Leases

3 Months Ended

Mar. 31, 2025

LEASES (Dollars In Thousands)

Arrow leases real property, primarily for financial services locations, and 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 three 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 Arrow Bank. Mr. Dake is retiring from the Board at the Annual Meeting on June 4, 2025.

The following includes quantitative data related to Arrow's leases as of and for the three months ended March 31, 2025 and March 31, 2024:


		Three Months Ended
Finance Lease Amounts:	Classification	March 31, 2025			March 31, 2024
Right-of-Use Assets	Premises and Equipment, Net	$	4,239		$	4,416
Lease Liabilities	Finance Leases	4,979			5,053

Operating Lease Amounts:
Right-of-Use Assets	Other Assets	$	4,834		$	4,790
Lease Liabilities	Other Liabilities	5,029			4,997

Other Information:

Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	47		$	48
Operating Outgoing Cash Flows From Operating Leases		188			155
Financing Outgoing Cash Flows From Finance Leases		26			13
Right-of-Use Assets Obtained In Exchange For New Finance Lease Liabilities		—			—
Right-of-Use Assets Obtained In Exchange For New Operating Lease Liabilities		376			—
Weighted-average Remaining Lease Term - Finance Leases (Yrs.)		25.09			26.04
Weighted-average Remaining Lease Term - Operating Leases (Yrs.)		9.86			11.06
Weighted-average Discount Rate—Finance Leases		3.75		%	3.75		%
Weighted-average Discount Rate—Operating Leases		3.45		%	3.10		%


Lease cost information for Arrow's leases is as follows:
	Three Months Ended
	March 31, 2025		March 31, 2024
Lease Cost:
Finance Lease Cost:
Reduction of Right-of-Use Assets	$	44	$	44
Interest on Lease Liabilities	47		48
Operating Lease Cost	215		195
Short-term Lease Cost	9		10
Variable Lease Cost	37		75
Total Lease Cost	$	352	$	372


Future Lease Payments at March 31, 2025 are as follows:
	Operating Leases		Financing Leases
Twelve Months Ended:
3/31/2026	$	819	$	256
3/31/2027	760		268
3/31/2028	691		268
3/31/2029	642		268
3/31/2030	576		280
Thereafter	2,495		6,649
Total Undiscounted Cash Flows	$	5,983	$	7,989
Less: Net Present Value Adjustment	954		3,010
Lease Liability	$	5,029	$	4,979

Leases

LEASES (Dollars In Thousands)

The following includes quantitative data related to Arrow's leases as of and for the three months ended March 31, 2025 and March 31, 2024:


		Three Months Ended
Finance Lease Amounts:	Classification	March 31, 2025			March 31, 2024
Right-of-Use Assets	Premises and Equipment, Net	$	4,239		$	4,416
Lease Liabilities	Finance Leases	4,979			5,053

Operating Lease Amounts:
Right-of-Use Assets	Other Assets	$	4,834		$	4,790
Lease Liabilities	Other Liabilities	5,029			4,997

Other Information:

Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	47		$	48
Operating Outgoing Cash Flows From Operating Leases		188			155
Financing Outgoing Cash Flows From Finance Leases		26			13
Right-of-Use Assets Obtained In Exchange For New Finance Lease Liabilities		—			—
Right-of-Use Assets Obtained In Exchange For New Operating Lease Liabilities		376			—
Weighted-average Remaining Lease Term - Finance Leases (Yrs.)		25.09			26.04
Weighted-average Remaining Lease Term - Operating Leases (Yrs.)		9.86			11.06
Weighted-average Discount Rate—Finance Leases		3.75		%	3.75		%
Weighted-average Discount Rate—Operating Leases		3.45		%	3.10		%


Lease cost information for Arrow's leases is as follows:
	Three Months Ended
	March 31, 2025		March 31, 2024
Lease Cost:
Finance Lease Cost:
Reduction of Right-of-Use Assets	$	44	$	44
Interest on Lease Liabilities	47		48
Operating Lease Cost	215		195
Short-term Lease Cost	9		10
Variable Lease Cost	37		75
Total Lease Cost	$	352	$	372


Future Lease Payments at March 31, 2025 are as follows:
	Operating Leases		Financing Leases
Twelve Months Ended:
3/31/2026	$	819	$	256
3/31/2027	760		268
3/31/2028	691		268
3/31/2029	642		268
3/31/2030	576		280
Thereafter	2,495		6,649
Total Undiscounted Cash Flows	$	5,983	$	7,989
Less: Net Present Value Adjustment	954		3,010
Lease Liability	$	5,029	$	4,979