Mid Penn Bancorp Kicks Off 2025 with Strong First Quarter Earnings and 58th Consecutive Dividend Payment Amid Strategic Momentum
Mid Penn Bancorp, Inc. (NASDAQ: MPB), the parent company of Mid Penn Bank and MPB Financial Services, LLC, opened the 2025 fiscal year on a high note by reporting robust financial results for the first quarter, exceeding analyst expectations and sustaining its long-standing dividend policy. For the three-month period ended March 31, 2025, Mid Penn Bancorp reported net income available to common shareholders of $13.7 million, translating to $0.71 per diluted common share. This marks a 13.3% increase from the $12.1 million, or $0.73 per share, reported in the same quarter a year ago. Notably, these earnings surpassed the consensus analyst estimate of $0.63 per diluted share, underscoring the company’s resilient financial performance in a challenging macroeconomic environment.
Strong Performance Metrics and Operational Highlights
Core earnings, a non-GAAP measure that excludes certain one-time items, climbed even higher. For Q1 2025, core earnings stood at $13.9 million or $0.72 per diluted share, representing a 30.3% increase compared to $10.7 million or $0.64 per diluted share for Q1 2024.
The quarter’s financial strength was underpinned by multiple favorable operational metrics. Net interest income for the quarter surged to $42.5 million, up from $36.5 million a year ago, and from $41.3 million in the prior quarter. This increase was fueled by widening net interest margins, prudent expense management, and moderate but healthy balance sheet growth.
The bank’s net interest margin (NIM) — a key profitability indicator — rose significantly to 3.37% in Q1 2025, compared to 3.21% in Q4 2024 and 2.97% in Q1 2024. The increase in NIM was primarily due to a strategic reduction in the cost of funds to 2.48%, down from 2.66% in the previous quarter, driven by the bank’s proactive approach to lowering deposit rates in response to multiple Federal Reserve interest rate cuts during the latter half of 2024.
While the yield on loans slightly dipped from 6.10% in Q4 2024 to 6.05% in Q1 2025, the broader interest-earning asset base provided sufficient income to maintain margin expansion.
Disciplined Loan and Deposit Growth Reflects Market Caution
Loan growth in Q1 2025 totaled $48.1 million, representing an annualized growth rate of 4.4%. Total loan balances as of March 31, 2025, stood at $4.5 billion, reflecting a $173.7 million or 4.0% year-over-year increase. On the deposit side, the company posted an annualized growth rate of 3.7% for the quarter, adding $42.3 million in total deposits. This compares favorably to the $16.8 million decline in deposits seen in Q4 2024. At quarter-end, total deposits had risen to $4.7 billion, up $353.1 million or 8.06% from the same period in 2024.
Interestingly, the deposit growth was driven by a $55.5 million increase in interest-bearing transaction accounts and a $29.1 million rise in noninterest-bearing deposits. These gains were partially offset by a $42.3 million decline in time deposits, a sign that customers are seeking more liquid, flexible banking options in a volatile interest rate environment.
Improving Shareholder Value and Dividend Consistency
Mid Penn’s focus on operational efficiency and profitability translated to enhanced shareholder value. Book value per common share increased to $34.50 as of March 31, 2025, compared to $33.84 at the end of Q4 2024 and $33.26 a year ago. Tangible book value per share also saw a meaningful jump to $27.58, up from $26.90 in Q4 2024 and $25.23 in Q1 2024.
Reflecting its continued profitability and commitment to returning capital to shareholders, Mid Penn’s Board of Directors declared a quarterly cash dividend of $0.20 per common share. This marks the 58th consecutive quarterly dividend — a testament to the company’s financial resilience and shareholder-focused strategy. The dividend is payable on May 26, 2025, to shareholders of record as of May 8, 2025.
Operational Efficiency and Cost Management
The core efficiency ratio — which measures how effectively a company is managing its expenses relative to revenue — improved meaningfully during the quarter. It dropped to 62.79% in Q1 2025, from 63.9% in Q4 2024 and a notably higher 68.8% in Q1 2024. CEO Rory G. Ritrievi attributed this improvement to strict expense controls and ongoing efforts to streamline operations without sacrificing service or growth potential.
According to Ritrievi, “Even while increasing revenues around 3% annualized, we decreased operating expenses over 3% annualized, resulting in a 110 basis point, or almost 7% annualized, improvement in the efficiency ratio. Solid expense management continues.”
Merger Progress and Strategic Expansion
During the quarter, Mid Penn also made progress on its strategic expansion plans. On the regulatory front, the company received full approval for its pending merger with William Penn Bank. Both companies’ shareholders have expressed strong support for the transaction, and the merger is expected to close during Q2 2025. The acquisition is expected to bring in additional scale and market presence, particularly in southeastern Pennsylvania and neighboring markets.
Ritrievi noted, “We welcome all the William Penn customers and shareholders in advance of the expected completion.” He acknowledged that the first quarter of 2025 was marked by economic caution among both borrowers and depositors, yet affirmed the bank’s commitment to disciplined, long-term growth.
In-Depth Financial Review: Interest Income and Deposit Strategy
The yield on interest-earning assets for Q1 2025 stood at 5.65%, down slightly from 5.67% in Q4 2024, but higher than 5.51% in Q1 2024. The marginal decline from the prior quarter was largely due to a reduction in the average balance of Federal Funds Sold and a modest decline in loan income. However, these factors were partially offset by a higher yield from taxable investment securities.
Overall, net interest income for Q1 2025 jumped 16.6% year-over-year, driven by a $3.3 million rise in loan income, a $420,000 boost from investment securities, and a $4.2 million drop in interest paid on short-term borrowings. These were partially offset by a $1.9 million increase in interest expenses on deposits.
The average cost of deposits came in at 2.45%, representing a 20 basis point reduction from Q4 2024, although slightly above the 2.43% recorded in Q1 2024. Mid Penn’s deposit strategy remains focused on stability and competitiveness, with ongoing efforts to align its deposit mix and pricing with customer expectations and market conditions.
Asset Quality Remains Strong with Conservative Credit Loss Provisions
Credit quality remained stable in Q1 2025. The provision for credit losses, including off-balance sheet exposures, was $301,000 — down slightly from $333,000 in Q4 2024 but up from a $937,000 benefit in Q1 2024. Net recoveries during the quarter amounted to just $3,000, indicating continued asset quality stability.
The allowance for credit losses on loans stood at 0.80% of total loans as of March 31, 2025, consistent with the prior quarter and slightly up from 0.78% a year earlier. Total nonperforming assets increased to $25.4 million, compared to $22.7 million in Q4 2024 and $15.5 million in Q1 2024. The increase was primarily due to the addition of three commercial loans totaling $7.0 million to the nonperforming category, partially offset by two payoffs totaling $3.0 million.
Loan delinquency rates remained low at 0.50% of total loans, compared to 0.52% in Q4 2024 and 0.38% a year ago. This indicates that, despite a modest rise in nonperforming assets, the bank’s overall credit quality remains sound and well-managed.
Looking Ahead: Growth, Discipline, and Shareholder Value
With strong first-quarter earnings, stable asset quality, and a well-capitalized balance sheet, Mid Penn Bancorp enters the rest of 2025 with momentum. The upcoming William Penn Bank merger and the bank’s ability to manage costs while generating consistent revenue highlight its readiness for continued success in a dynamic financial landscape.
CEO Rory Ritrievi summed up the quarter succinctly: “It is with great pleasure that we announce our first quarter of 2025 performance, which in many ways is a continuation of what we were able to accomplish in 2024.”
As Mid Penn Bancorp looks to integrate new assets, expand its footprint, and drive long-term shareholder value, its strong Q1 2025 results serve as both validation and motivation.
