ACNB CORP

Previous wording

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. 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 and Jarrettsville, Maryland, and Gettysburg, Pennsylvania and is licensed to do business in 46 states.

Current wording

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 26 community banking 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 and Jarrettsville, Maryland, and Gettysburg, Pennsylvania and is licensed to do business in 46 states.

Previous wording

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 economy 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.

Current wording

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.

Previous wording

The following table presents a summary of the Corporation’s earnings and selected performance ratios:

Current wording

The following table presents a summary of the Corporation’s earnings and selected performance and asset quality ratios:

Previous wording

•Asset Quality- Asset quality metrics continue to be stable. The provision for credit losses was $223 thousand and the provision for unfunded commitments was a reversal of $151 thousand for the three months ended March 31, 2024 compared toa $97 thousand provision for credit losses and a $276 thousand provision for unfunded commitments for the three months ended March 31, 2023. Non-performing loans were $3.9 million, or 0.24%, of total loans at March 31, 2024 compared to $3.8 million, or 0.25%, of total loans at March 31, 2023. Annualized net charge-offs for the year ended March 31, 2024 were 0.00% of total average loans compared to 0.02% for the three months ended March 31, 2023.

Current wording

◦Non-performing loans were $3.1 million, or 0.19%, of total loans at June 30, 2024 compared to $3.7 million, or 0.23%, of total loans at June 30, 2023.

Previous wording

•Noninterest income - Noninterest income was $5.7 million and $5.0 million in the first three months of 2024 and 2023, respectively. The increase was driven primarily by a net gain on sales of securities compared to a net loss in the same period of 2023, higher insurance commissions and increases in wealth management income.

Current wording

•Noninterest income - Noninterest income was $6.4 million for the three months ended June 30, 2024 and $6.2 million for the same period of 2023. The increase was driven primarily by no gain or loss on sales of securities in the current period compared to a net loss in the same period of 2023 and higher wealth management income. The increase was partially offset by no gain on assets held for sale in the current period compared to a $323 thousand gain that occurred in the same period of the prior year. For the six months ended June 30, 2024 noninterest income was $12.1 million and $11.2 million for the same period of the prior year. The increase was driven primarily by a net gain on sales of securities in the current period compared to a net loss in the same period of 2023, higher insurance commissions and higher wealth management income.

Previous wording

•Noninterest expenses -Noninterest expenses increased to $17.7 million, or by 8.5%, in the first three months of 2024, as compared to $16.3 million in the same period of 2023. The increase was driven primarily by higher salary and employee benefits expense, professional services, other expense, FDIC and regulatory, and equipment.

Current wording

•Noninterest expenses -Noninterest expenses increased to $16.4 million, or 0.7%, in the three months ended June 30, 2024 compared to $16.3 million in the same period of the prior year. The increase was driven primarily by higher salary and employee benefits expense partially offset by decreases in professional services, marketing and corporate relations and other. For the six months ended June 30, 2024, noninterest expenses increased to $34.1 million, or by 4.6%, from $32.6 million in the same period of 2023. The increase was driven primarily by higher salary and employee benefits expense, professional services, FDIC and regulatory, and other tax.

Previous wording

The accounting policies that the Corporation’s management deems to be most important to the portrayal of its financial condition and results of operations, and that 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 estimates are deemed to be critical by management:

Current wording

The accounting policies that the Corporation’s management deems to be most important to the portrayal of its financial condition and results of operations, and that 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:

Previous wording

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 credit losses, which is recorded as a current period operating expense.

Current wording

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

Previous wording

Net income for the three months ended March 31, 2024 was $6.8 million compared to net income of $9.0 million for the comparable period of the prior year, a decrease of $2.3 million or 25.0%. Basic and diluted earnings per share for the three months ended March 31, 2024 and 2023 were $0.80 and $1.06, respectively, a 24.5% decrease. The decrease in net income for the first quarter of 2024 was driven primarily by a decrease in net interest income and higher noninterest expenses, partially offset by an increase in noninterest income.

Current wording

Net income for the three months ended June 30, 2024 was $11.3 million compared to net income of $9.5 million for the same period of the prior year, an increase of $1.8 million or 18.4%. Basic and diluted earnings per share for the three months ended June 30, 2024 and 2023 were $1.32 and $1.12, respectively, resulting in a 17.9% increase. The increase in net income for the three months ended June 30, 2024 was driven primarily by a $3.2 million reversal of the provision for credit losses and unfunded commitments and higher noninterest income, partially offset by a decrease in net interest income and higher noninterest expenses.

Previous wording

Net interest income totaled $20.6 million for the three months ended March 31, 2024 compared to $23.1 million for the comparable quarter of the prior year, a decrease of $2.5 million, or 10.8%. The FTE net interest margin for the three months ended March 31, 2024 was 3.77%, a 45 bps decrease from 4.22% for the comparable quarter of the prior year. 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. The following table provides a comparative average balance sheet and net interest income analysis for the periods presented. The discussion following this table is based on these taxable-equivalent amounts.

Current wording

Net interest income totaled $21.0 million for the three months ended June 30, 2024 compared to $22.0 million for the same period of the prior year, a decrease of $1.0 million or 4.7%. The FTE net interest margin for the three months ended June 30, 2024 was 3.82%, a 29 bps decrease from 4.11% for the same period of the prior year. 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. The following table provides a comparative average balance sheet and net interest income analysis for the periods presented. The discussion following this table is based on these taxable-equivalent amounts.

Previous wording

(2) Average balances include non-accrual loans and are net of unearned income.

Current wording

2 Average balances include non-accrual loans and are net of unearned income.

Previous wording

(3) Average balance of investment securities is computed at fair value.

Current wording

3 Average balance of investment securities is computed at fair value.

Previous wording

The decrease in net interest income was driven primarily by an increase in funding costs related to an increase in borrowings and deposit promotions for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

The decrease in FTE net interest income was driven primarily by an increase in long-term borrowings and promotional time deposit balances and costs for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Previous wording

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, 2024 compared to the same period in 2023:

Current wording

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 thethree months ended June 30, 2024 compared to the same period in 2023:

Previous wording

(1) The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column.

Current wording

1 The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column.

Previous wording

(2) Based on average balances and includes non-accrual loans and are net of unearned income.

Current wording

2 Based on average balances and includes non-accrual loans and are net of unearned income.

Previous wording

Total noninterest income was $5.7 million for three months ended March 31, 2024 compared to $5.0 million for the same period of 2023, a $683 thousand, or 13.7% increase. The more significant fluctuations by category are explained below:

Current wording

Total noninterest income was $6.4 million for the three months ended June 30, 2024 compared to $6.2 million for the same period of the prior year, a $233 thousand, or 3.8% increase. The more significant fluctuations by category are explained below:

Previous wording

•Marketing and corporate relations decreased $66 thousand, or 42.9% driven primarily by the rebranding of the Bank’s Maryland banking locations in 2023.

Current wording

•Marketing and corporate relations decreased $71 thousand, or 44.7%, driven primarily by rebranding expenses incurred for the Bank’s Maryland banking locations during the same period of the prior year.

Previous wording

The Corporation recognized income taxes of $1.8 million during the three months ended March 31, 2024 compared to $2.4 million during the comparable period in 2023. The provision for income taxes for the three months ended March 31, 2024 reflects a combined Federal and State ETR of 20.6% compared to an ETR of 21.0% for the comparable period of 2023. Any variances from the federal statutory rate of 21% are generally due to tax-free income, which includes interest income on tax-free loans and investment securities and income from life insurance policies, federal income tax credits, and the impact of non-tax deductible expense.

Current wording

The Corporation recognized income taxes of $3.0 million during the three months ended June 30, 2024 compared to $2.5 million during the same period of the prior year. The provision for income taxes for the three months ended June 30, 2024 reflects a combined Federal and State ETR of 20.8% compared to an ETR of 21.0% for the same period of the prior year. Any variances from the federal statutory rate of 21% are generally due to tax-free income, which includes interest income on tax-free loans and investment securities and income from bank-owned life insurance policies, federal income tax credits, and the impact of non-tax deductible expense.

Previous wording

Total FTE interest income increased $2.0 million, or 8.5%, during the three months ended March 31, 2024 compared to the same period of 2023. ACNB experienced a $1.5 million increase in FTE interest income due to an increase in the yield on interest earning assets and a $519 thousand increase attributable to higher volume. FTE interest income on total loans increased $2.5 million, or 13.0%, compared to 2023. The yield increased 25 bps, contributing $1.0 million to the increase. Average loans increased $106.7 million, or 7.0%, contributing $1.5 million to the increase in FTE interest income. FTE interest income on investment securities decreased $214 thousand, or 5.7%, primarily driven by a lower volume of investment securities, partially offset by a higher yield on investment securities. The higher FTE interest income was offset by a decrease in interest income from interest-bearing deposits with banks of $264 thousand, or 26.0%, attributable to lower average balances of interest-bearing cash used to fund loan growth and deposit outflows, offset slightly by a higher interest rate environment.

Current wording

Total FTE interest income increased $5.7 million, or 12.0%, during the six months ended June 30, 2024 compared to the same period of the prior year. ACNB experienced a $3.9 million increase in FTE interest income due to an increase in the yield on interest earning assets and a $1.8 million increase attributable to higher volume. Average loans increased $121.8 million, or 7.9%, contributing $3.3 million to the increase in FTE interest income. The average yield on loans increased 36 bps, contributing $2.9 million to the increase in FTE interest income. FTE interest income on investment securities decreased $41 thousand, or 0.6%, primarily driven by a lower volume of investment securities partially offset by a higher yield on investment securities. FTE interest income on interest-bearing deposits with banks declined $470 thousand, or 24.7%, attributable to lower average balances of interest-bearing cash used to fund loan growth and deposit outflows offset slightly by a higher interest rate environment.

Previous wording

Total interest expense increased $4.6 million, or 558.6%, during the three months ended March 31, 2024 compared to the same period of 2023. The increase was primarily due to an increase in long-term borrowings. The rate on interest-bearing deposits increased 53 bps during the first quarter of 2024. Interest expense increased $1.7 million as a result of the higher rates on interest-bearing deposits. The largest increases in rates were in time deposits and money markets which increased 186 and 77 bps, respectively. The rates on total borrowings increased 223 bps during the three months ended March 31, 2024 compared to the same period of 2023. The average balance of total borrowings increased $231.0 million, or 356.4%, compared to the same period in 2023 and were used to fund loan growth and deposit outflows since March 31, 2023.

Current wording

Total interest expense increased $9.2 million, or 453.2%, during the six months ended June 30, 2024 compared to the same period of the prior year. The increase was driven primarily by an increase in long-term borrowings and promotional time deposit balances and costs. Total average borrowings increased $215.7 million, or 275.1%, for the six months ended June 30, 2024 compared to the same period of the prior year, contributing $4.6 million to the increase in interest expense. The average cost of total borrowings increased 165 bps during the six months ended June 30, 2024 compared to the same period of the prior year, contributing $795 thousand to the increase in interest expense. Total average interest-bearing deposits decreased $166.6 million, or 11.0%, for the six months ended June 30, 2024 compared to the same period of the prior year; however, average time deposit balances increased $7.2 million, or 2.9%, due to ongoing promotions. The average cost of interest-bearing deposits increased 59 bps for the six months ended June 30, 2024 compared to the same period of the prior year, contributing $3.9 million to interest expense. The largest increases in rates were in time deposits and money markets which increased 207 and 83 bps, respectively.

Previous wording

•Insurance commissions increased $213 thousand, or 11.2%, compared to the three months ended March 31, 2023 driven primarily by organic growth and timing of commissions.

Current wording

•Insurance commissions increased $120 thousand, or 2.5%, compared to the same period of the prior year driven primarily by organic growth and timing of commissions partially offset by lower contingent income.

Previous wording

•Wealth management income for the three months ended March 31, 2024 increased $122 thousand, or 14.5%, in comparison to the same period in 2023 driven primarily by market appreciation and new business generation.

Current wording

•Wealth management income for the six months ended June 30, 2024 increased $212 thousand, or 11.7%, in comparison to the same period in 2023 driven primarily by portfolio market appreciation and new business generation.

Previous wording

•Net gains (losses) on sales or calls of securities increased $262 thousand as a result of a gain of $69 thousand for the three months ended March 31, 2024 compared to a loss of $193 thousand in the same period of 2023.

Current wording

•Net gains (losses) on sales or calls of securities increased $808 thousand as a result of a gain of $69 thousand for the six months ended June 30, 2024 compared to a loss of $739 thousand in the same period of 2023.

Previous wording

Noninterest expenses totaled $17.7 million during the three months ended March 31, 2024, an 8.5% increase compared to the same period of 2023. The more significant fluctuations by category are explained below:

Current wording

Noninterest expenses totaled $34.1 million during the six months ended June 30, 2024, a 4.6% increase compared to the same period of 2023. The more significant fluctuations by category are explained below:

Previous wording

•Salaries and employee benefits, the largest component of noninterest expenses, increased 7.0% in 2024 to $11.2 million compared to $10.4 million in 2023. The increase was driven primarily by higher health insurance costs and base wages.

Current wording

•Salaries and employee benefits, the largest component of noninterest expenses, increased $1.3 million, or 6.6%, to $21.6 million for the six months ended June 30, 2024. The increase was driven primarily by higher base wages, incentive payment accruals and health insurance expenses.

Previous wording

•Professional services increased $234 thousand, or 61.3%, driven primarily by higher maintenance expenses related to a foreclosed asset held for resale and recruiting expenses for talent acquisition.

Current wording

•Professional services increased $162 thousand, or 16.5%, driven primarily by higher maintenance expenses related to a foreclosed asset held for resale and recruiting expenses for talent acquisition.

Previous wording

•FDIC and regulatory increased $126 thousand, or 50.6%, as a result of a higher FDIC assessment due to changes in the composition of the Bank’s balance sheet.

Current wording

•FDIC and regulatory increased $179 thousand, or 32.9%, as a result of a higher FDIC assessment rate for 2024.

Previous wording

ACNB uses investment securities to generate interest and dividend income, manage interest rate risk, provide collateral for certain funding products, and provide liquidity. The investment portfolio is comprised of U.S. Government and agency, mortgage-backed, state and municipal, and corporate securities. These securities provide the appropriate characteristics with respect to credit quality, yield and maturity relative to the management of the overall balance sheet.

Current wording

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 portfolio is comprised of U.S. Government and agencies, mortgage- backed, state and municipal, and corporate securities. These securities provide the appropriate characteristics with respect to credit quality, yield and maturity relative to the management of the overall balance sheet.

Previous wording

Total investment securities were $490.6 million at March 31, 2024 compared to $517.2 million at December 31, 2023, a decrease of 5.1%. The Corporation sold securities and did not reinvest the portfolio cash flows during the first quarter of 2024 as a result of general balance sheet management.

Current wording

Total investment securities were $483.9 million at June 30, 2024 compared to $517.2 million at December 31, 2023, a decrease of 6.4%. The Corporation sold securities and did not reinvest the portfolio cash flows during the first six months of 2024 as a result of general balance sheet management.

Previous wording

At March 31, 2024, the securities balance included a net unrealized loss on AFS securities of $42.9 million, net of taxes, on amortized cost of $478.1 million compared to a net unrealized loss of $41.0 million, net of taxes, on amortized cost of $501.9 million at December 31, 2023. The change in fair value of AFS securities was a result of an increase in market interest rates in 2024. The changes in value are deemed to be related solely to changes in market interest rates as the credit quality of the portfolio remains strong.

Current wording

At June 30, 2024, the securities balance included a net unrealized loss on AFS securities of $42.5 million, net of taxes, on amortized cost of $471.1 million compared to a net unrealized loss of $41.0 million, net of taxes, on amortized cost of $501.9 million at December 31, 2023. The change in fair value of AFS securities was a result of an increase in market interest rates in 2024. The changes in value are deemed to be related solely to changes in market interest rates as the credit quality of the portfolio remains strong.

Previous wording

At March 31, 2024, the securities balance included HTM securities with an amortized cost of $64.6 million and a fair value of $58.1 million as compared to an amortized cost of $64.6 million and a fair value of $59.1 million at December 31, 2023.

Current wording

At June 30, 2024, the securities balance included HTM securities with an amortized cost of $64.6 million and a fair value of $57.0 million as compared to an amortized cost of $64.6 million and a fair value of $59.1 million at December 31, 2023.

Previous wording

Total loans, net of unearned income, outstanding increased $37.0 million, or 2.3%, from December 31, 2023 to March 31, 2024. The increase was driven primarily by growth in the commercial real estate portfolio. Growth in the commercial real estate portfolio was spread throughout the footprint and across various property types. 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. ACNB does not have a significant concentration of credit risk with any single borrower, industry or geographic location. Most of the Corporation’s lending activities are with customers located within the Bank’s Market Area.

Current wording

Total loans, net of unearned income, outstanding increased $51.6 million, or 3.2%, from December 31, 2023 to June 30, 2024. The increase was driven by growth in the commercial real estate portfolio. Growth in the commercial real estate portfolio was spread throughout the footprint and across various property types. 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. ACNB does not have a significant concentration of credit risk with any single borrower, industry or geographic location. Most of the Corporation’s lending activities are with customers located within the Bank’s Market Area.

Previous wording

The commercial real estate portfolio grew $31.4 million, or 3.5%, in 2024. The collateral for these loans is primarily spread across Pennsylvania and Maryland, 53.8% and 43.9%, respectively at March 31, 2024 compared to 52.2% and 46.4%, respectively at March 31, 2023. Approximately 3% of the portfolio is for real estate in Urban areas such as Baltimore, Maryland and Philadelphia, Pennsylvania. The largest sectors of the commercial real estate portfolio are retail and mixed-use commercial rental units, hotels, motels and bed and breakfast entities and office complexes. Non-owner occupied commercial real estate represented 61.7% 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.

Current wording

The commercial real estate portfolio grew $51.4 million, or 5.7%, in 2024. The collateral for these loans is primarily spread across Pennsylvania and Maryland, 54.7% and 43.3%, respectively at June 30, 2024 compared to 52.4% and 45.7%, respectively at June 30, 2023. Approximately 3% of the portfolio is for real estate in Urban areas such as Baltimore, Maryland and Philadelphia, Pennsylvania. The largest sectors of the commercial real estate portfolio are retail and mixed-use commercial rental units, office complexes and hotels, motels and bed and breakfast entities. Non-owner occupied commercial real estate represented 60.9% 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.

Previous wording

(1) Constitutes over 40 loan categories that do not fit into the categories presented above.

Current wording

1 Constitutes over 40 loan categories that do not fit into the categories presented above

Previous wording

The concentration of non-owner occupied commercial real estate, construction, and multi-family was 213.3% of total capital of the Bank.

Current wording

The concentration of non-owner occupied commercial real estate, construction, and multi-family was 210.5% of total capital of the Bank as of June 30, 2024.

Previous wording

The ACL at March 31, 2024 was $20.2 million, or 1.21% of total loans, net of unearned income as compared to $20.0 million, or 1.23% of loans, at December 31, 2023 and $19.5 million, or 1.27% of loans, at March 31, 2023.

Current wording

The ACL at June 30, 2024 was $17.2 million, or 1.02% of total loans, net of unearned income as compared to $20.0 million, or 1.23% of loans, at December 31, 2023 and $19.1 million, or 1.22% of loans, at June 30, 2023.

Previous wording

Loans greater than or equal to 90 days past due and still accruing were $1.2 million as of both March 31, 2024 and December 31, 2023. Nonaccrual loans totaled $2.7 million and $3.0 million as of March 31, 2024 and December 31, 2023, respectively. The ratio of non-performing loans plus foreclosed assets to total assets was 0.18% at March 31, 2024 compared to 0.19% at December 31, 2023 and 0.18% at March 31, 2023.

Current wording

Loans greater than or equal to 90 days past due and accruing were $744 thousand as of June 30, 2024 and $1.2 million as of December 31, 2023. Nonaccrual loans totaled $2.4 million and $3.0 million as of June 30, 2024 and December 31, 2023, respectively. The ratio of non-performing assets to total assets was 0.14% at June 30, 2024 compared to 0.19% at December 31, 2023 and 0.17% at June 30, 2023.

Previous wording

ACNB relies on deposits as a primary source of funds for lending activities with total deposits of $1.8 billion as of March 31, 2024. Deposits decreased by $26.6 million, or 1.4%, from December 31, 2023, to March 31, 2024, driven primarily by an outflow of municipal deposits. Historically, deposits vary between quarters mostly reflecting different levels held by local companies, government units and school districts during different times of the year. Included in total deposits at March 31, 2024 were municipal deposits totaling $142.2 million, or 7.7%, of total deposits compared to $176.6 million, or 9.5%, of total deposits at December 31, 2023. Time deposits increased $25.1 million, or 10.8%, as a result of special deposit promotions that occurred during the first quarter of 2024.

Current wording

ACNB relies on deposits as a primary source of funds for lending activities with total deposits of $1.8 billion as of June 30, 2024. Deposits decreased by $23.2 million, or 1.2%, from December 31, 2023 to June 30, 2024 driven primarily by an outflow of municipal deposits. 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 June 30, 2024 were municipal deposits totaling $146.2 million, or 8.0%, of total deposits compared to $176.6 million, or 9.5%, of total deposits at December 31, 2023. Time deposits increased $23.3 million, or 10.0%, as a result of ongoing deposit promotions that occurred during the first six months of 2024. Time deposits include brokered deposits totaling $1.5 million at June 30, 2024 and none at December 31, 2023. The loan-to-deposit ratio was 91.35% at June 30, 2024 compared to 87.44% at December 31, 2023.

Previous wording

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. Interest bearing deposit costs for the first quarter of 2024 were 0.65% compared to 0.12% for the first quarter of 2023. Based on total Bank deposits outstanding, consumer and commercial constituted approximately 60% and 40% of total deposits as of March 31, 2024. The loan-to-deposit ratio was 90.72% at March 31, 2024. The ratio of uninsured and non-collateralized Bank deposits to total Bank deposits was approximately 17.76% at March 31, 2024. As of March 31, 2024, 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 325.3% of uninsured and non-collateralized Bank deposits. At March 31, 2024, deposits from the 20 largest unrelated depositors, excluding internal accounts, of the Bank totaled $162.6 million, or 8.8%, of total Bank deposits compared to $192.7 million, or 10.3%, of total Bank deposits at December 31, 2023.

Current wording

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. Interest-bearing deposit costs for the six months ended June 30, 2024 were 0.72% compared to 0.13% for the same period of the prior year. The increase in the interest-bearing costs was driven by ongoing deposit promotions that occurred during the first six months of 2024. Based on total Bank deposits outstanding, consumer and commercial constituted approximately 59% and 41% of total Bank deposits as of June 30, 2024. The ratio of uninsured and non-collateralized Bank deposits to total Bank deposits was approximately 18.68% at June 30, 2024. As of June 30, 2024, 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 312.7% of uninsured and non-collateralized Bank deposits.