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ACNB Corporation Reports 2023 Third Quarter Financial Results

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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 dataSeptember 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.

ACNB Corp

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