ACNB Corporation Reports Fourth Quarter and 2023 Financial Results

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ACNB Corporation's recent earnings report indicates a significant year-over-year decline in net income for both the fourth quarter and the full year, which is a red flag for investors and analysts. The decrease from $10.2 million to $4.1 million for the quarterly comparison and a $4.1 million decrease for the year, could be attributed to the repositioning of the investment securities portfolio, which resulted in a substantial after-tax loss of approximately $3.5 million. This strategic move, while negatively impacting current earnings, suggests a realignment aimed at improving future interest income by about $1.9 million over the next 12 months.

The reported decrease in net interest income for the quarter, primarily driven by higher deposit costs and borrowing rates, reflects the pressure on margins in a rising interest rate environment. However, the full-year net interest income increased by 5.9% and the fully taxable equivalent net interest margin improved significantly by 71 basis points year-over-year, indicating an overall positive trend in earning asset yields outpacing the cost of funds.

Another point of concern is the decline in noninterest income due to the sale of investment securities, which contributed to the overall decrease in profitability. The reported efficiency ratio's increase from 55.81% to 57.78% year-over-year suggests a slight decrease in operational efficiency, which stakeholders should monitor for future trends.

ACNB Corporation's loan portfolio shows a modest increase, indicating a stable demand for loans in their market segments. The growth in the commercial loan portfolio is a positive sign, potentially reflecting a healthy regional business environment. However, the slight uptick in non-performing loans, from 0.22% to 0.26%, should be monitored, although it remains well within industry norms and does not yet indicate a systemic issue.

The substantial decline in total deposits, particularly the outflow of municipal deposits and replacement of brokered deposits with long-term borrowings, could suggest a strategic shift in liability management or a response to competitive pressures on deposit rates. The increase in long-term borrowing rates, while funding loan growth, also contributes to the pressure on net interest margins and could affect future profitability if not managed effectively.

The financial results of ACNB Corporation reflect broader economic trends, such as rising interest rates and increased market volatility. The strategic repositioning of the investment securities portfolio aligns with a proactive approach to managing interest rate risk and optimizing the balance sheet for future performance. The bank's focus on maintaining strong capital levels and liquidity positions it well to navigate potential economic headwinds.

ACNB's efforts in rebranding and aligning its subsidiaries under a unified brand strategy may enhance market presence and customer engagement, potentially leading to long-term growth. The increase in wealth management income and insurance commissions suggests diversification in revenue streams, which is beneficial in the face of interest rate-induced challenges in traditional banking revenue.

01/25/2024 - 09:00 AM

GETTYSBURG, Pa., Jan. 25, 2024 (GLOBE NEWSWIRE) -- ACNB Corporation (NASDAQ: ACNB) (“ACNB” or the “Corporation”), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced net income of $4.1 million, or $0.48 per diluted earnings per share, for the three months ended December 31, 2023 compared to net income of $10.2 million, or $1.20 per diluted earnings per share, for the three months ended December 31, 2022. Compared to the three months ended September 30, 2023, net income and diluted earnings per share for the three months ended December 31, 2023 decreased $4.9 million and $0.58, respectively. The Corporation reported net income of $31.7 million, or $3.71 per diluted earnings per share, for the twelve months ended December 31, 2023, a decrease of $4.1 million compared to the twelve months ended December 31, 2022. The financial results for both the three and twelve month periods ended December 31, 2023 were impacted by the repositioning of the investment securities portfolio as announced on Form 8-K on December 15, 2023. ACNB completed a repositioning of the investment securities portfolio by selling approximately $51.1 million in book value of available for sale investment securities for an after-tax loss of approximately $3.5 million.

2023 Highlights

Return on average assets was 1.32% and return on average equity was 12.23% for the twelve months ended December 31, 2023.
Excluding the impact of the repositioning of the investment securities portfolio, return on average assets was 1.47%¹ and return on average equity was 13.57%¹ for the twelve months ended December 31, 2023.
Fully taxable equivalent (“FTE”) net interest margin was 4.07% for the twelve months ended December 31, 2023 compared to 3.36% for the twelve months ended December 31, 2022.
Efficiency ratio¹ was 57.78% for the twelve months ended December 31, 2023 compared to 55.81% for the twelve months ended December 31, 2022.
Total loans were $1.63 billion at December 31, 2023, an increase of $12.0 million, or 0.7%, from September 30, 2023 and an increase of $89.4 million, or 5.8%, from December 31, 2022.
Total non-performing loans to loans held-for-investment was 0.26% at December 31, 2023 compared to 0.22% at September 30, 2023 and 0.25% at December 31, 2022. Net charge-offs to average loans (annualized) were 0.02% for the three months ended December 31, 2023 compared to 0.03% for the three months ended September 30, 2023 and 0.02% for the three months ended December 31, 2022.
The loan to deposit ratio was 87.44% at December 31, 2023 and the ratio of uninsured and non-collateralized deposits to total deposits was approximately 17.3% at ACNB Bank at December 31, 2023.
Tangible common equity to tangible assets ratio¹ of 9.48% at December 31, 2023 compared to 8.65% at September 30, 2023 and 7.71% at December 31, 2022. The net unrealized loss on the available for sale securities portfolio was $50.2 million at December 31, 2023 compared to a net unrealized loss of $75.2 million at September 30, 2023 and a net unrealized loss of $64.1 million at December 31, 2022.
ACNB and ACNB Bank capital levels remain well in excess of ACNB’s internal minimums and those required to be categorized as well-capitalized by our bank regulators. ACNB’s overall liquidity position remains strong and stable.

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

“The financial services industry was challenged in 2023 with considerable market uncertainty and turmoil. However, ACNB Corporation continued to focus on fundamental community banking principals and we are pleased to share our positive operating results. As a result of our steadfast commitment to our shareholders, customers, and employees, our financial performance during the year has positioned ACNB Corporation to meet the future demands facing our industry and our customers,” said James P. Helt, ACNB Corporation President & Chief Executive Officer.

“We began 2023 with our rebranding efforts and the concept of One Together, One Team, One Brand. The goal of brand realignment is for ACNB Corporation and its subsidiaries to operate cohesively under one name and one brand to effectively serve the financial needs of customers throughout the organization’s footprint in southcentral Pennsylvania and central Maryland. Through this dedicated effort, ACNB Corporation, ACNB Bank and ACNB Insurance Services, Inc. now provide brand recognition and impact for customers, shareholders, and communities served alike. Additionally, we experienced meaningful loan growth in 2023 led by our Commercial Lending teams. Our capital base, superior asset quality metrics and continued robust risk management practices remain key strengths of the Corporation. These corporate strengths provided us the opportunity at the end of 2023 to reposition our investment securities portfolio to improve our future interest income by approximately $1.9 million over the next 12 months.”

Mr. Helt continued, “We look forward to a successful 2024 by continuing to execute our strategy of remaining an independent financial services provider of choice in the communities served by building relationships and finding solutions for our customers. As always, ACNB Corporation’s Management and Board of Directors are focused on the challenges and opportunities that lie ahead and we are committed to continued growth and profitability for the Corporation.”

Net Interest Income and Margin

Net interest income for the three months ended December 31, 2023 totaled $21.5 million, a decrease of $252 thousand, or 1.2%, compared to the three months ended September 30, 2023. The decline in net interest income was driven primarily by an increase in the cost of deposits and an increase in borrowings. The FTE net interest margin was 3.93%, a decrease of 8 basis points from 4.01% for the three months ended September 30, 2023. The average rate paid on interest-bearing deposits was 0.51% for the three months ended December 31, 2023, an increase of 25 basis points from the three months ended September 30, 2023. The average rate paid on total borrowings was 4.06% for the three months ended December 31, 2023, an increase of 23 basis points from the three months ended September 30, 2023. The average yield on interest-earning assets was 4.62% for the three months ended December 31, 2023, an increase of 16 basis points from the three months ended September 30, 2023.

Net interest income for the twelve months ended December 31, 2023 totaled $88.3 million, an increase of $4.9 million, or 5.9%, over the twelve months ended December 31, 2022. The increase in net interest income was driven primarily by higher interest rates. Paycheck Protection Program (“PPP”) fees and purchase accounting accretion for the twelve months ended December 31, 2023 totaled $1.2 million compared to $3.8 million for the twelve months ended December 31, 2022. The FTE net interest margin was 4.07% for the twelve months ended December 31, 2023, an increase of 71 basis points from 3.36% for the twelve months ended December 31, 2022. The average rate paid on interest-bearing deposits was 0.25% for the twelve months ended December 31, 2023, an increase of 10 basis points from the twelve months ended December 31, 2022. The average rate paid on total borrowings was 3.62% for the twelve months ended December 31, 2023, an increase of 187 basis points from the twelve months ended December 31, 2022. The average yield on interest-earning assets was 4.45% for the twelve months ended December 31, 2023, an increase of 95 basis points from the twelve months ended December 31, 2022.

Noninterest Income

Noninterest income for the three months ended December 31, 2023 was $970 thousand, a decrease of $5.3 million, or 84.6%, from the three months ended September 30, 2023. For the twelve months ended December 31, 2023, noninterest income was $18.4 million, a decrease of $3.4 million, or 15.4%, compared to the twelve months ended December 31, 2022. The decrease in both periods was driven primarily by the repositioning of the investment securities portfolio which generated a $4.5 million pre-tax loss on the sale of investment securities.

Insurance commissions for the three months ended December 31, 2023 was $1.9 million, a decrease of $681 thousand from the three months ended September 30, 2023 due to seasonality in annual policy renewals. Insurance commissions for the twelve months ended December 31, 2023 was $9.3 million, an increase of $1.0 million from the twelve months ended December 31, 2022 driven primarily by higher contingent income, organic growth and the full year contribution from the acquisition of the business and assets of the Hockley & O’Donnell Insurance Agency in early 2022. Wealth management income for the twelve months ended December 31, 2023 was $3.6 million, an increase of $484 thousand from the twelve months ended December 31, 2022 driven primarily by strong market returns, greater sales activity and new business generation. Earnings on investment in bank-owned life insurance for the twelve months ended December 31, 2023 was $1.9 million, an increase of $346 thousand from the twelve months ended December 31, 2022 driven primarily by additional purchases during the three months ended September 30, 2022.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2023 was $17.2 million, an increase of $837 thousand, or 5.1%, from the three months ended September 30, 2023. The increase was driven primarily by increases in salaries and employee benefits, equipment, professional services and FDIC and regulatory expenses. Salaries and employee benefits expense increased $527 thousand driven primarily by an increase in incentive compensation, an increase in employment taxes and an increase in expense due to loan originations. Equipment expense increased $176 thousand driven primarily by increases in core processing and annual maintenance expenses and purchases of additional equipment. Professional services increased $103 thousand primarily as a result of increased loan review and consulting expenses. The $68 thousand increase in FDIC and regulatory was the result of a higher FDIC assessment due to changes in the composition of ACNB’s balance sheet.

For the twelve months ended December 31, 2023, noninterest expense was $66.1 million compared to $60.3 million for the year ended December 31, 2022. The $5.8 million, or 9.6%, increase was primarily driven by increases in salaries and employee benefits, professional services, marketing and corporate relations, FDIC and regulatory and other expenses. Salaries and employee benefits increased $5.0 million in the comparable period, driven primarily by an increase to incentive compensation, partly due to a partial reversal of incentive compensation in 2022, an increase in stock-based compensation, a general increase in base wages and commissions, due in part to the full year impact of the acquisition of the business and assets of the Hockley & O’Donnell Insurance Agency, an increase in pension expense, a partial reversal of expenses in 2022 related to loan originations, and an increase in ACNB Bank’s supplemental executive retirement plan and split dollar life insurance expenses. Professional services increased $234 thousand driven primarily by an increase in recruiting, external audit and consulting expenses. Marketing and corporate relations increased $313 thousand driven primarily by an increase of $283 thousand related to the rebranding of ACNB Bank’s Maryland banking locations. FDIC and regulatory expense increased $260 thousand as a result of a higher FDIC assessment due to changes in the composition of ACNB bank’s balance sheet. Other expense increased $744 thousand driven primarily by the write-off of an investment in a partnership, an increase in director expenses, a mark-to-market loss on an SBIC fund and internet banking expenses.

Loans and Asset Quality

Total loans outstanding were $1.63 billion at December 31, 2023, an increase of $12.0 million, or 0.7%, from September 30, 2023 and an increase of $89.4 million, or 5.8%, from December 31, 2022. The increase in both periods was driven primarily by growth in the commercial loan portfolio in our core markets.

Asset quality metrics continue to be stable. The provision for credit losses was $786 thousand and the provision for unfunded commitments was a reversal of $242 thousand for the three months ended December 31, 2023 compared to a provision for credit losses of $250 thousand and the provision for unfunded commitments was a reversal of $171 thousand for three months ended September 30, 2023 and no provision for credit losses or unfunded commitments for the three months ended December 31, 2022. Non-performing loans were $4.2 million, or 0.26%, of total loans at December 31, 2023 compared to $3.6 million, or 0.22%, of total loans at September 30, 2023 and $3.9 million, or 0.25%, of total loans at December 31, 2022. The increase in the provision for credit losses for the three months ended December 31, 2023 and non-performing loans at December 31, 2023 compared to the prior quarter was driven by one commercial and industrial relationship and was not indicative of a general weakness in the overall loan portfolio. Annualized net charge-offs for the three months ended December 31, 2023 were 0.02% of total average loans compared to 0.03% for the three months ended September 30, 2023 and 0.02% for three months ended December 31, 2022.

Deposits and Borrowings

Total deposits were $1.86 billion at December 31, 2023. Deposits decreased by $89.5 million, or 4.6%, since September 30, 2023 and decreased by $337.2 million, or 15.3%, from December 31, 2022. The decrease of $89.5 million compared to September 30, 2023 was driven by an outflow of municipal deposits of $41.7 million and a replacement of $30.0 million of brokered deposits with long-term borrowings. During the twelve months ended December 31, 2023, ACNB Bank restrained deposit rates for the better part of the year despite an increase in market interest rates and an increase in rates by competitors. As a result, total deposits declined during 2023 as customers sought higher yielding alternative deposit and investment products.

Total borrowings were $252.2 million at December 31, 2023, an increase of $98.8 million compared to September 30, 2023. The increase in borrowings was driven primarily by the outflow of municipal deposits and replacement of brokered deposits. Total borrowings increased $189.2 million from December 31, 2022 to December 31, 2023 to fund loan growth and deposit outflows during that period. The average rate on total long-term borrowings was 4.77% for the three months ended December 31, 2023 compared to 4.71% for the three months ended September 30, 2023 and 4.56% for the three months ended December 31, 2022. For the twelve months ended December 31, 2023, the average rate on total long-term borrowings was 4.76% compared to 3.97% for the twelve months ended December 31, 2022.

Stockholders’ Equity, Dividends and Share Repurchases

Total stockholders’ equity was $277.5 million at December 31, 2023 compared to $255.6 million at September 30, 2023 and $245.0 million at December 31, 2022. Tangible book value¹ per share was $26.44, $23.80 and $22.41 at December 31, 2023, September 30, 2023 and December 31, 2022, respectively.

On January 23, 2024, the Board of Directors approved and declared a regular quarterly cash dividend of $0.30 per share of ACNB Corporation common stock payable on March 15, 2024, to shareholders of record as of March 1, 2024. This per share amount reflects a $0.02, or 7.1%, increase over the same quarter of 2023.

ACNB repurchased 13,838 shares of ACNB common stock during the three months ended December 31, 2023 at a cost of $452 thousand. For the twelve months ended December 31, 2023, ACNB repurchased 61,066 shares of ACNB common stock at a cost of $2.0 million.

About ACNB Corporation

ACNB Corporation, headquartered in Gettysburg, PA, is the $2.42 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 Annual Report on Form 10-K 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; banking instability caused by bank 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 #2024-3
January 25, 2024

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)	December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022
BALANCE SHEET DATA
Assets	$	2,418,847		$	2,388,522		$	2,378,151		$	2,410,933		$	2,525,507
Securities		517,221			501,063			518,093			568,232			620,250
Total loans		1,627,988			1,615,966			1,573,817			1,531,626			1,538,610
Allowance for credit losses		(19,969	)		(19,264	)		(19,148	)		(19,485	)		(17,861	)
Deposits		1,861,813			1,951,359			1,963,754			2,055,822			2,198,975
Allowance for unfunded commitments		1,719			1,962			2,132			2,011			92
Borrowings		252,174			153,388			132,703			76,294			62,954
Stockholders’ equity		277,461			255,638			257,069			255,841			245,042
INCOME STATEMENT DATA
Interest income	$	25,284		$	24,234		$	23,213		$	23,909		$	24,894
Interest expense		3,791			2,489			1,223			817			846
Net interest income		21,493			21,745			21,990			23,092			24,048
Provision for (reversal of ) credit losses		786			250			(273	)		97			—
(Reversal of) provision for unfunded commitments		(242	)		(171	)		121			276			—
Net interest income after provisions for credit losses and unfunded commitments		20,949			21,666			22,142			22,719			24,048
Noninterest income		970			6,297			6,194			4,984			5,423
Noninterest expenses		17,173			16,336			16,281			16,282			16,673
Income before income taxes		4,746			11,627			12,055			11,421			12,798
Provision for income taxes		649			2,583			2,531			2,398			2,599
Net income	$	4,097		$	9,044		$	9,524		$	9,023		$	10,199
PROFITABILITY RATIOS
Total loans held-for-investment to deposits		87.44	%		82.81	%		80.14	%		74.50	%		69.97	%
Return on average assets (annualized)		0.68	%		1.52	%		1.62	%		1.50	%		1.56	%
Return on average equity (annualized)		6.09	%		13.84	%		14.74	%		14.58	%		17.10	%
Efficiency ratio²		62.48	%		56.97	%		55.52	%		56.36	%		55.66	%
FTE Net interest margin		3.93	%		4.01	%		4.11	%		4.22	%		4.03	%
Yield on average earning assets		4.62	%		4.46	%		4.33	%		4.37	%		4.17	%
Yield on investment securities		2.36	%		2.24	%		2.24	%		2.46	%		2.30	%
Yield on total loans		5.29	%		5.16	%		5.05	%		5.12	%		4.97	%
Cost of funds		0.71	%		0.47	%		0.23	%		0.15	%		0.14	%
PER SHARE DATA
Diluted earnings per share	$	0.48		$	1.06		$	1.12		$	1.06		$	1.20
Cash dividends paid per share		0.30			0.28			0.28			0.28			0.28
Tangible book value per share²		26.44			23.80			23.83			23.66			22.41
Tangible book value per share² (excluding AOCI)³		31.74			31.43			30.64			29.76			29.23
CAPITAL RATIOS⁴
Tier 1 leverage ratio		11.57	%		11.97	%		11.79	%		11.09	%		9.91	%
Common equity tier 1 ratio		15.16	%		15.30	%		15.38	%		15.21	%		15.00	%
Tier 1 risk based capital ratio		15.45	%		15.59	%		15.72	%		15.56	%		15.36	%
Total risk based capital ratio		17.41	%		17.49	%		17.67	%		17.56	%		17.32	%
CREDIT QUALITY
Net charge-offs to average loans outstanding (annualized)		0.02	%		0.03	%		0.02	%		0.02	%		0.02	%
Total non-performing loans to loans held-for-investment⁵		0.26	%		0.22	%		0.23	%		0.25	%		0.25	%
Total non-performing assets to total assets⁶		0.19	%		0.17	%		0.17	%		0.18	%		0.17	%
Allowance for credit losses to loans held-for-investment		1.23	%		1.19	%		1.22	%		1.27	%		1.16	%

_{² Non-GAAP financial measure. Please refer to the calculation on the pages titled “Non-GAAP Reconciliation” at the end of this document.}
_{³ Accumulated Other Comprehensive Income (Loss).}
_{⁴ Regulatory capital ratios as of December 31, 2023 are preliminary.}
_{⁵ Non-performing Loans consists of loans on nonaccrual status and loans greater than ninety days past due and still accruing interest.}
_{⁶ Non-performing Assets consists of Non-performing Loans and Foreclosed assets held for resale.}

Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)	December 31, 2023			September 30, 2023			December 31, 2022
ASSETS
Cash and due from banks	$	21,442		$	22,786		$	40,067
Interest-bearing deposits with banks		44,516			41,255			128,094
Total Cash and Cash Equivalents		65,958			64,041			168,161
Equity securities with readily determinable fair values		928			888			1,719
Investment securities available for sale, at estimated fair value		451,693			435,559			553,554
Investment securities held to maturity, at amortized cost		64,600			64,616			64,977
Loans held for sale		280			—			123
Total loans		1,627,988			1,615,966			1,538,610
Less: Allowance for credit losses		(19,969	)		(19,264	)		(17,861	)
Loans, net		1,608,019			1,596,702			1,520,749
Assets held for sale		—			—			3,393
Premises and equipment, net		26,283			25,740			27,053
Right of use asset		2,615			2,784			3,162
Restricted investment in bank stocks		9,677			5,477			1,629
Investment in bank-owned life insurance		79,871			79,391			77,993
Investments in low-income housing partnerships		1,003			1,034			1,129
Goodwill		44,185			44,185			44,185
Intangible assets, net		9,082			9,434			10,332
Foreclosed assets held for resale		467			467			474
Other assets		54,186			58,204			46,874
Total Assets	$	2,418,847		$	2,388,522		$	2,525,507

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	500,332		$	565,530		$	595,049
Interest-bearing		1,361,481			1,385,829			1,603,926
Total Deposits		1,861,813			1,951,359			2,198,975
Short-term borrowings		56,882			33,106			41,954
Long-term borrowings		195,292			120,282			21,000
Lease liability		2,615			2,784			3,162
Allowance for unfunded commitments		1,719			1,962			92
Other liabilities		23,065			23,391			15,282
Total Liabilities		2,141,386			2,132,884			2,280,465

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; 8,896,119, 8,892,374, and 8,838,720 shares issued; 8,511,453, 8,521,546, and 8,515,120 shares outstanding		22,231			22,224			22,086
Treasury stock, at cost; 384,666, 370,828, and 323,600 shares		(10,954	)		(10,502	)		(8,927	)
Additional paid-in capital		97,602			96,744			96,022
Retained earnings		213,491			211,939			193,873
Accumulated other comprehensive loss		(44,909	)		(64,767	)		(58,012	)
Total Stockholders’ Equity		277,461			255,638			245,042
Total Liabilities and Stockholders’ Equity	$	2,418,847		$	2,388,522		$	2,525,507

Consolidated Income Statements (Unaudited)
	Three months ended December 31,						Years Ended December 31,
(Dollars in thousands, except per share data)		2023			2022			2023			2022
INTEREST AND DIVIDEND INCOME
Loans, including fees
Taxable	$	21,303		$	18,820		$	79,433		$	68,898
Tax-exempt		336			353			1,405			1,348
Securities:
Taxable		2,534			2,697			10,985			9,799
Tax-exempt		285			526			1,168			1,144
Dividends		135			25			331			104
Other		691			2,473			3,318			5,756
Total Interest and Dividend Income		25,284			24,894			96,640			87,049
INTEREST EXPENSE
Deposits		1,808			572			3,695			2,561
Short-term borrowings		334			17			898			77
Long-term borrowings		1,649			257			3,727			986
Total Interest Expense		3,791			846			8,320			3,624
Net Interest Income		21,493			24,048			88,320			83,425
Provision for credit losses		786			—			860			—
Reversal of provision for unfunded commitments		(242	)		—			(16	)		—
Net Interest Income after Provisions for Credit Losses and Unfunded Commitments		20,949			24,048			87,476			83,425
NONINTEREST INCOME
Insurance commissions		1,948			1,870			9,319			8,307
Service charges on deposits		1,007			1,020			3,958			4,066
Wealth management		872			711			3,644			3,160
ATM debit card charges		846			867			3,348			3,322
Gain from mortgage loans held for sale		25			19			56			487
Earnings on investment in bank-owned life insurance		479			480			1,878			1,532
Net losses on sales or calls of securities		(4,501	)		(234	)		(5,240	)		(234	)
Net gains (losses) on equity securities		40			46			18			(298	)
Net gain on sale of low-income housing partnership		—			421			—			421
Gain on assets held for sale		—			—			337			—
Other		254			223			1,127			1,044
Total Noninterest Income		970			5,423			18,445			21,807
NONINTEREST EXPENSES
Salaries and employee benefits		10,596			9,786			40,931			35,979
Net occupancy		927			978			3,908			4,076
Equipment		1,730			2,046			6,514			6,612
Other tax		304			403			1,269			1,632
Professional services		720			758			2,320			2,086
Supplies and postage		175			193			808			823
Marketing and corporate relations		140			72			612			299
FDIC and regulatory		456			330			1,388			1,128
Intangible assets amortization		352			399			1,424			1,492
Other		1,773			1,708			6,898			6,154
Total Noninterest Expenses		17,173			16,673			66,072			60,281
Income Before Income Taxes		4,746			12,798			39,849			44,951
Provision for income taxes		649			2,599			8,161			9,199
Net Income	$	4,097		$	10,199		$	31,688		$	35,752
PER SHARE DATA
Basic earnings	$	0.48		$	1.20		$	3.72		$	4.15
Diluted earnings	$	0.48		$	1.20		$	3.71		$	4.15

Average Balances, Income and Expenses, Yields and Rates
	Three months ended December 31, 2023						Three months ended September 30, 2023						Three months ended June 30, 2023						Three months ended March 31, 2023						Three months ended December 31, 2022
(Dollars in thousands)	Average Balance		Interest⁷		Yield/ Rate		Average Balance		Interest⁷		Yield/ Rate		Average Balance		Interest⁷		Yield/ Rate		Average Balance		Interest⁷		Yield/ Rate		Average Balance		Interest⁷		Yield/ Rate
ASSETS
Loans:
Taxable	$	1,559,411	$	21,303	5.42	%	$	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	%
Tax-exempt		69,058		425	2.44	%		73,995		457	2.45	%		75,670		446	2.36	%		77,341		451	2.36	%		78,274		446	2.26	%
Total Loans		1,628,469		21,728	5.29	%		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	%

Investment Securities:
Taxable		453,713		2,669	2.33	%		466,402		2,581	2.20	%		498,401		2,739	2.20	%		557,377		3,327	2.42	%		542,137		2,722	1.99	%
Tax-exempt		54,835		361	2.61	%		55,027		359	2.59	%		55,588		361	2.60	%		55,589		397	2.90	%		42,987		666	6.15	%
Total Investments		508,548		3,030	2.36	%		521,429		2,940	2.24	%		553,989		3,100	2.24	%		612,966		3,724	2.46	%		585,124		3,388	2.30	%

Interest-bearing deposits with banks		50,225		691	5.46	%		53,324		723	5.38	%		71,040		890	5.03	%		90,987		1,014	4.52	%		268,911		2,473	3.65	%

Total Earning Assets		2,187,242		25,449	4.62	%		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	%

Total Assets	$	2,406,900					$	2,365,365					$	2,357,626					$	2,439,219					$	2,598,000

LIABILITIES
Interest-bearing demand deposits	$	560,510	$	275	0.19	%	$	571,314	$	185	0.13	%	$	577,480	$	150	0.10	%	$	591,972	$	146	0.10	%	$	653,369	$	192	0.12	%
Money markets		274,226		707	1.02	%		245,899		312	0.50	%		261,560		100	0.15	%		298,584		73	0.10	%		328,808		85	0.10	%
Savings deposits		348,244		28	0.03	%		366,398		30	0.03	%		387,847		31	0.03	%		403,419		33	0.03	%		408,285		41	0.04	%
Time deposits		221,778		798	1.43	%		212,159		401	0.75	%		224,608		205	0.37	%		268,708		221	0.33	%		318,115		254	0.32	%
Total Interest-Bearing Deposits		1,404,758		1,808	0.51	%		1,395,770		928	0.26	%		1,451,495		486	0.13	%		1,562,683		473	0.12	%		1,708,577		572	0.13	%

Short-term borrowings		56,872		334	2.33	%		66,942		439	2.60	%		34,080		108	1.27	%		35,596		17	0.19	%		41,257		17	0.16	%
Long-term borrowings		137,026		1,649	4.77	%		94,554		1,122	4.71	%		59,901		629	4.21	%		29,211		327	4.54	%		22,350		257	4.56	%
Total borrowings		193,898		1,983	4.06	%		161,496		1,561	3.83	%		93,981		737	3.15	%		64,807		344	2.15	%		63,607		274	1.71	%

Total Interest-Bearing Liabilities		1,598,656		3,791	0.94	%		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	%
Noninterest-bearing demand deposits		519,797						541,995						550,581						557,546						586,092
Cost of Funds					0.71	%					0.47	%					0.23	%					0.15	%					0.14	%
FTE Net Interest Margin					3.93	%					4.01	%					4.11	%					4.22	%					4.03	%
Stockholders’ Equity		266,799						259,284						259,239						251,054						236,674

_{⁷ Income on interest-earning assets has been computed on a fully taxable equivalent (FTE) basis using the 21% federal income tax statutory rate.}

	Year Ended December 31, 2023						Year Ended December 31, 2022
(Dollars in thousands)	Average Balance		Interest⁸		Yield/ Rate		Average Balance		Interest⁸		Yield/ Rate
ASSETS
Loans:
Taxable	$	1,499,635	$	79,433	5.30	%	$	1,428,150	$	68,898	4.82	%
Tax-exempt		73,993		1,778	2.40	%		78,204		1,706	2.18	%
Total Loans		1,573,628		81,211	5.16	%		1,506,354		70,604	4.69	%

Investment Securities:
Taxable		491,208		11,316	2.30	%		516,126		9,799	1.90	%
Tax-exempt		57,670		1,478	2.56	%		53,242		1,448	2.72	%
Total Investments		548,878		12,794	2.33	%		569,368		11,247	1.98	%

Interest-bearing deposits with banks		66,246		3,318	5.01	%		427,706		5,860	1.37	%

Total Earning Assets		2,188,752		97,323	4.45	%		2,503,428		87,711	3.50	%

Total Assets	$	2,392,278					$	2,720,957

LIABILITIES
Interest-bearing demand deposits	$	569,357	$	757	0.13	%	$	600,366	$	749	0.12	%
Money markets		283,918		1,192	0.42	%		346,498		342	0.10	%
Savings deposits		377,498		122	0.03	%		409,839		167	0.04	%
Time deposits		230,431		1,624	0.70	%		370,766		1,303	0.35	%
Total Interest-Bearing Deposits		1,461,204		3,695	0.25	%		1,727,469		2,561	0.15	%
Short-term borrowings		49,433		898	1.82	%		35,882		77	0.21	%
Long-term borrowings		78,262		3,727	4.76	%		24,814		986	3.97	%
Total borrowings		127,695		4,625	3.62	%		60,696		1,063	1.75	%
Total Interest-Bearing Liabilities		1,588,899		8,320	0.52	%		1,788,165		3,624	0.20	%
Noninterest-bearing demand deposits		543,843						609,622
Cost of Funds					0.39	%					0.15	%
FTE Net Interest Margin					4.07	%					3.36	%
Stockholders’ Equity		259,094						249,074

_{⁸ Income on interest-earning assets has been computed on a fully taxable equivalent basis (FTE) 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)	December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022
Tangible book value per share
Stockholders’ equity	$	277,461		$	255,638		$	257,069		$	255,841		$	245,042
Less: Goodwill and intangible assets	(53,267		)	(53,619		)	(53,797		)	(54,157		)		(54,517	)
Tangible common stockholders’ equity (numerator)	$	224,194		$	202,019		$	203,272		$	201,684		$	190,525
Shares outstanding, less unvested shares, end of period (denominator)	8,478,460			8,488,446			8,528,782			8,523,406				8,501,752
Tangible book value per share	$	26.44		$	23.80		$	23.83		$	23.66		$	22.41
Tangible book value per share (excluding AOCI)
Tangible common stockholders’ equity	$	224,194		$	202,019		$	203,272		$	201,684		$	190,525
Less: AOCI	(44,909		)	(64,767		)	(58,052		)	(51,960		)		(58,012	)
Tangible equity (excluding AOCI)	$	269,103		$	266,786		$	261,324		$	253,644		$	248,537
Tangible book value per share (excluding AOCI)	$	31.74		$	31.43		$	30.64		$	29.76		$	29.23
Tangible common equity to tangible assets (TCE/TA Ratio)
Tangible common stockholders’ equity (numerator)	$	224,194		$	202,019		$	203,272		$	201,684		$	190,525
Total assets	$	2,418,847		$	2,388,522		$	2,378,151		$	2,410,933		$	2,525,507
Less: Goodwill and intangible assets	(53,267		)	(53,619		)	(53,797		)	(54,157		)		(54,517	)
Total tangible assets (denominator)	$	2,365,580		$	2,334,903		$	2,324,354		$	2,356,776		$	2,470,990
Tangible common equity to tangible assets	9.48		%	8.65		%	8.75		%	8.56		%		7.71	%
Efficiency Ratio
Noninterest expense	$	17,173		$	16,336		$	16,281		$	16,282		$	16,673
Less: Intangible amortization	352			352			360			360				399
Less: Loss on MD Title Investment	—			—			142			—				—
Numerator	$	16,821		$	15,984		$	15,779		$	15,922		$	16,274
Net interest income	$	21,493		$	21,745		$	21,990		$	23,092		$	24,048
Plus: Total noninterest income	970			6,297			6,194			4,984				5,423
Less: Net losses on sales or calls of securities	(4,501		)	—			(546		)	(193		)		(234	)
Less: Net gains (losses) on equity securities	40			(27		)	(15		)	20				46
Less: Gain on assets held for sale	—			14			323			—				—
Less: Net gains on sale of low income housing partnership	—			—			—			—				421
Denominator	$	26,924		$	28,055		$	28,422		$	28,249		$	29,238
Efficiency ratio	62.48		%	56.97		%	55.52		%	56.36		%		55.66	%

Non-GAAP Reconciliation

(Dollars in thousands)	Year Ended December 31, 2023			Year Ended December 31, 2022
Efficiency Ratio
Noninterest expense	$	66,072		$	60,281
Less: Intangible amortization		1,424			1,492
Less: Loss on MD Title Investment		142			—
Noninterest expense (numerator)	$	64,506		$	58,789
Net interest income	$	88,320		$	83,425
Plus: Total noninterest income		18,445			21,807
Less: Net losses on sales or calls of securities		(5,240	)		(234	)
Less: Net gains (losses) on equity securities		18			(298	)
Less: Gain on assets held for sale		337			—
Less: Net gains on sale of low income housing partnership		—			421
Total revenue (denominator)	$	111,650		$	105,343
Efficiency ratio		57.78	%		55.81	%

(Dollars in thousands)	Three Months Ended December 31, 2023			Year Ended December 31, 2023
Return on average assets (excluding the repositioning)
Net income	$	4,097		$	31,688
Less: Loss on repositioning of investment securities portfolio, net of tax effect		(3,479	)		(3,479	)
Net income, excluding repositioning (numerator)	$	7,576		$	35,167
Average assets (denominator)	$	2,406,900		$	2,392,278
Return on average assets (excluding the repositioning)		1.25	%		1.47	%

Return on average equity (excluding the repositioning)
Net income, excluding repositioning (numerator)	$	7,576		$	35,167
Average equity (denominator)	$	266,799		$	259,094
Return on average equity (excluding the repositioning)		11.27	%		13.57	%

FAQ

What is the net income and diluted earnings per share for ACNB for the three months ended December 31, 2023?

The net income was $4.1 million, or $0.48 per diluted earnings per share.

What was the impact of the repositioning of the investment securities portfolio on ACNB's financial results?

The financial results for the three and twelve months ended December 31, 2023 were impacted by the repositioning of the investment securities portfolio.

What was the return on average assets and return on average equity for ACNB for the twelve months ended December 31, 2023?

The return on average assets was 1.32% and return on average equity was 12.23% for the twelve months ended December 31, 2023.

What was the total loans amount at December 31, 2023 for ACNB?

Total loans were $1.63 billion at December 31, 2023, an increase of $12.0 million, or 0.7%, from September 30, 2023 and an increase of $89.4 million, or 5.8%, from December 31, 2022.

What was the total deposits amount at December 31, 2023 for ACNB?

Total deposits were $1.86 billion at December 31, 2023.

What was the total stockholders' equity at December 31, 2023 for ACNB?

Total stockholders’ equity was $277.5 million at December 31, 2023.

What was the regular quarterly cash dividend approved by the Board of Directors for ACNB?

The Board of Directors approved a regular quarterly cash dividend of $0.30 per share of ACNB Corporation common stock payable on March 15, 2024, to shareholders of record as of March 1, 2024.

ACNB Corporation Reports Fourth Quarter and 2023 Financial Results

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What is the net income and diluted earnings per share for ACNB for the three months ended December 31, 2023?

What was the impact of the repositioning of the investment securities portfolio on ACNB's financial results?

What was the return on average assets and return on average equity for ACNB for the twelve months ended December 31, 2023?

What was the total loans amount at December 31, 2023 for ACNB?

What was the total deposits amount at December 31, 2023 for ACNB?

What was the total stockholders' equity at December 31, 2023 for ACNB?

What was the regular quarterly cash dividend approved by the Board of Directors for ACNB?

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ACNB Corporation Reports Fourth Quarter and 2023 Financial Results

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FAQ

What is the net income and diluted earnings per share for ACNB for the three months ended December 31, 2023?

What was the impact of the repositioning of the investment securities portfolio on ACNB's financial results?

What was the return on average assets and return on average equity for ACNB for the twelve months ended December 31, 2023?

What was the total loans amount at December 31, 2023 for ACNB?

What was the total deposits amount at December 31, 2023 for ACNB?

What was the total stockholders' equity at December 31, 2023 for ACNB?

What was the regular quarterly cash dividend approved by the Board of Directors for ACNB?

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