ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB
Bank and Russell Insurance Group, Inc., announced financial results
for the three months ended December 31, 2020, with net income of
$7,049,000. Compared to net income of $5,081,000 for the three
months ended December 31, 2019, this is an increase of $1,968,000
or 38.7% over comparable period results, primarily due to higher
net interest income. Basic earnings per share was $0.81 and $0.72
for the three months ended December 31, 2020 and 2019,
respectively, which is an increase of $0.09 or 12.5%.
The Corporation reported net income of
$18,394,000 for the year ended December 31, 2020. Compared to net
income of $23,721,000 for the year ended December 31, 2019, this is
a decrease of $5,327,000 or 22.5% below comparable period results.
Basic earnings per share was $2.13 and $3.36 for the year ended
December 31, 2020 and 2019, respectively, which is a decrease of
$1.23 or 36.6%. These results were primarily attributable to
one-time merger-related expenses of $5,965,000 and a higher
provision for loan losses of $9,140,000 resulting mainly from the
increased risk due to the COVID-19 pandemic as well as a
previously-reported, large unanticipated charge-off of one loan
relationship during the first quarter of 2020. Without the
nonrecurring expenses related to the acquisition of FCBI, in
conjunction with the corresponding tax impact at the marginal tax
rate, net income (non-GAAP) would have been $23,033,000, or $2.67
basic earnings per share, for the year ended December 31, 2020.
“The COVID-19 pandemic continues to be a primary
driver in how we do our business today---nearly a year after this
national emergency changed how we interact in both our personal and
professional lives. However, due to the unceasing dedication and
hard work of our team members at ACNB Corporation’s subsidiaries of
ACNB Bank and Russell Insurance Group, Inc., our organization
continues to successfully navigate the many challenges encountered
in serving our customers and communities during this ongoing health
crisis,” said James P. Helt, ACNB Corporation President & Chief
Executive Officer. “Operationally, ACNB Corporation has been
diligent in its response to the changing impacts of the pandemic
with necessary modifications in the community banking office
network, as well as continual steps to reinforce systems to
accommodate heightened customer demands for electronic services and
to support the remote work environment for staff members.
Financially, this pandemic has taken a toll on the economy with
many businesses struggling after government actions were taken for
the purpose of limiting the spread of the virus in both the
Corporation’s Pennsylvania and Maryland markets. As of year-end
2020, however, the trend was overall positive with lessened volume
of customer requests for loan modifications and deferrals since the
initial requests at the onset of the pandemic. Plus, with the
signing of the Coronavirus Response and Relief Supplemental
Appropriations Act in late December 2020, there are now additional
government stimulus programs providing economic aid to consumers
and small businesses---including the reopening of the Paycheck
Protection Program for first-time and second-time borrowers, in
which ACNB Bank is again participating to assist business
customers.”
Mr. Helt continued, “As we begin a new year,
there is no doubt that there is still uncertainty ahead. At ACNB
Corporation, as always, we continue to look forward and plan for
the future founded upon our vision to be the independent financial
services provider of choice in the core markets served by building
relationships and finding solutions. This vision has been validated
and reinforced in the past as ACNB Corporation faced difficult
times and made hard decisions over the decades. This time is no
different, as we take deliberate steps forward for the benefit of
customers, employees, shareholders, and the many communities served
throughout our footprint.”
Revenues
Total revenues, defined as net interest income
plus noninterest income, for the year ended December 31, 2020, were
$93,002,000, or a 19.9% increase over total revenues of $77,587,000
for 2019. Total interest income for 2020 was $85,290,000, or an
increase of 22.6%, as compared to total interest income of
$69,558,000 for the year ended December 31, 2019.
Loans
Total loans outstanding were $1,637,784,000 at
December 31, 2020. Year over year, loans outstanding increased by
$365,183,000, or 28.7%, since December 31, 2019, including
$329,312,000 in loans acquired through FCBI. Loan growth is largely
attributable to the FCBI acquisition, net of selling new
residential mortgages in the secondary market and early payoffs of
loans, as well as active participation in the Small Business
Administration’s Paycheck Protection Program. As a result primarily
of the increased credit risk from COVID-19 as well as a
previously-reported, large unanticipated charge-off of one loan
relationship, combined with normal and anticipated credit losses in
the portfolio, the provision for loan losses for 2020 was
$9,140,000, an increase of $8,540,000 or 1,423.3% from prior
year-end results.
Deposits
Total deposits were $2,185,525,000 at December
31, 2020. Year over year, total deposits increased by $773,265,000,
or 54.8%, since December 31, 2019, including $374,058,000 in
deposits acquired through FCBI. Year over year, organic deposit
growth is largely attributable to PPP proceeds deposited to
customer accounts and increased balances in a broad base of
accounts from a lack of economic activity due to COVID-19.
Net Interest Income and
Margin
Net interest income rose by $13,650,000 to
$73,068,000 for the year ended December 31, 2020, an increase of
23.0% in comparison to the year ended December 31, 2019. The net
interest margin for 2020 was 3.35%, compared to 3.81% for 2019.
Both net interest income and the net interest margin were impacted
by lower market yields in 2020. The lower market yields negatively
affected the net interest margin as new loans at lower rates
replaced paydowns on existing loans at higher rates and variable
rate loans reset to new current rates.
Noninterest Income
Noninterest income for 2020 was $19,934,000, an
increase of $1,765,000 or 9.7% over the prior year ended December
31, 2019. The increase includes revenue from wealth management
activities, which grew 8.2% in comparison to the year ended
December 31, 2019, and reached $2,672,000 for 2020.
Noninterest Expense
Noninterest expense for 2020 was $61,160,000, an
increase of $13,539,000 or 28.4% over the prior year ended December
31, 2019. Nonrecurring acquisition and integration expenses related
to the acquisition of FCBI were $5,965,000 in 2020. Year over year,
salaries and employee benefits expense for 2020 increased by
$6,480,000 in comparison to the year ended December 31, 2019, which
is primarily attributable to higher staffing levels from the FCBI
acquisition and additional staff hired to support revenue
generation across all business lines.
Dividends
Quarterly cash dividends paid to ACNB
Corporation shareholders in 2020 totaled $8,685,000 in the
aggregate, or $1.00 per share---an increase of $1,765,000 or 25.5%
over the prior year. In 2019, ACNB Corporation paid a $0.98
dividend per share for total dividends paid to shareholders in the
amount of $6,920,000. When comparing the year of 2020 to 2019, the
increase in total dividends paid is also a result of the issuance
of additional shares of common stock in connection with the FCBI
acquisition in January 2020.
COVID-19 Pandemic
As previously reported, ACNB Corporation
implemented numerous initiatives to support and protect employees
and customers during the COVID-19 pandemic. These efforts continue
as the organization responds to changes in the operating
environment with varying levels of business activity in its regions
of operation in Pennsylvania and Maryland. Current information and
guidelines related to ACNB Bank’s ongoing COVID-19 initiatives and
communications are available at acnb.com. As of June 30, 2020, ACNB
Bank reported approved loan modifications and deferrals for 466
loans totaling $234,600,000 in principal balances, representing
13.5% of the total loan portfolio. As of September 30, 2020, the
Bank had outstanding approvals for loan modifications and deferrals
for 65 loans totaling $64,800,000 in principal balances,
representing 3.8% of the total loan portfolio. Most recently, as of
December 31, 2020, ACNB Bank has outstanding approvals for loan
modifications and deferrals for 48 loans totaling $36,123,155 in
principal balances, representing 2.39% of the total loan
portfolio.
Paycheck Protection Program
ACNB Corporation’s banking subsidiary, ACNB
Bank, serves as an active participant in the PPP, as authorized
initially by the Coronavirus Aid, Relief, and Economic Security
(CARES) Act and subsequently by the Coronavirus Response and Relief
Supplemental Appropriations Act. As of December 31, 2020, ACNB Bank
closed and funded 1,440 loans totaling $160,857,603, resulting in
approximately $6,100,000 in total fee income of which $2,875,000
was recognized through December 31, 2020, with the remainder to be
recognized either over the life of the loan or until loan
forgiveness occurs.
About ACNB Corporation
ACNB Corporation, headquartered in Gettysburg,
PA, is the $2.6 billion financial holding company for the
wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and Russell
Insurance Group, 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 21
community banking offices, located in the four southcentral
Pennsylvania counties of Adams, Cumberland, Franklin and York, as
well as loan offices in Lancaster and York, PA, and Hunt Valley,
MD. As divisions of ACNB Bank operating in Maryland, FCB Bank and
NWSB Bank serve the local marketplace with a network of five and
seven community banking offices located in Frederick County and
Carroll County, MD, respectively. Russell Insurance Group, Inc.,
the Corporation’s insurance subsidiary, is a full-service 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, Germantown and Jarrettsville, MD, and Gettysburg, PA.
For more information regarding ACNB Corporation and its
subsidiaries, please visit acnb.com.
Non-GAAP Financial Measures
ACNB Corporation uses non-GAAP financial
measures to provide information useful to investors in
understanding our operating performance and trends, and to
facilitate comparisons with the performance of our peers.
Management uses these measures internally to assess and better
understand our underlying business performance and trends related
to core business activities. The non-GAAP financial measures and
key performance indicators we use may differ from the non-GAAP
financial measures and key performance indicators other financial
institutions use to measure their performance and trends.
Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, our reported results
prepared in accordance with GAAP. In the event of such a disclosure
or release, the Securities and Exchange Commission’s (SEC)
Regulation G requires: (i) the presentation of the most directly
comparable financial measure calculated and presented in accordance
with GAAP and (ii) a reconciliation of the differences between the
non-GAAP financial measure presented and the most directly
comparable financial measure calculated and presented in accordance
with GAAP. Reconciliations of GAAP to non-GAAP operating measures
to the most directly comparable GAAP financial measures are
included in the tables at the end of this release.
Management believes merger-related expenses are
not organic costs attendant to operations and facilities. These
charges principally represent expenses to satisfy contractual
obligations of the acquired entity, without any useful benefit to
us, to convert and consolidate the entity’s records, systems and
data onto our platforms, and professional fees related to the
transaction. These costs are specific to each individual
transaction and may vary significantly based on the size and
complexity of the transaction.
SAFE HARBOR AND FORWARD-LOOKING STATEMENTS -
Should there be a material subsequent event prior to the filing of
the Annual Report on Form 10-K 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 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: the effects of governmental and fiscal policies, as well
as legislative and regulatory changes; the effects of new laws and
regulations, specifically the impact of the Coronavirus Response
and Relief Supplemental Appropriations Act, the Coronavirus Aid,
Relief, and Economic Security Act, the Tax Cuts and Jobs Act and
the Dodd-Frank Wall Street Reform and Consumer Protection Act;
impacts of the capital and liquidity requirements of the Basel III
standards; the 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- 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; the effects of economic
conditions particularly with regard to the negative impact of
severe, wide-ranging and continuing disruptions caused by the
spread of Coronavirus Disease 2019 (COVID-19) 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; the effects of competition, and of changes in laws
and regulations on competition, including industry consolidation
and development of competing financial products and services; the
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; the effects of technology changes;
volatilities in the securities markets; the effect of general
economic conditions and more specifically in the Corporation’s
market areas; the failure of assumptions underlying the
establishment of reserves for loan losses and estimations of values
of collateral and various financial assets and liabilities; acts of
war or terrorism; disruption of credit and equity markets; the
ability to manage current levels of impaired assets; the loss of
certain key officers; the 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
CORPORATIONFinancial Highlights
Unaudited Consolidated Condensed
Statements of IncomeDollars in thousands, except per share
data
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
INCOME STATEMENT
DATA |
|
|
|
|
|
|
|
Interest income |
$ |
21,472 |
|
$ |
17,521 |
|
$ |
85,290 |
|
$ |
69,558 |
Interest expense |
|
2,570 |
|
|
2,783 |
|
|
12,222 |
|
|
10,140 |
Net interest income |
|
18,902 |
|
|
14,738 |
|
|
73,068 |
|
|
59,418 |
Provision for loan losses |
|
1,040 |
|
|
175 |
|
|
9,140 |
|
|
600 |
Net interest income after provision for loan losses |
|
17,862 |
|
|
14,563 |
|
|
63,928 |
|
|
58,818 |
Noninterest income |
|
5,863 |
|
|
4,468 |
|
|
19,934 |
|
|
18,169 |
Merger-related expenses |
|
- |
|
|
253 |
|
|
5,965 |
|
|
769 |
Noninterest expense |
|
14,938 |
|
|
12,448 |
|
|
55,195 |
|
|
46,852 |
Income before income taxes |
|
8,787 |
|
|
6,330 |
|
|
22,702 |
|
|
29,366 |
Provision for income taxes |
|
1,738 |
|
|
1,249 |
|
|
4,308 |
|
|
5,645 |
Net income |
$ |
7,049 |
|
$ |
5,081 |
|
$ |
18,394 |
|
$ |
23,721 |
Basic earnings per share |
$ |
0.81 |
|
$ |
0.72 |
|
$ |
2.13 |
|
$ |
3.36 |
|
|
|
|
|
|
|
|
NON-GAAP MEASURES |
|
|
|
|
|
|
|
INCOME STATEMENT DATA |
|
|
|
|
|
|
|
Net income |
$ |
7,049 |
|
$ |
5,081 |
|
$ |
18,394 |
|
$ |
23,721 |
Merger-related expenses, net of income taxes |
|
- |
|
|
197 |
|
|
4,639 |
|
|
595 |
Adjusted net income (non-GAAP)* |
$ |
7,049 |
|
$ |
5,278 |
|
$ |
23,033 |
|
$ |
24,316 |
Adjusted basic earnings per share (non-GAAP)* |
$ |
0.81 |
|
$ |
0.75 |
|
$ |
2.67 |
|
$ |
3.44 |
|
|
|
|
|
|
|
|
*See Non-GAAP Financial Measures above. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Selected Financial
DataDollars in thousands, except per share data
|
December 31, 2020 |
|
|
December 31, 2019 |
BALANCE SHEET
DATA |
|
|
|
|
Assets |
$ |
2,555,362 |
|
|
|
$ |
1,720,253 |
|
Securities |
$ |
350,182 |
|
|
|
$ |
212,177 |
|
Loans, total |
$ |
1,637,784 |
|
|
|
$ |
1,272,601 |
|
Allowance for loan losses |
$ |
20,226 |
|
|
|
$ |
13,835 |
|
Deposits |
$ |
2,185,525 |
|
|
|
$ |
1,412,260 |
|
Borrowings |
$ |
92,209 |
|
|
|
$ |
99,731 |
|
Stockholders’ equity |
$ |
257,972 |
|
|
|
$ |
189,516 |
|
COMMON SHARE
DATA |
|
|
|
|
Basic earnings per share |
$ |
2.13 |
|
|
|
$ |
3.36 |
|
Cash dividends paid per share |
$ |
1.00 |
|
|
|
$ |
0.98 |
|
Book value per share |
$ |
29.62 |
|
|
|
$ |
26.77 |
|
Number of common shares outstanding |
8,709,393 |
|
|
|
7,079,359 |
|
SELECTED
RATIOS |
|
|
|
|
Return on average assets |
0.78 |
% |
|
|
1.40 |
% |
Return on average equity |
7.39 |
% |
|
|
13.33 |
% |
Non-performing loans to total loans |
0.48 |
% |
|
|
0.40 |
% |
Net charge-offs to average loans outstanding |
0.16 |
% |
|
|
0.06 |
% |
Allowance for loan losses to non-acquired loans (non-GAAP)* |
1.65 |
% |
|
|
1.26 |
% |
Allowance for loan losses to total loans |
1.23 |
% |
|
|
1.09 |
% |
Allowance for loan losses to non-performing loans |
251.16 |
% |
|
|
269.27 |
% |
* See Non-GAAP Financial Measures above.
|
|
Contact: |
Lynda L. Glass |
|
EVP/Secretary & |
|
Chief
Governance Officer |
|
717.339.5085 |
|
glass@acnb.com |
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