ACNB (ACNB) - 2025 Q2 - Quarterly Results

ACNB Corporation Q2 2025 Financial Results Financial Highlights The corporation reported strong Q2 2025 results driven by the Traditions Bancorp acquisition, with significant improvements in key financial metrics Q2 2025 Earnings Summary | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Net Income (Loss) | $11.6 million | $11.3 million | ($272 thousand) | | Diluted EPS (Loss) | $1.11 | $1.32 | ($0.03) | - The financial results for Q1 2025 were significantly impacted by two items related to the Traditions Bancorp acquisition: a $4.2 million provision for credit losses (net of taxes) and $6.2 million in merger-related expenses (net of taxes)[2] Q2 2025 Key Performance Indicators | Indicator | Value | Comparison Period | Comparison Value | | :--- | :--- | :--- | :--- | | FTE Net Interest Margin | 4.21% | Q1 2025 | 4.07% | | Return on Average Assets | 1.43% | - | - | | Return on Average Equity | 11.96% | - | - | | Total Loans | $2.34 billion | Q1 2025 | +0.8% | | Tangible Common Equity / Tangible Assets | 9.65% | Q1 2025 | 9.33% | Management Commentary Management highlighted strong profitability and successful acquisition integration while focusing on navigating future economic uncertainties - The second quarter of 2025 represents the first full quarter of combined operations including Traditions Bank, with the system conversion now complete[7] - The company is focused on managing through uncertain national economic challenges by diversifying revenue streams via ACNB Insurance Services, Wealth Management teams, and Traditions Mortgage[8] - Due to the acquisition of Traditions Bancorp, financial results for periods ended June 30, 2025, may not be directly comparable to prior reported periods[8] Capital Management The corporation actively managed capital through a dividend increase and continued share repurchases, approving a new buyback plan - The Board of Directors declared a quarterly cash dividend of $0.34 per share for Q2 2025, a $0.02 or 6.3% increase over the same period in 2024[9] - ACNB repurchased 71,592 shares of its common stock in open market transactions during Q2 2025[9][22] - On June 18, 2025, the Board approved a new plan to repurchase up to 314,000 shares, or approximately 3.0% of outstanding common stock, superseding all earlier plans[9][22] Financial Performance Analysis Performance was driven by the acquisition, with substantial growth in net interest income and noninterest income offset by higher expenses Net Interest Income and Margin Net Interest Income and Margin Performance | Metric | Q2 2025 | Change vs Q2 2024 | Change vs Q1 2025 | | :--- | :--- | :--- | :--- | | Net Interest Income | $31.0M | +$10.0M | +$3.9M | | FTE Net Interest Margin | 4.21% | +39 bps | +14 bps | | Yield on Total Loans | 6.29% | +76 bps | +21 bps | | Rate on Interest-Bearing Deposits | 1.49% | +70 bps | +11 bps | - Increases in net interest income and margin were primarily driven by the Traditions acquisition, with an accretion impact of $2.2 million in Q2 2025[10] Noninterest Income Noninterest Income Breakdown (Q2 2025) | Category | Amount | Change vs Q2 2024 | Change vs Q1 2025 | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $8.7M | +$2.3M | +$1.5M | | Gain from mortgage loans | $1.6M | +$1.5M | +$720k | | Insurance commissions | $2.9M | +$161k | +$761k | | Service charges on deposits | $1.2M | +$158k | +$85k | - The increase in insurance commissions was driven by the timing of policy renewals, new business, and seasonally stronger contingent commission income[12] Noninterest Expense Noninterest Expense Breakdown (Q2 2025) | Category | Amount | Change vs Q2 2024 | Change vs Q1 2025 | | :--- | :--- | :--- | :--- | | Total Noninterest Expense | $25.4M | +$9.0M | -$4.0M | | Merger-related expenses | $1.9M | +$1.9M | -$6.1M | | Salaries and employee benefits | $13.7M | +$3.3M | +$832k | - The decrease in noninterest expense from Q1 2025 was primarily due to lower merger-related expenses, which were $8.0 million in the prior quarter[13] - The increase in salaries and benefits was driven by a larger number of employees from the acquisition, merit increases, and higher mortgage commissions[13][14] Balance Sheet and Asset Quality Analysis The balance sheet expanded due to the acquisition, showing loan growth and stable asset quality, with stockholders' equity bolstered by net income Loans and Asset Quality Loan Portfolio and Asset Quality | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Loans | $2.34B | $2.32B | $1.68B | | Allowance for Credit Losses | $24.4M | $24.6M | $17.2M | | Non-performing Loans / Total Loans | 0.43% | 0.43% | 0.19% | | Annualized Net Charge-offs | 0.01% | 0.01% | 0.00% | - The year-over-year increase in loans and non-performing loans was primarily driven by the Traditions acquisition[15][16] - The allowance for credit losses decreased slightly from Q1 2025 due to the incorporation of post-COVID lower credit loss history in the bank's model[15] Deposits and Borrowings Deposits and Borrowings Summary | Metric | June 30, 2025 | Change vs March 31, 2025 | Change vs June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Deposits | $2.52B | -$15.5M | +$686.0M | | Noninterest-bearing Deposits | $568.3M | +$5.6M | +$88.6M | | Total Borrowings | $298.4M | -$1.1M | -$5.9M | - The decrease in total deposits from Q1 2025 was mainly caused by the withdrawal of a significant 1031 Exchange deposit from a commercial customer[18] - To partially offset the large deposit withdrawal, ACNB Bank issued $20.0 million in brokered time deposits in June 2025[18] Stockholders' Equity Stockholders' Equity and Tangible Book Value | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $395.2M | $386.9M | $289.3M | | Tangible Book Value per Share | $29.30 | $28.23 | $27.82 | - The increase in equity from Q1 2025 was driven by net income of $11.6 million, partially offset by $3.5 million in dividends and $3.1 million in stock repurchases[20] - The year-over-year increase in equity was primarily due to the common stock issued for the Traditions acquisition[20] Consolidated Financial Statements The statements detail the corporation's financial position and performance, reflecting the significant impact of the Traditions acquisition Selected Financial Data Selected Financial Data (As of June 30, 2025) | Metric | June 30, 2025 | | :--- | :--- | | Total Assets | $3,259,528 thousand | | Total loans, net | $2,341,816 thousand | | Deposits | $2,524,541 thousand | | Stockholders' equity | $395,151 thousand | Selected Income Statement Data (For Three Months Ended June 30, 2025) | Metric | Amount | | :--- | :--- | | Net interest income | $31,012 thousand | | Noninterest income | $8,682 thousand | | Noninterest expenses | $25,366 thousand | | Net income | $11,648 thousand | Consolidated Statements of Condition (Balance Sheet) Assets (As of June 30, 2025 vs June 30, 2024) | Asset Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Cash and Cash Equivalents | $103,109 thousand | $86,274 thousand | | Loans, net | $2,317,463 thousand | $1,662,438 thousand | | Goodwill | $64,449 thousand | $44,185 thousand | | Total Assets | $3,259,528 thousand | $2,457,753 thousand | Liabilities and Stockholders' Equity (As of June 30, 2025 vs June 30, 2024) | Liability/Equity Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Deposits | $2,524,541 thousand | $1,838,588 thousand | | Total Borrowings | $298,395 thousand | $304,286 thousand | | Total Stockholders' Equity | $395,151 thousand | $289,331 thousand | | Total Liabilities and Stockholders' Equity | $3,259,528 thousand | $2,457,753 thousand | Consolidated Income Statements Income Statement (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Interest Income | $31,012 thousand | $20,964 thousand | | Total Noninterest Income | $8,682 thousand | $6,427 thousand | | Total Noninterest Expenses | $25,366 thousand | $16,391 thousand | | Net Income | $11,648 thousand | $11,279 thousand | Income Statement (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Interest Income | $58,102 thousand | $41,557 thousand | | Total Noninterest Income | $15,866 thousand | $12,094 thousand | | Total Noninterest Expenses | $54,701 thousand | $34,053 thousand | | Net Income | $11,376 thousand | $18,047 thousand | Average Balances, Yields, and Rates Quarterly FTE Net Interest Margin Analysis (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Yield on Total Earning Assets | 5.64% | 4.89% | | Cost of Interest-Bearing Liabilities | 1.87% | 1.44% | | FTE Net Interest Margin | 4.21% | 3.82% | Year-to-Date FTE Net Interest Margin Analysis (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Yield on Total Earning Assets | 5.55% | 4.82% | | Cost of Interest-Bearing Liabilities | 1.84% | 1.38% | | FTE Net Interest Margin | 4.14% | 3.79% | Non-GAAP Reconciliation This section reconciles non-GAAP measures to provide useful comparative information by excluding items like goodwill and merger expenses Tangible Common Equity to Tangible Assets Ratio (TCE/TA) | Period | Ratio | | :--- | :--- | | June 30, 2025 | 9.65% | | March 31, 2025 | 9.33% | | June 30, 2024 | 9.84% | Tangible Book Value Per Share | Period | Value | | :--- | :--- | | June 30, 2025 | $29.30 | | March 31, 2025 | $28.23 | | June 30, 2024 | $27.82 | About ACNB Corporation ACNB Corporation is a $3.26 billion financial holding company operating banking and insurance subsidiaries across Pennsylvania and Maryland - ACNB Corporation is an independent financial holding company with $3.26 billion in assets[23] - The company operates ACNB Bank, which includes Traditions Bank and Traditions Mortgage, and ACNB Insurance Services, Inc[23] Safe Harbor and Forward-Looking Statements This section cautions that future projections are subject to risks and uncertainties, and actual results may differ materially - The press release contains forward-looking statements regarding future earnings, plans, and economic assumptions, which are subject to significant risks and uncertainties[24] - Key risks include inflation, banking instability, integration of acquisitions, economic conditions in market areas, and cybersecurity threats[25][26] - The financial information is subject to change pending the filing of the Form 10-Q with the SEC, and readers are cautioned not to place undue reliance on forward-looking statements[26]