Company Quick10K Filing
Arrow Financial
Price33.43 EPS2
Shares15 P/E18
MCap501 P/FCF15
Net Debt-92 EBIT51
TEV409 TEV/EBIT8
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-08-05
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-08
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-12
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-14
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-06
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-03-13
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-06
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-03-17
10-Q 2013-09-30 Filed 2013-11-12
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-15
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-03-10
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-04
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-05
8-K 2020-05-07 Shareholder Vote
8-K 2020-04-30 Other Events, Exhibits
8-K 2020-04-24 Earnings, Other Events, Exhibits
8-K 2020-04-23 Other Events, Exhibits
8-K 2020-02-03 Officers, Other Events, Exhibits
8-K 2020-01-28 Earnings, Exhibits
8-K 2019-10-30 Other Events, Exhibits
8-K 2019-10-22 Earnings, Exhibits
8-K 2019-08-28 Other Events, Exhibits
8-K 2019-07-31 Other Events, Exhibits
8-K 2019-07-22 Earnings, Exhibits
8-K 2019-06-03 Amend Bylaw, Exhibits
8-K 2019-05-08 Shareholder Vote
8-K 2019-04-24 Other Events, Exhibits
8-K 2019-04-23 Earnings, Exhibits
8-K 2019-02-04 Officers, Other Events, Exhibits
8-K 2019-01-29 Earnings, Exhibits
8-K 2018-10-31 Other Events, Exhibits
8-K 2018-10-22 Earnings, Exhibits
8-K 2018-08-29 Other Events, Exhibits
8-K 2018-07-25 Other Events, Exhibits
8-K 2018-07-23 Earnings, Exhibits
8-K 2018-04-25 Other Events, Exhibits
8-K 2018-04-25 Shareholder Vote
8-K 2018-04-23 Earnings, Exhibits
8-K 2018-02-06 Officers, Exhibits
8-K 2018-01-31 Other Events, Exhibits
8-K 2018-01-30 Earnings, Exhibits

AROW 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1. Accounting Policies
Note 2. Investment Securities (In Thousands)
Note 3. Loans (In Thousands)
Note 4. Commitments and Contingencies (In Thousands)
Note 5. Comprehensive Income (In Thousands)
Note 6. Stock - Based Compensation (Dollars in Thousands, Except Share and per Share Amounts)
Note 7. Retirement Benefit Plans (Dollars in Thousands)
Note 8. Earnings per Common Share (In Thousands, Except per Share Amounts)
Note 9. Fair Values (Dollars in Thousands)
Note 10. Leases (Dollars in Thousands)
Note 11. Derivative Instruments and Hedging Activities (In Thousands)
Note 12. Covid - 19 Pandemic
Item 2.
Item 3.
Item 4.
Part II - Other Information
Item 1.
Item 1.A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
EX-15 ex15awarenessletterq12020.htm
EX-31.1 ex311ceoq12020.htm
EX-31.2 ex312cfoq12020.htm
EX-32 ex32906cert-q12020.htm

Arrow Financial Earnings 2020-03-31

Balance SheetIncome StatementCash Flow

10-Q 1 arowform10-qmarch2020.htm 10-Q Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2020
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-12507

ARROW FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)
New York
 
22-2448962
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer
Identification No.)
250 GLEN STREET, GLENS FALLS, NEW YORK 12801
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code:   (518) 745-1000

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, Par Value $1.00 per share
AROW
NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes          No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes          No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer     
Accelerated filer   x 
Non-accelerated filer     
 
Smaller reporting company     
 
 
 
 
 
 
 
Emerging growth company     
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      x   No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding as of April 30, 2020
Common Stock, par value $1.00 per share
 
14,983,674




ARROW FINANCIAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS


# 2



PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
ASSETS
 
 
 
 
 
Cash and Due From Banks
$
32,525

 
$
47,035

 
$
36,198

Interest-Bearing Deposits at Banks
106,004

 
23,186

 
25,031

Investment Securities:
 
 
 
 
 
Available-for-Sale at Fair Value
378,186

 
357,334

 
298,812

Held-to-Maturity (Approximate Fair Value of $242,804 at March 31, 2020; $249,618 at December 31, 2019; and $280,414 at March 31, 2019)
238,520

 
245,065

 
279,400

Equity Securities
1,689

 
2,063

 
1,850

FHLB and Federal Reserve Bank Stock
5,379

 
10,317

 
7,878

Loans
2,414,193

 
2,386,120

 
2,235,208

Allowance for Loan Losses
(23,637
)
 
(21,187
)
 
(20,373
)
Net Loans
2,390,556

 
2,364,933

 
2,214,835

Premises and Equipment, Net
40,987

 
40,629

 
34,949

Goodwill
21,873

 
21,873

 
21,873

Other Intangible Assets, Net
1,640

 
1,661

 
1,777

Other Assets
73,973

 
70,179

 
62,280

Total Assets
$
3,291,332

 
$
3,184,275

 
$
2,984,883

LIABILITIES
 
 
 
 
 
Noninterest-Bearing Deposits
$
489,151

 
$
484,944

 
$
453,089

Interest-Bearing Checking Accounts
793,425

 
689,221

 
823,301

Savings Deposits
1,146,683

 
1,046,568

 
866,861

Time Deposits over $250,000
135,854

 
123,968

 
83,834

Other Time Deposits
245,892

 
271,353

 
263,012

Total Deposits
2,811,005

 
2,616,054

 
2,490,097

Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
57,909

 
51,099

 
58,407

Federal Home Loan Bank Overnight Advances

 
130,000

 
74,500

Federal Home Loan Bank Term Advances
50,000

 
30,000

 
35,000

Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts
20,000

 
20,000

 
20,000

Finance Leases
5,249

 
5,254

 
2,946

Other Liabilities
37,771

 
30,140

 
27,324

Total Liabilities
2,981,934

 
2,882,547

 
2,708,274

STOCKHOLDERS’ EQUITY
 
 
 
 
 
Preferred Stock, $1 Par Value and 1,000,000 Shares Authorized at March 31, 2020 and December 31, 2019; $5 Par Value and 1,000,000 Shares Authorized at March 31, 2019

 

 

Common Stock, $1 Par Value; 30,000,000 Shares Authorized at March 31, 2020 and December 31, 2019 and 20,000,000 Shares Authorized at March 31, 2019 (19,606,449 Shares Issued at March 31, 2020 and December 31, 2019 and 19,035,565 at March 31, 2019)
19,606

 
19,606

 
19,035

Additional Paid-in Capital
336,021

 
335,355

 
315,262

Retained Earnings
37,441

 
33,218

 
34,231

Unallocated ESOP Shares (None at March 31, 2020 and December 31, 2019 and 5,501 Shares at March 31, 2019)

 

 
(100
)
Accumulated Other Comprehensive Loss
(2,412
)
 
(6,357
)
 
(11,567
)
Treasury Stock, at Cost (4,624,348 Shares at March 31, 2020; 4,608,258 Shares at December 31, 2019 and 4,556,083 Shares at March 31, 2019)
(81,258
)
 
(80,094
)
 
(80,252
)
Total Stockholders’ Equity
309,398

 
301,728

 
276,609

Total Liabilities and Stockholders’ Equity
$
3,291,332

 
$
3,184,275

 
$
2,984,883

See Notes to Unaudited Interim Consolidated Financial Statements.

# 3



ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
Three Months Ended March 31
 
 
2020
 
2019
 
INTEREST AND DIVIDEND INCOME
 
 
 
 
Interest and Fees on Loans
$
24,874

 
$
22,403

 
Interest on Deposits at Banks
124

 
195

 
Interest and Dividends on Investment Securities:
 
 
 
 
Fully Taxable
2,193

 
2,369

 
Exempt from Federal Taxes
1,035

 
1,246

 
Total Interest and Dividend Income
28,226

 
26,213

 
INTEREST EXPENSE
 
 
 
 
Interest-Bearing Checking Accounts
487

 
482

 
Savings Deposits
2,471

 
1,601

 
Time Deposits over $250,000
533

 
396

 
Other Time Deposits
1,000

 
713

 
Federal Funds Purchased and
Securities Sold Under Agreements to Repurchase
22

 
22

 
Federal Home Loan Bank Advances
429

 
1,594

 
Junior Subordinated Obligations Issued to
Unconsolidated Subsidiary Trusts
228

 
269

 
Interest on Financing Leases
50

 
15

 
Total Interest Expense
5,220

 
5,092

 
NET INTEREST INCOME
23,006

 
21,121

 
Provision for Loan Losses
2,772

 
472

 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
20,234

 
20,649

 
NONINTEREST INCOME
 
 
 
 
Income From Fiduciary Activities
2,213

 
2,107

 
Fees for Other Services to Customers
2,451

 
2,402

 
Insurance Commissions
1,632

 
1,719

 
Net (Loss) Gain on Securities
(374
)
 
76

 
Net Gain on Sales of Loans
213

 
104

 
Other Operating Income
1,559

 
479

 
Total Noninterest Income
7,694

 
6,887

 
NONINTEREST EXPENSE
 
 
 
 
Salaries and Employee Benefits
10,383

 
9,319

 
Occupancy Expenses, Net
1,449

 
1,420

 
Technology and Equipment Expense
3,352

 
3,141

 
FDIC Assessments
219

 
212

 
Other Operating Expense
2,351

 
2,560

 
Total Noninterest Expense
17,754

 
16,652

 
INCOME BEFORE PROVISION FOR INCOME TAXES
10,174

 
10,884

 
Provision for Income Taxes
2,047

 
2,150

 
NET INCOME
$
8,127


$
8,734


Average Shares Outstanding 1:
 
 
 
 
Basic
14,996

 
14,903

 
Diluted
15,026

 
14,956

 
Per Common Share:
 
 
 
 
Basic Earnings
$
0.54

 
$
0.59

 
Diluted Earnings
0.54

 
0.58

 

1 2019 Share and Per Share Amounts have been restated for the September 27, 2019 3% stock dividend.
See Notes to Unaudited Interim Consolidated Financial Statements.

# 4



ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net Income
 
$
8,127

 
$
8,734

Other Comprehensive Income, Net of Tax:
 
 
 
 
  Net Unrealized Securities Holding Gains Arising During
the Period
 
4,098

 
2,080

  Net Unrealized Loss on Cash Flow Hedge Agreements
 
(219
)
 

  Amortization of Net Retirement Plan Actuarial Loss
 
27

 
121

  Amortization of Net Retirement Plan Prior Service Cost
 
39

 
42

Other Comprehensive Income
 
3,945

 
2,243

  Comprehensive Income
 
$
12,072

 
$
10,977

 
 
 
 
 

See Notes to Unaudited Interim Consolidated Financial Statements.


# 5



ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)

 
Three-Month Period Ended March 31, 2020
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Unallo-cated ESOP
Shares
 
Accumu-lated
Other Com-
prehensive
Loss
 
Treasury
Stock
 
Total
Balance at December 31, 2019
$
19,606

 
$
335,355

 
$
33,218

 
$

 
$
(6,357
)
 
$
(80,094
)
 
$
301,728

Net Income

 

 
8,127

 

 

 

 
8,127

Other Comprehensive Income

 

 

 

 
3,945

 

 
3,945

Cash Dividends Paid, $.26 per Share

 

 
(3,904
)
 

 

 

 
(3,904
)
Stock Options Exercised, Net  (14,282 Shares)

 
199

 

 

 

 
144

 
343

Shares Issued Under the Employee Stock
  Purchase Plan  (3,648 Shares)

 
84

 

 

 

 
37

 
121

Shares Issued for Dividend
  Reinvestment Plans (16,001 Shares)

 
280

 

 

 

 
162

 
442

Stock-Based Compensation Expense

 
103

 

 

 

 

 
103

Purchase of Treasury Stock
  (50,021 Shares)

 

 

 

 

 
(1,507
)
 
(1,507
)
Balance at March 31, 2020
$
19,606

 
$
336,021

 
$
37,441

 
$

 
$
(2,412
)
 
$
(81,258
)
 
$
309,398

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Three-Month Period Ended March 31, 2019
Balance at December 31, 2018
$
19,035

 
$
314,533

 
$
29,257

 
$
(100
)
 
$
(13,810
)
 
$
(79,331
)
 
$
269,584

Net Income

 

 
8,734

 

 

 

 
8,734

Other Comprehensive Loss

 

 

 

 
2,243

 

 
2,243

Cash Dividends Paid, $.252 per Share 1

 

 
(3,760
)
 

 

 

 
(3,760
)
Stock Options Exercised, Net (26,135 Shares)

 
249

 

 

 

 
286

 
535

Shares Issued Under the Employee Stock
  Purchase Plan  (3,709 Shares)

 
76

 

 

 

 
41

 
117

Shares Issued for Dividend
  Reinvestment Plans (13,132 Shares)

 
309

 

 

 

 
144

 
453

Stock-Based Compensation Expense

 
95

 

 

 

 

 
95

Purchase of Treasury Stock
 (40,852 Shares)

 

 

 

 

 
(1,392
)
 
(1,392
)
Balance at March 31, 2019
$
19,035

 
$
315,262

 
$
34,231

 
$
(100
)
 
$
(11,567
)
 
$
(80,252
)
 
$
276,609


1 Cash dividends paid per share have been adjusted for the September 27, 2019 3% stock dividend.
See Notes to Unaudited Interim Consolidated Financial Statements.




# 6



ARROW FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
 
Three Months Ended March 31,
Cash Flows from Operating Activities:
2020
 
2019
Net Income
$
8,127

 
$
8,734

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Provision for Loan Losses
2,772

 
472

Depreciation and Amortization
1,597

 
1,309

Net Loss (Gain) on Securities Transactions
374

 
(76
)
Loans Originated and Held-for-Sale
(9,322
)
 
(4,223
)
Proceeds from the Sale of Loans Held-for-Sale
7,975

 
3,718

Net Gain on the Sale of Loans
(213
)
 
(104
)
Net (Gain) Loss on the Sale of Premises and Equipment, Other Real Estate Owned and Repossessed Assets
(91
)
 
130

Contributions to Retirement Benefit Plans
(195
)
 
(153
)
Deferred Income Tax Benefit
(873
)
 
(297
)
Stock-Based Compensation Expense
103

 
95

Tax Benefit from Exercise of Stock Options
28

 
78

Net Increase in Other Assets
(5,719
)
 
(1,565
)
Net Increase in Other Liabilities
8,563

 
2,613

Net Cash Provided By Operating Activities
13,126

 
10,731

Cash Flows from Investing Activities:
 
 
 
Proceeds from the Maturities and Calls of Securities Available-for-Sale
17,444

 
21,261

Purchases of Securities Available-for-Sale
(33,201
)
 

Proceeds from the Maturities and Calls of Securities Held-to-Maturity
7,075

 
5,319

Purchases of Securities Held-to-Maturity
(717
)
 
(1,457
)
Net Increase in Loans
(27,317
)
 
(39,545
)
Proceeds from the Sales of Premises and Equipment, Other Real Estate Owned and Repossessed Assets
781

 
442

Purchase of Premises and Equipment
(1,072
)
 
(2,099
)
Net Decrease in Other Investments
4,938

 
7,628

Net Cash Used By Investing Activities
(32,069
)
 
(8,451
)
Cash Flows from Financing Activities:
 
 
 
Net Increase in Deposits
194,951

 
144,513

Net Decrease in Short-Term Federal Home Loan Bank Borrowings
(130,000
)
 
(159,500
)
Net Increase in Short-Term Borrowings
6,810

 
3,748

Finance Lease Payments
(5
)
 
(4
)
Federal Home Loan Bank Advances
40,000

 

Repayments of Federal Home Loan Bank Term Advances
(20,000
)
 
(10,000
)
Purchase of Treasury Stock
(1,507
)
 
(1,392
)
Stock Options Exercised, Net
343

 
535

Shares Issued Under the Employee Stock Purchase Plan
121

 
117

Shares Issued for Dividend Reinvestment Plans
442

 
453

Cash Dividends Paid
(3,904
)
 
(3,760
)
Net Cash Provided (Used) By Financing Activities
87,251

 
(25,290
)
Net Increase (Decrease) in Cash and Cash Equivalents
68,308

 
(23,010
)
Cash and Cash Equivalents at Beginning of Period
70,221

 
84,239

Cash and Cash Equivalents at End of Period
$
138,529

 
$
61,229

 
 
 
 
Supplemental Disclosures to Statements of Cash Flow Information:
 
 
 
Interest on Deposits and Borrowings
$
5,264

 
$
4,924

Income Taxes
344

 
311

Non-cash Investing and Financing Activity:
 
 
 
Transfer of Loans to Other Real Estate Owned and Repossessed Assets
371

 
728


See Notes to Unaudited Interim Consolidated Financial Statements.

# 7



NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1.     ACCOUNTING POLICIES

In the opinion of the management of Arrow Financial Corporation (Arrow, the Company, we, or us), the accompanying unaudited interim consolidated financial statements contain all of the adjustments necessary to present fairly the financial position as of March 31, 2020, December 31, 2019 and March 31, 2019; the results of operations for the three-month periods ended March 31, 2020 and 2019; the consolidated statements of comprehensive income for the three-month periods ended March 31, 2020 and 2019; the changes in stockholders' equity for the three-month periods ended March 31, 2020 and 2019; and the cash flows for the three-month periods ended March 31, 2020 and 2019. All such adjustments are of a normal recurring nature.

Management’s Use of Estimates -The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period.  Due to the uncertainty regarding the impact of the COVID-19 pandemic, management utilized estimates and assumptions in its evaluation of potential impairment of the Company's right-of-use lease assets, goodwill and intangible assets. Our most significant estimate is the allowance for loan losses. Other estimates include the evaluation of other-than-temporary impairment of investment securities, pension and other post-retirement liabilities and an analysis of a need for a valuation allowance for deferred tax assets. Actual results could differ from those estimates.
A material estimate that is particularly susceptible to significant change in the near term is the allowance for loan losses.  In connection with the determination of the allowance for loan losses, management obtains appraisals for properties.  The allowance for loan losses is management’s best estimate of probable loan losses incurred as of the balance sheet date.  While management uses available information to recognize losses on loans, future adjustments to the allowance for loan losses may be necessary based on changes in economic conditions.  
The unaudited interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements of Arrow for the year ended December 31, 2019 included in Arrow's Annual Report on Form 10-K for the year ended December 31, 2019.

The following accounting standards have been adopted in the first three months of 2020:

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-13 "Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" as part of its disclosure framework, and pursuant to which FASB has eliminated, amended and added disclosure requirements for fair value measurements. For Arrow, the standard became effective, on a prospective basis, on January 1, 2020. The adoption of this change in fair value disclosure did not have a material impact on its financial position or the results of operations in the period subsequent to its adoption.

In August 2018, the FASB issued Accounting Standards Update (ASU) 2018-15 "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" which will require companies to defer potentially significant, specified implementation costs incurred in a cloud computing arrangement that are currently often expensed under US GAAP. For Arrow, the standard was adopted, on a prospective basis, on January 1, 2020. The adoption of this standard did not have a material impact on its financial position or the results of operations in the period subsequent to its adoption.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities ("ASU 2018-17"). ASU 2018-17 provides that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. For Arrow, the standard was effective on January 1, 2020 and the adoption of this standard did not have a material impact on its financial position or the results of operations in the period subsequent to its adoption.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued, such as LIBOR. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022), and provides optional relief for contract modifications, hedge accounting and Held-to-maturity debt securities. For Arrow, this standard was effective January 1, 2020 and can be applied prospectively beginning January 1, 2020 for contract modifications and hedging relationships. The one-time election to sell and/or transfer securities classified as Held-to-maturity may be made at any point after March 12, 2020. Arrow is evaluating the impact of this standard as it will provide relief for contracts currently tied to LIBOR and hedge accounting relationships.

# 8



Note 2.    INVESTMENT SECURITIES (In Thousands)

The following table is the schedule of Available-For-Sale Securities at March 31, 2020, December 31, 2019 and March 31, 2019:
Available-For-Sale Securities
 
 
U.S. Government & Agency
Obligations
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Corporate
and Other
Debt
Securities
 
Total
Available-
For-Sale
Securities
March 31, 2020
 
 
 
 
 
 
 
 
 
 
Available-For-Sale Securities,
  at Amortized Cost
 
$
5,002

 
$
723

 
$
365,333

 
$
1,000

 
$
372,058

Gross Unrealized Gains
 
179

 

 
7,484

 

 
7,663

Gross Unrealized Losses
 

 

 
(1,335
)
 
(200
)
 
(1,535
)
Available-For-Sale Securities,
  at Fair Value
 
5,181

 
723

 
371,482

 
800

 
378,186

Available-For-Sale Securities,
  Pledged as Collateral, at Fair Value
 
 
 
 
 
 
 
 
 
273,124

 
 
 
 
 
 
 
 
 
 
 
Maturities of Debt Securities,
  at Amortized Cost:
 
 
 
 
 
 
 
 
 
 
Within One Year
 
$

 
$
26

 
$
14,201

 
$

 
$
14,227

From 1 - 5 Years
 
5,002

 
257

 
325,234

 

 
330,493

From 5 - 10 Years
 

 

 
25,898

 
1,000

 
26,898

Over 10 Years
 

 
440

 

 

 
440

 
 
 
 
 
 
 
 
 
 
 
Maturities of Debt Securities,
  at Fair Value:
 
 
 
 
 
 
 
 
 
 
Within One Year
 
$

 
$
26

 
$
14,616

 
$

 
$
14,642

From 1 - 5 Years
 
5,181

 
257

 
331,422

 

 
336,860

From 5 - 10 Years
 

 

 
25,444

 
800

 
26,244

Over 10 Years
 

 
440

 

 

 
440

 
 
 
 
 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
18,846

 
$

 
$
18,846

12 Months or Longer
 

 

 
59,262

 
800

 
60,062

Total
 
$

 
$

 
$
78,108

 
$
800

 
$
78,908

Number of Securities in a
  Continuous Loss Position
 

 

 
27

 
1

 
28

 
 
 
 
 
 
 
 
 
 
 
Unrealized Losses on
  Securities in a Continuous
  Loss Position:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
316

 
$

 
$
316

12 Months or Longer
 

 

 
1,019

 
200

 
1,219

Total
 
$

 
$

 
$
1,335

 
$
200

 
$
1,535

 
 
 
 
 
 
 
 
 
 
 
Disaggregated Details:
 
 
 
 
 
 
 
 
 
 
US Agency Obligations,
at Amortized Cost
 
5,002

 
 
 
 
 
 
 
 
US Agency Obligations,
at Fair Value
 
5,181

 
 
 
 
 
 
 
 
US Government Agency
  Securities, at Amortized Cost
 
 
 
 
 
$
58,089

 
 
 
 
US Government Agency
  Securities, at Fair Value
 
 
 
 
 
57,091

 
 
 
 
Government Sponsored Entity
  Securities, at Amortized Cost
 
 
 
 
 
307,244

 
 
 
 
Government Sponsored Entity
Securities, at Fair Value
 
 
 
 
 
314,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

# 9



Available-For-Sale Securities
 
 
U.S. Government & Agency
Obligations
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Corporate
and Other
Debt
Securities
 
Total
Available-
For-Sale
Securities
December 31, 2019
 
 
 
 
 
 
 
 
 
 
Available-For-Sale Securities,
  at Amortized Cost
 
$
5,002

 
$
764

 
$
349,944

 
$
1,000

 
$
356,710

Gross Unrealized Gains
 
52

 

 
1,852

 

 
1,904

Gross Unrealized Losses
 

 

 
(1,080
)
 
(200
)
 
(1,280
)
Available-For-Sale Securities,
  at Fair Value
 
5,054

 
764

 
350,716

 
800

 
357,334

Available-For-Sale Securities,
  Pledged as Collateral,
  at Fair Value
 
 
 
 
 
 
 
 
 
164,426

 
 
 
 
 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
52,491

 
$

 
$
52,491

12 Months or Longer
 

 

 
97,164

 
800

 
97,964

Total
 
$

 
$

 
$
149,655

 
$
800

 
$
150,455

Number of Securities in a
  Continuous Loss Position
 

 

 
54

 
1

 
55

 
 
 
 
 
 
 
 
 
 
 
Unrealized Losses on
  Securities in a Continuous
  Loss Position:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
317

 
$

 
$
317

12 Months or Longer
 

 

 
763

 
200

 
963

Total
 
$

 
$

 
$
1,080

 
$
200

 
$
1,280

 
 
 
 
 
 
 
 
 
 
 
Disaggregated Details:
 
 
 
 
 
 
 
 
 
 
US Agency Obligations,
at Amortized Cost
 
5,002

 
 
 
 
 
 
 
 
US Agency Obligations,
at Fair Value
 
5,054

 
 
 
 
 
 
 
 
US Government Agency
  Securities, at Amortized Cost
 
 
 
 
 
$
61,102

 
 
 
 
US Government Agency
  Securities, at Fair Value
 
 
 
 
 
60,616

 
 
 
 
Government Sponsored Entity
  Securities, at Amortized Cost
 
 
 
 
 
288,842

 
 
 
 
Government Sponsored Entity
Securities, at Fair Value
 
 
 
 
 
290,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

# 10



Available-For-Sale Securities
 
 
U.S. Government & Agency
Obligations
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Corporate
and Other
Debt
Securities
 
Total
Available-
For-Sale
Securities
March 31, 2019
 
 
 
 
 
 
 
 
 
 
Available-For-Sale Securities,
  at Amortized Cost
 
$
35,519

 
$
1,114

 
$
263,347

 
$
1,000

 
$
300,980

Gross Unrealized Gains
 

 
2

 
657

 

 
659

Gross Unrealized Losses
 
(136
)
 

 
(2,491
)
 
(200
)
 
(2,827
)
Available-For-Sale Securities,
  at Fair Value
 
35,383

 
1,116

 
261,513

 
800

 
298,812

Available-For-Sale Securities,
  Pledged as Collateral, at Fair Value
 
 
 
 
 
 
 
 
 
255,028

 
 
 
 
 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
53,131

 
$

 
$
53,131

12 Months or Longer
 
35,383

 

 
155,108

 
800

 
191,291

Total
 
$
35,383

 
$

 
$
208,239

 
$
800

 
$
244,422

Number of Securities in a
  Continuous Loss Position
 
7

 

 
80

 
1

 
88

 
 
 
 
 
 
 
 
 
 
 
Unrealized Losses on Securities
  in a Continuous Loss Position:
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$
258

 
$

 
$
258

12 Months or Longer
 
136

 

 
2,233

 
200

 
2,569

Total
 
$
136

 
$

 
$
2,491

 
$
200

 
$
2,827

 
 
 
 
 
 
 
 
 
 
 
Disaggregated Details:
 
 
 
 
 
 
 
 
 
 
US Agency Obligations,
at Amortized Cost
 
35,519

 
 
 
 
 
 
 
 
US Agency Obligations,
at Fair Value
 
35,383

 
 
 
 
 
 
 
 
US Government Agency
  Securities, at Amortized Cost
 
 
 
 
 
$
70,358

 
 
 
 
US Government Agency
  Securities, at Fair Value
 
 
 
 
 
70,034

 
 
 
 
Government Sponsored Entity
  Securities, at Amortized Cost
 
 
 
 
 
192,989

 
 
 
 
Government Sponsored Entity
Securities, at Fair Value
 
 
 
 
 
191,479

 
 
 
 



# 11




The following table is the schedule of Held-To-Maturity Securities at March 31, 2020, December 31, 2019 and March 31, 2019:
Held-To-Maturity Securities
 
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Total
Held-To
Maturity
Securities
March 31, 2020
 
 
 
 
 
 
Held-To-Maturity Securities,
  at Amortized Cost
 
$
204,148

 
$
34,372

 
$
238,520

Gross Unrealized Gains
 
3,104

 
1,329

 
4,433

Gross Unrealized Losses
 
(149
)
 

 
(149
)
Held-To-Maturity Securities,
  at Fair Value
 
207,103

 
35,701

 
242,804

Held-To-Maturity Securities,
  Pledged as Collateral, at Fair Value
 
 
 
 
 
231,539

 
 
 
 
 
 
 
Maturities of Debt Securities,
  at Amortized Cost:
 
 
 
 
 
 
Within One Year
 
$
16,308

 
$
2,857

 
$
19,165

From 1 - 5 Years
 
115,665

 
31,515

 
147,180

From 5 - 10 Years
 
70,585

 

 
70,585

Over 10 Years
 
1,590

 

 
1,590

 
 
 
 
 
 
 
Maturities of Debt Securities,
  at Fair Value:
 
 
 
 
 
 
Within One Year
 
$
16,329

 
$
2,964

 
$
19,293

From 1 - 5 Years
 
117,119

 
32,737

 
149,856

From 5 - 10 Years
 
72,031

 

 
72,031

Over 10 Years
 
1,624

 

 
1,624

 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
Less than 12 Months
 
$
5,625

 
$

 
$
5,625

12 Months or Longer
 
1,867

 

 
1,867

Total
 
$
7,492

 
$

 
$
7,492

 
 
 
 
 
 
 
Number of Securities in a
  Continuous Loss Position
 
16

 

 
16

 
 
 
 
 
 
 
Unrealized Losses on Securities
   in a Continuous Loss Position:
 
 
 
 
 
 
Less than 12 Months
 
$
16

 
$

 
$
16

12 Months or Longer
 
133

 

 
133

Total
 
$
149

 
$

 
$
149

 
 
 
 
 
 
 
Disaggregated Details:
 
 
 
 
 
 
US Government Agency
  Securities, at Amortized Cost
 
 
 
$
1,594

 
 
US Government Agency
  Securities, at Fair Value
 
 
 
1,655

 
 
Government Sponsored Entity
  Securities, at Amortized Cost
 
 
 
32,778

 
 
Government Sponsored Entity
Securities, at Fair Value
 
 
 
34,046

 
 
 
 
 
 
 
 
 

# 12



Held-To-Maturity Securities
 
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Total
Held-To
Maturity
Securities
December 31, 2019
 
 
 
 
 
 
Held-To-Maturity Securities,
  at Amortized Cost
 
$
208,243

 
$
36,822

 
$
245,065

Gross Unrealized Gains
 
4,170

 
477

 
4,647

Gross Unrealized Losses
 
(94
)
 

 
(94
)
Held-To-Maturity Securities,
  at Fair Value
 
212,319

 
37,299

 
249,618

Held-To-Maturity Securities,
  Pledged as Collateral, at Fair Value
 
 
 
 
 
237,969

 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
Less than 12 Months
 
$
1,438

 
$

 
$
1,438

12 Months or Longer
 
1,994

 

 
1,994

Total
 
$
3,432

 
$

 
$
3,432

Number of Securities in a
  Continuous Loss Position
 
10

 

 
10

 
 
 
 
 
 
 
Unrealized Losses on
  Securities in a Continuous
  Loss Position:
 
 
 
 
 
 
Less than 12 Months
 
$
85

 
$

 
$
85

12 Months or Longer
 
9

 

 
9

Total
 
$
94

 
$

 
$
94

 
 
 
 
 
 

Disaggregated Details:
 
 
 
 
 
 
US Government Agency
  Securities, at Amortized Cost
 
 
 
$
1,703

 
 
US Government Agency
  Securities, at Fair Value
 
 
 
1,720

 
 
Government Sponsored Entity
  Securities, at Amortized Cost
 
 
 
35,119

 
 
Government Sponsored Entity
Securities, at Fair Value
 
 
 
35,579

 
 
 
 
 
 
 
 
 
March 31, 2019
 
 
 
 
 
 
Held-To-Maturity Securities,
  at Amortized Cost
 
$
234,454

 
$
44,946

 
$
279,400

Gross Unrealized Gains
 
1,695

 
97

 
1,792

Gross Unrealized Losses
 
(573
)
 
(205
)
 
(778
)
Held-To-Maturity Securities,
  at Fair Value
 
235,576

 
44,838

 
280,414

Held-To-Maturity Securities,
  Pledged as Collateral, at Fair Value
 
 
 
 
 
265,465

 
 
 
 
 
 
 
Securities in a Continuous
  Loss Position, at Fair Value:
 
 
 
 
 
 
Less than 12 Months
 
$

 
$

 
$

12 Months or Longer
 
71,450

 
26,021

 
97,471

Total
 
$
71,450

 
$
26,021

 
$
97,471

Number of Securities in a
  Continuous Loss Position
 
193

 
29

 
222

 
 
 
 
 
 
 

# 13



Held-To-Maturity Securities
 
 
State and
Municipal
Obligations
 
Mortgage-
Backed
Securities
 
Total
Held-To
Maturity
Securities
Unrealized Losses on
  Securities in a Continuous
  Loss Position: