ACNB Corporation Reports 2024 Third Quarter Financial Results
GETTYSBURG, Pa., Oct. 24, 2024 (GLOBE NEWSWIRE) -- ACNB Corporation (NASDAQ:ACNB) ("ACNB" or the "Corporation"), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced net income of $7.2 million, or $0.84 diluted earnings per share, for the three months ended September 30, 2024 compared to net income of $9.0 million, or $1.06 diluted earnings per share, for the three months ended September 30, 2023 and net income of $11.3 million, or $1.32 diluted earnings per share, for the three months ended June 30, 2024. Financial results for the three months ended September 30, 2024 were impacted by $1.1 million in merger-related expense due to the pending acquisition of Traditions Bancorp, Inc. Financial results for the three month period ended June 30, 2024 were impacted by a $3.2 million reversal of the provisions for credit losses and unfunded commitments.
2024 Third Quarter Highlights
Return on average assets was 1.17% and return on average equity was 9.63% for the three months ended September 30, 2024. Core return on average assets1 was 1.32% and core return on average equity1 was 10.81% for the three months ended September 30, 2024.
Fully taxable equivalent ("FTE") net interest margin was 3.77% for the three months ended September 30, 2024 compared to 3.82% for the three months ended June 30, 2024 and 4.01% for the three months ended September 30, 2023.
Total non-performing loans to total loans, net of unearned income, was 0.39% at September 30, 2024 compared to 0.19% at June 30, 2024 and 0.22% at September 30, 2023. The increase in non-performing loans to total loans, net of unearned income, for the three months ended September 30, 2024 was the result of one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter.
Net charge-offs to average loans outstanding (annualized) were 0.01% for the three months ended September 30, 2024 and 0.00% for the three months ended June 30, 2024 compared to 0.03% for the three months ended September 30, 2023.
Tangible common equity to tangible assets ratio1 of 10.74% at September 30, 2024 compared to 9.84% at June 30, 2024 and 8.65% at September 30, 2023. The net unrealized loss on the available for sale securities portfolio was $36.8 million at September 30, 2024 compared to a net unrealized loss of $52.7 million at June 30, 2024 and a net unrealized loss of $75.2 million at September 30, 2023.
ACNB and ACNB Bank capital levels remain well in excess of ACNB's internal minimums and those required to be categorized as a well-capitalized institution by our bank regulators.
"We are once again pleased to share strong operating results for the third quarter of 2024. Our continued focus on profitability and asset quality as evidenced by our return on average assets and return on average equity are a testament to the continued focus on our strategic objectives," said James P. Helt, ACNB Corporation President and Chief Executive Officer.
"During the third quarter, we were also pleased to announce the strategic acquisition of Traditions Bancorp, Inc. This acquisition will create the largest community bank in Pennsylvania with assets less than $5 billion and enhances our presence in York County and expands our branch footprint in neighboring Lancaster County. We are excited to welcome Traditions as ACNB continues to expand our market presence. This strategic acquisition will complement our current operations with profitable growth opportunities in adjacent markets while contributing to the Corporation's established commitment of enhancing long-term shareholder value."
Mr. Helt continued, "As we look forward to the remainder of 2024 and the start of a new year in 2025, we are excited that our strong foundation based on community banking principles combined with the growth opportunities now before us through our strategic planning objectives will enable us to continue to deliver on our commitment to our stakeholders."
Net Interest Income and Margin
Net interest income for the three months ended September 30, 2024 totaled $20.9 million, a decrease of $803 thousand, or 3.7%, compared to the three months ended September 30, 2023 driven by a decrease in the FTE net interest margin over the same period. The FTE net interest margin for the three months ended September 30, 2024 was 3.77%, a decrease of 24 basis points from 4.01% for the three months ended September 30, 2023. The decrease in FTE net interest margin was driven primarily by an increase in long-term borrowings and promotional time deposit balances and costs. Total average borrowings increased $132.5 million for the three months ended September 30, 2024 compared to the same period in September 30, 2023. The average rate paid on total borrowings was 4.31% for the three months ended September 30, 2024, an increase of 48 basis points from the three months ended September 30, 2023. Total average interest-bearing deposits decreased $54.4 million, or 3.9%, for the three months ended September 30, 2024 compared to September 30, 2023; however, average time deposit balances increased $45.9 million due to ongoing promotions. The average rate paid on interest-bearing deposits was 0.92% for the three months ended September 30, 2024, an increase of 66 basis points from the three months ended September 30, 2023.
Net interest income for the three months ended September 30, 2024 totaled $20.9 million, a decrease of $22 thousand, or 0.1%, compared to $21.0 million for the three months ended June 30, 2024 driven by a decrease in the FTE net interest margin over the same period. The FTE net interest margin for the three months ended September 30, 2024 decreased 5 basis points from 3.82% for the three months ended June 30, 2024. The decrease in FTE net interest margin was driven primarily by the recognition of nonaccrual interest income related to a specific large relationship during the three months ended June 30, 2024 and increases in the cost of average interest-bearing deposits during the three months ended September 30, 2024. Excluding nonaccrual interest income related to the payoff of a specific large relationship, the FTE net interest margin was 3.79% for the three months ended June 30, 2024. The average rate paid on interest-bearing deposits was 0.92% for the three months ended September 30, 2024, an increase of 13 basis points from the three months ended June 30, 2024.
Noninterest Income
Noninterest income for the three months ended September 30, 2024 was $6.8 million, an increase of $536 thousand, or 8.5%, from the three months ended September 30, 2023. Wealth management income for the three months ended September 30, 2024 was $1.2 million, an increase of $235 thousand from the three months ended September 30, 2023 driven primarily by portfolio market appreciation, estate income and new business generation. Insurance commissions for the three months ended September 30, 2024 were $2.8 million, an increase of $158 thousand from the three months ended September 30, 2023 driven primarily by growth in commissions on policy renewals and new business in the current quarter. Gain from mortgage loans held for sale totaled $112 thousand for the three months ended September 30, 2024 compared to none for the three months ended September 30, 2023.
Noninterest income for the three months ended September 30, 2024 increased $406 thousand, or 6.3%, from the three months ended June 30, 2024. The increase was driven primarily by increases in wealth management income driven by higher estate income and other income driven by annual check ordering incentives received during the three months ended September 30, 2024. Additionally, there was a higher volume of mortgages sold in the current quarter, which resulted in a higher gain from mortgage loans held for sale for the three months ended September 30, 2024 compared to the three months ended June 30, 2024.
Noninterest Expense
Noninterest expense for the three months ended September 30, 2024 was $18.2 million, an increase of $1.9 million, or 11.7%, from the three months ended September 30, 2023. The increase was driven primarily by merger-related and salaries and employee benefits expenses. The increase in merger-related expense was driven primarily by professional service expenses incurred for the Traditions acquisition and totaled $1.1 million for the three months ended September 30, 2024. Salaries and employee benefits expense increased $948 thousand driven primarily by $682 thousand in higher employee health insurance expense and $273 thousand higher base wages. In addition, equipment expense increased $144 thousand driven primarily by higher core processing expenses and incremental purchases of office equipment. Partially offsetting these increases, professional services decreased $208 thousand for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 driven primarily by lower recruiting expenses for talent acquisition and consulting expenses. Marketing and corporate relations declined $60 thousand in the current quarter primarily due to rebranding expenses incurred for the three months ended September 30, 2023.
Noninterest expense for the three months ended September 30, 2024 increased $1.9 million, or 11.3%, from the three months ended June 30, 2024. The increase was driven primarily by merger-related and salaries and employee benefits expenses. Merger-related expense totaled $1.1 million for the three months ended September 30, 2024 compared to $23 thousand for the three months ended June 30, 2024. Salaries and employee benefits expense increased $591 thousand during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 driven primarily by higher employee health insurance expense of $519 thousand. Additionally, equipment expense increased $128 thousand driven primarily by higher core processing and software maintenance expenses coupled with incremental purchases of office equipment. Professional services expense decreased $120 thousand during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 driven primarily by lower transfer agent and audit expenses.
Loans and Asset Quality
Total loans outstanding were $1.68 billion at September 30, 2024, a decrease of $2.5 million, or 0.1%, from June 30, 2024 and an increase of $61.1 million, or 3.8%, from September 30, 2023. The decrease from June 30, 2024 was driven primarily by real estate construction. The increase from September 30, 2023 was driven primarily by growth in the commercial real estate portfolio in our core markets. Growth in the commercial real estate portfolio was spread throughout the Bank's geographic footprint and across various property types. The commercial real estate portfolio grew $59.2 million, or 6.6%, in 2024. The collateral for these loans is primarily spread across our Pennsylvania and Maryland market areas. Despite the intense competition in the Corporation's market areas, management continues to focus on asset quality and disciplined underwriting standards in the loan origination process.
Asset quality metrics continue to be stable. The provision for credit losses was $81 thousand and the provision for unfunded commitments was $40 thousand for the three months ended September 30, 2024 compared to a reversal to the provision for credit losses of $3.0 million and a reversal to the provision for unfunded commitments of $259 thousand for the three months ended June 30, 2024. For the three months ended September 30, 2023, there was a provision for credit losses of $250 thousand and a $171 thousand reversal to the provision for unfunded commitments. The increase in the provision for credit losses and unfunded commitments for the three months ended September 30, 2024 compared to the prior quarter was driven primarily by a $3.2 million reversal of the provision for credit losses and unfunded commitments in the prior quarter and one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter.
Non-performing loans were $6.6 million, or 0.39%, of total loans, net of unearned income, at September 30, 2024 compared to $3.1 million, or 0.19%, of total loans at June 30, 2024 and $3.6 million, or 0.22%, of total loans at September 30, 2023. The increase in non-performing loans at September 30, 2024 compared to the prior quarter was primarily the result of one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter. Annualized net charge-offs for the three months ended September 30, 2024 were 0.01% of total average loans compared to 0.00% and 0.03% for the three months ended June 30, 2024 and September 30, 2023, respectively.
Deposits and Borrowings
Deposits totaled $1.79 billion at September 30, 2024, a decrease of $47.3 million, or 2.6%, since June 30, 2024 and a decrease of $160.0 million, or 8.2%, from September 30, 2023. Included in total deposits were $1.33 billion interest-bearing deposits at September 30, 2024 which decreased $31.0 million, or 2.3%, from June 30, 2024 and decreased $58.0 million, or 4.2%, from September 30, 2023. Time deposits, included in interest-bearing deposits, increased $1.3 million, or 0.5%, and $43.5 million, or 20.4%, since June 30, 2024 and September 30, 2023, respectively. Total noninterest-bearing deposits were $463.5 million at September 30, 2024 compared to $479.7 million at June 30, 2024 and $565.5 million at September 30, 2023.
Total borrowings were $293.1 million at September 30, 2024, a decrease of $11.2 million, or 3.7%, compared to June 30, 2024 and an increase of $139.7 million, or 91.1%, compared to September 30, 2023. A $25.0 million short-term borrowing was paid off during the quarter. The average rate on total borrowings was 4.31% for the three months ended September 30, 2024 compared to 4.48% for the three months ended June 30, 2024 and 3.83% for the three months ended September 30, 2023.
Stockholders' Equity, Dividends and Share Repurchases
Total stockholders' equity was $306.8 million at September 30, 2024 compared to $289.3 million at June 30, 2024 and $255.6 million at September 30, 2023. Tangible book value2 per share was $29.90, $27.82 and $23.80 at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
As announced on Form 8-K on October 16, 2024, the Board of Directors approved and declared a regular quarterly cash dividend of $0.32 per share of ACNB Corporation common stock payable on December 13, 2024, to shareholders of record as of November 29, 2024. This per share amount reflects a $0.02, or 6.7%, increase over the same quarter of 2023.
ACNB repurchased 2,642 shares of ACNB common stock during the three months ended September 30, 2024.
About ACNB Corporation
ACNB Corporation, headquartered in Gettysburg, PA, is the $2.42 billion financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and ACNB Insurance Services, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 27 community banking offices and two loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, Inc. is a full-service insurance agency with licenses in 46 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, MD, and Gettysburg, PA. For more information regarding ACNB Corporation and its subsidiaries, please visit investor.acnb.com.
SAFE HARBOR AND FORWARD-LOOKING STATEMENTS - Should there be a material subsequent event prior to the filing of the Quarterly Report on Form 10-Q with the Securities and Exchange Commission, the financial information reported in this press release is subject to change to reflect the subsequent event. In addition to historical information, this press release may contain forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of Management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation's market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "intends", "will", "should", "anticipates", or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as national, regional and local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. Such risks, uncertainties, and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: short-term and long-term effects of inflation and rising costs on the Corporation, customers and economy; banking instability caused by bank failures and continuing financial uncertainty of various banks which may adversely impact the Corporation and its securities and loan values, deposit stability, capital adequacy, financial condition, operations, liquidity, and results of operations; effects of governmental and fiscal policies, as well as legislative and regulatory changes; effects of new laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which the Corporation and its subsidiaries must comply; impacts of the capital and liquidity requirements of the Basel III standards; effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including the effects of short-term and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; effects of economic conditions particularly with regard to the negative impact of any pandemic, epidemic or health-related crisis and the responses thereto on the operations of the Corporation and current customers, specifically the effect of the economy on loan customers' ability to repay loans; effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; inflation, securities market and monetary fluctuations; risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest rate protection agreements, as well as interest rate risks; difficulties in acquisitions and integrating and operating acquired business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; effects of technology changes; effects of general economic conditions and more specifically in the Corporation's market areas; failure of assumptions underlying the establishment of reserves for credit losses and estimations of values of collateral and various financial assets and liabilities; acts of war or terrorism or geopolitical instability; disruption of credit and equity markets; ability to manage current levels of impaired assets; loss of certain key officers; ability to maintain the value and image of the Corporation's brand and protect the Corporation's intellectual property rights; continued relationships with major customers; and, potential impacts to the Corporation from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses. Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of the Corporation's consolidated financial statements when filed with the SEC. Accordingly, the financial information in this announcement is subject to change. We caution readers not to place undue reliance on these forward-looking statements. They only reflect Management's analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the SEC.
ACNB #2024-17October 24, 2024
ACNB Corporation Financial HighlightsSelected Financial Data by Respective Quarter End(Unaudited)
(Dollars in thousands, except per share data)
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
BALANCE SHEET DATA
Assets
$
2,420,914
$
2,457,753
$
2,414,288
$
2,418,847
$
2,388,522
Investment securities
483,604
483,868
490,626
517,221
501,063
Total loans, net of unearned income
1,677,112
1,679,600
1,664,980
1,627,988
1,615,966
Allowance for credit losses
(17,214
)
(17,162
)
(20,172
)
(19,969
)
(19,264
)
Deposits
1,791,317
1,838,588
1,835,224
1,861,813
1,951,359
Allowance for unfunded commitments
1,349
1,310
1,569
1,719
1,962
Borrowings
293,091
304,286
272,605
252,174
153,388
Stockholders' equity
306,755
289,331
279,920
277,461
255,638
INCOME STATEMENT DATA
Interest and dividend income
$
27,241
$
26,869
$
25,974
$
25,284
$
24,234
Interest expense
6,299
5,905
5,381
3,791
2,489
Net interest income
20,942
20,964
20,593
21,493
21,745
Provision for (reversal of ) credit losses
81
(2,990
)
223
786
250
Provision for (reversal of) unfunded commitments
40
(259
)
(151
)
(242
)
(171
)
Net interest income after provisions for credit losses and unfunded commitments
20,821
24,213
20,521
20,949
21,666
Noninterest income
6,833
6,427
5,667
970
6,297
Noninterest expenses
18,244
16,391
17,662
17,173
16,336
Income before income taxes
9,410
14,249
8,526
4,746
11,627
Provision for income taxes
2,206
2,970
1,758
649
2,583
Net income
$
7,204
$
11,279
$
6,768
$
4,097
$
9,044
PROFITABILITY RATIOS
Total loans, net of unearned income to deposits
93.62
%
91.35
%
90.72
%
87.44
%
82.81
%
Return on average assets (annualized)
1.17
1.86
1.12
0.68
1.52
Return on average equity (annualized)
9.63
16.12
9.76
6.09
13.84
Efficiency ratio3
60.56
58.61
66.18
62.48
56.97
FTE Net interest margin
3.77
3.82
3.77
3.93
4.01
Yield on average earning assets
4.90
4.89
4.74
4.62
4.46
Yield on investment securities
2.59
2.65
2.70
2.36
2.24
Yield on total loans
5.56
5.53
5.37
5.29
5.16
Cost of funds
1.19
1.12
1.02
0.71
0.47
PER SHARE DATA
Diluted earnings per share
$
0.84
$
1.32
$
0.80
$
0.48
$
1.06
Cash dividends paid per share
0.32
0.32
0.30
0.30
0.28
Tangible book value per share3
29.90
27.82
26.70
26.44
23.80
Tangible book value per share3 (excluding AOCI)4
33.87
33.28
32.21
31.74
31.43
CAPITAL RATIOS5
Tier 1 leverage ratio
12.46
%
12.25
%
11.91
%
11.57
%
11.97
%
Common equity tier 1 ratio
16.07
15.78
15.40
15.16
15.30
Tier 1 risk based capital ratio
16.36
16.07
15.69
15.45
15.59
Total risk based capital ratio
18.15
17.86
17.68
17.41
17.49
CREDIT QUALITY
Net charge-offs to average loans outstanding (annualized)
0.01
%
0.00
%
0.00
%
0.02
%
0.03
%
Total non-performing loans to total loans, net of unearned income6
0.39
0.19
0.24
0.26
0.22
Total non-performing assets to total assets7
0.29
0.14
0.18
0.19
0.17
Allowance for credit losses to total loans, net of unearned income
1.03
1.02
1.21
1.23
1.19
Consolidated Balance Sheet(Unaudited)
(Dollars in thousands, except per share data)
September 30,2024
June 30,2024
March 31,2024
ASSETS
Cash and due from banks
$
24,636
$
26,681
$
17,395
Interest-bearing deposits with banks
33,456
59,593
35,740
Total Cash and Cash Equivalents
58,092
86,274
53,135
Equity securities with readily determinable fair values
947
919
918
Investment securities available for sale, at estimated fair value
418,079
418,364
425,114
Investment securities held to maturity, at amortized cost (fair value $59,038, $57,026, and $58,084)
64,578
64,585
64,594
Loans held for sale
1,080
1,801
88
Total loans, net of unearned income
1,677,112
1,679,600
1,664,980
Less: Allowance for credit losses
(17,214
)
(17,162
)
(20,172
)
Loans, net
1,659,898
1,662,438
1,644,808
Premises and equipment, net
25,542
25,760
25,916
Right of use asset
2,110
2,278
2,447
Restricted investment in bank stocks
10,853
11,853
10,877
Investment in bank-owned life insurance
81,344
80,841
80,348
Investments in low-income housing partnerships
909
940
971
Goodwill
44,185
44,185
44,185
Intangible assets, net
8,142
8,446
8,761
Foreclosed assets held for resale
406
406
467
Other assets
44,749
48,663
51,659
Total Assets
$
2,420,914
$
2,457,753
$
2,414,288
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing
$
463,501
$
479,726
$
499,583
Interest-bearing
1,327,816
1,358,862
1,335,641
Total Deposits
1,791,317
1,838,588
1,835,224
Short-term borrowings
37,769
48,974
17,303
Long-term borrowings
255,322
255,312
255,302
Lease liability
2,110
2,278
2,447
Allowance for unfunded commitments
1,349
1,310
1,569
Other liabilities
26,292
21,960
22,523
Total Liabilities
2,114,159
2,168,422
2,134,368
Stockholders' Equity:
Preferred Stock, $2.50 par value; 20,000,000 shares authorized; no shares outstanding at September 30, 2024, June 30, 2024 and March 31, 2024
—
—
—
Common stock, $2.50 par value; 20,000,000 shares authorized; 8,940,133, 8,934,495, and 8,928,441 shares issued; 8,548,625, 8,545,629, and 8,539,575 shares outstanding at September 30, 2024, June 30, 2024 and March 31, 2024, respectively
22,344
22,330
22,315
Treasury stock, at cost; 391,508, at September 30, 2024, and 388,866 at both June 30, 2024 and March 31, 2024
(11,203
)
(11,101
)
(11,101
)
Additional paid-in capital
98,697
98,230
97,818
Retained earnings
230,752
226,271
217,712
Accumulated other comprehensive loss
(33,835
)
(46,399
)
(46,824
)
