HARRISBURG, Pa., July 27, 2022 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. (NASDAQ:MPB) ("Mid Penn"), the parent company of Mid Penn Bank (the "Bank") and MPB Financial Services, LLC, today reported net income available to common shareholders ("earnings") for the quarter ended June 30, 2022 of $12.3 million, or $0.77 per common share basic and diluted.
Key Highlights in the Second Quarter of 2022
- Earnings increased $898 thousand and $0.06 per common share diluted to $12.3 million, or $0.77, respectively, for the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022.
- Tax equivalent net interest margin increased to 3.45% from 3.21% in the prior quarter and 3.34% in the same period prior year.
- Loans grew 8% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022. Loans, excluding Payroll Protection Program ("PPP") loans (1), grew 11% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022.
- Asset quality continues to remain strong with both nonperforming loans to total loans and nonperforming assets to total loans plus other real estate at 25 basis points ("bp") at June 30, 2022.
- Book value per common share increased to $31.23 and tangible book value per share (1) increased to $23.57 at June 30, 2022, compared to $30.96 and $23.31, respectively, at March 31, 2022.
"The team at Mid Penn is proud to deliver these second quarter results to our shareholders. The second quarter was our first full quarter after the completion of the Riverview acquisition and resulting customer conversion and branch optimization plan and it was also the first quarter in the last 8 with very little impact from PPP loans," said Rory G. Ritrievi, President and CEO. "The quarter was successful due to strong, high quality and profitable organic loan growth of 11% annualized, smart balance sheet management, continued strength in asset quality and of course a healthy reduction in expenses. Within the quarter, we saw a 7.6% improvement in net interest margin, a 12.2% improvement in ROA, a 6.4% improvement in ROE, a 6.0% improvement in ROTCE, a 7.3% improvement in our efficiency ratio(1) and an increase in the allowance of loan and lease losses to nonperforming assets to 211.7%. Those trends are all encouraging as we head into the last half of the year."
With this successful quarter, the Board is pleased to announce a quarterly cash dividend of $0.20 per share of common stock was declared at its meeting on July 27, 2022, payable on August 22, 2022 to shareholders of record as of August 10, 2022.
(1) Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document.
Net Interest Income and Average Balance Sheet
For the three months ended June 30, 2022, net interest income was $35.4 million compared to net interest income of $34.4 million for the three months ended March 31, 2022 and $26.9 million for the three months ended June 30, 2021. The tax-equivalent net interest margin for the three months ended June 30, 2022 was 3.45% versus 3.21% for the first quarter of 2022 and 3.34% for the second quarter of 2021, a 24 and 11 bp, respectively, increase compared to the prior quarter and the same period in 2021.The linked quarter increase was the result of a 22 bp increase in the yield on interest-earning assets and a 4 bp decrease in the rate on interest-bearing liabilities, partially offset by a $236.5 million decrease in average interest-earning assets. The increase in the yield on interest-earning assets was the result of a combination of excess cash being re-deployed into higher yielding investment securities and the increase in fed fund rates during the second quarter of 2022. The decrease in the rate on interest-bearing liabilities was primarily the result of a lag in the repricing of deposits as well as the strategic decision to allow higher cost time deposits obtained through the Riverview acquisition to run-off.
For the six months ended June 30, 2022, net interest income was $69.8 million, a $17.6 million, or 33.8%, increase compared to net interest income of $52.2 million for the six months ended June 30, 2021. The year-over-year increase in net interest income was positively impacted by (i) the acquisition of Riverview; (ii) the deployment of Fed Funds into higher yielding investment securities since September 30, 2021; (iii) interest and fees from core loan growth since June 30, 2021; and (iv) reduced interest expense due to the lower cost of deposits in the six months ended June 30, 2022 when compared to the same period in 2021. The tax-equivalent net interest margin for the six months ended June 30, 2022 was 3.33%, a 7 bp decrease compared to 3.40% for six months ended June 30, 2021. The decrease was primarily the result of a 28 bp decrease in the yield on interest-earning assets. The overall decrease in net interest margin for the six months ended June 30, 2022 was driven by the reduction of PPP fees recognized during the first six months of 2021, partially offset by the improvement in cost of interest-bearing liabilities.
The three months ended June 30, 2022 included the recognition of $652 thousand of PPP loan processing fees, a decrease of $5.6 million compared to $6.2 million of PPP loan processing fees recognized during the same period in 2021. These PPP fees are recognized as interest income over the term of the respective loan, or sooner if the loans are forgiven by the U.S. Small Business Administration ("SBA"), or the borrower otherwise pays down principal prior to the loan's stated maturity. The six months ended June 30, 2022 included the recognition of $3.6 million of PPP loan processing fees, a decrease of $7.7 million compared to $11.3 million of PPP loan processing fees recognized during the same period in 2021. These PPP fees are recognized as interest income over the term of the respective loan, or sooner if the loans are forgiven by the U.S. Small Business Administration ("SBA"), or the borrower otherwise pays down principal prior to the loan's stated maturity. As of June 30, 2022, there was $171 thousand in deferred fees related to PPP loans that we anticipate will be recognized during the third quarter of 2022.
Total average assets were $4.5 billion for the second quarter of 2022, reflecting a decrease of $231.0 million, or 4.9%, compared to total average assets of $4.7 billion for the first quarter of 2022, and an increase of $1.1 billion, or 29.9%, compared to total average assets of $3.4 billion second quarter of 2021. The decrease in total average assets from the prior quarter was primarily due to the reduction in federal funds sold. Total average assets were $4.6 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 38.3%, compared to total average assets of $3.3 billion the same period of 2021. The increase in total average assets for both the quarter and year to date as of June 30, 2021 to June 30, 2022 was primarily attributable to the acquisition of Riverview, effective November 30, 2021.
Total average loans were $3.1 billion for the second quarter of 2022, reflecting a decrease of $25.9 million, or 0.8%, compared to total average loans in the first quarter of 2022, and an increase of $520.0 million, or 19.9%, compared to total average loans of $2.6 billion for the second quarter of June 30, 2021. The decrease from the prior quarter was a result of the forgiveness of $34.9 million in PPP loans, which was partially offset by new loan originations. Total average loans were $3.1 billion for the first six months of 2022, reflecting an increase of $545.4 million, or 21.2%, compared to total average loans in the same period of 2021. The year-over-year growth is largely attributable to the Riverview acquisition on November 30, 2021.
Total average deposits were $3.8 billion for the second quarter of 2022, reflecting a decrease of $162.0 million, or 4.0%, compared to total average deposits in the first quarter of 2022, and an increase of $1.1 billion, or 19.9%, compared to total average deposits of $2.6 billion second quarter of 2021. The decrease in total average deposits during the second quarter was attributable to the maturity of certificates of deposit, which have renewed into lower rates, migrated to other deposit or retail investment products, or exited the Bank. We strategically right-sized our average cost of deposits through our targeted deposit run-off. The average cost of deposits was 0.21% for the second quarter of 2022, representing a 2 bp decrease from the first quarter of 2022 and a 22 bp decrease from the second quarter of 2021. Total average deposits were $3.9 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 47.9%, compared to total average deposits of $2.6 billion same period of 2021. The growth in average deposits compared to June 30, 2021 was positively impacted by the Riverview acquisition and significant increases in noninterest-bearing, interest-bearing, and money market deposits, primarily due to both expanded cash management and commercial deposit account relationships, and new deposits established as a result of Mid Penn's PPP loan funding activities.
Asset Quality
The provision for loan and lease losses was $1.7 million for the three months ended June 30, 2022, an increase of $1.2 million compared to the provision for loan losses of $500 thousand for the three months ended March 31, 2022 and an increase of $525 thousand compared to the three months ended June 30, 2021. The provision for loan and lease losses was $2.2 million for the six months ended June 30, 2022, an increase of $75 thousand compared to the provision for loan losses for the same period of 2021. The increase in the provision for the three and six months ended June 30, 2022 was the result of one partially legacy commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the quarter and the growth in total loans since the end of the second quarter of 2021. The allowance for loan and lease losses and the related provision reflects Mid Penn's continued application of the incurred loss method for estimating credit losses. We will adopt the current expected credit loss ("CECL") accounting standard, as required, effective January 1, 2023.
Total nonperforming assets were $8.0 million at June 30, 2022, a decrease compared to nonperforming assets of $10.5 million at December 31, 2021 and $8.7 million at June 30, 2021. The decrease in nonperforming assets since December 31, 2021 was primarily the result of the successful workout of two non-accrual home equity loans amongst one relationship totaling $2.3 million during the first quarter of 2022. The nonperforming assets included acquired impaired loans assumed in the Riverview transaction totaling $3.3 million as of December 31, 2021.
The allowance for loan and lease losses as a percentage of total loans including PPP loans was 0.53% at June 30, 2022, compared to 0.49% at March 31, 2022 and 0.47% at December 31, 2021. The ratios as of June 30, 2022 and December 31, 2021, were affected by the addition of the Riverview acquired loans, which, in accordance with purchase accounting principles, were recorded at fair value at the time of acquisition with no related allowance for loan and lease losses.
Capital
Shareholders' equity increased $5.8 million, or 1.2%, from $490.1 million as of December 31, 2021 to $495.8 million as of June 30, 2022. Regulatory capital ratios for both Mid Penn and its banking subsidiary indicate regulatory capital levels in excess of the regulatory minimums and the levels necessary for the Bank to be considered "well capitalized" at both June 30, 2022 and December 31, 2021.
Share Repurchase Program
During the second quarter of 2022, Mid Penn repurchased 103,912 shares of outstanding common stock at an average price of $26.88 under its treasury stock repurchase program ("Program"). The Program authorized the repurchase of up to $15.0 million of Mid Penn's outstanding common stock, of which $10.3 million remains available for repurchase.
Noninterest Income
For the three months ended June 30, 2022, noninterest income totaled $5.2 million, a decrease of $520 thousand, or 9.0%, compared to noninterest income of $5.8 million for the first quarter of 2022, primarily driven by decreases of $444 thousand in other income, $234 thousand in service charges on deposits, $224 thousand in mortgage banking income and a $166 thousand change in the net gain on sales of SBA loans. The decrease in other income was primarily the result of a higher fair value gain on a swap in the first quarter of 2022 compared to the second quarter of 2022. Service charges on deposits decreased as a result of certain Riverview legacy fees being aligned with Mid Penn fees at the end of the first quarter of 2022. The decrease in mortgage banking income was the result of increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during the second quarter of 2022. These decreases were partially offset by increases of $153 thousand in income from fiduciary activities, $71 thousand in ATM debit card interchange income and $14 thousand in merchant services income.
Compared to the second quarter of 2021, noninterest income in the second quarter of 2022 decreased $422 thousand, or 7.5%, driven by a $2.5 million decrease in mortgage banking income, a $122 thousand decrease in merchant services income and a $114 thousand lower net gain on sales of SBA loans. The decreases were partially offset by an $877 thousand increase in other income, a $663 thousand increase in income from fiduciary activities, a $472 thousand increase in ATM debit card interchange income and a $273 thousand increase in service charges on deposits. Other income increased as a result of income in the second quarter of 2022 from a hedging program related to mortgage derivative activities that Mid Penn did not participate in during the second quarter of 2021, as well as a result of a fair value gain on a swap in the second quarter of 2022 compared to no fair value gain in the second quarter of 2021. The increase in income from fiduciary activities was attributable to favorable growth in trust assets under management and increased sales of retail investments products, as a result of successful business development efforts by Mid Penn's trust and wealth management team. ATM debit card interchange income and service charges on deposits increased primarily as a result of a higher volume of transactional deposit accounts, including deposit accounts assumed in the Riverview acquisition.
For the six months ended June 30, 2022, noninterest income totaled $11.0 million, an increase of $616 thousand, or 5.9%, compared to noninterest income of $10.4 million for the first six months of 2021, primarily driven by increases of $2.2 million in other income, $1.2 million in income from fiduciary activities, $961 thousand in ATM debit card interchange income and $805 thousand in service charges on deposits. The increase in other income was primarily the result of a fair value gain on a swap in the first half of 2022 compared to the same period of 2021. The increases in fiduciary activities was a result of increased activity in the wealth management area and the Riverview transaction. The other increases mentioned were primarily the result of the Riverview transaction. These favorable variances were partially offset by a decrease in mortgage banking income of $4.3 million for the six months ended June 30, 2022 compared to the same period of 2021 due to increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during 2022.
Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during the first half of 2022. As a result of the corresponding mortgage rate increases and an increase in property values driven by supply shortfalls and high liquidity levels among buyers, the mortgage loan refinancing market has slowed, and purchase money mortgage originations have slowed relative to the lending volumes seen in the past several years.
Noninterest Expense
For the three months ended June 30, 2022, noninterest expense totaled $23.9 million, a decrease of $1.8 million, or 7.1%, compared to noninterest expense of $25.7 million for the first quarter of 2022. Most categories of noninterest expense decreased during the second quarter of 2022, as a result of cost savings fully recognized in the second quarter of 2022 from the completion of the Riverview acquisition. The most significant cost savings were in salaries and benefits.
Compared to the second quarter of 2021, noninterest expense in the second quarter of 2022 increased $4.5 million, or 22.9%, primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $2.4 million in salaries and benefits and $2.0 million in other expenses. The increases were partially offset by decreases of $712 thousand in mortgage banking profit-sharing expense, $522 thousand of post-acquisition restructuring expense in 2021 and $240 thousand in charitable contributions qualifying for state tax credits.
For the six months ended June 30, 2022, noninterest expense totaled $49.7 million, an increase of $12.6 million, or 34.2%, compared to noninterest expense of $37.1 million for the same period of 2021 primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $6.1 million in salaries and benefits and $4.7 million in other expenses.
The provision for income taxes was $2.8 million during the three months ended June 30, 2022, compared to $2.6 million and $2.3 million of income tax provision recorded for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes for the three months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.5% compared to 18.4% and 19.4% for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes was $5.3 million during the six months ended June 30, 2022, compared to $4.5 million of income tax provision recorded for the first half of 2021. The provision for income taxes for the six months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.4% compared to 19.1% for the same period of 2021. The decrease in the effective tax rate compared to the periods of the prior year reflects higher tax-exempt interest recognized due to an increase in tax-exempt securities being held in the investment security portfolio when compared to the prior year, the favorable treatment of the increase in cash surrender value on bank owned life insurance policies, which are nontaxable for federal tax purposes, and the expansion of low income housing tax credit projects ("Projects") acquired in the Riverview transaction, as well as Mid Penn legacy Projects. These decreases were partially offset by higher income before taxes in both periods of 2022.
The efficiency ratio(1) was 57.57% in the second quarter of 2022, compared to 62.12% in the first quarter of 2022, and 57.42% in the second quarter of 2021. The improvement in the efficiency ratio during the second quarter 2022 was due to the cost savings being realized from the Riverview acquisition. The efficiency ratio was 59.83% for the six months ended June 30, 2022, compared to 57.47% for the six months ended June 30, 2021. The increase in the efficiency ratio during the six months ended June 30, 2022 was primarily due to the increase in salary and benefit expenses related to Riverview employees retained through conversion.
Merger & Acquisition Activity
On November 30, 2021, Mid Penn announced the successful completion of the merger acquisition of Riverview. The acquisition of Riverview impacted periods presented within this report. For more information regarding this transaction, please see Mid Penn's Annual Report on Form 10-K for the year ended December 31, 2021.
Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's consolidated financial statements when filed with the Securities and Exchange Commission ("SEC"). Accordingly, the financial information in this announcement is subject to change. The statements are valid only as of the date hereof and Mid Penn disclaims any obligation to update this information.
(1) Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continues," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; the length and extent of the COVID-19 pandemic; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on securities held in Mid Penn's portfolio; the success and timing of PPP loan repayment and forgiveness; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; results of the regulatory examination and supervision process and oversight, including changes in monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; the availability of financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank's future businesses; material differences in the actual financial results of merger, acquisition and investment activities compared with Mid Penn's initial expectations, including the full realization of anticipated cost savings and revenue enhancements; the possibility that the anticipated benefits of the Riverview transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Mid Penn does business; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Riverview transaction; the ability to complete the integration of Mid Penn and Riverview successfully; the dilution caused by Mid Penn's issuance of additional shares of its capital stock in connection with the Riverview transaction; and other factors that may affect the future results of Mid Penn.
For a more detailed description of these and other factors which would affect our results, please see Mid Penn's filings with the SEC, including those risk factors identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent filings with the SEC. The statements in this press release are made as of the date of this press release, even if subsequently made available by Mid Penn on its website or otherwise. Mid Penn assumes no obligation for updating any such forward-looking statements at any time, except as required by law.
SUMMARY FINANCIAL HIGHLIGHTS (Unaudited):
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Ending Balances: | ||||||||||||||||||||
| Investment securities | $ | 618,184 | $ | 508,658 | $ | 392,619 | $ | 158,311 | $ | 161,702 | ||||||||||
| Net loans | 3,163,157 | 3,106,384 | 3,089,799 | 2,356,196 | 2,480,476 | |||||||||||||||
| Total assets | 4,310,163 | 4,667,174 | 4,689,425 | 3,453,187 | 3,461,792 | |||||||||||||||
| Total deposits | 3,702,587 | 3,989,037 | 4,002,016 | 2,961,881 | 2,782,124 | |||||||||||||||
| Shareholders' equity | 495,835 | 494,161 | 490,076 | 349,308 | 341,569 | |||||||||||||||
| Average Balances: | ||||||||||||||||||||
| Investment securities | 580,406 | 462,648 | 286,134 | 158,296 | 148,972 | |||||||||||||||
| Net loans | 3,129,334 | 3,103,469 | 2,319,544 | 2,422,378 | 2,609,803 | |||||||||||||||
| Total assets | 4,465,906 | 4,696,894 | 3,579,649 | 3,508,757 | 3,437,692 | |||||||||||||||
| Total deposits | 3,837,135 | 3,999,074 | 3,007,955 | 2,870,885 | 2,715,875 | |||||||||||||||
| Shareholders' equity | 495,681 | 494,019 | 403,010 | 345,816 | 312,006 | |||||||||||||||
| Income Statement: | Three Months Ended | |||||||||||||||||||
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Net interest income | $ | 35,433 | $ | 34,414 | $ | 29,372 | $ | 26,994 | $ | 26,877 | ||||||||||
| Provision for loan and lease losses | 1,725 | 500 | 370 | 425 | 1,150 | |||||||||||||||
| Noninterest income | 5,230 | 5,750 | 5,660 | 5,509 | 5,652 | |||||||||||||||
| Noninterest expense | 23,915 | 25,745 | 34,072 | 20,019 | 19,456 | |||||||||||||||
| Income before provision for income taxes | 15,023 | 13,919 | 590 | 12,059 | 11,923 | |||||||||||||||
| Provision for income taxes | 2,771 | 2,565 | (17 | ) | 2,272 | 2,310 | ||||||||||||||
| Net income available to shareholders | 12,252 | 11,354 | 607 | 9,787 | 9,613 | |||||||||||||||
| Net income excluding non-recurring expenses (1) | 12,252 | 11,614 | 10,266 | 9,943 | 10,025 | |||||||||||||||
| Per Share: | ||||||||||||||||||||
| Basic earnings per common share | $ | 0.77 | $ | 0.71 | $ | 0.05 | $ | 0.86 | $ | 0.93 | ||||||||||
| Diluted earnings per common share | $ | 0.77 | $ | 0.71 | $ | 0.05 | $ | 0.86 | $ | 0.93 | ||||||||||
| Cash dividends declared | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||
| Book value per common share | $ | 31.23 | $ | 30.96 | $ | 30.71 | $ | 30.55 | $ | 29.94 | ||||||||||
| Tangible book value per common share (1) | $ | 23.57 | $ | 23.31 | $ | 22.99 | $ | 24.75 | $ | 24.10 | ||||||||||
| Asset Quality: | ||||||||||||||||||||
| Net charge-offs (recoveries) to average loans (annualized) | -0.001 | % | -0.007 | % | 0.001 | % | 0.149 | % | 0.004 | % | ||||||||||
| Non-performing loans to total loans | 0.25 | % | 0.25 | % | 0.32 | % | 0.29 | % | 0.35 | % | ||||||||||
| Non-performing asset to total loans and other real estate | 0.25 | % | 0.26 | % | 0.32 | % | 0.29 | % | 0.35 | % | ||||||||||
| Non-performing asset to total assets | 0.19 | % | 0.18 | % | 0.22 | % | 0.20 | % | 0.25 | % | ||||||||||
| ALLL to total loans | 0.53 | % | 0.49 | % | 0.47 | % | 0.60 | % | 0.59 | % | ||||||||||
| ALLL to nonperforming loans | 211.66 | % | 190.84 | % | 146.23 | % | 209.90 | % | 169.50 | % | ||||||||||
| Profitability: | ||||||||||||||||||||
| Return on average assets | 1.10 | % | 0.98 | % | 0.06 | % | 1.11 | % | 1.12 | % | ||||||||||
| Return on average equity | 9.91 | % | 9.32 | % | 0.61 | % | 11.23 | % | 12.36 | % | ||||||||||
| Return on average tangible common equity (1) | 13.59 | % | 12.82 | % | 1.26 | % | 14.20 | % | 15.72 | % | ||||||||||
| Net interest margin | 3.45 | % | 3.21 | % | 3.48 | % | 3.26 | % | 3.34 | % | ||||||||||
| Efficiency ratio (1) | 57.57 | % | 62.12 | % | 61.34 | % | 60.33 | % | 57.42 | % | ||||||||||
| Capital Ratios: | ||||||||||||||||||||
| Tier 1 Capital (to Average Assets) | 9.0 | % | 8.4 | % | 8.1 | % | 8.6 | % | 8.8 | % | ||||||||||
| Common Tier 1 Capital (to Risk Weighted Assets) | 11.5 | % | 11.7 | % | 11.7 | % | 13.2 | % | 13.1 | % | ||||||||||
| Tier 1 Capital (to Risk Weighted Assets) | 11.8 | % | 12.0 | % | 12.0 | % | 13.2 | % | 13.1 | % | ||||||||||
| Total Capital (to Risk Weighted Assets) | 14.1 | % | 14.4 | % | 14.6 | % | 15.8 | % | 15.8 | % | ||||||||||
(1) Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document.
| CONSOLIDATED BALANCE SHEETS (Unaudited): | ||||||||||||||||||||
| (Dollars in thousands, except share data) | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | Jun. 30, 2021 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 64,440 | $ | 54,961 | $ | 41,100 | $ | 40,134 | $ | 35,815 | ||||||||||
| Interest-bearing balances with other financial institutions | 4,909 | 3,187 | 146,031 | 2,536 | 1,234 | |||||||||||||||
| Federal funds sold | 167,437 | 700,283 | 726,621 | 712,272 | 599,298 | |||||||||||||||
| Total cash and cash equivalents | 236,786 | 758,431 | 913,752 | 754,942 | 636,347 | |||||||||||||||
| Investment securities held to maturity, at amortized cost | 399,032 | 363,145 | 329,257 | 152,791 | 153,032 | |||||||||||||||
| Investment securities available for sale, at fair value | 218,698 | 145,039 | 62,862 | 5,015 | 8,162 | |||||||||||||||
| Equity securities available for sale, at fair value | 454 | 474 | 500 | 505 | 508 | |||||||||||||||
| Loans held for sale | 9,574 | 7,474 | 11,514 | 23,154 | 24,202 | |||||||||||||||
| Loans and leases, net of unearned interest | 3,180,033 | 3,121,531 | 3,104,396 | 2,370,429 | 2,495,192 | |||||||||||||||
| Less: Allowance for loan and lease losses | (16,876 | ) | (15,147 | ) | (14,597 | ) | (14,233 | ) | (14,716 | ) | ||||||||||
| Net loans and leases | 3,163,157 | 3,106,384 | 3,089,799 | 2,356,196 | 2,480,476 | |||||||||||||||
| Bank premises and equipment, net | 33,732 | 33,612 | 33,232 | 25,562 | 24,758 | |||||||||||||||
| Bank premises and equipment held for sale | 2,574 | 3,098 | 3,907 | — | — | |||||||||||||||
| Operating lease right of use asset | 8,326 | 8,751 | 9,055 | 9,942 | 10,364 | |||||||||||||||
| Finance lease right of use asset | 2,997 | 3,042 | 3,087 | 3,132 | 3,177 | |||||||||||||||
| Cash surrender value of life insurance | 50,169 | 49,907 | 49,661 | 17,406 | 17,332 | |||||||||||||||
| Restricted investment in bank stocks | 4,234 | 7,637 | 9,134 | 7,906 | 6,816 | |||||||||||||||
| Accrued interest receivable | 12,902 | 11,584 | 11,328 | 10,008 | 10,638 | |||||||||||||||
| Deferred income taxes | 13,780 | 11,974 | 10,779 | 4,133 | 5,465 | |||||||||||||||
| Goodwill | 113,835 | 113,835 | 113,835 | 62,840 | 62,840 | |||||||||||||||
| Core deposit and other intangibles, net | 7,729 | 8,250 | 9,436 | 3,537 | 3,804 | |||||||||||||||
| Foreclosed assets held for sale | 69 | 125 | — | 11 | 11 | |||||||||||||||
| Other assets | 32,115 | 34,412 | 28,287 | 16,107 | 13,860 | |||||||||||||||
| Total Assets | $ | 4,310,163 | $ | 4,667,174 | $ | 4,689,425 | $ | 3,453,187 | $ | 3,461,792 | ||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 850,180 | $ | 866,965 | $ | 850,438 | $ | 661,890 | $ | 692,016 | ||||||||||
| Interest-bearing demand | 1,023,027 | 1,050,923 | 1,066,852 | 745,833 | 629,375 | |||||||||||||||
| Money Market | 999,556 | 1,159,809 | 1,076,593 | 905,742 | 810,067 | |||||||||||||||
| Savings | 354,677 | 358,186 | 381,476 | 205,842 | 206,724 | |||||||||||||||
| Time | 475,147 | 553,154 | 626,657 | 442,574 | 443,942 | |||||||||||||||
| Total Deposits | 3,702,587 | 3,989,037 | 4,002,016 | 2,961,881 | 2,782,124 | |||||||||||||||
| Short-term borrowings | — | — | — | — | 196,889 | |||||||||||||||
| Long-term debt | 4,592 | 74,681 | 81,270 | 74,858 | 74,944 | |||||||||||||||
| Subordinated debt | 73,995 | 74,134 | 73,645 | 44,599 | 44,593 | |||||||||||||||
| Operating lease liability | 10,324 | 10,923 | 11,363 | 10,950 | 11,387 | |||||||||||||||
| Accrued interest payable | 1,542 | 2,067 | 1,791 | 1,901 | 2,122 | |||||||||||||||
| Other liabilities | 21,288 | 22,171 | 29,264 | 9,690 | 8,164 | |||||||||||||||
| Total Liabilities | 3,814,328 | 4,173,013 | 4,199,349 | 3,103,879 | 3,120,223 | |||||||||||||||
| Shareholders' Equity: | ||||||||||||||||||||
| Common stock, par value $1.00 per share; 20.0 million shares authorized | 16,081 | 16,059 | 16,056 | 11,532 | 11,507 | |||||||||||||||
| Additional paid-in capital | 386,128 | 385,765 | 384,742 | 246,830 | 246,546 | |||||||||||||||
| Retained earnings | 108,265 | 99,206 | 91,043 | 92,722 | 85,220 | |||||||||||||||
| Accumulated other comprehensive (loss) income | (9,759 | ) | (4,946 | ) | 158 | 147 | 219 | |||||||||||||
| Treasury stock | (4,880 | ) | (1,923 | ) | (1,923 | ) | (1,923 | ) | (1,923 | ) | ||||||||||
| Total Shareholders' Equity | 495,835 | 494,161 | 490,076 | 349,308 | 341,569 | |||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 4,310,163 | $ | 4,667,174 | $ | 4,689,425 | $ | 3,453,187 | $ | 3,461,792 | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (Unaudited): | ||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
| Jun. 30 | Mar. 31 | Dec. 31 | Sept. 30 | Jun. 30 | Jun. 30 | Jun. 30 | ||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||||||
| Interest and fees on loans and leases | $ | 34,264 | $ | 35,016 | $ | 31,021 | $ | 29,590 | $ | 29,835 | $ | 69,280 | $ | 58,165 | ||||||||||||||
| Interest and dividends on investment securities: | ||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 2,329 | 1,536 | 715 | 285 | 225 | 3,865 | 403 | |||||||||||||||||||||
| State and political subdivision obligations, tax-exempt | 379 | 336 | 288 | 279 | 278 | 715 | 555 | |||||||||||||||||||||
| Other securities | 504 | 417 | 329 | 277 | 291 | 921 | 593 | |||||||||||||||||||||
| Total Interest and Dividends on Investment Securities | 3,212 | 2,289 | 1,332 | 841 | 794 | 5,501 | 1,551 | |||||||||||||||||||||
| Interest on other interest-bearing balances | 8 | 13 | 8 | 1 | 2 | 21 | 4 | |||||||||||||||||||||
| Interest on federal funds sold | 736 | 314 | 324 | 308 | 98 | 1,050 | 177 | |||||||||||||||||||||
| Total Interest Income | 38,220 | 37,632 | 32,685 | 30,740 | 30,729 | 75,852 | 59,897 | |||||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||||||
| Interest on deposits | 2,019 | 2,294 | 2,536 | 2,909 | 2,916 | 4,313 | 5,882 | |||||||||||||||||||||
| Interest on short-term borrowings | — | — | — | 133 | 232 | — | 406 | |||||||||||||||||||||
| Interest on long-term and subordinated debt | 768 | 924 | 777 | 704 | 704 | 1,692 | 1,407 | |||||||||||||||||||||
| Total Interest Expense | 2,787 | 3,218 | 3,313 | 3,746 | 3,852 | 6,005 | 7,695 | |||||||||||||||||||||
| Net Interest Income | 35,433 | 34,414 | 29,372 | 26,994 | 26,877 | 69,847 | 52,202 | |||||||||||||||||||||
| PROVISION FOR LOAN AND LEASE LOSSES | 1,725 | 500 | 370 | 425 | 1,150 | 2,225 | 2,150 | |||||||||||||||||||||
| Net Interest Income After Provision for Loan and Lease Losses | 33,708 | 33,914 | 29,002 | 26,569 | 25,727 | 67,622 | 50,052 | |||||||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||||||
| Mortgage banking income | 305 | 529 | 1,932 | 3,162 | 2,841 | 834 | 5,220 | |||||||||||||||||||||
| Income from fiduciary and wealth management activities | 1,205 | 1,052 | 778 | 618 | 542 | 2,257 | 1,098 | |||||||||||||||||||||
| Service charges on deposits | 450 | 684 | 439 | 223 | 177 | 1,134 | 329 | |||||||||||||||||||||
| ATM debit card interchange income | 1,128 | 1,057 | 834 | 630 | 656 | 2,185 | 1,224 | |||||||||||||||||||||
| Net gain (loss) on sales of SBA loans | 119 | (9 | ) | 409 | 105 | 355 | 110 | 455 | ||||||||||||||||||||
| Merchant services income | 87 | 73 | 72 | 58 | 209 | 160 | 301 | |||||||||||||||||||||
| Earnings from cash surrender value of life insurance | 262 | 246 | 135 | 74 | 75 | 508 | 149 | |||||||||||||||||||||
| Net gain on sales of investment securities | — | — | — | 79 | — | — | — | |||||||||||||||||||||
| Other income | 1,674 | 2,118 | 1,061 | 560 | 797 | 3,792 | 1,588 | |||||||||||||||||||||
| Total Noninterest Income | 5,230 | 5,750 | 5,660 | 5,509 | 5,652 | 10,980 | 10,364 | |||||||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||||||
| Salaries and employee benefits | 12,340 | 13,244 | 11,838 | 10,342 | 9,933 | 25,584 | 19,531 | |||||||||||||||||||||
| Occupancy expense, net | 1,655 | 1,799 | 1,412 | 1,318 | 1,317 | 3,454 | 2,797 | |||||||||||||||||||||
| Equipment expense | 1,112 | 1,011 | 864 | 745 | 741 | 2,123 | 1,492 | |||||||||||||||||||||
| Software licensing and utilization | 1,821 | 2,106 | 1,839 | 1,551 | 1,497 | 3,927 | 2,942 | |||||||||||||||||||||
| FDIC Assessment | 506 | 591 | 524 | 461 | 433 | 1,097 | 903 | |||||||||||||||||||||
| Legal and professional fees | 694 | 639 | 388 | 610 | 555 | 1,333 | 981 | |||||||||||||||||||||
| Charitable contributions qualifying for State tax credits | 125 | 65 | 797 | — | 365 | 190 | 635 | |||||||||||||||||||||
| Mortgage banking profit-sharing expense | 33 | 145 | 566 | 1,140 | 745 | 178 | 865 | |||||||||||||||||||||
| (Gain) loss on sale or write-down of foreclosed assets, net | (15 | ) | (16 | ) | 1 | (7 | ) | (19 | ) | (31 | ) | (19 | ) | |||||||||||||||
| Intangible amortization | 521 | 481 | 357 | 266 | 276 | 1,002 | 557 | |||||||||||||||||||||
| Merger and acquisition expense | — | — | 2,347 | 198 | 522 | — | 522 | |||||||||||||||||||||
| Post-acquisition restructuring expense | — | 329 | 9,880 | — | — | 329 | — | |||||||||||||||||||||
| Other expenses | 5,123 | 5,351 | 3,259 | 3,395 | 3,091 | 10,474 | 5,808 | |||||||||||||||||||||
| Total Noninterest Expense | 23,915 | 25,745 | 34,072 | 20,019 | 19,456 | 49,660 | 37,014 | |||||||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 15,023 | 13,919 | 590 | 12,059 | 11,923 | 28,942 | 23,402 | |||||||||||||||||||||
| Provision for income taxes | 2,771 | 2,565 | (17 | ) | 2,272 | 2,310 | 5,336 | 4,477 | ||||||||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 12,252 | $ | 11,354 | $ | 607 | $ | 9,787 | $ | 9,613 | $ | 23,606 | $ | 18,925 | ||||||||||||||
| PER COMMON SHARE DATA: | ||||||||||||||||||||||||||||
| Basic and Diluted Earnings Per Common Share | $ | 0.77 | $ | 0.71 | $ | 0.05 | $ | 0.86 | $ | 0.93 | $ | 1.48 | $ | 2.02 | ||||||||||||||
| Diluted Earnings Per Common Share | $ | 0.77 | $ | 0.71 | $ | 0.05 | $ | 0.86 | $ | 0.93 | $ | 1.48 | $ | 2.02 | ||||||||||||||
| Cash Dividends Declared | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.39 | ||||||||||||||
CONSOLIDATED – AVERAGE BALANCE SHEET AND NET INTEREST INCOME ANALYSIS (Unaudited):
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | ||||||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | June 30, 2022 | March 31, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||||||||||||||||||
| Interest Bearing Balances | $ | 5,920 | $ | 8 | 0.54 | % | $ | 91,543 | $ | 13 | 0.06 | % | $ | 1,284 | $ | 2 | 0.62 | % | ||||||||||||||||||||||||
| Investment Securities: | ||||||||||||||||||||||||||||||||||||||||||
| Taxable | 501,631 | 2,740 | 2.19 | % | 389,034 | 1,822 | 1.90 | % | 93,161 | 430 | 1.85 | % | ||||||||||||||||||||||||||||||
| Tax-Exempt | 78,775 | 480 | (a) | 2.44 | % | 73,614 | 425 | (a) | 2.34 | % | 55,811 | 352 | (a) | 2.53 | % | |||||||||||||||||||||||||||
| Total Securities | 580,406 | 3,220 | 2.23 | % | 462,648 | 2,247 | 1.97 | % | 148,972 | 782 | 2.11 | % | ||||||||||||||||||||||||||||||
| Federal Funds Sold | 415,405 | 736 | 0.71 | % | 706,411 | 314 | 0.18 | % | 477,001 | 98 | 0.08 | % | ||||||||||||||||||||||||||||||
| Loans and Leases, Net | 3,129,334 | 34,354 | (b) | 4.40 | % | 3,103,469 | 35,123 | (b) | 4.59 | % | 2,609,803 | 29,908 | (b) | 4.60 | % | |||||||||||||||||||||||||||
| Restricted Investment in Bank Stocks | 4,854 | 94 | 7.77 | % | 8,347 | 131 | 6.36 | % | 6,865 | 86 | 5.02 | % | ||||||||||||||||||||||||||||||
| Total Earning Assets | 4,135,919 | 38,412 | 3.73 | % | 4,372,418 | 37,828 | 3.51 | % | 3,243,925 | 30,876 | 3.82 | % | ||||||||||||||||||||||||||||||
| Cash and Due from Banks | 59,822 | 57,397 | 34,683 | |||||||||||||||||||||||||||||||||||||||
| Other Assets | 270,165 | 267,079 | 159,084 | |||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 4,465,906 | $ | 4,696,894 | $ | 3,437,692 | ||||||||||||||||||||||||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | ||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing Demand | $ | 1,030,237 | $ | 462 | 0.18 | % | $ | 1,045,678 | $ | 461 | 0.18 | % | $ | 614,435 | $ | 579 | 0.38 | % | ||||||||||||||||||||||||
| Money Market | 1,079,900 | 584 | 0.22 | % | 1,125,094 | 600 | 0.22 | % | 791,498 | 819 | 0.42 | % | ||||||||||||||||||||||||||||||
| Savings | 357,433 | 43 | 0.05 | % | 376,006 | 58 | 0.06 | % | 203,468 | 58 | 0.11 | % | ||||||||||||||||||||||||||||||
| Time | 516,346 | 930 | 0.72 | % | 592,833 | 1,175 | 0.80 | % | 432,739 | 1,460 | 1.35 | % | ||||||||||||||||||||||||||||||
| Total Interest-bearing Deposits | 2,983,916 | 2,019 | 0.27 | % | 3,139,611 | 2,294 | 0.30 | % | 2,042,140 | 2,916 | 0.57 | % | ||||||||||||||||||||||||||||||
| Short Term Borrowings | — | — | 0.00 | % | — | — | 0.00 | % | 264,661 | 232 | 0.35 | % | ||||||||||||||||||||||||||||||
| Long-term Debt | 9,238 | 107 | 4.65 | % | 76,157 | 284 | 1.51 | % | 74,976 | 204 | 1.09 | % | ||||||||||||||||||||||||||||||
| Subordinated Debt | 74,062 | 661 | 3.58 | % | 74,189 | 640 | 3.50 | % | 44,589 | 500 | 4.50 | % | ||||||||||||||||||||||||||||||
| Total Interest-bearing Liabilities | 3,067,216 | 2,787 | 0.36 | % | 3,289,957 | 3,218 | 0.40 | % | 2,426,366 | 3,852 | 0.64 | % | ||||||||||||||||||||||||||||||
| Noninterest-bearing Demand | 853,219 | 859,463 | 673,735 | |||||||||||||||||||||||||||||||||||||||
| Other Liabilities | 49,790 | 53,455 | 25,585 | |||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 495,681 | 494,019 | 312,006 | |||||||||||||||||||||||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 4,465,906 | $ | 4,696,894 | $ | 3,437,692 | ||||||||||||||||||||||||||||||||||||
| Net Interest Income (taxable equivalent basis) | $ | 35,625 | $ | 34,610 | $ | 27,024 | ||||||||||||||||||||||||||||||||||||
| Taxable Equivalent Adjustment | (192 | ) | (196 | ) | (147 | ) | ||||||||||||||||||||||||||||||||||||
| Net Interest Income | $ | 35,433 | $ | 34,414 | $ | 26,877 | ||||||||||||||||||||||||||||||||||||
| Total Yield on Earning Assets | 3.73 | % | 3.51 | % | 3.82 | % | ||||||||||||||||||||||||||||||||||||
| Rate on Supporting Liabilities | 0.36 | % | 0.40 | % | 0.64 | % | ||||||||||||||||||||||||||||||||||||
| Average Interest Spread | 3.37 | % | 3.11 | % | 3.18 | % | ||||||||||||||||||||||||||||||||||||
| Net Interest Margin | 3.45 | % | 3.21 | % | 3.34 | % | ||||||||||||||||||||||||||||||||||||
(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $101 thousand, $89 thousand and $74 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $91 thousand, $107 thousand and $73 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | ||||||||||||||||||||||||||||
| For the Six Months Ended | ||||||||||||||||||||||||||||
| (Dollars in thousands) | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||||
| Interest Bearing Balances | $ | 48,495 | $ | 21 | 0.09 | % | $ | 1,342 | $ | 4 | 0.60 | % | ||||||||||||||||
| Investment Securities: | ||||||||||||||||||||||||||||
| Taxable | 445,644 | 4,561 | 2.06 | % | 85,849 | 815 | 1.91 | % | ||||||||||||||||||||
| Tax-Exempt | 76,208 | 905 | (a) | 2.39 | % | 55,377 | 702 | (a) | 2.56 | % | ||||||||||||||||||
| Total Securities | 521,852 | 5,466 | 2.11 | % | 141,226 | 1,517 | 2.17 | % | ||||||||||||||||||||
| Federal Funds Sold | 560,105 | 1,050 | 0.38 | % | 396,041 | 177 | 0.09 | % | ||||||||||||||||||||
| Loans and Leases, Net | 3,116,473 | 69,477 | (b) | 4.50 | % | 2,571,075 | 58,314 | (b) | 4.57 | % | ||||||||||||||||||
| Restricted Investment in Bank Stocks | 6,590 | 225 | 6.89 | % | 6,958 | 181 | 5.25 | % | ||||||||||||||||||||
| Total Earning Assets | 4,253,515 | 76,239 | 3.61 | % | 3,116,642 | 60,193 | 3.89 | % | ||||||||||||||||||||
| Cash and Due from Banks | 54,177 | 34,363 | ||||||||||||||||||||||||||
| Other Assets | 272,922 | 161,661 | ||||||||||||||||||||||||||
| Total Assets | $ | 4,580,614 | $ | 3,312,666 | ||||||||||||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | ||||||||||||||||||||||||||||
| Interest-bearing Demand | $ | 1,037,915 | $ | 923 | 0.18 | % | $ | 608,259 | $ | 1,157 | 0.38 | % | ||||||||||||||||
| Money Market | 1,102,372 | 1,184 | 0.22 | % | 767,877 | 1,597 | 0.42 | % | ||||||||||||||||||||
| Savings | 366,668 | 101 | 0.06 | % | 200,686 | 122 | 0.12 | % | ||||||||||||||||||||
| Time | 554,378 | 2,105 | 0.77 | % | 423,259 | 3,006 | 1.43 | % | ||||||||||||||||||||
| Total Interest-bearing Deposits | 3,061,333 | 4,313 | 0.28 | % | 2,000,081 | 5,882 | 0.59 | % | ||||||||||||||||||||
| Short-term Borrowings | - | - | 0.00 | % | 234,258 | 406 | 0.35 | % | ||||||||||||||||||||
| Long-term Debt | 42,513 | 391 | 1.85 | % | 75,019 | 408 | 1.10 | % | ||||||||||||||||||||
| Subordinated Debt | 74,126 | 1,301 | 3.54 | % | 44,586 | 999 | 4.52 | % | ||||||||||||||||||||
| Total Interest-bearing Liabilities | 3,177,972 | 6,005 | 0.38 | % | 2,353,944 | 7,695 | 0.66 | % | ||||||||||||||||||||
| Noninterest-bearing Demand | 856,324 | 648,537 | ||||||||||||||||||||||||||
| Other Liabilities | 51,612 | 24,529 | ||||||||||||||||||||||||||
| Shareholders' Equity | 494,706 | 285,656 | ||||||||||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 4,580,614 | $ | 3,312,666 | ||||||||||||||||||||||||
| Net Interest Income (taxable equivalent basis) | $ | 70,234 | $ | 52,498 | ||||||||||||||||||||||||
| Taxable Equivalent Adjustment | (387 | ) | (296 | ) | ||||||||||||||||||||||||
| Net Interest Income | $ | 69,847 | $ | 52,202 | ||||||||||||||||||||||||
| Total Yield on Earning Assets | 3.61 | % | 3.89 | % | ||||||||||||||||||||||||
| Rate on Supporting Liabilities | 0.38 | % | 0.66 | % | ||||||||||||||||||||||||
| Average Interest Spread | 3.23 | % | 3.24 | % | ||||||||||||||||||||||||
| Net Interest Margin | 3.33 | % | 3.40 | % | ||||||||||||||||||||||||
(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $190 thousand and $147 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $197 thousand and $149 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.
ALLOWANCE FOR LOAN AND LEASE LOSSES AND ASSET QUALITY (Unaudited):
| (Dollars in thousands, except | Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | |||||||||||||||
| per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Allowance for Loan and Lease Losses: | ||||||||||||||||||||
| Beginning balance | $ | 15,147 | $ | 14,597 | $ | 14,233 | $ | 14,716 | $ | 13,591 | ||||||||||
| Loans Charged off | ||||||||||||||||||||
| Commercial and industrial | — | — | (7 | ) | — | — | ||||||||||||||
| Commercial real estate | — | — | (1 | ) | (1,043 | ) | — | |||||||||||||
| Commercial real estate - construction | — | — | — | — | (23 | ) | ||||||||||||||
| Residential mortgage | — | — | — | (3 | ) | (7 | ) | |||||||||||||
| Home equity | — | — | — | — | — | |||||||||||||||
| Consumer | (9 | ) | (57 | ) | (19 | ) | (11 | ) | (9 | ) | ||||||||||
| Total loans charged off | (9 | ) | (57 | ) | (27 | ) | (1,057 | ) | (39 | ) | ||||||||||
| Recoveries of loans previously charged off | ||||||||||||||||||||
| Commercial and industrial | — | 13 | 10 | 1 | 1 | |||||||||||||||
| Commercial real estate | — | 65 | 1 | 140 | 10 | |||||||||||||||
| Commercial real estate - construction | — | 24 | 7 | — | — | |||||||||||||||
| Residential mortgage | 2 | — | — | 2 | 1 | |||||||||||||||
| Home equity | 1 | 1 | — | — | — | |||||||||||||||
| Consumer | 10 | 4 | 3 | 6 | 2 | |||||||||||||||
| Total recoveries | 13 | 107 | 21 | 149 | 14 | |||||||||||||||
| Balance before provision | 15,151 | 14,647 | 14,227 | 13,808 | 13,566 | |||||||||||||||
| Provision for loan and lease losses | 1,725 | 500 | 370 | 425 | 1,150 | |||||||||||||||
| Balance, end of quarter | $ | 16,876 | $ | 15,147 | $ | 14,597 | $ | 14,233 | $ | 14,716 | ||||||||||
| Nonperforming Assets | ||||||||||||||||||||
| Nonaccrual loans | $ | 7,551 | $ | 7,507 | $ | 9,547 | $ | 6,339 | $ | 8,233 | ||||||||||
| Accruing trouble debt restructured loans | 422 | 430 | 435 | 442 | 449 | |||||||||||||||
| Total nonperforming loans | 7,973 | 7,937 | 9,982 | 6,781 | 8,682 | |||||||||||||||
| Foreclosed real estate | 69 | 125 | — | 11 | 11 | |||||||||||||||
| Total nonperforming assets | 8,042 | 8,062 | 9,982 | 6,792 | 8,693 | |||||||||||||||
| Accruing loans 90 days or more past due | — | 133 | 515 | — | — | |||||||||||||||
| Total risk elements | $ | 8,042 | $ | 8,195 | $ | 10,497 | $ | 6,792 | $ | 8,693 | ||||||||||
PPP Summary
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| PPP loans, net of deferred fees | $ | 4,966 | $ | 34,124 | $ | 111,286 | $ | 229,679 | $ | 391,826 | ||||||||||
| PPP Fees recognized | $ | 652 | $ | 2,989 | $ | 4,426 | $ | 8,382 | $ | 4,109 | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES (Unaudited)
Explanatory note: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Mid Penn's management uses these non-GAAP financial measures in their analysis of the Company's performance. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing tangible book value. Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances or non-deductible portions of the non-GAAP adjustments. Non-PPP core banking loans are meaningful to investors as they are indicative of portfolio loans and related growth from traditional bank activities and excludes short-term or nonrecurring loans from special programs like the PPP. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Mid Penn's results and financial condition as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Core earnings per common share excludes from income available to common shareholders certain expenses related to significant non-core activities, including merger-related expenses, net of income taxes. For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity. The efficiency ratio is often used by management to measure its noninterest expense as a percentage of its revenue. Management believes that this non-GAAP supplemental information will be helpful in understanding Mid Penn's ongoing operating results. This supplemental presentation should not be construed as an inference that Mid Penn's future results will be unaffected by similar adjustments to be determined in accordance with GAAP. The reconciliation of the non-GAAP to comparable GAAP financial measures can be found in the tables at the end of this release.
Tangible Book Value Per Share
| (Dollars in thousands, except | Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | |||||||||||||||
| per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Shareholders' Equity | $ | 495,835 | $ | 494,161 | $ | 490,076 | $ | 349,308 | $ | 341,569 | ||||||||||
| Less: Goodwill | 113,835 | 113,835 | 113,835 | 62,840 | 62,840 | |||||||||||||||
| Less: Core Deposit and Other Intangibles | 7,729 | 8,250 | 9,436 | 3,537 | 3,804 | |||||||||||||||
| Tangible Equity | $ | 374,271 | $ | 372,076 | $ | 366,805 | $ | 282,931 | $ | 274,925 | ||||||||||
| Common Shares Outstanding | 15,878,193 | 15,960,916 | 15,957,830 | 11,433,554 | 11,408,712 | |||||||||||||||
| Tangible Book Value per Share | $ | 23.57 | $ | 23.31 | $ | 22.99 | $ | 24.75 | $ | 24.10 | ||||||||||
Non-PPP Core Banking Loans
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Loans and leases, net of unearned interest | $ | 3,180,033 | $ | 3,121,531 | $ | 3,104,396 | $ | 2,370,429 | $ | 2,495,192 | ||||||||||
| Less: PPP loans, net of deferred fees | 4,966 | 34,124 | 111,286 | 229,679 | 391,826 | |||||||||||||||
| Non-PPP core banking loans | $ | 3,175,067 | $ | 3,087,407 | $ | 2,993,110 | $ | 2,140,750 | $ | 2,103,366 | ||||||||||
Core Earnings Per Common Share Excluding Non-Recurring Expenses
| Three Months Ended | ||||||||||||||||||||
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Net Income Available to Common Shareholders | $ | 12,252 | $ | 11,354 | $ | 607 | $ | 9,787 | $ | 9,613 | ||||||||||
| Plus: Merger and Acquisition Expenses | — | 329 | 12,227 | 198 | 522 | |||||||||||||||
| Less: Tax Effect of Merger and Acquisition Expenses | — | 69 | 2,568 | 42 | 110 | |||||||||||||||
| Net Income Excluding Non-Recurring Expenses | $ | 12,252 | $ | 11,614 | $ | 10,266 | $ | 9,943 | $ | 10,025 | ||||||||||
| Weighted Average Shares Outstanding - denominator | 15,935,003 | 15,957,864 | 13,005,895 | 11,423,487 | 10,321,838 | |||||||||||||||
| Core Earnings Per Common Share Excluding Non-Recurring Expenses | $ | 0.77 | $ | 0.73 | $ | 0.79 | $ | 0.87 | $ | 0.97 | ||||||||||
| Return on Average Tangible Common Equity | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands, except per share data) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Net income available to common shareholders | $ | 12,252 | $ | 11,354 | $ | 607 | $ | 9,787 | $ | 9,613 | ||||||||||
| Plus: Intangible amortization, net of tax | 412 | 380 | 282 | 210 | 218 | |||||||||||||||
| $ | 12,664 | $ | 11,734 | $ | 889 | $ | 9,997 | $ | 9,831 | |||||||||||
| Average shareholder's equity | $ | 495,681 | $ | 494,019 | $ | 403,010 | $ | 345,816 | $ | 312,006 | ||||||||||
| Less: Average goodwill | 113,835 | 113,835 | 113,835 | 62,840 | 62,840 | |||||||||||||||
| Less: Average core deposit and other intangibles | 7,983 | 8,950 | 9,436 | 3,666 | 3,938 | |||||||||||||||
| Average tangible shareholder's equity | $ | 373,863 | $ | 371,234 | $ | 279,739 | $ | 279,310 | $ | 245,228 | ||||||||||
| Return on average tangible common equity | 13.59 | % | 12.82 | % | 1.26 | % | 14.20 | % | 15.72 | % | ||||||||||
| Efficiency Ratio | ||||||||||||||||||||
| Jun. 30, | Mar. 31, | Dec. 31, | Sept. 30, | Jun. 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| Noninterest expense | $ | 23,915 | $ | 25,745 | $ | 34,072 | $ | 20,019 | $ | 19,456 | ||||||||||
| Less: Merger and acquisition expenses | — | 329 | 12,227 | 198 | 522 | |||||||||||||||
| Less: Intangible amortization | 521 | 481 | 357 | 266 | 276 | |||||||||||||||
| Less: (Gain) loss on sale or write-down of foreclosed assets, net | (15 | ) | (16 | ) | 1 | (7 | ) | (19 | ) | |||||||||||
| Efficiency ratio numerator | $ | 23,409 | $ | 24,951 | $ | 21,487 | $ | 19,562 | $ | 18,677 | ||||||||||
| Net interest income | 35,433 | 34,414 | 29,372 | 26,994 | 26,877 | |||||||||||||||
| Noninterest income | 5,230 | 5,750 | 5,660 | 5,509 | 5,652 | |||||||||||||||
| Less: Net gain on sales of investment securities | — | — | — | 79 | — | |||||||||||||||
| Efficiency ratio denominator | $ | 40,663 | $ | 40,164 | $ | 35,032 | $ | 32,424 | $ | 32,529 | ||||||||||
| Efficiency ratio | 57.57 | % | 62.12 | % | 61.34 | % | 60.33 | % | 57.42 | % | ||||||||||
CONTACTS Rory G. Ritrievi President & Chief Executive Officer Allison S. Johnson Chief Financial Officer 1-866-642-7736
