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 September 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. ☐

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

As of November 5, 2021, the registrant had 11,433,554 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 September 30, 2021 and December 31, 2020 (Unaudited)	3
		Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2021 and September 30, 2020 (Unaudited)	4
		Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and September 30, 2020 (Unaudited)	5
		Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and September 30, 2020 (Unaudited)	6
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and September 30, 2020 (Unaudited)	8
		Notes to Consolidated Financial Statements (Unaudited)	10
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		49
	Item 3 – Quantitative and Qualitative Disclosures about Market Risk		68
	Item 4 – Controls and Procedures		68
PART II – OTHER INFORMATION			69
	Item 1 – Legal Proceedings		69
	Item 1A – Risk Factors		69
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		69
	Item 3 – Defaults upon Senior Securities		69
	Item 4 – Mine Safety Disclosures		69
	Item 5 – Other Information		69
	Item 6 – Exhibits		70
	Signatures		71

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)	September 30, 2021			December 31, 2020
ASSETS
Cash and due from banks	$	40,134		$	31,284
Interest-bearing balances with other financial institutions		2,536			1,541
Federal funds sold		712,272			270,899
Total cash and cash equivalents		754,942			303,724
Investment securities held to maturity, at amortized cost (fair value $155,680 and $132,794)		152,791			128,292
Investment securities available for sale, at fair value		5,015			5,748
Equity securities available for sale, at fair value		505			515
Loans held for sale		23,154			25,506
Loans and leases, net of unearned interest		2,370,429			2,384,041
Less:  Allowance for loan and lease losses		(14,233	)		(13,382	)
Net loans and leases		2,356,196			2,370,659
Bank premises and equipment, net		25,562			24,886
Operating lease right of use asset		9,942			10,157
Finance lease right of use asset		3,132			3,267
Cash surrender value of life insurance		17,406			17,183
Restricted investment in bank stocks		7,906			7,594
Accrued interest receivable		10,008			12,971
Deferred income taxes		4,133			3,619
Goodwill		62,840			62,840
Core deposit and other intangibles, net		3,537			4,360
Foreclosed assets held for sale		11			134
Other assets		16,107			17,493
Total Assets	$	3,453,187		$	2,998,948
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	661,890		$	536,224
Interest-bearing demand		745,833			605,567
Money Market		905,742			720,506
Savings		205,842			195,038
Time		442,574			417,245
Total Deposits		2,961,881			2,474,580
Short-term borrowings		—			125,617
Long-term debt		74,858			75,115
Subordinated debt		44,599			44,580
Operating lease liability		10,950			11,200
Accrued interest payable		1,901			2,007
Other liabilities		9,690			10,161
Total Liabilities		3,103,879			2,743,260
Shareholders' Equity:
Common stock, par value $1.00 per share; 20,000,000 shares authorized; Shares issued: 11,532,006 at September 30, 2021 and 8,511,835 at December 31, 2020; Shares outstanding:  11,433,554 at September 30, 2021 and 8,419,183 at December 31, 2020		11,532			8,512
Additional paid-in capital		246,830			178,853
Retained earnings		92,722			70,175
Accumulated other comprehensive income (loss)		147			(57	)
Treasury stock, at cost; 98,452 shares at September 30, 2021 and 92,652 shares at December 31, 2020		(1,923	)		(1,795	)
Total Shareholders’ Equity		349,308			255,688
Total Liabilities and Shareholders' Equity	$	3,453,187		$	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 September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020
INTEREST INCOME
Interest and fees on loans and leases	$	29,590		$	25,136		$	87,755		$	72,501
Interest and dividends on investment securities:
U.S. Treasury and government agencies		285			278			688			1,409
State and political subdivision obligations, tax-exempt		279			265			834			734
Other securities		277			406			870			882
Total Interest and Dividends on Investment Securities		841			949			2,392			3,025
Interest on other interest-bearing balances		1			3			5			36
Interest on federal funds sold		308			34			485			447
Total Interest Income		30,740			26,122			90,637			76,009
INTEREST EXPENSE
Interest on deposits		2,909			3,767			8,791			13,156
Interest on short-term borrowings		133			181			539			226
Interest on long-term and subordinated debt		704			766			2,111			2,208
Total Interest Expense		3,746			4,714			11,441			15,590
Net Interest Income		26,994			21,408			79,196			60,419
PROVISION FOR LOAN AND LEASE LOSSES		425			1,100			2,575			2,700
Net Interest Income After Provision for Loan and Lease Losses		26,569			20,308			76,621			57,719
NONINTEREST INCOME
Mortgage banking income		3,162			3,107			8,382			5,927
Income from fiduciary and wealth management activities		618			462			1,716			1,267
Service charges on deposits		223			140			552			460
ATM debit card interchange income		630			535			1,854			1,426
Net gain on sales of SBA loans		105			173			560			435
Merchant services income		58			95			359			276
Earnings from cash surrender value of life insurance		74			75			223			227
Net gain on sales of investment securities		79			150			79			393
Other income		560			565			2,148			1,447
Total Noninterest Income		5,509			5,302			15,873			11,858
NONINTEREST EXPENSE
Salaries and employee benefits		10,342			10,279			29,873			26,546
Occupancy expense, net		1,318			1,338			4,115			4,110
Equipment expense		745			713			2,237			2,148
Software licensing and utilization		1,551			1,363			4,493			3,881
Pennsylvania bank shares tax expense		498			409			1,022			869
FDIC Assessment		461			547			1,364			1,216
Legal and professional fees		610			336			1,591			1,037
Charitable contributions qualifying for State tax credits		—			—			635			545
Mortgage banking profit-sharing expense		1,140			390			2,005			540
Marketing and advertising expense		174			104			466			406
Telephone expense		134			134			409			405
Gain on sale or write-down of foreclosed assets, net		(7	)		(8	)		(26	)		(8	)
Intangible amortization		266			317			823