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 December 31, 2023, of $12.1
million, or $0.73 per diluted common share.
Key Highlights of the Fourth Quarter of 2023:
- Net income available to common shareholders increased 31.0% to
$12.1 million, or $0.73 per diluted common share for the fourth
quarter of 2023, compared to net income of $9.2 million, or $0.56
per diluted common share for the third quarter of 2023.
- Return on average assets was 0.92% and return on average equity
was 8.93% for the quarter ended December 31, 2023, compared to
return on average assets of 0.72% and return on average equity of
6.93% in the third quarter of 2023.
- Loan growth for the fourth quarter of 2023 was $107.1 million,
or 10.5% (annualized), from the third quarter of 2023. Total loans
increased $738.7 million compared to the prior year. Organic loan
growth for the year ended December 31, 2023, was $423.6 million or
10.8% (excluding Brunswick acquisition loans of $324.5
million).
- Total interest income increased 4.26% to $66.1 million for the
quarter ended December 31, 2023, driven by an increase in interest
income on loans of $2.5 million from the third quarter of
2023.
- Deposits decreased $35.4 million, or 3.2% (annualized), for the
quarter ended December 31, 2023, from the third quarter of 2023,
primarily driven by a decrease in interest bearing transaction
accounts partially offset by an increase in time deposits. Organic
deposits increased $285.3 million or 7.5% (excluding Brunswick
acquisition deposits) for the year ended December 31, 2023,
compared to the prior year.
- Total interest expense increased 12.26% to $29.1 million for
the quarter ended December 31, 2023, driven by an increase in the
cost of deposits of $2.2 million from the third quarter of
2023.
- Total noninterest income decreased $229.0 thousand to $5.1
million in the fourth quarter of 2023 from $5.3 million in the
prior quarter.
- Total noninterest expense decreased $2.4 million to $27.5
million in the fourth quarter of 2023 from $29.9 million in the
prior quarter.
- The Board declared a cash dividend of $0.20 per share, payable
February 20, 2024, to shareholders of record as of February 9,
2024.
“Our performance in the fourth quarter of 2023, while an
improvement over the linked third quarter of 2023, was still
heavily impacted by the continuation of an inverted yield curve and
the rigorous competition for core deposits," Chair, President, and
CEO Rory G. Ritrievi said. "The measures we implemented in the
third quarter, such as slowing down organic loan growth and cutting
operating expenses, helped shape the fourth quarter improvement
while positioning our strategy for fiscal year 2024."
Ritrievi continued, "We expect 2024 to be another difficult
operating environment for financial institutions, particularly ones
with a heavy reliance on the spread business. Accordingly, our
measured approach to growth and expense control will persist
throughout the year."
For the fourth quarter of 2023, the Board is pleased to announce
a quarterly cash dividend of $0.20 per share of common stock, which
was declared at its meeting on January 24, 2024, payable on
February 20, 2024, to shareholders of record as of February 9,
2024.
Net Interest Income
For the three months ended December 31, 2023, net interest
income was $37.0 million compared to net interest income of $37.5
million for the three months ended September 30, 2023, and $38.6
million for the three months ended December 31, 2022. The
tax-equivalent net interest margin for the three months ended
December 31, 2023, was 3.02% compared to 3.16% for the third
quarter of 2023, and 3.80% for the fourth quarter of 2022,
representing a 14 basis point ("bp") decrease compared to the prior
quarter, and a 78 bp decrease compared to the same period in 2022,
primarily driven by rising interest rates and persistent
inflation.
The yield on interest-earning assets increased to 5.39% for the
quarter ended December 31, 2023, from 5.35% for the quarter ended
September 30, 2023, and 4.58% for the quarter ended December 31,
2022. These increases were due to assets continuing to reprice at
higher rates during the fourth quarter of 2023. Increased yields on
interest-earning assets were more than offset by increases in
funding costs for the fourth quarter of 2023, with overall cost of
interest-bearing liabilities increasing to 3.02% during the fourth
quarter of 2023, compared to 2.79% for the three months ended
September 30, 2023, and 1.08% for the three months ended December
31, 2022.
For the twelve months ended December 31, 2023, net interest
income decreased $860.0 thousand to $147.0 million compared to net
interest income of $147.8 million for the same period of 2022.
Average Balances
Average loans increased $147.6 million to $4.2 billion for the
quarter ended December 31, 2023, compared to $4.1 billion for the
quarter ended September 30, 2023, and $3.4 billion for the quarter
ended December 31, 2022. Average deposits were $4.4 billion for the
fourth quarter of 2023, reflecting an increase of $41.5 million, or
1.0%, compared to total average deposits in the third quarter of
2023, and $675.3 million, or 18.1%, compared to total average
deposits of $3.7 billion for the fourth quarter of 2022. The
average cost of deposits was 2.33% for the fourth quarter of 2023,
representing an 18 bp increase and a 158 bp increase from the third
quarter of 2023 and the fourth quarter of 2022, respectively. We
continue to face headwinds with respect to deposit pricing, given
rising interest rates and competition for deposits across all
product types. Our primary focus with respect to deposit strategy
is stability, ensuring that our rates are competitive and our
product mix satisfies the needs of our customers. Additionally, Mid
Penn also maintains interest rate swaps to hedge the cash flows
associated with existing brokered CDs to mitigate the impact of
rising deposit costs.
The mix of deposits continues to shift as customers move funds
from non-interest-bearing accounts to time deposits given
prevailing thought that current rates are at highs. Time deposits
represented 31.0% of total deposits at September 30, 2023, and
increased to 33.6% at December 31, 2023. The mix of
non-interest-bearing deposits remained flat during the quarter,
representing approximately 18.4% of total deposits at December 31,
2023, compared to 18.4% at September 30, 2023, 19.4% at June 30,
2023, and 20.6% at March 31, 2023. The average duration of the
non-hedged time deposit portfolio is 12 months at December 31,
2023.
Asset Quality
On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial
Instruments - Credit Losses (ASC Topic 326): Measurement of Credit
Losses on Financial Instruments, which replaces the incurred loss
methodology and is referred to as CECL. Results for reporting
periods beginning after January 1, 2023, are presented under CECL,
while prior period results are reported in accordance with the
previously applicable incurred loss methodology.
The provision for credit losses on loans was $221.0 thousand for
the three months ended December 31, 2023, a decrease of $1.2
million compared to the provision for credit losses of $1.4 million
for the three months ended September 30, 2023. The provision for
credit losses on loans was $3.3 million for the twelve months ended
December 31, 2023, a decrease of $1.0 million compared to the
provision for credit losses of $4.3 million for the twelve months
ended December 31, 2022. The decrease in provision for the twelve
months ended December 31, 2023, is primarily due to a decrease in
nonperforming individually-evaluated loans. Net chargeoffs for the
twelve months ended December 31, 2023, were $332.0 thousand or less
than 1% of total loans.
Total nonperforming assets were $14.5 million at December 31,
2023, compared to nonperforming assets of $14.4 million and $8.6
million at September 30, 2023, and December 31, 2022, respectively.
The increase during the fourth quarter of 2023 primarily related to
payoffs on nonaccrual loans. Delinquency as a percentage of total
loans was 0.49% at December 31, 2023.
Capital
Shareholders’ equity increased $31.5 million, or 6.15%, from
$512.1 million as of December 31, 2022, to $543.6 million as of
December 31, 2023. The increase was primarily due to the
acquisition of Brunswick Bancorp in the second quarter of 2023.
Retained earnings increased $12.9 million or 9.67% from $133.1
million as of December 31, 2022, to $146.0 million as of December
31, 2023. Regulatory capital ratios for both Mid Penn and its
banking subsidiary indicate regulatory capital levels in excess of
both the regulatory minimums and the levels necessary for the Bank
to be considered "well capitalized" at December 31, 2023.
Additionally, Mid Penn declared $3.3 million in dividends during
the fourth quarter of 2023.
On May 11, 2023, Mid Penn’s Board of Directors reauthorized its
treasury stock repurchase program ("Program") effective through May
11, 2024. The Program authorizes the repurchase of up to $15.0
million of Mid Penn’s outstanding common stock. There were 12,500
share repurchases during the three months ended December 31, 2023.
During the twelve months ended December 31, 2023, Mid Penn
repurchased 216,879 shares of common stock at an average price of
$22.31. As of December 31, 2023, Mid Penn repurchased 425,222
shares of common stock at an average price of $22.86 per share
under the Program. The Program had $5.3 million remaining available
for repurchase as of December 31, 2023.
Noninterest Income
For the three months ended December 31, 2023, noninterest income
totaled $5.1 million, which was relatively consistent with
noninterest income of $5.3 million for the third quarter of
2023.
For the twelve months ended December 31, 2023, noninterest
income totaled $20.0 million, a decrease of $3.6 million, compared
to noninterest income of $23.7 million for the twelve months ended
December 31, 2022. The decrease in noninterest income is primarily
due to a $1.2 million decrease in residential mortgage business,
and a $1.8 million decrease in other miscellaneous income. Given
the rising interest rate environment and overall lower demand for
mortgages, that industry continues to be a drag on all other
earnings.
Noninterest Expense
Noninterest expense totaled $27.5 million, a decrease of $2.4
million, or 8.0%, for the three months ended December 31, 2023,
compared to noninterest expense of $29.9 million for the third
quarter of 2023. For the twelve months ended December 31, 2023,
noninterest expense totaled $119.0 million, an increase of $19.1
million, or 19.2%, compared to noninterest expense of $99.8 million
for the twelve months ended December 31, 2022. The increase in
noninterest expense for the twelve months ended December 31, 2023,
is driven by $8.5 million of merger-related expenses, a $6.7
million increase in salaries and benefits expense, and a $1.9
million increase in FDIC charges due to special assessments levied
to recover the losses to the Deposit Insurance Fund resulting from
the bank failures in 2023.
The efficiency ratio(1) was 64.1% in the fourth quarter of 2023,
compared to 67.9% in the third quarter of 2023, and 54.6% in the
fourth quarter of 2022. Mid Penn continues to evaluate levels of
noninterest expense for opportunities to reduce operating costs
throughout the organization.
Subsequent Events
Management considers subsequent events occurring after the
balance sheet date for matters which may require adjustment to, or
disclosure in, the consolidated financial statements. The review
period for subsequent events extends up to and including the filing
date of a public company’s consolidated financial statements when
filed with the Securities and Exchange Commission ("SEC").
Accordingly, the financial information in this announcement is
subject to change. The statements are valid only as of the date
hereof and Mid Penn disclaims any obligation to update this
information.
(1)
Non-GAAP financial measure. Refer
to the calculation on the section titled “Reconciliation of
Non-GAAP Measures” at the end of this document.
SPECIAL CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the
subjects of this release, contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are not historical facts and include
expressions about management's confidence and strategies and
management's current views and expectations about new and existing
programs and products, relationships, opportunities, technology and
market conditions. These statements may be identified by such
forward-looking terminology as "continues," "expect," "look,"
"believe," "anticipate," "may," "will," "should," "projects,"
"strategy" or similar statements. Actual results may differ
materially from such forward-looking statements, and no reliance
should be placed on any forward-looking statement. Factors that may
cause results to differ materially from such forward-looking
statements include, but are not limited to, changes in interest
rates, spreads on earning assets and interest-bearing liabilities,
and interest rate sensitivity; prepayment speeds, loan
originations, credit losses and market values on loans, collateral
securing loans, and other assets; sources of liquidity; common
shares outstanding; common stock price volatility; fair value of
and number of stock-based compensation awards to be issued in
future periods; the impact of changes in market values on
securities held in Mid Penn’s portfolio; legislation affecting the
financial services industry as a whole, and Mid Penn and Mid Penn
Bank individually or collectively, including tax legislation;
results of the regulatory examination and supervision process and
oversight, including changes in monetary policy and capital
requirements; changes in accounting policies or procedures as may
be required by the Financial Accounting Standards Board or
regulatory agencies; increasing price and product/service
competition by competitors, including new entrants; rapid
technological developments and changes; the ability to continue to
introduce competitive new products and services on a timely,
cost-effective basis; the mix of products/services; containing
costs and expenses; governmental and public policy changes;
protection and validity of intellectual property rights; reliance
on large customers; technological, implementation and
cost/financial risks in large, multi-year contracts; the outcome of
future litigation and governmental proceedings, including
tax-related examinations and other matters; continued availability
of financing; the availability of financial resources in the
amounts, at the times and on the terms required to support Mid Penn
and Mid Penn Bank’s future businesses; material differences in the
actual financial results of merger, acquisition and investment
activities compared with Mid Penn’s initial expectations, including
the full realization of anticipated cost savings and revenue
enhancements; the possibility that the anticipated benefits of a
transaction are not realized when expected or at all, including as
a result of the impact of, or problems arising from, the
integration of the two companies or as a result of the strength of
the economy and competitive factors in legacy Mid Penn and target
markets; diversion of management’s attention from ongoing business
operations and opportunities; potential adverse reactions or
changes to business or employee relationships, including those
resulting from the announcement or completion of a transaction; the
ability to complete the integration of Mid Penn and its target
successfully; the dilution caused by Mid Penn’s issuance of
additional shares of its capital stock in connection with a
transaction; and other factors that may affect the future results
of Mid Penn.
For a more detailed description of these and other factors which
would affect our results, please see Mid Penn’s filings with the
SEC, including those risk factors identified in the "Risk Factors"
section and elsewhere in our Annual Report on Form 10-K for the
year ended December 31, 2022 and subsequent filings with the SEC.
The statements in this press release are made as of the date of
this press release, even if subsequently made available by Mid Penn
on its website or otherwise. Mid Penn does not undertake, and
specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of unanticipated
events, except as required by law.
SUMMARY FINANCIAL HIGHLIGHTS
(Unaudited):
(Dollars in thousands, except per share
data)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Ending Balances:
Investment securities
$
623,121
$
620,038
$
634,038
$
633,831
$
637,802
Loans, net of unearned interest
4,218,605
4,111,653
4,001,922
3,580,082
3,495,162
Total assets
5,292,053
5,215,963
5,088,813
4,583,465
4,497,954
Total deposits
4,346,212
4,381,616
4,286,686
3,878,081
3,778,331
Shareholders' equity
543,611
528,711
525,888
510,793
512,099
Average Balances:
Investment securities
606,946
619,071
630,750
636,151
640,792
Loans, net of unearned interest
4,201,092
4,053,514
3,808,717
3,555,375
3,395,308
Total assets
5,226,382
5,106,103
4,827,786
4,520,869
4,381,213
Total deposits
4,402,565
4,361,067
4,057,605
3,782,990
3,727,287
Shareholders' equity
537,219
529,067
504,535
510,857
505,769
Three Months Ended
Income Statement:
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net interest income
$
37,000
$
37,480
$
36,444
$
36,049
$
38,577
Provision for credit losses
221
1,427
1,157
490
525
Noninterest income
5,117
5,346
5,220
4,325
6,714
Noninterest expense
27,504
29,889
35,529
26,070
25,468
Income before provision for income
taxes
14,392
11,510
4,978
13,814
19,298
Provision for income taxes
2,294
2,274
142
2,587
3,579
Net income available to shareholders
12,098
9,236
4,836
11,227
15,719
Net income excluding non-recurring
expenses (1)
12,098
9,514
11,112
11,404
15,951
Per Share:
Basic earnings per common share
$
0.73
$
0.56
$
0.29
$
0.71
$
0.99
Diluted earnings per common share
0.73
0.56
0.29
0.70
0.99
Cash dividends declared
0.20
0.20
0.20
0.20
0.20
Book value per common share
32.80
31.89
31.74
32.15
32.24
Tangible book value per common share
(1)
24.74
23.64
23.48
24.52
24.59
Asset Quality:
Net charge-offs (recoveries) to average
loans (annualized)
0.004
%
0.001
%
0.018
%
0.013
%
0.006
%
Non-performing loans to total loans
0.33
0.32
0.39
0.38
0.25
Non-performing asset to total loans and
other real estate
0.34
0.35
0.40
0.39
0.25
Non-performing asset to total assets
0.27
0.28
0.32
0.31
0.21
ACL on loans to total loans
0.80
0.82
0.81
0.87
0.54
ACL on loans to nonperforming loans
240.48
252.67
205.65
225.71
220.82
Profitability:
Return on average assets
0.92
%
0.72
%
0.40
%
1.01
%
1.42
%
Return on average equity
8.93
6.93
3.84
8.91
12.33
Return on average tangible common equity
(1)
12.36
9.72
5.53
11.97
16.61
Net interest margin
3.02
3.16
3.29
3.49
3.80
Efficiency ratio (1)
64.14
67.88
65.40
63.16
54.59
Capital Ratios:
Tier 1 Capital (to Average Assets) (2)
8.3
%
8.4
%
9.6
%
9.2
%
10.7
%
Common Tier 1 Capital (to Risk Weighted
Assets) (2)
9.7
9.7
10.7
10.8
12.5
Tier 1 Capital (to Risk Weighted Assets)
(2)
9.7
9.7
10.7
10.8
12.5
Total Capital (to Risk Weighted Assets)
(2)
11.6
11.7
11.5
13.1
14.5
(1)
Non-GAAP financial measure. Refer
to the calculation on the section titled “Reconciliation of
Non-GAAP Measures” at the end of this document.
(2)
Regulatory capital ratios as of
December 31, 2023 are preliminary and prior periods are actual.
CONSOLIDATED BALANCE SHEETS
(Unaudited):
(In thousands, except share data)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
ASSETS
Cash and due from banks
$
45,435
$
52,509
$
70,832
$
51,158
$
53,368
Interest-bearing balances with other
financial institutions
34,668
12,739
13,332
4,996
4,405
Federal funds sold
16,660
52,851
9,711
6,017
3,108
Total cash and cash equivalents
96,763
118,099
93,875
62,171
60,881
Investment Securities:
Held to maturity, at amortized cost
399,128
401,561
404,831
396,784
399,494
Available for sale, at fair value
223,555
218,064
228,774
236,609
237,878
Equity securities available for sale, at
fair value
438
413
433
438
430
Loans held for sale
3,855
4,270
7,258
2,677
2,475
Loans, net of unearned interest
4,252,792
4,145,657
4,034,510
3,611,347
3,514,119
Less: Allowance for credit losses
(34,187
)
(34,004
)
(32,588
)
(31,265
)
(18,957
)
Net loans
4,218,605
4,111,653
4,001,922
3,580,082
3,495,162
Premises and equipment, net
36,799
38,849
39,230
34,191
34,471
Operating lease right of use asset
8,953
8,693
9,106
8,414
8,798
Finance lease right of use asset
2,728
2,773
2,817
2,862
2,907
Cash surrender value of life insurance
54,497
54,209
53,931
50,928
50,674
Restricted investment in bank stocks
16,768
13,554
11,646
8,041
8,315
Accrued interest receivable
25,820
24,230
19,626
19,205
18,405
Deferred income taxes
25,372
25,509
24,309
15,548
13,674
Goodwill
127,054
129,752
129,403
114,231
114,231
Core deposit and other intangibles,
net
6,479
6,970
7,453
6,916
7,260
Foreclosed assets held for sale
293
905
489
248
43
Other assets
44,946
56,459
53,710
44,120
42,856
Total Assets
$
5,292,053
$
5,215,963
$
5,088,813
$
4,583,465
$
4,497,954
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand
$
801,312
$
804,785
$
830,479
$
797,038
$
793,939
Interest-bearing transaction accounts
2,086,450
2,217,885
2,180,312
2,197,216
2,325,847
Time
1,458,450
1,358,946
1,275,895
883,827
658,545
Total Deposits
4,346,212
4,381,616
4,286,686
3,878,081
3,778,331
Short-term borrowings
241,532
139,000
112,442
88,000
102,647
Long-term debt
59,003
58,992
58,982
4,316
4,409
Subordinated debt and trust preferred
securities
46,354
46,501
46,648
56,794
56,941
Operating lease liability
9,285
9,097
9,894
9,270
9,725
Accrued interest payable
14,257
14,657
11,115
5,809
2,303
Other liabilities
31,799
37,389
37,158
30,402
31,499
Total Liabilities
4,748,442
4,687,252
4,562,925
4,072,672
3,985,855
Shareholders' Equity:
Common stock, par value $1.00 per share;
40.0 million shares authorized
16,999
16,993
16,980
16,098
16,094
Additional paid-in capital
406,986
405,341
404,902
387,332
386,987
Retained earnings
145,982
137,199
131,271
129,617
133,114
Accumulated other comprehensive loss
(16,637
)
(21,362
)
(17,805
)
(17,374
)
(19,216
)
Treasury stock
(9,719
)
(9,460
)
(9,460
)
(4,880
)
(4,880
)
Total Shareholders’ Equity
543,611
528,711
525,888
510,793
512,099
Total Liabilities and Shareholders'
Equity
$
5,292,053
$
5,215,963
$
5,088,813
$
4,583,465
$
4,497,954
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited):
Three Months Ended
Twelve Months Ended
(Dollars in thousands, except per share
data)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2023
Dec. 31, 2022
INTEREST INCOME
Loans, including fees
$
61,309
$
58,792
$
52,094
$
45,865
$
42,492
$
218,060
$
150,256
Investment securities:
Taxable
4,063
4,106
3,962
3,874
3,784
16,005
11,952
Tax-exempt
378
382
391
389
390
1,540
1,497
Other interest-bearing balances
139
86
83
53
36
361
69
Federal funds sold
228
51
49
45
40
373
1,826
Total Interest Income
66,117
63,417
56,579
50,226
46,742
236,339
165,600
INTEREST EXPENSE
Deposits
25,808
23,559
17,927
12,001
6,995
79,295
14,144
Short-term borrowings
2,506
1,584
1,507
1,490
441
7,087
441
Long-term and subordinated debt
803
794
701
686
729
2,984
3,182
Total Interest Expense
29,117
25,937
20,135
14,177
8,165
89,366
17,767
Net Interest Income
37,000
37,480
36,444
36,049
38,577
146,973
147,833
PROVISION FOR CREDIT LOSSES
221
1,427
1,157
490
525
3,295
4,300
Net Interest Income After Provision for
Credit Losses
36,779
36,053
35,287
35,559
38,052
143,678
143,533
NONINTEREST INCOME
Fiduciary and wealth management
1,323
1,296
1,204
1,236
1,085
5,059
5,071
ATM debit card interchange
979
986
998
1,056
1,099
4,019
4,362
Service charges on deposits
485
509
514
435
461
1,943
2,078
Mortgage banking
300
382
287
384
237
1,353
1,607
Mortgage hedging
109
67
128
20
150
324
1,471
Net gain on sales of SBA loans
358
85
128
—
—
571
262
Earnings from cash surrender value of life
insurance
288
278
292
254
255
1,112
1,013
Other
1,275
1,743
1,669
940
3,427
5,627
7,793
Total Noninterest Income
5,117
5,346
5,220
4,325
6,714
20,008
23,657
NONINTEREST EXPENSE
Salaries and employee benefits
15,215
15,259
15,027
13,844
13,434
59,345
52,601
Software licensing and utilization
1,826
2,085
2,070
1,946
1,793
7,927
7,524
Occupancy, net
1,952
1,761
1,750
1,886
1,812
7,349
6,900
Equipment
1,330
1,292
1,248
1,251
1,249
5,121
4,493
Shares tax
255
808
751
899
160
2,713
2,786
Legal and professional fees
653
890
602
800
900
2,945
2,761
ATM/card processing
442
641
532
493
534
2,108
2,139
Intangible amortization
491
484
461
344
496
1,780
2,012
FDIC Assessment
730
1,746
684
340
243
3,500
1,594
(Gain) loss on sale or write-down of
foreclosed assets, net
—
(18
)
(126
)
—
(45
)
(144
)
(133
)
Merger and acquisition
—
352
4,992
224
294
5,544
294
Post-acquisition restructuring
—
—
2,952
—
—
2,952
329
Other
4,610
4,589
4,586
4,043
4,598
17,852
16,543
Total Noninterest Expense
27,504
29,889
35,529
26,070
25,468
118,992
99,843
INCOME BEFORE PROVISION FOR INCOME
TAXES
14,392
11,510
4,978
13,814
19,298
44,694
67,347
Provision for income taxes
2,294
2,274
142
2,587
3,579
7,297
12,541
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS
$
12,098
$
9,236
$
4,836
$
11,227
$
15,719
$
37,397
$
54,806
PER COMMON SHARE DATA:
Basic Earnings Per Common Share
$
0.73
$
0.56
$
0.29
$
0.71
$
0.99
$
2.29
$
3.44
Diluted Earnings Per Common Share
$
0.73
$
0.56
$
0.29
$
0.70
$
0.99
$
2.29
$
3.44
Cash Dividends Declared
$
0.20
$
0.20
$
0.20
$
0.20
$
0.20
$
0.80
$
0.80
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
December 31, 2023
September 30, 2023
December 31, 2022
(Dollars in thousands)
Average Balance
Interest(1)
Yield/
Rate
Average Balance
Interest(1)
Yield/
Rate
Average Balance
Interest(1)
Yield/
Rate
ASSETS:
Interest Bearing Balances
$
30,715
$
139
1.80
%
$
12,804
$
86
2.66
%
$
4,671
$
36
3.06
%
Investment Securities:
Taxable
530,099
3,199
2.39
541,403
3,846
2.82
561,119
3,733
2.64
Tax-Exempt
76,847
378
1.95
77,668
382
1.95
79,673
390
1.94
Total Securities
606,946
3,577
2.34
619,071
4,228
2.71
640,792
4,123
2.55
Federal Funds Sold
12,224
228
7.40
8,260
51
2.45
4,749
40
3.34
Loans, Net of Unearned Interest
4,201,092
61,309
5.79
4,053,514
58,792
5.75
3,395,308
42,492
4.97
Restricted Investment in Bank Stocks
13,754
864
24.92
10,968
260
9.40
6,694
51
3.02
Total Earning Assets
4,864,731
66,117
5.39
4,704,617
63,417
5.35
4,052,214
46,742
4.58
Cash and Due from Banks
38,370
77,122
45,385
Other Assets
323,281
324,364
192,969
Total Assets
$
5,226,382
$
5,106,103
$
4,290,568
LIABILITIES & SHAREHOLDERS'
EQUITY:
Interest-bearing Demand
$
938,246
$
4,087
1.73
%
$
960,052
$
3,899
1.61
%
$
1,057,649
$
2,051
0.77
%
Money Market
925,902
6,266
2.68
929,036
5,969
2.55
965,866
2,996
1.23
Savings
295,757
53
0.07
308,732
60
0.08
335,928
49
0.06
Time
1,405,927
15,403
4.35
1,308,945
13,631
4.13
527,708
1,899
1.43
Total Interest-bearing Deposits
3,565,832
25,809
2.87
3,506,765
23,559
2.67
2,887,151
6,995
0.96
Short term borrowings
149,218
2,506
6.66
64,282
1,584
9.78
47,262
441
3.70
Long-term debt
58,987
373
2.51
76,515
333
1.73
4,441
46
4.11
Subordinated debt and trust preferred
securities
46,425
429
3.67
46,377
461
3.94
64,673
683
4.19
Total Interest-bearing Liabilities
3,820,462
29,117
3.02
3,693,939
25,937
2.79
3,003,527
8,165
1.08
Noninterest-bearing Demand
836,733
854,302
840,136
Other Liabilities
31,968
28,795
31,781
Shareholders' Equity
537,219
529,067
505,769
Total Liabilities & Shareholders'
Equity
$
5,226,382
$
5,106,103
$
4,381,213
Net Interest Income
$
37,000
$
37,480
$
38,577
Taxable Equivalent Adjustment (1)
33
33
197
Net Interest Income (taxable equivalent
basis)
$
37,033
$
37,513
$
38,774
Total Yield on Earning Assets
5.39
%
5.35
%
4.58
%
Rate on Supporting Liabilities
3.02
2.79
1.08
Average Interest Spread
2.37
2.56
3.50
Net Interest Margin
3.02
3.16
3.80
(1)
Presented on a fully
taxable-equivalent basis using a 21% federal tax rate and statutory
interest expense disallowance.
ALLOWANCE FOR CREDIT LOSSES AND ASSET
QUALITY (Unaudited):
(Dollars in thousands)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Allowance for Credit Losses on
Loans:
Beginning balance
$
34,004
$
32,588
$
31,265
$
18,957
$
18,480
Impact of adopting CECL
—
—
—
11,931
—
Purchase credit deteriorated loans
—
—
336
—
—
Loans Charged off
Commercial real estate
—
—
—
(16
)
(7
)
Commercial and industrial
(19
)
—
(109
)
(111
)
—
Construction
—
—
—
—
—
Residential mortgage
(9
)
—
—
(4
)
(23
)
Consumer
(17
)
(32
)
(65
)
(19
)
(20
)
Total loans charged off
(45
)
(32
)
(174
)
(150
)
(50
)
Recoveries of loans previously charged
off
Commercial real estate
—
—
—
—
—
Commercial and industrial
—
—
—
—
—
Construction
—
—
—
—
—
Residential mortgage
—
7
—
30
—
Consumer
7
14
4
7
2
Total recoveries
7
21
4
37
2
Balance before provision
33,966
32,577
31,431
30,775
18,432
Provision for credit losses
221
1,427
1,157
490
525
Balance, end of quarter
$
34,187
$
34,004
$
32,588
$
31,265
$
18,957
Nonperforming Assets
Total nonperforming loans
14,216
13,458
15,846
13,909
8,585
Foreclosed real estate
293
905
489
248
43
Total nonperforming assets
14,509
14,363
16,335
14,157
8,628
Accruing loans 90 days or more past
due
—
12
9
7
654
Total risk elements
$
14,509
$
14,375
$
16,344
$
14,164
$
9,282
PPP Summary
(Dollars in thousands)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
PPP loans, net of deferred fees
$
1,426
$
1,547
$
1,633
$
1,752
$
2,600
PPP Fees recognized
$
3
$
3
$
3
$
5
$
29
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
Explanatory note: This press
release contains financial information determined by methods other
than in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"). Mid Penn’s management uses these non-GAAP
financial measures in their analysis of Mid Penn’s performance. For
tangible book value, the most directly comparable financial measure
calculated in accordance with GAAP is book value. We believe that
this measure is important to many investors in the marketplace who
are interested in changes from period to period in book value per
common share exclusive of changes in intangible assets. Goodwill
and other intangible assets have the effect of increasing total
book value while not increasing tangible book value. Income tax
effects of non-GAAP adjustments are calculated using the applicable
statutory tax rate for the jurisdictions in which the charges
(benefits) are incurred, while taking into consideration any
valuation allowances or non-deductible portions of the non-GAAP
adjustments. Non-PPP core banking loans are meaningful to investors
as they are indicative of portfolio loans and related growth from
traditional bank activities and excludes short-term or nonrecurring
loans from special programs like the PPP. Adjusted earnings per
common share excludes from income available to common shareholders
certain expenses related to significant non-core activities,
including merger-related expenses, net of income taxes. For return
on average tangible common equity, the most directly comparable
financial measure calculated in accordance with GAAP is return on
average equity. The efficiency ratio is often used by management to
measure its noninterest expense as a percentage of its revenue.
This non-GAAP disclosure has limitations as an analytical tool,
should not be viewed as a substitute for financial measures
determined in accordance with GAAP, and should not be considered in
isolation or as a substitute for analysis of Mid Penn’s results and
financial condition as reported under GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies. Management believes that this non-GAAP
supplemental information will be helpful in understanding Mid
Penn’s ongoing operating results. This supplemental presentation
should not be construed as an inference that Mid Penn’s future
results will be unaffected by similar adjustments to be determined
in accordance with GAAP. The reconciliation of the non-GAAP to
comparable GAAP financial measures can be found in the tables
below.
Tangible Book Value Per
Share
(Dollars in thousands, except per share
data)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Shareholders' Equity
$
543,611
$
528,711
$
525,888
$
510,793
$
512,099
Less: Goodwill
127,054
129,752
129,403
114,231
114,231
Less: Core Deposit and Other
Intangibles
6,479
6,970
7,453
6,916
7,260
Tangible Equity
$
410,078
$
391,989
$
389,032
$
389,646
$
390,608
Common Shares Outstanding
16,573,707
16,580,347
16,567,578
15,890,011
15,886,143
Tangible Book Value per Share
$
24.74
$
23.64
$
23.48
$
24.52
$
24.59
Non-PPP Core Banking
Loans
(Dollars in thousands)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Loans, net of unearned interest
$
4,252,792
$
4,145,657
$
4,034,510
$
3,611,347
$
3,514,119
Less: PPP loans, net of deferred fees
1,426
1,547
1,633
1,752
2,600
Non-PPP core banking loans
$
4,251,366
$
4,144,110
$
4,032,877
$
3,609,595
$
3,511,519
Adjusted Earnings Per Common Share
Excluding Non-Recurring Expenses
Three Months Ended
(Dollars in thousands, except per share
data)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net Income Available to Common
Shareholders
$
12,098
$
9,236
$
4,836
$
11,227
$
15,719
Plus: Merger and Acquisition Expenses
—
352
7,944
224
294
Less: Tax Effect of Merger and Acquisition
Expenses
—
74
1,668
47
62
Net Income Excluding Non-Recurring
Expenses
$
12,098
$
9,514
$
11,112
$
11,404
$
15,951
Weighted Average Shares Outstanding
16,574,199
16,571,825
16,235,106
15,886,186
15,883,003
Adjusted Earnings Per Common Share
Excluding Non-Recurring Expenses
$
0.73
$
0.57
$
0.68
$
0.72
$
0.99
Return on Average Tangible Common
Equity
Three Months Ended
(Dollars in thousands)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net income available to common
shareholders
$
12,098
$
9,236
$
4,836
$
11,227
$
15,719
Plus: Intangible amortization, net of
tax
388
382
364
272
392
$
12,486
$
9,618
$
5,200
$
11,499
$
16,111
Average shareholders' equity
$
537,219
$
529,067
$
504,535
$
510,857
$
505,769
Less: Average goodwill
129,869
129,428
120,284
114,231
113,879
Less: Average core deposit and other
intangibles
6,716
7,210
7,016
7,129
6,966
Average tangible shareholders' equity
$
400,634
$
392,429
$
377,235
$
389,497
$
384,924
Return on average tangible common
equity
12.36
%
9.72
%
5.53
%
11.97
%
16.61
%
Efficiency Ratio
Three Months Ended
(Dollars in thousands)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Noninterest expense
$
27,504
$
29,889
$
35,529
$
26,070
$
25,468
Less: Merger and acquisition expenses
—
352
7,944
224
294
Less: Intangible amortization
491
484
461
344
496
Less: (Gain) loss on sale or write-down of
foreclosed assets, net
—
(18
)
(126
)
—
(45
)
Efficiency ratio numerator
$
27,013
$
29,071
$
27,250
$
25,502
$
24,723
Net interest income
37,000
37,480
36,444
36,049
38,577
Noninterest income
5,117
5,346
5,220
4,325
6,714
Efficiency ratio denominator
$
42,117
$
42,826
$
41,664
$
40,374
$
45,291
Efficiency ratio
64.14
%
67.88
%
65.40
%
63.16
%
54.59
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125029097/en/
Mid Penn Bancorp, Inc. 1-866-642-7736 Rory G. Ritrievi Chair,
President & Chief Executive Officer Justin T. Webb Chief
Financial Officer
Mid Penn Bancorp (NASDAQ:MPB)
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