Mid Penn Bancorp, Inc. Reports Second Quarter Earnings and
Mid Penn Bancorp, Inc. Reports Second Quarter Earnings and

HARRISBURG, Pa., July 27, 2022 (GLOBE NEWSWIRE) — 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 June 30, 2022 of $12.3 million, or $0.77 per common share basic and diluted.

Key Highlights in the Second Quarter of 2022

  • Earnings increased $898 thousand and $0.06 per common share diluted to $12.3 million, or $0.77, respectively, for the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022.
  • Tax equivalent net interest margin increased to 3.45% from 3.21% in the prior quarter and 3.34% in the same period prior year.
  • Loans grew 8% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022. Loans, excluding Payroll Protection Program (“PPP”) loans (1), grew 11% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022.
  • Asset quality continues to remain strong with both nonperforming loans to total loans and nonperforming assets to total loans plus other real estate at 25 basis points (“bp”) at June 30, 2022.
  • Book value per common share increased to $31.23 and tangible book value per share (1) increased to $23.57 at June 30, 2022, compared to $30.96 and $23.31, respectively, at March 31, 2022.

“The team at Mid Penn is proud to deliver these second quarter results to our shareholders. The second quarter was our first full quarter after the completion of the Riverview acquisition and resulting customer conversion and branch optimization plan and it was also the first quarter in the last 8 with very little impact from PPP loans,” said Rory G. Ritrievi, President and CEO. “The quarter was successful due to strong, high quality and profitable organic loan growth of 11% annualized, smart balance sheet management, continued strength in asset quality and of course a healthy reduction in expenses. Within the quarter, we saw a 7.6% improvement in net interest margin, a 12.2% improvement in ROA, a 6.4% improvement in ROE, a 6.0% improvement in ROTCE, a 7.3% improvement in our efficiency ratio(1) and an increase in the allowance of loan and lease losses to nonperforming assets to 211.7%. Those trends are all encouraging as we head into the last half of the year.”

With this successful quarter, the Board is pleased to announce a quarterly cash dividend of $0.20 per share of common stock was declared at its meeting on July 27, 2022, payable on August 22, 2022 to shareholders of record as of August 10, 2022.

(1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.

Net Interest Income and Average Balance Sheet

For the three months ended June 30, 2022, net interest income was $35.4 million compared to net interest income of $34.4 million for the three months ended March 31, 2022 and $26.9 million for the three months ended June 30, 2021. The tax-equivalent net interest margin for the three months ended June 30, 2022 was 3.45% versus 3.21% for the first quarter of 2022 and 3.34% for the second quarter of 2021, a 24 and 11 bp, respectively, increase compared to the prior quarter and the same period in 2021.The linked quarter increase was the result of a 22 bp increase in the yield on interest-earning assets and a 4 bp decrease in the rate on interest-bearing liabilities, partially offset by a $236.5 million decrease in average interest-earning assets. The increase in the yield on interest-earning assets was the result of a combination of excess cash being re-deployed into higher yielding investment securities and the increase in fed fund rates during the second quarter of 2022. The decrease in the rate on interest-bearing liabilities was primarily the result of a lag in the repricing of deposits as well as the strategic decision to allow higher cost time deposits obtained through the Riverview acquisition to run-off.

For the six months ended June 30, 2022, net interest income was $69.8 million, a $17.6 million, or 33.8%, increase compared to net interest income of $52.2 million for the six months ended June 30, 2021. The year-over-year increase in net interest income was positively impacted by (i) the acquisition of Riverview; (ii) the deployment of Fed Funds into higher yielding investment securities since September 30, 2021; (iii) interest and fees from core loan growth since June 30, 2021; and (iv) reduced interest expense due to the lower cost of deposits in the six months ended June 30, 2022 when compared to the same period in 2021. The tax-equivalent net interest margin for the six months ended June 30, 2022 was 3.33%, a 7 bp decrease compared to 3.40% for six months ended June 30, 2021. The decrease was primarily the result of a 28 bp decrease in the yield on interest-earning assets. The overall decrease in net interest margin for the six months ended June 30, 2022 was driven by the reduction of PPP fees recognized during the first six months of 2021, partially offset by the improvement in cost of interest-bearing liabilities.

The three months ended June 30, 2022 included the recognition of $652 thousand of PPP loan processing fees, a decrease of $5.6 million compared to $6.2 million of PPP loan processing fees recognized during the same period in 2021. These PPP fees are recognized as interest income over the term of the respective loan, or sooner if the loans are forgiven by the U.S. Small Business Administration (“SBA”), or the borrower otherwise pays down principal prior to the loan’s stated maturity. The six months ended June 30, 2022 included the recognition of $3.6 million of PPP loan processing fees, a decrease of $7.7 million compared to $11.3 million of PPP loan processing fees recognized during the same period in 2021. These PPP fees are recognized as interest income over the term of the respective loan, or sooner if the loans are forgiven by the U.S. Small Business Administration (“SBA”), or the borrower otherwise pays down principal prior to the loan’s stated maturity. As of June 30, 2022, there was $171 thousand in deferred fees related to PPP loans that we anticipate will be recognized during the third quarter of 2022.

Total average assets were $4.5 billion for the second quarter of 2022, reflecting a decrease of $231.0 million, or 4.9%, compared to total average assets of $4.7 billion for the first quarter of 2022, and an increase of $1.1 billion, or 29.9%, compared to total average assets of $3.4 billion second quarter of 2021. The decrease in total average assets from the prior quarter was primarily due to the reduction in federal funds sold. Total average assets were $4.6 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 38.3%, compared to total average assets of $3.3 billion the same period of 2021. The increase in total average assets for both the quarter and year to date as of June 30, 2021 to June 30, 2022 was primarily attributable to the acquisition of Riverview, effective November 30, 2021.

Total average loans were $3.1 billion for the second quarter of 2022, reflecting a decrease of $25.9 million, or 0.8%, compared to total average loans in the first quarter of 2022, and an increase of $520.0 million, or 19.9%, compared to total average loans of $2.6 billion for the second quarter of June 30, 2021. The decrease from the prior quarter was a result of the forgiveness of $34.9 million in PPP loans, which was partially offset by new loan originations. Total average loans were $3.1 billion for the first six months of 2022, reflecting an increase of $545.4 million, or 21.2%, compared to total average loans in the same period of 2021. The year-over-year growth is largely attributable to the Riverview acquisition on November 30, 2021.

Total average deposits were $3.8 billion for the second quarter of 2022, reflecting a decrease of $162.0 million, or 4.0%, compared to total average deposits in the first quarter of 2022, and an increase of $1.1 billion, or 19.9%, compared to total average deposits of $2.6 billion second quarter of 2021. The decrease in total average deposits during the second quarter was attributable to the maturity of certificates of deposit, which have renewed into lower rates, migrated to other deposit or retail investment products, or exited the Bank. We strategically right-sized our average cost of deposits through our targeted deposit run-off. The average cost of deposits was 0.21% for the second quarter of 2022, representing a 2 bp decrease from the first quarter of 2022 and a 22 bp decrease from the second quarter of 2021. Total average deposits were $3.9 billion for the first half of 2022, reflecting an increase of $1.3 billion, or 47.9%, compared to total average deposits of $2.6 billion same period of 2021. The growth in average deposits compared to June 30, 2021 was positively impacted by the Riverview acquisition and significant increases in noninterest-bearing, interest-bearing, and money market deposits, primarily due to both expanded cash management and commercial deposit account relationships, and new deposits established as a result of Mid Penn’s PPP loan funding activities.

Asset Quality

The provision for loan and lease losses was $1.7 million for the three months ended June 30, 2022, an increase of $1.2 million compared to the provision for loan losses of $500 thousand for the three months ended March 31, 2022 and an increase of $525 thousand compared to the three months ended June 30, 2021. The provision for loan and lease losses was $2.2 million for the six months ended June 30, 2022, an increase of $75 thousand compared to the provision for loan losses for the same period of 2021. The increase in the provision for the three and six months ended June 30, 2022 was the result of one partially legacy commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the quarter and the growth in total loans since the end of the second quarter of 2021. The allowance for loan and lease losses and the related provision reflects Mid Penn’s continued application of the incurred loss method for estimating credit losses. We will adopt the current expected credit loss (“CECL”) accounting standard, as required, effective January 1, 2023.

Total nonperforming assets were $8.0 million at June 30, 2022, a decrease compared to nonperforming assets of $10.5 million at December 31, 2021 and $8.7 million at June 30, 2021. The decrease in nonperforming assets since December 31, 2021 was primarily the result of the successful workout of two non-accrual home equity loans amongst one relationship totaling $2.3 million during the first quarter of 2022. The nonperforming assets included acquired impaired loans assumed in the Riverview transaction totaling $3.3 million as of December 31, 2021.

The allowance for loan and lease losses as a percentage of total loans including PPP loans was 0.53% at June 30, 2022, compared to 0.49% at March 31, 2022 and 0.47% at December 31, 2021. The ratios as of June 30, 2022 and December 31, 2021, were affected by the addition of the Riverview acquired loans, which, in accordance with purchase accounting principles, were recorded at fair value at the time of acquisition with no related allowance for loan and lease losses. 

Capital

Shareholders’ equity increased $5.8 million, or 1.2%, from $490.1 million as of December 31, 2021 to $495.8 million as of June 30, 2022. Regulatory capital ratios for both Mid Penn and its banking subsidiary indicate regulatory capital levels in excess of the regulatory minimums and the levels necessary for the Bank to be considered “well capitalized” at both June 30, 2022 and December 31, 2021.

Share Repurchase Program

During the second quarter of 2022, Mid Penn repurchased 103,912 shares of outstanding common stock at an average price of $26.88 under its treasury stock repurchase program (“Program”). The Program authorized the repurchase of up to $15.0 million of Mid Penn’s outstanding common stock, of which $10.3 million remains available for repurchase.

Noninterest Income

For the three months ended June 30, 2022, noninterest income totaled $5.2 million, a decrease of $520 thousand, or 9.0%, compared to noninterest income of $5.8 million for the first quarter of 2022, primarily driven by decreases of $444 thousand in other income, $234 thousand in service charges on deposits, $224 thousand in mortgage banking income and a $166 thousand change in the net gain on sales of SBA loans. The decrease in other income was primarily the result of a higher fair value gain on a swap in the first quarter of 2022 compared to the second quarter of 2022. Service charges on deposits decreased as a result of certain Riverview legacy fees being aligned with Mid Penn fees at the end of the first quarter of 2022. The decrease in mortgage banking income was the result of increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during the second quarter of 2022. These decreases were partially offset by increases of $153 thousand in income from fiduciary activities, $71 thousand in ATM debit card interchange income and $14 thousand in merchant services income.

Compared to the second quarter of 2021, noninterest income in the second quarter of 2022 decreased $422 thousand, or 7.5%, driven by a $2.5 million decrease in mortgage banking income, a $122 thousand decrease in merchant services income and a $114 thousand lower net gain on sales of SBA loans. The decreases were partially offset by an $877 thousand increase in other income, a $663 thousand increase in income from fiduciary activities, a $472 thousand increase in ATM debit card interchange income and a $273 thousand increase in service charges on deposits. Other income increased as a result of income in the second quarter of 2022 from a hedging program related to mortgage derivative activities that Mid Penn did not participate in during the second quarter of 2021, as well as a result of a fair value gain on a swap in the second quarter of 2022 compared to no fair value gain in the second quarter of 2021. The increase in income from fiduciary activities was attributable to favorable growth in trust assets under management and increased sales of retail investments products, as a result of successful business development efforts by Mid Penn’s trust and wealth management team. ATM debit card interchange income and service charges on deposits increased primarily as a result of a higher volume of transactional deposit accounts, including deposit accounts assumed in the Riverview acquisition.

For the six months ended June 30, 2022, noninterest income totaled $11.0 million, an increase of $616 thousand, or 5.9%, compared to noninterest income of $10.4 million for the first six months of 2021, primarily driven by increases of $2.2 million in other income, $1.2 million in income from fiduciary activities, $961 thousand in ATM debit card interchange income and $805 thousand in service charges on deposits. The increase in other income was primarily the result of a fair value gain on a swap in the first half of 2022 compared to the same period of 2021. The increases in fiduciary activities was a result of increased activity in the wealth management area and the Riverview transaction. The other increases mentioned were primarily the result of the Riverview transaction. These favorable variances were partially offset by a decrease in mortgage banking income of $4.3 million for the six months ended June 30, 2022 compared to the same period of 2021 due to increasing mortgage interest rates slowing mortgage loan originations and secondary-market loan sales and gains during 2022.

Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during the first half of 2022. As a result of the corresponding mortgage rate increases and an increase in property values driven by supply shortfalls and high liquidity levels among buyers, the mortgage loan refinancing market has slowed, and purchase money mortgage originations have slowed relative to the lending volumes seen in the past several years.

Noninterest Expense

For the three months ended June 30, 2022, noninterest expense totaled $23.9 million, a decrease of $1.8 million, or 7.1%, compared to noninterest expense of $25.7 million for the first quarter of 2022. Most categories of noninterest expense decreased during the second quarter of 2022, as a result of cost savings fully recognized in the second quarter of 2022 from the completion of the Riverview acquisition. The most significant cost savings were in salaries and benefits.

Compared to the second quarter of 2021, noninterest expense in the second quarter of 2022 increased $4.5 million, or 22.9%, primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $2.4 million in salaries and benefits and $2.0 million in other expenses. The increases were partially offset by decreases of $712 thousand in mortgage banking profit-sharing expense, $522 thousand of post-acquisition restructuring expense in 2021 and $240 thousand in charitable contributions qualifying for state tax credits.

For the six months ended June 30, 2022, noninterest expense totaled $49.7 million, an increase of $12.6 million, or 34.2%, compared to noninterest expense of $37.1 million for the same period of 2021 primarily as a result of higher expenses from the Riverview acquisition, most significantly increases of $6.1 million in salaries and benefits and $4.7 million in other expenses.

The provision for income taxes was $2.8 million during the three months ended June 30, 2022, compared to $2.6 million and $2.3 million of income tax provision recorded for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes for the three months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.5% compared to 18.4% and 19.4% for the first quarter of 2022 and the second quarter of 2021, respectively. The provision for income taxes was $5.3 million during the six months ended June 30, 2022, compared to $4.5 million of income tax provision recorded for the first half of 2021. The provision for income taxes for the six months ended June 30, 2022 reflects a combined Federal and State effective tax rate of 18.4% compared to 19.1% for the same period of 2021. The decrease in the effective tax rate compared to the periods of the prior year reflects higher tax-exempt interest recognized due to an increase in tax-exempt securities being held in the investment security portfolio when compared to the prior year, the favorable treatment of the increase in cash surrender value on bank owned life insurance policies, which are nontaxable for federal tax purposes, and the expansion of low income housing tax credit projects (“Projects”) acquired in the Riverview transaction, as well as Mid Penn legacy Projects. These decreases were partially offset by higher income before taxes in both periods of 2022.

The efficiency ratio(1) was 57.57% in the second quarter of 2022, compared to 62.12% in the first quarter of 2022, and 57.42% in the second quarter of 2021. The improvement in the efficiency ratio during the second quarter 2022 was due to the cost savings being realized from the Riverview acquisition. The efficiency ratio was 59.83% for the six months ended June 30, 2022, compared to 57.47% for the six months ended June 30, 2021. The increase in the efficiency ratio during the six months ended June 30, 2022 was primarily due to the increase in salary and benefit expenses related to Riverview employees retained through conversion.

Merger & Acquisition Activity
  
On November 30, 2021, Mid Penn announced the successful completion of the merger acquisition of Riverview. The acquisition of Riverview impacted periods presented within this report. For more information regarding this transaction, please see Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2021.

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 disclaims any obligation to update this information.

(1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.

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; the length and extent of the COVID-19 pandemic; 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; the success and timing of PPP loan repayment and forgiveness; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; results of the regulatory examination and supervision process and oversight, including changes in 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; the availability of financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank’s future businesses; 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; the possibility that the anticipated benefits of the Riverview transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Mid Penn does business; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Riverview transaction; the ability to complete the integration of Mid Penn and Riverview successfully; the dilution caused by Mid Penn’s issuance of additional shares of its capital stock in connection with the Riverview transaction; and other factors that may affect the future results of Mid Penn. 

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, 2021 and subsequent filings with the SEC. 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.

SUMMARY FINANCIAL HIGHLIGHTS (Unaudited):

    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands, except per share data)   2022     2022     2021     2021     2021  
Ending Balances:                                        
Investment securities   $ 618,184     $ 508,658     $ 392,619     $ 158,311     $ 161,702  
Net loans     3,163,157       3,106,384       3,089,799       2,356,196       2,480,476  
Total assets     4,310,163       4,667,174       4,689,425       3,453,187       3,461,792  
Total deposits     3,702,587       3,989,037       4,002,016       2,961,881       2,782,124  
Shareholders’ equity     495,835       494,161       490,076       349,308       341,569  
Average Balances:                                        
Investment securities     580,406       462,648       286,134       158,296       148,972  
Net loans     3,129,334       3,103,469       2,319,544       2,422,378       2,609,803  
Total assets     4,465,906       4,696,894       3,579,649       3,508,757       3,437,692  
Total deposits     3,837,135       3,999,074       3,007,955       2,870,885       2,715,875  
Shareholders’ equity     495,681       494,019       403,010       345,816       312,006  
                                         
Income Statement:   Three Months Ended  
    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands, except per share data)   2022     2022     2021     2021     2021  
Net interest income   $ 35,433     $ 34,414     $ 29,372     $ 26,994     $ 26,877  
Provision for loan and lease losses     1,725       500       370       425       1,150  
Noninterest income     5,230       5,750       5,660       5,509       5,652  
Noninterest expense     23,915       25,745       34,072       20,019       19,456  
Income before provision for income taxes     15,023       13,919       590       12,059       11,923  
Provision for income taxes     2,771       2,565       (17 )     2,272       2,310  
Net income available to shareholders     12,252       11,354       607       9,787       9,613  
Net income excluding non-recurring expenses (1)     12,252       11,614       10,266       9,943       10,025  
                                         
Per Share:                                        
Basic earnings per common share   $ 0.77     $ 0.71     $ 0.05     $ 0.86     $ 0.93  
Diluted earnings per common share   $ 0.77     $ 0.71     $ 0.05     $ 0.86     $ 0.93  
Cash dividends declared   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.20  
Book value per common share   $ 31.23     $ 30.96     $ 30.71     $ 30.55     $ 29.94  
Tangible book value per common share (1)   $ 23.57     $ 23.31     $ 22.99     $ 24.75     $ 24.10  
                                         
Asset Quality:                                        
Net charge-offs (recoveries) to average loans (annualized)     -0.001 %     -0.007 %     0.001 %     0.149 %     0.004 %
Non-performing loans to total loans     0.25 %     0.25 %     0.32 %     0.29 %     0.35 %
Non-performing asset to total loans and other real estate     0.25 %     0.26 %     0.32 %     0.29 %     0.35 %
Non-performing asset to total assets     0.19 %     0.18 %     0.22 %     0.20 %     0.25 %
ALLL to total loans     0.53 %     0.49 %     0.47 %     0.60 %     0.59 %
ALLL to nonperforming loans     211.66 %     190.84 %     146.23 %     209.90 %     169.50 %
                                         
Profitability:                                        
Return on average assets     1.10 %     0.98 %     0.06 %     1.11 %     1.12 %
Return on average equity     9.91 %     9.32 %     0.61 %     11.23 %     12.36 %
Return on average tangible common equity (1)     13.59 %     12.82 %     1.26 %     14.20 %     15.72 %
Net interest margin     3.45 %     3.21 %     3.48 %     3.26 %     3.34 %
Efficiency ratio (1)     57.57 %     62.12 %     61.34 %     60.33 %     57.42 %
                                         
Capital Ratios:                                        
Tier 1 Capital (to Average Assets)     9.0 %     8.4 %     8.1 %     8.6 %     8.8 %
Common Tier 1 Capital (to Risk Weighted Assets)     11.5 %     11.7 %     11.7 %     13.2 %     13.1 %
Tier 1 Capital (to Risk Weighted Assets)     11.8 %     12.0 %     12.0 %     13.2 %     13.1 %
Total Capital (to Risk Weighted Assets)     14.1 %     14.4 %     14.6 %     15.8 %     15.8 %
                                         

(1) Non-GAAP financial measure. Refer to the calculation on the section titled “Reconciliation of Non-GAAP Measures” at the end of this document.

CONSOLIDATED BALANCE SHEETS (Unaudited):                                        
(Dollars in thousands, except share data)   Jun. 30, 2022     Mar. 31, 2022     Dec. 31, 2021     Sept. 30, 2021     Jun. 30, 2021  
ASSETS                                        
Cash and due from banks   $ 64,440     $ 54,961     $ 41,100     $ 40,134     $ 35,815  
Interest-bearing balances with other financial institutions     4,909       3,187       146,031       2,536       1,234  
Federal funds sold     167,437       700,283       726,621       712,272       599,298  
Total cash and cash equivalents     236,786       758,431       913,752       754,942       636,347  
                                         
Investment securities held to maturity, at amortized cost     399,032       363,145       329,257       152,791       153,032  
Investment securities available for sale, at fair value     218,698       145,039       62,862       5,015       8,162  
Equity securities available for sale, at fair value     454       474       500       505       508  
Loans held for sale     9,574       7,474       11,514       23,154       24,202  
Loans and leases, net of unearned interest     3,180,033       3,121,531       3,104,396       2,370,429       2,495,192  
Less: Allowance for loan and lease losses     (16,876 )     (15,147 )     (14,597 )     (14,233 )     (14,716 )
Net loans and leases     3,163,157       3,106,384       3,089,799       2,356,196       2,480,476  
                                         
Bank premises and equipment, net     33,732       33,612       33,232       25,562       24,758  
Bank premises and equipment held for sale     2,574       3,098       3,907              
Operating lease right of use asset     8,326       8,751       9,055       9,942       10,364  
Finance lease right of use asset     2,997       3,042       3,087       3,132       3,177  
Cash surrender value of life insurance     50,169       49,907       49,661       17,406       17,332  
Restricted investment in bank stocks     4,234       7,637       9,134       7,906       6,816  
Accrued interest receivable     12,902       11,584       11,328       10,008       10,638  
Deferred income taxes     13,780       11,974       10,779       4,133       5,465  
Goodwill     113,835       113,835       113,835       62,840       62,840  
Core deposit and other intangibles, net     7,729       8,250       9,436       3,537       3,804  
Foreclosed assets held for sale     69       125             11       11  
Other assets     32,115       34,412       28,287       16,107       13,860  
Total Assets   $ 4,310,163     $ 4,667,174     $ 4,689,425     $ 3,453,187     $ 3,461,792  
LIABILITIES & SHAREHOLDERS’ EQUITY                                        
Deposits:                                        
Noninterest-bearing demand   $ 850,180     $ 866,965     $ 850,438     $ 661,890     $ 692,016  
Interest-bearing demand     1,023,027       1,050,923       1,066,852       745,833       629,375  
Money Market     999,556       1,159,809       1,076,593       905,742       810,067  
Savings     354,677       358,186       381,476       205,842       206,724  
Time     475,147       553,154       626,657       442,574       443,942  
Total Deposits     3,702,587       3,989,037       4,002,016       2,961,881       2,782,124  
                                         
Short-term borrowings                             196,889  
Long-term debt     4,592       74,681       81,270       74,858       74,944  
Subordinated debt     73,995       74,134       73,645       44,599       44,593  
Operating lease liability     10,324       10,923       11,363       10,950       11,387  
Accrued interest payable     1,542       2,067       1,791       1,901       2,122  
Other liabilities     21,288       22,171       29,264       9,690       8,164  
Total Liabilities     3,814,328       4,173,013       4,199,349       3,103,879       3,120,223  
                                         
Shareholders’ Equity:                                        
Common stock, par value $1.00 per share; 20.0 million shares authorized     16,081       16,059       16,056       11,532       11,507  
Additional paid-in capital     386,128       385,765       384,742       246,830       246,546  
Retained earnings     108,265       99,206       91,043       92,722       85,220  
Accumulated other comprehensive (loss) income     (9,759 )     (4,946 )     158       147       219  
Treasury stock     (4,880 )     (1,923 )     (1,923 )     (1,923 )     (1,923 )
Total Shareholders’ Equity     495,835       494,161       490,076       349,308       341,569  
Total Liabilities and Shareholders’ Equity   $ 4,310,163     $ 4,667,174     $ 4,689,425     $ 3,453,187     $ 3,461,792  
                                         
CONSOLIDATED STATEMENTS OF INCOME (Unaudited):                  
(Dollars in thousands, except per share data)   Three Months Ended     Six Months Ended  
    Jun. 30     Mar. 31     Dec. 31     Sept. 30     Jun. 30     Jun. 30     Jun. 30  
    2022     2022     2021     2021     2021     2022     2021  
INTEREST INCOME                                                        
Interest and fees on loans and leases   $ 34,264     $ 35,016     $ 31,021     $ 29,590     $ 29,835     $ 69,280     $ 58,165  
Interest and dividends on investment securities:                                                        
U.S. Treasury and government agencies     2,329       1,536       715       285       225       3,865       403  
State and political subdivision obligations, tax-exempt     379       336       288       279       278       715       555  
Other securities     504       417       329       277       291       921       593  
Total Interest and Dividends on Investment Securities     3,212       2,289       1,332       841       794       5,501       1,551  
                                                         
Interest on other interest-bearing balances     8       13       8       1       2       21       4  
Interest on federal funds sold     736       314       324       308       98       1,050       177  
Total Interest Income     38,220       37,632       32,685       30,740       30,729       75,852       59,897  
INTEREST EXPENSE                                                        
Interest on deposits     2,019       2,294       2,536       2,909       2,916       4,313       5,882  
Interest on short-term borrowings                       133       232             406  
Interest on long-term and subordinated debt     768       924       777       704       704       1,692       1,407  
Total Interest Expense     2,787       3,218       3,313       3,746       3,852       6,005       7,695  
Net Interest Income     35,433       34,414       29,372       26,994       26,877       69,847       52,202  
PROVISION FOR LOAN AND LEASE LOSSES     1,725       500       370       425       1,150       2,225       2,150  
Net Interest Income After Provision for Loan and Lease Losses     33,708       33,914       29,002       26,569       25,727       67,622       50,052  
NONINTEREST INCOME                                                        
Mortgage banking income     305       529       1,932       3,162       2,841       834       5,220  
Income from fiduciary and wealth management activities     1,205       1,052       778       618       542       2,257       1,098  
Service charges on deposits     450       684       439       223       177       1,134       329  
ATM debit card interchange income     1,128       1,057       834       630       656       2,185       1,224  
Net gain (loss) on sales of SBA loans     119       (9 )     409       105       355       110       455  
Merchant services income     87       73       72       58       209       160       301  
Earnings from cash surrender value of life insurance     262       246       135       74       75       508       149  
Net gain on sales of investment securities                       79                    
Other income     1,674       2,118       1,061       560       797       3,792       1,588  
Total Noninterest Income     5,230       5,750       5,660       5,509       5,652       10,980       10,364  
NONINTEREST EXPENSE                                                        
Salaries and employee benefits     12,340       13,244       11,838       10,342       9,933       25,584       19,531  
Occupancy expense, net     1,655       1,799       1,412       1,318       1,317       3,454       2,797  
Equipment expense     1,112       1,011       864       745       741       2,123       1,492  
Software licensing and utilization     1,821       2,106       1,839       1,551       1,497       3,927       2,942  
FDIC Assessment     506       591       524       461       433       1,097       903  
Legal and professional fees     694       639       388       610       555       1,333       981  
Charitable contributions qualifying for State tax credits     125       65       797             365       190       635  
Mortgage banking profit-sharing expense     33       145       566       1,140       745       178       865  
(Gain) loss on sale or write-down of foreclosed assets, net     (15 )     (16 )     1       (7 )     (19 )     (31 )     (19 )
Intangible amortization     521       481       357       266       276       1,002       557  
Merger and acquisition expense                 2,347       198       522             522  
Post-acquisition restructuring expense           329       9,880                   329        
Other expenses     5,123       5,351       3,259       3,395       3,091       10,474       5,808  
Total Noninterest Expense     23,915       25,745       34,072       20,019       19,456       49,660       37,014  
INCOME BEFORE PROVISION FOR INCOME TAXES     15,023       13,919       590       12,059       11,923       28,942       23,402  
Provision for income taxes     2,771       2,565       (17 )     2,272       2,310       5,336       4,477  
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $ 12,252     $ 11,354     $ 607     $ 9,787     $ 9,613     $ 23,606     $ 18,925  
                                                         
PER COMMON SHARE DATA:                                                        
Basic and Diluted Earnings Per Common Share   $ 0.77     $ 0.71     $ 0.05     $ 0.86     $ 0.93     $ 1.48     $ 2.02  
Diluted Earnings Per Common Share   $ 0.77     $ 0.71     $ 0.05     $ 0.86     $ 0.93     $ 1.48     $ 2.02  
Cash Dividends Declared   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.40     $ 0.39  
                                                         

CONSOLIDATED – AVERAGE BALANCE SHEET AND NET INTEREST INCOME ANALYSIS (Unaudited):

    Average Balances, Income and Interest Rates on a Taxable Equivalent Basis  
    For the Three Months Ended  
(Dollars in thousands)   June 30, 2022     March 31, 2022     June 30, 2021  
    Average           Yield/     Average           Yield/     Average           Yield/  
    Balance     Interest     Rate     Balance     Interest     Rate     Balance     Interest     Rate  
ASSETS:                                                                                    
Interest Bearing Balances   $   5,920     $   8       0.54 %   $   91,543     $   13       0.06 %   $   1,284     $   2       0.62 %
Investment Securities:                                                                                    
Taxable       501,631         2,740       2.19 %       389,034         1,822       1.90 %       93,161         430       1.85 %
Tax-Exempt       78,775         480   (a)   2.44 %       73,614         425   (a)   2.34 %       55,811         352   (a)   2.53 %
Total Securities       580,406         3,220       2.23 %       462,648         2,247       1.97 %       148,972         782       2.11 %
                                                                                     
Federal Funds Sold       415,405         736       0.71 %       706,411         314       0.18 %       477,001         98       0.08 %
Loans and Leases, Net       3,129,334         34,354   (b)   4.40 %       3,103,469         35,123   (b)   4.59 %       2,609,803         29,908   (b)   4.60 %
Restricted Investment in Bank Stocks       4,854         94       7.77 %       8,347         131       6.36 %       6,865         86       5.02 %
Total Earning Assets       4,135,919         38,412       3.73 %       4,372,418         37,828       3.51 %       3,243,925         30,876       3.82 %
                                                                                     
Cash and Due from Banks       59,822                           57,397                           34,683                    
Other Assets       270,165                           267,079                           159,084                    
Total Assets   $   4,465,906                       $   4,696,894                       $   3,437,692                    
                                                                                     
LIABILITIES & SHAREHOLDERS’ EQUITY:                                                                                    
Interest-bearing Demand   $   1,030,237     $   462       0.18 %   $   1,045,678     $   461       0.18 %   $   614,435     $   579       0.38 %
Money Market       1,079,900         584       0.22 %       1,125,094         600       0.22 %       791,498         819       0.42 %
Savings       357,433         43       0.05 %       376,006         58       0.06 %       203,468         58       0.11 %
Time       516,346         930       0.72 %       592,833         1,175       0.80 %       432,739         1,460       1.35 %
Total Interest-bearing Deposits       2,983,916         2,019       0.27 %       3,139,611         2,294       0.30 %       2,042,140         2,916       0.57 %
                                                                                     
Short Term Borrowings                     0.00 %                     0.00 %       264,661         232       0.35 %
Long-term Debt       9,238         107       4.65 %       76,157         284       1.51 %       74,976         204       1.09 %
Subordinated Debt       74,062         661       3.58 %       74,189         640       3.50 %       44,589         500       4.50 %
Total Interest-bearing Liabilities       3,067,216         2,787       0.36 %       3,289,957         3,218       0.40 %       2,426,366         3,852       0.64 %
                                                                                     
Noninterest-bearing Demand       853,219                           859,463                           673,735                    
Other Liabilities       49,790                           53,455                           25,585                    
Shareholders’ Equity       495,681                           494,019                           312,006                    
Total Liabilities & Shareholders’ Equity   $   4,465,906                       $   4,696,894                       $   3,437,692                    
                                                                                     
Net Interest Income (taxable equivalent basis)             $   35,625                       $   34,610                       $   27,024          
Taxable Equivalent Adjustment                 (192 )                         (196 )                         (147 )        
Net Interest Income             $   35,433                       $   34,414                       $   26,877          
                                                                                     
Total Yield on Earning Assets                         3.73 %                         3.51 %                         3.82 %
Rate on Supporting Liabilities                         0.36 %                         0.40 %                         0.64 %
Average Interest Spread                         3.37 %                         3.11 %                         3.18 %
Net Interest Margin                         3.45 %                         3.21 %                         3.34 %
                                                                                     

(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $101 thousand, $89 thousand and $74 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $91 thousand, $107 thousand and $73 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.

    Average Balances, Income and Interest Rates on a Taxable Equivalent Basis  
    For the Six Months Ended  
(Dollars in thousands)   June 30, 2022     June 30, 2021  
    Average           Yield/     Average           Yield/  
    Balance     Interest     Rate     Balance     Interest     Rate  
ASSETS:                                                        
Interest Bearing Balances   $   48,495     $   21       0.09 %   $   1,342     $   4       0.60 %
Investment Securities:                                                        
Taxable       445,644         4,561       2.06 %       85,849         815       1.91 %
Tax-Exempt       76,208         905   (a)   2.39 %       55,377         702   (a)   2.56 %
Total Securities       521,852         5,466       2.11 %       141,226         1,517       2.17 %
                                                         
Federal Funds Sold       560,105         1,050       0.38 %       396,041         177       0.09 %
Loans and Leases, Net       3,116,473         69,477   (b)   4.50 %       2,571,075         58,314   (b)   4.57 %
Restricted Investment in Bank Stocks       6,590         225       6.89 %       6,958         181       5.25 %
Total Earning Assets       4,253,515         76,239       3.61 %       3,116,642         60,193       3.89 %
                                                         
Cash and Due from Banks       54,177                           34,363                    
Other Assets       272,922                           161,661                    
Total Assets   $   4,580,614                       $   3,312,666                    
                                                         
LIABILITIES & SHAREHOLDERS’ EQUITY:                                                        
Interest-bearing Demand   $   1,037,915     $   923       0.18 %   $   608,259     $   1,157       0.38 %
Money Market       1,102,372         1,184       0.22 %       767,877         1,597       0.42 %
Savings       366,668         101       0.06 %       200,686         122       0.12 %
Time       554,378         2,105       0.77 %       423,259         3,006       1.43 %
Total Interest-bearing Deposits       3,061,333         4,313       0.28 %       2,000,081         5,882       0.59 %
                                                         
Short-term Borrowings                     0.00 %       234,258         406       0.35 %
Long-term Debt       42,513         391       1.85 %       75,019         408       1.10 %
Subordinated Debt       74,126         1,301       3.54 %       44,586         999       4.52 %
Total Interest-bearing Liabilities       3,177,972         6,005       0.38 %       2,353,944         7,695       0.66 %
                                                         
Noninterest-bearing Demand       856,324                           648,537                    
Other Liabilities       51,612                           24,529                    
Shareholders’ Equity       494,706                           285,656                    
Total Liabilities & Shareholders’ Equity   $   4,580,614                       $   3,312,666                    
                                                         
Net Interest Income (taxable equivalent basis)             $   70,234                       $   52,498          
Taxable Equivalent Adjustment                 (387 )                         (296 )        
Net Interest Income             $   69,847                       $   52,202          
                                                         
Total Yield on Earning Assets                         3.61 %                         3.89 %
Rate on Supporting Liabilities                         0.38 %                         0.66 %
Average Interest Spread                         3.23 %                         3.24 %
Net Interest Margin                         3.33 %                         3.40 %
                                                         

(a) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $190 thousand and $147 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal securities in the investment portfolio.
(b) Includes tax-equivalent adjustments (calculated using statutory rates of 21 percent) of $197 thousand and $149 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively, resulting from the tax-free municipal loans in the commercial loans portfolio.

ALLOWANCE FOR LOAN AND LEASE LOSSES AND ASSET QUALITY (Unaudited):

(Dollars in thousands, except   Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
per share data)   2022     2022     2021     2021     2021  
Allowance for Loan and Lease Losses:                                        
Beginning balance   $ 15,147     $ 14,597     $ 14,233     $ 14,716     $ 13,591  
Loans Charged off                                        
Commercial and industrial                 (7 )            
Commercial real estate                 (1 )     (1,043 )      
Commercial real estate – construction                             (23 )
Residential mortgage                       (3 )     (7 )
Home equity                              
Consumer     (9 )     (57 )     (19 )     (11 )     (9 )
Total loans charged off     (9 )     (57 )     (27 )     (1,057 )     (39 )
Recoveries of loans previously charged off                                        
Commercial and industrial           13       10       1       1  
Commercial real estate           65       1       140       10  
Commercial real estate – construction           24       7              
Residential mortgage     2                   2       1  
Home equity     1       1                    
Consumer     10       4       3       6       2  
Total recoveries     13       107       21       149       14  
Balance before provision     15,151       14,647       14,227       13,808       13,566  
Provision for loan and lease losses     1,725       500       370       425       1,150  
Balance, end of quarter   $ 16,876     $ 15,147     $ 14,597     $ 14,233     $ 14,716  
                                         
Nonperforming Assets                                        
Nonaccrual loans   $ 7,551     $ 7,507     $ 9,547     $ 6,339     $ 8,233  
Accruing trouble debt restructured loans     422       430       435       442       449  
Total nonperforming loans     7,973       7,937       9,982       6,781       8,682  
                                         
Foreclosed real estate     69       125             11       11  
Total nonperforming assets     8,042       8,062       9,982       6,792       8,693  
                                         
Accruing loans 90 days or more past due           133       515              
Total risk elements   $ 8,042     $ 8,195     $ 10,497     $ 6,792     $ 8,693  
                                         

PPP Summary

    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands)   2022     2022     2021     2021     2021  
                                         
PPP loans, net of deferred fees   $ 4,966     $ 34,124     $ 111,286     $ 229,679     $ 391,826  
                                         
PPP Fees recognized   $ 652     $ 2,989     $ 4,426     $ 8,382     $ 4,109  
                                         

RECONCILIATION OF NON-GAAP MEASURES (Unaudited)

Explanatory note: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Mid Penn’s management uses these non-GAAP financial measures in their analysis of the Company’s performance. 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. Non-PPP core banking loans are meaningful to investors as they are indicative of portfolio loans and related growth from traditional bank activities and excludes short-term or nonrecurring loans from special programs like the PPP. 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. Core earnings per common share excludes from income available to common shareholders certain expenses related to significant non-core activities, including merger-related expenses, net of income taxes. For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity. The efficiency ratio is often used by management to measure its noninterest expense as a percentage of its revenue. 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. The reconciliation of the non-GAAP to comparable GAAP financial measures can be found in the tables at the end of this release.

Tangible Book Value Per Share

(Dollars in thousands, except   Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
per share data)   2022     2022     2021     2021     2021  
                                         
Shareholders’ Equity   $ 495,835     $ 494,161     $ 490,076     $ 349,308     $ 341,569  
Less: Goodwill     113,835       113,835       113,835       62,840       62,840  
Less: Core Deposit and Other Intangibles     7,729       8,250       9,436       3,537       3,804  
Tangible Equity   $ 374,271     $ 372,076     $ 366,805     $ 282,931     $ 274,925  
                                         
Common Shares Outstanding     15,878,193       15,960,916       15,957,830       11,433,554       11,408,712  
                                         
Tangible Book Value per Share   $ 23.57     $ 23.31     $ 22.99     $ 24.75     $ 24.10  
                                         

Non-PPP Core Banking Loans

    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands)   2022     2022     2021     2021     2021  
                                         
Loans and leases, net of unearned interest   $ 3,180,033     $ 3,121,531     $ 3,104,396     $ 2,370,429     $ 2,495,192  
Less: PPP loans, net of deferred fees     4,966       34,124       111,286       229,679       391,826  
Non-PPP core banking loans   $ 3,175,067     $ 3,087,407     $ 2,993,110     $ 2,140,750     $ 2,103,366  
                                         

Core Earnings Per Common Share Excluding Non-Recurring Expenses

    Three Months Ended  
    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands, except per share data)   2022     2022     2021     2021     2021  
Net Income Available to Common Shareholders   $ 12,252     $ 11,354     $ 607     $ 9,787     $ 9,613  
Plus: Merger and Acquisition Expenses           329       12,227       198       522  
Less: Tax Effect of Merger and Acquisition Expenses           69       2,568       42       110  
Net Income Excluding Non-Recurring Expenses   $ 12,252     $ 11,614     $ 10,266     $ 9,943     $ 10,025  
                                         
Weighted Average Shares Outstanding – denominator     15,935,003       15,957,864       13,005,895       11,423,487       10,321,838  
                                         
Core Earnings Per Common Share Excluding Non-Recurring Expenses   $ 0.77     $ 0.73     $ 0.79     $ 0.87     $ 0.97  
                                         
Return on Average Tangible Common Equity                                        
    Three Months Ended  
    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands, except per share data)   2022     2022     2021     2021     2021  
                                         
Net income available to common shareholders   $ 12,252     $ 11,354     $ 607     $ 9,787     $ 9,613  
Plus: Intangible amortization, net of tax     412       380       282       210       218  
    $ 12,664     $ 11,734     $ 889     $ 9,997     $ 9,831  
                                         
Average shareholder’s equity   $ 495,681     $ 494,019     $ 403,010     $ 345,816     $ 312,006  
Less: Average goodwill     113,835       113,835       113,835       62,840       62,840  
Less: Average core deposit and other intangibles     7,983       8,950       9,436       3,666       3,938  
Average tangible shareholder’s equity   $ 373,863     $ 371,234     $ 279,739     $ 279,310     $ 245,228  
                                         
Return on average tangible common equity     13.59 %     12.82 %     1.26 %     14.20 %     15.72 %
                                         
Efficiency Ratio                                        
    Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,     Jun. 30,  
(Dollars in thousands)   2022     2022     2021     2021     2021  
                                         
Noninterest expense   $ 23,915     $ 25,745     $ 34,072     $ 20,019     $ 19,456  
Less: Merger and acquisition expenses           329       12,227       198       522  
Less: Intangible amortization     521       481       357       266       276  
Less: (Gain) loss on sale or write-down of foreclosed assets, net     (15 )     (16 )     1       (7 )     (19 )
Efficiency ratio numerator   $ 23,409     $ 24,951     $ 21,487     $ 19,562     $ 18,677  
                                         
Net interest income     35,433       34,414       29,372       26,994       26,877  
Noninterest income     5,230       5,750       5,660       5,509       5,652  
Less: Net gain on sales of investment securities                       79        
Efficiency ratio denominator   $ 40,663     $ 40,164     $ 35,032     $ 32,424     $ 32,529  
                                         
Efficiency ratio     57.57 %     62.12 %     61.34 %     60.33 %     57.42 %
                                         

        

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