62 102.53 130.06 124.62 145.00 201.28 211.13 201.81 244.82 280.69 249.78 313.54
Zacks $1B-$5B
Bank Assets
Index
100.00
98.79 111.96
95.27 76.13
66.49 74.17
72.08
84.55 109.61 118.73 128.30 177.00 192.02 170.48 202.41
Source: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980–2020.
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.
Thomas J. Murphy
President and CEO
Arrow/Glens Falls National Bank
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
Michael B. Clarke
Retired President and CEO
Lone Star Industries
Gary C. Dake
President
Stewart’s Shops Corp.
Director Emeriti
Herbert O. Carpenter
John J. Carusone, Jr.
Mary-Elizabeth T. FitzGerald
Corporate Officers
Thomas J. Murphy
President and CEO
Herbert A. Heineman, Jr.
David L. Moynehan
Elizabeth O’Connor Little
Michael F. Massiano
(Chairman Emeritus)
John J. Murphy
Doris E. Ornstein
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 & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Tel: (888) 444-0058 or astfinancial.com
Our Family of Companies
250 Glen Street, PO Box 307
Glens Falls, NY 12801
(518) 745-1000
arrowfinancial.com
Aerial view of Glens Falls,
New York, home of
Arrow headquarters.
Aerial views of Glens Falls