MID PENN BANCORP INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following audited financial statements are set forth in this Annual Report on Form 10-K on the following pages: Index to Financial Statements Management Report on Internal Controls Over Financial Reporting 61 Reports of Independent Registered Public Accounting Firms 62 Consolidated Balance Sheets 66 Consolidated Statements of Income 67 Consolidated Statements of Comprehensive Income 68 Consolidated Statements of Changes in Shareholders' Equity 69 Consolidated Statements of Cash Flows 70 Notes to Consolidated Financial Statements 72 60 MID PENN BANCORP, INC. Management Report on Internal Controls Over Financial Reporting The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures, as defined in SEC Rules 13a-15(e) and 15d-15(e). Based upon the evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, the Corporation’s disclosure controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Corporation’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. The Corporation’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2024, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2024, the Corporation’s internal control over financial reporting is effective based on those criteria. The effectiveness of the Corporation’s internal control over financial reporting has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report which is included herein. /s/ Rory G. Ritrievi /s/ Justin T. Webb Rory G. Ritrievi Justin T. Webb President and Chief Financial Officer Chief Executive Officer March 13, 2025 March 13, 2025 61 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Mid Penn Bancorp, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Mid Penn Bancorp, Inc. and Subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 13, 2025 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Allowance for Credit Losses on Loans – Adjustments to Historical Losses As described in Note 1 and Note 4 of the financial statements, the Company’s allowance for credit losses (ACL) on loans is established through a provision for credit losses on loans and represents management’s estimate of all expected credit losses over the expected contractual life of the Company’s loan portfolio. The methodology for estimating the amount of expected credit losses reported in the ACL on loans 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 on loans for the collective component, loans are segregated into loan pools based on loan purpose codes and similar risk characteristics. The ACL on loans as of December 31, 2024 was $35.5 million, which consists of an ACL on loans collectively evaluated for credit losses of $34.1 million and an ACL on loans individually evaluated for credit losses of $1.4 million. The Company estimates the collective ACL on loans utilizing a discounted cash flow (DCF) methodology applied to portfolio segments and their loan pools segregated by similar risk characteristics. The Company’s DCF methodology adjusts loan level contractual cash flows for probability of default and loss given default and prepayment and curtailment rate assumptions to calculate expected future cash flows. A correlation between the selected macroeconomic indicators of 62 national unemployment rate and GDP and historic loss levels, adjusted to include representative peer group loss experience, was developed to predict loss expectations based on current economic conditions and a reasonable and supportable forecast period. At the end of the reasonable and supportable forecast period, the Company reverts to the long-term mean of the macroeconomic indicator. For the December 31, 2024 ACL on loans, the Company determined that reasonable and supportable forecasts could be made for a 12-month period and used a reversion period of four quarters reverting to the historical mean on a straight-line basis. The Company also calculates a qualitative portion of the ACL, which is based on general economic conditions and other internal and external factors affecting Mid Penn’s loan portfolio. At December 31, 2024, qualitative factors considered for the ACL on loans included concentrations of credit, lending process, and peer group divergence. We identified the adjustments to historical losses, both as it relates to the economic forecast selection and the qualitative factors, within the Company’s ACL on loans calculation as a critical audit matter as auditing the underlying adjustments required significant auditor judgment in the evaluation of the Company’s assumptions. Our audit procedures related to the Company’s adjustments to historical loss information component of the ACL on loans included the following, among others: • We obtained an understanding of the relevant controls related to the ACL on loans and tested such controls for design and operating effectiveness, including controls relating to management’s review and approval of the ACL on loans calculation, management’s assessment and review of the adjustments to historical loss information component of the ACL on loans for current conditions and forecasted scenarios and management’s validation of underlying source data. • We tested management’s calculation of adjustments to historical loss information within the ACL on loans calculation by: ◦ Agreeing calculation inputs to the Company’s internal and external source data, including for current and forecasted conditions; ◦ Verifying the mathematical accuracy of the calculation of adjustments to historical loss information; and ◦ Evaluating whether adjustments to historical loss information within the ACL on loans, or lack thereof, were reasonable and consistent with Company provided internal data and external independent data, including data related to current and forecasted periods. • We assessed the reasonableness of management’s calculated changes in adjustments to historical loss information within the ACL on loans calculation by: ◦ Evaluating the magnitude and directional consistency of changes, or lack thereof, in the level of adjustments to historical loss information between periods; and ◦ Evaluating whether management’s conclusions were reasonable and consistent with Company provided internal data and external independent data, including data related to current and forecasted periods. • We agreed management’s calculated adjustments to historical loss information to the ACL on loans calculation. Goodwill Impairment – Fair Value of Reporting Unit As described in Note 1 and Note 6 of the financial statements, the Company’s goodwill balance was $128.2 million as of December 31, 2024. Goodwill is tested annually for impairment, or at interim periods if certain events occur which may indicate the fair value of the reporting unit has fallen below its carrying amount, by comparing the estimated fair value of Company’s single reporting unit to its carrying value. The Company estimates the fair value of its single reporting unit through multiple valuation techniques, including a public company market change of control approach and a peer group change of control approach. Significant judgment is required to estimate the fair value of the Company’s single reporting unit including the evaluation of current market data as well as the selection of a control premium. We identified the Company’s annual goodwill impairment test as a critical audit matter due to the complexity of the analysis and certain significant assumptions made by management in estimating the fair value of the Company’s reporting unit such as the determination of a reasonable control premium and the identification of peer public companies. Auditing management’s assumptions required a high degree of auditor judgement, subjectivity, and increased audit effort, including the use of internal valuation specialists, due to the impact these assumptions could have on the accounting estimate. Our audit procedures related to the Company’s annual goodwill impairment test included the following, among others: • We obtained an understanding of the relevant controls related to management’s annual test of goodwill for impairment and tested such controls for design and operating effectiveness, including controls over management’s preparation of the significant assumptions such as the control premium. 63 • We tested the completeness and accuracy of the underlying data used by management in the fair value estimate by agreeing Company financial data to internal Company records. • We utilized internal valuation specialists who assisted in the following, among others: ◦ Evaluating the completeness and accuracy of the market data used in management’s calculation of the control premium by comparing such market data to independently sourced information. ◦ Evaluating the comparability of the Company to the peer public companies identified by management through consideration of size, location, and recent results of operations, among other factors. ◦ Evaluating the appropriateness of the valuation models used in management’s analysis and comparing management’s selected control premium to publicly available market data. We have served as the Company's auditor since 2020. /s/ RSM US LLP Philadelphia, Pennsylvania March 13, 2025 64 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Mid Penn Bancorp, Inc. and Subsidiaries Opinion on the Internal Control Over Financial Reporting We have audited Mid Penn Bancorp, Inc. and Subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report dated March 13, 2025 expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Philadelphia, Pennsylvania March 13, 2025 65 MID PENN BANCORP, INC. Consolidated Balance Sheets (In thousands, except per share data) December 31, 2024 December 31, 2023 ASSETS Cash and due from banks $ 37,002 $ 45,435 Interest-bearing balances with other financial institutions 14,490 34,668 Federal funds sold 19,072 16,660 Total cash and cash equivalents 70,564 96,763 Investment securities: Held to maturity, at amortized cost (fair value $ 340,648 and $ 357,521 ) 382,447 399,128 AFS, at fair value (amortized cost $ 284,770 and $ 245,886 ) 260,477 223,555 Equity securities, at fair value 428 438 Loans held for sale, at fair value 7,064 3,855 Loans, net of unearned income 4,443,070 4,252,792 Less: ACL - Loans ( 35,514 ) ( 34,187 ) Net loans 4,407,556 4,218,605 Premises and equipment, net 38,806 36,909 Operating lease right of use asset 7,699 8,953 Finance lease right of use asset 2,548 2,727 Cash surrender value of life insurance 51,521 54,497 Restricted investment in bank stocks 7,461 16,768 Accrued interest receivable 26,846 25,820 Deferred income taxes 22,747 24,146 Goodwill 128,160 127,031 Core deposit and other intangibles, net 6,242 6,479 Foreclosed assets held for sale 44 293 Other assets 50,326 44,825 Total Assets $ 5,470,936 $ 5,290,792 LIABILITIES & SHAREHOLDERS’ EQUITY Deposits: Noninterest-bearing demand $ 759,169 $ 801,312 Interest-bearing transaction accounts 2,319,753 2,086,450 Time 1,611,005 1,458,450 Total Deposits 4,689,927 4,346,212 Short-term borrowings 2,000 241,532 Long-term debt 23,603 59,003 Subordinated debt 45,741 46,354 Operating lease liability 8,092 9,285 Accrued interest payable 13,484 14,257 Other liabilities 33,071 31,799 Total Liabilities 4,815,918 4,748,442 Shareholders' Equity: Common stock, par value $ 1.00 per share; 40,000,000 shares authorized; 19,796,519 issued at December 31, 2024 and 16,998,929 at December 31, 2023; 19,355,797 outstanding at December 31, 2024 and 16,573,707 at December 31, 2023 19,797 16,999 Additional paid-in capital 480,491 405,725 Retained earnings 181,597 145,982 Accumulated other comprehensive loss ( 16,825 ) ( 16,637 ) Treasury Stock, at cost; 440,722 and 425,222 shares at December 31, 2024 and December 31, 2023 ( 10,042 ) ( 9,719 ) Total Shareholders’ Equity 655,018 542,350 Total Liabilities and Shareholders' Equity $ 5,470,936 $ 5,290,792 The accompanying notes are an integral part of these Consolidated Financial Statements. 66 MID PENN BANCORP, INC. Consolidated Statements of Income Years Ended December 31, (In thousands, except per share data) 2024 2023 2022 INTEREST INCOME Loans, including fees $ 265,522 $ 218,060 $ 150,256 Investment securities: Taxable 16,542 16,005 11,952 Tax-exempt 1,464 1,540 1,497 Other interest-bearing balances 1,127 361 69 Federal funds sold 1,928 373 1,826 Total Interest Income 286,583 236,339 165,600 INTEREST EXPENSE Deposits 116,320 79,295 14,144 Short-term borrowings 10,575 7,087 441 Long-term and subordinated debt 3,017 2,984 3,182 Total Interest Expense 129,912 89,366 17,767 Net Interest Income 156,671 146,973 147,833 Provision for credit losses - loans 2,144 3,295 4,300 (Benefit)/Provision for credit losses - CCL ( 628 ) 404 — Net Interest Income After Provision for Credit Losses 155,155 143,274 143,533 NONINTEREST INCOME Fiduciary and wealth management 4,680 5,059 5,071 ATM debit card interchange 3,851 4,019 4,362 Service charges on deposits 2,176 1,943 2,078 Mortgage banking 2,476 1,353 1,607 Mortgage hedging 10 324 1,471 Net gain on sales of SBA loans 347 571 262 Earnings from cash surrender value of life insurance 1,141 1,112 1,013 Other 7,812 5,627 7,793 Total Noninterest Income 22,493 20,008 23,657 NONINTEREST EXPENSE Salaries and employee benefits 64,098 59,345 52,601 Software licensing and utilization 9,300 7,927 7,524 Occupancy, net 7,571 7,349 6,900 Equipment 4,928 5,121 4,493 Shares tax 2,350 2,713 2,786 Legal and professional fees 4,306 2,945 2,761 ATM/card processing 2,284 2,108 2,139 Intangible amortization 1,784 1,780 2,012 FDIC Assessment 4,170 3,500 1,594 Loss (Gain) on sale of foreclosed assets, net 80 ( 144 ) ( 133 ) Merger and acquisition 545 5,544 294 Post-acquisition restructuring — 2,952 329 Other 16,200 17,448 16,543 Total Noninterest Expense 117,616 118,588 99,843 INCOME BEFORE PROVISION FOR INCOME TAXES 60,032 44,694 67,347 Provision for income taxes 10,595 7,297 12,541 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 49,437 $ 37,397 $ 54,806 PER COMMON SHARE DATA: Basic Earnings Per Common Share $ 2.90 $ 2.29 $ 3.44 Diluted Earnings Per Common Share $ 2.90 $ 2.29 $ 3.44 Weighted-average basic shares outstanding 17,026,240 16,319,006 15,912,877 Weighted-average diluted shares outstanding 17,070,862 16,350,963 15,934,635 The accompanying notes are an integral part of these Consolidated Financial Statements. 67 MID PENN BANCORP, INC. Consolidated Statements of Comprehensive Income Year Ended December 31, (In Thousands) 2024 2023 2022 Net income $ 49,437 $ 37,397 $ 54,806 Other comprehensive (loss)/income: Unrealized (losses)/gains arising during the period on available for sale securities, net of income tax. ( 1,550 ) 1,988 ( 19,072 ) Unrealized holding gains arising during the period on interest rate derivatives used in cash flow hedges, net of income tax. 665 820 — Change in defined benefit plans, net of income tax. (1) 723 ( 212 ) ( 294 ) Reclassification adjustment for settlement gains and activity related to benefit plans, net of income tax. (2) ( 26 ) ( 17 ) ( 8 ) Total other comprehensive (loss)/income ( 188 ) 2,579 ( 19,374 ) Total comprehensive income $ 49,249 $ 39,976 $ 35,432 (1) The change in defined benefit plans consists primarily of unrecognized actuarial (losses) gains on defined benefit plans during the period. (2) The reclassification adjustment for defined 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 the total noninterest income. See "Note 14 - Postretirement Benefit Plans " , to the Consolidated Financial Statements for more information. The accompanying notes are an integral part of these Consolidated Financial Statements. 68 MID PENN BANCORP, INC. Consolidated Statements of Changes in Shareholders’ Equity 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, 2022 16,056,282 $ 16,056 $ 384,742 $ 91,043 $ 158 $ ( 1,923 ) $ 490,076 Net income — — — 54,806 — — 54,806 Total other comprehensive loss, net of taxes — — — — ( 19,374 ) — ( 19,374 ) Common stock cash dividends declared - $ 0.80 per share — — — ( 12,735 ) — — ( 12,735 ) Riverview restricted stock (1) — — 776 — — — 776 Repurchased stock ( 109,891 shares) — — — — — ( 2,957 ) ( 2,957 ) Employee Stock Purchase Plan 7,152 7 193 — — — 200 Director Stock Purchase Plan 5,876 6 159 — — — 165 Restricted stock activity 25,176 25 1,117 — — — 1,142 Balance, December 31, 2022 16,094,486 $ 16,094 $ 386,987 $ 133,114 $ ( 19,216 ) $ ( 4,880 ) $ 512,099 Net income — $ — $ — $ 37,397 $ — $ — $ 37,397 Total other comprehensive income, net of taxes — — — — 2,579 — 2,579 Common stock cash dividends declared - $ 0.80 per share — — — ( 12,981 ) — — ( 12,981 ) Common stock issued to Brunswick shareholders (2) 849,510 850 17,245 — — — 18,095 Impact of adopting CECL (3) — — — ( 11,548 ) — — ( 11,548 ) Repurchased stock ( 216,879 shares) (4) — — ( 37 ) — — ( 4,839 ) ( 4,876 ) Employee Stock Purchase Plan 13,459 13 290 — — — 303 Director Stock Purchase Plan 7,884 8 171 — — — 179 Restricted stock activity 33,590 34 1,069 — — — 1,103 Balance, December 31, 2023 16,998,929 $ 16,999 $ 405,725 $ 145,982 $ ( 16,637 ) $ ( 9,719 ) $ 542,350 Net income — $ — $ — $ 49,437 $ — $ — $ 49,437 Total other comprehensive loss, net of taxes — — — — ( 188 ) — ( 188 ) Common stock cash dividends declared - $ 0.80 per share — — — ( 13,822 ) — — ( 13,822 ) Common stock issuance (5) 2,731,250 2,731 73,225 — — — 75,956 Repurchased stock ( 15,500 shares) (4) — — — — — ( 323 ) ( 323 ) Employee Stock Purchase Plan 19,829 20 418 — — — 438 Director Stock Purchase Plan 5,072 5 118 — — — 123 Restricted stock activity 41,439 42 1,005 — — — 1,047 Balance, December 31, 2024 19,796,519 $ 19,797 $ 480,491 $ 181,597 $ ( 16,825 ) $ ( 10,042 ) $ 655,018 (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) Shares issued as a result of the acquisition of Brunswick Bancorp ("Brunswick"). See "Note 2 - Business Combinations", to the Consolidated Financial Statements for more information. (3) The Corporation adopted ASC 326 , Financial Instruments - Credit Losses, effective January 1, 2023. See "Note 1 - Summary of Significant Accounting Policies" for further details. (4) Includes tax effects of repurchased stock. (5) Shares issued as a result of the underwritten public offering of 2,375,000 shares of common stock at a price of $ 29.50 per share on November 4, 2024. The accompanying notes are an integral part of these Consolidated Financial Statements. 69 MID PENN BANCORP, INC. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2024 2023 2022 Operating Activities: Net Income $ 49,437 $ 37,397 54,806 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 1,516 3,699 4,300 Depreciation 4,866 4,900 4,283 Amortization of intangibles 1,784 1,780 2,012 Net amortization of security discounts/premiums 397 472 729 Noncash operating lease expense 2,184 1,945 1,755 Amortization of finance lease right of use asset 179 180 180 Earnings on cash surrender value of life insurance ( 1,141 ) ( 1,112 ) ( 1,013 ) Mortgage loans originated for sale ( 113,741 ) ( 82,714 ) ( 138,611 ) Proceeds from sales of mortgage loans originated for sale 113,008 82,687 149,257 Gain on sale of mortgage loans ( 2,476 ) ( 1,353 ) ( 1,607 ) SBA loans originated for sale ( 4,603 ) ( 11,211 ) ( 5,310 ) Proceeds from sales of SBA loans originated for sale 4,951 10,640 5,571 Gain on sale of SBA loans ( 347 ) ( 571 ) ( 262 ) (Loss)/Gain on sale of property, plant, and equipment ( 10 ) — 938 Loss/(Gain) on sale or write-down of foreclosed assets 80 ( 144 ) ( 133 ) Write-off of bank premises and equipment held for sale — — 705 Accretion of subordinated debt ( 613 ) ( 587 ) ( 555 ) Stock compensation expense 1,047 1,103 1,142 Change in deferred income tax cost/(benefit) 1,516 ( 1,551 ) 2,262 Fair value adjustment on equity investments — — 70 Increase accrued interest receivable ( 1,026 ) ( 6,244 ) ( 7,080 ) (Increase)/Decrease in other assets ( 4,988 ) 9,736 ( 13,261 ) (Decrease)/Increase in accrued interest payable ( 773 ) 10,043 510 Decrease in operating lease liability ( 2,123 ) ( 2,540 ) ( 3,136 ) Increase/(Decrease) in other liabilities 2,264 ( 4,214 ) 2,439 Net Cash Provided By Operating Activities 51,388 52,341 59,991 Investing Activities: Proceeds from the sale of available-for-sale securities — 1,751 — Proceeds from the maturity or call of available-for-sale securities 33,756 16,611 14,574 Purchases of available-for-sale securities ( 72,712 ) — ( 213,976 ) Proceeds from the maturity or call of held-to-maturity securities 16,356 10,490 14,942 Purchases of held-to-maturity securities — — ( 85,664 ) Stock dividends of FHLB and other bank stock 1,288 864 289 Reduction (Purchases) of restricted investment in bank stock 8,019 ( 9,317 ) 530 Net cash (paid)/received from acquisition ( 2,676 ) 1,068 ( 901 ) Net increase in loans ( 190,658 ) ( 424,939 ) ( 411,800 ) Purchases of bank premises and equipment ( 6,916 ) ( 2,770 ) ( 4,249 ) Proceeds from the sale of premises and equipment 163 — 220 Proceeds from the sale of foreclosed assets 359 1,256 242 Proceeds from bank-owned life insurance 6,683 774 — Gain on bank-owned life insurance ( 2,566 ) ( 125 ) — Net change in investments in tax credits and other partnerships 162 ( 4,588 ) — Net cash paid on branch sale — — ( 18,918 ) Net Cash Used in Investing Activities ( 208,742 ) ( 408,925 ) ( 704,711 ) Financing Activities: Net increase/(Decrease) in deposits 343,715 286,498 ( 202,607 ) 70 MID PENN BANCORP, INC. Consolidated Statements of Cash Flows Proceeds from long-term debt — 25,000 — Common stock dividends paid ( 13,822 ) ( 12,981 ) ( 12,735 ) Proceeds from Employee and Director Stock Purchase Plan stock issuance 561 482 364 Proceeds from public offering of common stock 75,956 — — Treasury stock purchased ( 323 ) ( 4,876 ) ( 2,957 ) Riverview restricted stock (1) — — 776 Net change in finance lease liability ( 134 ) ( 93 ) ( 90 ) Net change in short-term borrowings ( 239,532 ) 138,885 102,647 Long-term debt repayment ( 35,266 ) ( 30,449 ) ( 76,771 ) Subordinated debt redemption and trust preferred securities — ( 10,000 ) ( 16,778 ) Net Cash Provided by Financing Activities 131,155 392,466 ( 208,151 ) Net increase/(decrease) in cash and cash equivalents ( 26,199 ) 35,882 ( 852,871 ) Cash and cash equivalents, beginning of period 96,763 60,881 913,752 Cash and cash equivalents, end of period $ 70,564 $ 96,763 $ 60,881 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 130,685 $ 77,413 $ 17,255 Cash paid for income taxes 853 7,965 7,552 Supplemental Noncash Disclosures: Recognition of operating lease right of use assets $ 930 $ 2,100 $ — Recognition of operating lease liabilities 930 2,100 1,498 Obsolete Riverview asset write-off — — 705 Loans transferred to foreclosed assets held for sale 164 1,362 152 Carrying value of assets sold in branch sale — — 2,159 Liabilities assigned in branch sale — — 21,076 Fair value of assets acquired in business combination, excluding cash (1)(2) 1,547 362,070 — Goodwill recorded (1)(2) 1,129 12,800 — Liabilities assumed in business combination (2) — 345,043 — Stock issued in business combination (3) — 18,095 — (1) Includes the impact of the Insurance Acquisition on July 31, 2024. See "Note 2 - Business Combinations" to the Consolidated Financial Statement for additional information. (2) This disclosure includes the impact of the Brunswick Acquisition on May 19, 2023. See "Note 2 - Business Combinations" to the Consolidated Financial Statements for more information. (3) Additionally, 2,500 shares of restricted stock were paid out in cash resulting in $ 776 thousand of cash consideration relating to stock awards. The accompanying notes are an integral part of these Consolidated Financial Statements. 71 MID PENN BANCORP, INC. Notes to Consolidated Financial Statements 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 Individual Retirement Accounts ("IRA"). 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 five wholly-owned nonbank subsidiaries, MPB Realty, LLC, 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 December 31, 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. For comparative purposes, the December 31, 2023 and December 31, 2022 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. Mid Penn has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 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. The accounting and reporting policies of Mid Penn conform with accounting principles generally accepted in the United States ("GAAP") and to general practice within the financial industry. Following is a description of the more significant accounting policies. Use of Estimates - The preparation of financial statements in conformity with U.S. 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. Significant Group of Concentrations of Credit Risk - Most of the Corporation’s activities are with customers located within Pennsylvania . "Note 3 - In vestment Securities" discusses the types of investment securities in which the Corporation invests. "Note 4 - L oans and Allowance for Loan Losses" discusses the types of lending that the Corporation engages in as well as loan concentrations. The Corporation does not have a significant concentration of credit risk with any one customer. Fair Value Measurements - 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. The Corporation groups 72 MID PENN BANCORP, INC. its assets and liabilities measured at fair value in three hierarchy levels, based on the observability and transparency of the inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. It is the Corporation’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs in estimating fair value. Unobservable inputs are utilized in determining fair value estimates only to the extent that observable inputs are not available. The need to use unobservable inputs generally results from a lack of market liquidity and trading volume. Transfers between levels of fair value hierarchy are recorded at the end of the reporting period. Cash and Cash Equivalents - For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand, balances due from banks, and federal funds sold, all of which mature within ninety days. Restrictions on Cash and Due from Bank Accounts - The Bank is required by banking regulations to maintain certain minimum cash reserves. As of both December 31, 2024 and 2023, there was no cash reserve balances required to be maintained at the Federal Reserve Bank of Philadelphia because the Bank had sufficient vault cash available. Debt Investment Securities - Mid Penn determines the classification of investment securities at the time of purchase. If Mid Penn has the intent and the ability at the time of purchase to hold debt securities until maturity, they are classified as held-to-maturity ("HTM"). HTM investment securities are stated at amortized cost. Debt securities Mid Penn does not intend to hold to maturity are classified as available for sale ("AFS") and carried at estimated fair value with unrealized gains or losses reported as a separate component of stockholders’ equity in accumulated other comprehensive income (loss), net of applicable income taxes. Available for sale securities are a part of Mid Penn’s asset/liability management strategy and may be sold in response to changes in interest rates, prepayment risk or other market factors. Management has elected to reclassify realized gains and losses from accumulated other comprehensive income when securities are sold on the trade date. Interest income and dividends on securities are recognized in interest income on an accrual basis. Premiums and discounts on debt securities are amortized as an adjustment to interest income over the period to maturity of the related security using the effective interest method. Realized gains or losses on the sale of securities are determined using the specific identification method. ASC 326, Financial Instruments-Credit Losses, was adopted by Mid Penn on January 1, 2023. ASC 326 introduced the CECL methodology for estimating allowances for credit losses. ASC 326 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 73 MID PENN BANCORP, INC. 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 ASC 326 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 ASC 326, Financial Instruments-Credit Losses, 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 are 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. At December 31, 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 December 31, 2024, accrued interest receivable totaled $ 1.2 million for AFS securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet. HTM Securities ASC 326, Financial Instruments-Credit Losses, 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 December 31, 2024, Mid Penn’s HTM securities totaled $ 382.4 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 December 31, 2024. 74 MID PENN BANCORP, INC. Accrued interest receivable is excluded from the estimate of credit losses for HTM securities. At December 31, 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 December 31, 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 December 31, 2024. Equity Securities - The Corporation reports its equity securities with readily determinable fair values at fair value on the Consolidated Balance Sheet, with realized and unrealized gains and losses reported in other expense on the Consolidated Statements of Income. As of December 31, 2024 and 2023, Mid Penn’s equity securities consisted of Community Reinvestment Act funds totaling $ 428 thousand and $ 438 thousand, respectively. No equity securities were sold during the years ended December 31, 2024, 2023 and 2022. Federal Home Loan Bank ("FHLB") and Atlantic Community Bankers' Bank ("ACBB") Stock - The Bank is a member of the FHLB and the ACBB and is required to maintain an investment in the stock of the FHLB and ACBB. No market exists for these stocks, and the Bank’s investment can be liquidated only through redemption by the FHLB or ACBB, at the discretion of and subject to conditions imposed by the FHLB and ACBB. Historically, FHLB and ACBB stock redemptions have been at cost (par value), which equals the Corporation’s carrying value. The Corporation monitors its investment in FHLB and ACBB stock for impairment through review of recent financial results of the FHLB and ACBB including capital adequacy and liquidity position, dividend payment history, redemption history and information from credit agencies. The Corporation has not identified any indicators of impairment of FHLB or ACBB stock. During the years ended December 31, 2024, 2023, and 2022 dividends received from the FHLB totaled $ 1.3 million, $ 864 thousand, and $ 289 thousand respectively. Investment in Limited Partnership - Mid Penn is a limited partner in a partnership that provides low-income housing in Enola, Pennsylvania. The carrying value of Mid Penn’s investment in the limited partnership was zero at December 31, 2024 and $ 15 thousand at December 31, 2023, net of amortization, using the proportional amortization method and is reported in other assets on the Consolidated Balance Sheets. Mid Penn’s maximum exposure to loss is limited to the carrying value of its investment. Mid Penn also owns a limited partnership interest in a low-income housing project to construct thirty-seven apartments and common amenities in Dauphin County, Pennsylvania. The total investment in this limited partnership, net of amortization, was $ 3.7 million and $ 4.5 million on December 31, 2024 and December 31, 2023, respectively, and was included in the reported balance of other assets on the Consolidated Balance Sheet. All of the units qualified for Federal Low-Income Housing Tax Credits ("LIHTCs") as provided for in Section 42 of the Internal Revenue Code of 1986, as amended. Mid Penn’s limited partner capital contribution commitment was $ 7.6 million, and the investment was fully funded within a three-year period beginning in 2020 and ending during the first quarter of 2021. The investment in the limited partnership is reported in other assets on the Consolidated Balance Sheet and is being amortized over a ten-year period using the proportional amortization method which began upon commencement of operations of the facility in December 2021. The project was formally awarded $ 8.5 million in total LIHTCs by the Pennsylvania Housing Finance Agency, which will be recognized over the ten-year period from December 2021 through November 2029. Mid Penn received low-income housing tax credits related to this project of $ 2.2 million for the tax year ended December 31, 2024, $ 1.3 million for the tax year ended December 31, 2023, and $ 853 thousand for the tax year ended December 31, 2022. Mid Penn’s maximum exposure to loss is limited to the carrying value of its investment. Mid Penn is a limited partner in a partnership that provides low-income housing in Mechanicsburg, Pennsylvania. The total investment in this limited partnership, net of amortization, was $ 9.7 million at December 31, 2024 and $ 8.9 million at December 31, 2023, respectively, and was included in other assets on the Consolidated Balance Sheet. All of the units qualified for Federal Low-Income Housing Tax Credits ("LIHTCs") as provided for in Section 42 of the Internal Revenue Code of 1986, as amended. The investment in the limited partnership is being amortized over a ten-year period using the proportional amortization method which began upon commencement of operations of the facility in December 2023. The project was formally awarded $ 12.0 million in total LIHTCs by the Pennsylvania Housing Finance Agency, which will be recognized over the ten-year period from December 2023 through November 2033. Mid Penn received low-income housing tax credits related to this project of $ 1.1 million for the tax year ended December 31, 2024, and zero for the tax year ended December 31, 2023, Mid Penn’s maximum exposure to loss is limited to the carrying value of its investment. 75 MID PENN BANCORP, INC. Mid Penn also owns a limited partnership interest in a low-income housing project to construct/rehabilitate seventeen apartments and two commercial shops in Schuylkill County, Pennsylvania. The total investment in this limited partnership, net of amortization, was $ 3.1 million and $ 3.3 million on December 31, 2024 and December 31, 2023, respectively, and was included in the reported balance of other assets on the Consolidated Balance Sheet. All of the units qualified for Federal Low-Income Housing Tax Credits ("LIHTCs") as provided for in Section 42 of the Internal Revenue Code of 1986, as amended. Mid Penn’s limited partner capital contribution commitment was $ 4.4 million, and the investment was fully funded within a three-year period beginning in 2020 and ending during the first quarter of 2023. The investment in the limited partnership is reported in other assets on the Consolidated Balance Sheet and is being amortized over a 10-year period using the proportional amortization method which began upon commencement of operations of the facility in 2023. The project was formally awarded $ 4.8 million in total LIHTCs by the Pennsylvania Housing Finance Agency, which will be recognized over the ten-year period from December 2023 through November 2033. Mid Penn received low-income housing tax credits related to this project of $ 484 thousand for the tax years ended December 31, 2024, and 2023, respectively. Mid Penn’s maximum exposure to loss is limited to the carrying value of its investment. Loans Held for Sale - During the third quarter of 2021, the Corporation made the election to measure mortgage loans held for sale at fair value. Derivative financial instruments related to mortgage banking activities are also recorded at fair value, as detailed under the heading "Mortgage Banking Derivative Financial Instruments," below. The Corporation determines fair value for its mortgage loans held for sale based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Changes in fair values during the period are recorded as components of mortgage banking income on the Consolidated Statements of Income. Interest income earned on mortgage loans held for sale is classified in interest income on the Consolidated Statements of Income. Loans - Loans that management has the intent and ability to hold for the foreseeable future are reported at their outstanding principal balances, net of an allowance for loan losses, unamortized deferred fees and costs and unamortized premiums or discounts. The net amount of nonrefundable loan origination fees and certain direct costs associated with the lending process are deferred and amortized to interest income over the contractual lives of the loans using methods which approximate the level yield method. Discounts and premiums are amortized or accreted to interest income over the estimated term of the loans using methods that approximate the level yield method. Interest income on loans is accrued based on the unpaid principal balance outstanding and the contractual terms of the loan agreements. A substantial portion of the loan portfolio is comprised of commercial and real estate loans throughout Pennsylvania. The ability of the Corporation’s debtors to honor their contracts is dependent upon the general economic conditions of this area. The loan portfolio is segmented into commercial real estate loans, commercial and industrial loans, construction loans, residential mortgage loans, and consumer loans. Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to repay the loan through operating profitably and effectively growing its business. The Corporation’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the credit quality and cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee to add strength to the credit and reduce the risk on a transaction to an acceptable level; however, some short-term loans may be made on an unsecured basis to the most credit worthy borrowers. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. With respect to loans to developers and builders, the Corporation generally requires the borrower to have a proven record of success and an expertise in the building industry. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. 76 MID PENN BANCORP, INC. The Corporation’s non-real estate consumer loans are based on the borrower’s proven earning capacity over the term of the loan. The Corporation monitors payment performance periodically for consumer loans to identify any deterioration in the borrower’s financial strength. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by management and staff. This activity, coupled with a relatively small volume of consumer loans, minimizes risk. Acquired Loans - 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 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. There were no loans acquired for the year ended December 31, 2024. Loans acquired in the Brunswick acquisition, included in the balance of loans, net of unearned interest, on the Consolidated Balance Sheets for December 31, 2023 totaled $ 324.5 million. Non-accrual Loans - The Corporation classifies loans as past due when the payment of principal or interest is greater than 30 days delinquent based on the contractual next payment due date. The Corporation’s policies related to when loans are placed on non-accrual status conform to guidelines prescribed by regulatory authorities. Loans are placed on non-accrual status when it is probable that principal or interest is not fully collectible, or generally when principal or interest becomes 90 days past due, whichever occurs first. When loans are placed on non-accrual status, interest receivable is reversed against interest income in the current period and amortization of any discount ceases. Interest payments received thereafter are applied as a reduction to the remaining principal balance unless management believes that the ultimate collection of the principal is likely, in which case payments are recognized in earnings on a cash basis. Loans are removed from non-accrual status when they become current as to both principal and interest and the collectability of principal and interest is no longer doubtful. Generally, a non-accrual loan that is restructured remains on non-accrual for a reasonable period of time (generally, at least six consecutive months) to demonstrate the borrower can meet the restructured terms. However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains classified as a non-accrual loan. 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. 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 - 77 MID PENN BANCORP, INC. 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 peer group divergence. 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, 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 78 MID PENN BANCORP, INC. 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 Appraisal Review Department 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 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. Premises and Equipment - Land is carried at cost. Buildings, furniture, fixtures, equipment, land improvements, and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the assets. Building assets are depreciated using an estimated useful life of five to fifty years . Furniture, fixtures, and equipment are depreciated using an estimated useful life of three to ten years . Land improvements are depreciated over an estimated useful life of ten to twenty years . Leasehold improvements are depreciated using an estimated useful life that is the lesser of the remaining life of the lease or ten to fifteen years . Maintenance and 79 MID PENN BANCORP, INC. normal repairs are charged to expense when incurred, while major additions and improvements are capitalized. Gains and losses on disposals are reflected in current operations . The Corporation reviews the carrying value of long-lived assets and certain identifiable intangibles for impairment whenever events and changes in circumstances indicate that the carrying amount of an asset may not be recoverable, as prescribed by ASC Topic 360, "Accounting for the Impairment or Disposal of Long-Lived Assets". Bank Premises and Equipment Held For Sale - Bank premises and equipment designated as held for sale are included in Other Assets on the Balance Sheet, and are carried at the lower of cost or market value, and totaled $ 702 thousand and $ 974 thousand at December 31, 2024 and 2023, respectively. The $ 272 thousand decrease in balance at December 31, 2024 related to the sale of the Riverview Halifax building in 2024. As of December 31, 2024, one property remained for sale. Foreclosed Assets Held for Sale - Real estate properties acquired through, or in lieu of, loan foreclosure are initially recorded at their fair value less estimated disposition costs. When such assets are acquired, any shortfall between the loan carrying value and the estimated fair value of the underlying collateral less disposition costs is recorded as an adjustment to the allowance for loan losses while any excess is recognized in income. The Corporation periodically performs a valuation of the property held; any excess of carrying value over fair value less disposition costs is charged to earnings as impairment. Routine maintenance and real estate taxes are expensed as incurred. Bank-Owned Life Insurance ("BOLI") - Mid Penn is the owner and beneficiary of BOLI policies on current and former Mid Penn directors, as well as BOLI policies acquired through the Phoenix, First Priority, Riverview and Brunswick acquisitions covering certain former Miners Bank, First Priority, Riverview, and Brunswick employees. These policies are recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement, if applicable. Increases in the cash surrender value of these policies are included in noninterest income in the Consolidated Statements of Income. The Corporation's BOLI policies are invested in general account and hybrid account products that have been underwritten by highly-rated third party insurance carriers. Mid Penn is also party to certain Split-Dollar Life Insurance Arrangements, and in accordance with GAAP, has accrued a liability related to the postretirement benefits covered by an endorsement split-dollar life insurance arrangement, and a liability for the future death benefit. Goodwill and Other Intangible Assets - Goodwill represents the excess of the purchase price over the underlying fair value of merged entities. We assess goodwill for impairment annually as of October 31 of each year. The Corporation has one reporting unit, community banking, which includes the Bank, the Corporation’s wholly-owned banking subsidiary. If certain events occur which indicate goodwill might be impaired between annual tests, goodwill must be tested when such events occur. In making this assessment, we use the widely accepted valuation techniques, including the public company market change of control approach and the peer group change of control approach, to determine the fair valuation of the reporting unit. Both approaches include earnings and price-to-tangible book value multiples of comparable public companies, which are applied to the earnings and equity of the reporting unit. The projected tangible book value ("TBV") multiple serves as an indicator of whether the market price or perceived value of the Company's tangible assets exceeds its book value. In 2024, the company applied a control premium based on its review of observable transactions and comparable marketplace data. Several factors are considered, such as operating results, business plans, economic projections, anticipated future cash flows, current market data, etc. There are inherent uncertainties related to these factors and our judgment in applying them to the analysis of goodwill impairment. Changes in economic and operating conditions could result in goodwill impairment in future periods. The Bank did not identify any impairment on its outstanding goodwill from its most recent testing, which was performed as of October 31, 2024. Core deposit intangible ("CDI") is a measure of the value of checking and savings deposits acquired in business combinations. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding relative to an alternative source of funding. CDI is amortized over the estimated useful lives of the existing deposit relationships acquired, but does not exceed ten years . Significantly all CDI is amortized using the sum of the years digits method. Customer list intangibles are a measure of the inherent value of certain customer arrangements acquired in business combinations. The fair value of the customer list is based on the income approach which employs a present value analysis, 80 MID PENN BANCORP, INC. which calculates the expected after-tax cash flow benefits of the net revenues generated by the acquired customers over the expected life of the acquired customers, discounted at a long-term market-oriented after-tax rate of return on investment. The value assigned to the acquired customers represents the future economic benefit from acquiring the customers (net of operating expenses). The customer list is amortized over a 10 to 20-year projection period, a sufficient time to capture the economic value of the customer list given an assumed customer attrition rate. The Corporation evaluates such identifiable intangibles for impairment when events and circumstances indicate that its carrying amount may not be recoverable. If an impairment loss is determined to exist, the loss is reflected as an impairment charge in the Consolidated Statements of Income for the period in which such impairment is identified. No impairment charges were required for the years ended December 31, 2024, 2023, or 2022. Leases - Mid Penn leases certain premises and equipment and recognizes a right-of-use ("ROU") asset and a related lease liability for each distinct lease agreement. The lease ROU asset consists of the amount of the initial measurement of the lease liability, adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, and any initial direct costs incurred by the lessee (defined as costs of a lease that would not have been incurred had the lease not been executed). The related lease liability is equal to the present value of the future lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the lessee’s incremental borrowing rate). Given that the rate implicit in the lease is rarely available, all lease liability amounts are calculated using Mid Penn’s incremental borrowing rate at lease inception, on a collateralized basis, for a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. Operating and finance lease ROU assets, as well as operating lease liabilities, are presented as separate line items on the Consolidated Balance Sheet, while finance lease liabilities are classified as a component of long-term debt . Operating lease expense, recognized as a component of occupancy expense on the Consolidated Statements of Income, consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis. Operating lease expense also includes variable lease payments not included in the lease liability, and any impairment of the ROU asset. Finance lease expense consists of the amortization of the ROU asset, recognized as a component of occupancy expense and interest expense on the lease liability, which is recorded as a component of other interest expense, both on the Consolidated Statements of Income. In assessing whether a contract contains a lease, Mid Penn reviews third-party agreements to determine if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration, and grants Mid Penn the right to both obtain substantially all of the economic benefits from the identified asset’s use and the direct the use of the identified asset throughout the term of the agreement. Upon identification that a lease agreement exists, Mid Penn performs an assessment of the consideration to be paid related to the identified asset and quantifies both the lease components, consisting of consideration paid to transfer a good or service to Mid Penn and non-lease components, consisting of consideration paid for distinct elements of the contract that are not related to securing the use of the leased asset, such as property taxes, common area maintenance, utilities, and insurance. Many of Mid Penn’s lease agreements include options to extend or renew contracts subsequent to the expiration of the initial lease term. Additionally, for leases that contain escalation clauses related to consumer or other price indices, Mid Penn includes the known lease payment amount as of the commencement date in the calculation of ROU assets and related lease liabilities. Subsequent increases in rental payments over the known amount at the commencement date due to increase in the indices will be expensed as incurred. None of Mid Penn’s lease agreements include residual value guarantees or material variable lease payments. Mid Penn does not have material restrictions or covenants imposed by leases that would impact Mid Penn’s ability to pay dividends or cause Mid Penn to incur additional financial obligations. Comprehensive Income - Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes changes in unrealized gains and losses on securities available for sale arising during the period and reclassification adjustments for realized gains and losses on securities available for sale included in net income. Mid Penn has an unfunded noncontributory defined benefit plan for directors and other postretirement benefit plans covering full-time employees. These plans utilize assumptions and methods to calculate the fair value of plan assets 81 MID PENN BANCORP, INC. and recognizing the overfunded and underfunded status of the plans on its Consolidated Balance Sheet. Gains and losses, prior service costs and credits are recognized in other comprehensive income (loss), net of tax, until they are amortized, or immediately upon curtailment. Trust Assets and Income - Assets held by the Bank in a fiduciary or agency capacity for customers of the trust department of the Bank are not included in the Consolidated Financial Statements since such items are not assets of the Bank. Assets under management totaled $ 473.5 million as of December 31, 2024, Most trust income is recognized as earned, which is not materially different than if it were reported on the accrual basis. Revenue Recognition - Mid Penn recognizes revenue when earned based upon contractual terms, as transactions occur, or as related services are provided, and collectability is reasonably assured. The largest source of revenue for Mid Penn is interest income. Noninterest income is earned from various banking and financial services that Mid Penn offers through its subsidiaries. In certain circumstances, noninterest income is reported net of associated expenses. Following is further detail on the various types of noninterest income Mid Penn earns and when it recognized: Interest Income - primarily recognized on an accrual basis according to loan agreements, investment securities contracts or other such written contracts. Income from Fiduciary and Wealth Management Activities - consists of trust, wealth management, and investment management fee income, brokerage transaction fee income, and estate fee income. Trust, wealth management, and investment management fee income consists of advisory fees that are typically based on market values of clients’ managed portfolios and transaction fees for fiduciary services performed, both of which are recognized as earned. Brokerage transaction fee income includes advisory fees, which are recognized as earned on a monthly basis and transaction fees that are recognized when transactions occur. Payment is typically received in the following month. Estate fee income is recognized as services are performed over the service period, generally eighteen months. ATM Debit Card Interchange Income - consists of interchange fees earned when Mid Penn’s debit cards are processed through card payments networks. The interchange fee is calculated as a percentage of the total electronic funds transfer ("EFT") transaction plus a per-transaction fee, which varies based on the type of card used, the method used to process the EFT transaction, and the type of business at which the transaction was processed. Revenue is recognized daily as transactions occur and interchange fees are subsequently processed. Payment for interchange activity is received primarily daily, while some fees are aggregated and payment is received in the following month. Service Charges on Deposits - consist of cash management, overdraft, non-sufficient fund fees and other service charges on deposit accounts. Revenue is primarily transactional and recognized when earned, which is at the time the respective initiating transaction occurs, and the related service charge is subsequently processed. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to the customers’ accounts. Mortgage Banking Income - consists of gains or losses on the sale of residential mortgage loans and is recognized when the sale is completed. Mortgage Hedging Income - relates to the changes in fair value of interest rate locks, forward mortgage loan sales commitments and hedging instruments on forward sales commitments. Other Income - includes credit card royalties, check orders, letter of credit fees and merchant services income. These fees are primarily transactional, and revenue is recognized when transactions occur, and the related services are subsequently processed. Payment is primarily received immediately or in the following month. Mid Penn does not exercise significant judgements in the recognition of income, as typically income is not recognized until the performance obligation has been satisfied. 82 MID PENN BANCORP, INC. Income Taxes - Income tax expense is determined using the asset and liability method and consists of income taxes that are currently payable and deferred income taxes. Deferred income tax expense (benefit) is determined by recognizing deferred tax assets and liabilities for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Changes in tax rates on deferred tax assets and liabilities are recognized in income in the period that includes the enactment date. A valuation allowance is established for deferred tax assets when management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such determinations, the Corporation considers all available positive and negative evidence that may impact the realization of deferred tax assets. These considerations include future reversals of existing taxable temporary differences, projected future taxable income, and available tax planning strategies. The Corporation files a consolidated federal income tax return including the results of its wholly-owned subsidiaries. The Corporation estimates income taxes payable based on the amount it expects to owe the various tax authorities (i.e., federal and state). Income taxes represent the net estimated amount due to, or to be received from, such tax authorities. In estimating income taxes, management assesses the relative merits and risks of the appropriate tax treatment of transactions, taking into account statutory, judicial, and regulatory guidance in the context of the Corporation’s tax position. Although the Corporation uses the best available information to record income taxes, underlying estimates and assumptions can change over time as a result of unanticipated events or circumstances such as changes in tax laws and judicial guidance influencing its overall tax position. An uncertain tax position is recognized only if it is more-likely-than-not to be sustained upon examination, including resolution of any related appeals or litigation process, based on the technical merits of the position. The amount of tax benefit recognized in the financial statements is the largest amount of benefit that is more than fifty percent likely to be sustained upon ultimate settlement of the uncertain tax position. If the initial assessment fails to result in recognition of a tax benefit, the Corporation subsequently recognizes a tax benefit if there are changes in tax law or case law that raise the likelihood of prevailing on the technical merits of the position to more-likely-than-not, the statute of limitations expires, or there is a completion of an examination resulting in a settlement of that tax year or position with the appropriate agency. The Corporation’s policy is to classify interest and penalties associated with income taxes within other expenses. The Corporation is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress for any tax periods. Management believes it is no longer subject to income tax examinations for years prior to 2021. Off-Balance Sheet Arrangements - The Corporation enters into contractual loan commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Since a portion of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Substantially all of the commitments to extend credit are contingent upon customers maintaining specific credit standards until the time of loan funding. The Corporation decreases its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Standby letters of credit are written conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Corporation would be required to fund the commitment. The maximum potential amount of future payments the Corporation could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the Corporation would be entitled to seek recovery from the customer. The Corporation’s policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements. Earnings per Common Share - The Corporation presents basic and diluted earnings per common share ("EPS") data for its common stock. Basic EPS is calculated by dividing the net income attributable to shareholders of the Corporation by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is determined by 83 MID PENN BANCORP, INC. adjusting the profit or loss attributable to shareholders and the weighted average number of shares of common stock outstanding adjusted for the effects of all dilutive potential common shares comprised of restricted stock awards. Treasury Stock - Common stock held in treasury is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. The shares may be purchased in the open market or in privately negotiated transactions from time to time depending upon the market conditions and other factors over a one-year period or such longer period of time as may be necessary to complete such repurchases. Derivative Financial Instruments Loan-level Interest Rate Swaps The Corporation offers certain derivative products directly to qualified commercial lending clients seeking to manage their interest rate risk. The Corporation economically hedges interest rate swap transactions to execute with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivative transactions executed as part of this program are not designed as qualifying hedging relationships and are, therefore, carried at fair value with the change in fair value recorded as noninterest income. Because these derivatives have mirror-image contractual terms, in additional to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. 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. Beginning in the first quarter of 2023, Mid Penn entered into interest rate swaps designated as cash flow hedges to hedge the cash flows associated with existing brokered CDs. 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. Mortgage Banking Derivative Financial Instruments In connection with its mortgage banking activities, Mid Penn entered into commitments to originate certain fixed-rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, Mid Penn entered into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may have also be in the form of commitments to sell individual mortgage loans at a fixed price at a future date. The amount necessary to settle each interest rate lock was based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Recent Accounting Pronouncements Accounting Standards Adopted On January 1, 2023, the Corporation adopted ASC 326, Financial Instruments - Credit Losses , which replaces the incurred loss methodology, and is referred to as CECL. The measurement of expected credit losses under CECL applies 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. The Corporation adopted CECL using the modified retrospective method for all financial assets measured at amortized cost, net of investments in leases and OBS credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL, while prior period results are reported in accordance with the previously applicable incurred 84 MID PENN BANCORP, INC. loss methodology. The Corporation recorded an overall increase of $ 15.0 million to the ACL on January 1, 2023 as a result of the adoption of CECL. Retained earnings decreased $ 11.5 million and deferred tax assets increased by $ 3.1 million. Included in the $ 15.0 million increase to the ACL was $ 3.1 million for certain OBS credit exposures that were previously recognized in other liabilities before the adoption of CECL. On January 1, 2023, the Corporation adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings in Accounting Standards Codification ("ASC") Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, ASU 2022-02 requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. See "Note 4 - Loans and Allowance for Credit Losses - Loans" for the new financial statement disclosures applicable under this update. The updates to the significant accounting policies related to CECL are further discussed in "Note 3 - Investment Securities", "Note 4 - Loans and Allowance for Credit Losses - Loans" and "Note 18 - Commitments and Contingencies". 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. 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. Accounting Standards Pending Adoption 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 our 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, 2024. ASU 2023-09 is not expected to have a significant impact on the Corporation's financial statements. 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 85 MID PENN BANCORP, INC. after December 15, 2025, and interim periods within those annual periods. ASU 2024-01 is not expected to have a significant impact on the Corporation's financial statements. ASU 2024-02 : The FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. This ASU contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments are effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. ASU 2024-02 is not expected to have a significant impact on the Corporation's financial statements. ASU 2024-03 : The FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses The amendments in the ASU improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 is not expected to have a significant impact on the Corporation's financial statements. ASU 2024-04: The FASB issued ASU - 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments The amendments in the ASU clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments in the ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU2020-06. ASU 2024-04 is not expected to have a significant impact on the Corporation's financial statements. 86 MID PENN BANCORP, INC. Note 2 - Business Combinations Commonwealth Benefits Group Acquisition On July 31, 2024, Mid Penn acquired the insurance business and related accounts of a full-service employee benefits firm that serves mid to large employers across central and eastern Pennsylvania, northern Maryland, and northern Virginia, for a purchase price of $ 2.0 million at closing and an additional $ 800 thousand potentially payable pursuant to a three year earnout. Mid Penn has recognized total goodwill of $ 1.1 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. Mid Penn incurred expenses related to the Commonwealth Benefits Group acquisition of $ 545 thousand for the year ended December 31, 2024, which is included in noninterest expense in the Consolidated Statements of Income. 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. 87 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. 88 MID PENN BANCORP, INC. Note 3 - Investment Securities AFS Securities At December 31, 2024, the fair value of AFS securities totaled $ 260.5 million. At December 31, 2024, no securities were identified that violated 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 December 31, 2024, accrued interest receivable totaled $ 1.2 million for AFS securities, and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet. HTM Securities At December 31, 2024, Mid Penn’s HTM securities totaled $ 382.4 million. The Company primarily held highly rated HTM securities, including taxable and tax-exempt securities issued mainly by the U.S government, state governments, and political subdivisions. As of December 31, 2024, the majority of Mid Penn's HTM securities were rated as A1/BBB by Moody's and/or Standard & Poor's ratings services. Credit ratings of HTM securities, which are a key factor in estimating expected credit losses, are reviewed on a quarterly basis. At December 31, 2024, there were no HTM securities that were past due 30 days or more as to principal or interest payments. Additionally, Mid Penn had no HTM securities classified as nonaccrual at December 31, 2024. Therefore, no allowance for credit losses was recorded as of December 31, 2024. Accrued interest receivable is excluded from the estimate of credit losses for HTM securities. At December 31, 2024, accrued interest receivable totaled $ 1.8 million for HTM securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet. The following tables set forth the amortized cost and estimated fair value of investment securities for the periods presented: December 31, 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 $ 22,247 $ — $ 740 $ 21,507 Mortgage-backed U.S. government agencies 222,464 11 19,531 202,944 State and political subdivision obligations 4,309 — 713 3,596 Corporate debt securities 35,750 — 3,320 32,430 Total available-for-sale debt securities $ 284,770 $ 11 $ 24,304 $ 260,477 Held-to-maturity U.S. Treasury and U.S. government agencies $ 241,941 $ — $ 28,133 $ 213,808 Mortgage-backed U.S. government agencies 37,593 — 5,508 32,085 State and political subdivision obligations 77,462 — 6,840 70,622 Corporate debt securities 25,451 — 1,318 24,133 Total held-to-maturity debt securities 382,447 — 41,799 340,648 Total $ 667,217 $ 11 $ 66,103 $ 601,125 89 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 13 - Fair Value Measurement," for additional information. Investment securities having a fair value of $ 440.0 million at December 31, 2024, and $ 380.3 million at December 31, 2023, were pledged primarily 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 $ 156.0 million as of December 31, 2024 and $ 153.5 million as of December 31, 2023. 90 MID PENN BANCORP, INC. The following tables present gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2024 and 2023. (Dollars in thousands) Less Than 12 Months 12 Months or More Total December 31, 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 — $ — $ — 12 $ 21,507 $ 740 12 $ 21,507 $ 740 Mortgage-backed U.S. government agencies 9 72,499 1,847 91 130,445 17,684 100 202,944 19,531 State and political subdivision obligations — — — 8 3,596 713 8 3,596 713 Corporate debt securities — — — 18 32,430 3,320 18 32,430 3,320 Total available-for-sale debt securities 9 $ 72,499 $ 1,847 129 $ 187,978 $ 22,457 138 $ 260,477 $ 24,304 Held-to-maturity debt securities: U.S. Treasury and U.S. government agencies — $ — $ — 143 $ 213,808 $ 28,133 143 $ 213,808 $ 28,133 Mortgage-backed U.S. government agencies 2 163 1 62 31,922 5,507 64 32,085 5,508 State and political subdivision obligations 8 3,176 30 169 67,446 6,810 177 70,622 6,840 Corporate debt securities 4 10,500 — 11 13,633 1,318 15 24,133 1,318 Total held-to-maturity debt securities 14 13,839 31 385 326,809 41,768 399 340,648 41,799 Total 23 $ 86,338 $ 1,878 514 $ 514,787 $ 64,225 537 $ 601,125 $ 66,103 (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 At December 31, 2024 and 2023, the majority of the unrealized losses on securities in an unrealized loss position were attributable to U.S. Treasury and U.S. government agencies, and mortgage-backed U.S. government agencies. Mid Penn had no securities considered by management to be credit related losses as of December 31, 2024 and December 31, 2023, and did not record any securities losses in the respective periods ended on these dates. Mid Penn does not consider the securities with unrealized losses on the respective dates to be credit related losses as the unrealized losses were deemed to be temporary changes in value related to market movements in interest yields at various periods similar to the maturity dates of holdings in the investment portfolio, and not reflective of an erosion of credit quality. There were no gross realized gains and losses on the sale of AFS securities as of December 31, 2024. 91 MID PENN BANCORP, INC. 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 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Due in 1 year or less $ 10,503 $ 10,466 $ 19,563 $ 19,420 Due after 1 year but within 5 years 22,397 21,414 140,217 130,043 Due after 5 years but within 10 years 28,562 25,006 169,190 145,879 Due after 10 years 844 647 15,884 13,221 62,306 57,533 344,854 308,563 Mortgage-backed securities 222,464 202,944 37,593 32,085 $ 284,770 $ 260,477 $ 382,447 $ 340,648 92 MID PENN BANCORP, INC. Note 4 - Loans and Allowance for Credit Losses - Loans Loans, net of unearned income, are summarized as follows by portfolio segment: (In thousands) December 31, 2024 December 31, 2023 Commercial real estate CRE Nonowner Occupied $ 1,251,010 $ 1,149,553 CRE Owner Occupied 624,007 629,904 Multifamily 412,900 309,059 Farmland 224,709 212,690 Total Commercial real estate 2,512,626 2,301,206 Commercial and industrial 705,392 675,079 Construction Residential Construction 99,399 92,843 Other Construction 326,171 362,624 Total Construction 425,570 455,467 Residential mortgage 1-4 Family 1st Lien 313,592 339,142 1-4 Family Rental 336,636 341,937 HELOC and Junior Liens 140,392 132,795 Total Residential Mortgage 790,620 813,874 Consumer 8,862 7,166 Total loans $ 4,443,070 $ 4,252,792 Total loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs. Net deferred loan fees were $ 3.8 million and $ 4.2 million as of December 31, 2024 and 2023, respectively. Accrued interest receivable is not included in the amortized cost basis of Mid Penn's loans. At December 31, 2024, accrued interest receivable for loans totaled $ 22.9 million with no related ACL and was reported in other assets on the accompanying Consolidated Balance Sheet. The Bank has granted loans to certain of its executive officers, directors, and their related interests. The aggregate amount of these loans was $ 13.8 million and $ 22.0 million at December 31, 2024 and 2023, respectively. During 2024, $ 924 thousand of new loans, advances and loans to new related parties were extended and repayments totaled $ 3.0 million. In addition, for the year ended December 31, 2024 there were $ 8.0 million of loans that were no longer extended to related parties. None of these loans were past due, in non-accrual status, or restructured at December 31, 2024. 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 December 31, 2024 and December 31, 2023, are summarized as follows: 93 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 December 31, 2024 Commercial real estate CRE Nonowner Occupied $ 1,281 $ 1,515 $ 11,658 $ 14,454 $ 1,236,556 $ 1,251,010 $ — CRE Owner Occupied 39 51 262 352 623,655 624,007 — Multifamily — — — — 412,900 412,900 — Farmland 184 — — 184 224,525 224,709 — Total Commercial real estate 1,504 1,566 11,920 14,990 2,497,636 2,512,626 — Commercial and industrial 74 3 794 871 704,521 705,392 — Construction Residential Construction — — — — 99,399 99,399 — Other Construction — — — — 326,171 326,171 — Total Construction — — — — 425,570 425,570 — Residential mortgage 1-4 Family 1st Lien 2,853 220 516 3,589 310,003 313,592 — 1-4 Family Rental 374 7 137 518 336,118 336,636 — HELOC and Junior Liens 724 209 2,157 3,090 137,302 140,392 — Total Residential Mortgage 3,951 436 2,810 7,197 783,423 790,620 — Consumer 20 — — 20 8,842 8,862 — Total $ 5,549 $ 2,005 $ 15,524 $ 23,078 $ 4,419,992 $ 4,443,070 $ — (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 $ — 94 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 December 31, 2024 and 2023 are summarized as follows: December 31, 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 $ 2,622 $ 11,153 $ 13,775 $ 361 $ 4,144 $ 4,505 CRE Owner Occupied — 546 546 — 1,909 1,909 Multifamily — 154 154 93 80 173 Farmland — — — — — — Total Commercial real estate 2,622 11,853 14,475 454 6,133 6,587 Commercial and industrial 758 3,894 4,652 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 — 1,028 1,028 — 1,875 1,875 1-4 Family Rental — 176 176 2 699 701 HELOC and Junior Liens — 2,279 2,279 — 1,208 1,208 Total Residential Mortgage — — 3,483 3,483 2 3,782 3,784 Consumer — — — — — — Total loans $ 3,380 $ 19,230 $ 22,610 $ 1,678 $ 12,538 $ 14,216 The amount of interest income recognized on nonaccrual loans was approximately $ 128 thousand and $ 174 thousand during the three months ended December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the amount of interest income recognized on nonaccrual loans was approximately $ 584 thousand and $ 1.2 million, respectively. Credit Quality Indicators Mid Penn categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. On a minimum of a quarterly basis, Mid Penn analyzes loans individually to classify the loans as to their credit risk. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal. PASS - This type of classification consists of 6 subcategories: Nominal Risk / Pass - This loan classification is a credit extension of the highest quality. Moderate Risk / Pass - This type of classification has strong financial ratios, substantial debt capacity, and low leverage with a very favorable comparison to industry peers or better than average improving trends. Good Acceptable Risk / Pass - This type of classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; the Borrower lists good quality assets with relatively low leverage and ample debt capacity. 95 MID PENN BANCORP, INC. Average Acceptable Risk / Pass - This type of classification has financial ratios and assets that are of above average quality; however, the leverage is worse than average compared to industry standards; the Borrower should have a good repayment history and possess consistent earnings with some growth. Marginally Acceptable Risk / Pass - This type of classification has financial ratios consistent with industry averages, assets of average quality with ascertainable values, acceptable leverage, moderate capital assets and an acceptable reliance on trade debt; however, the Borrower demonstrates marginally adequate earnings, cash flow and debt service plus positive trends. Weak/Monitor Risk (Watch list) / Pass - This type of classification has financial ratios that are slightly below standard industry averages and assets are below average quality with unstable values; fixed assets could be near or at the end of their useful life and liabilities may not match the asset structure. SPECIAL MENTION - These credits have developing weaknesses deserving extra attention from the lender and lending management. They are currently protected, but potentially weak. The weakness may be, cash flow, leverage, liquidity, management, industry or other factors which may, if not checked or corrected, weaken the asset or inadequately protect the Bank’s credit position at some future date. SUBSTANDARD - These credit extensions also have well defined weaknesses, which are inadequately protected by the current worth and debt service capacity of the 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. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal. December 31, 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 $ 85,501 $ 176,018 $ 343,072 $ 152,157 $ 130,650 $ 325,478 $ 11,732 $ 1,224,608 Special mention — — — — — 3,105 — 3,105 Substandard or lower — 1,515 1,260 — 3,281 17,241 — 23,297 Total CRE Nonowner Occupied 85,501 177,533 344,332 152,157 133,931 345,824 11,732 1,251,010 Gross charge offs — — — — — — — — Current period recoveries — — — — — 2 — 2 Net charge offs — — — — — 2 — 2 CRE Owner Occupied Pass 52,922 99,065 106,876 66,160 77,774 199,725 11,630 614,152 Special mention — 222 4,991 227 — 2,133 — 7,573 Substandard or lower — — — 194 — 2,088 — 2,282 Total CRE Owner Occupied 52,922 99,287 111,867 66,581 77,774 203,946 11,630 624,007 Gross charge offs — — — — — — — — 96 MID PENN BANCORP, INC. Current period recoveries — — — — — 4 — 4 Net recoveries — — — — — 4 — 4 Multifamily Pass 4,843 66,119 118,568 101,871 40,450 78,070 2,771 412,692 Special mention — — — — — 54 — 54 Substandard or lower — — — — — 154 — 154 Total Multifamily 4,843 66,119 118,568 101,871 40,450 78,278 2,771 412,900 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net charge offs — — — — — — — — Farmland Pass 27,449 31,259 56,178 42,693 25,119 24,729 14,801 222,228 Special mention — 128 — — — 2,163 190 2,481 Substandard or lower — — — — — — — — Total Farmland 27,449 31,387 56,178 42,693 25,119 26,892 14,991 224,709 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net charge offs — — — — — — — — Commercial and industrial Pass 114,175 106,657 78,702 54,312 21,532 92,723 222,525 690,626 Special mention — 62 503 31 — 3,534 4,498 8,628 Substandard or lower — — — 892 1,168 1,632 2,446 6,138 Total commercial and industrial 114,175 106,719 79,205 55,235 22,700 97,889 229,469 705,392 Gross charge offs — ( 201 ) — — ( 206 ) ( 412 ) — ( 819 ) Current period recoveries — — — — — 1 — 1 Net charge offs — ( 201 ) — — ( 206 ) ( 411 ) — ( 818 ) Residential Construction Pass 34,275 37,222 15,559 — — 2,007 10,336 99,399 Special mention — — — — — — — — Substandard or lower — — — — — — — — Total Residential Construction 34,275 37,222 15,559 — — 2,007 10,336 99,399 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net recoveries — — — — — — — — Other Construction Pass 66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 Special mention — — — — — — — — Substandard or lower — — — — — — — — Total Other Construction 66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 Gross charge offs — — — — — — — — Current period recoveries — — — — — — — — Net recoveries — — — — — — — — 97 MID PENN BANCORP, INC. 1-4 Family 1st Lien Performing 27,580 59,762 45,946 34,743 42,727 98,891 2,915 312,564 Non-performing — — — — 211 817 — 1,028 Total 1-4 Family 1st Lien 27,580 59,762 45,946 34,743 42,938 99,708 2,915 313,592 Gross charge offs — — — — — ( 7 ) — ( 7 ) Current period recoveries — — — — — 16 — 16 Net recoveries — — — — — 9 — 9 1-4 Family Rental Performing 28,735 51,488 88,594 59,397 35,222 69,890 2,009 335,335 Non-performing — 147 — — 595 559 — 1,301 Total 1-4 Family Rental 28,735 51,635 88,594 59,397 35,817 70,449 2,009 336,636 Gross charge offs — — — — — ( 2 ) — ( 2 ) Current period recoveries — — — — — 22 — 22 Net recoveries — — — — — 20 — 20 HELOC and Junior Liens Performing 6,096 16,125 9,856 4,845 2,182 10,887 88,122 138,113 Non-performing — 21 — — — 1,257 1,001 2,279 Total HELOC and Junior Liens 6,096 16,146 9,856 4,845 2,182 12,144 89,123 140,392 Gross charge offs — — ( 21 ) — — — — ( 21 ) Current period recoveries — — — — — — — — Net charge offs — — ( 21 ) — — — — ( 21 ) Consumer Performing 4,214 972 354 394 107 234 2,587 8,862 Non-performing — — — — — — — — Total consumer 4,214 972 354 394 107 234 2,587 8,862 Gross charge offs — — ( 2 ) — — ( 50 ) — ( 52 ) Current period recoveries — — 1 — — 38 — 39 Net charge offs — — ( 1 ) — — ( 12 ) — ( 13 ) Total Pass 385,876 610,959 823,394 428,857 306,508 734,660 299,622 3,589,876 Special mention — 412 5,494 258 — 10,989 4,688 21,841 Substandard or lower — 1,515 1,260 1,086 4,449 21,115 2,446 31,871 Performing 66,625 128,347 144,750 99,379 80,238 179,902 95,633 794,874 Nonperforming — 168 — — 806 2,633 1,001 4,608 Total $ 452,501 $ 741,401 $ 974,898 $ 529,580 $ 392,001 $ 949,299 $ 403,390 $ 4,443,070 98 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 99 MID PENN BANCORP, INC. 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 — — — — — — — — 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 — — — — — 7 — 7 Net recoveries — — — — — ( 6 ) — ( 6 ) 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 — — — — — 31 — 31 Net recoveries — — — — — 31 — 31 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 — — — — — — — — 100 MID PENN BANCORP, INC. 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 Mid Penn had no loans classified as "Doubtful" as of December 31, 2024 and 2023. There was $ 861 thousand and $ 121 thousand in loans for which formal foreclosure proceedings were in process at December 31, 2024 and December 31, 2023, respectively. Collateral-Dependent Loans A financial asset is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of financial assets deemed collateral-dependent, Mid Penn elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, Mid Penn records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent financial assets consists of various types of real estate, including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land. Total collateral-dependent loans as of December 31, 2024 were $ 22.6 million. Allowance for Credit Losses Mid Penn’s ACL - loans methodology follows guidance within FASB ASC Subtopic 326-20. 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 peer group divergence. The quantitative and qualitative portions of the allowance are added 101 MID PENN BANCORP, INC. 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, 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 Loans held for investment (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 102 MID PENN BANCORP, INC. 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 Appraisal Review Department 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 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 table presents the activity in the ACL - loans by portfolio segment for the year ended December 31, 2024 and 2023: (In thousands) Balance at December 31, 2023 Charge offs Recoveries Net loans (charged off) recovered (Benefit)/Provision for credit losses Year Ended December 31, 2024 Commercial Real Estate CRE Nonowner Occupied $ 10,267 $ — $ 2 $ 2 $ 778 $ 11,047 CRE Owner Occupied 5,646 — 4 4 ( 407 ) 5,243 Multifamily 2,202 — — — 1,230 3,432 Farmland 2,064 — — — ( 132 ) 1,932 Commercial and industrial 7,131 ( 819 ) 1 ( 818 ) 809 7,122 Construction Residential Construction 1,256 — — — ( 325 ) 931 Other Construction 2,146 — — — ( 15 ) 2,131 Residential Mortgage 1-4 Family 1st Lien 1,207 ( 7 ) 16 9 287 1,503 1-4 Family Rental 1,859 ( 2 ) 22 20 ( 123 ) 1,756 HELOC and Junior Liens 389 ( 21 ) — ( 21 ) 24 392 Consumer 20 ( 52 ) 39 ( 13 ) 18 25 Total $ 34,187 $ ( 901 ) $ 84 $ ( 817 ) $ 2,144 $ 35,514 103 MID PENN BANCORP, INC. (In thousands) Balance at December 31, 2022 CECL Impact PCD Loans Charge offs Recoveries Net loans (charged off) recovered Provision/(Benefit) for credit losses Year Ended December 31, 2023 Commercial Real Estate CRE Nonowner Occupied $ 8,284 $ 259 $ 312 $ — $ — $ — $ 1,412 $ 10,267 CRE Owner Occupied 2,916 91 2 ( 16 ) — ( 16 ) 2,653 5,646 Multifamily 1,111 35 — — — 1,056 2,202 Farmland 831 26 — — — 1,207 2,064 Commercial and industrial 4,593 6,601 5 ( 238 ) — ( 238 ) ( 3,830 ) 7,131 Construction Residential Construction — 1,270 12 — — — ( 26 ) 1,256 Other Construction — 1,931 1 — — — 214 2,146 Residential Mortgage 1-4 Family 1st Lien 370 1,307 4 ( 13 ) 7 ( 6 ) ( 468 ) 1,207 1-4 Family Rental 288 731 — 31 31 809 1,859 HELOC and Junior Liens 661 ( 230 ) — — — ( 42 ) 389 Consumer 29 154 ( 135 ) 32 ( 103 ) ( 60 ) 20 Unallocated ( 126 ) ( 244 ) — — — 370 — Total $ 18,957 $ 11,931 $ 336 $ ( 402 ) $ 70 $ ( 332 ) $ 3,295 $ 34,187 104 MID PENN BANCORP, INC. The following table presents the ACL for loans and the amortized cost basis of loans as of December 31, 2024 and December 31, 2023: (In thousands) ACL - Loans Loans December 31, 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 $ 9,945 $ 1,102 $ 11,047 $ 1,237,235 $ 13,775 $ 1,251,010 CRE Owner Occupied 5,243 — 5,243 623,461 546 624,007 Multifamily 3,432 — 3,432 412,746 154 412,900 Farmland 1,932 — 1,932 224,709 — 224,709 Commercial and industrial 6,785 337 7,122 700,740 4,652 705,392 Construction Residential Construction 931 — 931 99,399 — 99,399 Other Construction 2,131 — 2,131 326,171 — 326,171 Residential mortgage 1-4 Family 1st Lien 1,503 — 1,503 312,564 1,028 313,592 1-4 Family Rental 1,756 — 1,756 336,460 176 336,636 HELOC and Junior Liens 392 — 392 138,113 2,279 140,392 Consumer 25 — 25 8,862 — 8,862 Total $ 34,075 $ 1,439 $ 35,514 $ 4,420,460 $ 22,610 $ 4,443,070 (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 $ 4,252,792 105 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. Information related to loans modified (by type of modification), whereby the borrower was experiencing financial difficulty at the time of modification as of December 31, 2024, 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 Year ended December 31, 2024 Commercial and industrial $ — $ — $ 287 $ 287 0.04 % 1-4 Family Rental — 184 — 184 0.05 HELOC and Junior Liens — — 92 92 0.07 Total $ — $ 184 $ 379 $ 563 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. As of December 31, 2024, there were no defaulted troubled debt restructured loans, as all troubled debt restructured loans were current with respect to their associated forbearance agreements. There were also no defaults on troubled debt restructured loans within twelve months of restructure during 2023. Interest Only Term Extension Combination: Interest Only and Term Extension Total % of Total Class of Financing Receivable Year ended December 31, 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 Construction Other Construction — 700 — 700 0.19 Total Construction — 700 — 700 0.15 Total loans $ 51 $ 850 $ 180 $ 1,081 106 MID PENN BANCORP, INC. Note 5 - Premises and Equipment The following is a summary of premises and equipment as of December 31: (In thousands) 2024 2023 Land $ 6,251 $ 6,663 Buildings 28,948 29,680 Furniture, fixtures, and equipment 23,656 23,091 Leasehold improvements 3,317 2,469 Capital expenditures in process 4,941 1,165 Total cost 67,113 63,068 Less accumulated depreciation ( 28,307 ) ( 26,159 ) Total premises and equipment $ 38,806 $ 36,909 Depreciation expense was $ 4.9 million in 2024, $ 4.9 million in 2023, and $ 4.3 million in 2022. Note 6 - Goodwill and Intangible Assets The following table summarizes the changes in goodwill: For the Years Ended December 31, ( In thousands ) 2024 2023 Goodwill balance, beginning of year $ 127,031 $ 114,231 Brunswick Acquisition — 12,800 Commonwealth Benefits Group Acquisition 1,129 — Goodwill balance, end of year $ 128,160 $ 127,031 On July 31, 2024, Mid Penn acquired the insurance business and related accounts of a full-service employee benefits firm that serves mid to large employers across central and eastern Pennsylvania, northern Maryland, and northern Virginia. Goodwill totaling $ 1.1 million was booked as a result of this business combination. On May 19, 2023, Mid Penn purchased Brunswick Bank in a business combination. Goodwill totaling $ 12.8 million was booked as a result of this business combination. The following table summarizes the changes in core deposit intangible. For the Years Ended December 31, ( In thousands ) 2024 2023 2022 Core deposit intangible balance, beginning of year $ 4,649 $ 4,964 $ 7,282 Brunswick core deposit intangibles — 999 — Riverview (adjustment) acquisition — — ( 705 ) Amortization of core deposit intangibles 1,267 1,314 1,613 Core deposit and other intangible balances, end of year $ 3,382 $ 4,649 $ 4,964 107 MID PENN BANCORP, INC. The following table shows the amortization expense for future periods: (In thousands) 2025 $ 1,035 2026 812 2027 591 2028 370 2029 260 2030-thereafter 314 Total $ 3,382 Customer List Intangible As a result of the Commonwealth Financial Group and Riverview Acquisitions, Mid Penn recorded a customer list intangible asset included in total intangible assets related to the insurance and wealth management customers assumed in the acquisitions. This intangible is amortized as an expense over ten years using the sum of the years’ amortization method. The following table summarizes the changes in the customer list intangible during the years ended December 31: (In thousands) 2024 2023 Customer list intangible balance, beginning of year $ 1,830 $ 2,275 Commonwealth Financial Group acquisition 1,481 — Amortization of customer list intangible 512 445 Customer list intangible, end of year $ 2,799 $ 1,830 The following table shows the amortization expense for future periods: (In thousands) 2025 $ 608 2026 532 2027 456 2028 380 2029 304 2030-thereafter 519 Total $ 2,799 Note 7 - Leases Mid Penn has operating and finance leases for cert ain premises and equipment. Operating and finance lease ROU assets, as well as operating lease liabilities, are presented as separate line items on the Consolidated Balance Sheet, while finance lease liabilities are classified as a component of long-term debt. 108 MID PENN BANCORP, INC. Supplemental consolidated balance sheet information for each of the lease classifications as of December 31 was as follows: 2024 2023 (Dollars in thousands) Operating Leases Finance Lease Operating Leases Finance Lease ROU $ 7,699 $ 2,548 $ 8,953 $ 2,727 Lease liability 8,092 3,063 9,285 3,197 Weighted average remaining lease term (in years) 5.12 14.17 5.60 15.17 Weighted average discount rate 3.68 % 3.81 % 3.66 % 3.81 % Interest expense on finance lease liabilities is included in other interest expense, while all other lease costs are included in occupancy expense on Mid Penn’s Consolidated Statements of Income. Following is a summary of lease costs during the years ended December 31: (In thousands) 2024 2023 2022 Finance lease cost: Amortization of ROU asset $ 179 $ 180 $ 180 Interest expense on lease liability 119 123 127 Total finance lease cost 298 303 307 Operating lease cost 2,322 2,081 2,057 Sublease income ( 21 ) ( 29 ) ( 24 ) Total lease costs $ 2,599 $ 2,355 $ 2,340 The rental expense paid to related parties was $ 274 thousand for each of 2024, 2023 and 2022. Supplemental cash flow information related to operating and finance leases for the years ended December 31 was as follows: (In thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 119 $ 123 Operating cash flows from operating leases 2,382 2,556 Financing cash flows from finance leases 134 93 109 MID PENN BANCORP, INC. A maturity analysis of operating and finance lease liabilities and a reconciliation of the undiscounted cash flows to the total operating and finance lease liability amounts is presented below. December 31, 2024 (In thousands) Operating Leases Finance Lease Lease payments due: 2025 $ 2,361 $ 260 2026 2,179 260 2027 1,878 260 2028 1,136 259 2029 807 276 2030 and thereafter 617 2,677 Total lease payments 8,978 3,992 Less: imputed interest ( 886 ) ( 929 ) Present value of lease liabilities $ 8,092 $ 3,063 The future minimum payments to related parties are $ 185 thousand for 2025, $ 178 thousand for 2026, 2027, 2028 and 2029 and $ 638 thousand thereafter. There were no sale and leaseback transactions or leveraged leases as of December 31, 2024 or 2023. There were no leases that had not commenced as of December 31, 2024. Note 8 - Deposits Deposits consisted of the following as of December 31: (Dollars in thousands) 2024 2023 Noninterest-bearing demand deposits $ 759,169 $ 801,312 Interest-bearing demand deposits 1,101,444 947,372 Money market 958,051 850,674 Savings 260,258 288,404 Total demand and savings 3,078,922 2,887,762 Time 1,611,005 1,458,450 Total deposits $ 4,689,927 $ 4,346,212 The scheduled maturities of time deposits at December 31, 2024 were as follows: Time Deposits (In thousands) Less than $250,000 $250,000 or more Maturing in 2025 $ 1,089,099 $ 356,781 Maturing in 2026 104,814 15,638 Maturing in 2027 24,083 1,222 Maturing in 2028 10,503 264 Maturing in 2029 4,790 250 Maturing thereafter 3,007 554 $ 1,236,296 $ 374,709 110 MID PENN BANCORP, INC. Mid Penn had $ 319.8 million in brokered certificates of deposits as of December 31, 2024 and $ 244.8 million as of December 31, 2023. As of December 31, 2024 and 2023, Mid Penn had $ 83.7 million an d $ 96.7 million of CDAR (Certificate of Deposit Account Registry) deposits, respectively. Deposits and other funds from related parties held by Mid Penn at December 31, 2024 and 2023 amounted to $ 31.8 million and $ 48.3 million, respectively. Note 9 - Short-term Borrowings Total short-term borrowings were $ 2.0 million as of December 31, 2024 and $ 241.5 million as of 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 our 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 $ 2.3 billion at December 31, 2024. The Bank had short-term borrowing capacity from the FHLB up to the Bank’s unused borrowing capacity of $ 1.5 billion (equal to $ 1.6 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 December 31, 2024. No draws have been made on these lines of credit and on December 31, 2024 and 2023, the balance was $ 0 . Note 10 - Long-term Debt The following table presents a summary of long-term debt as of December 31: (Dollars in thousands) December 31, 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 % 523 782 Due February 2027, 6.71 % 17 24 Total FHLB fixed rate instruments 20,540 55,806 Lease obligations included in long-term debt 3,063 3,197 Total long-term debt $ 23,603 $ 59,003 Mid Penn prepaid no FHLB fixed rate instruments during the years ended December 31, 2024 and 2023. As a member of the FHLB, the Bank can access a number of credit products which are utilized to provide liquidity. As of December 31, 2024, and 2023, the Bank had long-term debt outstanding in the amount of $ 23.6 million and $ 59.0 million, respectively, consisting of FHLB fixed rate instruments, and a finance lease liability. The FHLB fixed rate instruments are secured under the terms of a blanket collateral agreement with the FHLB consisting of FHLB stock and qualifying Mid Penn loan receivables, principally real estate secured loans. Mid Penn 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. These FHLB letter of credit commitments totaled $ 156.0 million and $ 153.5 million as of December 31, 2024 and 2023, respectively. During the first quarter of 2019, Mid Penn entered into a lease agreement for one facility under a non-cancelable finance lease, which commenced March 1, 2019 and expires February 28, 2039 and is included in long-term debt on the Consolidated Balance Sheets. See "Note 7 - Leases", for more information related to Mid Penn’s finance lease obligation. The aggregate principal amounts due on FHLB fixed rate instruments subsequent to December 31, 2024 are as follows: 111 MID PENN BANCORP, INC. (In thousands) 2025 $ 318 2026 20,220 2027 2 Thereafter — $ 20,540 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 secured overnight financing rate ("SOFR") plus 563 bp, payable quarterly until maturity. Mid Penn may redeem the 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 4.50 % 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 4.50 %. 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 December 31, 2024 and 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 Mid Penn 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 were redeemed as Riverview was a holder of the March 2020 Notes. The balance of March 2020 Notes outstanding as of December 31, 2023 was $ 8.1 million. The March 2020 Notes held at December 31, 2024 are treated as Tier 2 capital for regulatory capital purposes. The March 2020 Notes bear interest at a rate of 4.00 % 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 112 MID PENN BANCORP, INC. 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 December 31, 2024 and 2023. Note 12 - 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. During the year ended December 31, 2024, 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. Mortgage Banking Derivative Financial Instruments In connection with its mortgage banking activities, Mid Penn entered into commitments to originate certain fixed-rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, Mid Penn entered into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may have also be in the form of commitments to sell individual mortgage loans at a fixed price at a future date. The amount necessary to settle each interest rate lock was based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. During the year ended December 31, 2023, Mid Penn did not participate in mortgage banking derivative activities. Information related to mortgage banking derivative activity is set forth in the following table: December 31, 2024 December 31, 2023 (In thousands) Notional Amount Asset (Liability) Fair Value Notional Amount Asset (Liability) Fair Value Interest Rate Lock Commitments Positive Fair Values $ 120 $ 1 $ — $ — Negative Fair Values 1,084 ( 4 ) — — Forward Commitments Positive Fair Values 2,380 7 — — Negative Fair Values $ 1,167 $ ( 6 ) $ — $ — For the year ended December 31, 2024, 2023, and 2022, Mid Penn recorded net gains from mortgage banking hedging activity of $ 10 thousand, $ 324 thousand, and $ 1.5 million, respectively. The following table presents derivative financial instruments and the amount of the net gains or losses recognized within other noninterest income on the Consolidated Statements of Income for the years ended December 31: (In thousands) 2024 2023 Interest Rate Lock Commitments $ ( 3 ) $ 37 Forward Commitments 14 287 Total $ 11 $ 324 113 MID PENN BANCORP, INC. Loan-level Interest Rate Swaps Mid Penn enters into loan-level interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. Mid Penn simultaneously enters into 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: (Dollars in thousands) December 31, 2024 December 31, 2023 Interest rate swaps on loans with customers Notional amount $ 217,150 $ 187,192 Weighted average remaining term (years) 5.11 6.24 Receive fixed rate (weighted average) 4.68 % 4.59 % Pay variable rate (weighted average) 6.64 % 7.50 % Estimated fair value (1) $ 11,118 $ 10,484 (Dollars in thousands) December 31, 2024 December 31, 2023 Interest rate swaps on loans with correspondents Notional amount $ 217,150 $ 187,192 Weighted average remaining term (years) 5.11 6.24 Receive variable rate (weighted average) 6.64 % 7.50 % Pay fixed rate (weighted average) 4.68 % 4.59 % Estimated fair value (2) $ 11,118 $ 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. During the year ended December 31, 2024, Mid Penn entered into interest rate swaps designated as cash flow hedges to hedge the cash flows associated with existing brokered CDs. Information related to cash flow hedges is set forth in the following table: (Dollars in thousands) December 31, 2024 December 31, 2023 Cash flow hedges Notional amount $ 295,000 $ 190,000 Weighted average remaining term (years) 1.55 2.22 Pay fixed rate (weighted average) 3.64 % 3.74 % Receive variable rate (weighted average) 4.10 % 4.07 % Estimated fair value (1) $ 2,590 $ 1,460 (1) Estimated fair value, net of accrued interest receivable, 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 ended December 31, 2025, Mid Penn estimates that an additional $ 1.4 million will be reclassified as a decrease to interest expense. 114 MID PENN BANCORP, INC. Note 13 - 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 year ended December 31, 2024 or the year ended December 31, 2023. The following tables illustrate the assets and liabilities measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets: December 31, 2024 (In thousands) Level 1 Level 2 Level 3 Total Available-for-sale securities: U.S. Treasury and U.S. government agencies $ — $ 21,507 $ — $ 21,507 Mortgage-backed U.S. government agencies — 202,944 — 202,944 State and political subdivision obligations — 3,596 — 3,596 Corporate debt securities — 32,430 — 32,430 Equity securities 428 — — 428 Loans held for sale — 7,064 — 7,064 Other assets: Derivative assets — 13,708 — 13,708 Other liabilities: Derivative liabilities — 11,118 — 11,118 December 31, 2023 (In thousands) Level 1 Level 2 Level 3 Total Available-for-sale securities: U.S. Treasury and U.S. government agencies $ — $ 35,649 $ — $ 35,649 Mortgage-backed U.S. government agencies — 152,683 — 152,683 State and political subdivision obligations — 3,646 — 3,646 Corporate debt securities — 31,577 — 31,577 Equity securities 438 — — 438 Loans held for sale — 3,855 — 3,855 Other assets: Derivative assets — 11,944 — 11,944 Other liabilities: Derivative Liabilities — 10,484 — 10,484 115 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 December 31, 2024 were measured as the price that secondary market investors were offering for loans with similar characteristics. Derivative instruments - Interest rate swaps are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do however have comparable, observable inputs in which an alternative pricing sources 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 the Corporation’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 12 - 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 (for example, upon their acquisition or when there is evidence of impairment). The following table illustrates financial instruments measured at fair value on a nonrecurring basis: December 31, 2024 (In thousands) Level 1 Level 2 Level 3 Total Individually evaluated loans, net of ACL $ — $ — $ 21,171 $ 21,171 Foreclosed assets held for sale — — 44 44 December 31, 2023 (In thousands) Level 1 Level 2 Level 3 Total Individually evaluated loans, net of ACL $ — $ — $ 13,399 $ 13,399 Foreclosed assets held for sale — — 293 293 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. All of Mid Penn’s individually evaluated loans for 2024 and 2023, 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. 116 MID PENN BANCORP, INC. The following table presents additional information about the valuation techniques for level 3 assets measured at fair value on a nonrecurring basis. December 31, 2024 (In thousands) Fair Value Valuation Technique Significant Unobservable Input Range of Inputs Weighted Average Individually evaluated loans, net of ACL $ 21,171 Appraisal of collateral Appraisal adjustments — % - 100 % 5.6 % Foreclosed assets held for sale 44 Appraisal of collateral Appraisal adjustments 26 % - 26 % 26.0 % December 31, 2023 (In thousands) Fair Value Valuation Technique Significant Unobservable Input Range of Inputs Weighted Average Individually evaluated loans, net of ACL $ 13,399 Appraisal of collateral Appraisal adjustments — % - 100 % 5.7 % Foreclosed assets held for sale 293 Appraisal of collateral Appraisal adjustments 25 % - 94 % 64.5 % The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of: December 31, 2024 Estimated Fair Value (In thousands) Carrying Amount Level 1 Level 2 Level 3 Total Financial instruments - assets Cash and cash equivalents $ 70,564 $ 70,564 $ — $ — $ 70,564 Available-for-sale securities 260,477 — 260,477 — 260,477 Held-to-maturity securities 382,447 — 340,648 — 340,648 Equity securities 428 428 — — 428 Loans held for sale 7,064 — 7,064 — 7,064 Net loans 4,407,556 — — 4,430,623 4,430,623 Restricted investment in bank stocks 7,461 7,461 — 7,461 Accrued interest receivable 26,846 26,846 — — 26,846 Derivative assets 13,708 — 13,708 — 13,708 Financial instruments - liabilities Deposits $ 4,689,927 $ — $ 4,684,548 $ — $ 4,684,548 Short-term borrowings 2,000 — 2,000 — 2,000 Long-term debt (1) 20,540 — 19,120 — 19,120 Subordinated debt 45,741 — 42,811 — 42,811 Accrued interest payable 13,484 13,484 — — 13,484 Derivative liabilities 11,118 — 11,118 — 11,118 (1) Long-term debt excludes finance lease obligations. 117 MID PENN BANCORP, INC. December 31, 2023 Estimated Fair Value (In thousands) Carrying Amount Level 1 Level 2 Level 3 Total Financial instruments - assets Cash and cash equivalents $ 96,763 $ 96,763 $ — $ — $ 96,763 Available-for-sale securities 223,555 — 223,555 — 223,555 Held-to-maturity securities 399,128 — 357,521 — 357,521 Equity securities 438 438 — — 438 Loans held for sale 3,855 — 3,855 — 3,855 Net loans 4,218,605 — — 4,221,926 4,221,926 Restricted investment in bank stocks 16,768 — 16,768 — 16,768 Accrued interest receivable 25,820 25,820 — — 25,820 Derivative assets 11,944 — 11,944 — 11,944 Financial instruments - liabilities Deposits $ 4,346,212 $ — $ 4,337,723 $ — $ 4,337,723 Short-term debt 241,532 — 241,532 — 241,532 Long-term debt (1) 55,806 — 55,081 — 55,081 Subordinated debt 46,354 — 39,515 — 39,515 Accrued interest payable 14,257 14,257 — — 14,257 Derivative liabilities 10,484 — 10,484 — 10,484 (1) Long-term debt excludes finance lease obligations The Bank’s outstanding and unfunded credit commitments and financial standby letters of credit were deemed to have no significant fair value as of December 31, 2024 and 2023. Note 14 - Postretirement Benefit Plans Mid Penn has an unfunded noncontributory defined benefit plan for directors, which provides defined benefits based on the respective director’s years of service, as well as a postretirement healthcare and life insurance benefit plan, which is noncontributory, covering certain full-time employees. Mid Penn also assumed noncontributory defined benefit pension plans as a result of the acquisitions of Scottdale on January 8, 2018 and Riverview on November 30, 2021. None of Mid Penn’s plans contained a promised interest crediting rate. Service costs related to plans benefiting Mid Penn employees are reported as a component of salaries and employee benefits on the Consolidated Statements of Income, while interest costs, expected return on plan assets, amortization (accretion) of prior service cost, and settlement gain are reported as a component of other income . Service costs, interest costs, and amortization of prior service costs related to plans benefiting Mid Penn’s nonemployee directors are reported as a component of director fees and benefits expense within the other expense line item on the Consolidated Statement of Income. The accrued benefit liability, related income statement impacts, and other significant aspects of the plans are detailed below. Life Insurance - Full-time employees who had at least ten years of service as of January 1, 2008 and retire with the Bank after age 55 and at least 20 years of service are eligible for term life insurance coverage. The insurance amount will be $ 50 thousand until age 65. After age 65, the insurance amount will decrease by $ 5 thousand per year until age 74. Thereafter, 118 MID PENN BANCORP, INC. the insurance amount will be $ 5 thousand. The payment of the life insurance premium by the Corporation shall terminate at any time if the retired employee obtains other employment. Health Benefit Plan - Full-time employees who had at least 10 years of service as of January 1, 2008 and who retire at age 55 or later, after completion of at least 20 years of service, are eligible for medical benefits. Medical benefits are provided for up to five years after retirement. Employees who retired prior to December 31, 2015 may elect the least expensive single coverage in the employer’s group medical plan. If the retiree becomes eligible for Medicare during the five year duration of coverage, the Bank will pay, at its discretion, premiums for single 65-special coverage or similar supplemental coverage. For those employees who retired between September 18, 2015 and December 31, 2015, the Bank will only pay up to $ 5 thousand towards such medical coverage. Employees who retired after December 31, 2015 may not participate in the employer’s group medical plan. Instead, the Bank will reimburse the retiree for up to $ 5 thousand (grossed up by 36.79 % as of December 31, 2024) in medical costs. The reimbursement shall terminate at any time during the five-year period if the retired employee obtains other employment or the retired employee dies. The following tables provide a reconciliation of the changes in the plan’s health and life insurance benefit obligations and fair value of plan assets for the years ended December 31, 2024 and 2023, and a statement of the funded status at December 31, 2024 and 2023. (In thousands) December 31, Change in benefit obligations: 2024 2023 Benefit obligations, January 1 $ 271 $ 297 Service cost 1 1 Interest cost 11 13 Change in experience ( 28 ) ( 22 ) Change in assumptions ( 7 ) — Benefit payments ( 22 ) ( 18 ) Benefit obligations, December 31 $ 226 $ 271 Change in fair value of plan assets: Fair value of plan assets, January 1 $ — $ — Employer contributions 22 18 Benefit payments ( 22 ) ( 18 ) Fair value of plan assets, December 31 — — Funded status at year end $ ( 226 ) $ ( 271 ) Mid Penn has capped the benefit to future retirees under its post-retirement health benefit plan. Employees who had achieved ten years of service as of January 1, 2008 and subsequently retire after at least 20 years of service are eligible for reimbursement of major medical insurance premiums up to $ 5 thousand, if the employee has not yet reached age 65. Upon becoming eligible for Medicare, Mid Penn will reimburse up to $ 5 thousand in premiums for Medicare Advantage or a similar supplemental coverage. The maximum reimbursement period will not exceed five years regardless of retirement age and will end upon the participant obtaining other employment or the participant’s death. The amount recognized in other liabilities on the Consolidated Balance Sheets at December 31, is as follows: (In thousands) 2024 2023 Accrued benefit liability $ 226 $ 271 119 MID PENN BANCORP, INC. The amounts recognized in accumulated other comprehensive income as of December 31 consist of: (In thousands) 2024 2023 Net (gain) loss, pretax $ ( 65 ) $ ( 38 ) Net prior service cost, pretax — — The accumulated benefit obligation for health and life insurance plans was $ 226 thousand and $ 271 thousand at December 31, 2024 and 2023, respectively. The components of net periodic postretirement benefit (income) cost for 2024, 2023 and 2022 are as follows: (In thousands) 2024 2023 2022 Service cost $ 1 $ 1 $ 2 Interest cost 11 13 8 Amortization of prior service cost — 10 ( 24 ) Amortization of net (gain) / loss ( 7 ) ( 2 ) 2 Net periodic postretirement benefit income $ 5 $ 22 $ ( 12 ) Assumptions used in the measurement of Mid Penn’s benefit obligations at December 31 are as follows: Weighted-average assumptions: 2024 2023 Discount rate 5.32 % 4.67 % Rate of compensation increase — — Assumptions used in the measurement of Mid Penn’s net periodic benefit cost for the years ended December 31 are as follows: Weighted-average assumptions: 2024 2023 2022 Discount rate 4.67 % 4.90 % 2.40 % Rate of compensation increase — — — Assumed health care cost trend rates at December 31 are as follows: 2024 2023 2022 Health care cost trend rate assumed for next year 7.00 % 7.00 % 6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.50 % 5.50 % 5.50 % Year that the rate reaches the ultimate trend rate 2028 2027 2026 The following table shows the estimated benefit payments for future periods: (In thousands) 2025 $ 30 2026 28 2027 28 2028 25 2029 14 2030-2034 65 120 MID PENN BANCORP, INC. Directors’ Retirement Plan - Mid Penn has an unfunded defined benefit retirement plan ("Director's Plan") for directors with benefits based on years of service. On October 1, 2023, the Bank decided to terminate the Plan and pay out any benefits to participants in a lump sum cash payout of $ 1.3 million, which was paid out on October 1, 2024. The following tables provide a reconciliation of the changes in the Director's Plan benefit obligations and fair value of plan assets for the years ended December 31, 2024 and 2023, and a statement of the status at December 31, 2024 and 2023. This Plan is unfunded. (In thousands) December 31, Change in benefit obligations: 2024 2023 Benefit obligations, January 1 $ 1,306 $ 1,299 Service cost — 56 Interest cost — 61 Actuarial loss — — Change in assumptions — ( 12 ) Benefit payments ( 1,306 ) ( 98 ) Benefit obligations, December 31 $ — $ 1,306 Change in fair value of plan assets: Fair value of plan assets, January 1 $ — $ — Employer contributions 1,306 98 Benefit payments ( 1,306 ) ( 98 ) Fair value of plan assets, — — Funded status at year end $ — $ ( 1,306 ) Amounts recognized in other liabilities on the Consolidated Balance Sheet at December 31 are as follows: (In thousands) 2024 2023 Accrued benefit liability $ — $ 1,306 Amounts recognized in accumulated other comprehensive loss (income) as of December 31 consist of: (In thousands) 2024 2023 Net prior service cost, pretax $ — $ — Net loss, pretax — 214 The accumulated benefit obligation for the retirement plan was zero at December 31, 2024 and $ 1.3 million at December 31, 2023. The components of net periodic retirement cost for 2024, 2023 and 2022 are as follows: (In thousands) 2024 2023 2022 Service cost $ — $ 56 $ 75 Interest cost — 61 30 Amortization of net loss — 34 20 Net periodic retirement cost $ — $ 151 $ 125 121 MID PENN BANCORP, INC. Assumptions used in the measurement of Mid Penn’s benefit obligations at December 31 are as follows: Weighted-average assumptions: 2024 2023 Discount rate — % 4.80 % Change in consumer price index — 3.40 Assumptions used in the measurement of Mid Penn’s net periodic benefit cost for the years ended December 31 are as follows: Weighted-average assumptions: 2024 2023 2022 Discount rate — % 4.80 % 4.90 % Change in consumer price index — 3.40 7.00 The Bank is the owner and beneficiary of insurance policies on the lives of certain officers and directors, which informally fund the retirement plan obligation. The aggregate cash surrender value of these policies was $ 4.3 million and $ 4.2 million at December 31, 2024 and 2023, respectively. Scottdale Defined Benefit Pension Plan - As a result of the acquisition of Scottdale on January 8, 2018, Mid Penn has assumed a noncontributory defined benefit pension plan ("Scottdale Plan") covering certain former employees of Scottdale. After the acquisition, Mid Penn does not allow for any further participants to join the Plan. Mid Penn’s policy is to fund pension benefits as accrued. The Scottdale Plan’s assets are managed by the trust department of the Bank and were primarily invested in corporate equity securities at the time of acquisition but have since been diversified into a more conservative investment profile, including fixed income debt securities. The investment objective of the plan is "Balanced" to provide relatively stable growth from assets offset by a moderate level of income with target portfolio allocations of up to 20 % cash, 30 - 50 % fixed income securities, and 40 - 60 % equity securities. The valuation of the plan’s assets is subject to market fluctuations. For the year ended December 31, 2024, Mid Penn recognized no settlement gains. For the year ended December 31, 2023, Mid Penn recognized $ 322 thousand of settlement gains, as a result of certain lump sum payouts to participants of the Scottdale Plan. The settlement gains were recorded in noninterest income as a component of other income in the Consolidated Statements of Income for the year ended December 31, 2023. 122 MID PENN BANCORP, INC. The following tables provide a reconciliation of the changes in the Scottdale Plan’s benefit obligations and fair value of plan assets for the year ended December 31, 2024 and 2023, and a statement of the status at December 31, 2024 and 2023: (In thousands) December 31, Change in benefit obligations: 2024 2023 Benefit obligations, January 1 $ 2,659 $ 3,805 Service cost 25 58 Interest cost 130 197 Settlement (gain) loss — ( 4 ) Actuarial (gain) / loss ( 97 ) 168 Settlement payments — ( 1,472 ) Benefit payments ( 170 ) ( 93 ) Benefit obligations, December 31 $ 2,547 $ 2,659 Change in fair value of plan assets: Fair value of plan assets, January 1 $ 3,468 $ 4,722 Return on plan assets 328 348 Employer contributions — — Benefit payments ( 170 ) ( 93 ) Administrative expenses ( 29 ) ( 37 ) Settlement payments — ( 1,472 ) Fair value of plan assets, December 31 3,597 3,468 Funded status at year end $ 1,050 $ 809 Amounts recognized on the Consolidated Balance Sheets at December 31 are as follows: (In thousands) 2024 2023 Accrued pension benefit asset $ 1,050 $ 809 Amounts recognized in accumulated other comprehensive loss consist of the following as of December 31: (In thousands) 2024 2023 Unrecognized actuarial gain $ 798 $ 581 The accumulated benefit obligation for the retirement plan was $ 2.5 million and $ 2.7 million at December 31, 2024 and 2023, respectively. The components of net periodic retirement cost for December 31 are as follows: (In thousands) 2024 2023 Service cost $ 25 $ 58 Interest cost 130 197 Expected return on plan assets 153 211 Recognized net actuarial gain ( 25 ) ( 63 ) Net periodic retirement income $ ( 23 ) $ ( 19 ) 123 MID PENN BANCORP, INC. Assumptions used in the measurement of Mid Penn’s benefit obligations and net periodic pension costs at December 31 are as follows: Weighted-average assumptions: 2024 2023 Discount rate 5.50 % 5.00 % Expected long-term return on plan assets 4.50 4.50 Rate of compensation increases 2.50 2.50 The following table presents a summary of the Scottdale Plan’s assets at fair value and the weighted-average asset allocations by investment category as of December 31: Estimated Fair Value Percentage of Total Assets Estimated Fair Value Percentage of Total Assets (Dollars in thousands) 2024 2023 Cash and cash equivalents $ 263 7.3 % $ 90 2.6 % Common stock 2,081 57.9 2,186 63.0 Corporate bonds 1,253 34.8 1,192 34.4 $ 3,597 100.0 % $ 3,468 100.0 % The description of the valuation methodologies used for assets measured at fair value is disclosed below. Common Stocks Valued at the closing price reported on the active market on which the individual securities are traded and therefore would be categorized as Level 1 assets under the fair value hierarchy. Corporate Bonds Valued using matrix pricing, 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 and therefore would be categorized as Level 2 assets under the fair value hierarchy. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table shows the estimated benefit payments for future periods. (In thousands) 2025 $ 139 2026 137 2027 168 2028 196 2029 194 2030-2034 1,038 Riverview Defined Benefit Plan - As a result of the Riverview Acquisition on November 30, 2021, Mid Penn has assumed noncontributory defined benefit pension plans ("Riverview Plans") covering certain former employees of Riverview (or its predecessor-in-interest) as follows: Pursuant to the consolidation with Union Bancorp, Inc. ("Union") effective November 1, 2013, Riverview assumed Union’s noncontributory defined benefit pension plan, which substantially covered all Union employees. The plan 124 MID PENN BANCORP, INC. benefits were based on average salary and years of service. Union elected to freeze all benefits earned under the plan effective January 1, 2007. Riverview also assumed responsibility of Citizens National Bank of Meyersdale’s ("Citizens") noncontributory defined benefit pension plan effective as of the December 31, 2015 merger date. The plan substantially covered all Citizens employees, and the plan benefits were based on average salary and years of service. Citizens elected to freeze all benefits earned under the plan effective January 1, 2013. As a result of a merger effective October 1, 2017, Riverview assumed responsibility of CBT Financial Corp’s ("CBT") postretirement benefits plan, which is an unfunded postretirement benefit plan covering health insurance costs and post-retirement life insurance benefits for certain retirees. Subsequent to the Riverview Acquisition, Mid Penn disallowed any further participants to join the Riverview Plans. Mid Penn’s policy is to fund pension and post-retirement benefits as accrued. The Riverview Plans’ assets are managed by a third party and were primarily invested in a combination of cash and cash equivalents, equity securities and fixed income securities at the time of acquisition. The valuation of the Riverview Plans’ assets is subject to market fluctuations. The following tables provide a reconciliation of the changes in the Riverview Plans' benefit obligations and fair value of plan assets for year ended December 31, 2024, and a statement of the status at December 31, 2024 and 2023. (In thousands) Change in benefit obligations: 2024 2023 Benefit obligations, January 1 $ 6,442 $ 6,424 Interest cost 299 309 Actuarial (Loss)/gain ( 483 ) 228 Benefit payments ( 518 ) ( 519 ) Benefit obligations, December 31 $ 5,740 $ 6,442 Change in fair value of plan assets: Fair value of plan assets, January 1, $ 6,895 $ 6,720 Return on plan assets 329 691 Contributions 3 3 Benefit payments ( 516 ) ( 519 ) Fair value of plan assets, December 31 6,711 6,895 Funded status at year end $ 971 $ 453 Amounts recognized in other liabilities on the Consolidated Balance Sheets as of December 31 are as follows: (In thousands) 2024 2023 Accrued pension benefit asset $ 971 $ 453 As of December 31, 2024 amounts related to the Riverview Plans that have been recognized in accumulated other comprehensive loss but not yet recognized as a component of net periodic pension cost are as follows: (In thousands) 2024 2023 Unrecognized actuarial gain $ 415 $ 76 125 MID PENN BANCORP, INC. The components of net periodic pension and postretirement benefit cost for the year ended December 31, 2024 and 2023 are as follows: (In thousands) 2024 2023 Interest cost $ 299 $ 309 Expected return on plan assets ( 397 ) ( 387 ) Amortization of net loss 12 — Net periodic pension benefit $ ( 86 ) $ ( 78 ) (In thousands) 2024 2023 Service credit $ — $ — Interest cost 1 1 Unrecognized gain ( 1 ) ( 1 ) Net periodic postretirement benefit $ — $ — The accumulated benefit obligation was $ 5.7 million and $ 6.4 million at December 31, 2024 and 2023, respectively, for the Riverview Plans. Weighted average assumptions used in the measurement of Mid Penn’s benefit obligations and net periodic pension costs at December 31, 2024 and 2023 are as follows: Pension Benefits Postretirement Life Insurance Benefits 2024 Union Citizens CBT Discount rate 4.83 % 4.83 % 5.32 % Expected long-term return on plan assets 6.00 6.00 n/a 2023 Discount rate 5.02 % 5.02 % 4.70 % Expected long-term return on plan assets 6.00 6.00 n/a The following summarizes the actuarial assumptions used for the Riverview Plans: For the pension plan, the selected long-term rate of return on plan assets was primarily based on the asset allocation of the plan’s assets. Analysis of the historic returns on these asset classes and projections of expected future returns were considered in setting the long-term rate of return. The benefit offered under the postretirement benefits plan is fixed; therefore, the accumulated postretirement benefit obligation is not impacted by health care cost trends or the rate of compensation increase. 126 MID PENN BANCORP, INC. The following table presents a summary of the Riverview Plan’s assets at fair value and the weighted-average asset allocations by investment category as of December 31: Estimated Fair Value Percentage of Total Assets Estimated Fair Value Percentage of Total Assets Weighted-average asset allocations: 2024 2023 Cash and cash equivalents $ 60 0.9 % $ 48 0.7 % Mutual fund - equity 2,619 39.0 2,499 36.2 Mutual fund / EFTs - fixed income 3,716 55.4 4,038 58.6 Common / collective trusts equity 316 4.7 310 4.5 $ 6,711 100 % $ 6,895 100 % The valuation used is based on quoted market prices provided by an independent third party. The fair values of mutual fund investments are considered Level 1 assess in the fair value hierarchy and the collective trusts equity are considered Level 2 assets. The following table shows the estimated benefit payments for future periods. (In thousands) Pension Benefits Postretirement Life Insurance Benefits 2025 $ 517 $ 4 2026 506 3 2027 493 3 2028 493 3 2029 485 3 2030-2033 2,207 11 Note 15 - Other Benefit Plans Mid Penn maintains several benefit plans for both current and former employees of the Corporation. Liabilities related to the plans are recorded in other liabilities on the balance sheet, and aggregate cash surrender values assets related to the life insurance plans are recorded in the cash surrender value of life insurance line item on the balance sheet. Significant aspects of the plans are detailed below. Defined-Contribution 401(k) Plan - The Bank has a 401(k) plan that covers substantially all employees. The plan allows employees to contribute a portion of their salaries and wages to the plan and provides for Mid Penn to match a portion of employee-elected salary deferrals, subject to certain percentage maximums of their salaries and wages. The Corporation’s contribution to the 401(k) Plan was $ 1.8 million, $ 1.7 million, and $ 1.4 million for the years ending December 31, 2024, 2023, and 2022, respectively and is included as a component of salaries and benefits expense in the Consolidated Statements of Income. The plan also includes a funded contributory profit sharing provision for substantially all employees which is funded annually when applicable. The Corporation did not make a profit sharing contribution to the plan in 2024, 2023, or 2022. Deferred Compensation Plan - Mid Penn has a directors’ deferred compensation plan, which allows directors to defer receipt of director fees for a specified period in order to provide future retirement income. At December 31, 2024 and 2023, the Corporation accrued a liability of $ 2.6 million and $ 2.4 million, respectively, for this plan. The expense related to the plan was $ 159 thousand, $ 127 thousand and $ 64 thousand in 2024, 2023 and 2022, respectively, and is included as a component of other expense in the Consolidated Statements of Income. Supplemental Executive Retirement Plan - On September 6, 2022, Mid Penn entered into new or amended and restated supplemental executive retirement plan agreements ("SERPs") with six named executive officers and three other members of the Bank’s executive management team. Each SERP provides for the monthly payment of a fixed cash benefit over a 127 MID PENN BANCORP, INC. period of 15 years, commencing on the first day of the month following the Executive’s separation from service: (i) occurring on or after reaching normal retirement age (age 70 ); (ii) due to disability; (iii) due to death; or (iv) within two years following a change in control of the Bank. The annual benefit vests over a term of four to ten years , with a portion of the annual benefit having previously vested for several of the participants. Any unvested portion of the benefit fully vests upon a change in control of the Bank. The accrued liability for the supplemental retirement plans was $ 3.2 million and $ 2.5 million at December 31, 2024 and 2023, respectively. The expense related to the plan was $ 739 thousand, $ 792 thousand and $ 609 thousand in 2024, 2023 and 2022, respectively and is included as a component of salaries and benefits expense in the Consolidated Statements of Income. Split Dollar Life Insurance Arrangements - At December 31, 2024 and 2023, the Bank had Split Dollar Life Insurance arrangements with two former executives for which the aggregate collateral assignment and cash surrender values are approximately $ 1.4 million for December 31, 2024 and 2023. Mid Penn acquired Phoenix’s Split Dollar Life Insurance arrangements in 2015 on select employees, which had aggregate cash surrender values of $ 4.5 million and $ 4.4 million at December 31, 2024 and 2023. Mid Penn acquired First Priority’s Split Dollar Life Insurance arrangements in 2018 on select employees, which had aggregate cash surrender values of $ 3.8 million and $ 3.7 million at December 31, 2024 and 2023. Mid Penn acquired Riverview’s Split Dollar Life Insurance arrangements in 2021 on select employees, which had aggregate cash surrender values of $ 1.4 million and $ 2.0 million at December 31, 2024 and 2023. Rabbi Trust - As a result of the acquisition of Riverview, Mid Penn assumed certain benefit plan liabilities related to compensation arrangements within other liabilities on the Consolidated Balance Sheets, including certain executive non-qualified retirement benefits, deferred compensation plans, and executive employment and separation agreements associated with Riverview. The details of the compensation arrangements for the years ended December 31 include: (In thousands) Fully Funded Gross Amounts Compensation Arrangements 2024 2023 Supplemental executive retirement agreements $ 1,112 $ 1,214 Executive deferred compensation agreement 1,235 1,440 Total compensation agreements $ 2,347 $ 2,654 The obligations are fully funded through a Rabbi Trust having a cash balance of $ 2.7 million and $ 2.9 million within other assets on the Consolidated Balance Sheets as of December 31, 2024 and 2023 to provide a source of funds in satisfying the obligations under the respective compensation arrangements. 128 MID PENN BANCORP, INC. Note 16 - Income Taxes Significant components of the Corporation’s net deferred tax asset at December 31, 2024 and 2023 are shown below. (In thousands) 2024 2023 Deferred tax assets: Allowance for loan losses $ 7,878 $ 7,642 Loan fees 769 1,053 Deferred compensation 1,317 1,476 Benefit plans 50 60 Unrealized loss on securities 5,389 4,992 Lease adjustments 87 74 Business combination adjustments 4,659 5,669 Acquired NOL, Section 1231, and charitable contribution carryforwards 3,153 3,832 Rabbi Trust 521 593 Riverview AMT credits 621 696 Equity Comp 249 256 Riverview subordinated debt fair value adjustment 139 327 Software renewal costs 222 335 Unfunded and loan basis adjustments 491 635 Investments in Flow-through entities 517 391 Other 482 378 26,544 28,409 Deferred tax liabilities: Depreciation ( 1,160 ) ( 1,397 ) Bond accretion ( 269 ) ( 187 ) Goodwill and intangibles ( 505 ) ( 1,017 ) Prepaid expenses ( 74 ) ( 227 ) Benefit plans ( 1,368 ) ( 1,199 ) Interest Rate Swaps ( 421 ) ( 236 ) ( 3,797 ) ( 4,263 ) Deferred tax asset, net $ 22,747 $ 24,146 In assessing the Corporation’s ability to realize deferred federal tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. At December 31, 2024, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that Mid Penn will realize the benefits of these deferred tax assets and has no valuation allowances recorded against any components of its deferred tax asset, including the carryforward balances related to net operating losses ("NOL"), Section 1231 losses, and charitable contribution carryforwards. At December 31, 2024, Mid Penn had NOL carryforwards of $ 2.4 million resulting from the November 30, 2021 acquisition of Riverview. These NOLs were assumed by Riverview in a previous acquisition and were generated during the tax years ended December 31, 2013, 2014, and 2015 and begin to expire in 2032. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, signed into law on March 27, 2020 to mitigate the economic effects of COVID-19, implemented a five-year carryback period for NOLs generated in tax years beginning in 2018, 2019, or 2020. As a result of this CARES Act provision, during the year ended December 31, 2023, Mid Penn filed the required federal tax returns to 129 MID PENN BANCORP, INC. carryback NOLs to the 2017 tax year, comprised of (i) $ 1.2 million of NOLs generated in 2018 and acquired from Scottdale, and (ii) $ 1.2 million of NOLs generated in 2018 and acquired from First Priority. The carryback of these NOLs to the 2017 tax year when the tax rate was 34 % (versus 21 % in 2018) generated a federal tax benefit of $ 318 thousand recorded in the provision for income taxes on the Consolidated Statements of Income for the year ended December 31, 2020. The remaining NOL balance of $ 119 thousand at December 31, 2021 was generated in the 2012 tax year, was acquired from First Priority, and expires in 2032. Mid Penn is limited to a deduction of the lesser of the available NOL carryforward or 80% of pre-NOL taxable income in a single tax year as set forth in the Tax Cuts and Jobs Act ("TCJA"). Mid Penn had no charitable contribution carryforwards at December 31, 2024 and December 31, 2023, while at December 31, 2022, Mid Penn had $ 43 thousand charitable contribution carryforwards which were acquired from Riverview. During the years ended December 31, 2024, 2023 and 2022, Mid Penn generated sufficient taxable income to utilize all charitable contribution carryforwards. Mid Penn expects to generate sufficient taxable income to utilize all charitable contribution carryforwards in the future. Acquired Section 1231 losses totaling $ 314 thousand were recorded as a result of filing the final First Priority return in 2019 and expired in 2022. The annual usage of acquired NOL, charitable contribution carryforwards, and Section 1231 losses is limited by Internal Revenue Service ("IRS") Section 382 regulations. These limitations are calculated separately for each acquisition as the federal long-term tax-exempt rate at the date of acquisition multiplied by the valuation of the selling company as calculated in accordance with GAAP. As a result, the usage of acquired NOLs, charitable contribution carryforwards, AMT carryforwards, and Section 1231 losses to offset taxable income related to the Riverview Acquisition is limited to $ 2.0 million per year and $ 1.9 million per year for the First Priority Acquisition. All contribution carryforwards related to the Scottdale Acquisition were utilized as of December 31, 2022. The provision for income taxes consists of the following: (In thousands) 2024 2023 2022 Current tax provision Federal $ 7,118 $ 7,570 $ 10,212 State 864 1,033 67 Total current tax provision $ 7,982 $ 8,603 $ 10,279 Deferred tax expense (benefit) Federal $ 1,998 $ ( 525 ) $ 2,262 State 615 ( 781 ) — Total deferred tax expense (benefit) 2,613 ( 1,306 ) 2,262 Total provision for income taxes $ 10,595 $ 7,297 $ 12,541 A reconciliation of the federal income tax provision at the statutory rate of 21% for 2024, 2023 and 2022 to Mid Penn's actual federal income tax provision at its effective rate is as follows: (In thousands) 2024 2023 2022 Provision at the expected statutory rate $ 12,607 $ 9,388 $ 14,143 Low income housing partnership tax credits ( 2,163 ) ( 1,337 ) ( 929 ) Effect of tax-exempt income ( 804 ) ( 641 ) ( 614 ) Effect of investment in life insurance ( 770 ) ( 252 ) ( 203 ) Nondeductible merger and acquisition expense 48 207 60 State income taxes, net of federal tax benefit 1,169 199 53 Nondeductible interest 150 108 20 Other items 358 ( 375 ) 11 Provision for income taxes $ 10,595 $ 7,297 $ 12,541 130 MID PENN BANCORP, INC. Mid Penn has no unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. Mid Penn does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. No amounts for interest and penalties were recorded in income tax expense in the Consolidated Statement of Income for the years ended December 31, 2024, 2023, or 2022. There were no amounts accrued for interest and penalties at December 31, 2024 or 2023. Mid Penn and its subsidiaries are subject to U.S. federal income tax and income tax for the states of Pennsylvania, New Jersey, and Maryland. With limited exceptions, Mid Penn is no longer subject to examination by taxing authorities for years before 2017. Note 17 - Regulatory Matters The Corporation and the Bank are subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger certain mandatory, and possibly additional discretionary, actions by the regulators that if, undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory account practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. As of December 31, 2024 and 2023, the Corporation and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized". However, future changes in regulations could increase capital requirements and may have an adverse effect on capital resources. Minimum regulatory capital requirements established by Basel III rules require the Corporation and the Bank to: • Meet a minimum Common Equity Tier I capital ratio of 4.5 % of risk-weighted assets; • Meet a minimum Tier I capital ratio of 6.0 % of risk-weighted assets; • Meet a minimum Total capital ratio of 8.0 % of risk-weighted assets; • Meet a minimum Tier I leverage capital ratio of 4.0 % of average assets; • Maintain a "capital conservation buffer" of 2.5 % above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonuses; and • Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses. The Basel III Rules use a standardized approach for risk weightings. The rules provide that the failure to maintain the "capital conservation buffer" results in restrictions on capital distributions and discretionary cash bonus payments to executive officers. As a result, under the Basel III Rules, if the Bank fails to maintain the required minimum capital conservation buffer, the Corporation will be subject to limits, and possibly prohibitions, on its ability to obtain capital distributions from the Bank. If the Corporation does not receive sufficient cash dividends from the Bank, it may not have sufficient funds to pay dividends on its common stock, service its debt obligations or repurchase its common stock. Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans, or advances. The amount of dividends that may be paid from the Bank to the Corporation in any calendar year is limited to the Bank’s current year’s net profits, combined with the retained net profits of the preceding two years. For the year ended December 31, 2024, $ 39.5 million of undistributed earnings of the Bank, included in the consolidated shareholders’ equity balance, was available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements below. 131 MID PENN BANCORP, INC. The following tables present the regulatory capital levels, leverage ratios, and risk-based capital ratios as of December 31: Actual Minimum for Basel III Capital Adequacy To Be Well-Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Mid Penn Bancorp, Inc. 2024 Tier 1 Capital (to Average Assets) $ 535,501 10.0 % $ 214,621 4.0 % N/A N/A Common Equity Tier 1 Capital (to Risk Weighted Assets) 535,501 11.9 313,979 7.0 N/A N/A Tier 1 Capital (to Risk Weighted Assets) 535,501 11.9 381,261 8.5 N/A N/A Total Capital (to Risk Weighted Assets) 618,971 13.8 470,969 10.5 N/A N/A Mid Penn Bank 2024 Tier 1 Capital (to Average Assets) $ 495,729 9.2 % $ 214,461 4.0 % $ 268,076 5.0 % Common Equity Tier 1 Capital (to Risk Weighted Assets) 495,729 11.1 313,456 7.0 291,066 6.5 Tier 1 Capital (to Risk Weighted Assets) 495,729 11.1 380,625 8.5 358,235 8.0 Total Capital (to Risk Weighted Assets) 533,458 11.9 470,183 10.5 447,794 10.0 Mid Penn Bancorp, Inc. 2023 Tier 1 Capital (to Average Assets) $ 427,353 8.3 % $ 204,935 4.0 % N/A N/A Common Equity Tier 1 Capital (to Risk Weighted Assets) 427,353 9.8 305,083 7.0 N/A N/A Tier 1 Capital (to Risk Weighted Assets) 427,353 9.8 370,458 8.5 N/A N/A Total Capital (to Risk Weighted Assets) 510,734 11.7 457,624 10.5 N/A N/A Mid Penn Bank 2023 Tier 1 Capital (to Average Assets) $ 458,077 8.9 % $ 204,777 4.0 % $ 255,971 5.0 % Common Equity Tier 1 Capital (to Risk Weighted Assets) 458,077 10.5 304,788 7.0 283,018 6.5 Tier 1 Capital (to Risk Weighted Assets) 458,077 10.5 370,100 8.5 348,330 8.0 Total Capital (to Risk Weighted Assets) 495,104 11.4 457,182 10.5 $ 435,412 10.0 Note 18 - Commitments and Contingencies 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 $ 64.3 million and $ 62.2 million of standby letters of credit outstanding as of December 31, 2024 and December 31, 2023, respectively. Mid Penn does not anticipate any losses because of these transactions. The 132 MID PENN BANCORP, INC. amount of the liability as of December 31, 2024 and December 31, 2023 for payment under standby letters of credit issued was not considered material. Mid Penn adopted FASB ASC 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 noninterest expense. 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 December 31, 2024 was $ 2.9 million compared to $ 3.6 million at December 31, 2023. The benefit for OBS for the year ended December 31, 2024 was $ 628 thousand. 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. The following table presents the activity in the ACL - OBS by segment for the year ended December 31, 2024 and December 31, 2023: (in thousands) Balance at December 31, 2023 (Benefit)/Provision for credit loss Year ended December 31, 2024 1-4 Family Rental $ 11 $ 5 $ 16 C&I 1,270 ( 105 ) 1,165 CRE NonOwner Occupied 113 19 132 CRE Owner Occupied 106 ( 8 ) 98 Consumer 3 — 3 Farmland 108 ( 16 ) 92 HELOC & Junior Liens 100 ( 8 ) 92 Multifamily 24 3 27 Other Construction & Land 1,036 ( 244 ) 792 Residential Construction 778 ( 262 ) 516 Residential First Liens 18 ( 12 ) 6 $ 3,567 $ ( 628 ) $ 2,939 133 MID PENN BANCORP, INC. (in thousands) Balance at December 31, 2022 Provision for credit loss Year ended December 31, 2023 1-4 Family Rental $ — $ 11 $ 11 C&I 33 1,237 1,270 CRE NonOwner Occupied 2 111 113 CRE Owner Occupied 4 102 106 Consumer 1 2 3 Farmland 2 106 108 HELOC & Junior Liens 13 87 100 Multifamily — 24 24 Other Construction & Land 23 1,013 1,036 Residential Construction 6 772 778 Residential First Liens 1 17 18 $ 85 $ 3,482 $ 3,567 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. 134 MID PENN BANCORP, INC. Note 19 - Earnings Per Share The following table presents the computation of basic and diluted EPS: (In thousands, except per share data) 2024 2023 2022 Net income $ 49,437 $ 37,397 $ 54,806 Weighted average shares outstanding (basic) 17,026,240 16,319,006 15,912,877 Effect of dilutive unvested restricted stock grants 44,622 31,957 21,758 Weighted average shares outstanding (diluted) 17,070,862 16,350,963 15,934,635 Basic earnings per common share $ 2.90 $ 2.29 $ 3.44 Diluted earnings per common share 2.90 2.29 3.44 There were no antidilutive shares at December 31, 2024, 2023, and 2022. As previously announced on a Form 8-K on November 4, 2024, Mid Penn completed an underwritten public offering of 2,375,000 shares of common stock at a price of $ 29.50 per share, with the aggregate gross proceeds of the offering totaling $ 70 million before underwriting discounts and offering expenses. The net proceeds of the offering after deducting the underwriting discount and other offering expenses were $ 67 million. Additionally, as previously announced on the Form 8-K on November 4, 2024, Mid Penn pursuant to an option granted to the underwriting sold an additional 356,250 shares of the Company's common stock, in full, at the public offering price less underwriting discounts and commissions, or $ 28.025 per share. The issuance was completed on November 5, 2024. 135 MID PENN BANCORP, INC. Note 20 - Shareholders' Equity Accumulated Other Comprehensive Loss (Income) The components of accumulated other comprehensive loss (income), 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 December 31, 2021 $ ( 255 ) $ — $ 413 $ 158 OCI before reclassifications ( 19,072 ) — ( 294 ) ( 19,366 ) Amounts reclassified from AOCI — — ( 8 ) ( 8 ) Balance - December 31, 2022 ( 19,327 ) — 111 ( 19,216 ) OCI before reclassifications 1,988 820 ( 212 ) 2,596 Amounts reclassified from AOCI — — ( 17 ) ( 17 ) Balance - December 31, 2023 ( 17,339 ) 820 ( 118 ) ( 16,637 ) OCI before reclassifications ( 1,550 ) 665 723 ( 162 ) Amounts reclassified from AOCI — — ( 26 ) ( 26 ) Balance - December 31, 2024 $ ( 18,889 ) $ 1,485 $ 579 $ ( 16,825 ) 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. Mid Penn repurchased 15,500 shares during 2024 at an average price per share of $ 20.81 under its share repurchase program. As of December 31, 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 $ 5.0 million remaining available for repurchase as of December 31, 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. Note 21 - Stock-Based Compensation 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 136 MID PENN BANCORP, INC. 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 December 31, 2024, a total of 263,974 restricted shares were granted under the 2014 Restricted Stock Plan, of which 82,278 shares were unvested. The 2014 Restricted Stock Plan shares granted and vested resulted in $ 1.1 million in share-based compensation expense for the years ended December 31, 2024 and 2023, 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. The following table presents compensation expense and related tax benefits for restricted stock awards recognized on the Consolidated Statements of Income: (In thousands) 2024 2023 2022 Compensation expense $ 1,047 $ 1,103 $ 1,142 Tax benefit ( 220 ) ( 232 ) ( 240 ) Net income effect $ 827 $ 871 $ 902 The following table presents information regarding the non-vested restricted stock for the year ended December 31, 2024: Shares Weighted-Average Grant Date Fair Value Non-vested at January 1, 2024 88,269 $ 26.07 Vested ( 41,101 ) 25.50 Forfeited ( 5,950 ) 20.59 Granted 41,060 20.05 Non-vested at December 31, 2024 82,278 23.75 At December 31, 2024, there was $ 1.9 million of unrecognized compensation cost related to all non-vested share-based compensation awards, which will be recognized as compensation expense through April 2028 with a weighted average recognition period of 2.5 years. Mid Penn recognizes the impact of forfeitures as of the forfeiture date. 137 MID PENN BANCORP, INC. Note 22 - Segment Reporting Mid Penn operates as a single reportable segment, providing a broad range of banking and financial services to individuals, businesses, and institutional clients. These services include commercial and consumer lending, deposit products, wealth management, insurance, and treasury management solutions. The Chief Executive Officer and the Chief Financial Officer are the Mid Penn Chief Operating Decision Makers ("CODM"). The CODM regularly evaluates financial performance and allocates resources on a consolidated basis. The following table presents certain information reviewed by management: (in thousands) December 31, 2024 December 31, 2023 December 31, 2022 Net interest income $ 156,671 $ 146,973 $ 147,833 Provision for credit losses 1,516 3,699 4,300 Noninterest income 22,493 20,008 23,657 Noninterest expense 117,616 118,588 99,843 Income taxes 10,595 7,297 12,541 Net income 49,437 37,397 54,806 Total assets 5,470,936 5,290,792 4,497,954 Other Segment Information Revenue Composition: Mid Penn generates revenue primarily from net interest income and non-interest income, including fees from deposit accounts, wealth management, insurance, and treasury services. Capital Allocation & Performance Metrics: The CODM assesses performance based on key financial metrics, including net interest margin, return on assets ("ROA"), return on equity ("ROE") and efficiency ratio. 138 MID PENN BANCORP, INC. Note 23 - Variable Interest Entities Mid Penn invests in Low-Income Housing Tax Credit ("LIHTC") partnerships that are considered variable interest entities ("VIEs") under ASC 810, Consolidation. These partnerships are formed to develop and operate affordable housing projects that qualify for federal tax credits under Section 42 of the Internal Revenue Code. The Company evaluates its LIHTC investments to determine whether it has a controlling financial interest in the partnerships. A controlling financial interest exists if the Company: • Has the power to direct activities that most significantly impact the entity's economic performance; and • Has the obligation to absorb losses or the right to receive benefits that could be significant. Based on this assessment, Mid Penn has determined that it is not the primary beneficiary of the LIHTC partnerships, as it does not control the significant operating decisions. Therefore, these entities are not consolidated in the financial statements. Mid Penn accounts for its LIHTC investments using the proportional amortization method under ASC 323-740, Investments - Equity method and Joint Ventures: Investments in Qualified Affordable Housing Projects. Under this method: • The initial investment is recorded as an asset with Other Assets on the balance sheet. • Tax credits and other tax benefits are recognized as a reduction of income tax expense. • The investment is amortized over the period in which the tax credits are received, with amortization recorded as a component of income tax expense . The investments in these unconsolidated entities are reflected in other assets on the Consolidated Balance Sheet, and are summarized for the periods below: For the Year Ended (in thousands) December 31, 2024 December 31, 2023 Income tax benefits $ 2,163 $ 1,337 Amortization of LIHTC investments 2,290 1,625 LIHTC investments are periodically assessed for impairment. No impairment losses were recognized for the years ended December 31, 2024 and 2023. In addition, Mid Penn holds private equity investments classified as variable interest entities, with a total carrying value of $ 2.8 million and $ 2.5 million as of December 31, 2024 and 2023. respectively. Mid Penn’s maximum exposure to loss is limited to the carrying value of its investment. 139 MID PENN BANCORP, INC. Note 24 - Parent Company Statements CONDENSED BALANCE SHEETS December 31, (In thousands) 2024 2023 ASSETS Cash and cash equivalents $ 83,209 $ 10,064 Investment in subsidiaries 617,476 575,971 Other assets 1,423 4,252 Total assets $ 702,108 $ 590,287 LIABILITIES AND SHAREHOLDERS' EQUITY Subordinated debt and trust preferred securities $ 45,741 $ 46,354 Other liabilities 1,349 1,583 Shareholders' equity 655,018 542,350 Total liabilities and shareholders' equity $ 702,108 $ 590,287 CONDENSED STATEMENTS OF INCOME Years Ended December 31, (In thousands) 2024 2023 2022 Income Other income $ 62 $ 147 $ 1,130 Total Income 62 147 1,130 Expenses 6,677 10,865 7,333 (Loss) income before income tax and equity in undistributed earnings of subsidiaries ( 6,615 ) ( 10,718 ) ( 6,203 ) Income Tax Benefit 1,549 2,932 702 Equity in undistributed earnings of subsidiaries 54,503 45,183 60,307 Net Income $ 49,437 $ 37,397 $ 54,806 140 MID PENN BANCORP, INC. CONDENSED STATEMENTS OF CASH FLOWS Years Ended December 31, (In thousands) 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 49,437 $ 37,397 $ 54,806 Equity in undistributed earnings of subsidiaries ( 54,503 ) ( 45,183 ) ( 60,307 ) Stock based compensation 1,047 1,103 1,142 Amortization of debt issuance costs 7 7 26 Net change in other assets 2,829 ( 3,407 ) 759 Net change in other liabilities ( 854 ) ( 246 ) ( 6,285 ) Net cash (used in) provided by operating activities ( 2,037 ) ( 10,329 ) ( 9,859 ) CASH FLOWS FROM INVESTING ACTIVITIES Net cash paid for acquisition — ( 25,574 ) — Investment in subsidiary 12,810 71,493 ( 1,787 ) Net cash provided by (used in) investing activities 12,810 45,919 ( 1,787 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid ( 13,822 ) ( 12,981 ) ( 12,735 ) Employee and Director Stock Purchase Plans stock issuance 561 482 364 Proceeds from issuance of common stock 75,956 — — Treasury stock purchased ( 323 ) ( 4,876 ) ( 2,957 ) Riverview restricted stock (1) — — 776 Subordinated debt and trust preferred securities redemption — ( 10,000 ) ( 16,778 ) Net cash (used in) provided by financing activities 62,372 ( 27,375 ) ( 31,330 ) Net increase (decrease) in cash and cash equivalents 73,145 8,215 ( 42,976 ) Cash and cash equivalents, beginning of year 10,064 1,849 44,825 Cash and cash equivalents, end of year $ 83,209 $ 10,064 $ 1,849 (1) Additionally, 2,500 shares of restricted stock were paid out in cash resulting in $ 776 thousand of cash consideration relating to stock awards. 141 MID PENN BANCORP, INC. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None