-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PKpQYPYRsn4bb+HRxQQldIWwBaK6FbK3UVlxTa6S1Le6lUnBz8DKUMX0QwDJM6jH 2zyN3Se4LUl04jftlrPTGg== 0000879635-97-000003.txt : 19971110 0000879635-97-000003.hdr.sgml : 19971110 ACCESSION NUMBER: 0000879635-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MID PENN BANCORP INC CENTRAL INDEX KEY: 0000879635 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 231666413 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20141 FILM NUMBER: 97710278 BUSINESS ADDRESS: STREET 1: 349 UNION ST CITY: MILLERSBURG STATE: PA ZIP: 17061 BUSINESS PHONE: 7176922133 MAIL ADDRESS: STREET 1: 349 UNION STREET STREET 2: 349 UNION STREET CITY: MILLERSBURG STATE: PA ZIP: 17061 10-Q 1 MID PENN BANK 10-Q PERIOD ENDING SEP 30, 1997 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 Commission file number 0-20141 Mid Penn Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 25-1666413 (State or other jurisdiction of (IRS Employer ID No) Incorporation or Organization) 349 Union Street, Millersburg, PA 17061 (Address of principal executive offices) (Zip Code) (717) 692-2133 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No Indicate the number of shares outstanding of each of the classes of common stock, as of the latest practical date. 2,607,552 shares of Common Stock, $1.00 par value per share, were outstanding as of September 30, 1997. MID PENN BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited; Dollars in thousands)
Sept. 30, Dec. 31, 1997 1996 -------- -------- ASSETS: Cash and due from banks 4,140 4,442 Interest bearing balances 34,270 28,433 Available-for-sale securities 37,068 28,733 Federal funds sold 0 0 Loans 144,096 146,393 Less: Unearned discount 1,985 1,879 Allowance for loan losses 2,167 2,173 ------- ------- Net loans 139,944 142,341 ------- ------- Bank premises and equip't, net 3,217 3,397 Other real estate 717 548 Accrued interest receivable 1,590 1,335 Other assets 1,080 943 ------- ------- Total Assets 222,026 210,172 ======= ======= LIABILITIES & STOCKHOLDERS EQUITY: Deposits: Demand 16,443 15,350 NOW 22,213 24,211 Money Market 11,690 11,575 Savings 17,029 17,061 Time 113,010 106,474 ------- ------- Total deposits 180,385 174,671 ------- ------- Short-term borrowings 7,351 4,512 Accrued interest payable 1,787 1,020 Other liabilities 1,279 609 Long-term debt 4,721 4,710 ------- ------- Total Liabilities 195,523 185,522 ------- ------- STOCKHOLDERS' EQUITY: Common stock, par value $1 per share; authorized 10,000,000 shares; issued 2,626,608 and 1,261,029 shares at Sept. 30, 1997 and December 31, 1996 2,627 1,261 Surplus 12,568 11,817 Undivided profits 11,594 11,937 Unrealized holding gain on securities, net of estimated tax effect 247 168 Less: Treasury Stock at cost (19,056 shares) 533 533 ------- ------- Total Stockholders Equity 26,503 24,650 ------- ------ Total Liabilities & Equity 222,026 210,172 ======= =======
MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited; dollars in thousands)
Three Months Nine Months Ended Sept 30, Ended Sept 30, 1997 1996 1997 1996 INTEREST INCOME: ----- ----- ----- ----- Interest & fees on loans 3,259 3,257 9,953 9,329 Int.-bearing balances 518 474 1,415 1,483 Treas. & Agency securities 332 230 818 647 Municipal securities 196 184 567 541 Other securities 10 11 42 40 Fed funds sold and repos 0 0 9 3 ----- ----- ----- ----- Total Int. Income 4,315 4,156 12,804 12,043 ----- ----- ----- ----- INTEREST EXPENSE: Deposits 1,854 1,810 5,431 5,350 Short-term borrowings 96 37 206 166 Long-term borrowings 78 49 207 109 ----- ----- ----- ----- Total Int. Expense 2,028 1,896 5,844 5,625 ----- ----- ----- ----- Net Int. Income 2,287 2,260 6,960 6,418 PROVISION FOR LOAN LOSSES 25 0 75 0 ----- ----- ----- ----- Net Int. Inc. after Prov. 2,262 2,260 6,885 6,418 ----- ----- ----- ----- NON-INTEREST INCOME: Trust Dept 12 6 50 44 Service Chgs. on Deposits 75 61 218 185 Investment sec. gains, net 0 0 -1 12 Gain on sale of loans 862 0 926 0 Other 78 85 253 273 ----- ----- ----- ----- Total Non-Interest Income 1,027 152 1,446 514 ----- ----- ----- ----- NON-INTEREST EXPENSE: Salaries and benefits 691 635 1,996 1,878 Occupancy, net 74 73 223 224 Equipment 96 90 275 270 PA Bank Shares tax 60 58 181 172 Other 357 301 1,046 1,030 ----- ----- ----- ----- Tot. Non-int. Exp. 1,278 1,157 3,721 3,574 ----- ----- ----- ----- Income before income taxes 2,011 1,255 4,610 3,358 INCOME TAX EXPENSE 634 360 1,398 965 ----- ----- ----- ----- NET INCOME 1,377 895 3,212 2,393 ===== ===== ===== ===== NET INCOME PER SHARE 0.53 0.34 1.23 .92 ===== ===== ===== ===== Weighted Average No. of Shares Outstanding 2,607,552 2,607,552 2,607,552 2,607,552
MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in thousands)
For the nine months ended: Sept 30, Sept 30, 1997 1996 -------- -------- Operating Activities: Net Income 3,212 2,393 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 75 0 Depreciation 251 253 Change in interest receivable -255 23 Change in other assets -137 -76 Change in interest payable 767 679 Change in other liabilities 670 62 Other, net 0 0 ------- ------- Net cash provided by operating activities: 4,583 3,334 ------- ------- Investing Activities: Net decrease in int-bearing balances -5,837 2,592 Proceeds from sale of securities 3,370 3,336 Proceeds from the maturity of secs. 4,433 3,041 Purchase of investment securities -16,123 -9,648 Proceeds from the sale of loans 7,454 0 Net decrease in loans -5,383 -8,312 Purchase of loans 0 0 Net purchases of fixed assets -71 -293 Proceeds from sale of other real estate 157 372 Capitalized additions - ORE 0 -13 ------- ------- Net cash provided by investing activities -12,000 -8,925 ------- ------- Financing Activities: Net increase in demand and savings -822 1,371 Net increase in time deposits 6,536 8,530 Net increase in sh-term borrowings 2,839 -2,683 Net increase in long-term borrowings 11 1,412 Cash dividend declared -1,449 -1,183 ------- ------- Net cash provided by financing activities 7,115 7,447 ------- ------- Net increase in cash & equivalents -302 1,856 Cash & cash equivalents, beg of period 4,442 3,389 ------- ------- Cash & cash equivalents, end of period 4,140 5,245 ======= ======= Supplemental Noncash Disclosures: Loan charge-offs 193 348 Transfers to other real estate 433 14
Mid Penn Bancorp, Inc. Notes to Consolidated Financial Statements 1. The consolidated interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission with respect to Form 10-Q. The financial information included herein reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. It is suggested that these interim financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's most recent Form 10-K. 2. Interim statements are subject to possible adjustments in connection with the annual audit of the Company's accounts for the full fiscal year. In the Company's opinion, all adjustments necessary in order to make the interim financial statements not misleading have been included. 3. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the full year. 4. Management considers the Allowance for Loan Losses to be adequate at this time. Mid Penn Bancorp, Inc. Millersburg, Pennsylvania Management's Discussion of Consolidated Financial Condition for the nine months ended Sept 30, 1997 compared to year end 1996 and the Results of Operations for the third quarter and first nine months of 1997 compared to the same period in 1996. CONSOLIDATED FINANCIAL CONDITION Total assets as of September 30, 1997, amounted to $222,026,000, an increase of $11,854,000 or 5.3% over the total assets as of December 31, 1996. Due to the growth of the economy during the first quarter of 1997, the Federal Open market Committee, at its March 25th meeting, raised the overnight bank rate target by a quarter point to 5.50%. In anticipation of the expected increase, rates on short to intermediate U.S. Treasury securities increased approximately 50 to 75 basis points during the quarter. Because of the lag time involved between the time when Treasury rates increase and financial institutions increase rates on deposits, $1,161,000 in maturing interest bearing balances was not re-invested during the first quarter. In addition, in anticipation of possible further action being taken by the Federal Open Market Committee to increase interest rates, $893,000 from the maturity, call or sale of available-for-sale securities was not re-invested. Shortly after the end of the first quarter, economic statistics seemed to indicate that growth for the year peaked in the first quarter, and, along with great inflation news, caused a substantial rally in the bond market. At June 30, 1997, the net result in the bond market was interest rates within 10 basis points of what they were at December 31, 1996. During this unanticipated rally, in May and June, interest bearing deposits with other financial institutions were increased by more than $2.7 million, taking advantage of the same lag time as previously described. These purchases were funded by short-term borrowings. In addition, in early May, the Bank sold over $2.3 million of student loans and those funds along with approximately $2.4 million in short-term borrowings were invested in available-for-sale securities, mostly in short-term to intermediate term Agency securities with call features. During the third quarter, funds continued to be invested in intermediate term available-for-sale securities in anticipation of the sale of the credit card portfolio. Upon the sale of the portfolio, the generated funds including the associated gain were used to repay some of the short-term borrowings used for the advance purchase of securities. The third quarter also offered an attractive rate environment for insured interest bearing balances of other financial institutions, which also yielded rewards for intermediate maturities. Loan demand remained sporadic during the first three quarters of 1997 as the banking industry continues to aggressively pursue borrowers by offering very competitive long-term, fixed-interest-rate loans. Net loans decreased by $139,944,000 during the first nine months of 1997. The net decrease was due to the $2.3 million sale of student loans and the $5.1 million sale of the credit card portfolio. Excluding the sale of student and credit card loan portfolios, other loans increased approximately five million dollars. This increase resulted largely in the commercial loan area. Foreclosed assets held for sale increased $173,000 to $717,000 during the first nine months of 1997. Two properties totaling $326,000 were added while previously held properties totaling $157,000 were sold. As of September 30, 1997, the balance of foreclosed assets held for sale consisted of undeveloped land, farmland and a single family residential property. Total deposits increased by 3.3% to $180,385,000 compared to $174,671,000 at December 31, 1996. The increase resulted largely from an influx of time deposits which were attracted during a late summer 25-month-maturity certificate of deposit. Short-term borrowings, including funds borrowed from the US Treasury and Fed funds, increased by $2.9 million from year end. All components of long-term debt are advances from the FHLB. Long-term debt advances were initiated in order to insure an adequate spread on several recent loans written by the Bank. RESULTS OF OPERATION Net income for the third quarter was $1,377,000, or $.53 per share, in 1997 as compared to $895,000, or $.34 per share, earned in the same quarter of 1996, while net income for the first nine months was $3,212,00, a $819,000 or 34.2% increase from the $2,393,000 earned in the same period of 1996. Net income per share for the nine months ended September 30, 1997, increased to $1.23 from $.92 earned in the same period of 1996. Net income on an annualized basis at September 30, 1997, as a percent of total average assets, also known as return on assets (ROA) was 2.0% as compared to 1.6% for the same period in 1996. Net income as a percentage of stockholders' equity, also known as return on equity (ROE), was 17.0% on an annualized basis for the first nine months of 1997 as compared to 13.7% for the same period in 1996. The major contributor to net income was the $862,000 gain on the sale of the Bank's credit card portfolio. Management decided to sell the portfolio as a result of increasing delinquencies and consumer bankruptcies. These factors reduced the yield on the credit card portfolio below an acceptable level. Third quarter income excluding the gain on sale of the credit card portfolio would have decreased by $87,000. Initially, the funds received from the sale of the portfolio which had a gross yield of nearly 11%, not factoring in associated costs, were reinvested largely in investment securities yielding approximately 6.5%. The sale, however, did provide the Bank with an investable gain of $569,000, net of income tax, and a reduction of the charge-offs and ongoing costs associated with a credit card portfolio. An additional factor in the increase in net income was the increase of net interest income. Net interest income as of September 30, 1997, was $6,960,000 as compared to $6,418,000 for the first nine months of 1996. The net interest margin on average earning assets was 4.79% at September 30,1997, compared to 4.74% at September 30, 1996. A significant contribution to the increase in net interest income was an increase in volume in addition to the increase in yield. The Bank made a provision for loan losses of $75,000 during the first three quarters of 1997. Due to the cyclical nature of the economy coupled with the Bank's substantial involvement in commercial loans and the record number of nationwide consumer bankruptcies, management thought it prudent to make this allocation now during stronger economic times. On a quarterly basis, senior management reviews potentially unsound loans, taking into consideration judgments regarding risk or error, economic conditions, trends and other factors. Non-interest income increased to $1,446,000 for the first nine months of 1997 as compared to $514,000 for the same period of 1996. The major component of the increase is a gain of $862,000 on the sale of the credit card portfolio and $64,000 on the sale of a block of student loans. Another significant contributor to non-interest income is NSF fee income. NSF fee income contributed in excess of $140,000 during the first nine months of 1997. Non-interest expense increased by $147,000, or 4.0%, from $3,574,000 at September 30, 1996, to $3,721,000 at September 30, 1997. The major factor contributing to the increase was an increase in salaries and employee benefits expense, which increased $118,000 during the first nine months of 1997 over the same period of 1996. As part of the fiscal year 1997 Omnibus Appropriations Bill signed into law by the President on September 30, 1996, beginning on January 1, 1997, the banking industry is now required to help pay the annual $780 million Financing Corporation (FICO) bond obligation. It is currently estimated that for three years, until January 1, 2000, banks will be required to pay 1.29 cents per $100 in deposits as FICO assessment. After January 1, 2000, the FICO assessment on bank deposits is anticipated to be 2.4 cents per $100 in deposits. Based on the Bank's current FDIC assessment base of $170,000,000, at 1.29 cents per $100 in deposits, the projected annual FICO assessment for 1997 would be approximately $21,930. The current annual statutory minimum assessment of $2,000 has been repealed. So long as the Bank Insurance Fund (BIF) remains fully capitalized, healthy banks will pay no premium for the BIF fund. They will only pay the FICO assessment. LIQUIDITY The Bank's objective is to maintain adequate liquidity while minimizing interest rate risk. Adequate liquidity provides resources for credit needs of borrowers, for depositor withdrawals, and for funding Corporate operations. Sources of liquidity include maturing investment securities, overnight borrowings of federal funds (and Flex Line), payments received on loans, and increases in deposit liabilities. Funds generated from operations contributed a major source of funds for the first nine months of 1997. Another major source of funds came from the sale of loans in the amount of $7,454,000, a net increase of $6,536,000 in time deposits, and a net increase of $2,839,000 in short-term borrowings. The major uses of these funds included a net increase in investment securities of $8,320,000, a net increase in interest-bearing balances of $5,837,000 and a net increase in loans, excluding the sales, of $5,383,000. CREDIT RISK AND ALLOWANCE FOR LOAN LOSSES The total non-performing assets of $3,057,000 representing 1.38% of total assets at September 30, 1997, increased slightly from $2,395,000 or 1.14% of total assets at December 31, 1996. Most non-performing assets are supported by collateral value that appears to be adequate at September 30, 1997. The Allowance for Loan Losses at September 30, 1997, was $2,167,000 or 1.52% of loans, net of unearned interest, as compared to $2,173,000 or 1.50% of loans, net of unearned interest, at December 31, 1996. Based upon the ongoing analysis of the Bank's loan portfolio by the loan review department, the latest quarterly analysis of potentially unsound loans and non-performing assets, Management considers the Allowance for Loan Losses to be adequate to absorb any reasonable, foreseeable loan losses. MID PENN BANCORP, INC.
Sept. 30, Dec. 31, 1997 1996 -------- -------- Non-Performing Assets: Non-accrual loans 1,661 1,183 Past due 90 days or more 566 519 Restructured loans 113 145 ------- ------- Total non-performing loans 2,340 1,847 Other real estate 717 548 ------- ------- Total 3,057 2,395 ======= ======= Percentage of total loans outstanding 2.12 1.64 Percentage of total assets 1.38 1.14 Analysis of the Allowance for Loan Losses: Balance beginning of period 2,173 2,347 Loans charged off: Commercial real estate, construction and land development 0 25 Commercial, industrial and agricultural 7 213 Real estate - residential mortgage 12 0 Consumer 174 226 ------- ------- Total loans charged off 193 464 ------- ------- Recoveries of loans previously charged off: Commercial real estate, construction and land development 4 38 Commercial, industrial and agricultural 76 106 Real estate - residential mortgage 3 35 Consumer 29 61 ------- ------- Total recoveries 112 240 ------- ------- Net charge-offs (recoveries) 81 224 ------- ------- Current period provision for loan losses 75 50 ------- ------- Balance end of period 2,167 2,173 ======= ======
Mid Penn Bancorp, Inc. PART II - OTHER INFORMATION: Item 1. Legal Proceedings - Nothing to report Item 2. Changes in Securities - A 100% stock dividend was paid on the common shares of Mid Penn Bancorp on August 25, 1997. Item 3. Defaults Upon Senior Securities - Nothing to report Item 4. Submission of Matters to a Vote of Security Holders - - Nothing to report Item 5. Other Information - The Bank received permission from the Pennsylvania Department of Banking and the FDIC to operate a mobile branch in the counties of Dauphin and Cumberland for the purpose of collecting deposits from commercial customers. The mobile branch is scheduled to begin operation by year end. In addition, the corporation is pursuing and has received a positive preliminary opinion on the listing of its common stock on the American Stock Exchange in New York, New York. The final application for listing is expected to be submitted by the corporation to AMEX by mid-November 1997. Item 6. Exhibits and Reports on Form 8-K a. Exhibits - (27) Financial Data Schedule b. Reports on Form 8-K - None Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mid Penn Bancorp, Inc. Registrant /s/ Eugene F. Shaffer /s/ Gerald D. Schoffstall By:Eugene F. Shaffer By:Gerald D. Schoffstall Chairman, Pres. & CEO Treasurer Date: November 1, 1997 Date: November 1, 1997 EX-27 2
9 1000 9-MOS DEC-31-1997 SEP-30-1997 4140 34270 0 0 37067 0 0 142111 2167 222026 180385 7351 3066 4721 0 0 2627 23876 222026 9953 2842 9 12804 5431 5844 6960 75 (1) 3721 4610 3212 0 0 3212 1.23 1.23 8.63 1661 566 113 2065 2173 193 112 2167 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----