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Section 1: 8-K (8-K_063019)

mpb-8k_20190724.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 24, 2019

 

MID PENN BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

 



 

 

 

 

 

Pennsylvania

1-13677

25-1666413

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission File Number)

(I.R.S. Employer

Identification Number)

 

 

349 Union Street

Millersburg, Pennsylvania

1.866.642.7736

17061

(Address of Principal Executive Offices)

( Registrant’s telephone number, including area code)

(Zip Code)

 

 

 

 

Not Applicable

 

(Former Name or Former Address, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $1.00 par value per share

 

MPB

 

The NASDAQ Stock Market LLC

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b) )

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4( c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 


 

 

MID PENN BANCORP, INC.

CURRENT REPORT ON FORM 8-K

 

ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 25, 2019, Mid Penn Bancorp, Inc. (the “Corporation”) issued a press release discussing its financial results for the three and six months ended June 30, 2019.  A copy of the Corporation’s press release dated July 25, 2019 is furnished herewith as Exhibit 99.1, and is incorporated herein by reference.

ITEM 8.01OTHER EVENTS

 

On July 24, 2019, the Board of Directors of the Corporation declared a quarterly cash dividend of $0.18 per common share payable on August 26, 2019 to shareholders of record as of August 7, 2019.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits.

99.1Press release, dated July 25, 2019, of Mid Penn Bancorp, Inc.


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

MID PENN BANCORP, INC.

(Registrant)

 

 

 

Date:  July 25, 2019

By:

/s/ Rory G. Ritrievi

 

Rory G. Ritrievi

 

President and Chief Executive Officer

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

mpb-ex991_6.htm

Exhibit 99.1

PRESS RELEASE

Mid Penn Bancorp, Inc.

349 Union Street

Millersburg, PA  17061

1-866-642-7736

CONTACTS

 

Rory G. Ritrievi

President & Chief Executive Officer

Michael D. Peduzzi, CPA

Chief Financial Officer

 

MID PENN BANCORP, INC. REPORTS SECOND QUARTER 2019 EARNINGS

AND DECLARES QUARTERLY DIVIDEND

 

July 25, 2019 – Millersburg, PA – Mid Penn Bancorp, Inc. (“Mid Penn”) (NASDAQ: MPB), the parent company of Mid Penn Bank (the “Bank”), today reported net income to common shareholders (earnings) for the quarter ended June 30, 2019 of $4,403,000 or $0.52 per common share basic and diluted, compared to earnings of $2,779,000 or $0.45 per common share basic and diluted for the quarter ended June 30, 2018.  The second quarter 2019 earnings per share (EPS) represents an increase of over 15 percent compared to the EPS for the second quarter of 2018.

 

Earnings for the six months ended June 30, 2019 were $8,480,000 or $1.00 per common share basic and diluted, compared to earnings of $3,783,000 or $0.63 per common share basic and diluted for the six months ended June 30, 2018. The results for the six months ended June 30, 2018 included merger and acquisition expenses resulting from (i) Mid Penn’s legal closing of its acquisition of The Scottdale Bank & Trust Company (“Scottdale”) on January 8, 2018, and (ii) Mid Penn entering into a merger agreement with First Priority Financial Corp. (“First Priority”) on January 16, 2018 (the First Priority acquisition legally closed on July 31, 2018).  No merger and acquisition expenses were recorded during the six months ended June 30, 2019.  Adjusted earnings for the six months ended June 30, 2018, when excluding the after-tax impact of merger and acquisition expenses (with such adjusted earnings being a non-GAAP measure), were $5,428,000 or $0.90 per share basic and diluted.  The increase in adjusted earnings per share for the six months ended June 30, 2019, compared to the same period in 2018, was $0.10 per share or 11 percent.  Please refer to the section included herein under the heading “Reconciliation of Non-GAAP Measures (Unaudited)” for a discussion of our use of non-GAAP adjusted financial information, which includes tables reconciling GAAP and non-GAAP adjusted financial measures for the quarters ended June 30, 2019 and 2018 and certain other periods.  

 

Tangible book value per common share, a non-GAAP measure that is regularly reported in the banking industry and the most directly comparable non-GAAP measure to book value per share, favorably increased to $19.13 as of June 30, 2019, compared to $18.10 as of December 31, 2018, and $18.58 as of June 30, 2018.  Mid Penn’s book value per share increased to $27.32 at June 30, 2019, compared to $26.38 as of December 31, 2018, and $23.15 at June 30, 2018.    

 

Mid Penn also reported total assets of $2,136,122,000 as of June 30, 2019, reflecting an increase of $58,141,000 or 3 percent compared to total assets of $2,077,981,000 as of December 31, 2018, and an increase of $720,475,000 or 51 percent compared to total assets of $1,415,647,000 as of June 30, 2018.  Asset growth during the first six months of 2019 was primarily attributable to (i) net organic loan growth, (ii) an increase in liquid assets primarily from demand deposit growth, and (iii) the recording of operating and finance lease right of use assets as a result of Mid Penn’s adoption of Accounting Standard Codification (ASC) 842 – Leases effective January 1, 2019, which required adopting entities to record a right of use asset and related liability for leases of property or equipment.

 

A significant portion of the asset growth in the twelve months ending June 30, 2019 resulted from Mid Penn’s acquisition of First Priority which legally closed effective July 31, 2018.  In general, the results of operations and the financial condition as of and for the periods ended June 30, 2019, as compared to prior periods and certain period-end dates in 2018, have been materially impacted by Mid Penn’s 2018 acquisitions of First Priority and Scottdale.

 

Mid Penn also reported that its Board of Directors, at a meeting held on July 24, 2019, declared a quarterly dividend per common share of $0.18 payable on August 26, 2019, to shareholders of record as of August 7, 2019.  

 


1


PRESIDENT’S STATEMENT

 

Mid Penn’s results for both the second quarter and the first half of 2019 reflect our continued core performance and growth in our legacy markets, and the accretive benefit of our 2018 acquisitions, which expanded our footprint into the Southeastern Pennsylvania and Western Pennsylvania markets.  In addition to these efforts which resulted in greater profitability, we remain focused on providing sound returns and increasing value to our shareholders, reflected by both our $0.18 quarterly dividend and the $1.03 year-to-date increase in our tangible book value per share.  Through our successful business development efforts for the six months ended June 30, 2019, we have increased total loans outstanding at an annualized growth rate of 8 percent, and increased deposits at an annualized growth rate of 6 percent, and despite the challenges of a competitive market interest rate environment, we increased our taxable-equivalent net interest margin to 3.69% compared to 3.53% for the same six-month period in 2018.  We are confident that as we look to the remainder of 2019 and beyond, the impact of our core organic growth, and the longer-term benefits of our recent acquisitions, will continue to have accretive benefits as we further implement new business development activities and overhead cost control measures.

 

OPERATING RESULTS

 

Net Interest Income and Net Interest Margin

 

Net interest income was $17,770,000 for the three months ended June 30, 2019, an increase of $6,356,000 or 56 percent compared to net interest income of $11,414,000 for the three months ended June 30, 2018.  Through the first six months of 2019, net interest income was $35,076,000, an increase of $12,784,000 or 57 percent compared to net interest income of $22,292,000 for the same period in 2018.  The primary source of the net interest income growth for both the three and six month periods was an increase in interest and fees on loans, as total loans increased $651,694,000 or 63 percent since June 30, 2018.  The substantial increase in total loans outstanding from June 30, 2018 to June 30, 2019 was comprised of organic loan growth of $185,756,000 and $465,938,000 of loans acquired from First Priority.

 

Net interest income for the second quarter of 2019 increased by $464,000 compared to net interest income for the first quarter of 2019 as increases from both loan growth and increasing yields on interest-earning assets more than offset increases in both the volume and costs of deposits, particularly money market accounts.  The increase in the cost of funds for the second quarter of 2019, compared to both the first quarter in 2019 and previous quarters in 2018, was impacted by the four 0.25% Federal Open Market Committee (“FOMC”) rate increases during 2018, which resulted in both increased deposit rates and short-term borrowing costs for liquidity management.

 

For the three months ended June 30, 2019, Mid Penn’s tax-equivalent net interest margin was 3.69% compared to 3.55% for the three months ended June 30, 2018.  For the six months ended June 30, 2019, Mid Penn’s tax-equivalent net interest margin was 3.69% versus 3.53% for the six months ended June 30, 2018. Year-over-year increases in yields on interest-earning assets and growth in noninterest-bearing deposits more than offset the impact of both (i) the rising cost of both deposit and borrowed funds as a result of the FOMC rate increases in 2018, and (ii) the higher volume of wholesale funding sources, including brokered time deposits and subordinated debt assumed in the First Priority acquisition, and other short-term borrowings added since June 30, 2018 to support liquidity and interest rate management while also partially funding loan growth.

 

Noninterest Income

 

During the three months ended June 30, 2019, noninterest income totaled $2,874,000, an increase of $961,000 or 50 percent, compared to noninterest income of $1,913,000 for the three months ended June 30, 2018.  For the six months ended June 30, 2019, noninterest income totaled $4,923,000, an increase of $1,363,000 or 38 percent, compared to noninterest income of $3,560,000 for the same period in 2018.

 

Income from fiduciary activities was $706,000 for the six months ended June 30, 2019, an increase of $180,000 or over 34 percent, compared to fiduciary income of $526,000 for the six months ended June 30, 2018. These additional revenues were attributed to continued growth in trust assets under management, and increased sales of retail investment products, as a result of successful business development efforts by Mid Penn’s trust and wealth management team.

 

Mortgage banking income was $1,514,000 for the six months ended June 30, 2019, an increase of $1,153,000 or over 300 percent compared to mortgage banking income for the six months ended June 30, 2018. Longer-term mortgage interest rates have declined significantly in the first six months of 2019, resulting in a higher level of mortgage originations and secondary-market loan sales during the first six months of 2019 when compared to the same period in 2018.  Additionally, Mid Penn expanded its team of residential mortgage originators in southeastern Pennsylvania during the first quarter of 2019, contributing to the larger volume of mortgage loans originated and sold in the six months ended June 30, 2019.

 


2


ATM debit card interchange income was $714,000 for the six months ended June 30, 2019, an increase of $123,000 or over 20 percent compared to interchange income of $591,000 for the six months ended June 30, 2018. The increase resulted from increasing card-transaction usage across our customer base, as well as the added volume from demand deposit accounts assumed in the First Priority acquisition.

 

Other income was $749,000 for the six months ended June 30, 2019, a decrease of $97,000 compared to other income of $846,000 for the six months ended June 30, 2018. Although wire transfer and other fees increased in 2019, these were more than offset by a decline in pension settlement gain income year over year. During the first half of 2018, Mid Penn recognized $290,000 of defined benefit pension plan settlement gains from certain plan participants receiving lump sum benefit payouts (the plan and related liabilities were assumed as a result of the Scottdale acquisition).  During the first half of 2019, a lower amount of pension plan lump sum payouts occurred, with related settlement gains totaling $37,000.

 

Net gains on sales of securities were $24,000 for the six months ended June 30, 2019, a decrease of $78,000 compared to net gains on sales of securities of $102,000 for the six months ended June 30, 2018. During the first half of 2018, some investment securities acquired from Scottdale were subsequently sold at gains to ensure that the overall portfolio was in alignment with Mid Penn’s investment management objectives.  The volume of investment sales, and realized gains, were less during the first six months of 2019, with such sales related to interest rate and liquidity management.

 

Noninterest Expense

Noninterest expense for the three months ended June 30, 2019 totaled $14,796,000, an increase of $4,700,000 or 47 percent compared to noninterest expenses of $10,096,000 for the three months ended June 30, 2018.  For the six months ended June 30, 2019, noninterest expense totaled $29,099,000, an increase of $7,820,000 or 37 percent, compared to noninterest expense of $21,279,000 for the same period in 2018.  The significant increase in noninterest expense was driven by continued franchise expansion which occurred in the twelve months following June 30, 2018, including (i) the acquisition of First Priority in July 2018 and the associated staff, facilities, and technology licensing costs, and (ii) the expansion of Mid Penn’s mortgage banking division in the southeastern Pennsylvania market.

 

Salaries and employee benefits expenses were $15,545,000 during the six months ended June 30, 2019, an increase of $5,649,000 or 57 percent, versus the same period in 2018, with the increase primarily attributable to (i) the retail staff additions at the eight retail locations added through the First Priority acquisition, effective July 31, 2018, (ii) the back-office and loan originator staff additions as a result of the expansion of the mortgage banking division, and (iii) the addition of commercial lending and credit administration personnel and other staff additions in alignment with Mid Penn’s core banking growth.

 

Occupancy expenses increased $1,078,000 or 65 percent during the first six months of 2019 compared to the same period in 2018.  Similarly, equipment expense increased $333,000 or 35 percent during the six months ended June 30, 2019 compared to the six months ended June 30, 2018.  These increases related to the incremental facilities operating costs including rent, utilities, and depreciation expense for the buildings and equipment associated with (i) the acquisition of the First Priority retail offices, and (ii) an investment in a corporate administrative facility to promote long-term operational and processing efficiencies by centralizing several back-office functions supporting the broader franchise.  

 

FDIC assessment expense was $673,000 for the six months ended June 30, 2019, an increase of $352,000 or 110 percent compared to $321,000 for the six months ended June 30, 2018.  The increase in assessment expense generally reflects the larger total asset profile (from both acquisition and organic growth activity) upon which the assessment is based.  

 

Legal and professional fees for the six months ended June 30, 2019 increased by $413,000 or 86 percent compared to the same period in 2018 due to increased use of third-party providers for audit and risk assessment activities, information technology support, and human resources services.

 

Software licensing and utilization costs were $2,132,000 during the six months ended June 30, 2019, an increase of $448,000 or 27 percent compared to $1,684,000 for the six months ended June 30, 2018. The increase is a result of additional costs to license (i) the locations and staff for the First Priority offices, the Pillow branch, and the expanded mortgage banking division, all of which were added after June 30, 2018; (ii) upgrades to internal systems to enhance data management and storage capabilities given the larger company profile; and (iii) increases in certain core processing fees as our customer base and account/transaction volumes continue to grow.

 

Intangible amortization increased from $496,000 during the six months ended June 30, 2018 to $723,000 during the same period in 2019 due to the core deposit intangible asset added from the First Priority acquisition in July 2018 which, similar to previously recorded core deposit intangibles, is being amortized using the sum of the years’ digit method over a ten-year period starting on date of acquisition.

 

3


Other expenses were $3,988,000 during the six months ended June 30, 2019, an increase of $1,188,000 or 42 percent compared to other expense of $2,800,000 for the same period in 2018.  As the First Priority acquisition and organic growth have increased the organization’s geographic profile and employee base, several categories within other expense experienced increases, including insurance costs, charitable donations, stationary and supplies, printing, loan collection costs, and directors’ fees.

 

No merger expenses were recorded during the six months ended June 30, 2019.  During the first six months of 2018, merger and acquisition expenses totaling $1,916,000 were recorded including investment banking fees, merger-related legal and professional fees, severance costs, and information technology conversion/termination costs incurred for the acquisitions of First Priority and Scottdale.

 

FINANCIAL CONDITION

 

Loans

 

Total loans at June 30, 2019 were $1,688,173,000 compared to $1,624,067,000 at December 31, 2018, an increase of $64,106,000 or 4 percent since year-end 2018.  The majority of the growth was commercial and industrial financing, and commercial real estate credits.

 

Deposits

 

Total deposits increased $52,375,000 or 3 percent, from $1,726,026,000 at December 31, 2018, to $1,778,401,000 at June 30, 2019.  The increase was attributed to both cash management and commercial deposit business development and from increases in several retail branches.  In response to market rate changes attributable to both FOMC increases and aggressive bank and nonbank competition for liquidity, Mid Penn repriced certain deposits to both retain existing customer relationships, and to attract new customers across the expanded footprint.  

 

Investments

 

Mid Penn’s portfolio of held-to-maturity securities decreased 5 percent to $160,182,000 as of June 30, 2019, as compared to $168,370,000 as of December 31, 2018 (held-to-maturity investments are recorded at amortized cost), primarily from principal repayments on mortgage-backed securities.  Mid Penn’s total available-for-sale securities portfolio decreased $28,519,000 or 25 percent, from $111,923,000 at December 31, 2018 to $83,404,000 at June 30, 2019 due to both mortgage-backed securities repayments, and from investment sales related to portfolio strategies in support of both liquidity and interest rate risk management.

 

Capital

 

Shareholders’ equity increased by $8,053,000 or 4 percent from $223,209,000 as of December 31, 2018 to $231,262,000 as of June 30, 2019. The increase in shareholders’ equity reflects both (i) the growth in retained earnings through year-to-date net income, net of dividends paid, through the first six months of 2019, and (ii) the year-to-date accumulated other comprehensive income from the after-tax appreciation in the market value of the available-for-sale investment portfolio.  Regulatory capital ratios for both Mid Penn and its banking subsidiary exceeded regulatory “well-capitalized” levels at both June 30, 2019 and 2018.

 

ASSET QUALITY

 

Total nonperforming assets were $7,058,000 at June 30, 2019, a significant decrease compared to nonperforming assets of $12,283,000 at December 31, 2018, and $10,055,000 at June 30, 2018. Nonperforming assets were 0.42% of the total of loans plus other real estate assets as of June 30, 2019, compared to 0.76% as of December 31, 2018, and 0.97% as of June 30, 2018.  The decrease was primarily due to the successful workout of a nonaccrual commercial credit relationship totaling $4,302,000 during the first half of 2019.

 

The allowance for loan and lease losses as a percentage of total loans was 0.52% at both June 30, 2019 and December 31, 2018, compared to 0.79% at June 30, 2018.  Mid Penn had net loan charge-offs of $216,000 for the six months ended June 30, 2019 compared to net recoveries of $458,000 during the same period in 2018.  The net charge-off position in 2019 was primarily due to a $205,000 charge-off taken on one relationship during the second quarter of 2019.  The favorable net recovery position during the second quarter of 2018 was driven by the recovery of $777,000 of principal from the successful workout of a commercial real estate relationship that originally had a large partial charge-off in 2009.

 

Loan loss reserves as a percentage of nonperforming loans were 131% at June 30, 2019, compared to 75% at December 31, 2018, and 90% at June 30, 2018.  The increase in the loan loss reserves as a percentage of nonperforming loans at June 30, 2019 as compared to both the prior year-end and June 30, 2018 was a result of both the year-over-year decrease in nonperforming loans, and the favorable impact of acquired loans from First Priority not having a notable volume of nonperforming assets.


4


Based upon management’s evaluation of the adequacy of the loan and lease loss allowance, a loan loss provision of $590,000 was recorded for the six months ended June 30, 2019 compared to $125,000 recorded during the same period of 2018.  The increase in the provision amount year-over-year was warranted to support both (i) the adequacy of the ALLL given the organic loan portfolio growth during the first six months of 2019, and (ii) the impact of historical loss factor changes due to charge-offs taken during the first half of 2019.  Management believes, based on information currently available, that the allowance for loan and lease losses of $8,771,000 is adequate as of June 30, 2019, to cover probable and estimated loan losses in the portfolio.

 

FINANCIAL HIGHLIGHTS (Unaudited):

 

(Dollars in thousands, except

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

June 30,

 

per share data)

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

48,145

 

 

$

86,968

 

 

$

40,065

 

 

$

62,085

 

 

$

39,407

 

Investment securities

 

 

243,586

 

 

 

264,323

 

 

 

280,293

 

 

 

282,048

 

 

 

265,012

 

Loans

 

 

1,688,173

 

 

 

1,646,686

 

 

 

1,624,067

 

 

 

1,567,286

 

 

 

1,036,479

 

Allowance for loan and lease losses

 

 

(8,771

)

 

 

(8,502

)

 

 

(8,397

)

 

 

(8,229

)

 

 

(8,189

)

Net loans

 

 

1,679,402

 

 

 

1,638,184

 

 

 

1,615,670

 

 

 

1,559,057

 

 

 

1,028,290

 

Goodwill and other intangibles

 

 

69,304

 

 

 

69,665

 

 

 

70,061

 

 

 

70,475

 

 

 

27,985

 

Other assets

 

 

95,685

 

 

 

88,677

 

 

 

71,892

 

 

 

70,615

 

 

 

54,953

 

Total assets

 

$

2,136,122

 

 

$

2,147,817

 

 

$

2,077,981

 

 

$

2,044,280

 

 

$

1,415,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

287,183

 

 

$

290,902

 

 

$

269,870

 

 

$

271,142

 

 

$

207,013

 

Interest-bearing deposits

 

 

1,491,218

 

 

 

1,493,278

 

 

 

1,456,156

 

 

 

1,491,323

 

 

 

1,029,505

 

Total deposits

 

 

1,778,401

 

 

 

1,784,180

 

 

 

1,726,026

 

 

 

1,762,465

 

 

 

1,236,518

 

Borrowings and subordinated debt

 

 

105,105

 

 

 

113,661

 

 

 

118,206

 

 

 

46,923

 

 

 

29,583

 

Other liabilities

 

 

21,354

 

 

 

22,539

 

 

 

10,540

 

 

 

13,057

 

 

 

7,771

 

Shareholders' equity

 

 

231,262

 

 

 

227,437

 

 

 

223,209

 

 

 

221,835

 

 

 

141,775

 

Total liabilities and shareholders' equity

 

$

2,136,122

 

 

$

2,147,817

 

 

$

2,077,981

 

 

$

2,044,280

 

 

$

1,415,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Value per Common Share

 

$

27.32

 

 

$

26.88

 

 

$

26.38

 

 

$

25.83

 

 

$

23.15

 

Tangible Book Value per Common Share *

 

$

19.13

 

 

$

18.64

 

 

$

18.10

 

 

$

17.50

 

 

$

18.58

 

* Non-GAAP measure; see Reconciliation of Non-GAAP Measures

 

OPERATING HIGHLIGHTS (Unaudited):

 

 

Three Months Ended

 

 

Six Months Ended

 

(Dollars in thousands, except

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

June 30,

 

 

June 30,

 

per share data)

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

23,998

 

 

$

22,866

 

 

$

22,371

 

 

$

19,583

 

 

$

13,720

 

 

$

46,864

 

 

$

26,700

 

Interest expense

 

 

6,228

 

 

 

5,560

 

 

 

4,640

 

 

 

3,672

 

 

 

2,306

 

 

 

11,788

 

 

 

4,408

 

Net Interest Income

 

 

17,770

 

 

 

17,306

 

 

 

17,731

 

 

 

15,911

 

 

 

11,414

 

 

 

35,076

 

 

 

22,292

 

Provision for loan and lease losses

 

 

465

 

 

 

125

 

 

 

275

 

 

 

100

 

 

 

 

 

 

590

 

 

 

125

 

Noninterest income

 

 

2,874

 

 

 

2,049

 

 

 

2,091

 

 

 

2,165

 

 

 

1,913

 

 

 

4,923

 

 

 

3,560

 

Noninterest expense

 

 

14,796

 

 

 

14,303

 

 

 

13,982

 

 

 

15,264

 

 

 

10,096

 

 

 

29,099

 

 

 

21,279

 

Income before provision for income taxes

 

 

5,383

 

 

 

4,927

 

 

 

5,565

 

 

 

2,712

 

 

 

3,231

 

 

 

10,310

 

 

 

4,448

 

Provision for income taxes

 

 

980

 

 

 

850

 

 

 

916

 

 

 

548

 

 

 

452

 

 

 

1,830

 

 

 

665

 

Net income

 

 

4,403

 

 

 

4,077

 

 

 

4,649

 

 

 

2,164

 

 

 

2,779

 

 

 

8,480

 

 

 

3,783

 

Preferred stock dividends

 

 

 

 

 

 

 

 

64

 

 

 

38

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

4,403

 

 

$

4,077

 

 

$

4,585

 

 

$

2,126

 

 

$

2,779

 

 

$

8,480

 

 

$

3,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Common Share

 

$

0.52

 

 

$

0.48

 

 

$

0.54

 

 

$

0.28

 

 

$

0.45

 

 

$

1.00

 

 

$

0.63

 

Return on Average Equity

 

 

7.71

%

 

 

7.35

%

 

 

8.19

%

 

 

4.26

%

 

 

7.90

%

 

 

7.54

%

 

 

5.34

%

5


OPERATING HIGHLIGHTS, CONTINUED (Unaudited):

 

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

Tier 1 Capital (to Average Assets)

 

7.8%

 

 

7.8%

 

 

8.0%

 

 

7.7%

 

 

8.4%

 

Common Tier 1 Capital (to Risk Weighted Assets)

 

9.8%

 

 

9.9%

 

 

10.0%

 

 

10.1%

 

 

11.4%

 

Tier 1 Capital (to Risk Weighted Assets)

 

9.8%

 

 

9.9%

 

 

10.0%

 

 

10.1%

 

 

11.4%

 

Total Capital (to Risk Weighted Assets)

 

12.0%

 

 

12.2%

 

 

12.3%

 

 

12.4%

 

 

13.8%

 

 

RECONCILIATION OF NON-GAAP MEASURES (Unaudited:)

 

This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). 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.   We believe earnings per share excluding the after-tax impact of merger-related expenses provides important supplemental information in evaluating Mid Penn’s operating results because these charges are not incurred as a result of ongoing operations.  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. 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.

 

Tangible Book Value Per Share

 

(Dollars in thousands, except

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

June 30,

 

per share data)

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder's Equity

 

$

231,262

 

 

$

227,437

 

 

$

223,209

 

 

$

221,835

 

 

$

141,775

 

Less: Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

3,404

 

 

 

 

Less: Goodwill

 

 

62,840

 

 

 

62,840

 

 

 

62,840

 

 

 

62,767

 

 

 

23,107

 

Less: Core Deposit and Other Intangibles

 

 

6,464

 

 

 

6,825

 

 

 

7,221

 

 

 

7,708

 

 

 

4,878

 

Tangible Equity

 

$

161,958

 

 

$

157,772

 

 

$

153,148

 

 

$

147,956

 

 

$

113,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares Issued and Outstanding

 

 

8,465,178

 

 

 

8,462,431

 

 

 

8,459,918

 

 

 

8,457,023

 

 

 

6,124,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value per Share

 

$

19.13

 

 

$

18.64

 

 

$

18.10

 

 

$

17.50

 

 

$

18.58

 

 

Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses

 

(Dollars in thousands, except

 

Three Months Ended

 

 

Six Months Ended

 

per share data)

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

Net Income Available to Common Shareholders

 

$

4,403

 

 

$

4,077

 

 

$

4,585

 

 

$

2,126

 

 

$

2,779

 

 

$

8,480

 

 

$

3,783

 

Plus: Merger and Acquisition Expenses

 

 

 

 

 

 

 

 

(164

)

 

 

3,038

 

 

 

222

 

 

 

 

 

 

1,916

 

Less: Tax Effect of Merger and Acquisition Expenses

 

 

 

 

 

 

 

 

(35

)

 

 

576

 

 

 

(3

)

 

 

 

 

 

271

 

Net Income Excluding Non-Recurring Expenses

 

$

4,403

 

 

$

4,077

 

 

$

4,456

 

 

$

4,588

 

 

$

3,004

 

 

$

8,480

 

 

$

5,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding - denominator

 

 

8,462,522

 

 

 

8,460,002

 

 

 

8,457,054

 

 

 

7,695,469

 

 

 

6,122,757

 

 

 

8,461,269

 

 

 

6,049,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Common Share Excluding Non-Recurring Expenses

 

$

0.52

 

 

$

0.48

 

 

$

0.53

 

 

$

0.60

 

 

$

0.49

 

 

$

1.00

 

 

$

0.90

 

6


CONSOLIDATED BALANCE SHEETS (Unaudited):

(Dollars in thousands, except share data)

 

June 30, 2019

 

 

Dec. 31, 2018

 

 

June 30, 2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

33,177

 

 

$

24,600

 

 

$

25,436

 

Interest-bearing balances with other financial institutions

 

 

4,623

 

 

 

4,572

 

 

 

4,775

 

Federal funds sold

 

 

10,345

 

 

 

10,893

 

 

 

9,196

 

Total cash and cash equivalents

 

 

48,145

 

 

 

40,065

 

 

 

39,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities available for sale, at fair value

 

 

83,404

 

 

 

111,923

 

 

 

111,691

 

Investment securities held to maturity, at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

(fair value $162,863, $166,582, and $150,016)

 

 

160,182

 

 

 

168,370

 

 

 

153,321

 

Loans held for sale

 

 

8,139

 

 

 

1,702

 

 

 

1,185

 

Loans and leases, net of unearned interest

 

 

1,688,173

 

 

 

1,624,067

 

 

 

1,036,479

 

Less:  Allowance for loan and lease losses

 

 

(8,771

)

 

 

(8,397

)

 

 

(8,189

)

Net loans and leases

 

 

1,679,402

 

 

 

1,615,670

 

 

 

1,028,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment, net

 

 

23,583

 

 

 

25,303

 

 

 

23,905

 

Bank premises and equipment held for sale

 

 

1,274

 

 

 

 

 

 

 

Operating lease right of use asset

 

 

10,834

 

 

 

 

 

 

 

Finance lease right of use asset

 

 

3,537

 

 

 

 

 

 

 

Cash surrender value of life insurance

 

 

16,725

 

 

 

16,691

 

 

 

13,171

 

Restricted investment in bank stocks

 

 

6,480

 

 

 

6,646

 

 

 

2,765

 

Accrued interest receivable

 

 

8,883

 

 

 

8,244

 

 

 

5,372

 

Deferred income taxes

 

 

3,917

 

 

 

4,696

 

 

 

2,540

 

Goodwill

 

 

62,840

 

 

 

62,840

 

 

 

23,107

 

Core deposit and other intangibles, net

 

 

6,464

 

 

 

7,221

 

 

 

4,878

 

Foreclosed assets held for sale

 

 

390

 

 

 

1,017

 

 

 

912

 

Other assets

 

 

11,923

 

 

 

7,593

 

 

 

5,103

 

Total Assets

 

$

2,136,122

 

 

$

2,077,981

 

 

$

1,415,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

287,183

 

 

$

269,870

 

 

$

207,013

 

Interest-bearing demand

 

 

404,651

 

 

 

384,834

 

 

 

349,109

 

Money Market

 

 

451,667

 

 

 

375,648

 

 

 

273,215

 

Savings

 

 

183,019

 

 

 

209,345

 

 

 

171,845

 

Time

 

 

451,881

 

 

 

486,329

 

 

 

235,336

 

Total Deposits

 

 

1,778,401

 

 

 

1,726,026

 

 

 

1,236,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

13,000

 

 

 

43,100

 

 

 

 

Long-term debt

 

 

65,035

 

 

 

48,024

 

 

 

12,241

 

Subordinated debt

 

 

27,070

 

 

 

27,082

 

 

 

17,342

 

Operating lease liability

 

 

11,983

 

 

 

 

 

 

 

Accrued interest payable

 

 

2,696

 

 

 

2,262

 

 

 

1,186

 

Other liabilities

 

 

6,675

 

 

 

8,278

 

 

 

6,585

 

Total Liabilities

 

 

1,904,860

 

 

 

1,854,772

 

 

 

1,273,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $1.00 per share; 20,000,000 shares authorized; 8,465,178 shares issued and outstanding at June 30, 2019; 10,000,000 shares authorized; 8,459,918 and 6,124,517 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively

 

 

8,465

 

 

 

8,460

 

 

 

6,125

 

Additional paid-in capital

 

 

177,850

 

 

 

177,565

 

 

 

103,498

 

Retained earnings

 

 

44,721

 

 

 

39,562

 

 

 

35,386

 

Accumulated other comprehensive income (loss)

 

 

226

 

 

 

(2,378

)

 

 

(3,234

)

Total Shareholders’ Equity

 

 

231,262

 

 

 

223,209

 

 

 

141,775

 

Total Liabilities and Shareholders' Equity

 

$

2,136,122

 

 

$

2,077,981

 

 

$

1,415,647

 

 

 


7


CONSOLIDATED STATEMENTS OF INCOME (Unaudited):

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

22,214

 

 

$

12,073

 

 

$

43,292

 

 

$

23,410

 

Interest on interest-bearing balances

 

 

27

 

 

 

17

 

 

 

57

 

 

 

26

 

Interest on federal funds sold

 

 

130

 

 

 

153

 

 

 

198

 

 

 

321

 

Interest and dividends on investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and government agencies

 

 

839

 

 

 

884

 

 

 

1,732

 

 

 

1,636

 

State and political subdivision obligations, tax-exempt

 

 

584

 

 

 

517

 

 

 

1,203

 

 

 

1,059

 

Other securities

 

 

204