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

Mid Penn Bancorp

HARRISBURG, Pa., July 27, 2022 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. (NASDAQ: MPB) (“Mid Penn”), the parent company of Mid Penn Bank (the “Bank”) and MPB Financial Services, LLC, today reported net income available to common shareholders (“earnings”) for the quarter ended June 30, 2022 of $12.3 million, or $0.77 per common share basic and diluted.

Key Highlights in the Second Quarter of 2022

• Earnings increased $898 thousand and $0.06 per common share diluted to $12.3 million, or $0.77, respectively, for the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022.
  
  

• Tax equivalent net interest margin increased to 3.45% from 3.21% in the prior quarter and 3.34% in the same period prior year.
  
  

• Loans grew 8% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022. Loans, excluding Payroll Protection Program (“PPP”) loans ⁽¹⁾, grew 11% (annualized) during the three months ended June 30, 2022 from the first quarter of 2022.
  
  

• Asset quality continues to remain strong with both nonperforming loans to total loans and nonperforming assets to total loans plus other real estate at 25 basis points (“bp”) at June 30, 2022.
  
  

• Book value per common share increased to $31.23 and tangible book value per share ⁽¹⁾ increased to $23.57 at June 30, 2022, compared to $30.96 and $23.31, respectively, at March 31, 2022.
  

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

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

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

Net Interest Income and Average Balance Sheet

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

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

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

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

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

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

Asset Quality

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

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

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

Capital

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

Share Repurchase Program

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

Noninterest Income

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

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

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

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

Noninterest Expense

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

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

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

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

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

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

Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s consolidated financial statements when filed with the Securities and Exchange Commission (“SEC”).  Accordingly, the financial information in this announcement is subject to change. The statements are valid only as of the date hereof and Mid Penn disclaims any obligation to update this information.

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

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continues," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement.  Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; the length and extent of the COVID-19 pandemic; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on securities held in Mid Penn’s portfolio; the success and timing of PPP loan repayment and forgiveness; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; results of the regulatory examination and supervision process and oversight, including changes in monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; the availability of financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank’s future businesses; material differences in the actual financial results of merger, acquisition and investment activities compared with Mid Penn’s initial expectations, including the full realization of anticipated cost savings and revenue enhancements; the possibility that the anticipated benefits of the Riverview transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Mid Penn does business; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Riverview transaction; the ability to complete the integration of Mid Penn and Riverview successfully; the dilution caused by Mid Penn’s issuance of additional shares of its capital stock in connection with the Riverview transaction; and other factors that may affect the future results of Mid Penn.

For a more detailed description of these and other factors which would affect our results, please see Mid Penn’s filings with the SEC, including those risk factors identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent filings with the SEC. The statements in this press release are made as of the date of this press release, even if subsequently made available by Mid Penn on its website or otherwise. Mid Penn assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

SUMMARY FINANCIAL HIGHLIGHTS (Unaudited):

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

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

CONSOLIDATED BALANCE SHEETS (Unaudited):
(Dollars in thousands, except share data)		Jun. 30, 2022				Mar. 31, 2022				Dec. 31, 2021				Sept. 30, 2021				Jun. 30, 2021
ASSETS
Cash and due from banks		$	64,440			$	54,961			$	41,100			$	40,134			$	35,815
Interest-bearing balances with other financial institutions			4,909				3,187				146,031				2,536				1,234
Federal funds sold			167,437				700,283				726,621				712,272				599,298
Total cash and cash equivalents			236,786				758,431				913,752				754,942				636,347
Investment securities held to maturity, at amortized cost			399,032				363,145				329,257				152,791				153,032
Investment securities available for sale, at fair value			218,698				145,039				62,862				5,015				8,162
Equity securities available for sale, at fair value			454				474				500				505				508
Loans held for sale			9,574				7,474				11,514				23,154				24,202
Loans and leases, net of unearned interest			3,180,033				3,121,531				3,104,396				2,370,429				2,495,192
Less: Allowance for loan and lease losses			(16,876	)			(15,147	)			(14,597	)			(14,233	)			(14,716	)
Net loans and leases			3,163,157				3,106,384				3,089,799				2,356,196				2,480,476
Bank premises and equipment, net			33,732				33,612				33,232				25,562				24,758
Bank premises and equipment held for sale			2,574				3,098				3,907				—				—
Operating lease right of use asset			8,326				8,751				9,055				9,942				10,364
Finance lease right of use asset			2,997				3,042				3,087				3,132				3,177
Cash surrender value of life insurance			50,169				49,907				49,661				17,406				17,332
Restricted investment in bank stocks			4,234				7,637				9,134				7,906				6,816
Accrued interest receivable			12,902				11,584				11,328				10,008				10,638
Deferred income taxes			13,780				11,974				10,779				4,133				5,465
Goodwill			113,835				113,835				113,835				62,840				62,840
Core deposit and other intangibles, net			7,729				8,250				9,436				3,537				3,804
Foreclosed assets held for sale			69				125				—				11				11
Other assets			32,115				34,412				28,287				16,107				13,860
Total Assets		$	4,310,163			$	4,667,174			$	4,689,425			$	3,453,187			$	3,461,792
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		$	850,180			$	866,965			$	850,438			$	661,890			$	692,016
Interest-bearing demand			1,023,027				1,050,923				1,066,852				745,833				629,375
Money Market			999,556				1,159,809				1,076,593				905,742				810,067
Savings			354,677				358,186				381,476				205,842				206,724
Time			475,147				553,154				626,657				442,574				443,942
Total Deposits			3,702,587				3,989,037				4,002,016				2,961,881				2,782,124
Short-term borrowings			—				—				—				—				196,889
Long-term debt			4,592				74,681				81,270				74,858				74,944
Subordinated debt			73,995				74,134				73,645				44,599				44,593
Operating lease liability			10,324				10,923				11,363				10,950				11,387
Accrued interest payable			1,542				2,067				1,791				1,901				2,122
Other liabilities			21,288				22,171				29,264				9,690				8,164
Total Liabilities			3,814,328				4,173,013				4,199,349				3,103,879				3,120,223
Shareholders' Equity:
Common stock, par value $1.00 per share; 20.0 million shares authorized			16,081				16,059				16,056				11,532				11,507
Additional paid-in capital			386,128				385,765				384,742				246,830				246,546
Retained earnings			108,265				99,206				91,043				92,722				85,220
Accumulated other comprehensive (loss) income			(9,759	)			(4,946	)			158				147				219
Treasury stock			(4,880	)			(1,923	)			(1,923	)			(1,923	)			(1,923	)
Total Shareholders’ Equity			495,835				494,161				490,076				349,308				341,569
Total Liabilities and Shareholders' Equity		$	4,310,163			$	4,667,174			$	4,689,425			$	3,453,187			$	3,461,792

CONSOLIDATED STATEMENTS OF INCOME (Unaudited):
(Dollars in thousands, except per share data)		Three Months Ended																				Six Months Ended
		Jun. 30				Mar. 31				Dec. 31				Sept. 30				Jun. 30				Jun. 30				Jun. 30
		2022				2022				2021				2021				2021				2022				2021
INTEREST INCOME
Interest and fees on loans and leases		$	34,264			$	35,016			$	31,021			$	29,590			$	29,835			$	69,280			$	58,165
Interest and dividends on investment securities:
U.S. Treasury and government agencies			2,329				1,536				715				285				225				3,865				403
State and political subdivision obligations, tax-exempt			379				336				288				279				278				715				555
Other securities			504				417				329				277				291				921				593
Total Interest and Dividends on Investment Securities			3,212				2,289				1,332				841				794				5,501				1,551
Interest on other interest-bearing balances			8				13				8				1				2				21				4
Interest on federal funds sold			736				314				324				308				98				1,050				177
Total Interest Income			38,220				37,632				32,685				30,740				30,729				75,852				59,897
INTEREST EXPENSE
Interest on deposits			2,019				2,294				2,536				2,909				2,916				4,313				5,882
Interest on short-term borrowings			—				—				—				133				232				—				406
Interest on long-term and subordinated debt			768				924				777				704				704				1,692				1,407
Total Interest Expense			2,787				3,218				3,313				3,746				3,852				6,005				7,695
Net Interest Income			35,433				34,414				29,372				26,994				26,877				69,847				52,202
PROVISION FOR LOAN AND LEASE LOSSES			1,725				500				370				425				1,150				2,225				2,150
Net Interest Income After Provision for Loan and Lease Losses			33,708				33,914				29,002				26,569				25,727				67,622				50,052
NONINTEREST INCOME
Mortgage banking income			305				529				1,932				3,162				2,841				834				5,220
Income from fiduciary and wealth management activities			1,205				1,052				778				618				542				2,257				1,098
Service charges on deposits			450				684				439				223				177				1,134				329
ATM debit card interchange income			1,128				1,057				834				630				656				2,185				1,224
Net gain (loss) on sales of SBA loans			119				(9	)			409				105				355				110				455
Merchant services income			87				73				72				58				209				160				301
Earnings from cash surrender value of life insurance			262				246				135				74				75				508				149
Net gain on sales of investment securities			—				—				—				79				—				—				—
Other income			1,674				2,118				1,061				560				797				3,792				1,588
Total Noninterest Income			5,230				5,750				5,660				5,509				5,652				10,980				10,364
NONINTEREST EXPENSE
Salaries and employee benefits			12,340				13,244				11,838				10,342				9,933				25,584				19,531
Occupancy expense, net			1,655				1,799				1,412				1,318				1,317				3,454				2,797
Equipment expense			1,112				1,011				864				745				741				2,123				1,492
Software licensing and utilization			1,821				2,106				1,839				1,551				1,497				3,927				2,942
FDIC Assessment			506				591				524				461				433				1,097				903
Legal and professional fees			694				639				388				610				555				1,333				981
Charitable contributions qualifying for State tax credits			125				65				797				—				365				190				635
Mortgage banking profit-sharing expense			33				145				566				1,140				745				178				865
(Gain) loss on sale or write-down of foreclosed assets, net			(15	)			(16	)			1				(7	)			(19	)			(31	)			(19	)
Intangible amortization			521				481				357				266				276				1,002				557
Merger and acquisition expense			—				—				2,347				198				522				—				522
Post-acquisition restructuring expense			—				329				9,880				—				—				329				—
Other expenses			5,123				5,351				3,259				3,395				3,091				10,474				5,808
Total Noninterest Expense			23,915				25,745				34,072				20,019				19,456				49,660				37,014
INCOME BEFORE PROVISION FOR INCOME TAXES			15,023				13,919				590				12,059				11,923				28,942				23,402
Provision for income taxes			2,771				2,565				(17	)			2,272				2,310				5,336				4,477
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	12,252			$	11,354			$	607			$	9,787			$	9,613			$	23,606			$	18,925
PER COMMON SHARE DATA:
Basic and Diluted Earnings Per Common Share		$	0.77			$	0.71			$	0.05			$	0.86			$	0.93			$	1.48			$	2.02
Diluted Earnings Per Common Share		$	0.77			$	0.71			$	0.05			$	0.86			$	0.93			$	1.48			$	2.02
Cash Dividends Declared		$	0.20			$	0.20			$	0.20			$	0.20			$	0.20			$	0.40			$	0.39

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

		Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
		For the Three Months Ended
(Dollars in thousands)		June 30, 2022														March 31, 2022														June 30, 2021
		Average										Yield/				Average										Yield/				Average										Yield/
		Balance					Interest					Rate				Balance					Interest					Rate				Balance					Interest					Rate
ASSETS:
Interest Bearing Balances		$		5,920			$		8				0.54	%		$		91,543			$		13				0.06	%		$		1,284			$		2				0.62	%
Investment Securities:
Taxable				501,631					2,740				2.19	%				389,034					1,822				1.90	%				93,161					430				1.85	%
Tax-Exempt				78,775					480		(a)		2.44	%				73,614					425		(a)		2.34	%				55,811					352		(a)		2.53	%
Total Securities				580,406					3,220				2.23	%				462,648					2,247				1.97	%				148,972					782				2.11	%
Federal Funds Sold				415,405					736				0.71	%				706,411					314				0.18	%				477,001					98				0.08	%
Loans and Leases, Net				3,129,334					34,354		(b)		4.40	%				3,103,469					35,123		(b)		4.59	%				2,609,803					29,908		(b)		4.60	%
Restricted Investment in Bank Stocks				4,854					94				7.77	%				8,347