-----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, E3Zj9IxwTt9Uyw+R9fhLFW3iy72PEfgoPux5Y/mwirIw3xYurD6Nt43LC1Jojgd6 OYRYKu42AZ4Al2VwuVHzPg== 0000950154-02-000247.txt : 20020813 0000950154-02-000247.hdr.sgml : 20020813 20020813110616 ACCESSION NUMBER: 0000950154-02-000247 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 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: 1934 Act SEC FILE NUMBER: 001-13677 FILM NUMBER: 02728294 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 midpenn-10q_53811.txt MID PENN 10-Q FILING 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 June 30, 2002 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. 3,036,417 shares of Common Stock, $1.00 par value per share, were outstanding as of June 30, 2002. MID PENN BANCORP, INC. CONSOLIDATED BALANCE SHEET (Unaudited; Dollars in thousands) June 30, Dec. 31, 2002 2001 ------- ------- ASSETS: Cash and due from banks 7,830 9,028 Interest-bearing balances 55,042 53,042 Available-for-sale securities 56,969 55,348 Federal funds sold 600 0 Loans 210,018 202,836 Less, Allowance for loan losses 2,950 2,856 ------- ------- Net loans 207,068 199,980 ------- ------- Bank premises and equip't, net 3,346 3,395 Other real estate 1,705 1,693 Accrued interest receivable 2,059 2,091 Cash surrender value of life insurance 4,626 4,504 Deferred income taxes 614 1,037 Other assets 679 517 ------- ------- Total Assets 340,538 330,635 ======= ======= LIABILITIES & STOCKHOLDERS' EQUITY: Deposits: Demand 27,098 29,226 NOW 32,853 30,795 Money Market 37,024 27,734 Savings 27,481 26,398 Time 143,251 139,952 ------- ------- Total deposits 267,707 254,105 ------- ------- Short-term borrowings 3,739 9,610 Accrued interest payable 1,705 1,292 Other liabilities 1,526 1,344 Long-term debt 32,477 32,568 ------- ------- Total Liabilities 307,154 298,919 ------- ------- STOCKHOLDERS' EQUITY: Common stock, par value $1 per share; authorized 10,000,000 shares; issued 3,056,501 shares at June 30, 2002 and December 31, 2001 3,057 3,057 Additional paid-in capital 20,368 20,368 Retained earnings 9,746 8,880 Accumulated other comprehensive inc (loss) 763 -56 Treasury stock at cost (20,084 and 19,065 shs., resp.) -550 -533 ------- ------- Total Stockholders' Equity 33,384 31,716 ------- ------- Total Liabilities & Equity 340,538 330,635 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. Note: The balance sheet at December 31, 2001, has been derived from the audited financial statements at that date but does not include all the information and notes required by generally accepted accounting principles for complete financial statements.
MID PENN BANCORP, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited; dollars in thousands) Three Months Six Months Ended June 30, Ended June 30, 2002 2001 2002 2001 --------- --------- --------- --------- INTEREST INCOME: Interest & fees on loans 3,882 4,152 7,881 8,229 Int.-bearing balances 685 781 1,401 1,528 Treas. & Agency securities 170 392 352 883 Municipal securities 507 441 999 850 Other securities 22 54 50 114 Fed funds sold and repos 8 20 11 20 --------- --------- --------- --------- Total Int. Income 5,274 5,840 10,694 11,624 --------- --------- --------- --------- INTEREST EXPENSE: Deposits 1,958 2,389 3,937 4,754 Short-term borrowings 8 87 30 380 Long-term borrowings 517 545 1,027 1,035 --------- --------- --------- --------- Total Int. Expense 2,483 3,021 4,994 6,169 --------- --------- --------- --------- Net Int. Income 2,791 2,819 5,700 5,455 PROVISION FOR LOAN LOSSES 100 75 200 150 --------- --------- --------- --------- Net Int. Inc. after Prov. 2,691 2,744 5,500 5,305 --------- --------- --------- --------- NON-INTEREST INCOME: Trust dept 43 32 86 68 Service chgs. on deposits 253 222 503 435 Investment sec. gains (losses), net 0 -7 5 -18 Gain on sale of loans 0 0 0 0 Other 158 190 328 390 --------- --------- --------- --------- Total Non-Interest Income 454 437 922 875 --------- --------- --------- --------- NON-INTEREST EXPENSE: Salaries and benefits 1,036 1,039 2,063 2,036 Occupancy, net 95 97 191 212 Equipment 132 127 258 238 PA Bank Shares tax 65 65 128 130 Other 582 524 1,114 973 --------- --------- --------- --------- Tot. Non-int. Exp. 1,910 1,852 3,754 3,589 --------- --------- --------- --------- Income before income taxes 1,235 1,329 2,668 2,591 INCOME TAX EXPENSE 259 312 586 603 --------- --------- --------- --------- NET INCOME 976 1,017 2,082 1,988 ========= ========= ========= ========= NET INCOME PER SHARE 0.32 0.33 0.69 0.65 ========= ========= ========= ========= DIVIDENDS PER SHARE 0.20 0.20 0.40 0.40 ========= ========= ========= ========= Weighted Average No. of Shares Outstanding 3,034,906 3,035,994 3,039,438 3,039,180
The accompanying notes are an integral part of these consolidated financial statements. MID PENN BANCORP, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited; Dollars in thousands) For the six months ended: June 30, June 30, 2002 2001 ------- ------ Operating Activities: Net Income 2,082 1,988 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 200 150 Depreciation 183 183 Incr. in cash-surr. value of life ins. -122 -99 Loss (gain) on sale of investment securities -5 18 Loss (gain) on sale/disposal of bank premises and equipment 0 0 Loss (gain) on the sale of foreclosed assets -3 0 Loss (gain) on the sale of loans 0 0 Change in accrued interest receivable 32 351 Change in other assets -162 -200 Change in accrued interest payable 413 566 Change in other liabilities 182 -59 ------- ------ Net cash provided by operating activities: 2,800 2,898 ------- ------ Investing Activities: Net (incr)decr in int-bearing balances -2,000 -5,579 Incr. in federal funds sold -600 -3,600 Proceeds from sale of securities 1,730 11,284 Proceeds from the maturity of secs. 3,227 12,458 Purchase of investment securities -5,331 -6,750 Proceeds from the sale of loans 0 0 Net increase in loans -7,288 -8,067 Purchases of fixed assets -134 -82 Proceeds from sale of other real estate 71 0 Capitalized additions - ORE -80 0 ------- ------ Net cash used in investing activities -10,405 -336 ------- ------ Financing Activities: Net (decr)incr in demand & svngs deps. 10,303 7,582 Net incr(decr) in time deposits 3,299 5,696 Net decrease in sh-term borrowings -5,871 -16,720 Net incr(decr) in long-term borrowings -91 4,915 Cash dividend declared -1,216 -1,215 Net sale of treasury stock -17 0 ------- ------ Net cash provided by financing activities 6,407 258 ------- ------ Net increase in cash & due from banks -1,198 2,820 Cash & due from banks, beg of period 9,028 5,986 ------- ------ Cash & due from banks, end of period 7,830 8,806 ======= ====== Supplemental Noncash Disclosures: Loan charge-offs 140 139 Transfers to other real estate 0 98 The accompanying notes are an integral part of these consolidated financial statements. Mid Penn Bancorp, Inc. Notes to Consolidated Financial Statements 1. The consolidated interim financial statements have been prepared by the Corporation, without audit, according to the rules and regulations of the Securities and Exchange Commission with respect to Form 10-Q. The financial information 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 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 Corporation's most recent Form 10-K. 2. Interim statements are subject to possible adjustments in connection with the annual audit of the Corporation'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. 5. Short-term borrowings as of June 30, 2002, and December 31, 2001, consisted of: (Dollars in thousands) 6/30/02 12/31/01 ------- -------- Federal funds purchased $ 0 $5,800 Repurchase agreements 2,679 2,666 Treasury, tax and loan note 512 196 Due to broker 548 948 ------ ------ $3,739 $9,610 ====== ====== Securities sold under repurchase agreements generally mature between one day and one year. Treasury, tax and loan notes are open-ended interest bearing notes payable to the U.S. Treasury upon call. All tax deposits accepted by the Bank are placed in the Treasury note option account. The due-to-broker balance represents previous day balances transferred from deposit accounts under a sweep account agreement. 6. Earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each of the periods presented, giving retroactive effect to stock dividends. The Corporation's basic and diluted earnings per share are the same since there are no dilutive securities outstanding. 7. The purpose of reporting comprehensive income (loss) is to report a measure of all changes in the Corporation's equity resulting from economic events other than transactions with stockholders in their capacity as stockholders. For the Corporation, "comprehensive income(loss)" includes traditional income statement amounts as well as unrealized gains and losses on certain investments in debt and equity securities (i.e. available for sale securities). Because unrealized gains and losses are part of comprehensive income (loss), comprehensive income (loss) may vary substantially between reporting periods due to fluctuations in the market prices of securities held. (In thousands) Three Months Six Months Ended June 30, Ended June 30, 2002 2001 2002 2001 ------ ------ ------ ------ Net Income $ 976 $1,017 $2,082 $1,988 ------ ------ ------ ------ Other comprehensive income(loss): Unrealized holding gains(losses) on securities arising during the period 1,488 51 1,241 854 Less: reclassification adjustments for (gains) losses included in net income 0 7 -5 18 ------ ------ ------ ------ Other comprehensive income(loss) before income tax (provision)benefit 1,488 58 1,236 872 Income tax (provision)benefit related to other comprehensive income(loss) -506 -20 -420 -297 ------ ------ ------ ------ Other comprehensive inc(loss) 982 38 816 575 ------ ------ ------ ------ Comprehensive Income(Loss) $1,958 $1,055 $2,898 $2,563 ====== ====== ====== ====== Mid Penn Bancorp, Inc. Millersburg, Pennsylvania Management's Discussion of Consolidated Financial Condition as of June 30, 2002, compared to year-end 2001 and the Results of Operations for the second quarter and the first six months of 2002 compared to the same periods in 2001. CONSOLIDATED FINANCIAL CONDITION Total assets as of June 30, 2002, increased to $340,538,000, from $330,635,000 as of December 31, 2001. During the first half of 2002, net loans outstanding increased by $7,088,000, or 3.5% from year end. Total deposits increased by $13,602,000 during the first six months of 2002. Money market accounts increased by $9,290,000 over year end largely due to the popularity of a new indexed money market product offered by the bank. Time deposits increased by $3,299,000. Short-term borrowings decreased by $5.9 million from year end. These borrowings were decreased largely through funds generated by operations. 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. As of June 30, 2002, the Bank's capital ratios are well in excess of the minimum and well-capitalized guidelines and the Corporation's capital ratios are in excess of the Bank's capital ratios. RESULTS OF OPERATIONS Net income for the first six months of 2002 was $2,082,000, compared with $1,988,000 earned in the same period of 2001. Net income per share for the same period of 2002 and 2001 was $.69 and $.65, respectively. Net income as a percentage of stockholders' equity, also known as return on equity, (ROE), was 13.1% on an annualized basis for the first half of both 2002 and 2001. Net income for the second quarter of 2002 was $976,000, compared with $1,017,000 earned in the same quarter of 2001. Net income per share for the second quarters of 2002 and 2001 was $.32 and $.33, respectively. Net interest income of $2,791,000 for the quarter ended June 30, 2002, decreased slightly from the $2,819,000 earned in the same quarter of 2001. Year-to-date, we have managed to maintain the bank's interest spread despite the drastic reduction in interest rates and keen interest rate competition. During the second quarter of 2002, we analyzed interest rate risk using the Profitstar Asset-Liability Management Model. Using the computerized model, management reviews interest rate risk on a periodic basis. This analysis includes an earnings scenario whereby interest rates are increased by 200 basis points (2 percentage points) and another whereby they are decreased by 200 basis points. At June 30, 2002, these scenarios indicate that there would be a variance of less than +/- 4.7% in net interest income at the one-year time frame due to interest rate changes; however, actual results could vary significantly from the calculations prepared by management. The Bank made a provision for loan losses of $100,000 during the second quarters of both 2002 and 2001. On a quarterly basis, senior management reviews potentially unsound loans taking into consideration judgments regarding risk of error, economic conditions, trends and other factors in determining a reasonable provision for the period. Non-interest income amounted to $454,000 for the second quarter of 2002 compared to $437,000 earned during the same quarter of 2001. Service charges on deposits grew by 14% during the second quarter of 2002 compared to the same period of 2001 as the bank continues to focus on fee and service charge income. One significant contributor to non-interest income is insufficient fund (NSF) fee income. NSF fee income contributed in excess of $391,000 during the first half of 2002. Non-interest expense increased by 3.1% during the second quarter of 2002 compared to the same quarter of 2001. The main reason for the increase was $59,000 in expenses incurred relating to maintaining and preparing other real estate in preparation of sale. 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 half of 2002. The major source of funds came from the net increase in money market funds of $9,290,000 mainly in the area of our new indexed money market. Another source of funds was the net increase of $3,299,000 in time deposits. The major use of funds during the period was a net increase in loans of $7,288,000. The other major use of funds was the net increase in interest-bearing balances, investments in insured certificates of deposit of other banks, of $2,000,000 purchased in anticipation of falling interest rates. CREDIT RISK AND ALLOWANCE FOR LOAN LOSSES Total non-performing assets increased slightly to $4,769,000 representing 1.40% of total assets at June 30, 2002, from $4,744,000 or 1.44% of total assets at December 31, 2001. Most non-performing assets are supported by collateral value that appears to be adequate at June 30, 2002. The allowance for loan losses at June 30, 2002, was $2,950,000 or 1.38% of loans, net of unearned interest, as compared to $2,856,000 or 1.41% of loans, net of unearned interest, at December 31, 2001. 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. MID PENN BANCORP, INC. June 30, Dec. 31, 2002 2001 -------- -------- Non-Performing Assets: Non-accrual loans 1,601 1,686 Past due 90 days or more 928 828 Restructured loans 535 537 ----- ----- Total non-performing loans 3,064 3,051 Other real estate 1,705 1,693 ----- ----- Total 4,769 4,744 ===== ===== Percentage of total loans outstanding 2.27 2.34 Percentage of total assets 1.40 1.44 Analysis of the Allowance for Loan Losses: Balance beginning of period 2,856 2,815 Loans charged off: Commercial real estate, construction and land development 0 249 Commercial, industrial and agricultural 32 118 Real estate - residential mortgage 0 0 Consumer 108 122 ----- ----- Total loans charged off 140 489 ----- ----- Recoveries of loans previously charged off: Commercial real estate, construction and land development 17 0 Commercial, industrial and agricultural 0 1 Real estate - residential mortgage 0 0 Consumer 17 29 ----- ----- Total recoveries 34 30 ----- ----- Net (charge-offs) recoveries -106 -459 ----- ----- Current period provision for loan losses 200 500 ----- ----- Balance end of period 2,950 2,856 ===== ===== 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: At the Annual Meeting of Shareholders held on April 23, 2002, a vote was held for the election of Class A directors: Gregory M. Kerwin, Warren A. Miller, Edwin D. Schlegel, and Eugene F. Shaffer to serve for a three-year term, and to ratify the selection of Parente Randolph as external auditors for the corporation for the year ending December 31, 2002. Gregory Kerwin received 2,528,847 votes for and 3,959 votes withheld. Warren Miller received 2,528,666 votes for and 4,140 votes withheld. Edwin Schlegel received 2,531,804 votes for and 1,002 votes withheld. Eugene Shaffer received 2,531,804 votes for and 1,002 withheld. The selection of external auditors received 2,529,819 votes for, 153 votes against, and 2,833 votes abstaining. Item 5. Other Information - Nothing to report Item 6. Exhibits and Reports on Form 8-K a. Exhibits - None. 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/ Alan W. Dakey /s/ Kevin W. Laudenslager - -------------------------- ------------------------- By: Alan W. Dakey By: Kevin W. Laudenslager President & CEO Treasurer Date: August 12, 2002 Date: August 12, 2002 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 In connection with the Quarterly Report of Mid Penn Bancorp, Inc. (the "Company") on Form 10-Q for the six month period ended June 30, 2002, as filed with the Securities and Exchange Commission (the "Report"), I, Alan W. Dakey, President and CEO, and I, Kevin W. Laudenslager, Treasurer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. /s/ Alan W. Dakey /s/ Kevin W. Laudenslager - ----------------- ------------------------- By: Alan W. Dakey By: Kevin W. Laudenslager President & CEO Treasurer Date: August 12, 2002 Date: August 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----