The following two tables present loan balances outstanding as of September 30, 2024, December 31, 2023 and September 30, 2023 and an analysis of the recorded investment in loans that are past due at these dates. Generally, Arrow considers a loan past due 30 or more days when the borrower is two payments past due. Loans held-for-sale of $203, $165 and $165 as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively, are included in the residential real estate balances for current loans.


Schedule of Past Due Loans by Loan Category
			Commercial
	Commercial		Real Estate		Consumer		Residential		Total
September 30, 2024
Loans Past Due 30-59 Days	$	577	$	—	$	12,413	$	382	$	13,372
Loans Past Due 60-89 Days	160		323		4,716		1,688		6,887
Loans Past Due 90 or more Days	16		15,120		1,669		3,839		20,644
Total Loans Past Due	753		15,443		18,798		5,909		40,903
Current Loans	169,131		740,977		1,101,443		1,287,483		3,299,034
Total Loans	$	169,884	$	756,420	$	1,120,241	$	1,293,392	$	3,339,937

December 31, 2023
Loans Past Due 30-59 Days	$	298	$	—	$	13,511	$	3,715	$	17,524
Loans Past Due 60-89 Days	21		636		5,579		861		7,097
Loans Past Due 90 or more Days	30		15,308		1,801		3,140		20,279
Total Loans Past Due	349		15,944		20,891		7,716		44,900
Current Loans	155,875		729,543		1,090,776		1,191,814		3,168,008
Total Loans	$	156,224	$	745,487	$	1,111,667	$	1,199,530	$	3,212,908

September 30, 2023
Loans Past Due 30-59 Days	$	247	$	13,787	$	11,864	$	1,692	$	27,590
Loans Past Due 60-89 Days	59		1,977		4,953		18		7,007
Loans Past Due 90 or more Days	3		—		1,504		3,271		4,778
Total Loans Past Due	309		15,764		18,321		4,981		39,375
Current Loans	147,757		718,840		1,089,316		1,143,329		3,099,242
Total Loans	$	148,066	$	734,604	$	1,107,637	$	1,148,310	$	3,138,617


Schedule of Non Accrual Loans by Category
			Commercial
September 30, 2024	Commercial		Real Estate		Consumer		Residential		Total
Loans 90 or More Days Past Due and Still Accruing Interest	$	—	$	—	$	—	$	816	$	816
Nonaccrual Loans	16		15,120		1,752		4,159		21,047
Nonaccrual With No Allowance for Credit Loss	16		15,120		1,752		4,159		21,047
Interest Income on Nonaccrual Loans	—		—		—		—		—

December 31, 2023
Loans 90 or More Days Past Due and Still Accruing Interest	$	—	$	—	$	6	$	446	$	452
Nonaccrual Loans	30		15,308		1,877		3,430		20,645

September 30, 2023
Loans 90 or More Days Past Due and Still Accruing Interest	$	—	$	—	$	—	$	251	$	251
Nonaccrual Loans	3		—		1,572		4,448		6,023

Commercial - Arrow offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. In the event of default by the borrower, Arrow may be required to liquidate collateral at deeply discounted values. To reduce the risk, management usually obtains personal guarantees to support the borrowing, as permitted by applicable law.

Commercial Real Estate - Arrow offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are typically secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner- and non-owner-occupied facilities. Arrow also offers commercial construction and land development loans to finance projects. Many projects will ultimately be used by the borrowers' businesses, while others are developed for resale. These real estate loans are also typically secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities and both owner-occupied and non-owner-occupied facilities. There is enhanced risk during the construction period, since the loan is secured by an incomplete project. Arrow’s Commercial Real Estate loans are primarily located within the footprint of the Company’s branch network, with some loans extending into the greater upstate New York area. Arrow does not provide Commercial Real Estate loans in major metropolitan areas such as New York City, Boston, etc.

Consumer Loans - This category is primarily comprised of automobile loans. Arrow primarily finances the purchases of automobiles indirectly through dealer relationships located throughout upstate New York and Vermont. Most automobile loans carry a fixed rate of interest with principal repayment terms typically ranging from three to seven years. Automobile loans are underwritten on a secured basis using the underlying collateral being financed. Arrow also offers a variety of consumer installment loans to finance personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to five years, based upon the nature of the collateral and the size of the loan. In addition to installment loans, Arrow also offers personal lines of credit and overdraft protection. Several of these consumer loans are unsecured, which carry a higher risk of loss.

Residential - Residential real estate loans consist primarily of loans secured by first or second mortgages on primary residences. Arrow originates fixed-rate and adjustable-rate one-to-four-family residential real estate loans for the construction, purchase of real estate or refinancing of an existing mortgage. These loans are collateralized primarily by owner-occupied properties generally located in Arrow's market area. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 80% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance. Arrow’s underwriting analysis for residential mortgage loans typically includes credit verification, independent appraisals, and a review of the borrower’s financial condition. Mortgage title insurance and hazard insurance are normally required. It is Arrow's general practice to underwrite residential real estate loans to secondary market standards. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. In addition, Arrow offers fixed home equity loans, as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses. Arrow's policy allows for a maximum loan to value ratio of 80%, although periodically higher advances are allowed. Arrow originates home equity lines of credit and second mortgage loans (loans secured by a second junior lien position on one-to-four-family residential real estate). Risk is generally reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.

Loan segments were selected by class code and application code to ensure each segment is comprised of loans with homogenous loan characteristics and similar risk profiles. The resulting loan segments are commercial, commercial real estate, consumer and residential real estate loans. The consumer segment is mainly comprised of automobile loans, and since they are relatively short-term in nature, with similar dollar amounts and collateral, the vintage analysis method was selected to determine the credit loss reserve. The vintage method utilizes Arrow loan data exclusively as the method calculates a loss rate based on the total origination balance of the loans by year and the charge-off and recovery rate of the same origination year. Arrow maintains, over the life of the loan, the loss curve by vintage year. The discounted cash flow method (DCF) is used to calculate the reserve for credit losses for the commercial, commercial real estate and residential real estate segments.

The September 30, 2024 allowance for credit losses calculation incorporated a reasonable and supportable forecast period to account for economic conditions utilized in the measurement. The quantitative model utilized a six-quarter economic forecast sourced from reputable third-parties that projects a negative change of approximately 0.25% in the forecasted national unemployment rate, forecasted gross domestic product projected to improve by approximately 0.07%, and the home price index (HPI) forecast to increase by approximately 0.20% from the previous quarter economic forecast. The overall change in the allowance from June 30, 2024 was primarily driven by the following factors: net loan growth contributed $335 thousand, changes in macro economic conditions reduced the allowance by $82 thousand, and net charge-offs of $681 thousand. The third quarter provision for credit losses was $934 thousand. In addition, Arrow recorded an increase for estimated credit losses on off-balance sheet credit exposures in other liabilities of $234 thousand in the third quarter of 2024. Management's evaluation considers the allowance for credit losses for loans to be appropriate as of September 30, 2024.


Allowance for Credit Losses
	Commercial		Commercial Real Estate		Consumer		Residential		Total









June 30, 2024	$	2,031	$	14,111	$	2,985	$	11,882	$	31,009
Charge-offs	$	—	$	—	$	(1,388)	$	(41)	$	(1,429)
Recoveries	$	—	$	—	$	748	$	—	$	748
Provision	$	(133)	$	(66)	$	296	$	837	$	934
September 30, 2024	$	1,898	$	14,045	$	2,641	$	12,678	$	31,262

December 31, 2023	$	1,958	$	15,521	$	2,566	$	11,220	$	31,265
Charge-offs	$	(9)	$	—	$	(4,512)	$	(41)	$	(4,562)
Recoveries	$	—	$	—	$	2,233	$	—	$	2,233
Provision	$	(51)	$	(1,476)	$	2,354	$	1,499	$	2,326
September 30, 2024	$	1,898	$	14,045	$	2,641	$	12,678	$	31,262







June 30, 2023	$	1,972	$	15,697	$	2,646	$	10,855	$	31,170
Charge-offs	—		—		(1,204)		—		$	(1,204)
Recoveries	—		—		792		—		$	792
Provision	(139)		(114)		301		306		$	354
September 30, 2023	$	1,833	$	15,583	$	2,535	$	11,161	$	31,112




December 31, 2022	$	1,961	$	15,213	$	2,585	$	10,193	$	29,952
Charge-offs	$	—	$	—	$	(3,806)	$	(6)	$	(3,812)
Recoveries	$	—	$	—	$	2,116	$	—	$	2,116
Provision	$	(128)	$	370	$	1,640	$	974	$	2,856
September 30, 2023	$	1,833	$	15,583	$	2,535	$	11,161	$	31,112

Financial instrument credit losses apply to off-balance sheet credit exposures such as unfunded loan commitments and standby letters of credit. A liability for expected credit losses for off-balance sheet exposures is recognized if the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancellable by the entity. Changes in this allowance are reflected in other operating expenses within the non-interest expense category. As of September 30, 2024, the total unfunded commitment off-balance sheet credit exposure was $1.2 million.

All loans that exceed $250,000, which are on nonaccrual status, are evaluated on an individual basis. Arrow has a policy applicable to collateral dependent financial assets when the borrower is experiencing financial difficulty and the repayment is expected through the sale of the collateral. This policy allows Arrow to use fair value of the collateral at the reporting date adjusted for estimated cost to sell when recording the net carrying amount of the asset and determining the allowance for credit losses for a financial asset. In the event where the repayment of a collateral dependent financial asset is expected to be provided substantially through the operation of the collateral, Arrow will use fair value of the collateral at the reporting date when recording the net carrying amount of the asset and determining the allowance for credit losses. As of September 30, 2024, there were six total relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $17.3 million and none had an allowance for credit loss.


Allowance for Credit Losses - Collectively and Individually Evaluated
	Commercial		Commercial Real Estate		Consumer		Residential		Total
September 30, 2024
Ending Loan Balance - Collectively Evaluated	$	169,884	$	741,300	$	1,120,241	$	1,291,249	$	3,322,674
Allowance for Credit Losses - Loans Collectively Evaluated	1,898		14,045		2,641		12,678		31,262

Ending Loan Balance - Individually Evaluated	—		15,120		—		2,143		17,263
Allowance for Credit Losses - Loans Individually Evaluated	—		—		—		—		—

December 31, 2023
Ending Loan Balance - Collectively Evaluated	$	156,224	$	730,179	$	1,111,667	$	1,198,084	$	3,196,154
Allowance for Credit Losses - Loans Collectively Evaluated	1,958		15,521		2,566		11,220		31,265
Ending Loan Balance - Individually Evaluated	—		15,308		—		1,446		16,754
Allowance for Credit Losses - Loans Individually Evaluated	—		—		—		—		—

September 30, 2023
Ending Loan Balance - Collectively Evaluated	$	148,066	$	734,604	$	1,107,637	$	1,146,361	$	3,136,668
Allowance for Credit Losses - Loans Collectively Evaluated	1,833		15,583		2,535		11,161		31,112
Ending Loan Balance - Individually Evaluated	—		—		—		1,949		1,949
Allowance for Credit Losses - Loans Individually Evaluated	—		—		—		—		—

Through the provision for credit losses, an allowance for credit losses is maintained that reflects the best estimate of the calculated expected credit losses in Arrow's loan portfolio as of the balance sheet date. Additions are made to the allowance for credit losses through a periodic provision for credit losses. Actual credit losses are charged against the allowance for credit losses when loans are deemed uncollectible and recoveries of amounts previously charged off are recorded as credits to the allowance for credit losses.


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
September 30, 2024	2024		2023		2022		2021		2020		Prior
Commercial:
Risk rating
Satisfactory	$	28,301	$	46,534	$	26,991	$	18,424	$	7,077	$	19,200	$	15,674	$	—	$	162,201
Special mention	38		80		220		—		87		1,200		1,683		—		3,308
Substandard	—		—		—		—		—		3,063		1,312		—		4,375
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Loans	$	28,339	$	46,614	$	27,211	$	18,424	$	7,164	$	23,463	$	18,669	$	—	$	169,884

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	9	$	—	$	—	$	—	$	9

Commercial Real Estate:
Risk rating
Satisfactory	$	49,229	$	90,818	$	137,343	$	109,829	$	117,259	$	195,942	$	3,543	$	—	$	703,963
Special mention	—		—		12,764		—		—		11,003		—		—		23,767
Substandard	—		147		175		2,004		2,366		23,227		771		—		28,690
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	49,229	$	90,965	$	150,282	$	111,833	$	119,625	$	230,172	$	4,314	$	—	$	756,420

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer:
Risk rating
Performing	$	298,014	$	325,751	$	270,669	$	139,101	$	58,060	$	26,417	$	477	$	—	$	1,118,489
Nonperforming	140		408		413		521		239		31		—		—		1,752
Total Consumer Loans	$	298,154	$	326,159	$	271,082	$	139,622	$	58,299	$	26,448	$	477	$	—	$	1,120,241

Current-period gross charge-offs	$	1,125	$	610	$	1,365	$	943	$	278	$	191	$	—	$	—	$	4,512

Residential:
Risk rating
Performing	$	112,717	$	178,789	$	228,354	$	184,861	$	109,638	$	343,929	$	130,129	$	—	$	1,288,417
Nonperforming	—		201		523		859		435		2,655		302		—		4,975
Total Residential Loans	$	112,717	$	178,990	$	228,877	$	185,720	$	110,073	$	346,584	$	130,431	$	—	$	1,293,392

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	41	$	—	$	—	$	41

Total Loans	$	488,439	$	642,728	$	677,452	$	455,599	$	295,161	$	626,667	$	153,891	$	—	$	3,339,937


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
December 31, 2023	2023		2022		2021		2020		2019		Prior
Commercial:
Risk rating
Satisfactory	$	54,584	$	34,047	$	23,470	$	9,655	$	4,107	$	13,360	$	8,586	$	—	$	147,809
Special mention	—		—		—		117		—		—		—		—		117
Substandard	—		—		—		—		—		3,199		5,099		—		8,298
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Loans	$	54,584	$	34,047	$	23,470	$	9,772	$	4,107	$	16,559	$	13,685	$	—	$	156,224

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate:
Risk rating
Satisfactory	$	81,582	$	151,818	$	105,365	$	120,845	$	41,406	$	174,516	$	1,667	$	—	$	677,199
Special mention	—		10,439		—		—		—		4,084		—		—		14,523
Substandard	150		9,169		1,670		2,533		791		38,955		497		—		53,765
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	81,732	$	171,426	$	107,035	$	123,378	$	42,197	$	217,555	$	2,164	$	—	$	745,487

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer:
Risk rating
Performing	$	405,099	$	355,217	$	195,799	$	93,708	$	44,206	$	15,252	$	—	$	—	$	1,109,281
Nonperforming	208		783		551		210		81		85		468		—		2,386
Total Consumer Loans	$	405,307	$	356,000	$	196,350	$	93,918	$	44,287	$	15,337	$	468	$	—	$	1,111,667

Current-period gross charge-offs	$	366	$	1,368	$	2,122	$	604	$	397	$	266	$	—	$	—	$	5,123

Residential:
Risk rating
Performing	$	161,878	$	231,365	$	192,588	$	116,451	$	73,875	$	296,935	$	122,573	$	—	$	1,195,665
Nonperforming	—		—		444		666		127		2,268		360		—		3,865
Total Residential Loans	$	161,878	$	231,365	$	193,032	$	117,117	$	74,002	$	299,203	$	122,933	$	—	$	1,199,530

Current-period gross charge-offs	$	—	$	—	$	—	$	21	$	—	$	33	$	—	$	—	$	54

Total Loans	$	703,501	$	792,838	$	519,887	$	344,185	$	164,593	$	548,654	$	139,250	$	—	$	3,212,908


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
September 30, 2023	2023		2022		2021		2020		2019		Prior
Commercial:
Risk rating
Satisfactory	$	37,300	$	36,456	$	23,602	$	10,622	$	4,799	$	21,459	$	10,328	$	—	$	144,566
Special mention	—		—		—		128		—		—		—		—		128
Substandard	—		—		—		—		26		3,245		101		—		3,372
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Loans	$	37,300	$	36,456	$	23,602	$	10,750	$	4,825	$	24,704	$	10,429	$	—	$	148,066

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate:
Risk rating
Satisfactory	$	57,761	$	157,741	$	106,128	$	121,968	$	41,827	$	184,590	$	2,035	$	—	$	672,050
Special mention	—		3,123		—		—		—		4,150		—		—		7,273
Substandard	—		9,299		1,685		2,590		797		40,411		499		—		55,281
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	57,761	$	170,163	$	107,813	$	124,558	$	42,624	$	229,151	$	2,534	$	—	$	734,604

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer:
Risk rating
Performing	$	322,084	$	384,607	$	216,234	$	107,743	$	53,646	$	21,276	$	—	$	—	$	1,105,590
Nonperforming	109		625		562		192		68		33		458		—		2,047
Total Consumer Loans	$	322,193	$	385,232	$	216,796	$	107,935	$	53,714	$	21,309	$	458	$	—	$	1,107,637

Current-period gross charge-offs	$	192	$	915	$	1,689	$	477	$	299	$	234	$	—	$	—	$	3,806

Residential:
Risk rating
Performing	$	106,267	$	235,027	$	191,780	$	118,517	$	76,518	$	305,076	$	108,098	$	—	$	1,141,283
Nonperforming	—		—		2,770		1,006		598		2,152		501		—		7,027
Total Residential Loans	$	106,267	$	235,027	$	194,550	$	119,523	$	77,116	$	307,228	$	108,599	$	—	$	1,148,310

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	6	$	—	$	—	$	6


Total Loans	$	523,521	$	826,878	$	542,761	$	362,766	$	178,279	$	582,392	$	122,020	$	—	$	3,138,617

2) Special Mention - Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. "Special mention" assets are not adversely classified and do not expose an institution to sufficient risk to

3) Substandard - Loans classified as “substandard” are inadequately protected by the current sound net worth or paying capacity of the borrower or the collateral pledged, if any. Loans in this category have well defined weaknesses that jeopardize the repayment. They are characterized by the distinct possibility that Arrow will sustain some loss if the deficiencies are not corrected. “Substandard” loans may include loans which are likely to require liquidation of collateral to effect repayment, and other loans where character or ability to repay has become suspect. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard;

4) Doubtful - Loans classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable. Although possibility of loss is extremely high, classification of these loans as “loss” has been deferred due to specific pending factors or events which may strengthen the value (e.g. possibility of additional collateral, injection of capital, collateral liquidation, debt restructure, economic recovery, etc). Loans classified as “doubtful” need to be placed on nonaccrual; and

Commercial loans are generally evaluated on an annual basis depending on the size and complexity of the loan relationship, unless the credit related quality indicator falls to a level of "special mention" or below, when the loan is evaluated quarterly. The credit quality indicator is one of the factors used in assessing the level of incurred risk of loss in our commercial related loan portfolios.