ACNB Corporation Reports 2023 Third Quarter Financial Results

Rhea-AI Summary

ACNB Corporation announces financial results for Q3 2023 with a decrease in net income compared to the same period last year. Return on average assets and return on average equity remain strong. Total loans outstanding and non-performing loans show increases. The Corporation plans to invest back into systems and resources and return capital to shareholders.

Positive

• ACNB Corporation announces strong Q3 2023 financial results with return on average assets of 1.52% and return on average equity of 13.84%. Total loans outstanding increase by 2.7% from the previous quarter. Non-performing loans decrease slightly. The Corporation plans to invest in systems and resources and increase quarterly cash dividends by 7.1%.

Negative

• Net income for ACNB Corporation decreases by 12.4% compared to the same period last year. Basic and diluted earnings per share also decrease by 11.7%. Net income decreases by 5.0% compared to the previous quarter. Basic and diluted earnings per share decrease by 5.4%.

GETTYSBURG, Pa., Oct. 27, 2023 (GLOBE NEWSWIRE) -- ACNB Corporation (NASDAQ: ACNB) (“ACNB” or the “Corporation”), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced financial results for the quarter ended September 30, 2023 with net income of $9.0 million, a decrease of $1.3 million, or 12.4%, compared to net income of $10.3 million for the three months ended September 30, 2022. For the three months ended September 30, 2023 and 2022, basic and diluted earnings per share were $1.06 and $1.20, respectively, which is a decrease of $0.14 per share, or 11.7%. The current quarter net income of $9.0 million decreased $480 thousand, or 5.0%, compared to net income of $9.5 million for the quarter ended June 30, 2023. The current quarter basic and diluted earnings per share decreased $0.06 per share, or 5.4%, compared to the prior quarter.

2023 Third Quarter Highlights

• Return on average assets was 1.52% and return on average equity was 13.84%.

• Fully taxable equivalent ("FTE") net interest margin was 4.01% compared to 4.11% for the prior quarter and 3.60% for the comparable quarter last year.

• Efficiency ratio¹ was 56.97% compared to 55.52% for the prior quarter and 52.45% from the comparable quarter last year.

• Total loans outstanding were $1.62 billion at September 30, 2023, an increase of $42.1 million, or 2.7%, from June 30, 2023 and an increase of $88.8 million, or 5.8% from September 30, 2022.

• Total non-performing loans to loans held-for-investment was 0.22% compared to 0.23% for the prior quarter and 0.26% for the comparable quarter of last year. Net charge-offs to average loans (annualized) was 0.03% compared to 0.02% for the prior quarter and 0.26% for the comparable quarter last year.

• The loan to deposit ratio was 82.8% for the most recent quarter. The ratio of uninsured and non-collateralized deposits to total deposits was approximately 17.4% at ACNB Bank for the most recent quarter.

• Tangible common equity to tangible assets ratio¹ of 8.65% for the most recent quarter compared to 8.75% for the prior quarter and 6.83% for the comparable quarter last year. The net unrealized loss on the available for sale securities portfolio was $75.2 million at September 30, 2023 compared to a net unrealized loss of $66.1 million at June 30, 2023 and a net unrealized loss of $68.8 million at September 30, 2022.
  

^{1 - Non-GAAP financial measure. Please refer to the calculation on the page titled “Non-GAAP Reconciliation” at the end of this document.}

“We are pleased to announce strong results for the third quarter of 2023 which reflect our continued focus on profitability.” said ACNB Corporation President and Chief Executive Officer James P. Helt. “Our team is delivering on its commitment to expertly serve the credit needs of our consumer and business customers while adhering to disciplined underwriting criteria. This commitment combined with a slowdown in loan prepayments due to the continued higher interest rate environment contributed to the positive loan growth this quarter. We also saw meaningful year-over-year increases in non-interest income as a result of other activities, including commissions from insurance sales and wealth management services. Asset quality remains a fundamental strength of the Corporation, and our results demonstrate that the Corporation is highly profitable in many key metrics, particularly return on average assets and return on average equity.”

Mr. Helt continued, “These solid operating results have enabled ACNB Corporation to generate sufficient capital to simultaneously invest back into the systems and resources that will allow us to continue to serve our customers in the future, as well as return capital to our shareholders in the form of stock repurchases and by increasing regular quarterly cash dividends by 7.1% to $0.30 per share of common stock, as was recently announced. We remain focused on our Vision to be the independent financial services provider of choice in the communities served by building relationships and finding solutions. As we look ahead to the final quarter of 2023, we are cautiously optimistic that our strong capital position, ample liquidity, and comprehensive menu of financial products and services will enable us to deliver on our commitment to success for the benefit of our many stakeholders.”

Net Interest Income and Margin

Net interest income for the three months ended September 30, 2023 totaled $21.7 million, a decrease of $775 thousand, or 3.4%, over the comparable quarter last year. The FTE net interest margin was 4.01%, an increase of 41 basis points from 3.60% for the comparable quarter last year. Paycheck Protection Program (“PPP”) fees and purchase accounting accretion for the three months ended September 30, 2023 totaled $208 thousand compared to $853 thousand for the comparable quarter last year. There were no PPP fees for the three months ended September 30, 2023 compared to $24 thousand for the comparable quarter last year. The decline in net interest income was driven primarily by a decrease in earning assets, an increase in the cost of funds, and a decrease in purchase accounting accretion.

Compared to the prior quarter, net interest income decreased $245 thousand, or 1.1%, driven primarily by an increase in the cost of funds and, to a lesser extent, a decrease in purchase accounting accretion. The FTE net interest margin decreased 10 basis points as funding cost increases out-paced the increases in the yields on interest-earning assets. Purchase accounting accretion for the three months ended September 30, 2023 totaled $208 thousand compared to $250 thousand for the prior quarter.

The average rate paid on interest-bearing deposits was 0.26% for the three months ended September 30, 2023, an increase of 13 basis points from the prior quarter and an increase of 12 basis points from the comparable quarter last year. The average rate paid on total borrowings was 3.83% for the three months ended September 30, 2023, an increase of 68 basis points from the prior quarter and an increase of 218 basis points from the comparable quarter last year. The average yield on interest-earning assets was 4.46% for the three months ended September 30, 2023, an increase of 13 basis points from the prior quarter and an increase of 72 basis points from the comparable quarter last year.

Noninterest Income

Noninterest income for the three months ended September 30, 2023 was $6.3 million, an increase of $448 thousand, or 7.7%, from the comparable quarter last year. The increase was driven primarily by an increase of $200 thousand in commissions from insurance sales due to organic growth, an increase of $130 thousand in income from fiduciary, investment management and brokerage activities, due to strong market returns and new business generation, and an increase in earnings on investment in bank-owned life insurance of $111 thousand due to the additional purchase of bank-owned life insurance in the third quarter of 2022. These increases were partially offset by lower service charges on deposit accounts of $82 thousand and lower income from mortgage loans held for sale of $42 thousand.

Compared to the prior quarter, noninterest income increased $103 thousand, or 1.7%. The second quarter of 2023 included a $323 thousand gain from the sale of three previously closed community banking offices and $553 thousand of contingent commissions earned in 2022, partially offset by losses of $546 thousand from the sale of securities.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2023 was $16.3 million, an increase of $1.0 million, or 6.6%, from the comparable quarter last year. The increase was driven primarily by increases in salaries and employee benefits, other operating, FDIC and regulatory and marketing and corporate relations expenses. Salaries and employee benefits expense was $10.1 million for the three months ended September 30, 2023 compared to $9.3 million for the comparable quarter last year. The increase in salaries and employee benefits expense was driven primarily by a general increase in base wages and commissions and an increase to incentive compensation. Other operating expense was $1.7 million for the three months ended September 30, 2023 compared to $1.5 million for the comparable quarter last year. The increase in other operating expenses was driven primarily by an increase in director-related fees of $97 thousand. FDIC and regulatory expense increased $125 thousand driven primarily by the timing of FDIC assessment recognition. Marketing and corporate relations expense was $159 thousand for the three months ended September 30, 2023 compared to $57 thousand for the comparable quarter last year. The increase was driven primarily by rebranding expenses of ACNB Bank’s Maryland banking locations.

Compared to the prior quarter, noninterest expense increased $55 thousand, or 0.34%, driven primarily by an increase in salary and employee benefits and FDIC and regulatory expenses partially offset by a decrease in other operating, equipment and net occupancy expenses. Salaries and employee benefits expense was $10.1 million for the three months ended September 30, 2023 compared to $9.8 million for the prior quarter. The increase in salaries and employee benefits expense was driven primarily by a general increase in base wages and commissions and an increase to incentive compensation. FDIC and regulatory expense increased $93 thousand driven primarily by the timing of FDIC assessment recognition. Other operating expense was $1.7 million for the three months ended September 30, 2023 compared to $1.9 million for the prior quarter. The decrease in other operating expense was driven primarily by a loss of $142 thousand recognized in the prior quarter as a result of writing off an investment in a title company. Equipment and net occupancy expenses were down primarily due to the timing of core processing costs and a decrease in maintenance and building repair expenses.

Loans and Asset Quality

Total loans outstanding were $1.62 billion at September 30, 2023, an increase of $42.1 million, or 2.7%, from June 30, 2023 and an increase of $88.8 million, or 5.8%, from September 30, 2022. The increase in both periods was driven mainly by growth in the commercial loan portfolio in our core markets.

Asset quality metrics continue to be stable. The provision for credit losses was $250 thousand and the provision for unfunded commitments was a reversal of $171 thousand for the three months ended September 30, 2023 compared to a reversal of provision for credit losses of $273 thousand and a provision for unfunded commitments of $121 thousand for the prior quarter. Non-performing loans were $3.6 million, or 0.22%, of total loans at September 30, 2023 compared to $3.7 million, or 0.23%, of total loans at June 30, 2023 and $3.9 million, or 0.26%, of total loans at September 30, 2022. Annualized net charge-offs for the three months ended September 30, 2023 were 0.03% of total average loans compared to 0.02% for the prior quarter and 0.26% for the comparable quarter last year.

Deposits and Borrowings

Total deposits were $2.0 billion at September 30, 2023. Deposits decreased by $12.4 million, or 0.6%, since June 30, 2023 and decreased by $384.9 million, or 16.5%, from September 30, 2022. Given ACNB’s funding level, Management continued to restrain deposit rates despite an increase in market interest rates and an increase in rates by competitors. As a result, total deposits declined during both periods as customers continued to seek higher yielding alternative deposit and investment products.

Total interest-bearing deposits were $1.4 billion at September 30, 2023. Interest-bearing deposits decreased by $8.2 million, or 0.6%, from June 30, 2023 and by $361.0 million, or 20.7%, from September 30, 2022. Brokered deposits were $30.0 million at September 30, 2023 compared to none at both June 30, 2023 and September 30, 2022. Total non-interest bearing deposits were $565.5 million at September 30, 2023. Non-interest bearing deposits decreased by $4.2 million, or 0.7%, from June 30, 2023 and decreased by $23.9 million, or 4.1%, from September 30, 2022. Compared to the prior quarter end, total borrowings increased $20.7 million at September 30, 2023 primarily to fund loan growth.

Stockholders’ Equity, Dividends and Share Repurchases

Total stockholders’ equity was $255.6 million at September 30, 2023 compared to $257.1 million at June 30, 2023 and $232.4 million at September 30, 2022. Tangible book value¹ per share was $23.80, $23.83 and $20.86 at September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

On October 19, 2023, the Board of Directors approved and declared a regular quarterly cash dividend of $0.30 per share of ACNB Corporation common stock payable on December 15, 2023, to shareholders of record as of December 1, 2023. This per share amount reflects a 7.1% increase, or $0.02, over the prior quarter’s cash dividend of $0.28 per share of common stock.

In addition, ACNB repurchased 46,378 shares of ACNB common stock during the three months ended September 30, 2023 at a cost of $1.5 million compared to no shares of ACNB common stock during the prior quarter and 109,931 shares of ACNB common stock during the comparable quarter last year at a cost of $3.8 million.

About ACNB Corporation

ACNB Corporation, headquartered in Gettysburg, PA, is the $2.4 billion financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and ACNB Insurance Services, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 26 community banking offices and three loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, Inc. is a full-service insurance agency with licenses in 44 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, MD, and Gettysburg, PA. For more information regarding ACNB Corporation and its subsidiaries, please visit investor.acnb.com.

SAFE HARBOR AND FORWARD-LOOKING STATEMENTS - Should there be a material subsequent event prior to the filing of the Quarterly Report on Form 10-Q with the Securities and Exchange Commission, the financial information reported in this press release is subject to change to reflect the subsequent event. In addition to historical information, this press release may contain forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of Management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as national, regional and local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. Such risks, uncertainties, and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: short-term and long-term effects of inflation and rising costs on the Corporation, customers and economy; the continuing banking instability caused by the recent failures and continuing financial uncertainty of various banks which may adversely impact the Corporation and its securities and loan values, deposit stability, capital adequacy, financial condition, operations, liquidity, and results of operations; effects of governmental and fiscal policies, as well as legislative and regulatory changes; effects of new laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which the Corporation and its subsidiaries must comply; impacts of the capital and liquidity requirements of the Basel III standards; effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including the effects of short-term and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; effects of economic conditions particularly with regard to the negative impact of any pandemic, epidemic or health-related crisis and the responses thereto on the operations of the Corporation and current customers, specifically the effect of the economy on loan customers’ ability to repay loans; effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; inflation, securities market and monetary fluctuations; risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest rate protection agreements, as well as interest rate risks; difficulties in acquisitions and integrating and operating acquired business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; effects of technology changes; effects of general economic conditions and more specifically in the Corporation’s market areas; failure of assumptions underlying the establishment of reserves for credit losses and estimations of values of collateral and various financial assets and liabilities; acts of war or terrorism or geopolitical instability; disruption of credit and equity markets; ability to manage current levels of impaired assets; loss of certain key officers; ability to maintain the value and image of the Corporation’s brand and protect the Corporation’s intellectual property rights; continued relationships with major customers; and, potential impacts to the Corporation from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses. We caution readers not to place undue reliance on these forward-looking statements. They only reflect Management’s analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the SEC.

ACNB #2023-21
October 27, 2023

Contact:	Jason H. Weber
	EVP/Treasurer &
	Chief Financial Officer
	717.339.5090
	jweber@acnb.com

ACNB Corporation Financial Highlights Selected Financial Data by Respective Quarter End (Unaudited)
Dollars in thousands, except per share data	September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
BALANCE SHEET DATA
Assets	$	2,388,522			$	2,378,151			$	2,410,933			$	2,525,507			$	2,654,153
Securities		501,063				518,093				568,232				620,250				571,796
Loans, total		1,615,966				1,573,817				1,531,626				1,538,610				1,527,128
Allowance for credit losses		19,264				19,148				19,485				17,861				17,952
Deposits		1,951,359				1,963,754				2,055,822				2,198,975				2,336,213
Allowance for unfunded commitments		1,962				2,132				2,011				92				92
Borrowings		153,388				132,703				76,294				62,954				65,691
Stockholders’ equity		255,638				257,069				255,841				245,042				232,370
INCOME STATEMENT DATA
Interest income	$	24,234			$	23,213			$	23,909			$	24,894			$	23,382
Interest expense		2,489				1,223				817				846				862
Net interest income		21,745				21,990				23,092				24,048				22,520
Provision for (reversal of ) credit losses		250				(273	)			97				—				—
(Reversal of) provision for unfunded commitments		(171	)			121				276				—				—
Net interest income after provisions for credit losses and unfunded commitments		21,666				22,142				22,719				24,048				22,520
Other income		6,297				6,194				4,984				5,423				5,849
Other expenses		16,336				16,281				16,282				16,673				15,320
Income before income taxes		11,627				12,055				11,421				12,798				13,049
Provision for income taxes		2,583				2,531				2,398				2,599				2,725
Net income	$	9,044			$	9,524			$	9,023			$	10,199			$	10,324
PROFITABILITY RATIOS
Loans held-for-investment to deposits		82.81	%			80.14	%			74.50	%			69.97	%			65.37	%
Return on average assets (annualized)		1.52	%			1.62	%			1.50	%			1.56	%			1.51	%
Return on average equity (annualized)		13.84	%			14.74	%			14.58	%			17.10	%			17.06	%
Efficiency ratio1		56.97	%			55.52	%			56.36	%			55.66	%			52.45	%
FTE Net interest margin		4.01	%			4.11	%			4.22	%			4.03	%			3.60	%
Yield on average earning assets		4.46	%			4.33	%			4.37	%			4.17	%			3.74	%
Yield on securities		2.24	%			2.24	%			2.46	%			2.30	%			2.05	%
Yield on loans		5.16	%			5.05	%			5.12	%			4.97	%			4.75	%
Cost of funds		0.47	%			0.23	%			0.15	%			0.14	%			0.14	%
PER SHARE DATA
Diluted earnings per share	$	1.06			$	1.12			$	1.06			$	1.20			$	1.20
Cash dividends paid per share		0.28				0.28				0.28				0.28				0.26
Tangible book value per share1		23.80				23.83				23.66				22.41				20.86
Tangible book value per share (ex-AOCI)1		31.43				30.64				29.76				29.23				28.23
CAPITAL RATIOS2
Tier 1 leverage ratio		11.97	%			11.79	%			11.09	%			9.91	%			9.33	%
Common equity tier 1 ratio		15.30	%			15.38	%			15.21	%			15.00	%			14.74	%
Tier 1 risk based capital ratio		15.59	%			15.72	%			15.56	%			15.36	%			15.10	%
Total risk based capital ratio		17.49	%			17.67	%			17.56	%			17.32	%			17.11	%
CREDIT QUALITY
Net charge-offs to average loans outstanding (annualized)		0.03	%			0.02	%			0.02	%			0.02	%			0.26	%
Total non-performing loans to loans held-for-investment3		0.22	%			0.23	%			0.25	%			0.25	%			0.26	%
Total non-performing assets to total assets4		0.17	%			0.17	%			0.18	%			0.17	%			0.16	%
Allowance for credit losses to loans held-for-investment		1.19	%			1.22	%			1.27	%			1.16	%			1.18	%

_{¹ Non-GAAP financial measure. Please refer to the calculation on the page titled “Non-GAAP Reconciliation” at the end of this document.
² Regulatory capital ratios as of September 30, 2023 are preliminary.
³ Non-performing Loans consists of loans on nonaccrual status and loans greater than ninety days past due and still accruing interest.
⁴ Non-performing Assets consists of Non-performing Loans and Other Real Estate Owned (OREO).}

Consolidated Balance Sheets (Unaudited)
Dollars in thousands, except per share data		September 30, 2023				June 30, 2023				March 31, 2023
ASSETS
Cash and due from banks		$	22,786			$	24,898			$	24,833
Interest bearing deposits with banks			41,255				59,145				89,233
Total Cash and Cash Equivalents			64,041				84,043				114,066
Equity securities with readily determinable fair values			888				915				1,328
Debt securities available for sale			435,559				452,252				501,944
Securities held to maturity, fair value $53,843; $58,133; $59,998			64,616				64,926				64,960
Loans held for sale			—				—				167
Loans, net of allowance for credit losses $19,264; $19,148; $19,485			1,596,702				1,554,669				1,512,141
Assets held for sale			—				1,418				3,393
Premises and equipment, net			25,740				26,145				26,588
Right of use assets			2,784				2,952				2,994
Restricted investment in bank stocks			5,477				4,877				2,552
Investment in bank-owned life insurance			79,391				78,919				78,435
Investments in low-income housing partnerships			1,034				1,066				1,097
Goodwill			44,185				44,185				44,185
Intangible assets, net			9,434				9,612				9,972
Foreclosed assets held for resale			467				467				474
Other assets			58,204				51,705				46,637
Total Assets		$	2,388,522			$	2,378,151			$	2,410,933
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing transaction accounts		$	565,530			$	569,729			$	594,355
Interest bearing transactions accounts			1,385,829				1,394,025				1,461,467
Total Deposits			1,951,359				1,963,754				2,055,822
Short-term borrowings			33,106				51,703				30,294
Long-term borrowings			120,282				81,000				46,000
Lease liabilities			2,784				2,952				2,994
Allowance for unfunded commitments			1,962				2,132				2,011
Other liabilities			23,391				19,541				17,971
Total Liabilities			2,132,884				2,121,082				2,155,092
STOCKHOLDERS’ EQUITY
Preferred Stock, $2.50 par value; 20,000,000 shares authorized; no shares outstanding			—				—				—
Common stock, $2.50 par value; 20,000,000 shares authorized; 8,892,374, 8,888,732, and 8,883,206 shares issued; 8,521,546, 8,564,282, and 8,523,256 shares outstanding			22,224				22,212				22,198
Treasury stock, at cost; 370,828, 324,450, and 324,450 shares			(10,502	)			(8,956	)			(8,956	)
Additional paid-in capital			96,744				96,586				96,415
Retained earnings			211,939				205,279				198,144
Accumulated other comprehensive loss			(64,767	)			(58,052	)			(51,960	)
Total Stockholders’ Equity			255,638				257,069				255,841
Total Liabilities and Stockholders’ Equity		$	2,388,522			$	2,378,151			$	2,410,933

Consolidated Income Statements (Unaudited)
		Three months ended September 30,								Nine Months Ended September 30,
Dollars in thousands, except per share data			2023				2022				2023				2022
INTEREST AND DIVIDEND INCOME
Loans, including fees
Taxable		$	20,285			$	17,789			$	58,130			$	50,078
Tax-exempt			361				424				1,069				995
Securities:
Taxable			2,477				2,830				8,451				7,102
Tax-exempt			284				189				883				618
Dividends			104				20				196				79
Other			723				2,130				2,627				3,283
Total Interest Income			24,234				23,382				71,356				62,155
INTEREST EXPENSE
Deposits			928				605				1,887				1,989
Short-term borrowings			439				23				564				60
Long-term borrowings			1,122				234				2,078				729
Total Interest Expense			2,489				862				4,529				2,778
Net Interest Income			21,745				22,520				66,827				59,377
Provision for Credit Losses			250				—				74				—
(Reversal of) Provision for Unfunded Commitments			(171	)			—				226				—
Net Interest Income after Provisions for Credit Losses and Unfunded Commitments			21,666				22,520				66,527				59,377
OTHER INCOME
Commissions from insurance sales			2,629				2,429				7,371				6,437
Service charges on deposit accounts			1,000				1,082				2,951				3,046
Income from fiduciary, investment management and brokerage activities			953				823				2,772				2,449
Gain from mortgage loans held for sale			—				42				31				468
Earnings on investment in bank-owned life insurance			473				362				1,399				1,052
Net losses on sales or calls of securities			—				—				(739	)			—
Net losses on equity securities			(27	)			(88	)			(22	)			(345	)
Gain on assets held for sale			14				—				337				—
Service charges on ATM and debit card transactions			845				837				2,502				2,455
Other			410				362				873				822
Total Other Income			6,297				5,849				17,475				16,384
OTHER EXPENSES
Salaries and employee benefits			10,069				9,320				30,335				26,193
Net occupancy			942				1,000				2,981				3,098
Equipment			1,554				1,521				4,784				4,566
Other tax			323				411				965				1,229
Professional services			617				589				1,600				1,328
Supplies and postage			229				254				633				630
Marketing and corporate relations			159				57				472				227
FDIC and regulatory			388				263				932				798
Intangible assets amortization			352				395				1,072				1,093
Other operating			1,703				1,510				5,125				4,446
Total Other Expenses			16,336				15,320				48,899				43,608
Income before Income Taxes			11,627				13,049				35,103				32,153
PROVISION FOR INCOME TAXES			2,583				2,725				7,512				6,600
Net Income		$	9,044			$	10,324			$	27,591			$	25,553
PER SHARE DATA
Basic earnings		$	1.06			$	1.20			$	3.24			$	2.95
Diluted earnings		$	1.06			$	1.20			$	3.23			$	2.95

Average Balances, Income and Expenses, Yields and Rates		Three months ended September 30, 2023									Three months ended September 30, 2022									Nine months ended September 30, 2023									Nine months ended September 30, 2022
Dollars in thousands		Average Balance			Interest5			Yield/ Rate			Average Balance			Interest5			Yield/ Rate			Average Balance			Interest5			Yield/ Rate			Average Balance			Interest5			Yield/ Rate
ASSETS
Interest bearing deposits with banks		$	53,324		$	723		5.38	%		$	368,265		$	2,130		2.29	%		$	71,645		$	2,627		4.90	%		$	481,219		$	3,283		0.91	%
Investments (Tax-exempt)			55,027			359		2.59	%			27,519			239		3.45	%			55,307			1,118		2.70	%			29,350			782		3.56	%
Investments (Taxable)			466,402			2,581		2.20	%			571,282			2,850		1.98	%			507,061			8,647		2.28	%			535,084			7,181		1.79	%
Total Investments			521,429			2,940		2.24	%			598,801			3,089		2.05	%			562,368			9,765		2.32	%			564,434			7,963		1.89	%
Loans (Tax-exempt)			73,995			457		2.45	%			80,604			424		2.09	%			75,657			1,353		2.39	%			78,180			1,259		2.15	%
Loans (Taxable)			1,520,134			20,285		5.29	%			1,440,646			17,789		4.90	%			1,479,690			58,130		5.25	%			1,417,589			50,078		4.72	%
Total Loans			1,594,129			20,742		5.16	%			1,521,250			18,213		4.75	%			1,555,347			59,483		5.11	%			1,495,769			51,337		4.59	%
Total Earning Assets			2,168,882			24,405		4.46	%			2,488,316			23,432		3.74	%			2,189,360			71,875		4.39	%			2,541,422			62,583		3.29	%
Total Assets		$	2,365,365								$	2,709,482								$	2,387,403								$	2,716,032
LIABILITIES
Interest bearing demand deposits		$	571,314								$	640,903								$	580,180								$	636,348
Money markets			245,899									342,002									276,154									337,892
Savings deposits			366,398									417,290									385,753									410,363
Time deposits			212,159									360,114									234,951									388,509
Total Interest Bearing Deposits			1,395,770			928		0.26	%			1,760,309			605		0.14	%			1,477,038			1,887		0.17	%			1,773,112			1,989		0.15	%
Short-term borrowings			66,942			439		2.60	%			38,017			23		0.24	%			47,852			564		1.58	%			37,365			60		0.21	%
Long-term borrowings			94,554			1,122		4.71	%			23,875			234		3.89	%			58,333			2,078		4.76	%			23,874			729		4.08	%
Total borrowings			161,496			1,561		3.83	%			61,892			257		1.65	%			106,185			2,642		3.33	%			61,239			789		1.72	%
Total Interest Bearing Liabilities			1,557,266			2,489		0.63	%			1,822,201			862		0.19	%			1,583,223			4,529		0.38	%			1,834,351			2,778		0.20	%
Non-interest bearing demand deposits			541,995									597,884									550,206									616,224
Cost of Funds								0.47	%								0.14	%								0.28	%								0.15	%
FTE Net Interest Margin								4.01	%								3.60	%								4.11	%								3.15	%
Stockholders’ Equity			259,284									240,026									256,526									253,207

---

_{⁵ Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.}

		Three months ended September 30, 2023									Three months ended June 30, 2023									Three months ended March 31, 2023									Three months ended December 31, 2022									Three months ended September 30, 2022
Dollars in thousands		Average Balance			Interest6			Yield/ Rate			Average Balance			Interest6			Yield/ Rate			Average Balance			Interest6			Yield/ Rate			Average Balance			Interest6			Yield/ Rate			Average Balance			Interest6			Yield/ Rate
ASSETS
Interest bearing deposits with banks		$	53,324		$	723		5.38	%		$	71,040		$	890		5.03	%		$	90,987		$	1,014		4.52	%		$	268,911		$	2,473		3.65	%		$	368,265		$	2,130		2.29	%
Investments (Tax-exempt)			55,027			359		2.59	%			55,588			361		2.60	%			55,589			397		2.90	%			42,987			666		6.15	%			27,519			239		3.45	%
Investments (Taxable)			466,402			2,581		2.20	%			498,401			2,739		2.20	%			557,377			3,327		2.42	%			542,137			2,722		1.99	%			571,282			2,850		1.98	%
Total Investments			521,429			2,940		2.24	%			553,989			3,100		2.24	%			612,966			3,724		2.46	%			585,124			3,388		2.30	%			598,801			3,089		2.05	%
Loans (Tax-exempt)			73,995			457		2.45	%			75,670			446		2.36	%			77,341			451		2.36	%			78,274			446		2.26	%			80,604			424		2.09	%
Loans (Taxable)			1,520,134			20,285		5.29	%			1,463,967			18,946		5.19	%			1,454,934			18,898		5.27	%			1,459,830			18,821		5.11	%			1,440,646			17,789		4.90	%
Total Loans			1,594,129			20,742		5.16	%			1,539,637			19,392		5.05	%			1,532,275			19,349		5.12	%			1,538,104			19,267		4.97	%			1,521,250			18,213		4.75	%
Total Earning Assets			2,168,882			24,405		4.46	%			2,164,666			23,382		4.33	%			2,236,228			24,087		4.37	%			2,392,139			25,128		4.17	%			2,488,316			23,432		3.74	%
Total Assets		$	2,365,365								$	2,357,626								$	2,439,219								$	2,598,000								$	2,709,482
LIABILITIES
Interest bearing demand deposits		$	571,314								$	577,480								$	591,972								$	653,369								$	640,903
Money markets			245,899									261,560									298,584									328,808									342,002
Savings deposits			366,398									387,847									403,419									408,285									417,290
Time deposits			212,159									224,608									268,708									318,115									360,114
Total Interest Bearing Deposits			1,395,770			928		0.26	%			1,451,495			486		0.13	%			1,562,683			473		0.12	%			1,708,577			572		0.13	%			1,760,309			605		0.14	%
Short-term borrowings			66,942			439		2.60	%			34,080			108		1.27	%			35,596			17		0.19	%			41,257			17		0.16	%			38,017			23		0.24	%
Long-term borrowings			94,554			1,122		4.71	%			59,901			629		4.21	%			29,211			327		4.54	%			22,350			257		4.56	%			23,875			234		3.89	%
Total borrowings			161,496			1,561		3.83	%			93,981			737		3.15	%			64,807			344		2.15	%			63,607			274		1.71	%			61,892			257		1.65	%
Total Interest Bearing Liabilities			1,557,266			2,489		0.63	%			1,545,476			1,223		0.32	%			1,627,490			817		0.20	%			1,772,184			846		0.19	%			1,822,201			862		0.19	%
Non-interest bearing demand deposits			541,995									550,581									557,546									586,092									597,884
Cost of Funds								0.47	%								0.23	%								0.15	%								0.14	%								0.14	%
FTE Net Interest Margin								4.01	%								4.11	%								4.22	%								4.03	%								3.60	%
Stockholders’ Equity			259,284									259,239									251,054									236,674									240,026

---

_{⁶ Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.}

Non-GAAP Reconciliation

Note: The Corporation has presented the following non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation’s results of operations and financial condition. These non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation’s industry. Investors should recognize that the Corporation’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other corporations. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.

		Three Months Ended
Dollars in thousands, except per share data		September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
Tangible book value per share
Stockholders’ equity		$	255,638			$	257,069			$	255,841			$	245,042			$	232,370
Less: Goodwill and intangible assets			(53,619	)			(53,797	)			(54,157	)			(54,517	)			(54,916	)
Tangible common stockholders’ equity (numerator)		$	202,019			$	203,272			$	201,684			$	190,525			$	177,454
Shares outstanding, less unvested shares, end of period (denominator)			8,488,446				8,528,782				8,523,256				8,501,752				8,505,843
Tangible book value per share		$	23.80			$	23.83			$	23.66			$	22.41			$	20.86
Tangible book value per share (ex-AOCI)
Tangible common stockholders’ equity		$	202,019			$	203,272			$	201,684			$	190,525			$	177,454
Less: AOCI			(64,767	)			(58,052	)			(51,960	)			(58,012	)			(62,690	)
Tangible equity (ex-AOCI)		$	266,786			$	261,324			$	253,644			$	248,537			$	240,144
Tangible book value per share (ex-AOCI)		$	31.43			$	30.64			$	29.76			$	29.23			$	28.23
Tangible common equity to tangible assets (TCE/TA Ratio)
Tangible common stockholders’ equity (numerator)		$	202,019			$	203,272			$	201,684			$	190,525			$	177,454
Total assets		$	2,388,522			$	2,378,151			$	2,410,933			$	2,525,507			$	2,654,153
Less: Goodwill and intangible assets			(53,619	)			(53,797	)			(54,157	)			(54,517	)			(54,916	)
Total tangible assets (denominator)		$	2,334,903			$	2,324,354			$	2,356,776			$	2,470,990			$	2,599,237
Tangible common equity to tangible assets			8.65	%			8.75	%			8.56	%			7.71	%			6.83	%
Efficiency Ratio
Non-interest expense		$	16,336			$	16,281			$	16,282			$	16,673			$	15,320
Less: Intangible amortization			(352	)			(360	)			(360	)			(399	)			(395	)
Less: Loss on MD Title Investment		$	—			$	(142	)		$	—			$	—			$	—
Non-interest expense (numerator)		$	15,984			$	15,779			$	15,922			$	16,274			$	14,925
Net interest income		$	21,745			$	21,990			$	23,092			$	24,048			$	22,520
Plus: Total non-interest income			6,297				6,194				4,984				5,423				5,849
Less: Net gains (losses) on sales or calls of securities			—				(546	)			(193	)			(234	)			—
Less: Net (losses) gains on equity securities			(27	)			(15	)			20				46				(88	)
Less: Gain on assets held for sale			14				323				—				—				—
Less: Net gains on sale of low income housing partnership			—				—				—				421				—
Total revenue (denominator)		$	28,055			$	28,422			$	28,249			$	29,238			$	28,457
Efficiency ratio			56.97	%			55.52	%			56.36	%			55.66	%			52.45	%

FAQ

What were the return on average assets and return on average equity for ACNB Corporation in Q3 2023?

The return on average assets for ACNB Corporation in Q3 2023 was 1.52% and the return on average equity was 13.84%.

What is the plan of ACNB Corporation for capital allocation?

ACNB Corporation plans to invest back into systems and resources and return capital to shareholders through stock repurchases and an increase in quarterly cash dividends.

How did total loans outstanding and non-performing loans change in Q3 2023?

Total loans outstanding increased by 2.7% compared to the previous quarter. Non-performing loans decreased slightly.