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

    المصدر: Nasdaq GlobeNewswire / 26 أكتوبر 2022 13:23:15   America/Chicago

    HARRISBURG, Pa., Oct. 26, 2022 (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 September 30, 2022 of $15.5 million, or $0.97 per common share basic and diluted.

    Key Highlights in the Third Quarter of 2022

    • Earnings increased $3.2 million to $15.5 million, or 26.4%, for the quarter ended September 30, 2022 compared to $12.3 million for the quarter ended June 30, 2022.
    • Tax equivalent net interest margin increased 47 basis points ("bp") to 3.92% from 3.45% in the prior quarter.
    • Organic loans grew 17.8% (annualized) during the three months ended September 30, 2022 from the second quarter of 2022 and is now 9.4% (annualized) year to date.

    • Return on average assets was 1.42% for the quarter ended September 30, 2022 compared to 1.10% for the prior quarter.

    • Return on average equity and return on average tangible common equity(1) were 12.37% and 16.55%, respectively, for the third quarter of 2022 up from 9.91% and 13.59%, respectively for the second quarter of 2022.
    • Asset quality continues to remain strong with Mid Penn still in a net recovery position for the year and with a quarterly improvement in all of the asset quality metrics we report.
    • Book value per common share increased to $31.42 within the third quarter up from $31.23 in the second quarter, while tangible book value per share(1) increased to $23.80 at September 30, 2022, compared to $23.57, at June 30, 2022.

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

    "We are proud to deliver these third quarter and year-to-date financial results to our shareholders," said Rory G. Ritrievi, President and CEO. "We continue to generate high-quality organic loan growth and at attractive yields. Core loan growth within the quarter and year to date are both over 15% on an annualized basis. We also continue to have success not only in generating core deposit growth, but in the disciplined pricing of those deposits. This has provided for a significant expansion in our net interest margin within the quarter. Even with a significant decline in our residential mortgage business-driven by increases in interest rates - our overall fee income has improved by 6.7% year to date over same period last year as a result of improvements in just about every other fee generating aspect of our business. Included in that would be our bank trust and wealth group and our non-bank wealth and insurance subsidiaries. Along with that impressive organic growth in loans, deposits and fee business has been continued strength in asset quality and continued recognition of expense efficiencies from the acquisitions we have made. In my opinion the third quarter of 2022 is the best overall quarter we have had in the 54 full quarters since I joined the company in 2009. I am very encouraged by that performance particularly considering the headwinds we are all facing right now economically and geopolitically both home and abroad. While we feel we have much work to do, we do take pride in the organization we have built with your investment. I hope you share our enthusiasm for that success."

    With this successful quarter, the Board is pleased to announce a quarterly cash dividend of $0.20 per share of common stock was declared at its meeting on October 26, 2022, payable on November 28, 2022 to shareholders of record as of November 10, 2022.

    Net Interest Income and Average Balance Sheet

    For the three months ended September 30, 2022, net interest income was $39.4 million compared to net interest income of $35.4 million for the three months ended June 30, 2022 and $27.0 million for the three months ended September 30, 2021. The tax-equivalent net interest margin for the three months ended September 30, 2022 was 3.92% versus 3.45% for the second quarter of 2022 and 3.26% for the third quarter of 2021, a 47 and 66 bp, respectively, increase compared to the prior quarter and the same period in 2021. The linked quarter increase was the result of a 55 bp increase in the yield on interest-earning assets, partially offset by a 12 bp increase in the rate on interest-bearing liabilities. The increase in the yield on interest-earning assets was the result of a combination of excess cash being re-deployed into higher yielding loans and investment securities and the increase in fed fund rates during the third quarter of 2022. The increase in the rate on interest-bearing liabilities was primarily the result of higher rates being paid on deposits as a result of the fed fund rate increases. The decrease in interest-earning assets was the result of a decrease in federal funds sold, primarily a result of a decrease in deposits partially offset by loan growth and re-deployment of cash into investment securities. The increase compared to the same period of the prior year was the result of a 57 bp increase in the yield on interest-earning assets, a 12 bp decrease in the rate on interest-bearing liabilities and a $699.4 million increase in average interest-earning assets, partially offset by a $498.7 million increase in average interest-bearing liabilities, primarily obtained through the acquisition of Riverview Financial Corporation ("Riverview"). The increase in the yield on interest-earning assets was the result of a combination of excess cash being re-deployed into higher yielding investment securities and the increases in the fed fund rate during 2022. The decrease in the rate on interest-bearing liabilities was primarily the result of a lag in the repricing of deposits as rates increased.

    For the nine months ended September 30, 2022, net interest income was $109.3 million, a $30.1 million, or 38.0%, increase compared to net interest income of $79.2 million for the nine months ended September 30, 2021. The year-over-year increase in net interest income was positively impacted by the Riverview acquisition in the fourth quarter of 2021, the deployment of fed funds into higher yielding investment securities since September 30, 2021, interest and fees from core loan growth since September 30, 2021 and reduced interest expense due to the lower cost of deposits in the nine months ended September 30, 2022 when compared to the same period in 2021. The tax-equivalent net interest margin for the nine months ended September 30, 2022 was 3.52%, a 17 bp increase compared to 3.35% for the nine months ended September 30, 2021. The increase was primarily the result of a $989.4 million increase in interest-earning assets and a 23 bp decrease in the rate on interest-bearing liabilities, partially offset by a $714.4 million increase in average interest-bearing liabilities and the reduction of PPP fees recognized during the first nine months of 2022 compared to the same period in 2021.

    The three months ended September 30, 2022 included the recognition of $99 thousand of PPP loan processing fees, a decrease of $6.1 million compared to $6.2 million of PPP loan processing fees recognized during the same period in 2021. The nine months ended September 30, 2022 included the recognition of $3.7 million of PPP loan processing fees, a decrease of $13.8 million compared to $17.5 million of PPP loan processing fees recognized during the same period in 2021. These PPP fees are recognized as interest income over the term of the respective loan, or sooner if the loans are forgiven by the U.S. Small Business Administration ("SBA"), or the borrower otherwise pays down principal prior to the loan’s stated maturity. As of September 30, 2022, we had $72 thousand of PPP fees remaining.

    Total average assets were $4.3 billion for the third quarter of 2022, reflecting a decrease of $126.1 million, or 2.8%, compared to total average assets of $4.5 billion for the second quarter of 2022, and an increase of $831.0 million, or 23.7%, compared to total average assets of $3.5 billion third quarter of 2021. The decrease in total average assets from the prior quarter was primarily due to the reduction in federal funds sold. Total average assets were $4.5 billion for the first nine months of 2022, reflecting an increase of $1.1 billion, or 33.2%, compared to total average assets of $3.4 billion for the same period of 2021. The increase in total average assets for the three and nine months ended from September 30, 2022 compared to the same periods in 2021 was primarily attributable to the Riverview acquisition, effective November 30, 2021.

    Total average loans were $3.2 billion for the third quarter of 2022, reflecting an increase of $108.3 million, or 3.5%, compared to total average loans of $3.1 billion in the second quarter of 2022, and an increase of $815.2 million, or 33.7%, compared to total average loans of $2.4 billion for the third quarter of 2021. Total average loans were $3.2 billion for the first nine months of 2022, reflecting an increase of $636.3 million, or 25.2%, compared to total average loans in the same period of 2021. The year-over-year growth is largely attributable to the Riverview acquisition.

    Total average deposits were $3.7 billion for the third quarter of 2022, reflecting a decrease of $110.5 million, or 2.9%, compared to total average deposits in the second quarter of 2022, and an increase of $855.8 million, or 29.8%, compared to total average deposits of $2.9 billion for the third quarter of 2021. The decrease in total average deposits during the third quarter was primarily attributable to the maturity of certificates of deposit, which have renewed into lower rates, and migrated to other retail investment products or exited the Bank. We strategically adjusted our average cost of deposits through our targeted deposit run-off. The average cost of deposits was 0.30% for the third quarter of 2022, representing a 9 bp increase from the second quarter of 2022 and a 10 bp decrease from the third quarter of 2021. Total average deposits were $3.9 billion for the first nine months of 2022, reflecting an increase of $1.1 billion, or 41.5%, compared to total average deposits of $2.7 billion for the same period of 2021. The year-over-year growth in average deposits was positively impacted by the Riverview acquisition and significant increases in noninterest-bearing, interest-bearing, and money market deposits, primarily due to both expanded cash management and commercial deposit account relationships, and new deposits established as a result of Mid Penn’s PPP loan funding activities.

    Asset Quality

    The provision for loan and lease losses was $1.6 million for the three months ended September 30, 2022, a decrease of $175 thousand compared to the provision for loan and lease losses of $1.7 million for the three months ended June 30, 2022 and an increase of $1.1 million compared to the provision for loan and lease losses of $425 thousand for the three months ended September 30, 2021. The provision for loan and lease losses of $1.6 million for the third quarter of 2022 related primarily to the provisioning on organic loan growth. The provision for loan and lease losses was $3.8 million for the nine months ended September 30, 2022, an increase of $1.2 million compared to the $2.6 million provision for loan and lease losses for the same period of 2021. The increase in the provision for loan and lease losses for the nine months ended September 30, 2022 was the result of one commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the second quarter of 2022 and the growth in total loans of $218 million since December 31, 2021. The allowance for loan and lease losses and the related provision for loan and lease losses reflects Mid Penn’s continued application of the incurred loss method for estimating credit losses. We will adopt the current expected credit loss accounting standard, as required, effective January 1, 2023.

    Total nonperforming assets were $7.7 million at September 30, 2022, compared to nonperforming assets of $10.0 million at December 31, 2021. The decrease in nonperforming assets since December 31, 2021 was primarily the result of the successful workout of two non-accrual home equity loans amongst one relationship totaling $2.3 million during the first quarter of 2022. The nonperforming assets included acquired impaired loans assumed in the Riverview acquisition totaling $3.3 million as of December 31, 2021.

    The allowance for loan and lease losses as a percentage of total loans, including PPP loans, was 0.56% at September 30, 2022, compared to 0.53% at June 30, 2022 and 0.47% at December 31, 2021.

    Capital

    Shareholders’ equity increased $9.0 million, or 1.84%, from $490.1 million as of December 31, 2021 to $499.1 million as of September 30, 2022. Regulatory capital ratios for both Mid Penn and its banking subsidiary indicate regulatory capital levels in excess of the regulatory minimums and the levels necessary for the Bank to be considered “well capitalized” at both September 30, 2022 and December 31, 2021.

    Noninterest Income

    For the three months ended September 30, 2022, noninterest income totaled $6.0 million, an increase of $733 thousand, or 14.02%, compared to noninterest income of $5.2 million for the second quarter of 2022, primarily driven by increases of $524 thousand in income from fiduciary and wealth management activities and $231 thousand in mortgage banking income.

    For the three months ended September 30, 2022, noninterest income increased $454 thousand, or 8.24%, compared to noninterest income of $5.5 million for the same period of 2021, primarily driven by increases of $1.1 million in other income, $1.1 million in income from fiduciary and wealth management activities, $448 thousand in ATM debit card interchange income, $260 thousand in service charges on deposits, partially offset by a decrease of $2.6 million in mortgage banking income. Other income increased as a result of income in the third quarter of 2022 from a hedging program related to mortgage derivative activities that Mid Penn did not participate in during the third quarter of 2021. The increase in income from fiduciary activities was attributable to favorable growth in trust assets under management and increased sales of retail investments products, as a result of successful business development efforts by Mid Penn’s trust and wealth management team. ATM debit card interchange income and service charges on deposits increased primarily as a result of a higher volume of transactional deposit accounts, including deposit accounts assumed in the Riverview acquisition. The decrease in mortgage banking income was the result of increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during the third quarter of 2022.

    For the nine months ended September 30, 2022, noninterest income totaled $16.9 million, an increase of $1.1 million, or 6.74%, compared to noninterest income of $15.9 million for the first nine months of 2021, primarily driven by increases of $3.2 million in other income, $2.3 million in income from fiduciary activities, $1.4 million in ATM debit card interchange income and $1.1 million in service charges on deposits. The increase in other income was primarily the result of a fair value gain on a swap in the first nine months of 2022 compared to the same period of 2021. The increases in fiduciary activities was a result of increased activity in the wealth management area and the Riverview acquisition. ATM debit card interchange income and service charges on deposits increased primarily as a result of a higher volume of transactional deposit accounts, including deposit accounts assumed in the Riverview acquisition. These favorable variances were partially offset by a decrease in mortgage banking income of $7.0 million for the nine months ended September 30, 2022 compared to the same period of 2021. Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during the first nine months of 2022. As a result of the corresponding mortgage rate increases and an increase in property values driven by supply shortfalls and high liquidity levels among buyers, the mortgage loan refinancing market has slowed, and purchase money mortgage originations have slowed relative to the lending volumes seen in the past several years.

    Noninterest Expense

    Noninterest expense totaled $24.7 million, an increase of $800 thousand, or 3.35%, for the three months ended September 30, 2022, compared to noninterest expense of $23.9 million for the second quarter of 2022. The increase was primarily the result of a $1.2 million increase in salaries and employee benefits and a $440 thousand increase in Pennsylvania bank shares tax. The higher salaries and benefits were a result of vacant positions that were filled during the quarter, an increase in incentive compensation due to better than anticipated results for the quarter and an increase in medical claims expense. The increase in shares tax compared to the prior quarter was the results of credits received in the second quarter that were not repeated in the third quarter.

    Compared to the third quarter of 2021, noninterest expense in the third quarter of 2022 increased $4.7 million, or 23.5%, from $20.0 million primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $3.2 million in salaries and benefits and $1.2 million in other expenses. The increases were partially offset by decreases of $1.1 million in mortgage banking profit-sharing expense, $207 thousand in FDIC assessment, and $198 thousand of post-acquisition restructuring expense in 2021.

    For the nine months ended September 30, 2022, noninterest expense totaled $74.4 million, an increase of $17.3 million, or 30.4%, compared to noninterest expense of $57.0 million for the same period of 2021 primarily as a result of higher expenses attributable to the Riverview acquisition, most significantly increases of $9.3 million in salaries and benefits and $4.1 million in other expenses.

    The provision for income taxes was $3.6 million during the three months ended September 30, 2022, compared to $2.8 million and $2.3 million of income tax provision recorded for the second quarter of 2022 and the third quarter of 2021, respectively. The provision for income taxes for the three months ended September 30, 2022 reflects a combined Federal and State effective tax rate of 19.0% compared to 18.4% and 18.8% for the second quarter of 2022 and the third quarter of 2021, respectively. The provision for income taxes was $9.0 million during the nine months ended September 30, 2022, compared to $6.7 million of income tax provision recorded for the same period of 2021. The provision for income taxes for the nine months ended September 30, 2022 reflects a combined Federal and State effective tax rate of 18.7% compared to 19.0% for the same period of 2021.

    The efficiency ratio(1) was 53.5% in the third quarter of 2022, compared to 57.6% in the second quarter of 2022, and 60.3% in the third quarter of 2021. The improvement in the efficiency ratio during the third quarter 2022 compared to the second quarter of 2022 was the result of higher net interest income and noninterest income. The improvement in the efficiency ratio during the third quarter 2022 compared to the third quarter of 2021 was the result of higher net interest income, as well as the cost savings realized from the Riverview acquisition.

    Merger & Acquisition Activity

    On November 30, 2021, Mid Penn announced the successful completion of the merger acquisition of Riverview. The acquisition of Riverview impacted periods presented within this release. For more information regarding this transaction, please see Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2021.

    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; the length and extent of the COVID-19 pandemic; 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; the success and timing of PPP loan repayment and forgiveness; 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 Riverview 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 the areas where Mid Penn does business; 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 completion of the Riverview 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, 2021 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)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
    Ending Balances:         
    Investment securities$644,766  $618,184  $508,658  $392,619  $158,311 
    Net loans and leases 3,303,977   3,163,157   3,106,384   3,089,799   2,356,196 
    Total assets 4,333,903   4,310,163   4,667,174   4,689,425   3,453,187 
    Total deposits 3,729,596   3,702,587   3,989,037   4,002,016   2,961,881 
    Shareholders' equity 499,105   495,835   494,161   490,076   349,308 
    Average Balances:         
    Investment securities 626,447   580,406   462,648   286,134   158,296 
    Net loans 3,237,587   3,129,334   3,103,469   2,319,544   2,422,378 
    Total assets 4,339,783   4,465,906   4,696,894   3,579,649   3,508,757 
    Total deposits 3,726,658   3,837,135   3,999,074   3,007,955   2,870,885 
    Shareholders' equity 502,082   495,681   494,019   403,010   345,816 
              
    Income Statement:Three Months Ended
     Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
    Net interest income$39,409  $35,433  $34,414  $29,372  $26,994 
    Provision for loan and lease losses 1,550   1,725   500   370   425 
    Noninterest income 5,963   5,230   5,750   5,660   5,509 
    Noninterest expense 24,715   23,915   25,745   34,072   20,019 
    Income before provision for income taxes 19,107   15,023   13,919   590   12,059 
    Provision for income taxes 3,626   2,771   2,565   (17)  2,272 
    Net income available to shareholders 15,481   12,252   11,354   607   9,787 
    Net income excluding non-recurring expenses (1) 15,481   12,252   11,614   10,266   9,943 
              
    Per Share:         
    Basic earnings per common share$0.97  $0.77  $0.71  $0.05  $0.86 
    Diluted earnings per common share$0.97  $0.77  $0.71  $0.05  $0.86 
    Cash dividends declared$0.20  $0.20  $0.20  $0.20  $0.20 
    Book value per common share$31.42  $31.23  $30.96  $30.71  $30.55 
    Tangible book value per common share (1)$23.80  $23.57  $23.31  $22.99  $24.75 
              
    Asset Quality:         
    Net (recoveries) charge-offs to average loans (annualized) -0.007%  -0.001%  -0.007%  0.001%  0.149%
    Non-performing loans to total loans 0.23%  0.25%  0.25%  0.32%  0.29%
    Non-performing asset to total loans and other real estate 0.23%  0.25%  0.26%  0.32%  0.29%
    Non-performing asset to total assets 0.18%  0.19%  0.18%  0.22%  0.20%
    ALLL to total loans 0.56%  0.53%  0.49%  0.47%  0.60%
    ALLL to nonperforming loans 242.23%  211.66%  190.84%  146.23%  209.90%
              
    Profitability:         
    Return on average assets 1.42%  1.10%  0.98%  0.06%  1.11%
    Return on average equity 12.37%  9.91%  9.32%  0.61%  11.23%
    Return on average tangible common equity (1) 16.55%  13.59%  12.82%  1.26%  14.20%
    Net interest margin 3.92%  3.45%  3.21%  3.48%  3.26%
    Efficiency ratio (1) 53.46%  57.57%  62.12%  61.34%  60.33%
              
    Capital Ratios:         
    Tier 1 Capital (to Average Assets) 9.6%  9.0%  8.4%  8.1%  8.6%
    Common Tier 1 Capital (to Risk Weighted Assets) 11.4%  11.5%  11.7%  11.7%  13.2%
    Tier 1 Capital (to Risk Weighted Assets) 11.7%  11.8%  12.0%  12.0%  13.2%
    Total Capital (to Risk Weighted Assets) 13.8%  14.1%  14.4%  14.6%  15.8%

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


    CONSOLIDATED BALANCE SHEETS (Unaudited):

    (Dollars in thousands, except share data)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
    ASSETS         
    Cash and due from banks$76,018  $64,440  $54,961  $41,100  $40,134 
    Interest-bearing balances with other financial institutions 4,520   4,909   3,187   146,031   2,536 
    Federal funds sold 14,140   167,437   700,283   726,621   712,272 
    Total cash and cash equivalents 94,678   236,786   758,431   913,752   754,942 
              
    Investment securities held to maturity, at amortized cost 402,142   399,032   363,145   329,257   152,791 
    Investment securities available for sale, at fair value 242,195   218,698   145,039   62,862   5,015 
    Equity securities available for sale, at fair value 428   454   474   500   505 
    Loans held for sale 5,997   9,574   7,474   11,514   23,154 
    Loans and leases, net of unearned interest 3,322,457   3,180,033   3,121,531   3,104,396   2,370,429 
    Less: Allowance for loan and lease losses (18,480)  (16,876)  (15,147)  (14,597)  (14,233)
    Net loans and leases 3,303,977   3,163,157   3,106,384   3,089,799   2,356,196 
              
    Bank premises and equipment, net 33,854   33,732   33,612   33,232   25,562 
    Bank premises and equipment held for sale 2,262   2,574   3,098   3,907   — 
    Operating lease right of use asset 8,352   8,326   8,751   9,055   9,942 
    Finance lease right of use asset 2,952   2,997   3,042   3,087   3,132 
    Cash surrender value of life insurance 50,419   50,169   49,907   49,661   17,406 
    Restricted investment in bank stocks 4,595   4,234   7,637   9,134   7,906 
    Accrued interest receivable 15,861   12,902   11,584   11,328   10,008 
    Deferred income taxes 16,093   13,780   11,974   10,779   4,133 
    Goodwill 113,871   113,835   113,835   113,835   62,840 
    Core deposit and other intangibles, net 7,215   7,729   8,250   9,436   3,537 
    Foreclosed assets held for sale 49   69   125   —   11 
    Other assets 28,963   32,115   34,412   28,287   16,107 
    Total Assets$4,333,903  $4,310,163  $4,667,174  $4,689,425  $3,453,187 
              
    LIABILITIES & SHAREHOLDERS’ EQUITY         
    Deposits:         
    Noninterest-bearing demand$863,037  $850,180  $866,965  $850,438  $661,890 
    Interest-bearing demand 1,103,000   1,023,027   1,050,923   1,066,852   745,833 
    Money Market 966,913   999,556   1,159,809   1,076,593   905,742 
    Savings 344,359   354,677   358,186   381,476   205,842 
    Time 452,287   475,147   553,154   626,657   442,574 
    Total Deposits 3,729,596   3,702,587   3,989,037   4,002,016   2,961,881 
              
    Long-term debt 4,501   4,592   74,681   81,270   74,858 
    Subordinated debt 66,357   73,995   74,134   73,645   44,599 
    Operating lease liability 10,261   10,324   10,923   11,363   10,950 
    Accrued interest payable 1,841   1,542   2,067   1,791   1,901 
    Other liabilities 22,242   21,288   22,171   29,264   9,690 
    Total Liabilities 3,834,798   3,814,328   4,173,013   4,199,349   3,103,879 
              
    Shareholders' Equity:         
    Common stock, par value $1.00 per share; 20.0 million shares authorized 16,091   16,081   16,059   16,056   11,532 
    Additional paid-in capital 386,452   386,128   385,765   384,742   246,830 
    Retained earnings 120,572   108,265   99,206   91,043   92,722 
    Accumulated other comprehensive (loss) income (19,130)  (9,759)  (4,946)  158   147 
    Treasury stock (4,880)  (4,880)  (1,923)  (1,923)  (1,923)
    Total Shareholders’ Equity 499,105   495,835   494,161   490,076   349,308 
    Total Liabilities and Shareholders' Equity$4,333,903  $4,310,163  $4,667,174  $4,689,425  $3,453,187 


    CONSOLIDATED STATEMENTS OF INCOME (Unaudited):

     Three Months Ended Nine Months Ended
    (Dollars in thousands, except per share data)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021    		 Sep. 30,
    2022    		 Sep. 30,
    2021
    INTEREST INCOME             
    Interest and fees on loans and leases$38,484  $34,264  $35,016  $31,021  $29,590  $107,764  $87,755 
    Interest and dividends on investment securities:             
    U.S. Treasury and government agencies 2,873   2,329   1,536   715   285   6,738   688 
    State and political subdivision obligations, tax-exempt 392   379   336   288   279   1,107   834 
    Other securities 509   504   417   329   277   1,430   870 
    Total Interest and Dividends on Investment Securities 3,774   3,212   2,289   1,332   841   9,275   2,392 
    Interest on other interest-bearing balances 12   8   13   8   1   33   5 
    Interest on federal funds sold 736   736   314   324   308   1,786   485 
    Total Interest Income 43,006   38,220   37,632   32,685   30,740   118,858   90,637 
    INTEREST EXPENSE             
    Interest on deposits 2,836   2,019   2,294   2,536   2,909   7,149   8,791 
    Interest on short-term borrowings —   —   —   —   133   —   539 
    Interest on long-term and subordinated debt 761   768   924   777   704   2,453   2,111 
    Total Interest Expense 3,597   2,787   3,218   3,313   3,746   9,602   11,441 
    Net Interest Income 39,409   35,433   34,414   29,372   26,994   109,256   79,196 
    PROVISION FOR LOAN AND LEASE LOSSES 1,550   1,725   500   370   425   3,775   2,575 
    Net Interest Income After Provision for Loan and Lease Losses 37,859   33,708   33,914   29,002   26,569   105,481   76,621 
    NONINTEREST INCOME             
    Income from fiduciary and wealth management activities 1,729   1,205   1,052   778   618   3,986   1,716 
    ATM debit card interchange income 1,078   1,128   1,057   834   630   3,263   1,854 
    Service charges on deposits 483   450   684   439   223   1,617   552 
    Mortgage banking income 536   305   529   1,932   3,162   1,370   8,382 
    Net gain (loss) on sales of SBA loans 152   119   (9)  409   105   262   560 
    Earnings from cash surrender value of life insurance 250   262   246   135   74   758   223 
    Net gain on sales of investment securities —   —   —   —   79   —   79 
    Other income 1,735   1,761   2,191   1,133   618   5,687   2,507 
    Total Noninterest Income 5,963   5,230   5,750   5,660   5,509   16,943   15,873 
    NONINTEREST EXPENSE             
    Salaries and employee benefits 13,583   12,340   13,244   11,838   10,342   39,167   29,873 
    Software licensing and utilization 1,804   1,821   2,106   1,839   1,551   5,731   4,493 
    Occupancy expense, net 1,634   1,655   1,799   1,412   1,318   5,088   4,115 
    Equipment expense 1,121   1,112   1,011   864   745   3,244   2,237 
    Shares tax 920   480   920   (222)  498   2,626   1,022 
    Legal and professional fees 528   694   639   388   610   1,861   1,591 
    ATM/card processing 518   571   517   357   249   1,605   696 
    Intangible amortization 514   521   481   357   266   1,516   823 
    FDIC Assessment 254   506   591   524   461   1,351   1,364 
    Charitable contributions qualifying for State tax credits —   125   65   797   —   190   635 
    Mortgage banking profit-sharing expense —   33   145   566   1,140   178   2,005 
    (Gain) loss on sale or write-down of foreclosed assets, net (57)  (15)  (16)  1   (7)  (88)  (26)
    Merger and acquisition expense —   —   —   2,347   198   —   720 
    Post-acquisition restructuring expense —   —   329   9,880   —   329   — 
    Other expenses 3,896   4,072   3,914   3,124   2,648   11,577   7,485 
    Total Noninterest Expense 24,715   23,915   25,745   34,072   20,019   74,375   57,033 
    INCOME BEFORE PROVISION FOR INCOME TAXES 19,107   15,023   13,919   590   12,059   48,049   35,461 
    Provision for income taxes 3,626   2,771   2,565   (17)  2,272   8,962   6,749 
    NET INCOME AVAILABLE TO COMMON SHAREHOLDERS$15,481  $12,252  $11,354  $607  $9,787  $39,087  $28,712 
    PER COMMON SHARE DATA:             
    Basic and Diluted Earnings Per Common Share$0.97  $0.77  $0.71  $0.05  $0.86  $2.45  $2.85 
    Diluted Earnings Per Common Share$0.97  $0.77  $0.71  $0.05  $0.86  $2.45  $2.85 
    Cash Dividends Declared$0.20  $0.20  $0.20  $0.20  $0.20  $0.60  $0.59 


    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
     September 30, 2022 June 30, 2022 September 30, 2021
    (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$5,583 $12  0.85% $5,920 $8  0.54% $2,491 $1  0.16%
    Investment Securities:                 
    Taxable 546,439  3,369  2.45   501,631  2,740  2.19   102,259  504  1.96 
    Tax-Exempt 80,008  496  2.46   78,775  480  2.44   56,037  353  2.50 
    Total Securities 626,447  3,865  2.45   580,406  3,220  2.23   158,296  857  2.15 
                      
    Federal Funds Sold 131,089  736  2.23   415,405  736  0.71   715,365  308  0.17 
    Loans and Leases, Net 3,237,587  38,573  4.73   3,129,334  34,354  4.40   2,422,378  29,660  4.86 
    Restricted Investment in Bank Stocks 4,322  13  1.19   4,854  94  7.77   7,148  58  3.22 
    Total Earning Assets 4,005,028  43,199  4.28   4,135,919  38,412  3.73   3,305,678  30,884  3.71 
                      
    Cash and Due from Banks 69,751      59,822      39,852    
    Other Assets 265,004      270,165      163,227    
    Total Assets$4,339,783     $4,465,906     $3,508,757    
                      
    LIABILITIES & SHAREHOLDERS' EQUITY:                 
    Interest-bearing Demand$1,072,496 $873  0.32% $1,030,237 $462  0.18% $681,171 $625  0.36%
    Money Market 994,446  1,097  0.44   1,079,900  584  0.22   854,065  864  0.40 
    Savings 352,024  43  0.05   357,433  43  0.05   208,163  60  0.11 
    Time 464,273  823  0.70   516,346  930  0.72   446,256  1,360  1.21 
    Total Interest-bearing Deposits 2,883,239  2,836  0.39   2,983,916  2,019  0.27   2,189,655  2,909  0.53 
                      
    Short Term Borrowings —  —  0.00   —  —  —   149,505  133  0.35 
    Long-term Debt 4,537  150  13.12   9,238  107  4.65   74,888  205  1.09 
    Subordinated Debt 69,523  611  3.49   74,062  661  3.58   44,596  499  4.44 
    Total Interest-bearing Liabilities 2,957,299  3,597  0.48   3,067,217  2,787  0.36   2,458,644  3,746  0.60 
                      
    Noninterest-bearing Demand 843,419      853,219      681,230    
    Other Liabilities 36,983      49,790      23,067    
    Shareholders' Equity 502,082      495,681      345,816    
    Total Liabilities & Shareholders' Equity$4,339,783     $4,465,906     $3,508,757    
                      
    Net Interest Income (taxable equivalent basis)  $39,602      $35,625      $27,138   
    Taxable Equivalent Adjustment   (193)      (192)      (144)  
    Net Interest Income  $39,409      $35,433      $26,994   
                      
    Total Yield on Earning Assets    4.28%     3.73%     3.71%
    Rate on Supporting Liabilities    0.48      0.36      0.60 
    Average Interest Spread    3.80      3.36      3.10 
    Net Interest Margin    3.92      3.45      3.26 

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

     Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
     For the Nine Months Ended
     September 30, 2022 September 30, 2021
    (Dollars in thousands)Average
    Balance    		 Interest (1) Yield/
    Rate    		 Average
    Balance    		 Interest (1) Yield/
    Rate
    ASSETS:           
    Interest Bearing Balances$34,034 $33  0.13% $1,729 $5  0.39%
    Investment Securities:           
    Taxable 479,611  7,930  2.21   91,379  1,319  1.93 
    Tax-Exempt 77,489  1,401  2.42   55,599  1,056  2.54 
    Total Securities 557,100  9,331  2.24   146,978  2,375  2.16 
                
    Federal Funds Sold 415,528  1,786  0.57   503,652  485  0.13 
    Loans and Leases, Net 3,157,288  108,050  4.58   2,520,965  87,974  4.67 
    Restricted Investment in Bank Stocks 5,826  238  5.46   7,022  239  4.55 
    Total Interest-earning Assets 4,169,776  119,438  3.83   3,180,346  91,078  3.83 
                
    Cash and Due from Banks 62,369      36,213    
    Other Assets 267,309      162,189    
    Total Assets$4,499,454     $3,378,748    
                
    LIABILITIES & SHAREHOLDERS' EQUITY:           
    Interest-bearing Demand$1,049,569 $1,796  0.23% $632,830 $1,782  0.38%
    Money Market 1,066,001  2,281  0.29   796,922  2,461  0.41 
    Savings 361,733  144  0.05   203,206  182  0.12 
    Time 524,013  2,928  0.75   431,009  4,366  1.35 
    Total Interest-bearing Deposits 3,001,316  7,149  0.32   2,063,967  8,791  0.57 
                
    Short-term Borrowings —  —  —   205,697  539  0.35 
    Long-term Debt 29,715  541  2.43   74,975  613  1.09 
    Subordinated Debt 72,574  1,912  3.52   44,589  1,498  4.49 
    Total Interest-bearing Liabilities 3,103,605  9,602  0.41   2,389,228  11,441  0.64 
                
    Noninterest-bearing Demand 851,975      659,554    
    Other Liabilities 46,960      24,037    
    Shareholders' Equity 496,914      305,929    
    Total Liabilities & Shareholders' Equity$4,499,454     $3,378,748    
                
    Net Interest Income (taxable-equivalent basis)  $109,836      $79,637   
    Taxable Equivalent Adjustment   (580)      (441)  
    Net Interest Income  $109,256      $79,196   
                
    Total Yield on Earning Assets    3.83%     3.83%
    Rate on Supporting Liabilities    0.41      0.64 
    Average Interest Spread    3.42      3.19 
    Net Interest Margin    3.52      3.35 

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


    ALLOWANCE FOR LOAN AND LEASE LOSSES AND ASSET QUALITY (Unaudited):

    (Dollars in thousands)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
    Allowance for Loan and Lease Losses:         
    Beginning balance$16,876  $15,147  $14,597  $14,233  $14,716 
    Loans Charged off         
    Commercial and industrial (1)  —   —   (7)  — 
    Commercial real estate —   —   —   (1)  (1,043)
    Commercial real estate - construction —   —   —   —   — 
    Residential mortgage (2)  —   —   —   (3)
    Home equity (1)  —   —   —   — 
    Consumer (11)  (9)  (57)  (19)  (11)
    Total loans charged off (15)  (9)  (57)  (27)  (1,057)
    Recoveries of loans previously charged off         
    Commercial and industrial —   —   13   10   1 
    Commercial real estate 63   —   65   1   140 
    Commercial real estate - construction —   —   24   7   — 
    Residential mortgage —   2   —   —   2 
    Home equity —   1   1   —   — 
    Consumer 6   10   4   3   6 
    Total recoveries 69   13   107   21   149 
    Balance before provision 16,930   15,151   14,647   14,227   13,808 
    Provision for loan and lease losses 1,550   1,725   500   370   425 
    Balance, end of quarter$18,480  $16,876  $15,147  $14,597  $14,233 
              
    Nonperforming Assets         
    Nonaccrual loans$7,233  $7,551  $7,507  $9,547  $6,339 
    Accruing trouble debt restructured loans 396   422   430   435   442 
    Total nonperforming loans 7,629   7,973   7,937   9,982   6,781 
              
    Foreclosed real estate 49   69   125   —   11 
    Total nonperforming assets 7,678   8,042   8,062   9,982   6,792 
              
    Accruing loans 90 days or more past due —   —   133   515   — 
    Total risk elements$7,678  $8,042  $8,195  $10,497  $6,792 


    PPP Summary

    (Dollars in thousands)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    PPP loans, net of deferred fees$2,800  $4,966  $34,124  $111,286  $229,679 
              
    PPP Fees recognized$99  $652  $2,989  $4,426  $6,238 


    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 the 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. Core 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)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    Shareholders' Equity$499,105  $495,835  $494,161  $490,076  $349,308 
    Less: Goodwill 113,871   113,835   113,835   113,835   62,840 
    Less: Core Deposit and Other Intangibles 7,215   7,729   8,250   9,436   3,537 
    Tangible Equity$378,019  $374,271  $372,076  $366,805  $282,931 
              
    Common Shares Outstanding 15,882,853   15,878,193   15,960,916   15,957,830   11,433,554 
              
    Tangible Book Value per Share$23.80  $23.57  $23.31  $22.99  $24.75 


    Non-PPP Core Banking Loans

    (Dollars in thousands) Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    Loans and leases, net of unearned interest$3,322,457  $3,180,033  $3,121,531  $3,104,396  $2,370,429 
    Less: PPP loans, net of deferred fees 2,800   4,966   34,124   111,286   229,679 
    Non-PPP core banking loans$3,319,657  $3,175,067  $3,087,407  $2,993,110  $2,140,750 


    Core Earnings Per Common Share Excluding Non-Recurring Expenses

     Three Months Ended
    (Dollars in thousands, except per share data)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    Net Income Available to Common Shareholders$15,481  $12,252  $11,354  $607  $9,787 
    Plus: Merger and Acquisition Expenses —   —   329   12,227   198 
    Less: Tax Effect of Merger and Acquisition Expenses —   —   69   2,568   42 
    Net Income Excluding Non-Recurring Expenses$15,481  $12,252  $11,614  $10,266  $9,943 
              
    Weighted Average Shares Outstanding 15,877,592   15,934,083   15,957,864   13,005,895   11,423,487 
              
    Core Earnings Per Common Share Excluding Non-Recurring Expenses$0.97  $0.77  $0.73  $0.79  $0.87 


    Return on Average Tangible Common Equity

     Three Months Ended
    (Dollars in thousands)Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    Net income available to common shareholders$15,481  $12,252  $11,354  $607  $9,787 
    Plus: Intangible amortization, net of tax 406   412   380   282   210 
     $15,887  $12,664  $11,734  $889  $9,997 
              
    Average shareholder's equity$502,082  $495,681  $494,019  $403,010  $345,816 
    Less: Average goodwill 113,835   113,835   113,835   113,835   62,840 
    Less: Average core deposit and other intangibles 7,465   7,983   8,950   9,436   3,666 
    Average tangible shareholder's equity$380,782  $373,863  $371,234  $279,739  $279,310 
              
    Return on average tangible common equity 16.55%  13.59%  12.82%  1.26%  14.20%


    Efficiency Ratio

     Three Months Ended
    (Dollars in thousands) Sep. 30,
    2022    		 Jun. 30,
    2022    		 Mar. 31,
    2022    		 Dec. 31,
    2021    		 Sep. 30,
    2021
              
    Noninterest expense$24,715  $23,915  $25,745  $34,072  $20,019 
    Less: Merger and acquisition expenses —   —   329   12,227   198 
    Less: Intangible amortization 514   521   481   357   266 
    Less: (Gain) loss on sale or write-down of foreclosed assets, net (57)  (15)  (16)  1   (7)
    Efficiency ratio numerator$24,258  $23,409  $24,951  $21,487  $19,562 
              
    Net interest income 39,409   35,433   34,414   29,372   26,994 
    Noninterest income 5,963   5,230   5,750   5,660   5,509 
    Less: Net gain on sales of investment securities —   —   —   —   79 
    Efficiency ratio denominator$45,372  $40,663  $40,164  $35,032  $32,424 
              
    Efficiency ratio 53.46%  57.57%  62.12%  61.34%  60.33%

     


    CONTACTS

Rory G. Ritrievi
President & Chief Executive Officer

Allison S. Johnson
Chief Financial Officer

1-866-642-7736

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