REGULATORY MATTERS

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

REGULATORY MATTERS

REGULATORY MATTERS

The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking regulators. 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). 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 phase-in period for the capital conservation and countercyclical capital buffers for all banking organizations will begin on January 1, 2016.

Management believes, as of December 31, 2015, that the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2015, 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 conditions or events since that notification that management believes have changed the Bank’s category.

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. As of December 31, 2015, 5,673 shares have been issued under the plan. In January 2011, the Corporation offered stockholders the opportunity to participate in the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan. The plan allows registered stockholders who have a minimal number of shares to participate and also provides for voluntary cash purchases of ACNB Corporation common stock. During 2015, 2014, and 2013, 24,074, 24,339, and 25,943 shares of common stock, respectively, were issued within the plan.

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	Ratio	Amount	Ratio
CORPORATION
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
As of December 31, 2014
Tier 1 leverage ratio (to average assets)	$	105,241	9.81	%	$ ≥42,905	≥4.0%	N/A	N/A
Tier 1 risk-based capital ratio (to risk-weighted assets)	105,241		14.02		≥30,032	≥4.0	N/A	N/A
Total risk-based capital ratio (to risk-weighted assets)	114,798		15.29		≥60,064	≥8.0	N/A	N/A
BANK
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
As of December 31, 2014
Tier 1 leverage ratio (to average assets)	$	95,028	8.86	%	$ ≥42,912	≥4.0%	$ ≥53,640	≥5.0%
Tier 1 risk-based capital ratio (to risk-weighted assets)	95,028		12.75		≥29,817	≥4.0	≥44,725	≥6.0
Total risk-based capital ratio (to risk-weighted assets)	104,425		14.01		≥59,633	≥8.0	≥74,542	≥10.0