ACNB Corporation
Annual Report 2014

Plain-text annual report

GROWING TOGETHER 2014 ANNUAL REVIEW Table of Contents Business Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Consolidated Statements of Condition . . . . . . . . . . . . . . . . . . 8 Geography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . 9 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Report to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Five-Year Financial Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Office Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Shareholder Information Annual Meeting The 2015 Annual Meeting of Shareholders for ACNB Corporation will be held on Tuesday, May 5, at 1:00 p .m . at Transfer Agent, Registrar and Dividend Disbursing Agent Computershare Shareholder Services the ACNB Corporation Operations Center, 100 V-Twin Drive, P .O . Box 30170 Gettysburg, PA . All proxy and other materials for the Annual College Station, TX 77842-3170 Meeting are available on the Internet at acnb .com under www .computershare .com/investor ACNB Corporation . Stock Listing ACNB Corporation common stock is listed and traded on The NASDAQ Capital Market under the symbol ACNB . For shareholder inquiries or information regarding the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan, call Computershare toll free at 1 .800 .368 .5948 . Annual Report on Form 10-K A copy of ACNB Corporation’s Annual Report on Form 10-K, Market Makers Market Makers Boenning & Scattergood, Inc . West Conshohocken, PA as filed with the Securities and Exchange Commission, may be 610 .832 .1212/1 .800 .883 .1212 obtained, without charge, by contacting: Lynda L . Glass Executive Vice President, Secretary & Chief Governance Officer ACNB Corporation PO Box 3129 Gettysburg, PA 17325 717 .339 .5085 The Annual Report and other Corporation reports are also filed electronically with the Securities and Exchange Commission and are accessible by the public on the Internet at www .sec .gov/edgar .shtml Janney Montgomery Scott LLC York, PA 717 .779 .2720/1 .800 .999 .0503 ocal Broker Local Broker Wells Fargo Advisors, LLC Hanover, PA 717 .637 .3817/1 .800 .242 .1331 Business Profile ACNB Corporation, headquartered in Gettysburg, PA, is the financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and Russell Insurance Group, Inc ., Westminster, MD . Through its banking subsidiary of ACNB Bank, ACNB Corporation provides a wide array of consumer, commercial and fiduciary services to fulfill the financial needs of individuals, businesses, public entities, and community organizations in its trading area . Originally founded in 1857, ACNB Bank serves its marketplace via a network of 20 retail banking offices located in the four southcentral Pennsylvania counties of Adams, Cumberland, Franklin and York . In addition, the Bank operates a loan office in York, York County, PA . Russell Insurance Group, Inc ., the insurance subsidiary of ACNB Corporation, offers a broad range of commercial and personal insurance lines through licenses in 36 states, including Maryland and Pennsylvania . This full-service insurance agency has office locations in Westminster, Carroll County, MD, and Germantown, Montgomery County, MD . 2 01 4 A N N UA L R E V I E W | 1 Geography Opening of First ACNB Bank Retail Banking Office in Chambersburg at 850 Norland Avenue on July 24, 2014 Cumberland County Newville Dillsburg Five ACNB Bank Locations in York County including York Loan Office Opened at 1601 South Queen Street on July 14, 2014 Franklin County Chambersburg Fourteen ACNB Bank Offices Located Throughout Adams County Two Office Locations for Russell Insurance Group, Inc. Adams County Gettysburg Carroll County Westminster Pennsylvania York County York Hanover Maryland Germantown Montgomery County Expansion of ACNB Bank ATM Network in November 2014 with Surcharge-Free ATM Access for Bank Customers at Over 600 Rite Aid® Stores Located in Pennsylvania and Maryland 2 | G R OW I N G TO G E T H E R Financial Highlights For the Year Net interest income Net income Cash dividends paid Per Share Statistics Basic earnings Cash dividends paid Book value (year-end) At Year-End Total assets Total loans Total deposits 2014 2013 2012 $33,880,000 $33,612,000 $34,344,000 10,290,000 9,315,000 8,886,000 4,622,000 4,542,000 4,524,000 $ 1.71 0.77 18.29 $ 1 .56 $ 1 .49 0 .76 17 .83 0 .76 16 .98 $1,089,808,000 $1,046,047,000 $1,049,995,000 799,272,000 728,648,000 708,136,000 844,876,000 800,643,000 834,176,000 Total stockholders’ equity 110,022,000 106,802,000 101,264,000 Key Ratios Return on average assets Return on average equity 0.97% 9.32% 0 .90% 9 .00% 0 .86% 8 .91% Dividend payout 44.92% 48 .76% 50 .91% Average stockholders’ equity to average assets 10.43% 9 .95% 9 .61% 2 01 4 A N N UA L R E V I E W | 3 Report To Shareholders Growing together, ACNB Corporation is branching out to serve new communities and new customers . The Corporation and its wholly-owned subsidiaries of ACNB Bank and Russell Insurance Group, Inc . have successfully weathered the turbulence of the economic recession and regulatory environment since 2008---standing strong like the oak tree after the storms and winds . Our roots run deep with a history of independence and commitment dating back to 1857 . Nearly 160 years later, acorns are still being dispersed to sprout new roots and new growth for ACNB Corporation . ACNB Corporation Financial Performance The financial performance ratios highlighting ACNB 2014 net income for ACNB Corporation totaled $10,290,000, Corporation’s profitability and condition all exhibited or $1 .71 per share . In 2013, net income was $9,315,000, or improvement for 2014 over 2013 . The Corporation’s return $1 .56 per share . This more than 10% increase in earnings on average assets was 0 .97% for 2014 and 0 .90% for 2013 . was the direct result of the Corporation’s long-term strategy, The return on average equity was 9 .32% and 9 .00% for through its banking subsidiary, to enhance loan growth in these same years, respectively . And, as an indicator of markets served, while maintaining a reasonable funding condition, average stockholders’ equity to average assets base by offering competitive deposit products and related was 10 .43% as of the end of 2014, in comparison to 9 .95% services . In addition, a lower provision for loan losses in 2014 as of the end of 2013 . offset increased operational expenses and reduced income on deposit accounts and the sale of residential mortgages . Shareholder Dividends & Equity ACNB Corporation paid $4,622,000, or $0 .77 per share, in Similar to other financial holding companies of community cash dividends to shareholders during 2014---increasing banks, ACNB Corporation’s net interest income is the primary the quarterly dividend by $0 .01 per share in Fourth Quarter driver of net income . Essentially, this is the income derived 2014 . This compares to $4,542,000, or $0 .76 per share, paid from the interest earned on loans and investments, less in 2013 . The dividend payout ratios were 45% and 49% for the interest paid on deposits and borrowings . Net interest 2014 and 2013, respectively . Unlike many of our competitors income is impacted by changes in interest rates, the volume in the industry, the Corporation paid a stable quarterly of interest earning assets and interest bearing liabilities, and dividend of $0 .19 per share throughout the financial crisis the composition of these assets and liabilities . In 2014, there and industry turmoil in recent years . This was a substantial was no relief on the net interest margin---a key measure of commitment of financial resources, but also a testament to changes in net interest income---due to the prolonged low ACNB Corporation’s continued soundness and determination interest rate environment . ACNB Corporation’s net interest in providing shareholders value on their investment during margin was 3 .47% in 2014 and 3 .48% in 2013 . However, the these years . Further, total stockholders’ equity remains Corporation’s net interest income improved to $33,880,000 strong at $110 million as of December 31, 2014 . Ongoing for the year ended December 31, 2014, compared to capital growth is fundamentally dependent upon continued $33,612,000 for the year ended December 31, 2013, due to earnings growth . strong loan growth in the second half of 2014 . The ACNB Corporation Dividend Reinvestment and Stock In addition, Russell Insurance Group, Inc . and ACNB Bank’s Purchase Plan offers registered shareholders the opportunity Trust & Investment Services contributed $4,839,000 and to purchase additional shares of the Corporation’s common $1,418,000, respectively, to income for the year of 2014 . stock through the automatic reinvestment of cash dividends For both of these entities, these income levels reflect and voluntary cash payments on a quarterly basis . The enhanced performance over the prior year of 2013 . benefit to the registered shareholders who elect to 4 | G R OW I N G TO G E T H E R participate in the plan includes the convenience of the source of loan volume, the results of which will be influential acquisition of additional shares of ACNB Corporation in 2015 . Despite the low interest rate environment and common stock, as well as the ability to do so without market competition, total deposits rose by greater than paying service fees or brokerage commissions . Since the $44,000,000, or 6%, year over year to $845 million at plan’s introduction in January 2011, 87,307 new shares of December 31, 2014 . ACNB Corporation common stock have been issued to plan participants as a result of both dividend reinvestment and voluntary cash purchases, which continue to fortify the Corporation’s equity position . ACNB Bank As in prior years, asset quality remains a management focus at ACNB Bank due to the slow economic recovery . The ratio of non-performing loans to total loans was 1 .04% and 1 .44%, respectively, at year-end 2014 and 2013 . This improved credit quality metric influenced the Bank’s ACNB Corporation’s banking subsidiary, ACNB Bank, has allowance for loan losses, which totaled $15,172,000 at been built on the precepts of community banking--- year-end 2014 . The resulting ratio of the allowance for loan reinvesting depositors’ dollars in loans to others for the losses to total loans was 1 .90% as of December 31, 2014, economic benefit of the shared community . The definition and the coverage ratio of the allowance for loan losses to of community implies a common bond . ACNB Bank is a vital non-performing loans was 183 .15% as of the same date--- link in contributing to the economic strength in its markets . both favorable in comparison to peers . ACNB Bank serves customers through a retail banking Core to ACNB Bank’s organizational strength and network of twenty offices located in the four southcentral sustainability is capital . The Bank’s total risk-based capital Pennsylvania counties of Adams, Cumberland, Franklin ratio was 14 .01% at December 31, 2014, which exceeds and York . In 2014, the Bank opened the doors at its first the regulatory requirement of 10 .00% to be considered a retail banking office in Chambersburg, Franklin County . The well capitalized financial institution by regulators . Looking Chambersburg Office, situated at 850 Norland Avenue, forward, capital requirements for ACNB Bank, including opened for business on July 24, 2014 . The design of this the implementation of a capital conservation buffer, will be location, as well as that of the newly-renovated North Hanover subject to Basel III regulatory capital reforms with the phase- Office, incorporates a new marketing and branding program in period beginning January 1, 2015 . In assessing the impact of to reinforce the Bank’s commitment to each local community . the regulatory capital changes, as required by the In addition, ACNB Bank entered the York, Pennsylvania, Dodd-Frank Wall Street Reform and Consumer Protection market with the establishment of the York Loan Office at Act, we believe our organization is well positioned to comply 1601 South Queen Street on July 14, 2014 . Both of these new with the new capital rules . Trust & Investment Services ACNB Bank’s Trust & Investment Services staff provides fiduciary, estate, investment and related services to clients . Assets under administration rose to $165 million at December 31, 2014 . Income from Trust & Investment Services exceeded $1,418,000 in 2014, which is a high for this business business locations complement ACNB Bank’s network of retail banking offices, providing additional opportunities for the Bank to serve current and prospective customers in key geographic areas of growth and development . Further, plans are underway for the opening of the Chambersburg Drive-Up at 915 Wayne Avenue in Second Quarter 2015 to further penetrate this growth market . Competition for loans and deposits is intense . Products, pricing and service all factor into the customer’s decision making . The Bank’s staff has responded to the demands of both commercial and retail customers in the local financial services marketplace---resulting in the hard-earned loan and deposit growth attained in 2014 . Total loans grew by more than $70,000,000, or 10%, to exceed $799 million at December 31, 2014 . This growth was fueled by increases in both consumer and commercial lending in the second half of 2014 . It was also during this time period that the Bank proactively looked to governmental lending as a 2 01 4 A N N UA L R E V I E W | 5 segment of the Bank . Further, the ACNB Portfolio Builder banking never waned during his nearly three decades of account, which was introduced in January 2013, notably service, and for this we are truly grateful . increased its contribution to account growth and revenue in 2014 . This investment option is based upon a limited mutual fund asset allocation model and features a lower minimum account balance of $50,000, lower cost, personalized planning, online access, and local expert advice . Russell Insurance Group, Inc . Richard L . Alloway II is the new nominee for election as a Director of ACNB Corporation at the Annual Meeting of Shareholders on May 5, 2015 . He is the State Senator for Pennsylvania’s 33rd District . He was first elected to the Pennsylvania Senate in November 2008 and is currently serving his second term representing the 33rd District, Russell Insurance Group, Inc . joined ACNB Corporation as which encompasses all of Adams County and portions of a wholly-owned insurance subsidiary effective January 5, Cumberland, Franklin and York Counties . The geography 2005 . This full-service insurance agency offers a broad range of Senator Alloway’s Senate District largely coincides with of property and casualty, life, and health insurance to both that of ACNB Bank’s marketplace---thus, bringing this commercial and personal clients through licenses in 36 states, shared perspective to the board room table . with a major focus in Maryland and Pennsylvania . In addition, the subsidiary operates a managing general agency as Russell Program Managers to target specialized markets such as swim clubs and pool management companies . Based in Westminster, Maryland, with a satellite office in Germantown, Maryland, Russell Insurance Group has served the needs of its clients since its founding in 1978 as an independent insurance agency by Frank C . Russell, Jr ., who continues to lead the subsidiary today . Ten years later, Russell Insurance Group’s 2014 revenue was $4,839,000, up 3 .6% in comparison to the year ended December 31, 2013 . This income category of commissions from insurance sales is the largest source of other income for ACNB Corporation . Our Employees As always, our progress and our success are truly predicated on the talents and diligence of our more than 300 employees . These individuals represent the organization many times each business day to our customers, vendors, business partners, shareholders, and community members . They are indeed the ones that provide the energy to build relationships In Closing The seed of the oak tree, the acorn, symbolizes potential and strength . Similarly, ACNB Corporation, with its deep roots and endurance, is poised for a future of continued growth . We recognize the demands, challenges and opportunities facing the Corporation and its subsidiaries . We have set a strategic direction . We are committed . Our Board of Directors is committed to ACNB Corporation’s future as well . As valued shareholders of ACNB Corporation, your ongoing investment, as well as recognition of our potential and strength, is sincerely appreciated . We thank you for your trust and confidence in our goal of growing together . Sincerely, Frank Elsner, III Chairman of the Board and find solutions . We continue to be thankful for their dedication and service to our organization . Thomas A. Ritter President & Chief Executive Officer Our Board of Directors In May of 2015, Harry L . Wheeler will retire as a Director of ACNB Corporation and ACNB Bank . He joined our organization’s Boards of Directors as a result of the acquisition of Farmers National Bancorp, Inc . and its banking subsidiary, Farmers National Bank of Newville, in 1999 . Mr . Wheeler’s commitment to a local financial institution began in 1987, when he was first elected as a director of Farmers National Bank of Newville . His genuine enthusiasm and team approach to community 6 | G R OW I N G TO G E T H E R Lynda L. Glass Executive Vice President, Secretary & Chief Governance Officer David W. Cathell Executive Vice President, Treasurer & Chief Financial Officer FIV E -Y E A R FI N A N C IA L OV E RV I E W Total Assets In millions of dollars Total Deposits In millions of dollars $1,089.8 $1,050.0 $1,046.0 $834.2 $844.9 $782.8 $800.6 $746.5 $1,004.8 $968.7 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Total Loans In millions of dollars Total Stockholders’ Equity In millions of dollars $799.3 $110.0 $106.8 $694.5 $708.1 $728.6 $665.3 $101.3 $97.5 $93.8 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Net Income In millions of dollars Book Value Per Share In dollars $10.3 $18.29 $17.83 $9.3 $8.9 $8.4 $8.5 $16.98 $16.39 $15.81 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2 01 4 A N N UA L R E V I E W | 7 CO N SO LI DATE D S TATE M E NT S O F CO N D ITI O N Dollars in thousands, except per share data Assets Cash and due from banks Interest bearing deposits with banks Total Cash and Cash Equivalents Securities available for sale Securities held to maturity (fair value $73,057 in 2014 and $92,082 in 2013) Loans held for sale December 31 2014 2013 $ 1 3 , 5 0 2 $ 1 3 , 9 6 3 6 , 1 7 1 1 9 , 6 7 3 1 1 8,000 7 3,3 4 6 1 , 6 2 3 4 , 1 5 3 1 8 , 1 1 6 1 2 9 ,9 8 3 9 4 , 3 7 3 4 9 6 Loans, net of allowance for loan losses ($15,172 in 2014 and $16,091 in 2013) 7 8 4 , 1 0 0 7 1 2 , 5 5 7 Premises and equipment Restricted investment in bank stocks Investment in bank-owned life insurance Investments in low-income housing partnerships Goodwill Intangible assets Foreclosed assets held for resale Other assets TOTAL ASSETS Liabilities Deposits Non-interest bearing Interest bearing Total Deposits Short-term borrowings Long-term borrowings Other liabilities TOTAL LIABILITIES Stockholders’ Equity Preferred stock (par value $2.50; 20,000,000 shares authorized; no shares outstanding) Common stock (par value $2.50; 20,000,000 shares authorized; 6,078,250 and 6,053,911 shares issued in 2014 and 2013, respectively; 6,015,650 and 5,991,311 shares outstanding in 2014 and 2013, respectively) Treasury stock, at cost (62,600 shares in 2014 and 2013) Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 1 7 , 7 2 5 4 , 2 1 6 3 7, 9 42 3, 793 6,308 1 , 1 9 6 1 , 6 1 7 1 5, 9 9 1 6, 8 6 1 3 2 , 2 3 7 4 , 6 8 7 6 , 3 0 8 1 , 8 4 5 1 , 7 6 2 20, 269 2 0 , 8 3 1 $1,08 9,808 $1,04 6 , 0 47 $ 1 4 4 , 9 87 $ 1 2 8 , 0 1 1 6 9 9, 8 89 8 4 4 , 876 4 5 ,699 8 0 , 93 7 8 , 2 74 6 7 2 , 632 8 0 0, 643 49,0 52 8 2 ,70 3 6 , 8 47 9 7 9,7 8 6 9 3 9, 24 5 — — 1 5 , 1 9 6 ( 7 2 8 ) 9,948 8 8, 329 ( 2,723 ) 1 5 , 1 3 5 ( 7 2 8 ) 9 , 6 2 8 8 2 , 6 6 1 1 0 6 1 1 0,02 2 1 06, 8 0 2 $1,089,808 $1,046, 0 47 See the consolidated financial statements and accompanying notes presented in the Corporation’s Annual Report on Form 10-K. 8 | G R OW I N G TO G E T H E R CO N SO LI DATE D S TATE M E NT S O F I N CO M E Dollars in thousands, except per share data Interest Income Loans, including fees Securities Taxable Tax-exempt Dividends Other TOTAL INTEREST INCOME Interest Expense Deposits Short-term borrowings Long-term borrowings TOTAL INTEREST EXPENSE NET INTEREST INCOME PROVISION FOR LOAN LOSSES Years Ended December 31 2014 2013 2012 $ 3 2 , 5 7 3 $ 3 2 , 0 8 4 $ 3 3 , 9 9 0 3 , 6 4 7 1 , 0 4 2 1 94 70 4 , 2 3 0 1 , 1 9 7 2 2 6 8 4, 8 7 6 1 , 4 5 7 27 8 9 3 7 , 5 2 6 3 7 , 6 0 1 4 0 , 4 3 9 1 , 8 1 0 6 3 1 , 7 7 3 3 , 64 6 2 , 1 7 7 3 , 4 4 1 6 1 1 , 7 5 1 3 , 9 8 9 76 2 , 5 7 8 6 ,0 9 5 3 3 , 8 8 0 3 3 , 6 1 2 3 4 , 3 4 4 1 5 0 1 , 4 5 0 4 , 6 7 5 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3 3 , 7 3 0 3 2 , 1 6 2 2 9 , 6 6 9 Other Income Service charges on deposit accounts Income from fiduciary activities Earnings on investment in bank-owned life insurance Gain on life insurance proceeds Gains on sales or calls of securities Service charges on ATM and debit card transactions Commissions from insurance sales Other TOTAL OTHER INCOME Other Expenses Salaries and employee benefits Net occupancy Equipment Other tax Professional services Supplies and postage Marketing and corporate relations FDIC and regulatory Intangible assets amortization Foreclosed real estate expense (income) Other operating TOTAL OTHER EXPENSES INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME Per Share Data Basic earnings Cash dividends paid 2 , 1 1 8 1 , 4 1 8 1 , 0 9 9 — 6 2 1 ,5 5 0 4 , 8 3 9 8 1 8 2 , 2 4 6 1 , 2 9 9 9 7 5 — — 1 , 4 3 4 4 , 6 7 1 1 , 0 7 8 2 , 4 3 3 1 , 2 24 9 8 1 6 3 7 1 , 2 9 1 4, 8 3 5 1 , 0 3 3 1 1 , 9 0 4 1 1 , 7 0 3 1 1 , 8 6 7 1 9 , 5 1 6 1 8 , 9 50 1 8 , 5 5 3 2 , 05 0 2 , 7 6 8 1 , 9 5 7 2 , 8 2 6 1 , 9 5 2 2 , 5 3 7 7 3 7 9 3 6 6 0 2 5 8 7 7 4 8 6 4 9 3 4 6 9 0 1 8 9 5 5 8 3 3 9 6 7 6 8 6 4 1 5 7 6 3, 3 2 5 3 2 ,2 6 4 1 3 , 3 7 0 3 ,0 8 0 3 , 5 2 2 3 2 , 0 1 5 1 1 , 8 5 0 2 , 5 3 5 8 3 3 8 2 5 6 3 4 3 7 2 8 43 6 4 1 ( 1 1 9 ) 3 , 26 0 30, 3 3 1 1 1 , 2 0 5 2, 3 1 9 $ 1 0 , 2 9 0 $ 9 , 3 1 5 $ 8, 8 8 6 $ $ 1 . 7 1 0.77 $ $ 1 .5 6 0.76 $ $ 1 .49 0.76 2 01 4 A N N UA L R E V I E W | 9 Boards of Directors ACNB Corporation and ACNB Bank Boards of Directors Frank Elsner, III Owner & Managing Director Donna M. Newell President & Chief ODT Global, LLC Executive Officer Thomas A. Ritter President & Chief Executive Officer Alan J. Stock Owner Eicholtz Company Chairman of the Board NTM Engineering, Inc . ACNB Corporation Vice Chairman ACNB Corporation and ACNB Bank Scott L. Kelley, Esquire President Stonesifer and Kelley, P .C . James J. Lott President J. Emmett Patterson President & Owner JDCS Enterprise Daniel W. Potts Business Development Global Technology & Consulting Bonnie Brae Fruit Farms, Inc . Capgemini and ACNB Bank Marian B. Schultz Retired Dean Shippensburg University ACNB Corporation and ACNB Bank Harry L. Wheeler Retired Proprietor Wheeler Drywall David L. Sites Owner & Managing Partner Realty Leasing & Management Co . James E. Williams President C .E . Williams Sons, Inc . Robert W. Miller Vice President Miller, Brown, Ohm & Associates, P .C . ACNB Bank Honorary Directors Dana P. Brandt Frank C. Egger Richard L. Galusha William B. Lower Mervin J. Morrison W. Irvin Nelson Russell Insurance Group, Inc. Board of Directors Frank Elsner, III Lynda L. Glass Daniel W. Potts Thomas A. Ritter Frank C. Russell, Jr. 1 0 | G R OW I N G TO G E T H E R Officers ACNB Corporation Frank Elsner, III Chairman of the Board Thomas A. Ritter President & Lynda L. Glass Executive Vice President, David W. Cathell Executive Vice President, Chief Executive Officer Secretary & Treasurer & Chief Governance Officer Chief Financial Officer ACNB Bank Frank Elsner, III Chairman of the Board Lynda L. Glass Executive Vice President, Laurie A. Laub Senior Vice President & Douglas A. Seibel Senior Vice President Thomas A. Ritter President & Chief Executive Officer David W. Cathell Executive Vice President, Treasurer & Chief Financial Officer First Vice Presidents Secretary & Chief Risk Officer James P. Helt Executive Vice President Banking Services Sandra A. Deaner Senior Vice President Human Resources Chief Credit Officer Commercial Lending Dorothy K. Puhl Senior Vice President Thomas R. Stone Senior Vice President Information Systems Retail Banking Carl L. Ricker Senior Vice President Retail Lending Karen B. Arthur Barry C. Dillman Kathy S. Hansel Scott E. Hartlaub L. John Hicks Michelle N. Paulnock Dennis R. Hollinger Lauren L. Shutt Vice Presidents Brian T. Adair Daniel K. Baer Mark P. Bernier Cara Lynn Clabaugh David W. Deaner Tiffany M. Faust Claire M. Forbush Stephen C. Hawbaker Vickie L. Hoffheins Gary R. Holder Leslie R. Horn Helen A. Jahn John E. Kashner Beth W. Lesko Debra T. Little Jill M. McNeil Cheryl A. McVay Donald C. McVay Celeste M. Miller Scott A. Miller Jeffrey A. Pottorff Edward C. Price, Jr. Gary W. Rappoldt Wendy D. Roth Christine R. Settle James E. Showvaker Debra T. Sites Rhonda L. Winterstein Merle J. Zehr Christina D. Ziser Assistant Vice Presidents Kevin L. Cook Andrée V. Dennis Carolyn M. Dull Kim D. Elmo Kimberly S. Flickinger Jacqueline A. Grasley Carolyn E. Groft Edward J. Groft Barbara D. Guise Jane E. Gwyn Grant J. Holub Susan R. Lang Russell Insurance Group, Inc. George F. Marguglio Laura L. McCusker Shelby L. Pentz R. Mark Purdy Karen J. Redding Susan M. Saylor Patrick O. Sease Jody M. Shealer Lisa A. Smith Jeffrey B. Stambaugh Tina M. Steckler Ruby L. Sullivan Frank C. Russell, Jr. President & Chief Executive Officer Daniel J. Coughlin Vice President David W. Cathell Vice President & Treasurer Lynda L. Glass Vice President & Secretary 2 01 4 A N N UA L R E V I E W | 1 1 McSherrystown McSherrystown Office 369 Main Street McSherrystown, PA 17344 New Oxford New Oxford Office 318 Lincoln Way East New Oxford, PA 17350 Newville Newville Office 39 Carlisle Road Newville, PA 17241 Spring Grove Spring Grove Office 221 North Main Street Spring Grove, PA 17362 York York Loan Office 1601 South Queen Street York, PA 17403 York Springs York Springs Office 202 Main Street York Springs, PA 17372 Office Locations ACNB Bank Arendtsville Arendtsville Office 101 Main Street Arendtsville, PA 17303 Bendersville Bendersville Office 101 North Main Street Bendersville, PA 17306 Biglerville Biglerville Office 3459 Biglerville Road Biglerville, PA 17307 Cashtown Franklin Township Drive-Up 10 High Street Cashtown, PA 17310 Chambersburg Chambersburg Office 850 Norland Avenue Chambersburg, PA 17201 Opening Second Quarter 2015 Chambersburg Drive-Up 915 Wayne Avenue Chambersburg, PA 17201 Dillsburg Dillsburg Office 3 Tristan Drive Dillsburg, PA 17019 East Berlin East Berlin Office 1677 Route 194 North East Berlin, PA 17316 Fairfield/Carroll Valley Fairfield/Carroll Valley Office 4910 Fairfield Road Fairfield, PA 17320 Gettysburg Adams Commerce Center Office 100 V-Twin Drive Gettysburg, PA 17325 Lincoln Square Office 2 Chambersburg Street Gettysburg, PA 17325 North Gettysburg Office 675 Old Harrisburg Road Gettysburg, PA 17325 West Gettysburg Office 545 West Middle Street Gettysburg, PA 17325 Hanover North Hanover Office 1127 Eichelberger Street Hanover, PA 17331 South Hanover Office 865 Baltimore Street Hanover, PA 17331 Littlestown Littlestown Office 444 West King Street Littlestown, PA 17340 Russell Insurance Group, Inc. Westminster Office 2526 West Liberty Road Westminster, MD 21157 Germantown Office 19500 Amaranth Drive, Suite C Germantown, MD 20874 1 2 | G R OW I N G TO G E T H E R Contact Information ACNB Bank acnb .com Customer Contact Center Toll Free 1 .888 .334 .ACNB (2262) 24-Hour Telephone Banking Line Toll Free 1 .888 .338 .ACNB (2262) Russell Insurance Group, Inc. riginsurance .com Toll Free 1 .800 .289 .4097 Forward-Looking Statements In addition to historical information, this document contains 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 Dodd-Frank Wall Street Reform and Consumer Protection Act; impacts of the new 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 deterioration and the prolonged economic malaise on 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; slow economic conditions; 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 Securities and Exchange Commission, 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 Securities and Exchange Commission . 2 01 4 A N N UA L R E V I E W | 1 3 16 LINCOLN SQUARE | PO BOX 3129 | GETTYSBURG, PA 17325 | ACNB.COM ACNB CORPORATION 002CSN4A66 

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