Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES (In Thousands)

The provision for income taxes is summarized below:

Current Tax Expense:	2011		2010			2009
Federal	$	6,726	$	8,369		$	8,178
State	816		1,231			907
Total Current Tax Expense	7,542		9,600			9,085
Deferred Tax Expense
Federal	1,775		273			579
State	397		(119		)	126
Total Deferred Tax Expense	2,172		154			705
Total Provision for Income Taxes	$	9,714	$9,754			$	9,790

The provisions for income taxes differed from the amounts computed by applying the U.S. Federal Income Tax Rate of 35% for 2011, 2010 and 2009 to pre-tax income as a result of the following:

	2011			2010			2009
Computed Tax Expense at Statutory Rate	$	11,076		$	11,076		$	11,054
Increase (Decrease) in Income Taxes Resulting From:
Tax-Exempt Income	(2,199		)	(2,236		)	(2,117		)
Nondeductible Interest Expense	152			176			178
State Taxes, Net of Federal Income Tax Benefit	788			723			671
Other Items, Net	(103		)	15			4
Total Provision for Income Taxes	$	9,714		$	9,754		$	9,790

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 are presented below:

Deferred Tax Assets:	2011			2010
Allowance for Loan Losses	$	5,957		$	5,827
Pension and Deferred Compensation Plans	3,965			3,842
Pension Liability (Included in Accumulated Other Comprehensive Income)	8,859			6,677
Other	669			608
Total Gross Deferred Tax Assets	19,450			16,954
Deferred Tax Liabilities:
Pension Plans	8,758			7,163
Depreciation	1,347			997
Deferred Income	3,017			2,872
Net Unrealized Gains on Securities Available-for-Sale included in      Accumulated Other Comprehensive Income	4,465			2,463
Goodwill	5,036			3,623
Total Gross Deferred Tax Liabilities	22,623			17,118
Net Deferred Tax Liabilities	$	(3,173	)	$	(164	)

Arrow recorded deferred tax assets of $44 thousand and deferred tax liabilities of $1.061 million during 2011 from the acquisition of subsidiaries. Management believes that the realization of the recognized net deferred tax assets at December 31, 2011 and 2010 is more likely than not, based on existing loss carryback ability, available tax planning strategies and expectations as to future taxable income.  Accordingly, there was no valuation allowance for deferred tax assets as of December 31, 2011 and 2010.

Arrow had no unrecognized tax benefits at December 31, 2011 and 2010.  Interest and penalties are recorded as a component of the provision for income taxes, if any.  Tax years 2008 through 2011 are subject to Federal and New York State examination.