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 June 30, 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 August 5, 2021, the registrant had 11,426,736 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 June 30, 2021 and December 31, 2020 (Unaudited)	3
		Consolidated Statements of Income for the Three and Six Months Ended June 30, 2021 and June 30, 2020 (Unaudited)	4
		Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2021 and June 30, 2020 (Unaudited)	5
		Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2021 and June 30, 2020 (Unaudited)	6
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and June 30, 2020 (Unaudited)	7
		Notes to Consolidated Financial Statements (Unaudited)	9
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
	Item 3 – Quantitative and Qualitative Disclosures about Market Risk		64
	Item 4 – Controls and Procedures		64
PART II – OTHER INFORMATION			65
	Item 1 – Legal Proceedings		65
	Item 1A – Risk Factors		65
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		67
	Item 3 – Defaults upon Senior Securities		67
	Item 4 – Mine Safety Disclosures		67
	Item 5 – Other Information		67
	Item 6 – Exhibits		68
	Signatures		69

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)	June 30, 2021			December 31, 2020
ASSETS
Cash and due from banks	$	35,815		$	31,284
Interest-bearing balances with other financial institutions		1,234			1,541
Federal funds sold		599,298			270,899
Total cash and cash equivalents		636,347			303,724
Investment securities held to maturity, at amortized cost (fair value $156,579 and $132,794)		153,032			128,292
Investment securities available for sale, at fair value		8,162			5,748
Equity securities available for sale, at fair value		508			515
Loans held for sale		24,202			25,506
Loans and leases, net of unearned interest		2,495,192			2,384,041
Less:  Allowance for loan and lease losses		(14,716	)		(13,382	)
Net loans and leases		2,480,476			2,370,659
Bank premises and equipment, net		24,758			24,886
Operating lease right of use asset		10,364			10,157
Finance lease right of use asset		3,177			3,267
Cash surrender value of life insurance		17,332			17,183
Restricted investment in bank stocks		6,816			7,594
Accrued interest receivable		10,638			12,971
Deferred income taxes		5,465			3,619
Goodwill		62,840			62,840
Core deposit and other intangibles, net		3,804			4,360
Foreclosed assets held for sale		11			134
Other assets		13,860			17,493
Total Assets	$	3,461,792		$	2,998,948
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	692,016		$	536,224
Interest-bearing demand		629,375			605,567
Money Market		810,067			720,506
Savings		206,724			195,038
Time		443,942			417,245
Total Deposits		2,782,124			2,474,580
Short-term borrowings		196,889			125,617
Long-term debt		74,944			75,115
Subordinated debt		44,593			44,580
Operating lease liability		11,387			11,200
Accrued interest payable		2,122			2,007
Other liabilities		8,164			10,161
Total Liabilities		3,120,223			2,743,260
Shareholders' Equity:
Common stock, par value $1.00 per share; 20,000,000 shares authorized; Shares issued: 11,507,164 at June 30, 2021 and 8,511,835 at December 31, 2020; Shares outstanding:  11,408,712 at June 30, 2021 and 8,419,183 at December 31, 2020		11,507			8,512
Additional paid-in capital		246,546			178,853
Retained earnings		85,220			70,175
Accumulated other comprehensive income (loss)		219			(57	)
Treasury stock, at cost; 98,452 shares at June 30, 2021 and 92,652 shares at December 31, 2020		(1,923	)		(1,795	)
Total Shareholders’ Equity		341,569			255,688
Total Liabilities and Shareholders' Equity	$	3,461,792		$	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 June 30,					Six Months Ended June 30,
		2021			2020		2021			2020
INTEREST INCOME
Interest and fees on loans and leases	$	29,835		$	25,116	$	58,165		$	47,365
Interest and dividends on investment securities:
U.S. Treasury and government agencies		225			460		403			1,131
State and political subdivision obligations, tax-exempt		278			248		555			469
Other securities		291			323		593			476
Total interest and dividends on investment securities		794			1,031		1,551			2,076
Interest on other interest-bearing balances		2			18		4			33
Interest on federal funds sold		98			23		177			413
Total Interest Income		30,729			26,188		59,897			49,887
INTEREST EXPENSE
Interest on deposits		2,916			4,009		5,882			9,389
Interest on short-term borrowings		232			45		406			45
Interest on long-term and subordinated debt		704			788		1,407			1,442
Total Interest Expense		3,852			4,842		7,695			10,876
Net Interest Income		26,877			21,346		52,202			39,011
PROVISION FOR LOAN AND LEASE LOSSES		1,150			1,050		2,150			1,600
Net Interest Income After Provision for Loan and Lease Losses		25,727			20,296		50,052			37,411
NONINTEREST INCOME
Mortgage banking income		2,841			1,638		5,220			2,820
Income from fiduciary and wealth management activities		542			421		1,098			805
Service charges on deposits		177			115		329			320
ATM debit card interchange income		656			475		1,224			891
Net gain on sales of SBA loans		355			178		455			262
Merchant services income		209			98		301			181
Earnings from cash surrender value of life insurance		75			76		149			152
Net gain on sales of investment securities		—			111		—			243
Other income		797			510		1,588			882
Total Noninterest Income		5,652			3,622		10,364			6,556
NONINTEREST EXPENSE
Salaries and employee benefits		9,933			7,986		19,531			16,267
Occupancy expense, net		1,317			1,333		2,797			2,772
Equipment expense		741			722		1,492			1,435
Software licensing and utilization		1,497			1,297		2,942			2,518
Pennsylvania bank shares tax expense		224			55		524			460
FDIC Assessment		433			357		903			669
Legal and professional fees		555			349		981			701
Charitable contributions qualifying for State tax credits		365			510		635			545
Mortgage banking profit-sharing expense		745			150		865			150
Marketing and advertising expense		157			98		292			302
Telephone expense		139			137		275			271
Gain on sale or write-down of foreclosed assets, net		(19	)		—		(19	)		—
Intangible amortization		276			326		557			649
Merger and acquisition expense		522			—		522			—
Other expenses		2,571			2,083		4,717			4,245
Total Noninterest Expense		19,456			15,403		37,014			30,984
INCOME BEFORE PROVISION FOR INCOME TAXES		11,923			8,515		23,402			12,983
Provision for income taxes		2,310			1,682		4,477			2,332
NET INCOME	$	9,613		$	6,833	$	18,925		$	10,651
PER COMMON SHARE DATA:
Basic Earnings Per Common Share	$	0.93		$	0.81	$	2.02		$	1.26
Diluted Earnings Per Common Share	$	0.93		$	0.81