Stock Based Compensation

12 Months Ended

Dec. 31, 2017

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 (Long Term Incentive Plan) and an Employee Stock Ownership Plan (ESOP).  All share and per share data have been adjusted for the September 28, 20173% stock dividend.

Long Term Incentive 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 Long Term Incentive Plan by Shares and Weighted Average Exercise Prices

	Long Term Incentive Plan
Roll Forward of Shares Outstanding:
Outstanding at January 1, 2017	366,329
Granted	55,621
Exercised	(58,804		)
Forfeited	(16,991		)
Outstanding at December 31, 2017	346,155
Exercisable at Period-End	225,694
Vested and Expected to Vest	120,461
Roll Forward of Shares Outstanding - Weighted Average Exercise Price:
Outstanding at January 1, 2017	$	21.86
Granted	36.12
Exercised	20.25
Forfeited	28.27
Outstanding at December 31, 2017	24.12
Exercisable at Period-End	21.61
Vested and Expected to Vest	28.80
Weighted Average Remaining Contractual Life (in years):
Outstanding at December 31, 2017	5.11
Exercisable at December 31, 2017	3.54
Vested and Expected to Vest	8.05
Aggregate Intrinsic Value:
Outstanding at December 31, 2017	$	3,403
Exercisable at December 31, 2017	2,785
Vested and Expected to Vest	618
Shares Available for Grant at Period-End	340,178

Schedule of Shares Authorized Under the Long Term Incentive Plan by Exercise Price Range

	Exercise Price Ranges
	$18.00		$20.17 to $21.56		$22.14 to $22.65		$23.89 to $24.37		$36.12		Total
Outstanding at December 31, 2017
Number of Shares Outstanding	27,999		85,068		94,111		89,536		49,441		346,155
Weighted-Average Remaining Contractual Life (in years)	1.06		2.58		4.49		7.27		9.07		5.11
Weighted-Average Exercise Price	$	18.00	$	20.98	$	22.43	$	24.15	$	36.12	$	24.12
Exercisable at December 31, 2017
Number of Shares Outstanding	27,999		85,068		79,797		31,800		1,030		225,694
Weighted-Average Remaining Contractual Life (in years)	1.06		2.58		4.20		6.49		9.07		3.54
Weighted-Average Exercise Price	$	18.00	$	20.98	$	22.39	$	24.08	$	36.12	$	21.61

Schedule of Other Long Term Incentive Plan Information

	2017			2016			2015
Shares Granted	55,621			58,350			58,975
Weighted Average Grant Date Information:
Fair Value of Options Granted	$	6.25		$	5.44		$	5.34
Fair Value Assumptions:
Dividend Yield	2.72		%	3.88		%	3.90		%
Expected Volatility	21.40		%	32.95		%	33.55		%
Risk Free Interest Rate	2.25		%	1.80		%	1.57		%
Expected Lives (in years)	6.88			7.56			7.66
Amount Expensed During the Year	$	351		$	287		$	308
Compensation Costs for Non-vested Awards Not Yet Recognized	528			521			500
Weighted Average Expected Vesting Period, In Years	2.59			2.71			2.12
Proceeds From Stock Options Exercised	$	1,190		$	2,404		$	918
Tax Benefits Related to Stock Options Exercised	168			188			59
Intrinsic Value of Stock Options Exercised	825			1,010			250

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

	2017		2016		2015
ESOP Compensation Expense	$	1,400	$	1,200	$	900

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, 2017 were as follows:

Schedule of Shares in ESOP Plan

ESOP Plan Shares:	2017
Allocated Shares	759,081
Shares Released for Allocation During 2017	10,407
Unallocated Shares	9,643
Total ESOP Shares	779,131
Market Value of Unallocated Shares	$	327