S-8

AS FILED WITH THE SECURITIES AND EXCHANGE
     COMMISSION ON SPETEMBER 2, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
               

FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
               

ARROW FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

          New York                    22-2448962
(State or other jurisdiction of      (I.R.S. Employer
incorporation or organization)       Identification No.)

     250 Glen Street
       Glens Falls, New York                   12801
(Address of Principal Executive Offices)       (Zip Code)

Arrow Financial Corporation 1998 Long Term Incentive Plan
       (Full title of the Plan)
                   
            Thomas L. Hoy
President and Chief Executive Officer
     Arrow Financial Corporation
           250 Glen Street
     Glens Falls, New York  12801
(Name and address of agent for service)
                   
            (518) 745-1000
  (Telephone number, including area
     code, of agent for service)
                   
   Copies of all correspondence to:
       Thomas B. Kinsock, Esq.
       Gallop, Johnson & Neuman
       Interco Corporate Tower
        101 South Hanley Road

CALCULATION OF REGISTRATION FEE


Title of Securities To be Registered
Common stock $1.00 par value per share


Amount To be Registered(1)
300,000

Proposed Maximum Offering Price Per share(2) 
$27.3125

Proposed Maximum Aggregate Offering Price
$8,193,750

Amount of Registration Fee
$2,417.16
                    
(1)  Represents maximum number of shares subject to awards under the
Plan.  Includes, for each share of common stock, one attached share
purchase right, pursuant to Registrant's Shareholder Protection Plan
dated April 30, 1997.
(2)  Estimated solely for the purpose of calculating the registration
fee and based upon the average of the high and low prices per share of
the Registrant's Common Stock as reported by the National Association
of Securities Dealers Automated Quotation National Market System on
August 30, 1998.
     
 PART II

INFORMATION REQUIRED IN THE REGISTRATION
              STATEMENT

Item 3.  Incorporation of Documents by Reference

     The following documents filed by the Registrant with
the Securities and Exchange Commission are incorporated
herein by reference:

     (a)  The Registrant's latest annual report on Form
10-K filed pursuant to Section 13 or 15(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act");

     (b)  All other reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act since the
end of the fiscal year covered by the annual report referred to
in (a) above; and

     (c)  The description of the Registrant's common
stock which is contained in the registration statement filed by
the Registrant under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of
updating such description.


     All documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of a post-effective
amendment that indicates that all securities offered hereby
have been sold or that deregisters all such securities then
remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof
from the date of filing of such documents.  Any statement
contained in a document incorporated by reference herein and
filed prior to the filing hereof shall be deemed to be modified
or superseded for purposes of this registration statement to
the extent that a statement contained herein modifies or
supersedes such statement, and any statement contained herein
or in any other document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of
this registration statement to the extent that a statement
contained in any other subsequently filed document that also
is incorporated by reference herein modifies or supersedes
such statement.  Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this registration statement.

Item 4.  Description of Securities

     Not Applicable.

Item 5.  Interests of Named Experts and Counsel

     Not Applicable.

Item 6.  Indemnification of Directors and Officers

     Sections 721-725 of the New York Business
Corporation Law generally provide for or permit a
corporation to indemnify the directors and officers against
liabilities they may incur in such capacities provided certain
standards are met, including good faith and the reasonable
belief that the particular action was in, or not opposed to, the
best interests of the corporation. 

     The Registrant's Certificate of Incorporation provides
that directors and officers of the Registrant shall be
indemnified, to the fullest extent permitted by the Business
Corporation Law, against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorneys' fees)
incurred by them in connection with actions to which they are,
or are threatened to be made, parties.  If a director or officer
is not successful in the defense of an action, he is entitled to
indemnification, under the Registrant's Certificate of
Incorporation and the relevant provisions of law, if ordered by
a court or if the Board of Directors, acting upon the written
opinion of independent legal counsel, determines that the
director or officer acted in good faith for a purpose which he
reasonably believed to be in the best interests of the
Registrant, and, in criminal actions, had no reasonable cause
to believe his conduct was unlawful.  In connection with
actions by or in the right of the Registrant (derivative suits) as
to which the director or officer is not successful,
indemnification is permitted for expenses and amounts paid in
settlement only if and to the extent that a court of competent
jurisdiction deems proper, and indemnification for adverse
judgments is not permitted.

     Under the Registrant's Certificate of Incorporation and
applicable provisions of law, the Board of Directors or the
Registrant may advance expenses to a director or officer
before final disposition of an action or proceeding upon
receipt of an undertaking by the director or officer to repay
the amount advanced if he is ultimately found not to be
entitled to indemnification with respect thereto.

     The Registrant's Certificate of Incorporation also
provides that to the fullest extent permitted by law, subject
only to the express prohibitions on limitation of liability set
forth in Section 402(b) of the Business Corporation Law, a
director of the Registrant shall not be liable to the Registrant
or its shareholders for monetary damages for any breach of
duty as a director.

     Pursuant to policies of directors' and officers' liability
insurance with total annual limits of $5 million the directors
and officers of the Registrant and its subsidiary banks are
insured, subject to the limits, exceptions and other terms and
conditions of such policy, against liability for claims made
against them for any actual or alleged error or misstatement or
misleading statement or act or omission or neglect or breach
of duty while acting in their individual or collective capacities
as directors or officers of such entities.


Item 7.  Exemption from Registration Claimed

     Not Applicable.

Item 8.  Exhibits

     The following exhibits are filed as part of this
registration statement or incorporated by reference herein.

Exhibit
Number                        Description

4.1     Arrow Financial Corporation 1998 Long Term
        Incentive Plan.

5.1     Legal Opinion of Gallop, Johnson & Neuman.

23.1    Consent of KPMG Peat Marwick LLP, Independent Certified
        Public Accountants.

23.2    Consent of Gallop, Johnson & Neuman
        (included in Exhibit 5.1).

24      Power of Attorney (included on signature page
        of the registration statement).

Item 9.  Undertakings

     (a)  The undersigned Registrant hereby undertakes:

          (1)  To file, during any period in which
     offers or sales are being made, a post-effective
     amendment to this registration statement:

                    (i)  To include any prospectus
     required by Section 10(a)(3) of the
     Securities Act of 1933;

                    (ii)  To reflect in the prospectus
     any facts or events arising after the
     effective date of this registration
     statement (or the most recent
     post-effective amendment hereof)
     which, individually or in the aggregate,
     represent a fundamental change in the
     information set forth in this registration
     statement.  Notwithstanding the
     foregoing, any increase or decrease in
     the volume of securities offered (if the
     total dollar value of securities offered
     would not exceed that which was
     registered) and any deviation from the
     low or high end of the estimated
     maximum offering range may be
     reflected in the form of prospectus filed
     with the Commission pursuant to Rule
     424(b) if, in the aggregate, the changes
     in volume and price represent no more
     than a 20 percent change in the
     maximum aggregate offering price set
     forth in the "Calculation of Registration
     Fee" table in the effective registration
     statement;

                    (iii)  To include any material
     information with respect to the plan of
     distribution not previously disclosed in
     this registration statement or any 
     material change to such information in
     this registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.  

          (2)  That, for the purpose of determining
any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

          (3)  To remove from registration by means
of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.

     (b)  The undersigned Registrant hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.

     (c)-(g)  Not Applicable.

     (h)  Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.  In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

     (i)  Not Applicable.

          (j)  Not Applicable.

SIGNATURES


     The Registrant.  Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Glens
Falls, State of New York, on July 22, 1998.


                        ARROW FINANCIAL CORPORATION



                      By: S/Thomas L. Hoy      
                         Thomas L. Hoy,
                         President and
                         Chief Executive Officer



          POWER OF ATTORNEY


     We, the undersigned officers and directors of Arrow
Financial Corporation, hereby severally and individually
constitute and appoint Thomas L. Hoy and John J. Murphy
and each of them, the true and lawful attorneys and agents of
each of us to execute in the name, place and stead of each of
us (individually and in any capacity stated below) any and all
amendments to this Registration Statement on Form S-8 and
all instruments necessary or advisable in connection therewith
and to file the same with the Securities and Exchange
Commission, each of said attorneys and agents to have the
power to act with or without the other and to have full power
and authority to do and perform in the name and on behalf of
each of the undersigned every act whatsoever necessary or
advisable to be done in the premises as fully and to all intents
and purposes as any of the undersigned might or could do in
person, and we hereby ratify and confirm our signatures as
they may be signed by our said attorneys and agents and each
of them to any and all such amendments and instruments.

     Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.


     II-6

     Name                Title                         Date

/s/ Thomas L. Hoy        President, Chief Executive 
Thomas L. Hoy            Officer and Director          July 22, 1998


/s/ John J. Murphy       Executive Vice President,
John J. Murphy           Treasurer and Chief Financial
                         Officer (Principal Financial
                         and Accounting Officer)       July 22, 1998


/s/ Michael F. Massiano  Chairman of the Board         July 22, 1998
Michael F. Massiano


/s/ John J. Carusone, Jr. Director                     July 22, 1998
John J. Carusone, Jr.


/s/ Michael B. Clarke     Director                     July 22, 1998
Michael B. Clarke


/s/ Kenneth C. Hopper, M.D.  Director                  July 22, 1998
Kenneth C. Hopper, M.D.


/s/ Dr. Edward F. Huntington  Director                 July 22, 1998
Dr. Edward F. Huntington


/s/ David G. Kruczlnicki      Director                 July 22, 1998
David G. Kruczlnicki


/s/ David L. Moynehan         Director                 July 22, 1998
David L. Moynehan


/s/ Doris E. Ornstein         Director                 July 22, 1998
Doris E. Ornstein


/s/ Daniel L. Robertson       Director                 July 22, 1998
Daniel L. Robertson

                           FORM S-8
                               
                  ARROW FINANCIAL CORPORATION


                         EXHIBIT INDEX

Exhibit                                 
Number                        Description                  


4.1       Arrow Financial Corporation
          1998 Long Term Incentive Plan      

5.1       Legal Opinion of Gallop, Johnson & Neuman         

23.1      Consent of KPMG Peat Marwick LLP, Independent Certified
          Public Accountants       

23.2      Consent of Gallop, Johnson & Neuman
          (included in Exhibit 5.1)

24        Power of Attorney (included on signature
          page of the registration statement)

EX-4.1

     ARROW FINANCIAL CORPORATION
    1998 LONG TERM INCENTIVE PLAN
                   
 Section 1.  Establishment and Purpose

     Arrow Financial Corporation (the "Company") hereby
establishes an incentive compensation plan to be named the
Arrow Financial Corporation 1998 Long Term Incentive Plan
(the "Plan"), for certain employees of the Company and its
subsidiaries.  The purpose of this Plan is to encourage those
employees who receive awards under the Plan to acquire and
maintain an interest in the Common Stock of the Company
and thus to have added incentives to work for the success of
the Company and its subsidiaries.

        Section 2.  Definitions

     Whenever used herein, the following terms shall have
the respective meanings set forth below:

     (a)  Award means any Option or Restricted Stock
          granted under the Plan.

     (b)  Award Agreement means the written
          agreement evidencing an Award under the
          Plan, which shall be executed by the Company
          and the Participant.

     (c)  Board means the Board of Directors of the
          Company.

     (d)  Code means the Internal Revenue Code of
          1986, as amended and in effect from time to
          time.

     (e)  Committee means the Personnel Committee
          of the Board or any subcommittee thereof or
          successor committee thereto charged from
          time to time with the administration of this
          Plan, or, in the absence of any such committee
          or subcommittee thusly charged, the full
          Board.

     (f)  Company means Arrow Financial
          Corporation, a New York corporation.

     (g)  Disability means permanent and total
          disability as defined in Section 22(e)(3) of the
          Code, as determined by the Committee in
          good faith upon receipt of and in reliance on
          sufficient competent medical advice.

     (h)  Eligible Employee means any salaried full-
          time employee (including officers and directors
          who are also employees) of the Company or
          any Subsidiary.

     (i)  Exercise Price of an Option means the
          purchase price per share of Stock upon
          exercise of the Option as fixed by the
          Committee upon grant, subject to adjustment
          thereafter under Section 12 of the Plan.

     (j)  Fair Market Value of the Stock as of any
          particular date means (i) for any period during
          which the price of the Stock shall be reported
          by the National Market System of the National
          Association of Securities Dealers Automated
          Quotation System ("NASDAQ"), the last
          transaction price per share as quoted by
          National Market System of NASDAQ on the
          last preceding day on which the securities
          markets were open, (ii) for any period during
          which the price of the Stock shall not be
          reported by the National Market System of
          NASDAQ but shall be reported by NASDAQ,
          the closing bid price per share as reported by
          NASDAQ on the last preceding day on which
          the securities markets were open, or (iii) for
          any period during which the price of the Stock
          is not reported on NASDAQ, the fair market
          price per share of Stock for such date as
          determined by the Board.

     (k)  Option means the right to purchase Stock at
          the Exercise Price for a specified period of
          time and subject to specified conditions; for
          purposes of the Plan, an Option may be either
          an Incentive Stock Option within the
          meaning of Section 422 of the Code or a so-
          called Nonqualified Stock Option, not
          qualifying under Section 422 of the Code.

     (l)  Participant means any Eligible Employee
          designated by the Committee to receive an
          Award under the Plan.

     (m)  Period of Restriction means the period during
          which an Award of Restricted Stock is
          restricted pursuant to Section 10 of the Plan.

     (n)  Restricted Stock means shares of Stock
          awarded to an Eligible Employee that are both
          subject to certain restrictions on transfer and
          are subject to forfeiture, as specified in Section
          10 of the Plan.

     (o)  Retirement means retirement with eligibility
          for normal or early retirement benefits under
          the terms of the Company's principal
          retirement plan in effect at such time.

     (p)  Stock means Common Stock of the Company.

     (q)  Subsidiary means a subsidiary corporation of
          the Company as defined in Section 425 of the
          Code.

     (r)  Taxable Event means an event requiring
          Federal, state or local tax to be withheld with
          respect to an Award hereunder, including but
          not limited to the exercise of Nonqualified
          Stock Options, the ending of a period of
          Restriction with respect to Restricted Stock,
          the making by a participant of an election
          under Section 83(b) of the Code, or any of the
          foregoing with respect to a Performance
          Award.

       Section 3.  Administration

     The Plan will be administered by the Committee.  The
Committee will have sole authority and discretion to select
those Eligible Employees who will receive Awards under the
Plan and to determine the number and type of Awards to be
granted to such Eligible Employees and the conditions
applicable to such Awards, consistent with the terms of the
Plan, provided that the Committee shall have the authority
from time to time to designate a subcommittee consisting of
two or more directors or executive officers of the Company,
which subcommittee shall have such authority to make
determinations with respect to the Plan as the Committee shall
specify.  Any determination of the Committee under the Plan
may be made without notice or meeting of the Committee, and
all actions made or taken by the Committee pursuant to the
provisions of the Plan shall be final and binding and conclusive
for all purposes and upon all persons.

          Section 4.  Duration

     No Award may be granted under the Plan after the
date that is ten (10) years after the date the Plan is approved
by the Board.  The Plan, unless earlier terminated pursuant to
Section 16, will expire upon the forfeiture, cancellation or
vesting (including exercise, if appropriate) of the last Award
granted or that may be granted under the Plan.

          Section 5.  Shares Reserved Under the Plan

     There is hereby reserved for issuance under the Plan an
aggregate of 300,000 shares of Stock, which is the maximum
number of shares available for Awards granted under the Plan,
subject to subsequent adjustment as provided in Section 12. 
Such shares may be authorized and unissued shares or treasury
shares.  Upon the grant of Awards under the Plan, the shares
of Stock underlying such Awards will be deducted from the
number of shares available for future Awards under the Plan,
provided that, (i) upon the forfeiture of outstanding Options
or shares of Restricted Stock prior to the exercise thereof (in
the case of Options) or the vesting thereof (in the case of
Restricted Stock), the shares underlying such forfeited Awards
will be added back to the number of shares available for future
Awards under the Plan, and (ii) in the event any Options
granted under the Plan are exercised and the purchase price
therefore is paid, in whole or in part, by the surrender of
shares of Stock to the Company, the number of shares thus
surrendered will be added back to the number of shares
available for future Awards under the Plan.

       Section 6.  Participation

     In selecting Eligible Employees to receive Awards
under the Plan and in determining the type and amount of their
respective Awards, the Committee shall consider such factors
as it deems pertinent.  The grant of an Award to an Eligible
Employee in any year shall not obligate the Committee to
grant an Award to any other Eligible Employee in such year or
to any Eligible Employee in any other year.

      Section 7.  Types of Awards

     The following Awards may be granted under the Plan: 
(a) Incentive Options, (b) Nonqualified Stock Options, and (c)
Restricted Stock, all as described below.  Except as
specifically limited herein, the Committee shall have complete
discretion in determining the type and number of Awards to be
granted to any Participant and the terms and conditions of
such Awards, which terms and conditions need not be uniform
as between different Participants.

      Section 8.  Incentive Stock Options

     (a)  Options granted under the Plan may be
"incentive stock options" qualifying under Section 422 of the
Internal Code.  Such Incentive Stock Options shall constitute
options to purchase shares of Stock at an Exercise Price
established by the Committee upon grant, which shall not be
less than, but may be more than, 100 percent of the Fair
Market Value of the Stock as of the date of grant.  The
aggregate Fair Market Value (determined as the date of grant)
of the Stock with respect to which any Incentive Stock
Options granted under the Plan to any one Participant
(together with all other incentive stock options previously
granted to such Participant under the Plan and under all other
option plans of the Company and its Subsidiaries) are
exercisable for the first time during any calendar year shall not
exceed $100,000.

     (b)  The Committee shall establish upon grant of an
Incentive Stock Option the period of time during which such
Option will be exercisable by the Participant, provided that no
Incentive Stock Option will continue to be exercisable, in
whole or in part, more than ten years after the date of grant. 
Subject to this limitation, the Committee may provide upon
grant that full exercisability of the Option will be phased in
and/or phased out over some designated period of time.  The
Committee also may provide that exercisability of an Incentive
Stock Option will be accelerated, to the extent such Option is
not already then exercisable, upon the occurrence of a certain
event or events as specified by the Committee, such as the
Retirement of the Participant or a change in control of the
Company.  Generally, exercisability of an Incentive Stock
Option granted under the Plan is conditioned upon continued
employment of the Participant by the Company and its
Subsidiaries, provided that the Committee may specify upon
grant that exercisability of such Option will continue for some
designated period of time after termination of employment. 
The maximum period of time for exercisability of an Incentive
Stock Option after termination of employment (which shall be
the applicable period of time of exercisability after termination
of employment for each Incentive Stock Option granted under
the Plan if the Committee does not specify otherwise) is as
follows:  (i) if employment is terminated other than due to the
death or Disability of the Participant, exercisability may be
extended for a maximum of 90 days after the date of
termination; (ii) if employment is terminated due to the
Disability of the Participant, exercisability may be extended for
a maximum of 12 months after the date of termination (unless
the Participant dies within such 12-month period, in which
event exercisability may be extended until the later of the date
3 months after the date of death or the last day of such 12-
month period); and (iii) if employment is terminated due to the
death of the Participant, exercisability may be extended until
the date ten years after the date of the original grant. 
Notwithstanding the preceding sentence, in no event may any
Incentive Stock Option granted under the Plan be exercised
after the date ten years after the date of grant.  Leaves of
absence required by law or otherwise granted by the Company
and transfers of employment between the Company and/or its
Subsidiaries shall not constitute a termination of employment.

     (c)  Upon exercise of an Incentive Stock Option, in
whole or in part, the Exercise Price with respect to the number
of shares as to which the Option is then being exercised may
be paid by check or, if the Committee has so authorized (and
subject to any conditions imposed by the Committee) and if
the Participant so elects, in whole or in part by delivery to the
Company of shares of Stock then owned by the Participant. 
Any Participant-owned Stock to be used in full or partial
payment of the Exercise Price shall be valued at the Fair
Market Value of the Stock on the date of exercise.  Delivery
by the Company of the shares as to which an Incentive Stock
Option has been exercised shall be made to the person
exercising the Option or the designee of such person.  If so
provided by the Committee upon the grant of an Incentive
Stock Option, the shares of Stock issuable upon exercise of
the Option may be subject to certain restrictions upon their
subsequent transfer or sale.  In the event the Exercise Price is
to be paid in full or in part by surrender of Stock, in lieu of
actual surrender of shares of Stock by the Participant, the
Company may waive such surrender and instead deliver to or
on behalf of the Participant a number of shares equal to the
total number of shares as to which the Option is then being
exercised less the number of shares which would otherwise
have been surrendered by the Participant to the Company.

     (d)  The Committee may require reasonable
advance notice of exercise of an Incentive Stock Option,
normally not to exceed three calendar days, and may condition
exercise of such Option upon the availability of an effective
registration statement or exemption from registration under
applicable federal and state securities laws relating to the
Stock being issued upon exercise.

         Section 9.  Nonqualified Stock Options

     (a)  Options granted under the Plan may be so-called 
"nonqualified stock options," that is, options that do not
qualify as "incentive stock options" under Section 422 of the
Code.  Such Nonqualified Stock Options shall constitute
options to purchase shares of Stock at an Exercise Price
established by the Committee upon grant, which Exercise
Price shall not be less than, but may be more than, 100 percent
of the Fair Market Value of the Stock as of the date of grant.

     (b)  The Committee shall establish upon grant of a
Nonqualified Stock Option the period of time during which
such Option will be exercisable by the Participant, provided
that no Nonqualified Stock Option will continue to be
exercisable, in whole or in part, later than ten years after the
date of grant.  Subject to this limitation, the Committee may
provide that full exercisability of the Option will be phased in
and/or phased out over some designated period of time.  The
Committee also may provide that exercisability of a
Nonqualified Stock Option will be accelerated, to the extent
such Option is not already then exercisable, upon the
occurrence of a certain event or events as specified by the
Committee, such as the Retirement of the Participant or a
change in control of the Company.  Generally, exercisability of
a Nonqualified Stock Option granted under the Plan is
conditioned upon continued employment of the Participant by
the Company and its Subsidiaries, provided that the
Committee may specify upon grant that exercisability of such 
Option will continue for some designated period of time after
termination of employment.  If the Committee does not
specify otherwise, a Nonqualified Stock Option granted under
the Plan will continue to be exercisable after termination of
employment of the Participant, to the extent such Option was
exercisable at termination of employment, as follows:  (i) if
employment is terminated other than due to the death,
Disability or Retirement of the Participant, exercisability will
continue for 90 days after the date of termination; (ii) if
employment is terminated due to the Disability or Retirement
of the Participant, exercisability will continue for 12 months
after the date of termination (unless the Participant dies within
such 12-month period, in which event exercisability will
continue until the later of the date 3 months after the date of
death or the last day of such 12-month period); and (iii) if
employment is terminated due to the death of the Participant,
exercisability may be extended until the date ten years after the
date of the original grant.  Notwithstanding the preceding
sentence, in no event may any Nonqualified Stock Option
granted under the Plan be exercised after the tenth anniversary
of the date of grant.  Leaves of absence required by law or
otherwise granted by the Company and transfers of
employment between the Company and/or its Subsidiaries
shall not constitute a termination of employment.

     (c)  Upon exercise of a Nonqualified Stock Option,
in whole or in part, the Exercise Price with respect to the
number of shares as to which the Option is then being
exercised may be paid by check or, if the Committee has so
authorized (and subject to any conditions imposed by the
Committee) and if the Participant so elects, in whole or in part
by delivery to the Company of shares of Stock then owned by
the Participant.  Any Participant-owned Stock to be used in
full or partial payment of the Exercise Price shall be valued at
the Fair Market Value of the Stock on the date of exercise. 
Delivery by the Company of the shares as to which a
Nonqualified Stock Option has been exercised shall be made
to the person exercising the Option or the designee of such
person.  If so provided by the Committee upon the grant of a
Nonqualified Stock Option, the shares of Stock issuable upon
exercise of the Option may be subject to certain restrictions
upon their subsequent transfer or sale.  In the event the
Exercise Price is to be paid in full or in part by surrender of
Stock, in lieu of actual surrender of shares of Stock by the
Participant, the Company may waive such surrender and
instead deliver to or on behalf of the Participant a number of
shares equal to the total number of shares as to which the
Option is then being exercised less the number of shares which
would otherwise have been surrendered by the Participant to
the Company.

     (d)  The Committee may require reasonable
advance notice of exercise of a Nonqualified Stock Option,
normally not to exceed three calendar days, and may condition
exercise of such an Option upon the availability of an effective
registration statement or exemption from registration under
applicable federal and state securities laws relating to the
Stock being issued upon exercise.



     Section 10.  Restricted Stock

     (a)  Restricted Stock shall consist of Stock or
rights to Stock awarded under the Plan by the Committee
which, during a Period of Restriction specified by the
Committee upon grant, shall be subject to (i) restriction on
sale or other transfer by the Participant and (ii) forfeiture by
the Participant to the Company if the Participant ceases to be
employed by the Company and its Subsidiaries, in each case as
further defined and described in this Plan and by the
Committee upon grant.  Restricted Stock may be granted at
no cost to Participants or, if subject to a purchase price, such
price shall not exceed the par value of the Stock and shall be
payable by the Participant to the Company in cash or by any
other means that the Committee deems appropriate, including
recognition of past employment.

     (b)  Except as otherwise provided below, the
minimum Period of Restriction for Restricted Stock shall be
three years from the date of grant of the Award.  The
Committee may provide upon grant of an Award of Restricted
Stock that different numbers or portions of the shares subject
to the Award shall have different Periods of Restriction.  The
Committee also may specify upon grant of an Award of
Restricted Stock or thereafter while such Award is
outstanding that any Period of Restriction for the Restricted
Stock subject to the Award otherwise still in effect will
terminate immediately upon the occurrence of a specified
event or one of several specified events, such as the retirement
of the Participant or a change in control of the Company.  The
Committee also may establish upon grant of an Award of
Restricted Stock that some or all of the shares subject thereto
shall be subject to additional restrictions upon transfer or sale
by the Participant (although not to forfeiture) after expiration
of the Period of Restriction.

     (c)  The Participant shall be entitled to all dividends
declared and paid on Stock with respect to all shares of
Restricted Stock held by the Participant, from and after the
date such shares are awarded to the Participant and
throughout the Period of Restriction except as otherwise
specified by the Committee upon grant, and the Participant
shall not be required to return any such dividends to the
Company in the event of forfeiture of the Restricted Stock.

     (d)  A Participant shall be entitled to vote all shares
of Restricted Stock awarded to the Participant from and after
the date of grant and throughout the Period of Restriction
except as otherwise specified by the Committee upon grant.

     (e)  Pending expiration of the Period of Restriction
for an Award of Restricted Stock, certificates representing
shares of Restricted Stock subject to the Award shall be held
by the Company or the transfer agent for the Stock.  Upon
expiration of the Period of Restriction for any such shares,
certificates representing such shares shall be delivered to the
Participant or in the event of death of the Participant, to the
beneficiary of the Participant.




     Section 11.  Award Agreements

     Within ten business days after the grant of an Award,
the Company shall notify the Participant of the grant, and as
soon as practicable thereafter, shall hand deliver or mail to the
Participant an Award Certificate, duly executed
by an officer on behalf of the Company.                  
             
       Section 12.  Adjustment Provisions

     (a)  If the Company shall at any time change the
number of issued shares of Stock without new consideration
to the Company (such as by stock dividends or stock splits),
the total number of shares reserved for issuance under the Plan
and reserved for issuance on the books of the Company
relating to the Plan shall be adjusted and the number of shares
(and, in the case of Options, the Exercise Price) covered by
each outstanding Award shall be adjusted so that the
aggregate consideration payable to the Company, if any, and
the value of each such Award to the Participant shall not be
changed.  Awards may also contain provisions for their
continuation or for other equitable adjustments after changes
in the Stock resulting from reorganization, sale, merger or
consolidation involving the Company or any Subsidiary or any
issuance of stock rights or warrants by the Company or any
similar occurrence.

     (b)  Notwithstanding any other provision of this
Plan, and without affecting the number of shares reserved for
issuance hereunder, the Board may authorize the issuance or
assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or
reorganization, upon such terms and conditions as it may
deem appropriate.

    Section 13.  Nontransferability

     Except if the Committee shall provide otherwise with
respect to an Award of a Nonqualified Stock Option, each
Award granted under the Plan to a Participant shall not be
transferable by the Participant otherwise than by will or the
laws of descent and distribution, and shall be exercisable,
during the Participant's lifetime, only by the Participant.  In the
event of the death of a Participant holding an unexercised
Option, any exercise of the Option thereafter, if otherwise
permitted, may be effected only by the executor or
administrator of the estate of the deceased Participant or the
person or persons to whom the deceased Participant's rights
under the Option shall pass by will or the laws of descent and
distribution.

           Section 14.  Taxes

     The Company shall be entitled to withhold, and shall
withhold, the minimum amount of any federal, state or local
tax attributable to any Award granted under the Plan, whether
upon exercise of a Nonqualified Stock Option or expiration or
termination of a Period of Restriction for Restricted Stock or
the occurrence of any other Taxable Event, after giving notice
to the Participant affected by such tax withholding as far in
advance of the Taxable Event as practicable, and in any such
case in which repayment or indemnification of such amount by
or on behalf of the Participant is required, the Company may
defer making delivery as to any Award until such repayment
or indemnification is completed.  Such withholding obligation
of the Company may be satisfied by any reasonable method,
including, if the Committee so provides, by reducing the
number of shares otherwise deliverable to or on behalf of the
Participant on such Taxable Event by a number of shares
having a fair value, based on the Fair Market Value of the
Stock on the date of such Taxable Event, equal to the amount
of such withholding obligation.

           Section 15.  No Right to Employment

     A Participant's right, if any, to continue to serve the
Company or any Subsidiary as an officer, employee, or
otherwise, shall not be enhanced or otherwise affected by the
designation of such person as a Participant under the Plan.

           Section 16.  Amendment and Termination

     The Committee or the Board may amend the Plan from
time to time or terminate the Plan at any time, provided that
no such amendment may increase the number of shares
reserved for issuance under the Plan unless such amendment
has been approved by the shareholders of the Company.  No
amendment of the Plan shall reduce the amount of any existing
Award or change the terms and conditions thereof in any
manner adverse to the interests of the Participant without the
Participant's consent.  By mutual agreement between the
Company and a Participant, one or more Awards may be
granted to such Participant in substitution and exchange for,
and in cancellation of, any Awards previously granted such
Participant under this Plan, provided that any such substitution
Award shall be deemed a new Award for purposes of
calculating any applicable exercise periods for Options or
Period of Restriction for Restricted Stock.  To the event that
any Awards that may be granted within the terms of the Plan
would qualify under present or future laws for tax treatment
that is beneficial to a Participant and not detrimental to the
Company, any such beneficial treatment shall be considered
within the intent, purpose and operational purview of the Plan
and the discretion of the Committee, and to the extent that any
such Awards would so qualify within the terms of the Plan, the
Committee shall have full and complete authority to grant
Stock Awards that so qualify (including the authority to grant,
simultaneously or otherwise, Awards that do not so qualify)
and to prescribe the terms and conditions (which need not be
identical as among recipients) in respect to the grant or
exercise of any such Awards under the Plan.

            Section 17.  Miscellaneous Provisions

     (a)  Naming of Beneficiaries.  In connection with
an Award, a Participant may name one or more beneficiaries
to receive the Participant's benefits, to the extent permissible
pursuant to the various provisions of the Plan, in the event of
the death of the Participant.

     (b)  Successors.  All obligations of the Company
under the Plan will respect to Awards issued hereunder shall
be binding on any successor to the Company.

     (c)  Governing Law.  The provisions of the Plan
and all Award Agreements under the Plan shall be construed
in accordance with, and governed by, the laws of the State of
New York without reference to applicable conflict of laws
provisions, except insofar as such provisions may be expressly
made subject to the laws of any other state or federal law.

              Section 18.  Shareholder Approval

     The Plan, in order to become and remain effective,
must be approved by the shareholders of the Company by the
minimum requisite vote under all applicable law, if any.

EX-5.1

September 1, 1998



Board of Directors
Arrow Financial Corporation
250 Glen Street
Glens Falls, New York 12801

     Re:  Registration Statement on Form S-8
              1998 Long Term Incentive plan

Gentlemen:

     We have served as counsel to Arrow Financial
Corporation (the "Company") in connection with the various
legal matters relating to the filing of a registration statement
on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder, relating to 300,000
shares of common stock of the Company, par value $1.00 per
share (the "Shares"), that may be offered and sold through the
Arrow Financial Corporation 1998 Long Term Incentive Plan
(the "Plan").

     We have examined such corporate records of the
Company, such laws and such other information as we have
deemed relevant, including the Company's Certificate of
Incorporation, as amended, and Bylaws, as amended, certain
resolutions adopted by the Board of Directors of the Company
relating to the Plan and certificates received from state
officials and from officers of the Company.  In delivering this
opinion, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to
us as certified, photostatic or conformed copies, and the
correctness of all statements submitted to us by officers of the
Company.  

     Based upon the foregoing, we are of the opinion that:

          1.  The Company is a corporation duly
              incorporated, validly existing and in
              good standing under the laws of the
              State of New York.

          2.  All originally issued Shares, issued
              under the Plan, if any, if issued in
              accordance with the Plan, will be
              validly issued and outstanding and will
              be fully paid and nonassessable.

     We consent to the use of this opinion as an exhibit to
the Registration Statement and to the use of our name in the
Registration Statement.  We also consent to your filing copies
of this opinion as an exhibit to the Registration Statement with
agencies of such states as you deem necessary in the course of
complying with the laws of such states regarding the offer and
sale of the Shares pursuant to the Plan.

                              Very truly yours, 

                     
                              GALLOP, JOHNSON & NEUMAN, L.C.

EX-23.1

The Board of Directors and Shareholders
Arrow Financial Corporation:

We consent to incorporation by reference in the
registration statement on Form S-8 of Arrow Financial
Corporation, of our report dated January 23, 1998,
relating to the consolidated balance sheets of Arrow
Financial Corporation and subsidiaries as of December
31, 1997 and 1996, and the related consolidated
statements of income, changes in shareholders' equity
and cash flows for each of the years in the three-year
period ended December 31, 1997, which report appears in the
December 31, 1997 annual report on Form 10-K of Arrow
Financial Corporation.

/s/ KPMG Peat Marwick LLP

Albany, New York
September 1, 1998