ANNUAL REVIEW
Our employees, customers and
communities count on us every day
and, as you will see on the following pages,
we have delivered for all of our stakeholders.
Tom Murphy
President and CEO
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 Annual Report on Form 10-K for the year ended December 31,
2021 and other filings with the Securities and Exchange Commission.
Arrow Stakeholders:
I am pleased to report that Arrow Financial
Corporation delivered another strong
performance in 2021. We are proud, once again,
to have delivered exceptional shareholder
value with record earnings, strong profitability
ratios, sound asset quality and asset growth
to a record of more than $4 billion. We have
issued a cash dividend to our shareholders for
114 consecutive quarters, including an increase
in the cash dividend in 2021, and for the past 13
years we have issued an annual stock dividend.
We did all this while weathering a second year
of pandemic-related issues. Our employees,
customers and communities count on us every
day, and as an essential business, the Arrow
Family of Companies demonstrated that we are
here for them! Certainly, the pandemic was top-
of-mind in the management of our business this
year, but we continued to find ways to improve
our customer experience.
As you will see in the Year in Review section,
our Team focused on investing and optimizing
our technology as well as our physical
network. We rolled out enhancements to the
digital customer experience and worked on
renovations, relocations and consolidations
of our brick-and-mortar presence within our
footprint. The Arrow Team rose to the challenge
of Paycheck Protection Program loan demand,
and our Retail Team navigated COVID-related
staffing concerns, while avoiding widespread
lobby closures for the predominance of the year.
Our people and our values have always been
our greatest asset. So to further strengthen
this foundation, we asked ourselves how to
best express our mission, vision and culture
to reflect the workforce and marketplace of
today as well as tomorrow. We are working
on cultivating diversity, equity, inclusion and
belonging in meaningful ways. Along these
lines, we are very proud to advise you that
we currently exceed the new Nasdaq diversity
2 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
requirements for our Board of Directors.
We have had a woman on our Board for more
than 30 years, two women on our Board for
more than 20 years and we currently have
one person of color on our Board.
Furthermore, as a publicly traded company,
we recognize the importance of being
environmentally and socially conscious and
reporting back to our shareholders on the ways
in which we demonstrate that commitment.
We look forward to sharing updates of both
our ongoing and emerging efforts.
Finally, as noted at the end of this report, we
surpassed prior-year community contributions
in terms of both dollars and hours. Being a
good and involved neighbor is a very important
part of who we are. We are enormously proud
of the dollars we donate, the thousands of
hours our Team gives back and the impact
we make on our communities by doing so.
As we look ahead, I want to commend the
Arrow Team for their stellar performance,
and their commitment and dedication to our
Company, our customers and our communities.
They made these achievements and financial
results possible, which, in turn, allow us to
continue to deliver the best service for our
customers, give back to our communities
and deliver value for our shareholders.
I thank you for your commitment to the Arrow
Family of Companies. For those of you who are
shareholders, I thank you for your investment
in Arrow Financial Corporation. Your trust and
support is appreciated as we continue to work
to maintain your trust in us and create value for
your investment. Please be healthy and stay safe!
Tom Murphy
President and CEO
Like most businesses, 2021
continued to challenge us in many
ways. However, with teamwork,
resilience and dedication, the Arrow
Team excelled. Below are a few of
our strategic areas of focus, followed
by more detailed financial results.
STEADY GROWTH
In 2021, Arrow Financial
Corporation exceeded $4 billion
in total assets, a significant growth
milestone. Our growth has been
steady, solid and organic, driven
by expansion in new markets and deepening
of existing customer relationships, all
without sacrificing asset quality and other
performance metrics, as recognized
by a number of third-party entities:
• Arrow was named a Raymond James
Community Bankers Cup winner in
2021, which recognizes the top 10% of
community banks using various profitability,
efficiency and balance sheet metrics.
• Arrow was also selected as one of the
top 35 banks and thrifts that comprise
the Piper Sandler Sm-All Stars Class
of 2021, and is one of just five New
York financial institutions on the list.
• Glens Falls National Bank and Saratoga
National Bank maintained their
5-Star “Exceptional Performance”
ratings from BauerFinancial for the
14th and 12th year, respectively.
BRANCH OPTIMIZATION
We focused on continued
optimization of our branch network
in 2021, evaluating placement,
performance and opportunity within our
footprint. A combination of renovation,
consolidation and relocation has allowed
us to deliver an enhanced customer
experience and to streamline expenses.
• In September, Saratoga National Bank
consolidated its smaller Jones Road and
3 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Ballard Road branches into one larger,
fully renovated branch in nearby Wilton
Square shopping plaza offering customers
a better and more convenient location.
• Glens Falls National Bank consolidated
two branches within a mile of each other
on Broadway in Fort Edward, allowing
our Team to serve the community
from one central, updated office.
HEADQUARTERS
RENOVATION
The renovation of our Downtown
Glens Falls Campus, which includes
our Arrow Family of Companies headquarters
as well as our Glens Falls National Bank Main
Office, kicked off in 2021 and is expected to
conclude in 2023.
• This full renovation is the final stage
of the multi-year plan to create a
more flexible and functional work
environment, improve energy efficiency
and replace aging infrastructure.
• The project involves exterior and
interior improvements, replacement
of aging building equipment with new,
energy-efficient systems, creation of a
new lobby for customer transactions
and development of additional space
for lending and corporate offices.
ADVANCING TECHNOLOGY
We are responding to customer experience
trends that favor self-service digital channels.
In 2021, efforts continued to enhance existing
systems and provide new digital offerings.
• An enhanced Business Online Banking
interface was launched in early 2021,
followed by a user-friendly Business
Mobile App.
• To help customers combat ongoing
and ever-present fraud attempts, in
June we launched SecurLOCK within
our consumer banking platform that
allows customers to turn their debit
card on and off and customize alerts.
• We rolled out a new mortgage application
platform in mid-2021 to make it easier
for customers to apply online and
connect with a mortgage originator.
• We refreshed all our native
websites with enhanced navigation,
content and functionality.
• Planning and preparation for a new
deposit online account opening platform
began in 2021 and has since rolled out.
SOCIALLY CONSCIOUS
PERFORMANCE
At Arrow, we are firmly committed
to operating in a socially conscious
manner that demonstrates positive
environmental, social and governance
contributions, also known as (“ESG”).
Environmentally, Arrow is dedicated
to conserving natural resources and
complying with environmental regulations.
Socially, we are proud of Arrow’s many
contributions to our employees, our
customers and our communities, including
meeting financial needs of the low- to
moderate-income population, providing
professional development and holistic
support of our Team, and giving back to our
communities. We are working in many ways
to demonstrate that we value differences,
particularly in the areas of diversity,
equity, inclusion and belonging (“DEIB”).
Finally, we believe that strong corporate
governance is the foundation to delivering
on our commitments to our stakeholders.
4 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Below are some examples of these
commitments. Additional details
can be found in our shareholder
communications and filings with the
Securities and Exchange Commission.
• Digital banking options and paperless
statements are provided and encouraged
• Facility renovations incorporate
energy-saving features
• Emissions reduction through remote
work and video conferencing
• Longstanding dedication to diversity
on Arrow’s Board of Directors,
exceeding Nasdaq requirements
• Professional development, wellness
and mental health employee
services are available to our Team
• Annual engagements with a third-party
to assess diversity within our employee
base and support for the setting and
tracking of goals to encourage the
advancement of minorities, women,
veterans and persons with disabilities
• Incorporation of inclusion and
belonging into our HR policies,
practices and programs
• Development of a future DEIB educational
series and related stakeholder group to
guide further initiatives
• Products to facilitate first-time
home ownership
• Bank On certification for Smart Steps
checking to serve the underbanked
• Extensive pandemic-related
support to customers in need,
including PPP and loan deferrals
• Annually, time, dollars and expertise are
donated to community organizations, with
an emphasis on affordable homeownership,
economic empowerment, health and
human services, and social progress
(more on our 2021 support on page 11)
• Comprehensive governance program,
as described in further detail in
our annual Proxy Statement
As a good corporate neighbor that is
firmly committed to both ESG and DEIB
initiatives, we look forward to sharing
more on the ways we are positively
contributing to our communities.
PANDEMIC
PERFORMANCE
The COVID-19 virus continued
to challenge us through 2021,
yet we met the pandemic head-
on with solid financial strength
and extraordinary business continuity
management. We stayed strong and
prioritized health and safety for our Team,
our customers, and our communities.
• In early 2021, both Glens Falls National
Bank and Saratoga National Bank were
named “Top Pandemic Performers” by
the Rivel Banking Benchmark Survey,
based on customer feedback.
• In 2021, we assisted over 900 business
customers with more than $93 million
in second-round Paycheck Protection
Program loans to help maintain their
business. Additionally, we assisted those
customers and first-round borrowers
with the forgiveness process.
• The Arrow Team implemented all of New
York State’s HERO Act safety protocols
and vaccination guidelines to keep our
Team strong and our customers safe when
conducting business on our premises.
• We recognized our Team for their
outstanding dedication and efforts
with a COVID bonus of one-
week’s pay in September.
5 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
2021 Financial Highlights
Arrow Financial Corporation delivered a
strong year of solid earnings, profitability
ratios and asset growth for increased
shareholder value. Here are some highlights:
Net Income:
Total Loans:
$49.9 million, up 22.1%
$2.7 billion, up 2.8%
Total Deposits:
$3.6 billion, up 9.8%
Total Assets:
$4.0 billion, up 9.2%
Return on Average Equity:
14.09%
Return on Average Assets:
1.28%
Stock Dividend:
3% distributed in September
Current Quarterly Cash Dividend: $0.27
Book Value Per Share:
Increase of 10.6%
Shareholders’ Equity:
Increase of 11.0%
6 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Performance Comparisons
$2.29
$2.36
$2.56
$1.86
$3.10
$2,988
$3,184
$2,760
$4,028
$3,689
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
DILUTED EARNINGS PER SHARE
For the 12 Months Ended December 31*
ASSETS
As of December 31
($ in Millions)
$0.91
$0.96
$0.86
$0.99
$1.02
$3,550
$3,235
$2,245
$2,346
$2,616
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
CASH DIVIDENDS PAID PER SHARE
For the 12 Months Ended December 31*
DEPOSITS
As of December 31
($ in Millions)
$23.14
$371
$20.92
$18.96
$334
$302
$15.92
$17.04
$270
$250
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
BOOK VALUE PER SHARE
SHAREHOLDERS’ EQUITY
As of December 31*
As of December 31
($ in Millions)
*Per Share Amounts have been restated for stock dividends distributed.
7 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Total Return Performance
Comparison of Five-Year Cumulative Total Return • Assumes Initial Investment of $100
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2021
200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2016
2017
2018
2019
2020
2021
Arrow Financial Corporation
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
ABA NASDAQ Community BankTR
December 2021
Arrow Financial Corporation
NASDAQ Banks Index
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
2016
100.00
100.00
100.00
100.00
2017
88.90
102.57
114.65
109.70
2018
88.86
87.28
102.02
99.82
2019
111.42
107.62
128.06
116.60
2020
94.01
95.19
153.62
95.03
2021
117.49
128.97
176.39
131.24
Comparison of 15 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2021
Comparison of 15-Year Cumulative Total Return • Assumes Initial Investment of $100
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Arrow Financial Corporation
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
ABA NASDAQ Community BankTR
December 2021
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020 2021
Arrow
Financial
Corporation
NASDAQ
Banks Index
Russell 2000
Index
100.00
93.60 114.55 122.27 144.58 132.53 149.83 169.06 185.27 193.70 306.95 272.89 272.74 342.00 288.57 360.62
100.00
77.15 64.00
51.71 57.64
53.88 63.42
89.86
94.04 103.02 142.96 146.63 124.78 153.85 136.08 184.38
100.00
98.43 65.17
82.88 105.13 100.74 117.21 162.70 170.66 163.14 197.90 226.89 201.91 253.45 304.04 349.09
Zacks $1B-$5B
Bank Assets
Index
100.00
79.78 68.44
56.19 60.62
56.91 67.87
86.29
94.03 104.01 145.29 159.39 145.03 169.41 138.08 190.68
Source: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980–2022.
8 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Consolidated Statements of Income (Unaudited)
(in thousands, except Per Share Amounts)
2017
2018
2019
2020
2021
Years Ended December 31
Interest and Dividend Income
Interest Expense
$84,657
7,006
$96,503
12,485
$109,759
21,710
$111,896
12,694
$115,550
5,195
Net Interest Income
Provision for Credit Losses
Net Interest Income after
Provision for Credit Losses
Total Noninterest Income
Total Noninterest Expense
Income Before Taxes
Provision for Income Taxes
77,651
2,736
74,915
27,645
62,705
39,855
10,529
84,018
2,607
81,411
28,949
65,055
45,305
9,026
88,049
2,079
99,202
9,319
110,365
272
85,970
28,555
67,450
47,075
9,600
89,883
32,658
70,678
51,863
11,036
110,083
32,369
78,048
64,404
14,547
Net Income
$29,326
$36,279
$37,475
$40,827
$49,857
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 Credit Losses to
Period-End Loans
15,742
$1.86
$.86
$15.92
$14.39
1.09%
12.14%
13.51%
3.02%
15,831
$2.29
$.91
$17.04
$15.54
1.27%
13.96%
15.38%
3.07%
15,896
$2.36
$.96
$18.96
$17.48
1.24%
13.17%
14.36%
3.05%
15,944
$2.56
$.99
$20.92
$19.43
1.17%
12.77%
13.78%
2.99%
16,073
$3.10
$1.02
$23.14
$21.66
1.28%
14.09%
15.11%
2.97%
9.49%
14.98%
9.61%
14.86%
9.98%
14.78%
9.07%
15.48%
9.20%
15.69%
0.28%
0.23%
0.18%
0.18%
0.29%
0.95%
0.92%
0.89%
1.13%
1.02%
9 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Consolidated Balance Sheets (Unaudited)
(in thousands)
2017
2018
2019
2020
2021
As of December 31
Assets
Cash and Due from Banks
Interest-Bearing Deposits
at Banks
Investment Securities
Loans
Allowance for Credit Losses
Net Loans
Premises and Equipment, Net
Goodwill and Intangible
Assets, Net
Other Assets
$42,562
$56,529
$47,035
$42,116
$26,978
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)
338,875
590,677
2,595,030
(29,232)
430,718
763,009
2,667,941
(27,281)
1,932,184
27,619
2,176,019
30,446
2,364,933
40,629
2,565,798
42,612
2,640,660
46,217
24,162
57,606
23,725
55,614
23,534
70,179
23,823
84,735
23,791
96,579
Total Assets
$2,760,465
$2,988,334
$3,184,275
$3,688,636
$4,027,952
Liabilities and
Shareholders’ Equity
Noninterest-Bearing Deposits
Interest-Bearing Checking
and Savings Deposits
$441,945
$472,768
$484,944
$701,341
$810,274
1,601,888
1,608,829
1,735,789
2,255,792
2,525,678
Time Deposits
201,283
263,987
395,321
277,593
214,545
Total Deposits
2,245,116
2,345,584
2,616,054
3,234,726
3,550,497
Short-Term Borrowings
Federal Home Loan
Bank Term Advances
Other Long-Term Debt
Other Liabilities
169,966
288,659
181,099
17,486
0
55,000
20,000
20,780
45,000
20,000
19,507
30,000
20,000
35,394
45,000
20,000
37,032
45,000
20,000
41,269
Total Liabilities
2,510,862
2,718,750
2,882,547
3,354,244
3,656,766
Total Shareholders’ Equity
249,603
269,584
301,728
334,392
371,186
Total Liabilities and
Shareholders’ Equity
$2,760,465
$2,988,334
$3,184,275
$3,688,636
$4,027,952
10 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Community Contributions
A LOOK AT OUR 2021 GIVING
INCLUDING
$105,825
from
employee
contributions
Donated to our communities
$674,000
7,757Hours
450+
COMMUNITY
ORGANIZATIONS
SUPPORTED
178
8
Donated
Employee
Volunteers
COUNTIES
SERVED
from Albany
to Plattsburgh
Our philanthropy supported many areas of impact,
including food insecurity, affordable housing, financial
empowerment, economic development, youth and
senior services, sports and recreation, emergency
services, education, workforce development, animal
welfare, arts and culture, environmental sustainability,
health and human services and more!
11 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
We have been there and will
continue to be there for our
communities, through charitable
contributions, partnerships
and volunteerism.
12 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Our Leadership
Corporate Officers
Thomas J. Murphy
President and CEO
Edward J. Campanella
Senior Vice President,
Treasurer and
Chief Financial Officer
David S. DeMarco
Senior Vice President
and Chief Banking Officer
David D. Kaiser
Senior Vice President
and Chief Credit Officer
Andrew J. Wise
Senior Vice President
and Chief Operating Officer
Board of Directors
Thomas L. Hoy (Chairman)
Retired President and CEO
Arrow Financial Corporation/
Glens Falls National Bank
Mark L. Behan
President
Behan Communications, Inc.
Tenée R. Casaccio, AIA
President
JMZ Architects and Planners, PC
Gregory J. Champion
Retired Attorney and
Managing Partner, Bond,
Schoeneck & King PLLC
Michael B. Clarke
Retired President and CEO
Lone Star Industries
Retiring eff. 2022 Annual Meeting
Gary C. Dake
President
Stewart’s Shops Corp.
David G. Kruczlnicki
Retired President
and CEO
Glens Falls Hospital
Elizabeth A. Miller
President and CEO
Miller Mechanical
Services, Inc.
Thomas J. Murphy
President and CEO
Arrow Financial Corporation/
Glens Falls National Bank
Raymond F. O’Conor
Chairman, Retired
President and CEO
Saratoga National Bank
William L. Owens, Esq.
Partner
Stafford, Owens, Piller, Murnane,
Kelleher and Trombley, PLLC
Colin L. Read, PhD
Professor of
Economics/Finance
SUNY Plattsburgh
Directors Emeriti
Herbert O. Carpenter
Elizabeth O’Connor Little
John J. Murphy
John J. Carusone, Jr.
Mary-Elizabeth T. FitzGerald
Herbert A. Heineman, Jr.
Michael F. Massiano
(Chairman Emeritus)
David L. Moynehan
Doris E. Ornstein
Richard J. Reisman, DMD
13 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Our Family of
Companies
Arrow Financial Corporation
is the parent company
of Glens Falls National
Bank and Trust Company
and Saratoga National
Bank and Trust Company.
Other subsidiaries
include an insurance
company, Upstate Agency,
LLC and North Country
Investment Advisers, Inc.
14 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Glens Falls National Bank and Trust
Company is a community bank
headquartered in Glens Falls, New York, that
serves Warren, Washington, Essex, Clinton
and northern Saratoga counties in Upstate
New York. It operates 27 banking offices and
provides a wide range of financial products
and services to individuals and businesses,
including banking, investments and insurance.
Saratoga National Bank and Trust Company
is a community bank headquartered in
Saratoga Springs, New York. It serves
Saratoga, Albany, Rensselaer and
Schenectady counties through 11 banking
offices and provides a wide range of financial
products to individuals and businesses,
including banking, investments and insurance.
Other Arrow Financial Corporation
subsidiaries include Upstate Agency, LLC,
an insurance agency that specializes in
personal and business insurance, as well
as group health and employee benefits
North Country Investment Advisers,
Inc., an investment advisory firm that
provides portfolio management of
proprietary accounts for our banks.
Our Footprint
15 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW
Arrow Financial Corporation is a multi-
bank holding company headquartered
in Glens Falls, New York, providing
banking, insurance and wealth
management services from 38 branches
and nine insurance offices in eight
counties from Plattsburgh to Albany.
With a footprint of more than 160
miles along the eastern border of New
York State, our companies reach a
broad customer base including rural,
urban and suburban areas from the
Canadian border to the Hudson Valley.
As of the 2020 Census, this service area
includes a population of over 1.1 million
individuals, families and businesses.
Our Arrow Team of more than 520 staff
members, strive to deliver an exceptional
customer experience across all lines of
business. They make our achievements
and financial results possible!
Glens Falls National Bank and Trust Company
Saratoga National Bank & Trust Company
Upstate Agency, LLC
ElizabethtownWarrensburgChestertownTiconderogaSchroon LakeDurkee St.Ticonderoga Drive-InSmithfield Blvd.Port HenryU.S. Ave.SchuylervilleCambridgeSalemArgyleKingsburyFort AnnFort EdwardGreenwichGranvilleMain OfficeQueensburyLakeGeorgeSouth Glens FallsAviation RoadLake LuzerneBroad St.Bay RoadExit 18CorinthWilton SquareRoute 9West Ave.Clifton ParkTroyLathamColonieSaratoga SpringsSchenectadyRotterdamSaratogaAlbanyRensselaerSchenectadyWashingtonWarrenClintonEssex 250 Glen Street, PO Box 307, Glens Falls, NY 12801
(518) 745-1000 | arrowfinancial.com
16 | ARROW FINANCIAL CORPORATION • 2021 ANNUAL REVIEW