Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES (Dollars In Thousands)

    The provision for income taxes is summarized below:  

Current Tax Expense:	2024		2023		2022
Federal	$	7,187	$	4,611	$	12,263
State	1,251		1,035		3,103
Total Current Tax Expense	8,438		5,646		15,366
Deferred Tax (Benefit) Expense:
Federal	(631)		1,825		(798)
State	(158)		(26)		(454)
Total Deferred Tax (Benefit) Expense	(789)		1,799		(1,252)
Total Provision for Income Taxes	$	7,649	$	7,445	$	14,114

The provisions for income taxes differed from the amounts computed by applying the U.S. Federal Income Tax Rate of 21% to pre-tax income as a result of the following:

	2024			2023			2022
Statutory Federal Tax Rate		21.0	%		21.0	%	21.0	%
(Decrease) Increase Resulting From:
Tax-Exempt Investment Income		(2.1)			(2.3)		(1.4)
State Taxes, Net of Federal Income Tax Benefit		2.3			2.3		3.4
Bank Owned Life Insurance		(0.9)			(1.0)		(0.5)
Other Items, Net		0.2			(0.2)		(0.1)
Effective Tax Rate		20.5	%		19.8	%	22.4	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented below:

	2024		2023
Deferred Tax Assets:
Net Unrealized Losses on Securities Available-for-Sale Included in Accumulated Other Comprehensive Income	$	9,427	$	11,003
Allowance for Credit Losses	9,068		8,475
Lease liabilities	2,539		2,635
Pension and Deferred Compensation Plans	3,460		3,708
Pension Liability Included in Accumulated Other Comprehensive Income	—		1,210
Historic Tax Credit	—		363
Other	773		781
Total Gross Deferred Tax Assets	25,267		28,175
Valuation Allowance for Deferred Tax Assets	—		—
Total Gross Deferred Tax Assets, Net of Valuation Allowance	$	25,267	$	28,175
Deferred Tax Liabilities:
Pension Plans	$	5,397	$	5,489
Depreciation	4,692		5,094
ROU assets	2,298		2,426
Deferred Income	3,524		3,905
Prepaid Pension Included in Accumulated Other Comprehensive Income	1,445		—
Net Unrealized Gains on Equity Securities	241		207
Goodwill	3,373		3,379
Gain on Cash Flow Hedge Agreements Included in Accumulated Other Comprehensive Income	1,620		590
Other	64		—
Total Gross Deferred Tax Liabilities	$	22,654	$	21,090
Deferred Tax Asset, Net	$	2,613	$	7,085

Management believes that the realization of the recognized gross deferred tax assets at December 31, 2024 and 2023 is more likely than not, based on historic earnings and expectations as to future taxable income.

Interest and penalties are recorded as a component of the provision for income taxes, if any.  There are no current examinations of our Federal income tax returns, nor have we been notified of any upcoming examinations. During 2024 the State of New York completed a desk audit of the Special Additional Mortgage Recording Tax Credit that Arrow claimed on the 2021 New York State income tax return. The audit resulted in an insignificant balance due. Our Tax years 2021 through 2024 are subject to Federal and New York State examination. Management annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of December 31, 2024.