Earnings jump at ACNB Corporation (NASDAQ: ACNB) with stronger margin and credit
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
ACNB Corporation posted strong quarterly results, with net income of $13.7 million for the three months ended March 31, 2026, versus a small loss a year earlier. Diluted earnings were $1.32 per share, and annualized return on average assets reached 1.71% with return on average equity of 12.97%.
Net interest income rose to $32.5 million, supported by a higher 4.46% fully taxable equivalent net interest margin, balance sheet restructuring, the Traditions acquisition, and new loans and securities at higher yields. Average loans grew, and average interest-bearing deposits increased, helped by the acquisition and targeted promotions.
Asset quality remained solid: the allowance for credit losses was $23.6 million, or 1.01% of total loans, with nonperforming loans at $9.6 million, or 0.41% of loans. Noninterest income climbed to $8.3 million, while noninterest expenses fell to $23.6 million as prior-year merger-related costs rolled off. ACNB also issued $15.0 million of 5.875% subordinated notes due 2036 and redeemed its prior $15.0 million 4.00% subordinated notes due 2031.
Positive
- Sharp earnings improvement: Net income reached $13.7 million (diluted EPS $1.32) versus a small prior-year loss driven by one-time acquisition items, with ROA at 1.71% and ROE at 12.97%.
- Margin and balance sheet benefits from acquisition and repositioning: Fully taxable equivalent net interest margin increased to 4.46%, aided by securities restructuring, higher-yield originations, and the Traditions acquisition.
- Stable asset quality: Allowance for credit losses of $23.6 million (1.01% of loans) and nonperforming loans at only 0.41% of total loans support a solid credit profile.
Negative
- None.
Insights
ACNB’s quarter shows a clean post-merger earnings step-up with stable credit quality.
ACNB delivered net income of $13.7 million after a small loss a year ago that was driven by merger-related charges and acquisition credit provisioning. The fully taxable equivalent net interest margin improved to 4.46%, helped by securities repositioning, the Traditions acquisition, and higher-yield originations.
Credit metrics remained controlled, with an allowance for credit losses of $23.6 million, or 1.01% of loans, and nonperforming loans at 0.41% of total loans. Annualized net recoveries were essentially flat, indicating limited realized loss activity.
On the liability and capital side, ACNB refinanced part of its stack by issuing $15.0 million of 5.875% subordinated notes due 2036 and redeeming $15.0 million of 4.00% notes due 2031. This supports regulatory capital structure while modestly increasing funding cost. Subsequent filings may provide more detail on how this interacts with broader funding and growth plans.
Key Figures
Net income: $13.7M
Diluted EPS: $1.32
Net interest income: $32.5M
+7 more
10 metrics
Net income
$13.7M
Three months ended March 31, 2026
Diluted EPS
$1.32
Three months ended March 31, 2026
Net interest income
$32.5M
Three months ended March 31, 2026
Net interest margin
4.46%
Fully taxable equivalent, Q1 2026
Total assets
$3.27B
As of March 31, 2026
Total loans
$2.35B
Total loans, net of unearned income, March 31, 2026
Total deposits
$2.53B
As of March 31, 2026
Allowance for credit losses
$23.6M (1.01% of loans)
As of March 31, 2026
Nonperforming loans
$9.6M (0.41% of loans)
As of March 31, 2026
2026 Subordinated Notes
$15.0M at 5.875%
Fixed-to-floating notes due March 15, 2036
Key Terms
Allowance for Credit Losses, nonperforming loans, basis point(s), cash flow hedges, +2 more
6 terms
Allowance for Credit Losses financial
"The allowance for credit losses was $23.6 million at March 31, 2026"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
nonperforming loans financial
"Non-performing loans were $9.6 million, or 0.41%, of total loans"
Nonperforming loans are loans on which borrowers have stopped making the scheduled interest or principal payments for an extended period (commonly 90 days or more) or are otherwise in serious danger of default. Think of them as IOUs that aren’t being repaid: they tie up a lender’s money, reduce future interest income, and force the lender to hold extra reserves or take losses. For investors, a rising share of nonperforming loans signals weakening credit quality, higher potential losses, and greater risk to a bank’s profitability and capital.
basis point(s) financial
"Net interest margin increased to 4.46% ... an increase of 39 bps"
cash flow hedges financial
"Unrealized gains on interest rate derivatives used in cash flow hedges"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
Tier 2 capital financial
"The 2026 Subordinated Notes are considered Tier 2 capital for the consolidated capital ratios"
Tier 2 capital is the secondary cushion a bank holds to absorb losses after its core capital is used, made up of items like long-term subordinated debt and certain reserves. Think of it as a backup battery that kicks in only after the main battery fails; it matters to investors because its size and quality affect a bank’s regulatory strength, creditworthiness, and the safety of dividends and bond payments under stress.
available for sale financial
"Investment securities available for sale, at estimated fair value"
Available for sale describes investments, usually bonds or stocks, that a company intends to keep but may sell before they mature; they are reported at current market value on the balance sheet while any unrealized profit or loss is kept separate from regular earnings. For investors, this matters because changes in market value affect a company’s reported net worth and can become realized gains or losses when sold, similar to how the changing resale value of a collectible affects your net wealth even before you sell it.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2026
OR
For the transition period from _______ to _______
Commission file number 1-35015
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (717 ) 334-3161
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
The number of shares of the Registrant’s Common Stock outstanding on April 30, 2026, was 10,212,044 .
Table of Contents
ACNB CORPORATION
Table of Contents
| Page | ||||||||
Glossary | 3 | |||||||
| Part I – Financial Information | ||||||||
| Item 1. | Consolidated Statements of Condition (Unaudited) | 4 | ||||||
Consolidated Statements of Income (Loss) (Unaudited) | 5 | |||||||
Consolidated Statements of Comprehensive Income (Unaudited) | 6 | |||||||
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) | 7 | |||||||
Consolidated Statements of Cash Flows (Unaudited) | 8 | |||||||
Notes to Consolidated Financial Statements | 9 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 42 | ||||||
| Item 4. | Controls and Procedures | 44 | ||||||
| Part II – Other Information | ||||||||
| Item 1. | Legal Proceedings | 45 | ||||||
| Item 1A. | Risk Factors | 45 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45 | ||||||
| Item 3. | Defaults Upon Senior Securities | 45 | ||||||
| Item 4. | Mine Safety Disclosures | 45 | ||||||
| Item 5. | Other Information | 45 | ||||||
| Item 6. | Exhibits | 46 | ||||||
Signatures | 50 | |||||||
2
Table of Contents
ACNB CORPORATION
Glossary of Defined Acronyms and Terms
| 2021 Subordinated Notes | 4.00% fixed-to-floating rate subordinated notes due March 31, 2031 | ||||
| 2026 Subordinated Notes | 5.875% fixed-to-floating rate subordinated notes due March 15, 2036 | ||||
| ACL | Allowance for Credit Losses | ||||
| ACNB Insurance Services | ACNB Insurance Services, Inc. | ||||
| ACNB, Corporation or Company | ACNB Corporation | ||||
| Acquisition | Acquisition of Traditions Bancorp, Inc. effective February 1, 2025 | ||||
| AFS | Available for Sale | ||||
| ALCO | Asset Liability Committee | ||||
| AOCI | Accumulated other comprehensive income | ||||
| ASU | Accounting Standard Update | ||||
| ATM | Automatic Teller Machine | ||||
| Bank | ACNB Bank | ||||
| Basel III | Risk-based requirements and rules issued by federal banking agencies | ||||
| bp or bps | Basis point(s) | ||||
| CME | Chicago Mercantile Exchange | ||||
| CRA | Community Reinvestment Act of 1977 | ||||
| ETR | Effective Tax Rate | ||||
| Exchange Act | Securities Exchange Act of 1934 | ||||
| FASB | Financial Accounting Standards Board | ||||
| FCBI | Frederick County Bancorp, Inc. | ||||
| FDIC | Federal Deposit Insurance Corporation | ||||
| FHLB | Federal Home Loan Bank | ||||
| FOMC | Federal Open Market Committee | ||||
| FTE | Fully Taxable Equivalent | ||||
| GAAP | U.S. Generally Accepted Accounting Principles | ||||
| HTM | Held to Maturity | ||||
| Market Area | Southcentral Pennsylvania and Northern Maryland | ||||
| N/A | Not Applicable | ||||
| OBS | Off-Balance Sheet | ||||
| OCI | Other comprehensive income | ||||
| PCD | Purchased credit-deteriorated | ||||
| Purchase Agreements | Subordinated Note Purchase Agreements | ||||
| Purchasers | Institutional accredited investors and qualified institutional buyers | ||||
| SEC | Securities and Exchange Commission | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| Traditions | Traditions Bancorp, Inc. | ||||
3
Table of Contents
PART I - FINANCIAL INFORMATION
ACNB CORPORATION
ITEM 1 – FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
| (Dollars in thousands, except per share data) | March 31, 2026 | December 31, 2025 | |||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Interest-bearing deposits with banks | |||||||||||
| Total Cash and Cash Equivalents | |||||||||||
| Equity securities with readily determinable fair values | |||||||||||
| Investment securities available for sale, at estimated fair value | |||||||||||
Investment securities held to maturity, at amortized cost (fair value $ | |||||||||||
| Loans held for sale | |||||||||||
| Total loans, net of unearned income | |||||||||||
| Less: Allowance for credit losses | ( | ( | |||||||||
| Loans, net | |||||||||||
| Premises and equipment, net | |||||||||||
| Right of use asset | |||||||||||
| Restricted investment in bank stocks | |||||||||||
| Investment in bank-owned life insurance | |||||||||||
| Investments in low-income housing partnerships | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Assets held for sale | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing | $ | $ | |||||||||
| Interest-bearing | |||||||||||
| Total Deposits | |||||||||||
| Short-term borrowings | |||||||||||
| Long-term borrowings | |||||||||||
| Lease liability | |||||||||||
| Allowance for unfunded commitments | |||||||||||
| Other liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Stockholders’ Equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ and | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Stockholders’ Equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
The accompanying notes are an integral part of the Consolidated Financial Statements.
4
Table of Contents
| ACNB CORPORATION | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| (Dollars in thousands, except share data) | 2026 | 2025 | |||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||
| Loans, including fees: | |||||||||||
| Taxable | $ | $ | |||||||||
| Tax-exempt | |||||||||||
| Investment Securities: | |||||||||||
| Taxable | |||||||||||
| Tax-exempt | |||||||||||
| Dividends | |||||||||||
| Other | |||||||||||
| Total Interest and Dividend Income | |||||||||||
| INTEREST EXPENSE | |||||||||||
| Deposits | |||||||||||
| Short-term borrowings | |||||||||||
| Long-term borrowings | |||||||||||
| Total Interest Expense | |||||||||||
| Net Interest Income | |||||||||||
| (Reversal of) provision for credit losses | ( | ||||||||||
| Reversal of provision for unfunded commitments | ( | ( | |||||||||
| Net Interest Income after (Reversal of) Provisions for Credit Losses and Unfunded Commitments | |||||||||||
| NONINTEREST INCOME | |||||||||||
| Insurance commissions | |||||||||||
| Gain from mortgage loans held for sale | |||||||||||
| Service charges on deposits | |||||||||||
| Wealth management | |||||||||||
| ATM debit card charges | |||||||||||
| Earnings on investment in bank-owned life insurance | |||||||||||
| Gain on assets held for sale | |||||||||||
| Gain on life insurance proceeds | |||||||||||
| Other | |||||||||||
| Net gains on sales or calls of investment securities | |||||||||||
| Net (losses) gains on equity securities | ( | ||||||||||
| Total Noninterest Income | |||||||||||
| NONINTEREST EXPENSES | |||||||||||
| Salaries and employee benefits | |||||||||||
| Equipment | |||||||||||
| Net occupancy | |||||||||||
| Intangible assets amortization | |||||||||||
| Professional services | |||||||||||
| Other tax | |||||||||||
| FDIC and regulatory | |||||||||||
| Merger-related | |||||||||||
| Other | |||||||||||
| Total Noninterest Expenses | |||||||||||
| Income (Loss) Before Income Taxes | ( | ||||||||||
| Income tax expense (benefit) | ( | ||||||||||
| Net Income (Loss) | $ | $ | ( | ||||||||
| PER SHARE DATA | |||||||||||
| Basic earnings (loss) | $ | $ | ( | ||||||||
| Diluted earnings (loss) | $ | $ | ( | ||||||||
| Weighted average shares basic | |||||||||||
| Weighted average shares diluted | |||||||||||
5
Table of Contents
ACNB CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
NET INCOME (LOSS) | $ | $ | ( | ||||||||
| OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||
| INVESTMENT SECURITIES | |||||||||||
Unrealized (losses) gains arising during the period, net of income tax (benefit) expense of $( | ( | ||||||||||
Reclassification adjustment for net AFS investment securities gains included in net income, net of income tax effect of $( | ( | ||||||||||
| Total unrealized (loss) gain on AFS investment securities | ( | ||||||||||
Amortization of unrealized losses on AFS investment securities transferred to HTM, net of income tax expense of $ | |||||||||||
| DERIVATIVE FINANCIAL INSTRUMENTS | |||||||||||
Unrealized gains on interest rate derivatives used in cash flow hedges, net of income tax expense of $ | |||||||||||
Reclassification adjustment for net interest rate derivative losses included in net income, net of income tax effect of $( | ( | ||||||||||
| Total unrealized gains on interest rate derivatives used in cash flow hedges | |||||||||||
| DEFINED BENEFIT PENSION PLAN | |||||||||||
Unrecognized net gain, net of income tax expense of $ | |||||||||||
| TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | ( | ||||||||||
| TOTAL COMPREHENSIVE INCOME | $ | $ | |||||||||
The accompanying notes are an integral part of the Consolidated Financial Statements.
6
Table of Contents
ACNB CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Three Months Ended March 31, 2026 and 2025
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Shares | Amount | |||||||||||||||||||||||||||||||||||||||
BALANCE – January 1, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Common stock shares issued | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Repurchased shares | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Restricted stock grants, net of forfeitures and withheld for taxes | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||
| Compensation expense for restricted shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| BALANCE – March 31, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Shares | Amount | |||||||||||||||||||||||||||||||||||||||
| BALANCE – January 1, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock to acquire Traditions | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Common stock shares issued | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Repurchased shares | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Restricted stock grants, net of forfeitures and withheld for taxes | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||
| Compensation expense for restricted shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| BALANCE – March 31, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the Consolidated Financial Statements.
7
Table of Contents
ACNB CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Gain from mortgage loans held for sale | ( | ( | |||||||||
| Earnings on investment in bank-owned life insurance | ( | ( | |||||||||
| Net gains on sales or calls of investment securities | ( | ||||||||||
| Net losses (gains) on equity securities | ( | ||||||||||
| Gain on sales of assets held for sale | ( | ||||||||||
| Restricted stock compensation expense | |||||||||||
| Depreciation and amortization | |||||||||||
| Net accretion of purchase accounting adjustments | ( | ( | |||||||||
| (Reversal of) provision for credit losses and reversal of unfunded commitments | ( | ||||||||||
| Net amortization of investment securities premiums | |||||||||||
| Increase in interest receivable | ( | ( | |||||||||
| (Decrease) increase in interest payable | ( | ||||||||||
| Mortgage loans originated for sale | ( | ( | |||||||||
| Proceeds from sales of loans originated for sale | |||||||||||
| Increase in other assets | ( | ( | |||||||||
| Deferred income tax | ( | ||||||||||
| Increase in other liabilities | |||||||||||
| Net Cash Provided by (Used in) Operating Activities | ( | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Proceeds from calls/maturities of investment securities held to maturity | |||||||||||
| Proceeds from calls/maturities of investment securities available for sale | |||||||||||
| Proceeds from sales of investment securities available for sale | |||||||||||
| Purchase of investment securities available for sale | ( | ( | |||||||||
| Net redemption of restricted investment in bank stocks | |||||||||||
| Net (increase) decrease in loans | ( | ||||||||||
| Gain on life insurance proceeds | ( | ( | |||||||||
| Net cash and cash equivalents received from acquisition | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sales of assets held for sale | |||||||||||
| Net Cash (Used in) Provided by Investing Activities | ( | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Net increase in noninterest-bearing deposits | |||||||||||
| Net increase in interest-bearing deposits | |||||||||||
| Net (decrease) increase in short-term borrowings | ( | ||||||||||
| Proceeds from long-term borrowings | |||||||||||
| Repayments on long-term borrowings | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Common stock repurchased | ( | ( | |||||||||
| Common stock issued, net of restricted stock forfeitures and withheld for taxes | ( | ( | |||||||||
| Net Cash Provided by (Used in) Financing Activities | ( | ||||||||||
| Net Increase in Cash and Cash Equivalents | |||||||||||
| CASH AND CASH EQUIVALENTS — BEGINNING | |||||||||||
| CASH AND CASH EQUIVALENTS — ENDING | $ | $ | |||||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for Federal income taxes | |||||||||||
| Cash paid for State income taxes | |||||||||||
| Supplemental disclosures of certain noncash activities: | |||||||||||
| Recognition of operating lease right of use assets | $ | $ | |||||||||
| Recognition of operating lease liabilities | |||||||||||
| Transactions related to acquisition: | |||||||||||
| Increase in assets and liabilities: | |||||||||||
| Net assets acquired | $ | $ | |||||||||
| Liabilities assumed | |||||||||||
| Common shares issued | |||||||||||
The accompanying notes are an integral part of the Consolidated Financial Statements.
8
Table of Contents
ACNB CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation and Nature of Operations
ACNB Corporation, headquartered in Gettysburg, Pennsylvania, provides banking, wealth management, mortgage and insurance services to businesses and consumers through its wholly-owned subsidiaries, ACNB Bank and ACNB Insurance Services. The Bank engages in full-service commercial and consumer banking and wealth management services, including trust and retail brokerage, through its 33 community banking offices, including 24 community banking office locations in Adams, Cumberland, Franklin, Lancaster and York Counties, Pennsylvania, and nine community banking office locations in Carroll and Frederick Counties, Maryland. There are two loan production offices located in West Lawn, Pennsylvania and in Hunt Valley, Maryland. ACNB Insurance Services is a full-service insurance agency based in Westminster, Maryland, with an additional location in Gettysburg, Pennsylvania. The agency offers a broad range of property, casualty, health, life and disability insurance to both individual and commercial clients.
Recent Acquisition
Effective February 1, 2025, ACNB closed the acquisition of Traditions Bancorp, Inc., holding company for Traditions Bank, York, Pennsylvania. Traditions was merged with and into a wholly-owned subsidiary of ACNB Corporation immediately followed by the merger of Traditions Bank with and into ACNB Bank. ACNB Bank is operating four of the former Traditions Bank offices as “Traditions Bank, A Division of ACNB Bank”.
Basis of Financial Statements
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities as of the date of the financial statements as well as revenues and expenses during the period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary for a fair presentation. All such adjustments are of a normal recurring nature. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025. The Corporation evaluates subsequent events through the filing date of this Form 10-Q with the SEC. The results of operations for the three month period ended March 31, 2026, are not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. Reclassifications had no material effect on prior year net income (loss) or stockholders’ equity.
Significant Accounting Policies
The significant accounting policies used in preparation of the Consolidated Financial Statements are disclosed in the Corporation’s 2025 Annual Report on Form 10-K. Those significant accounting policies are unchanged at March 31, 2026.
Accounting Standards Pending Adoption
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40)”. This ASU is intended to improve the decision usefulness of expense information on public business entities’ income statements through the disaggregation of relevant expense captions in the notes to the financial statements. The amendments of ASU 2024-03 are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and early adoption is permitted. The Corporation is currently evaluating the impact of this standard, and believes that its adoption will not have a material impact on the Corporation’s Consolidated Financial Statements.
In November 2025, the FASB issued ASU 2025-08, “Financial Instruments–Credit Losses (Topic 326): Purchased Loans”. The amendments in this ASU expand the population of acquired financial assets subject to the gross-up approach in Topic 326. Financial assets acquired with a “more-than-insignificant” deterioration of credit quality since its origination (PCD assets) and non-PCD assets are accounted for using the “gross up approach” to both populations. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, and early adoption is permitted. The amendments in this ASU should be applied prospectively to loans that are acquired on or after the initial application date. The Corporation is currently evaluating the impact of this standard, and believes that its adoption will not have a material impact on the Corporation’s Consolidated Financial Statements.
9
Table of Contents
In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements”. This ASU was issued to clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative. The objective of this ASU is to more closely align hedge accounting with the economics of an entity’s risk management activities. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, and early adoption is permitted. The Corporation is currently evaluating the impact of this standard, and believes that its adoption will not have a material impact on the Corporation’s Consolidated Financial Statements.
Note 2 – Earnings (Loss) Per Share
The Corporation has a simple capital structure. Basic earnings (loss) per share of common stock is calculated as net income (loss) available to common shareholders divided by the weighted average number of shares outstanding less unvested restricted stock at the end of the period. Diluted earnings (loss) per share is calculated as net income (loss) available to common shareholders divided by the weighted average number of shares outstanding.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Weighted average shares outstanding (basic) | |||||||||||
| Dilutive effect of unvested shares | |||||||||||
| Weighted average shares outstanding (diluted) | |||||||||||
| Per share: | |||||||||||
| Basic | $ | $ | ( | ||||||||
| Diluted | ( | ||||||||||
There were no antidilutive instruments at March 31, 2026 and 2025.
Share Repurchase Plans
On June 18, 2025, the Corporation announced that the Board of Directors approved a plan to repurchase, in open market transactions at prevailing market prices, up to 314,000 shares, or approximately 3 %, of the outstanding shares of ACNB’s common stock. This common stock repurchase program replaced and superseded any and all earlier announced repurchase plans. During the three months ended March 31, 2026 the Corporation repurchased 73,972 shares. There were 190,901 shares purchased under this plan through March 31, 2026. The Corporation repurchased the remaining outstanding share repurchases authorized under this plan in April of 2026, completing this program.
On April 29, 2026, the Corporation announced that the Board of Directors approved a plan to repurchase, in open market transactions at prevailing market prices, up to 310,000 shares, or approximately 3 %, of the outstanding shares of ACNB’s common stock. This common stock repurchase program replaced and superseded any and all earlier announced repurchase plans.
10
Table of Contents
Note 3 – Investment Securities
Fair value of equity securities with readily determinable fair values at March 31, 2026 and December 31, 2025, are as follows:
| (In thousands) | Fair Value at Beginning of Period | (Losses) Gains | Fair Value at End of Period | ||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||
| CRA Mutual Fund | $ | $ | ( | $ | |||||||||||||
| Twelve Months Ended December 31, 2025 | |||||||||||||||||
| CRA Mutual Fund | $ | $ | $ | ||||||||||||||
Amortized cost and fair value of investment securities were as follows:
| (In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||
| Available for Sale | |||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | |||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Held to Maturity | |||||||||||||||||||||||
| State and municipal | $ | $ | $ | $ | |||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Available for Sale | |||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | |||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Held to Maturity | |||||||||||||||||||||||
| State and municipal | $ | $ | $ | $ | |||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
11
Table of Contents
The following table shows the Corporation’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2026, and December 31, 2025:
| Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
| (In thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Available for Sale | |||||||||||||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Held to Maturity | |||||||||||||||||||||||||||||||||||
| State and municipal | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Available for Sale | |||||||||||||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Held to Maturity | |||||||||||||||||||||||||||||||||||
| State and municipal | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
All mortgage-backed securities, and those of a similar asset class, are government-sponsored enterprise pass-through instruments issued by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation or they are issued by the Government National Mortgage Association which is backed by the U.S. government which guarantees the timely payment of principal on these investments.
The Company evaluates AFS debt securities for impairment at each measurement date to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. In estimating credit events, management considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before anticipated recovery or if it does not expect to recover the entire amortized cost basis. There was no impairment on AFS debt securities as of March 31, 2026 and December 31, 2025. The Company evaluates HTM debt securities for expected credit losses at each measurement date to determine the ACL. The Corporation’s ACL on its HTM investment securities was de minimis as of March 31, 2026 and December 31, 2025.
12
Table of Contents
The Company monitors the credit quality of HTM debt securities through the use of credit analysis on a quarterly basis. The credit quality indicators were updated as of March 31, 2026. The following table shows the amortized cost of HTM debt securities as of March 31, 2026 and December 31, 2025, aggregated by credit quality indicator:
| (In thousands) | A+ Rated or Higher | Not Rated | |||||||||
| March 31, 2026 | |||||||||||
| State and political subdivisions | $ | $ | |||||||||
| Residential mortgage-backed securities | |||||||||||
| Total | $ | $ | |||||||||
| December 31, 2025 | |||||||||||
| State and political subdivisions | $ | $ | |||||||||
| Residential mortgage-backed securities | |||||||||||
| Total | $ | $ | |||||||||
Amortized cost and fair value at March 31, 2026, by contractual maturity, where applicable, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay with or without penalties. Securities not due at a single maturity date are shown separately below.
| Available for Sale | Held to Maturity | ||||||||||||||||||||||
| (In thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
| 1 year or less | $ | $ | $ | $ | |||||||||||||||||||
| Over 1 year through 5 years | |||||||||||||||||||||||
| Over 5 years through 10 years | |||||||||||||||||||||||
| Over 10 years | |||||||||||||||||||||||
| Mortgage-backed securities | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
The proceeds from sales and calls of investment securities and the associated gains and losses are listed below:
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Proceeds from sales | $ | $ | |||||||||
| Proceeds from calls | |||||||||||
| Gross gains | |||||||||||
| Gross losses | |||||||||||
During the three months ended March 31, 2025, ACNB received $97.7 million in proceeds from the sale of Traditions’ investments subsequent to the Acquisition date.
At March 31, 2026 and December 31, 2025, securities with a carrying value of $156.3 million and $159.6 million, respectively, were pledged as collateral as required by law on public and trust deposits, repurchase agreements, and for other purposes.
13
Table of Contents
Note 4 – Loans and Allowance for Credit Losses
The following table presents the composition of the loan portfolio:
| (In thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Commercial real estate | $ | $ | |||||||||
| Residential mortgage | |||||||||||
| Commercial and industrial | |||||||||||
| Home equity lines of credit | |||||||||||
| Real estate construction | |||||||||||
| Consumer | |||||||||||
| Gross loans | |||||||||||
| Unearned income | ( | ( | |||||||||
| Total loans, net of unearned income | $ | $ | |||||||||
One of the factors used to monitor the performance and credit quality of the loan portfolio is to analyze the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status:
| (In thousands) | 30–59 Days Past Due | 60–89 Days Past Due | ≥ 90 Days Past Due | Total Past Due | Current | Total Loans Receivable | Loans Receivable ≥ 90 Days and Accruing | ||||||||||||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||
| Gross Loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||
| Gross Loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
14
Table of Contents
Nonaccrual and Nonperforming Loans
Loans individually evaluated consist of nonaccrual loans, presented in the following table:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| (In thousands) | With a Related Allowance | Without a Related Allowance | Total | With a Related Allowance | Without a Related Allowance | Total | |||||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
During the three months ended March 31, 2026, no material amount of interest income was recognized on nonaccrual loans subsequent to their classification as nonaccrual.
Total nonperforming loans are as follows:
| (In thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Nonaccrual loans | $ | $ | |||||||||
Greater than or equal to 90 days past due and accruing1 | |||||||||||
| Total nonperforming loans | $ | $ | |||||||||
1 Nonperforming loans include consumer residential mortgages and home equity lines of credit which are well secured by residential real estate properties and are in the process of collection and are not considered nonaccrual.
Collateral-Dependent Loans
A loan is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Corporation elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, the Corporation records a partial charge-off to reduce the collateral-dependent loan’s carrying value to the fair value of the collateral less cost to sell. Substantially all of the collateral supporting collateral-dependent loans consists of various types of real estate, including residential properties, commercial properties, such as retail centers, office buildings, and lodging, agriculture land, and vacant land. Changes in the fair value of the collateral for individually evaluated loans are reported as provision for credit losses or a reversal of provision for credit losses in the period of change.
The following table presents the amortized cost basis of individually evaluated loans by type of collateral as of the periods presented:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (In thousands) | Business Assets | Real Estate | Business Assets | Real Estate | |||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | |||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Loan Modifications
The Corporation evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or combinations of the above. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.
15
Table of Contents
The following table presents the amortized cost basis of loans that were experiencing financial difficulty and modified during the three months ended March 31, 2026, by class, type of modification, and financial effect. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:
| (Dollars in thousands) | Term Extension | Percent of Class of Financing Receivable | Financial Effect | ||||||||||||||
| March 31, 2026 | |||||||||||||||||
| Commercial and industrial | $ | % | Extended the term of the loan | ||||||||||||||
There were no loans modified during the three months ended March 31, 2025.
The following presents the performance of loans modified in the previous twelve months as of March 31, 2026:
| (In thousands) | Current | 30-59 Days Past Due | 60-89 Days Past Due | ≥ 90 Days Past Due | Total Past Due | ||||||||||||||||||||||||
| Residential mortgage | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following presents the performance of loans modified in the previous twelve months as of March 31, 2025:
| (In thousands) | Current | 30-59 Days Past Due | 60-89 Days Past Due | ≥ 90 Days Past Due | Total Past Due | ||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
As of March 31, 2026, the Corporation had no commitments to lend any additional funds on modified loans. During the three months ended March 31, 2026, one residential mortgage loan in the amount of $92 thousand defaulted on the modified terms of the agreement by failure to make the monthly payments after the deferment period ended. During the three months ended March 31, 2025, there were no loans modified due to financial difficulty that defaulted subsequent to the modification. For purposes of this disclosure, a default occurs when, within 12 months of the original modification, either a full or partial charge-off occurs or the loan becomes 90 days or more past due.
Allowance for Credit Losses
The Corporation maintains an ACL at a level determined to be adequate by management to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. The ACL consists of loans evaluated collectively and individually for expected credit losses. The Corporation considers the performance of the loan portfolio and its impact on the ACL and does not assign internal risk ratings to smaller balance, homogeneous loans such as certain residential mortgage, home equity lines of credit, construction loans to individuals secured by residential real estate and consumer loans. For these loans, the Corporation evaluates credit quality based on the aging status of the loan and designates as performing and nonperforming.
16
Table of Contents
The following summarizes designated internal risk categories by portfolio segment for loans assigned a risk rating and those evaluated based on the performance status:
| March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | ||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | ||||||||||||||||||||||||||||||||||||||||
| Internally Risk Rated: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial real estate | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Home equity lines of credit | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Real estate construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Performance Rated: | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Home equity lines of credit | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Total Real estate construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Consumer | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Total Portfolio loans: | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | |||||||||||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Portfolio loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
17
Table of Contents
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | ||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Total | ||||||||||||||||||||||||||||||||||||||||
| Internally Risk Rated: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial real estate | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Residential mortgage | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Home equity lines of credit | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Real estate construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Performance Rated: | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Residential mortgage | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity lines of credit | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Home equity lines of credit | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Total Real estate construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Consumer | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Total Portfolio loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Performing | |||||||||||||||||||||||||||||||||||||||||||||||
| Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Portfolio loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Year-to-date gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
18
Table of Contents
The following table presents the activity in the ACL by loan portfolio segment:
| (In thousands) | Commercial Real Estate | Residential Mortgage | Commercial and Industrial | Home Equity Lines of Credit | Real Estate Construction | Consumer | Total | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Beginning balance - January 1, 2026 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||
| Provisions (reversal of) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Ending balance - March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Beginning balance - January 1, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Allowance established for acquired PCD loans | |||||||||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||
| Provisions (reversal of) | ( | ||||||||||||||||||||||||||||||||||||||||
| Ending balance - March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Note 5 – Deposits
Deposits were comprised of the following as of the periods presented:
| (In thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Noninterest-bearing demand deposits | $ | $ | |||||||||
| Interest-bearing demand deposits | |||||||||||
| Money market | |||||||||||
| Savings | |||||||||||
| Total demand and savings | |||||||||||
| Time | |||||||||||
| Total deposits | $ | $ | |||||||||
Time deposits include brokered deposits totaling $89.1 million at March 31, 2026 and $59.1 million at December 31, 2025.
Scheduled maturities of time deposits at March 31, 2026 are as follows:
| Time Deposits | |||||||||||
| (In thousands) | Less than $250,000 | $250,000 or more | |||||||||
| Less than 1 year | $ | $ | |||||||||
| 1 - 2 years | |||||||||||
| 2 - 3 years | |||||||||||
| 3 - 4 years | |||||||||||
| 4 - 5 years | |||||||||||
| Thereafter | |||||||||||
| Total time deposits | $ | $ | |||||||||
19
Table of Contents
Note 6 – Borrowings
Short-term borrowings and weighted-average interest rates for the periods presented:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (Dollars in thousands) | Amount | Rate | Amount | Rate | |||||||||||||||||||
| Securities sold under repurchase agreements | $ | % | $ | % | |||||||||||||||||||
| FHLB advances | |||||||||||||||||||||||
| Federal funds purchased | % | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
Borrowings with original maturities of one year or less are classified as short-term. Securities sold under repurchase agreements are comprised of customer repurchase agreements, which are sweep accounts with next-day maturities utilized by larger commercial customers to earn interest on their funds. Securities are pledged to these customers in an amount at least equal to the outstanding balance. Under an agreement with the FHLB, the Bank has short-term borrowing capacity included within its maximum borrowing capacity. All FHLB advances are collateralized by a security agreement covering qualifying loans. In addition, all FHLB advances are secured by the FHLB capital stock owned by the Bank having a par value of $12.3 million at March 31, 2026.
Long-term borrowings and their weighted-average contractual rates were comprised of the following for the periods presented:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (Dollars in thousands) | Amount | Rate | Amount | Rate | |||||||||||||||||||
| FHLB fixed-rate advances maturing: | |||||||||||||||||||||||
| 2026 | $ | % | $ | % | |||||||||||||||||||
| 2027 | |||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||
| 2029 | |||||||||||||||||||||||
Trust preferred subordinated debt 1 | |||||||||||||||||||||||
| Subordinated debt | |||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
1 Net of purchase accounting fair value mark.
The long-term FHLB advances have a weighted average rate of 4.42 %, and are collateralized by the assets defined in the security agreement and FHLB capital stock described previously. Based on this collateral and ACNB’s holding of FHLB stock, ACNB is eligible to borrow up to $1.28 billion, of which $1.04 billion was available at March 31, 2026.
The trust preferred subordinated debt is comprised of debt securities issued by FCBI in December 2006 and assumed by ACNB Corporation through the acquisition of FCBI. FCBI completed the private placement of an aggregate of $6.0 million of trust preferred securities. The interest rate on the subordinated debentures is adjusted quarterly to 163 bps over the three-month CME Term SOFR plus applicable tenor spread adjustment. On March 12, 2026, the most recent interest rate reset date, the interest rate was adjusted to 5.57 % through the period ending June 14, 2026. The trust preferred securities mature on December 15, 2036, and may be redeemed at par, at the Corporation’s option, on any interest payment date. The trust preferred subordinated debt is considered Tier 1 capital for the consolidated capital ratios.
On March 12, 2026, the Company entered into subordinated note purchase agreements with the Purchasers pursuant to which the Company sold and issued $15.0 million in aggregate principal amount of its 5.875 % fixed-to-floating rate subordinated notes due March 15, 2036. The 2026 Subordinated Notes bear interest at a fixed rate, for the period up to, but excluding March 15, 2031. From and including March 15, 2031 until maturity or redemption, the interest rate will adjust to a floating rate equal to a benchmark rate, which is expected to be the then-current Three-Month Term SOFR, plus 245 bps. The Company will pay interest in arrears semi-annually during the fixed interest rate period and quarterly during the floating interest rate period. The 2026 Subordinated Notes constitute unsecured and subordinated obligations of the Company and rank junior in right of payment to any senior indebtedness and obligations to general and secured creditors. Subject to limited exceptions, the Company cannot redeem the 2026 Subordinated Notes before March 15, 2031. The 2026 Subordinated Notes were issued by the Corporation to the Purchasers at a price equal to 100 % of their face amount. The issuance costs for the 2026 Subordinated Notes were $537 thousand and are reported net on the Consolidated Statements of Condition. The 2026 Subordinated Notes
20
Table of Contents
have a stated maturity of March 15, 2036, are redeemable by the Company at its option, in whole or in part, on or after March 30, 2031, and at any time upon the occurrences of certain events. The 2026 Subordinated Notes are considered Tier 2 capital for the consolidated capital ratios.
On March 30, 2021, the Company entered into subordinated note purchase agreements with the Purchasers pursuant to which the Company sold and issued $15.0 million in aggregate principal amount of its 4.00 % fixed-to-floating rate subordinated notes due March 31, 2031. The Company redeemed on March 31, 2026 all of the Company’s outstanding 4.00 % fixed-to-floating rate 2021 Subordinated Notes due March 31, 2031, having an aggregate principal amount of $15.0 million in accordance with the terms of the 2021 Subordinated Notes. The total redemption price was 100 % of the aggregate principal amount of the 2021 Subordinated Notes, plus interest accrued and unpaid to March 31, 2026.
Note 7 – Derivative Financial Instruments
The following table presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Consolidated Statements of Condition as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | Consolidated Statements of Condition Location | December 31, 2025 | |||||||||||||||||||||||||||
| (In thousands) | Notional Amount | Asset (Liability) Fair Value | Notional Amount | Asset (Liability) Fair Value | |||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
Interest rate lock commitments: | |||||||||||||||||||||||||||||
| Assets | $ | $ | Other Assets | $ | $ | ||||||||||||||||||||||||
| Liabilities | ( | Other Liabilities | |||||||||||||||||||||||||||
| Forward commitments: | |||||||||||||||||||||||||||||
| Assets | Other Assets | ||||||||||||||||||||||||||||
| Liabilities | ( | Other Liabilities | ( | ||||||||||||||||||||||||||
| Interest rate derivatives with customers: | |||||||||||||||||||||||||||||
| Assets | Other Assets | ||||||||||||||||||||||||||||
| Liabilities | ( | Other Liabilities | ( | ||||||||||||||||||||||||||
| Interest rate derivatives with dealer counterparties: | |||||||||||||||||||||||||||||
| Assets | Other Assets | ||||||||||||||||||||||||||||
| Liabilities | ( | Other Liabilities | ( | ||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
| Interest rate derivatives used in cash flow hedges: | |||||||||||||||||||||||||||||
| Assets | Other Assets | ||||||||||||||||||||||||||||
| Liabilities | Other Liabilities | ( | |||||||||||||||||||||||||||
The following table presents a summary of the fair value gains and losses on derivative financial instruments for the periods presented:
| Three Months Ended March 31, | Consolidated Statements of Income (Loss) Classification | ||||||||||||||||
| (In thousands) | 2026 | 2025 | |||||||||||||||
| Interest Rate Lock Commitments | $ | $ | Gain from mortgage loans held for sale | ||||||||||||||
| Forward Commitments | ( | Gain from mortgage loans held for sale | |||||||||||||||
21
Table of Contents
The following table presents the effect of fair value and cash flow hedge accounting on AOCI for the periods presented:
| (In thousands) | Amount of Gain Recognized in OCI on Derivative | Amount of Gain Recognized in OCI Included Component | Amount of Gain (Loss) Recognized in OCI Excluded Component | Location of Gain (Loss) Recognized from AOCI into Income | Amount of Gain Reclassified from OCI into Income | Amount of Gain Reclassified from AOCI into Income Included Component | Amount of Gain (Loss) Reclassified from AOCI into Income Excluded Component | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | $ | $ | Interest Expense | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | Interest Expense | ||||||||||||||||||||||||||||||||||||||||
The following table presents the effect of fair value and cash flow hedge accounting on the Consolidated Statements of Income (Loss) for the periods presented:
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Total amounts of expense line items presented in the consolidated statements of income (loss) in which the effects of fair value or cash flow hedges are recorded | $ | $ | |||||||||
| The effects of fair value or cash flow hedging: | |||||||||||
| Amount of gain reclassified from AOCI into income | |||||||||||
| Amount of gain reclassified from AOCI into income - included component | |||||||||||
| Amount of gain (loss) reclassified from AOCI into income - excluded component | |||||||||||
During the next 12 months, the Company estimates that an additional $112 thousand will be reclassified as a reduction to interest expense.
Note 8 – Fair Value Measurements
Fair value is the exchange price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.
Fair value measurement establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 — Quoted prices for similar assets or liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
22
Table of Contents
The following tables present assets measured at fair value and the basis of measurement used at the periods presented:
| March 31, 2026 | |||||||||||||||||||||||||||||
| (In thousands) | Basis | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
| AFS Investment Securities: | |||||||||||||||||||||||||||||
| U.S. Government and agencies | |||||||||||||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||
| Total AFS Investment Securities | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
| Loans held for sale | Recurring | ||||||||||||||||||||||||||||
| Derivative financial instruments - assets | Recurring | ||||||||||||||||||||||||||||
| Individually evaluated loans | Non-recurring | ||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Derivative financial instruments - liabilities | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| (In thousands) | Basis | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
| AFS Investment Securities: | |||||||||||||||||||||||||||||
| U.S. Government and agencies | |||||||||||||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||||||||
| State and municipal | |||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||
| Total AFS Investment Securities | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
| Loans held for sale | Recurring | ||||||||||||||||||||||||||||
| Derivative financial instruments - assets | Recurring | ||||||||||||||||||||||||||||
| Individually evaluated loans | Non-recurring | ||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Derivative financial instruments - liabilities | Recurring | $ | $ | $ | $ | ||||||||||||||||||||||||
The valuation techniques used to measure fair value for the items in the preceding tables are as follows:
Equity securities — The fair value of equity securities with readily determinable fair values is recorded on the Consolidated Statements of Condition, with realized and unrealized gains and losses reported in noninterest income on the Consolidated Statements of Income (Loss). They are classified as Level 1 assets.
Available for sale investment securities — Included in this asset category are debt and pass through securities. Level 2 investment securities are valued by a third-party pricing service. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings and matrix pricing. Standard market inputs include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided
23
Table of Contents
markets, benchmark securities, bids, offers and reference data, including market research publications. For certain security types, additional inputs may be used, or some of the standard market inputs may not be applicable.
• U.S. Government and agencies — Fair values are determined by a third-party pricing service, as detailed above. These debt securities are classified as Level 2.
• Collateralized mortgage obligations, Mortgage-backed securities and State and Municipal securities — Fair values are determined by a third-party pricing service, as detailed above. These debt securities are classified as Level 2.
• Corporate bonds — This category consists of subordinated and senior debt issued by financial institutions and the fair values for these corporate debt securities are determined by a third-party pricing service, as detailed above. They are classified as Level 2 investments.
Loans held for sale — This category includes mortgage loans held for sale that are measured at fair value utilizing Level 2 measurements. Fair values are measured as the price that secondary market investors were offering for loans with similar characteristics.
Derivative financial instruments — Derivative financial instruments include interest rate lock commitments, forward commitments and interest rate derivatives. The fair value of interest rate lock commitments is derived from the value of the underlying loans, adjusted for changes in market interest rates relative to the committed rate. The fair value of forward commitments is based on quoted prices for mortgage-backed securities with similar characteristics. The fair value of interest rate derivatives is based upon broker quotes. The fair value of both the assets and the related liabilities are determined in the same manner and are all classified as Level 2 assets.
Individually evaluated loans — This category consists of loans that were individually evaluated for impairment and have a specific reserve. They are classified as Level 3 assets.
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value:
| (Dollars in thousands) | Fair Value Estimate | Valuation Technique 1 | Unobservable Input 2 | Range | Weighted Average | ||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||
| Individually evaluated loans | $ | Appraisal of collateral | Appraisal adjustments | ||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Individually evaluated loans | $ | Appraisal of collateral | Appraisal adjustments | ||||||||||||||||||||||||||
__________________________________________________________________
1 Fair value is generally determined through management’s estimate or independent third-party appraisals of the underlying collateral, which generally
includes various Level 3 inputs which are not observable.
2 Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percentage of the appraisal. Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received, and/or age of the appraisal.
The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Management uses its best judgment in estimating the fair value of the Corporation’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Corporation could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective reporting dates and have not been reevaluated or updated for purposes of these Consolidated Financial Statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful.
FHLB and Atlantic Community Banker’s Bank stock represent restricted investments and are carried at cost less any impairment on the Consolidated Statement of Condition, which is a reasonable estimate of fair value. There was no impairment identified as of March 31, 2026 or December 31, 2025.
24
Table of Contents
The following tables present the carrying amount and the estimated fair value of the Corporation’s financial instruments:
| March 31, 2026 | |||||||||||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||
| (In thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | |||||||||||||||||||||||||||||
| Investment securities AFS | |||||||||||||||||||||||||||||
| Investment securities HTM | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Loans, net | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Demand deposits, savings, and money markets | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | |||||||||||||||||||||||||||||
| Federal funds purchased | |||||||||||||||||||||||||||||
| FHLB Advances | |||||||||||||||||||||||||||||
| Trust preferred and subordinated debt | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||
| (In thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | |||||||||||||||||||||||||||||
| Investment securities AFS | |||||||||||||||||||||||||||||
| Investment securities HTM | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Loans, net | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Demand deposits, savings, and money markets | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | |||||||||||||||||||||||||||||
| Federal funds purchased | |||||||||||||||||||||||||||||
| FHLB Advances | |||||||||||||||||||||||||||||
| Trust preferred and subordinated debt | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
25
Table of Contents
Note 9 – Defined Benefit Pension Plan
The components of net periodic benefit income related to the non-contributory, defined benefit pension plan were as follows:
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Service cost | $ | $ | |||||||||
| Interest cost | |||||||||||
| Expected return on plan assets | ( | ( | |||||||||
| Net Periodic Benefit Income | $ | ( | $ | ( | |||||||
The Corporation has determined that it will not be contributing to the defined benefit plan in 2026 based on current levels and expected returns on plan assets. Effective April 1, 2012, no inactive or former participant in the plan is eligible to again participate in the plan, and no employee hired after March 31, 2012, is eligible to participate in the plan.
Note 10 – Commitments and Contingencies
Commitments
The Corporation is a party to financial instruments with OBS risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist primarily of commitments to extend credit (typically mortgages and commercial loans) and, to a lesser extent, standby letters of credit. To varying degrees, these instruments involve elements of credit and interest rate risk in excess of the amount recognized on the Consolidated Statements of Condition.
The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments. The Corporation does not anticipate any material losses from these commitments.
Commitments to extend credit, including commitments to grant loans and unfunded commitments under lines of credit, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extensions of credit, is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property and equipment and income-producing commercial properties. On loans secured by real estate, the Corporation generally requires loan to value ratios of no greater than 80 %.
Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements and similar transactions. The terms of the letters of credit vary and may have renewal features. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Corporation generally holds collateral and/or personal guarantees supporting those commitments for which collateral is deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral and the enforcement of guarantees would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees.
The Corporation maintains a $5.0 million unsecured line of credit with a correspondent bank. The Corporation guarantees a note related to a $1.5 million commercial line of credit with a correspondent bank, with normal terms and conditions for such a line, for ACNB Insurance Services, the borrower. The commercial line of credit is for general working capital needs as they arise by the ACNB Insurance Services. The liability is recorded for the net drawn amount of this line, no further liability is recorded for the remaining line as to the guarantor’s obligation as the guarantor would have full recourse from all assets of its wholly-owned subsidiary. There were no advances on these lines at March 31, 2026 and at December 31, 2025.
The Corporation has not been required to perform on any financial guarantees, and has not incurred any losses on its commitments during the past three years.
26
Table of Contents
A summary of the Corporation’s commitments were as follows:
| (In thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Commitments to extend credit | $ | $ | |||||||||
| Standby letters of credit | |||||||||||
Contingencies
The Corporation is subject to claims and lawsuits which arise primarily in the ordinary course of business. Based on information presently available and advice received from legal counsel representing the Corporation in connection with any such claims and lawsuits, it is the opinion of management that the disposition or ultimate determination of any such claims and lawsuits will not have a material adverse effect on the consolidated financial position, consolidated results of operations or liquidity of the Corporation.
Note 11 – Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss, net of taxes, are as follows:
| (In thousands) | Net Change Related to Investment Securities | Net Change Related to Derivatives Used for Cash Flow Hedges | Net Change Related to Defined Benefit Pension Plans | Accumulated Other Comprehensive Loss | |||||||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Balance at January 1, 2026 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive (loss) income | ( | ( | |||||||||||||||||||||
| Balance at March 31, 2026 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Balance at January 1, 2025 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Balance at March 31, 2025 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
27
Note 12 – Segment Reporting
The Corporation has two reporting segments, the Bank and ACNB Insurance Services.
Segment information as of and for the periods listed below is as follows:
| (In thousands) | Banking | Insurance | Other1 | Consolidated | |||||||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | $ | |||||||||||||||||||
| Noninterest income | ( | ||||||||||||||||||||||
| Total consolidated revenues | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Reversal of provision for credit losses and unfunded commitments | ( | ( | |||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||
Other noninterest expense2 | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
| Total assets | $ | $ | $ | ( | $ | ||||||||||||||||||
| Goodwill | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | ( | $ | ||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Total consolidated revenues | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
Provision for credit losses and unfunded commitments | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||
Other noninterest expense2 | |||||||||||||||||||||||
| (Loss) income before income taxes | ( | ( | ( | ||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ||||||||||||||||||||
| Net (loss) income | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Total assets | $ | $ | $ | ( | $ | ||||||||||||||||||
| Goodwill | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
1Includes the holding company and intercompany eliminations, including the intersegment elimination of interest income and interest expense.
2Other noninterest expense for Banking includes equipment, net occupancy, professional services, other tax, FDIC and regulatory and merger-related expenses.
Other noninterest expense for Insurance includes equipment, net occupancy and professional services expenses.
| (In thousands) | ||
28
ACNB CORPORATION
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management’s discussion and analysis of the significant changes in the financial condition, results of operations, comprehensive income, capital resources, and liquidity presented in its accompanying Consolidated Financial Statements for ACNB Corporation, a financial holding company. Please read this discussion in conjunction with the Consolidated Financial Statements and disclosures included herein. Current performance does not guarantee, assure or indicate similar performance in the future.
Forward-Looking Statements
In addition to historical information, this Form 10-Q 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, noninterest 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; legislative and regulatory changes; banking system instability caused by failures and 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 or any similar 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; 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; and, trade and tariff uncertainties and volatility. Management considers subsequent events occurring after the balance sheet date for matters which may require adjustments to, or disclosure in, the Consolidated Financial Statements. 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 the Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the SEC.
29
Executive Overview
ACNB Corporation is the financial holding company for the wholly-owned subsidiaries of ACNB Bank and ACNB Insurance Services. ACNB Bank provides a full range of retail and commercial financial services in Pennsylvania and Maryland primarily through its network of 33 community banking offices and two loan production offices. ACNB Insurance Services offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster, Maryland, and Gettysburg, Pennsylvania and is licensed to do business in 46 states.
The primary source of the Corporation’s revenues is net interest income derived from interest earned on loans and investments, less deposit and borrowing funding costs. Revenues are influenced by general economic factors, including market interest rates, the economies of the markets served, stock market conditions, as well as competitive forces within the markets. The Corporation also generates revenue through commissions and fees earned on various services and financial products offered to its customers and through gains on sales of assets, such as loans, investments and properties. The Corporation incurs expenses to generate the revenue through provision for credit losses, noninterest expense and income taxes. The Corporation’s overall strategy is to increase loan growth in its local markets, while maintaining a reasonable funding base by offering competitive deposit products and services.
Financial results for the three months ended March 31, 2025 were impacted by two discrete items that were related to the Acquisition of Traditions Bancorp, Inc. which was completed on February 1, 2025: a provision for credit losses on non-PCD loans of $4.2 million, net of taxes, and merger-related expenses, net of taxes, totaling $6.2 million. Financial results for the three months ended March 31, 2025 include ACNB’s standalone results for the month of January 2025.
The following table presents a summary of the Corporation’s earnings and selected performance and asset quality ratios:
| Three Months Ended March 31, | |||||||||||
| (Dollars in thousands, except per share data) | 2026 | 2025 | |||||||||
| Net income (loss) | $ | 13,703 | $ | (272) | |||||||
| Diluted earnings (loss) per share | $ | 1.32 | $ | (0.03) | |||||||
| Cash dividends declared | $ | 0.38 | $ | 0.32 | |||||||
| Return on average assets (annualized) | 1.71 | % | (0.04) | % | |||||||
| Return on average equity (annualized) | 12.97 | % | (0.31) | % | |||||||
Net interest margin1 | 4.46 | % | 4.07 | % | |||||||
Non-performing loans to total loans, net of unearned income2 | 0.41 | % | 0.43 | % | |||||||
Non-performing assets to total assets3 | 0.29 | % | 0.32 | % | |||||||
| Net (recoveries) charge-offs to average loans outstanding (annualized) | (0.00) | % | 0.01 | % | |||||||
| Allowance for credit losses to total loans, net of unearned income | 1.01 | % | 1.06 | % | |||||||
1 Income on interest-earning assets has been computed on a FTE basis using the 21% federal income tax statutory rate.
2 Non-performing loans consists of loans on nonaccrual status and loans greater than 90 days past due and still accruing interest.
3 Non-performing assets consists of non-performing loans and foreclosed assets held for resale.
Summary Financial Results
•Net Interest Income — Net interest income was $32.5 million for the three months ended March 31, 2026 compared to $27.1 million for the same period of 2025, an increase of $5.4 million. The increase in net interest income was driven primarily by the balance sheet restructuring completed during the three months ended December 31, 2025, the Acquisition, and new loans and securities funded during the quarter at higher rates than those that paid off or matured.
◦Net Interest Margin — FTE net interest margin increased to 4.46% for the three months ended March 31, 2026 compared to 4.07% in the same period of 2025, an increase of 39 bps. The accretion impact of acquisition accounting adjustments on loans and deposits from the Acquisition was $1.9 million for the three months ended March 31, 2026 compared to $1.5 million for the same period of 2025
◦Loan Growth — Average loans increased $208.6 million for the three months ended March 31, 2026, compared to the same period of 2025, driven primarily by the Acquisition and, to a lesser extent, organic growth
◦Deposit Growth — Average interest-bearing deposits increased $151.8 million for the three months ended March 31, 2026 compared to the same period of 2025, driven primarily by the Acquisition and, to a lesser extent, promotional incentives on commercial checking accounts
30
◦Yield on Average Earning Assets — For the three months ended March 31, 2026, the yield on average earning assets was 5.78%, an increase of 33 bps compared to the same period of 2025
◦Rate on Average Interest-bearing Liabilities — For the three months ended March 31, 2026, the rate on average interest-bearing liabilities was 1.77%, a decrease of 4 bps compared to the same period of 2025
•Asset Quality — The allowance for credit losses was $23.6 million at March 31, 2026, compared to $23.7 million at December 31, 2025
◦The decrease was driven primarily by a reversal of the provision for credit losses of $76 thousand for the three months ended March 31, 2026 driven primarily by the movement of construction loans for completed projects, which are a higher loss rate segment, to lower loss rate segments within the loan portfolio, primarily commercial real estate, as well as paydowns of loans with a specific reserve, partially offset by loan growth
◦Annualized net recoveries for the three months ended March 31, 2026 were 0.00% of total average loans outstanding, compared to net charge-offs of 0.01% for the same period of 2025
◦Non-performing loans were $9.6 million, or 0.41%, of total loans at March 31, 2026 compared to $10.0 million, or 0.43%, of total loans at March 31, 2025. The decrease was driven primarily by paydowns of loans
•Noninterest income — Noninterest income was $8.3 million for the three months ended March 31, 2026, an increase of $1.1 million for the same period of 2025. The increase for the three months ended March 31, 2026 was driven primarily by the Acquisition. In addition to impact of the Acquisition, the increase for the three months ended March 31, 2026 was also driven primarily by a gain on an asset held for sale, earnings on investment in bank-owned life insurance, other, and wealth management
•Noninterest expenses — Noninterest expense was $23.6 million for the three months ended March 31, 2026, a decrease of $5.7 million for the same period of 2025. The decrease was driven primarily by merger-related expenses due to the Acquisition during the three months ended March 31, 2025
A more thorough discussion of the Corporation’s results of operations and financial condition is included in the following pages.
CRITICAL ACCOUNTING ESTIMATES
The accounting policies that the Corporation’s management deems to be most important to the portrayal of its financial condition and results of operations, because they require management’s most difficult, subjective or complex judgment, often result in the need to make estimates about the effect of such matters which are inherently uncertain. The following accounting estimate is deemed to be critical by management:
Allowance for Credit Losses — The ACL represents an amount which, in management’s judgment, is adequate to absorb expected credit losses on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience. The ACL is measured and recorded upon the initial recognition of a financial asset. The ACL is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (reversal of) credit losses, which is recorded as a current period operating expense.
Determination of an appropriate ACL is inherently complex and requires the use of significant and highly subjective estimates. The reasonableness of the ACL is reviewed quarterly by management.
Management believes it uses relevant information available to make determinations about the ACL and that it has established the existing allowance in accordance with GAAP. However, the determination of the ACL requires significant judgment, and estimates of expected credit losses in the loan portfolio can vary from the amounts actually observed. While management uses available information to recognize expected credit losses, future additions to the ACL may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes in the interest rate environment which may directly impact prepayment and curtailment rate assumption, and changes in the financial condition of borrowers. As of March 31, 2026, the Company believes that its ACL was adequate.
31
RESULTS OF OPERATIONS
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Net income for the three months ended March 31, 2026 was $13.7 million, or $1.32 diluted earnings per share, compared to net loss of $272 thousand, or $0.03 diluted loss per share for the same period of 2025, an increase of $14.0 million, or $1.35 diluted earnings per share. The financial results for the three months ended March 31, 2025 were impacted by two discrete items that were related to the Acquisition: a provision for credit losses on non-PCD loans of $4.2 million, net of taxes, and merger-related expenses, net of taxes, totaling $6.2 million. Financial results for the three months ended March 31, 2025 include ACNB’s standalone results for the month of January 2025.
Net Interest Income
Net interest income totaled $32.5 million for the three months ended March 31, 2026 compared to $27.1 million for the same period of 2025, an increase of $5.4 million. The FTE net interest margin for the three months ended March 31, 2026 was 4.46%, a 39 bps increase from 4.07% for the same period of 2025. The increase in net interest income and FTE net interest margin was driven primarily by the repositioning of the investment securities portfolio as announced on Form 8-K on December 5, 2025, the Acquisition, and new loans and investment securities funded at higher rates than those that paid off or matured. The accretion impact of acquisition accounting adjustments on loans and deposits from the Acquisition was $1.9 million for the three months ended March 31, 2026. The Corporation manages the risk associated with changes in interest rates through the techniques described within Item 3, “Quantitative and Qualitative Disclosures About Market Risk” in this Quarterly Report on Form 10-Q.
32
The following table provides a comparative average Consolidated Statement of Condition and net interest income analysis for the periods presented. Interest income and yields are presented on a FTE basis. The discussion following this table is based on these tax equivalent amounts.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest 1 | Yield/ Rate | Average Balance | Interest 1 | Yield/ Rate | |||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Taxable | $ | 2,290,463 | $ | 36,302 | 6.43 | % | $ | 2,080,231 | $ | 31,676 | 6.18 | % | |||||||||||||||||||||||
| Tax-exempt | 56,344 | 428 | 3.08 | 57,969 | 370 | 2.59 | |||||||||||||||||||||||||||||
Total Loans 2 | 2,346,807 | 36,730 | 6.35 | 2,138,200 | 32,046 | 6.08 | |||||||||||||||||||||||||||||
| Investment Securities: | |||||||||||||||||||||||||||||||||||
| Taxable | 494,221 | 4,575 | 3.75 | 447,986 | 3,242 | 2.93 | |||||||||||||||||||||||||||||
| Tax-exempt | 56,036 | 397 | 2.87 | 54,659 | 365 | 2.71 | |||||||||||||||||||||||||||||
Total Investment Securities 3 | 550,257 | 4,972 | 3.66 | 502,645 | 3,607 | 2.91 | |||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 76,769 | 703 | 3.71 | 73,181 | 792 | 4.39 | |||||||||||||||||||||||||||||
| Total Earning Assets | 2,973,833 | 42,405 | 5.78 | 2,714,026 | 36,445 | 5.45 | |||||||||||||||||||||||||||||
| Cash and due from banks | 24,482 | 20,603 | |||||||||||||||||||||||||||||||||
| Premises and equipment | 30,611 | 29,903 | |||||||||||||||||||||||||||||||||
| Other assets | 249,769 | 224,522 | |||||||||||||||||||||||||||||||||
| Allowance for credit losses | (23,682) | (19,939) | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 3,255,013 | $ | 2,969,115 | |||||||||||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 616,311 | $ | 460 | 0.30 | % | $ | 573,341 | $ | 524 | 0.37 | % | |||||||||||||||||||||||
| Money markets | 489,957 | 2,227 | 1.84 | 447,297 | 1,984 | 1.80 | |||||||||||||||||||||||||||||
| Savings deposits | 335,398 | 26 | 0.03 | 331,103 | 27 | 0.03 | |||||||||||||||||||||||||||||
| Time deposits | 472,621 | 3,674 | 3.15 | 410,749 | 3,461 | 3.42 | |||||||||||||||||||||||||||||
| Total Interest-Bearing Deposits | 1,914,287 | 6,387 | 1.35 | 1,762,490 | 5,996 | 1.38 | |||||||||||||||||||||||||||||
| Short-term borrowings | 74,562 | 563 | 3.06 | 38,721 | 294 | 3.08 | |||||||||||||||||||||||||||||
| Long-term borrowings | 243,880 | 2,767 | 4.60 | 257,558 | 2,910 | 4.58 | |||||||||||||||||||||||||||||
| Total Borrowings | 318,442 | 3,330 | 4.24 | 296,279 | 3,204 | 4.39 | |||||||||||||||||||||||||||||
| Total Interest-Bearing Liabilities | 2,232,729 | 9,717 | 1.77 | 2,058,769 | 9,200 | 1.81 | |||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 554,591 | 512,966 | |||||||||||||||||||||||||||||||||
| Other liabilities | 39,174 | 36,934 | |||||||||||||||||||||||||||||||||
| Stockholders’ Equity | 428,519 | 360,446 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 3,255,013 | $ | 2,969,115 | |||||||||||||||||||||||||||||||
| Taxable Equivalent Net Interest Income | 32,688 | 27,245 | |||||||||||||||||||||||||||||||||
| Taxable Equivalent Adjustment | (173) | (155) | |||||||||||||||||||||||||||||||||
| Net Interest Income | $ | 32,515 | $ | 27,090 | |||||||||||||||||||||||||||||||
| Cost of Funds | 1.41 | % | 1.45 | % | |||||||||||||||||||||||||||||||
| FTE Net Interest Margin | 4.46 | % | 4.07 | % | |||||||||||||||||||||||||||||||
1 Income on interest-earning assets has been computed on a FTE basis using the 21% federal income tax statutory rate.
2 Average balances include non-accrual loans and are net of unearned income.
3 Average balance of investment securities is computed at fair value.
33
The following table analyzes the relative impact on FTE net interest income attributed to changes in the volume of interest-earning assets and interest-bearing liabilities and changes in yields and rates for the three months ended March 31, 2026 compared to the same period of 2025:
| 2026 versus 2025 | |||||||||||||||||
| (Dollars in thousands) | Volume | Yield/Rate 1 | Net | ||||||||||||||
| INTEREST EARNING ASSETS | |||||||||||||||||
| Loans | |||||||||||||||||
| Taxable | $ | 3,204 | $ | 1,422 | $ | 4,626 | |||||||||||
| Tax-exempt | (10) | 68 | 58 | ||||||||||||||
Total Loans 2 | 3,194 | 1,490 | 4,684 | ||||||||||||||
| Investment Securities | |||||||||||||||||
| Taxable | 334 | 999 | 1,333 | ||||||||||||||
| Tax-exempt | 9 | 23 | 32 | ||||||||||||||
Total Investment Securities 3 | 343 | 1,022 | 1,365 | ||||||||||||||
| Interest-bearing deposits with banks | 39 | (128) | (89) | ||||||||||||||
| Total | $ | 3,576 | $ | 2,384 | $ | 5,960 | |||||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||||||||
| Interest-bearing demand deposits | $ | 39 | $ | (103) | $ | (64) | |||||||||||
| Money markets | 189 | 54 | 243 | ||||||||||||||
| Savings deposits | — | (1) | (1) | ||||||||||||||
| Time deposits | 522 | (309) | 213 | ||||||||||||||
| Total Interest-Bearing Deposits | 750 | (359) | 391 | ||||||||||||||
| Short-term borrowings | 272 | (3) | 269 | ||||||||||||||
| Long-term borrowings | (154) | 11 | (143) | ||||||||||||||
| Total Borrowings | 118 | 8 | 126 | ||||||||||||||
| Total | 868 | (351) | 517 | ||||||||||||||
| Change in Net Interest Income | $ | 2,708 | $ | 2,735 | $ | 5,443 | |||||||||||
__________________________________________________________________
1 The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column.
2 Based on average balances and includes non-accrual loans and are net of unearned income.
3 Average balance of investment securities is computed at fair value.
Total FTE interest income increased $6.0 million during the three months ended March 31, 2026 compared to the same period of 2025, driven primarily by higher average balances of interest earning assets due to the timing of the Acquisition and, to a lesser extent, organic growth. Also contributing to the increase was an increase in yield of interest earning assets, which was driven primarily by the repositioning of the investment securities portfolio, as well as new loans and investment securities funded at higher rates than those that paid off or matured.
Total interest expense increased $517 thousand during the three months ended March 31, 2026 compared to the same period of 2025, driven primarily by higher average balances of interest-bearing deposits due to the timing of the Acquisition. Partially offsetting this increase in volume were lower rates paid on interest-bearing deposits.
Provision for Credit Losses and Unfunded Commitments
The provisions for credit losses and unfunded commitments were reversals of $76 thousand and $13 thousand, respectively, for the three months ended March 31, 2026 compared to a provision for credit losses of $6.0 million and a reversal of the provision for unfunded commitments of $480 thousand for the same period of 2025. The reversal of the provision for credit losses for the three months ended March 31, 2026 was driven primarily by the paydowns of loans with a specific reserve and the movement of construction loans for completed projects, which are a higher loss rate segment, to lower loss rate segments within the loan portfolio, primarily commercial real estate, partially offset by loan growth. The provision for credit losses for the three months ended March 31, 2025 was driven primarily by the Acquisition. The Corporation assesses risks and reserves required compared with the balances in the ACL and unfunded commitments quarterly.
34
Noninterest Income
The following table presents the components of noninterest income:
Three Months Ended March 31, | Increase (Decrease) | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||
| Insurance commissions | $ | 2,128 | $ | 2,147 | $ | (19) | (0.9) | % | |||||||||||||||
| Gain from mortgage loans held for sale | 1,226 | 855 | 371 | 43.4 | |||||||||||||||||||
| Service charges on deposits | 1,235 | 1,094 | 141 | 12.9 | |||||||||||||||||||
| Wealth management | 1,160 | 1,060 | 100 | 9.4 | |||||||||||||||||||
| ATM debit card charges | 906 | 831 | 75 | 9.0 | |||||||||||||||||||
| Earnings on investment in bank-owned life insurance | 737 | 580 | 157 | 27.1 | |||||||||||||||||||
| Gain on assets held for sale | 177 | — | 177 | 100.0 | |||||||||||||||||||
| Gain on life insurance proceeds | 174 | 254 | (80) | (31.5) | |||||||||||||||||||
| Other | 489 | 349 | 140 | 40.1 | |||||||||||||||||||
| Net gains on sales or calls of investment securities | 49 | — | 49 | 100.0 | |||||||||||||||||||
| Net (losses) gain on equity securities | (7) | 14 | (21) | (150.0) | |||||||||||||||||||
| Total Noninterest Income | $ | 8,274 | $ | 7,184 | $ | 1,090 | 15.2 | % | |||||||||||||||
Total noninterest income was $8.3 million for the three months ended March 31, 2026 compared to $7.2 million for the same period of 2025. The increase was driven primarily by the Acquisition. The more significant variations by category that were not solely a direct result of the Acquisition are explained below:
•The increase in earnings on investment in bank-owned life insurance was driven primarily by the purchase of new policies in the third quarter of 2025 and the Acquisition
•The increase in wealth management was driven primarily by growth of fee-based assets under management/administration
•The increase in gain on assets held for sale was the result of a sale of a building previously used by ACNB Insurance Services
•Gain on life insurance proceeds for the three months ended March 31, 2026 and the same period of 2025 was the result of death benefits paid on life insurance policies
•The increase in other was driven primarily by a gain on a loan participation
35
Noninterest Expenses
The following table presents the components of noninterest expense:
Three Months Ended March 31, | Increase (Decrease) | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| NONINTEREST EXPENSES | |||||||||||||||||||||||
| Salaries and employee benefits | $ | 14,027 | $ | 12,861 | $ | 1,166 | 9.1 | % | |||||||||||||||
| Equipment | 2,600 | 2,280 | 320 | 14.0 | |||||||||||||||||||
| Net occupancy | 1,533 | 1,442 | 91 | 6.3 | |||||||||||||||||||
| Intangible assets amortization | 1,056 | 857 | 199 | 23.2 | |||||||||||||||||||
| Professional services | 678 | 577 | 101 | 17.5 | |||||||||||||||||||
| Other tax | 577 | 527 | 50 | 9.5 | |||||||||||||||||||
| FDIC and regulatory | 442 | 401 | 41 | 10.2 | |||||||||||||||||||
| Merger-related | — | 8,031 | (8,031) | (100.0) | |||||||||||||||||||
| Other | 2,702 | 2,359 | 343 | 14.5 | |||||||||||||||||||
| Total Noninterest Expenses | $ | 23,615 | $ | 29,335 | $ | (5,720) | (19.5) | % | |||||||||||||||
Noninterest expenses decreased $5.7 million for the three months ended March 31, 2026 compared to the same period of 2025 driven primarily by the Acquisition. The more significant variations by category that were not solely a direct result of the Acquisition are explained below:
•The increase in salaries and employee benefits, the largest component of noninterest expenses, was driven primarily by an increased number of employees attributable to the Acquisition and merit increases
•The increase in equipment was driven primarily by the Acquisition and the implementation of additional products into the core processing system
•The increase in professional services was driven primarily by services for software integration and legal fees
•The increase in other was driven primarily by higher internet banking services and supplies and postage
Income Taxes (Benefit)
The Corporation recognized income tax expense of $3.6 million during the three months ended March 31, 2026 compared to an income tax benefit of $277 thousand during the same period of 2025. The provision for income taxes for the three months ended March 31, 2026 reflects a combined Federal and State ETR of 20.6%. The income tax benefit for the three months ended March 31, 2025 was due to the net loss driven by the Acquisition. The variances from the federal statutory rate of 21% are generally due to tax-free income, which includes, but not limited to, interest income on tax-free loans and investment securities and income from bank-owned life insurance policies, federal income tax credits, the impact of non-tax deductible expenses such as certain merger-related costs and state taxes.
FINANCIAL CONDITION
Investment Securities
ACNB uses investment securities to manage interest rate risk, provide collateral for certain funding products, provide liquidity and generate interest and dividend income. The investment securities provide the appropriate characteristics with respect to credit quality, yield and maturity relative to the management of the overall Consolidated Statements of Condition.
Total investment securities were $535.8 million at March 31, 2026 compared to $531.1 million at December 31, 2025. At March 31, 2026, the securities balance included a net unrealized loss on AFS securities of $27.7 million on amortized cost of $499.3 million compared to a net unrealized loss of $24.2 million on amortized cost of $491.1 million at December 31, 2025. At March 31, 2026, the securities balance included HTM securities with an amortized cost of $63.2 million and a fair value of $56.2 million as compared to an amortized cost of $63.3 million and a fair value of $57.5 million at December 31, 2025.
The Corporation does not own investments consisting of pools of Alt-A or subprime mortgages, private label mortgage-backed securities, or trust preferred investments.
36
Loans
The following table presents the composition of the loan portfolio as follows:
| Increase (Decrease) | |||||||||||||||||||||||
| (In thousands) | March 31, 2026 | December 31, 2025 | $ | % | |||||||||||||||||||
| Commercial real estate | $ | 1,301,807 | $ | 1,273,813 | $ | 27,994 | 2.2 | % | |||||||||||||||
| Residential mortgage | 602,305 | 599,051 | 3,254 | 0.5 | |||||||||||||||||||
| Commercial and industrial | 204,714 | 205,452 | (738) | (0.4) | |||||||||||||||||||
| Home equity lines of credit | 126,473 | 127,341 | (868) | (0.7) | |||||||||||||||||||
| Real estate construction | 106,128 | 116,680 | (10,552) | (9.0) | |||||||||||||||||||
| Consumer | 9,864 | 10,140 | (276) | (2.7) | |||||||||||||||||||
| Gross loans | 2,351,291 | 2,332,477 | 18,814 | 0.8 | |||||||||||||||||||
| Unearned income | (2,046) | (1,963) | 83 | 4.2 | |||||||||||||||||||
| Total loans, net of unearned income | $ | 2,349,245 | $ | 2,330,514 | $ | 18,731 | 0.8 | % | |||||||||||||||
Total loans, net of unearned income, outstanding increased $18.7 million, or 0.8%, from December 31, 2025 to March 31, 2026. The increase was driven primarily by growth in the commercial real estate portfolio partially offset by a decrease in the real estate construction portfolio as a result of completed projects which primarily moved to commercial real estate loans. Total acquisition accounting adjustments on loans were $16.3 million at March 31, 2026. The majority of the loan acquisition accounting adjustments are expected to accrete back through as income as loans pay off or mature. ACNB does not have a significant concentration of credit risk with any single borrower, industry or geographic location other than within its primary Market Area.
The commercial real estate portfolio, which includes farmland, multifamily, owner-occupied and non-owner occupied commercial real estate, grew $28.0 million, or 2.2%, compared to December 31, 2025. The growth in commercial real estate was spread across a variety of industries, including non-owner occupied apartment complex, owner occupied and non-owner occupied farming, non-owner occupied warehouse and owner occupied office complex categories. The following data related to the commercial real estate portfolio through the breakout charts excludes the impact of the acquisition accounting adjustments on loans. The collateral for these loans is primarily spread across Pennsylvania and Maryland, 65.1% and 33.1%, respectively, at March 31, 2026, compared to 65.8% and 32.1%, respectively, at December 31, 2025. Less than 3% of the portfolio is for real estate in urban areas of Baltimore, Maryland and Philadelphia, Pennsylvania. The largest sectors of the commercial real estate portfolio are retail and mixed-use commercial rental units, office complexes, apartment complexes and hotels, motels and bed and breakfast entities. Non-owner occupied commercial real estate represented 65.3% of the commercial real estate portfolio. Non-owner occupied commercial real estate borrowers are geographically dispersed throughout ACNB’s Market Area and are leasing commercial properties to a varied group of tenants including medical offices, retail space, and other commercial purpose facilities. Because of the varied nature of the tenants, in aggregate, management believes that these loans present an acceptable risk when compared to commercial loans in general.
37
The following chart details the percentage of the various categories included in the portfolio:
_____________________________________________________________
1 Constitutes over 40 loan categories that do not fit into the categories presented above, with no loan category representing more than 3% of the total.
The concentration of non-owner occupied commercial real estate, construction, and multi-family was 233.1% of total risk-based capital of the Bank as of March 31, 2026 compared to 239.0% of total risk-based capital of the Bank as of December 31, 2025.
Residential real estate mortgages totaled $602.3 million, an increase of $3.3 million, or 0.5%, compared to December 31, 2025. Included in the residential real estate mortgages are $226.7 million of commercial loans and $58.9 million of consumer loans secured by residential real estate mortgages, which includes $37.3 million of junior liens. Junior liens inherently have more credit risk by virtue of the fact that another financial institution may have a senior security position in the case of foreclosure liquidation of collateral to extinguish the debt.
Allowance for Credit Losses and Asset Quality
The ACL at March 31, 2026 was $23.6 million, or 1.01% of total loans, net of unearned income as compared to $23.7 million, or 1.02% of loans, at December 31, 2025 and $24.6 million, or 1.06% of loans, at March 31, 2025.
Changes in the ACL were as follows for the periods presented:
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Beginning balance | $ | 23,672 | $ | 17,280 | |||||||
| Initial allowance established for acquired PCD loans | — | 1,464 | |||||||||
| (Reversal of) provision for credit losses | (76) | 5,968 | |||||||||
| Loans charged-off | (82) | (85) | |||||||||
| Recoveries on charged-off loans | 101 | 19 | |||||||||
| Ending balance | $ | 23,615 | $ | 24,646 | |||||||
| Net (recoveries) charge-offs to average loans (annualized) | (0.00) | % | 0.01 | % | |||||||
| Allowance for credit losses to total loans | 1.01 | % | 1.06 | % | |||||||
38
Information on nonaccrual loans, by collateral type rather than loan segment, at March 31, 2026, as compared to December 31, 2025, is as follows:
| (Dollars in thousands) | Number of Credit Relationships | Balance | Current Specific Loss Allocations | Current Year Charge-Offs | Location | Originated | |||||||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 10 | $ | 3,865 | $ | — | $ | — | In market | 2006-2024 | ||||||||||||||||||||||||||
| Business assets | 5 | 1,898 | 150 | — | In market | 2009-2023 | |||||||||||||||||||||||||||||
| Residential real estate | 6 | 1,863 | 86 | — | In market | 2019-2022 | |||||||||||||||||||||||||||||
| Total | 21 | $ | 7,626 | $ | 236 | $ | — | ||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 10 | $ | 3,961 | $ | — | $ | — | In market | 2006-2024 | ||||||||||||||||||||||||||
| Business assets | 5 | 1,971 | 259 | — | In market | 2009-2023 | |||||||||||||||||||||||||||||
| Residential real estate | 6 | 1,935 | 131 | — | In market | 2019-2022 | |||||||||||||||||||||||||||||
| Total | 21 | $ | 7,867 | $ | 390 | $ | — | ||||||||||||||||||||||||||||
Nonaccrual loans decreased $241 thousand from December 31, 2025 to March 31, 2026 driven primarily by paydowns. All nonaccrual loans are to borrowers located within ACNB’s Market Area and were originated by ACNB’s banking subsidiary or were part of the Acquisition and were originated by Traditions’ banking subsidiary.
Deposits
Deposits were comprised of the following for the periods presented:
| Increase (Decrease) | |||||||||||||||||||||||
| (In thousands) | March 31, 2026 | December 31, 2025 | $ | % | |||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 576,056 | $ | 553,855 | $ | 22,201 | 4.0 | % | |||||||||||||||
| Interest-bearing demand deposits | 625,363 | 623,620 | 1,743 | 0.3 | |||||||||||||||||||
| Money market | 497,031 | 485,808 | 11,223 | 2.3 | |||||||||||||||||||
| Savings | 338,763 | 333,973 | 4,790 | 1.4 | |||||||||||||||||||
| Total demand and savings | 2,037,213 | 1,997,256 | 39,957 | 2.0 | |||||||||||||||||||
| Time | 488,559 | 452,929 | 35,630 | 7.9 | |||||||||||||||||||
| Total deposits | $ | 2,525,772 | $ | 2,450,185 | $ | 75,587 | 3.1 | % | |||||||||||||||
ACNB relies on deposits as a primary source of funds for lending activities. The increase in deposits from December 31, 2025 to March 31, 2026 was driven primarily by the increase in time deposits, noninterest-bearing demand and money markets. Time deposits included $89.1 million of brokered time deposits compared to $59.1 million at December 31, 2025, an increase of $30.0 million. The increase in noninterest-bearing demand deposits was driven primarily by growth in commercial balances due to promotional incentives on commercial checking accounts and the increase in money markets was driven primarily by growth in balances of both consumer and commercial accounts. Historically, deposit balances fluctuate reflecting different balance levels held by local companies, government units and school districts during different times of the year. Included in total deposits at March 31, 2026 were municipal deposits totaling $127.1 million, or 5.0%, of total deposits compared to $119.3 million, or 4.9%, of total deposits at December 31, 2025. The loan-to-deposit ratio was 93.01% at March 31, 2026 compared to 95.12% at December 31, 2025.
ACNB’s deposit pricing function employs a disciplined pricing approach based upon liquidity needs and alternative funding rates, but also strives to price deposits to be competitive with relevant local competition, including local government investment trusts, credit unions and larger regional banks. Based on total Bank deposits outstanding, consumer and commercial constituted approximately 61% and 39%, respectively, of total Bank deposits as of both March 31, 2026 and December 31, 2025. The ratio of uninsured and non-collateralized Bank deposits to total Bank deposits was 17.7% at March 31, 2026. As of March 31, 2026, cash on hand, the fair value of unencumbered investment securities and collateralized borrowing capacities at the FHLB and the Federal Reserve discount window at the Bank were 349.5% of uninsured and non-collateralized Bank deposits. At March 31, 2026, deposits from the 20 largest unrelated depositors, excluding internal accounts, of the Bank totaled $174.9 million, or 6.9%, of total Bank deposits compared to $177.2 million, or 7.2%, of total Bank deposits at December 31, 2025.
39
Borrowings
Short-term borrowings are comprised of securities sold under agreements to repurchase, short-term borrowings from the FHLB and federal funds purchased. As of March 31, 2026, short-term borrowings were $63.8 million, a decrease of $912 thousand compared to $64.7 million at December 31, 2025. Short-term FHLB advances were $45.0 million at both March 31, 2026 and December 31, 2025. Short-term FHLB borrowings are used for general balance sheet management. Compared to December 31, 2025, securities sold under repurchase agreements balances decreased by $1.0 million, or 6.4%, due to normal changes in the cash flow position of ACNB’s commercial and local government customer base. Agreements to repurchase accounts are within the commercial and local government customer base and have attributes similar to core deposits. Investment securities are pledged in sufficient amounts to collateralize these agreements.
Long-term borrowings consist of longer-term advances from the FHLB, trust preferred subordinated debt and subordinated debt. Long-term borrowings totaled $215.4 million at March 31, 2026 compared to $255.4 million at December 31, 2025. During the three months ended March 31, 2026 the Company paid off $40.0 million of long-term FHLB borrowings. On March 12, 2026, the Company sold and issued $15.0 million in aggregate principal amount 5.875% fixed-to-floating rate subordinated notes due March 15, 2036. On March 31, 2026, the Company redeemed the $15.0 million in aggregate principal amount 4.00% fixed-to-floating rate subordinated notes that were issued on March 30, 2021. Further borrowings will be used when necessary for a variety of risk management and funding purposes. Please refer to the Liquidity discussion below for more information on the Corporation’s ability to borrow.
Capital
ACNB’s capital management strategies have been developed to provide an appropriate risk-adjusted rate of return, in the opinion of management, to shareholders, while maintaining levels above its internal minimums and “well-capitalized” regulatory position in relationship to its risk exposure. Total stockholders’ equity was $425.5 million at March 31, 2026 compared to $420.0 million at December 31, 2025. The increase to stockholders’ equity during the three months ended March 31, 2026 was driven primarily by net income of $13.7 million partially offset by a $1.3 million change in unrealized gains in AFS investment securities, cash dividends paid to ACNB Corporation stockholders of $3.9 million, and common stock repurchases of $3.6 million.
ACNB Corporation has a Dividend Reinvestment and Stock Purchase Plan that provides registered holders of ACNB Corporation common stock with a convenient way to purchase additional shares of common stock by permitting participants in the plan to automatically reinvest cash dividends on all or a portion of the shares owned and to make quarterly voluntary cash payments under the terms of the plan. Participation in the plan is voluntary, and there are eligibility requirements to participate in the plan. During the three months ended March 31, 2026, 7,669 shares were issued under this plan with proceeds in the amount of $356 thousand.
Regulatory Capital
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Minimum regulatory capital requirements established by Basel III rules require the Corporation and the Bank to:
•Meet a minimum Tier 1 leverage capital ratio of 4.0% of average assets;
•Meet a minimum Common Equity Tier 1 capital ratio of 4.5% of risk-weighted assets;
•Meet a minimum Tier 1 capital ratio of 6.0% of risk-weighted assets;
•Meet a minimum Total capital ratio of 8.0% of risk-weighted assets;
•Maintain a “capital conservation buffer” of 2.5% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus; and,
•Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses.
40
The capital ratios are as follows:
| Actual | For Capital Adequacy Purposes 1 | To Be Well Capitalized Under Prompt Corrective Action Regulations 2 | |||||||||||||||
| March 31, 2026 | |||||||||||||||||
| Tier 1 Leverage Capital (to average assets) | |||||||||||||||||
| ACNB Corporation | 11.74 | % | 4.00 | % | N/A | ||||||||||||
| ACNB Bank | 11.37 | % | 4.00 | % | 5.00 | % | |||||||||||
| Common Equity Tier 1 Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 14.92 | % | 4.50 | % | N/A | ||||||||||||
| ACNB Bank | 14.64 | % | 4.50 | % | 6.50 | % | |||||||||||
| Tier 1 Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 15.14 | % | 6.00 | % | N/A | ||||||||||||
| ACNB Bank | 14.64 | % | 6.00 | % | 8.00 | % | |||||||||||
| Total Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 16.73 | % | 8.00 | % | N/A | ||||||||||||
| ACNB Bank | 15.63 | % | 8.00 | % | 10.00 | % | |||||||||||
| December 31, 2025 | |||||||||||||||||
| Tier 1 Leverage Capital (to average assets) | |||||||||||||||||
| ACNB Corporation | 11.40 | % | 4.00 | % | N/A | ||||||||||||
| ACNB Bank | 10.92 | % | 4.00 | % | 5.00 | % | |||||||||||
| Common Equity Tier 1 Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 14.74 | % | 4.50 | % | N/A | ||||||||||||
| ACNB Bank | 14.32 | % | 4.50 | % | 6.50 | % | |||||||||||
| Tier 1 Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 14.96 | % | 6.00 | % | N/A | ||||||||||||
| ACNB Bank | 14.32 | % | 6.00 | % | 8.00 | % | |||||||||||
| Total Capital (to risk-weighted assets) | |||||||||||||||||
| ACNB Corporation | 16.54 | % | 8.00 | % | N/A | ||||||||||||
| ACNB Bank | 15.30 | % | 8.00 | % | 10.00 | % | |||||||||||
__________________________________________________________________
1 Ratios do not include capital conservation buffer.
2 N/A - Not applicable as “well capitalized” applies only to banks.
Liquidity
Effective liquidity management ensures the cash flow requirements of depositors and borrowers as well as the operating cash needs of ACNB are met. ACNB’s funds are available from a variety of sources, including assets that are readily convertible such as interest-bearing deposits with banks, maturities and repayments from the securities portfolio, scheduled repayments of loans receivable, the core deposit base, the ability to raise brokered deposits, and the ability to borrow from the FHLB, Federal Reserve Discount Window and unsecured Federal Funds line providers.
At March 31, 2026, ACNB’s banking subsidiary had borrowing capacity of approximately $1.28 billion from the FHLB, of which $1.04 billion was available. At March 31, 2026, ACNB’s banking subsidiary could borrow approximately $55.0 million from the Discount Window, of which the full amount was available. The underlying collateral at the Discount Window is made up of eligible loan collateral held in a joint-custody account under the Bank’s name.
ACNB’s banking subsidiary maintains several unsecured Fed Funds lines with correspondent banks. As of March 31, 2026, Fed Funds line capacity at the banking subsidiary was $192.0 million, of which the full amount was available. ACNB maintains a $5.0 million unsecured line of credit with a correspondent bank, all of which was available for borrowing as of March 31, 2026. The Corporation also executed a guaranty for a note related to a $1.5 million commercial line of credit from a local bank, with customary terms and conditions for such a line, for ACNB Insurance Services, the borrower and a wholly-owned subsidiary of ACNB Corporation. The commercial line of credit is for general working capital needs as they arise by ACNB Insurance Services.
41
Another source of liquidity is securities sold under repurchase agreements to customers of ACNB’s banking subsidiary totaling approximately $15.1 million and $16.1 million at March 31, 2026 and December 31, 2025, respectively. These agreements vary in balance according to the cash flow needs of customers and competing accounts at other financial organizations.
The liquidity of the parent company also represents an important aspect of liquidity management. The parent company’s cash outflows consist principally of dividends to shareholders, common stock repurchases and corporate expenses. The main source of funding for the parent company is the dividends it receives from its subsidiaries. Federal and state banking regulations place certain legal restrictions and other practicable safety and soundness restrictions on dividends paid to the parent company from the subsidiary bank.
ACNB manages liquidity by monitoring projected cash inflows and outflows on a daily basis, and believes it has sufficient funding sources to maintain sufficient liquidity under varying degrees of business conditions for liquidity and capital resource requirements for all material short- and long-term cash requirements from known contractual and other obligations.
Off-Balance Sheet Arrangements
The Corporation is party to financial instruments with OBS risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and, to a lesser extent, standby letters of credit. At March 31, 2026, the Corporation had unfunded outstanding commitments to extend credit of $582.7 million and outstanding standby letters of credit of $23.9 million. Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of ACNB’s ALCO, with direct oversight from the Board, is to maximize net interest income within established policy parameters. This objective is accomplished through the management of the statement of condition composition and duration, market risk exposures arising from changing economic conditions, and liquidity risk.
Market risk comprises exposure to interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market rate or price risks. Specific to the banking industry, one of the greatest risk exposures is to that of changing market interest rates. The primary objective of monitoring ACNB’s interest rate sensitivity risk is to provide management the flexibility necessary to manage the statement of condition to minimize adverse changes in net interest income as a result of changes in the direction and level of interest rates. FOMC monetary policy, economic uncertainty, and fiscal policy changes have been significant factors affecting the task of managing interest rate sensitivity positions in recent years.
ACNB’s ALCO is a management committee responsible for monitoring and managing interest rate risk within approved policy limits utilizing earnings sensitivity simulation and economic value-at-risk models. These models are highly dependent on various assumptions, which change regularly as the statement of condition composition and market interest rates change. The key assumptions and strategies employed are analyzed, reviewed and documented at least annually by the ALCO as well as provided to the Board.
Interest Rate Risk
Interest rate risk is the exposure to fluctuations in the Bank’s future earnings (earnings at risk) and value (value at risk) resulting from changes in interest rates. This exposure results from differences between the amounts of interest-earning assets and interest-bearing liabilities that reprice within a specified time period as a result of scheduled maturities, scheduled and unscheduled repayments, the propensity of borrowers and depositors to react to changes in their economic interests, and contractual loan interest rate changes.
Management attempts to manage the level of repricing and maturity mismatch through its asset/liability management processes so that fluctuations in net interest income are maintained within policy limits across a range of market conditions while satisfying liquidity and capital requirements. Management recognizes that a certain amount of interest rate risk is inherent, appropriate, and necessary to ensure the Bank’s profitability. Thus, the goal of the Bank’s interest rate risk management is to minimize the fluctuations of net interest income across all interest rate scenarios.
Management endeavors to control the exposure to changes in interest rates by understanding, reviewing, and making decisions based on its risk position. The Bank primarily uses its securities portfolio, FHLB advances, derivatives and brokered deposits to manage its interest rate risk position. Additionally, pricing, promotion, and product development activities are directed in an effort to emphasize the loan and deposit repricing characteristics that best meet current interest rate risk objectives.
ACNB uses simulation analysis to assess earnings at risk and net present value analysis to assess value at risk. These methods allow management to regularly monitor both the direction and magnitude of its interest rate risk exposure. These analyses
42
require numerous assumptions including, but are not limited to, changes in statement of condition mix, prepayment rates on loans and securities, cash flows and repricing of all financial instruments, changes in volumes and pricing, future shapes of the yield curve, relationship of market interest rates to each other (basis risk), credit spread, and deposit sensitivity. Assumptions are based on management’s best estimates, but may not accurately reflect actual results under certain changes in interest rates due to the timing, magnitude, and frequency of rate changes and changes in market conditions and management strategies, among other factors. However, the analyses are useful in quantifying risk and providing a relative gauge of the Corporation’s interest rate risk position over time.
ACNB’s ALCO operates under management policies, approved by the Board, which define guidelines and limits on the level of risk. ALCO meets regularly and reviews its interest rate risk position and monitors various liquidity ratios to ensure a satisfactory liquidity position. By utilizing the analyses, management can determine changes that may need to be made to the asset and liability mixes to mitigate the change in net interest income under various interest rate scenarios. Management continually evaluates the condition of the economy, the pattern of market interest rates, and other economic data to inform the committee. Regulatory authorities also monitor the Corporation’s interest rate risk position along with other liquidity ratios.
Net Interest Income Sensitivity
Simulation analysis evaluates the effect of upward and downward changes in market interest rates on future net interest income. The analysis involves changing the interest rates used in determining net interest income over the next twelve months. The resulting percentage change in net interest income in various rate scenarios is an indication of Corporation’s short-term interest rate risk. The analysis assumes recent pricing trends in new loan and deposit volumes will continue while balances remain constant. Additional assumptions are applied to modify pricing under the various rate scenarios.
The simulation analysis results are presented in the table below. At March 31, 2026, results in the falling interest rate scenario project a decrease in net interest income. The Bank is currently modestly asset-sensitive according to the model in a down rate environment as interest-earning assets are expected to reprice faster than interest-bearing liabilities.
| 12-Month Earnings at Risk Ramps | ||||||||||||||||||||
| Change in Market Interest Rates (bps) | % Change in Net Interest Income | |||||||||||||||||||
| March 31, 2026 | December 31, 2025 | Policy Limits | ||||||||||||||||||
| (200) | (1.3) | % | (0.9) | % | (10.0) | % | ||||||||||||||
| (100) | (0.7) | % | (0.6) | % | (5.0) | % | ||||||||||||||
| 100 | — | % | (0.3) | % | (5.0) | % | ||||||||||||||
| 200 | (0.5) | % | (1.1) | % | (10.0) | % | ||||||||||||||
Economic Value
Net present value analysis provides information on the risk inherent in the statement of condition that might not be considered in the simulation analysis due to the short time horizon used. The net present value of the statement of condition incorporates the discounted present value of expected asset cash flows minus the discounted present value of expected liability cash flows. The analysis involves changing the interest rates used in determining the expected cash flows and in discounting the cash flows. The resulting percentage change in net present value in various rate scenarios is an indication of the longer-term repricing risk and options embedded in the statement of condition.
The results at March 31, 2026 and December 31, 2025 are reflected in the following table. Funding cost and repricing speed will continue to be a factor in the results of the model. The behavior of the business and retail clients also varies across the rate scenarios, which is reflected in the results. To improve comparability across periods, the Bank strives to follow best practices related to the assumption setting and maintains the size and mix of the period end statement of condition; thus, the results do not reflect actions management may take through the normal course of business that would impact results.
| Value at Risk Ramps | ||||||||||||||||||||
| Change in Market Interest Rates (bps) | % Change in Market Value | |||||||||||||||||||
| March 31, 2026 | December 31, 2025 | Policy Limits | ||||||||||||||||||
| (200) | (10.4) | % | (11.0) | % | (35.0)% | |||||||||||||||
| (100) | (3.4) | % | (3.3) | % | (20.0)% | |||||||||||||||
| 100 | (0.1) | % | (0.1) | % | (20.0)% | |||||||||||||||
| 200 | (2.6) | % | (2.8) | % | (35.0)% | |||||||||||||||
43
ITEM 4 – CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Corporation carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Corporation (including its consolidated subsidiaries) required to be included in periodic SEC filings.
Disclosure controls and procedures are Corporation controls and other procedures that are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes in the Corporation’s internal control over financial reporting during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.
44
PART II – OTHER INFORMATION
ACNB CORPORATION
ITEM 1 – LEGAL PROCEEDINGS
As of March 31, 2026, there were no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which ACNB or its subsidiaries are a party or by which any of their assets are the subject, which could have a material adverse effect on ACNB or its subsidiaries or their results of operations. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Corporation or its subsidiaries by governmental authorities.
ITEM 1A – RISK FACTORS
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. Risk Factors of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 5, 2009, shareholders approved and adopted the amendment to the Articles of Incorporation of ACNB Corporation to authorize up to 20,000,000 shares of preferred stock, par value $2.50 per share. As of March 31, 2026, there were no issued or outstanding shares of preferred stock.
On May 1, 2018, shareholders approved and ratified the ACNB Corporation 2018 Omnibus Stock Incentive Plan, effective as of March 20, 2018, in which awards shall not exceed, in the aggregate, 400,000 shares of common stock, plus any shares that were authorized, but not issued, under the ACNB Corporation 2009 Restricted Stock Plan. As of March 31, 2026, there were 233,742 shares issued under this plan. The maximum number of shares that may yet be granted under this plan is 340,313. The Corporation’s Registration Statement under the Securities Act of 1933 on Form S-8 for the ACNB Corporation 2018 Omnibus Stock Incentive Plan was filed with the Securities and Exchange Commission on March 8, 2019. In addition, on March 8, 2019, the Corporation filed Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 for the ACNB Corporation 2009 Restricted Stock Plan to add the ACNB Corporation 2018 Omnibus Stock Incentive Plan to the registration statement to reflect that the remaining unissued shares under the 2009 Restricted Stock Plan may instead be issued under the 2018 Omnibus Stock Incentive Plan.
On June 18, 2025, the Corporation announced that the Board of Directors approved a plan to repurchase, in open market transactions at prevailing market prices, up to 314,000 shares, or approximately 3%, of the outstanding shares of ACNB’s common stock. This common stock repurchase program replaced and superseded any and all earlier announced repurchase plans. There were 73,972 shares purchased under this plan during the three months ended March 31, 2026. The Corporation repurchased the remaining outstanding share repurchases authorized under this plan in April of 2026, completing this program.
On April 29, 2026, the Corporation announced that the Board of Directors approved a plan to repurchase, in open market transactions at prevailing market prices, up to 310,000 shares, or approximately 3%, of the outstanding shares of ACNB’s common stock. This common stock repurchase program replaced and superseded any and all earlier announced repurchase plans.
The following is a summary of the Corporation’s purchases of common stock during the first quarter of 2026:
| Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plan | Maximum number of shares that may yet be purchased under the plan | ||||||||||||||||||||
| January 1 - January 31, 2026 | 2,429 | $ | 49.78 | 119,358 | 194,642 | ||||||||||||||||||
| February 1 - February 28, 2026 | 8,355 | $ | 52.17 | 127,713 | 186,287 | ||||||||||||||||||
| March 1 - March 31, 2026 | 63,188 | $ | 46.84 | 190,901 | 123,099 | ||||||||||||||||||
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES – NOTHING TO REPORT.
ITEM 4 – MINE SAFETY DISCLOSURES – NOT APPLICABLE.
ITEM 5 – OTHER INFORMATION
During the three months ended March 31, 2026, no director or officer of the Corporation adopted terminated
45
ITEM 6 – EXHIBITS
The following exhibits are included in this report:
| Exhibit 2.1 | Agreement and Plan of Reorganization by and among ACNB Corporation, ACNB South Acquisition Subsidiary, LLC, ACNB Bank, New Windsor Bancorp, Inc., and New Windsor State Bank dated as of November 21, 2016, as amended. (Incorporated by reference to Annex A of the Registrant’s Registration Statement No. 333-215914 on Form S-4, filed with the Commission on February 6, 2017.) Schedules are omitted; the Registrant agrees to furnish copies of Schedules to the Securities and Exchange Commission upon request. | |||||||
| Exhibit 2.2 | Amendment No. 2 to Agreement and Plan of Reorganization by and among ACNB Corporation, ACNB South Acquisition Subsidiary, LLC, ACNB Bank, New Windsor Bancorp, Inc., and New Windsor State Bank dated as of April 18, 2017. (Incorporated by reference to Exhibit 2.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed with the Commission on August 4, 2017.) | |||||||
| Exhibit 2.3 | Agreement and Plan of Reorganization by and among ACNB Corporation, ACNB South Acquisition Subsidiary, LLC, ACNB Bank, Frederick County Bancorp, Inc. and Frederick County Bank dated as of July 1, 2019. (Incorporated by reference to Annex A of the Registrant’s Registration Statement No. 333-233791 on Form S-4, filed with the Commission on September 16, 2019.) Schedules are omitted; the Registrant agrees to furnish copies of Schedules to the Securities and Exchange Commission upon request. | |||||||
| Exhibit 2.4 | Agreement and Plan of Reorganization by and among ACNB Corporation, ACNB South Acquisition Subsidiary, LLC, ACNB Bank, Traditions Bancorp, Inc. and Traditions Bank dated as of July 23, 2024. (Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on July 24, 2024.) Schedules are omitted; the Registrant agrees to furnish copies of Schedules to the Securities and Exchange Commission upon request. | |||||||
| Exhibit 3(i) | Amended and Restated Articles of Incorporation of ACNB Corporation. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on May 7, 2018.) | |||||||
| Exhibit 3(ii) | Amended and Restated Bylaws of ACNB Corporation. (Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on February 21, 2024.) | |||||||
| Exhibit 4.1 | Form of ACNB Corporation 4.00% Fixed-to-Floating Rate Subordinated Note due March 31, 2031. (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2021.) | |||||||
| Exhibit 4.2 | Form of ACNB Corporation 5.875% Fixed-to-Floating Rate Subordinated Note due March 15, 2036. (Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 12, 2026.) | |||||||
| Exhibit 10.1 | ACNB Bank Amended and Restated Executive Supplemental Life Insurance Plan — Applicable to James P. Helt, Douglas A. Seibel and Laurie A. Laub. (Incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Commission on March 6, 2015.) | |||||||
| Exhibit 10.2 | ACNB Bank Amended and Restated Director Supplemental Life Insurance Plan — Applicable to Kimberly S. Chaney, Frank Elsner, III, Todd L. Herring, Scott L. Kelley, James J. Lott, Donna M. Newell, Daniel W. Potts, D. Arthur Seibel, Jr. and Alan J. Stock. (Incorporated by reference to Exhibit 10.4 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Commission on March 6, 2015.) | |||||||
| Exhibit 10.3 | ACNB Bank Amended and Restated Director Deferred Fee Plan — Applicable to Kimberly S. Chaney, Frank Elsner, III, Todd L. Herring, Scott L. Kelley, James J. Lott, Donna M. Newell, D. Arthur Seibel, Jr. and Alan J. Stock. (Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on January 6, 2012.) | |||||||
| Exhibit 10.4 | ACNB Bank Salary Savings Plan. (Incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the Commission on November 4, 2022.) | |||||||
| Exhibit 10.5 | Group Pension Plan for Employees of ACNB Bank. (Incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the Commission on November 4, 2022.) | |||||||
46
| Exhibit 10.6 | ACNB Corporation 2009 Restricted Stock Plan. (Incorporated by reference to Appendix C of the Registrant’s Definitive Proxy Statement on Schedule 14A, filed with the Commission on March 25, 2009.) | |||||||
| Exhibit 10.7 | Salary Continuation Agreement by and between ACNB Bank and James P. Helt dated as of March 28, 2012. (Incorporated by reference to Exhibit 10.20 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Commission on March 7, 2014.) | |||||||
| Exhibit 10.8 | ACNB Bank Variable Compensation Plan effective January 1, 2014, as amended. (Incorporated by reference to Exhibit 10.16 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Commission on March 14, 2022.) | |||||||
| Exhibit 10.9 | Amended and Restated Employment Agreement by and among ACNB Corporation, ACNB Bank and James P. Helt dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.10 | ACNB Corporation 2018 Omnibus Stock Incentive Plan. (Incorporated by reference to Exhibit A of the Registrant’s Definitive Proxy Statement on Schedule 14A, filed with the Commission on March 27, 2018.) | |||||||
| Exhibit 10.11 | Form of Exhibit B Split Dollar Policy Endorsement to ACNB Bank Amended and Restated Director Supplemental Life Insurance Plan dated November 27, 2018. (Incorporated by reference to Exhibit 99.4 of the Registrant’s Current Report on Form 8-K, filed with the Commission on November 28, 2018.) | |||||||
| Exhibit 10.12 | Salary Continuation Agreement by and between ACNB Bank and James P. Helt dated as of November 27, 2018. (Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on November 28, 2018.) | |||||||
| Exhibit 10.13 | Form of Subordinated Note Purchase Agreement dated March 30, 2021, by and among ACNB Corporation and the Purchasers. (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2021.) | |||||||
| Exhibit 10.14 | Amended and Restated Employment Agreement by and among ACNB Corporation, ACNB Bank and Jason H. Weber dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.15 | Salary Continuation Agreement by and between ACNB Bank and James P. Helt dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.16 | Salary Continuation Agreement by and between ACNB Bank and Jason H. Weber dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.4 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.17 | First Amendment to ACNB Bank Salary Continuation Agreement by and between ACNB Bank and James P. Helt dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.5 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.18 | First Amendment to ACNB Bank Salary Continuation Agreement by and between ACNB Bank and Jason H. Weber dated as of October 5, 2022. (Incorporated by reference to Exhibit 99.7 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.19 | Salary Continuation Agreement by and between ACNB Bank and Jason H. Weber dated as of January 31, 2022. (Incorporated by reference to Exhibit 99.8 of the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2022.) | |||||||
| Exhibit 10.20 | Amended and Restated Employment Agreement between ACNB Bank and Douglas A. Seibel dated as of October 20, 2022. (Incorporated by reference to Exhibit 10.31 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Commission on March 3, 2023.) | |||||||
| Exhibit 10.21 | Supplemental Executive Retirement Plan by and between ACNB Bank and Douglas A. Seibel dated as of November 27, 2018. (Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K, filed with the Commission on November 28, 2018.) | |||||||
47
| Exhibit 10.22 | Supplemental Executive Retirement Plan by and between ACNB Bank and Douglas A. Seibel dated as of October 20, 2022. (Incorporated by reference to Exhibit 10.33 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Commission on March 3, 2023.) | |||||||
| Exhibit 10.23 | Amended and Restated Employment Agreement between ACNB Bank and Laurie A. Laub dated as of October 6, 2022. (Incorporated by reference to Exhibit 10.31 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Commission on March 14, 2024.) | |||||||
| Exhibit 10.24 | First Amendment to ACNB Bank Salary Continuation Agreement by and between ACNB Bank and Laurie A. Laub dated as of October 6, 2022. (Incorporated by reference to Exhibit 10.32 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Commission on March 14, 2024.) | |||||||
| Exhibit 10.25 | Salary Continuation Agreement by and between ACNB Bank and Laurie A. Laub dated as of October 6, 2022. (Incorporated by reference to Exhibit 10.33 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Commission on March 14, 2024.) | |||||||
| Exhibit 10.26 | First Amendment to ACNB Bank Amended and Restated Executive Supplemental Life Insurance Plan dated December 31, 2014. (Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K, filed with the Commission on November 3, 2023.) | |||||||
| Exhibit 10.27 | ACNB Bank 2023 Executive Supplemental Life Insurance Plan dated November 1, 2023 and Participant Election Form. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on November 3, 2023.) | |||||||
| Exhibit 10.28 | Form of ACNB Bank Variable Compensation Plan Restricted Stock Agreement for Employees dated as of March 15, 2024. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 20, 2024.) | |||||||
| Exhibit 10.29 | Employment Agreement by and between ACNB Corporation, ACNB Bank and Brett D. Fulk dated as of September 6, 2022. (Incorporated by reference to Exhibit 10.32 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Commission on March 14, 2025.) | |||||||
| Exhibit 10.30 | Salary Continuation Agreement by and between ACNB Bank and Brett D. Fulk dated as of September 6, 2022. (Incorporated by reference to Exhibit 10.33 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Commission on March 14, 2025.) | |||||||
| Exhibit 10.31 | Deferred Compensation Agreement by and between ACNB Bank and Brett D. Fulk dated as of September 6, 2022. (Incorporated by reference to Exhibit 10.34 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Commission on March 14, 2025.) | |||||||
| Exhibit 10.32 | Form of ACNB Bank Variable Compensation Plan Restricted Stock Agreement for Employees dated as of March 15, 2024. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 20, 2024.) | |||||||
| Exhibit 10.33 | Form of ACNB Bank Variable Compensation Plan Restricted Stock Agreement for Employees dated as of March 14, 2025. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 19, 2025.) | |||||||
| Exhibit 10.34 | First Amendment to Amended and Restated Employment Agreement by and among ACNB Corporation, ACNB Bank and Jason H. Weber dated as of February 19, 2026. (Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on February 20, 2026.) | |||||||
| Exhibit 10.35 | First Amendment to Amended and Restated Employment Agreement by and among ACNB Corporation, ACNB Bank and Brett D. Fulk dated as of February 19, 2026. (Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K, filed with the Commission on February 20, 2026.) | |||||||
| Exhibit 10.36 | Form of Subordinated Note Purchase Agreement 5.875% Fixed-to-Floating Rate Subordinated Note due March 15, 2036. (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 12, 2026.) | |||||||
| Exhibit 10.37 | Form of ACNB Bank Variable Compensation Plan Restricted Stock Agreement for Employees dated as of March 13, 2026. (Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K, filed with the Commission on March 18, 2026.) | |||||||
48
| Exhibit 31.1 | Chief Executive Officer Certification of Quarterly Report on Form 10-Q. | |||||||
| Exhibit 31.2 | Chief Financial Officer Certification of Quarterly Report on Form 10-Q. | |||||||
| Exhibit 32.1 | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| Exhibit 32.2 | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase. | |||||||
| Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | |||||||
| Exhibit 101.INS | XBRL Instance Document – The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| Exhibit 101.SCH | XBRL Taxonomy Extension Schema. | |||||||
| Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |||||||
| Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |||||||
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACNB CORPORATION (Registrant) | |||||||||||
| Date: | May 7, 2026 | /s/ James P. Helt | |||||||||
| James P. Helt | |||||||||||
| President & Chief Executive Officer | |||||||||||
| /s/ Jason H. Weber | |||||||||||
| Jason H. Weber | |||||||||||
| Executive Vice President/Treasurer & | |||||||||||
| Chief Financial Officer (Principal Financial Officer) | |||||||||||
50
FAQ
How did ACNB (ACNB) perform financially in the quarter ended March 31, 2026?
ACNB generated net income of $13.7 million, compared with a small loss a year earlier. Diluted earnings per share were $1.32, with annualized return on average assets of 1.71% and return on average equity of 12.97%, reflecting stronger core profitability.
What happened to ACNB (ACNB)’s net interest margin and net interest income?
Net interest income rose to $32.5 million, supported by a higher fully taxable equivalent net interest margin of 4.46%. The increase came from balance sheet restructuring, the Traditions Bancorp acquisition, and new loans and securities funded at higher yields than maturing or repaid balances.
How strong is ACNB (ACNB)’s asset quality and loan loss reserve?
ACNB reported an allowance for credit losses of $23.6 million, equal to 1.01% of total loans. Nonperforming loans were $9.6 million, or 0.41% of loans. Annualized net recoveries were essentially zero, indicating limited realized credit losses this quarter.
What were ACNB (ACNB)’s key loan and deposit levels as of March 31, 2026?
Total loans, net of unearned income, were $2.35 billion, with commercial real estate and residential mortgages the largest segments. Total deposits reached $2.53 billion, including $576.1 million in noninterest-bearing demand and $1.95 billion in interest-bearing balances across checking, savings, money market, and time deposits.
How did noninterest income and expenses affect ACNB (ACNB) this quarter?
Noninterest income increased to $8.3 million, helped by higher mortgage-related gains, bank-owned life insurance earnings, and other fee categories. Noninterest expenses fell to $23.6 million, mainly because prior-year results included significant merger-related costs linked to the Traditions Bancorp acquisition.
What recent capital or funding actions did ACNB (ACNB) take with subordinated notes?
On March 12, 2026, ACNB issued $15.0 million of 5.875% fixed-to-floating subordinated notes due 2036, treated as Tier 2 capital. It also redeemed all $15.0 million of its 4.00% fixed-to-floating subordinated notes due 2031 at par plus accrued interest.