UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11783
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ACNB CORPORATION
- --------------------------------------------------------------------------------
(Exact name of corporation as specified in its charter)
PENNSYLVANIA 23-2233457
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16 LINCOLN SQUARE, GETTYSBURG, PA 17325
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(Address of principal executive offices) (Zip Code)
(717) 334-3161
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(corporation's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the corporation (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
corporation was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the corporation has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class - Common Stock ($2.50 par value)
Outstanding at July 31, 2002 - 5,436,101
PART I
ITEM I FINANCIAL INFORMATION
ACNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
6/30 6/30 12/31
2002 2001 2001
ASSETS (000 omitted)
Cash and Due from Banks $ 22,157 $ 46,734 $ 21,925
Investment Securities
Securities Held to Maturity 36,232 47,515 48,480
Securities Available for Sale 196,977 92,541 175,017
-------- -------- --------
Total Investment Securities 233,209 140,056 223,497
Federal Funds Sold 0 0 0
Loans 370,821 359,916 362,579
Less: Reserve for Loan Losses (3,778) (3,757) (3,723)
-------- -------- --------
Net Loans 367,043 356,159 358,856
Premises and Equipment 6,612 5,409 5,704
Other Real Estate 807 1,262 1,646
Other Assets 19,054 17,354 18,606
-------- -------- --------
TOTAL ASSETS $648,882 $566,974 $630,234
======== ======== ========
LIABILITIES
Deposits
Noninterest Bearing 75,857 67,317 70,907
Interest Bearing 467,601 407,628 438,328
-------- -------- --------
Total Deposits 543,458 474,945 509,235
Securities Sold Under
Agreement To Repurchase 25,999 24,274 33,239
Borrowing Federal Home Loan Bank 7,700 0 17,850
Demand Notes U.S. Treasury 450 450 412
Other Liabilities 5,120 5,070 6,805
-------- -------- --------
TOTAL LIABILITIES 582,727 504,739 567,541
SHAREHOLDERS' EQUITY
Common Stock ($2.50 par value)
20,000,000 shares authorized:
5,436,101 shares issued and
outstanding at 6/30/02 13,590 13,590 13,590
Retained Earnings 50,998 48,031 48,661
Accumulated Other Comprehensive Income 1,567 614 442
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 66,155 62,235 62,693
TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY $648,882 $566,974 $630,234
======== ======== ========
See accompanying notes to financial statements.
PAGE 2
ACNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
6/30 6/30
2002 2001 2002 2001
(000 omitted) (000 omitted)
INTEREST INCOME
Loan Interest and Fees $6,241 $7,088 $12,508 $14,320
Interest and Dividends on
Investment Securities 3,097 2,517 6,228 5,309
Interest on Federal Funds Sold 0 127 0 198
Interest on Balances with
Depository Institutions 12 99 23 137
------ ------ ------- -------
TOTAL INTEREST INCOME 9,350 9,831 18,759 19,964
INTEREST EXPENSE
Deposits 3,008 3,851 6,062 7,691
Other Borrowed Funds 199 256 458 930
------ ------ ------- -------
TOTAL INTEREST EXPENSE 3,207 4,107 6,520 8,621
NET INTEREST INCOME 6,143 5,724 12,239 11,343
Provision for Loan Losses 60 60 120 120
NET INTEREST INCOME AFTER PROVISION ------ ------ ------- -------
FOR LOAN LOSSES 6,083 5,664 12,119 11,223
OTHER INCOME
Trust Department 225 120 377 278
Service Charges on Deposit Accounts 418 340 817 578
Other Operating Income 518 352 1,159 806
Securities Gains 0 0 0 0
------ ------ ------- -------
TOTAL OTHER INCOME 1,161 812 2,353 1,662
OTHER EXPENSES
Salaries and Employee Benefits 2,338 1,999 4,489 3,845
Premises and Equipment 490 467 1,017 1,030
Other Expenses 1,227 1,140 2,499 2,130
------ ------ ------- -------
TOTAL OTHER EXPENSE 4,055 3,606 8,005 7,005
INCOME BEFORE INCOME TAX 3,189 2,870 6,467 5,880
Applicable Income Tax 969 885 1,973 1,867
------ ------ ------- -------
NET INCOME $2,220 $1,985 $ 4,494 $ 4,013
====== ====== ======= =======
EARNINGS PER SHARE* $0.41 $0.37 $0.83 $0.74
DIVIDENDS PAID PER SHARE 0.20 0.20 0.60 0.40
*Based on a weighted average of 5,436,101 shares outstanding in 2002 and
5,436,133 in 2001
See accompanying notes to financial statements.
Page 3
ACNB CORPORATION AND SUBSIDIARY
STATEMENT OF CASH FLOWS
Six months ended
6/30
2002 2001
(000 omitted)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash Flows from Operating Activities:
Interest and Dividends Received $ 17,536 $ 19,125
Fees and Commissions Received 2,408 1,824
Interest Paid (7,123) (8,282)
Cash Paid to Suppliers and Employees (7,955) (14,788)
Income Taxes Paid (2,087) (1,973)
Net Cash (Used in) Provided by Operating Activities 2,779 (4,094)
Cash Flows from Investing Activities:
Proceeds from Maturities of Investment Securities
and Interest Bearing Balances with Other Banks 27,294 31,998
Purchase of Investment Securities and Interest
Bearing Balances with Other Banks (34,084) 0
Principal Collected on Loans 46,044 40,751
Loans Made to Customers (54,209) (40,016)
Capital Expenditures (1,199) (936)
Net Cash (Used in) Provided by Investing Activities (16,154) 31,797
Cash Flow from Financing Activities:
Net Increase (Decrease) in Demand Deposits, NOW Accounts, and
Savings Accounts 35,242 5,459
Proceeds from Sale of Certificates of Deposit 21,432 18,875
Payments for Maturing Certificates of Deposit (29,693) (10,471)
Dividends Paid (3,262) (2,174)
Increase (Decrease) in Borrowings (10,112) (16,300)
Retirement of Common Stock 0 (74)
Net Cash Used in Financing Activities 13,607 (4,685)
Net Increase (Decrease) in Cash and Cash Equivalents 232 23,018
Cash and Cash Equivalents: Beginning of Period 21,925 23,716
End of Period $ 22,157 $ 46,734
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net Income $ 4,494 $ 4,013
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 291 215
Provision for Loan Losses 120 120
Provision for Deferred Taxes (390) (85)
Amortization (Accretion) of Investment Securities Premiums (4) 12
Increase (Decrease) in Taxes Payable 276 (21)
(Increase) Decrease in Interest Receivable 198 (75)
Increase (Decrease) in Interest Payable (603) 339
Increase (Decrease) in Accrued Expenses 247 468
(Increase) Decrease in Other Assets (646) (8,466)
Increase (Decrease) in Other Liabilities (1,204) (614)
Net Cash (Used in) Provided by Operating Activities $ 2,779 $ (4,094)
DISCLOSURE OF ACCOUNTING POLICY
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, and federal funds sold. Generally, federal funds
are purchased and sold for one-day periods.
Page 4
ACNB CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly
ACNB Corporation's financial position as of June 30, 2002 and 2001 and
December 31, 2001 and the results of its operations for the six months
ended June 30, 2002 and 2001 and changes in financial position for the six
months then ended. All such adjustments are of a normal recurring nature.
The accounting policies followed by the corporation are set forth in Note A
to the corporation's financial statements in the 2001 ACNB Corporation
Annual Report and Form 10-K filed with the Securities and Exchange
Commission under file no. 0-11783.
2. The book and approximate market value of securities owned at June 30, 2002
and December 31, 2001 were as follows:
6/30/02 12/31/01
Amortized Fair Amortized Fair
Cost Value Cost Value
(000 omitted)
U.S. Treasury and U.S. Government
Agencies (held to maturity) 30,542 32,340 40,744 42,388
State and Municipal (held to
maturity) 1,709 1,763 2,123 2,126
Corporate (held to maturity) 218 223 1,957 1,974
Corporate (available for sale) 23,997 24,073
U.S. Government Agencies
(available for sale) 170,058 172,904 173,845 175,017
Restricted Equity Securities 3,763 3,763 3,656 3,656
-------- -------- -------- --------
TOTAL $230,287 $235,066 $222,325 $225,161
Income earned on investment securities was as follows:
Six Months Ended June 30
2002 2001
(000 omitted)
U.S. Treasury 26 343
U.S. Government Agencies 5,935 4,604
State and Municipal 40 59
Other Investments 227 303
----- -----
6,228 5,309
Page 5
3. Gross loans are summarized as follows:
June 30 December 31
2002 2001
(000 omitted)
Real Estate 324,609 316,928
Real Estate Construction 13,075 15,497
Commercial and Industrial 21,592 18,027
Consumer 11,545 12,127
-------- --------
Total Loans $370,821 $362,579
4. Earnings per share are based on the weighted average number of shares of
stock outstanding during each period. Weighted average shares outstanding
for the three month periods ended June 30, 2002 and 2001 were 5,436,101 and
5,436,133 respectively.
5. Dividends paid per share were $.60 and $.40 for the six month periods ended
June 30, 2002 and 2001, respectively. This represented a 72% payout of net
income in 2002 and a 54% payout in 2001.
6. The results of operations for the six month periods ended June 30, 2002 and
2001 are not necessarily indicative of the results to be expected for the
full year.
Page 6
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The Registrant's discussion and analysis of the significant changes in the
results of operations, capital resources and liquidity presented in the
accompanying consolidated financial statements for the Registrant, and its
wholly-owned subsidiary, Adams County National Bank, follow. The Registrant's
consolidated financial condition and results of operations consist almost
entirely of the bank's financial condition and results of operations. This
discussion should be read in conjunction with the corporation's 2001 Annual
Report to Shareholders. Current performance does not guarantee, assure, and is
not necessarily indicative of similar performance in the future.
In addition to historical information, this Form 10-Q contains forward-looking
statements. From time to time, the corporation may publish forward-looking
statements relating to such matters as anticipated financial performance,
business prospects, technological developments, new products, research and
development activities and similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for forward-looking statements. In
order to comply with the terms of the safe harbor, the corporation notes that a
variety of factors could cause the corporation's actual results and experience
to differ materially from the anticipated results or other expectations
expressed in the corporation's forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of the corporation's business include the following: general economic
conditions, including their impact on capital expenditures; business conditions
in the banking industry; the regulatory environment; rapidly changing technology
and evolving banking industry standards; competitive factors, including
increased competition with community, regional and national financial
institutions; new service and product offerings by competitors and price
pressures; and similar items.
Three months ended June 30, 2002 compared to three months ended June 30, 2001
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Net Income for the three month period ending June 30, 2002 was $2,220,000, up
$235,000 from the second quarter of 2001. Net interest income was up, total
other income was up and total other expense was up. The second quarter increase
is due to improved net interest income. Net income per share, for the second
quarter, was $.41, compared to the $.37 earned in the same period in 2001. For
the three month period (annualized) in 2002, the return on average assets and
return on average equity were 1.41% and 13.96%, respectively, compared to 1.42%
and 12.92%, respectively for 2001.
An explanation of the factors and trends that caused changes between the two
periods, by major earnings category, follows.
Total interest income for the second three month period of 2002 was $9,350,000,
down $481,000 or 4.9% below the $9,831,000 earned in the same period of 2001.
The $481,000 decrease in interest income was due to a sustained fall in interest
rates during 2001. In an effort to manage interest rate risk, the Registrant
lowered interest rates on transaction accounts to historic lows. Income from
loans and securities during the current period decreased approximately $267,000
due to lower interest rates even though loan and security volumes continued to
grow.
Page 7
Total interest expense for the second three month period of 2002 was $3,207,000,
down $900,000 or 21.9% from the $4,107,000 incurred for the same period in 2001.
The $900,000 decrease in interest expense was due to lower interest rates,
especially in the transaction account area. Because the decrease in interest
expense exceeded the decrease in interest income, net interest income increased
$419,000.
Total other income for the second three month period of 2002 at $1,161,000, was
$349,000 greater than the same quarter in 2001. This was due to increased
service charges on deposit accounts, trust income and a gain on sale of a parcel
of other real estate owned. The bank introduced a new service called overdraft
privilege in mid-year 2001. The increase should continue until the third quarter
of this year when it should mirror last year's performance. In the trust area,
there were improvements in both estate fees and brokerage fees. In addition, the
bank sold a small repossessed subdivision which generated a one-time gain of
$113,000.
Total other expense for the second three month period of 2002 was $4,055,000, up
$449,000 from the $3,606,000 incurred for the second quarter of 2001. The
increase was in salary and employee benefits, and write off of deposit purchase
premium and professional services associated with the overdraft plan, mentioned
above.
The provision for income taxes in the second quarter increased $84,000 due to a
higher level of pretax earnings.
Six months ended June 30,2002 compared to six months ended June 30, 2001
- ------------------------------------------------------------------------
Net income for the first six months of 2002 was $4,494,000, up $481,000 or 12%
above the $4,013,000 earned for the same period of 2001. The increase in net
income was due primarily to stronger net interest income but partially offset by
growing total other expense as explained below. For the six month period
(annualized) of 2002, the return on average assets (ROA) and return on average
equity (ROE) were 1.44% and 14.25%, respectively, compared to 1.43% and 13.12%,
respectively, for 2001.
At June 30, 2002, total assets were approximately $649 million, reflecting an
$82 million or 14% increase above June 30, 2001. This increase in assets stems
from migration of funds from the equities market and the purchase of
approximately $24,000,000 in deposits in November 2001. As explained more fully
under Capital Management section, book value per share was $12.17 on June 30,
2002, compared to $11.45 on June 30, 2001. The corporation's capital remained
sound as evidenced by Total Shareholders Capital Ratio of 10.19% and a Total
Risk-Based Capital Ratio of 18.27% on June 30, 2002.
Total interest income for the current six month period was $18,759,000 down
$1,205,000 or 6% from the $19,964,000 earned in the same period of 2001. The
$1,205,000 decrease in total interest income was due to falling interest rates
in the general market economy in 2002 translating to lower rates on new loans
and securities. In 2001, market rates fell rapidly and the effect is still
strongly affecting yields on components of the corporation's balance sheet.
Total interest expense for the current six month period was $6,520,000, down
$2,101,000 or 24% below the $8,621,000 incurred for the same period in 2001. The
$2,101,000 decrease in total interest expense was due to falling interest rates
through the year 2001 and their effect continuing into 2002.
Page 8
Net interest income was $12,239,000 for the current period, $896,000 above the
first six months in 2001. Margins are slipping, but assets are increasing and
helping net interest income. The bank has shifted to a funds purchased position
from a funds sold position since June of 2001, and has been able to improve
dollar denominated net yield, but not margins.
Total non-interest income for the current six month period was $2,353,000 ,an
increase of $691,000 or 42% above the same period in 2001. The increase was
caused by a $239,000 improvement in service charges on deposit accounts, as a
result of the new product mentioned above, $99,000 in trust services (mainly in
estates and brokerage fees), $32,000 in loan application fees, $123,000 on Bank
Owned Life Insurance, a $60,000 litigation settlement, and $116,000 in gains on
sale of other real estate.
Total non-interest expense for the current six month period was $8,005,000,
$1,000,000 or 14% above the $7,005,000 incurred for the same period in 2001. The
increase was located in a $644,000 increase in salaries and benefits, a $159,000
increase in write-off of deposit purchase premium, a $28,000 increase in audit
fees, a $37,000 increase in professional fees, and $52,000 increase in
charged-off cash items.
The provision for income taxes was $1,973,000 for the current period, $106,000
above the same period in 2001 due to higher pretax income.
OVERVIEW OF THE BALANCE SHEET
The changes in the balance sheet have been driven by strong growth in deposits.
The following are some of the results:
o Total investment securities were $233,209,000 at June 30, 2002, an increase
of $93,153,000 or 66% since June 30, 2001. Securities have increased from
25% of total assets to 36% of total assets.
o Total deposits have grown from $474,945,000 at June 30, 2001 to
$543,458,000 at June 30, 2002, an increase of $68,513,000 or 14%.
Approximately $24,000,000 of those deposits were obtained through a branch
purchase transaction with Farmers and Mechanics Bank of Frederick,
Maryland. Certificates of deposit were down $1,919,000 or 1% from the June
30, 2001 total. More than 100% of the $68,513,000 increase was from
transaction accounts. This has increased our liability sensitivity, as
measured by the bank's internal gap (see below).
o Accumulated other comprehensive income has increased from $442,000 at
December 31, 2001 to $1,567,000 at June 30, 2002. This indicates the after
tax effect in the change in market value of the available for sale
securities portfolio. This shift helped in repositioning of the portfolio
for income purposes as interest rates fell in the second quarter. Certain
low rate securities were sold in July to shorten maturities. Shorter term
securities will make it possible to sell and repurchase securities with
better yields in a rising rate environment.
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
Six Months Ended
6/30/02 6/30/01
Rate Rate
Earning Assets 6.36% 7.51%
Interest Bearing Liabilities 2.67% 3.97%
Interest Rate Spread 3.69% 3.54%
Net Yield on Earning Assets 4.15% 4.27%
Page 9
Net Yield on Earning Assets is the difference, stated in percentages, between
the interest earned on loans and other investments and the interest paid on
deposits and other sources of funds. The Net Yield on Earning Assets is one of
the best analytical tools available to demonstrate the effect of interest rate
changes on the corporation's earning capacity.
The Net Yield on Earning Assets, for the first six months of 2002, was down 12
basis points compared to the same period in 2001. Yields on loans and securities
have changed more rapidly than deposit rates as interest rates in the general
economy have continued to fall over the last twelve months.
PROVISION AND RESERVE FOR POSSIBLE LOAN LOSSES
Reserve for Possible Loan Losses
(In Thousands)
Six Months Ended
6/30/02 6/30/01
Balance at Beginning of Period 3,723 3,695
Provision Charged to Expense 120 120
Loans Charged Off 115 81
Recoveries 50 23
Balance at End of Period 3,778 3,757
Ratios:
Net Charge-offs to:
Net Income 1.45% 1.45%
Total Loans .02% .02%
Reserve for Possible Loan Losses 1.72% 1.54%
Reserve for Possible Loan Losses to:
Total Loans 1.02% 1.04%
The Reserve for Possible Loan Losses at June 30, 2002 was $3,778,000 (1.02% of
Total Loans), an increase of $21,000 from $3,757,000 (1.04% of Total Loans) at
the end of the first six months of 2001. Loans past due 90 days and still
accruing were $1,856,000 and non-accrual loans were $775,000, as of June 30,
2002. The ratio of non-performing assets plus other real estate owned to total
assets was .53%, at June 30, 2002. All properties are carried at the lower of
market or book value and are not considered to represent significant threat of
loss to the bank. In addition, a parcel of other real estate owned with a book
value of $782,000 was sold during the second quarter for $890,000, reducing
other real estate owned(OREO) by over 50%.
Loans past due 90 days and still accruing were $1,003,000, at year end 2001,
while non-accruals were at $837,000. The bulk of the corporation's real estate
loans are in owner occupied dwellings. Management believes that internal loan
review procedures will be effective in recognizing and correcting any real
estate lending problems that may occur due to current economic conditions.
Interest not accrued, due to an average of $799,000 in non-accrual loans, was
approximately $28,000 for the first six months of 2002.
The bank considers a loan impaired when, based on current information and
events, it is probable that a lender will be unable to collect all amounts due.
We measure impaired loans based on the present value of expected future cash
flows, discounted at the loan's effective interest rate, or as a practical
Page 10
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. If the measure of the impaired
loan is less than its recorded investment a lender must recognize an impairment
by creating, or adjusting, a valuation allowance with a corresponding charge to
loan loss expense. The corporation uses the cash basis method to recognize
interest income on loans that are impaired. All of the corporation's impaired
loans were on a non-accrual status for all reported periods.
CAPITAL MANAGEMENT
Total Shareholders' Equity was $66,155,000 at June 30, 2002, compared to
$62,235,000 at June 30, 2001, an increase of $3,920,000 or 6.3% over that
period. The ratio of Total Shareholders' Equity to Total Assets was 9.95% at
December 31, 2001, 10.98% at June 30, 2001, and 10.20% at June 30, 2002. The
total risk-based capital ratio was 18.27% at June 30, 2002. The leverage ratio
was 9.69% at June 30, 2002, and 10.79% during the same period in 2001. Capital
at the corporation remains strong. The payment of a special 20 cents per share
dividend in January 2002 has not slowed capital growth from the previous period.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Management believes that the corporation's liquidity is adequate. Liquid assets
(cash and due from banks, federal funds sold, money market instruments,
available for sale securities and held to maturity investment securities
maturing within one year) were 35% of total assets at June 30, 2002. This mix of
assets would be readily available for funding any cash requirements. In
addition, the Bank has an approved line of credit of $326,004,000 at the Federal
Home Loan Bank of Pittsburgh with $7,700,000 outstanding at June 30, 2002.
As of June 30, 2002, the cumulative asset sensitive gap was 7.9% of total assets
at one month, 3.3% at six months, and 5.1% at one year. Adjustable rate
mortgages, which have an annual interest rate cap of 2%, are considered rate
sensitive. Passbook and statement savings and NOW accounts are carried in the
one to five year category. Half of money market deposit accounts are spread over
the four to twelve month category. The other half are shown to mature in the one
to three year category.
There are no known trends or demands, commitments, events or uncertainties that
will result in, or that are reasonably likely to result in, liquidity increasing
or decreasing in any material way. Aside from those matters described above,
management does not currently believe that there are any known trends or
uncertainties that would have a material impact on future operating results,
liquidity or capital resources nor is it aware of any current recommendations by
the regulatory authorities, which, if they were to be implemented, would have
such an effect, although the general cost of compliance with numerous and
multiple federal and state laws and regulation does have and in the future may
have a negative impact on the corporation's results of operations.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Management monitors and evaluates changes in market conditions on a regular
basis. Based upon the most recent review management has determined that there
have been no material changes in market risks since year end. For further
discussion of year end information, refer to the annual report.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Nothing to report.
Page 11
Item 2. Changes in Securities and Use of Proceeds - Nothing to report.
Item 3. Defaults Upon Senior Securities - Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) An annual meeting of shareholders was held at 1:00 p.m. on May 7, 2002 at
the main office of Adams County National Bank, 675 Old Harrisburg Road,
Gettysburg, PA 17325.
(b) Five matters were voted upon, as follows:
Proposal to fix the number of Directors of ACNB Corporation at eleven (11):
Votes Cast Votes Cast Votes
"FOR" "AGAINST" ABSTAINED
---------- ---------- ---------
3,992,472 74,970 13,929
Proposal to fix the number of Class 1 Directors at four (4):
Votes Cast Votes Cast Votes
"FOR" "AGAINST" ABSTAINED
---------- ---------- ---------
4,028,693 28,438 24,240
Proposal to fix the number of Class 2 Directors at three (3):
Votes Cast Votes Cast Votes
"FOR" "AGAINST" ABSTAINED
---------- ---------- ---------
4,038,990 23,309 19,072
Proposal to fix the number of Class 3 Directors at four (4):
Votes Cast Votes Cast Votes
"FOR" "AGAINST" ABSTAINED
---------- ---------- ---------
4,034,746 27,847 18,778
Election of four (4) Class 3 Directors to serve for a three-year term:
Votes Cast Votes
Director Term Expires "FOR" "WITHHELD"
- -------- ------------ ---------- ----------
Philip P. Asper 2005 4,021,614 59,757
Guy F. Donaldson 2005 3,978,050 103,321
Frank Elsner, III 2005 4,036,967 44,404
Thomas A. Ritter 2005 3,924,655 156,716
Item 5. Other Information - Nothing to report.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibits are included in this Report:
Exhibit 3(i) Articles of Incorporation of Registrant (Incorporated by
Reference to Exhibit 3 (i) in Registrant's Annual Report on
Form 10-K for the year ended December 31, 1999).
Page 12
Exhibit 3(ii) Bylaws of Registrant (Incorporated by Reference to
Exhibit 3(ii) in Registrant's Report of 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 (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 (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 Computation of Earnings Per Share.
Exhibit 99.1 Certification of Chief Executive Officer
Exhibit 99.2 Certification of Chief Financial Officer
(b) Report on Form 8-K.
The Registrant filed no Current Reports on Form 8-K during the quarter
ended June 30, 2002.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
corporation has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACNB CORPORATION
Ronald L. Hankey, Chariman of the Board and CEO
August 7, 2002
John W. Krichten, Secretary/Treasurer
Page 13
EXHIBIT INDEX
Exhibit Number
- --------------
Exhibit 3(i) Articles of Incorporation of Registrant (Incorporated
by Reference to Exhibit 3 ( i ) of Registrant's Annual
Report on Form 10-K for the year ended December 31, 1999).
Exhibit 3(ii) Bylaws of Registrant (Incorporated by Reference to
Exhibit 3(ii) of Registrant's 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 (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 (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 Computation of Earnings Per Share.
Exhibit 99.1 Certification of Chief Executive Officer
Exhibit 99.2 Certification of Chief Financial Officer
Page 14