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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments ACNB is exposed to certain risks arising from both its business operations and economic conditions. ACNB manages market risk, including interest rate risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage interest rate risk that arise from business operations. All derivatives are recognized as either assets or liabilities in the Consolidated Statements of Condition. Until a derivative is settled, favorable changes in fair values result in unrealized gains that are recognized as assets, while unfavorable changes result in unrealized losses that are recognized as liabilities. Interest rate-lock commitments extended to borrowers relate to the origination of residential mortgage loans. To mitigate the interest rate risk inherent in these commitments, ACNB enters into mandatory delivery and best efforts forward commitments to sell adjustable-rate and fixed-rate residential mortgage loans (servicing released). Forward commitments and interest rate-lock commitments on residential mortgage loans are considered derivatives. Hedge accounting has not been applied for these derivatives. Accordingly, changes in the fair value of forward and interest rate-lock commitments are recognized in current earnings. ACNB executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously offset with essentially matching interest rate swaps with ACNB’s counterparties, such that ACNB minimizes its net risk exposure resulting from such transactions. Hedge accounting has not been applied for these derivatives. Accordingly, changes in the fair value of all such interest rate swaps are recognized in current earnings. ACNB applies hedge accounting, when applicable, to its derivatives used for interest rate risk management purposes. Hedge accounting is permitted only if specific criteria are met, including a requirement that a highly effective relationship exist between the derivative instrument and the hedged item, both at inception of the hedge and on an ongoing basis. The hedge accounting method depends upon whether the derivative instrument is classified as a fair value hedge (i.e. hedging an exposure related to a recognized asset or liability, or a firm commitment) or a cash flow hedge (i.e. hedging an exposure related to the variability of future cash flows associated with a recognized asset or liability, or a forecasted transaction). Changes in the fair value of effective fair value hedges are recognized in current earnings (with the change in fair value of the hedged asset or liability also recorded in earnings). Changes in the fair value of effective cash flow hedges are recognized in other comprehensive income or loss until earnings are affected by the variability in cash flows of the designated hedged item. Ineffective portions of hedge results are recognized in current earnings. Changes in the fair value of derivatives for which hedge accounting is not applied are recognized in current earnings. The following table presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Consolidated Statements of Condition as of September 30, 2025 and December 31, 2024:
| September 30, 2025 |  | Consolidated Statements of Condition Location |  | December 31, 2024
(In thousands) | Notional Amount |  | Asset (Liability) Fair Value |  |  | Notional Amount |  | Asset (Liability) Fair Value
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Interest rate lock commitments: |  |  |  |  |  |  |  |  |
Assets | $ | 63,386 |  |  | $ | 1,616 |  |  | Other Assets |  | $ | — |  |  | $ | — |
Liabilities | — |  |  | — |  |  | Other Liabilities |  | — |  |  | — |
Forward commitments: |  |  |  |  |  |  |  |  |
Assets | 11,481 |  |  | 19 |  |  | Other Assets |  | — |  |  | — |
Liabilities | 11,710 |  |  | (55) |  |  | Other Liabilities |  | — |  |  | — |
Interest rate derivatives with customers: |  |  |  |  |  |  |  |  |
Assets | 5,472 |  |  | 23 |  |  | Other Assets |  | — |  |  | — |
Liabilities | 44,912 |  |  | (3,548) |  |  | Other Liabilities |  | — |  |  | — |
Interest rate derivatives with dealer counterparties: |  |  |  |  |  |  |  |  |
Assets | 44,912 |  |  | 3,548 |  |  | Other Assets |  | — |  |  | — |
Liabilities | 5,472 |  |  | (23) |  |  | Other Liabilities |  | — |  |  | — |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |
Interest rate derivatives used in cash flow hedges: |  |  |  |  |  |  |  |  |
Assets | — |  |  | — |  |  | Other Assets |  | — |  |  | — |
Liabilities | 25,000 |  |  | (125) |  |  | Other Liabilities |  | — |  |  | — |
The following presents a summary of the fair value gains and losses on derivative financial instruments for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  | Consolidated Statements of Income Classification
(In thousands) | 2025 |  | 2024 |  | 2025 |  | 2024 |
Interest Rate Lock Commitments | $ | (139) |  |  | $ | — |  |  | $ | 404 |  |  | $ | — |  |  | Gain from mortgage loans held for sale
Forward Commitments | 126 |  |  | — |  |  | 37 |  |  | — |  |  | Gain from mortgage loans held for sale
The following table presents the effect of fair value and cash flow hedge accounting on AOCI for the periods presented:
(In thousands) | Amount of Gain (Loss) Recognized in OCI on Derivative |  | Amount of Gain (Loss) Recognized in OCI Included Component |  | Amount of Gain (Loss) Recognized in OCI Excluded Component |  | Location of Gain (Loss) Recognized from AOCI into Income |  | Amount of Gain (Loss) Reclassified from OCI into Income |  | Amount of Gain (Loss) Reclassified from AOCI into Income Included Component |  | Amount of Gain (Loss) Reclassified from AOCI into Income Excluded Component
Three Months Ended September 30, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | $ | (125) |  |  | $ | (125) |  |  | $ | — |  |  | Interest Expense |  | $ | (38) |  |  | $ | (38) |  |  | $ | — |
Three Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | — |  |  | — |  |  | — |  |  | Interest Expense |  | — |  |  | — |  |  | — |
Nine Months Ended September 30, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | (125) |  |  | (125) |  |  | — |  |  | Interest Expense |  | (38) |  |  | (38) |  |  | — |
Nine Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | — |  |  | — |  |  | — |  |  | Interest Expense |  | — |  |  | — |  |  | — |
As of September 30, 2025 the fair value of interest rate derivatives used in cash flow hedges in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $125 thousand. As of September 30, 2025, the Company has posted $260 thousand of collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2025, it could have been required to settle its obligations under the agreements at their termination value of $125 thousand. The following table presents the effect of fair value and cash flow hedge accounting on the Consolidated Statements of Income for the periods presented:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Total amounts of expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded | $ | (38) |  |  | $ | — |  |  | $ | (38) |  |  | $ | — |
The effects of fair value or cash flow hedging: |  |  |  |  |  |  |
Amount of loss reclassified from AOCI into income | (38) |  |  | — |  |  | (38) |  |  | — |
Amount of loss reclassified from AOCI into income - included component | (38) |  |  | — |  |  | (38) |  |  | — |
Amount of loss reclassified from AOCI into income - excluded component | — |  |  | — |  |  | — |  |  | — |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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