Arrow Financial Corporation · NASDAQ:AROW
Arrow Financial — Shareholder Meeting (October 2023)
46 slides from Arrow Financial's shareholder meeting presentation, Oct 25, 2023
Slide 1: Annual Meeting of Shareholders October 25, 2023
ANNUAL MEETING OF SHAREHOLDERS October 25, 2023
Slide 2: Welcome
Welcome =Arrow Financial Corporation
Slide 3: Today's Agenda
Today’s Agenda Welcome Arrow Overview Business Meeting Financials Strategic Focus Closing
Slide 4: Safe Harbor Statement
The information in this presentation may contain statements based on management’s beliefs, assumptions, expectations, estimates and/or 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 un
Slide 5: Acknowledgements
Acknowledgements Annual Meeting Technical Team Frank Arren, Inspector of Elections Maryteresa Crealese, Mark J. Vuono and J. Patrick Holmes Auditors Michele Kloeppel and William J. Vega Attorneys
Slide 6: In Memory of Tom Hoy
In Memory of Tom Hoy • Expanded our footprint and set forth a strategic vision • Unwavering commitment to community banking • His legacy lives on in our company culture he helped shape Thomas L. Hoy Former President, CEO and Chairman
Slide 7: Arrow Overview
Arrow Overview =Arrow Financial Corporation
Slide 8: Our Family of Companies
Our Family of Companies =A\RROW Financial Corporation GlensFallsNational § 3QBARCS | JVZSIATE, Bank and TrustCompany SeTIONAL Se
Slide 9: Our Market
Our Market Rensselaer Schenectady Saratoga Essex Clinton Albany Washington Counties Branches Insurance Offices 8 37 9
Slide 10: Our Guiding Language
Our Guiding Language To strengthen financial lives within our communities through the power of care, capability, commitment and collaboration. To build meaningful and long-lasting relationships with our customers, employees and shareholders.
Slide 11: Our Values
Our Values Our Six Core Values We are your neighbors. We believe a great team delivers great results. We continuously improve. We do the right thing, the right way. We make data-driven decisions. We value differences.
Slide 12: Our Philanthropy
Our Philanthropy ALOOK AT OUR 2022 GIVING $675,000 tie: employee Donated oD our communities Contributions 9, 395 —_ 208 lnioen ee Volunteers COMMUNITY COUNTIES 500+ ORGANIZATIONS | anal SUPPORTED to Plattsburgh Our philanthropy supported many areas of impact: financial empowerment, education, workfo
Slide 13: Our Directors
Our Directors Mark L. Behan Founder and President, Behan Communications, Inc. Tenée R. Casaccio, AIA President, JMZ Architects and Planners, P.C. Gregory J. Champion Executive Vice President – Legal, Syncromune, Inc. Gary C. Dake President, Stewart’s Shops Corp. William L. Owens, Esq. (Chairman) Par
Slide 14: Our Executive Management
Our Executive Management Penko Ivanov SEVP, Chief Financial Officer, Treasurer and Chief Accounting Officer David S. DeMarco President and CEO David Kaiser SEVP and Chief Credit Officer Andrew Wise SEVP and Chief Operating Officer
Slide 15: Our Senior Management
Our Senior Management Tracey Norman SVP and Director of Wealth Management Brooke Pancoe SVP and Director of Human Resources Leslie Munger SVP and Director of Compliance and Risk Kurt Moser SVP and Director of Corporate Banking Wendy Brust SVP and Director of Information Technology Wendy Lanzone SVP
Slide 16: Business Meeting
Business Meeting David S. DeMarco President and CEO
Slide 17: 2023 Shareholder Voting Proposals
2023 Shareholder Voting Proposals 1. Election of four Class A Directors to three-year terms and one Class B Director to a one-year term. 2. Advisory approval of Say-on-Pay frequency (1, 2 or 3 years). 3. Advisory approval of our 2022 executive compensation (“Say on Pay”). 4. Approval of the Arrow Fi
Slide 18: Financials
Financials Penko Ivanov SEVP, CFO and Treasurer
Slide 19: 2022 Financial Highlights
2022 Financial Highlights Arrow Financial Corporation delivered a year of solid earnings, sustained profitability and record loan growth. Please refer to the 2022 10-K and 3Q23 Earnings Release for a reconciliation of any non-GAAP measures.
Slide 20: 2022 Summary
2022 Summary Return on Average Assets 1.21% Earnings Per Share $2.95 Total Assets $3.97B Total Loans $3.0B, up 11.8% versus prior year
Slide 21: Assets
Assets $2,988 $3,184 $3,689 $4,028 $3,970 2018 2019 2020 2021 2022 Assets 7.4% CAGR History of strong performanceDollars in millions
Slide 22: Loans
$2,196 $2,386 $2,595 $2,668 $2,983 2018 2019 2020 2021 2022 Loans Loans History of strong performanceDollars in millions 8.0% CAGR
Slide 23: Deposits
Deposits History of strong performanceDollars in millions $2,346 $2,616 $3,235 $3,550 $3,498 2018 2019 2020 2021 2022 Deposits 10.5% CAGR
Slide 24: Credit
Credit 0.25% 0.18% 0.25% 0.44% 0.40% 2018 2019 2020 2021 2022 NPL1 / Gross Loans • Portfolio credit performance is strong • Charge-offs and NPLs are low • NPLs are trending toward pre-Covid levels 1 Non-Performing Loans
Slide 25: Return Metrics
Return Metrics 1.27% 1.24% 1.17% 1.28% 1.21% 2018 2019 2020 2021 2022 Return on Average Assets 13.96% 13.17% 12.77% 14.09% 13.55% 2018 2019 2020 2021 2022 Return on Average Equity • Delivered strong ROA and ROE results pre, during and post-pandemic • Balance Sheet grew in excess of 30% during the sa
Slide 26: EPS and Dividends
EPS and Dividends $2.22 $2.29 $2.49 $3.01 $2.95 2018 2019 2020 2021 2022 Diluted EPS $0.89 $0.93 $0.96 $0.99 $1.06 2018 2019 2020 2021 2022 Cash Dividends Paid Per Share Per share data has not been restated for the September 2023, 3% stock dividend. • Expanded balance sheet resulted in strong earnin
Slide 27: Strong Capital Position
Strong Capital Position 9.8% 15.1% 8.36% 4.0% 8.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% Tier 1 Leverage Ratio Total Risk-Based Capital Tangible Common Equity Select Capital Ratios – Arrow Minimum Regulatory Capital Ratios 2022 Building equity and maintaining strong regulatory capital $270 $302 $334 $371 $
Slide 28: 2023 YTD Performance
2023 YTD Performance =Arrow Financial Corporation
Slide 29: 2023 Highlights
2023 Highlights • Annualized loan growth of 9% in 3Q and 7% YTD • Exceptional asset/credit quality • Consistent dividend track record • Strong liquidity position and continued profitability
Slide 30: 2023 Key Financial Metrics
2023 Key Financial Metrics Earnings Per Share 3QTD: $0.46 YTD: $1.31 Return on Avg. Assets 3QTD: 0.75% YTD: 0.74% Assets Loans Deposits $4.27 billion up $303 million $3.14 billion up $155 million $3.67 billion up $168 million YTD YTD YTD
Slide 31: Strong Credit Quality
Strong Credit Quality 0.25% 0.44% 0.40% 0.37% 0.21% 0.20% 2020 2021 2022 1Q23 2Q23 3Q23 Non-Performing Loans (NPL) / Gross LoansDollars in millions $6.4 $11.7 $12.0 $11.2 $7.1 $6.9 • Charge-offs were 5bps in 3Q23; down from 7bps in 2Q23 and 10bps in 1Q23 • Allowance for Credit Losses (ACL) of 0.99%
Slide 32: Liquidity – As of September 30, 2023
Liquidity – As of September 30, 2023 FDIC Insured Deposits ~70% Uninsured Deposits ~30% Total Deposits = $3.67 billion • ~ $2.5 billion in deposits are insured • ~ 8% on-balance sheet liquidity (cash and unencumbered AFS securities) • Available Borrowing Capacity Brokered Deposits $0.8 billion Borro
Slide 33: Outlook
Outlook 2023 3Q EPS: $0.46 2023 YTD EPS: $1.31 • NIM bottoming out and improving o Assets expected to reprice at a faster rate than deposits o Active balance sheet management to further support NIM in 2024 • 2023 loan growth will provide additional earnings in 2024 • Focus on expense management o Re
Slide 34: Overall Strong Performance / Looking Ahead
Overall Strong Performance / Looking Ahead Strong earnings Record loan growth Sustained profitability Strong asset quality Steady organic growth Exceptional shareholder value In 2022, we delivered another year of strong performance, and we remain focused.
Slide 35: BauerFinancial Consecutive Quarters
BauerFinancial 66CONSECUTIVE QUARTERS Glens Falls National Bank Saratoga National Bank 58CONSECUTIVE QUARTERS
Slide 36: American Banker Top 200 Performing Banks
American Banker Arrow was ranked 83rd on American Banker’s Top 200 Performing Banks with $2B to $10B in Assets.
Slide 37: Strategic Focus
Strategic meleuls =Arrow Financial Corporation
Slide 38: Headquarters Renovation
Headquarters Renovation Our downtown Corporate Headquarters and Main Office branch renovations are complete! Project Updates Include: • A fully renovated lobby and lending center for the main branch of Glens Falls National Bank • The replacement of aging infrastructure and equipment including a full
Slide 39: Headquarters Renovation Main Branch Lending Lobby
Headquarters Renovation Main Branch Lending Lobby
Slide 40: Headquarters Renovation Open Stairwell Employee Café
Headquarters Renovation Open Stairwell Employee Café Sit-to-Stand Desks
Slide 41: Advancing Technology
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 are continu
Slide 42: Socially Conscious Performance
Socially Conscious Performance • We are committed to conserving natural resources and complying with environmental regulations. • We are working to meet the financial needs of the low- to moderate-income population, providing professional development and holistic support of our Team, and giving back
Slide 43: Our Focus Remains
Our Focus Remains Steady Growth Advancing Technology Investing in Our Team Socially Conscious Performance Branch Optimization
Slide 44: Our Team Great Team. Great Results.
Our Team Great Team. Great Results.
Slide 45: Closing
Closing =\RROW Financial Corporation
Slide 46: Arrow Financial Corporation
=A\RROW Financial Corporation Glens FillsNational §aRAEOGS UPSTATE z Bank and Trust Company NATIONAL (aa