Leases

6 Months Ended

Jun. 30, 2024

LEASES (Dollars In Thousands)

Arrow is a lessee in its leases, which are mainly for financial services locations in addition to leases for corporate vehicles. These leases generally require Arrow to pay third-party expenses on behalf of the Lessor, which are referred to as variable payments. Under some leases, Arrow pays the variable payments to the lessor, and in other leases, Arrow pays the variable payments directly to the applicable third party. None of Arrow's current leases include any residual value guarantees or any subleases, and there are no significant rights and obligations of Arrow for leases that have not commenced as of the reporting date.

Arrow leases two of its branch offices, at market rates, from Stewart’s Shops Corp. Additionally on June 14th, 2024, Arrow entered into a sale-leaseback agreement with Stewart’s Shops Corp. for a bank branch location. The sale price of the property was $1.1 million which resulted in a gain of $377 thousand. The lease agreement began in June 2024 and runs through May 2029, with rent totaling $5 thousand per month for the remainder of the lease. Mr. Gary C. Dake, President of Stewart’s Shops Corp., serves as a Director on the Board of Directors of Arrow and its two subsidiary banks.

The following includes quantitative data related to Arrow's leases as of and for the six months ended June 30, 2024 and June 30, 2023:


		Six Months Ended
Finance Lease Amounts:	Classification	June 30, 2024			June 30, 2023
Right-of-Use Assets	Premises and Equipment, Net	$	4,371		$	4,549
Lease Liabilities	Finance Leases	5,038			5,093

Operating Lease Amounts:
Right-of-Use Assets	Other Assets	$	4,956		$	5,134
Lease Liabilities	Other Liabilities	5,167			5,331

Other Information:

Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	95		$	97
Operating Outgoing Cash Flows From Operating Leases		311			510
Financing Outgoing Cash Flows From Finance Leases		28			26
Right-of-Use Assets Obtained In Exchange For New Finance Lease Liabilities		—			—
Right-of-Use Assets Obtained In Exchange For New Operating Lease Liabilities		326			19
Weighted-average Remaining Lease Term - Finance Leases (Yrs.)		25.82			26.78
Weighted-average Remaining Lease Term - Operating Leases (Yrs.)		10.55			11.56
Weighted-average Discount Rate—Finance Leases		3.75		%	3.75		%
Weighted-average Discount Rate—Operating Leases		3.23		%	3.01		%


Lease cost information for Arrow's leases is as follows:
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Lease Cost:
Finance Lease Cost:
Reduction of Right-of-Use Assets	$	44	$	44	$	88	$	88
Interest on Lease Liabilities	47		48		95		97
Operating Lease Cost	199		293		394		591
Short-term Lease Cost	11		21		21		35
Variable Lease Cost	70		48		145		121
Total Lease Cost	$	371	$	454	$	743	$	932


Future Lease Payments at June 30, 2024 are as follows:
	Operating Leases		Financing Leases
Twelve Months Ended:
6/30/2025	$	805	$	257
6/30/2026	736		266
6/30/2027	662		268
6/30/2028	567		268
6/30/2029	545		270
Thereafter	2,844		6,860
Total Undiscounted Cash Flows	$	6,159	$	8,189
Less: Net Present Value Adjustment	992		3,151
Lease Liability	$	5,167	$	5,038

Leases

LEASES (Dollars In Thousands)

The following includes quantitative data related to Arrow's leases as of and for the six months ended June 30, 2024 and June 30, 2023:


		Six Months Ended
Finance Lease Amounts:	Classification	June 30, 2024			June 30, 2023
Right-of-Use Assets	Premises and Equipment, Net	$	4,371		$	4,549
Lease Liabilities	Finance Leases	5,038			5,093

Operating Lease Amounts:
Right-of-Use Assets	Other Assets	$	4,956		$	5,134
Lease Liabilities	Other Liabilities	5,167			5,331

Other Information:

Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	95		$	97
Operating Outgoing Cash Flows From Operating Leases		311			510
Financing Outgoing Cash Flows From Finance Leases		28			26
Right-of-Use Assets Obtained In Exchange For New Finance Lease Liabilities		—			—
Right-of-Use Assets Obtained In Exchange For New Operating Lease Liabilities		326			19
Weighted-average Remaining Lease Term - Finance Leases (Yrs.)		25.82			26.78
Weighted-average Remaining Lease Term - Operating Leases (Yrs.)		10.55			11.56
Weighted-average Discount Rate—Finance Leases		3.75		%	3.75		%
Weighted-average Discount Rate—Operating Leases		3.23		%	3.01		%


Lease cost information for Arrow's leases is as follows:
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Lease Cost:
Finance Lease Cost:
Reduction of Right-of-Use Assets	$	44	$	44	$	88	$	88
Interest on Lease Liabilities	47		48		95		97
Operating Lease Cost	199		293		394		591
Short-term Lease Cost	11		21		21		35
Variable Lease Cost	70		48		145		121
Total Lease Cost	$	371	$	454	$	743	$	932


Future Lease Payments at June 30, 2024 are as follows:
	Operating Leases		Financing Leases
Twelve Months Ended:
6/30/2025	$	805	$	257
6/30/2026	736		266
6/30/2027	662		268
6/30/2028	567		268
6/30/2029	545		270
Thereafter	2,844		6,860
Total Undiscounted Cash Flows	$	6,159	$	8,189
Less: Net Present Value Adjustment	992		3,151
Lease Liability	$	5,167	$	5,038