UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 1-13677

MID PENN BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Pennsylvania	25-1666413
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
349 Union Street Millersburg, Pennsylvania	17061
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code 1.866.642.7736

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value per share	MPB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐ Accelerated filer  ☒ Non-accelerated filer  ☐ Smaller reporting company ☒ Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ☐    No ☒

As of May 5, 2021, the registrant had 11,406,095 shares of common stock outstanding.

1

FORM 10-Q

TABLE OF CONTENTS

PART 1 – FINANCIAL INFORMATION			3
	Item 1 – Financial Statements		3
		Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (Unaudited)	3
		Consolidated Statements of Income for the Three Months Ended March 31, 2021 and March 31, 2020 (Unaudited)	4
		Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and March 31, 2020 (Unaudited)	5
		Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2021 and March 31, 2020 (Unaudited)	6
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and March 31, 2020 (Unaudited)	7
		Notes to Consolidated Financial Statements (Unaudited)	9
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		43
	Item 3 – Quantitative and Qualitative Disclosures about Market Risk		58
	Item 4 – Controls and Procedures		58
PART II – OTHER INFORMATION			59
	Item 1 – Legal Proceedings		59
	Item 1A – Risk Factors		59
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		59
	Item 3 – Defaults upon Senior Securities		59
	Item 4 – Mine Safety Disclosures		59
	Item 5 – Other Information		59
	Item 6 – Exhibits		60
	Signatures		61

Unless the context otherwise requires, the terms “Mid Penn”, “Corporation” “we”, “us”, and “our” refer to Mid Penn Bancorp, Inc. and its consolidated wholly-owned banking subsidiary and nonbank subsidiaries.

2

MID PENN BANCORP, INC.

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except share data)	March 31, 2021			December 31, 2020
ASSETS
Cash and due from banks	$	36,109		$	31,284
Interest-bearing balances with other financial institutions		1,243			1,541
Federal funds sold		390,019			270,899
Total cash and cash equivalents		427,371			303,724
Investment securities held to maturity, at amortized cost (fair value $133,519 and $132,794)		130,560			128,292
Investment securities available for sale, at fair value		3,250			5,748
Equity securities available for sale, at fair value		508			515
Loans held for sale		25,842			25,506
Loans and leases, net of unearned interest		2,646,236			2,384,041
Less:  Allowance for loan and lease losses		(13,591	)		(13,382	)
Net loans and leases		2,632,645			2,370,659
Bank premises and equipment, net		24,710			24,886
Operating lease right of use asset		10,791			10,157
Finance lease right of use asset		3,222			3,267
Cash surrender value of life insurance		17,257			17,183
Restricted investment in bank stocks		6,860			7,594
Accrued interest receivable		11,855			12,971
Deferred income taxes		5,427			3,619
Goodwill		62,840			62,840
Core deposit and other intangibles, net		4,079			4,360
Foreclosed assets held for sale		154			134
Other assets		14,667			17,493
Total Assets	$	3,382,038		$	2,998,948
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	676,717		$	536,224
Interest-bearing demand		601,220			605,567
Money Market		770,800			720,506
Savings		201,225			195,038
Time		416,865			417,245
Total Deposits		2,666,827			2,474,580
Short-term borrowings		307,753			125,617
Long-term debt		75,030			75,115
Subordinated debt		44,586			44,580
Operating lease liability		11,828			11,200
Accrued interest payable		1,902			2,007
Federal income tax payable		1,321			—
Other liabilities		8,755			10,161
Total Liabilities		3,118,002			2,743,260
Shareholders' Equity:
Common stock, par value $1.00 per share; 20,000,000 shares authorized; Shares issued: 8,514,547 at March 31, 2021 and 8,511,835 at December 31, 2020; Shares outstanding:  8,416,095 at March 31, 2021 and 8,419,183 at December 31, 2020		8,515			8,512
Additional paid-in capital		179,055			178,853
Retained earnings		77,888			70,175
Accumulated other comprehensive income (loss)		501			(57	)
Treasury stock, at cost; 98,452 shares at March 31, 2021 and 92,652 shares at December 31, 2020		(1,923	)		(1,795	)
Total Shareholders’ Equity		264,036			255,688
Total Liabilities and Shareholders' Equity	$	3,382,038		$	2,998,948

The accompanying notes are an integral part of these consolidated financial statements.

3

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except per share data)	Three Months Ended March 31,
		2021		2020
INTEREST INCOME
Interest and fees on loans and leases	$	28,330	$	22,249
Interest and dividends on investment securities:
U.S. Treasury and government agencies		178		671
State and political subdivision obligations, tax-exempt		277		221
Other securities		302		153
Total interest and dividends on investment securities		757		1,045
Interest on other interest-bearing balances		2		15
Interest on federal funds sold		79		390
Total Interest Income		29,168		23,699
INTEREST EXPENSE
Interest on deposits		2,966		5,380
Interest on short-term borrowings		174		—
Interest on long-term and subordinated debt		703		654
Total Interest Expense		3,843		6,034
Net Interest Income		25,325		17,665
PROVISION FOR LOAN AND LEASE LOSSES		1,000		550
Net Interest Income After Provision for Loan and Lease Losses		24,325		17,115
NONINTEREST INCOME
Mortgage banking income		2,379		1,182
Income from fiduciary and wealth management activities		556		384
Service charges on deposits		152		205
ATM debit card interchange income		568		416
Net gain on sales of SBA loans		100		84
Merchant services income		92		83
Earnings from cash surrender value of life insurance		74		76
Net gain on sales of investment securities		—		132
Other income		791		372
Total Noninterest Income		4,712		2,934
NONINTEREST EXPENSE
Salaries and employee benefits		9,598		8,281
Occupancy expense, net		1,480		1,439
Equipment expense		751		713
Software licensing and utilization		1,445		1,221
Pennsylvania bank shares tax expense		300		405
FDIC Assessment		470		312
Legal and professional fees		426		352
Charitable contributions qualifying for State tax credits		270		35
Mortgage banking profit-sharing expense		120		—
Marketing and advertising expense		135		204
Telephone expense		136		134
Intangible amortization		281		323
Other expenses		2,146		2,162
Total Noninterest Expense		17,558		15,581
INCOME BEFORE PROVISION FOR INCOME TAXES		11,479		4,468
Provision for income taxes		2,167		650
NET INCOME	$	9,312	$	3,818
PER COMMON SHARE DATA:
Basic Earnings Per Common Share	$	1.11	$	0.45
Diluted Earnings Per Common Share	$	1.10	$	0.45
Cash Dividends Declared	$	0.19	$	0.23

The accompanying notes are an integral part of these consolidated financial statements. 

4

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(Dollars in thousands)	Three Months Ended March 31,
	2021			2020
Net income	$	9,312		$	3,818
Other comprehensive income (loss):
Unrealized income arising during the period on available-for-sale
securities, net of income taxes of $0 and $67, respectively		1			250
Reclassification adjustment for net gain on sales of available-for-sale securities
included in net income, net of income taxes of $0 and ($28), respectively (a)		—			(104	)
Change in defined benefit plans, net of income taxes of $159 and ($143), respectively (b)		600			(537	)
Reclassification adjustment for other activity related to benefit
plans, net of income taxes of ($11) and ($1), respectively (c)		(43	)		(4	)
Total other comprehensive income (loss)		558			(395	)
Total comprehensive income	$	9,870		$	3,423

(a) Amounts are included in net gain on sales of investment securities on the Consolidated Statements of Income as a separate element within total noninterest income.

(b) The change in defined benefit plans consists primarily of unrecognized actuarial gains (losses) on defined benefit plans during the period.  

(c) The reclassification adjustment for benefit plans includes settlement gains, and amortization of prior service costs.  Amounts are included in other income on the Consolidated Statements of Income within total noninterest income.  Please reference Note 11 – Defined Benefit Plans, for more information.

The accompanying notes are an integral part of these consolidated financial statements.

5

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands)								Accumulated
			Additional					Other						Total
	Common		Paid-in		Retained			Comprehensive			Treasury			Shareholders'
	Stock		Capital		Earnings			Income (Loss)			Stock			Equity
Balance, January 1, 2021	$	8,512	$	178,853	$	70,175		$	(57	)	$	(1,795	)	$	255,688
Net income		—		—		9,312			—			—			9,312
Total other comprehensive income, net of taxes		—		—		—			558			—			558
Common stock dividends declared		—		—		(1,599	)		—			—			(1,599	)
Repurchased stock (5,800 shares)		—		—		—			—			(128	)		(128	)
Employee Stock Purchase Plan (1,459 shares)		2		38		—			—			—			40
Director Stock Purchase Plan (1,253 shares)		1		32		—			—			—			33
Restricted stock activity		—		132		—			—			—			132
Balance, March 31, 2021	$	8,515	$	179,055	$	77,888		$	501		$	(1,923	)	$	264,036