What changed in this filing

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Item 1. Business

2025-03-13 compared with 2024-03-28 · 48 added, 38 removed, 324 unchanged (21% of the section changed)

4 unchanged sentences

Mid Penn Bancorp, Inc.

and its wholly owned bank and nonbank subsidiaries are collectively referred to herein as "Mid Penn" or the "Corporation." On December 31, 1991, Mid Penn acquired, as part of the holding company formation, all of the outstanding common stock of Mid Penn Bank, and the Bank became a wholly-owned subsidiary of Mid Penn.

During the year ended December 31, 2020, Mid Penn established three nonbank subsidiaries, including MPB Financial Services, LLC, under which two additional nonbank subsidiaries have been established:

(i) MPB Wealth Management, LLC, created to expand the wealth management function and services of the Corporation, and (ii) MPB Risk Services, LLC, created to fulfill the insurance needs of both existing and potential customers of the Corporation.

During the year ended December 31, 2021, Mid Penn formed MPB Launchpad Fund I, LLC to hold certain financial holding company eligible investments.

and its wholly owned bank and nonbank subsidiaries are collectively referred to herein as "Mid Penn" or the "Corporation." On December 31, 1991, Mid Penn acquired, as part of the holding company formation, all of the outstanding common stock of Mid Penn Bank, referred to herein as "The Bank", and the Bank became a wholly-owned subsidiary of Mid Penn.

In addition to Mid Penn Bank, Mid Penn maintains five wholly-owned nonbanks subsidiaries:

MPB Financial Services, LLC, which serves as the mid-tier holding company for MPB Risk Services, LLC, a licensed insurance producer, MPB Wealth Management, LLC (which ceased operating during the first quarter of 2024), and MPB Launchpad Fund I, LLC, which was formed to hold certain financial holding company eligible investments;

and MPB Realty Holding, LLC, which was formed for purposes of holding certain assets acquired for debts previously contracted.

As of December 31, 2024, the accounts and activities of these nonbank subsidiaries were not material to warrant separate disclosure or segment reporting.

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On July 31, 2018, Mid Penn completed its acquisition of First Priority Financial Corp.

("First Priority") pursuant to which First Priority was merged with and into Mid Penn (the "First Priority Merger"), with Mid Penn being the surviving corporation in the First Priority Merger.

pursuant to which First Priority was merged with and into Mid Penn (the "First Priority Merger"), with Mid Penn being the surviving corporation in the First Priority Merger.

As part of this acquisition, First Priority’s banking subsidiary, First Priority Bank, was merged with and into the Bank.

The First Priority Merger resulted in the addition of eight offices in Southeastern Pennsylvania operating as "First Priority Bank, a Division of Mid Penn Bank".

The First Priority Merger resulted in the addition of eight offices in Southeastern Pennsylvania.

On November 30, 2021, Mid Penn completed its acquisition of Riverview Financial Corporation, the holding company for Riverview Bank, through the merger of Riverview with and into Mid Penn.

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MID PENN BANCORP, INC.

On December 30, 2022, Mid Penn purchased the assets of Managing Partners, Inc.

("MPI Acquisition") in a business combination.

Managing Partners, Inc.

was an independent insurance agency that serviced the Central Pennsylvania area.

On December 30, 2022, Mid Penn purchased the assets of Managing Partners, Inc., an independent insurance agency that serviced the Central Pennsylvania area.

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.

This transaction included the acquisition of five branches and extended Mid Penn's footprint into Middlesex and Monmouth counties in central New Jersey.

On July 31, 2024, Mid Penn acquired the insurance business and related accounts of, Commonwealth Benefits Group, 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.

On October 31, 2024, Mid Penn entered into an Agreement and Plan of Merger with William Penn Bancorporation pursuant to which William Penn will merge with and into Mid Penn in an all-stock transaction valued at approximately $107 million, based on Mid Penn’s closing stock price as of October 30, 2024.

The Merger has been approved unanimously by each company’s board of directors and is expected to close in the first half of 2025.

Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Mid Penn and William Penn shareholders.

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

Additional information related to the recent acquisitions can be found in "Note 2 - Business Combinations", to the Consolidated Financial Statements contained in Part II, Item of this report.

As of December 31, 2023, the Bank operates 44 full-service retail banking locations in the Pennsylvania counties of Berks, Blair, Bucks, Centre, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with 5 full-service retail banking locations in the New Jersey counties of Middlesex and Monmouth.

As of December 31, 2024, the Bank operates 42 full-service retail banking locations in the Pennsylvania counties of Berks, Blair, Bucks, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with 3 full-service retail banking locations in the New Jersey counties of Middlesex and Monmouth.

One new full-service retail banking location opened in Camden County, New Jersey in January 2025.

Mid Penn’s primary business consists of attracting deposits and loans from the Bank’s network of community banking offices.

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The Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation supervise the Bank.

Deposits of the Bank are insured by the FDIC’s Deposit Insurance Fund to the maximum extent provided by law.

Deposits of the Bank are insured by the FDIC’s Deposit Insurance Fund ("DIF") to the maximum extent provided by law.

In addition, the Bank provides a full range of trust and retail investment services.

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The Bank provides services to commercial businesses and real estate investors, consumers, nonprofit organizations, and municipalities through its 45 full-service retail banking properties, one loan production office, one wealth management office, two corporate administrations offices, and one operations facility, primarily based in Pennsylvania.

Mid Penn’s primary markets reflect a diversified manufacturing and services base across nineteen Pennsylvania counties and two counties in New Jersey, including having several offices in and around the state capital region of Harrisburg.

Mid Penn’s primary markets reflect a diversified manufacturing and services base across sixteen Pennsylvania counties and two counties in New Jersey, including having several offices in and around the state capital region of Harrisburg.

The Bank emphasizes developing long-term customer relationships, maintaining high quality service, and providing prompt responses to customer needs.

Mid Penn believes that local relationship building and its prudent approach to lending are important factors in the success and growth of Mid Penn.

MID PENN BANCORP, INC.

Human Capital

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Bank leadership has seen the benefits of Employee Resource Groups ("ERG") within our organization.

In 2022, Mid Penn formalized committee members on our Women’s Leadership Network, Diversity, Equity and Inclusion ("DEI"), and our Culture Committees.

Throughout 2023 the company has benefited from the contributions of these groups.

In 2022, Mid Penn formalized committee members on our Women’s Leadership Network, Diversity, Equality, and Inclusion ("DEI"), and our Culture Committees.

Throughout 2024, the entire organization has benefited from the contributions of these groups.

Each group allows employees to come together based on shared characteristics to address common challenges and to drive positive impact within the workforce.

We have found that our Women’s Leadership Network has provided a sense of belonging and camaraderie for our primarily female workforce.

The Women’s Leadership group has expanded its reach by creating a subgroup called MPB Moms.

This group serves as a community for mothers to connect, share like experiences and offer support to each other as they balance their personal and professional lives.

Our DEI group has laid the groundwork to help create a more diverse and inclusive workplace by promoting understanding, respect, and awareness of different cultures, backgrounds, and perspectives.

Our Culture Committee has focused on contributing to a positive organizational culture by fostering open communication,

MID PENN BANCORP, INC.

collaboration, and a sense of community;

Our Culture Committee has focused on contributing to a positive organizational culture by fostering open communication, collaboration, and a sense of community;

this sense of community is important to Mid Penn as we continue to expand geographically.

The Culture Committee also supports wellness initiatives by creating initiatives, programs, and resources to encourage physical, mental, and emotional wellness.

The committee aims to support healthy work-life balance, understand and better utilize our benefit programs, and foster a positive, wellness-oriented workplace culture.

We have found that employees who belong to any of our ERGs are more engaged, are developing leadership skills, and are gaining new experiences through volunteer and networking opportunities.

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We provide in-house training to employees on a variety of topics, including leadership and professional development, cybersecurity, risk, compliance, and technology.

On an ongoing basis, we further promote the health and wellness of our employees by strongly encouraging work-life balance.

On an ongoing basis, we promote the health and wellness of our employees by strongly encouraging work-life balance.

Our benefits package includes health care coverage, retirement benefits, life and disability insurance, tuition-reimbursement, parental leave, wellness programs, and paid time off.

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In 2024, our employees demonstrated their commitment to our communities by personally giving more than $69 thousand to charitable organizations within Mid Penn’s footprint through our Dress Down Friday program.

MID PENN BANCORP, INC.

Lending Activities

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Mid Penn does not have any significant non-governmental concentrations within its investment securities portfolio.

MID PENN BANCORP, INC.

Mid Penn maintains both a held-to-maturity investment portfolio and an available-for-sale investment portfolio.

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This difference between the amortized cost and fair value of available-for-sale investment securities, or unrealized loss, amounted to $24.3 million as of December 31, 2024.

On an after-tax basis, this unrealized loss on available-for-sale securities resulted in an increase to shareholders’ equity, through the accumulated other comprehensive loss component, of $2.0 million.

On an after-tax basis, this unrealized loss on available-for-sale securities resulted in a decrease to shareholders’ equity, through the accumulated other comprehensive loss component, of $1.6 million.

As of December 31, 2024, there was no allowance for credit losses on either the held-to-maturity or available-for-sale investment portfolios.

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Mid Penn’s ability to attract retail funds in the future will continue to be impacted by the public’s appetite for the safety of insured or local investments versus the returns offered by alternative choices as part of their personal investment mix.

MID PENN BANCORP, INC.

The financial services and banking business is highly competitive, and the profitability of Mid Penn depends principally upon the Corporation’s ability to successfully compete in its market area.

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The regulation and supervision of the Corporation and particularly the Bank are primarily focused on the protection of depositors, the DIF, and the monetary system, and do not prioritize shareholder interests.

Enforcement actions that may be imposed by federal and

MID PENN BANCORP, INC.

state banking regulators include the imposition of a conservator or receiver, cease-and-desist orders and written agreements, the termination of insurance on deposits, the imposition of civil money penalties, and removal and prohibition orders.

Enforcement actions that may be imposed by federal and state banking regulators include the imposition of a conservator or receiver, cease-and-desist orders and written agreements, the termination of insurance on deposits, the imposition of civil money penalties, and removal and prohibition orders.

If a banking regulator takes any enforcement action, the value of an equity investment in Mid Penn could be substantially reduced or eliminated.

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In addition, the BHCA restricts the activities in which financial or bank holding companies may engage directly or through nonbank subsidiaries.

MID PENN BANCORP, INC.

Gramm-Leach-Bliley Financial Modernization Act

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Mid Penn made the election given the Corporation’s growth and the intended broadening spectrum of financial product and service offerings to potentially include, but not be limited to, insurance and wealth management services.

MID PENN BANCORP, INC.

Bank Regulation

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The requirements also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets.

Furthermore, the requirements indicate that the Federal Reserve will continue to consider a "Tangible Tier 1 Leverage Ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity.

Furthermore, the requirements indicate that the Federal Reserve will continue to consider a "Tangible Tier 1

MID PENN BANCORP, INC.

Leverage Ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity.

As of December 31, 2024, Mid Penn has met these leverage requirements, and the Federal Reserve has not advised Mid Penn of any specific minimum Tier 1 leverage ratio requirement.

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However, it will be deemed "undercapitalized" if it fails to meet the minimum capital requirements, "significantly undercapitalized" if it has a Total Risk-Based Capital ratio that is less than 6%, a Tier 1 Risk-Based Capital ratio that is less than 3%, or a leverage ratio that is less than 3%, and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%.

MID PENN BANCORP, INC.

The prompt corrective action rules require an undercapitalized institution to file a written capital restoration plan, along with a performance guaranty by its holding company or a third party.

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As of December 31, 2024, the Corporation and the Bank exceeded the minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III Rules.

MID PENN BANCORP, INC.

The Basel III Rules provide for a number of required deductions from and adjustments to CET1.

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Any redemption or repurchase of preferred stock or subordinated debt remains subject to the prior approval of the Federal Reserve.

MID PENN BANCORP, INC.

Safety and Soundness Standards

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Commercial Real Estate Guidance

Federal agencies released additional guidance in July 2023, in response to the increased commercial real estate concentrations that have occurred in recent years.

Federal agencies released additional guidance in July 2023, in response to the increased commercial real estate ("CRE") concentrations that have occurred in recent years.

The guidance identifies institutions that are potentially exposed to significant CRE concentration risk as those who have experienced rapid growth in CRE lending, have notable exposures to a specific type of CRE, or are approaching, or exceed the following supervisory criteria:

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• Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months.

MID PENN BANCORP, INC.

If the Bank's portfolio exceeds the guidelines mentioned above, additional risk management practices may be needed.

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Additional support offered by guarantors is also considered when applicable.

The mix of commercial real estate and construction portfolios in relation to the total portfolio increased 33.61% and 1.93%, respectively from December 31, 2022 to December 31, 2023.

Non-owner occupied office commercial real estate exposure represents 7.1% of total loan balances and is primarily limited to suburban offices.

MID PENN BANCORP, INC.

Commercial real estate loans increased 9.2% from December 31, 2023 to December 31, 2024.

Commercial real estate loans were the largest driver of the $190.3 million growth in the total loan portfolio.

Non-owner occupied commercial real estate loan exposure represents 28.2% of total loan balances and is primarily limited to suburban offices.

Payment of Dividends and Other Restrictions

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As the asset base of the banking industry is larger than the deposit base, the range of assessment rates is a low of 2.5 bp and a high of 45 bp, per $100 of assets.

MID PENN BANCORP, INC.

The FDIC was required under the Dodd-Frank Act to establish assessment rates that allowed the DIF to achieve a reserve ratio of 1.35% of Insurance Fund insured deposits by September 2020.

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The Bank maintains a comprehensive compliance management program to promote its compliance with these and other applicable consumer protection laws and regulations.

MID PENN BANCORP, INC.

The federal banking regulators have issued a number of regulations governing the privacy of consumer financial and customer information.

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government to detect and prosecute international money laundering and the financing of terrorism.

Under Title III of the USA Patriot Act, also known as the International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001, all financial institutions, including Mid Penn and the Bank, are required in general to identify their customers, adopt formal and comprehensive anti-money laundering programs, scrutinize or prohibit altogether certain transactions of special concern, and be prepared to respond to inquiries from U.S.

MID PENN BANCORP, INC.

inquiries from U.S.

law enforcement agencies concerning their customers and their transactions.

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The Bank has adopted policies, procedures, and controls to address compliance with the requirements of the USA Patriot Act under the existing regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by the USA Patriot Act and implementing regulations.

MID PENN BANCORP, INC.

In 2012, the Jumpstart Our Business Startups Act (the "JOBS Act") became law.

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From time to time, legislation is enacted that has the effect of increasing the compliance and operations requirements and the cost of doing business, changing the tax structure applicable to Mid Penn, limiting or expanding permissible activities, or affecting the competitive balance between banks and other financial institutions.

Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial institutions are frequently made in Congress and the various bank regulatory agencies.

Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial institutions are

MID PENN BANCORP, INC.

frequently made in Congress and the various bank regulatory agencies.

Mid Penn cannot predict the likelihood of any major changes or the impact such changes might have on Mid Penn, the Bank, or the nonbank subsidiaries.

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It is not possible to reasonably predict the nature, amount, frequency, and impact of future changes in monetary and fiscal policies.

MID PENN BANCORP, INC.

Environmental Laws

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The SEC’s Internet site address is www.sec.gov.

MID PENN BANCORP, INC.

Mid Penn’s headquarters are located at 2407 Park Drive, Harrisburg, Pennsylvania 17110, and its telephone number is 1-866-642-7736.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business