Mid Penn Bancorp, Inc. Reports Fourth Quarter Earnings and Declares Quarterly Dividend
Mid Penn Bancorp, Inc. reported a 31.0% increase in net income available to common shareholders for the fourth quarter of 2023, with a return on average assets of 0.92% and return on average equity of 8.93%. Loan growth was $107.1 million, totaling $738.7 million for the year. Total interest income increased by 4.26%, while deposits decreased by $35.4 million. Noninterest income totaled $5.1 million, and noninterest expense decreased by $2.4 million. Shareholders' equity increased by 6.15%, and Mid Penn declared a cash dividend of $0.20 per share.
Positive
31.0% increase in net income available to common shareholders
Return on average assets of 0.92% and return on average equity of 8.93%
Loan growth of $107.1 million, totaling $738.7 million for the year
Total interest income increased by 4.26%
Noninterest expense decreased by $2.4 million
Shareholders' equity increased by 6.15%
Cash dividend of $0.20 per share declared
The reported earnings of Mid Penn Bancorp, Inc. reflect a significant year-over-year increase in net income available to common shareholders, rising by 31.0% in the fourth quarter of 2023. This growth, coupled with an increase in loan volume and a stable deposit base, despite a slight decline, may indicate the company's resilience in a challenging economic environment characterized by an inverted yield curve and robust competition for core deposits. The solid return on average assets (0.92%) and equity (8.93%) surpasses the previous quarter's figures, suggesting efficient asset utilization and shareholder value creation amidst rising interest rates.
However, the increase in total interest expense by 12.26% and the decrease in noninterest income highlight the pressure on the bank's net interest margin, which has contracted by 78 basis points year-over-year. Investors should monitor how the bank manages its interest rate risk, especially given the adoption of CECL accounting standards and its impact on provisioning for credit losses. The bank's strategic focus on expense control and measured growth could be a prudent approach amidst the anticipated difficulties in the financial sector for 2024.
Mid Penn's strategic measures, such as slowing down organic loan growth and cutting operating expenses, have led to a decrease in total noninterest expense, which indicates a focus on improving operational efficiency. The bank's efficiency ratio improvement is a positive sign for investors, as it demonstrates cost control in relation to revenue generation. However, the banking industry is facing headwinds from the inverted yield curve and heightened competition for deposits, which could challenge profitability.
Investors should also note the bank's capital management strategies, including the declaration of dividends and the reauthorization of its stock repurchase program. These actions suggest confidence in the bank's financial stability and a commitment to returning value to shareholders. The bank's capital ratios exceed regulatory minimums, reinforcing its position as 'well-capitalized' and potentially providing a cushion against economic downturns.
The reported financials of Mid Penn Bancorp, Inc. occur within the context of a broader economic environment marked by rising interest rates and inflationary pressures. The bank's performance must be evaluated against these macroeconomic factors, as they directly influence interest margins and the cost of funding. The inverted yield curve mentioned by the CEO reflects the broader market's expectation of future economic contraction, which could affect the bank's interest income and loan growth prospects.
Furthermore, the bank's focus on maintaining a stable deposit base, while also navigating the competitive landscape for deposits, reflects a strategic balancing act in an environment where deposit costs are likely to increase. The shift in deposit mix towards time deposits, driven by customer behavior in response to higher interest rates, will need to be managed carefully to sustain the bank's liquidity without excessively increasing the cost of funds.
01/26/2024 - 09:28 AM
HARRISBURG, Pa. --(BUSINESS WIRE)--
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
Source: Mid Penn Bancorp
What is the net income available to common shareholders for the fourth quarter of 2023?
The net income available to common shareholders for the fourth quarter of 2023 was $12.1 million, or $0.73 per diluted common share.
What was the percentage increase in net income available to common shareholders for the fourth quarter of 2023?
There was a 31.0% increase in net income available to common shareholders for the fourth quarter of 2023.
What were the return on average assets and return on average equity for the fourth quarter of 2023?
The return on average assets was 0.92% and return on average equity was 8.93% for the fourth quarter of 2023.
How much was the loan growth for the fourth quarter of 2023?
Loan growth for the fourth quarter of 2023 was $107.1 million, totaling $738.7 million for the year.
What was the total interest income for the quarter ended December 31, 2023?
Total interest income increased by 4.26% to $66.1 million for the quarter ended December 31, 2023.
How much was the decrease in deposits for the quarter ended December 31, 2023?
Deposits decreased by $35.4 million, or 3.2% (annualized), for the quarter ended December 31, 2023.
What was the total noninterest income for the quarter ended December 31, 2023?
Noninterest income totaled $5.1 million for the quarter ended December 31, 2023.
How much was the decrease in noninterest expense for the quarter ended December 31, 2023?
Noninterest expense totaled $27.5 million, a decrease of $2.4 million, or 8.0%, for the quarter ended December 31, 2023.
By how much did shareholders' equity increase from December 31, 2022, to December 31, 2023?
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.
What was the cash dividend declared for the fourth quarter of 2023?
The Board declared a cash dividend of $0.20 per share, payable February 20, 2024, to shareholders of record as of February 9, 2024.