STOCKHOLDERS' EQUITY AND REGULATORY MATTERS

12 Months Ended

Dec. 31, 2016

Regulatory Capital Requirements [Abstract]

STOCKHOLDERS' EQUITY AND REGULATORY MATTERS

STOCKHOLDERS’ EQUITY AND REGULATORY MATTERS

In January 2011, the Corporation offered stockholders the opportunity to participate in the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan. The plan provides registered holders of ACNB Corporation 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 2016, 16,979 shares were issued under this plan with proceeds in the amount of $437,000. During 2015, 18,401 shares were issued under this plan with proceeds in the amount of $499,000. During 2014, 24,339 shares were issued under this plan with proceeds in the amount of $381,000. Proceeds are used for general corporate purposes.

On May 5, 2009, stockholders approved and ratified the ACNB Corporation 2009 Restricted Stock Plan, which awards shall not exceed, in the aggregate, 200,000 shares of common stock. The plan is available to employees and directors of the Bank to advance the best interests of ACNB Corporation and its shareholders. The plan provides those persons who have responsibility for its growth with additional incentive by allowing them to acquire an ownership in ACNB Corporation and thereby encouraging them to contribute to the success of the Corporation. As of December 31, 2016 and 2015, 7,435 shares and 5,673 shares, respectively, were issued under this plan. No shares were issued under this plan through December 31, 2014.

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 off-balance sheet 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.

Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital to average assets. The federal banking agencies issued final rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act. The phase-in period for community banking organizations began January 1, 2015, while larger institutions (generally those with assets of $250 billion or more) began compliance effective January 1, 2014. The final rules call for the following capital requirements:

• a minimum ratio of common Tier 1 capital to 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 to risk-weighted assets of 8.0%; and,

• a minimum leverage ratio of 4.0%.

In addition, the final rules establish a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets applicable to all banking organizations. If a banking organization fails to hold capital above the minimum capital ratios and the capital conservation buffer, it will be subject to certain restrictions on capital distributions and discretionary bonus payments. The 2.5% at 0.625% per year phase-in period for the capital conservation and countercyclical capital buffers for all banking organizations began on January 1, 2016.

Management believes, as of December 31, 2016, that the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2016, the most recent notification from the federal banking regulators categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. There are no subsequent conditions or events that management believes have changed the Bank’s category.

The actual and required capital amounts and ratios were as follows:

	Actual				For Capital Adequacy Purposes		To be Well Capitalized under Prompt Corrective Action Provisions
Dollars in thousands	Amount		Ratio		Amount (1)	Ratio (1)	Amount	Ratio
CORPORATION
As of December 31, 2016
Tier 1 leverage ratio (to average assets)	$	121,650	10.06	%	$ ≥48,382	≥4.0%	N/A	N/A
Common Tier 1 risk-based capital ratio (to risk-weighted assets)	121,650		14.71		≥37,205	≥4.5	N/A	N/A
Tier 1 risk-based capital ratio (to risk-weighted assets)	121,650		14.71		≥49,606	≥6.0	N/A	N/A
Total risk-based capital ratio (to risk-weighted assets)	132,033		15.97		≥66,142	≥8.0	N/A	N/A
As of December 31, 2015
Tier 1 leverage ratio (to average assets)	$	115,005	10.08	%	$ ≥45,646	≥4.0%	N/A	N/A
Common Tier 1 risk-based capital ratio (to risk-weighted assets)	115,005		15.00		≥34,503	≥4.5	N/A	N/A
Tier 1 risk-based capital ratio (to risk-weighted assets)	115,005		15.00		≥46,004	≥6.0	N/A	N/A
Total risk-based capital ratio (to risk-weighted assets)	124,675		16.26		≥61,339	≥8.0	N/A	N/A
BANK
As of December 31, 2016
Tier 1 leverage ratio (to average assets)	$	106,540	8.82	%	$ ≥48,316	≥4.0%	$ ≥60,395	≥5.0%
Common Tier 1 risk-based capital ratio (to risk-weighted assets)	106,540		12.96		≥36,995	≥4.5	≥53,438	≥6.5
Tier 1 risk-based capital ratio (to risk-weighted assets)	106,540		12.96		≥49,327	≥6.0	≥65,770	≥8.0
Total risk-based capital ratio (to risk-weighted assets)	116,865		14.22		≥65,770	≥8.0	≥82,212	≥10.0
As of December 31, 2015
Tier 1 leverage ratio (to average assets)	$	100,698	8.84	%	$ ≥45,550	≥4.0%	$ ≥56,938	≥5.0%
Common Tier 1 risk-based capital ratio (to risk-weighted assets)	100,698		13.22		≥34,270	≥4.5	≥49,501	≥6.5
Tier 1 risk-based capital ratio (to risk-weighted assets)	100,698		13.22		≥45,693	≥6.0	≥60,924	≥8.0
Total risk-based capital ratio (to risk-weighted assets)	110,287		14.48		≥60,924	≥8.0	≥76,155	≥10.0

(1) Amounts and ratios do not include capital conversation buffer.