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MPB Nasdaq· Mid Penn Bancorp, Inc
Earnings report Q3 2023

Mid Penn Bancorp, Inc. Reports Decrease in Revenue for the Latest Quarter

Segments of Revenue

Mid Penn Bancorp, Inc. experienced a decrease in revenue across various segments during the latest quarter. Noninterest income for the nine months ended September 30, 2023, totaled $14.9 million, reflecting a decrease of $2.1 million or 12.1% compared to the same period in 2022. The breakdown of the revenue segments is as follows:

  • Fiduciary and wealth management: $3.7 million
  • ATM debit card interchange: $3.0 million
  • Service charges on deposits: $1.5 million
  • Mortgage banking: $1.1 million
  • Mortgage hedging: $0.2 million
  • Net gain on sales of SBA loans: $0.2 million
  • Earnings from cash surrender value of life insurance: $0.8 million
  • Other: $4.4 million

The decrease in revenue was primarily driven by a decline in mortgage banking and mortgage hedging income, which decreased by $317 thousand and $1.1 million, respectively, for the nine months ended September 30, 2023, compared to the same period in 2022.

Strengths

Despite the decrease in revenue, Mid Penn Bancorp, Inc. demonstrated resilience in its net interest margin. The net interest margin for the third quarter of 2023 was 3.16%, compared to 3.90% for the same period in 2022. For the nine months ended September 30, 2023, the net interest margin was 3.33%, compared to 3.50% for the same period in 2022. The company attributes the increase in net interest margin to the six rate hikes implemented by the FOMC in the 12 months since September 30, 2022. Additionally, the yield on interest-earning assets increased by 107 basis points for the third quarter of 2023 compared to the same period in 2022.

Challenges

Mid Penn Bancorp, Inc. faced challenges in its revenue generation, particularly in the mortgage banking and mortgage hedging segments. The company experienced a decrease of $317 thousand and $1.1 million in mortgage banking and mortgage hedging income, respectively, for the nine months ended September 30, 2023, compared to the same period in 2022. These challenges were further compounded by expenses related to the Brunswick Acquisition and lower mortgage banking revenue.

Noteworthy

It is worth noting that Mid Penn Bancorp, Inc. completed the Brunswick Acquisition during the latest quarter. The acquisition involved the purchase of all outstanding stock and the cancellation of options of Brunswick for a total consideration of $45.7 million.

Summary

Mid Penn Bancorp, Inc. reported a decrease in revenue for the latest quarter, primarily driven by declines in mortgage banking and mortgage hedging income. However, the company demonstrated strength in its net interest margin, which was supported by the rate hikes implemented by the FOMC. The completion of the Brunswick Acquisition also marked a significant event for the company. Moving forward, Mid Penn Bancorp, Inc. will need to address the challenges in its revenue generation and continue to leverage its strengths to drive financial performance.

Source documents

Form 10-Q  filed on Nov 09, 2023
86 pages scanned

Reference data

Company financials Q3 revenue 41.9M
Analyst estimates Q3 EPS beat by 24.43%
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