ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB Bank and Russell Insurance Group, Inc., announced record financial results for the year ended Dec. 31, 2018, with net income of $21,748,000. Compared to net income of $9,788,000 for the year ended Dec. 31, 2017, this is an increase of $11,960,000, or 122.2 percent, over prior year-end results. Basic earnings per share were $3.09 and $1.50 for the year ended December 31, 2018 and 2017, respectively, which is an increase of $1.59 per share or 106.0 percent.
The higher net income reported for 2018 was a result of merger-related expenses incurred in 2017, organic net revenue growth in 2018, as well as the additional revenues and cost efficiencies associated with the acquisition of New Windsor Bancorp, Inc. (New Windsor) on July 1, 2017. In addition, net income was aided by a lower effective tax rate due to the Tax Cuts and Jobs Act effective on Jan. 1, 2018.
For the three months ended Dec. 31, 2018, the Corporation reported net income of $5,289,000. Compared to net income of $2,517,000 for the three months ended Dec. 31, 2017, this is an increase of $2,772,000, or 110.1 percent, over comparable period results. Basic earnings per share were 75 cents and 36 cents for the three months ended Dec. 31, 2018 and 2017, respectively, which is an increase of 39 cents per share or 108.3 percent.
“ACNB Corporation’s financial results for 2018 were exceptional in comparison to 2017 and prior years. The primary driver of this significant increase in net income was the first full year of combined banking operations and positive momentum experienced following the acquisition of New Windsor in July 2017,” said James P. Helt, ACNB Corporation President & CEO. “Also contributing to the Corporation’s strong 2018 financial performance was enhanced revenue growth attributable to subsidiary activities through both ACNB Bank Wealth Management and Russell Insurance Group, Inc.”
Total revenues, defined as interest income plus non-interest income, for the year ended Dec. 31, 2018, were $80,442,000, or a 22.0 percent increase over total revenues of $65,934,000 for 2017. Total interest income for 2018 was $64,494,000, or an increase of 24.5 percent, as compared to total interest income of $51,785,000 for the year ended Dec. 31, 2017, due to both organic loan growth and inorganic loan growth resulting from the New Windsor acquisition.
Total loans outstanding were $1,302,465,000 at Dec. 31, 2018. Year over year, loans outstanding increased by $58,295,000, or 4.7percent, since Dec. 31, 2017, primarily in the commercial portfolio, despite the generally slower economic conditions and continued intense competition during 2018 in the Corporation’s markets. As a result of loan growth and normal and anticipated credit losses in the loan portfolio, the provision for loan losses for 2018 was $1,620,000.
Total deposits were $1,348,092,000 at Dec. 31, 2018. Year over year, total deposits increased by $49,600,000, or 3.8 percent, since Dec. 31, 2017, with significant growth in transaction accounts. To enhance future deposit growth, ACNB Bank introduced a new menu of personal checking accounts with value-added benefits in 2018.
Net Interest Income and Margin
Net interest income rose by $10,743,000 to $57,095,000 for the year ended Dec. 31, 2018, an increase of 23.2 percent in comparison to the year ended Dec. 31, 2017. The net interest margin for 2018 was 3.81 percent, compared to 3.51 percent for 2017. The increases in net interest income and net interest margin for 2018 were primarily due to the impact of the New Windsor acquisition and the related purchase accounting adjustments.
Noninterest income for 2018 was $15,948,000, an increase of $1,799,000, or 12.7 percent, over the prior year. The increase includes both revenue from fiduciary, investment management and brokerage activities and commissions from insurance sales, which grew 17.5 percent and 10.5 percent, respectively, from the year ended December 31, 2017, to the year ended Dec. 31, 2018.
Noninterest expense for 2018 was $44,703,000, an increase of $624,000, or 1.4 percent, over the prior year. The modest increase in noninterest expense is attributable to normal business operations, a growing community banking footprint, and management’s continued focus on expense control.
Quarterly cash dividends paid to ACNB Corporation shareholders in 2018 totaled $6,261,000, or 89 cents per share, an increase of more than $1,000,000 over the prior year. In 2017, ACNB Corporation paid an $0.80 dividend per share for total dividends paid to shareholders in the amount of $5,233,000. A portion of the increase in total dividends paid to shareholders in 2018 was a result of new shares issued effective with the acquisition of New Windsor on July 1, 2017.