# Acnb Corp: Form 10-K for the period ended Dec 31, 2025 - Company: [Acnb Corp](/companies/acnb.md) (CIK 715579) - Form: 10-K - Filed: 2026-03-12 - Accepted by EDGAR: Mar 12, 2026, 16:08 ET - Period: 2025-12-31 - Accession: 0001628280-26-017229 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/715579/000162828026017229/acnb-20251231.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/715579/000162828026017229/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2025-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2025-01-01 to 2025-12-31 | $191.8m | us-gaap:Revenues | | Interest expense | 12 months, 2025-01-01 to 2025-12-31 | $40.1m | us-gaap:InterestExpense | | Income tax | 12 months, 2025-01-01 to 2025-12-31 | $9.4m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 12 months, 2025-01-01 to 2025-12-31 | $37.1m | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2025-01-01 to 2025-12-31 | $3.60 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2025-01-01 to 2025-12-31 | $3.61 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 12 months, 2025-01-01 to 2025-12-31 | 10,290,148 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 12 months, 2025-01-01 to 2025-12-31 | $53.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2025-01-01 to 2025-12-31 | $1.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 12 months, 2025-01-01 to 2025-12-31 | $14.4m | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 12 months, 2025-01-01 to 2025-12-31 | $11.2m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2025-12-31 | $65.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Total assets | at 2025-12-31 | $3.23bn | us-gaap:Assets | | Total liabilities | at 2025-12-31 | $2.81bn | us-gaap:Liabilities | | Long-term debt | at 2025-12-31 | $255.4m | us-gaap:LongTermDebt | | Short-term borrowings | at 2025-12-31 | $64.7m | us-gaap:ShortTermBorrowings | | Shareholders' equity | at 2025-12-31 | $420.0m | us-gaap:StockholdersEquity | ## Business As filed, 42,981 characters. ACNB Corporation, headquartered in Gettysburg, Pennsylvania, is the financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, Pennsylvania, and ACNB Insurance Services, Westminster, Maryland. Originally founded in 1857, ACNB Bank serves its marketplace with banking, mortgage and wealth management services, including trust and retail brokerage, via a network of 33 community banking offices and two loan offices located in the Pennsylvania counties of Adams, Berks, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, the Corporation’s insurance subsidiary, is a full-service agency licensed to do business in 46 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, Maryland, and Gettysburg, Pennsylvania. ACNB Corporation was formed in 1982, and became the bank holding company for ACNB Bank (formerly Adams County National Bank) in 1983. On July 1, 2017, ACNB Corporation completed the acquisition of New Windsor Bancorp, Inc. and its wholly-owned subsidiary, New Windsor State Bank, a Maryland state-chartered, FDIC-insured community bank headquartered in Taneytown, Maryland. On January 11, 2020, ACNB completed its acquisition of Frederick County Bancorp, Inc. and its wholly-owned subsidiary, Frederick County Bank, a Maryland state-chartered, FDIC-insured community bank headquartered in Frederick, Maryland. Effective February 1, 2025, ACNB closed the acquisition of Traditions Bancorp, Inc., holding company for Traditions Bank, York, Pennsylvania. Traditions was merged with and into a wholly-owned subsidiary of ACNB Corporation immediately followed by the merger of Traditions Bank with and into ACNB Bank. ACNB Bank is operating the former Traditions Bank offices as “Traditions Bank, A Division of ACNB Bank”. Traditions Bank operated eight community banking offices in South Central Pennsylvania which were included in the Acquisition. In April 2025, ACNB consolidated two of the eight Traditions Bank offices into nearby ACNB Bank offices. The Corporation purchased its insurance subsidiary, ACNB Insurance Services (formerly Russell Insurance Group, Inc.) in 2005. On February 28, 2022, ACNB Insurance Services, completed the acquisition of the business and assets of Hockley & O’Donnell, located in Gettysburg, Pennsylvania. ACNB’s major source of unconsolidated operating funds is dividends that it receives from its subsidiaries. ACNB’s unconsolidated expenses consist principally of interest expense on long-term borrowings and general expenses related to corporate governance. Dividends that ACNB pays to stockholders consist primarily of dividends declared and paid to ACNB by its subsidiary bank, ACNB Bank. ACNB and its subsidiaries are not dependent upon a single customer or a small number of customers, the loss of which would have a material adverse effect on the Corporation. ACNB does not depend on foreign sources of funds, nor does it make foreign loans. The common stock of ACNB is listed on The NASDAQ Capital Market under the symbol ACNB. ### BANKING SUBSIDIARY #### ACNB Bank ACNB Bank is a full-service commercial bank operating under charter from the Pennsylvania Department of Banking and Securities. The Bank’s principal Market Areas include Adams County, Pennsylvania, and its surrounding areas in South-central Pennsylvania, as well as Carroll and Frederick Counties in Northern Maryland. This geographic area depends on agriculture, industry, tourism, education and healthcare, as well as local governments, to provide employment for its residents. No single sector dominates the area’s economy. At December 31, 2025, ACNB Bank had total assets of $3.21 billion, total loans, net of unearned income, of $2.33 billion, total deposits of $2.48 billion, and total equity capital of $398.3 million. In October 2010, the Bank converted from a national banking association to a Pennsylvania state-chartered bank and trust company. The main community banking office of the Bank is located at 16 Lincoln Square, Gettysburg, Pennsylvania. The Bank has a total of 33 community banking offices. The Bank serves its local marketplace in Pennsylvania through 24 community banking offices, including 10 offices in Adams County, nine offices in York County, one office in Cumberland County, one in Franklin County, and two offices and a limited-service office in Lancaster County. In Maryland the Bank serves its local marketplace via a network of nine community banking offices including five located in Carroll County and four located in Frederick County. There are loan production offices located in West Lawn, Pennsylvania and Hunt Valley, Maryland. The Bank’s service delivery channels for its customers also include the ATM network, Customer Contact Center, and Online, Telephone and Mobile Banking. The Bank is subject to regulation and periodic examination by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation. The FDIC, as provided by law, insures the Bank’s deposits. Commercial lending includes commercial mortgages, real estate development and construction loans, accounts receivable and inventory financing, and agricultural and governmental loans. Consumer lending programs include home equity loans and lines of credit, automobile and recreational vehicle loans, manufactured housing loans, and personal lines of credit. Mortgage lending is done through Traditions Mortgage, a division of ACNB Bank, and includes programs such as personal residential mortgages, residential construction loans, and investment mortgage loans. The Bank, through its trust and investment services group, under the umbrella of ACNB Wealth Management, is named as trustee of financial assets. A trust is a legal fiduciary agreement whereby as trustee, the Bank invests, protects, manages and distributes financial assets as defined in the agreement. Estate settlement governed by the last will and testament of an individual constitutes another line of business for ACNB Wealth Management. Other services include, but are not limited to, those related to testamentary trusts, life insurance trusts, charitable remainder trusts, guardianships, powers of attorney, custodial accounts, and investment management and advisory accounts. Total trust assets under management and administration were $444.8 million and $24.1 million, respectively at December 31, 2025. The Bank, through the wealth advisory services group, also under the umbrella of ACNB Wealth Management, offers retail brokerage services through a third-party provider. This third-party provider is a broker/dealer, unaffiliated with the Bank or ACNB Wealth Management. At December 31, 2025, total assets under management and administration with the broker/dealer were $238.3 million and $31.6 million, respectively. ### NONBANKING SUBSIDIARY #### ACNB Insurance Services ACNB Corporation’s wholly-owned subsidiary, ACNB Insurance Services, is a full-service insurance agency, licensed to do business in 46 states that offers a broad range of property, casualty, health, life and disability insurance to both commercial and individual clients. Based in Westminster, Maryland, ACNB Insurance Services, has served the needs of its clients since its founding as an independent insurance agency by Frank C. Russell, Jr. in 1978. The agency was purchased by the Corporation in 2005. ACNB Insurance Services operates an additional location in Gettysburg, Pennsylvania. Total assets of ACNB Insurance Services as of December 31, 2025, were $19.7 million. ACNB Insurance Services is managed separately from the Bank and is reported as a separate operating segment. Financial information on this segment is included in Note 22 — “Segment and Related Information” in the Notes to Consolidated Financial Statements under Part II, Item 8 — “Financial Statements and Supplementary Data”. ### HUMAN CAPITAL #### Workforce Composition and Demographics As of December 31, 2025, ACNB had 501 full-time and 36 part-time employees. None of these employees are represented by a collective bargaining agreement, and ACNB believes it enjoys good relations with its personnel. As of December 31, 2025, approximately 66% of ACNB’s workforce was female and 34% were male. The average tenure of ACNB employees is approximately nine years. ACNB believes that it is critically important that its employee base reflects the communities that we serve. We work hard to recruit and retain the best talent to meet ACNB customers’ needs, using multiple sourcing methods to ensure we attract the most diverse and qualified candidate pool. #### Talent Development and Training The growth and development of ACNB employees is encouraged and supported. Continuous learning and career development is reinforced through ongoing performance and development conversations with employees, tuition reimbursement program, leadership development opportunities, internally-created training programs, including comprehensive compliance and community banking training. New community banking employees attend two weeks of training onsite, with an additional week of mentoring support on the job. Training opportunities are available both online and in-person, and all employees have online access to courses for professional development provided by a third party. Employee evaluations are conducted on at least an annual basis. Those evaluations focus on job performance against job specific and organizational competencies, and employee and career development. In addition, we monitor employee engagement through periodic employee surveys followed by a thorough action planning process. #### Benefits and Wellness Work-life balance and the safety, health and wellness of employees are top priorities. The Company balances hybrid/remote work while maintaining successful operations. Currently, many of ACNB employees effectively work a hybrid schedule from ACNB offices and remote locations. Employees are continually introduced to wellness initiatives, to reinforce the importance of overall health and well-being. An Employee Assistance Program offers free, confidential counseling services to all employees. #### Talent Attraction and Retention Competitive compensation is offered to support ACNB employee recruitment and retention efforts. Compensation packages include a market-competitive salary, healthcare and retirement benefits, paid time off, 12 paid holidays, and may also include bonuses or sales commissions and short-term and long-term equity incentives. We also offer an internship program to attract and develop future talent. #### Culture and Engagement The Company deploys numerous methods to foster employee engagement and connection, including regular company-wide video calls, bi-monthly service recognition breakfasts that provide connection and discussion with executive leaders, leadership visits and recognition on Employee Appreciation Day, community involvement events, and an annual picnic for all employees to attend. #### Community Involvement ACNB is dedicated to supporting charitable community organizations within the communities it serves. Employees are encouraged to participate in various community events such as parades, walks and 5k runs, farm shows, fund raising events and community donation drives. In 2025, employees supported over 160 community organizations by collectively contributing more than 4,000 volunteer hours in the Company’s Market Areas. ### MARKET AREA ECONOMIC FEATURES AND CONDITIONS ACNB Corporation’s headquarters is in Gettysburg, Pennsylvania. A material amount of land surrounding Gettysburg, Pennsylvania, is under the control of the National Park Service, limiting certain types of development. The Corporation’s major operations are in Adams County, Pennsylvania, and the surrounding areas in South-central Pennsylvania, as well as all of Carroll and Frederick Counties in Northern Maryland. This geographic area depends on agriculture, industry, tourism, education, and healthcare, as well as local governments, to provide employment for its residents. No single sector dominates the area’s economy. Unemployment figures in the subsidiary Bank’s market have been better than those for Pennsylvania and Maryland and the United States. Per capita and household incomes are generally under Pennsylvania averages. The unemployment rate during 2025 averaged 3.6% in the Bank’s nine-county market area, while it averaged 3.9% overall in Pennsylvania and Maryland, and 4.3% in the United States. ### COMPETITION The financial services industry in ACNB’s Market Area is highly competitive, including competition for similar products and services from commercial banks, thrifts, credit unions, finance and mortgage companies, and other nonbank providers of financial services. Several of ACNB’s competitors have legal lending limits that exceed those of ACNB’s subsidiary bank, as well as funding sources in the capital markets that exceed ACNB’s availability. The high level of competition has resulted from changes in the legal and regulatory environment, as well as from the economic climate, customer expectations, and service alternatives via the internet. ### SUPERVISION AND REGULATION #### Regulation of Bank Holding Company and Subsidiaries BANK HOLDING COMPANY ACT OF 1956 — ACNB is a financial holding company and is subject to the regulations of the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956. Bank holding companies are required to file periodic reports with and are subject to examination by the Federal Reserve. The Federal Reserve has issued regulations under the Bank Holding Company Act that require a financial holding company to serve as a source of financial and managerial strength to its subsidiary bank. As a result, the Federal Reserve may require ACNB to stand ready to use its resources to provide adequate capital funds to the Bank during periods of financial stress or adversity. In addition, the Federal Reserve may require a financial holding company to end a nonbanking business if the nonbanking business constitutes a serious risk to the financial soundness and stability of any banking subsidiary of the financial holding company. The Bank Holding Company Act prohibits ACNB from acquiring direct or indirect control of more than 5% of the outstanding voting stock of any bank, or substantially all of the assets of any bank, or merging with another bank holding company, without the prior approval of the Federal Reserve. The Bank Holding Company Act allows interstate bank acquisitions and interstate branching by acquisition and consolidation in those states that had not elected to opt out by the required deadline. The Pennsylvania Department of Banking and Securities also must approve any similar consolidation. Pennsylvania law permits Pennsylvania financial holding companies to control an unlimited number of banks. Further, the Bank Holding Company Act restricts ACNB’s nonbanking activities to those that are determined by the Federal Reserve Board to be financial in nature, incidental to such financial activity, or complementary to a financial activity. The Bank Holding Company Act does not place territorial restrictions on the activities of nonbanking subsidiaries of financial holding companies. GRAMM-LEACH-BLILEY ACT OF 1999 — The Gramm-Leach-Bliley Act of 1999 eliminated many of the restrictions placed on the activities of bank holding companies that become financial holding companies. Among other things, the GLBA repealed certain Glass-Steagall Act restrictions on affiliations between banks and securities firms, and amended the Bank Holding Company Act to permit bank holding companies that are financial holding companies to engage in activities, and acquire companies engaged in activities, that are: financial in nature (including insurance underwriting, insurance company portfolio investment, financial advisory, securities underwriting, dealing and market-making, and merchant banking activities); incidental to financial activities; or, complementary to financial activities if the Federal Reserve determines that they pose no substantial risk to the safety or soundness of depository institutions or the financial system in general. REGULATION W — Transactions between a bank and its “affiliates” are quantitatively and qualitatively restricted under the Federal Reserve Act. The Federal Deposit Insurance Act applies Sections 23A and 23B to insured nonmember banks in the same manner and to the same extent as if they were members of the Federal Reserve System. The Federal Reserve has also issued Regulation W, which codifies prior regulations under Sections 23A and 23B of the Federal Reserve Act, and interpretative guidance with respect to affiliate transactions. Regulation W incorporates the exemption from the affiliate transaction rules, but expands the exemption to cover the purchase of any type of loan or extension of credit from an affiliate. Affiliates of a bank include, among other entities, the bank’s holding company and companies that are under common control with the bank. ACNB Corporation and ACNB Insurance Services are considered to be affiliates of ACNB Bank. USA PATRIOT ACT OF 2001 — In October 2001, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 was enacted in response to the terrorist attacks in New York, Pennsylvania and Washington, D.C., which occurred on September 11, 2001. The USA Patriot Act is intended to strengthen U.S. law enforcement’s and the intelligence communities’ abilities to work cohesively to combat terrorism on a variety of fronts. The impact of the USA Patriot Act on financial institutions of all kinds is significant and wide ranging. The USA Patriot Act contains sweeping anti-money laundering and financial transparency laws and imposes various regulations, including standards for verifying customer identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. SARBANES-OXLEY ACT OF 2002 — In 2002, the Sarbanes-Oxley Act of 2002 became law. The stated goals of the SOA are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly-traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities law. The SOA generally applies to all companies, both U.S. and non-U.S., that file or are required to file periodic reports with the SEC under the Exchange Act. The SOA includes very specific additional disclosure requirements and corporate governance rules, as well as requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance, and other related rules. The SOA represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees. The SOA addresses, among other matters: - Audit committees for all reporting companies; - Certification of financial statements by the chief executive officer and the chief financial officer; - The forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve-month period following initial publication of any financial statements that later require restatement; - A prohibition on insider trading during pension plan blackout periods; - Disclosure of OBS transactions; - A prohibition on personal loans to directors and officers; - Expedited filing requirements for SEC Forms 4; - Disclosure of a code of ethics and filing an SEC Form 8-K for a change or waiver of such code; - “Real time” filing of periodic reports; - Formation of a public accounting oversight board; - Auditor independence; and, - Increased criminal penalties for violations of securities laws The SEC has been delegated the task of enacting rules to implement various provisions of the SOA with respect to, among other matters, disclosure in periodic filings pursuant to the Exchange Act. BANK SECRECY ACT — Under the Bank Secrecy Act, banks and other financial institutions are required to report to the Internal Revenue Service currency transactions of more than $10 thousand or multiple transactions of which a bank is aware in any one day that aggregate in excess of $10 thousand and to report suspicious transactions under specified criteria. Civil and criminal penalties are provided under the BSA for failure to file a required report, for failure to supply information required by the BSA, or for filing a false or fraudulent report. The Bank Secrecy Act, as amended by the USA Patriot Act, imposes obligations on U.S. financial institutions, including banks and broker-dealer subsidiaries, to implement policies, procedures and controls which are reasonably designed to detect and report instances of money laundering and the financing of terrorism. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the GLBA and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. Since 2018, the Bank has complied with the new Customer Due Diligence Rule, which clarified and strengthened the existing obligations for identifying new and existing customers and includes risk-based procedures for conducting ongoing customer due diligence. All financial institutions are also required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Corporation’s banking subsidiary has a BSA and USA Patriot Act compliance program commensurate with its risk profile and appetite. DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT — In 2010, Dodd-Frank was signed into law. Dodd-Frank was intended to affect a fundamental restructuring of federal banking regulation. Among other things, Dodd-Frank created the Financial Stability Oversight Council to identify systemic risks in the financial system and gives federal regulators new authority to take control of and liquidate financial firms. Dodd-Frank additionally created a new independent federal regulator to administer federal consumer protection laws. Dodd-Frank has had and will continue to have a significant impact on ACNB’s business operations as its provisions take effect. It is expected that, as various implementing rules and regulations are released, they will increase ACNB’s operating and compliance costs and could increase the Bank’s interest expense. Among the provisions that are likely to affect ACNB are the following: #### Holding Company Capital Requirements Dodd-Frank requires the Federal Reserve to apply consolidated capital requirements to bank holding companies that are no less stringent than those currently applied to depository institutions. Under these standards, trust preferred securities are excluded from Tier 1 capital unless such securities were issued prior to May 19, 2010, by a bank holding company with less than $15 billion in assets as of December 31, 2009. Dodd-Frank additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion, consistent with safety and soundness. For further information, please refer to *Regulatory Capital Requirements* in Management’s Discussion and Analysis. #### Deposit Insurance Dodd-Frank permanently increased the maximum deposit insurance amount for banks, savings institutions, and credit unions to $250 thousand per depositor. Dodd-Frank also broadened the base for FDIC insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution. Dodd-Frank required the FDIC to increase the reserve ratio of the Deposit Insurance Fund from 1.15% to 1.35% of insured deposits by 2020 and eliminated the requirement that the FDIC pay dividends to insured depository institutions when the reserve ratio exceeds certain thresholds. Dodd-Frank also eliminated the federal statutory prohibition against the payment of interest on business checking accounts. #### Corporate Governance Dodd-Frank requires publicly-traded companies to give stockholders a non-binding vote on executive compensation at least every three years, a non-binding vote regarding the frequency of the vote on executive compensation at least every six years, and a non-binding vote on “golden parachute” payments in connection with approvals of mergers and acquisitions unless previously voted on by stockholders. Additionally, Dodd-Frank directs the federal banking regulators to promulgate rules prohibiting excessive compensation paid to executives of depository institutions and their holding companies with assets in excess of $1 billion, regardless of whether the company is publicly traded. Dodd-Frank also gives the SEC authority to prohibit broker discretionary voting on elections of directors and executive compensation matters. #### Prohibition Against Charter Conversions of Troubled Institutions Dodd-Frank prohibits a depository institution from converting from a state to a federal charter, or vice versa, while it is the subject of a cease and desist order or other formal enforcement action or a memorandum of understanding with respect to a significant supervisory matter unless the appropriate federal banking agency gives notice of the conversion to the federal or state authority that issued the enforcement action and that agency does not object within 30 days. The notice must include a plan to address the significant supervisory matter. The converting institution must also file a copy of the conversion application with its current federal regulator, which must notify the resulting federal regulator of any ongoing supervisory or investigative proceedings that are likely to result in an enforcement action and provide access to all supervisory and investigative information relating thereto. #### Interstate Branching Dodd-Frank authorizes national and state banks to establish branches in other states to the same extent as a bank chartered by that state would be permitted. Previously, banks could only establish branches in other states if the host state expressly permitted out-of-state banks to establish branches in that state. Accordingly, banks are able to enter new markets more freely. #### Limits on Interstate Acquisitions and Mergers Dodd-Frank precludes a bank holding company from engaging in an interstate acquisition—the acquisition of a bank outside its home state—unless the bank holding company is both well capitalized and well managed. Furthermore, a bank may not engage in an interstate merger with another bank headquartered in another state unless the surviving institution will be well capitalized and well managed. The previous standard in both cases was adequately capitalized and adequately managed. #### Limits on Interchange Fees Dodd-Frank amended the Electronic Fund Transfer Act to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. #### Consumer Financial Protection Bureau Dodd-Frank created the independent federal agency called the CFPB, which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act, and certain other statutes. The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions are subject to rules promulgated by the CFPB, but continue to be examined and supervised by federal banking regulators for consumer compliance purposes. The CFPB has authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products. Dodd-Frank authorizes the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower’s ability to repay. In addition, Dodd-Frank allows borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB. Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations. ABILITY-TO-REPAY AND QUALIFIED MORTGAGE RULE — Pursuant to Dodd-Frank as highlighted above, the CFPB issued a final rule on January 10, 2013 (effective on January 10, 2014), amending Regulation Z as implemented by the Truth in Lending Act, requiring mortgage lenders to make a reasonable and good faith determination based on verified and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms. Mortgage lenders are required to determine the consumer’s ability to repay in one of two ways. The first alternative requires the mortgage lender to consider the following eight underwriting factors when making the credit decision: (1) current or reasonably expected income or assets; (2) current employment status; (3) the monthly payment on the covered transaction; (4) the monthly payment on any simultaneous loan; (5) the monthly payment for mortgage-related obligations; (6) current debt obligations, alimony, and child support; (7) the monthly debt-to-income ratio or residual income; and, (8) credit history. Alternatively, the mortgage lender can originate “qualified mortgages”, which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements. In general, a “qualified mortgage” is a mortgage loan without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years. In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount. Loans which meet these criteria will be considered qualified mortgages and, as a result, generally protect lenders from fines or litigation in the event of foreclosure. Qualified mortgages that are “higher-priced” (e.g., subprime loans) garner a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced” (e.g., prime loans) are given a safe harbor of compliance. The impact of the final rule, and the subsequent amendments thereto, on the Corporation’s lending activities and the Corporation’s statements of income or condition has had little or no impact; however, management will continue to monitor the implementation of the rule for any potential effects on the Corporation’s business. DEPARTMENT OF DEFENSE MILITARY LENDING RULE — In 2015, the U.S. Department of Defense issued a final rule which restricts pricing and terms of certain credit extended to active-duty military personnel and their families. This rule, which was implemented effective October 3, 2016, caps the interest rate on certain credit extensions to an annual percentage rate of 36% and restricts other fees. The rule requires financial institutions to verify whether customers are military personnel subject to the rule. The impact of this final rule, and any subsequent amendments thereto, on the Corporation’s lending activities and the Corporation’s statements of income or condition has had little or no impact; however, management will continue to monitor the implementation of the rule for any potential effects on the Corporation’s business. FEDERAL DEPOSIT INSURANCE CORPORATION ACT OF 1991 — Under the Federal Deposit Insurance Corporation Act of 1991, any depository institution, including the subsidiary bank, is prohibited from paying any dividends, making other distributions or paying any management fees if, after such payment, it would fail to satisfy the minimum capital requirement. FEDERAL RESERVE ACT — A subsidiary bank of a bank holding company is subject to certain restrictions and reporting requirements imposed by the Federal Reserve Act, including: - Extensions of credit to the bank holding company, its subsidiaries, or principal stockholders; - Investments in the stock or other securities of the bank holding company or its subsidiaries; and, - Taking such stock or securities as collateral for loans. COMMUNITY REINVESTMENT ACT OF 1977 — Under the CRA, the FDIC is required to assess the record of all financial institutions regulated by it to determine if these institutions are meeting the credit needs of the community, including low- and moderate-income neighborhoods, which they serve and to take this record into account in its evaluation of any application made by any of such institutions for, among other things, approval of a branch or other deposit facility, office relocation, merger, or acquisition of bank shares. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 amended the CRA to require, among other things, that the FDIC make publicly available the evaluation of a bank’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. This evaluation includes a descriptive rating like “outstanding”, “satisfactory”, “needs to improve” or “substantial noncompliance” and a statement describing the basis for the rating. These ratings are publicly disclosed. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 — The FDICIA requires that institutions be classified, based on their risk-based capital ratios, into one of five defined categories as follows and as illustrated below: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, or critically undercapitalized. | | Total Risk-Based Ratio | Tier 1 Risk-Based Ratio | Tier 1 Leverage Ratio | Under a Capital Order or Directive | | --- | --- | --- | --- | --- | | **Capital Category** | | | | | | Well capitalized | ≥10.0% | ≥8.0% | ≥5.0% | NO | | Adequately capitalized | ≥8.0% | ≥6.0% | ≥4.0% | | | Undercapitalized | \<8.0% | \<6.0% | ≥4.0% | | | Significantly undercapitalized | \<6.0% | \<4.0% | \<3.0% | | | Critically undercapitalized | | | \<2.0% | | In the event an institution’s capital deteriorates to the undercapitalized category or below, FDICIA prescribes an increasing amount of regulatory intervention, including the institution of a capital restoration plan and a guarantee of the plan by a parent institution and the placement of a hold on increases in assets, number of branches, or lines of business. If capital reaches the significantly or critically undercapitalized levels, further material restrictions can be imposed, including restrictions on interest payable on accounts, dismissal of management, and, in critically undercapitalized situations, appointment of a receiver. For well capitalized institutions, FDICIA provides authority for regulatory intervention when the institution is deemed to be engaging in unsafe or unsound practices or receives a less than satisfactory examination report rating for asset quality, management, earnings or liquidity. All but well capitalized institutions are prohibited from accepting brokered deposits without prior regulatory approval. Under FDICIA, financial institutions are subject to increased regulatory scrutiny and must comply with certain operational, managerial and compensation standards established by Federal Reserve Board regulations. In July 2013, the federal banking agencies issued final rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank. The phase-in period for community banking organizations began January 1, 2015, while larger institutions (generally those with assets of $50 billion or more) began compliance on January 1, 2014. The final rules call for the following capital requirements which remain in effect: - A minimum ratio of common equity Tier 1 capital to total risk-weighted assets of 4.5% - A minimum ratio of Tier 1 capital to risk-weighted assets of 6.0% - A minimum ratio of total capital ratio of total capital to total risk-weighted assets of 8.0% - A minimum leverage ratio of Tier 1 capital to average total consolidated assets of 4.0% A discussion of how these capital rules affect ACNB Corporation appears under Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. #### Dividends ACNB is a legal entity separate and distinct from its subsidiary bank and insurance agency subsidiary. ACNB’s revenues, on a parent company only basis, result primarily from dividends paid to the Corporation by its subsidiaries. Federal and state laws regulate the payment of dividends by ACNB’s subsidiary bank and state laws effect dividends paid by ACNB’s insurance subsidiary. ACNB’s dividends to stockholders is governed by the Pennsylvania Business Corporation Law. For further information, please refer to *Regulation of Bank* below and Note 16 — “Regulatory Matters”, to the Consolidated Financial Statements under Part II, Item 8 — “Financial Statements and Supplementary Data”. #### Regulation of Bank The operations of the subsidiary bank are subject to statutes applicable to banks and trust companies chartered under the banking laws of Pennsylvania, to state nonmember banks of the Federal Reserve, and to banks whose deposits are insured by the FDIC. The subsidiary bank’s operations are also subject to regulations of the Pennsylvania Department of Banking and Securities, Federal Reserve, and FDIC. The Pennsylvania Department of Banking and Securities, which has primary supervisory authority over banks chartered in Pennsylvania, regularly examines banks in such areas as reserves, loans, investments, management practices, and other aspects of operations. The subsidiary bank is also subject to examination and supervision by the FDIC for safety and soundness, as well as consumer compliance. These examinations and supervision are designed for the protection of the subsidiary bank’s depositors rather than ACNB’s stockholders. The subsidiary bank must file quarterly and annual reports to the Federal Financial Institutions Examination Council, or FFIEC. #### Monetary and Fiscal Policy ACNB and its subsidiary bank are affected by the monetary and fiscal policies of government agencies, including the Federal Reserve and FDIC. Through open market securities transactions and changes in its discount rate and reserve requirements, the Board of Governors of the Federal Reserve exerts considerable influence over the cost and availability of funds for lending and investment. The nature and impact of monetary and fiscal policies on future business and earnings of ACNB cannot be predicted at this time. From time to time, various federal and state legislation is proposed that could result in additional regulation of, and restrictions on, the business of ACNB and the subsidiary bank, or otherwise change the business environment. Management cannot predict whether any of this legislation will have a material effect on the business of ACNB. ### AVAILABLE INFORMATION The Corporation maintains a website on the Internet at investor.acnb.com. The Corporation makes available free of charge, on or through its website, its proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with the SEC. This reference to the Corporation’s Internet address shall not, under any circumstances, be deemed to incorporate the information available at such Internet address into this Form 10-K or other SEC filings. The information available at the Corporation’s Internet address is not part of this Form 10-K or any other report filed by the Corporation with the SEC. The Corporation’s SEC filings can also be obtained on the SEC’s website on the Internet at https://www.sec.gov. ### ACQUISITIONS ACNB Corporation and its subsidiaries pursue organic and inorganic growth strategies. In furtherance of the inorganic growth strategy, on July 1, 2017, ACNB acquired New Windsor Bancorp, Inc. and its wholly-owned subsidiary, New Windsor State Bank, headquartered in Taneytown, Maryland. Additionally, on January 11, 2020, ACNB acquired Frederick County Bancorp, Inc. and its wholly-owned subsidiary, Frederick County Bank, headquartered in Frederick, Maryland. Effective February 1, 2025, ACNB acquired Traditions Bancorp, Inc., holding company for Traditions Bank, York, Pennsylvania. Traditions was merged with and into a wholly-owned subsidiary of ACNB Corporation immediately followed by the merger of Traditions Bank with and into ACNB Bank. ACNB Bank is operating the former Traditions Bank offices as “Traditions Bank, A Division of ACNB Bank”. On February 28, 2022, ACNB Insurance Services, the wholly-owned insurance subsidiary of ACNB Corporation, acquired the business and assets of Hockley & O’Donnell, located in Gettysburg, Pennsylvania. ## Risk factors As filed, 63,471 characters. ### CREDIT RISKS ### ACNB IS SUBJECT TO INTEREST RATE RISK. ACNB’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond ACNB’s control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System. Changes in monetary policy, including changes in interest rates, could influence not only the amount of interest ACNB receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) ACNB’s ability to originate loans and obtain deposits, (ii) the fair value of ACNB’s financial assets and liabilities, and (iii) the average duration of ACNB’s mortgage-backed securities portfolio. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, ACNB’s net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. Although management believes it has implemented effective asset and liability management strategies to reduce the potential effects of changes and volatility in interest rates on ACNB’s results of operations, any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on ACNB’s financial condition and results of operations. ### ACNB IS SUBJECT TO CREDIT RISK. As of December 31, 2025, approximately 68% of ACNB’s loan portfolio consisted of commercial real estate loans, commercial and industrial and construction. These types of loans are generally viewed as having more risk of default than residential real estate loans or consumer loans. These types of loans are also typically larger than residential real estate loans and consumer loans. Because ACNB’s loan portfolio contains a significant number of commercial real estate, commercial and industrial and construction loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in non-performing loans. An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for credit losses, and an increase in loan charge-offs, all of which could have a material adverse effect on ACNB’s financial condition and results of operations. ### ACNB IS ALSO SUBJECT TO COMMERCIAL REAL ESTATE VOLATILITY. The commercial real estate market nationally, regionally, and locally has recently been subject to increased levels of volatility. Many believe that commercial real estate in the commercial office sector is undergoing a fundamental transformation and change that started during the recent pandemic but also continues due to evolving workplace environments. These changes in the marketplace affect the demand for commercial office space which in turn may affect the credit status, profitability, and collectability, of existing and future commercial real estate office sector loans. As explained above in greater detail in the risk factor for Credit Risk, volatility and increases in non-performing loans could have an adverse impact on ACNB’s financial condition and results of operations. **ACNB’S ALLOWANCE FOR CREDIT LOSSES MAY BE INSUFFICIENT.** ACNB maintains an ACL, which is a reserve established through a provision for credit losses charged to expense, that represents management’s best estimate of expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. Management utilizes a variety of inputs in the calculation of its estimate, based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience. Management’s use of a third-party service provider which provided historical loss data in the calculation of its CECL provision may not approximate its own historical loss data. Management’s ability to accurately forecast future losses under this methodology may be impaired by significant uncertainties such as: - Surrounding rapid increases in inflation and interest rates, which have disrupted financial markets and adversely affected commercial real estate and other sectors in the economy. - Related to the identification of the appropriate economic indicators. - Related to the data utilized to build models and draw assumptions. - Limitations related to the different sources of data: internal data, peer data, market data, macroeconomic data, geopolitical data, etc. - Related to the need to make difficult and complex judgments that are often interrelated. The allowance, in the judgment of management, is necessary to reserve for expected credit losses and risks inherent in the loan portfolio. The determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires ACNB to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of ACNB’s control, may require an increase in the ACL. In addition, bank regulatory agencies periodically review ACNB’s ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management. Further, if charge-offs in future periods exceed the ACL, ACNB will need additional provisions to increase the ACL. Any increases in the ACL will result in a decrease in net income, and possibly capital, and may have a material adverse effect on ACNB’s financial condition and results of operations. ### BUSINESS RISKS **COMPETITION FROM OTHER FINANCIAL INSTITUTIONS MAY ADVERSELY AFFECT ACNB’S PROFITABILITY.** ACNB’s banking subsidiary faces substantial competition in originating both commercial and consumer loans. This competition comes principally from other banks, credit unions, mortgage banking companies, and other lenders. Many of its competitors enjoy advantages, including greater financial resources with higher lending limits, wider geographic presence, more aggressive marketing campaign, better brand recognition, more branch office locations, the ability to offer a wider array of services or more favorable pricing alternatives, and lower origination and operating costs. This competition could reduce the Corporation’s net income by decreasing the number and size of loans that its banking subsidiary originates and the interest rates it may charge on these loans. In attracting business and consumer deposits, its banking subsidiary faces substantial competition from other insured depository institutions such as banks, savings institutions, and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. These competitors may offer higher interest rates than ACNB, which could decrease the deposits that it attracts or require it to increase its rates to retain existing deposits or attract new deposits. Increased deposit competition could adversely affect the subsidiary’s ability to generate the funds necessary for lending operations. As a result, it may need to seek other sources of funds that may be more expensive to obtain and could increase its cost of funds. ACNB’s banking subsidiary also competes with nonbank providers of financial services, such as brokerage firms, consumer finance companies, credit unions, insurance companies and agencies, and governmental organizations which may offer more favorable terms. Some of its nonbank competitors are not subject to the same extensive regulations that govern ACNB’s banking operations. As a result, such nonbank competitors may have advantages over ACNB’s banking subsidiary in providing certain products and services. This competition may reduce or limit ACNB’s margins on banking services, reduce its market share, and adversely affect its earnings and financial condition. **THE BASEL III CAPITAL REQUIREMENTS OR OTHER REGULATORY CAPITAL STANDARDS OR CHANGES MAY REQUIRE ACNB TO MAINTAIN HIGHER LEVELS OF CAPITAL, WHICH COULD REDUCE ACNB’S PROFITABILITY.** Basel III targets higher levels of base capital, certain capital buffers, and a migration toward common equity as the key source of regulatory capital. Although the new capital requirements are phased in over future years and may change substantially before final implementation, Basel III signals a growing effort by domestic and international bank regulatory agencies to require financial institutions, including depository institutions, to maintain higher levels of capital. The direction of the Basel III implementation activities or other regulatory standards or changes could require additional capital to support the Corporation’s business risk profile prior to final implementation of the Basel III standards. If ACNB and the subsidiary bank are required to maintain higher levels of capital, ACNB and the subsidiary bank may have fewer opportunities to invest capital into interest-earning assets, which could limit the profitable business operations available to ACNB and the subsidiary bank and adversely impact ACNB’s financial condition and results of operations. **ACNB’S OPERATIONS OF ITS BUSINESS, INCLUDING ITS TRANSACTIONS WITH CUSTOMERS, ARE INCREASINGLY DONE ELECTRONICALLY, AND THIS HAS INCREASED ITS RISKS RELATED TO CYBERSECURITY.** Increasingly, financial transactions are processed electronically, both by ACNB and its customers, via online, mobile, and cloud technologies. Operational systems are progressively becoming cloud-based. Conducting business in this environment depends on secure transmission and storage of data in digital form as well as procedures and systems to prevent or ensure the resiliency against system failures, interruptions or breaches in security. As a result, ACNB is exposed to the risk of cyber-attacks in the normal course of business, which may be perpetrated against ACNB, or its third-party service providers and its customers. Further, ACNB may face unknown or contingent liabilities arising from cybersecurity incidents or data breaches that previously occurred at companies it acquires. Such incidents may not have been discovered, disclosed, or if previously discovered fully remediated before closing, and the acquired company’s representations, warranties, and indemnities may be limited in scope, duration, or recoverability. As a result, ACNB could incur costs or liabilities after an acquisition relating to regulatory investigations, litigation, remediation efforts, reputational harm, or customer and partner claims, which could adversely affect its business, financial condition, and results of operations. In general, cyber incidents can result from deliberate attacks or unintentional events. ACNB has observed an increased level of attention in the industry focused on cyber-attacks that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. While ACNB maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover or ameliorate certain financial aspects of cyber risks, such insurance coverage may be insufficient to cover all losses. ACNB maintains policies and procedures designed to prevent or limit the effects of possible security breaches of its information systems. However, the techniques used for cyber-attacks are becoming increasingly sophisticated, including the use of AI, and there can be no assurance that preventive and detective measures are fail-safe. While ACNB has not incurred any material losses related to cyber-attacks, nor is it aware of any specific or threatened material cyber incidents as of the date of this report, it may incur substantial costs and suffer other negative consequences if it falls victim to successful cyber-attacks. Such negative consequences could include remediation costs that may include liability for stolen assets or information and repairing system damage that may have been caused; deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants; lost revenues resulting from unauthorized use of proprietary information or the failure to retain or attract customers following an attack; disruption or failures of physical infrastructure, operating systems or networks that support ACNB’s business and customers resulting in the loss of customers and business opportunities; additional regulatory scrutiny and possible regulatory penalties; litigation; and, reputational damage adversely affecting customer or investor confidence. **ACNB’S CONTROLS AND PROCEDURES MAY FAIL OR BE CIRCUMVENTED.** Management regularly reviews and updates ACNB’s internal controls, disclosure controls, and procedures, as well as corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of ACNB’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on ACNB’s business, financial condition, and results of operations. **ACNB’S ABILITY TO PAY DIVIDENDS DEPENDS PRIMARILY ON DIVIDENDS FROM ITS BANKING SUBSIDIARY, WHICH ARE SUBJECT TO REGULATORY LIMITS AND THE BANKING SUBSIDIARY PERFORMANCE.** ACNB is a financial holding company and its operations are conducted by its subsidiaries. Its ability to pay dividends depends on its receipt of dividends from its subsidiaries. Dividend payments from its banking subsidiary are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by the various banking regulatory agencies. The ability of its subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures, and other cash flow requirements. There is no assurance that its subsidiaries will be able to pay dividends in the future or that ACNB will generate adequate cash flow to pay dividends in the future. ACNB’s failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock. **NEW LINES OF BUSINESS OR NEW PRODUCTS AND SERVICES MAY SUBJECT ACNB TO ADDITIONAL RISKS.** From time to time, ACNB may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, ACNB may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business and/or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of ACNB’s system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business and new products or services could have a material adverse effect on ACNB’s business, financial condition, and results of operations. ### ACNB MAY NOT BE ABLE TO ATTRACT AND RETAIN SKILLED PEOPLE. ACNB’s success depends, in large part, on its ability to attract and retain key people. Competition for the best people in most activities engaged in by ACNB can be intense, and ACNB may not be able to hire people or to retain them. The unexpected loss of services of one or more of ACNB’s key personnel could have a material adverse impact on ACNB’s business because the Corporation would no longer have the benefit of their skills, knowledge of ACNB’s market, as well as years of industry experience, and it would be difficult to promptly find qualified replacement personnel. ### ACNB IS SUBJECT TO CLAIMS AND LITIGATION PERTAINING TO FIDUCIARY RESPONSIBILITY. From time to time, customers make claims and take legal action pertaining to ACNB’s performance of its fiduciary responsibilities. Whether customer claims and legal action related to ACNB’s performance of its fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to ACNB, they may result in significant financial liability and/or adversely affect the market perception of ACNB and its products and services, as well as impact customer demand for those products and services. Any financial liability or reputation damage could have a material adverse effect on ACNB’s business, which, in turn, could have a material adverse effect on ACNB’s financial condition and results of operations. **IF ACNB CONCLUDES THAT THE DECLINE IN VALUE OF ANY OF ITS AFS OR HTM INVESTMENT SECURITIES HAVE CREDIT QUALITY ISSUES, ACNB IS REQUIRED TO WRITE DOWN THE VALUE OF AFS SECURITIES THROUGH A CHARGE TO EARNINGS AND BOOK A RESERVE TO THE ACL FOR HTM SECURITIES.** ACNB reviews its investment securities portfolio at each quarter-end to determine whether the fair value is below the current carrying value. When the fair value of any of its investment securities has declined below its carrying value, ACNB is required to assess whether the decline is an impairment due to credit deterioration. If ACNB determines that the decline in value is impaired due to credit deterioration, it is required to write down the value of AFS securities through a charge to earnings and book a reserve for any HTM securities to the allowance for credit losses. Non-credit related reductions in the value of a security do not require a write down of the value through earnings unless ACNB intends to, or is required to, sell the security. Changes in the expected cash flows related to the credit related piece of the investment of a security in ACNB’s investment portfolio or a prolonged price decline may result in ACNB’s conclusion in future periods that a security is to be deemed impaired, which would require a charge to earnings to write down the security to fair value for AFS securities or book a reserve to the allowance for credit losses for HTM securities. Due to the complexity of the calculations and assumptions used in determining whether an asset is impaired, the impairment disclosed may not accurately reflect the actual impairment in the future. ### ACNB IS SUBJECT TO POTENTIAL IMPAIRMENT OF GOODWILL AND INTANGIBLES. ACNB has certain long-lived assets including purchased intangible assets subject to amortization and associated goodwill assets which are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the statement of condition and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. Accounting rules permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The goodwill impairment analysis involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value of goodwill assigned to the reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. Subsequent reversal of goodwill impairment losses is not permitted. Goodwill, which has an indefinite useful life, is evaluated pursuant to ASC Topic 350, *Intangibles — Goodwill and Other*, for impairment annually and is evaluated for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The goodwill impairment analysis involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value of goodwill assigned to the reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. Subsequent reversal of goodwill impairment losses is not permitted. ACNB performs an annual evaluation to determine if there is goodwill impairment. **ACNB IS SUBJECT TO ENVIRONMENTAL LIABILITY RISK ASSOCIATED WITH LENDING ACTIVITIES.** A significant portion of ACNB’s banking subsidiary loan portfolio is secured by real property. During the ordinary course of business, ACNB may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, ACNB may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require ACNB to incur substantial expense and may materially reduce the affected property’s value or limit ACNB’s ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase ACNB’s exposure to environmental liability. Although ACNB has policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on ACNB’s financial condition and results of operations. **ACNB’S COMMUNICATIONS, INFORMATION, AND TECHNOLOGY SYSTEMS MAY EXPERIENCE A FAILURE, INTERRUPTION OR BREACH IN SECURITY.** ACNB relies heavily on communications, information, and technology systems to conduct its business. Any failure, interruption or breach in security of these systems at ACNB, or at its third-party service provider of these systems, could result in the reduced ability to operate effectively; disruption in service to its customers; or corruption, loss or compromise of confidential corporate or customer data. The risks are greater if the issue is extensive, long-lasting, or results in financial losses to its customers. Such failures, interruptions or breaches in security may arise from events such as severe weather, acts of vandalism, telecommunications outages, human error, or cyber-attacks. These risks also arise to the extent ACNB’s third-party service providers experience failures, interruptions and breaches in security. ACNB is also exposed to the risk of a disruption at a common service provider used by ACNB’s third-party service providers. Even with attempts to diversify the reliance upon any one third-party, ACNB may not be able to mitigate the risk of its vendors’ use of common service providers. While ACNB has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its communication, information, and technology systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. Although ACNB maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover or ameliorate certain financial aspects of these risks, such insurance coverage may be insufficient to cover all losses. The occurrence of any failures, interruptions or security breaches of ACNB’s communications, information, and technology systems could damage ACNB’s reputation adversely affecting customer or investor confidence, result in a loss of customer business, subject ACNB to additional regulatory scrutiny and possible regulatory penalties, or expose ACNB to civil litigation and possible financial liability, any of which could have a material adverse effect on ACNB’s financial condition and results of operations. **ACNB MAY USE AI IN ITS BUSINESS, AND CHALLENGES WITH PROPERLY MANAGING ITS USE COULD RESULT IN DISRUPTION OF ITS INTERNAL OPERATIONS, REPUTATIONAL HARM, COMPETITIVE HARM, LEGAL LIABILITY AND ADVERSELY AFFECT ACNB’S RESULTS OF OPERATIONS AND STOCK PRICE.** ACNB may incorporate AI solutions into platforms that deliver products and services to its customers, including solutions developed by third parties whose AI is integrated into its products and services. ACNB’s business could be harmed and it may be exposed to legal liability and reputational risk if the AI it uses is or is alleged to be deficient, inaccurate, or biased because the AI algorithms are flawed, insufficient, of poor quality, or reflect unwanted forms of bias, particularly if third party AI integrated with its platforms produces false or “hallucinatory” inferences. Data practices by ACNB or others that result in controversy could impair the acceptance of AI, which could undermine the decisions, predictions, or analysis that AI applications produce. ACNB’s customers and potential customers may express adverse opinions concerning its use of AI and machine learning that could result in brand or reputational harm, competitive harm, or legal liability. If ACNB develops Generative AI, its content creation may require additional investment as testing for bias, accuracy and unintended, harmful impact is often complex and may be costly. As a result, ACNB may need to increase the cost of its products and services which may make it less competitive, particularly if its competitors incorporate AI more quickly or successfully. Governmental bodies have implemented laws and are considering further regulation of AI (including machine learning), which could negatively impact ACNB’s ability to use and develop AI. ACNB is unable to predict how application of existing laws, including federal and state privacy and data protection laws, and adoption of new laws and regulations applicable to AI will affect it but it is likely that compliance with such laws and regulations will increase its compliance costs and such increase may be substantial and adversely affect its results of operations. Furthermore, its use of Generative AI and other forms of AI may expose us to risks relating to intellectual property ownership and licensing rights, including copyright of Generative AI and other AI output as these issues have not been fully interpreted by federal courts or been fully addressed by federal or state legislation or regulations. ### STRATEGIC AND EXTERNAL RISKS **ACNB’S PROFITABILITY DEPENDS SIGNIFICANTLY ON ECONOMIC CONDITIONS IN ITS MARKET AREA AND IN THE COMMONWEALTH OF PENNSYLVANIA AND THE STATE OF MARYLAND.** ACNB’s success depends primarily on the general economic conditions of the Commonwealth of Pennsylvania, the State of Maryland, and the specific local markets in which ACNB operates. Unlike larger national or other regional banks that are more geographically diversified, ACNB provides banking and financial services to customers primarily in the South-central Pennsylvania and Northern Maryland region of the country. The local economic conditions in these areas have a significant impact on the demand for ACNB’s products and services, as well as the ability of ACNB’s customers to repay loans, the value of the collateral securing the loans, and the stability of ACNB’s deposit funding sources. A significant decline in general economic conditions caused by inflation, recession, acts of terrorism, outbreak of hostilities or other international or domestic occurrences and instability, unemployment, changes in securities markets, epidemics and pandemics (such as COVID-19) and governmental responses thereto, or other factors could impact these local economic conditions and, in turn, have a material adverse effect on ACNB’s financial condition and results of operations. **THE EARNINGS OF FINANCIAL SERVICES COMPANIES ARE SIGNIFICANTLY AFFECTED BY GENERAL BUSINESS AND ECONOMIC CONDITIONS.** ACNB’s operations and profitability are impacted by general business and economic conditions in the United States and abroad. These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, and the strength of the U.S. economy and the local economies in which ACNB operates, all of which are beyond ACNB’s control. Deterioration in economic conditions could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values, and a decrease in demand for ACNB’s products and services, among other things, any of which could have a material adverse impact on ACNB’s financial condition and results of operations. The regulatory environment for the financial services industry is being significantly impacted by financial regulatory reform initiatives in the United States and elsewhere, and regulations promulgated to implement them, including Dodd-Frank. **THE TRADING VOLUME IN ACNB’S COMMON STOCK IS LESS THAN THAT OF OTHER LARGER FINANCIAL SERVICES COMPANIES.** ACNB’s common stock trades on NASDAQ, and the trading volume in its common stock is less than that of other larger financial services companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of ACNB’s common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which ACNB has no control. Given the lower trading volume of ACNB’s common stock, significant sales of ACNB’s common stock, and the expectation of these sales, could cause ACNB’s stock price to fall. **ACNB OPERATES IN A HIGHLY REGULATED ENVIRONMENT AND MAY BE ADVERSELY AFFECTED BY CHANGES IN FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS.** ACNB, primarily through its banking subsidiary, is subject to extensive regulation, supervision and/or examination by federal and state banking authorities. Any change in applicable regulations or federal, state or local legislation could have a substantial impact on ACNB and its operations. Additional legislation and regulations that could significantly affect ACNB’s powers, authority and operations may be enacted or adopted in the future, which could have a material adverse effect on its financial condition and results of operations. Further, regulators have significant discretion and authority to prevent or remedy unsafe or unsound practices or violations of laws by banks and bank and financial holding companies in the performance of their supervisory and enforcement duties. The exercise of regulatory authority may have a negative impact on ACNB’s financial condition and results of operations. Like other financial holding companies and financial institutions, ACNB must comply with significant anti-money laundering and anti-terrorism laws. Under these laws, ACNB is required, among other things, to enforce a customer identification program and file currency transaction and suspicious activity reports with the federal government. Government agencies have substantial discretion to impose significant monetary penalties on institutions which fail to comply with these laws or make required reports. While ACNB has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. ### THE SOUNDNESS OF OTHER FINANCIAL INSTITUTIONS MAY ADVERSELY AFFECT ACNB. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. ACNB has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and institutional clients. Many of these transactions expose ACNB to credit risk in the event of a default by a counterparty or customer. In addition, ACNB’s credit risk may be exacerbated when the collateral held by ACNB cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit exposure due to ACNB. Any such losses could have a material adverse effect on ACNB’s financial condition and results of operations. **MARKET VOLATILITY AND OTHER CONDITIONS AND FACTORS MAY HAVE MATERIALLY ADVERSE EFFECTS ON ACNB’S LIQUIDITY AND FINANCIAL CONDITION.** The capital and credit markets may experience extreme volatility and disruption. In the past, in some cases, the markets have exerted downward pressure on stock prices, security prices, and credit capacity for certain issuers without regard to those issuers’ underlying financial strength. In addition, other conditions and factors that could materially adversely affect ACNB’s liquidity and funding including a lack of market or customer confidence in, or negative news about, ACNB or the financial services industry generally which also may result in a loss of deposits and/or negatively affect ACNB’s ability to access the capital markets; the loss of customer deposits to alternative investments; counterparty availability; interest rate fluctuations; general economic conditions; and the legal, regulatory, accounting and tax environments governing ACNB’s funding transactions. Many of the above conditions and factors may be caused by events over which ACNB has little or no control. There can be no assurance that significant disruption and volatility in the financial markets will not occur in the future. Further, ACNB’s customers may be adversely impacted by such conditions, which could have a negative impact on ACNB’s business, financial condition and results of operations. **ACNB MAY NEED OR BE COMPELLED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE WHICH COULD DILUTE STOCKHOLDERS OR BE UNAVAILABLE WHEN NEEDED OR AT UNFAVORABLE TERMS.** ACNB’s regulators or market conditions may require it to increase its capital levels. If ACNB raises capital through the issuance of additional shares of its common stock or other securities, it would likely dilute the ownership interests of current investors and would likely dilute the per share book value and earnings per share of its common stock. Furthermore, it may have an adverse impact on ACNB’s stock price. New investors may also have rights, preferences and privileges senior to ACNB’s current stockholders, which may adversely impact its current stockholders. ACNB’s ability to raise additional capital will depend on conditions in the capital markets at that time, which are outside its control, and on its financial performance. Accordingly, ACNB cannot be assured of its ability to raise additional capital on terms and/or in time frames acceptable to it, or to raise additional capital at all. If ACNB cannot raise additional capital in sufficient amounts when needed, its ability to comply with regulatory capital requirements could be materially impaired. Additionally, the inability to raise capital in sufficient amounts may adversely affect ACNB’s operations, financial condition, and results of operations. **PENNSYLVANIA BUSINESS CORPORATION LAW AND VARIOUS ANTI-TAKEOVER PROVISIONS UNDER ACNB’S ARTICLES AND BYLAWS COULD IMPEDE THE TAKEOVER OF ACNB.** Various Pennsylvania laws affecting business corporations may have the effect of discouraging offers to acquire ACNB, even if the acquisition would be advantageous to stockholders. In addition, ACNB has various anti-takeover measures in place under its articles of incorporation and bylaws, including a supermajority vote requirement for mergers, a staggered Board of Directors, and the absence of cumulative voting. Any one or more of these measures may impede the takeover of ACNB without the approval of the Board of Directors and may prevent stockholders from taking part in a transaction in which they could realize a premium over the current market price of ACNB common stock. **THE SEVERITY AND DURATION OF A FUTURE ECONOMIC DOWNTURN AND THE COMPOSITION OF THE BANKING SUBSIDIARY’S LOAN PORTFOLIO COULD IMPACT THE LEVEL OF LOAN CHARGE-OFFS AND THE PROVISION FOR CREDIT LOSSES AND MAY AFFECT ACNB’S NET INCOME OR LOSS.** Lending money is a substantial part of ACNB’s business through its banking subsidiary. However, every loan that ACNB makes carries a certain risk of non-payment. ACNB cannot assure that its allowance for credit losses will be sufficient to absorb actual loan losses. ACNB also cannot assure that it will not experience significant losses in its loan portfolio that may require significant increases to the allowance for credit losses in the future. Although ACNB evaluates every loan that it makes against its underwriting criteria, ACNB may experience losses by reasons of factors beyond its control. Some of these factors include changes in market conditions affecting the value of real estate and unexpected problems affecting the creditworthiness of ACNB’s borrowers. ACNB determines the adequacy of its ACL by considering various factors, including: - An analysis of the risk characteristics of various classifications of loans; - Previous loan loss experience; - Specific loans that would have loan loss potential; - Delinquency trends; - Estimated fair value of the underlying collateral; - Current economic conditions; - The views of ACNB’s regulators; - Reports of internal auditors; - Reports of external auditors; - Reports of loan reviews conducted by independent organizations; and, - Geographic and industry loan concentrations Local economic conditions could impact the loan portfolio of ACNB. For example, an increase in unemployment, a decrease in real estate values, or increases in interest rates, as well as other factors, could weaken the economies of the communities ACNB serves. Weakness in the Market Areas served by ACNB could depress the Corporation’s earnings and, consequently, its financial condition because: - Borrowers may not be able to repay their loans; - The value of the collateral securing ACNB’s loans to borrowers may decline; and/or, - The quality of ACNB’s loan portfolio may decline Although, based on the aforementioned procedures implemented by ACNB, management believes the current ACL is adequate, ACNB may have to increase its provision for credit losses should local economic conditions deteriorate which could negatively impact its financial condition and results of operations. **CHANGES IN REAL ESTATE VALUES MAY ADVERSELY IMPACT ACNB’S BANKING SUBSIDIARY LOANS THAT ARE SECURED BY REAL ESTATE.** A significant portion of ACNB’s banking subsidiary loan portfolio consists of residential and commercial mortgages, as well as consumer loans, secured by real estate. These properties are concentrated in ACNB’s Market Area. Real estate values and real estate markets generally are affected by, among other things, changes in national, regional or local economic conditions, fluctuations in interest rates, the availability of loans to potential purchasers, changes in the tax laws and other government statutes, regulations and policies, and acts of nature. If real estate prices decline, particularly in ACNB’s Market Area, the value of the real estate collateral securing ACNB’s loans could be reduced. This reduction in the value of the collateral could increase the number of non-performing loans and could have a material adverse impact on ACNB’s financial condition and results of operations. ### ACNB CONTINUALLY ENCOUNTERS TECHNOLOGICAL CHANGE. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. ACNB’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in ACNB’s operations. Many of ACNB’s competitors have substantially greater resources to invest in technological improvements. ACNB may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on ACNB’s business and, in turn, ACNB’s financial condition and results of operations. **FINANCIAL SERVICES COMPANIES DEPEND ON THE ACCURACY AND COMPLETENESS OF INFORMATION ABOUT CUSTOMERS AND COUNTERPARTIES.** In deciding whether to extend credit or enter into other transactions, ACNB may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports, and other financial information. ACNB may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports, or other financial information could have a material adverse impact on ACNB’s business and, in turn, ACNB’s financial condition and results of operations. ### CONSUMERS MAY DECIDE NOT TO USE BANKS TO COMPLETE THEIR FINANCIAL TRANSACTIONS. Technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods. For example, consumers can now maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation”, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on ACNB’s financial condition and results of operations. ### FUTURE ECONOMIC CONDITIONS MAY ADVERSELY AFFECT SECONDARY SOURCES OF LIQUIDITY. In addition to primary sources of liquidity in the form of deposits and principal and interest payments on outstanding loans and investments, ACNB maintains secondary sources that provide it with additional liquidity. These secondary sources include secured and unsecured borrowings from sources such as the Federal Reserve Bank, Federal Home Loan Bank of Pittsburgh, and third-party commercial banks. However, market liquidity conditions have been negatively impacted by past disruptions in the capital markets and could, in the future, have a negative impact on ACNB’s secondary sources of liquidity. **SEVERE WEATHER, NATURAL DISASTERS, ACTS OF WAR OR TERRORISM, GEOPOLITICAL RISKS/EVENTS, AND OTHER EXTERNAL EVENTS COULD SIGNIFICANTLY IMPACT ACNB’S BUSINESS.** The unpredictable nature of events such as severe weather, natural disasters, acts of war or terrorism (international or domestic), geopolitical risks/events, and other adverse external events could have a significant impact on ACNB’s ability to conduct business. If any of its financial, accounting, network or other information processing systems fail or have other significant shortcomings due to external events, ACNB could be materially adversely affected. Third parties with which ACNB does business could also be sources of operational risk to ACNB, including the risk that the third parties’ own network and information processing systems could fail. Any of these occurrences could materially diminish ACNB’s ability to operate one or more of the Corporation’s businesses, or result in potential liability to customers, reputational damage, and regulatory intervention, any of which could materially adversely affect ACNB. Such events could affect the stability of ACNB’s deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, impair ACNB’s liquidity, cause significant property damage, result in loss of revenue, and/or cause ACNB to incur additional expenses. ACNB may be subject to disruptions or failures of the financial, accounting, network and/or other information processing systems arising from events that are wholly or partially beyond ACNB’s control, which may include, for example, computer viruses, electrical or telecommunications outages, natural disasters, disease pandemics, damage to property or physical assets, or terrorist acts. ACNB has developed a comprehensive business continuity plan which includes plans to maintain or resume operations in the event of an emergency, such as a power outage or disease pandemic, and contingency plans in the event that operations or systems cannot be resumed or restored. The business continuity plan is updated as needed, periodically reviewed, and components are regularly tested. ACNB also reviews and evaluates the business continuity plans of critical third-party service providers. While ACNB believes its business continuity plan and efforts to evaluate the business continuity plans of critical third-party service providers help mitigate risks, disruptions or failures affecting any of these systems may cause interruptions in service to customers, damage to ACNB’s reputation, and loss or liability to the Corporation. **CHANGES IN CONTROL OF THE UNITED STATES GOVERNMENT AND ISSUES RELATING TO DEBT AND THE DEFICIT MAY ADVERSELY AFFECT THE CORPORATION.** Changes in elected officials in the federal government could result in significant changes or uncertainty in governmental policies, regulatory environments, spending sentiment, and many other factors and conditions, some of which could adversely impact the Corporation’s business, financial condition, and results of operations. In addition, should the federal government encounter difficulties in reaching agreement over federal debt and issues connected with the debt ceiling, certain rating agencies may place the United States government’s long-term sovereign debt rating on their equivalent of negative watch and possibly assign a rating downgrade. As a result, the rating agencies, due to constraints related to the rating of the United States, may also place government-sponsored enterprises in which the Corporation invests and receives lines of credit on negative watch, and a downgrade of the Unites States government’s credit rating would trigger a similar downgrade in the credit rating of these government-sponsored enterprises. Furthermore, the credit rating of other entities, such as state and local governments, may also be downgraded should the United States government’s credit rating be downgraded. The impact that a credit rating downgrade may have on the national and local economy could have an adverse effect on ACNB’s financial condition and results of operations. **NEGATIVE DEVELOPMENTS AFFECTING THE BANKING INDUSTRY, INCLUDING BANK FAILURES OR CONCERNS REGARDING LIQUIDITY, MAY ERODE CUSTOMER CONFIDENCE IN THE BANKING SYSTEM AND MAY HAVE A MATERIAL ADVERSE EFFECT ON ACNB.** In the past, events impacting the banking industry, including the high-profile failures or instability of certain banking institutions, resulted in general uncertainty and eroded confidence in the safety, soundness, and financial strength of the financial services sector. In particular, the bank failures highlighted the potential serious impact of a financial institution unable to meet withdrawal requests by depositors. This resulted in a growing concern about liquidity in the banking industry, access to and volatile capital markets and reduced stock valuations for certain financial institutions. Similar future events, including additional bank failures or bank instability, could directly or indirectly adversely impact ACNB’s own liquidity, access to capital markets, stock price, financial condition and results of operations. Further, such events may also result in: greater regulatory scrutiny and enforcement; additional and more stringent laws and regulations for the financial services industry; increased FDIC deposit insurance premiums or special FDIC assessments; and higher capital ratio requirements, which as a result could have a material negative impact and adverse effect on ACNB’s business, financial condition and results of operations. **ACNB’S BANKING SUBSIDIARY MAY BE REQUIRED TO PAY HIGHER FDIC INSURANCE PREMIUMS OR SPECIAL ASSESSMENTS WHICH MAY ADVERSELY AFFECT ITS EARNINGS.** In the past, poor economic conditions and the resulting bank failures have increased and, in the future, may increase the costs of the FDIC and adversely impacted its Deposit Insurance Fund. Any additional bank failures may prompt the FDIC to increase its premiums or to issue special assessments. ACNB is generally unable to control the amount of premiums or special assessments that its banking subsidiary is required to pay for FDIC insurance. Any future changes in the calculation or assessment of FDIC insurance premiums may have a material adverse effect on ACNB’s financial condition and results of operations. **THE INCREASING USE OF SOCIAL MEDIA PLATFORMS PRESENTS RISKS AND CHALLENGES AND THE INABILITY OR FAILURE TO RECOGNIZE, RESPOND TO, AND EFFECTIVELY MANAGE THE ACCELERATED IMPACT OF SOCIAL MEDIA COULD MATERIALLY ADVERSELY IMPACT ACNB’S BUSINESS.** The use of social media platforms, including weblogs (blogs), social media websites, and other forms of internet-based communications allows individuals access to a broad audience of consumers and other interested persons. Social media practices in the banking industry are continually evolving, which creates uncertainty and risk of noncompliance with regulations applicable to ACNB’s business. Consumers value readily-available information concerning businesses and their goods and services, and often act on such information without further investigation and without regard to its accuracy. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such platforms at any time may be adverse to ACNB’s interests and/or may be inaccurate. The dissemination of information online could harm ACNB’s business, prospects, financial condition, and results of operations, regardless of the information’s accuracy. The harm may be immediate without affording ACNB an opportunity for redress or correction. Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about ACNB’s business, exposure of personally identifiable information, fraud, out-of-date information, and improper use by employees and customers. The inappropriate use of social media by ACNB’s employees or customers could result in negative consequences such as remediation costs including training for employees, additional regulatory scrutiny, and possible regulatory penalties, litigation, or negative publicity that could damage ACNB’s reputation adversely affecting customer or investor confidence. **LITIGATION AND REGULATORY ACTIONS, INCLUDING POSSIBLE ENFORCEMENT ACTIONS, COULD SUBJECT ACNB AND ITS SUBSIDIARIES TO SIGNIFICANT FINES, PENALTIES, JUDGMENTS, OR OTHER REQUIREMENTS RESULTING IN INCREASED EXPENSES OR RESTRICTIONS ON BUSINESS ACTIVITIES.** In the normal course of business, from time to time, ACNB or its subsidiaries may be named as a defendant in various legal actions, arising in connection with their current and/or prior business activities. Legal actions could include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. Further, ACNB or its subsidiary bank may in the future be subject to consent orders or other formal or informal enforcement agreements with their regulators. They may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding current and/or prior business activities. Any such legal or regulatory actions may subject ACNB or its subsidiaries to substantial compensatory or punitive damages, significant fines, penalties, obligations to change business practices, or other requirements resulting in increased expenses, diminished income, and damage to their reputation. Involvement in any such matters, whether tangential or otherwise, and even if the matters are ultimately determined in their favor, could also cause significant harm to their reputation and divert management attention from the operation of their business. Further, any settlement, consent order, other enforcement agreement or adverse judgment in connection with any formal or informal proceeding or investigation by governmental agencies may result in litigation, investigations or proceedings as other litigants and governmental agencies begin independent reviews of the same activities. As a result, the outcome of legal and regulatory actions could have a material adverse effect on ACNB’s business, financial condition, and results of operations. **CHANGES TO TRADE POLICIES AND TARIFFS CAN HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OUR CUSTOMERS.** Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve. Our customers-particularly local businesses engaged in agriculture, manufacturing, and retail-may face higher costs for imported goods and materials, reduced export demand, and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced profitability, and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations. Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values, and weakened consumer confidence. If our customers experience financial stress, we could see an increase in loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance. Additionally, any decline in local economic activity could reduce loan demand, deposit growth, and fee income, which are critical to our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy. Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition, results of operations, and future growth prospects. **THE STOCK MARKET CAN BE VOLATILE, AND FLUCTUATIONS IN ACNB’S OPERATING RESULTS AND OTHER FACTORS COULD CAUSE ACNB’S STOCK PRICE TO DECLINE.** The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies and financial institutions specifically. Market fluctuations could adversely affect ACNB’s stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, government shutdowns, trade wars, pandemics or epidemics, or international currency fluctuations, may negatively affect the market price of ACNB’s common stock. Moreover, ACNB’s operating results may fluctuate and vary from period to period due to the risk factors set forth herein. As a result, period-to-period comparisons should not be relied upon as an indication of future performance. ACNB’s stock price could fluctuate significantly in response to ACNB’s quarterly or annual results, annual projections and the impact of these risk factors on ACNB’s operating results or financial position. Although ACNB’s common stock is quoted on the Nasdaq Capital Market, the volume of trades on any given day has been limited historically, as a result of which stockholders might not have been able to sell or purchase ACNB’s common stock at the volume, price, or time desired. From time to time, ACNB’s common stock may be included in certain and various stock market indices. Inclusion in these indices may positively impact the price, trading volume, and liquidity of ACNB’s common stock, in part, because index funds or other institutional investors often purchase securities that are in these indices. Conversely, if ACNB’s market capitalization falls below the minimum necessary to be included in any of the indices at any annual reconstitution date, the opposite could occur. Further, ACNB’s inclusion in indices may be weighted based on the size of ACNB’s market capitalization, so even if ACNB’s market capitalization remains above the amount required to be included on these indices, if ACNB’s market capitalization is below the amount it was on the most recent reconstitution date, ACNB’s common stock could be weighted at a lower level. If ACNB’s common stock is weighted at a lower level, holders attempting to track the composition of these indices will be required to sell ACNB’s common stock to match the reweighting of the indices. ### WEALTH MANAGEMENT AND INSURANCE INDUSTRY RISKS **REVENUES AND PROFITABILITY FROM ACNB’S WEALTH MANAGEMENT BUSINESS MAY BE ADVERSELY AFFECTED BY ANY REDUCTION IN ASSETS UNDER MANAGEMENT AND SUPERVISION AS A RESULT OF EITHER A DECLINE IN MARKET VALUE OF SUCH ASSETS OR NET OUTFLOWS, WHICH COULD REDUCE TRUST, INVESTMENT ADVISORY AND BROKERAGE, AND OTHER SERVICING FEES EARNED.** The wealth management business derives the majority of its revenue from noninterest income which consists of trust, investment advisory and brokerage, and other servicing fees. Substantial revenues are generated from investment management contracts with clients. Under these contracts, the investment advisory fees paid to us are typically based on the market value of assets under management. Assets under management and supervision may decline for various reasons including declines in the market value of the assets in the funds and accounts managed or supervised, which could be caused by price declines in the securities markets generally or by price declines in specific market segments. Assets under management may also decrease due to redemptions and other withdrawals by clients or termination of contracts. This could be in response to adverse market conditions or in pursuit of other investment opportunities. Any reduction in assets under management and supervision may adversely impact ACNB’s profitability. **THE WEALTH MANAGEMENT INDUSTRY IS SUBJECT TO EXTENSIVE REGULATION, SUPERVISION AND EXAMINATION BY REGULATORS, AND ANY ENFORCEMENT ACTION OR ADVERSE CHANGES IN THE LAWS OR REGULATIONS GOVERNING ACNB’S WEALTH MANAGEMENT BUSINESS COULD DECREASE ACNB’S REVENUES AND PROFITABILITY.** The wealth management business is subject to regulation by a number of regulatory agencies that are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of customers participating in those markets. In the event of noncompliance with an applicable regulation, governmental regulators, including the SEC and FINRA, may institute administrative or judicial proceedings that may result in censure, fines, civil penalties, issuance of cease-and-desist orders, deregistration or suspension of the noncompliant broker-dealer or investment advisor, or other adverse consequences. The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment’s operating results and financial condition. ACNB may also be adversely affected as a result of new or revised legislation or regulations. Regulatory changes have imposed and may continue to impose additional costs, which may adversely impact ACNB’s profitability. **REVENUES AND PROFITABILITY FROM ACNB’S INSURANCE BUSINESS MAY BE ADVERSELY AFFECTED BY MARKET CONDITIONS AND COMPETITION, WHICH COULD REDUCE INSURANCE COMMISSIONS AND FEES EARNED.** The revenues of ACNB’s fee-based insurance business are derived primarily from commissions from the sale of insurance policies, which commissions are generally calculated as a percentage of the policy premium. These insurance policy commissions can fluctuate as insurance carriers from time to time increase or decrease the premiums on the insurance products sold. Due to the cyclical nature of the insurance market and the impact of other market and macroeconomic conditions on insurance premiums, commission levels may vary. The reduction of these commission rates, along with general volatility and/or declines in premiums, may adversely impact ACNB’s profitability. The fee-based insurance business is extremely competitive. ACNB competes in the fee-based insurance business with regional and national companies many of which have greater resources than ACNB. This competition may adversely impact ACNB’s fee-based insurance business. ## Cybersecurity As filed, 5,874 characters. ACNB recognizes the critical importance of identifying, assessing and managing material risks from cybersecurity threats and is committed to implementing and maintaining a comprehensive information security program to manage such risks and safeguard its systems and data. Governance of cybersecurity risk is based on the Corporation’s Information Security Program and related policies and procedures, which are designed in conformance with industry standards and compliance with Section 39 of the Federal Deposit Insurance act and sections 501 and 505(b) of GLBA, and to protect the confidentiality, integrity and availability of its information assets. The Corporation’s Board of Directors is responsible for overseeing the development, implementation and maintenance of the Corporation’s overall information security standards. The Audit Committee of the Board of Directors has enterprise risk management oversight responsibilities, which includes information security. Information Security-related functions are performed by both ACNB Bank Risk Management and Technology Services personnel. The Information Security Committee is an ACNB Bank management committee which is responsible for providing oversight and direction for information security matters and standards and meets regularly throughout the year with minutes of their meetings provided to the Corporation’s Board of Directors. ACNB Bank’s Information Security Officer is responsible for managing and monitoring the Information Security Program, and is a part of the Risk Management department, which ultimately reports to the Chief Risk Officer. Additionally, the Information Security Program is supported by ACNB Bank’s Technology Services Department which is led by the Technology Services Manager who reports to the Chief Strategy Officer. The Information Security Program includes Information Security strategy, an incident response plan for incident management; access rights management; threat and vulnerability management; security training; risk and maturity assessments; security systems controls and standards; data use, reproduction, storage and destruction standards, intrusion prevention management, patch management, physical and environmental protections, encryption standards, malicious code prevention, intelligence sharing, and Information Security Monitoring, including architecture considerations, activity monitoring and condition monitoring. On an annual basis, Information Security-related risk assessments and a maturity analysis are performed and reported to the Board of Directors or the Board Audit Committee. Risks from cybersecurity threats associated with use of third-party service providers are addressed as part of the vendor management program, in initial and ongoing assessment of service providers. Information Security training is conducted for both employees and the Board of Directors annually. Training includes sharing educational communications to increase employee awareness of cybersecurity risks and conducting incident response plan exercises at least annually. ACNB engages independent third-party assessors and auditors in connection with its information security program, including to conduct external and internal penetration testing and internal vulnerability scanning, independent audits and risk assessments. Technology Services personnel perform internal security practices, including regular internal vulnerability scanning using commercial software tools and follow-up with corrective measures as required, monitoring for unauthorized access attempts, uses dynamically updated Endpoint Detection and Response for anti-malware, and deploying dynamically updated firewalls to protect against unknown actors. Platforms are in place with the ability to automate containment without the risk of employee response delays and a third-party provider performs additional external vulnerability scanning, network threat detection and automated containment, risk analysis and continuous monitoring. Information Security performs monthly phishing exercises with the reporting of results to the Information Security Committee, the Senior Management Committee and an annual summary of results to the Audit Committee. ACNB Bank also utilizes third-party service providers in the ordinary course of business. As part of ACNB Bank’s management program, initial and ongoing information security due diligence is reviewed and assessed on ACNB Bank’s service providers as appropriate, based on level of access to, storage of and processing of corporate and customer confidential information. Such due diligence may include review of service organization control reports and other independent testing, information security and incident response programs. As a regulated financial institution, ACNB Bank is also subject to financial privacy laws and its cybersecurity practices are subject to oversight by the federal banking agencies. For additional information, see “Supervision and Regulation” included in Part I, Item 1 — “Business” of this report. Although ACNB has not, as of the date of this Annual Report on Form 10-K, experienced a cybersecurity threat or incident that materially affected its business strategy, results of operations or financial condition, there can be no guarantee that ACNB will not experience such an incident in the future or the potential impact thereof. For additional information regarding the risk ACNB faces from cybersecurity threats, please see the risk factors titled “ACNB’s operations of its business, including its transactions with customers, are increasingly done electronically, and this has increased its risks related to cybersecurity” and “ACNB’s communications, information, and technology systems may experience a failure, interruption or breach in security” included in Part I, Item 1A — “Risk Factors” of this report. ## Properties As filed, 249 characters. The Corporation’s main operations center is located in Gettysburg, Pennsylvania. There are 29 owned and 12 leased buildings, including Community Banking, Insurance and Loan Production offices. All properties are suitable for their intended purposes. ## Legal proceedings As filed, 560 characters. As of December 31, 2025, there were no material pending legal proceedings, other than ordinary routine litigation incidental to and in the ordinary course of the business, to which ACNB or its subsidiaries are a party or by which any of their assets are the subject, which could have a material adverse effect on ACNB or its subsidiaries or their financial condition or results of operations. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Corporation or its subsidiaries by governmental authorities. ## Management's discussion and analysis As filed, 63,351 characters. The following is management’s discussion and analysis of the significant changes in the financial condition, results of operations, capital resources, and liquidity presented in its accompanying Consolidated Financial Statements for ACNB Corporation, a financial holding company. Please read this discussion in conjunction with the Consolidated Financial Statements and disclosures included herein. Current performance does not guarantee, assure or indicate similar performance in the future. Discussion of the earliest of the three years covered by the Consolidated Financial Statements presented in this report has been omitted as that disclosure is included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 in Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within that report. ### EXECUTIVE OVERVIEW ACNB Corporation is the financial holding company for the wholly-owned subsidiaries of ACNB Bank and ACNB Insurance Services. ACNB Bank provides a full range of retail and commercial financial services in Pennsylvania and Maryland primarily through its network of 33 community banking offices. ACNB Insurance Services offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster, Maryland, and Gettysburg, Pennsylvania and is licensed to do business in 46 states. The primary source of the Corporation’s revenues is net interest income derived from interest earned on loans and investments, less deposit and borrowing funding costs. Revenues are influenced by general economic factors, including market interest rates, the economies of the markets served, stock market conditions, as well as competitive forces within the markets. The Corporation also generates revenue through commissions and fees earned on various services and financial products offered to its customers and through gains on sales of assets, such as loans, investments and properties. The Corporation incurs expenses to generate the revenue through provision for credit losses, noninterest expense and income taxes. The Corporation’s overall strategy is to increase loan growth in its local markets, while maintaining a reasonable funding base by offering competitive deposit products and services. ACNB reported earnings of $37.1 million in 2025 impacted by three discrete items: $8.3 million merger-related expenses, net of tax impact, a provision for credit losses on non-PCD loans of $4.2 million, net of tax impact, both incurred as a result of the Acquisition, and a $2.8 million loss on sales of investment securities, net of tax impact, incurred as a result of the repositioning of the investment securities portfolio. #### Traditions Acquisition ACNB closed the Acquisition of Traditions effective February 1, 2025. Traditions contributed, after acquisition accounting adjustments, $877.7 million in assets, $648.5 million in loans and $741.5 million in deposits at the Acquisition date. See Note 2 — “Business Combination” in the Notes to Consolidated Financial Statements under Part II, Item 8 — “Financial Statements and Supplementary Data,” for more information. #### Investment Securities Portfolio Repositioning ACNB completed a repositioning of the investment securities portfolio by selling $74.6 million in book value of available for sale investment securities for an after-tax loss of $2.8 million as announced on Form 8-K on December 5, 2025. For additional information see “Investment Securities” in the Financial Condition section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following table presents a summary of the Corporation’s earnings and selected performance and asset quality ratios for the years ended December 31: *(Dollars in thousands, except per share data)* | | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Net income | **$37,051** | $31,846 | $31,688 | | Diluted earnings per share | **$3.60** | $3.73 | $3.71 | | Cash dividends declared | **$1.38** | $1.26 | $1.14 | | Return on average assets | **1.16%** | 1.31% | 1.32% | | Return on average equity | **9.44%** | 10.94% | 12.23% | | Net interest margin 1 | **4.23%** | 3.79% | 4.07% | | Non-performing loans to total loans, net of unearned income | **0.46%** | 0.40% | 0.26% | | Non-performing assets to total assets | **0.33%** | 0.30% | 0.19% | | Net charge-offs to average loans outstanding | **0.01%** | 0.02% | 0.02% | | Allowance for credit losses to total loans, net of unearned income | **1.02%** | 1.03% | 1.23% | 1 Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate. #### Summary Financial Results for the year ended December 31, 2025 - *Net Interest Income —* Net interest income was $123.1 million in 2025 compared to $83.6 million for the same period of 2024, an increase of $39.5 million. The increase in net interest income and growth in average loans and deposits was driven primarily by the Acquisition. - *Net Interest Margin —* The Corporation’s FTE net interest margin increased to 4.23% in 2025 compared to 3.79% for the same period of 2024, an increase of 44 bps. The accretion impact of acquisition accounting adjustments on loans and deposits from the Acquisition was $7.7 million for the year ended December 31, 2025. - *Yield on Average Interest-earning Assets —* ACNB experienced an increase of 75 bps in the yield on average interest-earning assets to 5.61% compared to the same period of 2024. - *Loan Growth —* Average loans grew $635.8 million compared to the same period of 2024. - *Deposit Growth —* Average interest-bearing deposits increased $542.1 million compared to the same period of 2024. - *Asset Quality —* The ACL was $23.7 million at December 31, 2025 compared to $17.3 million at December 31, 2024. The increase was driven primarily by an initial ACL of $5.5 million for non-PCD loans and $1.5 million for accruing PCD loans at the Acquisition date. - The provision for credit losses was $5.3 million and the provision for unfunded commitments was a reversal of $532 thousand for the year ended December 31, 2025 compared to the reversal of $2.4 million provision for credit losses and the reversal of $326 thousand for unfunded commitments for the same period of 2024. - Non-performing loans were $10.7 million, or 0.46% of total loans at December 31, 2025 compared to $6.8 million, or 0.40% of total loans for the same period of 2024. The increase was driven primarily by the Acquisition and, to a lesser extent, three unrelated relationships in the commercial real estate and residential mortgage portfolios. - Net charge-offs for the year ended December 31, 2025 were 0.01% of total average loans compared to 0.02% for the same period of 2024. - *Noninterest income —* Excluding net (losses) gains on sales or calls of securities, noninterest income was $32.1 million for the year ended December 31, 2025, an increase of $7.5 million from the same period of 2024. The increase was driven primarily by a $5.0 million increase in gain from mortgage loans held for sale, a $697 thousand increase in service charges on deposits and $614 thousand higher earnings on investment in bank-owned life insurance, which were driven primarily by the Acquisition. - *Noninterest expenses —* Noninterest expenses totaled $100.5 million, an increase of $29.8 million in 2025 compared to $70.7 million in 2024. The increase was driven primarily by the Acquisition. A more thorough discussion of the Corporation’s results of operations and financial condition is included in the following pages. ### CRITICAL ACCOUNTING ESTIMATES The accounting policies that the Corporation’s management deems to be most important to the presentation of its financial condition and results of operations, because they require management’s most difficult, subjective or complex judgment, often result in the need to make estimates about the effect of such matters which are inherently uncertain. The following accounting policies are deemed to be critical by management: Allowance for Credit Losses — The ACL represents an amount which, in management’s judgment, is adequate to absorb expected credit losses on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience. The ACL is measured and recorded upon the initial recognition of a financial asset. The ACL is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (reversal of) credit losses, which is recorded as a current period operating expense. Determination of an appropriate ACL is inherently complex and requires the use of significant and highly subjective estimates. The reasonableness of the ACL is reviewed quarterly by management. Management believes it uses relevant information available to make determinations about the ACL and that it has established the existing allowance in accordance with GAAP. However, the determination of the ACL requires significant judgment, and estimates of expected credit losses in the loan portfolio can vary from the amounts actually observed. While management uses available information to recognize expected credit losses, future additions to the ACL may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes in the interest rate environment which may directly impact prepayment and curtailment rate assumption, and changes in the financial condition of borrowers. As of December 31, 2025, the Company believes that its ACL was adequate. Business Combinations — The Company is required to record the assets acquired, including identified intangible assets such as core deposit intangibles, and the liabilities assumed at their respective fair values in an acquisition. The difference between consideration paid and the net fair value of assets acquired is recorded as goodwill. Management uses significant estimates and assumptions to determine the fair value of such items in accordance with ASC 820, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates, and realizable collateral values. The ACL for PCD loans is recognized as a component of acquisition accounting. The ACL for non-PCD assets is recognized as provision for credit losses in the same reporting period as the acquisition. Fair value adjustments are amortized or accreted into the income statement over the estimated life of the acquired assets or assumed liabilities. The purchase date valuations and any subsequent adjustments determine the amount of goodwill recognized in connection with the acquisition. The use of different assumptions could produce significantly different valuation results, which could have material positive or negative effects on our results of operations. The determination of fair values in accordance with ASC 820 is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors. In addition, we engaged third party specialists to assist in the development of fair values. Preliminary estimates of fair values may be adjusted for a period of time subsequent to the acquisition date if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Adjustments recorded during this period are recognized in the current reporting period. Management uses various valuation methodologies to estimate the fair value of these assets and liabilities, and often involves a significant degree of judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such items include loans, deposits, identifiable intangible assets, and certain other assets and liabilities. Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying value of assets, including goodwill and liabilities, which could result in impairment losses affecting our financial statements. As of December 31, 2025, the Company believes that the fair value of the assets acquired, liabilities assumed, consideration paid, and any non-controlling interests of the acquired business at fair value at the acquisition date was appropriately determined in accordance with GAAP. ### RESULTS OF OPERATIONS Net income for the year ended December 31, 2025 was $37.1 million, an increase of $5.2 million, or 16.3%, compared to net income of $31.8 million for the same period of 2024. Diluted earnings per share were $3.60 and $3.73 for the years ended December 31, 2025 and 2024, respectively. #### Net Interest Income The primary source of ACNB’s traditional banking revenue is net interest income, which represents the difference between interest income on earning assets and interest expense on liabilities used to fund those assets. Earning assets include loans, securities, and interest-bearing deposits with banks. Interest-bearing liabilities include deposits and borrowings. Net interest income is affected by changes in interest rates, volume of interest-bearing assets and liabilities, and the composition of those assets and liabilities. The Corporation manages the risk associated with changes in interest rates through the techniques described within Item 7a — “Quantitative and Qualitative Disclosures About Market Risk”. The following table provides a comparative average Consolidated Statement of Condition and net interest income analysis for the years ended December 31. Interest income and yields are presented on a FTE basis. The discussion following this table is based on these tax equivalent amounts. *(Dollars in thousands)* | ASSETS Loans: | 2025 Average Balance | Interest 1 | Yield/ Rate | 2024 Average Balance | Interest 1 | Yield/ Rate | 2023 Average Balance | Interest 1 | Yield/ Rate | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Taxable | **$2,245,727** | **$142,485** | **6.34%** | $1,605,976 | $90,547 | 5.64% | $1,499,635 | $79,433 | 5.30% | | Tax-exempt | **58,552** | **1,615** | **2.76** | 62,532 | 1,559 | 2.49 | 73,993 | 1,778 | 2.40 | | **Total Loans 2** | **2,304,279** | **144,100** | **6.25** | 1,668,508 | 92,106 | 5.52 | 1,573,628 | 81,211 | 5.16 | | Investment Securities: | | | | | | | | | | | Taxable | **474,424** | **14,494** | **3.06** | 445,531 | 11,718 | 2.63 | 491,208 | 11,316 | 2.30 | | Tax-exempt | **54,148** | **1,454** | **2.69** | 54,596 | 1,438 | 2.63 | 57,670 | 1,478 | 2.56 | | **Total Investments 3** | **528,572** | **15,948** | **3.02** | 500,127 | 13,156 | 2.63 | 548,878 | 12,794 | 2.33 | | Interest-bearing deposits with banks | **89,034** | **3,808** | **4.28** | 53,482 | 2,832 | 5.30 | 66,246 | 3,318 | 5.01 | | **Total Earning Assets** | **2,921,885** | **163,856** | **5.61** | 2,222,117 | 108,094 | 4.86 | 2,188,752 | 97,323 | 4.45 | | Cash and due from banks | **24,672** | | | 20,920 | | | 30,684 | | | | Premises and equipment | **31,188** | | | 25,873 | | | 26,582 | | | | Other assets | **244,251** | | | 185,037 | | | 165,175 | | | | Allowance for credit losses | **(23,141)** | | | (18,589) | | | (18,915) | | | | **Total Assets** | **$3,198,855** | | | $2,435,358 | | | $2,392,278 | | | | **LIABILITIES** | | | | | | | | | | | Interest-bearing demand deposits | **$609,263** | **$2,153** | **0.35%** | $516,033 | $1,603 | 0.31% | $569,357 | $757 | 0.13% | | Money markets | **496,820** | **9,542** | **1.92** | 248,733 | 2,588 | 1.04 | 283,918 | 1,192 | 0.42 | | Savings deposits | **334,956** | **107** | **0.03** | 324,034 | 118 | 0.04 | 377,498 | 122 | 0.03 | | Time deposits | **448,398** | **14,897** | **3.32** | 258,560 | 6,885 | 2.66 | 230,431 | 1,624 | 0.70 | | **Total Interest-Bearing Deposits** | **1,889,437** | **26,699** | **1.41** | 1,347,360 | 11,194 | 0.83 | 1,461,204 | 3,695 | 0.25 | | Short-term borrowings | **55,862** | **1,639** | **2.93** | 36,492 | 859 | 2.35 | 49,433 | 898 | 1.82 | | Long-term borrowings | **255,901** | **11,784** | **4.60** | 253,671 | 11,801 | 4.65 | 78,262 | 3,727 | 4.76 | | **Total Borrowings** | **311,763** | **13,423** | **4.31** | 290,163 | 12,660 | 4.36 | 127,695 | 4,625 | 3.62 | | **Total Interest-Bearing Liabilities** | **2,201,200** | **40,122** | **1.82** | 1,637,523 | 23,854 | 1.46 | 1,588,899 | 8,320 | 0.52 | | Noninterest-bearing demand deposits | **566,057** | | | 478,534 | | | 543,843 | | | | Other liabilities | **39,153** | | | 28,276 | | | 442 | | | | Stockholders’ Equity | **392,445** | | | 291,025 | | | 259,094 | | | | **Total Liabilities and Stockholders’ Equity** | **$3,198,855** | | | $2,435,358 | | | $2,392,278 | | | | **Taxable Equivalent Net Interest Income** | | **123,734** | | | 84,240 | | | 89,003 | | | **Taxable Equivalent Adjustment** | | **(644)** | | | (629) | | | (683) | | | **Net Interest Income** | | **$123,090** | | | $83,611 | | | $88,320 | | | **Cost of Funds** | | | **1.45%** | | | 1.13% | | | 0.39% | | **FTE Net Interest Margin** | | | **4.23%** | | | 3.79% | | | 4.07% | 1 Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate. 2 Average balances include non-accrual loans and are net of unearned income. 3 Average balance of investment securities is computed at fair value. FTE net interest income totaled $123.7 million for the year ended December 31, 2025 compared to $84.2 million for the same period of 2024, an increase of $39.5 million, or 46.9%. The FTE net interest margin for 2025 was 4.23%, an increase of 44 bps from 3.79% for the same period of 2024. The increases in FTE interest income, interest expense and the increases to average interest-earning assets and liabilities were driven primarily by the Acquisition. The following table analyzes the relative impact on FTE net interest income attributed to changes in the volume of interest-earning assets and interest-bearing liabilities and changes in yields and rates: *(In thousands)* | INTEREST EARNING ASSETS Loans | 2025 versus 2024 Volume | Yield/Rate 1 | Net | 2024 versus 2023 Volume | Yield/Rate 1 | Net | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Taxable | **$36,082** | **$15,856** | **$51,938** | $5,636 | $5,478 | $11,114 | | Tax-exempt | **(99)** | **155** | **56** | (275) | 56 | (219) | | **Total Loans 2** | **35,983** | **16,011** | **51,994** | 5,361 | 5,534 | 10,895 | | Investment Securities | | | | | | | | Taxable | **760** | **2,016** | **2,776** | (1,051) | 1,453 | 402 | | Tax-exempt | **(12)** | **28** | **16** | (79) | 39 | (40) | | **Total Investment Securities 3** | **748** | **2,044** | **2,792** | (1,130) | 1,492 | 362 | | Interest-bearing deposits with banks | **1,884** | **(908)** | **976** | (639) | 153 | (486) | | **Total Interest Income** | **$38,615** | **$17,147** | **$55,762** | $3,592 | $7,179 | $10,771 | | **INTEREST-BEARING LIABILITIES** | | | | | | | | Interest-bearing demand deposits | **$289** | **$261** | **$550** | $(69) | $915 | $846 | | Money markets | **2,580** | **4,374** | **6,954** | (148) | 1,544 | 1,396 | | Savings deposits | **4** | **(15)** | **(11)** | (16) | 12 | (4) | | Time deposits | **5,050** | **2,962** | **8,012** | 197 | 5,064 | 5,261 | | **Total Interest-Bearing Deposits** | **7,923** | **7,582** | **15,505** | (36) | 7,535 | 7,499 | | Short-term borrowings | **455** | **325** | **780** | (236) | 197 | (39) | | Long-term borrowings | **104** | **(121)** | **(17)** | 8,349 | (275) | 8,074 | | **Total Borrowings** | **559** | **204** | **763** | 8,113 | (78) | 8,035 | | **Total Interest Expense** | **8,482** | **7,786** | **16,268** | 8,077 | 7,457 | 15,534 | | **Change in Net Interest Income** | **$30,133** | **$9,361** | **$39,494** | $(4,485) | $(278) | $(4,763) | 1 The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column. 2 Based on average balances and includes non-accrual loans and are net of unearned income. 3 Average balance of investment securities is computed at fair value. FTE total interest income increased $55.8 million during 2025 compared to the same period of 2024. ACNB experienced a $38.6 million increase in interest income attributable to growth of average interest earning assets and a $17.1 million increase in the yield on interest earning assets. The average yield on interest-earning assets was 5.61% for 2025, an increase of 75 bps from the same period of 2024. FTE interest income on loans increased $52.0 million compared to the same period of 2024 due to growth in average loans and an increase in the yield on loans. Average loans increased $635.8 million while the yield increased 73 bps. Total interest expense increased $16.3 million during 2025 compared to the same period of 2024. The increase was primarily due to a $542.1 million increase in average interest-bearing deposits and higher rates on interest-bearing deposits. The average rate paid on interest-bearing deposits was 1.41%, an increase of 58 bps during 2025. The largest increases in rates were in money markets and time deposits which increased 88 and 66 bps, respectively. #### Provision for Credit Losses and Unfunded Commitments For the year ended December 31, 2025, the provision for credit losses was $5.3 million and the provision for unfunded commitments was a reversal of $532 thousand, compared to reversals of the provisions for credit losses and unfunded commitments of $2.4 million and $326 thousand, respectively, for the same period of 2024. In 2025, ACNB recorded an allowance for credit losses of $6.9 million at the Acquisition date, comprised of $5.5 million for non-PCD loans, which was recognized through the provision for credit losses, and $1.5 million for accruing PCD loans, which was recognized as an acquisition accounting adjustment to the amortized cost basis of the acquired loans. The reversal of the provision for unfunded commitments was impacted by the incorporation of post-COVID data which resulted in lower loss rates utilized within the Bank’s ACL model. During 2024, the Corporation revised estimates driven by a realignment of the peer group used for the CECL allowance process, an update to loss driver factors from third-party data, and an update to the application of prepayment and curtailment rate studies since implementation of CECL on January 1, 2023. These estimates, which were based on more current information available as of June 30, 2024, drove input assumptions which are used in the determination of the Corporation’s allowance for credit losses and the reserve for unfunded commitments. These updated estimates were the primary drivers for the reversal of the provision for credit losses and unfunded commitments in 2024. The determination of the provisions was a result of the analysis of the adequacy of the allowances for credit losses and unfunded commitments calculations. Each quarter, the Corporation assesses risks and reserves required compared with the balances in the allowance for credit losses and unfunded commitments. Nonaccrual loans increased $2.0 million during 2025 driven primarily by the Acquisition and, to a lesser extent, by three unrelated lending relationships in the commercial real estate and residential mortgage portfolios. For additional discussion of the provision and the associated loans, please refer to the *Asset Quality* section of this Management’s Discussion and Analysis. #### Noninterest Income *(In thousands)* | NONINTEREST INCOME | 2025 | 2024 | 2023 | $ Variance 2025 vs. 2024 | % Variance | $ Variance 2024 vs. 2023 | % Variance | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Insurance commissions | **$9,482** | $9,754 | $9,319 | $(272) | (2.8)% | $435 | 4.7% | | Gain from mortgage loans held for sale | **5,266** | 301 | 56 | 4,965 | N/M | 245 | N/M | | Service charges on deposits | **4,841** | 4,144 | 3,958 | 697 | 16.8 | 186 | 4.7 | | Wealth management | **4,475** | 4,226 | 3,644 | 249 | 5.9 | 582 | 16.0 | | ATM debit card charges | **3,563** | 3,303 | 3,348 | 260 | 7.9 | (45) | (1.3) | | Earnings on investment in bank-owned life insurance | **2,593** | 1,979 | 1,878 | 614 | 31.0 | 101 | 5.4 | | Gain on life insurance proceeds | **285** | — | — | 285 | 100.0 | — | — | | Net (losses) gains on sales or calls of investment securities | **(3,535)** | 69 | (5,240) | (3,604) | N/M | 5,309 | 101.3 | | Net gains (losses) on equity securities | **30** | (9) | 18 | 39 | N/M | (27) | (150.0) | | Gain on assets held for sale | **—** | — | 337 | — | — | (337) | (100.0) | | Other | **1,609** | 963 | 1,127 | 646 | 67.1 | (164) | (14.6) | | **Total Noninterest Income** | **$28,609** | $24,730 | $18,445 | $3,879 | 15.7% | $6,285 | 34.1% | As announced on Form 8-K on December 5, 2025, ACNB completed a repositioning of the investment securities portfolio by selling $74.6 million in book value of AFS investment securities, consisting of lower-yielding agency debt securities, for a pre-tax loss of $3.6 million. Total noninterest income, excluding net (losses) gains on sales or calls of investment securities, totaled $32.1 million in 2025 compared to $24.7 million in the same period of 2024, a $7.5 million increase. The majority of increases were driven primarily by the Acquisition and changes to customer products. The more significant fluctuations in noninterest income that were not a direct result of the Acquisition are explained below: - Earnings on investment in bank-owned life insurance increased driven primarily by the Acquisition and the purchase of new policies. - Gain on life insurance proceeds were the result of a death benefit received on a life insurance policy. #### Noninterest Expenses *(In thousands)* | NONINTEREST EXPENSES | 2025 | 2024 | 2023 | $ Variance 2025 vs. 2024 | % Variance | $ Variance 2024 vs. 2023 | % Variance | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Salaries and employee benefits | **$52,779** | $42,929 | $40,931 | $9,850 | 22.9% | $1,998 | 4.9% | | Equipment | **9,477** | 7,321 | 6,514 | 2,156 | 29.4 | 807 | 12.4 | | Net occupancy | **5,177** | 4,162 | 3,908 | 1,015 | 24.4 | 254 | 6.5 | | Professional services | **2,660** | 2,140 | 2,320 | 520 | 24.3 | (180) | (7.8) | | Other tax | **1,847** | 1,446 | 1,269 | 401 | 27.7 | 177 | 13.9 | | FDIC and regulatory | **1,751** | 1,425 | 1,388 | 326 | 22.9 | 37 | 2.7 | | Intangible assets amortization | **4,257** | 1,244 | 1,424 | 3,013 | N/M | (180) | (12.6) | | Merger-related | **10,718** | 2,045 | — | 8,673 | N/M | 2,045 | 100.0 | | Other | **11,849** | 7,973 | 8,318 | 3,876 | 48.6 | (345) | (4.1) | | **Total Noninterest Expenses** | **$100,515** | $70,685 | $66,072 | $29,830 | 42.2% | $4,613 | 7.0% | Noninterest expenses increased $29.8 million in 2025 compared to the same period of 2024, driven primarily by the Acquisition. The more significant fluctuations in noninterest expenses that were not a direct result of the Acquisition are explained below: - Salaries and employee benefits, the largest component of noninterest expenses, increased driven primarily by an increased number of employees attributable to the Acquisition, merit increases and higher mortgage commissions. - Equipment increased $2.2 million driven primarily by the Acquisition and the implementation of additional products into our core processing system. - Other increased $3.9 million driven primarily by the Acquisition, higher internet banking services and contributions. - Merger-related, which include legal, external audit, loan review and advisory fees, occurred due to the Acquisition. #### Income Taxes The Corporation recognized income taxes of $9.4 million during 2025 compared to $8.6 million during 2024. The provision for income taxes reflects an ETR of 20.2% for 2025 and 21.2% for 2024. The variances from the federal statutory rate of 21% are generally due to tax-free income, which includes, but not limited to, interest income on tax-free loans and investment securities and income from bank-owned life insurance policies, federal income tax credits, the impact of non-tax deductible expenses such as certain merger-related costs and state taxes. Note 15 — “Income Taxes”, to the Consolidated Financial Statements under Part II, Item 8 — “Financial Statements and Supplementary Data,” includes a reconciliation of the federal statutory tax rate to the Corporation’s ETR, which measures income tax expense as a percentage of pretax income. ### FINANCIAL CONDITION Total assets were $3.23 billion at December 31, 2025 compared to $2.39 billion at December 31, 2024. The Acquisition contributed $877.7 million to total assets. #### Investment Securities ACNB uses investment securities to manage interest rate risk, provide collateral for certain funding products, provide liquidity and generate interest and dividend income. These securities provide the appropriate characteristics with respect to credit quality, yield and maturity relative to the management of the overall Consolidated Statement of Condition. In December of 2025, ACNB completed a repositioning of the investment securities portfolio by selling $74.6 million in book value of AFS investment securities, consisting of lower-yielding agency investment securities, for an after-tax loss of $2.8 million. The investment securities sold had an average book yield of approximately 1.13% with a weighted-average remaining life of approximately 2.0 years. Net proceeds of $71.1 million from the sale were used to purchase higher-yielding investment securities that were all classified as AFS. The investment securities purchased consisted of $25.3 million of agency multi-family investment securities, $22.9 million agency collateralized mortgage obligation securities and $22.9 million agency mortgage-backed securities. The repositioning is estimated to improve interest income on the investment securities portfolio by approximately $2.6 million over the next 12 months. ACNB expects to recover the $2.8 million after-tax loss on the sale of investment securities in approximately 1.4 years. The table below presents the carrying amount of investment securities: *(In thousands)* | Available for Sale | December 31, 2025 | December 31, 2024 | Increase (Decrease) $% | | | --- | ---: | ---: | ---: | ---: | | U.S. Government and agencies | **$59,352** | $143,193 | $(83,841) | (58.6)% | | Collateralized mortgage obligations | **74,030** | 35,654 | 38,376 | 107.6 | | Residential mortgage-backed securities | **173,688** | 138,540 | 35,148 | 25.4 | | Commercial mortgage-backed securities | **122,209** | 60,785 | 61,424 | 101.1 | | State and municipal | **8,450** | — | 8,450 | 100.0 | | Corporate bonds | **29,165** | 15,803 | 13,362 | 84.6 | | **Total AFS Investment Securities** | **$466,894** | $393,975 | $72,919 | 18.5% | | Held to Maturity | | | | | | State and municipal | **$62,200** | $62,838 | $(638) | (1.0)% | | Residential mortgage-backed securities | **1,088** | 1,740 | (652) | (37.5) | | **Total HTM Investment Securities** | **$63,288** | $64,578 | $(1,290) | (2.0)% | At December 31, 2025, the investment securities balance included a net unrealized loss on AFS investment securities of $19.5 million, net of taxes, at an amortized cost of $491.1 million compared to a net unrealized loss of $38.2 million, net of taxes, at an amortized cost of $441.6 million at December 31, 2024. The changes in fair value are deemed to be related solely to changes in market interest rates and not related to credit deterioration. At December 31, 2025, the securities balance included HTM investment securities with an amortized cost of $63.3 million and a fair value of $57.5 million as compared to an amortized cost of $64.6 million and a fair value of $56.9 million at December 31, 2024. The Corporation's ACL on its HTM investment securities was de minimis. The Corporation does not own investments consisting of pools of Alt-A or subprime mortgages, private label mortgage-backed securities, or trust preferred investments. The following table discloses investment securities at the scheduled maturity date and weighted average yield at amortized cost at December 31, 2025. Mortgage-backed securities are allocated based upon scheduled maturities. Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties. Therefore, the stated yield may not be recognized in future periods. Additionally, residential mortgage-backed securities, which are collateralized by residential mortgage loans, typically prepay at a rate faster than the stated maturity. See “Note 4 — Investment Securities” for additional details. *(Dollars in thousands)* | Available for Sale | Maturing 1 Year or Less Amortized Cost | Weighted Average Yield1 | Over 1 - 5 Years Amortized Cost | Weighted Average Yield1 | Over 5 - 10 Years Amortized Cost | Weighted Average Yield1 | Over 10 Years or No Maturity Amortized Cost | Weighted Average Yield1 | Total Amortized Cost | Weighted Average Yield 1 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | U.S. Government and agencies | **$2,730** | **0.78%** | **$43,605** | **1.06%** | **$19,235** | **1.27%** | **$—** | **—%** | **$65,570** | **1.11%** | | Collateralized mortgage obligations | **—** | **—** | **47** | **2.22** | **230** | **2.53** | **75,705** | **3.96** | **75,982** | **3.95** | | Residential mortgage-backed securities | **—** | **—** | **1,224** | **2.33** | **17,073** | **1.84** | **167,906** | **2.92** | **186,203** | **2.81** | | Commercial mortgage-backed securities | **381** | **2.96** | **27,007** | **4.83** | **35,450** | **4.74** | **62,158** | **3.90** | **124,996** | **4.34** | | State and municipal | **—** | **—** | **—** | **—** | **—** | **—** | **8,499** | **5.23** | **8,499** | **5.23** | | Corporate bonds | **—** | **—** | **17,271** | **4.83** | **12,600** | **4.75** | **—** | **—** | **29,871** | **4.80** | | **Total** | **$3,111** | **1.04%** | **$89,154** | **2.95%** | **$84,588** | **3.36%** | **$314,268** | **3.42%** | **$491,121** | **3.31%** | | Held to Maturity | | | | | | | | | | | | State and municipal | **$400** | **1.27%** | **$5,652** | **1.85%** | **$36,357** | **2.43%** | **$19,791** | **2.46%** | **$62,200** | **2.38%** | | Residential mortgage-backed securities | **—** | **—** | **882** | **2.04** | **206** | **2.50** | **—** | **—** | **1,088** | **2.13** | | **Total** | **$400** | **1.27%** | **$6,534** | **1.88%** | **$36,563** | **2.43%** | **$19,791** | **2.46%** | **$63,288** | **2.38%** | 1 Weighted Average Yield has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate. The fair value of CRA Mutual Fund equity security has a readily determinable fair value of $949 thousand at December 31, 2025 with no stated maturity. #### Loans The following table presents the composition of the loan portfolio as follows: *(In thousands)* | | December 31, 2025 | December 31, 2024 | Increase $% | | | --- | ---: | ---: | ---: | ---: | | Commercial real estate | **$1,273,813** | $969,514 | $304,299 | 31.4% | | Residential mortgage | **599,051** | 401,950 | 197,101 | 49.0 | | Commercial and industrial | **205,452** | 140,906 | 64,546 | 45.8 | | Home equity lines of credit | **127,341** | 85,685 | 41,656 | 48.6 | | Real estate construction | **116,680** | 76,773 | 39,907 | 52.0 | | Consumer | **10,140** | 9,318 | 822 | 8.8 | | Gross loans | **2,332,477** | 1,684,146 | 648,331 | 38.5 | | Unearned income | **(1,963)** | (1,236) | 727 | 58.8 | | **Total Loans, Net of Unearned Income** | **$2,330,514** | $1,682,910 | $647,604 | 38.5% | The increase in total loans, net of unearned income, was driven primarily by $648.5 million in loans purchased at the Acquisition date. Total acquisition accounting adjustments on loans were $18.2 million at December 31, 2025. The majority of the loan acquisition accounting adjustments are expected to accrete back through as income as loans pay off or mature. Growth in the portfolio was spread throughout ACNB’s geographic footprint and across various property types. The collateral for the loans is primarily spread across the Bank’s Market Area. Despite the intense competition in these areas, management continues to focus on asset quality and disciplined underwriting standards in the loan origination process. ACNB does not have a significant concentration of credit risk with any single borrower, industry or geographic location. Most of the Corporation’s lending activities are with customers located within the Bank’s Market Area. The commercial real estate portfolio grew $304.3 million in 2025. The collateral for these loans is primarily spread across Pennsylvania and Maryland, 65.8% and 32.1%, respectively, at December 31, 2025 compared to 56.0% and 42.1%, respectively, at December 31, 2024. Less than 3% of the portfolio is for real estate in Urban areas such as Baltimore, Maryland and Philadelphia, Pennsylvania. The largest sectors of the commercial real estate portfolio are retail and mixed-use commercial rental units, office complexes, apartment complexes and hotels, motels and bed and breakfast entities. Non-owner occupied commercial real estate represented 65.4% of the commercial real estate portfolio at December 31, 2025, compared to 62.3% at December 31, 2024. Non-owner occupied commercial real estate borrowers are geographically dispersed throughout ACNB’s Market Area and are leasing commercial properties to a varied group of tenants including medical offices, retail space, and other commercial purpose facilities. Because of the varied nature of the tenants in aggregate, management believes that these loans present an acceptable risk when compared to commercial loans in general. The following chart details the percentage of the various segments included in the portfolio: 1 Constitutes over 40 loan categories that do not fit into the categories presented above The concentration of non-owner occupied commercial real estate, construction, and multi-family was 239.0% of total risk-based capital of the Bank as of December 31, 2025 compared to 207.0% of total risk-based capital of the Bank as of December 31, 2024. The increase was primarily a result of the Acquisition. Residential real estate mortgages totaled $599.1 million, an increase of $197.1 million, or 49.0%, in 2025. Included in the residential real estate mortgages are $221.1 million of commercial loans primarily for investment properties and $61.3 million of consumer loans secured by residential real estate mortgages. Total residential real estate mortgages include $50.7 million in junior liens. Junior liens inherently have more credit risk by virtue of the fact that another financial institution may have a senior security position in the case of foreclosure liquidation of collateral to extinguish the debt. Commercial and industrial loans totaled $205.5 million, an increase of $64.5 million, or 45.8% in 2025. This segment includes loans to school districts, municipalities (including townships) and essential purpose authorities. In many cases, these loans are obtained through a bid process that includes other local and regional banks and are especially subject to refinancing in certain rate environments. The following table presents the maturity schedule of the loan portfolio, segmented based on the underlying collateral, at December 31, 2025. Loans with variable rates or floating interest rates include adjustable-rate instruments that may have a remaining period of fixed rate interest, and in some instances, multiple years of a fixed rate interest period. ### LOANS MATURING *(In thousands)* | Loans with predetermined (fixed) interest rates | Due in One Year or Less | Due After One Year to Five Years | Due After Five Years to Fifteen Years | Due After Fifteen Years | Total | | --- | ---: | ---: | ---: | ---: | ---: | | Commercial real estate | **$36,949** | **$114,376** | **$19,541** | **$445** | **$171,311** | | Residential mortgage | **6,515** | **27,647** | **86,934** | **90,769** | **211,865** | | Commercial and industrial | **5,000** | **61,433** | **4,542** | **—** | **70,975** | | Home equity lines of credit | **—** | **94** | **29** | **229** | **352** | | Real estate construction | **11,603** | **12,669** | **1,040** | **28,485** | **53,797** | | Consumer | **259** | **3,644** | **1,825** | **36** | **5,764** | | **Total predetermined (fixed) interest rates** | **60,326** | **219,863** | **113,911** | **119,964** | **514,064** | | **Loans with variable or floating interest rates** | | | | | | | Commercial real estate | **35,978** | **129,584** | **458,602** | **478,338** | **1,102,502** | | Residential mortgage | **5,702** | **8,574** | **73,233** | **299,677** | **387,186** | | Commercial and industrial | **54,961** | **16,985** | **44,140** | **18,391** | **134,477** | | Home equity lines of credit | **14,821** | **20,538** | **22,985** | **68,645** | **126,989** | | Real estate construction | **17,681** | **17,952** | **6,476** | **20,774** | **62,883** | | Consumer | **450** | **854** | **1,187** | **1,885** | **4,376** | | **Total variable or floating interest rates** | **129,593** | **194,487** | **606,623** | **887,710** | **1,818,413** | | **Total fixed and floating interest rates** | **$189,919** | **$414,350** | **$720,534** | **$1,007,674** | **$2,332,477** | #### Asset Quality The ACNB loan portfolio is subject to varying degrees of credit risk. Credit risk is mitigated through prudent and disciplined underwriting standards, ongoing credit review, and monitoring and reporting asset quality measures. Additionally, loan portfolio diversification, limiting exposure to a single industry or borrower, and requiring collateral also reduces ACNB’s credit risk. ACNB’s commercial, consumer and residential mortgage loans are principally to borrowers in ACNB’s Market Area. As the majority of ACNB’s loans are located in this area, a substantial portion of the debtor’s ability to honor the obligation may be affected by the level of economic activity in the Market Area. The accrual of interest on residential mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in the process of collection. Consumer loans (consisting of home equity lines of credit and consumer loan categories) are typically charged off no later than 120 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. ACNB occasionally returns nonaccrual loans to performing status when the borrower brings the loan current and performs in accordance with contractual terms for a reasonable period of time. For loans to borrowers with commercial purposes, an internal risk rating process is used to monitor credit quality. For a complete description of the Corporation’s risk ratings, refer to the “Allowance for Credit Losses” section within Note 1 — “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8 — “Financial Statements and Supplementary Data”. The following table sets forth the Corporation’s nonperforming assets as of December 31: *(Dollars in thousands)* | | 2025 | 2024 | | --- | ---: | ---: | | Nonaccrual loans | **$7,867** | $5,871 | | Greater than or equal to 90 days past due and accruing | **2,854** | 941 | | **Total Nonperforming Loans** | **10,721** | 6,812 | | Foreclosed assets | **19** | 438 | | **Total Nonperforming Assets** | **$10,740** | $7,250 | | Ratios: | | | | Nonperforming loans to total loans | **0.46%** | 0.40% | | Nonperforming assets to total assets | **0.33** | 0.30 | | Allowance for credit losses to nonperforming loans | **220.80** | 253.67 | Nonaccrual loans increased $2.0 million driven primarily by the Acquisition and, to a lesser extent, by three unrelated relationships in the commercial real estate and residential mortgage portfolios. All nonaccrual loans are to borrowers located within ACNB’s Market Area and were originated by ACNB’s banking subsidiary or were part of the Acquisition and were originated by Traditions’ banking subsidiary. Additional information on nonaccrual loans by collateral type at December 31 is as follows: *(Dollars in thousands)* | 2025 | Number of Credit Relationships | Balance | Current Specific Loss Allocations | Current Year Charge-Offs | Location | Originated | | --- | ---: | ---: | ---: | ---: | --- | --- | | Commercial real estate | **10** | **$3,961** | **$—** | **$—** | **In market** | **2006-2024** | | Business assets | **5** | **1,971** | **259** | **—** | **In market** | **2009-2023** | | Residential real estate | **6** | **1,935** | **131** | **—** | **In market** | **2019-2022** | | **Total** | **21** | **$7,867** | **$390** | **$—** | | | | **2024** | | | | | | | | Commercial real estate | 6 | $3,564 | $138 | $— | In market | 2006-2022 | | Business assets | 4 | 2,307 | 569 | — | In market | 2009-2023 | | **Total** | 10 | $5,871 | $707 | $— | | | Foreclosed assets held for resale consist of the fair value of real estate acquired through foreclosure on real estate loan collateral or the acceptance of ownership of real estate in lieu of the foreclosure process. Fair values are based on appraisals that consider the sales prices of similar properties in the proximate vicinity less estimated selling costs. Foreclosed assets held for resale totaled $19 thousand, consisting of one property, at December 31, 2025 compared to two properties totaling $438 thousand at December 31, 2024. #### Allowance for Credit Losses In 2023, the Corporation adopted ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, universally referred to as CECL which replaced the prior incurred loss methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans, HTM securities and purchased financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. It also applies to OBS credit exposures such as loan commitments, standby letters of credit, financial guarantees and other similar instruments. ACNB maintains the ACL at a level believed to be adequate by management to absorb current expected losses in the loan portfolio, and it is funded through a provision for credit losses charged to earnings. A summary of ACNB’s activity in the ACL as of December 31: *(Dollars in thousands)* | | 2025 | 2024 | 2023 | | --- | ---: | ---: | ---: | | Beginning balance | **$17,280** | $19,969 | $17,861 | | Impact of CECL adoption | **—** | — | 1,618 | | Allowance established for acquired PCD loans | **1,464** | — | — | | Provision for (reversal of) credit losses | **5,262** | (2,437) | 860 | | Loans charged-off: | | | | | Commercial and industrial | **14** | 138 | 110 | | Commercial real estate | **32** | — | — | | Residential mortgage | **19** | — | — | | Consumer | **358** | 218 | 396 | | **Total Loans Charged-Off** | **423** | 356 | 506 | | Recoveries: | | | | | Commercial and industrial | **15** | 26 | 64 | | Consumer | **74** | 78 | 72 | | **Total Recoveries** | **89** | 104 | 136 | | Net charge-offs | **334** | 252 | 370 | | Ending balance | **$23,672** | $17,280 | $19,969 | | Ratios: | | | | | Net charge-offs to average loans | **0.01%** | 0.02% | 0.02% | | Allowance for credit losses to total loans | **1.02%** | 1.03% | 1.23% | The increase in the ACL for the year ended December 31, 2025 compared to the prior year was driven primarily by the higher provision for credit losses during 2025 related to the Acquisition. Total internally risk rated loans were $1.80 billion as of December 31, 2025 with a related ACL of $19.0 million. The allocation of the ACL as of December 31: *(In thousands)* | | 2025 Amount | Percent of Loan Type to Total Loans | 2024 Amount | Percent of Loan Type to Total Loans | | --- | ---: | ---: | ---: | ---: | | Commercial real estate | **$13,259** | **54.6%** | $10,578 | 57.6% | | Residential mortgage | **5,386** | **25.7** | 2,976 | 23.9 | | Commercial and industrial | **1,800** | **8.8** | 1,416 | 8.4 | | Home equity lines of credit | **482** | **5.5** | 294 | 5.1 | | Real estate construction | **2,588** | **5.0** | 1,918 | 4.5 | | Consumer | **157** | **0.4** | 98 | 0.5 | | **Total** | **$23,672** | **100.0%** | $17,280 | 100.0% | 44 #### Deposits The following table presents ending deposits, by type, as of December 31: *(In thousands)* | | 2025 | 2024 | Increase $% | | | --- | ---: | ---: | ---: | ---: | | Noninterest-bearing demand deposits | **$553,855** | $451,503 | $102,352 | 22.7% | | Interest-bearing demand deposits | **623,620** | 505,096 | 118,524 | 23.5 | | Money market | **485,808** | 251,667 | 234,141 | 93.0 | | Savings | **333,973** | 311,207 | 22,766 | 7.3 | | Total demand and savings | **1,997,256** | 1,519,473 | 477,783 | 31.4 | | Time | **452,929** | 273,028 | 179,901 | 65.9 | | **Total Deposits** | **$2,450,185** | $1,792,501 | $657,684 | 36.7% | The Bank relies on deposits as a primary source of funds for lending activities. The Bank’s deposit pricing function employs a disciplined approach based upon liquidity needs and alternative funding rates, but also strives to price deposits to be competitive with relevant local competition, including local government investment trusts, credit unions and larger regional banks. The increase in deposits from December 31, 2024 to December 31, 2025 was driven primarily by the Acquisition. ACNB acquired $741.5 million in deposits at the Acquisition date. Total demand and savings deposits increased $477.8 million and time deposits increased $179.9 million. Included in time deposits was $59.1 million in brokered time deposits issued by the Bank. Total deposits as of December 31, 2025 were comprised of approximately 61% consumer deposits and 39% commercial deposits, compared to approximately 63% consumer deposits and 37% commercial deposits as of December 31, 2024. The loan-to-deposit ratio was 95.12% at December 31, 2025 compared to 93.89% at December 31, 2024. Included in total deposits at December 31, 2025 were municipal deposits totaling $119.3 million, or 4.9%, of total deposits compared to $111.0 million, or 6.2%, of total deposits at December 31, 2024. Uninsured and non-collateralized deposits to total Bank deposits was 17.7% compared to 16.3% at December 31, 2025 and 2024, respectively. As of December 31, 2025, cash on hand, the fair value of unencumbered investment securities and collateralized borrowing capacities at the FHLB and the Federal Reserve discount window at the Bank were 342.7% of uninsured and non-collateralized Bank deposits. At December 31, 2025 deposits from the 20 largest depositors, excluding internal accounts, of the Bank totaled $177.2 million, or 7.2%, of total Bank deposits compared to $143.4 million, or 7.9%, of total Bank deposits at December 31, 2024. See Note 10 — “Deposits”, to the Consolidated Financial Statements under Part II, Item 8 — “Financial Statements and Supplementary Data,” for more information. #### Borrowings The Corporation’s borrowings as of December 31: *(In thousands)* | | 2025 | 2024 | Increase $% | | | --- | ---: | ---: | ---: | ---: | | Securities sold under repurchase agreements | **$16,129** | $15,826 | $303 | 1.9% | | Short-term FHLB advances | **45,000** | — | 45,000 | 100.0 | | Federal funds purchased | **3,611** | — | 3,611 | 100.0 | | **Total Short-Term Borrowings** | **64,740** | 15,826 | 48,914 | 309.1 | | Long-term FHLB advances | **235,000** | 235,000 | — | — | | Trust preferred subordinated debt1 | **5,376** | 5,333 | 43 | 0.8 | | Subordinated debt | **15,000** | 15,000 | — | — | | **Total Long-Term Borrowings** | **255,376** | 255,333 | 43 | — | | **Total Borrowings** | **$320,116** | $271,159 | $48,957 | 18.1% | 1Net of purchase accounting fair value mark. Short-term borrowings are comprised primarily of securities sold under agreements to repurchase, short-term borrowings from the FHLB and federal funds purchased. Fluctuations in securities sold under agreements to repurchase balances are due to normal changes in the cash flow position of ACNB’s commercial and local government customer base. Agreements to repurchase accounts are within the commercial and local government customer base and have attributes similar to core deposits. Investment securities are pledged in sufficient amounts to collateralize these agreements. Short-term FHLB borrowings are used for general balance sheet management. Long-term borrowings consist of longer-term advances from the FHLB, trust preferred subordinated debt and subordinated debt. Further borrowings will be used when necessary for a variety of risk management and funding purposes. Please refer to the *Liquidity* discussion below for more information on the Corporation’s ability to borrow. #### Capital ACNB’s capital management strategies have been developed to provide an appropriate rate of return relative to management’s identification and management of risk, in the opinion of management, to stockholders, while maintaining levels above its internal minimums and “well capitalized” regulatory position in relationship to its risk exposure. Total stockholders’ equity was $420.0 million at December 31, 2025 compared to $303.3 million at December 31, 2024. Stockholders’ equity increased primarily due to the $83.6 million issuance of common stock to acquire Traditions, net income of $37.1 million and a $18.6 million change in unrealized gains in AFS investment securities partially offset by $14.4 million in cash dividends paid to ACNB Corporation stockholders and $11.2 million of common stock repurchases. ACNB has a Dividend Reinvestment and Stock Purchase Plan that provides registered holders of ACNB common stock with a convenient way to purchase additional shares of common stock by permitting participants in the plan to automatically reinvest cash dividends on all or a portion of the shares owned and to make quarterly voluntary cash payments under the terms of the plan. Participation in the plan is voluntary, and there are eligibility requirements to participate in the plan. During the year ended December 31, 2025, 15,419 shares were issued under this plan. Proceeds from the plan are used for general corporate purposes. On June 18, 2025, the Corporation announced that the Board of Directors approved a plan to repurchase, in open market transactions at prevailing market prices, up to 314,000 shares, or approximately 3%, of the outstanding shares of ACNB’s common stock. This common stock repurchase program replaced and superseded any and all earlier announced repurchase plans. There were 116,929 shares purchased under this plan during 2025. On October 24, 2022, the Corporation announced that the Board of Directors approved on October 18, 2022 a new plan to repurchase, in open market and privately negotiated transactions, up to 255,575, or approximately 3%, of the outstanding shares of the Corporation’s common stock. There were 215,372 treasury shares purchased under this plan through June 30, 2025. The plan was replaced by the plan announced on June 18, 2025. #### Regulatory Capital Requirements The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Minimum regulatory capital requirements established by Basel III rules require the Corporation and the Bank to: - Meet a minimum Tier 1 leverage capital ratio of 4.0% of average assets; - Meet a minimum Common Equity Tier 1 capital ratio of 4.5% of risk-weighted assets; - Meet a minimum Tier 1 capital ratio of 6.0% of risk-weighted assets; - Meet a minimum Total capital ratio of 8.0% of risk-weighted assets; - Maintain a “capital conservation buffer” of 2.5% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus; and, - Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses. ACNB considers the capital ratios of the banking subsidiary to be the relevant measurement of capital adequacy. The banking subsidiary’s capital ratios are as follows: | | 2025 | 2024 | To be Well Capitalized under Prompt Corrective Action Regulations | | --- | ---: | ---: | ---: | | Tier 1 leverage ratio (to average assets) | **10.92%** | 12.03% | 5.00% | | Common Tier 1 capital (to risk-weighted assets) | **14.32%** | 16.03% | 6.50% | | Tier 1 risk-based capital ratio (to risk-weighted assets) | **14.32%** | 16.03% | 8.00% | | Total risk-based capital ratio (to risk-weighted assets) | **15.30%** | 17.02% | 10.00% | Quantitative measures established by regulation to ensure capital adequacy require ACNB to maintain minimum amounts and ratios of total and Tier 1 capital to average and risk adjusted assets. Management believes, as of December 31, 2025 and 2024, that ACNB’s banking subsidiary met all minimum capital adequacy requirements to which it is subject and is categorized as “well capitalized” for regulatory purposes. There are no subsequent conditions or events that management believes have changed the banking subsidiary’s category. For further information on the actual and required capital amounts and ratios, please refer to Note 16 — “Regulatory Matters” in the Notes to Consolidated Financial Statements. #### Liquidity Effective liquidity management ensures the cash flow requirements of depositors and borrowers as well as the operating cash needs of ACNB are met. ACNB’s funds are available from a variety of sources, including assets that are readily convertible such as interest-bearing deposits with banks, maturities and repayments from the securities portfolio, scheduled repayments of loans receivable, the core deposit base, the ability to raise brokered deposits, and the ability to borrow from the FHLB, Federal Reserve Discount Window and unsecured Federal Funds line providers. At December 31, 2025, ACNB’s banking subsidiary could borrow $1.29 billion from the FHLB of which $1.01 billion was available. At December 31, 2025, ACNB’s banking subsidiary could borrow $57.0 million from the Discount Window, of which the full amount was available. The underlying collateral at the Discount Window is made up of eligible loan collateral held in a joint-custody account under the Bank’s name. ACNB’s banking subsidiary maintains several unsecured Fed Funds lines with correspondent banks. As of December 31, 2025, Fed Funds line capacity at the banking subsidiary was $192.0 million, of which the full amount was available. ACNB maintains a $5.0 million unsecured line of credit with a correspondent bank, all of which was available for borrowing at December 31, 2025. The Corporation also executed a guaranty for a note related to a $1.5 million commercial line of credit from a local bank, with customary terms and conditions for such a line, for ACNB Insurance Services, the borrower and wholly-owned subsidiary of ACNB Corporation. The commercial line of credit is for general working capital needs as they arise by ACNB Insurance Services. Another source of liquidity is securities sold under repurchase agreements to customers of the Bank totaling $16.1 million and $15.8 million at December 31, 2025 and 2024, respectively. These agreements vary in balance according to the cash flow needs of customers and competing accounts at other financial organizations. The liquidity of the parent company also represents an important aspect of liquidity management. The parent company’s cash outflows consist principally of dividends to stockholders, common stock repurchases and corporate expenses. The main source of funding for the parent company is the dividends it receives from its subsidiaries. Federal and state banking regulations place certain legal restrictions and other practicable safety and soundness restrictions on dividends paid to the parent company from the subsidiary bank. For a discussion of ACNB’s dividend restrictions, please refer to Item 1 — “Business” and Note 16 — “Regulatory Matters” in the Notes to Consolidated Financial Statements. ACNB manages liquidity by monitoring projected cash inflows and outflows on a daily basis, and believes it has sufficient funding sources to maintain sufficient liquidity under varying degrees of business conditions for liquidity and capital resource requirements for all material short- and long-term cash requirements from known contractual and other obligations. #### Off-Balance Sheet Arrangements The Corporation is party to financial instruments with OBS risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and, to a lesser extent, standby letters of credit. At December 31, 2025 the Corporation had unfunded outstanding commitments to extend credit of $566.8 million and outstanding standby letters of credit of $24.4 million. Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements. Please refer to Note 17 — “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for a discussion of the nature, business purpose, and importance of the Corporation’s OBS arrangements. #### New Accounting Pronouncements See Note 1 — “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements for a summary of these new accounting pronouncements not yet adopted. ## Market risk As filed, 8,055 characters. The primary objective of ACNB’s ALCO with direct oversight from the Board is to maximize net interest income within established policy parameters. This objective is accomplished through the management of the statement of condition composition and duration, market risk exposures arising from changing economic conditions, and liquidity risk. Market risk comprises exposure to interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market rate or price risks. Specific to the banking industry, one of the greatest risk exposures is to that of changing market interest rates. The primary objective of monitoring ACNB’s interest rate sensitivity risk is to provide management the flexibility necessary to manage the statement of condition to minimize adverse changes in net interest income as a result of changes in the direction and level of interest rates. FOMC monetary policy, economic uncertainty, and fiscal policy changes have been significant factors affecting the task of managing interest rate sensitivity positions in recent years. ACNB’s ALCO is a management committee responsible for monitoring and managing interest rate risk within approved policy limits, utilizing earnings sensitivity simulation and economic value-at-risk models. These models are highly dependent on various assumptions, which change regularly as the statement of condition composition and market interest rates change. The key assumptions and strategies employed are analyzed, reviewed and documented at least annually by the ALCO as well as provided to the Board. ### Interest Rate Risk Interest rate risk is the exposure to fluctuations in the Bank’s future earnings (earnings at risk) and value (value at risk) resulting from changes in interest rates. This exposure results from differences between the amounts of interest-earning assets and interest-bearing liabilities that reprice within a specified time period as a result of scheduled maturities, scheduled and unscheduled repayments, the propensity of borrowers and depositors to react to changes in their economic interests, and contractual loan interest rate changes. Management attempts to manage the level of repricing and maturity mismatch through its asset/liability management processes so that fluctuations in net interest income are maintained within policy limits across a range of market conditions while satisfying liquidity and capital requirements. Management recognizes that a certain amount of interest rate risk is inherent, appropriate, and necessary to ensure the Bank’s profitability. Thus, the goal of the Bank’s interest rate risk management is to minimize the fluctuations of net interest income across all interest rate scenarios. Management endeavors to control the exposure to changes in interest rates by understanding, reviewing, and making decisions based on its risk position. The Bank primarily uses its securities portfolio, FHLB advances, derivatives and brokered deposits to manage its interest rate risk position. Additionally, pricing, promotion, and product development activities are directed in an effort to emphasize the loan and deposit repricing characteristics that best meet current interest rate risk objectives. ACNB uses simulation analysis to assess earnings at risk and net present value analysis to assess value at risk. These methods allow management to regularly monitor both the direction and magnitude of its interest rate risk exposure. These analyses require numerous assumptions including, but are not limited to, changes in the statement of condition mix, prepayment rates on loans and securities, cash flows and repricing of all financial instruments, changes in volumes and pricing, future shapes of the yield curve, relationship of market interest rates to each other (basis risk), credit spread, and deposit sensitivity. Assumptions are based on management’s best estimates, but may not accurately reflect actual results under certain changes in interest rates due to the timing, magnitude, and frequency of rate changes and changes in market conditions and management strategies, among other factors. However, the analyses are useful in quantifying risk and providing a relative gauge of the Corporation’s interest rate risk position over time. ACNB’s ALCO operates under management policies, approved by the Board, which define guidelines and limits on the level of risk. ALCO meets regularly and reviews its interest rate risk position and monitors various liquidity ratios to ensure a satisfactory liquidity position. By utilizing the analyses, management can determine changes that may need to be made to the asset and liability mixes to mitigate the change in net interest income under various interest rate scenarios. Management continually evaluates the condition of the economy, the pattern of market interest rates, and other economic data to inform the committee. Regulatory authorities also monitor the Corporation’s interest rate risk position along with other liquidity ratios. ### Net Interest Income Sensitivity Simulation analysis evaluates the effect of upward and downward changes in market interest rates on future net interest income. The analysis involves changing the interest rates used in determining net interest income over the next twelve months. The resulting percentage change in net interest income in various rate scenarios is an indication of Corporation’s short-term interest rate risk. The analysis assumes recent pricing trends in new loan and deposit volumes will continue while balances remain constant. Additional assumptions are applied to modify pricing under the various rate scenarios. The simulation analysis results are presented in the table below. At December 31, 2025, results in the falling or rising interest rate scenarios project a decrease in net interest income. The Bank is currently modestly asset-sensitive according to the model in a down rate environment as interest-earning assets are expected to reprice faster than interest-bearing liabilities. *12-Month Earnings at Risk Ramps* | Change in Market Interest Rates (bps) | % Change in Net Interest Income December 31, 2025 | December 31, 2024 | Policy Limits | | ---: | ---: | ---: | ---: | | (200) | (0.9)% | (1.7)% | (10.0)% | | (100) | (0.6)% | (1.0)% | (5.0)% | | 100 | (0.3)% | 0.3% | (5.0)% | | 200 | (1.1)% | (0.3)% | (10.0)% | ### Economic Value Net present value analysis provides information on the risk inherent in the statement of condition that might not be considered in the simulation analysis due to the short time horizon used. The net present value of the statement of condition incorporates the discounted present value of expected asset cash flows minus the discounted present value of expected liability cash flows. The analysis involves changing the interest rates used in determining the expected cash flows and in discounting the cash flows. The resulting percentage change in net present value in various rate scenarios is an indication of the longer-term repricing risk and options embedded in the statement of condition. The results at December 31, 2025 and 2024 are reflected in the following table. Funding cost and repricing speed will continue to be a factor in the results of the model. The behavior of the business and retail clients also varies across the rate scenarios, which is reflected in the results. To improve comparability across periods, the Bank strives to follow best practices related to the assumption setting and maintains the size and mix of the period end statement of condition; thus, the results do not reflect actions management may take through the normal course of business that would impact results. *Value at Risk Ramps* | Change in Market Interest Rates (bps) | % Change in Market Value December 31, 2025 | December 31, 2024 | Policy Limits | | ---: | ---: | ---: | ---: | | (200) | (11.0)% | (10.8)% | (35.0)% | | (100) | (3.3)% | (3.7)% | (20.0)% | | 100 | (0.1)% | (1.2)% | (20.0)% | | 200 | (2.8)% | (4.8)% | (35.0)% | 49 ## Controls and procedures As filed, 4,458 characters. ### EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES The Corporation carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Corporation (including its consolidated subsidiaries) required to be included in periodic SEC filings. Based on the evaluation of the effectiveness of the design and operation of the disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of December 31, 2025. The Corporation believes that the accompanying Consolidated Financial Statements fairly present the financial condition and results of operations for the fiscal years presented in this report on Form 10-K. ### CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There were no changes made to the Corporation’s internal control over financial reporting during the most recent fiscal quarter that materially affected, or would be reasonably likely to materially affect, the Corporation’s internal control over financial reporting. **MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING** ACNB is responsible for the preparation, integrity, and fair presentation of the Consolidated Financial Statements included in this annual report. The Consolidated Financial Statements and notes included in this annual report have been prepared in conformity with GAAP and, as such, include some amounts that are based on management’s best estimates and judgments. ACNB’s management is responsible for establishing and maintaining effective internal control over financial reporting. The system of internal control over financial reporting, as it relates to the Consolidated Financial Statements, is evaluated for effectiveness by management and tested for reliability through a program of internal audits and management testing and review. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation. The Board of Directors of ACNB, through its Audit Committee, meets regularly with management, internal auditors and the independent registered public accounting firm. The Audit Committee provides oversight to ACNB by reviewing audit plans and results, and evaluates management’s actions for internal control, accounting and financial reporting matters. The internal auditors and independent registered public accounting firm have direct and confidential access to the Audit Committee to discuss the results of their examinations. Management assessed the effectiveness of ACNB’s internal control over financial reporting as of December 31, 2025. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its *Internal Control—Integrated Framework (2013)*. Based on our assessment, management concluded that as of December 31, 2025, ACNB’s internal control over financial reporting is effective and meets the criteria of the *Internal Control—Integrated Framework (2013).* ACNB’s independent registered public accounting firm, which audited the Consolidated Financial Statements included in this annual report, has issued an attestation report on ACNB’s internal control over financial reporting as of December 31, 2025 that appears in Item 8 of this Form 10-K and is incorporated into this item by reference. | | | | --- | --- | | /s/ JAMES P. HELT | /s/ JASON H. WEBER | | James P. Helt President & Chief Executive Officer | Jason H. Weber Executive Vice President/Treasurer & Chief Financial Officer | 107 Filed Mar 12, 2026. Source: SEC EDGAR, the filing index for accession 0001628280-26-017229. Last ingested by Listed: Oct 28, 2026, 09:00 ET. No prices; not investment advice.