DOWN TO BUSINESS – The past 12 months have been a bit bumpy for Glens Falls-based Arrow Financial Corp., parent to two community banks and firms that offer wealth management and insurance.
Amid executive changes and a prickly systems upgrade, the company survived two stock delisting warnings and a CEO who “terminated” his own employment.
Through it all, Arrow remained “well capitalized,” according to regulatory filings, although its stock took a hit before beginning a slow recovery.
The personnel shuffle began in August 2022 when chief financial officer Edward Campanella announced his resignation for personal reasons. His duties were assumed on an interim basis by then-CEO Thomas Murphy, who continued doing double duty until February 2023 when Penko Ivanov came on as the new CFO.
Meanwhile, the September 2022 debut of a new “core banking system” was creating a few hiccups. Intended to provide better service to customers, the upgrade itself went smoothly, Arrow said, but the changes gummed up some internal reporting controls.
In turn, that created “material weaknesses,” as the company called them, which affected information Arrow is required to disclose to regulators and others.
It delayed the company’s annual report, which usually is out in March, and first-quarter results, which usually are released in May. That drew delisting warnings in the spring from the Nasdaq market, where Arrow’s stock trades.
(Incidentally, management consultant McKinsey & Co. reported last year that while competition and a “customer appetite” for digital experiences led banks to pursue such core system upgrades, only about a third of those implemented in the past decade have succeeded.)
Arrow’s wayward annual report finally was filed in mid-July, and first-quarter results were posted a week later. Second-quarter earnings followed this week, on schedule.
The annual report, which details the system breakdown, said a remediation plan is in place and its effectiveness will be subject to ongoing evaluation.
Back in the C-suite, Murphy, the CEO who took over for a time as interim chief financial officer, abruptly resigned in mid-May. No reason was given, and a regulatory filing listed him as having “terminated his employment.” Arrow has declined to discuss his exit.
Murphy was immediately succeeded as CEO by David DeMarco, a longtime executive who had the title of president of Arrow’s Saratoga National Bank. He’ll continue in that role while assuming that title for Glens Falls National Bank, too.
Soon after came word of the death of Thomas Hoy, a nearly five-decade executive who joined Glens Falls National as a management trainee in the 1970s and rose in the ranks to become Arrow CEO while also cementing his reputation as a community leader. He had just stepped away as chairman of the board.
DeMarco, in response to emailed questions, declined to discuss the personnel changes and reiterated Arrow’s sound financial footing.
Echoing comments in the company’s second-quarter earnings release, he stated, “As always, …[w]e remain focused on further enhancing the customer experience and optimizing our operations.”
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].