Mid Penn Bank: Mid Penn Bancorp, Inc. Reports First Quarter Earnings and Declares 58th Consecutive Quarterly Dividend

Mid Penn Bancorp, Inc. (NASDAQ: MPB) ("Mid Penn"), the parent company of Mid Penn Bank (the "Bank") and MPB Financial Services, LLC, today reported net income available to common shareholders ("earnings") for the quarter ended March 31, 2025, of $13.7 million, or $0.71 per diluted common share, compared to net income of $12.1 million, or $0.73 per diluted common share, for the first quarter of 2024, and a consensus analyst estimate of $0.63 per diluted common share for the first quarter of 2025. Key Highlights of the First Quarter of 2025: Net income available to common shareholders increased 13.3% to $13.7 million, or $0.71 per diluted common share, for the first quarter of 2025, compared to net income of $12.1 million, or $0.73 per diluted common share, for the first quarter of 2024. On a non-GAAP basis, core earnings (1) for the quarter ended March 31, 2025, increased 30.3% to $13.9 million, or $0.72 per diluted common share, compared to $10.7 million, or $0.64 per diluted common share, for the first quarter of 2024. Net interest margin increased to 3.37% for the quarter ended March 31, 2025, compared to 3.21% for the fourth quarter of 2024. Cost of funds decreased to 2.48% for the quarter ended March 31, 2025, compared to 2.66% for the fourth quarter of 2024, as a result of a decrease in interest paid on interest-bearing deposit accounts, driven by the Bank lowering rates in response to the Federal Reserve interest rate cuts in the third and fourth quarters of 2024. The yield on loans decreased to 6.05% for the quarter ended March 31, 2025, compared to 6.10% for the fourth quarter of 2024. Net interest margin increased to 3.37% for the quarter ended March 31, 2025, compared to 2.97% for the first quarter of 2024, representing a 40 bp increase compared to the same period in 2024. Loan growth for the first quarter of 2025 was $48.1 million, or 4.4% (annualized), as the Bank continued to execute on its restrained growth strategy in 2025. Total loans increased $173.7 million, or 4.0% to $4.5 billion at March 31, 2025, compared to $4.3 billion at March 31, 2024. Deposits increased $42.3 million, or 3.7% (annualized), during the first quarter of 2025, compared to a decrease of $16.8 million, or 1.4% (annualized), during the fourth quarter of 2024. This increase was driven by a $55.5 million increase in interest-bearing transaction accounts, a $29.1 million increase in noninterest-bearing accounts, offset by $42.3 million decrease in time deposits. Total deposits increased $353.1 million or 8.06% to $4.7 billion at March 31, 2025, compared to $4.4 billion at March 31, 2024. Book value per common share improved to $34.50 as of March 31, 2025, compared to $33.84 and $33.26 as of December 31, 2024 and March 31, 2024, respectively. Tangible book value per common share (1) improved to $27.58 for as of March 31, 2025, compared to $26.90 and $25.23 as of December 31, 2024 and March 31, 2024, respectively. The core efficiency ratio (1) improved to 62.79% in the first quarter of 2025, compared to 63.9% in the fourth quarter of 2024, and 68.8% in the first quarter of 2024. As a result of the foregoing, the Board of Directors declared a cash dividend of $0.20 per common share, payable May 26, 2025, to shareholders of record as of May 8, 2025. (1) Non-GAAP financial measure. Refer to the calculation in the section titled "Reconciliation of Non-GAAP Measures (Unaudited)" at the end of this document. Chair, President and CEO Rory G. Ritrievi provided the following statement: "It is with great pleasure that we announce our first quarter of 2025 performance, which in many ways is a continuation of what we were able to accomplish in 2024. Despite a fairly tumultuous quarter for the nation and most of the world, we delivered a solid beat of consensus estimates on earnings per share. That beat was the result of healthy net interest margin expansion, moderate growth in both loans and deposits, strong asset quality performance and an improvement in the efficiency ratio. The net interest margin expansion was achieved by a decrease in deposit costs resulting from repricing initiatives started in the fourth quarter of 2024 and continuing through the first quarter of 2025. Even while increasing revenues around 3% annualized, we decreased operating expenses over 3% annualized, resulting in a 110 basis point, or almost 7% annualized, improvement in the efficiency ratio. Solid expense management continues. Our commercial and consumer bankers across our expanding footprint delivered a respectable organic growth rate of 4.4% (annualized) in loans and 3.7% (annualized) in deposits. Those growth rates are a little less than what we had hoped for the quarter, but we recognize that our borrower's and depositors are influenced by what they feel and see in the overall economy. Their sentiment in the first quarter would be best described as cautious. In early April, we announced that we had received all regulatory approvals for our planned merger with William Penn Bank as well as the enthusiastic approval of both shareholder groups. As a result, we expect that the William Penn merger will close in the middle of the second quarter of 2025. We welcome all the William Penn customers and shareholders in advance of the expected completion. In consideration of our first quarter success, the Board has authorized its 58th consecutive quarterly dividend, a cash dividend of $0.20 per share of common stock, which was declared at its meeting on April 23, 2025, payable on May 26, 2025, to shareholders of record as of May 8, 2025." Net Interest Income For the three months ended March 31, 2025, net interest income was $42.5 million, compared to net interest income of $41.3 million for the three months ended December 31, 2024, and $36.5 million for the three months ended March 31, 2024. The tax-equivalent net interest margin for the three months ended March 31, 2025, was 3.37% compared to 3.21% and 2.97% for the fourth quarter of 2024 and first quarter of 2024, respectively, representing a 16 basis point ("bp") increase from the fourth quarter of 2024, and a 40 bp increase compared to the same period in 2024. The yield on interest-earning assets decreased to 5.65% for the quarter ended March 31, 2025, from 5.67% for the three months ended December 31, 2024, and increased from 5.51% for the three months ended March 31, 2024. The decrease from the fourth quarter of 2024 was primarily due to a decrease in the average balance of Federal Funds Sold and a decrease in interest income from loans as a result of lower rates, partially offset by an increase in taxable investment securities. The increase from March 31, 2024, was due to assets continuing to reprice at higher rates during 2024 and 2025, continued discipline on new loan pricing, and an overall increase in the average balance of Fed Funds Sold. For the three months ended March 31, 2025, net interest income increased 16.6% to $42.5 million compared to net interest income of $36.5 million for the same period of 2024. The increase was primarily due to a $3.3 million increase in interest income on loans, a $420 thousand increase in income on investment securities, and a $4.2 million decrease in the interest paid on short term borrowings, offset by a $1.9 million increase in interest expense on deposits compared to the same period of 2024. Average Balances Average loans increased $18.2 million to $4.5 billion for the quarter ended March 31, 2025, compared to $4.4 billion for the quarter ended December 31, 2024, and $4.3 billion for the quarter ended March 31, 2024. Average deposits were $4.7 billion for the first quarter of 2025, reflecting a decrease of $6.2 million, or 0.1%, compared to total average deposits of $4.7 billion in the fourth quarter of 2024, and an increase of $369.6 million, or 8.6%, compared to total average deposits of $4.3 billion for the first quarter of 2024. The average cost of deposits was 2.45% for the first quarter of 2025, representing a 20 bp decrease and a 2 bp increase from the fourth quarter of 2024 and the first quarter of 2024, respectively. The Bank continues to face headwinds with respect to deposit pricing, given competition for deposits across all product types. Our primary focus with respect to deposit strategy is stability, ensuring that our rates are competitive, and our product mix satisfies the needs of our customers. Additionally, the Bank also maintains interest rate swaps to hedge the cash flow risk associated with existing brokered CDs, and to mitigate the impact of higher deposit costs. Cost of funds decreased to 2.48%, compared to 2.66% for the fourth quarter of 2024, as a result of a $2.6 million decrease in interest paid on interest-bearing deposit accounts due to the Bank lowering rates in response to the Federal Reserve interest rate cuts in the third and fourth quarters of 2024. Asset Quality The total provision for credit losses, including provision for credit losses on off-balance sheet credit exposures, was $301 thousand for the three months ended March 31, 2025, a decrease of $32 thousand compared to the provision for credit losses of $333 thousand for the three months ended December 31, 2024, and a $1.2 million increase compared to the benefit for credit losses of $937 thousand for the three months ended March 31, 2024. This decrease from the three months ended December 31, 2024, was driven by decreases in loss rates across multiple segments of the portfolio, offset by increased reserves on individually evaluated loans. Net recoveries for the three months ended March 31, 2025, were $3 thousand or less than 0.0001% of total average loans. The provision for credit losses on loans was $321 thousand for the three months ended March 31, 2025, an increase of $940 thousand compared to the benefit for credit losses of $619 thousand for the three months ended March 31, 2024. This increase for the three months ended March 31, 2025, was primarily due to an increase in los