2
2
0
2
ANNUAL
REVIEW
This past year brought major investments
in our people, our technology and
our facilities, all designed to better
position us for the future.
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 obligated 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, 2022 and other filings with the Securities and Exchange Commission.
Arrow Stakeholders:
I am pleased to report that Arrow Financial
Corporation delivered another strong
financial performance in 2022 with record
loan growth, excellent earnings and
sustained profitability. We have issued a
cash dividend to our shareholders for 118
consecutive quarters, including an increase
in the cash dividend in 2022, and an annual
stock dividend for the past 14 years.
Please see the rest of this review for more
detail on our financial achievements and
the value we deliver for our shareholders.
This past year brought major investments
in our people, our technology and our
facilities, all designed to better position us
for the future. Our new mission statement
better articulates our drive to strengthen
financial lives. Additionally, our new culture
statement reinforces the long-held core
values that have made our Arrow Team
so great and our Company successful.
Among those values, we believe a great
team delivers great results, and that our
strength comes from investing in our people.
To that end, we expanded our learning and
development programs in 2022 with the
addition of “Arrow Leadership Academy”
to elevate and develop emerging talent
that will keep us moving forward. During
2022, we issued a special bonus (for the
third year in a row) to thank the Arrow Team
for their commitment and outstanding
performance during a challenging labor
market and our core banking system
upgrade, one of the most complex projects
our organization has ever undertaken.
more efficient operations and improved
reporting. Again, I thank our team for their time,
effort and dedication during this transition.
We also invested in our physical spaces
in 2022. The renovation of our downtown
Glens Falls, New York, main campus nears
completion, and we look forward to welcoming
a large portion of our team back to campus
later this year. This multiyear, multimillion-
dollar project will update our office and
Main Branch space, improve the customer
experience, facilitate internal collaboration
and reduce our environmental footprint
with significant energy improvements. You
can read more about our commitment to
socially conscious banking on page 4.
Finally, as noted at the end of this review,
we continued to demonstrate an impressive
commitment to our communities by donating
$675,000 and more than 9,000 volunteer
hours in 2022. Making the time to help and
support our neighbors is a very important part
of who we are, and we are incredibly 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 you review the year with us, 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 support
is appreciated as we continue to work
to maintain your trust in us and create
increased value for your investment.
We continue to work toward fully leveraging
the capabilities of our new system, which paves
the way for customer-facing enhancements,
Tom Murphy
President and CEO
2 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
2022
IN REVIEW
Through our team’s hard work
and dedication, we advanced
many strategic areas of focus.
Below are more details, followed
by our 2022 financial highlights.
STEADY GROWTH
In 2022, Arrow Financial Corporation
saw solid earnings, sustained profitability
and record-high organic loan growth.
We continued to focus on
deepening existing customer
relationships, expanding our
presence in newer markets,
maintaining asset quality and
other performance metrics.
BRANCH OPTIMIZATION
We continued to optimize our
branch network, evaluating
placement, performance
and opportunities within our
footprint. A combination of
renovation, consolidation and
relocation has allowed us to deliver
an enhanced customer experience,
while streamlining expenses.
3 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
• In December, Glens Falls National Bank
consolidated its Aviation Road Office
into nearby Queensbury locations.
• With a similar focus on optimization,
our banks managed through staffing
challenges in 2022 prompted by labor
market conditions and COVID-19. The
Retail Group continuously evaluates
branch needs, increasing the number
of floating team members and at
times leveraging other teams to
maximize availability and minimize
disruption. The agility exercised
during this time provided numerous
insights for enhancing the customer
experience going forward.
HEADQUARTERS
RENOVATION
Construction on our downtown
Glens Falls campus advanced
in 2022. This project includes our Arrow
Family of Companies headquarters as
well as our Glens Falls National Bank Main
Office. Once completed later this year, the
energy-efficient space will improve both
the employee and customer experience.
• This full renovation is the final stage
of the multiyear 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
In 2022, we took a major step forward
in our technology foundation with the
upgrade of our core banking system.
This investment paves the
way for customer-facing
enhancements externally,
as well as more efficient operations and
improved reporting internally. We will
continue to work toward fully leveraging
our new system's capabilities in 2023.
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.”
Below are some examples of our
commitment to conserving natural
resources; supporting our employees,
our customers and our communities;
demonstrating that we value differences,
particularly in the areas of diversity, equity,
inclusion and belonging (“DEIB”); and
adhering to strong corporate governance.
• Digital banking options and paperless
statements are provided and encouraged
• Facility renovations incorporate
energy-saving features
• Emissions reduction through remote
work and video conferencing
• Long-standing 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
4 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
GREAT TEAM,
GREAT RESULTS
Our Arrow Team continues to display their
dedication to our Company, customers,
communities and each other through their
strong performance and commitment to
our mission and values. What we achieve,
we achieve together. It is through the
team’s hard work and dedication that we
see continued success.
As a company, we focus on continuous
improvement. That means we are
constantly growing, learning and
evolving. This past year we launched
a new mission and culture statement
that better reflects meaningful changes
and preserves the long-standing
values that make us who we are.
Our people and our values have always
been our greatest asset. To that end,
we have expanded our learning and
development programs to elevate and
support emerging talent. And we issued
a special bonus for the third year in a
row to thank the Arrow Team for their
outstanding performance. Together,
we are Arrow Strong. Together, the
Arrow Team will continue to deliver
the great results expected of us.
• 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 Paycheck Protection
Program (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 (find more
on our 2022 support on page 12)
• Comprehensive governance
program, as described in further
detail in our annual Proxy Statement
• Expanding our philanthropic support
of environmental sustainability in our
community, including organizations
that impact soil and water conservation,
land conservation, sustainable farming,
mountain and lake protection and
stewardship, and parks and recreation
• Developed ESG Investment Models
for our socially conscious clients
• Strong cybersecurity protections
and training
Additional details can be found in our
shareholder communications and
filings with the Securities
and Exchange
Commission.
5 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Our downtown Glens Falls campus
renovation includes significant
improvements to the employee and
customer experience, energy efficiency
and our retail presence. We look forward to
welcoming our team back later in 2023.
6 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Artist rendering of Main Office lobby.
2022 Financial Highlights
Arrow Financial Corporation delivered a
strong year of solid earnings, sustained
profitability and record loan growth.
Here are some highlights:
Net Income:
Total Loans:
$48.8 million, down 2.1%
$3.0 billion, up 11.8%
Total Deposits:
$3.5 billion, down 1.5%
Total Assets:
$3.97 billion, down 1.5%
Return on Average Equity:
13.55%
Return on Average Assets:
1.21%
Stock Dividend:
3% distributed in September
Current Quarterly Cash Dividend: $0.27
Book Value Per Share:
Decrease of 4.9%
Shareholders’ Equity:
Decrease of 4.8%
7 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Performance Comparisons
$3.01
$2.95
$2,988
$3,184
$4,028
$3,970
$3,689
$2.22
$2.29
$2.49
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
DILUTED EARNINGS PER SHARE
For the 12 Months Ended December 31*
ASSETS
As of December 31
($ in Millions)
$0.93
$0.96
$0.99
$0.89
$1.06
$3,550
$3,498
$3,235
$2,616
$2,346
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
CASH DIVIDENDS PAID PER SHARE
For the 12 Months Ended December 31*
DEPOSITS
As of December 31
($ in Millions)
$22.47
$21.36
$20.31
$371
$354
$334
$302
$270
$18.41
$16.54
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
BOOK VALUE PER SHARE
SHAREHOLDERS’ EQUITY
As of December 31*
As of December 31
($ in Millions)
*Per Share Amounts have been restated for stock dividends distributed.
8 | ARROW FINANCIAL CORPORATION • 2022 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 2022
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2017
2018
2019
2020
2021
2022
Arrow Financial Corporation
ABA NASDAQ Community BankTR
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
December 2022
Arrow Financial Corporation
NASDAQ Banks Index
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
2017
100.00
100.00
100.00
100.00
2018
99.95
85.10
88.99
91.08
2019
125.32
104.92
111.70
107.31
2020
105.75
92.80
134.00
87.54
2021
132.15
125.74
153.85
119.93
2022
135.21
116.95
122.41
117.09
Comparison of 15 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2022
Comparison of 15-Year Cumulative Total Return • Assumes Initial Investment of $100
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Arrow Financial Corporation
ABA NASDAQ Community BankTR
Russell 2000 Index
Zacks $1B-$5B Bank Assets Index
December 2022
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021 2022
Arrow
Financial
Corporation
NASDAQ
Banks Index
Russell 2000
Index
100.00 122.38 130.63 154.46 141.58 160.07 180.61 197.93 206.94 327.92 291.54 291.38 365.37 308.29 385.27 394.20
100.00
82.95 67.03
74.71 69.83
82.20 116.47 121.89 133.53 185.30 190.06 161.73 199.42 176.38 238.98 222.27
100.00
66.21 84.20 106.81 102.34 119.08 165.30 173.38 165.74 201.06 230.51 205.13 257.49 308.89 354.66 282.18
Zacks $1B-$5B
Bank Assets
Index
100.00
84.84 70.34
75.77 70.60
84.44 106.87 116.78 128.83 178.65 197.52 179.90 211.95 172.90 236.87 231.26
Source: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980–2023.
9 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Consolidated Statements of Income (Unaudited)
(in thousands, except Per Share Amounts)
2018
2019
2020
2021
2022
Years Ended December 31
Interest and Dividend Income
Interest Expense
$96,503
12,485
$109,759
21,710
$111,896
12,694
$115,550
5,195
$129,651
11,308
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
84,018
2,607
81,411
28,949
65,055
45,305
9,026
88,049
2,079
99,202
9,319
110,355
272
118,343
4,798
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
113,545
30,898
81,530
62,913
14,114
Net Income
$36,279
$37,475
$40,827
$49,857
$48,799
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
16,306
$2.22
$.89
$16.54
$15.09
1.27%
13.96%
15.38%
3.07%
16,372
$2.29
$.93
$18.41
$16.97
1.24%
13.17%
14.36%
3.05%
16,422
$2.49
$.96
$20.31
$18.87
1.17%
12.77%
13.78%
2.99%
16,555
$3.01
$.99
$22.47
$21.03
1.28%
14.09%
15.11%
2.97%
16,562
$2.95
$1.06
$21.36
$19.95
1.21%
13.55%
14.50%
3.03%
9.61%
14.86%
9.98%
14.78%
9.07%
15.48%
9.20%
15.69%
9.80%
15.11%
0.23%
0.18%
0.18%
0.29%
0.32%
0.92%
0.89%
1.13%
1.02%
1.00%
*Further discussion and reconciliation of non-GAAP financial measures can be found in our earnings press release
and Form 8-K furnished January 30, 2023.
10 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Consolidated Balance Sheets (Unaudited)
(in thousands)
2018
2019
2020
2021
2022
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
$56,529
$47,035
$42,116
$26,978
$31,886
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)
32,774
757,097
2,983,207
(29,952)
2,176,019
30,446
2,364,933
40,629
2,565,798
42,612
2,640,660
46,217
2,953,255
56,491
23,725
55,614
23,534
70,179
23,823
84,735
23,791
96,579
23,373
114,633
Total Assets
$2,988,334
$3,184,275
$3,688,636
$4,027,952
$3,969,509
Liabilities and
Shareholders’ Equity
Noninterest-Bearing Deposits
Interest-Bearing Checking
and Savings Deposits
$472,768
$484,944
$701,341
$810,274
$836,871
1,608,829
1,735,789
2,255,792
2,525,678
2,452,058
Time Deposits
263,987
395,321
277,593
214,545
209,435
Total Deposits
2,345,584
2,616,054
3,234,726
3,550,497
3,498,364
Short-Term Borrowings
Federal Home Loan
Bank Term Advances
Other Long-Term Debt
Other Liabilities
288,659
181,099
17,486
0
27,000
45,000
20,000
19,507
30,000
20,000
35,394
45,000
20,000
37,032
45,000
20,000
41,269
27,800
20,000
42,807
Total Liabilities
2,718,750
2,882,547
3,354,244
3,656,766
3,615,971
Total Shareholders’ Equity
269,584
301,728
334,392
371,186
353,538
Total Liabilities and
Shareholders’ Equity
$2,988,334
$3,184,275
$3,688,636
$4,027,952
$3,969,509
11 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Community Contributions
A LOOK AT OUR 2022 GIVING
INCLUDING
$103,821
from
employee
contributions
Donated to our communities
$675,000
9,395 Hours
500+
COMMUNITY
ORGANIZATIONS
SUPPORTED
208
8
Logged
Employee
Volunteers
COUNTIES
SERVED
from Albany
to Plattsburgh
Our philanthropy supported many areas of impact: financial
empowerment, education, workforce support, basic needs, health
and human services, safe and affordable housing, business and
farm support, environmental sustainability and more
12 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
We are incredibly 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.
13 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW
Our Leadership
Corporate Officers
Thomas J. Murphy
President and CEO
David S. DeMarco
Senior Executive Vice
President and Chief
Banking Officer
David D. Kaiser
Senior Executive Vice
President and Chief
Credit Officer
Andrew J. Wise
Senior Executive Vice
President and Chief
Operating Officer
Penko Ivanov
Executive Vice President
and Chief Financial Officer
Effective February 21, 2023
Board of Directors
Thomas L. Hoy (Chairman)
Retired President and CEO
Arrow Financial Corporation/
Glens Falls National Bank
Mark L. Behan
Founder and President
Behan Communications, Inc.
Tenée R. Casaccio, AIA
President
JMZ Architects and Planners, PC
Gregory J. Champion
Executive Vice President -
Legal, Syncromune, Inc.
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 and 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
Herbert A. Heineman Jr.
David L. Moynehan
John J. Carusone Jr.
Michael B. Clarke
Mary-Elizabeth T. FitzGerald
Elizabeth O’Connor Little
John J. Murphy
Michael F. Massiano
(Chairman Emeritus)
Doris E. Ornstein
Richard J. Reisman, DMD
14 | ARROW FINANCIAL CORPORATION • 2022 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, Upstate Agency,
LLC and North Country
Investment Advisers, Inc.
15 | ARROW FINANCIAL CORPORATION • 2022 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 26 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
16 | ARROW FINANCIAL CORPORATION • 2022 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 37 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 more than 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 and Trust Company
Upstate Agency, LLC
ElizabethtownWarrensburgChestertownTiconderogaSchroon LakeDurkee St.Ticonderoga Drive-InPort HenryU.S. Ave.SchuylervilleCambridgeSalemArgyleKingsburyFort AnnFort EdwardGreenwichGranvilleMain OfficeQueensburyLakeGeorgeSouth Glens FallsLake LuzerneBroad St.Bay Rd.Exit 18CorinthWilton SquareRoute 9West Ave.Clifton ParkTroyLathamColonieSaratoga SpringsSchenectadyRotterdamSaratogaAlbanyRensselaerSchenectadyWashingtonWarrenClintonEssex 250 Glen Street, P.O. Box 307, Glens Falls, NY 12801
(518) 745-1000 | arrowfinancial.com
17 | ARROW FINANCIAL CORPORATION • 2022 ANNUAL REVIEW