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

PART I – FINANCIAL INFORMATION Financial Statements This section presents Mid Penn Bancorp's unaudited consolidated financial statements for Q1 2025 and 2024, covering balance sheets, income, comprehensive income, equity, and cash flows Consolidated Balance Sheets As of March 31, 2025, total assets increased to $5.55 billion from $5.47 billion at December 31, 2024, primarily driven by a $47.8 million increase in net loans Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $5,546,026 | $5,470,936 | | Net loans | $4,455,329 | $4,407,556 | | Total cash and cash equivalents | $107,254 | $70,564 | | Total Liabilities | $4,878,093 | $4,815,918 | | Total Deposits | $4,732,202 | $4,689,927 | | Total Shareholders' Equity | $667,933 | $655,018 | Consolidated Statements of Income For the three months ended March 31, 2025, net income available to common shareholders was $13.7 million, an increase from $12.1 million in the same period of 2024 Q1 2025 vs. Q1 2024 Income Statement Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Interest Income | $71,744 | $68,191 | | Total Interest Expense | $29,235 | $31,735 | | Net Interest Income | $42,509 | $36,456 | | Net provision/(benefit) for credit losses | $301 | $(937) | | Total Noninterest Income | $5,239 | $5,837 | | Total Noninterest Expense | $30,642 | $28,520 | | Net Income Available to Common Shareholders | $13,742 | $12,133 | | Diluted Earnings Per Common Share | $0.71 | $0.73 | Consolidated Statements of Comprehensive Income Total comprehensive income for Q1 2025 was $16.4 million, a significant increase from $11.8 million in Q1 2024, primarily due to a positive shift in other comprehensive income from a loss to a gain Q1 2025 vs. Q1 2024 Comprehensive Income (Unaudited) | (In Thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $13,742 | $12,133 | | Total other comprehensive income/(loss) | $2,662 | $(310) | | Total comprehensive income | $16,404 | $11,823 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from $655.0 million to $667.9 million in Q1 2025, driven by net income and other comprehensive income, partially offset by dividends - Key drivers of the $12.9 million increase in shareholders' equity during Q1 2025 were net income of $13.7 million and total other comprehensive income of $2.7 million, which were partially offset by cash dividends of $3.9 million[20] Consolidated Statements of Cash Flows Cash and cash equivalents increased by $36.7 million in Q1 2025, with net cash provided by operating and financing activities offsetting cash used in investing activities Q1 2025 vs. Q1 2024 Cash Flow Summary (Unaudited) | (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $11,529 | $12,409 | | Net Cash Used in Investing Activities | $(36,293) | $(65,746) | | Net Cash Provided by Financing Activities | $61,454 | $24,659 | | Net increase/(decrease) in cash and cash equivalents | $36,690 | $(28,678) | Notes to Consolidated Financial Statements (Unaudited) This section provides detailed disclosures supporting the consolidated financial statements, covering accounting policies, business combinations, investment securities, loans, deposits, derivatives, debt, and regulatory capital - On April 30, 2025, subsequent to the balance sheet date, Mid Penn completed its acquisition of William Penn Bancorporation[32] - The preparation of financial statements requires management to make material estimates, particularly for the allowance for credit losses, fair value of financial instruments, and valuation of goodwill[33][34][35] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial results, including net income, net interest margin, loan and deposit growth, asset quality, and changes in noninterest income and expenses, along with financial condition, liquidity, and capital adequacy Q1 2025 Performance Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (in thousands) | $13,742 | $12,133 | | Diluted EPS | $0.71 | $0.73 | | Return on average assets (annualized) | 1.01% | 0.92% | | Net interest margin (FTE) | 3.37% | 2.97% | - Total loans grew by $48.1 million (1.1%) during Q1 2025, primarily in commercial real estate and commercial & industrial loans[193] - Total deposits increased by $42.3 million (0.9%) during Q1 2025, driven by growth in interest-bearing transaction and non-interest bearing accounts[193] - Non-performing assets increased to $25.4 million at March 31, 2025, from $22.7 million at December 31, 2024, mainly due to the addition of three commercial loans to nonaccrual status[195] Results of Operations In Q1 2025, net interest income rose to $42.5 million with a 3.37% net interest margin, while noninterest income decreased and noninterest expense increased due to higher salary and software costs Net Interest Income Analysis (Q1 2025 vs Q1 2024) | (In thousands) | Increase (Decrease) due to Volume | Increase (Decrease) due to Rate | Net Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $2,432 | $1,121 | $3,553 | | Total Interest Expense | $(1,273) | $(1,227) | $(2,500) | | Net Interest Income | $3,705 | $2,348 | $6,053 | - Noninterest income decreased by 10.2% YoY, mainly due to a $1.4 million decrease in Bank-owned life insurance benefits, partially offset by increases in loan level swap fees and mortgage banking income[210] - Noninterest expense increased by 7.4% YoY, driven by higher salaries and employee benefits (+$847k), software licensing (+$454k), and merger and acquisition expenses (+$314k)[212] Financial Condition Total assets grew to $5.5 billion, driven by loan growth, while deposits increased, and the company maintained strong asset quality, liquidity, and regulatory capital ratios exceeding 'well-capitalized' minimums Loan Portfolio Composition (March 31, 2025) | Loan Category | Balance (in thousands) | % of Total | | :--- | :--- | :--- | | Commercial Real Estate | $2,563,022 | 57.0% | | Commercial and industrial | $720,695 | 16.0% | | Construction | $409,211 | 9.1% | | Residential mortgage | $791,422 | 17.7% | | Consumer | $6,817 | 0.2% | | Total Loans | $4,491,167 | 100.0% | Credit Quality Metrics (in thousands) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-performing assets | $25,447 | $22,654 | | ACL-loans to total loans | 0.80% | 0.80% | | ACL-loans to non-performing loans | 149.05% | 157.07% | Regulatory Capital Ratios (March 31, 2025) | Ratio | Mid Penn | Minimum for Adequacy (with buffer) | | :--- | :--- | :--- | | Total Risk-Based Capital | 13.85% | 10.50% | | Tier I Risk-Based Capital | 12.04% | 8.50% | | Common Equity Tier I | 12.04% | 7.00% | | Tier I Leverage Capital | 10.16% | 4.00% | Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk through an asset-liability model, projecting a 3.3% increase in net interest income for a 100 basis point rate rise and a 3.3% decrease for a 100 basis point rate fall, all within policy limits Net Interest Income Sensitivity Analysis (as of March 31, 2025) | Change in Basis Points | % Change in Net Interest Income | Policy Risk Limit | | :--- | :--- | :--- | | +400 | 12.5% | ≥ -25% | | +200 | 6.4% | ≥ -15% | | +100 | 3.3% | ≥ -10% | | -100 | (3.3)% | ≥ -10% | | -200 | (6.7)% | ≥ -15% | | -400 | (14.1)% | ≥ -25% | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2025[262] - No material changes were made to internal controls over financial reporting during the quarter ended March 31, 2025[263] PART II – OTHER INFORMATION Legal Proceedings Management does not anticipate that the ultimate liability from ongoing legal proceedings will be material to the company's consolidated financial position - Management does not expect pending or threatened legal matters to have a material impact on the company's consolidated financial position[265] Risk Factors No material changes to existing risk factors, but a new factor addresses potential impacts of current U.S. administration policies on financial regulations, trade, and taxes - A new risk factor was added concerning the potential impact of the current U.S. administration's policies on financial regulations, trade, and taxes, which could create uncertainties and affect business operations[268] Unregistered Sales of Equity Securities and Use of Proceeds The company had no unregistered sales of equity securities and made no share repurchases under its $15.0 million program during Q1 2025, with $5.0 million remaining available - No shares were repurchased in the three months ended March 31, 2025[173][270] - The stock repurchase program was renewed through April 30, 2026, with approximately $5.0 million remaining available for repurchase as of March 31, 2025[173][270] Defaults upon Senior Securities There were no defaults upon senior securities during the reporting period - None[272] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[272] Other Information No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during Q1 2025[272] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - Exhibits filed include Sarbanes-Oxley Act certifications (31.1, 31.2, 32) and Inline XBRL data files (101 series)[275]