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RETIREMENT PLANS | 12 Months Ended
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Dec. 31, 2023
Postemployment Benefits [Abstract] |
RETIREMENT PLANS | RETIREMENT PLANS Defined-Contribution 401(k) Retirement Plans The Bank maintains a 401(k) retirement plan for the benefit of eligible employees. The plan allows employees to contribute up to 100% of their compensation subject to certain limits based on federal tax laws. The plan also provides for the Bank to match 100% of the employee’s contribution to the plan up to 3% of the employee’s compensation, plus 50% the employee’s contribution to the plan on the next 2% of the employee’s compensation. Matching contributions vest immediately to the employee. Bank contributions to the plan were $999 thousand and $901 thousand for 2023 and 2022, respectively, and were included as a component of salaries and employee benefits expense. ACNB Insurance Services, Inc. has a similar but separate 401(k) plan with the match of 6% for non-highly compensated employees and 3% match for highly compensated employees. ACNB Insurance Services, Inc.’s contributions to the plan were $183 thousand and $157 thousand for 2023 and 2022, respectively, and were included as a component of salaries and employee benefits expense. Nonqualified Compensation Plans The Bank maintains nonqualified compensation plans for selected senior officers. The estimated present value of future benefits is accrued over the period from the effective date of the agreements until the expected retirement dates of the individuals. The balance accrued for these plans included in other liabilities as of December 31, 2023 and 2022, totaled $4.5 million and $4.1 million, respectively. The annual expense included in salaries and employee benefits expense totaled $953 thousand and $628 thousand during the years ended December 31, 2023 and 2022, respectively. To fund the benefits under these plans, the Bank is the owner of single premium life insurance policies on participants in the nonqualified retirement plans. Defined Benefit Pension Plan The Bank has a non-contributory, defined benefit pension plan. No employee hired after March 31, 2012 is eligible to participate in the plan. Retirement benefits are a function of both years of service and compensation. As of the last annual census, the Bank had a combined 336 active, vested terminated, and retired persons in the plan. The funding policy is to contribute annually the amount that is sufficient to meet the minimum funding requirements set forth by ERISA. The Bank uses a measurement date of December 31 for this plan. The following table summarized the changes in the projected benefit obligation and fair value of plan assets for the plan years ended December 31:
(In thousands) | 2023 |  | 2022
Change in benefit obligation: |  |  |
Projected Benefit obligation at beginning of year | $ | 30,226 |  |  | $ | 39,123 |
Service cost | 495 |  |  | 777 |
Interest cost | 1,493 |  |  | 1,052 |
Actuarial gain (loss) | 983 |  |  | (9,141) |
Benefits paid | (1,703) |  |  | (1,585) |
Projected benefit obligation at end of year | 31,494 |  |  | 30,226 |
Change in plan assets, at fair value: |  |  |
Fair value of plan assets at beginning of year | 43,119 |  |  | 50,218 |
Actual return on plan assets | 5,011 |  |  | (5,514) |
Benefits paid | (1,703) |  |  | (1,585) |
Fair value of plan assets at end of year | 46,427 |  |  | 43,119 |
Funded Status, included in other assets | $ | 14,933 |  |  | $ | 12,893 |
The amounts recognized in accumulated other comprehensive income (loss) are as follows:
(In thousands) |  | 2023 |  | 2022
Total net actuarial loss (pre-tax) |  | $ | 5,120 |  |  | $ | 6,887 |
For the years ended December 31, 2023 and 2022, the assumptions used to determine the benefit obligation are as follows:
| 2023 |  | 2022
Discount rate | 4.90 | % |  | 5.10 | %
Rate of compensation increase | 3.50 | % |  | 3.50 | %
The discount rate assumption used to determine the benefit obligation decreased since last year. This change results in an increase in the benefit obligation. The components of net periodic benefit cost (income) related to the non-contributory, defined benefit pension plan are as follows for the years ended December 31 :
(In thousands) | 2023 |  | 2022
Components of net periodic benefit cost (income): |  |  |
Service cost | $ | 495 |  |  | $ | 777 |
Interest cost | 1,493 |  |  | 1,052 |
Expected return on plan assets | (2,653) |  |  | (3,136) |
Recognized net actuarial loss | 392 |  |  | 407 |
Net Periodic Benefit Income | (273) |  |  | (900) |
Net gain | (1,375) |  |  | (491) |
Amortization of net loss | (392) |  |  | (407) |
Total recognized in other comprehensive income (loss) | (1,767) |  |  | (898) |
Total recognized in net periodic benefit cost (income) and other comprehensive income | $ | (2,040) |  |  | $ | (1,798) |
The assumptions used to determine the net periodic benefit cost (income) are as follows for the years ended December 31:
|  | 2023 |  | 2022
Discount rate |  | 5.10 | % |  | 2.75 | %
Expected long-term rate of return on plan assets |  | 6.75 | % |  | 6.75 | %
Rate of compensation increase |  | 3.50 | % |  | 3.50 | %
The Corporation’s comparison of obligations to plan assets at December 31, 2023 and 2022 are as follows:
(In thousands) | 2023 |  | 2022
Projected benefit obligation | $ | 31,494 |  |  | $ | 30,226 |
Accumulated benefit obligation | 30,411 |  |  | 29,150 |
Fair value of plan assets at measurement date | 46,427 |  |  | 43,119 |
For the year ended December 31, 2023 the mortality assumption was updated to reflect the most recently published mortality information through October 2023. Estimated future benefit payments are as follows:
Year | (in thousands)
2024 | $ | 2,010 |
2025 | 2,060 |
2026 | 2,070 |
2027 | 2,060 |
2028 | 2,060 |
2029-2033 | 10,750 |
The Corporation’s overall investment strategy is to achieve a mix of investments to meet the long-term rate of return assumption and near-term pension obligations with a diversification of assets types, fund strategies and fund managers. The mix of investments is adjusted periodically by retaining an advisory firm to recommend appropriate allocations after reviewing the Corporation’s risk tolerance on contribution levels, funded status and plan expense, and any applicable regulatory requirements. The weighted-average assets’ allocation in the following table represents the Corporation’s conclusion on the appropriate mix of investments. The specific investment vehicles are institutional separate accounts from a variety of fund managers which are regularly reviewed by the Corporation for acceptable performance. The Corporation’s pension plan weighted-average assets’ allocations at December 31, 2023 and 2022, are as follows:
| 2023 |  | 2022
Equity securities | 43 | % |  | 46 | %
Debt securities | 54 |  |  | 49 |
Real property | 3 |  |  | 5 |
| 100 | % |  | 100 | %
Equity securities included $3.9 million of the Corporation’s common stock, or 8%, of total plan assets, and $3.3 million, or 8%, of total plan assets, at December 31, 2023 and 2022, respectively. Fair value measurements were as follows:
(In thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
December 31, 2023 |  |  |  |  |  |  |
Equity securities | $ | 20,123 |  |  | $ | 3,876 |  |  | $ | 16,247 |  |  | $ | — |
Debt securities | 24,891 |  |  | — |  |  | 24,891 |  |  | — |
Real estate | 1,413 |  |  | — |  |  | 1,413 |  |  | — |
Total | $ | 46,427 |  |  | $ | 3,876 |  |  | $ | 42,551 |  |  | $ | — |
December 31, 2022 |  |  |  |  |  |  |
Equity securities | $ | 19,749 |  |  | $ | 3,339 |  |  | $ | 16,410 |  |  | $ | — |
Debt securities | 21,228 |  |  | — |  |  | 21,228 |  |  | — |
Real estate | 2,142 |  |  | — |  |  | 2,142 |  |  | — |
Total | $ | 43,119 |  |  | $ | 3,339 |  |  | $ | 39,780 |  |  | $ | — |

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