FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001.
Commission file no. 0-11783.
ACNB CORPORATION
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2233457
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(State of Incorporation) (IRS Employer Identification Number)
16 LINCOLN SQUARE
GETTYSBURG, PA 17325
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (717)334-3161
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON CAPITAL STOCK PAR VALUE $2.50 A SHARE
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past ninety (90) days. YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
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As of February 28, 2002, ACNB Corporation had outstanding 5,436,101 shares
of Common Stock. The aggregate market value of such Common Stock held by
nonaffiliates as of February 28, 2002, was approximately $94,501,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2001 Annual Report to Shareholders are
incorporated by reference into Parts II, III and IV. Portions of the Proxy
Statement for the Annual Meeting of Shareholders, to be held May 7, 2002, are
incorporated by reference into Part III.
FORM 10-K
PART I
ITEM 1. BUSINESS
The Registrant owns all of the outstanding shares of Adams County National
Bank (hereinafter the "Bank"). The Registrant, organized in 1983 and
headquartered in Gettysburg, Pennsylvania, presently has no significant
operations other than serving as a financial holding company.
On March 31, 1999, ACNB Corporation acquired Farmers National Bancorp,
Inc., a single-bank holding company located in Newville, Cumberland County,
Pennsylvania, with assets of $44 million. The sole and wholly-owned subsidiary
of Farmers National Bancorp, Inc. was Farmers National Bank of Newville. The
rate of exchange was 2.266 shares of ACNB Corporation for every share of Farmers
National Bancorp, Inc. Then, effective October 1, 2000, Farmers National Bank of
Newville became a division of Adams County National Bank.
The Bank engages in a full-service commercial and consumer banking and
trust business. Adams County National Bank provides financial services to its
customers through its retail banking network of fifteen offices located
throughout Adams County, Pennsylvania, and in Hanover, York County,
Pennsylvania. Farmers National Bank of Newville, a division of Adams County
National Bank, serves its marketplace via three banking offices in the Newville,
Cumberland County, Pennsylvania area. As of December 31, 2001, the Registrant
had a total of 174 full-time and 68 part-time employees.
The Bank's primary services include accepting demand, savings and time
deposits including NOW, SuperNOW, money market, passbook and statement savings,
a diversified array of certificates of deposit, IRAs, and club accounts. These
services also include making secured and unsecured commercial and consumer
loans; financing commercial transactions; making construction and mortgage
loans; making residential mortgage loans and home equity lines of credit; making
small business loans; making student loans; and, the renting of safe deposit box
facilities. Further, the Bank's business loans include seasonal credit,
collateral loans and term loans.
Trust and investment services provided by Adams County National Bank
include services as executor and trustee under wills and deeds; estate planning
and settlement; personal trust administration; and, investment planning and
management. Trust services also include employee benefit services for employers
such as pension and profit-sharing plans.
The Bank has a relatively stable deposit base, and no material amount of
deposits is obtained from a single depositor or group of depositors (including
federal, state and local governments). See Management's Discussion and Analysis
in the 2001 Annual Report to Shareholders. The Bank has not experienced any
significant seasonal fluctuations in the amount of its deposits.
During 2000, ACNB Corporation, along with seven other banks, entered into a
joint venture to form Pennsbank Insurance Company, an offshore reinsurance
company. Each bank owns an insurance cell through which its premiums and losses
from credit life, health and accident insurance are funded. Each bank is
responsible for the activity in its respective cell. The 2000 and 2001 financial
activity for the insurance cell has been included in the consolidated financial
statements.
SUPERVISION AND REGULATION
The Registrant and the Bank are considered "affiliates" for purposes of
Section 23A of the Federal Reserve Act and, as such, are subject to certain
limitations specified therein on the making of loans on, extensions of credit
to, or investments in each other. The Gramm-Leach-Bliley Act of 1999, also
called the Financial Services Modernization Act, repealed the Glass-Steagall
Act, which prohibits commercial banks from engaging in the securities industry.
The Financial Services Modernization Act permits national banks to engage in
expanded activities, such as having a subsidiary engaged in any activity
authorized for national banks, except for insurance underwriting, insurance
investments, real estate investment or development, or merchant banking, which
must be conducted through a subsidiary of a Financial Holding Company. The
Registrant became a Financial Holding Company in Fourth Quarter 2000, as
permitted under an amendment to the Bank Holding Company Act.
COMPETITION
All phases of the Bank's business are highly competitive. The Bank's market
area is the primary trading area of Adams County, Pennsylvania; a western
portion of York County, Pennsylvania; central Cumberland County, Pennsylvania;
and, the northernmost portions of those counties in Maryland which are
immediately adjacent to the southern border of Adams County. The market
concentration is in the area of Gettysburg, Pennsylvania. The Bank competes with
local commercial banks, other commercial banks with branches in the Bank's
market area, savings banks, and other financial service providers. The Bank
considers its major competition to be PNC Bank, Allfirst Bank, Bank of Hanover,
Peoples State Bank, M&T Bank, F&M Trust, and Orrstown Bank.
GOVERNMENT MONETARY POLICIES AND ECONOMIC CONTROLS
The earnings and growth of the Bank are affected by the policies of the
regulatory authorities including the Office of the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, and the Federal Deposit
Insurance Corporation. An important function of the Federal Reserve System is to
regulate the money supply and interest rates. Among the instruments used to
implement these objectives are open market operations in U.S. Government
securities and changes in reserve requirements against member bank deposits.
These instruments are used in varying combinations to influence overall growth
and distribution of bank loans, investments and deposits. Their use may also
affect interest rates charged on loans or paid for deposits. The policies and
regulations of the Federal Reserve Board have had, and will probably continue to
have, a significant effect on the Bank's deposits, loans and investment growth,
as well as the rate of interest earned and paid. The impact of such policies and
regulations upon the future business and earnings of the Bank cannot be
accurately predicted.
FORM 10-K
ITEM 2. PROPERTIES
The Registrant owns two offices and leases one office in Gettysburg,
Pennsylvania. The office at 16 Lincoln Square is the main office and
administrative headquarters. The Registrant owns eight other offices and leases
three facilities, which are spread throughout Adams County. In addition, the
Registrant owns one office in western York County and two in central Cumberland
County. A third facility in Cumberland County is leased. All three counties are
located in southcentral Pennsylvania.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of the management of the Registrant, there are no
proceedings pending to which the Registrant and the Bank are a party or to which
its property is subject, which, if determined adversely to the Registrant and
the Bank, would be material in relation to the Registrant's and Bank's financial
condition. There are no proceedings pending other than ordinary routine
litigation incident to the business of the Registrant and the Bank. In addition,
no material proceedings are pending or are known to be threatened or
contemplated against the Registrant and the Bank by government authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information required by this Item, regarding market value, dividend
payment, and number of shareholders, is set forth on page 45 of the Registrant's
2001 Annual Report to Shareholders and incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is set forth on pages 7 and 38 of the
Registrant's 2001 Annual Report to Shareholders and incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is set forth on pages 8 through 16 of
the Registrant's 2001 Annual Report to Shareholders and incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The information required by this Item is set forth on pages 12 through 13
of the Registrant's 2001 Annual Report to Shareholders and incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth on pages 18 through 37
of the Registrant's 2001 Annual Report to Shareholders and incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item, relating to directors, executive
officers, and control persons, is set forth in sections "Principal Beneficial
Owners of the Corporation's Stock", "Information as to Nominees, Directors and
Executive Officers" and "Principal Officers of the Corporation" of the
Registrant's definitive Proxy Statement to be used in connection with the 2002
Annual Meeting of Shareholders, which pages are incorporated herein by
reference.
Section 16(a) Beneficial Ownership Compliance. Section 16(a) of the
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Securities Exchange Act of 1934, as amended, requires the Registrant's officers
and directors, and persons who own more than 10 percent of a registered class of
the Registrant's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission, or SEC. Officers,
directors and greater than 10 percent shareholders are required by SEC
regulation to furnish the Registrant with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Registrant believes that during the period of
January 1, 2001, through December 31, 2001, its officers and directors were in
compliance with all filing requirements applicable to them.
FORM 10-K
PART IV
ITEM 14C. EXHIBITS
EXHIBIT 3(i) Articles of Incorporation of ACNB Corporation, as amended.
EXHIBIT 3(ii) Bylaws of Registrant
A copy of the Bylaws, as amended, of ACNB Corporation is incorporated
by reference to Exhibit 3(ii) of the Registrant's Current Report on
Form 8-K, filed with the Commission on March 25, 1998.
EXHIBIT 10.1 Executive Employment Agreement Dated as of January 1, 1998,
between Adams County National Bank, ACNB Corporation and
Ronald L. Hankey
A copy of the Executive Employment Agreement dated as of January 1,
1998, between Adams County National Bank, ACNB Corporation and Ronald
L. Hankey is incorporated by reference to Exhibit 99 of the
Registrant's Current Report on Form 8-K, filed with the Commission on
March 25, 1998.
EXHIBIT 10.2 Executive Employment Agreement Dated as of January 1, 2000,
between Adams County National Bank, ACNB Corporation and
Thomas A. Ritter
A copy of the Executive Employment Agreement dated as of January 1,
2000, between Adams County National Bank, ACNB Corporation and Thomas
A. Ritter is incorporated by reference to Exhibit 99 of the
Registrant's Current Report on Form 8-K, filed with the Commission on
March 26, 2001.
EXHIBIT 11 Statement Regarding the Computation of Earnings Per Share
EXHIBIT 12 Statements Regarding the Computation of Ratios
The information required by this Exhibit is set forth on page 38 of
the Registrant's 2001 Annual Report to Shareholders and incorporated
herein by reference.
EXHIBIT 21 Subsidiaries of the Registrant
The Registrant has one banking subsidiary, Adams County National Bank,
a national bank, which is wholly-owned by the Registrant.
EXHIBIT 23 Consents
FORM 10-K
ITEM 15. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ACNB CORPORATION (Registrant) March 19, 2002
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Date
BY: /s/ Ronald L. Hankey BY: /s/ John W. Krichten
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Ronald L. Hankey John W. Krichten
Chairman & CEO Secretary & Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on March 19, 2002, by the following persons in the
capacities indicated.
/s/ Philip P. Asper /s/ William B. Lower
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Philip P. Asper William B. Lower
Director Director
/s/ Guy F. Donaldson /s/ Thomas A. Ritter
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Guy F. Donaldson Thomas A. Ritter
Director Director & President
/s/ D. Richard Guise /s/ Ralph S. Sandoe
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D. Richard Guise Ralph S. Sandoe
Director & Vice Chairman of the Board Director
/s/ Ronald L. Hankey /s/ Marian B. Schultz
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Ronald L. Hankey Marian B. Schultz
Director, Chairman & CEO Director
/s/ Edgar S. Heberlig /s/ Jennifer L. Weaver
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Edgar S. Heberlig Jennifer L. Weaver
Director Director
/s/ Wayne E. Lau /s/ Harry L. Wheeler
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Wayne E. Lau Harry L. Wheeler
Director Director