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ACNB Corporation Reports 2023 Second Quarter Financial Results
Source: Nasdaq GlobeNewswire / 27 Jul 2023 08:47:19 America/New_York
GETTYSBURG, Pa., July 27, 2023 (GLOBE NEWSWIRE) -- ACNB Corporation (NASDAQ: ACNB) (“ACNB” or the “Corporation”), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced financial results for the quarter ended June 30, 2023 with net income of $9.5 million, an increase of $0.9 million or 10.36%, compared to net income of $8.6 million for the three months ended June 30, 2022. For the three months ended June 30, 2023 and 2022, basic and diluted earnings per share were $1.12 and $0.99, respectively, which is an increase of $0.13 per share, or 13.13%. Compared to the prior quarter, net income increased $0.5 million, or 5.55%, and basic and diluted earnings per share increased $0.06 per share, or 5.66%.
2023 Second Quarter Highlights
- Return on average assets was 1.62% and return on average equity was 14.74%.
- Fully taxable equivalent (“FTE”) net interest margin was 4.11% compared to 4.22% for the prior quarter and 3.15% for the comparable quarter last year.
- Efficiency ratio1 was 55.52% compared to 56.36% for the prior quarter and 56.16% from the comparable quarter last year.
- Total loans outstanding were $1.57 billion at June 30, 2023, an increase of $42.2 million, or 2.75%, from March 31, 2023 and an increase of $64.0 million, or 4.24% from June 30, 2022.
- Total non-performing loans to loans held-for-investment was 0.23% compared to 0.25% for the prior quarter and 0.35% for the comparable quarter of last year. Net charge-offs to average loans (annualized) was 0.02% compared to 0.02% for the prior quarter and 0.01% for the comparable quarter last year.
- Loan to deposit ratio of 80.1%. The ratio of uninsured and non-collateralized deposits to total deposits was approximately 18.1% at ACNB Bank.
- Tangible common equity to tangible assets ratio1 of 8.75% compared to 8.56% for the prior quarter and 7.30% for the comparable quarter last year. The net unrealized loss on the available for sale securities portfolio was $66.1 million at June 30, 2023 compared to a net unrealized loss of $57.6 million at March 31, 2023 and a net unrealized loss of $43.5 million at June 30, 2022.
1 - Non-GAAP financial measure. Please refer to the calculation on the page titled “Non-GAAP Reconciliation” at the end of this document.
“As the second quarter of 2023 came to a close, the financial services industry has been challenged with considerable market uncertainty and turmoil over the past six months. However, ACNB Corporation has continued to focus on fundamental community banking principles as we live our vision every day to build relationships and find solutions for our customers in the communities we serve. As a result of this steadfast commitment to our shareholders, customers and employees, we are pleased to share our June 30, 2023 operating results,” said James P. Helt, ACNB Corporation President and Chief Executive Officer.
“Our financial performance, strong capital base, superior asset quality metrics and our continued robust risk management practices have well positioned ACNB Corporation to meet the demands facing our industry and our customers. We are pleased to see meaningful loan growth during the second quarter and remain optimistic for the remainder of the year in spite of continued higher interest rates. Superior asset quality metrics remain a key strength of the Corporation, and is the result of tremendous teamwork by our lending and credit teams, as well as working closely with our borrowers to understand and meet their unique needs and financial goals.”
Mr. Helt continued, “ACNB Corporation has made the strategic decision to restrain deposit rates as a result of our elevated funding levels coming out of the pandemic. At the end of the second quarter, our level of uninsured and non-collateralized deposits was approximately 18% of total deposits and total deposits were approximately 8.4% higher than pre-pandemic deposit levels as of March 31, 2020 — even with the recent deposit outflows.”
“As we look to the second half of the year, ACNB Corporation’s strategic focus remains constant in seeking opportunities for both organic and inorganic growth to ensure the continued success of the banking subsidiary of ACNB Bank and the insurance subsidiary of ACNB Insurance Services, Inc. as we strive to enhance long-term shareholder value.”
Net Interest Income and Margin
Net interest income for the three months ended June 30, 2023 totaled $22.0 million, an increase of $2.2 million, or 11.04%, over comparable quarter last year. The FTE net interest margin was 4.11%, an increase of 96 basis points from 3.15% for the comparable quarter last year. Paycheck Protection Program (“PPP”) fees and purchase accounting accretion for the three months ended June 30, 2023 totaled $250 thousand compared to $1.0 million for the comparable quarter last year. There were no PPP fees for the three months ended June 30, 2023 compared to $482 thousand for the comparable quarter last year. Higher FTE net interest margin and net interest income were attributable to higher interest rates and a shift into higher-yielding assets.
Compared to the prior quarter, net interest income decreased $1.1 million, or 4.77%, driven primarily by an increase in short term and long term borrowings to fund loan growth and deposit outflows. The FTE net interest margin decreased 11 basis points as earning asset yields decreased slightly while funding costs increased. PPP Fees and purchase accounting accretion for the three months ended June 30, 2023 totaled $250 thousand compared to $374 thousand for the prior quarter. There were no PPP fees for the three months ended June 30, 2023 compared to $8 thousand for the prior quarter.
The average rate paid on interest bearing deposits was 0.13% for the three months ended June 30, 2023, an increase of 1 basis point from the prior quarter and a decrease of 2 basis points from the comparable quarter last year. The average rate paid on total borrowings was 3.15% for the three months ended June 30, 2023, an increase of 100 basis points from the prior quarter and an increase of 136 basis points from the comparable quarter last year. The average yield on earning assets was 4.33% for the three months ended June 30, 2023, a decrease of 4 basis points from the prior quarter and an increase of 104 basis points from the comparable quarter last year. Compared to the prior quarter, the average yield on earning assets declined primarily due to the sale of higher-yielding securities, lower loan origination yields, lower purchase accounting accretion and higher net deferred expenses for new loan originations.
Noninterest Income
Noninterest income for the three months ended June 30, 2023 was $6.2 million, an increase of $118 thousand, or 1.94%, from the comparable quarter last year. The increase was driven primarily by increased income from fiduciary, investment management and brokerage activities of $163 thousand due to strong market returns and new business generation and an increase in earnings on investment in bank-owned life insurance of $121 thousand due to increasing net yields and additional purchases in the third quarter of 2022 partially offset by lower income from mortgage loans held for sale of $131 thousand.
Compared to the prior quarter, noninterest income increased $1.2 million, or 24.28%, driven primarily by an increase in commissions from insurance sales of $938 thousand due to seasonally stronger commissions and an increase in contingent commissions for income received during the three months ended June 30, 2023 for contingent commissions earned in 2022. Income from fiduciary, investment management and brokerage activities increased $139 thousand due to strong market returns and new business generation. During the three months ended June 30, 2023, three previously closed community banking offices were sold for a gain of $323 thousand, which is reflected in other income.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2023 was $16.3 million, an increase of $1.3 million, or 8.50%, from the comparable quarter last year. The increase was driven primarily by increases in salaries and employee benefits, professional services and other operating expenses. Salaries and employee benefits expense was $9.8 million for the three months ended June 30, 2023 compared to $9.3 million for the comparable quarter last year. The increase in salaries and employee benefits expense was driven primarily by a general increase in base wages. Professional services expense was $601 thousand for the three months ended June 30, 2023 compared to $430 thousand for the comparable quarter last year. The increase in professional services expense was driven primarily by additional expenses related to employee recruiting, legal and consulting services for various projects within the organization. Other operating expense was $1.9 million for the three months ended June 30, 2023 compared to $1.5 million for the comparable quarter last year. The increase in other operating expenses was driven primarily by a loss of $142 thousand as a result of writing off an investment in a title agency as well as a mark-to-market loss of $83 thousand related to a Small Business Investment Company (“SBIC”) fund.
Equipment expense was $1.6 million for the three months ended June 30, 2023 compared to $1.5 million for the comparable quarter last year. The increase in equipment expense was attributable to expenses related to ACNB Bank’s core processing system as well as ongoing expenses related to the new loan origination system that was implemented in late 2022. Marketing and corporate relations expense was $159 thousand for the three months ended June 30, 2023 compared to $67 thousand for the comparable quarter last year. The increase was driven by $72 thousand in expenses related to the rebranding of ACNB Bank’s Maryland banking divisions.
Compared to the prior quarter, noninterest expense decreased $1 thousand, or 0.01%, driven primarily by lower salary and employee benefits expense offset by an increase in professional services and other operating expenses. Salaries and employee benefits expense was $9.8 million for the three months ended June 30, 2023 compared to $10.4 million for the prior quarter. The decrease in salaries and employee benefits expense was driven primarily by a decrease of $276 thousand in the extended leave reserve and a decrease of $241 thousand in stock-based compensation. Professional services expense was $601 thousand for the three months ended June 30, 2023 compared to $382 thousand for the prior quarter. The increase in professional services expense was driven primarily by additional expenses related to employee recruiting, collection fees and consulting services for various projects within the organization. Other operating expense was $1.9 million for the three months ended June 30, 2023 compared to $1.5 million for the prior quarter. The increase in other operating was driven primarily by a loss of $142 thousand as result of writing off an investment in a title company as well as a mark-to-market loss of $83 thousand related to an SBIC fund.
Loans and Asset Quality
Total loans outstanding were $1.57 billion at June 30, 2023, an increase of $42.2 million, or 2.75%, from March 31, 2023 and an increase of $64.0 million, or 4.24%, from June 30, 2022. The increase in both periods was driven mainly by growth in the commercial loan portfolio.
Asset quality metrics continue to be stable. The provision for credit losses was $(273) thousand and the provision for unfunded commitments was $121 thousand for the three months ended June 30, 2023 compared to a provision for credit losses of $97 thousand and a provision for unfunded commitments of $276 thousand for the prior quarter. Non-performing loans were $3.7 million, or 0.23%, of total loans at June 30, 2023 compared to $3.8 million, or 0.25%, of total loans at March 31, 2023 and $5.2 million, or 0.35%, of total loans at June 30, 2022. Annualized net charge-offs for the three months ended June 30, 2023 were 0.02% of total average loans compared to 0.02% for the prior quarter and 0.01% for the comparable quarter last year.
Deposits
Total deposits were $2.0 billion at June 30, 2023. Deposits decreased by $92.1 million, or 4.48%, since March 31, 2023 and decreased by $400.0 million, or 16.92%, from June 30, 2022. Given ACNB’s funding level, management made a strategic decision to restrain deposit rates and thereby moderate deposit costs in 2022 and into 2023 despite an increase in market interest rates and an increase in rates by competitors. As a result, total deposits declined during both periods as customers began to seek higher yielding alternative deposit and investment products.
Total interest bearing deposits were $1.4 billion at June 30, 2023. Interest bearing deposits decreased by $67.4 million, or 4.61%, from March 31, 2023 and decreased by $385.8 million, or 21.68%, from June 30, 2022. Total non-interest bearing deposits were $569.7 million at June 30, 2023. Non-interest bearing deposits decreased by $24.6 million, or 4.14%, from March 31, 2023 and decreased by $14.2 million, or 2.43%, from June 30, 2022.
Stockholders’ Equity, Dividends and Share Repurchases
Total stockholders’ equity was $257.1 million at June 30, 2023 compared to $255.8 million at March 31, 2023 and $247.0 million at June 30, 2022. Book value per share was $28.69, $30.02 and $30.14 at June 30, 2022, March 31, 2023 and June 30, 2023, respectively.
Similar to the prior quarter, ACNB paid a quarterly cash dividend of $2.4 million, or $0.28 per common share for the three months ended June 30, 2023 compared to $2.3 million, or $0.26 per common share for the comparable quarter last year. In addition, ACNB did not repurchase any shares of ACNB common stock during the three months ended June 30, 2023 compared to 850 shares of ACNB common stock during the prior quarter at a cost of $29 thousand and 88,225 shares of ACNB common stock during the comparable quarter last year at a cost of $2.9 million.
ACNB Corporation Update
As previously announced, on July 26, 2023, ACNB Corporation declared the regular quarterly cash dividend for the third quarter of 2023 in the amount of $0.28 per common share, payable on September 15, 2023, to shareholders of record as of September 1, 2023. This quarterly cash dividend declared of $0.28 per common share is an increase of $0.02, or 7.7%, per common share compared to the third quarter of 2022.
About ACNB Corporation
ACNB Corporation, headquartered in Gettysburg, PA, is the $2.4 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 26 community banking offices and three 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 44 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; the continuing banking instability caused by the recent 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. 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 #2023-15
July 27, 2023ACNB Corporation Financial Highlights Selected Financial Data by Respective Quarter End (Unaudited) Dollars in thousands, except per share data June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 BALANCE SHEET DATA Assets $ 2,378,151 $ 2,410,933 $ 2,525,507 $ 2,654,153 $ 2,683,162 Securities $ 518,093 $ 568,232 $ 620,250 $ 571,796 $ 598,088 Loans, total $ 1,573,817 $ 1,531,626 $ 1,538,610 $ 1,527,128 $ 1,509,792 Allowance for credit losses $ 19,148 $ 19,485 $ 17,861 $ 17,952 $ 18,943 Deposits $ 1,963,754 $ 2,055,822 $ 2,198,975 $ 2,336,213 $ 2,363,773 Allowance for unfunded commitments $ 2,132 $ 2,011 $ 92 $ 92 $ 92 Borrowings $ 132,703 $ 76,294 $ 62,954 $ 65,691 $ 53,609 Stockholders’ equity $ 257,069 $ 255,841 $ 245,042 $ 232,370 $ 247,032 INCOME STATEMENT DATA Interest income $ 23,213 $ 23,909 $ 24,894 $ 23,382 $ 20,696 Interest expense 1,223 817 846 862 892 Net interest income 21,990 23,092 24,048 22,520 19,804 Provision for credit losses (273 ) 97 — — — Provision for unfunded commitments 121 276 — — — Net interest income after provision for credit losses and unfunded commitments 22,142 22,719 24,048 22,520 19,804 Other income 6,194 4,984 5,423 5,849 6,076 Other expenses 16,281 16,282 16,673 15,320 15,006 Income before income taxes 12,055 11,421 12,798 13,049 10,874 Provision for income taxes 2,531 2,398 2,599 2,725 2,244 Net income $ 9,524 $ 9,023 $ 10,199 $ 10,324 $ 8,630 PROFITABILITY RATIOS Loans held-for-investment to deposits 80.14 % 74.50 % 69.97 % 65.37 % 63.87 % Return on average assets (annualized) 1.62 % 1.50 % 1.56 % 1.51 % 1.28 % Return on average equity (annualized) 14.74 % 14.58 % 17.10 % 17.06 % 13.69 % Efficiency ratio1 55.52 % 56.36 % 55.66 % 52.45 % 56.16 % FTE Net interest margin 4.11 % 4.22 % 4.03 % 3.60 % 3.15 % Yield on average earning assets 4.33 % 4.37 % 4.17 % 3.74 % 3.29 % Yield on securities 2.24 % 2.46 % 2.30 % 2.05 % 2.00 % Yield on loans 5.05 % 5.12 % 4.97 % 4.75 % 4.53 % Cost of funds 0.23 % 0.15 % 0.14 % 0.14 % 0.15 % Noninterest income to total revenue 21.98 % 17.75 % 18.40 % 20.62 % 23.48 % PER SHARE DATA Diluted earnings per share $ 1.12 $ 1.06 $ 1.20 $ 1.20 $ 0.99 Cash dividends paid per share $ 0.28 $ 0.28 $ 0.28 $ 0.26 $ 0.26 Tangible book value per share1 $ 23.83 $ 23.66 $ 22.41 $ 20.86 $ 22.27 Tangible book value per share (ex-AOCI)1 $ 30.64 $ 29.76 $ 29.23 $ 28.23 $ 27.32 CAPITAL RATIOS2 Tier 1 leverage ratio 11.79 % 11.09 % 9.91 % 9.33 % 8.87 % Common equity tier 1 ratio 15.38 % 15.21 % 15.00 % 14.74 % 14.63 % Tier 1 risk based capital ratio 15.72 % 15.56 % 15.36 % 15.10 % 15.01 % Total risk based capital ratio 17.67 % 17.56 % 17.32 % 17.11 % 17.13 % CREDIT QUALITY Net charge-offs to average loans outstanding (annualized) 0.02 % 0.02 % 0.02 % 0.26 % 0.01 % Total non-performing loans to loans held-for-investment3 0.23 % 0.25 % 0.25 % 0.26 % 0.35 % Total non-performing assets to total assets4 0.17 % 0.18 % 0.17 % 0.16 % 0.19 % Allowance for credit losses to loans held-for-investment 1.22 % 1.27 % 1.16 % 1.18 % 1.25 % _______________________________________
1 Non-GAAP financial measure. Please refer to the calculation on the page titled “Non-GAAP Reconciliation” at the end of this document.
2 Capital ratios for March and September are estimated due to the Corporation being a smaller reporting company. June 30, 2023 capital ratios are not finalized and are estimates.
3 Non-performing Loans consists of loans on nonaccrual status and loans greater than ninety days past due and still accruing interest.
4 Non-performing Assets consists of Non-performing Loans and Other Real Estate Owned (OREO).Consolidated Balance Sheets (Unaudited) Dollars in thousands, except per share data June 30, 2023 March 31, 2023 December 31, 2022 ASSETS Cash and due from banks $ 24,898 $ 24,833 $ 40,067 Interest bearing deposits with banks 59,145 89,233 128,094 Total Cash and Cash Equivalents 84,043 114,066 168,161 Equity securities with readily determinable fair values 915 1,328 1,719 Debt securities available for sale 452,252 501,944 553,554 Securities held to maturity, fair value $58,133; $59,998; $58,078 64,926 64,960 64,977 Loans held for sale — 167 123 Loans, net of allowance for loan losses $19,148; $19,485; $17,861 1,554,669 1,512,141 1,520,749 Assets held for sale 1,418 3,393 3,393 Premises and equipment, net 26,145 26,588 27,053 Right of use assets 2,952 2,994 3,162 Restricted investment in bank stocks 4,877 2,552 1,629 Investment in bank-owned life insurance 78,919 78,435 77,993 Investments in low-income housing partnerships 1,066 1,097 1,129 Goodwill 44,185 44,185 44,185 Intangible assets, net 9,612 9,972 10,332 Foreclosed assets held for resale 467 474 474 Other assets 51,705 46,637 46,874 Total Assets 2,378,151 2,410,933 2,525,507 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Deposits: Non-interest bearing transaction accounts 569,729 594,355 595,049 Interest bearing transactions accounts 1,394,025 1,461,467 1,603,926 Total Deposits 1,963,754 2,055,822 2,198,975 Short-term borrowings 51,703 30,294 41,954 Long-term borrowings 81,000 46,000 21,000 Lease liabilities 2,952 2,994 3,162 Allowance for unfunded commitments 2,132 2,011 92 Other liabilities 19,541 17,971 15,282 Total Liabilities 2,121,082 2,155,092 2,280,465 STOCKHOLDERS’ EQUITY Preferred Stock, $2.50 par value; 20,000,000 shares authorized; no shares outstanding — — — Common stock, $2.50 par value; 20,000,000 shares authorized; 8,888,732, 8,883,206, and 8,838,720 shares issued; 8,564,282, 8,523,256, and 8,515,120 shares outstanding 22,212 22,198 22,086 Treasury stock, at cost; 324,450, 324,450, and 323,600 shares (8,956 ) (8,956 ) (8,927 ) Additional paid-in capital 96,586 96,415 96,022 Retained earnings 205,279 198,144 193,873 Accumulated other comprehensive loss (58,052 ) (51,960 ) (58,012 ) Total Stockholders’ Equity 257,069 255,841 245,042 Total Liabilities and Stockholders’ Equity $ 2,378,151 $ 2,410,933 $ 2,525,507 Consolidated Income Statements (Unaudited) Three Months Ended June 30, Six Months Ended June 30, Dollars in thousands, except per share data 2023 2022 2023 2022 INTEREST AND DIVIDEND INCOME Loans, including fees Taxable $ 18,947 $ 16,414 $ 37,845 $ 32,200 Tax-exempt 352 356 708 660 Securities: Taxable 2,688 2,722 5,974 4,272 Tax-exempt 285 289 599 429 Dividends 51 24 92 59 Other 890 891 1,904 1,153 Total Interest Income 23,213 20,696 47,122 38,773 INTEREST EXPENSE Deposits 486 646 959 1,384 Short-term borrowings 108 20 125 37 Long-term borrowings 629 226 956 495 Total Interest Expense 1,223 892 2,040 1,916 Net Interest Income 21,990 19,804 45,082 36,857 Provision for Credit Losses (273 ) — (176 ) — Provision for Unfunded Commitments 121 — 397 — Net Interest Income after Provisions for Credit Losses and Unfunded Commitments 22,142 19,804 44,861 36,857 OTHER INCOME Commissions from insurance sales 2,840 2,808 4,742 4,008 Service charges on deposit accounts 989 1,006 1,951 1,964 Income from fiduciary, investment management and brokerage activities 979 816 1,819 1,626 Income from mortgage loans held for sale 14 145 31 426 Earnings on investment in bank-owned life insurance 484 363 926 690 Net losses on sales or calls of securities (546 ) — (739 ) — Net (losses) gains on equity securities (15 ) (148 ) 5 (257 ) Gain on assets held for sale 323 — 323 — Service charges on ATM and debit card transactions 834 865 1,657 1,618 Other 292 221 463 460 Total Other Income 6,194 6,076 11,178 10,535 OTHER EXPENSES Salaries and employee benefits 9,824 9,314 20,266 16,873 Net occupancy 1,002 939 2,039 2,098 Equipment 1,623 1,527 3,230 3,045 Other tax 305 402 642 818 Professional services 601 430 983 739 Supplies and postage 198 195 404 376 Marketing and corporate relations 159 67 313 170 FDIC and regulatory 295 264 544 535 Intangible assets amortization 360 389 720 698 Other operating 1,914 1,479 3,422 2,936 Total Other Expenses 16,281 15,006 32,563 28,288 Income before Income Taxes 12,055 10,874 23,476 19,104 PROVISION FOR INCOME TAXES 2,531 2,244 4,929 3,875 Net Income $ 9,524 $ 8,630 $ 18,547 $ 15,229 PER SHARE DATA Basic earnings $ 1.12 $ 0.99 $ 2.18 $ 1.75 Diluted earnings $ 1.12 $ 0.99 $ 2.17 $ 1.75 Average Balances, Income and Expenses, Yields and Rates Three months ended
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RateASSETS Interest bearing deposits with banks $ 71,040 $ 890 5.03 % $ 426,169 $ 891 0.84 % $ 80,958 $ 1,904 4.74 % $ 538,632 $ 1,153 0.43 % Investments (Tax-exempt) 55,588 361 2.60 % 30,054 366 4.88 % 55,449 758 2.76 % 30,280 543 3.62 % Investments (Taxable) 498,401 2,739 2.20 % 593,903 2,745 1.85 % 527,576 6,066 2.32 % 516,678 4,331 1.69 % Total Investments 553,989 3,100 2.24 % 623,957 3,111 2.00 % 583,025 6,824 2.36 % 546,958 4,874 1.80 % Loans (Tax-exempt) 75,670 446 2.36 % 81,656 451 2.22 % 76,501 897 2.36 % 76,949 835 2.19 % Loans (Taxable) 1,463,967 18,946 5.19 % 1,411,584 16,413 4.66 % 1,459,455 37,844 5.23 % 1,406,082 32,200 4.62 % Total Loans 1,539,637 19,392 5.05 % 1,493,240 16,864 4.53 % 1,535,956 38,741 5.09 % 1,483,031 33,035 4.49 % Total Earning Assets 2,164,666 23,382 4.33 % 2,543,366 20,866 3.29 % 2,199,939 47,469 4.35 % 2,568,621 39,062 3.07 % Total Assets $ 2,357,626 $ 2,703,149 $ 2,398,423 $ 2,735,853 LIABILITIES Interest bearing demand deposits $ 577,480 $ 635,556 $ 584,686 $ 594,097 Money markets 261,560 348,919 285,996 344,097 Savings deposits 387,847 411,610 395,590 406,841 Time deposits 224,608 388,733 246,536 442,879 Total Interest Bearing Deposits 1,451,495 486 0.13 % 1,784,818 646 0.15 % 1,512,808 959 0.13 % 1,787,914 1,384 0.16 % Short-term borrowings 34,080 108 1.27 % 30,808 20 0.26 % 34,834 125 0.72 % 4,967 37 1.50 % Long-term borrowings 59,901 629 4.21 % 24,175 226 3.75 % 43,597 956 4.42 % 56,991 495 1.75 % Total borrowings 93,981 737 3.15 % 54,983 246 1.79 % 78,431 1,081 2.78 % 61,958 532 1.73 % Total Interest Bearing Liabilities 1,545,476 1,223 0.32 % 1,839,801 892 0.19 % 1,591,239 2,040 0.26 % 1,849,872 1,916 0.21 % Non-interest bearing demand deposits 550,581 611,179 554,340 621,248 Cost of Funds 0.23 % 0.15 % 0.19 % 0.16 % FTE Net Interest Margin 4.11 % 3.15 % 4.16 % 2.92 % Stockholders’ Equity 259,239 252,933 255,147 259,798 _______________________________________
5 Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.
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BalanceInterest6 Yield/
RateAverage
BalanceInterest6 Yield/
RateAverage
BalanceInterest6 Yield/
RateASSETS Interest bearing deposits with banks $ 71,040 $ 890 5.03 % $ 90,987 $ 1,014 4.52 % $ 268,911 $ 2,473 3.65 % $ 368,265 $ 2,130 2.29 % $ 426,169 $ 891 0.84 % Investments (Tax-exempt) 55,588 361 2.60 % 55,589 397 2.90 % 42,987 666 6.15 % 27,519 239 3.45 % 30,054 366 4.88 % Investments (Taxable) 498,401 2,739 2.20 % 557,377 3,327 2.42 % 542,137 2,722 1.99 % 571,282 2,850 1.98 % 593,903 2,745 1.85 % Total Investments 553,989 3,100 2.24 % 612,966 3,724 2.46 % 585,124 3,388 2.30 % 598,801 3,089 2.05 % 623,957 3,111 2.00 % Loans (Tax-exempt) 75,670 446 2.36 % 77,341 451 2.36 % 78,274 446 2.26 % 80,604 425 2.09 % 81,656 451 2.22 % Loans (Taxable) 1,463,967 18,946 5.19 % 1,454,934 18,898 5.27 % 1,459,830 18,821 5.11 % 1,440,646 17,789 4.90 % 1,411,584 16,413 4.66 % Total Loans 1,539,637 19,392 5.05 % 1,532,275 19,349 5.12 % 1,538,104 19,267 4.97 % 1,521,250 18,214 4.75 % 1,493,240 16,864 4.53 % Total Earning Assets 2,164,666 23,382 4.33 % 2,236,228 24,087 4.37 % 2,392,139 25,128 4.17 % 2,488,316 23,433 3.74 % 2,543,366 20,866 3.29 % Total Assets $ 2,357,626 $ 2,439,219 $ 2,598,000 $ 2,709,482 $ 2,703,149 LIABILITIES Interest bearing demand deposits $ 577,480 $ 591,972 $ 653,369 $ 640,903 $ 635,556 Money markets 261,560 298,584 328,808 342,002 348,919 Savings deposits 387,847 403,419 408,285 417,290 411,610 Time deposits 224,608 268,708 318,115 360,114 388,733 Total Interest Bearing Deposits 1,451,495 486 0.13 % 1,562,683 473 0.12 % 1,708,577 572 0.13 % 1,760,309 605 0.14 % 1,784,818 646 0.15 % Short-term borrowings 34,080 108 1.27 % 35,596 17 0.19 % 41,257 17 0.16 % 38,017 23 0.24 % 30,808 20 0.26 % Long-term borrowings 59,901 629 4.21 % 29,211 327 4.54 % 22,350 257 4.56 % 23,875 234 3.89 % 24,175 226 3.75 % Total borrowings 93,981 737 3.15 % 64,807 344 2.15 % 63,607 274 1.71 % 61,892 257 1.65 % 54,983 246 1.79 % Total Interest Bearing Liabilities 1,545,476 1,223 0.32 % 1,627,490 817 0.20 % 1,772,184 846 0.19 % 1,822,201 862 0.19 % 1,839,801 892 0.19 % Non-interest bearing demand deposits 550,581 557,546 586,092 597,884 611,179 Cost of Funds 0.23 % 0.15 % 0.14 % 0.14 % 0.15 % FTE Net Interest Margin 4.11 % 4.22 % 4.03 % 3.60 % 3.15 % Stockholders’ Equity 259,239 251,054 236,674 240,026 252,933 _______________________________________
6 Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.
Non-GAAP Reconciliation
Note: The Corporation has presented the following non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation’s results of operations and financial condition. These non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation’s industry. Investors should recognize that the Corporation’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other corporations. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.
Three Months Ended Dollars in thousands, except per share data June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Tangible book value per share Stockholders’ equity $ 257,069 $ 255,841 $ 245,042 $ 232,370 $ 247,032 Less: Goodwill and intangible assets (53,797 ) (54,157 ) (54,517 ) (54,916 ) (55,310 ) Tangible common stockholders’ equity (numerator) $ 203,272 $ 201,684 $ 190,525 $ 177,454 $ 191,722 Shares outstanding, less unvested shares, end of period (denominator) 8,528,782 8,523,256 8,501,752 8,505,843 8,610,667 Tangible book value per share $ 23.83 $ 23.66 $ 22.41 $ 20.86 $ 22.27 Tangible book value per share (ex-AOCI) Tangible common stockholders’ equity $ 203,272 $ 201,684 $ 190,525 $ 177,454 $ 191,722 Less: AOCI (58,052 ) (51,960 ) (58,012 ) (62,690 ) (43,526 ) Tangible equity (ex-AOCI) $ 261,324 $ 253,644 $ 248,537 $ 240,144 $ 235,248 Tangible book value per share (ex-AOCI) $ 30.64 $ 29.76 $ 29.23 $ 28.23 $ 27.32 Tangible common equity to tangible assets (TCE/TA Ratio) Tangible common stockholders’ equity (numerator) $ 203,272 $ 201,684 $ 190,525 $ 177,454 $ 191,722 Total assets $ 2,378,151 $ 2,410,933 $ 2,525,507 $ 2,654,153 $ 2,683,162 Less: Goodwill and intangible assets (53,797 ) (54,157 ) (54,517 ) (54,916 ) (55,310 ) Total tangible assets (denominator) $ 2,324,354 $ 2,356,776 $ 2,470,990 $ 2,599,237 $ 2,627,852 Tangible common equity to tangible assets 8.75 % 8.56 % 7.71 % 6.83 % 7.30 % Efficiency Ratio Non-interest expense $ 16,281 $ 16,282 $ 16,673 $ 15,320 $ 15,006 Less: Intangible amortization (360 ) (360 ) (399 ) (395 ) (389 ) Less: Loss on MD Title Investment $ (142 ) $ — $ — $ — $ — Non-interest expense (numerator) $ 15,779 $ 15,922 $ 16,274 $ 14,925 $ 14,617 Net interest income $ 21,990 $ 23,092 $ 24,048 $ 22,520 $ 19,804 Plus: Total non-interest income 6,194 4,984 5,423 5,849 6,076 Less: Net gains (losses) on sales or calls of securities (546 ) (193 ) (234 ) — — Less: Net gains (losses) on equity securities (15 ) 20 46 (88 ) (148 ) Less: Gain on assets held for sale 323 — — — — Less: Net gains on sale of low income housing partnership — — 421 — — Total revenue (denominator) $ 28,422 $ 28,249 $ 29,238 $ 28,457 $ 26,028 Efficiency ratio 55.52 % 56.36 % 55.66 % 52.45 % 56.16 % Contact: Jason H. Weber EVP/Treasurer & Chief Financial Officer 717.339.5090 jweber@acnb.com 
- Return on average assets was 1.62% and return on average equity was 14.74%.