ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB
Bank and ACNB Insurance Services, Inc., announced financial results
for the three months ended June 30, 2022, with net income of
$8,630,000. Compared to net income of $8,508,000 for the three
months ended June 30, 2021, this was an increase of $122,000 or
1.43% from comparable period results. The increase in net income
for the three months ended June 30, 2022, was driven by increases
in net interest income of $1,235,000 and commissions from insurance
sales of $955,000. The increase in net interest income was a result
of the rise in net interest margin of 8 basis points and in average
earning assets of $96,303,000 period over period. The increase in
commissions from insurance sales was primarily attributable to the
acquisition of the business and assets of Hockley & O’Donnell
Insurance Agency in the first quarter of 2022. The acquisition
added $719,000 of revenue during the second quarter of 2022. For
the three months ended June 30, 2022 and 2021, basic earnings per
share was $0.99 and $0.98, respectively, which is an increase of
$0.01 per share or 1.02%.
The Corporation reported net income of
$15,229,000 for the six months ended June 30, 2022. Compared to net
income of $15,979,000 for the six months ended June 30, 2021, this
is a decrease of $750,000 or 4.69% from comparable period results.
Basic earnings per share was $1.75 and $1.83 for the six months
ended June 30, 2022 and 2021, respectively, which is a decrease of
$0.08 or 4.37%. These year-to-date 2022 results were primarily due
to lower income from residential mortgage loans sold of
$1,771,000.
“As the second quarter of 2022 came to a close,
the financial services industry was in uncharted waters as the
Federal Reserve raised interest rates by 75 basis points, which was
the third increase this year and the largest since 1994. In these
unusual and unpredictable times, ACNB Corporation reported strong
financial performance for the quarter despite the downward pressure
of PPP loan payoffs and the decline in income from the sale of
residential mortgage loans. Solid loan growth and the deployment of
excess cash into higher-yielding securities contributed to earnings
during the first half of 2022,” said James P. Helt, ACNB
Corporation President & Chief Executive Officer. “With a strong
capital base, ample liquidity, and superior asset quality as we
enter the second half of 2022, we are cautiously optimistic as well
as poised and prepared for the turbulence of the unknown interest
rate environment and any other recessionary challenges ahead.”
Mr. Helt continued, “A major project for ACNB
Corporation’s subsidiary bank, ACNB Bank, is the construction of
the new Upper Adams Office, slated to open in October 2022, which
will consolidate the operations of three current community banking
offices in this Pennsylvania geography. Due to evolving customer
behaviors and expectations, branch optimization is a component of
our strategic plan as we simultaneously seek both profitable and
sustainable organic and inorganic growth. As always, our vision for
growth is fundamental to the success of both the banking subsidiary
of ACNB Bank and the insurance agency subsidiary of ACNB Insurance
Services, Inc. as we strive to enhance long-term shareholder value
and to be the independent financial services provider of choice in
the core markets served by building relationships and finding
solutions.”
Revenues
Total revenues, defined as net interest income
plus noninterest income, for the first half of 2022 were
$47,392,000, or a 0.78% decrease from total revenues of $47,763,000
for the first half of 2021.
Net Interest Income and
Margin
Net interest income increased by $963,000 to
$36,857,000 for the first six months of 2022, which was an increase
of 2.68% compared to $35,894,000 for the first six months of 2021.
The improvement in net interest income was driven by an increase in
average earning assets from $2,444,884,000 in the first half of
2021 to $2,566,700,000 in the first half of 2022. The net interest
margin for the first half of 2022 was 2.90%, compared to 2.96% for
the same period of 2021.
Noninterest Income
Noninterest income for the first six months of
2022 was $10,535,000, a decrease of $1,334,000 or 11.24% compared
to the first six months of 2021. Income from residential mortgage
loans sold decreased 80.61%, while income from commissions from
insurance sales increased 23.86%, from the first half of 2021 to
the first half of 2022.
Noninterest Expense
Noninterest expense for the first six months of
2022 was $28,288,000, an increase of $770,000 or 2.80% from the
same period in 2021. The increase was driven by increases in
equipment, professional and other expenses. Equipment expense was
$3,045,000 for the first six months of 2022, compared to $2,602,000
for the first six months of 2021. This rise in equipment expense
was attributable to the additional ongoing expenses related to the
Bank’s core systems conversion in late 2021. Professional expense
was $739,000 for the first six months of 2022, compared to $468,000
for the first six months of 2021. This increase was a result of the
additional expenses related to the transition of the Corporation’s
independent audit firm, as well as higher expenses due to the use
of executive recruiters to fill key roles within the Bank.
Loans
Total loans outstanding were $1,509,792,000 at
June 30, 2022. Loans outstanding increased by $41,365,000, or
2.82%, since December 31, 2021, and decreased by $47,984,000,
or 3.08%, from June 30, 2021 to June 30, 2022. Year over
year, the decrease in loans was largely attributable to the payoff
of PPP loans and a reduction in residential mortgage loans. PPP
loans declined by $93,112,000 during this period. Excluding PPP
loan payoffs, loans increased $59,664,000, or 4.1%, from December
31, 2021 to June 30, 2022, due primarily to strong loan
originations in the commercial and government lending portfolios
during the period. Despite the intense competition in the
Corporation’s market areas, there is a continued focus internally
on asset quality and disciplined underwriting standards in the loan
origination process. As a result of stable loan risk metrics,
combined with low credit losses in the portfolio, the provision for
loan losses for the first six months of 2022 was $0.
Deposits
Total deposits were $2,363,773,000 at
June 30, 2022. Deposits decreased by $62,616,000, or 2.58%,
since December 31, 2021, and increased by $25,738,000, or
1.10%, from June 30, 2021 to June 30, 2022. Year over
year, the increase in deposits was a result of customers holding
higher balances across a broad base of accounts due to tepid
economic activity resulting from the effects of the current
economic environment. Since December 31, 2021, the decrease in
deposits was due to customers beginning to seek alternative
investments as market interest rates rose during the first half of
2022.
Stockholders’ Equity
Total stockholders’ equity was $247,032,000 at
June 30, 2022, compared to $272,114,000 at December 31,
2021, and $266,366,000 at June 30, 2021. Year to date, the
$25,082,000 decline in stockholders’ equity from December 31,
2021 to June 30, 2022, was primarily attributable to the
change in accumulated other comprehensive income due to unrealized
losses in the securities portfolio resulting from the increase in
market interest rates during the year. These unrealized losses were
also the primary driver of the decline in the book value per share,
which was $31.35 and $28.64 at December 31, 2021 and
June 30, 2022, respectively.
Dividends and Share
Repurchases
Quarterly cash dividends paid to ACNB
Corporation shareholders in the first half of 2022 totaled
$4,521,000, or $0.52 per common share. In the first half of 2021,
ACNB Corporation also paid $0.52 per common share, including a
special dividend of $0.02 per common share, for total dividends
paid to shareholders in the amount of $4,530,000. On July 21, 2022,
the Corporation announced the regular quarterly cash dividend
declared for the third quarter of 2022 in the amount of $0.26 per
common share, payable on September 15, 2022, to shareholders of
record as of September 1, 2022, which is consistent with the
dividend paid in the first and second quarters of 2022.
Further, ACNB Corporation repurchased 88,225
shares of ACNB Corporation common stock during the second quarter
of 2022 at a cost of $2,905,000. As of June 30, 2022, up to an
additional 118,704 of ACNB Corporation’s common stock may be
repurchased under the common stock repurchase program originally
announced on February 25, 2021.
ACNB Corporation Update
Effective June 1, 2022, Jason H. Weber became
Executive Vice President/Treasurer & Chief Financial Officer of
ACNB Corporation and ACNB Bank. As previously announced, Mr. Weber
was selected as the successor to David W. Cathell, who announced in
September 2021 his intention to retire from all of his positions
with ACNB Corporation and its subsidiaries effective the close of
business on May 31, 2022.
ACNB Bank Update
On January 12, 2022, ACNB Bank announced plans
to build a full-service community banking office to serve the Upper
Adams area of Adams County, PA. The new office location at 3425
Biglerville Road, Biglerville, will offer enhanced services and
conveniences, as well as will deploy new design concepts in the
office lobby with the goal of streamlining and improving the
customer experience. Upon completion of construction of the Upper
Adams Office in Fall 2022, the plan is to consolidate operations of
the three current ACNB Bank offices in the Upper Adams geography as
part of the Bank’s branch optimization strategy and continued
endeavors to enhance operational efficiencies and performance. It
was recently announced that the new Upper Adams Office will open
for business on October 17, 2022.
ACNB Insurance Services, Inc.
Update
On January 6, 2022, ACNB Corporation announced
the name change and rebranding of the insurance agency subsidiary
to ACNB Insurance Services, Inc. from Russell Insurance Group, Inc.
effective January 1, 2022. This rebranding reinforces the common
ownership by ACNB Corporation of both ACNB Bank and the insurance
agency, as well as makes this affiliation more visible for
businesses and consumers in order to maximize cross-selling
opportunities in the shared communities served.
Additionally, as previously announced, effective
February 28, 2022, ACNB Insurance Services, Inc. completed the
acquisition of the business and assets of Hockley & O’Donnell
Insurance Agency, LLC, Gettysburg, PA. This transaction is the most
recent acquisition of a book of insurance business by ACNB
Insurance Services, Inc., which is anticipated to increase gross
premium dollars for the agency by approximately 30%. Systems
integration related to this acquisition occurred as of June 27,
2022.
ACNB Corporation, headquartered in Gettysburg,
PA, is the $2.7 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 20 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 six community banking offices located in Frederick
County and Carroll County, MD, respectively. ACNB Insurance
Services, Inc. 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.
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 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; 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 severe, wide-ranging and continuing
disruptions caused by the spread of Coronavirus Disease 2019
(COVID-19) and any other 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
loan 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 #2022-29July 29, 2022
Contact: |
Lynda L. Glass |
|
EVP/Secretary & |
|
Chief Governance Officer |
|
717.339.5085 |
|
lglass@acnb.com |
|
|
ACNB Corporation Financial
Highlights
|
Unaudited Consolidated Condensed Statements of
IncomeDollars in thousands, except per share data |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
INCOME STATEMENT
DATA |
|
|
|
|
|
|
|
Interest income |
$ |
20,696 |
|
|
$ |
20,633 |
|
|
$ |
38,773 |
|
|
$ |
40,003 |
|
Interest expense |
|
892 |
|
|
|
2,064 |
|
|
|
1,916 |
|
|
|
4,109 |
|
Net interest income |
|
19,804 |
|
|
|
18,569 |
|
|
|
36,857 |
|
|
|
35,894 |
|
Provision for loan losses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Net interest income after provision for loan losses |
|
19,804 |
|
|
|
18,569 |
|
|
|
36,857 |
|
|
|
35,844 |
|
Noninterest income |
|
6,076 |
|
|
|
5,956 |
|
|
|
10,535 |
|
|
|
11,869 |
|
Noninterest expense |
|
15,006 |
|
|
|
13,731 |
|
|
|
28,288 |
|
|
|
27,518 |
|
Income before income taxes |
|
10,874 |
|
|
|
10,794 |
|
|
|
19,104 |
|
|
|
20,195 |
|
Provision for income taxes |
|
2,244 |
|
|
|
2,286 |
|
|
|
3,875 |
|
|
|
4,216 |
|
Net income |
$ |
8,630 |
|
|
$ |
8,508 |
|
|
$ |
15,229 |
|
|
$ |
15,979 |
|
Basic earnings per share |
$ |
0.99 |
|
|
$ |
0.98 |
|
|
$ |
1.75 |
|
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Selected Financial DataDollars in
thousands, except per share data |
|
|
|
|
|
|
|
June 30, 2022 |
|
June 30, 2021 |
|
December 31, 2021 |
BALANCE SHEET
DATA |
|
|
|
|
|
Assets |
$ |
2,683,162 |
|
|
$ |
2,708,520 |
|
|
$ |
2,786,987 |
|
Securities |
$ |
598,088 |
|
|
$ |
396,520 |
|
|
$ |
446,161 |
|
Loans, total |
$ |
1,509,792 |
|
|
$ |
1,557,776 |
|
|
$ |
1,468,427 |
|
Allowance for loan losses |
$ |
18,943 |
|
|
$ |
20,207 |
|
|
$ |
19,033 |
|
Deposits |
$ |
2,363,773 |
|
|
$ |
2,338,035 |
|
|
$ |
2,426,389 |
|
Borrowings |
$ |
53,609 |
|
|
$ |
84,458 |
|
|
$ |
69,902 |
|
Stockholders’ equity |
$ |
247,032 |
|
|
$ |
266,366 |
|
|
$ |
272,114 |
|
COMMON SHARE
DATA |
|
|
|
|
|
Basic earnings per share |
$ |
1.75 |
|
|
$ |
1.83 |
|
|
$ |
3.19 |
|
Cash dividends paid per share |
$ |
0.52 |
|
|
$ |
0.52 |
|
|
$ |
1.03 |
|
Book value per share |
$ |
28.64 |
|
|
$ |
30.54 |
|
|
$ |
31.35 |
|
Number of common shares outstanding |
|
8,624,035 |
|
|
|
8,721,348 |
|
|
|
8,679,206 |
|
SELECTED
RATIOS |
|
|
|
|
|
Return on average assets |
|
1.11 |
% |
|
|
1.23 |
% |
|
|
1.03 |
% |
Return on average equity |
|
11.82 |
% |
|
|
12.43 |
% |
|
|
10.52 |
% |
Non-performing loans to total loans |
|
0.35 |
% |
|
|
0.50 |
% |
|
|
0.42 |
% |
Net charge-offs to average loans outstanding |
|
0.01 |
% |
|
|
— |
% |
|
|
0.08 |
% |
Allowance for loan losses to total loans |
|
1.25 |
% |
|
|
1.30 |
% |
|
|
1.30 |
% |
Allowance for loan losses to non-performing loans |
|
362.48 |
% |
|
|
260.53 |
% |
|
|
306.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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