Mid Penn Bancorp, Inc. Reports Third Quarter Earnings and Dividend Announcement

MILLERSBURG, Pa., Nov. 2, 2009 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. ("Mid
Penn") (Nasdaq:MPB), the parent company of Mid Penn Bank, today reported
increased total assets, loans, and deposits for the third quarter of 2009, as
well as third quarter earnings of $206,000, including per common share earnings
of $0.06. Earnings for the third quarter of 2008 were $1,122,000, or $0.32 per
common share. Through the first nine months of 2009, Mid Penn's earnings were
$875,000, or $0.25 per common share. During the same period in 2008, Mid Penn
recorded earnings of $3,355,000, or $0.96 per common share.

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2009 Financial Highlights
-------------------------
(dollars in thousands, except per share data)

09/30/09 09/30/08 % Change
-------- -------- --------
Total Assets $598,192 $552,412 8.3%

Total Loans (net) 477,043 419,383 13.7%

Total Deposits 471,416 417,897 12.8%

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Three Months Ended Nine Months Ended
------------------ -----------------
09/30/09 09/30/08 % Change 09/30/09 09/30/08 % Change
-------- -------- -------- -------- -------- --------

Net
Interest
Income $ 4,670 $ 4,292 8.8% $ 13,357 $ 12,639 5.7%

Net Income
Available
to Common
Share
-holders 206 1,122 -81.6% 875 3,355 -73.9%

Diluted
Earnings
per Common
Share 0.06 0.32 -81.3% 0.25 0.96 -74.0%

Return on
Equity 2.64% 11.10% -76.2% 3.23% 11.09% -70.9%
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President's Statement

Our earnings results for the third quarter of 2009, described in this press
release, are a disappointment to me and all those involved at Mid Penn. While
the core earnings engine of net interest income and net interest margin have
shown continued improvement throughout 2009, net income was again affected by a
much larger than normal Provision for Loan and Lease Losses and a much higher
deposit insurance premium. These two expenses combined to deplete earnings
before tax effect by $1,168,000, or $0.22 per common share after tax effect,
more in the third quarter of 2009 than they did in the third quarter of 2008.
These two expenses negatively influenced earnings before tax effect by
$2,816,000, or $0.53 per common share after tax effect, more in the nine months
ended September 30, 2009 than during the same period in 2008. Mid Penn's deposit
insurance premium, which is the amount paid to the Federal Deposit Insurance
Corporation to provide deposit insurance to our customers, is an expense that is
completely out of our control and one that is not very predictable. Accordingly,
our challenge is to drive the core earnings engine to a point where we are able
to digest that expense if it in fact stays at these higher levels. Our net
interest income and net interest margin both showed continued improvement during
2009, which indicates we are on our way to accomplishing that task.

The Provision for Loan and Lease Losses, which is the amount added to our
Allowance for Loan and Lease Losses every quarter, is calculated primarily upon
four factors: 1. Actual credit losses during the quarter. 2. Quantitative
assessment of the risks in the remaining credit portfolio. 3. External factors
such as the economy. 4. Loan growth experienced during the quarter. While all
four factors contributed to the higher level of Provision throughout the three
and nine months ended September 30, 2009, most of the increase was attributable
to the first two factors. We, as most banks, have experienced a decline in our
overall asset quality metrics, and it is only prudent to prepare now for the
ultimate effects that might stem from that decline. With the risk assessment
expertise we have put into place, we are able to identify problem credits and
assess potential losses more efficiently. While we cannot do anything about the
loans already in the portfolio, we are now in a better position to effectively
manage the risks associated with those loans. Additionally, we have enhanced our
underwriting process to ensure that loans currently being generated are of the
appropriate quality and price. Stability in the Provision is dependent upon us
being successful in both those tasks, and is an absolute must.

Through September 30, 2009, we generated net income of $0.25 per common share
while distributing dividends to common shareholders totaling $0.52 per common
share. Consequently, we announce today that we will suspend the quarterly
dividend for the fourth quarter, and that announcement is the primary source of
our disappointment. We have paid a quarterly dividend for years, and I know it
is something that our loyal Stockholders have become accustomed to receiving.
Unfortunately, we are not in a position to honor that custom during the fourth
quarter, as doing so would impede our ability to remain a strong and viable
community bank. It is my pledge to all of our Stockholders that we are all
working diligently to get Mid Penn back to producing a stable and predictable
earnings stream that will allow us to reinstate the quarterly dividend as
quickly as possible. I am confident that we will honor that pledge.

Income Statement

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Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
(dollars in
thousands,
except per
share data) 2009 2008 % Change 2009 2008 % Change
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Net
Interest
Income $ 4,670 $ 4,292 8.8% $ 13,357 $ 12,639 5.7%
Total
Revenues 8,795 8,984 -2.1% 26,155 26,649 -1.9%
Total
Operating
Expenses 4,230 3,525 20.0% 12,439 10,448 19.1%
Net Income
Available
to Common
Share
-holders 206 1,122 -81.6% 875 3,355 -73.9%
Diluted
Earnings
per Common
Share 0.06 0.32 -81.3% 0.25 0.96 -74.0%
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Net income available to common stockholders was $206,000 for the third quarter
of 2009, a decrease of $916,000, or 81.6%, from $1,122,000 for the third quarter
of 2008. Year-to-date, net income available to common stockholders totaled
$875,000 for 2009, a decrease of $2,480,000, or 73.9%, from $3,355,000 in 2008.
Fully diluted earnings per common share for the third quarter were $0.06, an
81.3% decrease from the $0.32 recorded for the same period a year ago. Fully
diluted earnings per common share during the first nine months of 2009 were
$0.25, a decrease of 74.0% from the $0.96 recorded during the same period in
2008.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2009 totaled $4,670,000, an
increase of $378,000, or 8.8% from the $4,292,000 recorded a year ago. Net
interest income for the first nine months of 2009 also increased from
$12,639,000 in 2008 to $13,357,000, an increase of 5.7%. The improvement in net
interest income was spurred by growth in average earning assets of 8.9% during
the first nine months of 2009 coupled with a reduction in the average cost of
funds from 3.41% during the first nine months of 2008 to 2.88% during the first
nine months of 2009.

The net interest margin on a taxable-equivalent basis for the nine months ended
September 30, 2009 was 3.43%, down 10 basis points from 3.53% during the same
period in 2008. Net interest margin was adversely impacted during the period by
a decline in the average yield on earning assets, which slipped from 6.50% to
5.89% between the first nine months of 2008 and 2009. This reduction was fueled
by the decline in lending rates and other market rates to which Mid Penn indexes
its variable rate loans and the negative effect of increasing nonaccrual loans
on interest income.

Noninterest Expenses

Noninterest expenses for the third quarter of 2009 were $4,230,000, up 20.0%
over $3,525,000 for the third quarter of 2008. Noninterest expense for the nine
months ended September 30, 2009 was $12,439,000, an increase of 19.1% over
$10,448,000 for the same period in 2008. The breakdown of noninterest expenses
for the three months and nine months ended September 30, 2009, and 2008,
respectively, are shown in the following table:

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Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
(dollars in
thousands) 2009 2008 % Change 2009 2008 % Change
--------------------------------------- ----------------------------
Salaries
and
employee
benefits $ 2,102 $ 1,832 14.7% $ 6,224 $ 5,428 14.7%
Occupancy
expense,
net 225 227 -0.9% 661 754 -12.3%
Equipment
expense 304 208 46.2% 848 634 33.8%
Computer
expense 109 135 -19.3% 332 383 -13.3%
PA bank
shares tax
expense 100 93 7.5% 301 277 8.7%
FDIC
assessment 347 12 2,791.7% 871 45 1,835.6%
Legal and
profess
-ional
fees 126 223 -43.5% 479 544 -11.9%
Director
fees and
benefits
expense 83 77 7.8% 225 245 -8.2%
Marketing
and adver
-tising
expense 145 155 -6.5% 606 337 79.8%
Loss on
sale/write
-down of
foreclosed
assets 40 -- 0.0% 76 32 137.5%
Other
expenses 649 563 15.3% 1,816 1,769 2.7%
---------------------------------------- ----------------------------
Total
non
-interest
expense $ 4,230 $ 3,525 20.0% $ 12,439 $ 10,448 19.1%
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The increase in expenses in 2009 over 2008 was driven by four primary factors.
The first is the dramatic increase in the FDIC assessment. In addition to an
increase in the ordinary assessment levied on financial institutions, the FDIC
enacted a special assessment as of June 30, 2009. This special assessment was
$265,000 at Mid Penn, and is reflected above in our year to date financial
statements. The higher expense and special assessment were required for all FDIC
insured institutions. The second major area of impact is in the area of salaries
and employee benefits. These increases are the result of selectively adding
talented employees to enhance Mid Penn's infrastructure and better serve our
expanding customer base. The third expense area of note is marketing and
advertising expense. Mid Penn invested significant dollars in the first six
months of 2009 to increase core deposits in response to specific funding
opportunities. During the third quarter a more targeted approach was adopted,
focusing on internal calling efforts rather than broad media campaigns. The
final area of impact was the opening in April 2009 of Mid Penn's new operations
facility in Halifax. This project increased equipment expense, primarily
depreciation costs, and fulfills much needed space enhancements for current and
future growth.

Balance Sheet

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September 30,
------------------
(dollars in thousands) 2009 2008 % Change
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Total Assets $598,192 $552,412 8.3%
Total Loans (net) 477,043 419,383 13.7%
Total Deposits 471,416 417,897 12.8%
Total Core Deposits 369,298 307,171 20.2%
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Strong balance sheet growth continued throughout the first nine months of 2009.
Loans increased 13.7% since September of 2008, spurred by credit-worthy business
borrowers who were impacted by credit restrictions at regional or national
financial institutions. Core deposit growth of 20.2% was robust as depositors
exited the stock market for the safety and stability of insured deposit
products. Additionally, more targeted focus has been given to increasing the
core deposit base within our market throughout 2009, as we expand existing
relationships and develop new ones within our footprint.

Asset Quality

Mid Penn's asset quality ratios are highlighted below:

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Period Ended
----------------------------
Sept. 30, Dec. 31, Sept. 30,
2009 2008 2008
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Non-performing assets to period-end loans
and other real estate 2.08% 1.30% 1.27%
Net loan charge-offs/average total
loans (annualized) 0.11% 0.13% 0.09%
Loan loss allowance/gross loans 1.58% 1.27% 1.19%
Nonperforming loan coverage 79.04% 132.20% 125.76%
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Nonperforming assets and loans past due 90 days at September 30, 2009 totaled
$10,827,000, or 2.23% of total loans, as compared to $7,540,000, or 1.73% of
total loans, at December 31, 2008 and $9,374,000, or 2.21% of total loans one
year ago. Mid Penn's provision for loan and lease losses was $1,108,000 for the
third quarter of 2009, compared to $275,000 during the third quarter of 2008.
For the nine months ended September 30, 2009, the provision for loan and lease
losses was $2,520,000 compared to $530,000 for the first nine months of 2008.
The increase in the provision for loan and lease losses for the quarter is a
result of Mid Penn's loan growth of approximately $60,000,000 over the past
twelve months and continued weakness in the overall economy.

Total net charge-offs for the three months ended September 30, 2009, were
$72,000 versus net charge-offs of $232,000 for the same period in 2008. Total
net charge-offs were $359,000 for the first nine months of 2009, compared to
$253,000 for the first nine months of 2008.

Capital

The Bank's capital ratios at September 30, 2009 were as follows:

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Regulatory Guidelines
Mid Penn Bank "Well Capitalized"
--------------------- ---------------------
Leverage Ratio 8.24% 5.00%
Tier 1 9.97% 6.00%
Total Capital 11.22% 10.00%
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Stockholders' equity at September 30, 2009, totaled $50,620,000, an increase of
$9,924,000, or 24.4%, over September 30, 2008. The increase in stockholder's
equity is primarily the result of the $10,000,000 received in December 2008
under the Treasury Department's Capital Purchase Program for strong
well-capitalized banks.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this press release may constitute
forward-looking statements for purposes of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and as such may
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Mid Penn to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements. The words "expect", "anticipate", "intend",
"plan", "believe", "estimate", and similar expressions are intended to identify
such forward-looking statements.

Mid Penn's actual results may differ materially from the results anticipated in
these forward-looking statements due to a variety of factors, including, without
limitation:

* the effects of future economic conditions on Mid Penn and the
Bank's customers;
* the costs and effects of litigation and of unexpected or adverse
outcomes in such litigation;
* governmental monetary and fiscal policies, as well as
legislative and regulatory changes;
* the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies, as well as the
Financial Accounting Standards Board and other accounting
standard setters;
* the risks of changes in interest rates on the level and
composition of deposits, loan demand, and the values of loan
collateral, securities and interest rate protection agreements,
as well as interest rate risks;
* the effects of economic deterioration on current customers,
specifically the effect of the economy on loan customers'
ability to repay loans;
* the effects of competition from other commercial banks, thrifts,
mortgage banking firms, consumer finance companies, credit
unions, securities brokerage firms, insurance companies, money
market and other mutual funds and other financial institutions
operating in Mid Penn's market area and elsewhere, including
institutions operating locally, regionally, nationally and
internationally, together with such competitors offering banking
products and services by mail, telephone, computer and the
Internet;
* technological changes;
* acquisitions and integration of acquired businesses;
* the failure of assumptions underlying the establishment of
reserves for loan and lease losses and estimations of values of
collateral and various financial assets and liabilities;
* acts of war or terrorism;
* disruption of credit and equity markets; and
* deteriorating economic conditions.
All written or oral forward-looking statements attributable to Mid Penn are
expressly qualified in their entirety by these cautionary statements.

The Mid Penn Bancorp, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6428

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CONTACT: Mid Penn Bancorp, Inc.
Rory G. Ritrievi, President
Chief Executive Officer
Kevin W. Laudenslager, Vice President
Treasurer
(717) 692-2133