MID PENN BANCORP INC 10-Q

ITEM 1 – FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except per share data) June 30, 2024 December 31, 2023 ASSETS Cash and due from banks $ 36,948 $ 45,435 Interest-bearing balances with other financial institutions 25,585 34,668 Federal funds sold 43,193 16,660 Total cash and cash equivalents 105,726 96,763 Investment securities: HTM, at amortized cost (fair value $ 347,275 and $ 357,521 ) 393,320 399,128 AFS, at fair value 207,936 223,555 Equity securities available for sale, at fair value 427 438 Loans held for sale, at fair value 8,420 3,855 Loans, net of unearned interest 4,364,561 4,252,792 Less: ACL - Loans ( 35,288 ) ( 34,187 ) Net loans 4,329,273 4,218,605 Premises and equipment, net 34,344 36,909 Operating lease right of use asset 7,925 8,953 Finance lease right of use asset 2,638 2,727 Cash surrender value of life insurance 53,298 54,497 Restricted investment in bank stocks 13,930 16,768 Accrued interest receivable 27,381 25,820 Deferred income taxes 24,520 24,146 Goodwill 127,031 127,031 Core deposit and other intangibles, net 5,626 6,479 Foreclosed assets held for sale 441 293 Other assets 49,513 44,825 Total Assets $ 5,391,749 $ 5,290,792 LIABILITIES & SHAREHOLDERS’ EQUITY Deposits: Noninterest-bearing demand $ 766,014 $ 801,312 Interest-bearing transaction accounts 2,194,948 2,086,450 Time 1,536,049 1,458,450 Total Deposits 4,497,011 4,346,212 Short-term borrowings 200,000 241,532 Long-term debt 23,827 59,003 Subordinated debt 46,047 46,354 Operating lease liability 8,344 9,285 Accrued interest payable 18,139 14,257 Other liabilities 38,695 31,799 Total Liabilities 4,832,063 4,748,442 Shareholders' Equity: Common stock, par value $ 1.00 per share; 40,000,000 shares authorized at June 30, 2024 and December 31, 2023; 17,051,236 issued at June 30, 2024 and 16,998,929 at December 31, 2023; 16,580,595 outstanding at June 30, 2024 and 16,573,707 at December 31, 2023 17,051 16,999 Additional paid-in capital 406,544 405,725 Retained earnings 163,256 145,982 Accumulated other comprehensive loss ( 17,123 ) ( 16,637 ) Treasury stock, at cost; 440,722 shares at June 30, 2024 and 425,222 shares at December 31, 2023 ( 10,042 ) ( 9,719 ) Total Shareholders’ Equity 559,686 542,350 Total Liabilities and Shareholders' Equity $ 5,391,749 $ 5,290,792 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (In thousands, except per share data) 2024 2023 2024 2023 INTEREST INCOME Loans, including fees $ 66,096 $ 52,094 $ 129,332 $ 97,959 Investment securities: Taxable 4,143 3,962 8,183 7,836 Tax-exempt 371 391 747 780 Other interest-bearing balances 347 83 750 136 Federal funds sold 282 49 418 94 Total Interest Income 71,239 56,579 139,430 106,805 INTEREST EXPENSE Deposits 28,463 17,927 54,795 29,928 Short-term borrowings 3,324 1,507 7,770 2,997 Long-term and subordinated debt 686 701 1,643 1,387 Total Interest Expense 32,473 20,135 64,208 34,312 Net Interest Income 38,766 36,444 75,222 72,493 Provision for credit losses - loans 1,782 1,157 1,163 1,647 (Benefit)/Provision for credit losses - CCL ( 178 ) 401 ( 496 ) 629 Net provision for credit losses 1,604 1,558 667 2,276 Net Interest Income After Provision for Credit Losses 37,162 34,886 74,555 70,217 NONINTEREST INCOME Fiduciary and wealth management 1,129 1,204 2,261 2,440 ATM debit card interchange 973 998 1,918 2,054 Service charges on deposits 539 514 1,048 949 Mortgage banking 628 287 1,052 671 Mortgage hedging — 128 — 148 Net gain on sales of SBA loans 74 128 181 128 Earnings from cash surrender value of life insurance 301 292 585 546 Other 1,685 1,669 4,121 2,609 Total Noninterest Income 5,329 5,220 11,166 9,545 NONINTEREST EXPENSE Salaries and employee benefits 15,533 15,027 30,995 28,871 Software licensing and utilization 2,208 2,070 4,328 4,016 Occupancy, net 1,861 1,750 3,843 3,636 Equipment 1,287 1,248 2,509 2,499 Shares tax 124 751 1,121 1,650 Legal and professional fees 689 602 1,687 1,402 ATM/card processing 510 532 1,044 1,025 Intangible amortization 425 461 853 805 FDIC Assessment 1,232 684 2,177 1,024 Loss (Gain) on sale of foreclosed assets, net 42 ( 126 ) 42 ( 126 ) Merger and acquisition — 4,992 — 5,216 Post-acquisition restructuring — 2,952 — 2,952 Other 4,313 4,185 8,145 8,000 Total Noninterest Expense 28,224 35,128 56,744 60,970 INCOME BEFORE PROVISION FOR INCOME TAXES 14,267 4,978 28,977 18,792 Provision for income taxes 2,496 142 5,073 2,729 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 11,771 $ 4,836 $ 23,904 $ 16,063 PER COMMON SHARE DATA: Basic Earnings Per Common Share $ 0.71 $ 0.29 $ 1.44 $ 1.00 Diluted Earnings Per Common Share $ 0.71 $ 0.29 $ 1.44 $ 1.00 Weighted-average basic shares outstanding 16,576,283 16,233,473 16,572,102 16,060,789 Weighted-average diluted shares outstanding 16,605,353 16,255,278 16,608,863 16,096,270 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2024 2023 2024 2023 Net income $ 11,771 $ 4,836 $ 23,904 $ 16,063 Other comprehensive (loss)/income: Unrealized losses arising during the period on available for sale securities, net of income tax benefit of $ 53 , $ 867 , $ 508 , and $ 341 respectively. (1) ( 201 ) ( 3,261 ) ( 1,912 ) ( 1,284 ) Unrealized holding gains arising during the period on interest rate derivatives used in cash flow hedges, net of income tax cost of ($ 7 ), ($ 754 ), ($ 382 ), and ($ 720 ) respectively. (1) 28 2,837 1,438 2,709 Change in defined benefit plans, net of income tax benefit (cost) of $ 1 , $ 1 , ($ 1 ), and $ 0 respectively (1), (2) ( 3 ) ( 7 ) 5 ( 2 ) Reclassification adjustment for settlement gains and activity related to benefit plans, net of income tax benefit of $ 0 , $ 0 , $ 5 , and $ 3 respectively (1), (3) — — ( 17 ) ( 12 ) Total other comprehensive (loss)/income ( 176 ) ( 431 ) ( 486 ) 1,411 Total comprehensive income $ 11,595 $ 4,405 $ 23,418 $ 17,474 (1) The income tax impacts of the components of other comprehensive income are calculated using a 21% statutory tax rate. (2) The change in defined benefit plans consists primarily of unrecognized actuarial (losses)/gains on defined benefit plans during the period. (3) 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. 6 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 7 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 (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. 8 Table of Contents MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (In thousands) 2024 2023 Operating Activities: Net Income $ 23,904 $ 16,063 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 667 2,276 Depreciation 2,433 2,393 Amortization of intangibles 853 805 Net amortization of security discounts/premiums 201 247 Noncash operating lease expense 1,028 1,028 Amortization of finance lease right of use asset 89 90 Earnings on cash surrender value of life insurance ( 585 ) ( 546 ) Mortgage loans originated for sale ( 50,023 ) ( 53,679 ) Proceeds from sales of mortgage loans originated for sale 46,510 49,567 Gain on sale of mortgage loans ( 1,052 ) ( 671 ) SBA loans originated for sale ( 2,437 ) ( 2,080 ) Proceeds from sales of SBA loans originated for sale 2,618 2,208 Gain on sale of SBA loans ( 181 ) ( 128 ) Gain on sale of property, plant, and equipment ( 43 ) ( 59 ) Loss/(Gain) on sale or write-down of foreclosed assets 42 ( 126 ) Accretion of subordinated debt ( 307 ) ( 293 ) Stock compensation expense 590 500 Change in deferred income tax benefit ( 178 ) ( 1,148 ) Increase accrued interest receivable ( 1,561 ) ( 50 ) Decrease (Increase) in other assets ( 2,263 ) 490 Increase in accrued interest payable 3,882 6,901 Decrease in operating lease liability ( 941 ) ( 1,167 ) Increase in other liabilities 7,196 1,879 Net Cash Provided By Operating Activities 30,442 24,500 Investing Activities: Proceeds from the sale of available-for-sale securities — 1,751 Proceeds from the maturity or call of available-for-sale securities 13,164 7,927 Proceeds from the maturity or call of held-to-maturity securities 5,642 4,968 Stock dividends of FHLB and other bank stock 682 289 Reduction (Purchases) of restricted investment in bank stock 2,156 ( 3,620 ) Net cash received from acquisition — 1,068 Net increase in loans ( 111,525 ) ( 207,306 ) Purchases of bank premises and equipment ( 646 ) ( 1,837 ) Proceeds from the sale of premises and equipment 821 59 Proceeds from the sale of foreclosed assets — 374 Proceeds from bank-owned life insurance 1,784 774 Gain on bank-owned life insurance — ( 125 ) Net change in investments in tax credits and other partnerships ( 976 ) ( 4,854 ) Net Cash Used in Investing Activities ( 88,898 ) ( 200,532 ) 9 Table of Contents MID PENN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(CONTINUED) Financing Activities: Net increase in deposits 150,799 225,736 Proceeds from long-term debt — 25,000 Common stock dividends paid ( 6,630 ) ( 6,358 ) Proceeds from Employee and Director Stock Purchase Plan stock issuance 281 206 Treasury stock purchased ( 323 ) ( 4,580 ) Net change in finance lease liability ( 63 ) ( 46 ) Net change in short-term borrowings ( 41,532 ) 9,795 Long-term debt repayment ( 35,113 ) ( 30,727 ) Subordinated debt redemption and trust preferred securities — ( 10,000 ) Net Cash Provided by Financing Activities 67,419 209,026 Net increase in cash and cash equivalents 8,963 32,994 Cash and cash equivalents, beginning of period 96,763 60,881 Cash and cash equivalents, end of period $ 105,726 $ 93,875 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 60,326 $ 25,500 Cash paid for income taxes — 3,970 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 164 693 Fair value of assets acquired in business combination, excluding cash (1) $ — $ 362,070 Goodwill recorded (1) — 12,800 Liabilities assumed in business combination (1) — 345,043 Stock issued in business combination (1) — 18,095 (1) Additionally, 2,500 shares of restricted stock were paid out in cash resulting in $ 776 thousand of cash consideration relating to stock awards . (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. The accompanying notes are an integral part of these unaudited consolidated financial statements. 10 Table of Contents 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 in 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 nonbank subsidiaries, MPB Financial Services, LLC, which includes MPB Wealth Management, LLC (which ceased operating during the first quarter of 2024) and MPB Risk Services, LLC, and MPB Launchpad Fund I, LLC. As of June 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 June 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 June 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 July 31, 2024, Mid Penn acquired the insurance business and related accounts of a full-service employee benefits firm that served 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. 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 11 Table of Contents MID PENN BANCORP, INC. 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. 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 June 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. The Corporation does not expect the adoption of ASU No. 2023-02 to have a material impact on its 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. 12 Table of Contents 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 Dec. 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 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. 13 Table of Contents 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. 14 Table of Contents 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. Quarterly, Mid Penn evaluates if any security has a fair value less than its amortized cost. 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: • Review the extent to which the fair value is less than the amortized cost and observe 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 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. 15 Table of Contents MID PENN BANCORP, INC. At June 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 June 30, 2024, accrued interest receivable totaled $ 986 thousand 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 June 30, 2024, Mid Penn’s HTM securities totaled $ 393.3 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 June 30, 2024. Accrued interest receivable is excluded from the estimate of credit losses for HTM securities. At June 30, 2024, accrued interest receivable totaled $ 1.8 million for HTM securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet. At June 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 June 30, 2024. The amortized cost and estimated fair value of investment securities for the periods presented: June 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 $ 31,693 $ — $ 1,074 $ 30,619 Mortgage-backed U.S. government agencies 160,932 — 18,895 142,037 State and political subdivision obligations 4,320 — 729 3,591 Corporate debt securities 35,742 — 4,053 31,689 Total available-for-sale debt securities 232,687 — 24,751 207,936 Held-to-maturity U.S. Treasury and U.S. government agencies $ 245,873 $ — $ 30,436 $ 215,437 Mortgage-backed U.S. government agencies 40,845 — 5,776 35,069 State and political subdivision obligations 81,142 — 7,719 73,423 Corporate debt securities 25,460 — 2,114 23,346 Total held-to-maturity debt securities 393,320 — 46,045 347,275 Total $ 626,007 $ — $ 70,796 $ 555,211 16 Table of Contents MID PENN BANCORP, INC. 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 $ 408.3 million at June 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 $ 138.9 million as of June 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 June 30, 2024 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 debt securities: U.S. Treasury and U.S. government agencies — $ — $ — 17 $ 30,619 $ 1,074 17 $ 30,619 $ 1,074 Mortgage-backed U.S. government agencies — — — 93 142,037 18,895 93 142,037 18,895 State and political subdivision obligations — — — 8 3,591 729 8 3,591 729 Corporate debt securities 1 413 87 17 31,276 3,966 18 31,689 4,053 Total available-for-sale debt securities 1 $ 413 $ 87 135 $ 207,523 $ 24,664 136 $ 207,936 $ 24,751 Held-to-maturity debt securities: U.S. Treasury and U.S. government agencies — — — 145 215,437 30,436 145 215,437 30,436 Mortgage-backed U.S. government agencies — — — 64 35,069 5,776 64 35,069 5,776 State and political subdivision obligations 3 952 18 186 72,471 7,701 189 73,423 7,719 Corporate debt securities 6 12,950 1,050 9 10,396 1,064 15 23,346 2,114 Total held-to-maturity debt securities 9 13,902 1,068 404 333,373 44,977 413 347,275 46,045 Total 10 $ 14,315 $ 1,155 539 $ 540,896 $ 69,641 549 $ 555,211 $ 70,796 17 Table of Contents MID PENN BANCORP, INC. (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 six months ended June 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 June 30, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Due in 1 year or less $ 12,000 $ 11,870 $ 17,458 $ 17,255 Due after 1 year but within 5 years 29,949 28,395 125,451 115,700 Due after 5 years but within 10 years 28,481 24,565 189,439 162,513 Due after 10 years 1,325 1,069 20,127 16,738 71,755 65,899 352,475 312,206 Mortgage-backed securities 160,932 142,037 40,845 35,069 $ 232,687 $ 207,936 $ 393,320 $ 347,275 18 Table of Contents MID PENN BANCORP, INC. 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) June 30, 2024 December 31, 2023 Commercial real estate CRE Nonowner Occupied $ 1,187,050 $ 1,149,553 CRE Owner Occupied 623,756 629,904 Multifamily 374,175 309,059 Farmland 213,002 212,690 Total Commercial real estate 2,397,983 2,301,206 Commercial and industrial 692,703 675,079 Construction Residential Construction 105,676 92,843 Other Construction 348,289 362,624 Total Construction 453,965 455,467 Residential mortgage 1-4 Family 1st Lien 327,302 339,142 1-4 Family Rental 351,554 341,937 HELOC and Junior Liens 134,686 132,795 Total Residential Mortgage 813,542 813,874 Consumer 6,368 7,166 Total loans $ 4,364,561 $ 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 $ 3.8 million and $ 4.2 million reduced the carrying value of loans as of June 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 $ 24.0 million and $ 22.1 million as of June 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 June 30, 2024 and December 31, 2023, are summarized as follows: 19 Table of Contents MID PENN BANCORP, INC. (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 June 30, 2024 Commercial real estate CRE Nonowner Occupied $ 7,850 $ — $ 2,074 $ 9,924 $ 1,177,126 $ 1,187,050 $ — CRE Owner Occupied 693 — 955 1,648 622,108 623,756 — Multifamily — — — — 374,175 374,175 — Farmland 505 — — 505 212,497 213,002 — Total Commercial real estate 9,048 — 3,029 12,077 2,385,906 2,397,983 — Commercial and industrial 493 414 1,548 2,455 690,248 692,703 — Construction Residential Construction — — — — 105,676 105,676 — Other Construction — — — — 348,289 348,289 — Total Construction — — — — 453,965 453,965 — Residential mortgage 1-4 Family 1st Lien 5,258 41 762 6,061 321,241 327,302 — 1-4 Family Rental 69 — 301 370 351,184 351,554 — HELOC and Junior Liens 1,424 1,077 1,157 3,658 131,028 134,686 — Total Residential Mortgage 6,751 1,118 2,220 10,089 803,453 813,542 — Consumer 42 — — 42 6,326 6,368 — Total $ 16,334 $ 1,532 $ 6,797 $ 24,663 $ 4,339,898 $ 4,364,561 $ — (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 $ — 20 Table of Contents MID PENN BANCORP, INC. 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. Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of June 30, 2024 and December 31, 2023 are summarized as follows: June 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 354 2,221 2,575 361 4,144 4,505 CRE Owner Occupied — 1,642 1,642 — 1,909 1,909 Multifamily 88 77 165 93 80 173 Total Commercial real estate 442 3,940 4,382 454 6,133 6,587 Commercial and industrial 1,104 1,355 2,459 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 — 1,530 1,530 — 1,875 1,875 1-4 Family Rental — 348 348 2 699 701 HELOC and Junior Liens — 1,280 1,280 — 1,208 1,208 Total Residential Mortgage $ — $ — $ 3,158 $ 3,158 $ 2 $ 3,782 $ 3,784 Consumer — — — — — — Total loans $ 1,546 $ 8,453 $ 9,999 $ 1,678 $ 12,538 $ 14,216 The amount of interest income recognized on nonaccrual loans was approximately $ 132 thousand and $ 281 thousand during the three months ended June 30, 2024 and 2023, respectively. During the six months ended June 30, 2024 and 2023, the amount of interest income recognized on nonaccrual loans was approximately $ 291 thousand and $ 463 thousand, respectively. 21 Table of Contents MID PENN BANCORP, INC. 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 are necessary to be in this classification. Good Acceptable Risk / Pass - The Borrower in this rating classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; they list good quality assets and fairly low leverage plus ample debt capacity. Average Acceptable Risk / Pass - This type of classification has financial ratios and assets are of above average quality, 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; 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 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 plus 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 Borrowers, 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 their debt. All trends are negative and the damage to the financial condition of the Borrower can’t be reversed now or in the near future. 22 Table of Contents MID PENN BANCORP, INC. June 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 $ 37,757 $ 123,658 $ 352,395 $ 155,832 $ 137,304 $ 338,754 $ 13,338 $ 1,159,038 Special mention $ — $ — $ 286 $ — $ — $ 8,563 $ — $ 8,849 Substandard or lower $ — $ — $ — $ — $ 3,186 $ 15,977 $ — $ 19,163 Total CRE Nonowner Occupied $ 37,757 $ 123,658 $ 352,681 $ 155,832 $ 140,490 $ 363,294 $ 13,338 $ 1,187,050 Gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — Current period recoveries $ — $ — $ — $ — $ — $ — $ — $ — Net charge offs $ — $ — $ — $ — $ — $ — $ — $ — CRE Owner Occupied Pass $ 22,571 $ 95,962 $ 112,787 $ 69,370 $ 84,057 $ 217,751 $ 12,469 $ 614,967 Special mention $ — $ — $ 4,197 $ — $ — $ 1,196 $ — $ 5,393 Substandard or lower $ — $ — $ — $ 202 $ — $ 3,194 $ — $ 3,396 Total CRE Owner Occupied $ 22,571 $ 95,962 $ 116,984 $ 69,572 $ 84,057 $ 222,141 $ 12,469 $ 623,756 Gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — Current period recoveries $ — $ — $ — $ — $ — $ 4 $ — $ 4 Net charge offs $ — $ — $ — $ — $ — $ 4 $ — $ 4 Multifamily Pass $ 1,760 $ 48,131 $ 68,902 $ 124,194 $ 40,289 $ 88,103 $ 2,573 $ 373,952 Special mention $ — $ — $ — $ — $ — $ 58 $ — $ 58 Substandard or lower $ — $ — $ — $ — $ — $ 165 $ — $ 165 Total Multifamily $ 1,760 $ 48,131 $ 68,902 $ 124,194 $ 40,289 $ 88,326 $ 2,573 $ 374,175 Gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — Current period recoveries $ — $ — $ — $ — $ — $ — $ — $ — Net charge offs $ — $ — $ — $ — $ — $ — $ — $ — Farmland Pass $ 10,235 $ 31,232 $ 58,763 $ 43,714 $ 26,913 $ 26,001 $ 13,581 $ 210,439 Special mention $ — $ 130 $ — $ — $ — $ 2,239 $ 194 $ 2,563 Substandard or lower $ — $ — $ — $ — $ — $ — $ — $ — Total Farmland $ 10,235 $ 31,362 $ 58,763 $ 43,714 $ 26,913 $ 28,240 $ 13,775 $ 213,002 Gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — Current period recoveries $ — $ — $ — $ — $ — $ — $ — $ — Net charge offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial Pass $ 61,938 $ 140,077 $ 93,136 $ 63,424 $ 26,521 $ 99,786 $ 198,482 $ 683,364 Special mention $ — $ 73 $ 349 $ 111 $ — $ 2,083 $ 2,609 $ 5,225 Substandard or lower $ — $ — $ — $ 1,199 $ — $ 2,300 $ 615 $ 4,114 Total commercial and industrial $ 61,938 $ 140,150 $ 93,485 $ 64,734 $ 26,521 $ 104,169 $ 201,706 $ 692,703 Gross charge offs $ — $ — $ — $ — $ — $ ( 56 ) $ — $ ( 56 ) Current period recoveries $ — $ — $ — $ — $ — $ — $ — $ — Net charge offs $ — $ — $ — $ — $ — $ ( 56 ) $ — $ ( 56 ) Residential Construction Pass $ 13,518 $ 48,702 $ 22,406 $ 2,147 $ 266 $ — $ 18,637 $ 105,676 Special mention $ — $ — $ — $ — $ — $ — $ — $ — 23 Table of Contents MID PENN BANCORP, INC. Substandard or lower — — — — — — — — Total Residential Construction 13,518 48,702 22,406 2,147 266 — 18,637 105,676 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net recoveries — — — — — — — — Other Construction Pass 16,732 126,782 141,267 15,126 15,240 13,480 17,852 346,479 Special mention — — — — 1,810 — — 1,810 Substandard or lower — — — — — — — — Total Other Construction 16,732 126,782 141,267 15,126 17,050 13,480 17,852 348,289 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net recoveries — — — — — — — — 1-4 Family 1st Lien Performing 18,016 65,349 48,612 37,567 45,419 108,872 1,937 325,772 Non-performing — — — — 220 1,310 — 1,530 Total 1-4 Family 1st Lien 18,016 65,349 48,612 37,567 45,639 110,182 1,937 327,302 Gross charge offs — — — — — ( 7 ) — ( 7 ) Current period recoveries — — — — — 7 — 7 Net charge offs — — — — — — — — 1-4 Family Rental Performing 17,981 61,319 91,335 62,865 37,115 76,677 1,885 349,177 Non-performing — 148 — — 1,430 799 — 2,377 Total 1-4 Family Rental 17,981 61,467 91,335 62,865 38,545 77,476 1,885 351,554 Gross charge offs — — — — — ( 2 ) — ( 2 ) Current period recoveries — — — — — 22 — 22 Net charge offs — — — — — 20 — 20 HELOC and Junior Liens Performing 2,535 17,139 10,644 5,294 2,500 9,918 85,377 133,407 Non-performing — 24 — — — 1,255 — 1,279 Total HELOC and Junior Liens 2,535 17,163 10,644 5,294 2,500 11,173 85,377 134,686 Gross charge offs — — ( 21 ) — — — — ( 21 ) Current period recoveries — — — — — — — — Net charge offs — — ( 21 ) — — — — ( 21 ) Consumer Performing 1,606 1,147 524 470 160 267 2,194 6,368 Non-performing — — — — — — — — Total consumer 1,606 1,147 524 470 160 267 2,194 6,368 Gross charge offs — — ( 2 ) — — ( 24 ) — ( 26 ) Current period recoveries — — 1 — — 16 — 17 Net charge offs — — ( 1 ) — — ( 8 ) — ( 9 ) Total Pass 164,511 614,544 849,656 473,807 330,590 783,875 276,932 3,493,915 Special mention — 203 4,832 111 1,810 14,139 2,803 23,898 Substandard or lower — — — 1,401 3,186 21,636 615 26,838 Performing 40,138 144,954 151,115 106,196 85,194 195,734 91,393 814,724 Nonperforming — 172 — — 1,650 3,364 — 5,186 Total $ 204,649 $ 759,873 $ 1,005,603 $ 581,515 $ 422,430 $ 1,018,748 $ 371,743 $ 4,364,561 24 Table of Contents MID PENN BANCORP, INC. 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 $ — $ — $ — $ — $ — $ — $ — $ — 25 Table of Contents MID PENN BANCORP, INC. 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 26 Table of Contents MID PENN BANCORP, INC. Mid Penn had no loans classified as "doubtful" as of June 30, 2024 and December 31, 2023. There was $ 892 thousand and $ 121 thousand in loans for which formal foreclosure proceedings were in process at June 30, 2024 and December 31, 2023. 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. 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, 27 Table of Contents MID PENN BANCORP, INC. 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 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 28 Table of Contents MID PENN BANCORP, INC. 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 six months ended June 30, 2024 and the three and six months ended June 30, 2023: (In thousands) Balance at March 31, 2024 Charge offs Recoveries Net loans (charged off) recovered (Benefit)/Provision for credit losses Three Months Ended June 30, 2024 Commercial Real Estate CRE Nonowner Occupied 10,417 — — — 230 10,647 CRE Owner Occupied 5,602 — 4 4 224 5,830 Multifamily 2,370 — — — 839 3,209 Farmland 2,002 — — — 57 2,059 Commercial and industrial 6,500 ( 56 ) — ( 56 ) 490 6,934 Construction Residential Construction 1,176 — — — ( 47 ) 1,129 Other Construction 2,171 — — — ( 158 ) 2,013 Residential Mortgage 1-4 Family 1st Lien 1,271 — 7 7 71 1,349 1-4 Family Rental 1,539 ( 2 ) 22 20 145 1,704 HELOC and Junior Liens 457 — — — ( 60 ) 397 Consumer 19 ( 4 ) 11 7 ( 9 ) 17 Total 33,524 ( 62 ) 44 ( 18 ) 1,782 35,288 (In thousands) Balance at December 31, 2023 Charge offs Recoveries Net loans (charged off) recovered (Benefit)/Provision for credit losses Six Months Ended June 30, 2024 Commercial Real Estate CRE Nonowner Occupied 10,267 — — — 380 10,647 CRE Owner Occupied 5,646 — 4 4 180 5,830 Multifamily 2,202 — — — 1,007 3,209 Farmland 2,064 — — — ( 5 ) 2,059 Commercial and industrial 7,131 ( 56 ) — ( 56 ) ( 141 ) 6,934 Construction Residential Construction 1,256 — — — ( 127 ) 1,129 Other Construction 2,146 — — — ( 133 ) 2,013 Residential Mortgage 1-4 Family 1st Lien 1,207 ( 7 ) 7 — 142 1,349 1-4 Family Rental 1,859 ( 2 ) 22 20 ( 175 ) 1,704 HELOC and Junior Liens 389 ( 21 ) — ( 21 ) 29 397 Consumer 20 ( 26 ) 17 ( 9 ) 6 17 Total 34,187 ( 112 ) 50 ( 62 ) 1,163 35,288 29 Table of Contents MID PENN BANCORP, INC. (In thousands) Balance at March 31, 2023 PCD Loans Charge offs Recoveries Net loans (charged off) recovered Provision/(Benefit) for credit losses Three Months Ended June 30, 2023 Commercial Real Estate CRE Nonowner Occupied $ 8,175 $ 312 $ — $ — $ — $ ( 615 ) $ 7,872 CRE Owner Occupied 3,079 2 — — — 1,060 4,141 Multifamily 1,159 — — — 85 1,244 Farmland 899 — — — 41 940 Commercial and industrial 11,269 5 ( 109 ) — ( 109 ) 238 11,403 Construction Residential Construction 1,423 12 — — — 294 1,729 Other Construction 2,208 1 — — — ( 271 ) 1,938 Residential Mortgage 1-4 Family 1st Lien 1,356 4 — — — 268 1,628 1-4 Family Rental 1,066 — — — — ( 19 ) 1,047 HELOC and Junior Liens 452 — — — — 18 470 Consumer 179 — ( 65 ) 4 ( 61 ) 58 176 Unallocated — — — — — — — Total $ 31,265 $ 336 $ ( 174 ) $ 4 $ ( 170 ) $ 1,157 $ 32,588 (In thousands) Balance at December 31, 2022 CECL Impact PCD Loans Charge offs Recoveries Net loans (charged off) recovered Provision/(Benefit) for credit losses Six Months Ended June 30, 2023 Commercial Real Estate CRE Nonowner Occupied $ 8,284 $ 259 $ 312 $ — $ — $ — $ ( 983 ) $ 7,872 CRE Owner Occupied 2,916 91 2 ( 16 ) — ( 16 ) 1,148 4,141 Multifamily 1,111 35 — — — 98 1,244 Farmland 831 26 — — — 83 940 Commercial and industrial 4,593 6,601 5 ( 220 ) — ( 220 ) 424 11,403 Construction Residential Construction — 1,270 12 — — — 447 1,729 Other Construction — 1,931 1 — — — 6 1,938 Residential Mortgage 1-4 Family 1st Lien 370 1,307 4 ( 4 ) — ( 4 ) ( 49 ) 1,628 1-4 Family Rental 288 731 — 30 30 ( 2 ) 1,047 HELOC and Junior Liens 661 ( 230 ) — — — 39 470 Consumer 29 154 ( 84 ) 11 ( 73 ) 66 176 Unallocated ( 126 ) ( 244 ) — — — 370 — Total $ 18,957 $ 11,931 $ 336 $ ( 324 ) $ 41 $ ( 283 ) $ 1,647 $ 32,588 30 Table of Contents MID PENN BANCORP, INC. The following table presents the ACL for loans and the amortized cost basis of the loans by the measurement methodology used as of June 30, 2024 and December 31, 2023: (In thousands) ACL - Loans Loans June 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 $ 10,293 $ 354 $ 10,647 $ 1,184,475 $ 2,575 $ 1,187,050 CRE Owner Occupied 5,830 — 5,830 622,114 1,642 623,756 Multifamily 3,202 7 3,209 374,010 165 374,175 Farmland 2,059 — 2,059 213,002 — 213,002 Commercial and industrial 6,258 676 6,934 690,244 2,459 692,703 Construction Residential Construction 1,129 — 1,129 105,676 — 105,676 Other Construction 2,013 — 2,013 348,289 — 348,289 Residential mortgage 1-4 Family 1st Lien 1,349 — 1,349 325,772 1,530 327,302 1-4 Family Rental 1,704 — 1,704 351,206 348 351,554 HELOC and Junior Liens 397 — 397 133,406 1,280 134,686 Consumer 17 — 17 6,368 — 6,368 Total $ 34,251 $ 1,037 $ 35,288 $ 4,354,562 $ 9,999 $ 4,364,561 (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 31 Table of Contents MID PENN BANCORP, INC. 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. There were no new modifications to borrowers experiencing financial difficulty for the quarter ended June 30, 2024. 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 Six months ended June 30, 2024 Residential mortgage HELOC and Junior Liens — — 92 92 0.07 % Total Residential Mortgage — — — 0 92 92 0.01 % Total $ — $ — $ 92 $ 92 (In thousands) Interest Only Term Extension Combination: Interest Only and Term Extension Total % of Total Class of Financing Receivable Three months ended June 30, 2023 Commercial and industrial $ — $ 150 $ — $ 150 0.02 % Total $ — $ 150 $ — $ 150 (In thousands) Interest Only Term Extension Combination: Interest Only and Term Extension Total % of Total Class of Financing Receivable Six months ended June 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. 32 Table of Contents MID PENN BANCORP, INC. Note 5 - Deposits Deposits consisted of the following as of June 30, 2024 and December 31, 2023: (Dollars in thousands) June 30, 2024 % of Total Deposits December 31, 2023 % of Total Deposits Noninterest-bearing demand deposits $ 766,014 17.0 % $ 801,312 18.4 % Interest-bearing demand deposits 1,021,636 22.7 % 947,372 21.8 % Money market 896,179 19.9 % 850,674 19.6 % Savings 277,133 6.2 % 288,404 6.6 % Total demand and savings 2,960,962 65.8 % 2,887,762 66.4 % Time 1,536,049 34.2 % 1,458,450 33.6 % Total deposits $ 4,497,011 100.0 % $ 4,346,212 100.0 % Overdrafts $ 206 0.00 % $ 315 0.01 % The scheduled maturities of time deposits at June 30, 2024 were as follows: Time Deposits (In thousands) Less than $250,000 $250,000 or more Maturing in 2024 $ 699,424 $ 237,344 Maturing in 2025 380,228 138,800 Maturing in 2026 39,854 4,547 Maturing in 2027 18,302 1,198 Maturing in 2028 9,295 259 Maturing thereafter 6,506 292 $ 1,153,609 $ 382,440 Mid Penn had $ 244.8 million in brokered certificates of deposits as of June 30, 2024 and December 31, 2023. As of June 30, 2024 and December 31, 2023, Mid Penn had $ 82.5 million and $ 96.7 million of CDAR deposits, respectively. 33 Table of Contents MID PENN BANCORP, INC. 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: June 30, 2024 December 31, 2023 (Dollars in thousands) Interest rate swaps on loans with customers Notional amount $ 204,525 $ 187,192 Weighted average remaining term (years) 5.63 6.24 Receive fixed rate (weighted average) 4.57 % 4.59 % Pay variable rate (weighted average) 7.47 % 7.50 % Estimated fair value (1) $ 11,543 $ 10,484 June 30, 2024 December 31, 2023 (Dollars in thousands) Interest rate swaps on loans with correspondents Notional amount $ 204,525 $ 187,192 Weighted average remaining term (years) 5.63 6.24 Receive variable rate (weighted average) 7.47 % 7.50 % Pay fixed rate (weighted average) 4.57 % 4.59 % Estimated fair value (2) $ 11,543 $ 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. Information related to cash flow hedges is set forth in the following table: 34 Table of Contents MID PENN BANCORP, INC. June 30, 2024 December 31, 2023 (Dollars in thousands) Cash flow hedges Notional amount $ 190,000 $ 190,000 Weighted average remaining term (years) 1.72 2.22 Pay fixed rate (weighted average) 3.74 % 3.74 % Receive variable rate (weighted average) 4.07 % 4.07 % Estimated fair value (1) $ 3,272 $ 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 $ 2.2 million 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 March 31, 2024 $ ( 19,050 ) $ 2,230 $ ( 127 ) $ ( 16,947 ) OCI before reclassifications ( 201 ) 28 ( 3 ) ( 176 ) Amounts reclassified from AOCI — — — — Balance at June 30, 2024 $ ( 19,251 ) $ 2,258 $ ( 130 ) ( 17,123 ) Balance at December 31, 2023 $ ( 17,339 ) $ 820 $ ( 118 ) $ ( 16,637 ) OCI before reclassifications ( 1,912 ) 1,438 5 ( 469 ) Amounts reclassified from AOCI — — ( 17 ) ( 17 ) Balance at June 30, 2024 $ ( 19,251 ) $ 2,258 $ ( 130 ) $ ( 17,123 ) Balance at March 31, 2023 $ ( 17,350 ) $ ( 128 ) $ 104 $ ( 17,374 ) OCI before reclassifications ( 3,261 ) 2,837 ( 7 ) ( 431 ) Amounts reclassified from AOCI — — — — Balance at June 30, 2023 $ ( 20,611 ) $ 2,709 $ 97 $ ( 17,805 ) Balance at December 31, 2022 $ ( 19,327 ) $ — $ 111 $ ( 19,216 ) OCI before reclassifications ( 1,284 ) 2,709 ( 2 ) 1,423 Amounts reclassified from AOCI — — ( 12 ) ( 12 ) Balance at June 30, 2023 $ ( 20,611 ) $ 2,709 $ 97 $ ( 17,805 ) 35 Table of Contents MID PENN BANCORP, INC. Note 8 - Fair Value Measurement The Corporation 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 six months ended June 30, 2024 or the year ended December 31, 2023. The following tables illustrate the assets measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets. June 30, 2024 (In thousands) Level 1 Level 2 Level 3 Total Available-for-sale securities: U.S. Treasury and U.S. government agencies $ — $ 30,619 $ — $ 30,619 Mortgage-backed U.S. government agencies — 142,037 — 142,037 State and political subdivision obligations — 3,591 — 3,591 Corporate debt securities — 31,689 — 31,689 Equity securities 427 — — 427 Loans held for sale — 8,420 — 8,420 Other assets: Derivative assets — 14,815 — 14,815 Total $ 427 $ 231,171 $ — $ 231,598 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 Total $ 438 $ 239,354 $ — $ 239,792 36 Table of Contents MID PENN BANCORP, INC. 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 equity and 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 June 30, 2024 were measured as the price that secondary market investors were offering for loans with similar characteristics. Derivative assets - 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 interest rate swap agreements as Level 2. See "Note 5 - Derivative Financial Instruments," for additional information. 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) June 30, 2024 December 31, 2023 Individually evaluated loans, net of ACL $ 8,962 $ 13,399 Foreclosed assets held for sale 441 293 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. 37 Table of Contents MID PENN BANCORP, INC. 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: June 30, 2024 Carrying Amount Estimated Fair Value (In thousands) Level 1 Level 2 Level 3 Total Financial instruments - assets Cash and cash equivalents $ 105,726 $ 105,726 $ — $ — $ 105,726 Available-for-sale investment securities 207,936 — 207,936 — 207,936 Held-to-maturity investment securities 393,320 — 347,275 — 347,275 Equity securities 427 427 — — 427 Loans held for sale 8,420 — 8,420 — 8,420 Net loans 4,329,273 — — 4,329,703 4,329,703 Restricted investment in bank stocks 13,930 13,930 — — 13,930 Accrued interest receivable 27,381 27,381 — — 27,381 Derivative assets 14,815 — 14,815 — 14,815 Financial instruments - liabilities Deposits $ 4,497,011 $ — $ 4,493,809 $ — $ 4,493,809 Short-term borrowings 200,000 — 200,000 — 200,000 Long-term debt (1) 20,693 — 20,693 — 20,693 Subordinated debt 46,047 — 40,612 — 40,612 Accrued interest payable 18,139 18,139 — — 18,139 Derivative liabilities 11,543 — 11,543 — 11,543 (1) Long-term debt excludes finance lease obligations. 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 investment securities 223,555 — 223,555 — 223,555 Held-to-maturity investment 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 38 Table of Contents MID PENN BANCORP, INC. (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 June 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 $ 61.9 million and $ 62.2 million of standby letters of credit outstanding as of June 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 June 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 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 June 30, 2024 was $ 3.1 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 $ 177 thousand and $ 496 thousand was recorded for the three and six months ended June 30, 2024, respectively. The benefit for OBS credit losses was $ 340 thousand and $ 629 thousand for the three and six months ended June 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. 39 Table of Contents MID PENN BANCORP, INC. Note 10 - Debt Short-term FHLB and Correspondent Bank Borrowings Total short-term borrowings were $ 200.0 million and $ 241.5 million as of June 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 $ 3.0 billion at June 30, 2024. The Bank had a short-term borrowing capacity from the FHLB as of June 30, 2024 up to the Bank’s unused borrowing capacity of $ 1.8 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 June 30, 2024. No draws were made on these lines as of June 30, 2024 and December 31, 2023. Long-term Debt The following table presents a summary of long-term debt as of June 30, 2024 and December 31, 2023. (Dollars in thousands) June 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 % 672 782 Due February 2027, 6.71 % 21 24 Total FHLB fixed rate instruments 20,693 55,806 Lease obligations included in long-term debt 3,134 3,197 Total long-term debt $ 23,827 $ 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 $ 138.9 million and $ 153.5 million as of June 30, 2024 and December 31, 2023, respectively. 40 Table of Contents MID PENN BANCORP, INC. 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 June 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 June 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. 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 June 30, 2024 and December 31, 2023. 41 Table of Contents MID PENN BANCORP, INC. 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 six months ended June 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 June 30, 2024. As of June 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 June 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 June 30, 2024, a total of 263,974 restricted shares were granted under the 2014 Plan, of which 85,802 shares were unvested. The 2014 Plan shares granted and vested resulted in $ 321 thousand and $ 252 thousand in share-based compensation expense for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, the 2014 Plan shares granted and vested resulted in share-based compensation expense of $ 623 thousand and $ 1.1 million, 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. 42 Table of Contents MID PENN BANCORP, INC. The following data shows the amounts used in computing basic and diluted earnings per common share: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except per share data) 2024 2023 2024 2023 Net income $ 11,771 $ 4,836 $ 23,904 $ 16,063 Weighted average common shares outstanding (basic) 16,576,283 16,233,473 16,572,102 16,060,789 Effect of dilutive unvested restricted stock grants 29,070 21,805 36,761 35,481 Weighted average common shares outstanding (diluted) 16,605,353 16,255,278 16,608,863 16,096,270 Basic earnings per common share $ 0.71 $ 0.29 $ 1.44 $ 1.00 Diluted earnings per common share 0.71 0.29 1.44 1.00 There were no antidilutive instruments at June 30, 2024 and 2023. 43 Table of Contents MID PENN BANCORP, INC.