MID PENN BANCORP INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
MPB$34.46+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000879635-24-000146
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000879635-24-000203
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 146 previous paragraphs and 155 current paragraphs.
89 unchanged; 47 reworded; 19 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Certain of the matters discussed in this document or in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Exchange Act. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results, including after giving effect to the Merger with William Penn Bancorporation and the assumptions upon which those statements are based. Forward looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” or words or phrases of similar meaning. These forward-looking statements include the expectations of Mid Penn relating to the anticipated opportunities and financial and other benefits of the Merger, and the projections of, or guidance on, Mid Penn’s or the combined company’s future financial performance, asset quality, liquidity, capital levels, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in Mid Penn’s business or financial results. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.
Current report
The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements:
Current report
•Mid Penn’s ability to efficiently integrate acquisitions, including as a result of the Merger, into its business and operations, which may take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to Mid Penn’s existing business and operations;
Current report
•the possibility that the anticipated benefits of the Merger, including anticipated cost savings and other synergies of the Merger may take longer to be realized or may not be achieved in their entirety, and attrition in key client, partner and other relationships relating to the Merger may be greater than expected;
Current report
•changes in technology;
Current report
•the ability to obtain regulatory approvals and satisfy other closing conditions to the Merger, including approval by the shareholders of Mid Penn and William Penn;
Current report
•the possibility of increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the Merger;
Current report
•potential exposure to unknown or contingent risks and liabilities we have acquired, or may acquire, or target for acquisition, including in connection with the Merger;
Current report
•supply chain disruption;
Current report
•other risks and uncertainties contained in this prospectus supplement or incorporated by reference into this prospectus supplement from the other reports and filings with the SEC.
Current report
(2) Annualized ratios
Current report
•Noninterest Income - Noninterest income totaled $5.2 million for the three months ended September 30, 2024 compared to $5.3 million for the same period of 2023. The decrease is primarily due to a $474 thousand decrease in other miscellaneous noninterest income, driven by a $482 thousand decrease in Bank owned life insurance benefits received, and a $92 thousand decrease in income from Fiduciary activities, partially offset by a $386 thousand increase in mortgage banking income, and a $66 thousand increase in the gain on sales of SBA loans. Noninterest income totaled $16.3 million for the nine months ended September 30, 2024 compared to $14.9 million for the same period of 2023.
Current report
•Noninterest Expense - Noninterest expense totaled $30.0 million for the three months ended September 30, 2024, an increase of $730 thousand, or 2.5%, compared to noninterest expense of $29.2 million for the same period of 2023. The increase was driven by a $897 thousand increase in salaries and employee benefits, and a $723 thousand increase in legal and professional fees, partially offset by a $596 thousand decrease in FDIC assessments, a $243 thousand decrease in Merger and Acquisition costs from the Brunswick acquisition in 2023, and a $240 thousand decrease in other miscellaneous noninterest expense. Noninterest expense totaled $86.7 million for the nine months ended September 30, 2024, a decrease of $3.5 million, or 3.88%, compared to noninterest expense of $90.2 million for the same period of 2023.
Current report
(2)Annualized ratios
Current report
(2)Annualized ratios
Current report
For the three months ended September 30, 2024, noninterest income totaled $5.2 million, a decrease of $168 thousand, or 3.14%, compared to noninterest income of $5.3 million for the three months ended September 30, 2023. The decrease is primarily due to a $474 thousand decrease in other miscellaneous noninterest income, driven by a $482 thousand decrease in Bank owned life insurance benefits received, partially offset by a $386 thousand increase in mortgage banking income, a $76 thousand increase in the gain on sales of SBA loans, and a $74 thousand increase in income from Fiduciary activities.
Current report
For the nine months ended September 30, 2024, noninterest income totaled $16.3 million, an increase of $1.5 million, or 9.76%, compared to noninterest income of $14.9 million for the nine months ended September 30, 2023. The increase in noninterest income is primarily driven by a $1.0 million increase in other miscellaneous noninterest income, driven by increases in Bank owned life insurance benefits received, and a $767 thousand increase in mortgage banking income.
Current report
Loans, net of unearned income
Current report
Total nonperforming assets were $17.7 million at September 30, 2024, an increase compared to nonperforming assets of $14.5 million at December 31, 2023. The increase during the third quarter of 2024 is primarily related to the addition of one commercial property with a balance of $7.7 million being placed on nonaccrual in the third quarter of 2024, offset by the sale of one foreclosed property with a balance of $4.7 million in the second quarter of 2024. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.61% at September 30, 2024, compared to 0.57% and 0.49% as of June 30, 2024, and December 31, 2023, respectively.
Removed paragraphs (10)
Previous report
Certain of the matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations", may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mid Penn or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect", "anticipates", "intend", "plan", "believe", "estimate", and similar expressions are intended to identify such forward-looking statements. Mid Penn’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:
Previous report
•technological changes;
Previous report
•supply chain disruption; and
Previous report
The above list of factors that may affect future performance is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with this understanding of inherent uncertainty. Additional information regarding these as well as other factors that could affect future financial results can be found in the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation's 2023 Annual Report. The results of operations for interim periods are not necessarily indicative of operating results expected for the full year.
Previous report
•Noninterest Income - Noninterest income totaled $5.3 million for the three months ended June 30, 2024 compared to $5.2 million for the same period of 2023. The increase in noninterest income is primarily due to a $1.5 million increase in other miscellaneous income, partially offset by a $381 thousand decrease in mortgage banking. Noninterest income totaled $11.2 million for the six months ended June 30, 2024 compared to $9.5 million for the same period of 2023.
Previous report
For the three months ended June 30, 2024, noninterest income totaled $5.3 million, an increase of $109 thousand, or 2.09%, compared to noninterest income of $5.2 million for the three months ended June 30, 2023. The increase in noninterest income is primarily due to $341 thousand increase in mortgage banking income, partially offset by a $128 thousand decrease in mortgage hedging.
Previous report
For the six months ended June 30, 2024, noninterest income totaled $11.2 million, an increase of $1.6 million, or 16.98%, compared to noninterest income of $9.5 million for the six months ended June 30, 2023. The increase in noninterest income is primarily due to a $1.5 million increase in other miscellaneous noninterest income, driven by a $1.5 million death benefit from Bank owned life insurance.
Previous report
For the six months ended June 30, 2024, noninterest expense totaled $56.7 million, a decrease of $4.2 million, or 6.9%, compared to noninterest expense of $61.0 million for the six months ended June 30, 2023. The decrease was primarily the result of a $8.2 million decrease in merger and acquisition costs related to the Brunswick Acquisition, partially offset by an increase of $2.1 million in salaries and benefits also related to the Brunswick Acquisition, and a $1.2 million increase in FDIC charges due to increased assessment rates.
Previous report
Loans, net of unearned interest
Previous report
Total nonperforming assets were $10.4 million at June 30, 2024, a decrease compared to nonperforming assets of $14.5 million at December 31, 2023. The decrease during the second quarter of 2024 primarily related to the sale of one foreclosed property, which resulted in a loss on sale of approximately $26 thousand. Delinquency as a percentage of total loans was 0.57% at June 30, 2024.
Reworded paragraphs (47)
Previous wording
This Management Discussion relates to the Corporation, a financial holding company incorporated in the Commonwealth of Pennsylvania, and its wholly owned subsidiaries. Management's Discussion should be read in conjunction with the consolidated financial statements and other financial information presented in this report.
Current wording
This Management Discussion relates to the Corporation, a financial holding company incorporated in the Commonwealth of Pennsylvania, and its wholly-owned subsidiaries, and should be read in conjunction with the consolidated financial statements and other financial information presented in this report.
Previous wording
•the effects of future economic conditions on Mid Penn, its bank and nonbank subsidiaries, and their markets and customers;
Current wording
•the effects of future economic conditions on Mid Penn, the Bank, our nonbank subsidiaries, and our markets and customers;
Previous wording
•the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Mid Penn’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;
Current wording
•the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;
Previous wording
•an increase in the Pennsylvania Bank Shares Tax to which Mid Penn Bank’s capital stock is currently subject, or imposition of any additional taxes on the capital stock of Mid Penn or Mid Penn Bank;
Current wording
•an increase in the Pennsylvania Bank Shares Tax to which the Bank’s capital stock is currently subject, or imposition of any additional taxes on the capital stock of Mid Penn or the Bank;
Previous wording
•the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, the SEC, and other accounting and reporting standard setters;
Current wording
•the effect of changes in accounting policies and practices, as may be adopted by regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, the SEC, and other accounting and reporting rule making authorities;
Previous wording
•the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
Current wording
•the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, including litigation related to the Merger;
Previous wording
•our ability to successfully implement business strategies, including our acquisition strategy;
Current wording
•our ability to implement business strategies, including our acquisition strategy;
Previous wording
•our ability to successfully expand our franchise, including acquisitions or establishing new offices at favorable prices;
Current wording
•our ability to successfully expand our franchise, including through acquisitions or establishing new offices at favorable prices;
Previous wording
•the failure of assumptions underlying the establishment of reserves for loan losses, the assessment of potential impairment of investment securities, and estimations of values of collateral and various financial assets and liabilities;
Current wording
•the failure of assumptions underlying the establishment of reserves for loan and lease losses, the assessment of potential impairment of investment securities, and estimations of values of collateral and various financial assets and liabilities;
Previous wording
•our ability to maintain compliance with the listing rules of NASDAQ;
Current wording
•our ability to maintain compliance with the listing rules of The NASDAQ Stock Market;
Previous wording
•the factors described in Item 1A of the Corporation's 2023 Annual Report and subsequent filings with the SEC.
Current wording
•the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings with the SEC; and
Previous wording
•Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended June 30, 2024 was $11.8 million, or $0.71 per both common share basic and diluted, compared to earnings of $4.8 million, or $0.29 per both common share basic and diluted for the three months ended June 30, 2023. Mid Penn's earnings for the six months ended June 30, 2024 was $23.9 million, or $1.44 per both common share basic and diluted, compared to earnings of $16.1 million, or $1.00 per both common share basic and diluted for the six months ended June 30, 2023.
Current wording
•Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended September 30, 2024 was $12.3 million, or $0.74 per both common share basic and diluted, compared to earnings of $9.2 million, or $0.56 per both common share basic and diluted for the three months ended September 30, 2023. Mid Penn's earnings for the nine months ended September 30, 2024 was $36.2 million, or $2.18 per both common share basic and diluted, compared to earnings of $25.3 million, or $1.56 per both common share basic and diluted for the nine months ended September 30, 2023.
Previous wording
◦Net Interest Margin - For the second quarter of 2024, Mid Penn’s net interest margin was 3.12% versus 3.29% for the same period of 2023. For the six months ended June 30, 2024, net interest margin was 3.04% versus 3.39% for the same period of 2023. The decrease is primarily driven by higher interest rates resulting from persistent inflation. The yield on interest-earning assets for the second quarter of 2024 increased 61 basis points from the same period of 2023. The rate on interest-bearing liabilities increased 93 basis points from the same period of 2023.
Current wording
◦Net Interest Margin - For the third quarter of 2024, Mid Penn’s net interest margin was 3.13% versus 3.16% for the same period of 2023. For the nine months ended September 30, 2024, net interest margin was 3.07% versus 3.34% for the same period of 2023. The decrease is primarily driven by higher interest rates resulting from persistent inflation. The yield on interest-earning assets for the third quarter of 2024 increased 38 basis points from the same period of 2023. The rate on interest-bearing liabilities increased 51 basis points from the same period of 2023.
Previous wording
◦Loan Growth - Total loans, net of unearned income, as of June 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023, an increase of $111.8 million, or 2.6%. The growth was primarily driven by an increase in multifamily of$65.1 million, an increase in nonowner occupied commercial real estate of$37.5 million, and an increase in commercial and industrial loans of$17.6 million.
Current wording
◦Loan Growth - Total loans, net of unearned income, as of September 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023, an increase of $178.9 million, or 4.2%. The growth was primarily driven by an increase in multifamily of$106.4 million, an increase in nonowner occupied commercial real estate of$55.5 million, and an increase in commercial and industrial loans of$38.4 million.
Previous wording
◦Deposit Growth - Total deposits increased $150.8 million, or 3.5%, from $4.3 billion at December 31, 2023, to $4.5 billion at June 30, 2024. The growth was driven by an increase of $108.5 million in interest-bearing transaction accounts, and an increase of $77.6 million in time deposits, offset by a $35.3 million decrease in non-interest bearing accounts.
Current wording
◦Deposit Growth - Total deposits increased $360.6 million, or 8.3%, from $4.3 billion at December 31, 2023, to $4.7 billion at September 30, 2024. The growth was driven by an increase of $202.3 million in interest-bearing transaction accounts, and an increase of $167.6 million in time deposits, offset by a $9.3 million decrease in non-interest bearing accounts.
Previous wording
•Asset Quality - ACL at June 30, 2024 was $35.3 million, or 0.81% of total loans, as compared to $34.2 million, or 0.80% of total loans at December 31, 2023.
Current wording
•Asset Quality - ACL at September 30, 2024 was $35.6 million, or 0.80% of total loans, as compared to $34.2 million, or 0.80% of total loans at December 31, 2023.
Previous wording
◦Net Charge-offs/Recoveries - Mid Penn had net charge-offs of $18 thousand and $170 thousand for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, net charge-offs were $62 thousand compared to $283 thousand for the same period of 2023.
Current wording
◦Net Charge-offs/Recoveries - Mid Penn had net charge-offs of $347 thousand and $11 thousand for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, net charge-offs were $409 thousand compared to $294 thousand for the same period of 2023.
Previous wording
◦Non-performing assets - Total non-performing assets were $10.4 million at June 30, 2024, a decrease compared to non-performing assets of $14.5 million at December 31, 2023. The decrease is primarily related to the sale of one foreclosed property, which resulted in a loss on sale of approximately $26 thousand. Delinquency as a percentage of total loans was 0.57% at June 30, 2024.
Current wording
◦Non-performing assets - Total non-performing assets were $17.7 million at September 30, 2024, an increase compared to non-performing assets of $14.5 million at December 31, 2023. The increase is primarily related to the addition of one commercial property with a balance of $7.7 million being placed on nonaccrual in the third quarter of 2024, offset by the sale of one foreclosed property with a balance of $4.7 million in the second quarter of 2024. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.61% at September 30, 2024, compared to 0.57% and 0.49% as of June 30, 2024, and December 31, 2023, respectively.
Previous wording
◦Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $1.8 million for the three months ended June 30, 2024 compared to $1.2 million for the same period of 2023. The benefit for credit losses on off-balance sheet credit exposures was $178 thousand for the three months ended June 30, 2024, compared to a benefit of $496 thousand for the same period of 2023. The provision for credit losses - loans was $1.2 million for the six months ended June 30, 2024 compared to $1.6 million for the same period of 2023. The decrease in provision for the six months ended June 30, 2024, is primarily due to a decrease in loss factors across all portfolios.
Current wording
◦Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $621 thousand for the three months ended September 30, 2024 compared to $1.4 million for the same period of 2023. The benefit for credit losses on off-balance sheet credit exposures was $105 thousand for the three months ended September 30, 2024, compared to a benefit of $660 thousand for the same period of 2023. The provision for credit losses - loans was $1.8 million for the nine months ended September 30, 2024 compared to $3.1 million for the same period of 2023. The decrease in provision for the nine months ended September 30, 2024, is primarily due to a decrease in loss factors across all portfolios.
Previous wording
•Liquidity - Current liquidity, including borrowing capacity, enhanced to nearly $1.79 billion or 140.4% of uninsured and uncollateralized deposits, or approximately 39.8% of total deposits.
Current wording
•Liquidity - Current liquidity, including borrowing capacity, enhanced to nearly $1.91 billion or 141.5% of uninsured and uncollateralized deposits, or approximately 40.5% of total deposits.
Previous wording
The following discussion is regarding the critical accounting estimates related to the application of CECL and business combinations.
Current wording
The following discussion regards the critical accounting estimates related to the application of CECL and business combinations.
Previous wording
Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible, a triggering event. At June 30, 2024, Mid Penn had goodwill of $127.0 million and Mid Penn's stock continues to trade below book value.
Current wording
Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event.
Previous wording
Our annual impairment test was conducted during the fourth quarter of 2023. Factors considered include actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. No goodwill impairment has been recorded for 2024. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment.
Current wording
Our most recent annual impairment test was conducted during the fourth quarter of 2023. Factors considered include actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. At September 30, 2024, Mid Penn had goodwill of $128.2 million and Mid Penn's stock continues to trade below book value. Management has not noted any factors either internally or externally which would indicate that a triggering event has occurred during the third quarter of 2024 warranting an additional impairment test. No goodwill impairment has been recorded for 2024. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment.
Previous wording
For the three months ended June 30, 2024, net interest income was $38.8 million compared to net interest income of $36.4 million for the three months ended June 30, 2023. The tax-equivalent net interest margin for the three months ended June 30, 2024 was 3.12% compared to 3.31% for the second quarter of 2023, representing a 17 bp decrease compared to the same period in 2023.
Current wording
For the three months ended September 30, 2024, net interest income was $40.2 million compared to net interest income of $37.5 million for the three months ended September 30, 2023. The tax-equivalent net interest margin for the three months ended September 30, 2024 was 3.13% compared to 3.16% for the third quarter of 2023, representing a 3 bp decrease compared to the same period in 2023.
Previous wording
The yield on interest-earning assets increased to 5.69% for the quarter ended June 30, 2024, from 5.08% for the quarter ended June 30, 2023. These increases were due to assets continuing to reprice at higher rates during the second quarter of 2024, continued discipline on new loan pricing, and increase in Fed funds sold. Increased yields on interest-earning assets were offset by increases in funding costs for the second quarter of 2024, with the overall cost of interest-bearing liabilities increasing to 3.28% during the second quarter of 2024, compared to 2.35% for the three months ended June 30, 2023.
Current wording
The yield on interest-earning assets increased to 5.73% for the quarter ended September 30, 2024, from 5.35% for the quarter ended September 30, 2023. These increases were due to assets continuing to reprice at higher rates during the third quarter of 2024, continued discipline on new loan pricing, and an increase in Fed Funds Sold. Increased yields on interest-earning assets were offset by increases in funding costs for the third quarter of 2024, with the overall cost of interest-bearing liabilities increasing to 3.30% during the third quarter of 2024, compared to 2.79% for the three months ended September 30, 2023.
Previous wording
Average investment securities decreased $22.6 million and the yield on those investment securities decreased 4 bps during the second quarter of 2024 compared to the second quarter of 2023, reducing interest income due to volume by $146 thousand, and reducing interest income due to rates by $44 thousand. Average loans increased $544.6 million, and the yield on those loans increased 62 bps, contributing $7.4 million and $6.6 million, respectively, to the increase in interest income.
Current wording
Average investment securities decreased $8.5 million and the yield on those investment securities decreased 7 bps during the third quarter of 2024 compared to the third quarter of 2023, reducing interest income due to volume by $50 thousand, and reducing interest income due to rates by $137 thousand. Average loans increased $352.5 million, and the yield on those loans increased 39 bps, contributing $5.1 million and $4.2 million, respectively, to the increase in interest income.
Previous wording
Interest expense increased $12.3 million during the second quarter of 2024 compared to the second quarter of 2023. The rate of interest-bearing liabilities increased from 2.35% for the second quarter of 2023 to 3.28% for the second quarter of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits. In addition, average short-term borrowings of $241.7 million were used to help fund loan growth, contributing $1.8 million to interest expense during the second quarter of 2024.
Current wording
Interest expense increased $7.7 million during the third quarter of 2024 compared to the third quarter of 2023. The rate of interest-bearing liabilities increased from 2.79% for the third quarter of 2023 to 3.30% for the third quarter of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits. In addition, average short-term borrowings of $169.8 million were used to help fund loan growth, contributing $712 thousand to interest expense during the third quarter of 2024.
Previous wording
The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the six months ended June 30, 2024 in comparison to the same period in 2023:
Current wording
The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the nine months ended September 30, 2024 in comparison to the same period in 2023:
Previous wording
For the six months ended June 30, 2024, net interest income was $75.2 million compared to net interest income of $72.5 million for the six months ended June 30, 2023. FTE net interest income was $75.7 million for the six months ended June 30, 2024, an increase of $2.8 million, or 3.9%, compared to the same period of June 30, 2023. Mid Penn’s FTE net interest margin for the six months ended June 30, 2024 was 3.04% compared to 3.39% for the same period of June 30, 2023, representing a 35 bp decrease compared to the same period in 2023, primarily driven by higher interest rates resulting from persistent inflation.
Current wording
For the nine months ended September 30, 2024, net interest income was $115.4 million compared to net interest income of $110.0 million for the nine months ended September 30, 2023. FTE net interest income was $116.2 million for the nine months ended September 30, 2024, an increase of $6.0 million, or 5.4%, compared to the same period of September 30, 2023. Mid Penn’s FTE net interest margin for the nine months ended September 30, 2024 was 3.07% compared to 3.34% for the same period of September 30, 2023, representing a 27 bp decrease compared to the same period in 2023, primarily driven by higher interest rates resulting from persistent inflation.
Previous wording
The higher yields and the growth in interest-earning assets contributed $14.8 million and $17.9 million, respectively, to the increase in interest income. The yield on interest-earning assets increased 62 bps to 5.60% for the six months ended June 30, 2024 compared to 4.98% for the same period of 2023. Average interest-earning assets increased $16.5 million, or 15.4%, during the six months ended June 30, 2024 compared to the same period of 2023.
Current wording
The higher yields and the growth in interest-earning assets contributed $16.8 million and $26.3 million, respectively, to the increase in interest income. The yield on interest-earning assets increased 48 bps to 5.64% for the nine months ended September 30, 2024 compared to 5.16% for the same period of 2023. Average interest-earning assets increased $24.7 million, or 14.5%, during the nine months ended September 30, 2024 compared to the same period of 2023.
Previous wording
Average investment securities decreased $21.5 million, or 3.4%, and the yield on those investment securities decreased 1 bp, deducting $289 thousand and contributing $210 thousand, respectively, to interest income. Average loans increased $640.8 million, and the yield on those loans increased 65 bps contributing $17.1 million and $14.3 million, respectively, to the increase in interest income.
Current wording
Average investment securities decreased $17.0 million, or 2.7%, and the yield on those investment securities increased 1 bp, deducting $329 thousand and contributing $62 thousand, respectively, to interest income. Average loans increased $595.1 million, and the yield on those loans increased 48 bps contributing $24.9 million and $15.8 million, respectively, to the increase in interest income.
Previous wording
Interest expense increased $29.9 million during the first six months of 2024 compared to the same period of 2023. The rate of interest-bearing liabilities increased from 2.09% for the first six months of 2023 to 3.26% for the first six months of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. The rate on average interest-bearing deposits increased 117 bps contributing $15.9 million to the increase in interest expense during the six months ended June 30, 2024 compared to the same period in 2023. In addition, average short-term borrowings of $278.9 million were used to help fund loan growth, contributing $4.8 million to interest expense during the six months ended June 30, 2024 compared to the same period in 2023.
Current wording
Interest expense increased $37.6 million during the first nine months of 2024 compared to the same period of 2023. The rate of interest-bearing liabilities increased from 2.37% for the first nine months of 2023 to 3.27% for the first nine months of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. The rate on average interest-bearing deposits increased 91 bps contributing $18.4 million to the increase in interest expense during the nine months ended September 30, 2024 compared to the same period in 2023. In addition, average short-term borrowings of $242.2 million were used to help fund loan growth, contributing $5.5 million to interest expense during the nine months ended September 30, 2024 compared to the same period in 2023.
Previous wording
On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology, and is referred to as CECL. The provision for credit losses on loans was $1.8 million for the three months ended June 30, 2024 compared to a provision of $1.2 million for the three months ended June 30, 2023. The increase in provision was driven by an increase in loss factors across the commercial and commercial real estate portfolios. The provision for credit losses on loans was $1.2 million for the six months ended June 30, 2024 compared to a provision of $1.6 million for the six months ended June 30, 2023. The decrease is primarily due to a decrease in loss factors across all portfolios.
Current wording
On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology, and is referred to as CECL. The provision for credit losses on loans was $621 thousand for the three months ended September 30, 2024 compared to a provision of $1.4 million for the three months ended September 30, 2023. The decrease in provision was driven by a decrease in loss factors across all portfolios. The provision for credit losses on loans was $1.8 million for the nine months ended September 30, 2024 compared to a provision of $3.1 million for the nine months ended September 30, 2023. The decrease is primarily due to a decrease in loss factors across all portfolios.
Previous wording
Noninterest income for the three months ended June 30, 2024 was $5.3 million and $5.2 million for the three months ended June 30, 2023. The following table and explanations that follow provide additional analysis of noninterest income.
Current wording
Noninterest income for the three months ended September 30, 2024 was $5.2 million and $5.3 million for the three months ended September 30, 2023. The following table and explanations that follow provide additional analysis of noninterest income.
Previous wording
For the three months ended June 30, 2024, noninterest expense totaled $28.2 million, a decrease of $6.9 million, or 19.7%, compared to noninterest expense of $35.1 million for the same period in 2023. The following table and explanations that follow provide additional analysis of noninterest expense:
Current wording
For the three months ended September 30, 2024, noninterest expense totaled $30.0 million, an increase of $730 thousand, or 2.5%, compared to noninterest expense of $29.2 million for the same period in 2023. The following table and explanations that follow provide additional analysis of noninterest expense:
Previous wording
•Noninterest Expense - Noninterest expense totaled $28.2 million for the three months ended June 30, 2024, a decrease of $6.9 million, or 19.7%, compared to noninterest expense of $35.1 million for the same period of 2023. The decrease was primarily due to $7.9 million of Brunswick acquisition costs in 2023, partially offset by a $506 thousand increase in salaries and benefits expense, also driven by the Brunswick acquisition, and a $548 thousand increase in FDIC charges due to increased assessment rates. Noninterest expense totaled $56.7 million for the six months ended June 30, 2024, a decrease of $4.2 million, or 6.93%, compared to noninterest expense of $61.0 million for the same period of 2023.
Current wording
For the nine months ended September 30, 2024, noninterest expense totaled $86.7 million, a decrease of $3.5 million, or 3.9%, compared to noninterest expense of $90.2 million for the nine months ended September 30, 2023. The decrease was primarily driven by $7.9 million of Brunswick acquisition costs in 2023, partially offset by a $3.0 million increase in salaries and benefits expense, and a $1.0 million increase in legal and professional fees.
Previous wording
The provision for income taxes was $2.5 million for the three months ended June 30, 2024 compared to $142 thousand for the same period in 2023. The provision for income taxes for the six months ended June 30, 2024 reflects a combined Federal and State effective tax rate of 17.5% and 2.9%, for the six months ended June 30, 2024 and June 30, 2023, respectively. Generally, Mid Penn’s effective tax rate is below the federal statutory rate due to earnings on tax-exempt loans, investments, and earnings from the cash surrender value of life insurance, as well as the impact of federal income tax credits, including those awarded from Mid Penn’s low-income housing investments. The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn currently anticipates that future earnings will be adequate to fully realize the currently recorded deferred tax assets.
Current wording
The provision for income taxes was $2.6 million for the three months ended September 30, 2024 compared to $2.3 million for the same period in 2023. The provision for income taxes for the nine months ended September 30, 2024 reflects a combined Federal and State effective tax rate of 17.4% and 16.5%, for the nine months ended September 30, 2024 and September 30, 2023, respectively. Generally, Mid Penn’s effective tax rate is below the federal statutory rate due to earnings on tax-exempt loans, investments, and earnings from the cash surrender value of life insurance, as well as the impact of federal income tax credits, including those awarded from Mid Penn’s low-income housing investments. The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn currently anticipates that future earnings will be adequate to fully realize the currently recorded deferred tax assets.
Previous wording
Mid Penn’s total assets were $5.4 billion as of June 30, 2024, reflecting an increase of $101.0 million, or 1.9%, compared to total assets of $5.3 billion as of December 31, 2023. The increase was primarily driven by organic loan growth, offset by a reduction in investment securities.
Current wording
Mid Penn’s total assets were $5.5 billion as of September 30, 2024, reflecting an increase of $236.2 million, or 4.5%, compared to total assets of $5.3 billion as of December 31, 2023. The increase was primarily driven by organic loan growth, increases in investment securities, and an increase in Fed Funds Sold.
Previous wording
Mid Penn’s investment portfolio is utilized primarily to support overall liquidity and interest rate risk management, to provide collateral supporting pledging requirements for public funds on deposit, and to generate additional interest income within reasonable risk parameters. Total investment securities as of June 30, 2024 were $601.3 million compared to $622.7 million as of December 31, 2023. Mid Penn does not intend to grow the investment portfolio beyond levels necessary to support pledging requirements.
Current wording
Mid Penn’s investment portfolio is utilized primarily to support overall liquidity and interest rate risk management, to provide collateral supporting pledging requirements for public funds on deposit, and to generate additional interest income within reasonable risk parameters. The carrying value of total investment securities as of September 30, 2024 were $641.8 million compared to $622.7 million as of December 31, 2023. Mid Penn does not intend to grow the investment portfolio beyond levels necessary to support pledging requirements.
Previous wording
Total loans, net of unearned interest, as of June 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023. The growth of $111.8 million, or 2.6%, since December 31, 2023 was primarily the result of organic loan growth across the commercial real estate and commercial and industrial portfolios, offset by decreases in residential mortgage loan portfolios.
Current wording
Total loans, net of unearned income, as of September 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023. The growth of $178.9 million, or 4.2%, since December 31, 2023 was primarily the result of organic loan growth across the commercial real estate and commercial and industrial portfolios, offset by decreases in residential mortgage loan portfolios.
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