Regulatory Matters

12 Months Ended

Dec. 31, 2024

Equity [Abstract]

Regulatory Matters

REGULATORY MATTERS (Dollars in Thousands)

In the normal course of business, Arrow and its subsidiaries operate under certain regulatory restrictions, such as the extent and structure of covered inter-company borrowings and maintenance of reserve requirement balances.

The principal source of the funds for the payment of stockholder dividends by Arrow has been from dividends declared and paid to Arrow by Arrow Bank.  As of December 31, 2024, the maximum amount that could have been paid by to Arrow by GFNB and SNB, prior to the Unification, without prior regulatory approval, was approximately $44.4 million.

Under current Federal Reserve regulations, Arrow is prohibited from borrowing from Arrow Bank unless such borrowings are secured by specific obligations.  Additionally, the maximum of any such borrowings from Arrow Bank (aggregated with all other "covered transactions" between Arrow Bank and Arrow) is limited to 10% of that bank’s capital and surplus. Loans and other covered transactions between Arrow Bank and all of its affiliates cannot exceed 20% of that bank's capital and surplus.

Arrow and Arrow Bank are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory--and possibly additional discretionary--actions by regulators that, if undertaken, could have a direct material effect on an institution’s financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Arrow and Arrow Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Current quantitative measures established by regulation to ensure capital adequacy require Arrow and Arrow Bank to maintain minimum capital amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).  Management believes, as of December 31, 2024 and 2023, that Arrow Bank meet all capital adequacy requirements to which it is subject. The regulatory capital requirements incorporate a capital concept, the so-called "capital conservation buffer" (set at 2.5%), which must be added to each of the minimum required risk-based capital ratios (i.e., the minimum CET1 ratio, the minimum Tier 1 risk-based capital ratio and the minimum total risk-based capital ratio).

As of December 31, 2024, Arrow Bank qualified as well-capitalized under the regulatory framework for prompt corrective action.  To be categorized as “well-capitalized,” Arrow Bank must maintain minimum total risk-based, Tier I risk-based, Tier I leverage, and CET1 risk-based ratios as set forth in the table below.  There are no conditions or events that management believes have changed Arrow’s or Arrow Bank's categories. The actual capital amounts and ratios for Arrow and Arrow Bank are presented in the table below as of December 31, 2024 and 2023:

	Actual				Minimum Amounts For Capital Adequacy Purposes (including "capital conservation buffer")				Minimum Amounts To Be Well-Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2024
Total Capital  (to Risk Weighted Assets):
Arrow	$	452,506	14.5	%	$	328,268	10.5	%	$	312,636	10.0	%
Arrow Bank National Association	435,628		14.0	%	327,050		10.5	%	311,476		10.0	%
Tier I Capital  (to Risk Weighted Assets):
Arrow	417,338		13.4	%	265,741		8.5	%	250,109		8.0	%
Arrow Bank National Association	400,460		12.9	%	264,755		8.5	%	249,181		8.0	%

	Actual				Minimum Amounts For Capital Adequacy Purposes (including "capital conservation buffer")				Minimum Amounts To Be Well-Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier I Capital  (to Average Assets):
Arrow	417,338		9.6	%	173,952		4.0	%	217,440		5.0	%
Arrow Bank National Association	400,460		9.2	%	173,656		4.0	%	217,070		5.0	%
Common Equity Tier 1 Capital  (to Risk Weighted Assets):
Arrow	397,285		12.7	%	218,845		7.0	%	203,214		6.5	%
Arrow Bank National Association	400,407		12.9	%	218,033		7.0	%	202,459		6.5	%
As of December 31, 2023
Total Capital  (to Risk Weighted Assets):
Arrow	$	447,091	14.7	%	$	319,351	10.5	%	$	304,144	10.0	%
Glens Falls National	320,449		14.3	%	235,295		10.5	%	224,090		10.0	%
Saratoga National	110,510		13.7	%	84,697		10.5	%	80,664		10.0	%
Tier I Capital  (to Risk Weighted Assets):
Arrow	414,221		13.7	%	256,998		8.5	%	241,881		8.0	%
Glens Falls National	297,667		13.2	%	191,680		8.5	%	180,404		8.0	%
Saratoga National	100,449		12.5	%	68,305		8.5	%	64,287		8.0	%
Tier I Capital  (to Average Assets):
Arrow	414,221		9.8	%	169,070		4.0	%	211,337		5.0	%
Glens Falls National	297,667		9.2	%	129,420		4.0	%	161,776		5.0	%
Saratoga National	100,449		9.6	%	41,854		4.0	%	52,317		5.0	%
Common Equity Tier 1 Capital  (to Risk Weighted Assets):
Arrow	394,166		13.0	%	212,243		7.0	%	197,083		6.5	%
Glens Falls National	297,612		13.2	%	157,825		7.0	%	146,551		6.5	%
Saratoga National	100,449		12.5	%	56,251		7.0	%	52,233		6.5	%