HARRISBURG, Pa., Jan. 25, 2023 (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 December 31, 2022 of $15.7 million, or $0.99 per common share basic and diluted.

Key Highlights in the Fourth Quarter of 2022

Earnings increased $238 thousand to $15.7 million, or 1.5%, for the quarter ended December 31, 2022 compared to $15.5 million for the quarter ended September 30, 2022.
Tax equivalent net interest margin was 3.80% compared to 3.92% in the prior quarter and 3.16% in the fourth quarter of 2021.
Loans and leases, net ("loans") grew 22.9% (annualized) during the three months ended December 31, 2022 from the third quarter of 2022.
Return on average assets was 1.42% for the quarter ended December 31, 2022.
Return on average equity and return on average tangible common equity⁽¹⁾were 12.33% and 16.61%, respectively, for the fourth quarter of 2022, up from 12.23% and 16.55%, respectively, for the third quarter of 2022.
Book value per common share increased to $32.24 for the fourth quarter, up from $31.42 in the third quarter, while tangible book value per share⁽¹⁾ increased to $24.59 at December 31, 2022, compared to $23.80, at September 30, 2022.

"It is with great enthusiasm that we deliver these fourth quarter and full year earnings report. For the quarter, we generated net income available to common shareholders of $15.7 million, or $0.99 per common share, which compares favorably to both the $607 thousand, or $0.05 per common share, generated in the fourth quarter of 2021, which was negatively impacted by merger and acquisition charges, and the $15.5 million, or $0.97 per common share, generated in the third quarter of 2022." said Rory G. Ritrievi, President and CEO. "For the year, we generated net income available to common shareholders of $54.8 million, or $3.44 per common share, which compares favorably to the $29.3 million, or $2.71 per common share, for the year ended December 31, 2021. This year's net income and our earnings per common share are both records for the company. We accomplished this great quarter and this great year through continued successes in: high quality loan growth of 22.9% (annualized) for the quarter and 13.2% for the full year, noninterest income growth of 18.6% for the quarter compared to the fourth quarter of 2021 and 9.9% for the year, and a controlled growth in operating expenses."

"Those successes were accomplished by our incredible employees working together within our customer relationship focused model to deliver the best service in our footprint. The Board is very proud of that employee group for following our strategic plan to a tee and delivering the best annual results our shareholders have seen," said Mr. Ritrievi.

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 January 25, 2023, payable on February 20, 2023 to shareholders of record as of February 10, 2023.

_{⁽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 December 31, 2022, net interest income was $38.6 million compared to net interest income of $39.4 million for the three months ended September 30, 2022 and $29.4 million for the three months ended December 31, 2021. The tax-equivalent net interest margin for the three months ended December 31, 2022 was 3.80% compared to 3.92% for the third quarter of 2022 and 3.16% for the fourth quarter of 2021, a 12 basis point(s) ("bp") decrease and a 64 bp increase, respectively, compared to the prior quarter and the same period in 2021. The linked quarter decrease was primarily the result of a 60 bp increase in the rate on interest-bearing liabilities, partially offset by a 32 bp increase in the yield on interest-earning assets. The increase in the rate on interest-bearing liabilities compared to the linked quarter was primarily the result of higher deposit pricing to attract and retain new and existing customers. The increase in the yield on interest-earning assets was primarily driven by the increase of the yield on loans by 25 bp, to 4.98% during the fourth quarter of 2022.

The 108 bp increase in the yield on interest-earning assets compared to the fourth quarter of 2021 was primarily driven by the increase of loan yields of 22 bp and the increase on the yield of taxable investment securities of 98 bp. Additionally, average interest-earning assets increased $346.5 million and average interest-bearing liabilities increased $263.8 million from the fourth quarter of 2021, primarily due to the inclusion of only one month in 2021 in the average balances of the assets and liabilities obtained through the acquisition of Riverview Financial Corporation ("Riverview"), which closed on November 30, 2021. The increase in average interest-earning assets was also impacted by loan growth and re-deployment of cash into investment securities partially offset by a decrease in federal funds sold. 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 increases in the fed fund rate during 2022. The increase in the rate on interest-bearing liabilities was primarily the result of higher deposit pricing to attract and retain new and existing customers.

For the year ended December 31, 2022, net interest income was $147.8 million, a $39.3 million, or 36.2%, increase compared to net interest income of $108.6 million for the year ended December 31, 2021. The year-over-year increase in net interest income was positively impacted by the Riverview acquisition in the fourth quarter of 2021, the deployment of fed funds into higher yielding investment securities in the first half of 2022, interest and fees from core loan growth and lower cost of deposits in the year ended December 31, 2022, when compared to the same period in 2021. The tax-equivalent net interest margin for the year ended December 31, 2022 was 3.59%, a 29 bp increase compared to 3.30% for the year ended December 31, 2021. The increase was primarily the result of a $828.1 million increase in the average balance of interest-earning assets and an increase in the yield of total interest-earning assets of 28 bp, partially offset by a $601.4 million increase in average interest-bearing liabilities and the reduction of Paycheck Protection Program ("PPP") fees recognized during 2022 compared to the same period in 2021.

The three months ended December 31, 2022 included the recognition of $29 thousand of PPP loan processing fees compared to $4.4 million of PPP loan processing fees recognized during the three months ended December 31, 2021. The year ended December 31, 2022 included the recognition of $3.8 million of PPP loan processing fees, a decrease of $18.2 million compared to $22.0 million of PPP loan processing fees recognized during the year ended 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 December 31, 2022, $43 thousand of PPP fees remained.

Total average assets were $4.4 billion for the fourth quarter of 2022, reflecting an increase of $41.4 million, or 1.0%, and $437.1 million, or 11.1% compared to total average assets of $4.3 billion and $3.9 billion for the third quarter of 2022 and the fourth quarter of 2021, respectively. Total average assets were $4.5 billion for the year ended 2022, reflecting an increase of $948.9 million, or 27.0%, compared to total average assets of $3.5 billion for the year ended 2021. The increase in total average assets for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily attributable to the Riverview acquisition, effective November 30, 2021.

Total average loans were $3.4 billion for the fourth quarter of 2022, reflecting an increase of $157.7 million, or 4.9%, compared to total average loans of $3.2 billion in the third quarter of 2022, and an increase of $800.2 million, or 30.8%, compared to total average loans of $2.6 billion for the fourth quarter of 2021. Total average loans were $3.2 billion for the year ended 2022, reflecting an increase of $678.2 million, or 26.7%, compared to total average loans for the year ended 2021. The year-over-year growth is largely attributable to the Riverview acquisition.

Total average deposits were $3.7 billion for the fourth quarter of 2022, reflecting an increase of $629 thousand compared to total average deposits in the third quarter of 2022, and an increase of $359.2 million, or 10.7%, compared to total average deposits of $3.4 billion for the fourth quarter of 2021. The average cost of deposits was 0.74% for the fourth quarter of 2022, representing a 44 bp increase from the third quarter of 2022 and the fourth quarter of 2021. Total average deposits were $3.8 billion for the year ended December 31, 2022, reflecting an increase of $937.0 million, or 32.5%, compared to total average deposits of $2.9 billion for the same period of 2021. The year-over-year growth in average deposits 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 $525 thousand for the three months ended December 31, 2022, a decrease of $1.0 million compared to the provision for loan and lease losses of $1.6 million for the three months ended September 30, 2022 and an increase of $155 thousand compared to the provision for loan and lease losses of $370 thousand for the three months ended December 31, 2021. The provision for loan and lease losses was $4.3 million for the year ended December 31, 2022, an increase of $1.4 million compared to the $2.9 million provision for loan and lease losses for the year ended December 31, 2021. This reduction in the provision for the fourth quarter was primarily due to an improvement in credit quality, driven by positive risk rate migration in large portfolios. The increase in the provision for loan and lease losses for the year ended December 31, 2022 was primarily the result of one commercial relationship that was downgraded from substandard accrual to substandard non-accrual during the second quarter of 2022 and the growth in total loans during 2022.

Total nonperforming assets were $8.6 million at December 31, 2022, compared to nonperforming assets of $10.0 million at December 31, 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 acquisition totaling $2.9 million and $3.3 million as of December 31, 2022 and 2021, respectively.

The allowance for loan and lease losses as a percentage of total loans, including PPP loans, was 0.54% at December 31, 2022, compared to 0.56% at September 30, 2022 and 0.47% at December 31, 2021.

Capital

Shareholders' equity increased $22.0 million, or 4.49%, from $490.1 million as of December 31, 2021 to $512.1 million as of December 31, 2022. Mid Penn declared $12.7 million in dividends during 2022 and repurchased $3.0 million of common stock through its treasury stock repurchase program. 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 December 31, 2022 and December 31, 2021.

Noninterest Income

For the three months ended December 31, 2022, noninterest income totaled $6.7 million, an increase of $751 thousand, or 12.6%, compared to noninterest income of $6.0 million for the third quarter of 2022, primarily a result of increases in other income, which included a branch sale. For the three months ended December 31, 2022, noninterest income increased $1.1 million, or 18.6%, compared to noninterest income of $5.7 million for the fourth quarter of 2021, primarily driven by increases of $2.3 million in other income, $307 thousand in income from fiduciary and wealth management activities and $265 thousand in ATM debit card interchange income, partially offset by a decrease of $1.7 million in mortgage banking income. The increase in income from fiduciary activities was attributable to favorable growth in trust assets under management and increased sales of retail investment 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. 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 2022.

For the year ended December 31, 2022, noninterest income totaled $23.7 million, an increase of $2.1 million, or 9.9%, compared to noninterest income of $21.5 million for the year ended December 31, 2021, primarily driven by increases of $4.2 million in other income, $2.6 million in income from fiduciary activities, $1.7 million in ATM debit card interchange income and $1.1 million in service charges on deposits. The increase in other income was primarily the result of higher insurance commissions, letter of credit fees, a gain on sale of a branch office and income from the early termination of a lease in 2022 compared to the year ended December 31, 2021. The increases in fiduciary activities was a result of increased activity in the wealth management area and the Riverview acquisition. 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. These favorable variances were partially offset by a decrease in mortgage banking income of $8.7 million for the year ended December 31, 2022 compared to the same period of 2021. Mortgage banking income decreased as interest rates increased in response to the increase in the fed funds rate during 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

Noninterest expense totaled $25.5 million, an increase of $753 thousand, or 3.0%, for the three months ended December 31, 2022, compared to noninterest expense of $24.7 million for the third quarter of 2022. The increase was primarily the result of a $843 thousand increase in charitable contributions qualifying for state tax credits, which typically occur more frequently towards the end of the year, a $372 thousand increase in legal and professional fees and $294 thousand of merger and acquisition expenses recorded in the fourth quarter of 2022.

Compared to the fourth quarter of 2021, noninterest expense in the fourth quarter of 2022 decreased $8.6 million, or 25.3%, from $34.1 million to $25.5 million as a result of merger and acquisition and post-acquisition restructuring expenses totaling $12.2 million. This decrease in noninterest expense was partially offset by increases in operating expenses from the Riverview acquisition. The most significant increases were $1.6 million in salaries and benefits, $631 thousand in other expenses, $400 thousand in occupancy and $385 thousand in equipment expense. In addition, legal and professional fees were $512 thousand higher in the fourth quarter of 2022 compared to the fourth quarter in 2021.

For the year ended December 31, 2022, noninterest expense totaled $99.8 million, an increase of $8.7 million, or 9.6%, compared to noninterest expense of $91.1 million for the year ended December 31, 2021, primarily as the result of higher expenses attributable to the Riverview acquisition, most significantly increases of $10.9 million in salaries and benefits and $4.7 million in other expenses. The increase in expense was partially offset by $623 thousand in merger and acquisition and post-acquisition restructuring expenses for the year ended December 31, 2022 compared to $12.9 million for the year ended 2021.

The efficiency ratio⁽¹⁾ was 54.59% in the fourth quarter of 2022, compared to 53.46% in the third quarter of 2022, and 61.34% in the fourth quarter of 2021. The change in the efficiency ratio during the fourth quarter 2022 compared to the third quarter of 2022 was the result of lower net interest income and higher noninterest expenses, partially offset by higher noninterest income. The improvement in the efficiency ratio during the fourth quarter 2022 compared to the fourth quarter of 2021 was the result of higher net interest income, partially offset by higher noninterest expenses, excluding the merger and acquisition expense.

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 release. For more information regarding this transaction, please see Mid Penn's Annual Report on Form 10-K for the year ended December 31, 2021.

On December 20, 2022, Mid Penn announced its entry into an agreement and plan of merger with Brunswick Bancorp ("Brunswick"). The acquisition will result in a meaningful expansion for Mid Penn into the attractive central New Jersey market. Mid Penn will acquire Brunswick in a combination cash and stock transaction valued at approximately $53.9 million (based on Mid Penn's closing stock price of $30.95 for the trading day ending December 19, 2022).

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 occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Mid Penn and Brunswick; the outcome of any legal proceedings that may be instituted against Mid Penn or Brunswick; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to obtain shareholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the 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 and Brunswick do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; 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 transaction; the ability to complete the transaction and integration of Mid Penn and Brunswick successfully; the dilution caused by Mid Penn's issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Mid Penn and Brunswick.

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):

(Dollars in thousands, except per share data)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
Ending Balances:
Investment securities	$	637,802		$	644,766		$	618,184		$	508,658		$	392,619
Net loans and leases		3,495,162			3,303,977			3,163,157			3,106,384			3,089,799
Total assets		4,486,257			4,333,903			4,310,163			4,667,174			4,689,425
Total deposits		3,778,331			3,729,596			3,702,587			3,989,037			4,002,016
Shareholders' equity		512,099			499,105			495,835			494,161			490,076
Average Balances:
Investment securities		640,792			626,447			580,406			462,648			286,134
Net loans		3,395,308			3,237,587			3,129,334			3,103,469			2,319,544
Total assets		4,381,213			4,339,783			4,465,906			4,696,894			3,579,649
Total deposits		3,727,287			3,726,658			3,837,135			3,999,074			3,007,955
Shareholders' equity		505,769			502,082			495,681			494,019			403,010

Income Statement:	Three Months Ended
	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
Net interest income	$	38,577		$	39,409		$	35,433		$	34,414		$	29,372
Provision for loan and lease losses		525			1,550			1,725			500			370
Noninterest income		6,714			5,963			5,230			5,750			5,660
Noninterest expense		25,468			24,715			23,915			25,745			34,072
Income before provision for income taxes		19,298			19,107			15,023			13,919			590
Provision for income taxes		3,579			3,626			2,771			2,565			(17	)
Net income available to shareholders		15,719			15,481			12,252			11,354			607
Net income excluding non-recurring expenses ⁽¹⁾		15,951			15,481			12,252			11,614			10,266

Per Share:
Basic earnings per common share	$	0.99		$	0.97		$	0.77		$	0.71		$	0.05
Diluted earnings per common share	$	0.99		$	0.97		$	0.77		$	0.71		$	0.05
Cash dividends declared	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20
Book value per common share	$	32.24		$	31.42		$	31.23		$	30.96		$	30.71
Tangible book value per common share ⁽¹⁾	$	24.59		$	23.80		$	23.57		$	23.31		$	22.99

Asset Quality:
Net charge-offs (recoveries) to average loans (annualized)		0.006	%		-0.007	%		-0.001	%		-0.007	%		0.001	%
Non-performing loans to total loans		0.25	%		0.23	%		0.25	%		0.25	%		0.32	%
Non-performing asset to total loans and other real estate		0.25	%		0.23	%		0.25	%		0.26	%		0.32	%
Non-performing asset to total assets		0.21	%		0.18	%		0.19	%		0.18	%		0.22	%
ALLL to total loans		0.54	%		0.56	%		0.53	%		0.49	%		0.47	%
ALLL to nonperforming loans		220.82	%		242.23	%		211.66	%		190.84	%		146.23	%

Profitability:
Return on average assets		1.42	%		1.42	%		1.10	%		0.98	%		0.06	%
Return on average equity		12.33	%		12.23	%		9.91	%		9.32	%		0.61	%
Return on average tangible common equity ⁽¹⁾		16.61	%		16.55	%		13.59	%		12.82	%		1.26	%
Net interest margin		3.80	%		3.92	%		3.45	%		3.21	%		3.16	%
Efficiency ratio ⁽¹⁾		54.59	%		53.46	%		57.57	%		62.12	%		61.34	%

Capital Ratios:
Tier 1 Capital (to Average Assets)⁽²⁾		10.7	%		9.6	%		9.0	%		8.4	%		8.1	%
Common Tier 1 Capital (to Risk Weighted Assets) ⁽²⁾		12.5	%		11.4	%		11.5	%		11.7	%		11.7	%
Tier 1 Capital (to Risk Weighted Assets) ⁽²⁾		12.5	%		11.7	%		11.8	%		12.0	%		12.0	%
Total Capital (to Risk Weighted Assets) ⁽²⁾		14.5	%		13.8	%		14.1	%		14.4	%		14.6	%

_{⁽¹⁾Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document}

_{⁽²⁾Regulatory capital ratios as of December 31, 2022 are preliminary and prior periods are actual.}

CONSOLIDATED BALANCE SHEETS (Unaudited):

(In thousands, except share data)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
ASSETS
Cash and due from banks	$	53,368		$	76,018		$	64,440		$	54,961		$	41,100
Interest-bearing balances with other financial institutions		4,405			4,520			4,909			3,187			146,031
Federal funds sold		3,108			14,140			167,437			700,283			726,621
Total cash and cash equivalents		60,881			94,678			236,786			758,431			913,752
Investment Securities:
Held to maturity, at amortized cost		399,494			402,142			399,032			363,145			329,257
Available for sale, at fair value		237,878			242,195			218,698			145,039			62,862
Equity securities available for sale, at fair value		430			428			454			474			500
Loans held for sale		2,475			5,997			9,574			7,474			11,514
Loans and leases, net of unearned interest		3,514,119			3,322,457			3,180,033			3,121,531			3,104,396
Less: Allowance for loan and lease losses		(18,957	)		(18,480	)		(16,876	)		(15,147	)		(14,597	)
Net loans and leases		3,495,162			3,303,977			3,163,157			3,106,384			3,089,799

Premises and equipment, net		34,471			33,854			33,732			33,612			33,232
Bank premises and equipment held for sale		1,306			2,262			2,574			3,098			3,907
Operating lease right of use asset		8,798			8,352			8,326			8,751			9,055
Finance lease right of use asset		2,907			2,952			2,997			3,042			3,087
Cash surrender value of life insurance		50,674			50,419			50,169			49,907			49,661
Restricted investment in bank stocks		8,315			4,595			4,234			7,637			9,134
Accrued interest receivable		18,405			15,861			12,902			11,584			11,328
Deferred income taxes		13,674			16,093			13,780			11,974			10,779
Goodwill		114,231			113,871			113,835			113,835			113,835
Core deposit and other intangibles, net		7,260			7,215			7,729			8,250			9,436
Foreclosed assets held for sale		43			49			69			125			—
Other assets		29,853			28,963			32,115			34,412			28,287
Total Assets	$	4,486,257		$	4,333,903		$	4,310,163		$	4,667,174		$	4,689,425

LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	793,939		$	863,037		$	850,180		$	866,965		$	850,438
Interest-bearing transaction accounts		2,325,847			2,414,272			2,377,260			2,568,918			2,524,921
Time		658,545			452,287			475,147			553,154			626,657
Total Deposits		3,778,331			3,729,596			3,702,587			3,989,037			4,002,016

Short-term borrowings		102,647			—			—			—			—
Long-term debt		4,409			4,501			4,592			74,681			81,270
Subordinated debt and trust preferred securities		56,941			66,357			73,995			74,134			73,645
Operating lease liability		9,725			10,261			10,324			10,923			11,363
Accrued interest payable		2,303			1,841			1,542			2,067			1,791
Other liabilities		19,802			22,242			21,288			22,171			29,264
Total Liabilities		3,974,158			3,834,798			3,814,328			4,173,013			4,199,349

Shareholders' Equity:
Common stock, par value $1.00 per share; 20.0 million shares authorized		16,094			16,091			16,081			16,059			16,056
Additional paid-in capital		386,987			386,452			386,128			385,765			384,742
Retained earnings		133,114			120,572			108,265			99,206			91,043
Accumulated other comprehensive (loss) income		(19,216	)		(19,130	)		(9,759	)		(4,946	)		158
Treasury stock		(4,880	)		(4,880	)		(4,880	)		(1,923	)		(1,923	)
Total Shareholders' Equity		512,099			499,105			495,835			494,161			490,076
Total Liabilities and Shareholders' Equity	$	4,486,257		$	4,333,903		$	4,310,163		$	4,667,174		$	4,689,425

CONSOLIDATED STATEMENTS OF INCOME (Unaudited):

	Three Months Ended															Year Ended
(Dollars in thousands, except per share data)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021			Dec. 31, 2022			Dec. 31, 2021
INTEREST INCOME
Loans including fees, and lease	$	42,492		$	38,484		$	34,264		$	35,016		$	31,021		$	150,256		$	118,776
Investment securities:
Taxable		3,784			3,382			2,833			1,953			1,044			11,952			2,602
Tax-exempt		390			392			379			336			288			1,497			1,122
Interest on other interest-bearing balances		36			12			8			13			8			69			13
Interest on federal funds sold		40			736			736			314			324			1,826			809
Total Interest Income		46,742			43,006			38,220			37,632			32,685			165,600			123,322
INTEREST EXPENSE
Deposits		6,995			2,836			2,019			2,294			2,536			14,144			11,327
Short-term borrowings		441			—			—			—			—			441			539
Long-term and subordinated debt		729			761			768			924			777			3,182			2,888
Total Interest Expense		8,165			3,597			2,787			3,218			3,313			17,767			14,754
Net Interest Income		38,577			39,409			35,433			34,414			29,372			147,833			108,568
PROVISION FOR LOAN AND LEASE LOSSES		525			1,550			1,725			500			370			4,300			2,945
Net Interest Income After Provision for Loan and Lease Losses		38,052			37,859			33,708			33,914			29,002			143,533			105,623
NONINTEREST INCOME
Fiduciary and wealth management		1,085			1,729			1,205			1,052			778			5,071			2,494
ATM debit card interchange		1,099			1,078			1,128			1,057			834			4,362			2,688
Service charges on deposits		461			483			450			684			439			2,078			991
Mortgage banking		237			536			305			529			1,932			1,607			10,314
Mortgage hedging		150			217			538			566			42			1,471			64
Net gain (loss) on sales of SBA loans		—			152			119			(9	)		409			262			969
Earnings from cash surrender value of life insurance		255			250			262			246			135			1,013			358
Net gain on sales of investment securities		—			—			—			—			—			—			79
Other		3,427			1,518			1,223			1,625			1,091			7,793			3,576
Total Noninterest Income		6,714			5,963			5,230			5,750			5,660			23,657			21,533
NONINTEREST EXPENSE
Salaries and employee benefits		13,434			13,583			12,340			13,244			11,838			52,601			41,711
Software licensing and utilization		1,793			1,804			1,821			2,106			1,839			7,524			6,332
Occupancy, net		1,812			1,634			1,655			1,799			1,412			6,900			5,527
Equipment		1,249			1,121			1,112			1,011			864			4,493			3,101
Shares tax		160			920			480			920			(222	)		2,786			800
Legal and professional fees		900			528			694			639			388			2,761			1,979
ATM/card processing		534			518			571			517			357			2,139			1,053
Intangible amortization		496			514			521			481			357			2,012			1,180
FDIC Assessment		243			254			506			591			524			1,594			1,888
Charitable contributions qualifying for State tax credits		843			—			125			65			797			1,033			1,432
Mortgage banking profit-sharing		—			—			33			145			566			178			2,571
(Gain) loss on sale or write-down of foreclosed assets, net		(45	)		(57	)		(15	)		(16	)		1			(133	)		(25	)
Merger and acquisition		294			—			—			—			2,347			294			3,067
Post-acquisition restructuring		—			—			—			329			9,880			329			9,880
Other		3,755			3,896			4,072			3,914			3,124			15,332			10,609
Total Noninterest Expense		25,468			24,715			23,915			25,745			34,072			99,843			91,105
INCOME BEFORE PROVISION FOR INCOME TAXES		19,298			19,107			15,023			13,919			590			67,347			36,051
Provision for income taxes		3,579			3,626			2,771			2,565			(17	)		12,541			6,732
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	15,719		$	15,481		$	12,252		$	11,354		$	607		$	54,806		$	29,319

PER COMMON SHARE DATA:
Basic and Diluted Earnings Per Common Share	$	0.99		$	0.97		$	0.77		$	0.71		$	0.05		$	3.44		$	2.71
Cash Dividends Declared	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20		$	0.80		$	0.79

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
	December 31, 2022							September 30, 2022							December 31, 2021
(Dollars in thousands)	Average Balance		Interest ⁽¹⁾			Yield/ Rate		Average Balance		Interest ⁽¹⁾			Yield/ Rate		Average Balance		Interest⁽¹⁾			Yield/ Rate
ASSETS:
Interest Bearing Balances	$	4,671	$	36		3.06	%	$	5,583	$	12		0.85	%	$	58,015	$	8		0.05	%
Investment Securities:
Taxable		561,119		3,733		2.64			546,439		3,369		2.45			223,546		938		1.66
Tax-Exempt		79,673		494		2.46			80,008		496		2.46			62,588		365		2.31
Total Securities		640,792		4,227		2.62			626,447		3,865		2.45			286,134		1,303		1.81

Federal Funds Sold		4,749		40		3.34			131,089		736		2.23			758,165		324		0.17
Loans and Leases, Net		3,395,308		42,585		4.98			3,237,587		38,573		4.73			2,595,090		31,108		4.76
Restricted Investment in Bank Stocks		6,694		51		3.02			4,322		13		1.19			8,328		106		5.05
Total Earning Assets		4,052,214		46,939		4.60			4,005,028		43,199		4.28			3,705,732		32,849		3.52

Cash and Due from Banks		67,284							69,751							45,385
Other Assets		261,715							265,004							192,969
Total Assets	$	4,381,213						$	4,339,783						$	3,944,086

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	1,057,649	$	2,051		0.77	%	$	1,072,496	$	873		0.32	%	$	855,060	$	548		0.25	%
Money Market		965,866		2,996		1.23			994,446		1,097		0.44			976,601		696		0.28
Savings		335,928		49		0.06			352,024		43		0.05			264,547		55		0.08
Time		527,708		1,899		1.43			464,273		823		0.70			511,953		1,236		0.96
Total Interest-bearing Deposits		2,887,151		6,995		0.96			2,883,239		2,836		0.39			2,608,161		2,535		0.39

Short term borrowings		47,262		441		3.70			—		—		—			—		—		—
Long-term debt		4,441		46		4.11			4,537		47		4.11			76,990		209		1.08
Subordinated debt and trust preferred securities		64,673		683		4.19			69,523		714		4.07			54,615		569		4.13
Total Interest-bearing Liabilities		3,003,527		8,165		1.08			2,957,299		3,597		0.48			2,739,766		3,313		0.48

Noninterest-bearing Demand		840,136							843,419							759,897
Other Liabilities		31,781							36,983							46,659
Shareholders' Equity		505,769							502,082							397,764
Total Liabilities & Shareholders' Equity	$	4,381,213						$	4,339,783						$	3,944,086

Net Interest Income (taxable equivalent basis)			$	38,774						$	39,602						$	29,536
Taxable Equivalent Adjustment				(197	)						(193	)						(164	)
Net Interest Income			$	38,577						$	39,409						$	29,372

Total Yield on Earning Assets						4.60	%						4.28	%						3.52	%
Rate on Supporting Liabilities						1.08							0.48							0.48
Average Interest Spread						3.52							3.80							3.04
Net Interest Margin						3.80							3.92							3.16

_{⁽¹⁾Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowance.}

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	For the Year Ended
	December 31, 2022							December 31, 2021
(Dollars in thousands)	Average Balance		Interest ⁽¹⁾			Yield/ Rate		Average Balance		Interest ⁽¹⁾			Yield/ Rate
ASSETS:
Interest Bearing Balances	$	26,633	$	69		0.26	%	$	15,916	$	13		0.08	%
Investment Securities:
Taxable		500,156		11,663		2.33			124,692		2,257		1.81
Tax-Exempt		78,039		1,895		2.43			57,361		1,420		2.48
Total Securities		578,195		13,558		2.34			182,053		3,677		2.02

Federal Funds Sold		311,989		1,826		0.59			567,647		809		0.14
Loans and Leases, Net		3,217,282		150,636		4.68			2,539,074		119,082		4.69
Restricted Investment in Bank Stocks		6,045		289		4.78			7,351		345		4.69
Total Interest-earning Assets		4,140,144		166,378		4.02			3,312,041		123,926		3.74

Cash and Due from Banks		63,608							38,517
Other Assets		265,691							169,946
Total Assets	$	4,469,443						$	3,520,504

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	1,051,605	$	3,847		0.37	%	$	688,595	$	2,330		0.34	%
Money Market		1,040,762		5,277		0.51			842,107		3,157		0.37
Savings		355,229		193		0.05			218,546		237		0.11
Time		524,944		4,827		0.92			451,277		5,603		1.24
Total Interest-bearing Deposits		2,972,540		14,144		0.48			2,200,525		11,327		0.51

Short-term borrowings		11,914		441		—			153,850		539		0.35
Long-term debt		23,344		352		1.51			75,483		821		1.09
Subordinated debt and trust preferred securities		70,583		2,830		4.01			47,116		2,067		4.39
Total Interest-bearing Liabilities		3,078,381		17,767		0.58			2,476,974		14,754		0.60

Noninterest-bearing Demand		848,991							684,022
Other Liabilities		43,133							30,433
Shareholders' Equity		498,938							329,075
Total Liabilities & Shareholders' Equity	$	4,469,443						$	3,520,504

Net Interest Income (taxable-equivalent basis)			$	148,611						$	109,172
Taxable Equivalent Adjustment				(778	)						(604	)
Net Interest Income			$	147,833						$	108,568

Total Yield on Earning Assets						4.02	%						3.74	%
Rate on Supporting Liabilities						0.58							0.60
Average Interest Spread						3.44							3.15
Net Interest Margin						3.59							3.30

_{⁽¹⁾ Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowance.}

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

(Dollars in thousands)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
Allowance for Loan and Lease Losses:
Beginning balance	$	18,480		$	16,876		$	15,147		$	14,597		$	14,233
Loans Charged off
Commercial and industrial		—			(1	)		—			—			(7	)
Commercial real estate		(7	)		—			—			—			(1	)
Commercial real estate - construction		—			—			—			—			—
Residential mortgage		(23	)		(2	)		—			—			—
Home equity		—			(1	)		—			—			—
Consumer		(20	)		(11	)		(9	)		(57	)		(19	)
Total loans charged off		(50	)		(15	)		(9	)		(57	)		(27	)
Recoveries of loans previously charged off
Commercial and industrial		—			—			—			13			10
Commercial real estate		—			63			—			65			1
Commercial real estate - construction		—			—			—			24			7
Residential mortgage		—			—			2			—			—
Home equity		—			—			1			1			—
Consumer		2			6			10			4			3
Total recoveries		2			69			13			107			21
Balance before provision		18,432			16,930			15,151			14,647			14,227
Provision for loan and lease losses		525			1,550			1,725			500			370
Balance, end of quarter	$	18,957		$	18,480		$	16,876		$	15,147		$	14,597

Nonperforming Assets
Nonaccrual loans	$	8,195		$	7,233		$	7,551		$	7,507		$	9,547
Accruing trouble debt restructured loans		390			396			422			430			435
Total nonperforming loans		8,585			7,629			7,973			7,937			9,982

Foreclosed real estate		43			49			69			125			—
Total nonperforming assets		8,628			7,678			8,042			8,062			9,982

Accruing loans 90 days or more past due		654			633			—			133			515
Total risk elements	$	9,282		$	8,311		$	8,042		$	8,195		$	10,497

PPP Summary

(Dollars in thousands)	Dec. 31, 2022		Sep. 30, 2022		Jun. 30, 2022		Mar. 31, 2022		Dec. 31, 2021

PPP loans, net of deferred fees	$	2,600	$	2,800	$	4,966	$	34,124	$	111,286

PPP Fees recognized	$	29	$	99	$	652	$	2,989	$	4,426

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 Mid Penn'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. 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. 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. The reconciliation of the non-GAAP to comparable GAAP financial measures can be found in the tables below.

Tangible Book Value Per Share

(Dollars in thousands, except per share data)	Dec. 31, 2022		Sep. 30, 2022		Jun. 30, 2022		Mar. 31, 2022		Dec. 31, 2021

Shareholders' Equity	$	512,099	$	499,105	$	495,835	$	494,161	$	490,076
Less: Goodwill		114,231		113,871		113,835		113,835		113,835
Less: Core Deposit and Other Intangibles		7,260		7,215		7,729		8,250		9,436
Tangible Equity	$	390,608	$	378,019	$	374,271	$	372,076	$	366,805

Common Shares Outstanding		15,886,143		15,882,853		15,878,193		15,960,916		15,957,830

Tangible Book Value per Share	$	24.59	$	23.80	$	23.57	$	23.31	$	22.99

Non-PPP Core Banking Loans

(Dollars in thousands)	Dec. 31, 2022		Sep. 30, 2022		Jun. 30, 2022		Mar. 31, 2022		Dec. 31, 2021

Loans and leases, net of unearned interest	$	3,514,119	$	3,322,457	$	3,180,033	$	3,121,531	$	3,104,396
Less: PPP loans, net of deferred fees		2,600		2,800		4,966		34,124		111,286
Non-PPP core banking loans	$	3,511,519	$	3,319,657	$	3,175,067	$	3,087,407	$	2,993,110

Core Earnings Per Common Share Excluding Non-Recurring Expenses

	Three Months Ended
(Dollars in thousands, except per share data)	Dec. 31, 2022		Sep. 30, 2022		Jun. 30, 2022		Mar. 31, 2022		Dec. 31, 2021

Net Income Available to Common Shareholders	$	15,719	$	15,481	$	12,252	$	11,354	$	607
Plus: Merger and Acquisition Expenses		294		—		—		329		12,227
Less: Tax Effect of Merger and Acquisition Expenses		62		—		—		69		2,568
Net Income Excluding Non-Recurring Expenses	$	15,951	$	15,481	$	12,252	$	11,614	$	10,266

Weighted Average Shares Outstanding		15,883,003		15,877,592		15,934,083		15,957,864		13,005,895

Core Earnings Per Common Share Excluding Non-Recurring Expenses	$	0.99	$	0.97	$	0.77	$	0.73	$	0.79

Return on Average Tangible Common Equity

	Three Months Ended
(Dollars in thousands)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021

Net income available to common shareholders	$	15,719		$	15,481		$	12,252		$	11,354		$	607
Plus: Intangible amortization, net of tax		392			406			412			380			282
	$	16,111		$	15,887		$	12,664		$	11,734		$	889

Average shareholders' equity	$	505,769		$	502,082		$	495,681		$	494,019		$	403,010
Less: Average goodwill		113,879			113,835			113,835			113,835			113,835
Less: Average core deposit and other intangibles		6,966			7,465			7,983			8,950			9,436
Average tangible shareholders' equity	$	384,924		$	380,782		$	373,863		$	371,234		$	279,739

Return on average tangible common equity		16.61	%		16.55	%		13.59	%		12.82	%		1.26	%

Efficiency Ratio

	Three Months Ended
(Dollars in thousands)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021

Noninterest expense	$	25,468		$	24,715		$	23,915		$	25,745		$	34,072
Less: Merger and acquisition expenses		294			—			—			329			12,227
Less: Intangible amortization		496			514			521			481			357
Less: (Gain) loss on sale or write-down of foreclosed assets, net		(45	)		(57	)		(15	)		(16	)		1
Efficiency ratio numerator	$	24,723		$	24,258		$	23,409		$	24,951		$	21,487

Net interest income		38,577			39,409			35,433			34,414			29,372
Noninterest income		6,714			5,963			5,230			5,750			5,660
Efficiency ratio denominator	$	45,291		$	45,372		$	40,663		$	40,164		$	35,032

Efficiency ratio		54.59	%		53.46	%		57.57	%		62.12	%		61.34	%

CONTACTS

Rory G. Ritrievi
President & Chief Executive Officer

Allison S. Johnson
Chief Financial Officer

1-866-642-7736

Mid Penn Bancorp, Inc. Reports Fourth Quarter Earnings and Declares Dividend