HARRISBURG, Pa., Jan. 25, 2023 (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 December 31, 2022 of $15.7 million, or $0.99 per common share basic and diluted.
Key Highlights in the Fourth Quarter of 2022
- Earnings increased $238 thousand to $15.7 million, or 1.5%, for the quarter ended December 31, 2022 compared to $15.5 million for the quarter ended September 30, 2022.
- Tax equivalent net interest margin was 3.80% compared to 3.92% in the prior quarter and 3.16% in the fourth quarter of 2021.
- Loans and leases, net ("loans") grew 22.9% (annualized) during the three months ended December 31, 2022 from the third quarter of 2022.
- Return on average assets was 1.42% for the quarter ended December 31, 2022.
- Return on average equity and return on average tangible common equity(1) were 12.33% and 16.61%, respectively, for the fourth quarter of 2022, up from 12.23% and 16.55%, respectively, for the third quarter of 2022.
- Book value per common share increased to $32.24 for the fourth quarter, up from $31.42 in the third quarter, while tangible book value per share(1) increased to $24.59 at December 31, 2022, compared to $23.80, at September 30, 2022.
"It is with great enthusiasm that we deliver these fourth quarter and full year earnings report. For the quarter, we generated net income available to common shareholders of $15.7 million, or $0.99 per common share, which compares favorably to both the $607 thousand, or $0.05 per common share, generated in the fourth quarter of 2021, which was negatively impacted by merger and acquisition charges, and the $15.5 million, or $0.97 per common share, generated in the third quarter of 2022." said Rory G. Ritrievi, President and CEO. "For the year, we generated net income available to common shareholders of $54.8 million, or $3.44 per common share, which compares favorably to the $29.3 million, or $2.71 per common share, for the year ended December 31, 2021. This year's net income and our earnings per common share are both records for the company. We accomplished this great quarter and this great year through continued successes in: high quality loan growth of 22.9% (annualized) for the quarter and 13.2% for the full year, noninterest income growth of 18.6% for the quarter compared to the fourth quarter of 2021 and 9.9% for the year, and a controlled growth in operating expenses."
"Those successes were accomplished by our incredible employees working together within our customer relationship focused model to deliver the best service in our footprint. The Board is very proud of that employee group for following our strategic plan to a tee and delivering the best annual results our shareholders have seen," said Mr. Ritrievi.
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 January 25, 2023, payable on February 20, 2023 to shareholders of record as of February 10, 2023.
(1)Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document.
Net Interest Income and Average Balance Sheet
For the three months ended December 31, 2022, net interest income was $38.6 million compared to net interest income of $39.4 million for the three months ended September 30, 2022 and $29.4 million for the three months ended December 31, 2021. The tax-equivalent net interest margin for the three months ended December 31, 2022 was 3.80% compared to 3.92% for the third quarter of 2022 and 3.16% for the fourth quarter of 2021, a 12 basis point(s) ("bp") decrease and a 64 bp increase, respectively, compared to the prior quarter and the same period in 2021. The linked quarter decrease was primarily the result of a 60 bp increase in the rate on interest-bearing liabilities, partially offset by a 32 bp increase in the yield on interest-earning assets. The increase in the rate on interest-bearing liabilities compared to the linked quarter was primarily the result of higher deposit pricing to attract and retain new and existing customers. The increase in the yield on interest-earning assets was primarily driven by the increase of the yield on loans by 25 bp, to 4.98% during the fourth quarter of 2022.
The 108 bp increase in the yield on interest-earning assets compared to the fourth quarter of 2021 was primarily driven by the increase of loan yields of 22 bp and the increase on the yield of taxable investment securities of 98 bp. Additionally, average interest-earning assets increased $346.5 million and average interest-bearing liabilities increased $263.8 million from the fourth quarter of 2021, primarily due to the inclusion of only one month in 2021 in the average balances of the assets and liabilities obtained through the acquisition of Riverview Financial Corporation ("Riverview"), which closed on November 30, 2021. The increase in average interest-earning assets was also impacted by loan growth and re-deployment of cash into investment securities partially offset by a decrease in federal funds sold. 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 increases in the fed fund rate during 2022. The increase in the rate on interest-bearing liabilities was primarily the result of higher deposit pricing to attract and retain new and existing customers.
For the year ended December 31, 2022, net interest income was $147.8 million, a $39.3 million, or 36.2%, increase compared to net interest income of $108.6 million for the year ended December 31, 2021. The year-over-year increase in net interest income was positively impacted by the Riverview acquisition in the fourth quarter of 2021, the deployment of fed funds into higher yielding investment securities in the first half of 2022, interest and fees from core loan growth and lower cost of deposits in the year ended December 31, 2022, when compared to the same period in 2021. The tax-equivalent net interest margin for the year ended December 31, 2022 was 3.59%, a 29 bp increase compared to 3.30% for the year ended December 31, 2021. The increase was primarily the result of a $828.1 million increase in the average balance of interest-earning assets and an increase in the yield of total interest-earning assets of 28 bp, partially offset by a $601.4 million increase in average interest-bearing liabilities and the reduction of Paycheck Protection Program ("PPP") fees recognized during 2022 compared to the same period in 2021.
The three months ended December 31, 2022 included the recognition of $29 thousand of PPP loan processing fees compared to $4.4 million of PPP loan processing fees recognized during the three months ended December 31, 2021. The year ended December 31, 2022 included the recognition of $3.8 million of PPP loan processing fees, a decrease of $18.2 million compared to $22.0 million of PPP loan processing fees recognized during the year ended 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 December 31, 2022, $43 thousand of PPP fees remained.
Total average assets were $4.4 billion for the fourth quarter of 2022, reflecting an increase of $41.4 million, or 1.0%, and $437.1 million, or 11.1% compared to total average assets of $4.3 billion and $3.9 billion for the third quarter of 2022 and the fourth quarter of 2021, respectively. Total average assets were $4.5 billion for the year ended 2022, reflecting an increase of $948.9 million, or 27.0%, compared to total average assets of $3.5 billion for the year ended 2021. The increase in total average assets for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily attributable to the Riverview acquisition, effective November 30, 2021.
Total average loans were $3.4 billion for the fourth quarter of 2022, reflecting an increase of $157.7 million, or 4.9%, compared to total average loans of $3.2 billion in the third quarter of 2022, and an increase of $800.2 million, or 30.8%, compared to total average loans of $2.6 billion for the fourth quarter of 2021. Total average loans were $3.2 billion for the year ended 2022, reflecting an increase of $678.2 million, or 26.7%, compared to total average loans for the year ended 2021. The year-over-year growth is largely attributable to the Riverview acquisition.
Total average deposits were $3.7 billion for the fourth quarter of 2022, reflecting an increase of $629 thousand compared to total average deposits in the third quarter of 2022, and an increase of $359.2 million, or 10.7%, compared to total average deposits of $3.4 billion for the fourth quarter of 2021. The average cost of deposits was 0.74% for the fourth quarter of 2022, representing a 44 bp increase from the third quarter of 2022 and the fourth quarter of 2021. Total average deposits were $3.8 billion for the year ended December 31, 2022, reflecting an increase of $937.0 million, or 32.5%, compared to total average deposits of $2.9 billion for the same period of 2021. The year-over-year growth in average deposits 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 $525 thousand for the three months ended December 31, 2022, a decrease of $1.0 million compared to the provision for loan and lease losses of $1.6 million for the three months ended September 30, 2022 and an increase of $155 thousand compared to the provision for loan and lease losses of $370 thousand for the three months ended December 31, 2021. The provision for loan and lease losses was $4.3 million for the year ended December 31, 2022, an increase of $1.4 million compared to the $2.9 million provision for loan and lease losses for the year ended December 31, 2021. This reduction in the provision for the fourth quarter was primarily due to an improvement in credit quality, driven by positive risk rate migration in large portfolios. The increase in the provision for loan and lease losses for the year ended December 31, 2022 was primarily the result of one commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the second quarter of 2022 and the growth in total loans during 2022.
Total nonperforming assets were $8.6 million at December 31, 2022, compared to nonperforming assets of $10.0 million at December 31, 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 acquisition totaling $2.9 million and $3.3 million as of December 31, 2022 and 2021, respectively.
The allowance for loan and lease losses as a percentage of total loans, including PPP loans, was 0.54% at December 31, 2022, compared to 0.56% at September 30, 2022 and 0.47% at December 31, 2021.
Capital
Shareholders' equity increased $22.0 million, or 4.49%, from $490.1 million as of December 31, 2021 to $512.1 million as of December 31, 2022. Mid Penn declared $12.7 million in dividends during 2022 and repurchased $3.0 million of common stock through its treasury stock repurchase program. 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 December 31, 2022 and December 31, 2021.
Noninterest Income
For the three months ended December 31, 2022, noninterest income totaled $6.7 million, an increase of $751 thousand, or 12.6%, compared to noninterest income of $6.0 million for the third quarter of 2022, primarily a result of increases in other income, which included a branch sale. For the three months ended December 31, 2022, noninterest income increased $1.1 million, or 18.6%, compared to noninterest income of $5.7 million for the fourth quarter of 2021, primarily driven by increases of $2.3 million in other income, $307 thousand in income from fiduciary and wealth management activities and $265 thousand in ATM debit card interchange income, partially offset by a decrease of $1.7 million in mortgage banking income. The increase in income from fiduciary activities was attributable to favorable 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. 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. 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 2022.
For the year ended December 31, 2022, noninterest income totaled $23.7 million, an increase of $2.1 million, or 9.9%, compared to noninterest income of $21.5 million for the year ended December 31, 2021, primarily driven by increases of $4.2 million in other income, $2.6 million in income from fiduciary activities, $1.7 million in ATM debit card interchange income and $1.1 million in service charges on deposits. The increase in other income was primarily the result of higher insurance commissions, letter of credit fees, a gain on sale of a branch office and income from the early termination of a lease in 2022 compared to the year ended December 31, 2021. The increases in fiduciary activities was a result of increased activity in the wealth management area and the Riverview acquisition. 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. These favorable variances were partially offset by a decrease in mortgage banking income of $8.7 million for the year ended December 31, 2022 compared to the same period of 2021. Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during 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
Noninterest expense totaled $25.5 million, an increase of $753 thousand, or 3.0%, for the three months ended December 31, 2022, compared to noninterest expense of $24.7 million for the third quarter of 2022. The increase was primarily the result of a $843 thousand increase in charitable contributions qualifying for state tax credits, which typically occur more frequently towards the end of the year, a $372 thousand increase in legal and professional fees and $294 thousand of merger and acquisition expenses recorded in the fourth quarter of 2022.
Compared to the fourth quarter of 2021, noninterest expense in the fourth quarter of 2022 decreased $8.6 million, or 25.3%, from $34.1 million to $25.5 million as a result of merger and acquisition and post-acquisition restructuring expenses totaling $12.2 million. This decrease in noninterest expense was partially offset by increases in operating expenses from the Riverview acquisition. The most significant increases were $1.6 million in salaries and benefits, $631 thousand in other expenses, $400 thousand in occupancy and $385 thousand in equipment expense. In addition, legal and professional fees were $512 thousand higher in the fourth quarter of 2022 compared to the fourth quarter in 2021.
For the year ended December 31, 2022, noninterest expense totaled $99.8 million, an increase of $8.7 million, or 9.6%, compared to noninterest expense of $91.1 million for the year ended December 31, 2021, primarily as the result of higher expenses attributable to the Riverview acquisition, most significantly increases of $10.9 million in salaries and benefits and $4.7 million in other expenses. The increase in expense was partially offset by $623 thousand in merger and acquisition and post-acquisition restructuring expenses for the year ended December 31, 2022 compared to $12.9 million for the year ended 2021.
The efficiency ratio(1) was 54.59% in the fourth quarter of 2022, compared to 53.46% in the third quarter of 2022, and 61.34% in the fourth quarter of 2021. The change in the efficiency ratio during the fourth quarter 2022 compared to the third quarter of 2022 was the result of lower net interest income and higher noninterest expenses, partially offset by higher noninterest income. The improvement in the efficiency ratio during the fourth quarter 2022 compared to the fourth quarter of 2021 was the result of higher net interest income, partially offset by higher noninterest expenses, excluding the merger and acquisition expense.
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 release. For more information regarding this transaction, please see Mid Penn's Annual Report on Form 10-K for the year ended December 31, 2021.
On December 20, 2022, Mid Penn announced its entry into an agreement and plan of merger with Brunswick Bancorp ("Brunswick"). The acquisition will result in a meaningful expansion for Mid Penn into the attractive central New Jersey market. Mid Penn will acquire Brunswick in a combination cash and stock transaction valued at approximately $53.9 million (based on Mid Penn's closing stock price of $30.95 for the trading day ending December 19, 2022).
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 occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Mid Penn and Brunswick; the outcome of any legal proceedings that may be instituted against Mid Penn or Brunswick; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to obtain shareholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Mid Penn and Brunswick do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Mid Penn and Brunswick successfully; the dilution caused by Mid Penn's issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Mid Penn and Brunswick.
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):
| (Dollars in thousands, except per share data) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | ||||||||||||||
| Ending Balances: | |||||||||||||||||||
| Investment securities | $ | 637,802 | $ | 644,766 | $ | 618,184 | $ | 508,658 | $ | 392,619 | |||||||||
| Net loans and leases | 3,495,162 | 3,303,977 | 3,163,157 | 3,106,384 | 3,089,799 | ||||||||||||||
| Total assets | 4,486,257 | 4,333,903 | 4,310,163 | 4,667,174 | 4,689,425 | ||||||||||||||
| Total deposits | 3,778,331 | 3,729,596 | 3,702,587 | 3,989,037 | 4,002,016 | ||||||||||||||
| Shareholders' equity | 512,099 | 499,105 | 495,835 | 494,161 | 490,076 | ||||||||||||||
| Average Balances: | |||||||||||||||||||
| Investment securities | 640,792 | 626,447 | 580,406 | 462,648 | 286,134 | ||||||||||||||
| Net loans | 3,395,308 | 3,237,587 | 3,129,334 | 3,103,469 | 2,319,544 | ||||||||||||||
| Total assets | 4,381,213 | 4,339,783 | 4,465,906 | 4,696,894 | 3,579,649 | ||||||||||||||
| Total deposits | 3,727,287 | 3,726,658 | 3,837,135 | 3,999,074 | 3,007,955 | ||||||||||||||
| Shareholders' equity | 505,769 | 502,082 | 495,681 | 494,019 | 403,010 | ||||||||||||||
| Income Statement: | Three Months Ended | ||||||||||||||||||
| Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |||||||||||||||
| Net interest income | $ | 38,577 | $ | 39,409 | $ | 35,433 | $ | 34,414 | $ | 29,372 | |||||||||
| Provision for loan and lease losses | 525 | 1,550 | 1,725 | 500 | 370 | ||||||||||||||
| Noninterest income | 6,714 | 5,963 | 5,230 | 5,750 | 5,660 | ||||||||||||||
| Noninterest expense | 25,468 | 24,715 | 23,915 | 25,745 | 34,072 | ||||||||||||||
| Income before provision for income taxes | 19,298 | 19,107 | 15,023 | 13,919 | 590 | ||||||||||||||
| Provision for income taxes | 3,579 | 3,626 | 2,771 | 2,565 | (17 | ) | |||||||||||||
| Net income available to shareholders | 15,719 | 15,481 | 12,252 | 11,354 | 607 | ||||||||||||||
| Net income excluding non-recurring expenses (1) | 15,951 | 15,481 | 12,252 | 11,614 | 10,266 | ||||||||||||||
| Per Share: | |||||||||||||||||||
| Basic earnings per common share | $ | 0.99 | $ | 0.97 | $ | 0.77 | $ | 0.71 | $ | 0.05 | |||||||||
| Diluted earnings per common share | $ | 0.99 | $ | 0.97 | $ | 0.77 | $ | 0.71 | $ | 0.05 | |||||||||
| Cash dividends declared | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | |||||||||
| Book value per common share | $ | 32.24 | $ | 31.42 | $ | 31.23 | $ | 30.96 | $ | 30.71 | |||||||||
| Tangible book value per common share (1) | $ | 24.59 | $ | 23.80 | $ | 23.57 | $ | 23.31 | $ | 22.99 | |||||||||
| Asset Quality: | |||||||||||||||||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.006 | % | -0.007 | % | -0.001 | % | -0.007 | % | 0.001 | % | |||||||||
| Non-performing loans to total loans | 0.25 | % | 0.23 | % | 0.25 | % | 0.25 | % | 0.32 | % | |||||||||
| Non-performing asset to total loans and other real estate | 0.25 | % | 0.23 | % | 0.25 | % | 0.26 | % | 0.32 | % | |||||||||
| Non-performing asset to total assets | 0.21 | % | 0.18 | % | 0.19 | % | 0.18 | % | 0.22 | % | |||||||||
| ALLL to total loans | 0.54 | % | 0.56 | % | 0.53 | % | 0.49 | % | 0.47 | % | |||||||||
| ALLL to nonperforming loans | 220.82 | % | 242.23 | % | 211.66 | % | 190.84 | % | 146.23 | % | |||||||||
| Profitability: | |||||||||||||||||||
| Return on average assets | 1.42 | % | 1.42 | % | 1.10 | % | 0.98 | % | 0.06 | % | |||||||||
| Return on average equity | 12.33 | % | 12.23 | % | 9.91 | % | 9.32 | % | 0.61 | % | |||||||||
| Return on average tangible common equity (1) | 16.61 | % | 16.55 | % | 13.59 | % | 12.82 | % | 1.26 | % | |||||||||
| Net interest margin | 3.80 | % | 3.92 | % | 3.45 | % | 3.21 | % | 3.16 | % | |||||||||
| Efficiency ratio (1) | 54.59 | % | 53.46 | % | 57.57 | % | 62.12 | % | 61.34 | % | |||||||||
| Capital Ratios: | |||||||||||||||||||
| Tier 1 Capital (to Average Assets) (2) | 10.7 | % | 9.6 | % | 9.0 | % | 8.4 | % | 8.1 | % | |||||||||
| Common Tier 1 Capital (to Risk Weighted Assets) (2) | 12.5 | % | 11.4 | % | 11.5 | % | 11.7 | % | 11.7 | % | |||||||||
| Tier 1 Capital (to Risk Weighted Assets) (2) | 12.5 | % | 11.7 | % | 11.8 | % | 12.0 | % | 12.0 | % | |||||||||
| Total Capital (to Risk Weighted Assets) (2) | 14.5 | % | 13.8 | % | 14.1 | % | 14.4 | % | 14.6 | % | |||||||||
(1) Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document
(2) Regulatory capital ratios as of December 31, 2022 are preliminary and prior periods are actual.
CONSOLIDATED BALANCE SHEETS (Unaudited):
| (In thousands, except share data) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 53,368 | $ | 76,018 | $ | 64,440 | $ | 54,961 | $ | 41,100 | |||||||||
| Interest-bearing balances with other financial institutions | 4,405 | 4,520 | 4,909 | 3,187 | 146,031 | ||||||||||||||
| Federal funds sold | 3,108 | 14,140 | 167,437 | 700,283 | 726,621 | ||||||||||||||
| Total cash and cash equivalents | 60,881 | 94,678 | 236,786 | 758,431 | 913,752 | ||||||||||||||
| Investment Securities: | |||||||||||||||||||
| Held to maturity, at amortized cost | 399,494 | 402,142 | 399,032 | 363,145 | 329,257 | ||||||||||||||
| Available for sale, at fair value | 237,878 | 242,195 | 218,698 | 145,039 | 62,862 | ||||||||||||||
| Equity securities available for sale, at fair value | 430 | 428 | 454 | 474 | 500 | ||||||||||||||
| Loans held for sale | 2,475 | 5,997 | 9,574 | 7,474 | 11,514 | ||||||||||||||
| Loans and leases, net of unearned interest | 3,514,119 | 3,322,457 | 3,180,033 | 3,121,531 | 3,104,396 | ||||||||||||||
| Less: Allowance for loan and lease losses | (18,957 | ) | (18,480 | ) | (16,876 | ) | (15,147 | ) | (14,597 | ) | |||||||||
| Net loans and leases | 3,495,162 | 3,303,977 | 3,163,157 | 3,106,384 | 3,089,799 | ||||||||||||||
| Premises and equipment, net | 34,471 | 33,854 | 33,732 | 33,612 | 33,232 | ||||||||||||||
| Bank premises and equipment held for sale | 1,306 | 2,262 | 2,574 | 3,098 | 3,907 | ||||||||||||||
| Operating lease right of use asset | 8,798 | 8,352 | 8,326 | 8,751 | 9,055 | ||||||||||||||
| Finance lease right of use asset | 2,907 | 2,952 | 2,997 | 3,042 | 3,087 | ||||||||||||||
| Cash surrender value of life insurance | 50,674 | 50,419 | 50,169 | 49,907 | 49,661 | ||||||||||||||
| Restricted investment in bank stocks | 8,315 | 4,595 | 4,234 | 7,637 | 9,134 | ||||||||||||||
| Accrued interest receivable | 18,405 | 15,861 | 12,902 | 11,584 | 11,328 | ||||||||||||||
| Deferred income taxes | 13,674 | 16,093 | 13,780 | 11,974 | 10,779 | ||||||||||||||
| Goodwill | 114,231 | 113,871 | 113,835 | 113,835 | 113,835 | ||||||||||||||
| Core deposit and other intangibles, net | 7,260 | 7,215 | 7,729 | 8,250 | 9,436 | ||||||||||||||
| Foreclosed assets held for sale | 43 | 49 | 69 | 125 | - | ||||||||||||||
| Other assets | 29,853 | 28,963 | 32,115 | 34,412 | 28,287 | ||||||||||||||
| Total Assets | $ | 4,486,257 | $ | 4,333,903 | $ | 4,310,163 | $ | 4,667,174 | $ | 4,689,425 | |||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 793,939 | $ | 863,037 | $ | 850,180 | $ | 866,965 | $ | 850,438 | |||||||||
| Interest-bearing transaction accounts | 2,325,847 | 2,414,272 | 2,377,260 | 2,568,918 | 2,524,921 | ||||||||||||||
| Time | 658,545 | 452,287 | 475,147 | 553,154 | 626,657 | ||||||||||||||
| Total Deposits | 3,778,331 | 3,729,596 | 3,702,587 | 3,989,037 | 4,002,016 | ||||||||||||||
| Short-term borrowings | 102,647 | - | - | - | - | ||||||||||||||
| Long-term debt | 4,409 | 4,501 | 4,592 | 74,681 | 81,270 | ||||||||||||||
| Subordinated debt and trust preferred securities | 56,941 | 66,357 | 73,995 | 74,134 | 73,645 | ||||||||||||||
| Operating lease liability | 9,725 | 10,261 | 10,324 | 10,923 | 11,363 | ||||||||||||||
| Accrued interest payable | 2,303 | 1,841 | 1,542 | 2,067 | 1,791 | ||||||||||||||
| Other liabilities | 19,802 | 22,242 | 21,288 | 22,171 | 29,264 | ||||||||||||||
| Total Liabilities | 3,974,158 | 3,834,798 | 3,814,328 | 4,173,013 | 4,199,349 | ||||||||||||||
| Shareholders' Equity: | |||||||||||||||||||
| Common stock, par value $1.00 per share; 20.0 million shares authorized | 16,094 | 16,091 | 16,081 | 16,059 | 16,056 | ||||||||||||||
| Additional paid-in capital | 386,987 | 386,452 | 386,128 | 385,765 | 384,742 | ||||||||||||||
| Retained earnings | 133,114 | 120,572 | 108,265 | 99,206 | 91,043 | ||||||||||||||
| Accumulated other comprehensive (loss) income | (19,216 | ) | (19,130 | ) | (9,759 | ) | (4,946 | ) | 158 | ||||||||||
| Treasury stock | (4,880 | ) | (4,880 | ) | (4,880 | ) | (1,923 | ) | (1,923 | ) | |||||||||
| Total Shareholders' Equity | 512,099 | 499,105 | 495,835 | 494,161 | 490,076 | ||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 4,486,257 | $ | 4,333,903 | $ | 4,310,163 | $ | 4,667,174 | $ | 4,689,425 | |||||||||
CONSOLIDATED STATEMENTS OF INCOME (Unaudited):
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | ||||||||||||||||||||
| INTEREST INCOME | |||||||||||||||||||||||||||
| Loans including fees, and lease | $ | 42,492 | $ | 38,484 | $ | 34,264 | $ | 35,016 | $ | 31,021 | $ | 150,256 | $ | 118,776 | |||||||||||||
| Investment securities: | |||||||||||||||||||||||||||
| Taxable | 3,784 | 3,382 | 2,833 | 1,953 | 1,044 | 11,952 | 2,602 | ||||||||||||||||||||
| Tax-exempt | 390 | 392 | 379 | 336 | 288 | 1,497 | 1,122 | ||||||||||||||||||||
| Interest on other interest-bearing balances | 36 | 12 | 8 | 13 | 8 | 69 | 13 | ||||||||||||||||||||
| Interest on federal funds sold | 40 | 736 | 736 | 314 | 324 | 1,826 | 809 | ||||||||||||||||||||
| Total Interest Income | 46,742 | 43,006 | 38,220 | 37,632 | 32,685 | 165,600 | 123,322 | ||||||||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||||||||||
| Deposits | 6,995 | 2,836 | 2,019 | 2,294 | 2,536 | 14,144 | 11,327 | ||||||||||||||||||||
| Short-term borrowings | 441 | - | - | - | - | 441 | 539 | ||||||||||||||||||||
| Long-term and subordinated debt | 729 | 761 | 768 | 924 | 777 | 3,182 | 2,888 | ||||||||||||||||||||
| Total Interest Expense | 8,165 | 3,597 | 2,787 | 3,218 | 3,313 | 17,767 | 14,754 | ||||||||||||||||||||
| Net Interest Income | 38,577 | 39,409 | 35,433 | 34,414 | 29,372 | 147,833 | 108,568 | ||||||||||||||||||||
| PROVISION FOR LOAN AND LEASE LOSSES | 525 | 1,550 | 1,725 | 500 | 370 | 4,300 | 2,945 | ||||||||||||||||||||
| Net Interest Income After Provision for Loan and Lease Losses | 38,052 | 37,859 | 33,708 | 33,914 | 29,002 | 143,533 | 105,623 | ||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||||||
| Fiduciary and wealth management | 1,085 | 1,729 | 1,205 | 1,052 | 778 | 5,071 | 2,494 | ||||||||||||||||||||
| ATM debit card interchange | 1,099 | 1,078 | 1,128 | 1,057 | 834 | 4,362 | 2,688 | ||||||||||||||||||||
| Service charges on deposits | 461 | 483 | 450 | 684 | 439 | 2,078 | 991 | ||||||||||||||||||||
| Mortgage banking | 237 | 536 | 305 | 529 | 1,932 | 1,607 | 10,314 | ||||||||||||||||||||
| Mortgage hedging | 150 | 217 | 538 | 566 | 42 | 1,471 | 64 | ||||||||||||||||||||
| Net gain (loss) on sales of SBA loans | - | 152 | 119 | (9 | ) | 409 | 262 | 969 | |||||||||||||||||||
| Earnings from cash surrender value of life insurance | 255 | 250 | 262 | 246 | 135 | 1,013 | 358 | ||||||||||||||||||||
| Net gain on sales of investment securities | - | - | - | - | - | - | 79 | ||||||||||||||||||||
| Other | 3,427 | 1,518 | 1,223 | 1,625 | 1,091 | 7,793 | 3,576 | ||||||||||||||||||||
| Total Noninterest Income | 6,714 | 5,963 | 5,230 | 5,750 | 5,660 | 23,657 | 21,533 | ||||||||||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||||||||||||
| Salaries and employee benefits | 13,434 | 13,583 | 12,340 | 13,244 | 11,838 | 52,601 | 41,711 | ||||||||||||||||||||
| Software licensing and utilization | 1,793 | 1,804 | 1,821 | 2,106 | 1,839 | 7,524 | 6,332 | ||||||||||||||||||||
| Occupancy, net | 1,812 | 1,634 | 1,655 | 1,799 | 1,412 | 6,900 | 5,527 | ||||||||||||||||||||
| Equipment | 1,249 | 1,121 | 1,112 | 1,011 | 864 | 4,493 | 3,101 | ||||||||||||||||||||
| Shares tax | 160 | 920 | 480 | 920 | (222 | ) | 2,786 | 800 | |||||||||||||||||||
| Legal and professional fees | 900 | 528 | 694 | 639 | 388 | 2,761 | 1,979 | ||||||||||||||||||||
| ATM/card processing | 534 | 518 | 571 | 517 | 357 | 2,139 | 1,053 | ||||||||||||||||||||
| Intangible amortization | 496 | 514 | 521 | 481 | 357 | 2,012 | 1,180 | ||||||||||||||||||||
| FDIC Assessment | 243 | 254 | 506 | 591 | 524 | 1,594 | 1,888 | ||||||||||||||||||||
| Charitable contributions qualifying for State tax credits | 843 | - | 125 | 65 | 797 | 1,033 | 1,432 | ||||||||||||||||||||
| Mortgage banking profit-sharing | - | - | 33 | 145 | 566 | 178 | 2,571 | ||||||||||||||||||||
| (Gain) loss on sale or write-down of foreclosed assets, net | (45 | ) | (57 | ) | (15 | ) | (16 | ) | 1 | (133 | ) | (25 | ) | ||||||||||||||
| Merger and acquisition | 294 | - | - | - | 2,347 | 294 | 3,067 | ||||||||||||||||||||
| Post-acquisition restructuring | - | - | - | 329 | 9,880 | 329 | 9,880 | ||||||||||||||||||||
| Other | 3,755 | 3,896 | 4,072 | 3,914 | 3,124 | 15,332 | 10,609 | ||||||||||||||||||||
| Total Noninterest Expense | 25,468 | 24,715 | 23,915 | 25,745 | 34,072 | 99,843 | 91,105 | ||||||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 19,298 | 19,107 | 15,023 | 13,919 | 590 | 67,347 | 36,051 | ||||||||||||||||||||
| Provision for income taxes | 3,579 | 3,626 | 2,771 | 2,565 | (17 | ) | 12,541 | 6,732 | |||||||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 15,719 | $ | 15,481 | $ | 12,252 | $ | 11,354 | $ | 607 | $ | 54,806 | $ | 29,319 | |||||||||||||
| PER COMMON SHARE DATA: | |||||||||||||||||||||||||||
| Basic and Diluted Earnings Per Common Share | $ | 0.99 | $ | 0.97 | $ | 0.77 | $ | 0.71 | $ | 0.05 | $ | 3.44 | $ | 2.71 | |||||||||||||
| Cash Dividends Declared | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.80 | $ | 0.79 | |||||||||||||
CONSOLIDATED - AVERAGE BALANCE SHEET AND NET INTEREST INCOME ANALYSIS (Unaudited):
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | |||||||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest (1) | Yield/ Rate | Average Balance | Interest (1) | Yield/ Rate | Average Balance | Interest (1) | Yield/ Rate | ||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||
| Interest Bearing Balances | $ | 4,671 | $ | 36 | 3.06 | % | $ | 5,583 | $ | 12 | 0.85 | % | $ | 58,015 | $ | 8 | 0.05 | % | |||||||||||
| Investment Securities: | |||||||||||||||||||||||||||||
| Taxable | 561,119 | 3,733 | 2.64 | 546,439 | 3,369 | 2.45 | 223,546 | 938 | 1.66 | ||||||||||||||||||||
| Tax-Exempt | 79,673 | 494 | 2.46 | 80,008 | 496 | 2.46 | 62,588 | 365 | 2.31 | ||||||||||||||||||||
| Total Securities | 640,792 | 4,227 | 2.62 | 626,447 | 3,865 | 2.45 | 286,134 | 1,303 | 1.81 | ||||||||||||||||||||
| Federal Funds Sold | 4,749 | 40 | 3.34 | 131,089 | 736 | 2.23 | 758,165 | 324 | 0.17 | ||||||||||||||||||||
| Loans and Leases, Net | 3,395,308 | 42,585 | 4.98 | 3,237,587 | 38,573 | 4.73 | 2,595,090 | 31,108 | 4.76 | ||||||||||||||||||||
| Restricted Investment in Bank Stocks | 6,694 | 51 | 3.02 | 4,322 | 13 | 1.19 | 8,328 | 106 | 5.05 | ||||||||||||||||||||
| Total Earning Assets | 4,052,214 | 46,939 | 4.60 | 4,005,028 | 43,199 | 4.28 | 3,705,732 | 32,849 | 3.52 | ||||||||||||||||||||
| Cash and Due from Banks | 67,284 | 69,751 | 45,385 | ||||||||||||||||||||||||||
| Other Assets | 261,715 | 265,004 | 192,969 | ||||||||||||||||||||||||||
| Total Assets | $ | 4,381,213 | $ | 4,339,783 | $ | 3,944,086 | |||||||||||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | |||||||||||||||||||||||||||||
| Interest-bearing Demand | $ | 1,057,649 | $ | 2,051 | 0.77 | % | $ | 1,072,496 | $ | 873 | 0.32 | % | $ | 855,060 | $ | 548 | 0.25 | % | |||||||||||
| Money Market | 965,866 | 2,996 | 1.23 | 994,446 | 1,097 | 0.44 | 976,601 | 696 | 0.28 | ||||||||||||||||||||
| Savings | 335,928 | 49 | 0.06 | 352,024 | 43 | 0.05 | 264,547 | 55 | 0.08 | ||||||||||||||||||||
| Time | 527,708 | 1,899 | 1.43 | 464,273 | 823 | 0.70 | 511,953 | 1,236 | 0.96 | ||||||||||||||||||||
| Total Interest-bearing Deposits | 2,887,151 | 6,995 | 0.96 | 2,883,239 | 2,836 | 0.39 | 2,608,161 | 2,535 | 0.39 | ||||||||||||||||||||
| Short term borrowings | 47,262 | 441 | 3.70 | - | - | - | - | - | - | ||||||||||||||||||||
| Long-term debt | 4,441 | 46 | 4.11 | 4,537 | 47 | 4.11 | 76,990 | 209 | 1.08 | ||||||||||||||||||||
| Subordinated debt and trust preferred securities | 64,673 | 683 | 4.19 | 69,523 | 714 | 4.07 | 54,615 | 569 | 4.13 | ||||||||||||||||||||
| Total Interest-bearing Liabilities | 3,003,527 | 8,165 | 1.08 | 2,957,299 | 3,597 | 0.48 | 2,739,766 | 3,313 | 0.48 | ||||||||||||||||||||
| Noninterest-bearing Demand | 840,136 | 843,419 | 759,897 | ||||||||||||||||||||||||||
| Other Liabilities | 31,781 | 36,983 | 46,659 | ||||||||||||||||||||||||||
| Shareholders' Equity | 505,769 | 502,082 | 397,764 | ||||||||||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 4,381,213 | $ | 4,339,783 | $ | 3,944,086 | |||||||||||||||||||||||
| Net Interest Income (taxable equivalent basis) | $ | 38,774 | $ | 39,602 | $ | 29,536 | |||||||||||||||||||||||
| Taxable Equivalent Adjustment | (197 | ) | (193 | ) | (164 | ) | |||||||||||||||||||||||
| Net Interest Income | $ | 38,577 | $ | 39,409 | $ | 29,372 | |||||||||||||||||||||||
| Total Yield on Earning Assets | 4.60 | % | 4.28 | % | 3.52 | % | |||||||||||||||||||||||
| Rate on Supporting Liabilities | 1.08 | 0.48 | 0.48 | ||||||||||||||||||||||||||
| Average Interest Spread | 3.52 | 3.80 | 3.04 | ||||||||||||||||||||||||||
| Net Interest Margin | 3.80 | 3.92 | 3.16 | ||||||||||||||||||||||||||
(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowance.
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | |||||||||||||||||||
| For the Year Ended | |||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest (1) | Yield/ Rate | Average Balance | Interest (1) | Yield/ Rate | |||||||||||||
| ASSETS: | |||||||||||||||||||
| Interest Bearing Balances | $ | 26,633 | $ | 69 | 0.26 | % | $ | 15,916 | $ | 13 | 0.08 | % | |||||||
| Investment Securities: | |||||||||||||||||||
| Taxable | 500,156 | 11,663 | 2.33 | 124,692 | 2,257 | 1.81 | |||||||||||||
| Tax-Exempt | 78,039 | 1,895 | 2.43 | 57,361 | 1,420 | 2.48 | |||||||||||||
| Total Securities | 578,195 | 13,558 | 2.34 | 182,053 | 3,677 | 2.02 | |||||||||||||
| Federal Funds Sold | 311,989 | 1,826 | 0.59 | 567,647 | 809 | 0.14 | |||||||||||||
| Loans and Leases, Net | 3,217,282 | 150,636 | 4.68 | 2,539,074 | 119,082 | 4.69 | |||||||||||||
| Restricted Investment in Bank Stocks | 6,045 | 289 | 4.78 | 7,351 | 345 | 4.69 | |||||||||||||
| Total Interest-earning Assets | 4,140,144 | 166,378 | 4.02 | 3,312,041 | 123,926 | 3.74 | |||||||||||||
| Cash and Due from Banks | 63,608 | 38,517 | |||||||||||||||||
| Other Assets | 265,691 | 169,946 | |||||||||||||||||
| Total Assets | $ | 4,469,443 | $ | 3,520,504 | |||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | |||||||||||||||||||
| Interest-bearing Demand | $ | 1,051,605 | $ | 3,847 | 0.37 | % | $ | 688,595 | $ | 2,330 | 0.34 | % | |||||||
| Money Market | 1,040,762 | 5,277 | 0.51 | 842,107 | 3,157 | 0.37 | |||||||||||||
| Savings | 355,229 | 193 | 0.05 | 218,546 | 237 | 0.11 | |||||||||||||
| Time | 524,944 | 4,827 | 0.92 | 451,277 | 5,603 | 1.24 | |||||||||||||
| Total Interest-bearing Deposits | 2,972,540 | 14,144 | 0.48 | 2,200,525 | 11,327 | 0.51 | |||||||||||||
| Short-term borrowings | 11,914 | 441 | - | 153,850 | 539 | 0.35 | |||||||||||||
| Long-term debt | 23,344 | 352 | 1.51 | 75,483 | 821 | 1.09 | |||||||||||||
| Subordinated debt and trust preferred securities | 70,583 | 2,830 | 4.01 | 47,116 | 2,067 | 4.39 | |||||||||||||
| Total Interest-bearing Liabilities | 3,078,381 | 17,767 | 0.58 | 2,476,974 | 14,754 | 0.60 | |||||||||||||
| Noninterest-bearing Demand | 848,991 | 684,022 | |||||||||||||||||
| Other Liabilities | 43,133 | 30,433 | |||||||||||||||||
| Shareholders' Equity | 498,938 | 329,075 | |||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 4,469,443 | $ | 3,520,504 | |||||||||||||||
| Net Interest Income (taxable-equivalent basis) | $ | 148,611 | $ | 109,172 | |||||||||||||||
| Taxable Equivalent Adjustment | (778 | ) | (604 | ) | |||||||||||||||
| Net Interest Income | $ | 147,833 | $ | 108,568 | |||||||||||||||
| Total Yield on Earning Assets | 4.02 | % | 3.74 | % | |||||||||||||||
| Rate on Supporting Liabilities | 0.58 | 0.60 | |||||||||||||||||
| Average Interest Spread | 3.44 | 3.15 | |||||||||||||||||
| Net Interest Margin | 3.59 | 3.30 | |||||||||||||||||
(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowance.
ALLOWANCE FOR LOAN AND LEASE LOSSES AND ASSET QUALITY (Unaudited):
| (Dollars in thousands) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | ||||||||||||||
| Allowance for Loan and Lease Losses: | |||||||||||||||||||
| Beginning balance | $ | 18,480 | $ | 16,876 | $ | 15,147 | $ | 14,597 | $ | 14,233 | |||||||||
| Loans Charged off | |||||||||||||||||||
| Commercial and industrial | - | (1 | ) | - | - | (7 | ) | ||||||||||||
| Commercial real estate | (7 | ) | - | - | - | (1 | ) | ||||||||||||
| Commercial real estate - construction | - | - | - | - | - | ||||||||||||||
| Residential mortgage | (23 | ) | (2 | ) | - | - | - | ||||||||||||
| Home equity | - | (1 | ) | - | - | - | |||||||||||||
| Consumer | (20 | ) | (11 | ) | (9 | ) | (57 | ) | (19 | ) | |||||||||
| Total loans charged off | (50 | ) | (15 | ) | (9 | ) | (57 | ) | (27 | ) | |||||||||
| Recoveries of loans previously charged off | |||||||||||||||||||
| Commercial and industrial | - | - | - | 13 | 10 | ||||||||||||||
| Commercial real estate | - | 63 | - | 65 | 1 | ||||||||||||||
| Commercial real estate - construction | - | - | - | 24 | 7 | ||||||||||||||
| Residential mortgage | - | - | 2 | - | - | ||||||||||||||
| Home equity | - | - | 1 | 1 | - | ||||||||||||||
| Consumer | 2 | 6 | 10 | 4 | 3 | ||||||||||||||
| Total recoveries | 2 | 69 | 13 | 107 | 21 | ||||||||||||||
| Balance before provision | 18,432 | 16,930 | 15,151 | 14,647 | 14,227 | ||||||||||||||
| Provision for loan and lease losses | 525 | 1,550 | 1,725 | 500 | 370 | ||||||||||||||
| Balance, end of quarter | $ | 18,957 | $ | 18,480 | $ | 16,876 | $ | 15,147 | $ | 14,597 | |||||||||
| Nonperforming Assets | |||||||||||||||||||
| Nonaccrual loans | $ | 8,195 | $ | 7,233 | $ | 7,551 | $ | 7,507 | $ | 9,547 | |||||||||
| Accruing trouble debt restructured loans | 390 | 396 | 422 | 430 | 435 | ||||||||||||||
| Total nonperforming loans | 8,585 | 7,629 | 7,973 | 7,937 | 9,982 | ||||||||||||||
| Foreclosed real estate | 43 | 49 | 69 | 125 | - | ||||||||||||||
| Total nonperforming assets | 8,628 | 7,678 | 8,042 | 8,062 | 9,982 | ||||||||||||||
| Accruing loans 90 days or more past due | 654 | 633 | - | 133 | 515 | ||||||||||||||
| Total risk elements | $ | 9,282 | $ | 8,311 | $ | 8,042 | $ | 8,195 | $ | 10,497 | |||||||||
PPP Summary
| (Dollars in thousands) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |||||||||
| PPP loans, net of deferred fees | $ | 2,600 | $ | 2,800 | $ | 4,966 | $ | 34,124 | $ | 111,286 | ||||
| PPP Fees recognized | $ | 29 | $ | 99 | $ | 652 | $ | 2,989 | $ | 4,426 | ||||
RECONCILIATION OF NON-GAAP MEASURES (Unaudited)
Explanatory note: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Mid Penn's management uses these non-GAAP financial measures in their analysis of Mid Penn's performance. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing tangible book value. Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances or non-deductible portions of the non-GAAP adjustments. Non-PPP core banking loans are meaningful to investors as they are indicative of portfolio loans and related growth from traditional bank activities and excludes short-term or nonrecurring loans from special programs like the PPP. 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. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Mid Penn's results and financial condition as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding Mid Penn's ongoing operating results. This supplemental presentation should not be construed as an inference that Mid Penn's future results will be unaffected by similar adjustments to be determined in accordance with GAAP. The reconciliation of the non-GAAP to comparable GAAP financial measures can be found in the tables below.
Tangible Book Value Per Share
| (Dollars in thousands, except per share data) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |||||||||
| Shareholders' Equity | $ | 512,099 | $ | 499,105 | $ | 495,835 | $ | 494,161 | $ | 490,076 | ||||
| Less: Goodwill | 114,231 | 113,871 | 113,835 | 113,835 | 113,835 | |||||||||
| Less: Core Deposit and Other Intangibles | 7,260 | 7,215 | 7,729 | 8,250 | 9,436 | |||||||||
| Tangible Equity | $ | 390,608 | $ | 378,019 | $ | 374,271 | $ | 372,076 | $ | 366,805 | ||||
| Common Shares Outstanding | 15,886,143 | 15,882,853 | 15,878,193 | 15,960,916 | 15,957,830 | |||||||||
| Tangible Book Value per Share | $ | 24.59 | $ | 23.80 | $ | 23.57 | $ | 23.31 | $ | 22.99 | ||||
Non-PPP Core Banking Loans
| (Dollars in thousands) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |||||||||
| Loans and leases, net of unearned interest | $ | 3,514,119 | $ | 3,322,457 | $ | 3,180,033 | $ | 3,121,531 | $ | 3,104,396 | ||||
| Less: PPP loans, net of deferred fees | 2,600 | 2,800 | 4,966 | 34,124 | 111,286 | |||||||||
| Non-PPP core banking loans | $ | 3,511,519 | $ | 3,319,657 | $ | 3,175,067 | $ | 3,087,407 | $ | 2,993,110 | ||||
Core Earnings Per Common Share Excluding Non-Recurring Expenses
| Three Months Ended | ||||||||||||||
| (Dollars in thousands, except per share data) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |||||||||
| Net Income Available to Common Shareholders | $ | 15,719 | $ | 15,481 | $ | 12,252 | $ | 11,354 | $ | 607 | ||||
| Plus: Merger and Acquisition Expenses | 294 | - | - | 329 | 12,227 | |||||||||
| Less: Tax Effect of Merger and Acquisition Expenses | 62 | - | - | 69 | 2,568 | |||||||||
| Net Income Excluding Non-Recurring Expenses | $ | 15,951 | $ | 15,481 | $ | 12,252 | $ | 11,614 | $ | 10,266 | ||||
| Weighted Average Shares Outstanding | 15,883,003 | 15,877,592 | 15,934,083 | 15,957,864 | 13,005,895 | |||||||||
| Core Earnings Per Common Share Excluding Non-Recurring Expenses | $ | 0.99 | $ | 0.97 | $ | 0.77 | $ | 0.73 | $ | 0.79 | ||||
Return on Average Tangible Common Equity
| Three Months Ended | |||||||||||||||||||
| (Dollars in thousands) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | ||||||||||||||
| Net income available to common shareholders | $ | 15,719 | $ | 15,481 | $ | 12,252 | $ | 11,354 | $ | 607 | |||||||||
| Plus: Intangible amortization, net of tax | 392 | 406 | 412 | 380 | 282 | ||||||||||||||
| $ | 16,111 | $ | 15,887 | $ | 12,664 | $ | 11,734 | $ | 889 | ||||||||||
| Average shareholders' equity | $ | 505,769 | $ | 502,082 | $ | 495,681 | $ | 494,019 | $ | 403,010 | |||||||||
| Less: Average goodwill | 113,879 | 113,835 | 113,835 | 113,835 | 113,835 | ||||||||||||||
| Less: Average core deposit and other intangibles | 6,966 | 7,465 | 7,983 | 8,950 | 9,436 | ||||||||||||||
| Average tangible shareholders' equity | $ | 384,924 | $ | 380,782 | $ | 373,863 | $ | 371,234 | $ | 279,739 | |||||||||
| Return on average tangible common equity | 16.61 | % | 16.55 | % | 13.59 | % | 12.82 | % | 1.26 | % | |||||||||
Efficiency Ratio
| Three Months Ended | |||||||||||||||||||
| (Dollars in thousands) | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | ||||||||||||||
| Noninterest expense | $ | 25,468 | $ | 24,715 | $ | 23,915 | $ | 25,745 | $ | 34,072 | |||||||||
| Less: Merger and acquisition expenses | 294 | - | - | 329 | 12,227 | ||||||||||||||
| Less: Intangible amortization | 496 | 514 | 521 | 481 | 357 | ||||||||||||||
| Less: (Gain) loss on sale or write-down of foreclosed assets, net | (45 | ) | (57 | ) | (15 | ) | (16 | ) | 1 | ||||||||||
| Efficiency ratio numerator | $ | 24,723 | $ | 24,258 | $ | 23,409 | $ | 24,951 | $ | 21,487 | |||||||||
| Net interest income | 38,577 | 39,409 | 35,433 | 34,414 | 29,372 | ||||||||||||||
| Noninterest income | 6,714 | 5,963 | 5,230 | 5,750 | 5,660 | ||||||||||||||
| Efficiency ratio denominator | $ | 45,291 | $ | 45,372 | $ | 40,663 | $ | 40,164 | $ | 35,032 | |||||||||
| Efficiency ratio | 54.59 | % | 53.46 | % | 57.57 | % | 62.12 | % | 61.34 | % | |||||||||
