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

    Source: Nasdaq GlobeNewswire / 25 Oct 2023 16:15:01   America/New_York

    HARRISBURG, Pa., Oct. 25, 2023 (GLOBE NEWSWIRE) -- October 25, 2023 – Harrisburg, PA – 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, 2023, of $9.2 million, or $0.56 per diluted common share.

    Key Highlights of the Third Quarter of 2023

    • Organic loan growth for the third quarter of 2023 was $111.1 million, or 10.9% (annualized), from the second quarter of 2023.
    • Organic deposit growth for the quarter ended September 30, 2023 was $94.9 million, or 8.8% (annualized), from the second quarter of 2023.
    • Credit quality strengthened during the third quarter of 2023 with nonperforming assets declining $1.6 million from June 30, 2023.

    “The third quarter of 2023 was a challenging one for Mid Penn, mostly due to external forces beyond our control. Chief among them was an inverted yield curve throughout the quarter that had our base borrowing rate, the effective funds rate, higher than our base lending rate, the 5-year Treasury. As a consequence, maintaining a respectable net interest margin was extremely difficult, as evidenced by additional compression in that metric,” Chair, President, and CEO Rory G. Ritrievi said.

    Ritrievi added, “The residential mortgage business, a significant portion of our noninterest revenues, continues to be impacted by elevated rates, which have dampened productivity across the country. Our ongoing response to these pressures is to find expense cuts throughout the company that will help us preserve net income for not only the fourth quarter of 2023 but also fiscal year 2024. We take these measures while also focusing on the positive aspects of the third quarter, which were: significant organic growth on both sides of the balance sheet, a continuous improvement in our asset quality metrics, and continued growth in shareholder equity.”

    For the third 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 October 25, 2023, payable on November 27, 2023, to shareholders of record as of November 10, 2023.

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

    Net Interest Income

    For the three months ended September 30, 2023, net interest income was $37.5 million compared to net interest income of $36.4 million for the three months ended June 30, 2023, and $39.4 million for the three months ended September 30, 2022. The tax-equivalent net interest margin for the three months ended September 30, 2023, was 3.16% compared to 3.29% for the second quarter of 2023, and 3.92% for the third quarter of 2022, a 13 and 76 basis point ("bp") decrease, respectively, compared to the prior quarter and the same period in 2022.

    The yield on interest-earning assets increased to 5.35% for the quarter ended September 30, 2023, from 5.10% for the quarter ended June 30, 2023, and 4.28% for the quarter ended September 30, 2022. These increases were due to assets continuing to reprice at higher rates during the third quarter of 2023. Increased yields on interest-earning assets were more than offset by increases in funding costs for the third quarter of 2023 with overall cost of interest-bearing liabilities increasing to 2.79% during the third quarter of 2023, compared to 2.35% at June 30, 2023, and 0.48% at September 30, 2022.

    For the nine months ended September 30, 2023, net interest income increased $700 thousand to $110.0 million compared to net interest income of $109.3 million for the same period of 2022.

    Average Balances

    Average loans increased $244.8 million to $4.1 billion at September 30, 2023, compared to $3.8 billion at June 30, 2023, and $3.2 billion at September 30, 2022. Average deposits were $4.4 billion for the third quarter of 2023, reflecting an increase of $303.5 million, or 7.5%, compared to total average deposits in the second quarter of 2023, and $634.4 million, or 17.0%, compared to total average deposits of $3.7 billion for the third quarter of 2022. The average cost of deposits was 2.14% for the third quarter of 2023, representing a 37 bp and 184 bp increase from the second quarter of 2023 and the third quarter of 2022, respectively. We continue to face headwinds with respect to deposit pricing as customers in many product types have become increasingly rate sensitive. Our primary focus with respect to deposit strategy is stability, ensuring that our rates are competitive and our product mix satisfies the needs of our customers. Additionally, Mid Penn also maintains interest rate swaps 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 22.8% of total deposits at March 31, 2023, and increased to 31.0% at September 30, 2023. The mix of non-interest-bearing deposits declined during the quarter, representing approximately 18.4% of total deposits at September 30, 2023 compared to 19.4% at June 30, 2023 and 20.6% at both March 31, 2023. The average duration of the non-hedged time deposit portfolio is 12 months at September 30, 2023. We believe this positions us well to reprice the portfolio at lower rates in the future.

    Asset Quality

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

    The provision for credit losses on loans was $1.4 million for the three months ended September 30, 2023, an increase of $270 thousand compared to the provision for credit losses of $1.2 million for the three months ended June 30, 2023. The provision for credit losses on loans was $3.1 million for the nine months ended September 30, 2023, a decrease of $701 thousand compared to the provision for credit losses of $3.8 million for the nine months ended September 30, 2022. The ratio of allowance for credit losses to total loans increased to 0.82% at September 30, 2023, from 0.81% at June 30, 2023, primarily due to lower nonperforming individually-evaluated loans.

    Total nonperforming assets were $14.7 million at September 30, 2023, compared to nonperforming assets of $16.3 million and $7.7 million at June 30, 2023, and September 30, 2022, respectively. The decrease during the third quarter of 2023 primarily related to payoffs on nonaccrual loans. Delinquency as a percentage of total loans was 0.30% at September 30, 2023.

    Capital

    Shareholders’ equity increased $16.6 million, or 3.24%, from $512.1 million as of December 31, 2022, to $528.7 million as of September 30, 2023. The increase was primarily due to the acquisition of Brunswick Bancorp in the second quarter of 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 September 30, 2023. Additionally, Mid Penn declared $3.2 million in dividends during the third 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 no share repurchases during the three months ended September 30, 2023. During the nine months ended September 30, 2023, Mid Penn repurchased 204,379 shares of common stock at an average price of $22.41. As of September 30, 2023, Mid Penn repurchased 412,722 shares of common stock at an average price of $22.92 per share under the Program. The Program had $5.5 million remaining available for repurchase as of September 30, 2023.

    Noninterest Income

    For the three months ended September 30, 2023, noninterest income totaled $5.3 million, which was consistent with noninterest income of $5.2 million for the second quarter of 2023.

    For the nine months ended September 30, 2023, noninterest income totaled $14.9 million, a decrease of $2.0 million, compared to noninterest income of $16.9 million for the nine months ended September 30, 2022. The decrease in noninterest income is primarily due to mortgage banking hedging activities. Given the rising interest rate environment and lower demand for mortgages, hedging the mortgage pipeline becomes more difficult and adds volatility to earnings.

    Noninterest Expense

    Noninterest expense totaled $29.9 million, a decrease of $5.6 million, or 15.8%, for the three months ended September 30, 2023, compared to noninterest expense of $35.5 million for the second quarter of 2023. Noninterest expense for the three months ended June 30, 2023, included $7.9 million of merger-related expenses, which is the primary driver of the decrease. Excluding merger related expenses, overall noninterest expense remained relatively flat for the third quarter of 2023 compared to the second quarter of 2023. For the nine months ended September 30, 2023, noninterest expense totaled $91.5 million, an increase of $17.1 million, or 23.0%, compared to noninterest expense of $74.4 million for the nine months ended September 30, 2022. Noninterest expense for the nine months ended September 30, 2023, includes $8.5 million of merger-related expenses.

    The efficiency ratio(1) was 67.9% in the third quarter of 2023, compared to 65.4% in the second quarter of 2023, and 53.5% in the third quarter of 2022. Mid Penn is currently evaluating 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 the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in legacy Mid Penn and Brunswick markets; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the integration of Mid Penn and Brunswick successfully; the dilution caused by Mid Penn’s issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Mid Penn.

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

    SUMMARY FINANCIAL HIGHLIGHTS (Unaudited):

    (Dollars in thousands, except per share data)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
    Ending Balances:         
    Investment securities$620,038  $634,038  $633,831  $637,802  $644,765 
    Loans, net of unearned interest 4,111,653   4,001,922   3,580,082   3,495,162   3,303,977 
    Total assets 5,215,963   5,088,813   4,583,465   4,497,954   4,333,903 
    Total deposits 4,381,616   4,286,686   3,878,081   3,778,331   3,729,596 
    Shareholders' equity 528,711   525,888   510,793   512,099   499,105 
    Average Balances:         
    Investment securities 619,071   630,750   636,151   640,792   626,447 
    Loans, net of unearned interest 4,053,514   3,808,717   3,555,375   3,395,308   3,237,587 
    Total assets 5,106,103   4,827,786   4,520,869   4,381,213   4,339,783 
    Total deposits 4,361,067   4,057,605   3,782,990   3,727,287   3,726,658 
    Shareholders' equity 529,067   504,535   510,857   505,769   502,082 
              
     Three Months Ended
    Income Statement:Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
    Net interest income$37,480  $36,444  $36,049  $38,577  $39,409 
    Provision for credit losses 1,427   1,157   490   525   1,550 
    Noninterest income 5,346   5,220   4,325   6,714   5,963 
    Noninterest expense 29,889   35,529   26,070   25,468   24,715 
    Income before provision for income taxes 11,510   4,978   13,814   19,298   19,107 
    Provision for income taxes 2,274   142   2,587   3,579   3,626 
    Net income available to shareholders 9,236   4,836   11,227   15,719   15,481 
    Net income excluding non-recurring expenses(1) 9,514   11,112   11,404   15,951   15,481 
              
    Per Share:         
    Basic earnings per common share$0.56  $0.29  $0.71  $0.99  $0.97 
    Diluted earnings per common share 0.56   0.29   0.70   0.99   0.97 
    Cash dividends declared 0.20   0.20   0.20   0.20   0.20 
    Book value per common share 31.89   31.74   32.15   32.24   31.42 
    Tangible book value per common share(1) 23.63   23.48   24.52   24.59   23.80 
              
    Asset Quality:         
    Net charge-offs (recoveries) to average loans (annualized) 0.001%  0.018%  0.013%  0.006%  (0.007%)
    Non-performing loans to total loans 0.33   0.39   0.38   0.25   0.23 
    Non-performing asset to total loans and other real estate 0.36   0.40   0.39   0.25   0.23 
    Non-performing asset to total assets 0.28   0.32   0.31   0.21   0.18 
    ACL on loans to total loans 0.82   0.81   0.87   0.54   0.56 
    ACL on loans to nonperforming loans 245.91   205.65   225.71   220.82   242.23 
              
    Profitability:         
    Return on average assets 0.72%  0.40%  1.01%  1.42%  1.42%
    Return on average equity 6.93   3.84   8.91   12.33   12.23 
    Return on average tangible common equity(1) 9.72   5.53   11.97   16.61   16.55 
    Net interest margin 3.16   3.29   3.49   3.80   3.92 
    Efficiency ratio(1) 67.88   65.40   63.16   54.59   53.46 
              
    Capital Ratios:         
    Tier 1 Capital (to Average Assets)(2) 8.4%  9.6%  9.2%  10.7%  9.6%
    Common Tier 1 Capital (to Risk Weighted Assets)(2) 9.7   10.7   10.8   12.5   11.4 
    Tier 1 Capital (to Risk Weighted Assets)(2) 9.7   10.7   10.8   12.5   11.7 
    Total Capital (to Risk Weighted Assets)(2) 11.7   11.5   13.1   14.5   13.8 

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

    CONSOLIDATED BALANCE SHEETS (Unaudited):

    (In thousands, except share data)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
    ASSETS         
    Cash and due from banks$52,509  $70,832  $51,158  $53,368  $76,018 
    Interest-bearing balances with other financial institutions 12,739   13,332   4,996   4,405   4,520 
    Federal funds sold 52,851   9,711   6,017   3,108   14,140 
    Total cash and cash equivalents 118,099   93,875   62,171   60,881   94,678 
    Investment Securities:         
    Held to maturity, at amortized cost 401,561   404,831   396,784   399,494   402,142 
    Available for sale, at fair value 218,064   228,774   236,609   237,878   242,195 
    Equity securities available for sale, at fair value 413   433   438   430   428 
    Loans held for sale 4,270   7,258   2,677   2,475   5,997 
    Loans, net of unearned interest 4,145,657   4,034,510   3,611,347   3,514,119   3,322,457 
    Less: Allowance for credit losses (34,004)  (32,588)  (31,265)  (18,957)  (18,480)
    Net loans 4,111,653   4,001,922   3,580,082   3,495,162   3,303,977 
              
    Premises and equipment, net 38,849   39,230   34,191   34,471   33,854 
    Operating lease right of use asset 8,693   9,106   8,414   8,798   8,352 
    Finance lease right of use asset 2,773   2,817   2,862   2,907   2,952 
    Cash surrender value of life insurance 54,209   53,931   50,928   50,674   50,419 
    Restricted investment in bank stocks 13,554   11,646   8,041   8,315   4,595 
    Accrued interest receivable 24,230   19,626   19,205   18,405   15,861 
    Deferred income taxes 25,509   24,309   15,548   13,674   16,093 
    Goodwill 129,897   129,403   114,231   114,231   113,871 
    Core deposit and other intangibles, net 6,970   7,453   6,916   7,260   7,215 
    Foreclosed assets held for sale 905   489   248   43   49 
    Other assets 56,314   53,710   44,120   42,856   31,225 
    Total Assets$5,215,963  $5,088,813  $4,583,465  $4,497,954  $4,333,903 
              
    LIABILITIES & SHAREHOLDERS’ EQUITY         
    Deposits:         
    Noninterest-bearing demand$804,785  $830,479  $797,038  $793,939  $863,037 
    Interest-bearing transaction accounts 2,217,885   2,180,312   2,197,216   2,325,847   2,414,272 
    Time 1,358,946   1,275,895   883,827   658,545   452,287 
    Total Deposits 4,381,616   4,286,686   3,878,081   3,778,331   3,729,596 
              
    Short-term borrowings 139,000   112,442   88,000   102,647   — 
    Long-term debt 58,992   58,982   4,316   4,409   4,501 
    Subordinated debt and trust preferred securities 46,501   46,648   56,794   56,941   66,357 
    Operating lease liability 9,097   9,894   9,270   9,725   10,261 
    Accrued interest payable 14,657   11,115   5,809   2,303   1,841 
    Other liabilities 37,389   37,158   30,402   31,499   22,242 
    Total Liabilities 4,687,252   4,562,925   4,072,672   3,985,855   3,834,798 
              
    Shareholders' Equity:         
    Common stock, par value $1.00 per share; 40.0 million shares authorized 16,993   16,980   16,098   16,094   16,091 
    Additional paid-in capital 405,341   404,902   387,332   386,987   386,452 
    Retained earnings 137,199   131,271   129,617   133,114   120,572 
    Accumulated other comprehensive loss (21,362)  (17,805)  (17,374)  (19,216)  (19,130)
    Treasury stock (9,460)  (9,460)  (4,880)  (4,880)  (4,880)
    Total Shareholders’ Equity 528,711   525,888   510,793   512,099   499,105 
    Total Liabilities and Shareholders' Equity$5,215,963  $5,088,813  $4,583,465  $4,497,954  $4,333,903 

    CONSOLIDATED STATEMENTS OF INCOME (Unaudited):

     Three Months Ended Nine Months Ended
    (Dollars in thousands, except per share data)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022    		 Sep. 30,
    2023    		 Sep. 30,
    2022
    INTEREST INCOME             
    Loans, including fees$58,792  $52,094  $45,865 $42,492  $38,484  $156,751  $107,764 
    Investment securities:             
    Taxable 4,106   3,962   3,874  3,784   3,382   11,942   8,168 
    Tax-exempt 382   391   389  390   392   1,162   1,107 
    Other interest-bearing balances 86   83   53  36   12   222   33 
    Federal funds sold 51   49   45  40   736   145   1,786 
    Total Interest Income 63,417   56,579   50,226  46,742   43,006   170,222   118,858 
    INTEREST EXPENSE             
    Deposits 23,559   17,927   12,001  6,995   2,836   53,487   7,149 
    Short-term borrowings 1,584   1,507   1,490  441   —   4,581   — 
    Long-term and subordinated debt 794   701   686  729   761   2,181   2,453 
    Total Interest Expense 25,937   20,135   14,177  8,165   3,597   60,249   9,602 
    Net Interest Income 37,480   36,444   36,049  38,577   39,409   109,973   109,256 
    PROVISION FOR CREDIT LOSSES 1,427   1,157   490  525   1,550   3,074   3,775 
    Net Interest Income After Provision for Credit Losses 36,053   35,287   35,559  38,052   37,859   106,899   105,481 
    NONINTEREST INCOME             
    Fiduciary and wealth management 1,296   1,204   1,236  1,085   1,729   3,736   3,986 
    ATM debit card interchange 986   998   1,056  1,099   1,078   3,040   3,263 
    Service charges on deposits 509   514   435  461   483   1,458   1,617 
    Mortgage banking 382   287   384  237   536   1,053   1,370 
    Mortgage hedging 67   128   20  150   217   215   1,321 
    Net gain on sales of SBA loans 85   128   —  —   152   213   262 
    Earnings from cash surrender value of life insurance 278   292   254  255   250   824   758 
    Other 1,743   1,669   940  3,427   1,518   4,352   4,366 
    Total Noninterest Income 5,346   5,220   4,325  6,714   5,963   14,891   16,943 
    NONINTEREST EXPENSE             
    Salaries and employee benefits 15,259   15,027   13,844  13,434   13,583   44,130   39,167 
    Software licensing and utilization 2,085   2,070   1,946  1,793   1,804   6,101   5,731 
    Occupancy, net 1,761   1,750   1,886  1,812   1,634   5,397   5,088 
    Equipment 1,292   1,248   1,251  1,249   1,121   3,791   3,244 
    Shares tax 808   751   899  160   920   2,458   2,626 
    Legal and professional fees 890   602   800  900   528   2,292   1,861 
    ATM/card processing 641   532   493  534   518   1,666   1,605 
    Intangible amortization 484   461   344  496   514   1,289   1,516 
    FDIC Assessment 1,746   684   340  243   254   2,770   1,351 
    (Gain) loss on sale or write-down of foreclosed assets, net (18)  (126)  —  (45)  (57)  (144)  (88)
    Merger and acquisition 352   4,992   224  294   —   5,568   — 
    Post-acquisition restructuring —   2,952   —  —   —   2,952   329 
    Other 4,589   4,586   4,043  4,598   3,896   13,218   11,945 
    Total Noninterest Expense 29,889   35,529   26,070  25,468   24,715   91,488   74,375 
    INCOME BEFORE PROVISION FOR INCOME TAXES 11,510   4,978   13,814  19,298   19,107   30,302   48,049 
    Provision for income taxes 2,274   142   2,587  3,579   3,626   5,003   8,962 
    NET INCOME AVAILABLE TO COMMON SHAREHOLDERS$9,236  $4,836  $11,227 $15,719  $15,481  $25,299  $39,087 
                  
    PER COMMON SHARE DATA:             
    Basic Earnings Per Common Share$0.56  $0.29  $0.71 $0.99  $0.97  $1.56  $2.45 
    Diluted Earnings Per Common Share$0.56  $0.29  $0.70 $0.99  $0.97  $1.56  $2.45 
    Cash Dividends Declared$0.20  $0.20  $0.20 $0.20  $0.20  $0.60  $0.60 

    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, 2023 June 30, 2023 September 30, 2022
    (Dollars in thousands)Average
    Balance    		 Interest(1) Yield/
    Rate    		 Average
    Balance    		 Interest(1) Yield/
    Rate    		 Average
    Balance    		 Interest(1) Yield/
    Rate
    ASSETS:                 
    Interest Bearing Balances$12,804 $86 2.66% $7,777 $83  4.28% $5,583 $12  0.85%
    Investment Securities:                 
    Taxable 541,403  3,846 2.82   551,832  3,783  2.75   546,439  3,369  2.45 
    Tax-Exempt 77,668  382 1.95   78,918  495  2.52   80,008  496  2.46 
    Total Securities 619,071  4,228 2.71   630,750  4,278  2.72   626,447  3,865  2.45 
                      
    Federal Funds Sold 8,260  51 2.45   6,035  49  3.26   131,089  736  2.23 
    Loans, Net of Unearned Interest 4,053,514  58,792 5.75   3,808,717  52,192  5.50   3,237,587  38,573  4.73 
    Restricted Investment in Bank Stocks 10,968  260 9.40   10,177  179  7.05   4,322  13  1.19 
    Total Earning Assets 4,704,617  63,417 5.35   4,463,456  56,781  5.10   4,005,028  43,199  4.28 
                      
    Cash and Due from Banks 77,122      70,378      69,751    
    Other Assets 324,364      293,953      265,004    
    Total Assets$5,106,103     $4,827,787     $4,339,783    
                      
    LIABILITIES & SHAREHOLDERS' EQUITY:                 
    Interest-bearing Demand$960,052 $3,899 1.61% $936,687 $3,216  1.38% $1,072,496 $873  0.32%
    Money Market 929,036  5,969 2.55   929,774  5,104  2.20   994,446  1,097  0.44 
    Savings 308,732  60 0.08   319,728  64  0.08   352,024  43  0.05 
    Time 1,308,945  13,631 4.13   1,061,276  9,543  3.61   464,273  823  0.70 
    Total Interest-bearing Deposits 3,506,765  23,559 2.67   3,247,465  17,927  2.21   2,883,239  2,836  0.39 
                      
    Short term borrowings 64,282  1,585 9.78   94,067  1,507  6.43   —  —  — 
    Long-term debt 76,515  332 1.72   54,347  194  1.43   4,537  150  13.12 
    Subordinated debt and trust preferred securities 46,377  461 3.94   47,782  507  4.26   69,523  611  3.49 
    Total Interest-bearing Liabilities 3,693,939  25,937 2.79   3,443,661  20,135  2.35   2,957,299  3,597  0.48 
                      
    Noninterest-bearing Demand 854,302      810,140      843,419    
    Other Liabilities 28,795      69,451      36,983    
    Shareholders' Equity 529,067      504,535      502,082    
    Total Liabilities & Shareholders' Equity$5,106,103     $4,827,787     $4,339,783    
                      
    Net Interest Income (taxable equivalent basis)  $37,480     $36,646      $39,602   
    Taxable Equivalent Adjustment   80      (202)      (193)  
    Net Interest Income  $37,560     $36,444      $39,409   
                      
    Total Yield on Earning Assets    5.35%     5.10%     4.28%
    Rate on Supporting Liabilities    2.79      2.35      0.48 
    Average Interest Spread    2.56      2.76      3.80 
    Net Interest Margin    3.16      3.29      3.92 

    (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)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
    Allowance for Credit Losses on Loans:         
    Beginning balance$32,588  $31,265  $18,957  $18,480  $16,876 
              
    Impact of adopting CECL —   —   11,931   —   — 
    Purchase credit deteriorated loans —   336   —   —   — 
              
    Loans Charged off         
    Commercial real estate —   —   (16)  (7)  — 
    Commercial and industrial —   (109)  (111)  —   (1)
    Construction —   —   —   —   — 
    Residential mortgage —   —   (4)  (23)  (3)
    Consumer (32)  (65)  (19)  (20)  (11)
    Total loans charged off (32)  (174)  (150)  (50)  (15)
    Recoveries of loans previously charged off         
    Commercial real estate —   —   —   —   63 
    Commercial and industrial —   —   —   —   — 
    Construction —   —   —   —   — 
    Residential mortgage 7   —   30   —   — 
    Consumer 14   4   7   2   6 
    Total recoveries 21   4   37   2   69 
    Balance before provision 32,577   31,431   30,775   18,432   16,930 
    Provision for credit losses 1,427   1,157   490   525   1,550 
    Balance, end of quarter$34,004  $32,588  $31,265  $18,957  $18,480 
              
    Nonperforming Assets         
    Total nonperforming loans 13,828   15,846   13,909   8,585   7,629 
              
    Foreclosed real estate 905   489   248   43   49 
    Total nonperforming assets 14,733   16,335   14,157   8,628   7,678 
              
    Accruing loans 90 days or more past due 12   9   7   654   633 
    Total risk elements$14,745  $16,344  $14,164  $9,282  $8,311 

    PPP Summary

    (Dollars in thousands)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    PPP loans, net of deferred fees$1,547 $1,633 $1,752 $2,600 $2,800
              
    PPP Fees recognized$3 $3 $5 $29 $99

    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)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    Shareholders' Equity$528,711 $525,888 $510,793 $512,099 $499,105
    Less: Goodwill 129,897  129,403  114,231  114,231  113,871
    Less: Core Deposit and Other Intangibles 6,970  7,453  6,916  7,260  7,215
    Tangible Equity$391,844 $389,032 $389,646 $390,608 $378,019
              
    Common Shares Outstanding 16,580,347  16,567,578  15,890,011  15,886,143  15,882,853
              
    Tangible Book Value per Share$23.63 $23.48 $24.52 $24.59 $23.80

    Non-PPP Core Banking Loans

    (Dollars in thousands)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    Loans, net of unearned interest$4,145,657 $4,034,510 $3,611,347 $3,514,119 $3,322,457
    Less: PPP loans, net of deferred fees 1,547  1,633  1,752  2,600  2,800
    Non-PPP core banking loans$4,144,110 $4,032,877 $3,609,595 $3,511,519 $3,319,657

    Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses

     Three Months Ended
    (Dollars in thousands, except per share data)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    Net Income Available to Common Shareholders$9,236 $4,836 $11,227 $15,719 $15,481
    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$9,514 $11,112 $11,404 $15,951 $15,481
              
    Weighted Average Shares Outstanding 16,571,825  16,235,106  15,886,186  15,883,003  15,877,592
              
    Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses$0.57 $0.68 $0.72 $0.99 $0.97

    Return on Average Tangible Common Equity

     Three Months Ended
    (Dollars in thousands)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    Net income available to common shareholders$9,236  $4,836  $11,227  $15,719  $15,481 
    Plus: Intangible amortization, net of tax 382   364   272   392   406 
     $9,618  $5,200  $11,499  $16,111  $15,887 
              
    Average shareholders' equity$529,067  $504,535  $510,857  $505,769  $502,082 
    Less: Average goodwill 129,428   120,284   114,231   113,879   113,835 
    Less: Average core deposit and other intangibles 7,210   7,016   7,129   6,966   7,465 
    Average tangible shareholders' equity$392,429  $377,235  $389,497  $384,924  $380,782 
              
    Return on average tangible common equity 9.72%  5.53%  11.97%  16.61%  16.55%

    Efficiency Ratio

     Three Months Ended
    (Dollars in thousands)Sep. 30,
    2023    		 Jun. 30,
    2023    		 Mar. 31,
    2023    		 Dec. 31,
    2022    		 Sep. 30,
    2022
              
    Noninterest expense$29,889  $35,529  $26,070  $25,468  $24,715 
    Less: Merger and acquisition expenses 352   7,944   224   294   — 
    Less: Intangible amortization 484   461   344   496   514 
    Less: (Gain) loss on sale or write-down of foreclosed assets, net (18)  (126)  —   (45)  (57)
    Efficiency ratio numerator$29,071  $27,250  $25,502  $24,723  $24,258 
              
    Net interest income 37,480   36,444   36,049   38,577   39,409 
    Noninterest income 5,346   5,220   4,325   6,714   5,963 
    Efficiency ratio denominator$42,826  $41,664  $40,374  $45,291  $45,372 
              
    Efficiency ratio 67.88%  65.40%  63.16%  54.59%  53.46%


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

CONTACTS

Rory G. Ritrievi
Chair, President & Chief Executive Officer

Allison S. Johnson
Chief Financial Officer

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