ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB
Bank and ACNB Insurance Services, Inc., announced financial results
for the three months ended September 30, 2022 with net income of
$10,324,000, an increase of $2,964,000, or 40.27%, compared to net
income of $7,360,000 for the three months ended September 30, 2021.
This year-over-year increase in net income was primarily driven by
increases in net interest income of $4,520,000 and commissions from
insurance sales of $714,000. For the three months ended September
30, 2022 and 2021, basic earnings per share was $1.20 and $0.84,
respectively, which is an increase of $0.36 per share or 42.86%.
The Corporation reported net income of
$25,553,000 for the nine months ended September 30, 2022, an
increase of $2,214,000, or 9.49%, compared to net income of
$23,339,000 for the nine months ended September 30, 2021.
Year-over-year, the higher net income was driven primarily by
increases in net interest income of $5,483,000 and commissions from
insurance sales of $1,486,000. Basic earnings per share was $2.95
and $2.67 for the nine months ended September 30, 2022 and 2021,
respectively, which is an increase of $0.28 per share or
10.49%.
“The year of 2022 has been far from predictable.
With the goal of curbing inflation, there have been five interest
rate hikes by the Federal Reserve since March, totaling 300 basis
points to date. Interest rate increases have been a major
contributor to ACNB Corporation’s year-to-date 2022 earnings
performance as assets repriced more quickly than liabilities, which
coupled with asset growth resulted in strong net interest income
performance,” said James P. Helt, ACNB Corporation President &
Chief Executive Officer. “Amidst these unusual economic times, the
Corporation made progress on its strategic initiatives planned for
2022 including the acquisition by the insurance subsidiary, ACNB
Insurance Services, Inc., of the business and assets of Hockley
& O’Donnell Insurance Agency in Gettysburg, PA, in February and
the recent completion of the new Upper Adams Office in Biglerville,
PA, as the banking subsidiary, ACNB Bank, optimizes its community
banking network.”
Mr. Helt continued, “We, at ACNB Corporation,
remain cautiously optimistic as the end of 2022 approaches. Our
solid year-to-date financial performance, strong capital base, and
superior asset quality position us to face the ongoing uncertainty
of the operating environment with confidence despite inflation and
potential recessionary challenges. Profitable and sustainable
organic and inorganic growth are key to ACNB Corporation’s future
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.”
Net Interest Income and
Margin
Net interest income for the three months ended
September 30, 2022 totaled $22,520,000, an increase of
$4,520,000, or 25.11%, over comparable period results in 2021. Net
interest income for the nine months ended September 30, 2022
totaled $59,377,000, an increase of $5,483,000, or 10.17%, over
comparable period results in 2021. Higher net interest income was
attributable to higher interest rates, deployment of excess
liquidity, lower funding costs, and a shift into higher-yielding
assets.
The net interest margin for the three months
ended September 30, 2022 was 3.59%, an increase of 84 basis
points from 2.75% for the comparable period in 2021. PPP fees and
purchase accounting accretion for the three months ended
September 30, 2022 totaled $853,000, compared to $1,722,000
for the same period in 2021. The 2022 year-to-date net interest
margin increased 23 basis points to 3.13% from 2.90% for the
comparable nine-month period in 2021. Year-to-date, PPP fees and
purchase accounting accretion totaled $2,803,000, compared to
$6,665,000 for the same period in 2021.
Noninterest Income
Noninterest income for the three months ended
September 30, 2022 was $5,849,000, an increase of $575,000, or
10.90%, from the comparable period in 2021. The increase was driven
primarily by income from commissions from insurance sales as a
result of the acquisition of the business and assets of the Hockley
& O’Donnell Insurance Agency effective February 28, 2022.
Noninterest income for the first nine months of 2022 was
$16,384,000, a decrease of $759,000, or 4.43%, from the comparable
period in 2021. Comparing the first nine months of 2022 to 2021,
income from residential mortgage loans sold decreased by $2,029,000
while income from commissions from insurance sales increased
$1,486,000 due to the acquisition of the business and assets of the
Hockley & O’Donnell Insurance Agency.
Noninterest Expense
Noninterest expense for the three months ended
September 30, 2022 was $15,320,000, an increase of $1,344,000,
or 9.62%, from the comparable period in 2021. Noninterest expense
for the first nine months of 2022 was $43,608,000, an increase of
$2,114,000, or 5.09%, from the comparable period in 2021. The
increases in both periods were driven primarily by increases in
equipment, professional and other expenses. Equipment expenses were
$1,521,000 and $4,566,000 for the first three and nine months ended
September 30, 2022, respectively, compared to $1,181,000 and
$3,783,000 for the comparable periods in 2021, respectively. The
increases in equipment expense were attributable to the additional
ongoing expenses related to the banking subsidiary’s core systems
conversion in late 2021. Professional expenses were $589,000 and
$1,328,000 for first three and nine months ended September 30,
2022, respectively, compared to $422,000 and $890,000 for the
comparable periods in 2021, respectively. The increases in
professional expenses were a result of additional expenses related
to the transition of the Corporation’s independent audit firm, as
well as higher expenses for consultants and executive recruiters to
fill key roles within the organization.
Loans and Asset Quality
Total loans outstanding were $1,527,128,000 at
September 30, 2022 compared to $1,486,886,000 at
September 30, 2021, an increase of 2.71%. Year-over-year, the
increase was driven mainly by growth in the commercial loan
portfolio. Loans increased by $58,701,000, or 4.00%, from
December 31, 2021 to September 30, 2022, also mainly from
growth in the commercial loan portfolio. Excluding payoffs for PPP
loans, loans grew by 5.20% from December 31, 2021 to
September 30, 2022.
As a result of stable loan risk metrics,
combined with low credit losses in the portfolio, the provision for
loan losses for the first nine months of 2022 was $0 despite solid
loan growth. Non-performing loans were $7,391,000, or 0.48% of
total loans, at September 30, 2022, compared to $9,727,000, or
0.65% of total loans, at September 30, 2021. Annualized net
charge-offs for the nine months ended September 30, 2022 were 0.10%
of total average loans, compared to 0.10% for the nine months ended
September 30, 2021. The net charge-offs for the nine months ended
September 30, 2022 and 2021 resulted from a few isolated credits
and were not indicative of a general weakness in the overall loan
portfolio.
Deposits
Total deposits were $2,336,213,000 at
September 30, 2022. Deposits decreased by $90,176,000, or
3.72%, since December 31, 2021 and decreased by $81,348,000,
or 3.36%, from September 30, 2021 to September 30, 2022.
The decrease in deposits was driven by customers beginning to seek
higher yielding alternative investment products as market interest
rates rose during the first three quarters of 2022.
Stockholders’ Equity
Total stockholders’ equity was $232,370,000 at
September 30, 2022, compared to $272,114,000 at
December 31, 2021 and $269,840,000 at September 30, 2021.
Year-to-date, the $39,744,000 decline in stockholders’ equity from
December 31, 2021 to September 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 $27.28 at
December 31, 2021 and September 30, 2022,
respectively.
Dividends and Share
Repurchases
Quarterly cash dividends paid to ACNB
Corporation shareholders in the first nine months of 2022 totaled
$6,734,000, or $0.78 per common share. Compared to a year ago, ACNB
Corporation paid $0.77 in total dividends per common share in the
first three quarters of 2021, which included a special dividend of
$0.02 per common share paid on June 15, 2021. In addition, ACNB
Corporation repurchased 109,931 shares of ACNB Corporation common
stock during the third quarter of 2022 at a cost of $3,777,000,
which effectively completed the authorization for the repurchase of
shares of ACNB Corporation common stock under the program approved
by the Board of Directors on February 23, 2021.
ACNB Corporation Update
As previously announced, on October 24, 2022,
ACNB Corporation declared the regular quarterly cash dividend for
the fourth quarter of 2022 in the amount of $0.28 per common share,
payable on December 15, 2022, to shareholders of record as of
December 1, 2022. This quarterly cash dividend declared of $0.28
per common share is an increase of $0.02, or 7.69%, per common
share compared to the fourth quarter of 2021 and the three previous
quarters in 2022. Further, on the same date of October 24, 2022,
the Board of Directors of ACNB Corporation approved a new common
stock repurchase program, authorizing the repurchase of up to 3.00%
of the Corporation’s outstanding shares.
ACNB Bank Update
On October 17, 2022, ACNB Bank opened its new
full-service community banking office to serve the Upper Adams area
of Adams County, PA. The newly-constructed office location at 3425
Biglerville Road, Biglerville, offers enhanced services and
conveniences, as well as deploys new design concepts in the office
lobby with the goal of streamlining and improving the customer
experience. In tandem with this new office investment of more than
$2,000,000, the operations of three community banking offices were
consolidated in this Pennsylvania geography in alignment with the
Bank’s branch optimization strategy and continued endeavors to
enhance operational efficiencies and performance. Also as part of
the Bank’s branch optimization program, in the third quarter of
2022, ACNB Bank announced the planned closure of three additional
community banking offices effective December 2, 2022, including the
Adams Commerce Center Office in Gettysburg, PA; East Frederick
Office in Frederick, MD; and, Hampstead Office in Hampstead,
MD.
ACNB Insurance Services, Inc.
Update
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., as the agency continues its efforts to grow
strategically. Of significance, this insurance agency acquisition
in Adams County, PA, leverages the affiliation with ACNB
Corporation and ACNB Bank in their headquarters market, where the
Bank celebrates a history of 165 years.
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 18 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 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 #2022-38October 27, 2022
ACNB Corporation Financial
HighlightsUnaudited Consolidated Condensed
Statements of IncomeDollars in thousands, except per share
data
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
INCOME STATEMENT
DATA |
|
|
|
|
|
|
|
Interest income |
$ |
23,382 |
|
$ |
19,482 |
|
$ |
62,155 |
|
$ |
59,485 |
Interest expense |
|
862 |
|
|
1,482 |
|
|
2,778 |
|
|
5,591 |
Net interest income |
|
22,520 |
|
|
18,000 |
|
|
59,377 |
|
|
53,894 |
Provision for loan losses |
|
— |
|
|
— |
|
|
— |
|
|
50 |
Net interest income after provision for loan losses |
|
22,520 |
|
|
18,000 |
|
|
59,377 |
|
|
53,844 |
Noninterest income |
|
5,849 |
|
|
5,274 |
|
|
16,384 |
|
|
17,143 |
Noninterest expense |
|
15,320 |
|
|
13,976 |
|
|
43,608 |
|
|
41,494 |
Income before income taxes |
|
13,049 |
|
|
9,298 |
|
|
32,153 |
|
|
29,493 |
Provision for income taxes |
|
2,725 |
|
|
1,938 |
|
|
6,600 |
|
|
6,154 |
Net income |
$ |
10,324 |
|
$ |
7,360 |
|
$ |
25,553 |
|
$ |
23,339 |
Basic earnings per share |
$ |
1.20 |
|
$ |
0.84 |
|
$ |
2.95 |
|
$ |
2.67 |
Year-To-Date Unaudited Selected Financial
DataDollars in thousands, except per share data
|
September 30, 2022 |
|
September 30, 2021 |
|
December 31, 2021 |
BALANCE SHEET
DATA |
|
|
|
|
|
Assets |
$ |
2,654,153 |
|
|
$ |
2,792,792 |
|
|
$ |
2,786,987 |
|
Securities |
$ |
571,796 |
|
|
$ |
421,444 |
|
|
$ |
446,161 |
|
Loans, total |
$ |
1,527,128 |
|
|
$ |
1,486,886 |
|
|
$ |
1,468,427 |
|
Allowance for loan losses |
$ |
17,952 |
|
|
$ |
19,141 |
|
|
$ |
19,033 |
|
Deposits |
$ |
2,336,213 |
|
|
$ |
2,417,561 |
|
|
$ |
2,426,389 |
|
Borrowings |
$ |
65,691 |
|
|
$ |
86,305 |
|
|
$ |
69,902 |
|
Stockholders’ equity |
$ |
232,370 |
|
|
$ |
269,840 |
|
|
$ |
272,114 |
|
COMMON SHARE
DATA |
|
|
|
|
|
Basic earnings per share |
$ |
2.95 |
|
|
$ |
2.67 |
|
|
$ |
3.19 |
|
Cash dividends paid per share |
$ |
0.78 |
|
|
$ |
0.77 |
|
|
$ |
1.03 |
|
Book value per share |
$ |
27.28 |
|
|
$ |
30.97 |
|
|
$ |
31.35 |
|
Number of common shares outstanding |
|
8,519,211 |
|
|
|
8,712,189 |
|
|
|
8,679,206 |
|
SELECTED
RATIOS |
|
|
|
|
|
Return on average assets |
|
1.25 |
% |
|
|
1.18 |
% |
|
|
1.03 |
% |
Return on average equity |
|
13.49 |
% |
|
|
11.87 |
% |
|
|
10.52 |
% |
Non-performing loans to total loans |
|
0.48 |
% |
|
|
0.65 |
% |
|
|
0.67 |
% |
Net charge-offs to average loans outstanding |
|
0.10 |
% |
|
|
0.10 |
% |
|
|
0.08 |
% |
Allowance for loan losses to total loans |
|
1.18 |
% |
|
|
1.29 |
% |
|
|
1.30 |
% |
Allowance for loan losses to non-performing loans |
|
242.89 |
% |
|
|
196.78 |
% |
|
|
193.11 |
% |
Contact: |
Jason H. Weber |
|
EVP/Treasurer & |
|
Chief Financial Officer |
|
717.339.5090 |
|
jweber@acnb.com |
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