ACNB (ACNB) - 2025 Q3 - Quarterly Results

Executive Summary This section provides a high-level overview of ACNB Corporation's strong Q3 2025 financial performance, including record profitability and strategic insights from the CEO Q3 2025 Financial Highlights ACNB Corporation reported record Q3 2025 net income and diluted EPS, with improved net interest margin and stable asset quality, significantly impacted by the Traditions Bancorp acquisition Q3 2025 Key Financial Performance: | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Income (in millions) | $14.9 | $11.6 | $7.2 | | Diluted EPS | $1.42 | $1.11 | $0.84 | | FTE Net Interest Margin | 4.27% | 4.21% | 3.77% | | Return on Average Assets | 1.80% | N/A | N/A | | Return on Average Equity | 14.66% | N/A | N/A | - Total non-performing loans to total loans, net of unearned income, was 0.43% at September 30, 2025, stable compared to June 30, 2025, but up from 0.39% at September 30, 2024[5] - The Board of Directors approved a regular quarterly cash dividend of $0.38 per share for the fourth quarter, an 11.8% increase over the prior quarter and an 18.8% increase over the same period of 2024[5] - ACNB repurchased 61,586 shares of common stock in open market transactions for the three months ended September 30, 2025[6] - Financial results for the first three quarters of 2025 were impacted by the acquisition of Traditions Bancorp, Inc. on February 1, 2025, making direct comparisons to prior reported periods potentially not comparable[6] CEO's Statement CEO James P. Helt highlighted record profitability, stable asset quality, and active capital management, crediting community banking and the Traditions Bank integration - ACNB Corporation reported strong profitability and record quarterly net income for Q3 2025, reflecting commitment to community banking and successful integration of Traditions Bank[7] - The quarter featured stable asset quality metrics, increased profitability, and active capital management strategies, including share repurchases and a strong dividend[8] - Management aims to finish the year strong by managing economic cycles and diversifying revenue streams through ACNB Insurance Services, ACNB Wealth Management, and Traditions Mortgage for long-term shareholder growth[8] Financial Performance Analysis This section analyzes ACNB Corporation's financial performance, focusing on net interest income, noninterest income, and noninterest expense trends Net Interest Income and Margin Net interest income significantly increased YoY and moderately QoQ, driven by higher earning assets and improved FTE net interest margin, influenced by lower deposit costs from the Traditions acquisition Net Interest Income & Margin Trends: | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :---------------------- | :------ | :------ | :------ | | Net Interest Income (in millions) | $32.1 | $31.0 | $20.9 | | FTE Net Interest Margin | 4.27% | 4.21% | 3.77% | - The increase in FTE net interest margin from Q2 2025 was primarily due to a 7 basis points decrease in the cost of interest-bearing deposits, resulting from lower rates on higher cost deposits and reduced balances from the Traditions Acquisition[10] - Total average earning assets increased by $28.5 million quarter-over-quarter, and total average noninterest-bearing demand deposits increased by $30.5 million quarter-over-quarter[10] - Year-over-year, total average loans increased by $675.4 million, with the yield on total loans rising by 73 basis points to 6.29% for Q3 2025[11] Noninterest Income Noninterest income slightly decreased QoQ but notably increased YoY, driven by lower insurance commissions and higher gains from mortgage loans and service charges, partially due to the acquisition Noninterest Income (in thousands): | Category | Q3 2025 | Q2 2025 | Q3 2024 | | :-------------------------------- | :------ | :------ | :------ | | Total Noninterest Income | $8,411 | $8,682 | $6,833 | | Insurance commissions | $2,545 | $2,908 | $2,787 | | Gain from mortgage loans held for sale | $1,463 | $1,575 | $112 | | Service charges on deposits | $1,286 | $1,179 | $1,048 | - The decrease in insurance commissions QoQ was primarily due to lower contingent commission income, and YoY due to timing of policy renewals and a $121 thousand decrease from one customer's policy cancellation[13] - Service charges on deposits increased YoY primarily due to the Traditions Acquisition and an increase in overall customer activity[13] Noninterest Expense Noninterest expense significantly decreased QoQ due to lower merger-related costs and salaries, but increased YoY due to acquisition-related personnel and operational expenses Noninterest Expense (in thousands): | Category | Q3 2025 | Q2 2025 | Q3 2024 | | :-------------------------------- | :------ | :------ | :------ | | Total Noninterest Expenses | $22,361 | $25,366 | $18,244 | | Merger-related expenses | $169 | $1,900 | $1,100 | | Salaries and employee benefits | $13,191 | $13,693 | $11,017 | | Intangible assets amortization | $1,129 | $1,141 | $304 | - Salaries and employee benefits decreased QoQ primarily due to a higher employee vacancy rate, lower incentive compensation, lower overtime, conversion-related expenses, and lower health insurance expense[14] - Salaries and employee benefits increased YoY primarily due to additional employees attributable to the Acquisition, merit increases, and higher mortgage commissions[14] - Intangible assets amortization increased by $825 thousand YoY as a direct result of the Traditions Acquisition[15] Balance Sheet and Asset Quality This section examines ACNB Corporation's balance sheet, focusing on loans, asset quality, deposits, borrowings, and stockholders' equity Loans and Asset Quality Total loans and asset quality metrics showed stability QoQ and significant growth YoY, primarily due to the Traditions acquisition Loans and Asset Quality (in thousands): | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | | Total loans outstanding | $2,336,605 | $2,341,816 | $1,677,112 | | Allowance for credit losses | $23,660 | $24,353 | $17,214 | | Total non-performing loans to total loans | 0.43% | 0.43% | 0.39% | - The YoY increase in total loans was spread across all loan categories and was driven primarily by the Traditions Acquisition[17] - The QoQ decrease in allowance for credit losses was driven primarily by the movement of construction loans to lower loss rate segments and the paydowns of loans with a specific reserve[17] Deposits and Borrowings Total deposits decreased QoQ but significantly increased YoY, largely due to the Traditions acquisition, while borrowings also increased Deposits and Borrowings (in thousands): | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | | Total Deposits | $2,465,896 | $2,524,541 | $1,791,317 | | Total Interest-Bearing Deposits | $1,884,199 | $1,956,240 | $1,327,816 | | Noninterest-Bearing Deposits | $581,697 | $568,301 | $463,501 | | Total Borrowings | $335,833 | $298,395 | $293,091 | - The QoQ decreases in money market and time deposits were driven primarily by lower balances of higher cost deposits from the Acquisition and a net decline of $20.0 million of short-term brokered deposits[18] - The overall increase in total deposits compared to September 30, 2024, was driven primarily by the Traditions Acquisition[18] - Total borrowings increased QoQ primarily due to an increase in short-term borrowings, including a three-month FHLB borrowing of $25.0 million[19] Stockholders' Equity Total stockholders' equity increased QoQ and YoY, driven by net income, unrealized gains, and common stock issued in the Traditions acquisition Stockholders' Equity (in thousands): | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | | Total Stockholders' Equity | $408,642 | $395,151 | $306,755 | | Tangible book value per share | $30.87 | $29.30 | $29.90 | - The QoQ increase in stockholders' equity was driven primarily by net income of $14.9 million and a $4.3 million change in unrealized gains in available-for-sale investment securities, partially offset by $3.5 million in dividends paid and $2.7 million in common stock repurchased[21] - The YoY increase in stockholders' equity was driven primarily by the common stock equity issued in the Traditions Acquisition[21] Company Overview ACNB Corporation is a $3.25 billion financial holding company operating through ACNB Bank and ACNB Insurance Services, providing diverse financial services - ACNB Corporation is an independent $3.25 billion financial holding company headquartered in Gettysburg, PA[22] - Its wholly-owned subsidiaries include ACNB Bank (with operating divisions Traditions Bank and Traditions Mortgage) and ACNB Insurance Services, Inc.[22] - ACNB Bank provides banking and wealth management services through 33 community banking offices and one loan office in Pennsylvania and Maryland, while ACNB Insurance Services, Inc. is a full-service insurance agency licensed in 46 states[22] Forward-Looking Statements This section cautions that forward-looking statements are subject to risks and uncertainties, advising readers to review SEC filings for comprehensive risk factors - The press release contains forward-looking statements, which are subject to certain risks and uncertainties such as national, regional, and local economic conditions, competitive factors, and regulatory limitations[24] - Actual results may differ materially from those projected due to factors including inflation, banking instability, governmental policies, new laws, accounting policy changes, business strategy ineffectiveness, and acquisition integration difficulties[24] - Readers are cautioned not to place undue reliance on these forward-looking statements and are encouraged to review risk factors described in the Corporation's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC[25] Financial Tables This section provides detailed financial tables, including selected data, consolidated statements, and average balances, offering comprehensive insights into ACNB Corporation's performance Selected Financial Data by Respective Quarter End This table presents key financial data, including balance sheet, income statement, profitability, per share, capital, and credit quality metrics for the past five quarters, highlighting the Traditions acquisition's impact Selected Financial Data by Respective Quarter End (Dollars in thousands, except per share data): | (Dollars in thousands, except per share data) | September 30, 2025 | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :------------------------------------------ | :----------------- | :------------ | :------------- | :---------------- | :----------------- | | BALANCE SHEET DATA | | | | | | | Total assets | $ 3,250,838 | $ 3,259,528 | $ 3,270,041 | $ 2,394,830 | $ 2,420,914 | | Total loans, net of unearned income | 2,336,605 | 2,341,816 | 2,322,209 | 1,682,910 | 1,677,112 | | Deposits | 2,465,896 | 2,524,541 | 2,540,009 | 1,792,501 | 1,791,317 | | Stockholders' equity | 408,642 | 395,151 | 386,883 | 303,273 | 306,755 | | INCOME STATEMENT DATA | | | | | | | Net interest income | 32,137 | 31,012 | 27,090 | 21,112 | 20,942 | | Noninterest income | 8,411 | 8,682 | 7,184 | 5,803 | 6,833 | | Noninterest expenses | 22,361 | 25,366 | 29,335 | 18,388 | 18,244 | | Net income (loss) | $ 14,870 | $ 11,648 | $ (272) | $ 6,595 | $ 7,204 | | PROFITABILITY RATIOS | | | | | | | Return on average assets (annualized) | 1.80 % | 1.43 % | (0.04) % | 1.08 % | 1.17 % | | Return on average equity (annualized) | 14.66 | 11.96 | (0.31) | 8.57 | 9.63 | | FTE Net interest margin | 4.27 | 4.21 | 4.07 | 3.81 | 3.77 | | PER SHARE DATA | | | | | | | Diluted earnings (loss) per share | $ 1.42 | $ 1.11 | $ (0.03) | $ 0.77 | $ 0.84 | | Tangible book value per share | 30.87 | 29.30 | 28.23 | 29.51 | 29.90 | | CREDIT QUALITY | | | | | | | Total non-performing loans to total loans | 0.43 % | 0.43 % | 0.43 % | 0.40 % | 0.39 % | Consolidated Statements of Condition This table presents consolidated balance sheets for ACNB Corporation, detailing assets, liabilities, and stockholders' equity, showing significant YoY growth largely due to the Traditions acquisition Consolidated Statements of Condition (Dollars in thousands): | (Dollars in thousands, except per share data) | September 30, 2025 | June 30. 2025 | September 30, 2024 | | :------------------------------------------ | :----------------- | :------------ | :----------------- | | ASSETS | | | | | Total Cash and Cash Equivalents | $ 102,139 | $ 103,109 | $ 58,092 | | Investment securities available for sale | 462,217 | 455,317 | 418,079 | | Loans, net | 2,312,945 | 2,317,463 | 1,659,898 | | Goodwill | 64,449 | 64,449 | 44,185 | | Intangible assets, net | 23,565 | 24,694 | 8,142 | | Total Assets | $ 3,250,838 | $ 3,259,528 | $ 2,420,914 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Noninterest-bearing Deposits | $ 581,697 | $ 568,301 | $ 463,501 | | Interest-bearing Deposits | 1,884,199 | 1,956,240 | 1,327,816 | | Total Deposits | 2,465,896 | 2,524,541 | 1,791,317 | | Short-term borrowings | 80,468 | 43,041 | 37,769 | | Long-term borrowings | 255,354 | 255,322 | 255,365 | | Total Liabilities | 2,842,196 | 2,864,377 | 2,114,159 | | Total Stockholders' Equity | 408,642 | 395,151 | 306,755 | | Total Liabilities and Stockholders' Equity | $ 3,250,838 | $ 3,259,528 | $ 2,420,914 | Consolidated Income Statements This table presents consolidated income statements, showing substantial increases in interest income, net interest income, and net income, largely influenced by the Traditions acquisition Consolidated Income Statements (Dollars in thousands, except per share data): | (Dollars in thousands, except per share data) | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | INTEREST AND DIVIDEND INCOME | | | | | | Total Interest and Dividend Income | $ 42,490 | $ 27,241 | $ 120,356 | $ 80,084 | | INTEREST EXPENSE | | | | | | Total Interest Expense | 10,353 | 6,299 | 30,117 | 17,585 | | Net Interest Income | 32,137 | 20,942 | 90,239 | 62,499 | | NONINTEREST INCOME | | | | | | Total Noninterest Income | 8,411 | 6,833 | 24,277 | 18,927 | | NONINTEREST EXPENSES | | | | | | Total Noninterest Expenses | 22,361 | 18,244 | 77,062 | 52,297 | | Income Before Income Taxes | 18,916 | 9,410 | 33,277 | 32,185 | | Income tax expense | 4,046 | 2,206 | 7,031 | 6,934 | | Net Income | $ 14,870 | $ 7,204 | $ 26,246 | $ 25,251 | | PER SHARE DATA | | | | | | Diluted earnings | $ 1.42 | $ 0.84 | $ 2.56 | $ 2.96 | Average Balances, Income and Expenses, Yields and Rates (Quarterly) This table details average balances, income, expenses, yields, and rates for earning assets and interest-bearing liabilities across five quarters, illustrating trends in yields, deposit costs, and FTE net interest margin Average Balances, Income and Expenses, Yields and Rates (Quarterly, Dollars in thousands): | (Dollars in thousands) | September 30, 2025 | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :--------------------- | :----------------- | :------------ | :------------- | :---------------- | :----------------- | | ASSETS | | | | | | | Total Loans | $ 2,356,641 | $ 2,355,332 | $ 2,138,200 | $ 1,676,928 | $ 1,681,280 | | Yield on total loans | 6.29 % | 6.29 % | 6.08 % | 5.61 % | 5.56 % | | Total Earning Assets | 2,998,405 | 2,969,874 | 2,714,026 | 2,222,823 | 2,225,758 | | Yield on average earning assets | 5.64 % | 5.64 % | 5.45 % | 4.93 % | 4.90 % | | LIABILITIES | | | | | | | Total Interest-Bearing Deposits | 1,916,928 | 1,965,483 | 1,762,490 | 1,355,685 | 1,341,365 | | Rate on interest-bearing deposits | 1.42 % | 1.49 % | 1.38 % | 0.96 % | 0.92 % | | Total Borrowings | 325,747 | 299,862 | 296,279 | 278,413 | 293,982 | | Rate on total borrowings | 4.24 % | 4.39 % | 4.39 % | 4.27 % | 4.31 % | | Total Interest-Bearing Liabilities | 2,242,675 | 2,265,345 | 2,058,769 | 1,634,098 | 1,635,347 | | Rate on interest-bearing liabilities | 1.83 % | 1.87 % | 1.81 % | 1.53 % | 1.53 % | | Cost of Funds | 1.45 % | 1.50 % | 1.45 % | 1.19 % | 1.19 % | | FTE Net Interest Margin | 4.27 % | 4.21 % | 4.07 % | 3.81 % | 3.77 % | Average Balances, Income and Expenses, Yields and Rates (Nine Months) This table compares average balances, income, expenses, yields, and rates for earning assets and interest-bearing liabilities for the nine months ended September 30, 2025 and 2024, demonstrating YoY growth in earning assets and increased cost of funds Average Balances, Income and Expenses, Yields and Rates (Nine Months, Dollars in thousands): | (Dollars in thousands) | Nine months ended September 30, 2025 | Nine months ended September 30, 2024 | | :--------------------- | :----------------------------------- | :----------------------------------- | | ASSETS | | | | Total Loans | $ 2,284,141 | $ 1,665,681 | | Yield on total loans | 6.23 % | 5.49 % | | Total Earning Assets | 2,895,093 | 2,221,880 | | Yield on average earning assets | 5.58 % | 4.84 % | | LIABILITIES | | | | Total Interest-Bearing Deposits | 1,882,199 | 1,344,565 | | Rate on interest-bearing deposits | 1.43 % | 0.79 % | | Total Borrowings | 307,404 | 294,109 | | Rate on total borrowings | 4.33 % | 4.39 % | | Total Interest-Bearing Liabilities | 2,189,603 | 1,638,674 | | Rate on interest-bearing liabilities | 1.84 % | 1.43 % | | Cost of Funds | 1.47 % | 1.11 % | | FTE Net Interest Margin | 4.19 % | 3.79 % | Loan and Deposit Detail by Type This table details gross loans and total deposits by type, comparing balances across periods and highlighting changes in categories, with YoY growth largely attributed to the acquisition Loan and Deposit Detail by Type (Dollars in thousands): | (Dollars in thousands) | September 30, 2025 | June 30, 2025 | September 30, 2024 | September 2025 vs. June 2025 | September 2025 vs. September 2024 | | :--------------------- | :----------------- | :------------ | :----------------- | :--------------------------- | :-------------------------------- | | Loans | | | | | | | Commercial real estate | $ 1,263,896 | $ 1,254,733 | $ 957,904 | $ 9,163 | $ 305,992 | | Residential mortgage | 593,283 | 594,889 | 397,994 | (1,606) | 195,289 | | Commercial and industrial | 218,364 | 226,276 | 152,148 | (7,912) | 66,216 | | Home equity lines of credit | 125,839 | 122,546 | 84,316 | 3,293 | 41,523 | | Real estate construction | 126,451 | 135,023 | 75,953 | (8,572) | 50,498 | | Consumer | 10,144 | 10,253 | 9,773 | (109) | 371 | | Gross loans | 2,337,977 | 2,343,720 | 1,678,088 | (5,743) | 659,889 | | Total loans, net of unearned income | $ 2,336,605 | $ 2,341,816 | $ 1,677,112 | $ (5,211) | $ 659,493 | | Deposits | | | | | | | Noninterest-bearing demand deposits | $ 581,697 | $ 568,301 | $ 463,501 | $ 13,396 | $ 118,196 | | Interest-bearing demand deposits | 614,130 | 604,854 | 509,930 | 9,276 | 104,200 | | Money market | 493,430 | 531,738 | 249,197 | (38,308) | 244,233 | | Savings | 330,200 | 339,179 | 311,958 | (8,979) | 18,242 | | Total demand and savings | 2,019,457 | 2,044,072 | 1,534,586 | (24,615) | 484,871 | | Time | 446,439 | 480,469 | 256,731 | (34,030) | 189,708 | | Total deposits | $ 2,465,896 | $ 2,524,541 | $ 1,791,317 | $ (58,645) | $ 674,579 | Non-GAAP Reconciliation This section reconciles non-GAAP financial measures like tangible book value per share, TCE/TA Ratio, and efficiency ratio to GAAP, offering additional insights into financial condition and performance for industry comparisons - Non-GAAP financial measures are provided to offer useful and comparative information for assessing trends in the Corporation's financial condition, frequently used by analysts and investors[47] Non-GAAP Reconciliation (Dollars in thousands, except per share data): | (Dollars in thousands, except per share data) | September 30, 2025 | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :------------------------------------------ | :----------------- | :------------ | :------------- | :---------------- | :----------------- | | Tangible book value per share | | | | | | | Tangible book value per share | $ 30.87 | $ 29.30 | $ 28.23 | $ 29.51 | $ 29.90 | | Tangible common equity to tangible assets (TCE/TA Ratio) | | | | | | | Tangible common equity to tangible assets | 10.14 % | 9.65 % | 9.33 % | 10.72 % | 10.74 % | | Efficiency Ratio | | | | | | | Efficiency ratio | 51.96 % | 56.21 % | 60.13 % | 63.83 % | 60.56 % |