ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB
Bank and ACNB Insurance Services, Inc., announced record financial
results for the year ended December 31, 2022 with net income
of $35,752,000, an increase of $7,918,000, or 28.45%, compared to
net income of $27,834,000 for the year ended December 31,
2021. This year-over-year increase in net income was primarily
driven by increases in net interest income of $12,181,000 and
commissions from insurance sales of $2,156,000. For the years ended
December 31, 2022 and 2021, basic earnings per share were
$4.15 and $3.19, respectively, which is an increase of $0.96 per
share or 30.09%.
The Corporation reported net income of
$10,199,000 for the three months ended December 31, 2022, an
increase of $5,704,000, or 126.90%, compared to net income of
$4,495,000 for the three months ended December 31, 2021. The
quarterly year-over-year increase in net income was driven
primarily by increases in net interest income of $6,698,000 and
commissions from insurance sales of $670,000. Basic earnings per
share were $1.20 and $0.52 for the three months ended
December 31, 2022 and 2021, respectively, which is an increase
of $0.68 per share or 130.77%.
“We, at ACNB Corporation, are extremely pleased
to report another year of record earnings for 2022 totaling more
than $35,000,000. This corporate achievement was not anticipated at
the start of the year, but neither were the economic conditions
that evolved during the year. In response to inflationary
pressures, the unprecedented actions of the Federal Reserve
resulted in seven interest rate hikes beginning in March of 2022
for a fed funds target rate range of 4.25% to 4.50% at the end of
the year. The steep interest rate changes during the year pushed
the fed funds rate to its highest point since December 2007. These
interest rate increases were a major contributor to ACNB
Corporation’s 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. “Despite
these unusual and unprecedented economic times, the Corporation
completed key 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 opening of
the new Upper Adams Office in Biglerville, PA, in October as the
banking subsidiary, ACNB Bank, continued its plans for optimization
of the community banking network. ACNB Corporation was also honored
in 2022 to be named by the Central Penn Business Journal to its
annual list of Fastest Growing Companies in Central Pennsylvania
for the fifth consecutive year.”
Mr. Helt continued, “As always, ACNB
Corporation’s Management and Board of Directors looks to the past
with respect, but also anticipates the future and its inherent
challenges and opportunities. With record financial performance in
2022, in tandem with ongoing strength in its capital base and asset
quality, the Corporation is poised for continued progress in 2023.
Our fundamental focus remains 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 year ended
December 31, 2022 totaled $83,425,000, an increase of
$12,181,000, or 17.10%, over the year ended December 31, 2021.
Net interest income for the three months ended December 31,
2022 totaled $24,048,000, an increase of $6,698,000, or 38.61%,
over comparable period results in 2021. The increases in net
interest income were attributable to higher interest rates,
deployment of excess liquidity, lower funding costs, and growth in
higher-yielding earning assets.
The net interest margin for the year ended
December 31, 2022 was 3.33%, an increase of 51 basis points
from 2.82% for the year ended December 31, 2021. PPP fees and
purchase accounting accretion for the year ended December 31,
2022 totaled $3,768,000, compared to $8,781,000 for the year ended
December 31, 2021. The net interest margin for the three
months ended December 31, 2022 increased 141 basis points to
3.99% from 2.58% for the comparable three month period in 2021. PPP
fees and purchase accounting accretion totaled $845,000 for the
three months ended December 31, 2022, compared to $1,987,000
for the same period in 2021.
Noninterest Income
Noninterest income for the year ended
December 31, 2022 was $21,807,000, a decrease of $969,000, or
4.25%, from the comparable period in 2021. The decrease was
primarily a result of lower income from mortgage loans held for
sale, as interest rates continued to increase in 2022, and losses
from the changes in fair value of equity securities. Income from
mortgage loans held for sale was $487,000 for the year ended
December 31, 2022, compared to $3,393,000 for the year ended
December 31, 2021. Realized losses on equity securities was
$298,000 for the year ended December 31, 2022, compared to
realized gains of $439,000 for the year ended December 31,
2021.
Noninterest income for the three months ended
December 31, 2022 was $5,423,000, a decrease of $210,000, or
3.73%, from the same period in 2021. Comparing the last three
months of 2022 to the same period in 2021, income from mortgage
loans held for sale decreased by $877,000, while income from
commissions from insurance sales increased by $670,000 due
principally to the acquisition of the business and assets of the
Hockley & O’Donnell Insurance Agency in combination with higher
contingent income.
Noninterest Expense
Noninterest expense for the year ended
December 31, 2022 was $60,281,000, an increase of $1,330,000,
or 2.26%, from the comparable period in 2021. The increase was
driven primarily by equipment, professional services, FDIC and
regulatory, intangible assets amortization and other operating
expenses partially offset by a decrease in salary and employee
benefits expense. Equipment expense was $6,612,000 for the year
ended December 31, 2022, compared to $6,175,000 for the prior
year of 2021. The increase in equipment expense was attributable to
the additional ongoing expenses related to the banking subsidiary’s
core systems conversion in late 2021 and the implementation of a
new loan origination system in late 2022. Professional services
expense was $2,086,000 for the year ended December 31, 2022,
compared to $1,304,000 for the prior year of 2021. The increase in
professional services expense was a result of additional costs
related to the change in the Corporation’s independent audit firm,
consultants for Current Expected Credit Loss (CECL) standard
readiness and purchase accounting work, loan workout costs for a
large commercial loan, legal expenses, and executive recruiters to
fill key roles within the organization. FDIC and regulatory and
intangible assets amortization expenses were $1,128,000 and
$1,492,000, respectively, for the year ended December 31,
2022, compared to $960,000 and $1,164,000 for the prior year of
2021. The increase in intangible assets amortization expense was
due to the acquisition of the business and assets of the Hockley
& O’Donnell Insurance Agency. Other operating expense was
$6,154,000 for the year ended December 31, 2022, compared to
$5,841,000 for the prior year of 2021. The increase in other
operating expense was driven primarily by waived consumer loan
fees, internet banking expense, and operational and customer fraud
losses. Salary and employee benefits expense was $35,979,000 for
the year ended December 31, 2022, compared to $36,816,000 for
the prior year of 2021. The decrease was a result of lower
incentive compensation and pension expenses.
Noninterest expense for the three months ended
December 31, 2022 was $16,673,000, a decrease of $784,000, or
4.49%, from the comparable period in 2021. The decrease was
primarily attributable to lower salary and employee benefits and
equipment expenses partially offset by an increase in professional
services expense. Salary and employee benefits expense was
$9,786,000 for the three months ended December 31, 2022,
compared to $10,557,000 for the same period in 2021. The decrease
was a result of lower incentive compensation and pension expenses.
Equipment expense was $2,046,000 for the three months ended
December 31, 2022, compared to $2,392,000 for the same period
in 2021. The decrease was due to less technology spending for the
three months ended December 31, 2022, compared to the same
period in 2021. Professional services expense was $758,000 for the
three months ended December 31, 2022, compared to $414,000 for
the same period in 2021. The increase in professional services
expense was driven by additional costs related to the transition of
the Corporation’s independent audit firm, loan workout costs for a
large commercial loan, and various consultants for CECL standard
readiness, purchase accounting work, and other corporate
initiatives.
Loans and Asset Quality
Total loans outstanding were $1,538,610,000 at
December 31, 2022 compared to $1,468,427,000 at
December 31, 2021, an increase of 4.78%. Year-over-year, the
increase was driven mainly by growth in the commercial loan
portfolio. Excluding payoffs for PPP loans, loans grew by 6.04%
from December 31, 2021 to December 31, 2022.
As a result of stable loan risk metrics,
combined with low credit losses in the portfolio, the provision for
loan losses for 2022 was $0 despite solid loan growth.
Non-performing loans were $3,857,000, or 0.25% of total loans, at
December 31, 2022, compared to $6,219,000, or 0.42% of total
loans, at December 31, 2021. Net charge-offs for the year
ended December 31, 2022 were 0.08% of total average loans,
compared to 0.08% for the year ended December 31, 2021. Net
charge-offs for the year were due to a few isolated credits of
unrelated borrowers and were not indicative of a general weakness
in the overall loan portfolio.
Deposits
Total deposits were $2,198,975,000 at
December 31, 2022. Deposits decreased by $227,414,000, or
9.37%, since December 31, 2021. The decrease in deposits was a
result of customers seeking higher yielding alternative investment
or deposit products as market interest rates rose during 2022.
Stockholders’ Equity
Total stockholders’ equity was $245,042,000 at
December 31, 2022, compared to $272,114,000 at
December 31, 2021. Year-over-year, the $27,072,000 decline in
stockholders’ equity from December 31, 2021 to
December 31, 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 Corporation’s book value
per share, which was $28.78 and $31.35 at December 31, 2022
and 2021, respectively.
Dividends and Share
Repurchases
Quarterly cash dividends paid to ACNB
Corporation shareholders in 2022 totaled $9,117,000, or $1.06 per
common share. Compared to prior year, ACNB Corporation paid $1.03
in total dividends per common share in 2021, which included a
special dividend of $0.02 per common share paid on June 15,
2021.
In addition, ACNB Corporation repurchased
206,929 shares of ACNB Corporation common stock during 2022 at a
cost of $6,682,000, 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. On October 18, 2022, the ACNB Corporation Board of Directors
approved a new plan to repurchase, in open market and privately
negotiated transactions, up to 255,575, or approximately 3.0%, of
the outstanding shares of the Corporation’s common stock. As of
January 26, 2023, no common stock has been repurchased under
this new plan.
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, on December 2, 2022, ACNB
Bank closed and transferred operations for three additional
community banking offices, including the Adams Commerce Center
Office in Gettysburg, PA; East Frederick Office in Frederick, MD;
and, Hampstead Office in Hampstead, MD.
On December 19, 2022, plans for ACNB Bank to
rebrand its Maryland banking divisions were announced. Effective
January 1, 2023, these divisions, NWSB Bank and FCB Bank, formally
adopted the ACNB Bank name and brand identity in the counties of
Carroll and Frederick in central Maryland, respectively. The goal
of this rebranding initiative is to eliminate customer confusion,
especially for those who bank in multiple markets, and to provide
future operating and cost efficiencies. Further, this step now
fully aligns the brand of ACNB Bank with that of ACNB Insurance
Services, Inc., which was rebranded effective January 1, 2022, to
create enhanced synergies and market recognition throughout the
Corporation’s footprint in southcentral Pennsylvania and central
Maryland.
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 insurance agency acquisition in
Adams County, PA, leveraged the affiliation with ACNB Corporation
and ACNB Bank in their headquarters market, where the Bank
celebrated its 165th anniversary in 2022.
ACNB Corporation, headquartered in Gettysburg,
PA, is the $2.5 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 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 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; 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 #2023-2January 26, 2023
ACNB Corporation Financial
HighlightsUnaudited Consolidated Condensed
Statements of IncomeDollars in thousands, except per share
data
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
INCOME STATEMENT
DATA |
|
|
|
|
|
|
|
Interest income |
$ |
24,894 |
|
$ |
18,674 |
|
$ |
87,049 |
|
$ |
78,159 |
Interest expense |
|
846 |
|
|
1,324 |
|
|
3,624 |
|
|
6,915 |
Net interest income |
|
24,048 |
|
|
17,350 |
|
|
83,425 |
|
|
71,244 |
Provision for loan losses |
|
— |
|
|
— |
|
|
— |
|
|
50 |
Net interest income after provision for loan losses |
|
24,048 |
|
|
17,350 |
|
|
83,425 |
|
|
71,194 |
Noninterest income |
|
5,423 |
|
|
5,633 |
|
|
21,807 |
|
|
22,776 |
Noninterest expense |
|
16,673 |
|
|
17,457 |
|
|
60,281 |
|
|
58,951 |
Income before income taxes |
|
12,798 |
|
|
5,526 |
|
|
44,951 |
|
|
35,019 |
Provision for income taxes |
|
2,599 |
|
|
1,031 |
|
|
9,199 |
|
|
7,185 |
Net income |
$ |
10,199 |
|
$ |
4,495 |
|
$ |
35,752 |
|
$ |
27,834 |
Basic earnings per share |
$ |
1.20 |
|
$ |
0.52 |
|
$ |
4.15 |
|
$ |
3.19 |
Year-End Unaudited Selected Financial
DataDollars in thousands, except per share data
|
December 31, 2022 |
|
December 31, 2021 |
BALANCE SHEET
DATA |
|
|
|
Assets |
$ |
2,525,507 |
|
|
$ |
2,786,987 |
|
Securities |
$ |
620,250 |
|
|
$ |
446,161 |
|
Loans, total |
$ |
1,538,610 |
|
|
$ |
1,468,427 |
|
Allowance for loan losses |
$ |
17,861 |
|
|
$ |
19,033 |
|
Deposits |
$ |
2,198,975 |
|
|
$ |
2,426,389 |
|
Borrowings |
$ |
62,954 |
|
|
$ |
69,902 |
|
Stockholders’ equity |
$ |
245,042 |
|
|
$ |
272,114 |
|
COMMON SHARE
DATA |
|
|
|
Basic earnings per share |
$ |
4.15 |
|
|
$ |
3.19 |
|
Cash dividends paid per share |
$ |
1.06 |
|
|
$ |
1.03 |
|
Book value per share |
$ |
28.78 |
|
|
$ |
31.35 |
|
Number of common shares outstanding |
|
8,515,120 |
|
|
|
8,679,206 |
|
SELECTED
RATIOS |
|
|
|
Return on average assets |
|
1.31 |
% |
|
|
1.03 |
% |
Return on average equity |
|
14.35 |
% |
|
|
10.52 |
% |
Non-performing loans to total loans |
|
0.25 |
% |
|
|
0.42 |
% |
Net charge-offs to average loans outstanding |
|
0.08 |
% |
|
|
0.08 |
% |
Allowance for loan losses to total loans |
|
1.16 |
% |
|
|
1.30 |
% |
Allowance for loan losses to non-performing loans |
|
463.08 |
% |
|
|
306.05 |
% |
Contact: |
Jason H. Weber |
|
EVP/Treasurer & |
|
Chief
Financial Officer |
|
717.339.5090 |
|
jweber@acnb.com |
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