MILLERSBURG, Pa., July 31, 2009 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. ("Mid Penn") (Nasdaq:MPB), the parent company of Mid Penn Bank, today reported increased total assets, loans, and deposits for the second quarter of 2009, as well as second quarter earnings of $584,000, including per common share earnings of $0.17. Earnings for the second quarter of 2008 were $1,060,000, or $0.30 per common share. Through the first six months of 2009, Mid Penn's earnings were $669,000, or $0.19 per common share. During the same period in 2008, Mid Penn recorded earnings of $2,233,000, or $0.64 per common share.
2009 Financial Highlights
-------------------------
(dollars in thousands, except per share data)
Year-to-Date Ended Quarter Ended
------------------ ------------------
06/30/09 06/30/08 % Change 06/30/09 06/30/08 % Change
-------- -------- -------- -------- -------- --------
Total
Assets $579,416 $540,699 7.2%
Total
Deposits 442,574 402,550 9.9%
Total
Loans
(net) 460,679 396,086 16.3%
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Net
Interest
Income $ 8,687 $ 8,348 4.1% $ 4,731 $ 4,147 14.1%
Net
Income
Avail-
able
to
Common
Stock-
holders 669 2,233 -70.0% 584 1,060 -44.9%
Diluted
Earnings
per
Common
Share 0.19 0.64 -70.3% 0.17 0.30 -43.3%
Return
on
Equity 2.65% 11.12% -76.2% 3.75% 10.56% -64.5%
President's Statement
In commenting on the second quarter, President Ritrievi stated:
In these difficult times, we feel that the three most important analytics for a bank are earnings, asset quality and capital. The second quarter for Mid Penn was movement in the right direction on all three.
While our year-over-year earnings are disappointedly down, we are encouraged by the nice rebound we had from the difficult first quarter. Even though second quarter net income was adversely impacted by a special FDIC assessment of $265,000 and another significant loan loss provision, our earnings per common share increased from 2 cents in the first quarter of 2009 to 17 cents in the second quarter of 2009. A nice increase in net interest income led the way to establishing earnings that allowed for us to digest those unusual expenses. We are hopeful that the FDIC assessment will truly be a one-time event, and we are committed to making up that loss in earnings through prudent expense control throughout the remainder of the year.
Our second quarter loan loss provision of $479,000 was made primarily in consideration of the weak economy and the effect that might have on our loan portfolio. It was also made in consideration of another strong quarter of loan growth. As can be seen in this release, our asset quality numbers improved in the second quarter of 2009 versus both year-end and the same period a year ago. With a healthy loan loss provision for the first six months of 2009 and a controlled level of net charge-offs during that same time period, we now have a healthy loan loss allowance ratio of 1.42%.
By regulatory definition, Mid Penn Bank remains a well-capitalized company as depicted in the chart below. We are committed to remaining in that category through good decisions and good behaviors today and ongoing.
Last week, we proudly announced yet another quarterly dividend. This dividend of 16 cents per common share was based on our second quarter of 2009 performance summarized herein and will be payable in the third quarter of 2009. We are proud of our consistent dividend history and view it as a reward to our stockholders for their investment and loyalty.
Income Statement
Three months ended Six months ended
June 30, June 30,
----------------------- ------------------------
(dollars in
thousands,
except per % %
share data) 2009 2008 Change 2009 2008 Change
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Net Interest Income $ 4,731 $4,147 14.1% $ 8,687 $ 8,348 4.1%
Total Revenues 8,854 8,692 1.9% 17,360 17,665 -1.7%
Total Operating
Expenses 4,341 3,478 24.8% 8,209 6,925 18.5%
Net Income
Available
to Common
Stockholders 584 1,060 -44.9% 669 2,233 -70.0%
Diluted Earnings
per Common
Share $ 0.17 $ 0.30 -43.3% $ 0.19 $ 0.64 -70.3%
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Net income available to common stockholders was $584,000 for the second quarter of 2009, a decrease of $476,000, or 44.9%, from $1,060,000 for the second quarter of 2008. Year-to-date, net income available to common stockholders totaled $669,000 for 2009, a decrease of $1,564,000, or 70.0%, from $2,233,000 in 2008. Fully diluted earnings per common share for the second quarter were $0.17, a 43.3% decrease from the $0.30 recorded for the same period a year ago. Fully diluted earnings per common share during the first six months of 2009 were $0.19, a decrease of 70.3% from the $0.64 recorded during the same period in 2008.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2009 totaled $4,731,000, an increase of $584,000, or 14.1% from the $4,147,000 recorded a year ago. Net interest income for the first half of 2009 also increased from $8,348,000 in 2008 to $8,687,000, an increase of 4.1%. The improvement in net interest income was spurred by growth in average earning assets of 6.9% during the first half of 2009 coupled with a reduction in the average cost of funds from 3.40% during the first six months of 2008 to 2.98% during the first six months of 2009.
The net interest margin on a taxable-equivalent basis for the six months ended June 30, 2009 was 3.39%, down 8 basis points from 3.47% during the same period in 2008. Net interest margin was adversely impacted during the period by a decline in the average yield on earning assets, which slipped from 6.44% to 5.93% between the first six months of 2008 and 2009. This reduction was fueled by the decline in the prime lending rate and other market rates to which Mid Penn indexes its variable rate loans.
Noninterest Expenses
Noninterest expenses for the second quarter of 2009 were $4,341,000, up 24.8% over $3,478,000 for the second quarter of 2008. Noninterest expense for the six months ended June 30, 2009 were $8,209,000, an increase of 18.5% over $6,925,000 for the same period in 2008. The breakdown of noninterest expenses for the three months and six months ended June 30, 2009, and 2008, respectively, are shown in the following table:
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
(dollars in
thousands) 2009 2008 % Change 2009 2008 % Change
----------- ------------------------- -------------------------
Salaries and
employee
benefits $ 2,021 $1,785 13.2% $ 4,121 $ 3,597 14.6%
Occupancy
expense,
net 231 239 -3.3% 436 528 -17.4%
Equipment
expense 306 203 50.7% 544 426 27.7%
Computer
expense 120 111 8.1% 223 249 -10.4%
PA bank shares
tax expense 100 92 8.7% 201 184 9.2%
FDIC assessment 395 21 1,781.0% 523 33 1,484.8%
Legal and
professional
fees 215 176 22.2% 354 321 10.3%
Director fees
and benefits
expense 66 90 -26.7% 143 168 -14.9%
Marketing and
advertising
expense 266 103 158.3% 460 182 152.7%
Loss on sale/
write-down of
foreclosed
assets 4 -- 0.0% 36 32 12.5%
Other expenses 617 658 -6.2% 1,168 1,205 -3.1%
----------- ------------------------- -------------------------
Total
noninterest
expense $ 4,341 $ 3,478 24.8% $ 8,209 $ 6,925 18.5%
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The increase in expenses in 2009 over 2008 was driven by four primary factors. The first is the dramatic increase in the FDIC assessment. In addition to an increase in the ordinary assessment levied on financial institutions, the FDIC enacted a special assessment as of June 30, 2009. This special assessment was $265,000 at Mid Penn, and is reflected in our second quarter financial statements. The second major area of impact is in the area of salaries and employee benefits. These increases are the result of selectively adding talented employees to enhance Mid Penn's infrastructure and better serve our expanding customer base. The third expense area of note is marketing and advertising expense. Mid Penn invested significant dollars in the first six months of 2009 to increase core deposits in response to specific funding opportunities. One promotion, late in the first quarter, was aimed at retaining or replacing maturing time deposits with core deposits. The second promotion was the sponsorship of the annual Fourth of July Fireworks celebration in Millersburg along with an associated drive to capture new core deposit accounts. The final area of impact was the opening in April 2009 of Mid Penn's new operations facility in Halifax. This project increased equipment expense, primarily depreciation costs, and fulfills much needed space enhancements for current and future growth.
Balance Sheet
June 30,
-------------------------
(dollars in thousands) 2009 2008 % Change
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Total Assets $ 579,416 $ 540,699 7.2%
Total Loans (net) 460,679 396,086 16.3%
Total Deposits 442,574 402,550 9.9%
Total Core Deposits 339,334 289,654 17.2%
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Strong balance sheet growth continued throughout the first half of 2009. Loans increased 16.3% since June of 2008, spurred by credit-worthy business borrowers who were impacted by credit restrictions at regional or national financial institutions. Core deposit growth was robust as depositors exited the stock market for the safety and stability of insured deposit products.
Asset Quality
Mid Penn's asset quality ratios are highlighted below:
Quarter Ended
----------------------------------
June 30, Dec. 31, June 30,
2009 2008 2008
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Nonperforming assets to
period-end loans and
other real estate 1.09% 1.30% 1.44%
Net loan charge-offs/average
total loans (annualized) 0.13% 0.13% 0.01%
Loan loss allowance/
gross loans 1.42% 1.27% 1.25%
Nonperforming loan coverage 158.16% 132.20% 95.30%
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Nonperforming assets and loans past due 90 days at June 30, 2009 totaled $6,197,000, or 1.33% of total loans, as compared to $7,540,000, or 1.73% of total loans, at December 31, 2008 and $6,742,000, or 1.68% of total loans one year ago. Mid Penn's provision for loan and lease losses was $479,000 for the second quarter of 2009, compared to $155,000 during the second quarter of 2008. For the six months ended June 30, 2009, the provision for loan and lease losses was $1,412,000 compared to $255,000 for the first half of 2008. The increase in the provision for loan and lease losses for the quarter is a result of Mid Penn's loan growth of approximately $66,000,000 over the past twelve months and continued weakness in the overall economy.
Total net charge-offs for the three months ended June 30, 2009 were $174,000, versus a net recovery of $1,000 for the same period in 2008. Total net charge-offs were $287,000 for the first six months of 2009, compared to $21,000 for the first six months of 2008.
Capital
The Bank's capital ratios at June 30, 2009 were as follows:
Regulatory Guidelines
Mid Penn Bank "Well Capitalized"
--------------------- ---------------------
Leverage Ratio 8.47% 5.00%
Tier 1 10.38% 6.00%
Total Capital 11.63% 10.00%
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Stockholders' equity at June 30, 2009, totaled $50,149,000, an increase of $9,631,000, or 23.7% over June 30, 2008. The increase in stockholder's equity is the result of the $10,000,000 received under the Treasury Department's Capital Purchase Program for strong well-capitalized banks.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this press release may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mid Penn to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect," "anticipate," "intend," "plan," "believe," "estimate," and similar expressions are intended to identify such forward-looking statements.
Mid Penn's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:
* the effects of future economic conditions on Mid Penn and the Bank's customers; * the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; * governmental monetary and fiscal policies, as well as legislative and regulatory changes; * the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; * the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks; * the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Mid Penn's market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; * technological changes; * acquisitions and integration of acquired businesses; * the failure of assumptions underlying the establishment of reserves for loan and lease losses and estimations of values of collateral and various financial assets and liabilities; * acts of war or terrorism; and * disruption of credit and equity markets.
All written or oral forward-looking statements attributable to Mid Penn are expressly qualified in their entirety by these cautionary statements.
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