ACNB Corporation
Annual Report 2019

Plain-text annual report

COMMUNITY 2019 ANNUAL REVIEW TO BE THE INDEPENDENT FINANCIAL SERVICES PROVIDER OF CHOICE IN THE CORE MARKETS SERVED BY BUILDING RELATIONSHIPS AND FINDING SOLUTIONS. OURVISION \ VETERANS MEMORIAL BRIDGE, PA \ GETTYSBURG, PA FREDERICK, MD / REPORT TO SHAREHOLDERS A community is composed of many different facets. These facets reflect the past, present and future of the community. At ACNB Corporation and its subsidiaries, community is at the core of our organization as it has been since its origins in 1857 with the mission of serving the financial needs of local depositors and borrowers. Our footprint now encompasses many communities after more than 160 years, but the commitment to community is as true and vibrant today at the Corporation’s subsidiaries of ACNB Bank and Russell Insurance Group, Inc. \ VETERANS MEMORIAL BRIDGE BETWEEN YORK COUNTY, PA, AND LANCASTER COUNTY, PA 3 2019 ANNUAL REVIEWThe New Year of 2020 At the current time, in March 2020, we look back on the first two months of the year. Much has happened at ACNB Corporation since January 1, 2020. for 2019 and 2018, respectively. These strong financial results reflect the Corporation’s long-term focus on building shareholder value through profitable organic and inorganic growth opportunities. YORK COUNTY, PA / Effective January 11, 2020, the Corporation completed the acquisition of Frederick County Bancorp, Inc. and its wholly-owned subsidiary, Frederick County Bank, headquartered in Frederick, Maryland. Strategically, this acquisition complements ACNB Corporation’s banking and insurance operations with expansion into a diverse and growing market adjacent to the Corporation’s footprint in southcentral Pennsylvania and central Maryland. To build upon the strong community focus of Frederick County Bank and to transition to the next chapter for the customers served in this market, ACNB Bank now operates in the Frederick County, Maryland, market under the brand of FCB Bank, A Division of ACNB Bank. As a result of this acquisition, upon the effective date, ACNB Corporation had $2.2 billion in assets, $1.8 billion in deposits, and $1.6 billion in loans with 34 community banking offices and three loan offices located in the counties of Adams, Cumberland, Franklin, Lancaster and York in Pennsylvania and the counties of Baltimore, Carroll and Frederick in Maryland. On February 15, 2020, Frank Elsner, III, retired as Chairman of the Boards of Directors of ACNB Corporation and ACNB Bank due to the demands of his growing business. Mr. Elsner provided valuable leadership and guidance to both the Corporation and the Bank in the capacity of Chairman of the Board since 2013. He will continue to serve our organization with roles as Director of ACNB Corporation and ACNB Bank, as well as Vice Chairman of the Board of Directors of Russell Insurance Group, Inc. In accepting Mr. Elsner’s retirement, the Boards of Directors of ACNB Corporation and ACNB Bank elected Alan J. Stock to be Chairman of the Board of both entities effective February 15, 2020. Mr. Stock has been a member of the Corporation’s and the Bank’s Boards of Directors since 2005 and, most recently, served as Vice Chairman of both Boards of Directors since 2013. As we look to the future, Mr. Stock’s past experiences as a leader in the local business community will continue to benefit the Corporation and its stakeholders. 2019 Financial Performance ACNB Corporation reported a 9% increase in earnings for 2019, another record year and the second full year of operations after the successful acquisition of New Windsor Bancorp, Inc. as of July 1, 2017. Net income was $23,721,000 for the year ended December 31, 2019, as compared to $21,748,000 as of December 31, 2018. On a per share basis, net income was $3.36 and $3.09 4 The principal component of ACNB Corporation’s net income is net interest income. This fundamental source of revenue is the income derived from the interest earned on loans and investments, less the interest paid on deposits and borrowings. Net interest income is impacted by changes in interest rates, the volume of interest earning assets and interest bearing liabilities, and the composition of these assets and liabilities. By its inherent nature, this income source is predominantly influenced by market interest rates, local economic conditions, stock market impacts, and competitive market dynamics. In 2019, net interest income totaled $59,418,000. This is an increase of $2,323,000, or 4%, in comparison to net interest income of $57,095,000 in 2018, while the net interest margin remained steady at 3.81% from year to year despite the lowering of the Fed Funds Rate by the Federal Reserve’s Open Market Committee three times during 2019 for a total of 75 basis points to a range of 1.50% to 1.75%. Other income rose by $2,221,000, or 14%, to a total of $18,169,000 for 2019, compared to $15,948,000 for 2018. The increase includes positive revenue contributions from both ACNB Bank’s wealth management services and Russell Insurance Group, Inc.’s insurance operations, which grew 4% and 14%, respectively, from the year ended December 31, 2018, to the year ended December 31, 2019. Other expenses increased by $2,918,000, or 7%, to a total of $47,621,000 for 2019, compared to $44,703,000 for 2018. The increase is primarily attributable to salaries and employee benefits, but also includes $769,000 in merger-related expenses for 2019. Total assets of ACNB Corporation at December 31, 2019, were $1,720,253,000. Total loans decreased by 2% to $1,272,601,000, as compared to December 31, 2018, primarily due to intense competition in the markets served. Total deposits rose by 5% to $1,412,260,000 over the prior year with the increase concentrated in interest bearing accounts for individual, commercial and municipal customers. Shareholder Dividends & Equity Shareholders, the majority of which are from the Corporation’s communities, benefit from the organization’s success and ACNB Corporation’s history of paying a solid and stable quarterly cash dividend on its common stock for decades through times of both economic expansion and recession. In 2019, ACNB Corporation shareholders were rewarded with another increase in the quarterly cash dividend amount from $0.23 per share to $0.25 per share effective with the payment of the cash dividend on June 14, 2019—resulting in a total dividend paid of $0.98 per share for the year. Aggregate dividends paid to all shareholders totaled $6,920,000 for 2019, which is an increase of 11%. In 2018, ACNB Corporation paid an $0.89 dividend per share for total dividends paid to shareholders in the amount of $6,261,000. Over the last two-year period, the quarterly cash dividend amount has risen by 25% from $0.20 per share to $0.25 per share as the Corporation grows. At December 31, 2019, total stockholders’ equity was $189,516,000. As compared to $168,137,000 at December 31, 2018, this is an increase of $21,379,000, or 13%, due to earnings retained in capital in 2019 and new shares of common stock from dividend reinvestment. Continued capital enhancement is fundamentally dependent upon sustained and strong earnings over time. The ACNB Corporation Dividend Reinvestment and Stock Purchase Plan offers registered shareholders the opportunity to purchase additional shares of the Corporation’s common stock through the automatic reinvestment of cash dividends and voluntary cash payments on a quarterly basis. The benefit to the registered shareholders who elect to participate in the plan includes the convenience of the acquisition of additional shares of ACNB Corporation common stock, as well as the ability to do so without paying service fees or brokerage commissions. Since the plan’s introduction in January 2011, 170,596 new shares of ACNB Corporation common stock, totaling approximately $3,800,000 in plan investments, 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 ACNB Corporation’s community banking subsidiary, ACNB Bank, operates in both southcentral Pennsylvania and central Maryland with strategic market expansion across the Mason-Dixon Line beginning in 2017. The most recent acquisition of Frederick County Bancorp, Inc. and its subsidiary bank, Frederick County Bank, as of January 11, 2020, further strengthened the Corporation’s position in the Maryland market, which also includes the Corporation’s other wholly-owned subsidiary, Russell Insurance Group, Inc. ACNB Bank’s community banking operations in the Maryland market are branded as FCB Bank, A Division of ACNB Bank, and NWSB Bank, A Division of ACNB Bank, with five and seven offices serving customers in the Frederick County and Carroll County markets, respectively. All ACNB Bank customers can conduct transactions at any of the community banking offices located in Pennsylvania and Maryland. The Corporation’s commitment to the community banking model is fundamentally predicated upon the reinvestment of depositors’ dollars in loans to others for the economic benefit of the communities served. 5 ACNB CORPORATION2019 ANNUAL REVIEW\ LANCASTER, PA On May 20, 2019, ACNB Bank opened the Lancaster Loan Office in Lancaster County, Pennsylvania, which is a natural extension of the Bank’s footprint across the Susquehanna River from York. This area’s robust business sector, coupled with an experienced commercial lender, provides a strategic opportunity to leverage the Bank’s ability to contribute to the success of mid- sized companies and small businesses through proven customer relationship management and competitive products and services. A new initiative to grow core deposits and to build customer relationships was launched in late 2018, and continued to be a key focus in 2019. With the introduction of Advantage Rewards Checking for personal customers, ACNB Bank furthered its commitment to serving the financial needs of customers while also providing benefits and rewards to assist customers in their daily lives. Advantage Rewards Checking benefits include cell phone protection, personal identity theft assistance, roadside assistance, travel accidental death insurance, and savings on pharmacy, vision and hearing services. Plus, there are money-saving discounts from national retailers. But, most importantly, ACNB Bank works with local merchants in its markets to provide Bank customers with rewards for shopping locally—all accessible via a convenient mobile app. Competition remains keen in the banking industry for both loans and deposits. This competition encompasses local banks and credit unions, nonbank entities, and online providers of financial services. As with all community banks, the growth and quality of ACNB Bank’s loan and deposit portfolios is basic to the ongoing success of the organization and its commitment to safety and soundness for the benefit of all stakeholders. ACNB Bank employees also demonstrate their commitment to the communities in which they live and work through volunteerism and community involvement. In 2019, the Bank’s employees supported 183 community organizations by collectively contributing more than 7,600 volunteer hours in the Bank’s market areas. The community banking offices served as collection points for toys, school supplies, and food items to benefit local organizations. Additionally, ACNB Bank employees delivered financial literacy presentations in 2019 to nearly 1,000 students and adults, educating them on the importance of developing sound financial skills for life. Wealth Management ACNB Bank introduced the Wealth Management Division, composed of Trust & Investment Services staff and Wealth Advisors, in 2018 and continued its development and market coverage in 2019. Trust & Investment Services staff provide fiduciary, estate, investment and related services to clients. Assets under management totaled $257,025,000 at December 31, 2019, up 11% compared to $231,514,000 at December 31, 2018. Through a third-party relationship, ACNB Bank offers retail brokerage services, including non-deposit investment products, using the brands of ACNB Wealth Advisors and Windsor Wealth Advisors. Assets under management in the brokerage portfolio totaled $132,023,000 at December 31, 2019, up 20% compared to $109,982,000 at December 31, 2018. Total revenues from fiduciary, investment management and brokerage activities were $2,469,000 for the year ended December 31, 2019, an increase of 4% in comparison to the year ended December 31, 2018, due primarily to the higher levels of assets under management in the Wealth Management Division. Boards of Directors of ACNB Corporation and ACNB Bank. Ms. Chaney was a member of the Frederick County Bancorp, Inc. and Frederick County Bank Boards of Directors since 2013 and, most recently, served as Chairman of the Board for both of these entities. She is a CPA with more than 30 years of experience and owns an accounting practice specializing in services and consulting for small businesses in Frederick, Maryland. Ms. Chaney’s knowledge of the Frederick market will prove valuable in the execution of the Corporation's long- term strategic plan. Russell Insurance Group, Inc. On September 1, 2019, Frank C. Russell, Jr., the Chief Executive Officer of Russell Insurance Group, Inc., the insurance subsidiary of ACNB Corporation, retired after founding and leading this organization since 1978. Under his tenure, Mr. Russell grew the insurance agency operations through client referrals, specialized insurance programs, and agency and book purchases. His successor, Mark A. Westcott, joined Russell Insurance Group, Inc. in March 2019 as President, then also assumed the title of Chief Executive Officer upon Mr. Russell’s retirement. Acquired by ACNB Corporation in 2005, Russell Insurance Group, Inc. is a full-service insurance agency offering a broad range of property, casualty, health, life and disability insurance to both personal and commercial clients through licenses in 44 states. The agency is based in Westminster, Carroll County, Maryland. It also conducts business at office locations in Germantown, Montgomery County, and Jarrettsville, Harford County, Maryland. Revenues from this subsidiary’s commissions from insurance sales is the most significant source of other income for ACNB Corporation. Commissions from insurance sales totaled $6,339,000 for the year of 2019, as compared to $5,550,000 for the year of 2018. The year-over-year rise of 14% is primarily attributable to increased personal and commercial lines commission income as a result of book purchase activity in late 2018 and 2019. Board of Directors Director J. Emmett Patterson recently announced his retirement from the Boards of Directors of both ACNB Corporation and ACNB Bank effective May 5, 2020, in conjunction with the 2020 Annual Meeting of Shareholders. To him, we owe our sincere thanks for his commitment to our organization since 2012. In Closing Community is about people, and ACNB Corporation is in the business of serving and helping people with their financial needs. Our business is one built upon relationships and trust. Community is built upon the attribute of unity, incorporating distinct segments to make a stronger whole. The many facets of our communities are illuminated in the diverse landscapes, as well as embodied in the people who live and work in these communities. ACNB Corporation has a long history of commitment to the communities shared with its employees, customers, and shareholders. In gratitude, we recognize those who contribute to ACNB Corporation’s vision to be the independent financial services provider of choice in the core markets served by building relationships and finding solutions. Sincerely, Alan J. Stock Chairman of the Board James P. Helt President & Chief Executive Officer Lynda L. Glass Executive Vice President/Secretary & Chief Governance Officer As of January 11, 2020, with the acquisition of Frederick County Bancorp, Inc., Kimberly S. Chaney joined the David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer 6 7 ACNB CORPORATION2019 ANNUAL REVIEWPROFILE & GEOGRAPHY 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. As of December 31, 2019, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 22 community banking offices, located in the four southcentral Pennsylvania counties of Adams, Cumberland, Franklin and York, as well as loan offices in Lancaster and York, PA, and Hunt Valley, MD. As divisions of ACNB Bank operating in Maryland, FCB Bank and NWSB Bank serve the local marketplace with a network of five and seven community banking offices located in Frederick County and Carroll County, MD, respectively. Russell Insurance Group, Inc., the Corporation’s insurance subsidiary, is a full-service agency with licenses in 44 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster, Germantown and Jarrettsville, MD. For more information regarding ACNB Corporation and its subsidiaries, please visit acnb.com. CUMBERLAND LANCASTER FRANKLIN ADAMS YORK PENNSYLVANIA CARROLL MARYLAND FREDERICK BALTIMORE HARFORD MONTGOMERY LOCATIONS ACNB Corporation Operations Center ACNB Bank FCB Bank NWSB Bank Russell Insurance Group, Inc. ACNB Bank Loan Office Visit acnb.com and riginsurance.com for specific locations. 2019 ANNUAL REVIEW 9 FINANCIAL HIGHLIGHTS FINANCIAL OVERVIEW 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 Total Stockholders’ Equity KEY RATIOS Return on Average Assets Return on Average Equity Dividend Payout Average Stockholders’ Equity to Average Assets 2019 2018 2017 TOTAL ASSETS / IN MILLIONS OF DOLLARS TOTAL DEPOSITS / IN MILLIONS OF DOLLARS $59,418,000 $57,095,000 $46,352,000 23,721,000 6,920,000 21,748,000 9,788,000  * 6,261,000 5,233,000 $ 3.36 0.98 26.77 $ 3.09 0.89 23.86 $ 1.50 0.80 21.92 $1,720,253,000 $1,647,724,000 $1,595,432,000 1,272,601,000 1,302,465,000 1,244,170,000 1,412,260,000 1,348,092,000 1,298,492,000 189,516,000 168,137,000 153,966,000 1.40% 13.33% 29.17% 10.54% 1.34% 13.62% 28.79% 9.85% 0.69% 7.12% 53.46% 9.69% $1,147.9 $1,206.3 $1,595.4 $1,647.7 $1,720.3 $913.0 $967.6 $1,298.5 $1,348.1 $1,412.3 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 TOTAL LOANS / IN MILLIONS OF DOLLARS TOTAL STOCKHOLDERS’ EQUITY / IN MILLIONS OF DOLLARS $853.0 $907.9 $1,244.2 $1,302.5 $1,272.6 $114.7 $120.1 $154.0 $168.1 $189.5 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 NET INCOME / IN MILLIONS OF DOLLARS BOOK VALUE PER SHARE / IN DOLLARS *Without the nonrecurring expenses incurred as a result of the acquisition and integration of New Windsor Bancorp, Inc., net of the corresponding tax impact at the marginal tax rate, in the amount of $3,010,000 and the one-time charge due to the Tax Cuts and Jobs Act in the amount of $1,700,000, ACNB Corporation’s net income for the year ended December 31, 2017, would have been $14,498,000. $11.0 $10.9 $9.8/$14.5* $21.7 $23.7 $18.99 $19.80 $21.92 $23.86 $26.77 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 10 11 ACNB CORPORATION2019 ANNUAL REVIEWCONSOLIDATED STATEMENTS OF CONDITION CONSOLIDATED STATEMENTS OF INCOME / DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA / DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA ASSETS Cash and due from banks Interest bearing deposits with banks Total Cash and Cash Equivalents Equity securities with readily determinable fair values Debt securities available for sale Securities held to maturity (fair value $19,281 in 2019 and $26,911 in 2018) Loans held for sale Loans, net of allowance for loan losses ($13,835 in 2019 and $13,964 in 2018) Premises and equipment Right of use assets 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 Lease liabilities Other liabilities TOTAL LIABILITIES STOCKHOLDERS’ EQUITY Preferred stock ($2.50 par value; 20,000,000 shares authorized; no shares outstanding) Common stock ($2.50 par value; 20,000,000 shares authorized; 7,141,959 and 7,108,620 shares issued in 2019 and 2018, respectively; 7,079,359 and 7,046,020 shares outstanding in 2019 and 2018, respectively) Treasury stock, at cost (62,600 shares in 2019 and 2018) Additional paid-in capital Retained earnings Accumulated other comprehensive loss TOTAL STOCKHOLDERS’ EQUITY DECEMBER 31 2019 $ 16,878 97,478 114,356 2,106 190,837 19,234 2,406 1,258,766 25,724 3,502 3,644 50,663 1,506 19,580 4,427 364 23,138 2018 $ 20,105 20,800 40,905 1,839 161,730 27,266 408 1,288,501 26,409 — 4,336 48,003 1,871 19,580 4,407 155 22,314 $ 1,720,253 $ 1,647,724 $ 314,377 1,097,883 1,412,260 33,435 66,296 3,502 15,244 $ 302,394 1,045,698 1,348,092 34,648 83,516 — 13,331 1,530,737 1,479,587 — — 17,855 (728) 39,579 138,663 (5,853) 189,516 17,772 (728) 38,448 121,862 (9,217) 168,137 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,720,253 $ 1,647,724 See the consolidated financial statements and accompanying notes presented in the Corporation’s Annual Report on Form 10-K. 12 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 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES OTHER INCOME Commissions from insurance sales Service charges on deposit accounts Income from fiduciary, investment management and brokerage activities Earnings on investment in bank-owned life insurance Gain on life insurance proceeds Net gains on sales or calls of securities Net gains (losses) on equity securities Service charges on ATM and debit card transactions 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 Merger-related expenses Intangible assets amortization Foreclosed real estate expenses Other operating expenses TOTAL OTHER EXPENSES INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME PER SHARE DATA Basic earnings Cash dividends paid YEARS ENDED DECEMBER 31 2019 $ 63,653 2018 $ 59,593 4,183 140 328 1,254 69,558 8,129 94 1,917 10,140 59,418 600 58,818 6,339 3,903 2,469 1,160 — — 267 2,444 1,587 18,169 28,798 3,094 4,771 1,086 1,772 747 559 436 769 621 12 4,956 47,621 29,366 5,645 3,735 219 299 648 64,494 5,253 59 2,087 7,399 57,095 1,620 55,475 5,550 3,350 2,364 1,068 52 85 (296) 2,375 1,400 15,948 26,734 2,971 4,959 902 1,468 766 565 688 — 745 129 4,776 44,703 26,720 4,972 $ 23,721 $ 21,748 $3.36 $0.98 $3.09 $0.89 13 ACNB CORPORATION2019 ANNUAL REVIEWBOARDS OF DIRECTORS ACNB CORPORATION AND ACNB BANK Alan J. Stock Retired Owner & President Eicholtz Company Chairman of the Board ACNB Corporation and ACNB Bank Richard L. Alloway II, Esquire Principal Alloway Law Office Kimberly S. Chaney Owner Kimberly S. Chaney, CPA LLC Frank Elsner, III Owner & Managing Director ODT Global, LLC James P. Helt President & Chief Executive Officer ACNB Corporation and ACNB Bank Todd L. Herring Market Director Pivot Health Solutions Scott L. Kelley, Esquire Partner Barley Snyder LLP James J. Lott President Bonnie Brae Fruit Farms, Inc. Donna M. Newell President & Chief Executive Officer NTM Engineering, Inc. RUSSELL INSURANCE GROUP, INC. J. Emmett Patterson Owner & President JDCS Enterprise & Fry Guy Corporation Daniel W. Potts Client Executive DXC Technology D. Arthur Seibel, Jr. Retired Chief Operating Officer Springdale Preparatory School David L. Sites Owner Sites Realty, Inc. and Realty Leasing & Management Co. Thomas A. Ritter Retired President & Chief Executive Officer ACNB Corporation and ACNB Bank James E. Williams President C.E. Williams Sons, Inc. Managing Partner Frantz Plumbing LLC Marian B. Schultz Retired Dean Shippensburg University OFFICERS ACNB BANK James P. Helt President & Chief Executive Officer David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer Lynda L. Glass Executive Vice President/ Secretary and Chief Risk & Governance Officer Douglas A. Seibel Executive Vice President/ Chief Lending & Revenue Officer Kathy S. Hansel Senior Vice President/ Principal Accounting Officer Thomas R. Stone Executive Vice President/ Chief Community Banking Officer Kevin J. Hayes Senior Vice President/ General Counsel Mark P. Bernier Senior Vice President/ Wealth Management Officer Andrew P. Heck Senior Vice President/ Regional Commercial Lending Manager Lisa A. Monthley Senior Vice President/ Regional Sales Manager Michelle N. Paulnock Senior Vice President/ Information Systems Manager Laurie A. Laub Executive Vice President/ Chief Credit & Operations Officer Sandra A. Deaner Senior Vice President/ Human Resources Manager Tom N. Rasmussen Executive Vice President/ Maryland Market President Denise Guyton-Boyer Senior Vice President/ Commercial Loan Officer Thomas A. Ritter Chairman of the Board Frank Elsner, III Vice Chairman Lynda L. Glass James P. Helt Scott L. Kelley, Esquire Daniel W. Potts Alan J. Stock First Vice Presidents Karen B. Arthur Barry C. Dillman Scott E. Hartlaub Dennis R. Hollinger Laura L. McCusker OFFICERS ACNB CORPORATION James P. Helt President & Chief Executive Officer Lynda L. Glass Executive Vice President/Secretary & Chief Governance Officer David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer \ FREDERICK, MD Vice Presidents Brian T. Adair Daniel K. Baer James W. Bear Duane E. Bock Dawn M. Bornman Sarah E. Brechbuehl Michael S. Burrier Cara Lynn Clabaugh Kevin L. Cook Lori C. Cromwell David W. Deaner Carolyn M. Dull Assistant Vice Presidents Eric L. Alleman Susan L. Behm Tonya A. Boczek Amber R. Bowers Andree V. Dennis Kacie N. Dillman Kellie J. Doherty Corey V. Dorsey Shawn D. Epling Stephanie N. Fitch Andrea D. Foore Tiffany M. Faust Heather N. Gormont Christopher D. Grimm Barbara D. Guise Victoria D. Hale Vickie L. Hoffheins Thomas A. Holmes Grant J. Holub John D. Husser Tammie S. Jones John E. Kashner Frank E. Koser II Jacqueline A. Grasley Nancy L. Hamilton Ginny L. Huntsberry Holly A. Keffer Douglas R. Lindsay Michael E. Lippy George F. Marguglio Julie A. Marshall Joey L. Martin Heather D. Masgalas Sylvia E. Mason RUSSELL INSURANCE GROUP, INC. Gregory S. Liegey Nathan E. Lightner Leslie R. Metzger Celeste M. Miller Scott A. Miller Lauren J. Muzzy Timothy H. Owings Adnan Pasic Jacob R. Price Yvonne M. Reeder Matthew A. Rickeman Michael W. Rittase Lauren E. McMullen Lisa M. Miller Stanley E. Miller Nicole D. Mooney Brian M. Neely Zachary K. Pretty Susan M. Saylor Sara M. Sciarretta Sonali J. Shah Angela M. Sibert Lisa A. Smith Gary W. Rappoldt Senior Vice President/ Regional Commercial Lending Manager Lauren L. Shutt Senior Vice President/ Risk Manager Wayne A. Steinour Senior Vice President/ Agribusiness Lending Manager Harry L. Weetenkamp, Jr. Senior Vice President/ Regional Commercial Lending Manager Merle J. Zehr Senior Vice President/ Regional Commercial Lending Manager Linda S. Roth Patrick O. Sease Christine R. Settle James E. Showvaker Kristen R. Snow Kristie L. Stottlemyer Jennifer A. Tyler Kathleen P. Wagner Rhonda L. Winterstein Christina D. Ziser Anthony A. Spangler Jeffrey B. Stambaugh Morgan A. Stevenson Ruby L. Sullivan Brian C. Taylor Gerald L. Waytashek Steven M. Williams Tracy L. Wolf Mark A. Westcott President & Chief Executive Officer Daniel J. Coughlin Vice President & General Manager David W. Cathell Vice President & Treasurer Lynda L. Glass Vice President & Secretary 15 2019 ANNUAL REVIEWSHAREHOLDER INFORMATION 2020 ANNUAL MEETING The Annual Meeting of Shareholders for ACNB Corporation will be held on Tuesday, May 5, at 1:00 p.m. at the ACNB Corporation Operations Center, 100 V-Twin Drive, Gettysburg, PA. All proxy and other materials for the Annual Meeting are available at investor.acnb.com. STOCK LISTING ACNB Corporation common stock is listed and traded on The NASDAQ Capital Market under the symbol ACNB. ANNUAL REPORT ON FORM 10-K A copy of ACNB Corporation’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, may be obtained, without charge, by contacting: Lynda L. Glass Executive Vice President/ Secretary & Chief Governance Officer ACNB Corporation P.O. 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 at sec.gov/edgar.shtml. CONTACT INFORMATION TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT Computershare Shareholder Services P.O. Box 505000 Louisville, KY 40233-5000 computershare.com/investor For shareholder inquiries or information regarding the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan, call Computershare toll free at 1.800.368.5948. ACNB BANK acnb.com FCB BANK fcbmd.com NWSB BANK nwsbbank.com RUSSELL INSURANCE GROUP, INC. riginsurance.com Customer Contact Center Toll Free 1.888.334.ACNB (2262) Customer Contact Center Toll Free 1.844.413.5463 Customer Contact Center Toll Free 1.844.822.NWSB (6972) Toll Free 1.800.289.4097 YORK, PA / 24-Hour Telephone Banking Line Toll Free 1.888.338.ACNB (2262) 24-Hour Telephone Banking Line Toll Free 1.877.236.1485 24-Hour Telephone Banking Line Toll Free 1.866.276.4979 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 Tax Cuts and Jobs Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act; impacts of the capital and liquidity requirements of the Basel III standards; the effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including the effects of short- and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; the effects of economic conditions 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; the effect of general economic conditions and more specifically in the Corporation’s market areas; the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities; acts of war or terrorism; disruption of credit and equity markets; the ability to manage current levels of impaired assets; the loss of certain key officers; the ability to maintain the value and image of the Corporation’s brand and protect the Corporation’s intellectual property rights; continued relationships with major customers; and, potential impacts to the Corporation from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses. We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the SEC. COVER / CHAMBERSBURG, PA; LANCASTER COUNTY, PA; GETTYSBURG, PA 16 \ CARROLL COUNTY, MD ACNB CORPORATIONCOMMITTED TO YOU ACNB.COM 

Continue reading text version or see original annual report in PDF format above