Mid Penn Bancorp(MPB) - 2025 Q1 - Quarterly Results

Financial & Operational Highlights Mid Penn Bancorp reported strong Q1 2025 results, driven by net interest margin expansion, improved efficiency, and moderate growth Q1 2025 Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | Change | Q4 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Common) ($) | $13.7 million | $12.1 million | +13.3% | $13.2 million | | Diluted EPS ($) | $0.71 | $0.73 | -2.7% | $0.72 | | Core Earnings (Non-GAAP) ($) | $13.9 million | $10.7 million | +30.3% | $13.0 million | | Net Interest Margin (%) | 3.37% | 2.97% | +40 bps | 3.21% | | Loan Growth (Annualized) (%) | 4.4% | N/A | N/A | N/A | | Deposit Growth (Annualized) (%) | 3.7% | N/A | N/A | -1.4% | | Core Efficiency Ratio (%) | 62.79% | 68.80% | -601 bps | 63.90% | - The Board of Directors declared a cash dividend of $0.20 per common share, payable on May 26, 2025, to shareholders of record as of May 8, 2025, marking the 58th consecutive quarterly dividend[5][11] Book Value Per Share Growth | Metric | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Book Value per Common Share ($) | $34.50 | $33.84 | $33.26 | | Tangible Book Value per Common Share ($) | $27.58 | $26.90 | $25.23 | Management Commentary CEO Rory G. Ritrievi attributed strong Q1 performance to net interest margin expansion, effective expense management, and moderate organic growth - Net interest margin expansion was achieved through a decrease in deposit costs, resulting from repricing initiatives started in Q4 2024 and continued through Q1 2025[8] - The company achieved respectable annualized organic growth rates of 4.4% in loans and 3.7% in deposits, despite what management described as a 'cautious' sentiment from borrowers and depositors[9] - The planned merger with William Penn Bank has received all regulatory and shareholder approvals and is expected to close in the middle of the second quarter of 2025[10] Financial Performance Analysis Q1 2025 financial performance was marked by significant net interest income growth, margin expansion, stable asset quality, and strong capital levels Net Interest Income and Margin Net interest income rose to $42.5 million in Q1 2025, with NIM expanding to 3.37% due to lower deposit costs Net Interest Income & Margin Trend | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income ($M) | $42.5M | $41.3M | $36.5M | | Net Interest Margin (Tax-Equiv.) (%) | 3.37% | 3.21% | 2.97% | - The cost of funds decreased to 2.48% in Q1 2025 from 2.66% in Q4 2024, attributed to lower interest paid on deposit accounts after the Bank reduced rates[4][16] Balance Sheet Analysis Total loans grew to $4.5 billion and deposits to $4.7 billion as of March 31, 2025, reflecting restrained growth Loan and Deposit Balances (Ending) | Balance Sheet Item | Mar 31, 2025 | Mar 31, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Loans ($) | $4.5 billion | $4.3 billion | +4.0% | | Total Deposits ($) | $4.7 billion | $4.4 billion | +8.06% | - Q1 2025 deposit growth of $42.3 million was driven by a $55.5 million increase in interest-bearing transaction accounts and a $29.1 million increase in noninterest-bearing accounts, offset by a $42.3 million decrease in time deposits[4] Asset Quality Asset quality remained stable with minimal provision for credit losses, though nonperforming assets increased to $25.4 million Asset Quality Metrics | Metric | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Total Nonperforming Assets ($) | $25.4M | $22.7M | $15.5M | | Allowance for Credit Losses / Loans (%) | 0.80% | 0.80% | 0.78% | | Provision for Credit Losses ($) | $301K | $333K | ($937K) Benefit | - The increase in nonperforming assets during Q1 2025 was mainly due to the addition of three commercial loans with a combined balance of $7.0 million[20] Capital Position Shareholders' equity increased to $667.9 million, strengthening capital and exceeding 'well capitalized' regulatory minimums - Shareholders' equity increased by 2.0% to $667.9 million as of March 31, 2025, from $655.0 million at year-end 2024[22] - The stock repurchase program was reauthorized through April 30, 2026, with $5.0 million remaining available[23] - Regulatory capital ratios remain in excess of levels required to be considered 'well capitalized'[22] Noninterest Income & Expense Noninterest income decreased to $5.2 million, noninterest expense increased, but the core efficiency ratio improved to 62.8% Noninterest Income & Expense Summary | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Noninterest Income ($) | $5.2M | $6.1M | $5.8M | | Noninterest Expense ($) | $30.6M | $30.9M | $28.5M | | Core Efficiency Ratio (%) | 62.8% | 63.9% | 68.8% | - The YoY decrease in noninterest income was mainly driven by a $731 thousand decrease in other miscellaneous income, which included a $1.4 million decrease in BOLI benefits[25] - The YoY increase in noninterest expense was primarily due to higher costs for salaries and benefits (+$847k), software licensing (+$454k), and merger/acquisition expenses (+$314k)[27] Subsequent Events Shareholders of Mid Penn and William Penn Bancorporation approved Mid Penn's acquisition of William Penn on April 2, 2025 - On April 2, 2025, shareholders of both Mid Penn and William Penn Bancorporation approved the proposed acquisition of William Penn by Mid Penn[30] Financial Statements and Schedules This section presents unaudited consolidated financial statements and supporting schedules for Q1 2025 Summary Financial Highlights This summary presents key financial data for Q1 2025, including total assets, loans, and deposits Key Balances as of March 31, 2025 | Item | Amount (in thousands) ($) | | :--- | :--- | | Total Assets | $5,546,026 | | Loans, net | $4,491,167 | | Total Deposits | $4,732,202 | | Shareholders' Equity | $667,933 | Consolidated Balance Sheets The consolidated balance sheet as of March 31, 2025, shows total assets of $5.55 billion, with deposits as the primary funding source - Compared to December 31, 2024, total assets increased from $5.47 billion to $5.55 billion, and total deposits increased from $4.69 billion to $4.73 billion[40] Consolidated Statements of Income For Q1 2025, net interest income was $42.5 million, resulting in net income available to common shareholders of $13.7 million Q1 2025 Income Statement Summary (in thousands) | Line Item | Q1 2025 ($) | | :--- | :--- | | Net Interest Income | $42,509 | | Provision for Credit Losses | $301 | | Noninterest Income | $5,239 | | Noninterest Expense | $30,642 | | Net Income | $13,742 | Allowance for Credit Losses and Asset Quality The allowance for credit losses on loans was $35.8 million, with total nonperforming assets at $25.4 million - The allowance for credit losses on loans began Q1 2025 at $35.5 million and ended at $35.8 million after a $321 thousand provision and net recoveries of $3 thousand[46] Reconciliation of Non-GAAP Measures This section reconciles non-GAAP financial measures like Tangible Book Value per Share and Adjusted EPS to their GAAP counterparts Key Non-GAAP Metrics (Q1 2025) | Non-GAAP Metric | Q1 2025 Value | | :--- | :--- | | Tangible Book Value per Share ($) | $27.58 | | Adjusted EPS ($) | $0.72 | | Return on Average Tangible Common Equity (%) | 10.84% | | Core Efficiency Ratio (%) | 62.79% | - Adjusted earnings for Q1 2025 of $13.9 million were calculated by taking GAAP net income of $13.7 million, adding back $314 thousand in merger expenses (net of tax), and subtracting $83 thousand in BOLI death benefit income[49]