Leases

9 Months Ended

Sep. 30, 2019

LEASES (Dollars In Thousands)

The Company is a lessee in its leases, which are mainly for financial services locations in addition to leases for corporate vehicles. These leases generally require the Company to pay third-party expenses on behalf of the Lessor, which are referred to as variable payments. Under some leases, the Company pays the variable payments to the lessor, and in other leases, the Company pays the variable payments directly to the applicable third party. None of the Company's current leases include any residual value guarantees or any subleases, and there are no significant rights and obligations of the Company for leases that have not commenced as of the reporting date.

Arrow leases five of its branch offices, at market rates, from Stewart’s Shops Corp. Mr. Gary C. Dake, President of Stewart’s Shops Corp., serves as a director on the board of directors of each of Arrow and Saratoga National Bank and Trust Company.

The following includes quantitative data related to the Company's leases as of and for the nine months ended September 30, 2019:



Finance Lease Amounts:	Classification
Right-of-use Assets	Premises and Equipment, Net	$	5,199
Lease Liabilities	Finance Leases	5,263

Operating Lease Amounts:
Right-of-use Assets	Other Assets	$	5,815
Lease Liabilities	Other Liabilities	5,876


Other Information:
Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	71
Operating Outgoing Cash Flows From Operating Leases		563
Financing Outgoing Cash Flows From Finance Leases		19
Right-of-use Assets Obtained In Exchange For New Finance Lease Liabilities		5,271
Right-of-use Assets Obtained In Exchange For New Operating Lease Liabilities		6,266
Weighted-average Remaining Lease Term—Finance Leases (Yrs.)		31.05
Weighted-average Remaining Lease Term—Operating Leases (Yrs.)		13.75
Weighted-average Discount Rate—Finance Leases %		3.75		%
Weighted-average Discount Rate—Operating Leases %		3.35		%



Lease cost information for the Company's leases is as follows:
	Three Months Ended		Nine Months Ended
	9/30/2019		9/30/2019
Lease Cost:
Finance Lease Cost:
Amortization of Right-of-use assets	$	28	$	72
Interest on Lease Liabilities	28		71
Operating Lease Cost	211		577
Short-term Lease Cost	17		73
Variable Lease Cost	45		140
Total Lease Cost	$	329	$	933



Future Lease Payments at September 30, 2019 are as follows:

	Operating Leases		Financing Leases
Twelve Months Ended:
9/30/2020	$	805	$	207
9/30/2021	709		236
9/30/2022	597		206
9/30/2023	541		243
9/30/2024	531		247
Thereafter	4,240		8,297
Total Undiscounted Cash Flows	$	7,423	$	9,436
Less: Net Present Value Adjustment	1,547		4,173
Lease Liability	$	5,876	$	5,263

Arrow adopted ASU 2016-02 using a modified retrospective adoption at January 1, 2019 as discussed in Note 1. The following disclosure is provided for the period prior to the adoption.

Future minimum lease payments on operating leases at December 31, 2018 were as follows:



	Operating Leases
2019	$	857
2020	626
2021	497
2022	357
2023	286
2024 and beyond	2,776
Total Minimum Lease Payments	$	5,399

Leases

LEASES (Dollars In Thousands)

The following includes quantitative data related to the Company's leases as of and for the nine months ended September 30, 2019:



Finance Lease Amounts:	Classification
Right-of-use Assets	Premises and Equipment, Net	$	5,199
Lease Liabilities	Finance Leases	5,263

Operating Lease Amounts:
Right-of-use Assets	Other Assets	$	5,815
Lease Liabilities	Other Liabilities	5,876


Other Information:
Cash Paid For Amounts Included In The Measurement Of Lease Liabilities:
Operating Outgoing Cash Flows From Finance Leases		$	71
Operating Outgoing Cash Flows From Operating Leases		563
Financing Outgoing Cash Flows From Finance Leases		19
Right-of-use Assets Obtained In Exchange For New Finance Lease Liabilities		5,271
Right-of-use Assets Obtained In Exchange For New Operating Lease Liabilities		6,266
Weighted-average Remaining Lease Term—Finance Leases (Yrs.)		31.05
Weighted-average Remaining Lease Term—Operating Leases (Yrs.)		13.75
Weighted-average Discount Rate—Finance Leases %		3.75		%
Weighted-average Discount Rate—Operating Leases %		3.35		%



Lease cost information for the Company's leases is as follows:
	Three Months Ended		Nine Months Ended
	9/30/2019		9/30/2019
Lease Cost:
Finance Lease Cost:
Amortization of Right-of-use assets	$	28	$	72
Interest on Lease Liabilities	28		71
Operating Lease Cost	211		577
Short-term Lease Cost	17		73
Variable Lease Cost	45		140
Total Lease Cost	$	329	$	933



Future Lease Payments at September 30, 2019 are as follows:

	Operating Leases		Financing Leases
Twelve Months Ended:
9/30/2020	$	805	$	207
9/30/2021	709		236
9/30/2022	597		206
9/30/2023	541		243
9/30/2024	531		247
Thereafter	4,240		8,297
Total Undiscounted Cash Flows	$	7,423	$	9,436
Less: Net Present Value Adjustment	1,547		4,173
Lease Liability	$	5,876	$	5,263

Arrow adopted ASU 2016-02 using a modified retrospective adoption at January 1, 2019 as discussed in Note 1. The following disclosure is provided for the period prior to the adoption.

Future minimum lease payments on operating leases at December 31, 2018 were as follows:



	Operating Leases
2019	$	857
2020	626
2021	497
2022	357
2023	286
2024 and beyond	2,776
Total Minimum Lease Payments	$	5,399