-----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, NNwW0q2vXSulPZuZn8Ctl1Ec+2RJdntoDo3/w5xW/uQTOMvPnY3KMtJS/jzcKrB0 J1gDloV/VkkBJTa5JriH+w== 0000879635-99-000001.txt : 19990514 0000879635-99-000001.hdr.sgml : 19990514 ACCESSION NUMBER: 0000879635-99-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MID PENN BANCORP INC CENTRAL INDEX KEY: 0000879635 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 251666413 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13677 FILM NUMBER: 99620089 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 MAR 31, 1999 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 March 31, 1999 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. 2,893,197 shares of Common Stock, $1.00 par value per share, were outstanding as of March 31, 1999. MID PENN BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited; Dollars in thousands)
March 31, Dec. 31, 1999 1998 -------- -------- ASSETS: Cash and due from banks 4,575 5,651 Interest bearing balances 39,909 42,883 Available-for-sale securities 69,620 67,933 Federal funds sold 0 0 Loans 152,526 152,993 Less: Allowance for loan losses 2,357 2,313 ------- ------- Net loans 150,169 150,680 ------- ------- Bank premises and equip't, net 3,436 3,498 Other real estate 174 347 Accrued interest receivable 2,051 1,907 Cash surrender value of life insurance 3,947 3,900 Other assets 1,356 1,028 ------- ------- Total Assets 275,237 277,827 ======= ======= LIABILITIES & STOCKHOLDERS EQUITY: Deposits: Demand 21,433 20,971 NOW 26,647 28,234 Money Market 20,174 17,158 Savings 26,058 25,305 Time 129,631 125,134 ------- ------- Total deposits 223,943 216,802 ------- ------- Short-term borrowings 5,848 12,159 Accrued interest payable 1,594 1,240 Other liabilities 1,216 540 Long-term debt 15,513 15,550 ------- ------- Total Liabilities 248,114 246,291 ------- ------- STOCKHOLDERS' EQUITY: Common stock, par value $1 per share; authorized 10,000,000 shares; issued 2,912,267 shares at March 31, 1999 and December 31, 1998 2,912 2,912 Surplus 17,181 17,181 Undivided profits 7,703 11,640 Unrealized holding gain on securities, net of estimated tax effect -139 344 Less: Treasury Stock at cost (19,319 and 19,241 shs., resp.) 534 541 ------- ------- Total Stockholders Equity 27,123 31,536 ------- ------ Total Liabilities & Equity 275,237 277,827 ======= =======
MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited; dollars in thousands)
Three Months Ended March 31, 1999 1998 INTEREST INCOME: ----- ----- Interest & fees on loans 3,347 3,508 Int.-bearing balances 633 615 Treas. & Agency securities 625 569 Municipal securities 324 229 Other securities 29 12 Fed funds sold and repos 0 8 ----- ----- Total Int. Income 4,958 4,941 ----- ----- INTEREST EXPENSE: Deposits 2,111 2,176 Short-term borrowings 80 86 Long-term borrowings 212 116 ----- ----- Total Int. Expense 2,403 2,378 ----- ----- Net Int. Income 2,555 2,563 PROVISION FOR LOAN LOSSES 75 29 ----- ----- Net Int. Inc. after Prov. 2,480 2,534 ----- ----- NON-INTEREST INCOME: Trust Dept 18 8 Service Chgs. on Deposits 125 100 Investment sec. gains, net 50 5 Other 261 308 ----- ----- Total Non-Interest Income 454 421 ----- ----- NON-INTEREST EXPENSE: Salaries and benefits 979 837 Occupancy, net 89 82 Equipment 115 123 PA Bank Shares tax 69 79 Other 403 525 ----- ----- Tot. Non-int. Exp. 1,655 1,646 ----- ----- Income before income taxes 1,279 1,309 INCOME TAX EXPENSE 327 368 ----- ----- NET INCOME 952 941 ===== ===== Other Comprehensive Income, net of tax: Unrealized holding losses on securities arising during the period -483 -37 Less: reclassification adjustments for gains included in net income 50 5 ----- ----- Other comprehensive income -533 -42 ----- ----- Comprehensive Income 419 899 ===== ===== NET INCOME PER SHARE 0.33 0.33 ===== ===== Weighted Average No. of Shares Outstanding 2,893,246 2,892,107
MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in thousands)
For the three months ended: March 31, March 31, 1999 1998 -------- -------- Operating Activities: Net Income 952 941 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 75 29 Depreciation 100 90 Loss (gain) on sale of investment securities -50 0 Loss (gain) on sale/disposal of bank premises and equipment 0 0 Loss (gain) on the sale of foreclosed assets -59 -209 Change in interest receivable -144 186 Change in other assets -328 -78 Change in interest payable 354 271 Change in other liabilities 676 459 Other, net 233 218 ------- ------- Net cash provided by operating activities: 1,809 1,907 ------- ------- Investing Activities: Net decrease in int-bearing balances 2,974 -7,327 Proceeds from sale of securities 3,811 2,460 Proceeds from the maturity of secs. 1,463 924 Purchase of investment securities -7,680 -5,355 Net decrease in loans 460 -1,990 Net purchases of fixed assets -38 -404 Proceeds from sale of other real estate 221 1,128 Capitalized additions - ORE 0 0 ------- ------- Net cash provided by investing activities 1,211 -10,564 ------- ------- Financing Activities: Net increase in demand and savings 2,644 2,617 Net increase in time deposits 4,497 -2,864 Net increase in sh-term borrowings -6,311 3,452 Net increase in long-term borrowings -37 4,966 Cash dividend declared -4,889 -495 ------- ------- Net cash provided by financing activities -4,096 7,676 ------- ------- Net increase in cash & equivalents -1,076 -981 Cash & cash equivalents, beg of period 5,651 6,998 ------- ------- Cash & cash equivalents, end of period 4,575 6,017 ======= ======= Supplemental Noncash Disclosures: Loan charge-offs 42 5 Transfers to other real estate 0 0
Mid Penn Bancorp, Inc. Notes to Consolidated Financial Statements 1. The consolidated interim financial statements included here have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission with respect to Form 10-Q. The financial information included here reflects all adjustments (consisting only of normal recurring adjustments) which are, in our opinion, necessary for a fair statement of results for the periods covered. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted according to these rules and regulations. We believe, however, that the disclosures made here are adequate so that the information is not misleading. You should read these interim financial statements along with the financial statements including the notes 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 our opinion, all necessary adjustments have been included so that the interim financial statements are not misleading. 3. The results of operations for the interim periods presented are not necessarily an indicator 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 three months ended March 31, 1999, compared to year- end 1998 and the Results of Operations for the first quarter of 1999 compared to the same period in 1998. CONSOLIDATED FINANCIAL CONDITION Total assets as of March 31, 1999, amounted to $275,237,000, compared to $277,827,000 the total assets as of December 31, 1998. During the first quarter of 1999, Management (we) applied the proceeds of maturing interest bearing balances (certificates of deposit of other banks) to pay down short- term borrowings. We were able to reduce borrowings of less than one year by $6,311,000 during the first quarter of 1999. Loans remained fairly flat during the first quarter due to some large payoffs in the commercial loan portfolio along with a continued competitive pricing environment Foreclosed assets held for sale (real estate owned by the Corporation resulting from loan transactions) decreased to $174,000 during the first quarter of 1999 due to the sale of several lots of undeveloped land. These sales of other real estate resulted in an after-tax gain of approximately $39,000. As of March 31, 1999, the balance of foreclosed assets held for sale consisted of undeveloped land and one commercial property. Total deposits increased by $7,141,000 during the first three months of 1999. This increase was seen mainly in our money market deposit accounts and in certificates of deposit, particularly jumbo certificates issued to municipalities. As discussed, short-term borrowings, consisting of overnight borrowings, decreased by $6.3 million from year end. All components of long-term debt are advances from the FHLB. Long-term debt advances were initiated in order to secure an adequate spread on certain pools of loans and investments of the Bank. During the first quarter of 1999 our Board of Directors declared a special cash dividend of $1.50 per share. This special dividend is not expected to affect future regular dividends. The special dividend was declared to reduce the capital levels of Mid Penn Bancorp, Inc., increase return on equity (ROE), and enhance shareholder value. We have enjoyed a very solid capital position due to strong financial performance. After payment of this special dividend, Mid Penn will maintain capital levels well above regulatory requirements. In the banking industry, there has been a general shift from return on assets (ROA) to ROE as a measure of financial performance. By lowering capital through this special dividend, we will be improving ROE, thus improving this ratio important to bank stock analysis. We have also modified our employee performance incentives to encourage activities that will emphasize earnings per share and return on equity instead of our traditional return on assets approach. We believe over time this change in emphasis will improve performance measures that investors utilize. RESULTS OF OPERATION Net income for the first quarter of 1999 was $952,000, compared with $941,000 earned in the same quarter of 1998. Net income per share for the first quarters of both 1999 and 1998 was $.33. Net income as a percentage of stockholders' equity, also known as return on equity, (ROE), was 13.6% on an annualized basis for the first quarter of 1999 as compared to 11.9% for the same period in 1998. Net interest income of $2,555,000 for the quarter ended March 31, 1999, remained flat compared to the $2,563,000 earned in the same quarter of 1998. Margins continued to be challenged by strong rate competition for loans. The Bank made a provision for loan losses of $75,000 and $29,000 during the first quarters of 1999 and 1998, respectively. 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 $454,000 for the first quarter of 1999 over $421,000 earned during the same quarter of 1998. A significant contribution to non-interest income is insufficient fund (NSF) fee income. NSF fee income contributed in excess of $90,000 during the first quarter of 1999. We also earned $50,000 resulting from the gain on the sale of investment securities completed early in 1999. Gains resulting from the sale of other real estate amounted to $85,000 during the first quarter of 1999 in comparison to the $192,000 earned during the same period of 1998. Non-interest expense during the first quarter of 1999 remained flat despite the fact that we paid out in excess of $120,000 in total additional employee bonuses to all employees in conjunction with our performance-based employee bonus plan. We had incurred several non-recurring expenses during the first quarter of 1998 including $18,000 in legal and administrative costs associated with the Bancorp's merger with Miners Bank of Lykens, which became effective on July 13, 1998. Additionally, the Corporation incurred $20,000 in costs associated with the property held for sale as other real estate, and in excess of $15,000 in finder's fees for the hire additional Bank management talent during this period of 1998. 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 quarter of 1999 The major source of funds came from the increase in time deposits, mainly the $4,497,000 increase of jumbo certificates issued to local government bodies. Other major sources of funds included the $2,974,000 net decrease in investment certificates of deposit, and the increase in demand and savings deposits of $2,644,000. The major use of funds during the period was a net decrease in short-term borrowings of $6,311,000. The other major use of funds was for the payment of the first quarter regular and special dividend totaling $4,889,000. CREDIT RISK AND ALLOWANCE FOR LOAN LOSSES Total non-performing assets decreased to $2,909,000 representing 1.06% of total assets at March 31, 1999, from $3,064,000 or 1.10% of total assets at December 31, 1998. Most non-performing assets are supported by collateral value that appears to be adequate at March 31, 1999. The Allowance for Loan Losses at March 31, 1999, was $2,357,000 or 1.55% of loans, net of unearned interest, as compared to $2,313,000 or 1.51% of loans, net of unearned interest, at December 31, 1998. 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, we consider the Allowance for Loan Losses to be adequate to absorb any reasonable, foreseeable loan losses. YEAR 2000 COMPLIANCE: MANAGEMENT INFORMATION SYSTEMS We have established a Year 2000 compliance committee to address the risks of the critical internal bank systems that are affected by date sensitive applications, as well as external systems provided by third parties. A comprehensive Year 2000 Business Action Plan was developed detailing the sequence of events and actions to be taken as the Year 2000 approaches. In November 1997, the Company purchased and installed an upgrade to its current computer systems to improve efficiencies of operations and position itself for future growth. The cost of the new system was approximately $284,000. Anticipated additional costs prior to year 2000 are estimated to be $47,000. Testing demonstrated that the new hardware and software are Year 2000 compliant. In addition, the Corporation has hired a third-party Year 2000 consultant. With the aid of the consultant, we have developed a Year 2000 testing master plan, organization chart and detailed work plan. The testing plan includes several phases of testing in accordance with regulatory guidelines. We successfully completed the testing of all systems critical the operation of the bank on February 3, 1999. MID PENN BANCORP, INC.
March 31, Dec. 31, 1999 1998 -------- -------- Non-Performing Assets: Non-accrual loans 979 376 Past due 90 days or more 820 844 Restructured loans 936 1,497 ------- ------- Total non-performing loans 2,735 2,717 Other real estate 174 347 ------- ------- Total 2,909 3,064 ======= ======= Percentage of total loans outstanding 1.90 2.00 Percentage of total assets 1.06 1.10 Analysis of the Allowance for Loan Losses: Balance beginning of period 2,313 2,281 Loans charged off: Commercial real estate, construction and land development 0 40 Commercial, industrial and agricultural 20 200 Real estate - residential mortgage 0 40 Consumer 22 37 ------- ------- Total loans charged off 42 317 ------- ------- Recoveries of loans previously charged off: Commercial real estate, construction and land development 0 10 Commercial, industrial and agricultural 0 56 Real estate - residential mortgage 0 0 Consumer 11 29 ------- ------- Total recoveries 11 95 ------- ------- Net (charge-offs) recoveries -31 222 ------- ------- Current period provision for loan losses 75 254 ------- ------- Balance end of period 2,357 2,313 ======= ======
Mid Penn Bancorp, Inc. PART II - OTHER INFORMATION: Item 1. Legal Proceedings - Nothing to report Item 2. Changes in Securities - Nothing to report 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 - Nothing to report Item 6. Exhibits and Reports on Form 8-K a. Exhibits - (27) Financial Data Schedule 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/ Kevin W. Laudenslager By:Eugene F. Shaffer By:Kevin W. Laudenslager Chairman, Pres. & CEO Treasurer Date: May 12, 1999 Date: May 12, 1999 EX-27 2
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