July 26, 2021 – Millersburg, PA – Mid Penn Bancorp, Inc. (“Mid Penn”) (NASDAQ: MPB), the parent company of Mid Penn Bank (the “Bank”) and MPB Financial Services, LLC, today reported net income to common shareholders (earnings) for the quarter ended June 30, 2021 of $9,613,000 or $0.93 per common share basic and diluted, compared to earnings of $6,833,000 or $0.81 per common share basic and diluted for the quarter ended June 30, 2020. The earnings per share for the quarter ended June 30, 2021 reflect an increase of over 15 percent compared to the earnings for the same period in the prior year. Earnings for the six months ended June 30, 2021 were $18,925,000 or $2.02 per common share basic and diluted, compared to earnings of $10,651,000 or $1.26 per common share basic and diluted for the six months ended June 30, 2020. The earnings per share for the first half of 2021 represents a 60 percent increase over the same period in 2020. Mid Penn also reported total assets of $3,461,792,000 as of June 30, 2021, reflecting an increase of $462,844,000 or over 15 percent compared to total assets of $2,998,948,000 as of December 31, 2020.
Tangible book value per common share, a non-GAAP measure that is regularly reported in the banking industry and the most directly comparable non-GAAP measure to book value per share, favorably increased to $24.10 as of June 30, 2021, compared to $22.39 as of December 31, 2020 and $20.86 as of June 30, 2020. The GAAP measure of book value per share was $29.94 as of June 30, 2021 compared to $30.37 at December 31, 2020, and $28.94 as of June 30, 2020. Please refer to the section included herein under the heading “Reconciliation of Non-GAAP Measures (Unaudited)” for a discussion of our use of non-GAAP adjusted financial information, which includes tables reconciling GAAP and non-GAAP adjusted financial measures for these and certain other periods ended from June 30, 2020 to June 30, 2021.
Included in total assets as of June 30, 2021 are $391,826,000 of Paycheck Protection Program (“PPP”) loans, net of deferred fees, with this total being comprised of (i) $317,428,000 of PPP 2021 loans, net of deferred fees, originated during the first two quarters of 2021; and (ii) $74,398,000 of PPP 2020 loans, net of deferred fees, originated during 2020 which, as of June 30, 2021, were still outstanding. Comparatively, as of December 31, 2020, Mid Penn had $388,313,000 of PPP 2020 loans outstanding, net of deferred fees. Mid Penn had $14,472,000 of PPP deferred loan processing fees not yet realized as income as of June 30, 2021, consisting of (i) $872,000 of loan processing fees received related to PPP loans funded during the year ended December 31, 2020, and (ii) $13,600,000 of loan processing fees received related to PPP loans funded during the six months ended June 30, 2021. Comparatively, as of December 31, 2020, Mid Penn had $7,746,000 of PPP deferred loan processing fees not yet realized as income, all resulting from PPP loans funded during the year ended December 31, 2020. Mid Penn was a significant participating lender under the PPP, which was originally created when the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law on March 27, 2020, extended by the signing of the Consolidated Appropriations Act, 2021 into law on December 27, 2020, and further extended to May 31, 2021 by the PPP Extension Act of 2021.
Total core banking loans (total loans excluding both the PPP loans outstanding, and residential mortgage loans held for sale, a non-GAAP measure), increased by $107,639,000 since year-end 2020 and totaled $2,103,366,000 as of June 30, 2021, representing an annualized growth rate of 11 percent. Deposit growth since year-end 2020 through June 30, 2021 totaled $307,544,000 representing an annualized deposit growth rate of over 25 percent, including an increase of $155,792,000 in noninterest-bearing deposits including some remaining proceeds deposited from PPP loan funding. Also, during the first half of 2021, the Bank obtained $71,272,000 of additional net funding (draws less paydowns) from the Federal Reserve through the Paycheck Protection Program Liquidity Facility (“PPPLF”), with such funding used to support the PPP 2021 loan production. Under the PPPLF, the Federal Reserve supplies financing to the Bank at a rate of 35 basis points (0.35%) for a term and amount determined based on the principal amount of PPP loans fully and specifically pledged as collateral in support of the PPPLF borrowings. Draws of PPPLF funds must be repaid to the Federal Reserve immediately after the specific PPP loans collateralizing the related draws are repaid to the Bank.
Additionally, as previously announced on a Form 8-K on May 4, 2021, Mid Penn completed an underwritten public offering of 2,990,000 shares of common stock at a price of $25.00 per share, with the aggregate gross proceeds of the offering totaling $74,750,000 before underwriting discounts and offering expenses. The net proceeds of the offering after deducting the underwriting discount and offering expenses were $70,238,000. The additional shares issued on May 4, 2021 significantly impacted the weighted average number of shares outstanding used for both the second quarter of 2021 and year-to-date 2021 earnings per share calculations.
MERGER & ACQUISITION ACTIVITIES
On June 30, 2021, and as announced on a Form 8-K including related disclosures, Mid Penn entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Riverview Financial Corporation (“Riverview”) pursuant to which Riverview will merge with and into Mid Penn (the “Merger”), with Mid Penn being the surviving corporation in the Merger. Pending required bank regulatory agency and shareholder approvals, upon consummation of the Merger, Riverview Bank, a wholly-owned subsidiary of Riverview, will be merged with and into Mid Penn Bank (the “Bank Merger”), a wholly-owned subsidiary of Mid Penn, with Mid Penn Bank being the surviving bank in the Bank Merger. The Merger Agreement was unanimously approved by the boards of directors of Mid Penn and Riverview.
Under the terms of the Merger Agreement, shareholders of Riverview will have the right to receive 0.4833 shares of Mid Penn common stock for each share of Riverview common stock they own. It is expected that the Merger will be completed in the fourth quarter of 2021 pending required approvals.
We are very pleased to deliver these strong operating results to both our legacy retail and institutional shareholders and the institutional shareholders we picked up in our recent common equity raise.
With healthy organic growth on both sides of the balance sheet, strong performance in noninterest income production and great progress in PPP loan forgiveness, we delivered yet another quarter of impressive net earnings which ultimately bolstered our tangible book value per share by $1.71 per share since December 31, 2020.
During this second quarter, while delivering that performance, we also initiated and completed an impressive follow-on common stock offering and announced our agreement to acquire Riverview Financial Corporation.
We feel that those three achievements will go a long way toward setting the table for continued strong performance not only throughout the remainder of 2021, but into 2022 and beyond.
The results of the first six months of 2021 reflect significant progress toward our goal of building the best community bank franchise in PA.
It is with all of the above in mind that the Board of Directors proudly announces the declaration of a third quarter dividend of $0.20 per common share payable on August 23, 2021 to shareholders of record as of August 10, 2021.
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