MPB 10-Q Quarterly Report Sept. 30, 2024

MID PENN BANCORP INC

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mpb-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-13677

MID PENN BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)


Pennsylvania						25-1666413
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)
2407 Park Drive Harrisburg , Pennsylvania						17110
(Address of Principal Executive Offices)						(Zip Code)

Registrant’s telephone number, including area code 1.866 . 642.7736

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value per share

MPB

The NASDAQ Stock Market LLC

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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated Filer

Emerging Growth Company

Non-accelerated Filer

Smaller Reporting Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of October 31, 2024, the registrant had 16,620,174 shares of common stock outstanding, par value $1.00 per share.

Table of Contents

FORM 10-Q

TABLE OF CONTENTS


PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements			4

Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)			4

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)			5

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)			6

Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)			7

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (Unaudited)			9

Notes to Consolidated Financial Statements (Unaudited)			11

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			48

Item 3 – Quantitative and Qualitative Disclosures about Market Risk			70

Item 4 – Controls and Procedures			70

PART II – OTHER INFORMATION			72

Item 1 – Legal Proceedings			72

Item 1A – Risk Factors			72

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			75

Item 3 – Defaults upon Senior Securities			76

Item 4 – Mine Safety Disclosures			76

Item 5 – Other Information			76

Item 6 – Exhibits			77

Signatures			78

Unless the context otherwise requires, the terms "Mid Penn", "Corporation" "we", "us", and "our" refer to Mid Penn Bancorp, Inc. and its consolidated wholly-owned banking subsidiary and nonbank subsidiaries.

Table of Contents

GLOSSARY OF DEFINED ACRONYMS AND TERMS


2014 Plan			2014 Restricted Stock Plan
2023 Annual Report			Corporation's Annual Report on Form 10-K for the year ended December 31, 2023
2023 Plan			2023 Stock Incentive Plan
ACL			Allowance for Credit Losses
AFS			Available for Sale
AOCI			Accumulated Other Comprehensive Income/(Loss)
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
the Bank			Mid Penn Bank
BOLI			Bank Owned Life Insurance
bp or bps			basis point(s)
Brunswick			Brunswick Bancorp
Brunswick Acquisition			Merger acquisition of Brunswick
Brunswick Bank			Brunswick Bank & Trust Company
CCL			Provision for Credit Losses - Credit Commitments
CECL			Current Expected Credit Losses
DCF			Discounted Cash Flow
DIF			FDIC’s Deposit Insurance Fund
DRIP			Dividend Reinvestment Plan
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
FHLB			Federal Home Loan Bank of Pittsburgh
FICO			the Financing Corporation
FOMC			Federal Open Market Committee
FTE			Fully taxable-equivalent
HFS			Held for Sale
HTM			Held to Maturity
LGD			Loss Given Default
LHFI			Loans held for investment
LIHTC			Low-Income Housing Tax Credits
Loans			Loans, net of unearned income
Management Discussion			Management's Discussion and Analysis of Financial Condition and Results of Operations
Merger			Merger of William Penn

Mid Penn or the Corporation			Mid Penn Bancorp, Inc.
N/M			Not meaningful - (percentage changes greater than +/- 150% not considered meaningful)
OBS			Off-Balance Sheet
OCI			Other Comprehensive Income
PCD			Purchased Credit Deteriorated
PCL			Provision for Credit Losses - Loans
PD			Probability of Default
Public Offering			Underwritten public offering of 2,375,000 shares of the Corporation’s common stock
Riverview			Riverview Financial Corporation
Riverview Acquisition			Merger acquisition of Riverview
ROA			Return on Assets
ROE			Return on Equity
SBA			Small Business Association
SEC			Securities Exchange Commission
SOFR			Secured Overnight Financing Rate
WSJP			Wall Street Journal Prime

Table of Contents

MID PENN BANCORP, INC.

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(In thousands, except per share data)	September 30, 2024		December 31, 2023
ASSETS
Cash and due from banks	$	57,518	$	45,435
Interest-bearing balances with other financial institutions	19,323		34,668
Federal funds sold	67,554		16,660
Total cash and cash equivalents	144,395		96,763
Investment securities:
HTM, at amortized cost (fair value $ 354,365 and $ 357,521 , respectively)	386,618		399,128
AFS, at fair value	255,227		223,555
Equity securities, at fair value	446		438
Loans held for sale, at fair value	7,919		3,855
Loans, net of unearned income	4,431,704		4,252,792
Less: ACL - Loans	( 35,562 )		( 34,187 )
Net loans	4,396,142		4,218,605

Premises and equipment, net	33,765		36,909
Operating lease right of use asset	7,390		8,953
Finance lease right of use asset	2,593		2,727
Cash surrender value of life insurance	53,135		54,497
Restricted investment in bank stocks	10,589		16,768
Accrued interest receivable	27,286		25,820
Deferred income taxes	23,197		24,146
Goodwill	128,160		127,031
Core deposit and other intangibles, net	6,713		6,479
Foreclosed assets held for sale	281		293
Other assets	43,169		44,825
Total Assets	$	5,527,025	$	5,290,792

LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	791,980	$	801,312
Interest-bearing transaction accounts	2,288,783		2,086,450
Time	1,626,001		1,458,450
Total Deposits	4,706,764		4,346,212

Short-term borrowings	114,097		241,532
Long-term debt	23,716		59,003
Subordinated debt	45,894		46,354
Operating lease liability	7,778		9,285
Accrued interest payable	18,995		14,257
Other liabilities	36,722		31,799
Total Liabilities	4,953,966		4,748,442

Shareholders' Equity:
Common stock, par value $ 1.00 per share; 40,000,000 shares authorized at September 30, 2024 and December 31, 2023; 17,060,896 issued at September 30, 2024 and 16,998,929 at December 31, 2023; 16,620,174 outstanding at September 30, 2024 and 16,573,707 at December 31, 2023	17,061		16,999
Additional paid-in capital	406,922		405,725
Retained earnings	172,234		145,982
Accumulated other comprehensive loss	( 13,116 )		( 16,637 )
Treasury stock, at cost; 440,722 shares at September 30, 2024 and 425,222 shares at December 31, 2023	( 10,042 )		( 9,719 )
Total Shareholders’ Equity	573,059		542,350
Total Liabilities and Shareholders' Equity	$	5,527,025	$	5,290,792

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2024		2023		2024		2023
INTEREST INCOME
Loans, including fees	$	68,080	$	58,792	$	197,412	$	156,751
Investment securities:
Taxable	4,136		4,106		12,319		11,942
Tax-exempt	359		382		1,106		1,162
Other interest-bearing balances	223		86		973		222
Federal funds sold	1,043		51		1,461		145
Total Interest Income	73,841		63,417		213,271		170,222
INTEREST EXPENSE
Deposits	30,689		23,559		85,484		53,487
Short-term borrowings	2,296		1,584		10,066		4,581
Long-term and subordinated debt	687		794		2,330		2,181
Total Interest Expense	33,672		25,937		97,880		60,249
Net Interest Income	40,169		37,480		115,391		109,973
Provision for credit losses - loans	621		1,427		1,784		3,074
(Benefit)/Provision for credit losses - CCL	( 105 )		660		( 601 )		1,290
Net provision for credit losses	516		2,087		1,183		4,364
Net Interest Income After Provision for Credit Losses	39,653		35,393		114,208		105,609
NONINTEREST INCOME
Fiduciary and wealth management	1,204		1,296		3,465		3,736
ATM debit card interchange	962		986		2,880		3,040
Service charges on deposits	549		509		1,597		1,458
Mortgage banking	768		382		1,820		1,053
Mortgage hedging	( 1 )		67		( 1 )		215
Net gain on sales of SBA loans	151		85		332		213
Earnings from cash surrender value of life insurance	276		278		861		824

Other	1,269		1,743		5,390		4,352
Total Noninterest Income	5,178		5,346		16,344		14,891
NONINTEREST EXPENSE
Salaries and employee benefits	16,156		15,259		47,151		44,130
Software licensing and utilization	2,366		2,085		6,694		6,101
Occupancy, net	1,815		1,761		5,658		5,397
Equipment	1,206		1,292		3,715		3,791
Shares tax	824		808		1,945		2,458
Legal and professional fees	1,613		890		3,300		2,292
ATM/card processing	606		641		1,650		1,666
Intangible amortization	460		484		1,313		1,289
FDIC Assessment	1,150		1,746		3,327		2,770
Loss (Gain) on sale of foreclosed assets, net	( 35 )		( 18 )		7		( 144 )
Merger and acquisition	109		352		109		5,568
Post-acquisition restructuring	—		—		—		2,952
Other	3,689		3,929		11,834		11,928
Total Noninterest Expense	29,959		29,229		86,703		90,198
INCOME BEFORE PROVISION FOR INCOME TAXES	14,872		11,510		43,849		30,302
Provision for income taxes	2,571		2,274		7,644		5,003
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	12,301	$	9,236	$	36,205	$	25,299

PER COMMON SHARE DATA:
Basic Earnings Per Common Share	$	0.74	$	0.56	$	2.18	$	1.56
Diluted Earnings Per Common Share	$	0.74	$	0.56	$	2.18	$	1.56
Weighted-average basic shares outstanding	16,612,657		16,571,825		16,585,719		16,233,006
Weighted-average diluted shares outstanding	16,657,169		16,594,999		16,625,559		16,264,722

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In Thousands)	2024		2023		2024		2023
Net income	$	12,301	$	9,236	$	36,205	$	25,299

Other comprehensive (loss)/income:

Unrealized gains/(losses) arising during the period on available for sale securities, net of income tax.	6,436		( 4,410 )		4,524		( 5,694 )



Unrealized holding (losses)/gains arising during the period on interest rate derivatives used in cash flow hedges, net of income tax.	( 2,427 )		859		( 989 )		3,568

Change in defined benefit plans, net of income tax.( 1)	( 2 )		( 6 )		3		( 8 )

Reclassification adjustment for settlement gains and activity related to benefit plans, net of income tax.( 2 )	—		—		( 17 )		( 12 )

Total other comprehensive (loss)/income	4,007		( 3,557 )		3,521		( 2,146 )

Total comprehensive income	$	16,308	$	5,679	$	39,726	$	23,153

(1) The change in defined benefit plans consists primarily of unrecognized actuarial (losses)/gains on defined benefit plans during the period.

(2) The reclassification adjustment for benefit plans includes settlement gains, amortization of prior service costs, and amortization of net gain or loss. Amounts are included in other income on the Consolidated Statements of Income within total noninterest income.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Shareholders' Equity
(In thousands, except per share data)	Shares	Amount
Balance, January 1, 2024	16,998,929	$	16,999	$	405,725	$	145,982	$	( 16,637 )	$	( 9,719 )	$	542,350
Net income	—	—		—		12,133		—		—		12,133
Total other comprehensive income, net of taxes	—	—		—		—		( 310 )		—		( 310 )
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,314 )		—		—		( 3,314 )
Repurchased stock	—	—		—		—		—		( 323 )		( 323 )
Employee Stock Purchase Plan	5,653	5		107		—		—		—		112
Director Stock Purchase Plan	1,777	2		34		—		—		—		36
Restricted stock activity	—	—		284		—		—		—		284
Balance, March 31, 2024	17,006,359	$	17,006	$	406,150	$	154,801	$	( 16,947 )	$	( 10,042 )	$	550,968

Net income	—	—		—		11,771		—		—		11,771
Total other comprehensive loss, net of taxes	—	—		—		—		( 176 )		—		( 176 )
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,316 )		—		—		( 3,316 )


Employee Stock Purchase Plan	5,123	5		98		—		—		—		103
Director Stock Purchase Plan	1,389	1		29		—		—		—		30
Restricted stock activity	38,365	39		267		—		—		—		306
Balance, June 30, 2024	17,051,236	$	17,051	$	406,544	$	163,256	$	( 17,123 )	$	( 10,042 )	$	559,686

Net income	—	—		—		12,301		—		—		12,301
Total other comprehensive loss, net of taxes	—	—		—		—		4,007		—		4,007
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,323 )		—		—		( 3,323 )
Repurchased stock	—	—		—		—		—		—		—
Employee Stock Purchase Plan	5,565	6		116		—		—		—		122
Director Stock Purchase Plan	1,021	1		30		—		—		—		31
Restricted stock activity	3,074	3		232		—		—		—		235
Balance, September 30, 2024	17,060,896	$	17,061	$	406,922	$	172,234	$	( 13,116 )	$	( 10,042 )	$	573,059

Table of Contents

MID PENN BANCORP, INC.


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
(In thousands, except per share data)	Shares	Amount
Balance, January 1, 2023	16,094,486	$	16,094	$	386,987	$	133,114	$	( 19,216 )	$	( 4,880 )	$	512,099
Net income	—	—		—		11,227		—		—		11,227
Total other comprehensive loss, net of taxes	—	—		—		—		1,842		—		1,842
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,176 )		—		—		( 3,176 )
Impact of adopting CECL (1)	—	—		—		( 11,548 )		—		—		( 11,548 )
Employee Stock Purchase Plan	2,217	2		55		—		—		—		57
Director Stock Purchase Plan	1,651	2		41		—		—		—		43
Restricted stock activity	—	—		249		—		—		—		249
Balance, March 31, 2023	16,098,354	$	16,098	$	387,332	$	129,617	$	( 17,374 )	$	( 4,880 )	$	510,793

Net income	—	—		—		4,836		—		—		4,836
Total other comprehensive loss, net of taxes	—	—		—		—		( 431 )		—		( 431 )
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,182 )		—		—		( 3,182 )
Common stock issued to Brunswick shareholders (2)	849,510	850		17,245		—		—				18,095
Repurchased stock	—	—		—		—		—		( 4,580 )		( 4,580 )
Employee Stock Purchase Plan	2,258	2		48		—		—		—		50
Director Stock Purchase Plan	2,511	3		53		—		—		—		56
Restricted stock activity	27,667	27		224		—		—		—		251
Balance, June 30, 2023	16,980,300	$	16,980	$	404,902	$	131,271	$	( 17,805 )	$	( 9,460 )	$	525,888

Net income	—	—		—		9,236		—		—		9,236
Total other comprehensive loss, net of taxes	—	—		—		—		( 3,557 )		—		( 3,557 )
Common stock cash dividends declared, $ 0.20 per share	—	—		—		( 3,308 )		—		—		( 3,308 )
Employee Stock Purchase Plan	4,833	5		90		—		—		—		95
Director Stock Purchase Plan	2,263	2		43		—		—		—		45
Restricted stock activity	5,673	6		306		—		—		—		312
Balance, September 30, 2023	16,993,069	16,993		405,341		137,199		( 21,362 )		( 9,460 )		528,711

(1) The Corporation adopted ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" effective January 1, 2023. See "Note 1 - Summary of Significant Accounting Policies" for further details.

(2) Shares issued on May 19, 2023 as a result of the Brunswick Acquisition . See "Note 2 - Business Combinations" to the Consolidated Financial Statements for more information.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
(In thousands)	2024		2023
Operating Activities:
Net Income	$	36,205	$	25,299
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	1,183		4,364
Depreciation	3,666		3,645
Amortization of intangibles	1,313		1,289
Net amortization of security discounts/premiums	305		363
Noncash operating lease expense	1,563		1,413
Amortization of finance lease right of use asset	135		134

Earnings on cash surrender value of life insurance	( 861 )		( 824 )
Mortgage loans originated for sale	( 84,379 )		( 86,451 )
Proceeds from sales of mortgage loans originated for sale	82,135		85,709
Gain on sale of mortgage loans	( 1,820 )		( 1,053 )
SBA loans originated for sale	( 4,375 )		( 4,015 )
Proceeds from sales of SBA loans originated for sale	4,707		3,802
Gain on sale of SBA loans	( 332 )		( 213 )
Gain on sale of property, plant, and equipment	( 10 )		( 59 )
Loss/(Gain) on sale or write-down of foreclosed assets	7		( 144 )


Accretion of subordinated debt	( 460 )		( 440 )
Stock compensation expense	825		812
Change in deferred income tax cost/(benefit)	80		( 1,501 )


Increase accrued interest receivable	( 1,466 )		( 4,654 )
Decrease (Increase) in other assets	1,065		( 621 )
Increase in accrued interest payable	4,738		10,443
Decrease in operating lease liability	( 1,507 )		( 1,936 )
Increase in other liabilities	4,575		2,332
Net Cash Provided By Operating Activities	47,292		37,694

Investing Activities:
Proceeds from the sale of available-for-sale securities	—		1,751
Proceeds from the maturity or call of available-for-sale securities	22,050		12,782
Purchases of available-for-sale securities	( 48,051 )		—
Proceeds from the maturity or call of held-to-maturity securities	12,261		8,145

Stock dividends of FHLB and other bank stock	1,136		549
Reduction (Purchases) of restricted investment in bank stock	5,043		( 5,788 )
Net cash (paid)/received from acquisition	( 2,676 )		1,068
Net increase in loans	( 178,910 )		( 319,369 )
Purchases of bank premises and equipment	( 664 )		( 2,707 )
Proceeds from the sale of premises and equipment	152		59
Proceeds from the sale of foreclosed assets	195		644
Proceeds from bank-owned life insurance	2,223		774

Gain on bank-owned life insurance	—		( 125 )
Net change in investments in tax credits and other partnerships	( 407 )		( 5,615 )
Net Cash Used in Investing Activities	( 187,648 )		( 307,832 )

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MID PENN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(CONTINUED)


Financing Activities:
Net increase in deposits	360,552		320,666
Proceeds from long-term debt	—		25,000
Common stock dividends paid	( 9,953 )		( 9,666 )
Proceeds from Employee and Director Stock Purchase Plan stock issuance	434		346

Treasury stock purchased	( 323 )		( 4,580 )

Net change in finance lease liability	( 98 )		( 69 )
Net change in short-term borrowings	( 127,435 )		36,353
Long-term debt repayment	( 35,189 )		( 30,694 )
Subordinated debt redemption and trust preferred securities	—		( 10,000 )

Net Cash Provided by Financing Activities	187,988		327,356

Net increase in cash and cash equivalents	47,632		57,218
Cash and cash equivalents, beginning of period	96,763		60,881
Cash and cash equivalents, end of period	$	144,395	$	118,099

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	93,142	$	56,707
Cash paid for income taxes	291		4,400

Supplemental Noncash Disclosures:
Recognition of operating lease right of use assets	$	—	$	1,336
Recognition of operating lease liabilities	—		1,336

Loans transferred to foreclosed assets held for sale	164		1,362







Fair value of assets acquired in business combination, excluding cash (1)(2)	$	1,547	$	362,070
Goodwill recorded (1)(2)	1,129		12,800
Liabilities assumed in business combination (2)	—		345,043
Stock issued in business combination (3)	—		18,095

(1) Includes the impact of the Insurance Acquisition on July 31, 2024. See "Note 2 - Business Combinations" to the Consolidated Financial Statement for additional information.

(2) Includes the impact of the Brunswick Acquisition on May 19, 2023. See "Note 2 - Business Combinations" to the Consolidated Financial Statement for additional information.

(3) 2,500 shares of restricted stock were paid out in cash resulting in $ 776 thousand of cash consideration relating to stock awards as a result of the Brunswick Acquisition on May 19, 2023.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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MID PENN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

Mid Penn Bancorp, Inc. ("Mid Penn" or the "Corporation"), through operations conducted by Mid Penn Bank (the "Bank") and its nonbank subsidiaries, engages in a full-service commercial banking and trust business, making available to the community a wide range of financial services, including, but not limited to, mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development loans, loans to non-profit entities and local government loans, and various types of time and demand deposits including but not limited to, checking accounts, savings accounts, clubs, money market deposit accounts, certificates of deposit, and IRAs. In addition, the Bank provides a full range of trust and wealth management services through its Trust Department. Deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") to the extent provided by law.

Mid Penn also fulfills the insurance needs of both existing and potential customers through MPB Risk Services, LLC, doing business as MPB Insurance and Risk Management.

The financial services are provided to individuals, partnerships, non-profit organizations, and corporations through its retail banking offices located throughout Pennsylvania and two counties in New Jersey.

Basis of Presentation

For all periods presented, the accompanying consolidated financial statements include the accounts of Mid Penn Bancorp, Inc., its wholly-owned subsidiary, Mid Penn Bank, and four wholly-owned nonbank subsidiaries, MPB Financial Services, LLC, which includes MPB Wealth Management, LLC (which ceased operating during the first quarter of 2024), MPB Risk Services, LLC, and MPB Launchpad Fund I, LLC. As of September 30, 2024, the accounts and activities of these nonbank subsidiaries were not material to warrant separate disclosure or segment reporting. As a result, Mid Penn has only one reportable segment for financial reporting purposes. All material intercompany accounts and transactions have been eliminated in consolidation.

Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. Mid Penn believes the information presented is not misleading, and the disclosures are adequate. For comparative purposes, the September 30, 2023 and December 31, 2023 balances have been reclassified, when necessary, to conform to the 2024 presentation. Such reclassifications had no impact on net income or total shareholders’ equity. In the opinion of management, all adjustments necessary for fair presentation of the periods presented have been reflected in the accompanying consolidated financial statements. All such adjustments are of a normal, recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2023 Annual Report.

Subsequent Events

Mid Penn has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2024 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the issuance date of these consolidated financial statements.

On October 31, 2024, Mid Penn Bancorp, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with William Penn Bancorporation (“William Penn”) pursuant to which William Penn will merge with and into Mid Penn in an all-stock transaction valued at approximately $ 127 million, based on Mid Penn’s closing stock price as of October 30, 2024. The Merger has been approved unanimously by each company’s board of directors and is expected to close in the first half of 2025. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Mid Penn and William Penn shareholders.

Under the terms of the Merger Agreement, shareholders of William Penn will have the right to receive, for each share of common stock, par value $ 0.01 per share, of William Penn, 0.426 shares of Mid Penn common stock (the “Exchange Ratio”) and cash in lieu of fractional shares, subject to adjustment and proration as described in the Merger Agreement.

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MID PENN BANCORP, INC.

Underwritten Public Offering

On November 1, 2024, Mid Penn issued a press release on a Form 8-K announcing the pricing of an underwritten public offering of 2,375,000 shares of the Corporation’s common stock at a price to the public of $ 29.50 per share, for an aggregate offering amount of $ 70.0 million, through Stephens Inc. and Piper Sandler & Co., as representatives of the underwriters (the “Underwriters”). Mid Penn also granted the Underwriters a 30 -day option to purchase up to an additional 15 percent of the offered amount of common stock, equal to 356,250 shares, from the Corporation.

On November 4, 2024, Mid Penn announced on a Form 8-K that it had completed its underwritten public offering of 2,375,000 shares of common stock at a price of $ 29.50 per share, before underwriting discounts, and on November 5, 2024, Mid Penn announced on a Form 8-K that it had completed the sale and issuance of 356,250 additional shares of common stock upon the exercise in full by the Underwriters of their option to purchase additional shares. The aggregate gross proceeds of the offering were $ 80.6 million. The net proceeds of the offering after deducting the underwriting discount and other estimated offering expenses are expected to be approximately $ 76.5 million.

Mid Penn intends to use the net proceeds of the offering to support our continued growth, including investments in the Bank to support organic growth, potential redemption of subordinated debt, future strategic transactions and for other general corporate purposes.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Material estimates subject to significant change include the allowance for credit losses, the expected cash flows and collateral values associated with loans that are individually evaluated for credit losses, the carrying value of other real estate owned ("OREO"), the fair value of financial instruments, business combination fair value computations, the valuation of goodwill and other intangible assets, stock-based compensation and deferred income tax assets.

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Accounting Standards adopted and Updated Significant Accounting Policy

On January 1, 2023, the Corporation adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments , which replaced the incurred loss methodology, and is referred to as CECL. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans and HTM debt securities. It also applies to OBS credit exposures (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with ASC Topic 842. Prior to 2024, the provision for OBS credit losses was included in Other Expenses on the Statement of Income. Beginning March 31, 2024, the provision for OBS credit losses is included in Provision for Credit Losses on the Income Statement. Prior periods have been updated for presentation.

All other significant accounting policies used in preparation of the Consolidated Financial Statements are disclosed in the 2023 Annual Report. Those significant accounting policies are unchanged at September 30, 2024.

Accounting Standards Pending Adoption

ASU No. 2023-02: The FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

The amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments. The amendments in this update also remove certain guidance for Qualified Affordable Housing Project investments and require the application of the delayed equity contribution guidance to all tax equity investments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and must be applied on either a modified retrospective or a retrospective basis. Early adoption is permitted in any interim period, however if adopted in an interim period the entity shall adopt the amendments in this update as of the beginning of the fiscal year that includes the interim period. ASU No. 2023-02 is not expected to have a material impact on the Corporation's consolidated financial statements.

ASU 2023-06: The FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

ASU 2023-06 amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532 - Disclosure Update and Simplification that was issued in 2018. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. ASU 2023-06 is not expected to have a significant impact on the Corporation's financial statements.

ASU 2023-07: The FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.

ASU 2023-07 amends the ASC to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is not expected to have a significant impact on the Corporation's financial statements.

ASU 2023-09 : The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.

ASU 2023-09 amends the ASC to enhance income tax disclosures by requiring entities to disclose income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes. Additionally, entities are required to disclose amounts greater than 5% of the total income taxes paid to an individual jurisdiction The amendments are effective for annual periods beginning after December 15, 2025. ASU 2023-09 is not expected to have a significant impact on the Corporation's financial statements.

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MID PENN BANCORP, INC.

ASU 2024-01 —The FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718): Scope application of profits interest and similar awards.

The amendments in the ASU apply to all reporting entities that account for profits interest awards as compensation to employees or nonemployees in return for goods or services. The amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods. ASU 2024-01 is not expected to have a significant impact on the Corporation's financial statements.

ASU 2024-02 : The FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements.

This ASU contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments are effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. ASU 2024-02 is not expected to have a significant impact on the Corporation's financial statements.

Note 2 - Business Combination

Commonwealth Benefits Group Acquisition

On July 31, 2024, Mid Penn acquired the insurance business and related accounts of a full-service employee benefits firm that serves mid to large employers across central and eastern Pennsylvania, northern Maryland, and northern Virginia, for a purchase price of $ 2.0 million at closing and an additional $ 800 thousand potentially payable pursuant to a three year earnout.

Mid Penn has recognized total goodwill of $ 1.1 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired.

Brunswick Acquisition

On May 19, 2023, Mid Penn completed its acquisition of Brunswick through the merger of Brunswick with and into Mid Penn with Mid Penn being the surviving corporation. In connection with this acquisition, Brunswick Bank, a wholly-owned subsidiary of Brunswick, merged with and into Mid Penn Bank, a wholly-owned subsidiary of Mid Penn.

This transaction included the acquisition of 5 branches and extended Mid Penn’s footprint into Middlesex and Monmouth counties in central New Jersey. Mid Penn issued 849,510 shares of its common stock as well as a net cash payment to Brunswick shareholders of $ 27.6 million, for total consideration of $ 45.7 million for all outstanding stock and the cancellation of stock options of Brunswick.

Mid Penn has recognized total goodwill of $ 12.8 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. The fair value of the consideration exchanged related to Mid Penn’s common stock was calculated based upon the closing market price of Mid Penn’s common stock as of May 19, 2023. None of the goodwill recognized is expected to be deductible for income tax purposes.

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. Mid Penn considers various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment. As part of the Brunswick Acquisition, Mid Penn acquired PCD loans and leases of $ 18.7 million. Mid Penn established an ACL at acquisition of $ 336 thousand with a corresponding gross-up to the amortized cost of the PCD loans and leases. The non-credit discount on the PCD loans and leases was $ 2.4 million and the Day 1 fair value was $ 16.3 million. The initial provision expense for non-PCD loans associated with the Brunswick Acquisition was $ 2.0 million.

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MID PENN BANCORP, INC.

Estimated fair values of the assets acquired and liabilities assumed in the Brunswick Acquisition as of the closing date are as follows:


(In thousands)
Assets acquired:
Cash and cash equivalents	$	21,029
Federal funds sold	7,604
Investment securities	2,423
Loans	324,471
Goodwill	12,800
Core deposit intangible	999
Premises and equipment	4,568
Cash surrender value of life insurance	3,361
Deferred income taxes	6,393
Accrued interest receivable	1,171
Other assets	5,884
Total assets acquired	390,703
Liabilities assumed:
Deposits:
Noninterest-bearing demand	60,888
Interest-bearing demand	11,767
Money Market	47,362
Savings	14,203
Time	147,163
Long-term debt	60,136
Accrued interest payable	1,911
Other liabilities	1,613
Total liabilities assumed	345,043

Consideration paid	$	45,660

Cash paid	$	27,565
Fair value of common stock issued	18,095

Management has completed its evaluation of fair values of all assets and liabilities shown in the table above and all amounts are considered final.

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MID PENN BANCORP, INC.

Note 3 - Investment Securities

FASB ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," was adopted by Mid Penn on January 1, 2023. ASU 2016-13 introduces the CECL methodology for estimating allowances for credit losses. ASU 2016-13 applies to all financial instruments carried at amortized cost, including HTM securities, and makes targeted improvements to the accounting for credit losses on AFS securities.

In order to comply with ASC 326, Mid Penn conducted a review of its investment portfolio and determined that for certain classes of securities it would be appropriate to assume the expected credit loss to be zero. This zero-credit loss assumption applies to debt issuances of the U.S. Treasury and agencies and instrumentalities of the United States government. The reasons behind the adoption of the zero-credit loss assumption are as follows:

• High credit rating

• Long history with no credit losses

• Guaranteed by a sovereign entity

• Widely recognized as "risk-free rate"

• Can print its own currency

• Currency is routinely held by central banks, used in international commerce, and commonly viewed as reserve currency

• Currently under the U.S. Government conservatorship or receivership

Mid Penn will continuously monitor any changes in economic conditions, credit downgrades, changes to explicit or implicit guarantees granted to certain debt issuers, and any other relevant information that would indicate potential credit deterioration and prompt Mid Penn to reconsider its zero-credit loss assumption.

At the date of adoption, Mid Penn’s estimated allowance for credit losses on AFS and HTM securities under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Mid Penn did not recognize a cumulative effect adjustment through retained earnings related to the AFS and HTM securities.

AFS Securities

ASU 2016-13 made targeted improvements to the accounting for credit losses on AFS securities. The concept of other-than-temporarily impaired has been replaced with the allowance for credit losses. Unlike HTM securities, AFS securities are evaluated on an individual level and pooling of securities is not allowed.

Mid Penn evaluates if any security has a fair value less than its amortized cost on a quarterly basis. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, Mid Penn performs further analysis as outlined below:

• Mid Penn reviews the extent to which the fair value is less than the amortized cost and observes the security’s lowest credit rating as reported by third-party credit ratings companies.

• The securities that violate the credit loss triggers above would be subjected to additional analysis that may include, but is not limited to: changes in market interest rates, changes in securities credit ratings, security type, service area economic factors, financial performance of the issuer or obligor of the underlying issue and any third-party guarantee.

• If Mid Penn determines that a credit loss exists, the credit portion of the allowance will be measured using a DCF analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss Mid Penn records will be limited to the amount by which the amortized cost exceeds the fair value.

The DCF analysis utilizes contractual maturities, as well as third-party credit ratings and cumulative default rates published annually by a reputable third-party.

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MID PENN BANCORP, INC.

At September 30, 2024, the results of the analysis did not identify any securities that violate the credit loss triggers; therefore, no DCF analysis was performed, and no credit loss was recognized on any of the securities available for sale.

Accrued interest receivable is excluded from the estimate of credit losses for AFS securities. At September 30, 2024, accrued interest receivable totaled $ 1.1 million for AFS securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet.

HTM Securities

ASU 2016-13 requires institutions to measure expected credit losses on financial assets carried at amortized cost on a collective or pool basis when similar risks exist. Mid Penn uses several levels of segmentation in order to measure expected credit losses:

• The portfolio is segmented into agency and non-agency securities.

• The non-agency securities are separated into state and political subdivision obligations and corporate debt securities.

Each individual segment is categorized by third-party credit ratings.

As discussed above, Mid Penn has determined that, for certain classes of securities, it would be appropriate to assume the expected credit loss to be zero, which include debt issuances of the U.S. Treasury and agencies and instrumentalities of the United States government. This assumption will be reviewed and attested to quarterly.

At September 30, 2024, Mid Penn’s HTM securities totaled $ 386.6 million. After applying appropriate probability of default and loss given default assumptions, the total amount of current expected credit losses was deemed immaterial. Therefore, no reserve was recorded at September 30, 2024.

Accrued interest receivable is excluded from the estimate of credit losses for HTM securities. At September 30, 2024, accrued interest receivable totaled $ 2.2 million for HTM securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet.

At September 30, 2024, Mid Penn had no HTM securities that were past due 30 days or more as to principal or interest payments. Mid Penn had no HTM securities classified as nonaccrual at September 30, 2024.

The following tables set forth the amortized cost and estimated fair value of investment securities for the periods presented:


	September 30, 2024
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale
U.S. Treasury and U.S. government agencies	$	27,720	$	—	$	484	$	27,236
Mortgage-backed U.S. government agencies	204,050		—		11,888		192,162
State and political subdivision obligations	4,315		—		554		3,761
Corporate debt securities	35,746		—		3,678		32,068
Total available-for-sale debt securities	271,831		—		16,604		255,227
Held-to-maturity
U.S. Treasury and U.S. government agencies	$	241,907	$	—	$	21,463	$	220,444
Mortgage-backed U.S. government agencies	39,213		—		4,233		34,980
State and political subdivision obligations	80,042		—		5,238		74,804
Corporate debt securities	25,456		—		1,319		24,137
Total held-to-maturity debt securities	386,618		—		32,253		354,365
Total	$	658,449	$	—	$	48,857	$	609,592

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	December 31, 2023
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale
U.S. Treasury and U.S. government agencies	$	36,637	$	—	$	988	$	35,649
Mortgage-backed U.S. government agencies	169,184		—		16,501		152,683
State and political subdivision obligations	4,332		—		686		3,646
Corporate debt securities	35,733		—		4,156		31,577
Total available-for-sale debt securities	$	245,886	$	—	$	22,331	$	223,555
Held-to-maturity
U.S. Treasury and U.S. government agencies	$	245,805	$	2	$	28,676	$	217,131
Mortgage-backed U.S. government agencies	43,818		—		5,523		38,295
State and political subdivision obligations	84,035		11		6,486		77,560
Corporate debt securities	25,470		—		935		24,535
Total held-to-maturity debt securities	399,128		13		41,620		357,521
Total	$	645,014	$	13	$	63,951	$	581,076

Estimated fair values of debt securities are based on quoted market prices, where applicable. If quoted market prices are not available, fair values are based on quoted market prices of instruments of a similar type, credit quality and structure, adjusted for differences between the quoted instruments and the instruments being valued. See "Note 8 - Fair Value Measurement," for additional information.

Investment securities having a fair value of $ 490.1 million at September 30, 2024 and $ 380.3 million at December 31, 2023 were pledged to secure public deposits, some Trust department deposit accounts, and certain other borrowings. In accordance with legal provisions for alternatives other than pledging of investments, Mid Penn also obtains letters of credit from the FHLB to secure certain public deposits. These FHLB letter of credit commitments totaled $ 154.0 million as of September 30, 2024 and $ 153.5 million as of December 31, 2023.

The following tables present gross unrealized losses and fair value of debt investment securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the periods presented:


(Dollars in thousands)	Less Than 12 Months					12 Months or More					Total
September 30, 2024	Number of Securities	Estimated Fair Value		Gross Unrealized Losses/(Gains)		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses
Available-for-sale debt securities:
U.S. Treasury and U.S. government agencies	—	$	—	$	—	15	$	27,236	$	484	15	$	27,236	$	484
Mortgage-backed U.S. government agencies	6	51,410		144		91	140,752		11,744		97	192,162		11,888
State and political subdivision obligations	—	—		—		8	3,761		554		8	3,761		554
Corporate debt securities	1	428		72		17	31,640		3,606		18	32,068		3,678
Total available-for-sale debt securities	7	$	51,838	$	216	131	$	203,389	$	16,388	138	$	255,227	$	16,604

Held-to-maturity debt securities:
U.S. Treasury and U.S. government agencies	—	—		—		143	220,444		21,463		143	220,444		21,463
Mortgage-backed U.S. government agencies	2	174		—		62	34,806		4,233		64	34,980		4,233
State and political subdivision obligations	11	3,707		( 12 )		175	71,097		5,250		186	74,804		5,238
Corporate debt securities	4	10,500		—		11	13,637		1,319		15	24,137		1,319
Total held-to-maturity debt securities	17	14,381		( 12 )		391	339,984		32,265		408	354,365		32,253
Total	24	$	66,219	$	204	522	$	543,373	$	48,653	546	$	609,592	$	48,857

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(Dollars in thousands)	Less Than 12 Months					12 Months or More					Total
December 31, 2023	Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses
Available-for-sale securities:
U.S. Treasury and U.S. government agencies	—	$	—	$	—	19	$	35,649	$	988	19	$	35,649	$	988
Mortgage-backed U.S. government agencies	1	4,015		26		92	148,668		16,475		93	152,683		16,501
State and political subdivision obligations	—	—		—		8	3,646		686		8	3,646		686
Corporate debt securities	1	410		90		17	31,167		4,066		18	31,577		4,156
Total available-for-sale securities	2	4,425		116		136	219,130		22,215		138	223,555		22,331

Held-to-maturity securities:
U.S. Treasury and U.S. government agencies	1	$	2,002	$	—	144	$	215,129	$	28,676	145	$	217,131	$	28,676
Mortgage-backed U.S. government agencies	—	—		—		64	38,295		5,523		64	38,295		5,523
State and political subdivision obligations	25	8,729		63		170	68,831		6,423		195	77,560		6,486
Corporate debt securities	1	936		57		14	23,599		878		15	24,535		935
Total held to maturity securities	27	11,667		120		392	345,854		41,500		419	357,521		41,620
Total	29	$	16,092	$	236	528	$	564,984	$	63,715	557	$	581,076	$	63,951

There were no gross realized gains and losses on sales of available-for-sale debt securities for the nine months ended September 30, 2024 and 2023.

The table below illustrates the contractual maturity of debt investment securities at amortized cost and estimated fair value. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay with or without call or prepayment penalties.


(In thousands)	Available-for-sale				Held-to-maturity
September 30, 2024	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in 1 year or less	$	15,003	$	14,958	$	16,458	$	16,345
Due after 1 year but within 5 years	22,970		22,069		134,278		127,167
Due after 5 years but within 10 years	28,964		25,356		178,504		160,077
Due after 10 years	844		682		18,165		15,796
	67,781		63,065		347,405		319,385
Mortgage-backed securities	204,050		192,162		39,213		34,980
	$	271,831	$	255,227	$	386,618	$	354,365

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Note 4 - Loans and Allowance for Credit Losses - Loans

Mid Penn adopted the amendments of FASB ASU 2016-13 on January 1, 2023. The amendments of ASU 2016-13 created FASB ASC Topic 326, "Financial Instruments – Credit Losses," which, among other things, replace much of the guidance and disclosures previously provided in FASB ASC Topic 310, "Receivables." The guidance in FASB ASC Topic 326 replaces the incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit losses. In accordance with FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," Mid Penn has developed an ACL methodology effective January 1, 2023, which replaced its previous allowance for loan losses methodology. See the section captioned "Allowance for Credit Losses, effective January 1, 2023" within this note for additional information regarding Mid Penn’s ACL.

Loans, net of unearned income, are summarized as follows by portfolio segment:


(In thousands)	September 30, 2024		December 31, 2023
Commercial real estate
CRE Nonowner Occupied	$	1,205,058	$	1,149,553
CRE Owner Occupied	627,831		629,904
Multifamily	415,467		309,059
Farmland	220,939		212,690
Total Commercial real estate	2,469,295		2,301,206
Commercial and industrial	713,429		675,079
Construction
Residential Construction	96,000		92,843
Other Construction	340,037		362,624
Total Construction	436,037		455,467
Residential mortgage
1-4 Family 1st Lien	318,646		339,142
1-4 Family Rental	348,803		341,937
HELOC and Junior Liens	138,756		132,795
Total Residential Mortgage	806,205		813,874
Consumer	6,738		7,166
Total loans	$	4,431,704	$	4,252,792

Total loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs. Net deferred loan fees of $ 4.0 million and $ 4.2 million reduced the carrying value of loans as of September 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable is not included in the amortized cost basis of Mid Penn's loans. Accrued interest receivable for loans totaled $ 23.3 million and $ 22.1 million as of September 30, 2024 and December 31, 2023, respectively, with no related ACL and was reported in other assets on the accompanying Consolidated Balance Sheet.

Past Due and Nonaccrual Loans

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The classes of the loan portfolio summarized by the past due status as of September 30, 2024 and December 31, 2023, are summarized as follows:

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(In thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
September 30, 2024
Commercial real estate
CRE Nonowner Occupied	$	1,871	$	1,868	$	10,303	$	14,042	$	1,191,016	$	1,205,058	$	—
CRE Owner Occupied	—		307		457		764		627,067		627,831		—
Multifamily	—		—		—		—		415,467		415,467		—
Farmland	—		—		—		—		220,939		220,939		—
Total Commercial real estate	1,871		2,175		10,760		14,806		2,454,489		2,469,295		—
Commercial and industrial	269		374		917		1,560		711,869		713,429		1
Construction
Residential Construction	184		—		—		184		95,816		96,000		—
Other Construction	—		—		—		—		340,037		340,037		—
Total Construction	184		—		—		184		435,853		436,037		—
Residential mortgage
1-4 Family 1st Lien	3,649		4		726		4,379		314,267		318,646		—
1-4 Family Rental	73		1,307		137		1,517		347,286		348,803		—
HELOC and Junior Liens	2,055		371		2,191		4,617		134,139		138,756		—
Total Residential Mortgage	5,777		1,682		3,054		10,513		795,692		806,205		—
Consumer	117		—		—		117		6,621		6,738		—






Total	$	8,218	$	4,231	$	14,731	$	27,180	$	4,404,524	$	4,431,704	$	1

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(In thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
December 31, 2023
Commercial real estate
CRE Nonowner Occupied	$	3,339	$	682	$	2,115	$	6,136	$	1,143,417	$	1,149,553	$	—
CRE Owner Occupied	1,734		—		859		2,593		627,311		629,904		—
Multifamily	—		—		—		—		309,059		309,059		—
Farmland	—		—		—		—		212,690		212,690		—
Total Commercial real estate	5,073		682		2,974		8,729		2,292,477		2,301,206		—
Commercial and industrial	638		24		1,270		1,932		673,147		675,079		—
Construction
Residential Construction	—		270		303		573		92,270		92,843		—
Other Construction	—		—		2,256		2,256		360,368		362,624		—
Total Construction	—		270		2,559		2,829		452,638		455,467		—
Residential mortgage
1-4 Family 1st Lien	1,554		217		847		2,618		336,524		339,142		—
1-4 Family Rental	2,520		—		644		3,164		338,773		341,937		—
HELOC and Junior Liens	574		50		1,027		1,651		131,144		132,795		—
Total Residential Mortgage	4,648		267		2,518		7,433		806,441		813,874		—
Consumer	41		31		—		72		7,094		7,166		—
Total	$	10,400	$	1,274	$	9,321	$	20,995	$	4,231,797	$	4,252,792	$	—

Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due.

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Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of September 30, 2024 and December 31, 2023 are summarized as follows:


	September 30, 2024						December 31, 2023
(In thousands)	With a Related Allowance		Without a Related Allowance		Total		With a Related Allowance		Without a Related Allowance		Total
Commercial real estate
CRE Nonowner Occupied	505		9,943		10,448		361		4,144		4,505
CRE Owner Occupied	—		1,099		1,099		—		1,909		1,909
Multifamily	—		158		158		93		80		173

Total Commercial real estate	505		11,200		11,705		454		6,133		6,587
Commercial and industrial	762		1,132		1,894		1,222		64		1,286
Construction
Residential Construction	—		—		—		—		303		303
Other Construction	—		—		—		—		2,256		2,256
Total Construction	—		—		—		—		2,559		2,559
Residential mortgage
1-4 Family 1st Lien	—		1,315		1,315		—		1,875		1,875
1-4 Family Rental	—		180		180		2		699		701
HELOC and Junior Liens	—		2,286		2,286		—		1,208		1,208
Total Residential Mortgage	$	—	$	3,781	$	3,781	$	2	$	3,782	$	3,784
Consumer	—		—		—		—		—		—
Total loans	$	1,267	$	16,113	$	17,380	$	1,678	$	12,538	$	14,216

The amount of interest income recognized on nonaccrual loans was approximately $ 165 thousand and $ 551 thousand during the three months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024 and 2023, the amount of interest income recognized on nonaccrual loans was approximately $ 456 thousand and $ 1.0 million, respectively.

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Credit Quality Indicators

Mid Penn categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. On a minimum of a quarterly basis, Mid Penn analyzes loans individually to classify the loans as to their credit risk. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal.

PASS - This type of classification consists of 6 subcategories:

Nominal Risk / Pass - This loan classification is a credit extension of the highest quality.

Moderate Risk / Pass - This type of classification has strong financial ratios, substantial debt capacity, and low leverage with a very favorable comparison to industry peers or better than average improving trends.

Good Acceptable Risk / Pass - This type of classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; the Borrower lists good quality assets with relatively low leverage and ample debt capacity.

Average Acceptable Risk / Pass - This type of classification has financial ratios and assets that are of above average quality; however, the leverage is worse than average compared to industry standards; the Borrower should have a good repayment history and possess consistent earnings with some growth.

Marginally Acceptable Risk / Pass - This type of classification has financial ratios consistent with industry averages, assets of average quality with ascertainable values, acceptable leverage, moderate capital assets and an acceptable reliance on trade debt; however, the Borrower demonstrates marginally adequate earnings, cash flow and debt service plus positive trends.

Weak/Monitor Risk (Watch list) / Pass - This type of classification has financial ratios that are slightly below standard industry averages and assets are below average quality with unstable values; fixed assets could be near or at the end of their useful life and liabilities may not match the asset structure.

SPECIAL MENTION - These credits have developing weaknesses deserving extra attention from the lender and lending management. They are currently protected, but potentially weak. The weakness may be cash flow, leverage, liquidity, management, industry or other factors which may, if not checked or corrected, weaken the asset or inadequately protect the Bank’s credit position at some future date.

SUBSTANDARD - These credit extensions also have well-defined weaknesses, which are inadequately protected by the current worth and debt service capacity of the Borrower, or the collateral pledged, if any. The repayment of principal and interest as originally intended can be jeopardized by defined weaknesses related to adverse financial, managerial, economic, market or political conditions.

DOUBTFUL - These credits have definite weaknesses inherent in Substandard loans with added characteristics that are severe enough to make further collection in full highly questionable and improbable based on the current trends.

LOSS . These loans are considered uncollectible and no longer a viable asset of the Bank. They lack an identifiable source of repayment based on an inability to generate sufficient cash flow to service the debt. All trends are negative and the damage to the financial condition of the Borrower cannot be reversed now or in the near future.

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	September 30, 2024
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis

(In thousands)	2024		2023		2022		2021		2020		Prior				Total
CRE Nonowner Occupied
Pass	$	65,245	$	128,241	$	348,380	$	154,184	$	135,683	$	330,778	$	10,125	$	1,172,636
Special mention	$	—	$	1,517	$	1,260	$	—	$	—	$	9,227	$	—	$	12,004
Substandard or lower	$	—	$	—	$	—	$	—	$	3,238	$	17,180	$	—	$	20,418
Total CRE Nonowner Occupied	$	65,245	$	129,758	$	349,640	$	154,184	$	138,921	$	357,185	$	10,125	$	1,205,058
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE Owner Occupied
Pass	$	32,163	$	100,464	$	112,097	$	67,431	$	82,067	$	210,599	$	12,958	$	617,779
Special mention	$	—	$	220	$	5,069	$	179	$	—	$	1,740	$	—	$	7,208
Substandard or lower	$	—	$	—	$	—	$	198	$	—	$	2,646	$	—	$	2,844
Total CRE Owner Occupied	$	32,163	$	100,684	$	117,166	$	67,808	$	82,067	$	214,985	$	12,958	$	627,831
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	4
Net recoveries	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	4
Multifamily
Pass	$	2,689	$	48,356	$	116,566	$	123,668	$	40,988	$	80,132	$	2,854	$	415,253
Special mention	$	—	$	—	$	—	$	—	$	—	$	56	$	—	$	56
Substandard or lower	$	—	$	—	$	—	$	—	$	—	$	158	$	—	$	158
Total Multifamily	$	2,689	$	48,356	$	116,566	$	123,668	$	40,988	$	80,346	$	2,854	$	415,467
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Farmland
Pass	$	20,269	$	31,606	$	56,933	$	43,239	$	26,510	$	25,428	$	14,435	$	218,420
Special mention	$	—	$	129	$	—	$	—	$	—	$	2,197	$	193	$	2,519
Substandard or lower	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Farmland	$	20,269	$	31,735	$	56,933	$	43,239	$	26,510	$	27,625	$	14,628	$	220,939
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass	$	80,578	$	131,799	$	87,408	$	59,214	$	24,454	$	96,114	$	221,231	$	700,798
Special mention	$	—	$	68	$	505	$	31	$	—	$	4,031	$	4,498	$	9,133
Substandard or lower	$	—	$	—	$	—	$	1,017	$	—	$	1,835	$	646	$	3,498
Total commercial and industrial	$	80,578	$	131,867	$	87,913	$	60,262	$	24,454	$	101,980	$	226,375	$	713,429
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	( 412 )	$	—	$	( 412 )
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	( 412 )	$	—	$	( 412 )
Residential Construction
Pass	$	23,937	$	40,748	$	17,162	$	728	$	—	$	2,006	$	11,235	$	95,816
Special mention	$	—	$	—	$	—	$	—	$	184	$	—	$	—	$	184

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Substandard or lower	—		—		—		—		—		—		—		—
Total Residential Construction	23,937		40,748		17,162		728		184		2,006		11,235		96,000
Gross charge offs	—		—		—		—		—		—		—		—
Current period recoveries	—		—		—		—		—		—		—		—
Net recoveries	—		—		—		—		—		—		—		—
Other Construction
Pass	34,856		142,413		100,095		13,163		13,755		13,325		21,962		339,569
Special mention	—		—		—		—		468		—		—		468
Substandard or lower	—		—		—		—		—		—		—		—
Total Other Construction	34,856		142,413		100,095		13,163		14,223		13,325		21,962		340,037
Gross charge offs	—		—		—		—		—		—		—		—
Current period recoveries	—		—		—		—		—		—		—		—
Net recoveries	—		—		—		—		—		—		—		—
1-4 Family 1st Lien
Performing	23,657		61,907		47,589		35,294		43,586		102,943		2,355		317,331
Non-performing	—		—		—		—		215		1,100		—		1,315
Total 1-4 Family 1st Lien	23,657		61,907		47,589		35,294		43,801		104,043		2,355		318,646
Gross charge offs	—		—		—		—		—		( 7 )		—		( 7 )
Current period recoveries	—		—		—		—		—		9		—		9
Net recoveries	—		—		—		—		—		2		—		2
1-4 Family Rental
Performing	23,563		60,438		89,962		61,131		36,022		73,484		2,055		346,655
Non-performing	—		148		—		—		1,426		574		—		2,148
Total 1-4 Family Rental	23,563		60,586		89,962		61,131		37,448		74,058		2,055		348,803
Gross charge offs	—		—		—		—		—		( 2 )		—		( 2 )
Current period recoveries	—		—		—		—		—		22		—		22
Net recoveries	—		—		—		—		—		20		—		20
HELOC and Junior Liens
Performing	4,618		16,783		10,274		5,006		2,297		10,854		86,638		136,470
Non-performing	—		24		—		—		—		1,261		1,001		2,286
Total HELOC and Junior Liens	4,618		16,807		10,274		5,006		2,297		12,115		87,639		138,756
Gross charge offs	—		—		( 21 )		—		—		—		—		( 21 )
Current period recoveries	—		—		—		—		—		—		—		—
Net charge offs	—		—		( 21 )		—		—		—		—		( 21 )
Consumer
Performing	1,884		1,075		407		426		141		251		2,554		6,738
Non-performing	—		—		—		—		—		—		—		—
Total consumer	1,884		1,075		407		426		141		251		2,554		6,738
Gross charge offs	—		—		( 2 )		—		—		( 32 )		—		( 34 )
Current period recoveries	—		—		1		—		—		31		—		32
Net charge offs	—		—		( 1 )		—		—		( 1 )		—		( 2 )
Total
Pass	259,737		623,627		838,641		461,627		323,457		758,382		294,800		3,560,271
Special mention	—		1,934		6,834		210		652		17,251		4,691		31,572
Substandard or lower	—		—		—		1,215		3,238		21,819		646		26,918
Performing	53,722		140,203		148,232		101,857		82,046		187,532		93,602		807,194
Nonperforming	—		172		—		—		1,641		2,935		1,001		5,749
Total	$	313,459	$	765,936	$	993,707	$	564,909	$	411,034	$	987,919	$	394,740	$	4,431,704

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	December 31, 2023
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis

(In thousands)	2023		2022		2021		2020		2019		Prior				Total
CRE Nonowner Occupied
Pass	$	119,793	$	329,715	$	160,583	$	140,083	$	86,629	$	267,210	$	10,030	$	1,114,043
Special mention	$	—	$	—	$	—	$	—	$	6,009	$	7,926	$	—	$	13,935
Substandard or lower	$	—	$	5,209	$	—	$	3,162	$	229	$	12,975	$	—	$	21,575
Total CRE Nonowner Occupied	$	119,793	$	334,924	$	160,583	$	143,245	$	92,867	$	288,111	$	10,030	$	1,149,553
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE Owner Occupied
Pass	$	92,561	$	121,231	$	75,711	$	86,322	$	60,761	$	174,680	$	14,388	$	625,654
Special mention	$	—	$	—	$	—	$	—	$	—	$	190	$	—	$	190
Substandard or lower	$	—	$	—	$	208	$	—	$	—	$	3,852	$	—	$	4,060
Total CRE Owner Occupied	$	92,561	$	121,231	$	75,919	$	86,322	$	60,761	$	178,722	$	14,388	$	629,904
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	( 16 )	$	—	$	( 16 )
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	( 16 )	$	—	$	( 16 )
Multifamily
Pass	$	26,776	$	44,450	$	105,406	$	41,713	$	23,118	$	65,480	$	1,881	$	308,824
Special mention	$	—	$	—	$	—	$	—	$	—	$	62	$	—	$	62
Substandard or lower	$	—	$	—	$	—	$	—	$	—	$	173	$	—	$	173
Total Multifamily	$	26,776	$	44,450	$	105,406	$	41,713	$	23,118	$	65,715	$	1,881	$	309,059
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Farmland
Pass	$	32,525	$	61,405	$	45,211	$	29,628	$	7,926	$	20,956	$	11,962	$	209,613
Special mention	$	194	$	—	$	—	$	—	$	—	$	2,304	$	186	$	2,684
Substandard or lower	$	—	$	—	$	—	$	—	$	—	$	345	$	48	$	393
Total Farmland	$	32,719	$	61,405	$	45,211	$	29,628	$	7,926	$	23,605	$	12,196	$	212,690
Gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass	$	158,824	$	106,714	$	68,448	$	29,961	$	50,206	$	57,892	$	188,714	$	660,759
Special mention	$	—	$	89	$	2,224	$	—	$	227	$	2,200	$	4,391	$	9,131
Substandard or lower	$	—	$	—	$	662	$	—	$	—	$	1,978	$	2,549	$	5,189
Total commercial and industrial	$	158,824	$	106,803	$	71,334	$	29,961	$	50,433	$	62,070	$	195,654	$	675,079
Gross charge offs	$	—	$	( 100 )	$	—	$	( 111 )	$	—	$	( 27 )	$	—	$	( 238 )
Current period recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net charge offs	$	—	$	( 100 )	$	—	$	( 111 )	$	—	$	( 27 )	$	—	$	( 238 )
Residential construction
Pass	$	43,043	$	25,159	$	6,444	$	979	$	—	$	—	$	16,645	$	92,270
Special mention	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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Substandard or lower	—	573	—	—	—	—	—	573
Total Residential construction	43,043	25,732	6,444	979	—	—	16,645	92,843
Gross charge offs	—	—	—	—	—	—	—	—
Current period recoveries	—	—	—	—	—	—	—	—
Net recoveries	—	—	—	—	—	—	—	—
Other construction
Pass	110,553	156,055	48,214	21,378	10,247	5,856	6,617	358,920
Special mention	—	—	—	1,447	—	—	—	1,447
Substandard or lower	—	—	—	—	—	2,257	—	2,257
Total Other construction	110,553	156,055	48,214	22,825	10,247	8,113	6,617	362,624
Gross charge offs	—	—	—	—	—	—	—	—
Current period recoveries	—	—	—	—	—	—	—	—
Net recoveries	—	—	—	—	—	—	—	—
1-4 Family 1st Lien
Performing	77,801	51,651	41,133	48,748	9,348	106,353	2,240	337,274
Non-performing	—	—	37	218	—	1,613	—	1,868
Total 1-4 Family 1st Lien	77,801	51,651	41,170	48,966	9,348	107,966	2,240	339,142
Gross charge offs	—	—	—	—	—	( 13 )	—	( 13 )
Current period recoveries	—	—	—	—	—	8	—	8
Net recoveries	—	—	—	—	—	( 5 )	—	( 5 )
1-4 Family Rental
Performing	62,897	90,092	64,766	38,672	16,831	64,309	1,885	339,452
Non-performing	—	—	56	1,252	—	1,177	—	2,485
Total 1-4 Family Rental	62,897	90,092	64,822	39,924	16,831	65,486	1,885	341,937
Gross charge offs	—	—	—	—	—	—	—	—
Current period recoveries	—	—	—	—	—	30	—	30
Net recoveries	—	—	—	—	—	30	—	30
HELOC and Junior Liens
Performing	17,936	11,460	5,711	2,962	1,684	8,236	83,598	131,587
Non-performing	—	—	—	—	—	1,208	—	1,208
Total HELOC and Junior Liens	17,936	11,460	5,711	2,962	1,684	9,444	83,598	132,795
Gross charge offs	—	—	—	—	—	—	—	—
Current period recoveries	—	—	—	—	—	—	—	—
Net recoveries	—	—	—	—	—	—	—	—
Consumer
Performing	2,361	754	649	273	223	103	2,803	7,166
Non-performing	—	—	—	—	—	—	—	—
Total consumer	2,361	754	649	273	223	103	2,803	7,166
Gross charge offs	( 86 )	—	( 10 )	( 9 )	—	( 30 )	—	( 135 )
Current period recoveries	26	—	—	1	—	5	—	32
Net charge offs	( 60 )	—	( 10 )	( 8 )	—	( 25 )	—	( 103 )
Total
Pass	584,075	844,729	510,017	350,064	238,887	592,074	250,237	3,370,083
Special mention	194	89	2,224	1,447	6,236	12,682	4,577	27,449
Substandard or lower	—	5,782	870	3,162	229	21,580	2,597	34,220
Performing	160,995	153,957	112,259	90,655	28,086	179,001	90,526	815,479
Nonperforming	—	—	93	1,470	—	3,998	—	5,561
Total	745,264	1,004,557	625,463	446,798	273,438	809,335	347,937	4,252,792

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Mid Penn had no loans classified as "doubtful" as of September 30, 2024 and December 31, 2023. There was $ 892 thousand and $ 121 thousand in loans for which formal foreclosure proceedings were in process at September 30, 2024 and December 31, 2023, respectively.

Collateral-Dependent Loans

A financial asset is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of financial assets deemed collateral-dependent, Mid Penn elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, Mid Penn records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent financial assets consists of various types of real estate, including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land.

Allowance for Credit Losses

Mid Penn’s ACL - loans methodology is based upon guidance within FASB ASC Subtopic 326-20, as well as regulatory guidance from the FDIC, its primary federal regulator. The ACL - loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL - loans. The ACL - loans is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL - loans is adjusted through the PCL and reduced by the charge off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.

Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and credit quality. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects management’s expectations of future conditions based on reasonable and supportable forecasts.

The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan purpose codes and similar risk characteristics.

The commercial real estate and residential mortgage loan portfolio segments include loans for both commercial and residential properties that are secured by real estate. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and, if applicable, guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance, in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered when applicable. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.

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The commercial and industrial loan portfolio segment includes commercial loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory, equipment and fixed asset purchases that are secured by those assets, and term financing for those within Mid Penn’s geographic markets. Mid Penn’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information, and evaluation of underlying collateral to support the credit.

The consumer loan portfolio segment is comprised of loans which are underwritten after evaluating a borrower’s capacity, credit and collateral. Several factors are considered when assessing a borrower’s capacity, including the borrower’s employment, income, current debt, assets and level of equity in the property. Credit is assessed using a credit report that provides credit scores and the borrower’s current and past information about their credit history. Loan-to-value and debt-to-income ratios, loan amount and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends, such as conditions that negatively affect housing prices and demand and levels of unemployment.

Mid Penn utilizes a DCF method to estimate the quantitative portion of the allowance for credit losses for loan pools. The DCF is based off of historical losses, including peer data, which is correlated to national unemployment and GDP.

The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.

Mid Penn determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the LHFI portfolio extend beyond this forecast period, Mid Penn uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans.

Qualitative factors used in the ACL methodology include the following:

• Lending process

• Concentrations of credit

• Peer Group Divergence

The ACL for individual loans, such as non-accrual and PCD, that do not share risk characteristics with other loans is measured as the difference between the discounted value of expected future cash flows, based on the effective interest rate at origination, and the amortized cost basis of the loan, or the net realizable value. The ACL is the difference between the loan’s net realizable value and its amortized cost basis (net of previous charge-offs and deferred loan fees and costs), except for collateral-dependent loans. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or the "as is" value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on a regular basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Mid Penn’s Real Estate Administration Group to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of the expected credit loss is charged off.

Mid Penn may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine whether there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, Mid Penn takes into consideration loan grades, past due and nonaccrual status. Mid Penn may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, and number of times past due. At the purchase or acquisition date, the amortized cost basis of PCD loans is equal to the

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purchase price and an initial estimate of credit losses. The initial recognition of expected credit losses on PCD loans has no impact on net income. When the initial measurement of expected credit losses on PCD loans is calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the PCL. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan.

Loans are charged off against the ACL, with any subsequent recoveries credited back to the ACL account. Expected recoveries may not exceed the aggregate of amounts previously charged off and expected to be charged off.

The following tables present the activity in the ACL - loans by portfolio segment for the three and nine months ended September 30, 2024 and the three and nine months ended September 30, 2023:


(In thousands)	Balance at June 30, 2024	Charge offs	Recoveries	Net loans (charged off) recovered	(Benefit)/Provision for credit losses	Three Months Ended September 30, 2024
Commercial Real Estate
CRE Nonowner Occupied	10,647	—	—	—	387	11,034
CRE Owner Occupied	5,830	—	—	—	( 607 )	5,223
Multifamily	3,209	—	—	—	349	3,558
Farmland	2,059	—	—	—	( 294 )	1,765
Commercial and industrial	6,934	( 356 )	—	( 356 )	253	6,831
Construction
Residential Construction	1,129	—	—	—	( 102 )	1,027
Other Construction	2,013	—	—	—	426	2,439
Residential Mortgage
1-4 Family 1st Lien	1,349	—	2	2	156	1,507
1-4 Family Rental	1,704	—	—	—	68	1,772
HELOC and Junior Liens	397	—	—	—	( 9 )	388
Consumer	17	( 8 )	15	7	( 6 )	18
Total	35,288	( 364 )	17	( 347 )	621	35,562

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(In thousands)	Balance at December 31, 2023	Charge offs	Recoveries	Net loans (charged off) recovered	(Benefit)/Provision for credit losses	Nine Months Ended September 30, 2024
Commercial Real Estate
CRE Nonowner Occupied	10,267	—	—	—	767	11,034
CRE Owner Occupied	5,646	—	4	4	( 427 )	5,223
Multifamily	2,202	—	—	—	1,356	3,558
Farmland	2,064	—	—	—	( 299 )	1,765
Commercial and industrial	7,131	( 412 )	—	( 412 )	112	6,831
Construction
Residential Construction	1,256	—	—	—	( 229 )	1,027
Other Construction	2,146	—	—	—	293	2,439
Residential Mortgage
1-4 Family 1st Lien	1,207	( 7 )	9	2	298	1,507
1-4 Family Rental	1,859	( 2 )	22	20	( 107 )	1,772
HELOC and Junior Liens	389	( 21 )	—	( 21 )	20	388
Consumer	20	( 34 )	32	( 2 )	—	18
Total	34,187	( 476 )	67	( 409 )	1,784	35,562


(In thousands)	Balance at June 30, 2023		Charge offs		Recoveries		Net loans (charged off) recovered		Provision/(Benefit) for credit losses		Three Months Ended September 30, 2023
Commercial Real Estate
CRE Nonowner Occupied	$	7,872	$	—	$	—	$	—	$	2,283	$	10,155
CRE Owner Occupied	4,141		—		—		—		513		4,654
Multifamily	1,244		—		—		—		989		2,233
Farmland	940		—		—		—		697		1,637
Commercial and industrial	11,403		—		—		—		( 4,072 )		7,331
Construction
Residential Construction	1,729		—		—		—		( 1 )		1,728
Other Construction	1,938		—		—		—		2,212		4,150
Residential Mortgage
1-4 Family 1st Lien	1,628		—		7		7		( 762 )		873
1-4 Family Rental	1,047		—		—		—		( 188 )		859
HELOC and Junior Liens	470		—		—		—		( 107 )		363
Consumer	176		( 33 )		15		( 18 )		( 137 )		21
Unallocated	—		—		—		—		—		—
Total	$	32,588	$	( 33 )	$	22	$	( 11 )	$	1,427	$	34,004

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(In thousands)	Balance at December 31, 2022		CECL Impact		PCD Loans		Charge offs		Recoveries		Net loans (charged off) recovered		Provision/(Benefit) for credit losses		Nine Months Ended September 30, 2023
Commercial Real Estate
CRE Nonowner Occupied	$	8,284	$	259	$	312	$	—	$	—	$	—	$	1,300	$	10,155
CRE Owner Occupied	2,916		91		2		( 16 )		—		( 16 )		1,661		4,654
Multifamily	1,111		35				—		—		—		1,087		2,233
Farmland	831		26				—		—		—		780		1,637
Commercial and industrial	4,593		6,601		5		( 220 )		—		( 220 )		( 3,648 )		7,331
Construction
Residential Construction	—		1,270		12		—		—		—		446		1,728
Other Construction	—		1,931		1		—		—		—		2,218		4,150
Residential Mortgage
1-4 Family 1st Lien	370		1,307		4		( 4 )		7		3		( 811 )		873
1-4 Family Rental	288		731				—		30		30		( 190 )		859
HELOC and Junior Liens	661		( 230 )				—		—		—		( 68 )		363
Consumer	29		154				( 117 )		26		( 91 )		( 71 )		21
Unallocated	( 126 )		( 244 )				—		—		—		370		—
Total	$	18,957	$	11,931	$	336	$	( 357 )	$	63	$	( 294 )	$	3,074	$	34,004

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The following table presents the ACL for loans and the amortized cost basis of the loans by the measurement methodology used as of September 30, 2024 and December 31, 2023:


(In thousands)	ACL - Loans						Loans
September 30, 2024	Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total ACL - Loans		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total Loans
Commercial real estate
CRE Nonowner Occupied	$	10,918	$	116	$	11,034	$	1,194,610	$	10,448	$	1,205,058
CRE Owner Occupied	5,223		—		5,223		626,732		1,099		627,831
Multifamily	3,558		—		3,558		415,309		158		415,467
Farmland	1,765		—		1,765		220,939		—		220,939
Commercial and industrial	6,490		341		6,831		711,535		1,894		713,429
Construction
Residential Construction	1,027		—		1,027		96,000		—		96,000
Other Construction	2,439		—		2,439		340,037		—		340,037
Residential mortgage
1-4 Family 1st Lien	1,507		—		1,507		317,331		1,315		318,646
1-4 Family Rental	1,772		—		1,772		348,623		180		348,803
HELOC and Junior Liens	388		—		388		136,470		2,286		138,756
Consumer	18		—		18		6,738		—		6,738
Total	$	35,105	$	457	$	35,562	$	4,414,324	$	17,380	$	4,431,704


(In thousands)	ACL - Loans						Loans
December 31, 2023	Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total ACL - Loans		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total Loans
Commercial real estate
CRE Nonowner Occupied	$	9,906	$	361	$	10,267	$	1,145,048	$	4,505	$	1,149,553
CRE Owner Occupied	5,646		—		5,646		627,995		1,909		629,904
Multifamily	2,190		12		2,202		308,886		173		309,059
Farmland	2,064		—		2,064		212,690		—		212,690
Commercial and industrial	6,419		712		7,131		673,793		1,286		675,079
Construction
Residential Construction	1,256		—		1,256		92,270		573		92,843
Other Construction	2,146		—		2,146		360,368		2,256		362,624
Residential mortgage
1-4 Family 1st Lien	1,207		—		1,207		337,267		1,875		339,142
1-4 Family Rental	1,857		2		1,859		341,236		701		341,937
HELOC and Junior Liens	389		—		389		131,587		1,208		132,795
Consumer	20		—		20		7,166		—		7,166
Total	$	33,100	$	1,087	$	34,187	$	4,238,306	$	14,486	$	4,252,792

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Modifications to Borrowers Experiencing Financial Difficulty

From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, or a combination thereof, among other things.

Information related to loans modified (by type of modification), whereby the borrower was experiencing financial difficulty at the time of modification, is set forth in the following table:


(In thousands)	Interest Only		Term Extension		Combination: Interest Only and Term Extension		Total		% of Total Class of Financing Receivable
Three months ended September 30, 2024






Commercial and industrial	—		—		287		287		0.04	%










Total	$	—	$	—	$	287	$	287


(In thousands)	Interest Only		Term Extension		Combination: Interest Only and Term Extension		Total		% of Total Class of Financing Receivable

Nine months ended September 30, 2024


























Commercial and industrial	—		—		287		287		0.04	%







HELOC and Junior Liens	—		—		92		92		0.07	%
Total Residential Mortgage	—		—		92		92		0.01	%
Consumer	—		—		—		—		—	%
Total	$	—	$	—	$	379	$	379


(In thousands)	Interest Only	Term Extension	Combination: Interest Only and Term Extension	Total	% of Total Class of Financing Receivable
Three months ended September 30, 2023






Commercial and industrial	—	150	—	150	—










Total	—	150	—	150























(In thousands)	Interest Only		Term Extension		Combination: Interest Only and Term Extension		Total		% of Total Class of Financing Receivable
Nine months ended September 30, 2023
Commercial real estate

CRE Owner Occupied	$	51	$	—	$	180	$	231	0.04	%


Total Commercial real estate	$	51	$	—	$	180	$	231	0.02	%
Commercial and industrial	$	—	$	150	$	—	$	150	0.02	%










Total loans	$	51	$	150	$	180	$	381

The financial effects of the interest-only loan modifications reduced the monthly payment amounts for the borrower and the term extensions in the table above added a weighted-average of 2.0 years to the life of the loans, which also reduced the monthly payment amounts for the borrowers.

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Note 5 - Deposits

Deposits consisted of the following as of September 30, 2024 and December 31, 2023:


(Dollars in thousands)	September 30, 2024		% of Total Deposits		December 31, 2023		% of Total Deposits
Noninterest-bearing demand deposits	$	791,980	16.8	%	$	801,312	18.4	%
Interest-bearing demand deposits	1,098,658		23.4	%	947,372		21.8	%
Money market	925,399		19.7	%	850,674		19.6	%
Savings	264,726		5.6	%	288,404		6.6	%
Total demand and savings	3,080,763		65.5	%	2,887,762		66.4	%
Time	1,626,001		34.5	%	1,458,450		33.6	%
Total deposits	$	4,706,764	100.0	%	$	4,346,212	100.0	%

Overdrafts	$	128	0.00	%	$	315	0.01	%

The scheduled maturities of time deposits at September 30, 2024 were as follows:


	Time Deposits
(In thousands)	Less than $250,000		$250,000 or more
Maturing in 2024	$	543,695	$	193,278
Maturing in 2025	580,141		213,497
Maturing in 2026	49,155		7,741
Maturing in 2027	19,627		1,210
Maturing in 2028	9,772		264
Maturing thereafter	7,329		292
	$	1,209,719	$	416,282

Mid Penn had $ 269.8 million and $ 244.8 million in brokered certificates of deposits as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, Mid Penn had $ 83.8 million and $ 96.7 million of CDAR deposits, respectively.

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Note 6 - Derivative Financial Instruments

Mid Penn manages its exposure to certain interest rate risks through the use of derivatives; however, none are entered into for speculative purposes. In 2023, Mid Penn entered into outstanding derivative contracts designated as hedges. Mid Penn’s free-standing derivative financial instruments are required to be carried at their fair value on the Consolidated Balance Sheets.

Loan-level Interest Rate Swaps

Mid Penn enters into loan-level interest rate swaps with certain qualifying, creditworthy commercial loan customers to meet their interest rate risk management needs. Mid Penn simultaneously enters into parallel interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of the offsetting customer and dealer counterparty swap agreements is that the customer pays a fixed rate of interest and Mid Penn receives a floating rate. Mid Penn’s loan-level interest rate swaps are considered derivatives but are not accounted for using hedge accounting.

Information related to loan level swaps is set forth in the following table:


	September 30, 2024	December 31, 2023
		(Dollars in thousands)
Interest rate swaps on loans with customers
Notional amount		$	205,500		$	187,192
Weighted average remaining term (years)		5.38			6.24
Receive fixed rate (weighted average)		4.58		%	4.59		%
Pay variable rate (weighted average)		7.08		%	7.50		%
Estimated fair value (1)		$	8,778		$	10,484


		September 30, 2024			December 31, 2023
		(Dollars in thousands)
Interest rate swaps on loans with correspondents
Notional amount		$	205,500		$	187,192
Weighted average remaining term (years)		5.38			6.24
Receive variable rate (weighted average)		7.08		%	7.50		%
Pay fixed rate (weighted average)		4.58		%	4.59		%
Estimated fair value (2)		$	8,778		$	10,484

(1) The net amount of the estimated fair value is disclosed in Other Liabilities on the Consolidated Balance Sheet.

(2) The net amount of the estimated fair value is disclosed in Other Assets on the Consolidated Balance Sheet.

Cash Flow Hedges of Interest Rate Risk

Mid Penn’s objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements. To accomplish this objective, Mid Penn primarily uses interest rate swaps as part of its interest rate risk management strategy.

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Information related to cash flow hedges is set forth in the following table:


	September 30, 2024	December 31, 2023
		(Dollars in thousands)
Cash flow hedges
Notional amount		$	240,000		$	190,000
Weighted average remaining term (years)		1.57			2.22
Pay fixed rate (weighted average)		3.67		%	3.74		%
Receive variable rate (weighted average)		3.74		%	4.07		%
Estimated fair value (1)		$	209		$	1,460

(1) The net amount of the estimated fair value is disclosed in Other Assets on the Consolidated Balance Sheet.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on Mid Penn’s variable-rate liabilities. During the next twelve months, Mid Penn estimates that an additional $ 584 thousand will be reclassified as a decrease to interest expense.

Note 7 - Accumulated Other Comprehensive (Loss) Income

The changes in each component of accumulated other comprehensive loss, net of taxes, are as follows:


(I n thousands )	Unrealized Loss on Securities		Unrealized Holding Losses on Interest Rate Derivatives used in Cash Flow Hedges		Defined Benefit Plans		Total
Balance at June 30, 2024	$	( 19,251 )	$	2,258	$	( 130 )	$	( 17,123 )
OCI before reclassifications	6,436		( 2,427 )		( 2 )		4,007
Amounts reclassified from AOCI	—		—		—		—
Balance at September 30, 2024	$	( 12,815 )	$	( 169 )	$	( 132 )	( 13,116 )

Balance at December 31, 2023	$	( 17,339 )	$	820	$	( 118 )	$	( 16,637 )
OCI before reclassifications	4,524		( 989 )		3		3,538
Amounts reclassified from AOCI	—		—		( 17 )		( 17 )
Balance at September 30, 2024	$	( 12,815 )	$	( 169 )	$	( 132 )	$	( 13,116 )

Balance at June 30, 2023	$	( 20,611 )	$	2,709	$	97	$	( 17,805 )
OCI before reclassifications	( 4,410 )		859		( 6 )		( 3,557 )
Amounts reclassified from AOCI	—		—		—		—
Balance at September 30, 2023	$	( 25,021 )	$	3,568	$	91	$	( 21,362 )

Balance at December 31, 2022	$	( 19,327 )	$	—	$	111	$	( 19,216 )
OCI before reclassifications	( 5,694 )		3,568		( 8 )		( 2,134 )
Amounts reclassified from AOCI	—		—		( 12 )		( 12 )
Balance at September 30, 2023	$	( 25,021 )	$	3,568	$	91	$	( 21,362 )

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Note 8 - Fair Value Measurement

Mid Penn uses estimates of fair value in applying various accounting standards for its consolidated financial statements on either a recurring or non-recurring basis. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. Mid Penn groups its assets and liabilities measured at fair value in three hierarchy levels, based on the observability and transparency of the inputs. The fair value hierarchy is as follows:

Level 1 - Inputs that represent quoted prices for identical instruments in active markets.

Level 2 - Inputs that represent quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Inputs that are largely unobservable, as little or no market data exists for the instrument being valued.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

There were no transfers of assets between fair value Level 1 and Level 2 during the three and nine months ended September 30, 2024 or the year ended December 31, 2023.

The following tables illustrate the assets and liabilities measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets.


	September 30, 2024
(In thousands)	Level 1		Level 2		Level 3		Total
Available-for-sale securities:
U.S. Treasury and U.S. government agencies	$	—	$	27,236	$	—	$	27,236
Mortgage-backed U.S. government agencies	—		192,162		—		192,162
State and political subdivision obligations	—		3,761		—		3,761
Corporate debt securities	—		32,068		—		32,068
Equity securities	446		—		—		446
Loans held for sale	—		7,919		—		7,919
Other assets:
Derivative assets	—		8,987		—		8,987
Other liabilities:
Derivative liabilities	—		8,778				8,778


	December 31, 2023
(In thousands)	Level 1		Level 2		Level 3		Total
Available-for-sale securities:
U.S. Treasury and U.S. government agencies	$	—	$	35,649	$	—	$	35,649
Mortgage-backed U.S. government agencies	—		152,683		—		152,683
State and political subdivision obligations	—		3,646		—		3,646
Corporate debt securities	—		31,577		—		31,577
Equity securities	438		—		—		438
Loans held for sale	—		3,855		—		3,855
Other assets:
Derivative assets	—		11,944		—		11,944
Other liabilities:
Derivative Liabilities	—		10,484		—		10,484

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The valuation methodologies and assumptions used to estimate the fair value for the items in the preceding tables are as follows:

Available for sale investment securities - The fair value of debt securities classified as available for sale is determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather, relying on the securities’ relationship to other benchmark quoted prices.

Equity securities - The fair value of equity securities with readily determinable fair values is recorded on the Consolidated Balance Sheet, with realized and unrealized gains and losses reported in other expense on the Consolidated Statements of Income.

Loans held for sale - This category includes mortgage loans held for sale that are measured at fair value. Fair values as of September 30, 2024 were measured as the price that secondary market investors were offering for loans with similar characteristics.

Derivative instruments - Interest rate swaps are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do, however, have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2.

Mortgage banking derivatives represent the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors and the fair value of interest rate swaps. The fair values of Mid Penn’s interest rate locks, forward commitments and interest rate swaps represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. These characteristics classify Mortgage banking derivatives as Level 2. As of September 30, 2024, Mortgage banking derivatives are not considered material.

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. The following table illustrates Level 3 financial instruments measured at fair value on a nonrecurring basis:



(In thousands)	September 30, 2024		December 31, 2023
Individually evaluated loans, net of ACL	$	16,923	$	13,399
Foreclosed assets held for sale	281		293

Net loans - This category consists of loans that were individually evaluated for credit losses, net of the related ACL, and have been classified as Level 3 assets. For 2023, the amount shown is the balance of individually evaluated loans reporting a specific allocation or that have been partially charged-off. All of these loans are considered collateral-dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allowance allocation or not, are considered collateral-dependent. Mid Penn utilized Level 3 inputs such as independent appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable. Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses.

Foreclosed assets held for sale - Values are based on appraisals that consider the sales prices of property in the proximate vicinity.

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The following tables summarize the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn's financial instruments as of the periods presented:


	September 30, 2024
	Carrying Amount		Estimated Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial instruments - assets
Cash and cash equivalents	$	144,395	$	144,395	$	—	$	—	$	144,395
Available-for-sale securities	255,227		—		255,227		—		255,227
Held-to-maturity securities	386,618		—		354,365		—		354,365
Equity securities	446		446		—		—		446
Loans held for sale	7,919		—		7,919		—		7,919
Net loans	4,396,142		—		—		4,426,090		4,426,090
Restricted investment in bank stocks	10,589		10,589		—		—		10,589
Accrued interest receivable	27,286		27,286		—		—		27,286
Derivative assets	8,987		—		8,987		—		8,987
Financial instruments - liabilities
Deposits	$	4,706,764	$	—	$	4,710,933	$	—	$	4,710,933
Short-term borrowings	114,097		—		114,097		—		114,097
Long-term debt (1)	20,617		—		20,617		—		20,617
Subordinated debt	45,894		—		—		—		—
Accrued interest payable	18,995		18,995		—		—		18,995
Derivative liabilities	8,778		—		8,778		—		8,778

(1) Long-term debt excludes finance lease obligations.

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	December 31, 2023
			Estimated Fair Value
(In thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial instruments - assets
Cash and cash equivalents	$	96,763	$	96,763	$	—	$	—	$	96,763
Available-for-sale securities	223,555		—		223,555		—		223,555
Held-to-maturity securities	399,128		—		357,521		—		357,521
Equity securities	438		438		—		—		438
Loans held for sale	3,855		—		3,855		—		3,855
Net loans	4,218,605		—		—		4,221,926		4,221,926
Restricted investment in bank stocks	16,768		16,768		—		—		16,768
Accrued interest receivable	25,820		25,820		—		—		25,820
Derivative assets	11,944		—		11,944		—		11,944
Financial instruments - liabilities
Deposits	$	4,346,212	$	—	$	4,337,723	$	—	$	4,337,723
Short-term debt	241,532		—		241,532		—		241,532
Long-term debt (1)	55,806		—		55,081		—		55,081
Subordinated debt	46,354		—		39,515		—		39,515
Accrued interest payable	14,257		14,257		—		—		14,257
Derivative liabilities	10,484		—		10,484		—		10,484

(1) Long-term debt excludes finance lease obligations.

The Bank’s outstanding and unfunded credit commitments and financial standby letters of credit were deemed to have no significant fair value as of September 30, 2024 and December 31, 2023.

Note 9 - Commitments and Contingencies

Guarantees and commitments to extend credit

Mid Penn is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The commitments include various guarantees and commitments to extend credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Mid Penn evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the customer. Standby letters of credit and financial guarantees written are conditional commitments to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Mid Penn had $ 63.8 million and $ 62.2 million of standby letters of credit outstanding as of September 30, 2024 and December 31, 2023, respectively. Mid Penn does not anticipate any losses because of these transactions. The amount of the liability as of September 30, 2024 and December 31, 2023 for payment under standby letters of credit issued was not considered material.

Mid Penn adopted FASB ASC Topic 326, effective January 1, 2023, which requires Mid Penn to estimate expected credit losses for OBS credit exposures which are not unconditionally cancellable. Mid Penn maintains a separate ACL on OBS credit exposures, including unfunded loan commitments and letters of credit, which is included in other liabilities on the accompanying Consolidated Balance Sheets.

The ACL - OBS is adjusted as a provision for OBS commitments in provision for credit losses. The estimate includes consideration of the likelihood that funding will occur, an estimate of exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates that are derived from the same models and

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approaches for Mid Penn's other loan portfolio segments described in "Note 4 - Loans and Allowance for Credit Losses - Loans" above, as these unfunded commitments share similar risk characteristics with these loan portfolio segments.

The ACL - OBS at September 30, 2024 was $ 3.0 million compared to $ 3.6 million at December 31, 2023. On January 1, 2023 in conjunction with adopting ASC 326, Mid Penn recorded an additional $ 3.1 million of provision for OBS which was included in the adoption cumulative effect adjustment. A benefit for OBS credit losses of $ 105 thousand and $ 601 thousand was recorded for the three and nine months ended September 30, 2024, respectively. The provision for OBS credit losses was $ 661 thousand and $ 1.3 million for the three and nine months ended September 30, 2023, respectively.

Litigation

Mid Penn and its subsidiaries are subject to various pending and threatened legal proceedings or other matters arising out of the normal conduct of business in which claims for monetary damages are asserted. As of the date of this report, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of such pending or threatened matters will be material to Mid Penn’s consolidated financial position. On at least a quarterly basis, Mid Penn assesses its liabilities and contingencies in connection with such matters. For those matters where it is probable that Mid Penn will incur losses and the amounts of the losses can be reasonably estimated, Mid Penn records an expense and corresponding liability in its consolidated financial statements. To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable. The range of losses for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate. This is based on information currently available to Mid Penn and involves elements of judgment and significant uncertainties. While Mid Penn does not believe that the outcome of pending or threatened litigation or other matters will be material to Mid Penn’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future. In addition, regardless of the ultimate outcome of any such legal proceeding, inquiry or investigation, any such matter could cause Mid Penn to incur additional expenses, which could be significant, and possibly material, to Mid Penn’s results of operations in any future period.

Note 10 - Debt

Short-term FHLB and Correspondent Bank Borrowings

Total short-term borrowings were $ 114.1 million and $ 241.5 million as of September 30, 2024 and December 31, 2023, respectively. Short-term borrowings generally consist of federal funds purchased and advances from the FHLB with an original maturity of less than a year. Federal funds purchased from correspondent banks mature in one business day and reprice daily based on the Federal Funds rate. Advances from the FHLB are collateralized by the Bank’s investment in the common stock of the FHLB and by a blanket lien on selected loan receivables comprised principally of real estate secured loans within the Bank’s portfolio totaling $ 3.1 billion at September 30, 2024. The Bank had a short-term borrowing capacity from the FHLB as of September 30, 2024 up to the Bank’s unused borrowing capacity of $ 1.9 billion (equal to $ 2.1 billion of maximum borrowing capacity, less the aggregate amount of FHLB letter of credits securing public funds deposits, and other FHLB advances and obligations outstanding) upon satisfaction of any stock purchase requirements of the FHLB.

The Bank also has unused overnight lines of credit with other correspondent banks amounting to $ 35.0 million at September 30, 2024. No draws were made on these lines as of September 30, 2024 and December 31, 2023, respectively.

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Long-term Debt

The following table presents a summary of long-term debt as of September 30, 2024 and December 31, 2023.


(Dollars in thousands)	September 30, 2024		December 31, 2023
FHLB fixed rate instruments:
Due January 2024, 1.10 %	$	—	$	10,000
Due March 2024, 5.60 %	—		25,000
Due February 2026, 4.51 %	20,000		20,000
Due August 2026, 4.80 %	598		782
Due February 2027, 6.71 %	19		24
Total FHLB fixed rate instruments	20,617		55,806
Lease obligations included in long-term debt	3,099		3,197
Total long-term debt	$	23,716	$	59,003

As a member of the FHLB, the Bank can access a number of credit products which are utilized to provide liquidity. The FHLB fixed rate instruments obtained by the Bank are secured under the terms of a blanket collateral agreement with the FHLB consisting of FHLB stock and qualifying Bank loan receivables, principally real estate secured loans. The Bank also obtains letters of credit from the FHLB to secure certain public fund deposits of municipality and school district customers who agree to use of the FHLB letters of credit as a legally allowable alternative to investment pledging. These FHLB letter of credit commitments totaled $ 154.0 million and $ 153.5 million as of September 30, 2024 and December 31, 2023, respectively.

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Note 11 - Subordinated Debt and Trust Preferred Securities

Subordinated Debt Assumed November 2021 with the Riverview Acquisition

On November 30, 2021, Mid Penn completed its acquisition of Riverview and assumed $ 25.0 million of subordinated notes (the "Riverview Notes"). In accordance with purchase accounting principles, the Riverview Notes were assigned a fair value premium of $ 2.3 million. The notes are treated as Tier 2 capital for regulatory reporting purposes.

The Riverview Notes were entered into by Riverview on October 6, 2020 with certain qualified institutional buyers and accredited institutional investors. The Riverview Notes have a maturity date of October 15, 2030 and initially bear interest, payable semi-annually, at a fixed annual rate of 5.75 % per annum until October 15, 2025. Commencing on that date, the interest rate applicable to the outstanding principal amount due will be reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 563 bps, payable quarterly until maturity. Mid Penn may redeem the Riverview Notes at par, in whole or in part, at its option, anytime beginning on October 15, 2025.

Subordinated Debt Issued December 2020

On December 22, 2020, Mid Penn entered into agreements for and sold at 100 % of their principal amount, an aggregate of $ 12.2 million of its subordinated notes due December 2030 (the "December 2020 Notes") on a private placement basis to accredited investors. The December 2020 Notes are treated as Tier 2 capital for regulatory capital purposes.

The December 2020 Notes bear interest at a rate of 4.5 % per year for the first five years and then float at the Wall Street Journal’s Prime Rate, provided that the interest rate applicable to the outstanding principal balance during the period the December 2020 Notes are floating will at no time be less than 4.5 %. Interest is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on March 31, 2021. The December 2020 Notes will mature on December 31, 2030 and are redeemable, in whole or in part, without premium or penalty, on any interest payment date on or after December 31, 2025 and prior to December 31, 2030, subject to any required regulatory approvals. Additionally, if (i) all or any portion of the December 2020 Notes cease to be deemed Tier 2 Capital, (ii) interest on the December 2020 Notes fails to be deductible for United States federal income tax purposes, or (iii) Mid Penn will be considered an "investment company," Mid Penn may redeem the December 2020 Notes, in whole but not in part, by giving 10 days’ notice to the holders of the December 2020 Notes. In the event of a redemption described in the previous sentence, Mid Penn will redeem the December 2020 Notes at 100 % of the principal amount of the December 2020 Notes, plus accrued and unpaid interest thereon to but excluding the date of redemption.

Holders of the December 2020 Notes may not accelerate the maturity of the December 2020 Notes, except upon the bankruptcy, insolvency, liquidation, receivership or similar event of Mid Penn or Mid Penn Bank, its principal banking subsidiary. Related parties held $ 750 thousand of the December 2020 Notes as of September 30, 2024 and December 31, 2023.

Subordinated Debt Issued March 2020

On March 20, 2020, Mid Penn entered into agreements with accredited investors who purchased $ 15.0 million aggregate principal amount of its subordinated notes due March 2030 (the "March 2020 Notes"). As a result of Mid Penn’s merger with Riverview on November 30, 2021, $ 6.9 million of the March 2020 Notes balance was redeemed as Riverview was a holder of the March 2020 Notes. The balance of March 2020 Notes outstanding as of September 30, 2024 was $ 8.1 million. The March 2020 Notes are intended to be treated as Tier 2 capital for regulatory capital purposes.

The March 2020 Notes bear interest at a rate of 4.0 % per year for the first five years and then float at the Wall Street Journal’s Prime Rate, provided that the interest rate applicable to the outstanding principal balance during the period the March 2020 Notes are floating will at no time be less than 4.25 %. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, beginning on June 30, 2020, for the first five years after issuance and will be payable quarterly in arrears thereafter on March 30, June 30, September 30 and December 30. The March 2020 Notes will mature on March 30, 2030 and are redeemable in whole or in part, without premium or penalty, at any time on or after March 30, 2025 and prior to March 30, 2030. Additionally, if all or any portion of the March 2020 Notes cease to be deemed Tier 2 Capital, Mid Penn may redeem, on any interest payment date, all or part of the 2020 Notes. In the event of a redemption described in the previous sentence, Mid Penn will redeem the March 2020 Notes at 100 % of the principal amount of the March 2020 Notes, plus accrued and unpaid interest thereon to but excluding the date of redemption.

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Holders of the March 2020 Notes may not accelerate the maturity of the March 2020 Notes, except upon the bankruptcy, insolvency, liquidation, receivership or similar event of Mid Penn or Mid Penn Bank, its principal banking subsidiary. Related parties held $ 1.7 million of the March 2020 Notes as of September 30, 2024 and December 31, 2023.

Note 12 - Common Stock and Earnings Per Share

Treasury Stock Repurchase Program

Mid Penn adopted a treasury stock repurchase program ("Program") initially effective March 19, 2020, and renewed through April 24, 2025 by Mid Penn’s Board of Directors on April 24, 2024. The Program authorizes the repurchase of up to $ 15.0 million of Mid Penn’s outstanding common stock. Under the Program, Mid Penn conducts repurchases of its common stock through open market transactions (which may be by means of a trading plan adopted under SEC Rule 10b5-1) or in privately negotiated transactions. Repurchases under the Program are made at the discretion of management and are subject to market conditions and other factors. There is no guarantee as to the exact number of shares that Mid Penn may repurchase. The Program is able to be modified, suspended or terminated at any time, at Mid Penn’s discretion, based upon a number of factors, including liquidity, market conditions, the availability of alternative investment opportunities and other factors Mid Penn deems appropriate. The Program does not obligate Mid Penn to repurchase any shares.

During the nine months ended September 30, 2024, Mid Penn repurchased 15,500 shares of common stock at an average price of $ 20.81 . No shares were repurchased in the three months ended September 30, 2024. As of September 30, 2024, Mid Penn had repurchased 440,722 shares of common stock at an average price of $ 22.78 per share under the Program. The Program had approximately $ 5.0 million remaining available for repurchase as of September 30, 2024.

Dividend Reinvestment Plan

Under Mid Penn’s amended and restated DRIP, 300,000 shares of Mid Penn’s authorized but unissued common stock are reserved for issuance. The DRIP also allows for voluntary cash payments, within specified limits, to be used for the purchase of additional shares.

Equity Incentive Plans

On May 9, 2023, shareholders approved the 2023 Stock Incentive Plan, which authorizes Mid Penn to grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. The 2023 Plan was established for employees and directors of Mid Penn and the Bank, selected by the Compensation Committee of the Board of Directors, to incentivize the further success of the Company, and replaces the 2014 Restricted Stock Plan. The aggregate number of shares of common stock of the Company available for issuance under the Plan is 350,000 shares .

As of September 30, 2024, a total of 263,974 restricted shares were granted under the 2014 Plan, of which 82,728 shares were unvested. The 2014 Plan shares granted and vested resulted in $ 191 thousand and $ 324 thousand in share-based compensation expense for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the 2014 Plan shares granted and vested resulted in share-based compensation expense of $ 813 thousand and $ 825 thousand, respectively.

Share-based compensation expense relating to restricted stock is calculated using grant date fair value and is recognized on a straight-line basis over the vesting periods of the awards. Restricted shares granted to employees vest in equal amounts on the anniversary of the grant date over the vesting period and the expense is a component of salaries and benefits expense on the Consolidated Statement of Income. The employee grant vesting period is determined by the terms of each respective grant, with vesting periods generally between one and four years . Restricted shares granted to directors have a twelve-month vesting period, and the expense is a component of directors’ fees and benefits within the other expense line item on the Consolidated Statement of Income.

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The following data shows the amounts used in computing basic and diluted earnings per common share:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2024		2023		2024		2023
Net income	$	12,301	$	9,236	$	36,205	$	25,299

Weighted average common shares outstanding (basic)	16,612,657		16,571,825		16,585,719		16,233,006
Effect of dilutive unvested restricted stock grants	44,512		23,174		39,840		31,716
Weighted average common shares outstanding (diluted)	16,657,169		16,594,999		16,625,559		16,264,722

Basic earnings per common share	$	0.74	$	0.56	$	2.18	$	1.56
Diluted earnings per common share	0.74		0.56		2.18		1.56

There were no antidilutive instruments at September 30, 2024 and 2023, respectively.

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management Discussion relates to the Corporation, a financial holding company incorporated in the Commonwealth of Pennsylvania, and its wholly-owned subsidiaries, and should be read in conjunction with the consolidated financial statements and other financial information presented in this report.

Caution About Forward-Looking Statements

Forward-looking statements involve risks, uncertainties and assumptions. Although Mid Penn generally does not make forward-looking statements unless Mid Penn’s management believes its management has a reasonable basis for doing so, Mid Penn cannot guarantee the accuracy of any forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements due to a number of uncertainties and risks, including the risks described in this Quarterly Report on Form 10-Q, the 2023 Annual Report, and other unforeseen risks. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available by us on Mid Penn’s website or otherwise, and Mid Penn undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Certain of the matters discussed in this document or in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Exchange Act. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results, including after giving effect to the Merger with William Penn Bancorporation and the assumptions upon which those statements are based. Forward looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” or words or phrases of similar meaning. These forward-looking statements include the expectations of Mid Penn relating to the anticipated opportunities and financial and other benefits of the Merger, and the projections of, or guidance on, Mid Penn’s or the combined company’s future financial performance, asset quality, liquidity, capital levels, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in Mid Penn’s business or financial results. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.

The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements:

• Mid Penn’s ability to efficiently integrate acquisitions, including as a result of the Merger, into its business and operations, which may take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to Mid Penn’s existing business and operations;

• the possibility that the anticipated benefits of the Merger, including anticipated cost savings and other synergies of the Merger may take longer to be realized or may not be achieved in their entirety, and attrition in key client, partner and other relationships relating to the Merger may be greater than expected;

• the effects of future economic conditions on Mid Penn, the Bank, our nonbank subsidiaries, and our markets and customers;

• governmental monetary and fiscal policies, as well as legislative and regulatory changes;

• future actions or inactions of the United States government, including a failure to increase the government debt limit or a prolonged shutdown of the federal government;

• business or economic disruption from national or global epidemic or pandemic events;

• the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, the value of investment securities, and interest rate protection agreements;

• 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 our market area and elsewhere, including institutions operating locally,

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regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;

• an increase in the Pennsylvania Bank Shares Tax to which the Bank’s capital stock is currently subject, or imposition of any additional taxes on the capital stock of Mid Penn or the Bank;

• impacts of the capital and liquidity requirements imposed by bank regulatory agencies;

• the effect of changes in accounting policies and practices, as may be adopted by regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, the SEC, and other accounting and reporting rule making authorities;

• the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, including litigation related to the Merger;

• changes in technology;

• our ability to implement business strategies, including our acquisition strategy;

• our ability to successfully expand our franchise, including through acquisitions or establishing new offices at favorable prices;

• our ability to successfully integrate any banks, companies, offices, assets, liabilities, customers, systems and management personnel we acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames;

• potential goodwill impairment charges, or future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames;

• our ability to attract and retain qualified management and personnel;

• results of regulatory examination and supervision processes;

• the ability to obtain regulatory approvals and satisfy other closing conditions to the Merger, including approval by the shareholders of Mid Penn and William Penn;

• the possibility of increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the Merger;

• potential exposure to unknown or contingent risks and liabilities we have acquired, or may acquire, or target for acquisition, including in connection with the Merger;

• the failure of assumptions underlying the establishment of reserves for loan and lease losses, the assessment of potential impairment of investment securities, and estimations of values of collateral and various financial assets and liabilities;

• our ability to maintain compliance with the listing rules of The NASDAQ Stock Market;

• our ability to maintain the value and image of our brand and protect our intellectual property rights;

• volatility in the securities markets;

• disruptions due to flooding, severe weather, or other natural disasters or acts of God;

• acts of war, terrorism, or global military conflict;

• supply chain disruption;

• the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings with the SEC; and

• other risks and uncertainties contained in this prospectus supplement or incorporated by reference into this prospectus supplement from the other reports and filings with the SEC.

Overview

Mid Penn is a financial holding company, which generates the majority of its revenues through net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the net interest margin, which is FTE net interest income as a percentage of average interest-earning assets. Mid Penn also generates revenue through fees earned on the various services and products offered to its customers and through gains on sales of assets, such as loans,

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investments and properties. Offsetting these revenue sources are provisions for credit losses, non-interest expenses and income taxes.

The following table presents a summary of Mid Penn's earnings and selected performance ratios:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net Income	$	12,301		$	9,236		$	36,205		$	25,299
Diluted EPS	$	0.74		$	0.56		$	2.18		$	1.56
Dividends Declared	$	0.20		$	0.20		$	0.60		$	0.60
Return on average assets (2)	0.89		%	0.72		%	0.89		%	0.71		%
Return on average equity (2)	8.66		%	6.93		%	8.69		%	6.57		%
Net interest margin (1)	3.13		%	3.16		%	3.07		%	3.33		%
Non-performing assets to total assets	0.32		%	0.28		%	0.32		%	0.28		%
Net charge-offs to average loans (annualized)	0.031		%	0.001		%	0.037		%	0.010		%

(1) Presented on a FTE basis using a 21% Federal tax rate and statutory interest expense disallowances. See also the "Net Interest Income" section.

(2) Annualized ratios

During the second quarter of 2023, Mid Penn completed the Brunswick Acquisition, which added total assets of $390.7 million comprised primarily of $324.5 million of loans. This transaction resulted in the addition of 5 branches in central New Jersey. Mid Penn issued 849,510 shares of its common stock as well as a net cash payment to Brunswick shareholders of $27.6 million, for total consideration of $45.7 million for all outstanding stock and the cancellation of options of Brunswick.

Summary of Financial Results

• Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended September 30, 2024 was $12.3 million, or $0.74 per both common share basic and diluted, compared to earnings of $9.2 million, or $0.56 per both common share basic and diluted for the three months ended September 30, 2023. Mid Penn's earnings for the nine months ended September 30, 2024 was $36.2 million, or $2.18 per both common share basic and diluted, compared to earnings of $25.3 million, or $1.56 per both common share basic and diluted for the nine months ended September 30, 2023.

◦ Net Interest Margin - For the third quarter of 2024, Mid Penn’s net interest margin was 3.13% versus 3.16% for the same period of 2023. For the nine months ended September 30, 2024, net interest margin was 3.07% versus 3.34% for the same period of 2023. The decrease is primarily driven by higher interest rates resulting from persistent inflation. The yield on interest-earning assets for the third quarter of 2024 increased 38 basis points from the same period of 2023. The rate on interest-bearing liabilities increased 51 basis points from the same period of 2023.

◦ Loan Growth - Total loans, net of une arned income, as of September 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023, an increase of $178.9 million, or 4.2%. The growth was primarily driven by an increase in multifamily of $106.4 million, an increase in nonowner occupied commercial real estate of $55.5 million , and an increase in commercial and industrial loans of $38.4 million .

◦ Deposit Growth - Total deposits increased $360.6 million, or 8.3%, from $4.3 billion at December 31, 2023, to $4.7 billion at September 30, 2024. The growth was driven by an increase of $202.3 million in interest-bearing transaction accounts, and an increase of $167.6 million in time deposits, offset by a $9.3 million decrease in non-interest bearing accounts.

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• Asset Quality - ACL at September 30, 2024 was $35.6 million, or 0.80% of total loans, as compared to $34.2 million, or 0.80% of total loans at December 31, 2023.

◦ Net Charge-offs/Recoveries - Mid Penn had net charge-offs of $347 thousand and $11 thousand for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, net charge-offs were $409 thousand compared to $294 thousand for the same period of 2023.

◦ Non-performing assets - Total non-performing assets were $17.7 million at September 30, 2024, an increase compared to non-performing assets of $14.5 million at December 31, 2023. The increase is primarily related to the addition of one commercial property with a balance of $7.7 million being placed on nonaccrual in the third quarter of 2024, offset by the sale of one foreclosed property with a balance of $4.7 million in the second quarter of 2024. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.61% at September 30, 2024, compared to 0.57% and 0.49% as of June 30, 2024, and December 31, 2023, respectively.

◦ Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $621 thousand for the three months ended September 30, 2024 compared to $1.4 million for the same period of 2023. The benefit for credit losses on off-balance sheet credit exposures was $105 thousand for the three months ended September 30, 2024, compared to a benefit of $660 thousand for the same period of 2023. The provision for credit losses - loans was $1.8 million for the nine months ended September 30, 2024 compared to $3.1 million for the same period of 2023. The decrease in provision for the nine months ended September 30, 2024, is primarily due to a decrease in loss factors across all portfolios.

• Noninterest Income - Noninterest income totaled $5.2 million for the three months ended September 30, 2024 compared to $5.3 million for the same period of 2023. The decrease is primarily due to a $474 thousand decrease in other miscellaneous noninterest income, driven by a $482 thousand decrease in Bank owned life insurance benefits received, and a $92 thousand decrease in income from Fiduciary activities, partially offset by a $386 thousand increase in mortgage banking income, and a $66 thousand increase in the gain on sales of SBA loans. Noninterest income totaled $16.3 million for the nine months ended September 30, 2024 compared to $14.9 million for the same period of 2023.

• Noninterest Expense - Noninterest expense totaled $30.0 million for the three months ended September 30, 2024, an increase of $730 thousand, or 2.5%, compared to noninterest expense of $29.2 million for the same period of 2023. The increase was driven by a $897 thousand increase in salaries and employee benefits, and a $723 thousand increase in legal and professional fees, partially offset by a $596 thousand decrease in FDIC assessments, a $243 thousand decrease in Merger and Acquisition costs from the Brunswick acquisition in 2023, and a $240 thousand decrease in other miscellaneous noninterest expense. Noninterest expense totaled $86.7 million for the nine months ended September 30, 2024, a decrease of $3.5 million, or 3.88%, compared to noninterest expense of $90.2 million for the same period of 2023.

• Liquidity - Current liquidity, including borrowing capacity, enhanced to nearly $1.91 billion or 141.5% of uninsured and uncollateralized deposits, or approximately 40.5% of total deposits.

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Critical Accounting Estimates

The 2023 Annual Report includes a summary of critical accounting estimates that Mid Penn considers to be most important to the presentation of its financial condition and results of operations because they require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.

The following discussion regards the critical accounting estimates related to the application of CECL and business combinations.

Allowance for Credit Losses

In accordance with CECL, the ACL, which includes both the ACL - loans and the ACL for OBS credit exposures, is calculated with the objective of maintaining a reserve for current expected credit losses over the remaining expected life of the portfolio. Management's determination of the appropriateness of the reserve is based on continuously monitoring and evaluating the loan portfolio, lending-related commitments, current as well as forecasted economic factors, and other relevant factors. The ACL - loans is an estimate of expected losses inherent within Mid Penn's existing loan portfolio.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by Management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.

Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and credit quality. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects Management’s expectations of future conditions based on reasonable and supportable forecasts. As such, the calculation of ACL is inherently subjective and requires management to exercise significant judgment. The CECL estimate is highly sensitive to the economic forecasts used to develop the estimate.

While management endeavors to use the best information known to it in order to make ACL valuations, adjustments to the ACL may be necessary based on changes in economic and other conditions, changes in the composition of the loan portfolio, or changes in accounting guidance. In times of economic slowdown, either local, regional or national, the risk inherent in the loan portfolio could increase resulting in the need for additional provisions to the ACL in future periods. An increase could also be necessitated by an increase in the size of the loan portfolio or in any of its components even though the credit quality of the overall portfolio may be improving.

For further discussion of the methodology used in the determination of the ACL, refer to "Note 1 - Summary of Significant Accounting Policies", "Note 3 - Investment Securities", "Note 4 - Loans and Allowance for Credit Losses - Loans" and "Note 9 - Commitments and Contingencies" to the Consolidated Financial Statements. To the extent actual outcomes differ from management estimates, additional PCL may be required that would adversely impact earnings in future periods.

Goodwill

Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event.

Our most recent annual impairment test was conducted during the fourth quarter of 2023. Factors considered include actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. At September 30, 2024, Mid Penn had goodwill of $128.2 million and Mid Penn's stock continues to trade below book value. Management has not noted any factors either internally or externally which would indicate that a triggering event has occurred during the third quarter of 2024 warranting an additional impairment test. No goodwill impairment has been

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recorded for 2024. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment.

Business Combinations

Assets acquired and liabilities assumed in business combinations are measured at fair value as of the acquisition date. In many cases, determining the fair value of the assets acquired and liabilities assumed requires Mid Penn to estimate the timing and amount of cash flows expected to result from these assets and liabilities and to discount these cash flows at appropriate rates of interest, which require the utilization of significant estimates and judgment in accounting for the acquisition.

Results of Operations

Net Interest Income

Net interest income, Mid Penn’s primary source of revenue, is the amount by which interest income on loans and investments exceeds interest incurred on deposits and borrowings. The amount of net interest income is affected by changes in interest rates and changes in the volume and mix of interest-sensitive assets and liabilities. Net interest income is also shown on a taxable-equivalent basis in total. Income from tax-exempt assets, primarily loans to or securities issued by state and local governments, is adjusted by an amount equivalent to the federal income taxes which would have been paid if the income received on these assets was taxable at the statutory rate of 21% for the periods presented.

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The following table includes average balances, amounts, and yields of interest income and rates of expense, interest rate spread, and net interest margin for the periods presented:


	Average Balances, Income and Interest Rates
	For the Three Months Ended
	September 30, 2024						September 30, 2023
(Dollars in thousands)	Average Balance		Interest		Yield/ Rate (2)		Average Balance		Interest		Yield/ Rate (2)
ASSETS:
Interest Bearing Balances	$	25,123	$	223	3.53	%	$	12,804	$	86	2.66	%
Investment Securities:
Taxable	537,257		3,682		2.73	%	541,403		3,846		2.82	%
Tax-Exempt	73,329		359		1.95	%	77,668		382		1.95	%
Total Investment Securities	610,586		4,041		2.63	%	619,071		4,228		2.71	%

Federal Funds Sold	75,683		1,043		5.48	%	8,260		51		2.45	%
Loans, net of unearned income	4,405,969		68,080		6.15	%	4,053,514		58,792		5.75	%
Restricted Investment in Bank Stocks	13,252		454		13.63	%	10,968		260		9.40	%
Total Interest-earning Assets	5,130,613		73,841		5.73	%	4,704,617		63,417		5.35	%

Cash and Due from Banks	44,052						77,122
Other Assets	295,976						324,364
Total Assets	$	5,470,641					$	5,106,103

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	1,066,878	$	5,291	1.97	%	$	960,052	$	3,899	1.61	%
Money Market	921,054		7,060		3.05	%	929,036		5,969		2.55	%
Savings	272,186		63		0.09	%	308,732		60		0.08	%
Time	1,561,633		18,275		4.66	%	1,308,945		13,631		4.13	%
Total Interest-bearing Deposits	3,821,751		30,689		3.19	%	3,506,765		23,559		2.67	%

Short-term borrowings	169,754		2,296		5.38	%	64,282		1,584		9.78	%
Long-term debt	23,757		264		4.42	%	76,515		333		1.73	%
Subordinated debt and trust preferred securities	45,969		423		3.66	%	46,377		461		3.94	%
Total Interest-bearing Liabilities	4,061,231		33,672		3.30	%	3,693,939		25,937		2.79	%

Noninterest-bearing Demand	775,935						854,302
Other Liabilities	68,175						28,795
Shareholders' Equity	565,300						529,067
Total Liabilities & Shareholders' Equity	$	5,470,641					$	5,106,103

Net Interest Income			$	40,169					$	37,480
Taxable Equivalent Adjustment (1)			252						33
Net Interest Income (taxable-equivalent basis)			$	40,421					$	37,513

Total Yield on Earning Assets					5.73	%					5.35	%
Rate on Supporting Liabilities					3.30	%					2.79	%
Average Interest Spread					2.43	%					2.56	%
Net Interest Margin (1)					3.13	%					3.16	%

(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances.

(2) Annualized ratios

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The following table summarizes the changes in interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the three months ended September 30, 2024 in comparison to the same period in 2023:


	Three months ended September 30, 2024 vs. September 30, 2023
	Increase (decrease)
(Dollars in thousands)	Volume		Rate		Net
INTEREST INCOME:
Interest Bearing Balances	$	83	$	54	$	137
Investment Securities:
Taxable	(29)		(135)		(164)
Tax-Exempt	(21)		(2)		(23)
Total Investment Securities	(50)		(137)		(187)

Federal Funds Sold	415		577		992
Loans	5,098		4,190		9,288
Restricted Investment Bank Stocks	54		140		194
Total Interest Income	5,600		4,824		10,424

INTEREST EXPENSE:
Interest Bearing Deposits:
Interest Bearing Demand	433		959		1,392
Money Market	(51)		1,142		1,091
Savings	(7)		10		3
Time	2,624		2,020		4,644
Total Interest-Bearing Deposits	2,999		4,131		7,130

Short-term Borrowings	2,592		(1,880)		712
Long-term Debt	(229)		160		(69)
Subordinated Debt	(4)		(34)		(38)
Total Interest Expense	5,358		2,377		7,735

NET INTEREST INCOME	$	242	$	2,447	$	2,689

For the three months ended September 30, 2024, net interest income was $40.2 million compared to net interest income of $37.5 million for the three months ended September 30, 2023. The tax-equivalent net interest margin for the three months ended September 30, 2024 was 3.13% compared to 3.16% for the third quarter of 2023, representing a 3 bp decrease compared to the same period in 2023.

The yield on interest-earning assets increased to 5.73% for the quarter ended September 30, 2024, from 5.35% for the quarter ended September 30, 2023. These increases were due to assets continuing to reprice at higher rates during the third quarter of 2024, continued discipline on new loan pricing, and an increase in Fed Funds Sold. Increased yields on interest-earning assets were offset by increases in funding costs for the third quarter of 2024, with the overall cost of interest-bearing liabilities increasing to 3.30% during the third quarter of 2024, compared to 2.79% for the three months ended September 30, 2023.

Average investment securities decreased $8.5 million and the yield on those investment securities decreased 7 bps during the third quarter of 2024 compared to the third quarter of 2023, reducing interest income due to volume by $50 thousand, and reducing interest income due to rates by $137 thousand. Average loans increased $352.5 million, and the yield on those loans increased 39 bps, contributing $5.1 million and $4.2 million, respectively, to the increase in interest income.

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Interest expense increased $7.7 million during the third quarter of 2024 compared to the third quarter of 2023. The rate of interest-bearing liabilities increased from 2.79% for the third quarter of 2023 to 3.30% for the third quarter of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits. In addition, average short-term borrowings of $169.8 million were used to help fund loan growth, contributing $712 thousand to interest expense during the third quarter of 2024.

Although the effective interest rate impact on interest-earning assets and funding sources can be reasonably estimated at current interest rate levels, the interest-bearing product and pricing options selected by customers, and the future mix of the loan, investment, and deposit products in the Bank's portfolios, may significantly change the estimates used in Mid Penn’s asset and liability management and related interest rate risk simulation models. In addition, our net interest income may be impacted by further interest rate actions of the Federal Reserve’s FOMC.

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	Average Balances, Income and Interest Rates on a Taxable-Equivalent Basis
	For the Nine Months Ended September 30,
	2024						2023
(Dollars in thousands)	Average Balance		Interest		Yield/ Rate (2)		Average Balance		Interest		Yield/ Rate (2)
ASSETS:
Interest Bearing Balances	$	33,549	$	973	3.87	%	$	8,806	$	222	3.37	%
Investment Securities:
Taxable	536,894		11,183		2.78		549,883		11,394		2.77
Tax-Exempt	74,584		1,106		1.98		78,606		1,162		1.98
Total Investment Securities	611,478		12,289		2.68		628,489		12,556		2.67

Federal Funds Sold	35,311		1,461		5.53		5,455		145		3.55
Loans, net of unearned income	4,351,253		197,412		6.06		3,756,159		156,751		5.58
Restricted Investment in Bank Stocks	16,241		1,136		9.34		10,234		548		7.16
Total Interest-earning Assets	5,047,832		213,271		5.64		4,409,143		170,222		5.16

Cash and Due from Banks	40,416						66,546
Other Assets	301,733						289,667
Total Assets	$	5,389,981					$	4,765,356

LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing Demand	$	979,676	$	13,652	1.86	%	$	954,396	$	9,806	1.37	%
Money Market	902,104		19,660		2.91		926,079		15,158		2.19
Savings	280,473		187		0.09		317,544		177		0.07
Time	1,513,617		51,985		4.59		1,019,034		28,346		3.72
Total Interest-bearing Deposits	3,675,870		85,484		3.11		3,217,053		53,487		2.22

Short-term borrowings	242,232		10,066		5.55		93,205		4,581		6.57
Long-term debt	29,379		1,059		4.81		40,693		602		1.98
Subordinated debt and trust preferred securities	46,122		1,271		3.68		50,307		1,579		4.20
Total Interest-bearing Liabilities	3,993,603		97,880		3.27		3,401,258		60,249		2.37

Noninterest-bearing Demand	778,421						798,803
Other Liabilities	62,927						50,392
Shareholders' Equity	555,030						514,903
Total Liabilities & Shareholders' Equity	$	5,389,981					$	4,765,356

Net Interest Income			$	115,391					$	109,973
Taxable Equivalent Adjustment (1)			766						232
Net Interest Income (taxable-equivalent basis)			$	116,157					$	110,205

Total Yield on Earning Assets					5.64	%					5.16	%
Rate on Supporting Liabilities					3.27						2.37
Average Interest Spread					2.37						2.79
Net Interest Margin					3.07						3.34

(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances

(2) Annualized ratios

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MID PENN BANCORP, INC.

The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the nine months ended September 30, 2024 in comparison to the same period in 2023:


	Nine Months Ended September 30, 2024 vs. September 30, 2023
(Dollars in thousands)	Increase (decrease)
	Volume		Rate		Net
INTEREST INCOME:
Interest Bearing Balances	$	624	$	127	$	751
Investment Securities:
Taxable	(269)		58		(211)
Tax-Exempt	(60)		4		(56)
Total Investment Securities	(329)		62		(267)

Federal Funds Sold	794		522		1,316
Loans, net of unearned income	24,857		15,804		40,661
Restricted Investment Bank Stocks	322		266		588
Total Interest Income	26,268		16,781		43,049

INTEREST EXPENSE:
Interest Bearing Deposits:
Interest Bearing Demand	260		3,586		3,846
Money Market	(393)		4,895		4,502
Savings	(21)		31		10
Time	13,770		9,869		23,639
Total Interest-Bearing Deposits	13,616		18,381		31,997

Short-term Borrowings	6,193		(708)		5,485
Long-term Debt	(168)		625		457
Subordinated Debt	(131)		(177)		(308)
Total Interest Expense	19,510		18,121		37,631

NET INTEREST INCOME	$	6,758	$	(1,340)	$	5,418

For the nine months ended September 30, 2024, net interest income was $115.4 million compared to net interest income of $110.0 million for the nine months ended September 30, 2023. FTE net interest income was $116.2 million for the nine months ended September 30, 2024, an increase of $6.0 million, or 5.4%, compared to the same period of September 30, 2023. Mid Penn’s FTE net interest margin for the nine months ended September 30, 2024 was 3.07% compared to 3.34% for the same period of September 30, 2023, representing a 27 bp decrease compared to the same period in 2023, primarily driven by higher interest rates resulting from persistent inflation.

The higher yields and the growth in interest-earning assets contributed $16.8 million and $26.3 million, respectively, to the increase in interest income. The yield on interest-earning assets increased 48 bps to 5.64% for the nine months ended September 30, 2024 compared to 5.16% for the same period of 2023. Average interest-earning assets increased $24.7 million, or 14.5%, during the nine months ended September 30, 2024 compared to the same period of 2023.

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Average investment securities decreased $17.0 million, or 2.7%, and the yield on those investment securities increased 1 bp, deducting $329 thousand and contributing $62 thousand, respectively, to interest income. Average loans increased $595.1 million, and the yield on those loans increased 48 bps contributing $24.9 million and $15.8 million, respectively, to the increase in interest income.

Interest expense increased $37.6 million during the first nine months of 2024 compared to the same period of 2023. The rate of interest-bearing liabilities increased from 2.37% for the first nine months of 2023 to 3.27% for the first nine months of 2024. The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. The rate on average interest-bearing deposits increased 91 bps contributing $18.4 million to the increase in interest expense during the nine months ended September 30, 2024 compared to the same period in 2023. In addition, average short-term borrowings of $242.2 million were used to help fund loan growth, contributing $5.5 million to interest expense during the nine months ended September 30, 2024 compared to the same period in 2023.

Provision for Credit Losses - Loans

On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology, and is referred to as CECL. The provision for credit losses on loans was $621 thousand for the three months ended September 30, 2024 compared to a provision of $1.4 million for the three months ended September 30, 2023. The decrease in provision was driven by a decrease in loss factors across all portfolios. The provision for credit losses on loans was $1.8 million for the nine months ended September 30, 2024 compared to a provision of $3.1 million for the nine months ended September 30, 2023. The decrease is primarily due to a decrease in loss factors across all portfolios.

Noninterest Income

Noninterest income for the three months ended September 30, 2024 was $5.2 million and $5.3 million for the three months ended September 30, 2023. The following table and explanations that follow provide additional analysis of noninterest income.

Noninterest income and variance analysis:


	Three Months Ended September 30,
(Dollars in Thousands)	2024		2023		$ Variance		% Variance
Fiduciary and wealth management	$	1,204	$	1,296	$	(92)	(7.1	%)
ATM debit card interchange	962		986		(24)		(2.4)
Service charges on deposits	549		509		40		7.9
Mortgage banking	768		382		386		101.0
Mortgage hedging	(1)		67		(68)		(101.5)
Net gain on sales of SBA loans	151		85		66		77.6
Earnings from cash surrender value of life insurance	276		278		(2)		(0.7)

Other	1,269		1,743		(474)		(27.2)
Total	$	5,178	$	5,346	$	(168)	(3.1	%)

For the three months ended September 30, 2024, noninterest income totaled $5.2 million, a decrease of $168 thousand, or 3.14%, compared to noninterest income of $5.3 million for the three months ended September 30, 2023. The decrease is primarily due to a $474 thousand decrease in other miscellaneous noninterest income, driven by a $482 thousand decrease in Bank owned life insurance benefits received, partially offset by a $386 thousand increase in mortgage banking income, a $76 thousand increase in the gain on sales of SBA loans, and a $74 thousand increase in income from Fiduciary activities.

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MID PENN BANCORP, INC.


	Nine Months Ended September 30,
(Dollars in Thousands)	2024		2023		$ Variance		% Variance
Fiduciary and wealth management	$	3,465	$	3,736	$	(271)	(7.3	%)
ATM debit card interchange	2,880		3,040		(160)		(5.3)
Service charges on deposits	1,597		1,458		139		9.5
Mortgage banking	1,820		1,053		767		72.8
Mortgage hedging	(1)		215		(216)		(100.5)
Net gain on sales of SBA loans	332		213		119		55.9
Earnings from cash surrender value of life insurance	861		824		37		4.5

Other	5,390		4,352		1,038		23.9
Total	$	16,344	$	14,891	$	1,453	9.8	%

For the nine months ended September 30, 2024, noninterest income totaled $16.3 million, an increase of $1.5 million, or 9.76%, compared to noninterest income of $14.9 million for the nine months ended September 30, 2023. The increase in noninterest income is primarily driven by a $1.0 million increase in other miscellaneous noninterest income, driven by increases in Bank owned life insurance benefits received, and a $767 thousand increase in mortgage banking income.

Noninterest Expense

For the three months ended September 30, 2024, noninterest expense totaled $30.0 million, an increase of $730 thousand, or 2.5%, compared to noninterest expense of $29.2 million for the same period in 2023. The following table and explanations that follow provide additional analysis of noninterest expense:


	Three Months Ended September 30,
(Dollars in Thousands)	2024		2023		$ Variance		% Variance
Salaries and employee benefits	$	16,156	$	15,259	$	897	5.9	%
Software licensing and utilization	2,366		2,085		281		13.5
Occupancy expense, net	1,815		1,761		54		3.1
Equipment expense	1,206		1,292		(86)		(6.7)
Shares tax	824		808		16		2.0
Legal and professional fees	1,613		890		723		81.2
ATM/card processing	606		641		(35)		(5.5)
Intangible amortization	460		484		(24)		(5.0)
FDIC Assessment	1,150		1,746		(596)		(34.1)
Gain on sale of foreclosed assets, net	(35)		(18)		(17)		94.4
Merger and acquisition expense	109		352		(243)		(69.0)

Other expenses	3,689		3,929		(240)		(6.1)
Total Noninterest Expense	$	29,959	$	29,229	$	730	2.5	%

For the nine months ended September 30, 2024, noninterest expense totaled $86.7 million, a decrease of $3.5 million, or 3.9%, compared to noninterest expense of $90.2 million for the nine months ended September 30, 2023. The decrease was primarily driven by $7.9 million of Brunswick acquisition costs in 2023, partially offset by a $3.0 million increase in salaries and benefits expense, and a $1.0 million increase in legal and professional fees.

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MID PENN BANCORP, INC.


	Nine Months Ended September 30,
(Dollars in Thousands)	2024		2023		$ Variance		% Variance
Salaries and employee benefits	$	47,151	$	44,130	$	3,021	6.8	%
Software licensing and utilization	6,694		6,101		593		9.7
Occupancy expense, net	5,658		5,397		261		4.8
Equipment expense	3,715		3,791		(76)		(2.0)
Shares tax	1,945		2,458		(513)		(20.9)
Legal and professional fees	3,300		2,292		1,008		44.0
ATM/card processing	1,650		1,666		(16)		(1.0)
Intangible amortization	1,313		1,289		24		1.9
FDIC Assessment	3,327		2,770		557		20.1
Gain on sale of foreclosed assets, net	7		(144)		151		(104.9)
Merger and acquisition expense	109		5,568		(5,459)		(98.0)
Post-acquisition restructuring expense	—		2,952		(2,952)		(100.0)
Other expenses	11,834		11,928		(94)		(0.8)
Total Noninterest Expense	$	86,703	$	90,198	$	(3,495)	(3.9	%)

Income Taxes

The provision for income taxes was $2.6 million for the three months ended September 30, 2024 compared to $2.3 million for the same period in 2023. The provision for income taxes for the nine months ended September 30, 2024 reflects a combined Federal and State effective tax rate of 17.4% and 16.5%, for the nine months ended September 30, 2024 and September 30, 2023, respectively. Generally, Mid Penn’s effective tax rate is below the federal statutory rate due to earnings on tax-exempt loans, investments, and earnings from the cash surrender value of life insurance, as well as the impact of federal income tax credits, including those awarded from Mid Penn’s low-income housing investments. The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn currently anticipates that future earnings will be adequate to fully realize the currently recorded deferred tax assets.

Financial Condition

Mid Penn’s total assets were $5.5 billion as of September 30, 2024, reflecting an increase of $236.2 million, or 4.5%, compared to total assets of $5.3 billion as of December 31, 2023. The increase was primarily driven by organic loan growth, increases in investment securities, and an increase in Fed Funds Sold.

Investment Securities

Mid Penn’s investment portfolio is utilized primarily to support overall liquidity and interest rate risk management, to provide collateral supporting pledging requirements for public funds on deposit, and to generate additional interest income within reasonable risk parameters. The carrying value of total investment securities as of September 30, 2024 were $641.8 million compared to $622.7 million as of December 31, 2023. Mid Penn does not intend to grow the investment portfolio beyond levels necessary to support pledging requirements.

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MID PENN BANCORP, INC.

The following table presents the expected maturities of the investment portfolio and the weighted average yields (calculated based on historical cost):


	Maturing
(In Thousands)	One Year and Less				After One Year thru Five Years				After Five Years Thru Ten Years				After Ten Years
As of September 30, 2024	Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield
Available for sale securities, at fair value:
U.S. Treasury and U.S. government agencies	$	9,961	3.37	%	$	15,384	2.45	%	$	1,891	3.30	%	$	—	—	%
Mortgage-backed U.S. government agencies	—		—		—		—		5,487		2.53		186,675		3.48
State and political subdivision obligations	—		—		—		—		3,079		2.49		682		2.23
Corporate debt securities	4,996		5.15		6,702		4.29		20,370		4.41		—		—
	$	14,957	3.96	%	$	22,086	3.03	%	$	30,827	3.84	%	$	187,357	3.48	%
Held to maturity securities, at amortized cost:
U.S. Treasury and U.S. government agencies	$	6,500	3.09	%	$	94,697	1.91	%	$	140,710	2.09	%	$	—	—	%
Mortgage-backed U.S. government agencies	—		—		2,221		2.97		5,192		2.79		31,800		2.02
State and political subdivision obligations	7,945		2.42		35,587		2.47		18,345		2.25		18,165		2.56
Corporate debt securities	2,011		3.88		3,995		3.23		19,450		4.16		—		—
	$	16,456	2.86	%	$	136,500	2.11	%	$	183,697	2.34	%	$	49,965	2.21	%

Loans, net of unearned income

Total loans, net of unearned income, as of September 30, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023. The growth of $178.9 million, or 4.2%, since December 31, 2023 was primarily the result of organic loan growth across the commercial real estate and commercial and industrial portfolios, offset by decreases in residential mortgage loan portfolios.

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MID PENN BANCORP, INC.


	September 30, 2024				December 31, 2023				Change in Balance
(Dollars in thousands)	Balance		% of Total Loans		Balance		% of Total Loans		$		%
Commercial real estate
CRE Nonowner Occupied	$	1,205,058	27.1	%	$	1,149,553	27.0	%	$	55,505	4.8	%
CRE Owner Occupied	627,831		14.2		629,904		14.8		(2,073)		(0.3)
Multifamily	415,467		9.4		309,059		7.3		106,408		34.4
Farmland	220,939		5.0		212,690		5.0		8,249		3.9
Total Commercial Real Estate	2,469,295		55.7		2,301,206		54.1		168,089		7.3
Commercial and industrial	713,429		16.1		675,079		15.9		38,350		5.7
Construction
Residential Construction	96,000		2.2		92,843		2.2		3,157		3.4
Other Construction	340,037		7.6		362,624		8.5		(22,587)		(6.2)
Total Construction	436,037		9.8		455,467		10.7		(19,430)		(4.3)
Residential mortgage
1-4 Family 1st Lien	318,646		7.2		339,142		8.0		(20,496)		(6.0)
1-4 Family Rental	348,803		7.9		341,937		8.0		6,866		2.0
HELOC and Junior Liens	138,756		3.1		132,795		3.1		5,961		4.5
Total Residential Mortgage	806,205		18.2		813,874		19.1		(7,669)		(0.9)
Consumer	6,738		0.2		7,166		0.2		(428)		(6.0)
	$	4,431,704	100.0	%	$	4,252,792	100.0	%	$	178,912	4.2	%

The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area of the Pennsylvania counties of Berks, Blair, Bucks, Centre, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with Middlesex and Monmouth counties of New Jersey. Commercial real estate, construction, and land development loans are collateralized mainly by mortgages on the income-producing real estate or land involved. Commercial, industrial, and agricultural loans are primarily made to business entities and may be secured by business assets, including commercial real estate, or may be unsecured. Residential real estate loans are secured by liens on the residential property. Consumer loans include installment loans, lines of credit and home equity loans. The Bank has no significant concentration of credit to any one borrower. The Bank’s highest concentration of credit by loan type is in commercial real estate.

Credit risk is managed through portfolio diversification, underwriting policies and procedures, and loan monitoring practices. Lenders are provided with detailed underwriting policies for all types of credit risks accepted by the Bank and must obtain appropriate internal approvals for credit extensions. The Bank also maintains strict documentation requirements and robust credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible, so any exposures that are discovered might be mitigated or potential losses reduced. The Bank generally secures its loans with real estate, with such collateral values dependent and subject to change based on real estate market conditions within its market area.

The following table presents the commercial real estate portfolio by property type along with the weighted average loan to value:

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MID PENN BANCORP, INC.


(Dollars in thousands)	September 30, 2024						December 31, 2023
Commercial Real Estate	Balance		% of portfolio		Weighted Average LTV (2)		Balance		% of portfolio		Weighted Average LTV (2)
Owner Occupied (1)	$	627,831	25.4	%	N/A		$	629,904	27.5	%	N/A
Farmland (1)	220,939		8.9		N/A		212,690		9.2		N/A
Multifamily	415,467		16.8		60.4		309,059		13.4		58.9
Non Owner Occupied
Retail	430,443		17.4		57.1		414,485		18.0		51.0
Office	292,101		11.8		61.0		301,810		13.1		64.4
Industrial	146,816		5.9		49.6		156,075		6.8		49.3
Hospitality	142,635		5.8		46.8		137,718		6.0		49.4
Flex	42,812		1.7		42.7		39,374		1.7		56.0
Mobile Home Park	21,640		0.9		62.7		21,298		0.9		68.4
Health Care	14,636		0.6		53.7		15,618		0.7		54.6
Other Property Types	113,975		4.8		59.8		63,175		2.7		43.2
Total Commercial Real Estate	$	2,469,295	100.0	%	56.7	%	$	2,301,206	100.0	%	55.4	%

(1) LTV not available for Owner Occupied and Farmland properties.

(2) Weighted average Loan to Value is calculated based on estimated current market values of the properties.

Maturity distribution by contractual maturity date and rate sensitivity information related to the loan portfolio is reflected in the table below:


(In Thousands)
As of September 30, 2024	One Year and Less		One to Five Years		Five to Fifteen Years		Over Fifteen Years		Total
Commercial real estate
CRE Nonowner Occupied	$	51,652	$	372,000	$	485,719	$	295,687	$	1,205,058
CRE Owner Occupied	24,144		70,153		262,826		270,708		627,831
Multifamily	54,108		144,721		114,385		102,253		415,467
Farmland	929		7,949		61,392		150,669		220,939
Total Commercial real estate	130,833		594,823		924,322		819,317		2,469,295
Commercial and industrial	22,111		330,657		111,176		249,485		713,429
Construction
Residential Construction	52,882		34,446		7,648		1,024		96,000
Other Construction	124,461		162,672		30,470		22,434		340,037
Total Construction	177,343		197,118		38,118		23,458		436,037
Residential mortgage
1-4 Family 1st Lien	5,529		20,979		87,548		204,590		318,646
1-4 Family Rental	12,702		54,903		107,832		173,366		348,803
HELOC and Junior Liens	8,598		15,033		35,336		79,789		138,756
Total Residential Mortgage	26,829		90,915		230,716		457,745		806,205
Consumer	845		1,905		1,369		2,619		6,738
Total loans held in portfolio	$	357,961	$	1,215,418	$	1,305,701	$	1,552,624	$	4,431,704

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MID PENN BANCORP, INC.


Fixed interest rates:
Commercial real estate
CRE Nonowner Occupied	$	45,308	$	215,021	$	59,229	$	9,447	$	329,005
CRE Owner Occupied	16,057		48,888		22,688		2,069		89,702
Multifamily	35,513		88,668		6,733		—		130,914
Farmland	382		6,750		7,945		56		15,133
Total Commercial real estate	97,260		359,327		96,595		11,572		564,754
Commercial and industrial	16,677		197,420		30,595		11,529		256,221
Construction
Residential Construction	19,845		9,431		40		—		29,316
Other Construction	31,534		37,708		18,477		816		88,535
Total Construction	51,379		47,139		18,517		816		117,851
Residential mortgage
1-4 Family 1st Lien	5,516		19,498		56,030		139,804		220,848
1-4 Family Rental	7,893		50,357		5,855		6,071		70,176
HELOC and Junior Liens	461		6,670		24,565		2,835		34,531
Total Residential Mortgage	13,870		76,525		86,450		148,710		325,555
Consumer	492		1,873		1,369		207		3,941
Total fixed interest rates	$	179,678	$	682,284	$	233,526	$	172,834	$	1,268,322

Floating interest rates:
Commercial real estate
CRE Nonowner Occupied	$	6,343	$	156,980	$	426,490	$	286,240	$	876,053
CRE Owner Occupied	8,086		21,265		240,138		268,640		538,129
Multifamily	18,599		56,052		107,649		102,253		284,553
Farmland	547		1,199		53,447		150,613		205,806
Total Commercial real estate	33,575		235,496		827,724		807,746		1,904,541
Commercial and industrial	5,434		133,237		80,582		237,955		457,208
Construction
Residential Construction	33,037		25,015		7,608		1,024		66,684
Other Construction	92,926		124,964		11,994		21,618		251,502
Total Construction	125,963		149,979		19,602		22,642		318,186
Residential mortgage
1-4 Family 1st Lien	12		1,481		31,519		64,786		97,798
1-4 Family Rental	4,809		4,546		101,977		167,295		278,627
HELOC and Junior Liens	8,137		8,363		10,771		76,954		104,225
Total Residential Mortgage	12,958		14,390		144,267		309,035		480,650
Consumer	353		32		—		2,412		2,797
Total floating interest rates	178,283		533,134		1,072,175		1,379,790		3,163,382
Total fixed and floating interest rates	$	357,961	$	1,215,418	$	1,305,701	$	1,552,624	$	4,431,704

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MID PENN BANCORP, INC.

Credit Quality, Credit Risk, and Allowance for Credit Losses

Mid Penn adopted FASB ASC Topic 326, in accordance with the amendments of FASB ASU 2016-13, effective January 1, 2023. The guidance in FASB ASC 326 replaces Mid Penn’s previous incurred loss methodology with a methodology that reflects the current expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit losses. Mid Penn’s ACL methodology for loans is based upon guidance within FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," as well as regulatory guidance from the FDIC, the Bank's primary federal regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense.

For a complete description of Mid Penn’s ACL methodology and the quantitative and qualitative factors included in the calculation, please see "Note 4 – Loans and Allowance for Credit Losses – Loans" included in Part I. Item 1. – Financial Statements of this report.

Upon the adoption of FASB ASC Topic 326 on January 1, 2023, Mid Penn recorded an overall increase of $15.0 million to the ACL on January 1, 2023 as a result of the adoption of CECL. Retained earnings decreased $11.5 million and deferred tax assets increased by $3.1 million.

Changes in the ACL are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2024			2023			2024			2023
Balance, beginning of period	$	35,288		$	32,588		$	34,187		$	18,957

Impact of adopting CECL	—			—			—			11,931
Purchase credit deteriorated loans	—			—			—			336

Loans charged off during period	(364)			(33)			(476)			(357)
Recoveries of loans previously charged off	17			22			67			63
Net (charge-offs) recoveries	(347)			(11)			(409)			(294)

Provision for credit losses (1)	621			1,427			1,784			3,074
Balance, end of period	$	35,562		$	34,004		$	35,562		$	34,004

Ratio of net charge-offs (recoveries) to average loans outstanding (annualized)	0.031		%	0.001		%	0.013		%	0.010		%

Ratio of ACL - loans to net loans at end of period	0.80		%	0.82		%	0.80		%	0.82		%

.(1) Includes a $2.0 million initial provision for the nine months ended September 30, 2023, for credit losses on non-PCD loans acquired in the Brunswick Acquisition. in 2023.

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The following table presents the change in nonperforming asset categories as of September 30, 2024, December 31, 2023, and September 30, 2023.


(Dollars in thousands)	September 30, 2024			December 31, 2023			September 30, 2023
Non-performing Assets:
Total non-accrual loans	$	17,380		$	14,216		$	13,458

Foreclosed real estate	281			293			905
Total non-performing assets	17,661			14,509			14,363

Accruing loans 90 days or more past due	1			—			12
Total risk elements	$	17,662		$	14,509		$	14,375

Non-accrual loans as a percentage of total loans outstanding	0.39		%	0.33		%	0.32		%

Non-performing assets as a percentage of total loans outstanding and foreclosed real estate	0.40		%	0.34		%	0.35		%

Ratio of ACL to non-performing loans	204.61		%	240.48		%	252.67		%

Total nonperforming assets were $17.7 million at September 30, 2024, an increase compared to nonperforming assets of $14.5 million at December 31, 2023. The increase during the third quarter of 2024 is primarily related to the addition of one commercial property with a balance of $7.7 million being placed on nonaccrual in the third quarter of 2024, offset by the sale of one foreclosed property with a balance of $4.7 million in the second quarter of 2024. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.61% at September 30, 2024, compared to 0.57% and 0.49% as of June 30, 2024, and December 31, 2023, respectively.

Goodwill

Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event. At September 30, 2024, Mid Penn had goodwill of $128.2 million and Mid Penn's stock continues to trade below book value. Management has not noted any factors either internally or externally which would indicate that a triggering event has occurred during the third quarter of 2024 warranting an additional impairment test. Factors considered include actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment. Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2024.

Deposits

Total deposits increased $360.6 million, or 8.3%, from $4.3 billion on December 31, 2023, to $4.7 billion at September 30, 2024. The growth was driven by a $202.3 million increase in interest bearing accounts, and a $167.6 million increase in time deposits, offset by a $9.3 million decrease in noninterest bearing accounts.

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As of September 30, 2024, uninsured deposits were approximately $1.3 billion compared to $1.2 billion as of December 31, 2023. The maturities of the uninsured time deposits as of September 30, 2024 were as follows:



(In thousands)	2024
Three months or less	$	192,587
Over three months to six months	137,421
Over six months to twelve months	67,653
Over twelve months	18,621
	$	416,282

Borrowings

Total short-term borrowings decreased $127.4 million, or 52.8%, from December 31, 2023. FHLB overnight borrowings decreased $112.4 million, along with a decrease of $15.0 million in short term FHLB borrowings. Total long-term borrowings were $23.7 million at September 30, 2024, a decrease of $35.3 million from December 31, 2023.

Liquidity

Mid Penn’s objective is to maintain adequate liquidity to meet funding needs at a reasonable cost and to provide contingency plans to meet unanticipated funding needs or a loss of funding sources, 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 are as follows:

• a growing core deposit base;

• proceeds from the sale or maturity of investment securities;

• payments received on loans and mortgage-backed securities;

• overnight correspondent bank borrowings on various credit lines; and

• borrowing capacity available from the FHLB and the Federal Reserve Discount Window available to Mid Penn.

Mid Penn believes its core deposits are generally stable even in periods of changing interest rates. Liquidity is measured and monitored daily, allowing management to better understand and react to balance sheet trends. These measurements indicate that liquidity generally remains stable and exceeds our minimum defined levels of adequacy. Other than the trends of continued competitive pressures and volatile interest rates, and the uncertain impact of the current inflationary environment, there are no known demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way.

On at least a quarterly basis, a comprehensive liquidity analysis is reviewed by the Asset Liability Committee and Board of Directors. The analysis provides a summary of the current liquidity measurements, projections, and future liquidity positions given various levels of liquidity stress. Management also maintains a detailed Contingency Funding Plan designed to respond to overall stress in the financial condition of the banking industry or a prospective liquidity problem specific to Mid Penn.

The Consolidated Statements of Cash Flows provide additional information. Mid Penn’s operating activities during the nine months ended September 30, 2024 provided $47.3 million of cash, mainly due to net income. Cash used in investing activities during the nine months ended September 30, 2024 was $187.6 million, mainly the result of the net increase in loans. Cash provided by financing activities during the nine months ended September 30, 2024 totaled $188.0 million, primarily the result of an increase in net deposits.

Regulatory Capital

Mid Penn and the Bank are subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger certain mandatory, and possibly additional discretionary, actions by the regulators that if, undertaken, could have a direct material effect on Mid Penn's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory account practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

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Minimum regulatory capital requirements established by Basel III rules require Mid Penn and the Bank to:

• Meet a minimum Common Equity Tier I capital ratio of 4.5% of risk-weighted assets;

• Meet a minimum Tier I capital ratio of 6.0% of risk-weighted assets;

• Meet a minimum Total capital ratio of 8.0% of risk-weighted assets;

• Meet a minimum Tier I leverage capital ratio of 4.0% of average assets;

• Maintain a "capital conservation buffer" of 2.5% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonuses; and

• Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses.

The Basel III Rules use a standardized approach for risk weightings that expands the risk-weighting for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off-balance sheet exposures and resulting in higher risk weightings for a variety of asset categories.

Banks are evaluated for capital adequacy by regulatory supervisory agencies based on the ratio of capital to risk-weighted assets and total assets. The minimum capital to risk-weighted assets requirements, including the capital conservation buffers, which became effective for Mid Penn and the Bank on January 1, 2016, are illustrated below. At September 30, 2024, regulatory capital ratios for both Mid Penn and the Bank met the definition of a "well-capitalized" institution under the regulatory framework for prompt corrective action and exceeded the minimum capital requirements under Basel III.

Mid Penn maintained the following regulatory capital ratios in comparison to regulatory requirements:


	September 30, 2024		December 31, 2023		Regulatory Minimum for Capital Adequacy		Fully Phased-In, with Capital Conversation Buffers
Total Risk-Based Capital (to Risk-Weighted Assets)	11.93	%	11.69	%	10.50	%	4.00	%
Tier I Risk-Based Capital (to Risk-Weighted Assets)	10.05		9.78		8.50		7.00
Common Equity Tier I (to Risk-Weighted Assets)	10.05		9.78		7.00		8.50
Tier I Leverage Capital (to Average Assets)	8.39		8.32		4.00		10.50

As of September 30, 2024 and December 31, 2023, Mid Penn and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized". However, future changes in regulations could increase capital requirements and may have an adverse effect on capital resources.

Shareholders' Equity

Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets, and the desire to collectively maintain and enhance shareholders’ value, and satisfactorily address regulatory capital requirements. Accordingly, capital management has been, and will continue to be, of paramount importance to Mid Penn.

Shareholders’ equity increased by $30.7 million, or 5.7%, from $542.4 million as of December 31, 2023 to $573.1 million as of September 30, 2024, primarily due to earnings of $36.2 million, partially offset by dividends declared of $10.0 million and stock repurchases of $323 thousand.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a financial institution, Mid Penn’s primary source of market risk is interest rate risk. Interest rate risk is the exposure to fluctuations in Mid Penn’s future earnings, earnings at risk, resulting from changes in interest rates. This exposure or sensitivity is a function of the repricing characteristics of Mid Penn's portfolio of assets and liabilities. Each asset and liability reprices either at maturity or during the life of the instrument. Interest rate sensitivity is measured as the difference between the volume of assets and liabilities that are subject to repricing in a future period of time.

The principal purpose of asset-liability management is to maximize current and future net interest income within acceptable levels of interest rate risk while satisfying liquidity and capital requirements. Net interest income is increased by increasing the net interest margin and by volume growth. Thus, the goal of interest rate risk management is to maintain a balance between risk and reward such that net interest income is maximized while risk is maintained at an acceptable level.

Mid Penn utilizes an asset-liability management model to measure the impact of interest rate movements on its interest rate sensitivity position. Mid Penn’s management also reviews the traditional maturity gap analysis regularly. Mid Penn does not always attempt to achieve an exact match between interest sensitive assets and liabilities because it believes that an actively managed amount of interest rate risk is inherent and appropriate in the management of Mid Penn’s profitability.

Modeling techniques and simulation analysis involve assumptions and estimates that inherently cannot be measured with complete precision. Key assumptions in the analyses include maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing. These assumptions are inherently uncertain due to the timing, magnitude and frequency of rate changes and changes in market conditions and management strategies, among other factors. However, the analyses are useful in quantifying risk and provide a relative gauge of Mid Penn’s interest rate risk position over time.

Management reviews interest rate risk on a quarterly basis. This analysis includes earnings scenarios whereby interest rates are increased or decreased by 100, 200, 300 and 400 bps. These scenarios, detailed in the table below, indicate that Mid Penn would experience enhanced net interest income over a one-year time frame due to downward interest rate changes, while an increase in interest rates would result in a decline in net interest income over a one-year time frame; however, actual results could vary significantly from the calculations prepared by management. At September 30, 2024, all interest rate risk levels according to the model were within the tolerance limits of the Board-approved policy.


Change in Basis Points	% Change in Net Interest Income	Policy Risk Limit
400	8.30%	≥ -25%
300	6.10%	≥ -20%
200	4.00%	≥ -15%
100	2.00%	≥ -10%
(100)	(1.80)%	≥ -10%
(200)	(3.90)%	≥ -15%
(300)	(6.10)%	≥ -20%
(400)	(8.90)%	≥ -25%

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Mid Penn maintains controls and procedures designed to ensure that information required to be disclosed in the reports that Mid Penn files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures as of September 30, 2024, Mid Penn’s management, with the participation of the Principal Executive Officer and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of such date.

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Changes in Internal Controls

There were no changes in Mid Penn’s internal control over financial reporting that have materially affected, or are reasonable likely to materially affect, Mid Penn’s internal control over financial reporting during the nine months ended September 30, 2024.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

In addition, management does not know of any material proceedings contemplated by governmental authorities against Mid Penn or any of its properties.

ITEM 1A – RISK FACTORS

Management has reviewed the risk factors that were previously disclosed in the 2023 Annual Report and subsequent reports filed with the SEC to determine if there were material changes applicable to the nine months ended September 30, 2024. Aside from the following risk factors, there have been no material changes to the risk factors that were previously disclosed in the 2023 Annual Report.

Risks Related to the Merger

Failure to complete the Merger could negatively affect our market price, future business and financial results.

Although we anticipate closing the Merger in the second quarter of 2025, we cannot guarantee when, or whether, the Merger will be completed. If the Merger is not completed for any reason, we will be subject to a number of material risks, including the following:

• Costs related to the Merger, such as legal, accounting and financial advisory fees, and, in specific circumstances, additional reimbursement and termination fees, must be paid even if the Merger is not completed.

• Declines in our market price to the extent that the current market price of our common stock already reflects a market assumption that the Merger will be completed.

• The diversion of management’s attention from the day-to-day business operations and the potential disruption to each company’s employees and business relationships during the period before the completion of the Merger may make it difficult to regain financial and market positions if the Merger does not occur.

• Becoming subject to litigation related to any failure to complete the Merger.

Regulatory waivers and approvals may not be received or may be received and subsequently expire, be revoked or be amended to impose conditions that are not presently anticipated or cannot be met.

Before the transactions contemplated in the Merger Agreement, including the Merger, may be completed, various waivers, approvals or consents must be obtained from various bank regulatory and other authorities, including the Board of Governors of the Federal Reserve System, the FDIC, and the Pennsylvania Department of Banking and Securities. In determining whether to grant these approvals, regulatory authorities consider a variety of factors, including the regulatory standing of each party. These approvals could be delayed or not obtained at all, including due to any or all of the following: an adverse development in any party’s regulatory standing or any other factors considered by regulators in granting such approvals; governmental, political, or community group inquiries, investigations or opposition; or changes in legislation or

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the political or regulatory environment generally, including as a result of changes of the U.S. executive administration, or Congressional leadership and regulatory agency leadership.

Even if the approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the Merger Agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations, or restrictions or that such conditions, limitations, obligations, or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the Merger or otherwise reduce the anticipated benefits of the Merger if the Merger were completed successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, limitations, obligations, or restrictions will not result in the delay or abandonment of the Merger. The completion of the Merger is conditioned on the receipt of the requisite regulatory approvals without the imposition of any materially burdensome regulatory condition and the expiration of all statutory waiting periods. Additionally, the completion of the Merger is conditioned on the absence of certain orders, injunctions, or decrees issued by any court or any governmental entity of competent jurisdiction that would prevent, prohibit, or make illegal the completion of the Merger or any of the other transactions contemplated by the Merger Agreement.

Despite the parties’ expected commitment to use their reasonable best efforts to respond to any request for information and resolve any objection that may be asserted by any governmental entity with respect to the Merger Agreement, neither party is required under the terms of the Merger Agreement to take any action, commit to take any action, or agree to any condition or restriction in connection with obtaining these approvals, that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the proposed Merger.

Further, such approvals are subject to expiration if the transaction is not consummated within the time period provided in the approval.

Combining Mid Penn and William Penn may be more difficult, costly or time consuming than expected, and we may fail to realize the anticipated benefits of the Merger.

The success of the Merger will depend on, among other things, our ability to integrate William Penn into our business in a manner that facilitates growth opportunities and achieves the anticipated benefits of the Merger, including those described under “Summary—Recent Developments—William Penn Transaction.” If we are not able to successfully achieve these objectives, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost and savings and anticipated benefits of the Merger could be less than anticipated, and integration may result in additional unforeseen expenses.

Litigation relating to the Merger could require us to incur significant costs and suffer management distraction, as well as delay and/or enjoin the Merger.

Neither William Penn nor Mid Penn is currently able to predict the outcome of any suit arising out of or relating to the proposed transaction that may be filed in the future. If any letters or complaints are filed, absent allegations that are material, William Penn and Mid Penn will not necessarily announce such filings.

William Penn and Mid Penn could be subject to demands or litigation related to the Merger, whether or not the Merger is consummated. Such actions may create additional uncertainty relating to the Merger, and responding to such demands and defending such actions may be costly and distracting to management. Although there can be no assurance as to the ultimate outcomes of any demand or any subsequent litigation, we do not believe that the resolution of such demands or any subsequent litigation will have a material adverse effect on our financial position, results of operations or cash flow.

We and William Penn will be subject to various uncertainties while the Merger is pending that could adversely affect our financial results or the anticipated benefits of the Merger.

Uncertainty about the effect of the Merger on counterparties to contracts, employees and other parties may have an adverse effect on us or the anticipated benefits of the Merger. These uncertainties could cause contract counterparties and others who deal with us or William Penn to seek to change existing business relationships with us or William Penn, and may impair our or William Penn’s ability to attract, retain and motivate key personnel until the Merger is completed and for a period of time thereafter. Employee retention and recruitment may be particularly challenging prior to the completion of

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the Merger, as our employees and prospective employees, and the employees and prospective employees of William Penn, may experience uncertainty about their future roles with us following the Merger.

The pursuit of the Merger and the preparation for the integration of the two companies may place a significant burden on management and internal resources. Any significant diversion of management attention away from ongoing business and any difficulties encountered in the transition and integration process could affect our financial results prior to and/or following the completion of the Merger and could limit us from pursuing attractive business opportunities and making other changes to our business prior to completion of the Merger or termination of the Merger Agreement.

William Penn may have liabilities that are not known to us.

In connection with the Merger, we will assume all of William Penn’s liabilities by operation of law. There may be liabilities that we failed or were unable to discover in the course of performing due diligence investigations into William Penn, or we may not have correctly assessed the significance of certain liabilities of William Penn identified in the course of our due diligence. Any such liabilities, individually or in the aggregate, could have an adverse effect on our business, financial condition, and results of operations.

We expect to incur substantial transaction costs in connection with the Merger.

We expect to incur a significant amount of non-recurring expenses in connection with the Merger, including legal, accounting, consulting and other expenses. In general, these expenses are payable by us whether or not the Merger is completed. Additional unanticipated costs may be incurred following consummation of the Merger in the course of the integration of our businesses and the business of William Penn. We cannot be certain that the elimination of duplicative costs or the realization of other efficiencies related to the integration of the two businesses will offset the transaction and integration costs in the near term, or at all.

The unaudited pro forma financial information incorporated by reference into this prospectus supplement is presented for illustrative purposes only and does not purport to be indicative of our financial condition or results of operations following the completion of the Merger.

The unaudited pro forma financial information incorporated by reference into this prospectus supplement is presented for illustrative purposes only, is based on various adjustments, assumptions and preliminary estimates and may not be an indication of our financial condition or results of operations following the consummation of the offering made pursuant to this prospectus supplement or the Merger for several reasons. Our actual financial condition and results of operations following the consummation of the offering made pursuant to this prospectus supplement and the Merger may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect our financial condition or results of operations following the consummation of the offering made pursuant to this prospectus supplement and the Merger. Our potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recent combined companies.

The Merger may be completed on different terms from those contained in the Merger Agreement.

Prior to the completion of the Merger, we and William Penn may, by mutual agreement, amend or alter the terms of the Merger Agreement, including with respect to, among other things, the Merger consideration or any covenants or agreements with respect to the parties’ respective operations during the pendency of the Merger Agreement. Any such amendments or alterations may have negative consequences to us.

The Merger will not be completed unless important conditions are satisfied or waived, including approval of the Merger Agreement by our shareholders and William Penn’s shareholders.

Specified conditions set forth in the Merger Agreement must be satisfied or waived to complete the Merger. If the conditions are not satisfied or, subject to applicable law, waived, the Merger will not occur or will be delayed and each of William Penn and us may lose some or all of the intended benefits of the Merger.

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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(1) None.

(2) None.

Mid Penn adopted a treasury stock repurchase program ("Program") initially effective March 19, 2020, and renewed through April 24, 2025 by Mid Penn’s Board of Directors on April 24, 2024. The Program authorizes the repurchase of up to $15.0 million of Mid Penn’s outstanding common stock. Under the Program, Mid Penn conducts repurchases of its common stock through open market transactions (which may be by means of a trading plan adopted under SEC Rule 10b5-1) or in privately negotiated transactions. Repurchases under the Program are made at the discretion of management and are subject to market conditions and other factors. There is no guarantee as to the exact number of shares that Mid Penn may repurchase. The Program is able to be modified, suspended or terminated at any time, at Mid Penn’s discretion, based upon a number of factors, including liquidity, market conditions, the availability of alternative investment opportunities and other factors Mid Penn deems appropriate. The Program does not obligate Mid Penn to repurchase any shares. During the nine months ended September 30, 2024, Mid Penn repurchased 15,500 shares of common stock at an average price of $20.81. As of September 30, 2024, Mid Penn repurchased 440,722 shares of common stock under the Program.

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ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5 – OTHER INFORMATION

During the three months ended September 30, 2024, none of Mid Penn’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Mid Penn’s common stock that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as such term is defined in Item 408(c) of Regulation S-K.

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ITEM 6 – EXHIBITS


3.1						The Registrant’s Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on form 10-Q with the SEC on May 9, 2023.)

3.2						The Registrant’s By-laws . (Incorporated by reference to Exhibit 3.1 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 28, 2024.)

31.1						Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002.

32						Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.

101.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101).

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SIGNATURES

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)

By:			/s/ Rory G. Ritrievi
			Rory G. Ritrievi President and CEO (Principal Executive Officer)

Date:			November 7, 2024

By:			/s/ Justin T. Webb
			Justin T. Webb Chief Financial Officer (Principal Financial Officer)

Date:			November 7, 2024

TABLE OF CONTENTS

Part 1 Financial Information Item 1 Financial Statements Note 1 - Summary Of Significant Accounting Policies Note 2 - Business Combination Note 3 - Investment Securities Note 4 - Loans and Allowance For Credit Losses - Loans Note 5 - Deposits Note 6 - Derivative Financial Instruments Note 7 - Accumulated Other Comprehensive (loss) Income Note 8 - Fair Value Measurement Note 9 - Commitments and Contingencies Note 10 - Debt Note 11 - Subordinated Debt and Trust Preferred Securities Note 12 - Common Stock and Earnings Per Share Item 2 Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3 Quantitative and Qualitative Disclosures About Market Risk Item 4 Controls and Procedures Part II Other Information Item 1 Legal Proceedings Item 1A Risk Factors Item 2 Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3 Defaults Upon Senior Securities Item 4 Mine Safety Disclosures Item 5 Other Information Item 6 Exhibits

Exhibits

3.1 The Registrants Articles of Incorporation.(Incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on form 10-Q with the SEC on May 9, 2023.) 3.2 The Registrants By-laws. (Incorporated by reference to Exhibit 3.1 to Registrants Annual Report on Form 10-K filed with the SEC on March 28, 2024.) 31.1 Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.

MPB 10-Q Quarter ended Sept. 30, 2024

Exhibits