LOANS AND ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2025

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

The following table presents the composition of the loan portfolio:


(In thousands)	December 31, 2025		December 31, 2024
Commercial real estate	$	1,273,813	$	969,514
Residential mortgage	599,051		401,950
Commercial and industrial	205,452		140,906
Home equity lines of credit	127,341		85,685
Real estate construction	116,680		76,773
Consumer	10,140		9,318
Gross loans	2,332,477		1,684,146
Unearned income	(1,963)		(1,236)
Total loans, net of unearned income	$	2,330,514	$	1,682,910

Loans with a fair value of $648.5 million at the Acquisition date were assumed and included an acquisition accounting adjustment of $25.3 million.

The Bank has granted loans to certain of its executive officers, directors and their related interests. These loans were made on substantially the same basis, including interest rates and collateral as those prevailing for comparable transactions with other borrowers at the same time. None of these loans were past due, in nonaccrual status, or restructured at December 31, 2025. The following table is a summary of the aggregate dollar amount, including unadvanced commitments, for these related-party loans:


(In thousands)	2025
Balance at January 1	$	4,759
New loans1	11,859
Repayments	496
Balance at December 31	$	16,122

__________________________________________________

1 Includes $6.7 million of loans as a result of the Acquisition.

One of the factors used to monitor the performance and credit quality of the loan portfolio is to analyze the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status:


(In thousands)	30–59 Days Past Due		60–89 Days Past Due		≥ 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable ≥ 90 Days and Accruing
December 31, 2025
Commercial real estate	$	457	$	400	$	292	$	1,149	$	1,272,664	$	1,273,813	$	—
Residential mortgage	4,988		2,098		4,261		11,347		587,704		599,051		2,332
Commercial and industrial	10		332		142		484		204,968		205,452		—
Home equity lines of credit	572		—		514		1,086		126,255		127,341		514
Real estate construction	578		—		—		578		116,102		116,680		—
Consumer	23		30		8		61		10,079		10,140		8
Gross Loans	$	6,628	$	2,860	$	5,217	$	14,705	$	2,317,772	$	2,332,477	$	2,854

December 31, 2024
Commercial real estate	$	763	$	527	$	314	$	1,604	$	967,910	$	969,514	$	—
Residential mortgage	953		987		850		2,790		399,160		401,950		850
Commercial and industrial	437		24		155		616		140,290		140,906		—
Home equity lines of credit	161		—		91		252		85,433		85,685		91
Real estate construction	15		11		—		26		76,747		76,773		—
Consumer	47		18		—		65		9,253		9,318		—
Gross Loans	$	2,376	$	1,567	$	1,410	$	5,353	$	1,678,793	$	1,684,146	$	941

Nonaccrual and Nonperforming Loans

Loans individually evaluated consist of nonaccrual loans, presented in the following table:


	December 31, 2025						December 31, 2024
(In thousands)	With a Related Allowance		Without a Related Allowance		Total		With a Related Allowance		Without a Related Allowance		Total
Commercial real estate	$	—	$	3,644	$	3,644	$	314	$	3,250	$	3,564
Residential mortgage	246		1,684		1,930		—		—		—
Commercial and industrial	698		1,590		2,288		2,081		226		2,307
Home equity lines of credit	—		5		5		—		—		—

Total	$	944	$	6,923	$	7,867	$	2,395	$	3,476	$	5,871

No additional funds are committed to be advanced in connection with individually evaluated loans. If interest on all nonaccrual loans had been accrued at original contract rates, interest income would have increased by $449 thousand in 2025, $299 thousand in 2024, and $302 thousand in 2023.

Total nonperforming loans at December 31 are as follows:


(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

Consumer residential mortgages and home equity lines of credit which are well secured by residential real estate properties and are in the process of collection are not considered nonaccrual, however, formal foreclosure proceedings are in process. These loans totaled $992 thousand and $373 thousand at December 31, 2025 and 2024, respectively, and are included in nonperforming loans if they are greater than or equal to 90 days past due.

Collateral-Dependent Loans

The amortized cost basis of individually evaluated loans by type of collateral as of December 31:


	2025				2024

(In thousands)	Business Assets		Real Estate		Business Assets		Real Estate
Commercial real estate	$	—	$	3,644	$	—	$	3,564
Residential mortgage	—		1,930		—		—
Commercial and industrial	1,971		317		2,307		—
Home equity lines of credit	—		5		—		—


Total	$	1,971	$	5,896	$	2,307	$	3,564

Loan Modifications

The Corporation evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the above. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.

The following tables present the amortized cost basis of loans that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:


(Dollars in thousands)	Term Extension		Payment Deferral		Combination Payment Deferral and Term Extension		Combination Payment Deferral and Interest-Only Payments		Percent of Class of Financing Receivable
2025
Residential mortgage	$	—	$	—	$	436	$	—	0.1	%
Commercial real estate	—		126		—		—		—	%
Commercial and industrial	142		—		—		—		0.1	%
Consumer	—		—		10		—		0.1	%
Total	$	142	$	126	$	446	$	—

2024
Commercial real estate	$	—	$	—	$	—	$	2,293	0.2	%
Commercial and industrial	—		—		—		1,748		1.2	%
Total	$	—	$	—	$	—	$	4,041

The following presents information regarding the financial effect on modified loans to borrowers experiencing difficulty during the year ended December 31, 2025:

Modification Type

Financial Effect

2025

Residential mortgage

Combination Payment Deferral and Term Extension

Extended the term of the loans by a weighted-average of 6 months, which allowed the borrowers to defer payments.

Commercial real estate

Payment Deferral

The term was not extended.

Commercial and industrial

Term Extension

Extended the term of the loan 12 months.

Consumer

Combination Payment Deferral and Term Extension

Extended the term of the loan by 4 months, which allowed the borrower to defer payments.

The loan modifications made during 2024 did not result in term extensions.

The following presents the performance of loans modified in the previous twelve months as of December 31, 2025:


(In thousands)	Current		30-89 Days Past Due		≥ 90 Days Past Due		Total Past Due
Residential mortgage	$	436	$	—	$	—	$	—
Commercial real estate	126		—		—		—
Commercial and industrial	142		—		—		—
Consumer	10		—		—		—
Total	$	714	$	—	$	—	$	—

As of December 31, 2025, the Corporation had no commitments to lend any additional funds on modified loans. During the years ended December 31, 2025 and 2024, there were no loans modified due to financial difficulty that defaulted subsequent to the modification. For purposes of this disclosure, a default occurs when, within 12 months of the original modification, either a full or partial charge-off occurs or the loan becomes 90 days or more past due.

Allowance for Credit Losses

The Corporation maintains an ACL at a level determined to be adequate by management to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. The ACL consists of loans evaluated collectively and individually for expected credit losses. The Corporation considers the performance of the loan portfolio and its impact on the ACL and does not assign internal risk ratings to smaller balance, homogeneous loans such as certain residential mortgage, home equity lines of credit, construction loans to individuals secured by residential real estate and consumer loans. For these loans, the Corporation evaluates credit quality based on the aging status of the loan and designates as performing and nonperforming.

The following summarizes designated internal risk categories by portfolio segment for loans assigned a risk rating and those evaluated based on the performance status:


	December 31, 2025
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
(In thousands)	2025		2024		2023		2022		2021		Prior
Internally Risk Rated:
Commercial real estate
Pass	$	83,583	$	171,026	$	182,864	$	199,094	$	166,194	$	392,397	$	25,109	$	1,220,267
Special Mention	420		1,807		2,386		4,485		9,367		25,923		1,615		46,003
Substandard	153		105		294		2,492		327		4,172		—		7,543
Total Commercial real estate	$	84,156	$	172,938	$	185,544	$	206,071	$	175,888	$	422,492	$	26,724	$	1,273,813
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	32	$	—	$	32
Residential mortgage
Pass	$	37,231	$	29,754	$	34,884	$	23,227	$	37,692	$	54,050	$	953	$	217,791
Special Mention	176		247		140		304		140		2,789		—		3,796
Substandard	—		—		231		1,816		—		271		—		2,318
Total Residential Mortgage	$	37,407	$	30,001	$	35,255	$	25,347	$	37,832	$	57,110	$	953	$	223,905
Year-to-date gross charge-offs	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	19
Commercial and industrial
Pass	$	20,925	$	22,881	$	16,950	$	20,101	$	30,917	$	30,588	$	46,211	$	188,573
Special Mention	383		208		478		4,888		40		483		7,100		13,580
Substandard	—		—		463		774		94		513		1,455		3,299
Total Commercial and industrial	$	21,308	$	23,089	$	17,891	$	25,763	$	31,051	$	31,584	$	54,766	$	205,452
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	14	$	—	$	14
Home equity lines of credit
Pass	$	—	$	—	$	485	$	84	$	29	$	51	$	10,974	$	11,623
Special Mention	—		—		—		—		93		97		160		350
Substandard	—		—		—		—		—		5		5		10
Total Home equity lines of credit	$	—	$	—	$	485	$	84	$	122	$	153	$	11,139	$	11,983

Real estate construction
Pass	$	26,653	$	19,215	$	15,519	$	7,513	$	1,640	$	757	$	5,867	$	77,164
Special Mention	—		—		—		4,678		—		365		—		5,043

Total Real estate construction	$	26,653	$	19,215	$	15,519	$	12,191	$	1,640	$	1,122	$	5,867	$	82,207

Performance Rated:
Residential mortgage
Performing	$	40,566	$	33,541	$	53,484	$	79,888	$	39,877	$	120,302	$	5,157	$	372,815
Nonperforming	—		231		—		635		—		1,465		—		2,331
Total Residential Mortgage	$	40,566	$	33,772	$	53,484	$	80,523	$	39,877	$	121,767	$	5,157	$	375,146
Home equity lines of credit
Performing	$	—	$	—	$	13	$	29	$	—	$	1,989	$	112,813	$	114,844
Nonperforming	—		—		—		—		—		—		514		514
Total Home equity lines of credit	$	—	$	—	$	13	$	29	$	—	$	1,989	$	113,327	$	115,358
Real estate construction
Performing	$	27,937	$	4,650	$	553	$	362	$	144	$	826	$	1	$	34,473

Total Real estate construction	$	27,937	$	4,650	$	553	$	362	$	144	$	826	$	1	$	34,473
Consumer
Performing	$	1,641	$	1,232	$	877	$	1,125	$	260	$	587	$	4,410	$	10,132
Nonperforming	—		—		—		—		—		8		—		8
Total Consumer	$	1,641	$	1,232	$	877	$	1,125	$	260	$	595	$	4,410	$	10,140
Year-to-date gross charge-offs	$	14	$	27	$	61	$	18	$	—	$	8	$	230	$	358
Total Portfolio loans
Pass	$	168,392	$	242,876	$	250,702	$	250,019	$	236,472	$	477,843	$	89,114	$	1,715,418
Special Mention	979		2,262		3,004		14,355		9,640		29,657		8,875		68,772
Substandard	153		105		988		5,082		421		4,961		1,460		13,170
Performing	70,144		39,423		54,927		81,404		40,281		123,704		122,381		532,264
Nonperforming	—		231		—		635		—		1,473		514		2,853
Total Portfolio loans	$	239,668	$	284,897	$	309,621	$	351,495	$	286,814	$	637,638	$	222,344	$	2,332,477
Year-to-date gross charge-offs	$	33	$	27	$	61	$	18	$	—	$	54	$	230	$	423


	December 31, 2024
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis
(In thousands)	2024		2023		2022		2021		2020		Prior				Total
Internally Risk Rated:
Commercial real estate
Pass	$	120,989	$	135,995	$	164,167	$	121,092	$	55,408	$	312,999	$	17,276	$	927,926
Special Mention	1,887		3,826		2,880		6,639		2,177		11,613		1,303		30,325
Substandard	—		—		2,332		342		1,485		7,059		45		11,263
Total Commercial real estate	$	122,876	$	139,821	$	169,379	$	128,073	$	59,070	$	331,671	$	18,624	$	969,514

Residential mortgage
Pass	$	27,887	$	35,566	$	23,095	$	38,848	$	13,446	$	31,784	$	466	$	171,092
Special Mention	130		1,692		167		146		366		3,246		115		5,862
Substandard	—		237		188		—		—		68		—		493
Total Residential Mortgage	$	28,017	$	37,495	$	23,450	$	38,994	$	13,812	$	35,098	$	581	$	177,447

Commercial and industrial
Pass	$	10,000	$	10,067	$	19,584	$	29,673	$	13,162	$	18,976	$	30,015	$	131,477
Special Mention	165		109		246		192		78		459		2,554		3,803
Substandard	—		526		468		335		2		979		3,316		5,626
Total Commercial and industrial	$	10,165	$	10,702	$	20,298	$	30,200	$	13,242	$	20,414	$	35,885	$	140,906
Year-to-date gross charge-offs	$	—	$	38	$	—	$	—	$	—	$	100	$	—	$	138
Home equity lines of credit
Pass	$	—	$	294	$	92	$	—	$	—	$	501	$	5,729	$	6,616
Special Mention	—		—		—		—		—		—		696		696
Substandard	—		—		—		—		—		6		—		6
Total Home equity lines of credit	$	—	$	294	$	92	$	—	$	—	$	507	$	6,425	$	7,318

Real estate construction
Pass	$	21,227	$	24,463	$	7,719	$	1,209	$	298	$	1,060	$	6,086	$	62,062
Special Mention	—		168		5,100		—		—		667		45		5,980
Substandard	—		—		—		—		—		62		—		62
Total Real estate construction	$	21,227	$	24,631	$	12,819	$	1,209	$	298	$	1,789	$	6,131	$	68,104

Performance Rated:
Residential mortgage
Performing	$	14,786	$	41,275	$	39,943	$	13,523	$	13,876	$	100,601	$	72	$	224,076
Nonperforming	—		—		—		—		—		427		—		427
Total Residential Mortgage	$	14,786	$	41,275	$	39,943	$	13,523	$	13,876	$	101,028	$	72	$	224,503
Home equity lines of credit
Performing	$	—	$	18	$	34	$	—	$	12	$	2,591	$	75,621	$	78,276
Nonperforming	—		—		—		—		—		—		91		91
Total Home equity lines of credit	$	—	$	18	$	34	$	—	$	12	$	2,591	$	75,712	$	78,367
Real estate construction
Performing	$	6,486	$	222	$	725	$	160	$	188	$	888	$	—	$	8,669

Total Real estate construction	$	6,486	$	222	$	725	$	160	$	188	$	888	$	—	$	8,669
Consumer
Performing	$	2,000	$	1,521	$	1,694	$	465	$	276	$	778	$	2,584	$	9,318

Total Consumer	$	2,000	$	1,521	$	1,694	$	465	$	276	$	778	$	2,584	$	9,318
Year-to-date gross charge-offs	$	—	$	4	$	9	$	—	$	1	$	7	$	197	$	218
Total Portfolio loans
Pass	$	180,103	$	206,385	$	214,657	$	190,822	$	82,314	$	365,320	$	59,572	$	1,299,173
Special Mention	2,182		5,795		8,393		6,977		2,621		15,985		4,713		46,666
Substandard	—		763		2,988		677		1,487		8,174		3,361		17,450
Performing	23,272		43,036		42,396		14,148		14,352		104,858		78,277		320,339
Nonperforming	—		—		—		—		—		427		91		518
Total Portfolio loans	$	205,557	$	255,979	$	268,434	$	212,624	$	100,774	$	494,764	$	146,014	$	1,684,146
Year-to-date gross charge-offs	$	—	$	42	$	9	$	—	$	1	$	107	$	197	$	356

The following table presents the ACL by loan portfolio segment:


(In thousands)	Commercial Real Estate		Residential Mortgage		Commercial and Industrial		Home Equity Lines of Credit		Real Estate Construction		Consumer		Unallocated		Total
Beginning balance - January 1, 2025	$	10,578	$	2,976	$	1,416	$	294	$	1,918	$	98	$	—	$	17,280
Allowance established for acquired PCD loans	798		140		194		13		169		150		—		1,464
Charge-offs	(32)		(19)		(14)		—		—		(358)		—		(423)
Recoveries	—		—		15		—		—		74		—		89
Provisions	1,915		2,289		189		175		501		193		—		5,262
Ending balance - December 31, 2025	$	13,259	$	5,386	$	1,800	$	482	$	2,588	$	157	$	—	$	23,672

Beginning balance - January 1, 2024	$	12,010	$	3,303	$	2,048	$	397	$	2,070	$	141	$	—	$	19,969
Charge-offs	—		—		(138)		—		—		(218)		—		(356)
Recoveries	—		—		26		—		—		78		—		104
(Reversal of) provisions	(1,432)		(327)		(520)		(103)		(152)		97		—		(2,437)
Ending balance - December 31, 2024	$	10,578	$	2,976	$	1,416	$	294	$	1,918	$	98	$	—	$	17,280

Beginning balance - January 1, 2023	$	10,016	$	3,029	$	2,848	$	347	$	1,000	$	376	$	245	$	17,861
Impact of CECL adoption	1,106		297		(762)		17		1,347		(142)		(245)		1,618
Charge-offs	—		—		(110)		—		—		(396)		—		(506)
Recoveries	—		—		64		—		—		72		—		136
Provisions (reversal of)	888		(23)		8		33		(277)		231		—		860
Ending balance - December 31, 2023	$	12,010	$	3,303	$	2,048	$	397	$	2,070	$	141	$	—	$	19,969

ACNB CORP 10-K