• Mid Penn Bancorp, Inc. Reports Second Quarter Earnings and Declares Dividend

    Источник: Nasdaq GlobeNewswire / 27 июл 2023 18:03:08   America/New_York

    HARRISBURG, Pa., July 27, 2023 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. (NASDAQ: MPB) ("Mid Penn"), the parent company of Mid Penn Bank (the "Bank") and MPB Financial Services, LLC, today reported net income available to common shareholders ("earnings") for the quarter ended June 30, 2023, of $4.8 million, or $0.29 per diluted common share. Adjusted net income excluding non-recurring expenses(1) for the second quarter 2023 was $11.1 million and adjusted earnings per share common share excluding non-recurring expenses was $0.68, which excluded $6.3 million of after-tax merger-related expenses.

    Key Highlights of the Second Quarter of 2023

    • Completed the acquisition of Brunswick Bancorp ("Brunswick"), which added total assets of $391.9 million comprised primarily of $324.8 million of loans.
    • Organic deposit growth for the quarter was $126.0 million, or 13% (annualized), from the first quarter of 2023.
    • Organic loan growth for the quarter was $98.3 million, or 10.9% (annualized), from the first quarter of 2023.
    • Repurchased 204,379 shares of common stock at an average price of $22.41.
    • Total accumulated other comprehensive loss was 4.5% of tangible shareholders' equity(1) at June 30, 2023.
    • Book value per common share was $32.05 for the second quarter, compared to $32.15 for the first quarter of 2023. Tangible book value per share(1) was $23.79 at June 30, 2023, compared to $24.52, at March 31, 2023.

    “During the second quarter, while completing the acquisition of Brunswick Bancorp, Mid Penn achieved 13% annualized organic deposit growth and 10.9% annualized organic loan growth, demonstrating our resilience in the face of recent turbulence in the banking industry. The Brunswick acquisition added $325 million in quality loans and $283 million in core deposits while giving Mid Penn entry into the dynamic central New Jersey market. We look forward to complementing Brunswick’s talented team of bankers with the resources of a $5+ billion balance sheet to help them compete effectively in a market with very attractive demographics,” Chair, President, and CEO Rory G. Ritrievi said.

    Ritrievi added, “As a result of the interest rate yield curve being inverted throughout the quarter, our net interest margin remained under pressure, as is the case for most community banks that compete in the spread business. Notwithstanding the rate increase announced this week, we feel we are nearing an end of that margin compression with the expectation that we will now begin to build that margin back to the level we saw in FY2021 and 2022. As we do that, we will remain diligent in controlling noninterest expenses so that our final FY2023 operating results will meet the expectations of our shareholders and analysts.”

    For the second quarter, the Board is pleased to announce a quarterly cash dividend of $0.20 per share of common stock, which was declared at its meeting on July 26, 2023, payable on August 28, 2023, to shareholders of record as of August 10, 2023.

    (1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.

    Net Interest Income

    For the three months ended June 30, 2023, net interest income was $36.4 million compared to net interest income of $36.0 million for the three months ended March 31, 2023, and $35.4 million for the three months ended June 30, 2022. The tax-equivalent net interest margin for the three months ended June 30, 2023, was 3.29% compared to 3.49% for the first quarter of 2023, and 3.45% for the second quarter of 2022, a 20 and 16 basis point ("bp") decrease, respectively, compared to the prior quarter and the same period in 2022.

    The yield on interest-earning assets increased to 5.10% for the quarter ended June 30, 2023, from 4.86% for the quarter ended March 31, 2023, and 3.73% for the quarter ended June 30, 2022. The increase was due to assets continuing to reprice at higher rates during the quarter. Increased yields on interest-earning assets were more than offset by increases in funding costs for the quarter with overall cost of interest-bearing liabilities increasing to 2.35% during the second quarter of 2023, compared to 1.81% at March 31, 2023, and 0.36% at June 30, 2022.

    For the six months ended June 30, 2023, net interest income increased $2.6 million to $72.5 million compared to net interest income of $69.8 million for the same period of 2022.

    Both interest-earning assets and interest-bearing liabilities associated with the Brunswick acquisition had substantially similar yields to the corresponding Mid Penn portfolios. We do not anticipate a material change in net interest margin resulting from the acquisition.

    Average Balances

    Average balances were significantly impacted by the Brunswick acquisition given that the acquisition closed on May 19, 2023. Day one increases in loans, total assets, deposits, borrowings, and total liabilities were $324.8 million, $391.9 million, $282.6 million, $60.1 million, and $346.3 million, respectively.

    Average loans increased $253.3 million to $3.8 billion at June 30, 2023, compared to $3.6 billion at March 31, 2023, and $3.1 billion at June 30, 2022. Average deposits were $4.1 billion for the second quarter of 2023, reflecting an increase of $274.6 million, or 7.3%, compared to total average deposits in the first quarter of 2023, and $220.5 million, or 5.8%, compared to total average deposits of $3.8 billion for the second quarter of 2022. The average cost of deposits was 1.77% for the second quarter of 2023, representing a 48 bp and 156 bp increase from the first quarter of 2023 and the second quarter of 2022, respectively. We continue to face headwinds with respect to deposit pricing as customers in many product types have become increasingly rate sensitive. Our primary focus with respect to deposit strategy is stability, ensuring that our rates are competitive and our product mix satisfies the needs of our customers. Additionally, Mid Penn also maintains interest rate swaps designated as cash flow hedges to hedge the cash flows associated with existing brokered CDs to mitigate the impact of rising deposit costs.

    As a result of the Brunswick acquisition and organic movement, the mix of deposits has shifted from the prior quarter. Time deposits represented 22.8% of total deposits at March 31, 2023, and increased to 29.8% at June 30, 2023. Nearly all of this increase corresponds to movement out of interest-bearing transaction accounts. The mix of non-interest bearing deposits remained stable, representing approximately 20% of total deposits for both March 31 and June 30, 2023. The average duration of the non-hedged time deposit portfolio is 12 months at June 30, 2023. We believe this positions us well to reprice the portfolio at lower rates in the future.

    Asset Quality

    On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology, and is referred to as CECL. Results for reporting periods beginning after January 1, 2023, are presented under CECL, while prior period results are reported in accordance with the previously applicable incurred loss methodology.

    The provision for credit losses on loans was $1.2 million for the three months ended June 30, 2023, an increase of $667 thousand compared to the provision for credit losses of $490 thousand for the three months ended March 31, 2023. The increase in provision was primarily due to reserving for the loans acquired through the Brunswick acquisition which was $2.0 million for non-PCD loans. The provision for credit losses on loans was $1.6 million for the six months ended June 30, 2023, a decrease of $578 thousand compared to the provision for credit losses of $2.2 million for the six months ended June 30, 2022. The ratio of allowance for credit losses to total loans declined to 0.81% at June 30, 2023, from 0.87% at March 31, 2023, primarily due to improved economic forecasts.

    Total nonperforming assets were $16.3 million at June 30, 2023, compared to nonperforming assets of $14.2 million and $8.0 million at March 31, 2023, and June 30, 2022, respectively. The increase during the second quarter primarily related to $3.9 million of non-accrual loans acquired from Brunswick, partially offset by reductions to other non-accrual loans. Delinquency as a percentage of total loans was 0.47% at June 30, 2023.

    Capital

    Shareholders’ equity increased $18.9 million, or 3.68%, from $512.1 million as of December 31, 2022, to $531.0 million as of June 30, 2023. The increase was primarily due to the Brunswick acquisition. Regulatory capital ratios for both Mid Penn and its banking subsidiary indicate regulatory capital levels in excess of both the regulatory minimums and the levels necessary for the Bank to be considered "well capitalized" at June 30, 2023. Additionally, Mid Penn declared $3.2 million in dividends during the second quarter of 2023.

    On May 11, 2023, Mid Penn’s Board of Directors reauthorized its treasury stock repurchase program ("Program") effective through May 11, 2024. The Program authorizes the repurchase of up to $15.0 million of Mid Penn’s outstanding common stock. During the six months ended June 30, 2023, Mid Penn repurchased 204,379 shares of common stock at an average price of $22.41. As of June 30, 2023, Mid Penn repurchased 412,722 shares of common stock at an average price of $22.92 per share under the Program. The Program had $5.5 million remaining available for repurchase as of June 30, 2023.

    Noninterest Income

    For the three months ended June 30, 2023, noninterest income totaled $5.2 million, an increase of $895 thousand, compared to noninterest income of $4.3 million for the first quarter of 2023. The primary driver of the increase was a death benefit claim related to BOLI and increased insurance revenues from the MPB Insurance division, which are included in other income. The Brunswick acquisition provides a market with an attractive demographic in which to create new wealth management and insurance customer relationships, which would help bolster noninterest income.

    For the six months ended June 30, 2023, noninterest income totaled $9.5 million, a decrease of $1.4 million, compared to noninterest income of $11.0 million for the six months ended June 30, 2022. The decrease in noninterest income is primarily due to mortgage banking hedging activities. Given the rising interest rate environment and lower demand for mortgages, hedging the mortgage pipeline becomes more difficult and adds volatility to earnings.

    Noninterest Expense

    Noninterest expense totaled $35.5 million, an increase of $9.5 million, or 36.3%, for the three months ended June 30, 2023, compared to noninterest expense of $26.1 million for the first quarter of 2023. Noninterest expense for the three months ended June 30, 2023, includes $7.9 million of merger related expenses. Excluding merger related expenses, overall noninterest expense remained relatively flat for the second quarter of 2023. For the six months ended June 30, 2023, noninterest expense totaled $61.6 million, an increase of $11.9 million, or 24.0%, compared to noninterest expense of $49.7 million for the six months ended June 30, 2022. Noninterest expense for the six months ended June 30, 2023, includes $8.2 million of merger-related expenses.

    The efficiency ratio(1) was 65.40% in the second quarter of 2023, compared to 63.16% in the first quarter of 2023, and 57.57% in the second quarter of 2022. Mid Penn is currently evaluating levels of noninterest expense for opportunities to reduce operating costs throughout the organization.

    Brunswick Acquisition

    On May 19, 2023, Mid Penn completed its acquisition of Brunswick through the merger of Brunswick with and into Mid Penn, with Mid Penn being the surviving corporation. In connection with this acquisition, Brunswick Bank and Trust Company, a wholly-owned subsidiary of Brunswick, merged with and into Mid Penn Bank, a wholly-owned subsidiary of Mid Penn.

    Pursuant to the terms of the Merger Agreement, each share of Brunswick common stock issued and outstanding as of May 19, 2023, was converted into the right to receive, at the election of the holder, either 0.598 shares of Mid Penn common stock or $18.00 cash, subject to adjustment and proration procedures described in the Merger Agreement requiring that fifty percent (50%) of the outstanding shares of Brunswick common stock be converted into the right to receive cash and the balance converted into the right to receive Mid Penn common stock. Cash was paid to Brunswick shareholders in lieu of any fractional shares. As a result of the merger, Mid Penn paid holders of Brunswick common stock approximately $25.6 million in cash and issued approximately 849,510 shares of Mid Penn common stock.

    Subsequent Events

    Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s consolidated financial statements when filed with the Securities and Exchange Commission ("SEC"). Accordingly, the financial information in this announcement is subject to change. The statements are valid only as of the date hereof and Mid Penn disclaims any obligation to update this information.

    (1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.

    SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

    This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continues," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on securities held in Mid Penn’s portfolio; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; results of the regulatory examination and supervision process and oversight, including changes in monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; the availability of financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank’s future businesses; material differences in the actual financial results of merger, acquisition and investment activities compared with Mid Penn’s initial expectations, including the full realization of anticipated cost savings and revenue enhancements; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in legacy Mid Penn and Brunswick markets; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the integration of Mid Penn and Brunswick successfully; the dilution caused by Mid Penn’s issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Mid Penn.

    For a more detailed description of these and other factors which would affect our results, please see Mid Penn’s filings with the SEC, including those risk factors identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC. The statements in this press release are made as of the date of this press release, even if subsequently made available by Mid Penn on its website or otherwise. Mid Penn assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

    SUMMARY FINANCIAL HIGHLIGHTS (Unaudited):

    (Dollars in thousands, except per share data) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
    Ending Balances:          
    Investment securities $634,038  $633,831  $637,802  $644,766  $618,184 
    Loans, net of unearned interest  4,001,922   3,580,082   3,495,162   3,303,977   3,163,157 
    Total assets  5,093,887   4,583,465   4,497,954   4,333,903   4,310,163 
    Total deposits  4,286,686   3,878,081   3,778,331   3,729,596   3,702,587 
    Shareholders' equity  530,962   510,793   512,099   499,105   495,835 
    Average Balances:          
    Investment securities  630,750   636,151   640,792   626,447   580,406 
    Loans, net of unearned interest  3,808,717   3,555,375   3,395,308   3,237,587   3,129,334 
    Total assets  4,827,786   4,520,869   4,381,213   4,339,783   4,465,906 
    Total deposits  4,057,605   3,782,990   3,727,287   3,726,658   3,837,135 
    Shareholders' equity  504,535   510,857   505,769   502,082   495,681 
               
               
      Three Months Ended
    Income Statement: Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
    Net interest income $36,444  $36,049  $38,577  $39,409  $35,433 
    Provision for credit losses  1,157   490   525   1,550   1,725 
    Noninterest income  5,220   4,325   6,714   5,963   5,230 
    Noninterest expense  35,529   26,070   25,468   24,715   23,915 
    Income before provision for income taxes  4,978   13,814   19,298   19,107   15,023 
    Provision for income taxes  142   2,587   3,579   3,626   2,771 
    Net income available to shareholders  4,836   11,227   15,719   15,481   12,252 
    Net income excluding non-recurring expenses (1)  11,112   11,404   15,951   15,481   12,252 
               
    Per Share:          
    Basic earnings per common share $0.29  $0.71  $0.99  $0.97  $0.77 
    Diluted earnings per common share  0.29   0.70   0.99   0.97   0.77 
    Cash dividends declared  0.20   0.20   0.20   0.20   0.20 
    Book value per common share  32.05   32.15   32.24   31.42   31.23 
    Tangible book value per common share (1)  23.79   24.52   24.59   23.80   23.57 
               
    Asset Quality:          
    Net charge-offs (recoveries) to average loans (annualized)  0.018%  0.013%  0.006%  (0.007%)  (0.001%)
    Non-performing loans to total loans  0.39   0.38   0.25   0.23   0.25 
    Non-performing asset to total loans and other real estate  0.40   0.39   0.25   0.23   0.25 
    Non-performing asset to total assets  0.32   0.31   0.21   0.18   0.19 
    ACL on loans to total loans  0.81   0.87   0.54   0.56   0.53 
    ACL on loans to nonperforming loans  205.65   225.71   220.82   242.23   211.66 
               
    Profitability:          
    Return on average assets  0.40%  1.01%  1.42%  1.42%  1.10%
    Return on average equity  3.84   8.91   12.33   12.23   9.91 
    Return on average tangible common equity (1)  5.53   11.97   16.61   16.55   13.59 
    Net interest margin  3.29   3.49   3.80   3.92   3.45 
    Efficiency ratio (1)  65.40   63.16   54.59   53.46   57.57 
               
    Capital Ratios:          
    Tier 1 Capital (to Average Assets) (2)  9.6%  9.2%  10.7%  9.6%  9.0%
    Common Tier 1 Capital (to Risk Weighted Assets) (2)  10.7   10.8   12.5   11.4   11.5 
    Tier 1 Capital (to Risk Weighted Assets) (2)  10.7   10.8   12.5   11.7   11.8 
    Total Capital (to Risk Weighted Assets) (2)  11.5   13.1   14.5   13.8   14.1 

    (1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.
    (2) Regulatory capital ratios as of June 30, 2023 are preliminary and prior periods are actual.

    CONSOLIDATED BALANCE SHEETS (Unaudited):

    (In thousands, except share data) Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022
    ASSETS          
    Cash and due from banks $75,906  $51,158  $53,368  $76,018  $64,440 
    Interest-bearing balances with other financial institutions  13,332   4,996   4,405   4,520   4,909 
    Federal funds sold  9,711   6,017   3,108   14,140   167,437 
    Total cash and cash equivalents  98,949   62,171   60,881   94,678   236,786 
    Investment Securities:          
    Held to maturity, at amortized cost  404,831   396,784   399,494   402,142   399,032 
    Available for sale, at fair value  228,774   236,609   237,878   242,195   218,698 
    Equity securities available for sale, at fair value  433   438   430   428   454 
    Loans held for sale  7,258   2,677   2,475   5,997   9,574 
    Loans, net of unearned interest  4,034,510   3,611,347   3,514,119   3,322,457   3,180,033 
    Less: Allowance for credit losses  (32,588)  (31,265)  (18,957)  (18,480)  (16,876)
    Net loans  4,001,922   3,580,082   3,495,162   3,303,977   3,163,157 
               
    Premises and equipment, net  39,230   34,191   34,471   33,854   33,732 
    Operating lease right of use asset  9,106   8,414   8,798   8,352   8,326 
    Finance lease right of use asset  2,817   2,862   2,907   2,952   2,997 
    Cash surrender value of life insurance  53,931   50,928   50,674   50,419   50,169 
    Restricted investment in bank stocks  11,646   8,041   8,315   4,595   4,234 
    Accrued interest receivable  19,626   19,205   18,405   15,861   12,902 
    Deferred income taxes  24,309   15,548   13,674   16,093   13,780 
    Goodwill  129,403   114,231   114,231   113,871   113,835 
    Core deposit and other intangibles, net  7,453   6,916   7,260   7,215   7,729 
    Foreclosed assets held for sale  489   248   43   49   69 
    Other assets  53,710   44,120   42,856   31,225   34,689 
    Total Assets $5,093,887  $4,583,465  $4,497,954  $4,333,903  $4,310,163 
               
    LIABILITIES & SHAREHOLDERS’ EQUITY          
    Deposits:          
    Noninterest-bearing demand $830,479  $797,038  $793,939  $863,037  $850,180 
    Interest-bearing transaction accounts  2,180,312   2,197,216   2,325,847   2,414,272   2,377,260 
    Time  1,275,895   883,827   658,545   452,287   475,147 
    Total Deposits  4,286,686   3,878,081   3,778,331   3,729,596   3,702,587 
               
    Short-term borrowings  112,442   88,000   102,647   —   — 
    Long-term debt  58,982   4,316   4,409   4,501   4,592 
    Subordinated debt and trust preferred securities  45,929   56,794   56,941   66,357   73,995 
    Operating lease liability  9,894   9,270   9,725   10,261   10,324 
    Accrued interest payable  11,834   5,809   2,303   1,841   1,542 
    Other liabilities  37,158   30,402   31,499   22,242   21,288 
    Total Liabilities  4,562,925   4,072,672   3,985,855   3,834,798   3,814,328 
               
    Shareholders' Equity:          
    Common stock, par value $1.00 per share; 40.0 million shares authorized  16,980   16,098   16,094   16,091   16,081 
    Additional paid-in capital  409,976   387,332   386,987   386,452   386,128 
    Retained earnings  131,271   129,617   133,114   120,572   108,265 
    Accumulated other comprehensive loss  (17,805)  (17,374)  (19,216)  (19,130)  (9,759)
    Treasury stock  (9,460)  (4,880)  (4,880)  (4,880)  (4,880)
    Total Shareholders’ Equity  530,962   510,793   512,099   499,105   495,835 
    Total Liabilities and Shareholders' Equity $5,093,887  $4,583,465  $4,497,954  $4,333,903  $4,310,163 
                         

    CONSOLIDATED STATEMENTS OF INCOME (Unaudited):

      Three Months Ended Six Months Ended
    (Dollars in thousands, except per share data) Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022
    INTEREST INCOME              
    Loans, including fees $52,094  $45,865  $42,492  $38,484  $34,264  $97,959  $69,280 
    Investment securities:              
    Taxable  3,962   3,874   3,784   3,382   2,833   7,836   4,786 
    Tax-exempt  391   389   390   392   379   780   715 
    Other interest-bearing balances  83   53   36   12   8   136   21 
    Federal funds sold  49   45   40   736   736   94   1,050 
    Total Interest Income  56,579   50,226   46,742   43,006   38,220   106,805   75,852 
    INTEREST EXPENSE              
    Deposits  17,927   12,001   6,995   2,836   2,019   29,928   4,313 
    Short-term borrowings  1,507   1,490   441   —   —   2,997   — 
    Long-term and subordinated debt  701   686   729   761   768   1,387   1,692 
    Total Interest Expense  20,135   14,177   8,165   3,597   2,787   34,312   6,005 
    Net Interest Income  36,444   36,049   38,577   39,409   35,433   72,493   69,847 
    PROVISION FOR CREDIT LOSSES  1,157   490   525   1,550   1,725   1,647   2,225 
    Net Interest Income After Provision for Credit Losses  35,287   35,559   38,052   37,859   33,708   70,846   67,622 
    NONINTEREST INCOME              
    Fiduciary and wealth management  1,204   1,236   1,085   1,729   1,205   2,440   2,257 
    ATM debit card interchange  998   1,056   1,099   1,078   1,128   2,054   2,185 
    Service charges on deposits  514   435   461   483   450   949   1,134 
    Mortgage banking  287   384   237   536   305   671   834 
    Mortgage hedging  128   20   150   217   538   148   1,104 
    Net gain on sales of SBA loans  128   —   —   152   119   128   110 
    Earnings from cash surrender value of life insurance  292   254   255   250   262   546   508 
    Other  1,669   940   3,427   1,518   1,223   2,609   2,848 
    Total Noninterest Income  5,220   4,325   6,714   5,963   5,230   9,545   10,980 
    NONINTEREST EXPENSE              
    Salaries and employee benefits  15,027   13,844   13,434   13,583   12,340   28,871   25,584 
    Software licensing and utilization  2,070   1,946   1,793   1,804   1,821   4,016   3,927 
    Occupancy, net  1,750   1,886   1,812   1,634   1,655   3,636   3,454 
    Equipment  1,248   1,251   1,249   1,121   1,112   2,499   2,123 
    Shares tax  751   899   160   920   480   1,650   1,706 
    Legal and professional fees  602   800   900   528   694   1,402   1,333 
    ATM/card processing  532   493   534   518   571   1,025   1,087 
    Intangible amortization  461   344   496   514   521   805   1,002 
    FDIC Assessment  684   340   243   254   506   1,024   1,097 
    (Gain) loss on sale or write-down of foreclosed assets, net  (126)  —   (45)  (57)  (15)  (126)  (31)
    Merger and acquisition  4,992   224   294   —   —   5,216   — 
    Post-acquisition restructuring  2,952   —   —   —   —   2,952   329 
    Other  4,586   4,043   4,598   3,896   4,230   8,629   8,049 
    Total Noninterest Expense  35,529   26,070   25,468   24,715   23,915   61,599   49,660 
    INCOME BEFORE PROVISION FOR INCOME TAXES  4,978   13,814   19,298   19,107   15,023   18,792   28,942 
    Provision for income taxes  142   2,587   3,579   3,626   2,771   2,729   5,336 
    NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $4,836  $11,227  $15,719  $15,481  $12,252  $16,063  $23,606 
                   
    PER COMMON SHARE DATA:              
    Basic Earnings Per Common Share $0.29  $0.71  $0.99  $0.97  $0.77  $1.00  $1.48 
    Diluted Earnings Per Common Share $0.29  $0.70  $0.99  $0.97  $0.77  $1.00  $1.48 
    Cash Dividends Declared $0.20  $0.20  $0.20  $0.20  $0.20  $0.20  $0.40 
                                 

    CONSOLIDATED – AVERAGE BALANCE SHEET AND NET INTEREST INCOME ANALYSIS (Unaudited):

      Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
      For the Three Months Ended
      June 30, 2023 March 31, 2023 June 30, 2022
    (Dollars in thousands) Average Balance Interest (1) Yield/
    Rate    		 Average Balance Interest (1) Yield/
    Rate    		 Average Balance Interest (1) Yield/
    Rate
    ASSETS:                  
    Interest Bearing Balances $7,777 $83  4.28% $5,761 $53  3.73% $5,920 $8  0.54%
    Investment Securities:                  
    Taxable  551,832  3,783  2.75   556,901  3,764  2.74   501,631  2,740  2.19 
    Tax-Exempt  78,918  495  2.52   79,250  493  2.52   78,775  480  2.44 
    Total Securities  630,750  4,278  2.72   636,151  4,257  2.71   580,406  3,220  2.23 
                       
    Federal Funds Sold  6,035  49  3.26   3,775  45  4.83   415,405  736  0.71 
    Loans, Net of Unearned Interest  3,808,717  52,192  5.50   3,555,375  45,961  5.24   3,129,334  34,354  4.40 
    Restricted Investment in Bank Stocks  10,177  179  7.05   9,542  110  4.68   4,854  94  7.77 
    Total Earning Assets  4,463,456  56,781  5.10   4,210,604  50,426  4.86   4,135,919  38,412  3.73 
                       
    Cash and Due from Banks  70,378      51,444      59,822    
    Other Assets  293,952      258,821      270,165    
    Total Assets $4,827,786     $4,520,869     $4,465,906    
                       
    LIABILITIES & SHAREHOLDERS' EQUITY:                  
    Interest-bearing Demand $936,687 $3,216  1.38% $968,951 $2,691  1.13% $1,030,237 $462  0.18%
    Money Market  929,774  5,104  2.20   940,286  4,084  1.76   1,079,900  584  0.22 
    Savings  319,728  64  0.08   330,773  54  0.07   357,433  43  0.05 
    Time  1,061,276  9,543  3.61   749,598  5,172  2.80   516,346  930  0.72 
    Total Interest-bearing Deposits  3,247,465  17,927  2.21   2,989,608  12,001  1.63   2,983,916  2,019  0.27 
                       
    Short term borrowings  94,067  1,507  6.43   121,898  1,490  4.96   —  —  — 
    Long-term debt  54,347  194  1.43   4,350  44  4.10   9,238  107  4.65 
    Subordinated debt and trust preferred securities  47,782  507  4.26   56,875  642  4.58   74,062  661  3.58 
    Total Interest-bearing Liabilities  3,443,661  20,135  2.35   3,172,731  14,177  1.81   3,067,216  2,787  0.36 
                       
    Noninterest-bearing Demand  810,140      793,382      853,219    
    Other Liabilities  69,451      43,899      49,790    
    Shareholders' Equity  504,535      510,857      495,681    
    Total Liabilities & Shareholders' Equity $4,827,787     $4,520,869     $4,465,906    
                       
    Net Interest Income (taxable equivalent basis)   $36,646      $36,249      $35,625   
    Taxable Equivalent Adjustment    (202)      (200)      (192)  
    Net Interest Income   $36,444      $36,049      $35,433   
                       
    Total Yield on Earning Assets     5.10%     4.86%     3.73%
    Rate on Supporting Liabilities     2.35      1.81      0.36 
    Average Interest Spread     2.76      3.04      3.37 
    Net Interest Margin     3.29      3.49      3.45 

    (1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowance.

    ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY (Unaudited):

    (Dollars in thousands) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
    Allowance for Credit Losses on Loans:          
    Beginning balance $31,265  $18,957  $18,480  $16,876  $15,147 
               
    Impact of adopting CECL  —   11,931   —   —   — 
    Purchase credit deteriorated loans  336   —   —   —   — 
               
    Loans Charged off          
    Commercial real estate  —   (16)  (7)  —   — 
    Commercial and industrial  (109)  (111)  —   (1)  — 
    Construction  —   —   —   —   — 
    Residential mortgage  —   (4)  (23)  (3)  — 
    Consumer  (65)  (19)  (20)  (11)  (9)
    Total loans charged off  (174)  (150)  (50)  (15)  (9)
    Recoveries of loans previously charged off          
    Commercial real estate  —   —   —   63   — 
    Commercial and industrial  —   —   —   —   — 
    Construction  —   —   —   —   — 
    Residential mortgage  —   30   —   —   3 
    Consumer  4   7   2   6   10 
    Total recoveries  4   37   2   69   13 
    Balance before provision  31,431   30,775   18,432   16,930   15,151 
    Provision for credit losses  1,157   490   525   1,550   1,725 
    Balance, end of quarter $32,588  $31,265  $18,957  $18,480  $16,876 
               
    Nonperforming Assets          
    Total nonperforming loans  15,846   13,909   8,585   7,629   7,973 
               
    Foreclosed real estate  489   248   43   49   69 
    Total nonperforming assets  16,335   14,157   8,628   7,678   8,042 
               
    Accruing loans 90 days or more past due  9   7   654   633   — 
    Total risk elements $16,344  $14,164  $9,282  $8,311  $8,042 
                         

    PPP Summary

    (Dollars in thousands) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    PPP loans, net of deferred fees $1,633  $1,752  $2,600  $2,800  $4,966 
               
    PPP Fees recognized $3  $5  $29  $99  $652 
                         

    RECONCILIATION OF NON-GAAP MEASURES (Unaudited)
    Explanatory note: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Mid Penn’s management uses these non-GAAP financial measures in their analysis of Mid Penn’s performance. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing tangible book value. Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances or non-deductible portions of the non-GAAP adjustments. Non-PPP core banking loans are meaningful to investors as they are indicative of portfolio loans and related growth from traditional bank activities and excludes short-term or nonrecurring loans from special programs like the PPP. Adjusted earnings per common share excludes from income available to common shareholders certain expenses related to significant non-core activities, including merger-related expenses, net of income taxes. For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity. The efficiency ratio is often used by management to measure its noninterest expense as a percentage of its revenue. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Mid Penn’s results and financial condition as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding Mid Penn’s ongoing operating results. This supplemental presentation should not be construed as an inference that Mid Penn’s future results will be unaffected by similar adjustments to be determined in accordance with GAAP. The reconciliation of the non-GAAP to comparable GAAP financial measures can be found in the tables below.

    Tangible Book Value Per Share

    (Dollars in thousands, except per share data) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    Shareholders' Equity $530,962  $510,793  $512,099  $499,105  $495,835 
    Less: Goodwill  129,403   114,231   114,231   113,871   113,835 
    Less: Core Deposit and Other Intangibles  7,453   6,916   7,260   7,215   7,729 
    Tangible Equity $394,106  $389,646  $390,608  $378,019  $374,271 
               
    Common Shares Outstanding  16,567,578   15,890,011   15,886,143   15,882,853   15,878,193 
               
    Tangible Book Value per Share $23.79  $24.52  $24.59  $23.80  $23.57 
                         

    Non-PPP Core Banking Loans

    (Dollars in thousands) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    Loans, net of unearned interest $4,034,510  $3,611,347  $3,514,119  $3,322,457  $3,180,033 
    Less: PPP loans, net of deferred fees  1,633   1,752   2,600   2,800   4,966 
    Non-PPP core banking loans $4,032,877  $3,609,595  $3,511,519  $3,319,657  $3,175,067 
                         

    Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses

      Three Months Ended
    (Dollars in thousands, except per share data) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    Net Income Available to Common Shareholders $4,836  $11,227  $15,719  $15,481  $12,252 
    Plus: Merger and Acquisition Expenses  7,944   224   294   —   — 
    Less: Tax Effect of Merger and Acquisition Expenses  1,668   47   62   —   — 
    Net Income Excluding Non-Recurring Expenses $11,112  $11,404  $15,951  $15,481  $12,252 
               
    Weighted Average Shares Outstanding  16,235,106   15,886,186   15,883,003   15,877,592   15,934,083 
               
    Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses $0.68  $0.72  $0.99  $0.97  $0.77 
                         

    Return on Average Tangible Common Equity

      Three Months Ended
    (Dollars in thousands) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    Net income available to common shareholders $4,836  $11,227  $15,719  $15,481  $12,252 
    Plus: Intangible amortization, net of tax  364   272   392   406   412 
      $5,200  $11,499  $16,111  $15,887  $12,664 
               
    Average shareholders' equity $504,535  $510,857  $505,769  $502,082  $495,681 
    Less: Average goodwill  120,284   114,231   113,879   113,835   113,835 
    Less: Average core deposit and other intangibles  7,016   7,129   6,966   7,465   7,983 
    Average tangible shareholders' equity $377,235  $389,497  $384,924  $380,782  $373,863 
               
    Return on average tangible common equity  5.53%  11.97%  16.61%  16.55%  13.59%
                         

    Efficiency Ratio

      Three Months Ended
    (Dollars in thousands) Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Jun. 30,
    2022
               
    Noninterest expense $35,529  $26,070  $25,468  $24,715  $23,915 
    Less: Merger and acquisition expenses  7,944   224   294   —   — 
    Less: Intangible amortization  461   344   496   514   521 
    Less: (Gain) loss on sale or write-down of foreclosed assets, net  (126)  —   (45)  (57)  (15)
    Efficiency ratio numerator $27,250  $25,502  $24,723  $24,258  $23,409 
               
    Net interest income  36,444   36,049   38,577   39,409   35,433 
    Noninterest income  5,220   4,325   6,714   5,963   5,230 
    Efficiency ratio denominator $41,664  $40,374  $45,291  $45,372  $40,663 
               
    Efficiency ratio  65.40%  63.16%  54.59%  53.46%  57.57%

     


    Mid Penn Bancorp, Inc.
2407 Park Drive
Harrisburg, PA 17110
1-866-642-7736

CONTACTS

Rory G. Ritrievi
Chair, President & Chief Executive Officer

Allison S. Johnson
Chief Financial Officer

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