MID PENN BANCORP INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
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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.
Mar 31, 2025 · Filed May 8, 2025
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 2024-09-30; filed 2024-11-07.
0000879635-24-000203
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000879635-25-000109
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 155 previous paragraphs and 133 current paragraphs.
91 unchanged; 36 reworded; 6 added; 23 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 15 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 (6)
Current report
Management of the Corporation considers the accounting judgments relating to the allowance for credit losses and goodwill impairment to be the accounting area that requires the most subjective and complex judgments.
Current report
There have been no material changes to Mid Penn's critical accounting estimates as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024.
Current report
The provision for credit losses on loans was $321 thousand for the three months ended March 31, 2025 compared to a benefit of $619 thousand for the three months ended March 31, 2024. The increase in provision was driven by an increase in loss factors across certain portfolios.
Current report
For the three months ended March 31, 2025, noninterest expense totaled $30.6 million, an increase of $2.1 million, or 7.4%, compared to noninterest expense of $28.5 million for the same period in 2024. The increase was primarily driven by a $847 thousand increase in salaries and employee benefits, a $454 thousand increase in software licensing, a $314 thousand increase in merger and acquisition expenses, and a $292 thousand increase in occupancy expenses, partially offset by a $172 thousand decrease in legal and professional fees.
Current report
Average balances and average interest rates applicable to deposits by major classification:
Current report
Total short-term borrowings increased $23.0 million, or 1150.0%, from December 31, 2024. The increase in short-term borrowings was driven by our objective to maintain a strong unencumbered liquid assets ratio, ensuring the availability of high-quality liquidity to meet potential near-term obligations. Short term FHLB borrowings increased $25.0 million, offset by a decrease of $2.0 million in FHLB overnight borrowings. Total long-term borrowings were $23.5 million at March 31, 2025, a decrease of $114 thousand from December 31, 2024.
Removed paragraphs (23)
Previous 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;
Previous report
During the second quarter of 2023, Mid Penn completed the Brunswick Acquisition, which added total assets of $390.7 million comprised primarily of $324.5 million of loans. This transaction resulted in the addition of 5 branches in central New Jersey. Mid Penn issued 849,510 shares of its common stock as well as a net cash payment to Brunswick shareholders of $27.6 million, for total consideration of $45.7 million for all outstanding stock and the cancellation of options of Brunswick.
Previous report
The following discussion regards the critical accounting estimates related to the application of CECL and business combinations.
Previous report
Allowance for Credit Losses
Previous report
In accordance with CECL, the ACL, which includes both the ACL - loans and the ACL for OBS credit exposures, is calculated with the objective of maintaining a reserve for current expected credit losses over the remaining expected life of the portfolio. Management's determination of the appropriateness of the reserve is based on continuously monitoring and evaluating the loan portfolio, lending-related commitments, current as well as forecasted economic factors, and other relevant factors. The ACL - loans is an estimate of expected losses inherent within Mid Penn's existing loan portfolio.
Previous report
Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and credit quality. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects Management’s expectations of future conditions based on reasonable and supportable forecasts. As such, the calculation of ACL is inherently subjective and requires management to exercise significant judgment. The CECL estimate is highly sensitive to the economic forecasts used to develop the estimate.
Previous report
While management endeavors to use the best information known to it in order to make ACL valuations, adjustments to the ACL may be necessary based on changes in economic and other conditions, changes in the composition of the loan portfolio, or changes in accounting guidance. In times of economic slowdown, either local, regional or national, the risk inherent in the loan portfolio could increase resulting in the need for additional provisions to the ACL in future periods. An increase could also be necessitated by an increase in the size of the loan portfolio or in any of its components even though the credit quality of the overall portfolio may be improving.
Previous report
For further discussion of the methodology used in the determination of the ACL, refer to "Note 1 - Summary of Significant Accounting Policies", "Note 3 - Investment Securities", "Note 4 - Loans and Allowance for Credit Losses - Loans" and "Note 9 - Commitments and Contingencies" to the Consolidated Financial Statements. To the extent actual outcomes differ from management estimates, additional PCL may be required that would adversely impact earnings in future periods.
Previous report
Business Combinations
Previous report
Assets acquired and liabilities assumed in business combinations are measured at fair value as of the acquisition date. In many cases, determining the fair value of the assets acquired and liabilities assumed requires Mid Penn to estimate the timing and amount of cash flows expected to result from these assets and liabilities and to discount these cash flows at appropriate rates of interest, which require the utilization of significant estimates and judgment in accounting for the acquisition.
Previous report
(2)Annualized ratios
Previous report
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 report
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 report
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 report
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 report
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 report
Noninterest income and variance analysis:
Previous 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.
Previous report
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 report
Upon the adoption of FASB ASC Topic 326 on January 1, 2023, Mid Penn recorded an overall increase of $15.0 million to the ACL on January 1, 2023 as a result of the adoption of CECL. Retained earnings decreased $11.5 million and deferred tax assets increased by $3.1 million.
Previous report
.(1) Includes a $2.0 million initial provision for the nine months ended September 30, 2023, for credit losses on non-PCD loans acquired in the Brunswick Acquisition. in 2023.
Previous report
Goodwill
Previous report
Total short-term borrowings decreased $127.4 million, or 52.8%, from December 31, 2023. FHLB overnight borrowings decreased $112.4 million, along with a decrease of $15.0 million in short term FHLB borrowings. Total long-term borrowings were $23.7 million at September 30, 2024, a decrease of $35.3 million from December 31, 2023.
Reworded paragraphs (36)
Previous wording
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 wording
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, 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.
Previous wording
•the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, including litigation related to the Merger;
Current wording
•the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
Previous 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.
Current wording
•Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended March 31, 2025 was $13.7 million, or $0.71 per both common share basic and diluted, compared to earnings of $12.1 million, or $0.73 per both common share basic and diluted for the three months ended March 31, 2024.
Previous 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.
Current wording
◦Net Interest Margin - For the first quarter of 2025, Mid Penn’s net interest margin was 3.37% versus 2.97% for the same period of 2024. The yield on interest-earning assets for the first quarter of 2025 increased 14 basis points from the same period of 2024. The rate on interest-bearing liabilities decreased 30 basis points from the same period of 2024.
Previous 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.
Current wording
◦Loan Growth - Total loans, net of unearned income, as of March 31, 2025 were $4.5 billion compared to $4.4 billion as of December 31, 2024, anincrease of $48.1 million, or 1.1%. The growth was primarily driven by an increase in owner occupied commercial real estate of$30.3 million, an increase in nonowner occupied commercial real estate of$21.1 million, and an increase in commercial and industrial loans of$15.3 million, partially offset by an $11.2 million decrease in residential construction loans.
Previous 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.
Current wording
◦Deposit Growth - Total deposits increased $42.3 million, or 0.9%, from $4.7 billion at December 31, 2024, to $4.7 billion at March 31, 2025. The growth was driven by an increase of $55.5 million in interest-bearing transaction accounts, a $29.1 million increase in non-interest bearing accounts, offset by a decrease of $42.3 million in time deposits.
Previous 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.
Current wording
•Asset Quality - ACL-loans at March 31, 2025 was $35.8 million, or 0.80% of total loans, as compared to $35.5 million, or 0.80% of total loans at December 31, 2024.
Previous 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.
Current wording
◦Net Charge-offs/Recoveries - Mid Penn had net recoveries of $3 thousand and net charge-offs of $44 thousand for the three months ended March 31, 2025 and 2024, respectively.
Previous 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.
Current wording
◦Non-performing assets - Total non-performing assets were $25.4 million at March 31, 2025, an increase compared to non-performing assets of $22.7 million at December 31, 2024. The increase during the first quarter of 2025 is primarily related to the addition of three commercial loans with a combined balance of $7.0 million, partially offset by the payoff of two commercial loans with a combined balance of $3.0 million. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.50% at March 31, 2025, compared to 0.52% as of December 31, 2024.
Previous 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.
Current wording
◦Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $321 thousand for the three months ended March 31, 2025 compared to a benefit of $619 thousand for the same period of 2024. The benefit for credit losses on off-balance sheet credit exposures was $20 thousand for the three months ended March 31, 2025, compared to a benefit of $318 thousand for the same period of 2024. The increase in provision for the three months ended March 31, 2025, is primarily due to an increase in loss factors across certain portfolios.
Previous wording
•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 wording
•Noninterest Income - Noninterest income totaled $5.2 million for the three months ended March 31, 2025 compared to $5.8 million for the same period of 2024. The decrease is primarily due to a $731 thousand decrease in other miscellaneous noninterest income, driven by a $1.4 million decrease in Bank-owned life insurance benefits received, partially offset by a $357 thousand increase in loan level swap fees, a $113 thousand increase in other letter of credit income, and a $167 thousand increase in Mortgage Banking income.
Previous wording
•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 wording
•Noninterest Expense - Noninterest expense totaled $30.6 million for the three months ended March 31, 2025, an increase of $2.1 million, or 7.4%, compared to noninterest expense of $28.5 million for the same period of 2024. The increase was primarily driven by a $847 thousand increase in salaries and employee benefits, a $454 thousand increase in software licensing, a $314 thousand increase in merger and acquisition expenses, and a $292 thousand increase in occupancy expenses, partially offset by a $172 thousand decrease in legal and professional fees.
Previous 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.
Current wording
•Liquidity - Current liquidity, including borrowing capacity, decreased to $1.6 billion or 104.2% of uninsured and uncollateralized deposits, or approximately 33.0% of total deposits.
Previous wording
The 2023 Annual Report includes a summary of critical accounting estimates that Mid Penn considers to be most important to the presentation of its financial condition and results of operations because they require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Current wording
The 2024 Annual Report on Form 10-K includes a summary of critical accounting estimates that Mid Penn considers to be most important to the presentation of its financial condition and results of operations. These estimates require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Previous 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.
Current wording
For the three months ended March 31, 2025, net interest income was $42.5 million compared to net interest income of $36.5 million for the three months ended March 31, 2024. The tax-equivalent net interest margin for the three months ended March 31, 2025 was 3.37% compared to 2.97% for the first quarter of 2024, representing a 40 bp increase compared to the same period in 2024.
Previous 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.
Current wording
The yield on interest-earning assets increased to 5.65% for the quarter ended March 31, 2025, from 5.51% for the quarter ended March 31, 2024. These increases were due to assets continuing to reprice at higher rates during 2024 and the first quarter of 2025, continued discipline on new loan pricing, and an increase in Fed Funds Sold.
Previous 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.
Current wording
Average investment securities increased $23.9 million and the yield on those investment securities increased 23 bps during the first quarter of 2025 compared to the first quarter of 2024, increasing interest income due to volume by $179 thousand, and increasing interest income due to rates by $302 thousand. Average loans increased $165.9 million, and the yield on those loans increased 13 bps, contributing $2.4 million and $879 thousand, respectively, to the increase in interest income.
Previous 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.
Current wording
Interest expense decreased $2.5 million during the first quarter of 2025 compared to the first quarter of 2024. The rate of interest-bearing liabilities decreased from 3.24% for the first quarter of 2024 to 2.95% for the first quarter of 2025. The decrease in the rate was primarily a result of a decrease in short-term borrowings, a decrease in long term debt, and a decrease in time deposits. Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits.
Previous wording
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 wording
For the three months ended March 31, 2025, noninterest income totaled $5.2 million, a decrease of $598 thousand, or 10.2%, compared to noninterest income of $5.8 million for the three months ended March 31, 2024. The decrease is primarily due to a $731 thousand decrease in other miscellaneous noninterest income, driven by a $1.4 million decrease in Bank-owned life insurance benefits received, partially offset by a $357 thousand increase in loan level swap fees, a $113 thousand increase in other letter of credit income, and a $167 thousand increase in Mortgage Banking income.
Previous 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.
Current wording
The following table and explanations that follow provide additional analysis of noninterest income:
Previous 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:
Current wording
The following table and explanations that follow provide additional analysis of noninterest expense:
Previous 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.
Current wording
The provision for income taxes was $3.1 million for the three months ended March 31, 2025 compared to $2.6 million for the same period in 2024. The provision for income taxes for the three months ended March 31, 2025 reflects a combined Federal and State effective tax rate of 18.2% and 17.5%, for the three months ended March 31, 2025 and March 31, 2024, 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 $5.5 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.
Current wording
Mid Penn’s total assets were $5.5 billion as of March 31, 2025, reflecting an increase of $75.1 million, or 1.4%, compared to total assets of $5.5 billion as of December 31, 2024. The increase was primarily driven by organic loan growth, 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. 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.
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 March 31, 2025 were $633.6 million compared to $642.9 million as of December 31, 2024. Mid Penn does not intend to grow the investment portfolio beyond levels necessary to support pledging requirements.
Previous 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.
Current wording
Total loans, net of unearned income, as of March 31, 2025 were $4.5 billion compared to $4.4 billion as of December 31, 2024. The growth of $48.1 million, or 1.1%, since December 31, 2024 was primarily the result of organic loan growth across the commercial real estate and commercial and industrial portfolios, offset by decreases in residential and other construction loan portfolios.
Previous wording
The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area of the Pennsylvania counties of Berks, Blair, Bucks, Centre, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with Middlesex and Monmouth counties of New Jersey. Commercial real estate, construction, and land development loans are collateralized mainly by mortgages on the income-producing real estate or land involved. Commercial, industrial, and agricultural loans are primarily made to business entities and may be secured by business assets, including commercial real estate, or may be unsecured. Residential real estate loans are secured by liens on the residential property. Consumer loans include installment loans, lines of credit and home equity loans. The Bank has no significant concentration of credit to any one borrower. The Bank’s highest concentration of credit by loan type is in commercial real estate.
Current wording
The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area of the Pennsylvania counties of Berks, Blair, Bucks, Chester, Clearfield, Cumberland, Dauphin, Delaware, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with Camden, Middlesex and Monmouth counties of New Jersey. Commercial real estate, construction, and land development loans are collateralized mainly by mortgages on the income-producing real estate or land involved. Commercial, industrial, and agricultural loans are primarily made to business entities and may be secured by business assets, including commercial real estate, or may be unsecured. Residential real estate loans are secured by liens on the residential property. Consumer loans include installment loans, lines of credit and home equity loans. The Bank has no significant concentration of credit to any one borrower. The Bank’s highest concentration of credit by loan type is in commercial real estate.
Previous wording
Mid Penn adopted FASB ASC Topic 326, in accordance with the amendments of FASB ASU 2016-13, effective January 1, 2023. The guidance in FASB ASC 326 replaces Mid Penn’s previous incurred loss methodology with a methodology that reflects the current expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit losses. Mid Penn’s ACL methodology for loans is based upon guidance within FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," as well as regulatory guidance from the FDIC, the Bank's primary federal regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries.
Current wording
Mid Penn’s ACL methodology for loans is based upon guidance within FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," as well as regulatory guidance from the FDIC, the Bank's primary federal regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries.
Previous wording
For a complete description of Mid Penn’s ACL methodology and the quantitative and qualitative factors included in the calculation, please see "Note 4 – Loans and Allowance for Credit Losses – Loans" included in Part I. Item 1. – Financial Statements of this report.
Current wording
For a complete description of Mid Penn’s ACL-loans methodology and the quantitative and qualitative factors included in the calculation, please see "Note 4 – Loans and Allowance for Credit Losses – Loans" included in Part I. Item 1. – Financial Statements of this report.
Previous wording
Changes in the ACL are summarized as follows:
Current wording
Changes in the ACL-loans are summarized as follows:
Previous wording
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.
Current wording
Total nonperforming assets were $25.4 million at March 31, 2025, an increase compared to nonperforming assets of $22.7 million at December 31, 2024. The increase during the first quarter of 2025 is primarily related to the addition of three commercial loans with a combined balance of $7.0 million being placed on nonaccrual in the first quarter of 2025, offset by the payoff of two commercial loans with a combined balance of $3.0 million in the first quarter of 2025. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.50% at March 31, 2025, compared to 0.52% and 0.38% as of December 31, 2024 and March 31, 2024.
Previous wording
Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event. 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. Factors considered include actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment. Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2024.
Current wording
Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event. At March 31, 2025, Mid Penn had goodwill of $128.2 million and Mid Penn's stock continues to trade below book value, warranting additional analysis. Management has reviewed actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. Management has not noted any factors which would indicate that an additional impairment test is necessary. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment. Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2025.
Previous wording
Total deposits increased $360.6 million, or 8.3%, from $4.3 billion on December 31, 2023, to $4.7 billion at September 30, 2024. The growth was driven by a $202.3 million increase in interest bearing accounts, and a $167.6 million increase in time deposits, offset by a $9.3 million decrease in noninterest bearing accounts.
Current wording
Total deposits increased $42.3 million, or 0.9%, from $4.7 billion on December 31, 2024, to $4.7 billion at March 31, 2025. The growth was driven by a $55.5 million increase in interest bearing accounts, and a $29.1 million increase in noninterest bearing accounts, offset by a $42.3 million decrease in time deposits.
Previous wording
As of September 30, 2024, uninsured deposits were approximately $1.3 billion compared to $1.2 billion as of December 31, 2023. The maturities of the uninsured time deposits as of September 30, 2024 were as follows:
Current wording
As of March 31, 2025, uninsured deposits were approximately $1.5 billion compared to $1.4 billion as of December 31, 2024. The maturities of the uninsured time deposits as of March 31, 2025 were as follows:
Previous wording
The Consolidated Statements of Cash Flows provide additional information. Mid Penn’s operating activities during the nine months ended September 30, 2024 provided $47.3 million of cash, mainly due to net income. Cash used in investing activities during the nine months ended September 30, 2024 was $187.6 million, mainly the result of the net increase in loans. Cash provided by financing activities during the nine months ended September 30, 2024 totaled $188.0 million, primarily the result of an increase in net deposits.
Current wording
The Consolidated Statements of Cash Flows provide additional information. Mid Penn’s operating activities during the three months ended March 31, 2025 provided $11.5 million of cash, mainly due to net income. Cash used in investing activities during the three months ended March 31, 2025 was $36.3 million, mainly the result of the net increase in loans. Cash provided by financing activities during the three months ended March 31, 2025 totaled $61.5 million, primarily the result of an increase in net deposits.
Previous wording
Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets, and the desire to collectively maintain and enhance shareholders’ value, and satisfactorily address regulatory capital requirements. Accordingly, capital management has been, and will continue to be, of paramount importance to Mid Penn.
Current wording
Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets, and the desire to collectively maintain and enhance shareholders’ value, and satisfactorily address regulatory capital requirements. Accordingly, capital management practices have been, and will continue to be, of paramount importance to Mid Penn.
Previous wording
Shareholders’ equity increased by $30.7 million, or 5.7%, from $542.4 million as of December 31, 2023 to $573.1 million as of September 30, 2024, primarily due to earnings of $36.2 million, partially offset by dividends declared of $10.0 million and stock repurchases of $323 thousand.
Current wording
Shareholders’ equity increased by $12.9 million, or 2.0%, from $655.0 million as of December 31, 2024 to $667.9 million as of March 31, 2025, primarily due to earnings of $13.7 million.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by Management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.
Previous report — wording carried elsewhere
Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
(1)Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances
Previous report — wording carried elsewhere
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: