MILLERSBURG, Pa., April 27, 2020 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. (“Mid Penn”) (NASDAQ: MPB), the parent company of Mid Penn Bank (the “Bank”), today reported net income to common shareholders (earnings) for the quarter ended March 31, 2020 of $3,818,000 or $0.45 per common share basic and diluted, compared to earnings of $4,077,000 or $0.48 per common share basic and diluted for the quarter ended March 31, 2019. Mid Penn also reported that, based upon its first quarter results for 2020, the Board of Directors, at a meeting held on April 22, 2020, declared a regular quarterly dividend per common share of $0.18 payable on May 25, 2020, to shareholders of record as of May 11, 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 $20.18 as of March 31, 2020, compared to $19.96 at December 31, 2019, and $18.64 as of March 31, 2019. Mid Penn’s GAAP book value per share was $28.23 at March 31, 2020, compared to $28.05 at December 31, 2019 and $26.88 as of March 31, 2019. 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 the quarters ended March 31, 2020 and 2019 and certain other periods.
Mid Penn also reported continued growth in total assets to $2,299,751,000 as of March 31, 2020, reflecting an increase of $68,576,000 or 3 percent compared to total assets of $2,231,175,000 as of December 31, 2019, and an increase of $151,934,000 or 7 percent compared to total assets of $2,147,817,000 as of March 31, 2019. Asset growth during the quarter ended March 31, 2020 included an increase of $21,897,000 in investment securities, and an increase in total loans outstanding of $35,393,000 since year-end, representing an 8 percent annualized loan growth rate. The asset growth was funded by $60,887,000 of deposit growth, representing an annualized deposit growth rate of 13 percent, with more than half of such growth favorably being in noninterest-bearing deposits.
PRESIDENT’S STATEMENT
As reflected in the accompanying information for the first quarter of 2020, Mid Penn’s financial condition and performance continue to reflect soundness, qualitative growth, consistent profitability, increasing tangible book value, and a sustained quarterly dividend.
But versus looking back on our successes, we like our communities, nation, and world are focused forward on effectively dealing with the impact of the coronavirus (COVID-19) pandemic. Since the very beginning of this COVID-19 outbreak, the Mid Penn board of directors has challenged our team to be aggressive in how we protect our employees, customers and communities, but to also ensure that we do all we can to provide the critical financial support and resources so many reliably need in this critical time. I would like to share some of the key steps we have taken to provide our full range of essential services while helping to keep all parties safe:
- Beginning Tuesday, March 17, we temporarily closed all bank branch lobbies. Our tellers continue to work providing access to customers through drive-thru banking services and night depositories. Services that cannot be performed through drive-through (i.e. business cash orders, loan closings and new account openings) are accommodated in the branches by appointment. We are continuously cleaning bank branches during business hours with disinfecting wipes to sanitize all facets of our common areas, including door handles, work stations, ATMs and service counters.
- We have mandated that all branch employees who handle cash use latex gloves when doing so, and we are requiring all employees to use hand sanitizer after each transaction and wash their hands with soap and hot water several times every hour. Additionally, employees having face-to-face interaction with customers are required to wear a mask. Importantly, we maintain appropriate social distancing standards when individuals are required by their job duties to be in the same branch or administrative location.
- We have made outreaches to every customer of the Bank advising them of the changes in branch services, while also ensuring they had updated awareness of our TeleBanker services, online banking, mobile device app, Mid Penn debit card, and secure messaging that allows customers to access their accounts and our services and employees without requiring in-person interaction.
Through the first round of funding under the federal Paycheck Protection Program (PPP) as established under the CARES Act, our expert team of commercial lenders and business development personnel have already disbursed over $467 million of those funds to over 2,100 businesses and we continue to process already approved applications. This level of involvement in the first phase of the PPP placed us third in the nation as far as total PPP loans disbursed as a percentage of a bank’s total loans. These loans will provide continuing payroll support for over 50,000 employees of these borrowers and the communities we serve. As Congress has authorized a second round of PPP, we are again actively involved in receiving and processing new applications to provide funding to help even more businesses.
We are so grateful for the tireless efforts of our healthcare workers, first responders, parents and caregivers, and so many who are making incredible sacrifices to ensure that we take care of each other day by day, knowing that we will win the battle against COVID-19. Be assured that as we manage through the numerous challenges we at Mid Penn face in these unprecedented times, we are focused on doing all we can to support the personal and financial safety of our customers, employees, and communities we serve.
OPERATING RESULTS
Net Interest Income and Net Interest Margin
For the three months ended March 31, 2020, net interest income was $17,665,000, an increase of $359,000 or 2 percent compared to net interest income of $17,306,000 for the three months ended March 31, 2019. Mid Penn’s tax-equivalent net interest margin was 3.45% for the first quarter of 2020 compared to 3.70% for the first quarter of 2019. Though the quarterly average balance of interest-earning assets increased year over year, the yields on interest earning assets declined consistent with reductions in the yield curve during the first quarter of 2020, including the impact of the two rate decreases approved by the Federal Open Market Committee (“FOMC”), for 1.50% combined, during March 2020 in response to the COVID-19 pandemic. The total cost of deposits for the first quarter of 2020 favorably decreased compared to the first quarter of 2019 as a result of the same yield curve reductions and FOMC rate cuts.
Noninterest Income
During the three months ended March 31, 2020, noninterest income totaled $2,934,000, an increase of $885,000 or 43 percent, compared to noninterest income of $2,049,000 for the three months ended March 31, 2019.
Mortgage banking income was $1,182,000 for the three months ended March 31, 2020, an increase of $745,000 or 170 percent compared to mortgage banking income of $437,000 for the three months ended March 31, 2019. Longer-term mortgage interest rates have declined significantly over the past twelve months, resulting in a higher level of mortgage originations (both purchase and refinance activity) and secondary-market loan sales when comparing the first quarter of 2020 to the same period in 2019. Additionally, the first three months of 2020 reflected a full quarter of production and loan sales from Mid Penn’s Southeastern Pennsylvania mortgage origination team, while the same group was not fully operational for the entire first quarter of 2019.
ATM debit card interchange income was $416,000 for the three months ended March 31, 2020, an increase of $82,000 or 25 percent compared to interchange income of $334,000 for the three months ended March 31, 2019. The increase resulted from increasing card-based transaction usage across our expanding transactional account customer base.
Net gains on sales of securities were $132,000 for the three months ended March 31, 2020, an increase of $125,000 compared to net gains on sales of securities of $7,000 for the three months ended March 31, 2019. Sale volume and gains were driven by the implementation of asset/liability management strategies, which vary from quarter to quarter based upon market conditions and related yield curve and valuation changes.
Net gains on sales of SBA loans were $84,000 for the three months ended March 31, 2020, a decrease of $118,000 or 58 percent compared to net gains on sales of SBA loans of $202,000 during the same quarter of 2019. None of the SBA loan production or sales activity in the first quarter of 2020 related to the PPP loans under the CARES Act, as the PPP loans did not begin to be disbursed by Mid Penn until April 2020.
Other income was $372,000 for the three months ended March 31, 2020, an increase of $42,000 compared to other income of $330,000 for the three months ended March 31, 2019. The increase in other income was primarily driven by higher volumes of fee-based income, including wire transfer fees, letter of credit fees, and credit card program referrals and royalties.
Noninterest Expense
For the three months ended March 31, 2020, noninterest expense totaled $15,581,000, an increase of $1,278,000 or 9 percent, compared to noninterest expense of $14,303,000 for the three months ended March 31, 2019. The year-over-year increase in quarterly noninterest expense was attributable to both (i) growth-related business development and retail staff additions since March 31, 2019, and (ii) increases across other expense categories reflective of the overall growth of the organization, including software licensing and utilization, Pennsylvania bank shares tax, and occupancy and equipment expenses. Also, other expenses for the first quarter of 2020 included approximately $63,000 of non-recurring FHLB prepayment costs resulting from Mid Penn’s early redemption of $9,500,000 of higher-cost term advances. No FHLB borrowing prepayments occurred during the first quarter of 2019.
Salaries and employee benefits were $8,281,000 for the three months ended March 31, 2020, an increase of $522,000 or 7 percent, versus the same period in 2019, with the increase primarily attributable to (i) retail staff added as part of the new Hazle Township branch location opened during the fourth quarter of 2019, (ii) the addition of private banking business development professionals to enhance our wealth management activities, and (iii) increases in medical expenses and other employee benefits costs when compared to the same period of 2019.
Equipment expense increased $86,000 or 14 percent during the three months ended March 31, 2020 compared to the same period in 2019, related to the expansion of the corporate administrative facilities and further centralization of back-office functions to enhance operations and efficiencies across the Mid Penn footprint.
Pennsylvania bank shares tax expense was $405,000 for the three months ended March 31, 2020, an increase of $269,000 or 198 percent compared to $136,000 for the three months ended March 31, 2019. The first quarter of 2019 reflected the application of $122,500 of shares tax credits that were earned based upon the timing of certain carryover donations made that quarter that had been committed by First Priority Bank (which Mid Penn acquired in 2018). Similar donations and credits did not occur in the first quarter 2020. The increase in shares tax expense also reflects the organic growth in the past year of the total shareholder equity balance upon which the tax is based.
Software licensing and utilization costs were $1,221,000 for the three months ended March 31, 2020, an increase of $200,000 or 20 percent compared to $1,021,000 for the three months ended March 31, 2019. This increase reflects the additional costs from both transaction volume based charges, and licensing fees related to the addition of new staff and locations added since the first quarter of 2019. Additionally, Mid Penn continued to invest in upgrades to internal systems, networks, storage capabilities, and data security mechanisms to enhance data management and security capabilities responsive to both the larger company profile and increasing complexity of information technology management.
FDIC assessment expense was $312,000 for the three months ended March 31, 2020, a decrease of $47,000 or 13 percent compared to $359,000 for the three months ended March 31, 2019 due to the Bank having a favorably lower FDIC Assessment rate during the first quarter of 2020.
Legal and professional fees for the three months ended March 31, 2020 decreased by $70,000 or 17 percent compared to the same period in 2019, due primarily to the first quarter of 2019 including additional services supporting a new third-party loan review service, as well costs associated with supporting both trust and wealth management activities, and the update and revision of Mid Penn’s corporate governance and Board structure.
Intangible amortization decreased from $363,000 during the three months ended March 31, 2019 to $323,000 during the three months ended March 31, 2020, as the core deposit intangible (“CDI”) amortization from the 2018 acquisitions of both (i) the Scottdale Bank and Trust on January 8, 2018, and (ii) First Priority Bancorp on July 31, 2018 continues to decrease as it is amortized using the sum-of-the-years digits method over a ten year term (which results in decreasing expense recognized in each year following the respective acquisition).
The provision for income taxes was $650,000 during the three months ended March 31, 2020, a decrease of $200,000 or 24 percent compared to $850,000 for the same period in 2019. The provision for income taxes for the three months ended March 31, 2020 reflects an effective federal tax rate of 14.5%, compared to an effective federal tax rate of 17.3% for the three months ended March 31, 2019. The reduction in the effective federal tax rate for 2020 reflects tax credits recognized related to Mid Penn’s investment in a low-income housing project in Dauphin County, Pennsylvania. The units were substantially completed and met the occupancy requirements necessary to begin recognizing the related amortization and tax credits during the fourth quarter of 2019. Similar credits were not recognized during the three months ended March 31, 2019.
FINANCIAL CONDITION
Loans
Total loans at March 31, 2020 were $1,798,149,000 compared to $1,762,756,000 at December 31, 2019, an increase of $35,393,000 or 2.0 percent since year-end 2019 (annualized growth rate of 8 percent). The increase in total loans was primarily comprised of growth in both commercial real estate credits, and commercial and industrial financing loans.
Investments
Mid Penn’s portfolio of held-to-maturity securities, recorded at amortized cost, increased $31,486,000 to $167,963,000 as of March 31, 2020, as compared to $136,477,000 as of December 31, 2019. Mid Penn’s total available-for-sale securities portfolio decreased $9,589,000 or 26 percent, from $37,009,000 at December 31, 2019 to $27,420,000 at March 31, 2020. The first quarter of 2020 reflected a higher volume of calls of both available-for-sale and held-to-maturity securities as market rates dropped due both changes in the yield curve and from the FOMC reducing rates in response to the COVID-19 pandemic, leading to security issuers to execute calls on some higher coupon securities. Additionally, Mid Penn initiated some sales of available-for-sale investment securities for both portfolio and asset liability management. Growth within the held-to-maturity portfolio was a result of purchases made in anticipation of near-term future calls of investment securities.
Deposits
Total deposits increased $60,887,000 or 3.2 percent, from $1,912,394,000 at December 31, 2019, to $1,973,281,000 at March 31, 2020 (annualized growth rate of over 12 percent). Deposit growth was led by substantial increases in noninterest-bearing balances and money market deposits, primarily due to both new and expanded cash management and commercial deposit account relationships.
Long-Term Debt
Long-term debt decreased $9,539,000 or 29 percent, from $32,903,000 at December 31, 2019 to $23,364,000 at March 31, 2020. During the first quarter of 2020, Mid Penn prepaid $9,500,000 of long-term Federal Home Loan Bank (“FHLB”) borrowings as these borrowings had rates above both the incremental cost of deposits and overnight federal funds rate yields. Mid Penn recognized $63,000 of FHLB prepayment penalties, which were recorded within other noninterest expenses on the Consolidated Statements of Income.
Subordinated Debt
Subordinated debt increased $14,989,000 or 55 percent, from $27,070,000 at December 31, 2019 to $42,059,000 at March 31, 2020. As previously reported on a Form 8-K dated March 20, 2020, Mid Penn entered into agreements for an aggregate of $15,000,000 of its Subordinated Notes due 2030 (the “Notes”) to accredited investors. The Notes will bear interest at a rate of 4.0% per year for the first five years and then float at the Wall Street Journal’s Prime Rate, and are intended to be treated as Tier 2 capital for regulatory capital purposes.
Capital
Shareholders’ equity increased by $1,637,000 or less than 1 percent from $237,874,000 as of December 31, 2019 to $239,511,000 as of March 31, 2020. The increase in shareholders’ equity reflects the growth in retained earnings through year-to-date net income, net of dividends paid. Regulatory capital ratios for both Mid Penn and its banking subsidiary exceeded regulatory “well-capitalized” levels at both March 31, 2020 and December 31, 2019.
ASSET QUALITY
The allowance for loan and lease losses as a percentage of total loans was 0.56% at March 31, 2020 compared to 0.54% at December 31, 2019 and 0.52% at March 31, 2019. Mid Penn had net loan charge-offs of $51,000 and $20,000 for the three months ended March 31, 2020 and 2019, respectively. Loan loss reserves as a percentage of nonperforming loans were 90% at March 31, 2020, compared to 79% at December 31, 2019, and 119% at March 31, 2019.
The provision for loan losses was $550,000 for the first quarter of 2020, an increase of over 340 percent compared to a provision for loan losses of $125,000 for the first quarter of 2019. The allowance for loan losses and the related provision reflect Mid Penn’s continued application of the incurred loss method for estimating credit losses as Mid Penn has not yet adopted the current expected credit loss (“CECL”) accounting standard. The increase in the loan loss reserves and the quarterly provision was primarily the result of an increase in the allowance balance related to general allocations, driven by increases in specific qualitative factors, particularly in the commercial real estate pool, when compared to prior periods.
Total nonperforming assets were $12,872,000 at March 31, 2020, an increase compared to nonperforming assets of $12,157,000 at December 31, 2019, and $7,517,000 at March 31, 2019. Nonperforming assets were 0.72% of the total of loans plus other real estate assets as of March 31, 2020, compared to 0.69% as of December 31, 2019, and 0.46% as of March 31, 2019. The increase in foreclosed real estate from $196,000 at December 31, 2019 to $1,718,000 at March 31, 2020 was driven by the transfer of one loan relationship from nonaccrual status to foreclosed real estate during the first quarter of 2020.
Asset quality measures did not reflect any new impaired assets or specific reserve allocations related to the early impact of the COVID-19 pandemic, though Bank management is continuously and closely monitoring and evaluating the impact of the COVID-19 situation on the portfolio as discussed in the COVID-19 Considerations and Subsequent Events section below. Management believes, based on information currently available, that the allowance for loan and lease losses of $10,014,000 is adequate as of March 31, 2020, to cover probable and estimated loan losses in the portfolio.
COVID-19 CONSIDERATIONS AND SUBSEQUENT EVENTS
In response to the COVID-19 global pandemic event which has impacted the United States including the State of Pennsylvania and Mid Penn’s market area and communities and customers during the first quarter of 2020 and continuing through the period subsequent to March 31, 2020, Mid Penn management performed several updated evaluations subsequent to March 31, 2020 and through the date of this release to determine whether the current or expected impact from this COVID-19 event resulted in any impairment to Mid Penn’s business and the recorded value of certain assets:
- With the assistance of a third-party firm with an expertise in goodwill valuation assessment, Mid Penn performed an updated and extensive “Step One” goodwill valuation assessment as of March 31, 2020. Based upon this detailed analysis, Mid Penn management concluded that as of March 31, 2020 and subsequently through the date of this release, there was no impairment to Mid Penn’s goodwill. As the COVID-19 event continues and its implications to the country, the economy, and specifically Mid Penn evolve, management will continue to update this goodwill assessment as necessary.
- Mid Penn management evaluated whether this COVID-19 event resulted in any impairment to the intangible asset value of its acquired consumer demand and savings deposit base (“core deposit intangible”). Management’s determination was that as of March 31, 2020 and subsequently through the date of this release, there was no impairment to its core deposit intangible. Supporting this assertion, as reflected in the Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019, Mid Penn has recognized substantial total deposit growth of $60,887,000 or 3.2 percent during the first quarter of 2020, with none of this growth attributable to brokered deposits. Subsequent to March 31, 2020, and through the date of this filing, these increased deposit levels were sustained and continued to reflect no evidence of impairment.
- Mid Penn management performed an updated assessment of all of its debt security holdings of obligations of state and political subdivisions to determine whether this COVID-19 event resulted in any significant credit deterioration of the financial condition of the underlying issuers which would result in any related securities having what appears to be other-than-temporary impairment. Based upon this comprehensive review, management’s determination was that as of March 31, 2020 and subsequently through the date of this release, there was no other-than-temporary impairment to its debt security holdings of obligations of state and political subdivisions. As the COVID-19 event continues and its implications to the states and municipalities evolve, Mid Penn will continue to update this other-than-temporary impairment assessment as necessary.
- As previously noted, the allowance for credit losses (“allowance”) and the related provision reflect Mid Penn’s continued application of the incurred loss method for estimating credit losses as Mid Penn has not yet adopted the current expected credit loss (“CECL”) accounting standard. The increase in the overall allowance for loan losses and the increased provision for the quarter ended March 31, 2020 (as compared to the provision for the quarter ended March 31, 2019) were primarily the result of an increase in the allowance balance related to general allocations. Mid Penn’s allowance and other asset quality measures did not reflect any new impaired assets or specific reserve allocations related to the early impact of the COVID-19 pandemic, though Bank management is continuously and closely monitoring and evaluating the impact of the COVID-19 situation on the portfolio.
- The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn has evaluated its current and projected revenues, including potential stresses to revenue streams as a result of the COVID-19 impact to the economy and specifically Mid Penn’s markets and customers, and management currently anticipates that future earnings will be adequate to fully realize the recorded deferred tax assets as of March 31, 2020, with no valuation reserve required.
In addition to the specific banking service changes and measures as discussed in the President’s Statement in how we protect our employees, customers and communities during this COVID-19 pandemic, we have also made significant lending program efforts to provide critical support to our borrowers and other small businesses in our markets:
- As initially reported in a Form 8-K filed on April 17, 2020, Mid Penn was a significant lender under the federal Paycheck Protection Program (PPP) which was created when the CARES Act was recently signed into law. Through April 24, 2020, Mid Penn had disbursed an aggregate amount of $467,932,000 in PPP loans to 2,160 borrowers through the first round of funding, and had received numerous applications for submission to the Small Business Administration (“SBA”) in anticipation of the second round of funding. All PPP loans are 100% guaranteed by the Small Business Administration, and from the disbursements made through April 24, 2020, Mid Penn expects to receive nearly $15 million in PPP loan processing fees under fee schedules as established by the SBA.
- On March 22, 2020, the federal financial institution regulatory agencies and the state banking regulators issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. Concurrently, the Financial Accounting Standards Board (FASB) released a statement indicating that the interagency guidance was developed in consultation with the FASB staff. The banking agencies encouraged financial institutions to work with borrowers, and indicated that they will not criticize institutions for doing so in a safe and sound manner, and will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings (TDRs). The statement indicated that the agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk.
Prior to this interagency guidance being issued, Mid Penn had proactively reached out to its borrowers to assess how the COVID-19 situation was impacting them, and was evaluating taking similar forbearance and payment deferral measures. In response to these customer outreaches and respectful of the interagency guidance, through April 24, 2020, Mid Penn has provided loan modifications to 921 borrowers with aggregate loans outstanding of $409,735,000. Depending upon the specific needs and circumstances affecting each borrower, the majority of these modifications range from deferrals of both principal and interest payments for three to six months, or borrowers reverting to interest-only payments for a period of three to six months. Mid Penn remains in communication with each of these borrowers to assess the ongoing credit status of the borrowers, and may make further adjustments to a borrower’s modification at some future time if warranted for the specific situation.
FINANCIAL HIGHLIGHTS (Unaudited):
| (Dollars in thousands, except | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||
| per share data) | 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||
| Cash and cash equivalents | $ | 140,758 | $ | 139,030 | $ | 160,879 | $ | 48,145 | $ | 86,968 | ||||||||||
| Investment securities | 195,383 | 173,486 | 222,891 | 243,586 | 264,323 | |||||||||||||||
| Loans | 1,798,149 | 1,762,756 | 1,710,434 | 1,688,173 | 1,646,686 | |||||||||||||||
| Allowance for loan and lease losses | (10,014 | ) | (9,515 | ) | (9,316 | ) | (8,771 | ) | (8,502 | ) | ||||||||||
| Net loans | 1,788,135 | 1,753,241 | 1,701,118 | 1,679,402 | 1,638,184 | |||||||||||||||
| Goodwill and other intangibles | 68,275 | 68,598 | 68,949 | 69,304 | 69,665 | |||||||||||||||
| Other assets | 107,200 | 96,820 | 95,062 | 95,685 | 88,677 | |||||||||||||||
| Total assets | $ | 2,299,751 | $ | 2,231,175 | $ | 2,248,899 | $ | 2,136,122 | $ | 2,147,817 | ||||||||||
| Noninterest-bearing deposits | $ | 347,532 | $ | 310,036 | $ | 298,885 | $ | 287,183 | $ | 290,902 | ||||||||||
| Interest-bearing deposits | 1,625,749 | 1,602,358 | 1,591,208 | 1,491,218 | 1,493,278 | |||||||||||||||
| Total deposits | 1,973,281 | 1,912,394 | 1,890,093 | 1,778,401 | 1,784,180 | |||||||||||||||
| Borrowings and subordinated debt | 65,423 | 59,973 | 102,038 | 105,105 | 113,661 | |||||||||||||||
| Other liabilities | 21,536 | 20,934 | 22,156 | 21,354 | 22,539 | |||||||||||||||
| Shareholders' equity | 239,511 | 237,874 | 234,612 | 231,262 | 227,437 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,299,751 | $ | 2,231,175 | $ | 2,248,899 | $ | 2,136,122 | $ | 2,147,817 | ||||||||||
| Book Value per Common Share | $ | 28.23 | $ | 28.05 | $ | 27.67 | $ | 27.32 | $ | 26.88 | ||||||||||
| Tangible Book Value per Common Share * | $ | 20.18 | $ | 19.96 | $ | 19.54 | $ | 19.13 | $ | 18.64 | ||||||||||
* Non-GAAP measure; see Reconciliation of Non-GAAP Measures
OPERATING HIGHLIGHTS (Unaudited):
| Three Months Ended | ||||||||||||||||||||
| (Dollars in thousands, except | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||
| per share data) | 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||
| Interest income | $ | 23,699 | $ | 23,935 | $ | 24,513 | $ | 23,998 | $ | 22,866 | ||||||||||
| Interest expense | 6,034 | 6,630 | 6,746 | 6,228 | 5,560 | |||||||||||||||
| Net Interest Income | 17,665 | 17,305 | 17,767 | 17,770 | 17,306 | |||||||||||||||
| Provision for loan and lease losses | 550 | 235 | 565 | 465 | 125 | |||||||||||||||
| Noninterest income | 2,934 | 4,695 | 3,003 | 2,874 | 2,049 | |||||||||||||||
| Noninterest expense | 15,581 | 16,171 | 14,683 | 14,796 | 14,303 | |||||||||||||||
| Income before provision for income taxes | 4,468 | 5,594 | 5,522 | 5,383 | 4,927 | |||||||||||||||
| Provision for income taxes | 650 | 1,186 | 709 | 980 | 850 | |||||||||||||||
| Net income available to common shareholders | $ | 3,818 | $ | 4,408 | $ | 4,813 | $ | 4,403 | $ | 4,077 | ||||||||||
| Basic Earnings per Common Share | $ | 0.45 | $ | 0.52 | $ | 0.57 | $ | 0.52 | $ | 0.48 | ||||||||||
| Return on Average Equity | 6.43 | % | 7.41 | % | 8.34 | % | 7.71 | % | 7.35 | % | ||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||
| Tier 1 Capital (to Average Assets) | 7.8 | % | 7.8 | % | 7.7 | % | 7.8 | % | 7.8 | % | |||||||||
| Common Tier 1 Capital (to Risk Weighted Assets) | 9.6 | % | 9.8 | % | 9.9 | % | 9.8 | % | 9.9 | % | |||||||||
| Tier 1 Capital (to Risk Weighted Assets) | 9.6 | % | 9.8 | % | 9.9 | % | 9.8 | % | 9.9 | % | |||||||||
| Total Capital (to Risk Weighted Assets) | 12.5 | % | 11.9 | % | 12.1 | % | 12.0 | % | 12.2 | % | |||||||||
RECONCILIATION OF NON-GAAP MEASURES (Unaudited:)
This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing tangible book value. Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances or non-deductible portions of the non-GAAP adjustments. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Mid Penn’s results and financial condition as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding Mid Penn’s ongoing operating results. This supplemental presentation should not be construed as an inference that Mid Penn’s future results will be unaffected by similar adjustments to be determined in accordance with GAAP.
Tangible Book Value Per Share
| (Dollars in thousands, except | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||
| per share data) | 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||
| Shareholder's Equity | $ | 239,511 | $ | 237,874 | $ | 234,612 | $ | 231,262 | $ | 227,437 | ||||||||||
| Less: Goodwill | 62,840 | 62,840 | 62,840 | 62,840 | 62,840 | |||||||||||||||
| Less: Core Deposit and Other Intangibles | 5,435 | 5,758 | 6,109 | 6,464 | 6,825 | |||||||||||||||
| Tangible Equity | $ | 171,236 | $ | 169,276 | $ | 165,663 | $ | 161,958 | $ | 157,772 | ||||||||||
| Common Shares Issued and Outstanding | 8,484,328 | 8,480,938 | 8,478,461 | 8,465,178 | 8,462,431 | |||||||||||||||
| Tangible Book Value per Share | $ | 20.18 | $ | 19.96 | $ | 19.54 | $ | 19.13 | $ | 18.64 | ||||||||||
CONSOLIDATED BALANCE SHEETS (Unaudited):
| (Dollars in thousands, except share data) | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 31,763 | $ | 25,746 | $ | 35,573 | ||||||
| Interest-bearing balances with other financial institutions | 4,186 | 4,657 | 5,049 | |||||||||
| Federal funds sold | 104,809 | 108,627 | 46,346 | |||||||||
| Total cash and cash equivalents | 140,758 | 139,030 | 86,968 | |||||||||
| Investment securities available for sale, at fair value | 27,420 | 37,009 | 101,532 | |||||||||
| Investment securities held to maturity, at amortized cost | ||||||||||||
| (fair value $170,399, $137,476, and $163,723) | 167,963 | 136,477 | 162,791 | |||||||||
| Loans held for sale | 15,534 | 8,422 | 4,050 | |||||||||
| Loans and leases, net of unearned interest | 1,798,149 | 1,762,756 | 1,646,686 | |||||||||
| Less: Allowance for loan and lease losses | (10,014 | ) | (9,515 | ) | (8,502 | ) | ||||||
| Net loans and leases | 1,788,135 | 1,753,241 | 1,638,184 | |||||||||
| Bank premises and equipment, net | 26,247 | 24,937 | 23,881 | |||||||||
| Bank premises and equipment held for sale | — | — | 1,274 | |||||||||
| Operating lease right of use asset | 10,999 | 11,442 | 11,249 | |||||||||
| Finance lease right of use asset | 3,402 | 3,447 | 3,582 | |||||||||
| Cash surrender value of life insurance | 16,957 | 16,881 | 16,769 | |||||||||
| Restricted investment in bank stocks | 4,555 | 4,902 | 5,933 | |||||||||
| Accrued interest receivable | 8,786 | 7,964 | 8,527 | |||||||||
| Deferred income taxes | 1,761 | 2,810 | 4,018 | |||||||||
| Goodwill | 62,840 | 62,840 | 62,840 | |||||||||
| Core deposit and other intangibles, net | 5,435 | 5,758 | 6,825 | |||||||||
| Foreclosed assets held for sale | 1,718 | 196 | 350 | |||||||||
| Other assets | 17,241 | 15,819 | 9,044 | |||||||||
| Total Assets | $ | 2,299,751 | $ | 2,231,175 | $ | 2,147,817 | ||||||
| LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing demand | $ | 347,532 | $ | 310,036 | $ | 290,902 | ||||||
| Interest-bearing demand | 468,773 | 458,451 | 397,959 | |||||||||
| Money Market | 507,138 | 488,748 | 414,503 | |||||||||
| Savings | 174,849 | 177,737 | 195,226 | |||||||||
| Time | 474,989 | 477,422 | 485,590 | |||||||||
| Total Deposits | 1,973,281 | 1,912,394 | 1,784,180 | |||||||||
| Short-term borrowings | — | — | 35,000 | |||||||||
| Long-term debt | 23,364 | 32,903 | 51,585 | |||||||||
| Subordinated debt | 42,059 | 27,070 | 27,076 | |||||||||
| Operating lease liability | 12,070 | 12,544 | 12,428 | |||||||||
| Accrued interest payable | 2,478 | 2,208 | 2,921 | |||||||||
| Other liabilities | 6,988 | 6,182 | 7,190 | |||||||||
| Total Liabilities | 2,060,240 | 1,993,301 | 1,920,380 | |||||||||
| Shareholders' Equity: | ||||||||||||
| Common stock, par value $1.00 per share; 20,000,000 shares authorized at March 31, 2020 and December 31, 2019; 8,484,328 and 8,480,938 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively; 10,000,000 shares authorized at March 31, 2019; 8,462,431 shares issued and outstanding at March 31, 2019 | 8,484 | 8,481 | 8,462 | |||||||||
| Additional paid-in capital | 178,320 | 178,159 | 177,704 | |||||||||
| Retained earnings | 52,759 | 50,891 | 41,842 | |||||||||
| Accumulated other comprehensive (loss) income | (52 | ) | 343 | (571 | ) | |||||||
| Total Shareholders’ Equity | 239,511 | 237,874 | 227,437 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,299,751 | $ | 2,231,175 | $ | 2,147,817 | ||||||
CONSOLIDATED STATEMENTS OF INCOME (Unaudited):
| (Dollars in thousands, except per share data) | Three Months Ended March 31, | ||||||
| 2020 | 2019 | ||||||
| INTEREST INCOME | |||||||
| Interest and fees on loans and leases | $ | 22,249 | $ | 21,078 | |||
| Interest on interest-bearing balances | 15 | 30 | |||||
| Interest on federal funds sold | 390 | 68 | |||||
| Interest and dividends on investment securities: | |||||||
| U.S. Treasury and government agencies | 671 | 893 | |||||
| State and political subdivision obligations, tax-exempt | 221 | 619 | |||||
| Other securities | 153 | 178 | |||||
| Total Interest Income | 23,699 | 22,866 | |||||
| INTEREST EXPENSE | |||||||
| Interest on deposits | 5,380 | 4,586 | |||||
| Interest on short-term borrowings | — | 232 | |||||
| Interest on long-term and subordinated debt | 654 | 742 | |||||
| Total Interest Expense | 6,034 | 5,560 | |||||
| Net Interest Income | 17,665 | 17,306 | |||||
| PROVISION FOR LOAN AND LEASE LOSSES | 550 | 125 | |||||
| Net Interest Income After Provision for Loan and Lease Losses | 17,115 | 17,181 | |||||
| NONINTEREST INCOME | |||||||
| Income from fiduciary activities | 384 | 359 | |||||
| Service charges on deposits | 205 | 217 | |||||
| ATM debit card interchange income | 416 | 334 | |||||
| Mortgage banking income | 1,182 | 437 | |||||
| Net gain on sales of SBA loans | 84 | 202 | |||||
| Merchant services income | 83 | 85 | |||||
| Earnings from cash surrender value of life insurance | 76 | 78 | |||||
| Net gain on sales of investment securities | 132 | 7 | |||||
| Other income | 372 | 330 | |||||
| Total Noninterest Income | 2,934 | 2,049 | |||||
| NONINTEREST EXPENSE | |||||||
| Salaries and employee benefits | 8,281 | 7,759 | |||||
| Occupancy expense, net | 1,439 | 1,401 | |||||
| Equipment expense | 713 | 627 | |||||
| Pennsylvania bank shares tax expense | 405 | 136 | |||||
| FDIC Assessment | 312 | 359 | |||||
| Legal and professional fees | 352 | 422 | |||||
| Marketing and advertising expense | 204 | 179 | |||||
| Software licensing and utilization | 1,221 | 1,021 | |||||
| Telephone expense | 134 | 154 | |||||
| (Gain) loss on sale or write-down of foreclosed assets | — | (4 | ) | ||||
| Intangible amortization | 323 | 363 | |||||
| Other expenses | 2,197 | 1,886 | |||||
| Total Noninterest Expense | 15,581 | 14,303 | |||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 4,468 | 4,927 | |||||
| Provision for income taxes | 650 | 850 | |||||
| NET INCOME | 3,818 | 4,077 | |||||
| PER COMMON SHARE DATA: | |||||||
| Basic and Diluted Earnings Per Common Share | $ | 0.45 | $ | 0.48 | |||
| Cash Dividends Paid | $ | 0.23 | $ | 0.25 | |||
NET INTEREST MARGIN, (Unaudited):
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | ||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||
| (Dollars in thousands) | March 31, 2020 | December 31, 2019 | ||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||
| Balance | Interest | Rates | Balance | Interest | Rates | |||||||||||||||||
| ASSETS: | ||||||||||||||||||||||
| Interest Bearing Balances | $ | 4,488 | $ | 15 | 1.34 | % | $ | 5,083 | $ | 20 | 1.56 | % | ||||||||||
| Investment Securities: | ||||||||||||||||||||||
| Taxable | 133,502 | 740 | 2.23 | % | 133,073 | 725 | 2.16 | % | ||||||||||||||
| Tax-Exempt | 42,765 | 280 | (a) | 2.63 | % | 62,891 | 441 | (a) | 2.78 | % | ||||||||||||
| Total Securities | 176,267 | 1,020 | 2.33 | % | 195,964 | 1,166 | 2.36 | % | ||||||||||||||
| Federal Funds Sold | 122,635 | 390 | 1.28 | % | 124,507 | 518 | 1.65 | % | ||||||||||||||
| Loans and Leases, Net | 1,771,444 | 22,341 | (b) | 5.07 | % | 1,726,383 | 22,296 | (b) | 5.12 | % | ||||||||||||
| Restricted Investment in Bank Stocks | 4,660 | 84 | 7.25 | % | 5,578 | 112 | 7.97 | % | ||||||||||||||
| Total Earning Assets | 2,079,494 | 23,850 | 4.61 | % | 2,057,515 | 24,112 | 4.65 | % | ||||||||||||||
| Cash and Due from Banks | 30,580 | 31,898 | ||||||||||||||||||||
| Other Assets | 147,924 | 149,201 | ||||||||||||||||||||
| Total Assets | $ | 2,257,998 | $ | 2,238,614 | ||||||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | ||||||||||||||||||||||
| Interest-bearing Demand | $ | 455,685 | 1,172 | 1.03 | % | $ | 446,952 | 1,316 | 1.17 | % | ||||||||||||
| Money Market | 502,925 | 1,597 | 1.28 | % | 484,279 | 1,922 | 1.57 | % | ||||||||||||||
| Savings | 175,924 | 120 | 0.27 | % | 178,728 | 146 | 0.32 | % | ||||||||||||||
| Time | 480,316 | 2,491 | 2.09 | % | 466,400 | 2,475 | 2.11 | % | ||||||||||||||
| Total Interest-bearing Deposits | 1,614,850 | 5,380 | 1.34 | % | 1,576,359 | 5,859 | 1.47 | % | ||||||||||||||
| Short-term Borrowings | — | — | 0.00 | % | 1,576 | 13 | 3.27 | % | ||||||||||||||
| Long-term Debt | 28,780 | 252 | 3.52 | % | 50,533 | 363 | 2.85 | % | ||||||||||||||
| Subordinated Debt | 29,048 | 402 | 5.57 | % | 27,069 | 397 | 5.82 | % | ||||||||||||||
| Total Interest-bearing Liabilities | 1,672,678 | 6,034 | 1.45 | % | 1,655,537 | 6,632 | 1.59 | % | ||||||||||||||
| Noninterest-bearing Demand | 320,524 | 322,125 | ||||||||||||||||||||
| Other Liabilities | 25,927 | 25,049 | ||||||||||||||||||||
| Shareholders' Equity | 238,869 | 235,903 | ||||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 2,257,998 | $ | 2,238,614 | ||||||||||||||||||
| Net Interest Income (taxable equivalent basis) | $ | 17,816 | $ | 17,480 | ||||||||||||||||||
| Taxable Equivalent Adjustment | (151 | ) | (175 | ) | ||||||||||||||||||
| Net Interest Income | $ | 17,665 | $ | 17,305 | ||||||||||||||||||
| Total Yield on Earning Assets | 4.61 | % | 4.65 | % | ||||||||||||||||||
| Rate on Supporting Liabilities | 1.45 | % | 1.59 | % | ||||||||||||||||||
| Average Interest Spread | 3.16 | % | 3.06 | % | ||||||||||||||||||
| Net Interest Margin | 3.45 | % | 3.37 | % | ||||||||||||||||||
(a) Includes tax-equivalent adjustments on interest from tax-free municipal securities of $59,000 for the three months ended March 31, 2020 and $93,000 for the three months ended December 31, 2019. Tax-equivalent adjustments were calculated using statutory tax rate of 21% at March 31, 2020 and December 31, 2019.
(b) Includes tax-equivalent adjustments on interest from tax-free municipal loans of $92,000 for the three months ended March 31, 2020 and $82,000 for the three months ended December 31, 2019, respectively. Tax-equivalent adjustments were calculated using statutory tax rate of 21% at March 31, 2020 and December 31, 2019.
NET INTEREST MARGIN, CONTINUED (Unaudited):
| Average Balances, Income and Interest Rates on a Taxable Equivalent Basis | |||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||
| (Dollars in thousands) | March 31, 2020 | March 31, 2019 | |||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||
| Balance | Interest | Rates | Balance | Interest | Rates | ||||||||||||||||
| ASSETS: | |||||||||||||||||||||
| Interest Bearing Balances | $ | 4,488 | $ | 15 | 1.34 | % | $ | 6,162 | $ | 30 | 1.97 | % | |||||||||
| Investment Securities: | |||||||||||||||||||||
| Taxable | 133,502 | 740 | 2.23 | % | 165,461 | 989 | 2.42 | % | |||||||||||||
| Tax-Exempt | 42,765 | 280 | (a) | 2.63 | % | 107,718 | 784 | (a) | 2.95 | % | |||||||||||
| Total Securities | 176,267 | 1,020 | 2.33 | % | 273,179 | 1,773 | 2.63 | % | |||||||||||||
| Federal Funds Sold | 122,635 | 390 | 1.28 | % | 11,294 | 68 | 2.44 | % | |||||||||||||
| Loans and Leases, Net | 1,771,444 | 22,341 | (b) | 5.07 | % | 1,629,480 | 21,162 | (b) | 5.27 | % | |||||||||||
| Restricted Investment in Bank Stocks | 4,660 | 84 | 7.25 | % | 5,987 | 82 | 5.55 | % | |||||||||||||
| Total Earning Assets | 2,079,494 | 23,850 | 4.61 | % | 1,926,102 | 23,115 | 4.87 | % | |||||||||||||
| Cash and Due from Banks | 30,580 | 28,178 | |||||||||||||||||||
| Other Assets | 147,924 | 138,249 | |||||||||||||||||||
| Total Assets | $ | 2,257,998 | $ | 2,092,529 | |||||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY: | |||||||||||||||||||||
| Interest-bearing Demand | $ | 455,685 | 1,172 | 1.03 | % | $ | 382,478 | 853 | 0.90 | % | |||||||||||
| Money Market | 502,925 | 1,597 | 1.28 | % | 387,525 | 1,463 | 1.53 | % | |||||||||||||
| Savings | 175,924 | 120 | 0.27 | % | 200,714 | 176 | 0.36 | % | |||||||||||||
| Time | 480,316 | 2,491 | 2.09 | % | 487,567 | 2,094 | 1.74 | % | |||||||||||||
| Total Interest-bearing Deposits | 1,614,850 | 5,380 | 1.34 | % | 1,458,284 | 4,586 | 1.28 | % | |||||||||||||
| Short-term Borrowings | — | — | 0.00 | % | 34,491 | 232 | 2.73 | % | |||||||||||||
| Long-term Debt | 28,780 | 252 | 3.52 | % | 48,125 | 354 | 2.98 | % | |||||||||||||
| Subordinated Debt | 29,048 | 402 | 5.57 | % | 27,079 | 388 | 5.81 | % | |||||||||||||
| Total Interest-bearing Liabilities | 1,672,678 | 6,034 | 1.45 | % | 1,567,979 | 5,560 | 1.44 | % | |||||||||||||
| Noninterest-bearing Demand | 320,524 | 276,673 | |||||||||||||||||||
| Other Liabilities | 25,927 | 22,970 | |||||||||||||||||||
| Shareholders' Equity | 238,869 | 224,907 | |||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 2,257,998 | $ | 2,092,529 | |||||||||||||||||
| Net Interest Income (taxable equivalent basis) | $ | 17,816 | $ | 17,555 | |||||||||||||||||
| Taxable Equivalent Adjustment | (151 | ) | (249 | ) | |||||||||||||||||
| Net Interest Income | $ | 17,665 | $ | 17,306 | |||||||||||||||||
| Total Yield on Earning Assets | 4.61 | % | 4.87 | % | |||||||||||||||||
| Rate on Supporting Liabilities | 1.45 | % | 1.44 | % | |||||||||||||||||
| Average Interest Spread | 3.16 | % | 3.43 | % | |||||||||||||||||
| Net Interest Margin | 3.45 | % | 3.70 | % | |||||||||||||||||
(a) Includes tax-equivalent adjustments on interest from tax-free municipal securities of $59,000 and $165,000 for the three months ended March 31, 2020 and 2019, respectively. Tax-equivalent adjustments were calculated using statutory tax rate of 21% at March 31, 2020 and 2019.
(b) Includes tax-equivalent adjustments on interest from tax-free municipal loans of $92,000 and $84,000 for the three months ended March 31, 2020 and 2019, respectively. Tax-equivalent adjustments were calculated using statutory tax rate of 21% at March 31, 2020 and 2019.
Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s consolidated financial statements when filed with the Securities and Exchange Commission (“SEC”). Accordingly, the financial information in this announcement is subject to change. The statements are valid only as of the date hereof and Mid Penn Bancorp, Inc. disclaims any obligation to update this information.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continues," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on securities held in Mid Penn’s portfolio; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; regulatory supervision and oversight, including monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank’s future businesses; and material differences in the actual financial results of merger, acquisition and investment activities compared with Mid Penn’s initial expectations, including the full realization of anticipated cost savings and revenue enhancements.
A specific risk factor impacting the Corporation at this time relates to the COVID-19 pandemic which could have a negative impact on our business and operations. While we have a special operating plan in place during the pandemic, the COVID-19 impact has disrupted the normal operations of our business (including communications and technology), and the finances and typical practices of our deposit and loan clients, suppliers, third-party vendors and counterparties. The COVID-19 pandemic could impact us negatively to the extent that it results in increased credit losses and decreased market values of collateral securing loans, reduced capital markets activity, lower asset price levels, or disruptions in general economic activity in the United States or abroad, or in financial market settlement functions or the realization of other risk factors described herein. This impact could extend beyond the current short-term stress to affect longer-term economic growth negatively, which could have an adverse effect on our business and operations. It could also adversely affect the financial stability of our deposit and loan clients, suppliers, third-party vendors and counterparties, in ways that we are unable to predict.
For a more detailed description of these and other factors which would affect our results, please see Mid Penn’s filings with the SEC, including those risk factors identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent filings. The statements in this press release are made as of the date of this press release, even if subsequently made available by Mid Penn on its website or otherwise. Mid Penn assumes no obligation for updating any such forward-looking statements at any time, except as required by law.