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

来源: Nasdaq GlobeNewswire / 27 7月 2022 13:47:17 America/New_York

HARRISBURG, Pa., July 27, 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 June 30, 2022 of $12.3 million, or $0.77 per common share basic and diluted.

Key Highlights in the Second Quarter of 2022

Earnings increased $898 thousand and $0.06 per common share diluted to $12.3 million, or $0.77, respectively, for the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022.
Tax equivalent net interest margin increased to 3.45% from 3.21% in the prior quarter and 3.34% in the same period prior year.
Loans grew 8% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022. Loans, excluding Payroll Protection Program (“PPP”) loans ⁽¹⁾, grew 11% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022.
Asset quality continues to remain strong with both nonperforming loans to total loans and nonperforming assets to total loans plus other real estate at 25 basis points (“bp”) at June 30, 2022.
Book value per common share increased to $31.23 and tangible book value per share ⁽¹⁾ increased to $23.57 at June 30, 2022, compared to $30.96 and $23.31, respectively, at March 31, 2022.

“The team at Mid Penn is proud to deliver these second quarter results to our shareholders. The second quarter was our first full quarter after the completion of the Riverview acquisition and resulting customer conversion and branch optimization plan and it was also the first quarter in the last 8 with very little impact from PPP loans,” said Rory G. Ritrievi, President and CEO. “The quarter was successful due to strong, high quality and profitable organic loan growth of 11% annualized, smart balance sheet management, continued strength in asset quality and of course a healthy reduction in expenses. Within the quarter, we saw a 7.6% improvement in net interest margin, a 12.2% improvement in ROA, a 6.4% improvement in ROE, a 6.0% improvement in ROTCE, a 7.3% improvement in our efficiency ratio⁽¹⁾ and an increase in the allowance of loan and lease losses to nonperforming assets to 211.7%. Those trends are all encouraging as we head into the last half of the year.”

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 July 27, 2022, payable on August 22, 2022 to shareholders of record as of August 10, 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.

Net Interest Income and Average Balance Sheet

For the three months ended June 30, 2022, net interest income was $35.4 million compared to net interest income of $34.4 million for the three months ended March 31, 2022 and $26.9 million for the three months ended June 30, 2021. The tax-equivalent net interest margin for the three months ended June 30, 2022 was 3.45% versus 3.21% for the first quarter of 2022 and 3.34% for the second quarter of 2021, a 24 and 11 bp, respectively, increase compared to the prior quarter and the same period in 2021.The linked quarter increase was the result of a 22 bp increase in the yield on interest-earning assets and a 4 bp decrease in the rate on interest-bearing liabilities, partially offset by a $236.5 million decrease in average interest-earning assets. 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 increase in fed fund rates during the second quarter of 2022. The decrease in the rate on interest-bearing liabilities was primarily the result of a lag in the repricing of deposits as well as the strategic decision to allow higher cost time deposits obtained through the Riverview acquisition to run-off.

For the six months ended June 30, 2022, net interest income was $69.8 million, a $17.6 million, or 33.8%, increase compared to net interest income of $52.2 million for the six months ended June 30, 2021. The year-over-year increase in net interest income was positively impacted by (i) the acquisition of Riverview; (ii) the deployment of Fed Funds into higher yielding investment securities since September 30, 2021; (iii) interest and fees from core loan growth since June 30, 2021; and (iv) reduced interest expense due to the lower cost of deposits in the six months ended June 30, 2022 when compared to the same period in 2021. The tax-equivalent net interest margin for the six months ended June 30, 2022 was 3.33%, a 7 bp decrease compared to 3.40% for six months ended June 30, 2021. The decrease was primarily the result of a 28 bp decrease in the yield on interest-earning assets. The overall decrease in net interest margin for the six months ended June 30, 2022 was driven by the reduction of PPP fees recognized during the first six months of 2021, partially offset by the improvement in cost of interest-bearing liabilities.

The three months ended June 30, 2022 included the recognition of $652 thousand of PPP loan processing fees, a decrease of $5.6 million compared to $6.2 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. The six months ended June 30, 2022 included the recognition of $3.6 million of PPP loan processing fees, a decrease of $7.7 million compared to $11.3 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 June 30, 2022, there was $171 thousand in deferred fees related to PPP loans that we anticipate will be recognized during the third quarter of 2022.

Total average assets were $4.5 billion for the second quarter of 2022, reflecting a decrease of $231.0 million, or 4.9%, compared to total average assets of $4.7 billion for the first quarter of 2022, and an increase of $1.1 billion, or 29.9%, compared to total average assets of $3.4 billion second 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 $4.6 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 38.3%, compared to total average assets of $3.3 billion the same period of 2021. The increase in total average assets for both the quarter and year to date as of June 30, 2021 to June 30, 2022 was primarily attributable to the acquisition of Riverview, effective November 30, 2021.

Total average loans were $3.1 billion for the second quarter of 2022, reflecting a decrease of $25.9 million, or 0.8%, compared to total average loans in the first quarter of 2022, and an increase of $520.0 million, or 19.9%, compared to total average loans of $2.6 billion for the second quarter of June 30, 2021. The decrease from the prior quarter was a result of the forgiveness of $34.9 million in PPP loans, which was partially offset by new loan originations. Total average loans were $3.1 billion for the first six months of 2022, reflecting an increase of $545.4 million, or 21.2%, compared to total average loans in the same period of 2021. The year-over-year growth is largely attributable to the Riverview acquisition on November 30, 2021.

Total average deposits were $3.8 billion for the second quarter of 2022, reflecting a decrease of $162.0 million, or 4.0%, compared to total average deposits in the first quarter of 2022, and an increase of $1.1 billion, or 19.9%, compared to total average deposits of $2.6 billion second quarter of 2021. The decrease in total average deposits during the second quarter was attributable to the maturity of certificates of deposit, which have renewed into lower rates, migrated to other deposit or retail investment products, or exited the Bank. We strategically right-sized our average cost of deposits through our targeted deposit run-off. The average cost of deposits was 0.21% for the second quarter of 2022, representing a 2 bp decrease from the first quarter of 2022 and a 22 bp decrease from the second quarter of 2021. Total average deposits were $3.9 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 47.9%, compared to total average deposits of $2.6 billion same period of 2021. The growth in average deposits compared to June 30, 2021 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 $1.7 million for the three months ended June 30, 2022, an increase of $1.2 million compared to the provision for loan losses of $500 thousand for the three months ended March 31, 2022 and an increase of $525 thousand compared to the three months ended June 30, 2021. The provision for loan and lease losses was $2.2 million for the six months ended June 30, 2022, an increase of $75 thousand compared to the provision for loan losses for the same period of 2021. The increase in the provision for the three and six months ended June 30, 2022 was the result of one partially legacy commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the quarter and the growth in total loans since the end of the second quarter of 2021. The allowance for loan and lease losses and the related provision reflects Mid Penn’s continued application of the incurred loss method for estimating credit losses. We will adopt the current expected credit loss (“CECL”) accounting standard, as required, effective January 1, 2023.

Total nonperforming assets were $8.0 million at June 30, 2022, a decrease compared to nonperforming assets of $10.5 million at December 31, 2021 and $8.7 million at June 30, 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 transaction 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 0.53% at June 30, 2022, compared to 0.49% at March 31, 2022 and 0.47% at December 31, 2021. The ratios as of June 30, 2022 and December 31, 2021, were affected by the addition of the Riverview acquired loans, which, in accordance with purchase accounting principles, were recorded at fair value at the time of acquisition with no related allowance for loan and lease losses.

Capital

Shareholders’ equity increased $5.8 million, or 1.2%, from $490.1 million as of December 31, 2021 to $495.8 million as of June 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 June 30, 2022 and December 31, 2021.

Share Repurchase Program

During the second quarter of 2022, Mid Penn repurchased 103,912 shares of outstanding common stock at an average price of $26.88 under its treasury stock repurchase program (“Program”). The Program authorized the repurchase of up to $15.0 million of Mid Penn’s outstanding common stock, of which $10.3 million remains available for repurchase.

Noninterest Income

For the three months ended June 30, 2022, noninterest income totaled $5.2 million, a decrease of $520 thousand, or 9.0%, compared to noninterest income of $5.8 million for the first quarter of 2022, primarily driven by decreases of $444 thousand in other income, $234 thousand in service charges on deposits, $224 thousand in mortgage banking income and a $166 thousand change in the net gain on sales of SBA loans. The decrease in other income was primarily the result of a higher fair value gain on a swap in the first quarter of 2022 compared to the second quarter of 2022. Service charges on deposits decreased as a result of certain Riverview legacy fees being aligned with Mid Penn fees at the end of the first quarter of 2022. 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 second quarter of 2022. These decreases were partially offset by increases of $153 thousand in income from fiduciary activities, $71 thousand in ATM debit card interchange income and $14 thousand in merchant services income.

Compared to the second quarter of 2021, noninterest income in the second quarter of 2022 decreased $422 thousand, or 7.5%, driven by a $2.5 million decrease in mortgage banking income, a $122 thousand decrease in merchant services income and a $114 thousand lower net gain on sales of SBA loans. The decreases were partially offset by an $877 thousand increase in other income, a $663 thousand increase in income from fiduciary activities, a $472 thousand increase in ATM debit card interchange income and a $273 thousand increase in service charges on deposits. Other income increased as a result of income in the second quarter of 2022 from a hedging program related to mortgage derivative activities that Mid Penn did not participate in during the second quarter of 2021, as well as a result of a fair value gain on a swap in the second quarter of 2022 compared to no fair value gain in the second 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.

For the six months ended June 30, 2022, noninterest income totaled $11.0 million, an increase of $616 thousand, or 5.9%, compared to noninterest income of $10.4 million for the first six months of 2021, primarily driven by increases of $2.2 million in other income, $1.2 million in income from fiduciary activities, $961 thousand in ATM debit card interchange income and $805 thousand 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 half 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 transaction. The other increases mentioned were primarily the result of the Riverview transaction. These favorable variances were partially offset by a decrease in mortgage banking income of $4.3 million for the six months ended June 30, 2022 compared to the same period of 2021 due to increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during 2022.

Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during the first half 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

For the three months ended June 30, 2022, noninterest expense totaled $23.9 million, a decrease of $1.8 million, or 7.1%, compared to noninterest expense of $25.7 million for the first quarter of 2022. Most categories of noninterest expense decreased during the second quarter of 2022, as a result of cost savings fully recognized in the second quarter of 2022 from the completion of the Riverview acquisition. The most significant cost savings were in salaries and benefits.

Compared to the second quarter of 2021, noninterest expense in the second quarter of 2022 increased $4.5 million, or 22.9%, primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $2.4 million in salaries and benefits and $2.0 million in other expenses. The increases were partially offset by decreases of $712 thousand in mortgage banking profit-sharing expense, $522 thousand of post-acquisition restructuring expense in 2021 and $240 thousand in charitable contributions qualifying for state tax credits.

For the six months ended June 30, 2022, noninterest expense totaled $49.7 million, an increase of $12.6 million, or 34.2%, compared to noninterest expense of $37.1 million for the same period of 2021 primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $6.1 million in salaries and benefits and $4.7 million in other expenses.

The provision for income taxes was $2.8 million during the three months ended June 30, 2022, compared to $2.6 million and $2.3 million of income tax provision recorded for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes for the three months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.5% compared to 18.4% and 19.4% for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes was $5.3 million during the six months ended June 30, 2022, compared to $4.5 million of income tax provision recorded for the first half of 2021. The provision for income taxes for the six months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.4% compared to 19.1% for the same period of 2021. The decrease in the effective tax rate compared to the periods of the prior year reflects higher tax-exempt interest recognized due to an increase in tax-exempt securities being held in the investment security portfolio when compared to the prior year, the favorable treatment of the increase in cash surrender value on bank owned life insurance policies, which are nontaxable for federal tax purposes, and the expansion of low income housing tax credit projects (“Projects”) acquired in the Riverview transaction, as well as Mid Penn legacy Projects. These decreases were partially offset by higher income before taxes in both periods of 2022.

The efficiency ratio⁽¹⁾ was 57.57% in the second quarter of 2022, compared to 62.12% in the first quarter of 2022, and 57.42% in the second quarter of 2021. The improvement in the efficiency ratio during the second quarter 2022 was due to the cost savings being realized from the Riverview acquisition. The efficiency ratio was 59.83% for the six months ended June 30, 2022, compared to 57.47% for the six months ended June 30, 2021. The increase in the efficiency ratio during the six months ended June 30, 2022 was primarily due to the increase in salary and benefit expenses related to Riverview employees retained through conversion.

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 report. 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 announcement or completion of the Riverview transaction; the ability to complete the integration of Mid Penn and Riverview successfully; the dilution caused by Mid Penn’s issuance of additional shares of its capital stock in connection with 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):

	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
(Dollars in thousands, except per share data)	2022			2022			2021			2021			2021
Ending Balances:
Investment securities	$	618,184		$	508,658		$	392,619		$	158,311		$	161,702
Net loans		3,163,157			3,106,384			3,089,799			2,356,196			2,480,476
Total assets		4,310,163			4,667,174			4,689,425			3,453,187			3,461,792
Total deposits		3,702,587			3,989,037			4,002,016			2,961,881			2,782,124
Shareholders' equity		495,835			494,161			490,076			349,308			341,569
Average Balances:
Investment securities		580,406			462,648			286,134			158,296			148,972
Net loans		3,129,334			3,103,469			2,319,544			2,422,378			2,609,803
Total assets		4,465,906			4,696,894			3,579,649			3,508,757			3,437,692
Total deposits		3,837,135			3,999,074			3,007,955			2,870,885			2,715,875
Shareholders' equity		495,681			494,019			403,010			345,816			312,006

Income Statement:	Three Months Ended
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
(Dollars in thousands, except per share data)	2022			2022			2021			2021			2021
Net interest income	$	35,433		$	34,414		$	29,372		$	26,994		$	26,877
Provision for loan and lease losses		1,725			500			370			425			1,150
Noninterest income		5,230			5,750			5,660			5,509			5,652
Noninterest expense		23,915			25,745			34,072			20,019			19,456
Income before provision for income taxes		15,023			13,919			590			12,059			11,923
Provision for income taxes		2,771			2,565			(17	)		2,272			2,310
Net income available to shareholders		12,252			11,354			607			9,787			9,613
Net income excluding non-recurring expenses⁽¹⁾		12,252			11,614			10,266			9,943			10,025

Per Share:
Basic earnings per common share	$	0.77		$	0.71		$	0.05		$	0.86		$	0.93
Diluted earnings per common share	$	0.77		$	0.71		$	0.05		$	0.86		$	0.93
Cash dividends declared	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20
Book value per common share	$	31.23		$	30.96		$	30.71		$	30.55		$	29.94
Tangible book value per common share ⁽¹⁾	$	23.57		$	23.31		$	22.99		$	24.75		$	24.10

Asset Quality:
Net charge-offs (recoveries) to average loans (annualized)		-0.001	%		-0.007	%		0.001	%		0.149	%		0.004	%
Non-performing loans to total loans		0.25	%		0.25	%		0.32	%		0.29	%		0.35	%
Non-performing asset to total loans and other real estate		0.25	%		0.26	%		0.32	%		0.29	%		0.35	%
Non-performing asset to total assets		0.19	%		0.18	%		0.22	%		0.20	%		0.25	%
ALLL to total loans		0.53	%		0.49	%		0.47	%		0.60	%		0.59	%
ALLL to nonperforming loans		211.66	%		190.84	%		146.23	%		209.90	%		169.50	%

Profitability:
Return on average assets		1.10	%		0.98	%		0.06	%		1.11	%		1.12	%
Return on average equity		9.91	%		9.32	%		0.61	%		11.23	%		12.36	%
Return on average tangible common equity ⁽¹⁾		13.59	%		12.82	%		1.26	%		14.20	%		15.72	%
Net interest margin		3.45	%		3.21	%		3.48	%		3.26	%		3.34	%
Efficiency ratio ⁽¹⁾		57.57	%		62.12	%		61.34	%		60.33	%		57.42	%

Capital Ratios:
Tier 1 Capital (to Average Assets)		9.0	%		8.4	%		8.1	%		8.6	%		8.8	%
Common Tier 1 Capital (to Risk Weighted Assets)		11.5	%		11.7	%		11.7	%		13.2	%		13.1	%
Tier 1 Capital (to Risk Weighted Assets)		11.8	%		12.0	%		12.0	%		13.2	%		13.1	%
Total Capital (to Risk Weighted Assets)		14.1	%		14.4	%		14.6	%		15.8	%		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)	Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021			Sept. 30, 2021			Jun. 30, 2021
ASSETS
Cash and due from banks	$	64,440		$	54,961		$	41,100		$	40,134		$	35,815
Interest-bearing balances with other financial institutions		4,909			3,187			146,031			2,536			1,234
Federal funds sold		167,437			700,283			726,621			712,272			599,298
Total cash and cash equivalents		236,786			758,431			913,752			754,942			636,347

Investment securities held to maturity, at amortized cost		399,032			363,145			329,257			152,791			153,032
Investment securities available for sale, at fair value		218,698			145,039			62,862			5,015			8,162
Equity securities available for sale, at fair value		454			474			500			505			508
Loans held for sale		9,574			7,474			11,514			23,154			24,202
Loans and leases, net of unearned interest		3,180,033			3,121,531			3,104,396			2,370,429			2,495,192
Less: Allowance for loan and lease losses		(16,876	)		(15,147	)		(14,597	)		(14,233	)		(14,716	)
Net loans and leases		3,163,157			3,106,384			3,089,799			2,356,196			2,480,476

Bank premises and equipment, net		33,732			33,612			33,232			25,562			24,758
Bank premises and equipment held for sale		2,574			3,098			3,907			—			—
Operating lease right of use asset		8,326			8,751			9,055			9,942			10,364
Finance lease right of use asset		2,997			3,042			3,087			3,132			3,177
Cash surrender value of life insurance		50,169			49,907			49,661			17,406			17,332
Restricted investment in bank stocks		4,234			7,637			9,134			7,906			6,816
Accrued interest receivable		12,902			11,584			11,328			10,008			10,638
Deferred income taxes		13,780			11,974			10,779			4,133			5,465
Goodwill		113,835			113,835			113,835			62,840			62,840
Core deposit and other intangibles, net		7,729			8,250			9,436			3,537			3,804
Foreclosed assets held for sale		69			125			—			11			11
Other assets		32,115			34,412			28,287			16,107			13,860
Total Assets	$	4,310,163		$	4,667,174		$	4,689,425		$	3,453,187		$	3,461,792
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	850,180		$	866,965		$	850,438		$	661,890		$	692,016
Interest-bearing demand		1,023,027			1,050,923			1,066,852			745,833			629,375
Money Market		999,556			1,159,809			1,076,593			905,742			810,067
Savings		354,677			358,186			381,476			205,842			206,724
Time		475,147			553,154			626,657			442,574			443,942
Total Deposits		3,702,587			3,989,037			4,002,016			2,961,881			2,782,124

Short-term borrowings		—			—			—			—			196,889
Long-term debt		4,592			74,681			81,270			74,858			74,944
Subordinated debt		73,995			74,134			73,645			44,599			44,593
Operating lease liability		10,324			10,923			11,363			10,950			11,387
Accrued interest payable		1,542			2,067			1,791			1,901			2,122
Other liabilities		21,288			22,171			29,264			9,690			8,164
Total Liabilities		3,814,328			4,173,013			4,199,349			3,103,879			3,120,223

Shareholders' Equity:
Common stock, par value $1.00 per share; 20.0 million shares authorized		16,081			16,059			16,056			11,532			11,507
Additional paid-in capital		386,128			385,765			384,742			246,830			246,546
Retained earnings		108,265			99,206			91,043			92,722			85,220
Accumulated other comprehensive (loss) income		(9,759	)		(4,946	)		158			147			219
Treasury stock		(4,880	)		(1,923	)		(1,923	)		(1,923	)		(1,923	)
Total Shareholders’ Equity		495,835			494,161			490,076			349,308			341,569
Total Liabilities and Shareholders' Equity	$	4,310,163		$	4,667,174		$	4,689,425		$	3,453,187		$	3,461,792

CONSOLIDATED STATEMENTS OF INCOME (Unaudited):
(Dollars in thousands, except per share data)	Three Months Ended															Six Months Ended
	Jun. 30			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Jun. 30			Jun. 30
	2022			2022			2021			2021			2021			2022			2021
INTEREST INCOME
Interest and fees on loans and leases	$	34,264		$	35,016		$	31,021		$	29,590		$	29,835		$	69,280		$	58,165
Interest and dividends on investment securities:
U.S. Treasury and government agencies		2,329			1,536			715			285			225			3,865			403
State and political subdivision obligations, tax-exempt		379			336			288			279			278			715			555
Other securities		504			417			329			277			291			921			593
Total Interest and Dividends on Investment Securities		3,212			2,289			1,332			841			794			5,501			1,551

Interest on other interest-bearing balances		8			13			8			1			2			21			4
Interest on federal funds sold		736			314			324			308			98			1,050			177
Total Interest Income		38,220			37,632			32,685			30,740			30,729			75,852			59,897
INTEREST EXPENSE
Interest on deposits		2,019			2,294			2,536			2,909			2,916			4,313			5,882
Interest on short-term borrowings		—			—			—			133			232			—			406
Interest on long-term and subordinated debt		768			924			777			704			704			1,692			1,407
Total Interest Expense		2,787			3,218			3,313			3,746			3,852			6,005			7,695
Net Interest Income		35,433			34,414			29,372			26,994			26,877			69,847			52,202
PROVISION FOR LOAN AND LEASE LOSSES		1,725			500			370			425			1,150			2,225			2,150
Net Interest Income After Provision for Loan and Lease Losses		33,708			33,914			29,002			26,569			25,727			67,622			50,052
NONINTEREST INCOME
Mortgage banking income		305			529			1,932			3,162			2,841			834			5,220
Income from fiduciary and wealth management activities		1,205			1,052			778			618			542			2,257			1,098
Service charges on deposits		450			684			439			223			177			1,134			329
ATM debit card interchange income		1,128			1,057			834			630			656			2,185			1,224
Net gain (loss) on sales of SBA loans		119			(9	)		409			105			355			110			455
Merchant services income		87			73			72			58			209			160			301
Earnings from cash surrender value of life insurance		262			246			135			74			75			508			149
Net gain on sales of investment securities		—			—			—			79			—			—			—
Other income		1,674			2,118			1,061			560			797			3,792			1,588
Total Noninterest Income		5,230			5,750			5,660			5,509			5,652			10,980			10,364
NONINTEREST EXPENSE
Salaries and employee benefits		12,340			13,244			11,838			10,342			9,933			25,584			19,531
Occupancy expense, net		1,655			1,799			1,412			1,318			1,317			3,454			2,797
Equipment expense		1,112			1,011			864			745			741			2,123			1,492
Software licensing and utilization		1,821			2,106			1,839			1,551			1,497			3,927			2,942
FDIC Assessment		506			591			524			461			433			1,097			903
Legal and professional fees		694			639			388			610			555			1,333			981
Charitable contributions qualifying for State tax credits		125			65			797			—			365			190			635
Mortgage banking profit-sharing expense		33			145			566			1,140			745			178			865
(Gain) loss on sale or write-down of foreclosed assets, net		(15	)		(16	)		1			(7	)		(19	)		(31	)		(19	)
Intangible amortization		521			481			357			266			276			1,002			557
Merger and acquisition expense		—			—			2,347			198			522			—			522
Post-acquisition restructuring expense		—			329			9,880			—			—			329			—
Other expenses		5,123			5,351			3,259			3,395			3,091			10,474			5,808
Total Noninterest Expense		23,915			25,745			34,072			20,019			19,456			49,660			37,014
INCOME BEFORE PROVISION FOR INCOME TAXES		15,023			13,919			590			12,059			11,923			28,942			23,402
Provision for income taxes		2,771			2,565			(17	)		2,272			2,310			5,336			4,477
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	12,252		$	11,354		$	607		$	9,787		$	9,613		$	23,606		$	18,925

PER COMMON SHARE DATA:
Basic and Diluted Earnings Per Common Share	$	0.77		$	0.71		$	0.05		$	0.86		$	0.93		$	1.48		$	2.02
Diluted Earnings Per Common Share	$	0.77		$	0.71		$	0.05		$	0.86		$	0.93		$	1.48		$	2.02
Cash Dividends Declared	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20		$	0.40		$	0.39

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
(Dollars in thousands)	June 30, 2022									March 31, 2022									June 30, 2021
	Average						Yield/			Average						Yield/			Average						Yield/
	Balance		Interest				Rate			Balance		Interest				Rate			Balance		Interest				Rate
ASSETS:
Interest Bearing Balances	$	5,920	$	8				0.54	%	$	91,543	$	13				0.06	%	$	1,284	$	2				0.62	%
Investment Securities:
Taxable		501,631		2,740				2.19	%		389,034		1,822				1.90	%		93,161		430				1.85	%
Tax-Exempt		78,775		480		(a)		2.44	%		73,614		425		(a)		2.34	%		55,811		352		(a)		2.53	%
Total Securities		580,406		3,220				2.23	%		462,648		2,247				1.97	%		148,972		782				2.11	%

Federal Funds Sold		415,405		736				0.71	%		706,411		314				0.18	%		477,001		98				0.08	%
Loans and Leases, Net		3,129,334		34,354		(b)		4.40	%		3,103,469		35,123		(b)		4.59	%		2,609,803		29,908		(b)		4.60	%
Restricted Investment in Bank Stocks		4,854		94				7.77	%		8,347		131				6.36	%		6,865		86				5.02	%
Total Earning Assets		4,135,919		38,412				3.73	%		4,372,418		37,828				3.51	%		3,243,925		30,876				3.82	%

Cash and Due from Banks		59,822									57,397									34,683
Other Assets		270,165									267,079									159,084
Total Assets	$	4,465,906								$	4,696,894								$	3,437,692

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	1,030,237	$	462				0.18	%	$	1,045,678	$	461				0.18	%	$	614,435	$	579				0.38	%
Money Market		1,079,900		584				0.22	%		1,125,094		600				0.22	%		791,498		819				0.42	%
Savings		357,433		43				0.05	%		376,006		58				0.06	%		203,468		58				0.11	%
Time		516,346		930				0.72	%		592,833		1,175				0.80	%		432,739		1,460				1.35	%
Total Interest-bearing Deposits		2,983,916		2,019				0.27	%		3,139,611		2,294				0.30	%		2,042,140		2,916				0.57	%

Short Term Borrowings		—		—				0.00	%		—		—				0.00	%		264,661		232				0.35	%
Long-term Debt		9,238		107				4.65	%		76,157		284				1.51	%		74,976		204				1.09	%
Subordinated Debt		74,062		661				3.58	%		74,189		640				3.50	%		44,589		500				4.50	%
Total Interest-bearing Liabilities		3,067,216		2,787				0.36	%		3,289,957		3,218				0.40	%		2,426,366		3,852				0.64	%

Noninterest-bearing Demand		853,219									859,463									673,735
Other Liabilities		49,790									53,455									25,585
Shareholders' Equity		495,681									494,019									312,006
Total Liabilities & Shareholders' Equity	$	4,465,906								$	4,696,894								$	3,437,692

Net Interest Income (taxable equivalent basis)			$	35,625								$	34,610								$	27,024
Taxable Equivalent Adjustment				(192	)								(196	)								(147	)
Net Interest Income			$	35,433								$	34,414								$	26,877

Total Yield on Earning Assets								3.73	%								3.51	%								3.82	%
Rate on Supporting Liabilities								0.36	%								0.40	%								0.64	%
Average Interest Spread								3.37	%								3.11	%								3.18	%
Net Interest Margin								3.45	%								3.21	%								3.34	%

(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $101 thousand, $89 thousand and $74 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $91 thousand, $107 thousand and $73 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	For the Six Months Ended
(Dollars in thousands)	June 30, 2022									June 30, 2021
	Average						Yield/			Average						Yield/
	Balance		Interest				Rate			Balance		Interest				Rate
ASSETS:
Interest Bearing Balances	$	48,495	$	21				0.09	%	$	1,342	$	4				0.60	%
Investment Securities:
Taxable		445,644		4,561				2.06	%		85,849		815				1.91	%
Tax-Exempt		76,208		905		(a)		2.39	%		55,377		702		(a)		2.56	%
Total Securities		521,852		5,466				2.11	%		141,226		1,517				2.17	%

Federal Funds Sold		560,105		1,050				0.38	%		396,041		177				0.09	%
Loans and Leases, Net		3,116,473		69,477		(b)		4.50	%		2,571,075		58,314		(b)		4.57	%
Restricted Investment in Bank Stocks		6,590		225				6.89	%		6,958		181				5.25	%
Total Earning Assets		4,253,515		76,239				3.61	%		3,116,642		60,193				3.89	%

Cash and Due from Banks		54,177									34,363
Other Assets		272,922									161,661
Total Assets	$	4,580,614								$	3,312,666

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	1,037,915	$	923				0.18	%	$	608,259	$	1,157				0.38	%
Money Market		1,102,372		1,184				0.22	%		767,877		1,597				0.42	%
Savings		366,668		101				0.06	%		200,686		122				0.12	%
Time		554,378		2,105				0.77	%		423,259		3,006				1.43	%
Total Interest-bearing Deposits		3,061,333		4,313				0.28	%		2,000,081		5,882				0.59	%

Short-term Borrowings		-		-				0.00	%		234,258		406				0.35	%
Long-term Debt		42,513		391				1.85	%		75,019		408				1.10	%
Subordinated Debt		74,126		1,301				3.54	%		44,586		999				4.52	%
Total Interest-bearing Liabilities		3,177,972		6,005				0.38	%		2,353,944		7,695				0.66	%

Noninterest-bearing Demand		856,324									648,537
Other Liabilities		51,612									24,529
Shareholders' Equity		494,706									285,656
Total Liabilities & Shareholders' Equity	$	4,580,614								$	3,312,666

Net Interest Income (taxable equivalent basis)			$	70,234								$	52,498
Taxable Equivalent Adjustment				(387	)								(296	)
Net Interest Income			$	69,847								$	52,202

Total Yield on Earning Assets								3.61	%								3.89	%
Rate on Supporting Liabilities								0.38	%								0.66	%
Average Interest Spread								3.23	%								3.24	%
Net Interest Margin								3.33	%								3.40	%

(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $190 thousand and $147 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $197 thousand and $149 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.

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

(Dollars in thousands, except	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
per share data)	2022			2022			2021			2021			2021
Allowance for Loan and Lease Losses:
Beginning balance	$	15,147		$	14,597		$	14,233		$	14,716		$	13,591
Loans Charged off
Commercial and industrial		—			—			(7	)		—			—
Commercial real estate		—			—			(1	)		(1,043	)		—
Commercial real estate - construction		—			—			—			—			(23	)
Residential mortgage		—			—			—			(3	)		(7	)
Home equity		—			—			—			—			—
Consumer		(9	)		(57	)		(19	)		(11	)		(9	)
Total loans charged off		(9	)		(57	)		(27	)		(1,057	)		(39	)
Recoveries of loans previously charged off
Commercial and industrial		—			13			10			1			1
Commercial real estate		—			65			1			140			10
Commercial real estate - construction		—			24			7			—			—
Residential mortgage		2			—			—			2			1
Home equity		1			1			—			—			—
Consumer		10			4			3			6			2
Total recoveries		13			107			21			149			14
Balance before provision		15,151			14,647			14,227			13,808			13,566
Provision for loan and lease losses		1,725			500			370			425			1,150
Balance, end of quarter	$	16,876		$	15,147		$	14,597		$	14,233		$	14,716

Nonperforming Assets
Nonaccrual loans	$	7,551		$	7,507		$	9,547		$	6,339		$	8,233
Accruing trouble debt restructured loans		422			430			435			442			449
Total nonperforming loans		7,973			7,937			9,982			6,781			8,682

Foreclosed real estate		69			125			—			11			11
Total nonperforming assets		8,042			8,062			9,982			6,792			8,693

Accruing loans 90 days or more past due		—			133			515			—			—
Total risk elements	$	8,042		$	8,195		$	10,497		$	6,792		$	8,693

PPP Summary

	Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,
(Dollars in thousands)	2022		2022		2021		2021		2021

PPP loans, net of deferred fees	$	4,966	$	34,124	$	111,286	$	229,679	$	391,826

PPP Fees recognized	$	652	$	2,989	$	4,426	$	8,382	$	4,109

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 Company’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. 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. 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. 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 at the end of this release.

Tangible Book Value Per Share

(Dollars in thousands, except	Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,
per share data)	2022		2022		2021		2021		2021

Shareholders' Equity	$	495,835	$	494,161	$	490,076	$	349,308	$	341,569
Less: Goodwill		113,835		113,835		113,835		62,840		62,840
Less: Core Deposit and Other Intangibles		7,729		8,250		9,436		3,537		3,804
Tangible Equity	$	374,271	$	372,076	$	366,805	$	282,931	$	274,925

Common Shares Outstanding		15,878,193		15,960,916		15,957,830		11,433,554		11,408,712

Tangible Book Value per Share	$	23.57	$	23.31	$	22.99	$	24.75	$	24.10

Non-PPP Core Banking Loans

	Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,
(Dollars in thousands)	2022		2022		2021		2021		2021

Loans and leases, net of unearned interest	$	3,180,033	$	3,121,531	$	3,104,396	$	2,370,429	$	2,495,192
Less: PPP loans, net of deferred fees		4,966		34,124		111,286		229,679		391,826
Non-PPP core banking loans	$	3,175,067	$	3,087,407	$	2,993,110	$	2,140,750	$	2,103,366

Core Earnings Per Common Share Excluding Non-Recurring Expenses

	Three Months Ended
	Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,
(Dollars in thousands, except per share data)	2022		2022		2021		2021		2021
Net Income Available to Common Shareholders	$	12,252	$	11,354	$	607	$	9,787	$	9,613
Plus: Merger and Acquisition Expenses		—		329		12,227		198		522
Less: Tax Effect of Merger and Acquisition Expenses		—		69		2,568		42		110
Net Income Excluding Non-Recurring Expenses	$	12,252	$	11,614	$	10,266	$	9,943	$	10,025

Weighted Average Shares Outstanding - denominator		15,935,003		15,957,864		13,005,895		11,423,487		10,321,838

Core Earnings Per Common Share Excluding Non-Recurring Expenses	$	0.77	$	0.73	$	0.79	$	0.87	$	0.97

Return on Average Tangible Common Equity
	Three Months Ended
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
(Dollars in thousands, except per share data)	2022			2022			2021			2021			2021

Net income available to common shareholders	$	12,252		$	11,354		$	607		$	9,787		$	9,613
Plus: Intangible amortization, net of tax		412			380			282			210			218
	$	12,664		$	11,734		$	889		$	9,997		$	9,831

Average shareholder's equity	$	495,681		$	494,019		$	403,010		$	345,816		$	312,006
Less: Average goodwill		113,835			113,835			113,835			62,840			62,840
Less: Average core deposit and other intangibles		7,983			8,950			9,436			3,666			3,938
Average tangible shareholder's equity	$	373,863		$	371,234		$	279,739		$	279,310		$	245,228

Return on average tangible common equity		13.59	%		12.82	%		1.26	%		14.20	%		15.72	%

Efficiency Ratio
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
(Dollars in thousands)	2022			2022			2021			2021			2021

Noninterest expense	$	23,915		$	25,745		$	34,072		$	20,019		$	19,456
Less: Merger and acquisition expenses		—			329			12,227			198			522
Less: Intangible amortization		521			481			357			266			276
Less: (Gain) loss on sale or write-down of foreclosed assets, net		(15	)		(16	)		1			(7	)		(19	)
Efficiency ratio numerator	$	23,409		$	24,951		$	21,487		$	19,562		$	18,677

Net interest income		35,433			34,414			29,372			26,994			26,877
Noninterest income		5,230			5,750			5,660			5,509			5,652
Less: Net gain on sales of investment securities		—			—			—			79			—
Efficiency ratio denominator	$	40,663		$	40,164		$	35,032		$	32,424		$	32,529

Efficiency ratio		57.57	%		62.12	%		61.34	%		60.33	%		57.42	%

CONTACTS

Rory G. Ritrievi
President & Chief Executive Officer

Allison S. Johnson
Chief Financial Officer

1-866-642-7736

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

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