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Debt | 6 Months Ended
--- | ---
Jun. 30, 2024
Debt Disclosure [Abstract] |
Debt | DEBT (Dollars in Thousands) Schedule of Borrowings:
| June 30, 2024 |  | December 31, 2023 |  | June 30, 2023
Balance: |  |  |  |  |
BTFP Advances | $ | 100,000 |  |  | $ | — |  |  | 150,000 |
FHLBNY Overnight Advances | — |  |  | 20,000 |  |  | 14,000 |
FHLBNY Term Advances | 6,500 |  |  | 6,500 |  |  | 7,800 |
Total Borrowings | $ | 106,500 |  |  | $ | 26,500 |  |  | $ | 171,800 |
Maximum Borrowing Capacity: |  |  |  |  |
Federal Funds Purchased | $ | 28,000 |  |  | $ | 28,000 |  |  | $ | 52,000 |
Federal Home Loan Bank of New York | 587,448 |  |  | 576,602 |  |  | 634,989 |
Federal Reserve Bank of New York | 874,889 |  |  | 738,511 |  |  | 708,373 |
Available Borrowing Capacity: |  |  |  |  |
Federal Funds Purchased | $ | 28,000 |  |  | $ | 28,000 |  |  | $ | 52,000 |
Federal Home Loan Bank of New York | 535,848 |  |  | 550,102 |  |  | 529,189 |
Federal Reserve Bank of New York | 774,889 |  |  | 738,511 |  |  | 708,373 |
Arrow's subsidiary banks have in place unsecured federal funds lines of credit with two correspondent banks. As a member of the FHLBNY, Arrow participates in the advance program which allows for overnight and term advances up to the limit of pledged collateral, including FHLBNY stock and any loans secured by real estate such as commercial real estate, residential real estate and home equity loans (see Notes 4: Investment Securities, and 5: Loans to the Consolidated Financial Statements). The maximum borrowing capacities at the FHLBNY and FRB are determined based on the fair value of the collateral pledged, subject to discounts determined by the respective lenders. As of June 30, 2024, the carrying cost for the FHLBNY collateral was approximately $861 million and approximately $1.2 billion for the FRB. As of June 30, 2024, the fair value for the FHLBNY collateral was approximately $717 million and approximately $1.2 billion for the FRB. The investment in FHLBNY stock is proportional to the total of Arrow's overnight and term advances (see the Schedule of FFRB and FHLB Stock in Note 4, Investment Securities, to the Consolidated Financial Statements). Arrow's bank subsidiaries have also established borrowing facilities with the FRB of New York for potential “discount window” advances, pledging certain consumer loans as collateral (see Note 5, Loans, to the Consolidated Financial Statements). Debt Maturities BTFP Advances - The BTFP was created to support American businesses and households by making additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. In the first quarter of 2024, Arrow borrowed $100 million pursuant to the BTFP. The BTFP Advances mature in January 2025 and have a weighted average interest rate of 4.76%. Maturity Schedule of FHLBNY Term Advances:
|  | Balances |  | Weighted Average Rate 1
Final Maturity |  | 6/30/2024 |  | 12/31/2023 |  | 6/30/2023 |  | 6/30/2024 |  | 12/31/2023 |  | 6/30/2023
First Year |  | $ | 4,250 |  |  | $ | 4,250 |  |  | $ | 7,800 |  |  | 5.80 | % |  | 5.80 | % |  | 5.14 | %
Second Year |  | 2,250 |  |  | 2,250 |  |  | — |  |  | 5.38 | % |  | 5.38 | % |  | — | %
Total |  | $ | 6,500 |  |  | $ | 6,500 |  |  | $ | 7,800 |  |  | 5.66 | % |  | 5.66 | % |  | 5.14 | %
1. The effective rate on the FHLBNY Advances is 0% due to subsidized funding in the form of interest rate credits.
Long Term Debt - Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Debentures At June 30, 2024, the Company had two classes of financial instruments issued by two separate subsidiary business trusts of Arrow, Arrow Capital Statutory Trust II ("ACST II") and Arrow Capital Statutory Trust III ("ACST III" and, together with ACST II, the "Trusts"), identified as “Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts” on the Consolidated Balance Sheets and the Consolidated Statements of Income. The first of the two classes of trust-issued instruments outstanding at June 30, 2024 was issued by ACST II, a Delaware business trust established on July 16, 2003, upon the filing of a certificate of trust with the Delaware Secretary of State. In July 2003, ACST II issued all of its voting (common) stock to Arrow and issued and sold to an unaffiliated purchaser 30-year guaranteed preferred beneficial interests in the trust's assets ("ACST II TRUPS"). The rate on the securities is variable, previously adjusting quarterly to the now discontinued 3-month London Inter-Bank Offered Rate ("LIBOR") plus 3.15%. Arrow designated the Secured Overnight Financing Rate ("SOFR") as the replacement index for financial instruments. The rate on the securities are tied to the 3-month SOFR plus 3.15% post-conversion. ACST II used the proceeds of the sale of the ACST II TRUPS to purchase an identical amount of junior subordinated debentures issued by Arrow that bear an interest rate identical at all times to the rate payable on the ACST II TRUPS. The ACST II TRUPS became redeemable after July 23, 2008 and mature on July 23, 2033. The second of the two classes of trust-issued instruments outstanding at year-end was issued by ACST III, a Delaware business trust established on December 23, 2004, upon the filing of a certificate of trust with the Delaware Secretary of State. On December 28, 2004, the ACST III issued all of its voting (common) stock to Arrow and issued and sold to an unaffiliated purchaser 30-year guaranteed preferred beneficial interests in the trust's assets ("ACST III TRUPS"). The rate on the ACST III TRUPS is a variable rate, adjusting quarterly to the 3-month SOFR plus 2.00%. The rate previously adjusted quarterly to the now discontinued 3-month LIBOR plus 2.00% pre-conversion. ACST III used the proceeds of the sale of the ACST III TRUPS to purchase an identical amount of junior subordinated debentures issued by Arrow that bear an interest rate identical at all times to the rate payable on the ACST III TRUPS. The ACST III TRUPS became redeemable on or after March 31, 2010 and mature on December 28, 2034. Arrow has entered into interest rate swaps to synthetically fix the variable rate interest payments associated with $20 million in outstanding subordinated trust securities attributable to the Trusts. These agreements are designated as cash flow hedges. The primary assets of the Trusts are Arrow's junior subordinated debentures discussed above, and the sole revenues of the Trusts are payments received by them from Arrow with respect to the junior subordinated debentures. The trust preferred securities issued by the Trusts are non-voting. All common voting securities of the Trusts are owned by Arrow. Arrow used the net proceeds from its sale of junior subordinated debentures to the Trusts, facilitated by the Trusts' sale of their trust preferred securities to the purchasers thereof, for general corporate purposes. The trust preferred securities and underlying junior subordinated debentures, with associated expense that is tax deductible, qualify as Tier I capital under regulatory definitions. Arrow's primary source of funds to pay interest on the debentures that are held by the Trusts are current dividends received by Arrow from its subsidiary banks. Accordingly, Arrow's ability to make payments on the debentures, and the ability of the Trusts to make payments on their trust preferred securities, are dependent upon the continuing ability of Arrow's subsidiary banks to pay dividends to Arrow. Since the trust preferred securities issued by the subsidiary trusts and the underlying junior subordinated debentures issued by Arrow at June 30, 2024, December 31, 2023, and June 30, 2023 are classified as debt for financial statement purposes, the expense associated with these securities is recorded as interest expense in the Consolidated Statements of Income for the three years. Schedule of Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Debentures
| June 30, 2024 |  | December 31, 2023 |  | June 30, 2023
ACST II |  |  |  |  |
Balance | $ | 10,000 |  |  | $ | 10,000 |  |  | $ | 10,000 |
Period End: |  |  |  |  |
Variable Interest Rate | 8.74 | % |  | 8.74 | % |  | 8.69 | %
Fixed Interest Rate resulting from cash flow hedge agreement | 4.00 | % |  | 4.00 | % |  | 4.00 | %
ACST III |  |  |  |  |
Balance | $ | 10,000 |  |  | $ | 10,000 |  |  | $ | 10,000 |
Period End: |  |  |  |  |
Variable Interest Rate | 7.59 | % |  | 7.59 | % |  | 7.54 | %
Fixed Interest Rate resulting from cash flow hedge agreement | 2.86 | % |  | 2.86 | % |  | 2.86 | %

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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