Stock Based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

STOCK BASED COMPENSATION (Dollars In Thousands, Except Share and Per Share Amounts)

Arrow has established two stock based compensation plans: an Incentive and Non-qualified Stock Option Plan (Stock Option Plan) and an Employee Stock Ownership Plan (ESOP).  All share and per share data have been adjusted for the September 29, 20163% stock dividend.

Stock Option Plan

Options may be granted at a price no less than the greater of the par value or fair market value of such shares on the date on which such option is granted, and generally expire ten years from the date of grant.  The options usually vest over a four-year period.

Roll Forward Schedule of Stock Option Plan by Shares and Weighted Average Exercise Prices

	Stock Option Plans
Roll Forward of Shares Outstanding:
Outstanding at January 1, 2016	421,751
Granted	56,650
Exercised	(111,992		)
Forfeited	(10,758		)
Outstanding at December 31, 2016	355,651
Exercisable at Period-End	224,039
Vested and Expected to Vest	131,612
Roll Forward of Shares Outstanding - Weighted Average Exercise Price:
Outstanding at January 1, 2016	$	21.93
Granted	25.10
Exercised	21.47
Forfeited	23.97
Outstanding at December 31, 2016	22.52
Exercisable at Period-End	21.40
Vested and Expected to Vest	24.44
Weighted Average Remaining Contractual Life (in years):
Outstanding at December 31, 2016	5.59
Exercisable at December 31, 2016	4.05
Vested and Expected to Vest	8.21
Aggregate Intrinsic Value:
Outstanding at December 31, 2016	$	6,395
Exercisable at December 31, 2016	4,279
Vested and Expected to Vest	2,116
Shares Available for Grant at Period-End	367,775

Schedule of Shares Authorized Under the Stock Option Plan by Exercise Price Range

	Exercise Price Ranges
	$17.82 to $18.54		$20.78		$22.18 to $22.80		23.33		$24.61 to $25.10		Total
Outstanding at December 31, 2016
Number of Shares Outstanding	51,254		40,305		100,747		59,912		103,433		355,651
Weighted-Average Remaining Contractual Life (in years)	1.71		3.08		4.58		7.05		8.61		5.59
Weighted-Average Exercise Price	$	18.32	$	20.78	$	22.46	$	23.33	$	24.87	$	22.52
Exercisable at December 31, 2016
Number of Shares Outstanding	51,254		40,305		98,555		25,134		8,791		224,039
Weighted-Average Remaining Contractual Life (in years)	1.71		3.08		4.56		7.01		8.08		4.05
Weighted-Average Exercise Price	$	18.32	$	20.78	$	22.46	$	23.33	$	24.61	$	21.40

Schedule of Other Stock Option Plan Information

	2016			2015			2014
Shares Granted	56,650			57,258			77,784
Weighted Average Grant Date Information:
Fair Value of Options Granted	$	5.60		$	5.50		$	5.63
Fair Value Assumptions:
Dividend Yield	3.88		%	3.90		%	3.97		%
Expected Volatility	32.95		%	33.55		%	35.30		%
Risk Free Interest Rate	1.80		%	1.57		%	2.19		%
Expected Lives (in years)	7.56			7.66			6.85
Amount Expensed During the Year	$	287		$	308		$	360
Compensation Costs for Non-vested Awards Not Yet Recognized	521			500			478
Weighted Average Expected Vesting Period, In Years	2.71			2.12			1.68
Proceeds From Stock Options Exercised	$	2,404		$	917		$	1,454
Tax Benefits Related to Stock Options Exercised	188			59			25
Intrinsic Value of Stock Options Exercised	1,010			250			170

Employee Stock Ownership Plan

Arrow maintains an employee stock ownership plan (“ESOP”).  Substantially all employees of Arrow and its subsidiaries are eligible to participate upon satisfaction of applicable service requirements.  The ESOP borrowed funds from one of Arrow’s subsidiary banks to purchase outstanding shares of Arrow’s common stock.  The notes require annual payments of principal and interest through 2018.  As the debt is repaid, shares are released from collateral based on the proportion of debt paid to total debt outstanding for the year and allocated to active employees.  In addition, the Company makes additional cash contributions to the Plan each year.

Schedule of ESOP Compensation Expense

	2016		2015		2014
ESOP Compensation Expense	$	1,200	$	900	$	800

Shares pledged as collateral are reported as unallocated ESOP shares in stockholders’ equity.  As shares are released from collateral, Arrow reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings per share computations.  The ESOP shares as of December 31, 2016 were as follows:

Schedule of Shares in ESOP Plan

ESOP Plan Shares:	2016
Allocated Shares	713,814
Shares Released for Allocation During 2016	36,927
Unallocated Shares	19,466
Total ESOP Shares	770,207
Market Value of Unallocated Shares	$	789