ACNB earned a record $15.2M ($1.49/share) in Q2 2026 as its net interest margin widened to 4.56% and the efficiency ratio fell to 51.6%, though loans outgrew deposits and a special dividend plus buybacks trimmed CET1 to 14.49%.
Net interest income
$34M
+9.6% YoY
Net interest margin
4.56%
Net income
$15M
+30.6% YoY
Diluted EPS
$1.49
+34.2% YoY
Efficiency ratio
51.6%
Net charge-off ratio
0.03%
CET1 capital ratio
14.5%
Net interest margin (NIM): what a bank earns on its loans and securities minus what it pays for deposits and borrowing, as a share of those assets. Efficiency ratio: operating costs per dollar of revenue (lower is better). Net charge-off (NCO) ratio: loans written off as unrecoverable, net of recoveries, as a share of average loans. CET1: the bank's core capital cushion against losses, as a share of risk-weighted assets.
This period vs a year ago
Same period last year
This period
Net interest income▲+9.6%
≈$31M
$34M
Net income▲+30.6%
≈$12M
$15M
Diluted EPS+34.2%
ACNB Corporation, the Gettysburg, Pennsylvania parent of ACNB Bank (a $3.3 billion-asset community bank with 33 offices across south-central Pennsylvania and central Maryland, plus an insurance agency), earned a record $15.2 million, or $1.49 per diluted share, in the second quarter of 2026, up from $11.6 million, or $1.11, a year earlier. Most of that jump came from the bank earning more on its loans and paying less for its deposits, not from one-offs: net interest income rose 9.6% while day-to-day costs were flat. The year-ago quarter was also held down by $1.5 million of after-tax costs tied to buying Traditions Bancorp in February 2025, which flatters the headline comparison.
At a glance
Net interest margin 4.56% vs 4.21%. The bank now keeps about 4.6 cents a year for every dollar it lends or invests, after paying depositors and lenders. That is high for a community bank and the main source of the profit increase.
Efficiency ratio 51.6% vs 56.2%. It spent about 52 cents to earn each dollar of revenue, down from 56 cents. Most of the improvement comes from revenue growing while costs stayed flat once merger costs are excluded.
Net charge-offs 0.03% of loans (annualized). Loans actually written off stayed close to zero, and non-performing loans were 0.41% of the book. Credit is not a problem so far.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue (net interest income + noninterest income)
$42.8M
$39.7M
+7.9%
Net interest income
$34.0M
$31.0M
+9.6%
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▲
≈$1.11
$1.49
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Noninterest income
$8.8M
$8.7M
+1.6%
Noninterest expense
$23.1M
$25.4M
−8.8%
Net income
$15.2M
$11.6M
+30.6%
Diluted EPS
$1.49
$1.11
+34.2%
Net interest margin (FTE)
4.56%
4.21%
+0.35 pts
Efficiency ratio (non-GAAP)
51.60%
56.21%
−4.61 pts
Net charge-offs / average loans (annualized)
0.03%
0.01%
+0.02 pts
Total loans (period-end)
$2,398.1M
$2,341.8M
+2.4%
Total deposits (period-end)
$2,535.7M
$2,524.5M
+0.4%
CET1 ratio
14.49%
13.96%
+0.53 pts
Return on average equity (annualized)
14.54%
11.96%
+2.58 pts
Tangible book value per share (non-GAAP)
$33.42
$29.30
+14.1%
Total revenue is net interest income plus noninterest income from the income statement. The efficiency ratio and tangible book value are the company's own non-GAAP figures. The company doesn't report return on tangible common equity.
Why the margin keeps widening
A bank's core profit is net interest income: the interest it collects on loans and bonds minus the interest it pays on deposits and borrowings. The net interest margin (NIM) expresses that as a share of the assets earning interest. ACNB reports it on a "fully taxable equivalent" (FTE) basis, which grosses up tax-exempt municipal loans and bonds so they compare with taxable ones. The effect is small: FTE net interest income was $34.18 million against $34.00 million reported.
The margin has risen for five straight quarters, from 4.21% to 4.27%, 4.36%, 4.46% and now 4.56%. Management gives three reasons, and the rate table supports each of them:
Loans reprice upward. The average loan yield rose to 6.40% from 6.29%. According to the filing, new loans were "funded during the quarter at higher rates than those that paid off or matured." Average loans grew $46.0 million year on year, mostly commercial real estate.
The bond portfolio was reset. Investment securities yielded 3.68% against 2.95% a year ago. That follows a repositioning completed in Q4 2025: Q4 2025 results include a $3.6 million net loss on securities sales. That cost is already in last year's numbers, and 2026 gets the higher yield.
Deposits cost less. Total cost of funds fell to 1.38% from 1.50%. Money market balances inherited from Traditions, which paid higher rates, have been leaving (money market deposits fell $50.7 million over the year), and time-deposit rates dropped to 3.14% from 3.42%. At the same time, non-interest-bearing checking balances, which cost the bank nothing, rose $32.4 million to $600.7 million. The company attributes that to "promotional incentives on commercial checking accounts."
Acquisition accounting also adds to income. When ACNB bought Traditions, it marked the acquired loans and deposits to market value, and that discount now flows back into interest income over time. That "accretion" added $1.8 million this quarter, down from $2.2 million a year ago. It is shrinking, so it pulled growth down slightly rather than inflating it. Excluding accretion, net interest income grew from about $28.8 million to $32.2 million, roughly 12%.
Costs, fees and credit
Noninterest expense fell 8.8%, but nearly all of that decline is the absence of the $1.9 million of pre-tax merger costs booked in Q2 2025. Without them, expenses were $23.1 million against $23.4 million, about 1% lower. Salaries were essentially flat at $13.8 million. The efficiency ratio (operating costs as a share of revenue, where lower is better) fell to 51.6% from 56.2%. The company's version already strips out merger costs and intangible amortization, so this improvement reflects revenue growth rather than a one-off.
Fee income barely moved (+1.6%). Wealth management rose 9.3% on growth in assets under management, and bank-owned life insurance income rose 20.6% after new policies were bought in Q4 2025. Lower "other" fees (credit card processing and letter-of-credit fees) offset part of that.
Credit costs went the other way. ACNB booked a $554,000 provision for loan losses this quarter, after releasing $228,000 of reserves a year ago. The provision is money set aside for loans that may not be repaid. The company says this quarter's build was "driven primarily by loan growth," and the reserve stayed at 1.00% of loans. Nonaccrual loans (loans no longer paying interest) fell $1.2 million this year, mainly because several moved to foreclosed property and one paid off.
Loans, deposits and funding
Loans rose $48.9 million in the quarter, an 8.6% annualized pace, to $2.40 billion. Commercial real estate grew $31.2 million, almost all of it farmland ($31.1 million) and owner-occupied property ($12.5 million), while non-owner-occupied balances (investor-owned rental and office property) shrank $11.0 million. Commercial and industrial loans grew $12.4 million, which the company attributes to three new relationships in the Lancaster and Berks regions.
Deposits did not keep up. Total deposits were up only $9.9 million in the quarter and 0.4% over the year, so ACNB paid for its loan growth with borrowed money. Total borrowings rose $43.9 million in the quarter to $323.1 million, "to fund loan growth," and short-term borrowings reached $108.3 million against $63.8 million in March. Loans now equal 94.6% of deposits, up from 93.0% in March. That still leaves room, but future loan growth will depend more on winning deposits or paying up for wholesale funding.
What the headline numbers hide
Part of the 31% profit growth is the merger comparison. Q2 2025 carried $1.5 million of after-tax merger costs. Adding those back puts last year's quarter at about $13.1 million, so the underlying increase is closer to 16%. That is still a strong quarter, but it is roughly half of the headline.
Buybacks and a lower tax rate helped EPS a little. Diluted shares averaged 10.21 million against 10.49 million a year ago, 2.6% fewer, which accounts for about 3 points of the 34% EPS growth. The effective tax rate slipped to 21.0% from 21.9%. Most of the improvement came from operations: pre-tax, pre-provision income excluding merger costs rose about 21%.
Credit costs went against the bank this year. A $554,000 provision against a year-ago release is a pre-tax headwind of about $1 million once the unfunded-commitment reserve is included, and profit grew anyway.
Cash conversion is lower than profit but explainable. First-half operating cash flow was $20.9 million against $28.9 million of net income. The gap comes mostly from $3.6 million of non-cash acquisition accretion counted in income, plus $2.7 million more mortgages originated for sale than sold. Loans held for sale rose to $33.5 million from $15.2 million in March, which fits the seasonal mortgage pickup the company describes.
Capital went down this quarter by choice. ACNB returned $18.5 million in Q2 ($9.3 million of dividends, including a one-time $0.50 special dividend, and $9.2 million of buybacks), more than its $15.2 million profit. The CET1 ratio, which measures the bank's core loss-absorbing capital against its risk-weighted assets, fell to 14.49% from 14.92% in March. The subsidiary bank's own CET1 ratio is 14.30%, far above the 6.5% level at which regulators treat a bank as "well capitalized," so this is a deliberate payout rather than a warning sign. The special dividend won't necessarily repeat.
First-half comparisons are skewed. Year-to-date EPS of $2.81 against $1.12 looks like a 150% jump, but the first half of 2025 absorbed $10.0 million of merger costs and a $5.7 million loan-loss provision in the half the Traditions deal closed. That comparison says more about the deal than about the trend.
Takeaway: ACNB's record quarter comes mainly from a margin that has widened five quarters in a row as loans and bonds reprice upward and expensive acquired deposits leave. That is a sturdier source of profit than the merger-cost comparison inflating the headline. The weak spot is funding: loans grew about $49 million while deposits grew $10 million, and borrowings covered the difference.
Outlook
ACNB gives no earnings or margin guidance in the release or the 10-Q, so what follows is our read. The margin tailwinds should continue for a while, because older loans keep maturing into higher yields and the Q4 2025 bond repositioning is now fully in the base. They should fade gradually, though: loan yields rose only 5 basis points in the quarter, and the cheapest funding gains (the runoff of high-cost acquired money-market deposits) run out as those balances shrink. The number to watch in Q3 is whether deposits start to fund loan growth again. If borrowings keep rising, the extra interest on them (short-term borrowings cost 3.02% and long-term 4.69% this quarter) will start to eat into margin gains. Capital returns are the other lever: the board raised the regular quarterly dividend to $0.42 and declared another $0.42 for Q3, and 253,692 shares remained under the buyback plan after Q2. Separately, ACNB said on September 25, 2026 that it plans to rebrand its Traditions Bank and Traditions Mortgage divisions, effective in the first quarter of 2027. Q1 and Q2 results came out on April 23 and July 23; if that pattern holds, Q3 results would land in late October.