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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 256 added, 92 removed, 408 unchanged (46% of the section changed)

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

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

Caution About Forward-Looking Statements

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Certain of the matters discussed in this document or in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Exchange Act.

These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results, including after giving effect to the Merger, and the assumptions upon which those statements are based.

These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based.

Forward looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” or words or phrases of similar meaning.

These forward-looking statements include the expectations of Mid Penn relating to the anticipated opportunities and financial and other benefits of the Merger, and the projections of, or guidance on, Mid Penn’s or the combined company’s future financial performance, asset quality, liquidity, capital levels, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in Mid Penn’s business or financial results.

We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control.

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

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

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

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

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

MID PENN BANCORP, INC.

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

• the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;

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

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• changes in technology;

MID PENN BANCORP, INC.

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

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• the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent filings with the SEC.

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

The above list of factors that may affect future performance is illustrative, but by no means exhaustive.

Accordingly, all forward-looking statements should be evaluated with this understanding of inherent uncertainty.

MID PENN BANCORP, INC.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net Income $ 4,762 $ 11,771 $ 18,504 $ 23,904

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Non-performing assets to total assets 0.44 % 0.19 % 0.44 % 0.19 %

Net (recoveries)/charge-offs to average loans (annualized) (0.0003) % 0.004 %

Net charge-offs to average loans (annualized) 0.0688 % 0.002 % 0.069 % 0.006 %

(1) Presented on a FTE basis using a 21% Federal tax rate and statutory interest expense disallowances.

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(2) Annualized ratios

On April 30, 2025, Mid Penn completed the acquisition of William Penn, which added total assets of $727.7 million, comprised primarily of $405.3 million of loans.

This transaction included the acquisition of 12 branches, further expanding Mid Penn's presence in the Philadelphia region and surrounding counties in Pennsylvania and New Jersey.

Each share of William Penn common stock issued and outstanding as of April 30, 2025, was converted into 0.426 shares of Mid Penn common stock.

As a result of the acquisition, Mid Penn issued approximately 3,506,795 shares of Mid Penn common stock, plus up to an additional 538,447 shares of Mid Penn common stock issuable upon the exercise of former William Penn stock options, for a purchase price of $103.2 million.

Additionally, on May 12, 2025, Mid Penn acquired the insurance business and related accounts of Charis Insurance Group, which provides business, home and auto insurance throughout central and southern Pennsylvania, for a purchase price of $4.0 million.

Summary of Financial Results

• Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended March 31, 2025 was $13.7 million, or $0.71 per both common share basic and diluted, compared to earnings of $12.1 million, or $0.73 per both common share basic and diluted for the three months ended March 31, 2024.

◦ Net Interest Margin - For the first quarter of 2025, Mid Penn’s net interest margin was 3.37% versus 2.97% for the same period of 2024.

The yield on interest-earning assets for the first quarter of 2025 increased 14 basis points from the same period of 2024.

• Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended June 30, 2025 was $4.8 million, or $0.22 per both common share basic and diluted, compared to earnings of $11.8 million, or $0.71 per both common share basic and diluted for the three months ended June 30, 2024.

Mid Penn's earnings for the six months ended June 30, 2025 was $18.5 million, or $0.90 per common share basic, and $0.89 per diluted common share, compared to earnings of $23.9 million, or $1.44 per both common share basic and diluted for the six months ended June 30, 2024.

◦ Net Interest Margin - For the second quarter of 2025, Mid Penn’s net interest margin was 3.44% versus 3.12% for the same period of 2024.

For the six months ended June 30, 2025, net interest margin was 3.41% versus 3.04% for the same period of 2024.

The yield on interest-earning assets for the three months ended June 30, 2025 decreased 1 basis point from the same period of 2024.

The rate on interest-bearing liabilities decreased 39 basis points from the same period of 2024.

◦ Loan Growth - Total loans, net of une arned income, as of March 31, 2025 were $4.5 billion compared to $4.4 billion as of December 31, 2024, an increase of $48.1 million, or 1.1%.

The growth was primarily driven by an increase in owner occupied commercial real estate of $30.3 million, an increase in nonowner occupied commercial real estate of $21.1 million , and an increase in commercial and industrial loans of $15.3 million, partially offset by an $11.2 million decrease in residential construction loans.

◦ Deposit Growth - Total deposits increased $42.3 million, or 0.9%, from $4.7 billion at December 31, 2024, to $4.7 billion at March 31, 2025.

The growth was driven by an increase of $55.5 million in interest-bearing transaction accounts, a $29.1 million increase in non-interest bearing accounts, offset by a decrease of $42.3 million in time deposits.

• Asset Quality - ACL-loans at March 31, 2025 was $35.8 million, or 0.80% of total loans, as compared to $35.5 million, or 0.80% of total loans at December 31, 2024.

◦ Loan Growth - Total loans, net of une arned income, as of June 30, 2025 were $4.8 billion compared to $4.4 billion as of December 31, 2024, an increase of $389.8 million, or 8.8%.

The growth was primarily

MID PENN BANCORP, INC.

◦ Net Charge-offs/Recoveries - Mid Penn had net recoveries of $3 thousand and net charge-offs of $44 thousand for the three months ended March 31, 2025 and 2024, respectively.

◦ Non-performing assets - Total non-performing assets were $25.4 million at March 31, 2025, an increase compared to non-performing assets of $22.7 million at December 31, 2024.

The increase during the first quarter of 2025 is primarily related to the addition of three commercial loans with a combined balance of $7.0 million, partially offset by the payoff of two commercial loans with a combined balance of $3.0 million.

Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.50% at March 31, 2025, compared to 0.52% as of December 31, 2024.

◦ Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $321 thousand for the three months ended March 31, 2025 compared to a benefit of $619 thousand for the same period of 2024.

The benefit for credit losses on off-balance sheet credit exposures was $20 thousand for the three months ended March 31, 2025, compared to a benefit of $318 thousand for the same period of 2024.

The increase in provision for the three months ended March 31, 2025, is primarily due to an increase in loss factors across certain portfolios.

• Noninterest Income - Noninterest income totaled $5.2 million for the three months ended March 31, 2025 compared to $5.8 million for the same period of 2024.

The decrease is primarily due to a $731 thousand decrease in other miscellaneous noninterest income, driven by a $1.4 million decrease in Bank-owned life insurance benefits received, partially offset by a $357 thousand increase in loan level swap fees, a $113 thousand increase in other letter of credit income, and a $167 thousand increase in Mortgage Banking income.

• Noninterest Expense - Noninterest expense totaled $30.6 million for the three months ended March 31, 2025, an increase of $2.1 million, or 7.4%, compared to noninterest expense of $28.5 million for the same period of 2024.

The increase was primarily driven by a $847 thousand increase in salaries and employee benefits, a $454 thousand increase in software licensing, a $314 thousand increase in merger and acquisition expenses, and a $292 thousand increase in occupancy expenses, partially offset by a $172 thousand decrease in legal and professional fees.

• Liquidity - Current liquidity, including borrowing capacity, decreased to $1.6 billion or 104.2% of uninsured and uncollateralized deposits, or approximately 33.0% of total deposits.

driven by an increase in residential mortgage loans of $212.3 million , an increase in owner occupied commercial real estate of $84.8 million, an increase in nonowner occupied commercial real estate of $91.5 million , and an increase in commercial and industrial loans of $25.2 million, partially offset by an $20.1 million decrease in multifamily loans.

William Penn acquisition loans contributed $405.3 million to this increase.

◦ Deposit Growth - Total deposits increased $759.7 million, or 16.2%, from $4.7 billion at December 31, 2024, to $5.4 billion at June 30, 2025.

The growth was driven by an increase of $453.0 million in interest-bearing transaction accounts, an increase of $208.8 million in time deposits, and a $97.9 million increase in non-interest bearing accounts.

The William Penn acquisition deposits contributed $619.8 million to this increase.

• Asset Quality - ACL-loans at June 30, 2025 was $37.6 million, or 0.78% of total loans, as compared to $35.5 million, or 0.80% of total loans at December 31, 2024.

◦ Net Charge-offs/Recoveries - Mid Penn had net charge-offs of $811 thousand and $18 thousand for the three months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2025, net charge-offs were $808 thousand compared to $62 thousand for the same period of 2024.

◦ Non-performing assets - Total nonperforming assets were $28.0 million at June 30, 2025, an increase compared to nonperforming assets of $22.7 million at December 31, 2024.

The increase during the second quarter of 2025 is primarily related to the addition of two commercial real estate loans with a combined balance of $8.8 million being foreclosed in the second quarter of 2025, offset by payoffs and paydowns in the second quarter of 2025.

Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.58% at June 30, 2025, compared to 0.52% and 0.57% as of December 31, 2024 and June 30, 2024, respectively.

◦ Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $2.2 million for the three months ended June 30, 2025 compared to $1.8 million for the same period of 2024.

The provision for credit losses on off-balance sheet credit exposures was $24 thousand for the three months ended June 30, 2025, compared to a benefit of $178 thousand for the same period of 2024.

The provision for credit losses on loans was $2.6 million for the six months ended June 30, 2025, an increase of $1.4 million compared to the provision for credit losses of $1.2 million for the six months ended June 30, 2024.

This increase for the six months ended June 30, 2025 was primarily due to a $2.3 million reserve on non-PCD loans acquired through the William Penn acquisition.

The provision for credit losses on off-balance sheet credit exposures was $24 thousand and $4 thousand for the three and six months ended June 30, 2025, respectively.

The increase was primarily driven by new participations in construction loans originated in the second quarter.

• Noninterest Income - Noninterest income totaled $6.1 million for the three months ended June 30, 2025 compared to $5.3 million for the same period of 2024.

The increase is primarily due to a $277 thousand increase in Fiduciary and wealth management, a $190 thousand increase in earnings from the cash surrender value of life insurance as a result of policies assumed during the William Penn acquisition, and a $219 thousand increase in other miscellaneous noninterest income, driven by a $146 thousand increase in insurance commissions and a $63 thousand increase in ATM surcharge fees.

Noninterest income totaled $11.4 million for the six months ended June 30, 2025 compared to $11.2 million for the same period of 2024.

The increase in noninterest income is primarily driven by a $285 thousand increase in fiduciary and wealth management, a $215 thousand increase in mortgage banking income, and a $180 thousand increase in earnings from the cash surrender value of life insurance as a result of policies assumed during the William Penn acquisition, offset by a $512 thousand decrease in other miscellaneous noninterest income, driven by a $1.9 million decrease in Bank-owned life insurance benefits received, partially offset by a $568 thousand increase in loan level swap fees.

MID PENN BANCORP, INC.

• Noninterest Expense - Noninterest expense totaled $47.8 million for the three months ended June 30, 2025, an increase of $19.6 million, or 69.4%, compared to noninterest expense of $28.2 million for the same period of 2024.

Merger and acquisition expenses increased $11.0 million for the three months ended June 30, 2025 compared to the same period in 2024.

This includes $10.5 million of merger related expenses related to the William Penn acquisition and $164 thousand related to the Charis Insurance Group acquisition.

Salaries and employee benefits increased $5.2 million for the three months ended June 30, 2025 compared to the same period in 2024.

The increase is attributable to (i) equity-based compensation expense for stock options and restricted stock awards totaling $2.0 million that were recognized during the second quarter of 2025.

(Future expected compensation expense related to these awards is approximately $753 thousand for the third quarter of 2025 and $2.2 million over the remaining vesting periods);

(ii) the retail staff additions at the twelve retail locations added through the William Penn acquisition;

and (iii) the retention of various William Penn team members through the completion of systems integration, which occurred on June 20, 2025.

Software licensing and utilization costs increased $1.1 million for the three months ended June 30, 2025 compared to the same period in 2024.

The increase reflects additional costs to (i) license the additional William Penn branches;

and (ii) upgrades to internal systems, including network storage, cybersecurity, and data security enhancements in response to the Bank's larger size and increased IT complexity.

in software licensing, an increase in merger and acquisition expenses, and a $504 thousand increase in occupancy expenses.

Noninterest expense totaled $78.4 million for the six months ended June 30, 2025 compared to $56.7 million for the same period of 2024.

Merger and acquisition expenses increased $11.3 million for the six months ended June 30, 2025, which includes $11.2 million of merger related expenses related to the William Penn acquisition and $164 thousand related to the Charis Insurance Group acquisition.

Salaries and benefits increased $6.1 million for the six months ended June 30, 2025, compared to the same period in 2024, largely driven by the same Q2 items noted above, including $2.0 million in equity compensation, staff additions from the William Penn acquisition, and retention of key personnel through integration.

Software licensing and utilization costs increased $1.5 million for the six months ended June 30, 2025, compared to the same period in 2024, reflecting the same Q2 drivers noted above.

These include the onboarding of newly acquired William Penn branches, investments in IT infrastructure and cybersecurity.

Occupancy expenses increased $796 thousand for the six months ended June 30, 2025, compared to the same period in 2024.

The increase was driven by the facility operating costs of the additional retail locations added through the William Penn acquisition.

• Liquidity - Current liquidity, including borrowing capacity, increased to $1.6 billion or 99.4% of uninsured and uncollateralized deposits, or approximately 29.3% of total deposits.

MID PENN BANCORP, INC.

Critical Accounting Estimates

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These estimates require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Management of the Corporation considers the accounting judgments relating to the allowance for credit losses and goodwill impairment to be the accounting area that requires the most subjective and complex judgments.

Management of the Corporation considers the accounting judgments relating to the allowance for credit losses, business combinations, and goodwill impairment to be the accounting area that requires the most subjective and complex judgments.

There have been no material changes to Mid Penn's critical accounting estimates as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024.

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For the Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

(Dollars in thousands) Average Balance Interest Yield/

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Long-term debt 23,417 252 4.32 % 23,870 262 4.41 %

Subordinated debt and trust preferred securities 45,662 424 3.77 % 46,275 424 3.69 %

Subordinated debt 45,264 495 4.39 % 46,122 424 3.70 %

Total Interest-bearing Liabilities 4,422,046 31,814 2.89 % 3,985,003 32,473 3.28 %

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MID PENN BANCORP, INC.

The following table summarizes the changes in interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the three months ended March 31, 2025 in comparison to the same period in 2024:

The following table summarizes the changes in interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the three months ended June 30, 2025 in comparison to the same period in 2024:

Three months ended

March 31, 2025 vs.

March 31, 2024

June 30, 2025 vs.

June 30, 2024

Increase (decrease)

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NET INTEREST INCOME $ 6,725 $ 2,715 $ 9,440

For the three months ended March 31, 2025, net interest income was $42.5 million compared to net interest income of $36.5 million for the three months ended March 31, 2024.

The tax-equivalent net interest margin for the three months ended March 31, 2025 was 3.37% compared to 2.97% for the first quarter of 2024, representing a 40 bp increase compared to the same period in 2024.

The yield on interest-earning assets increased to 5.65% for the quarter ended March 31, 2025, from 5.51% for the quarter ended March 31, 2024.

These increases were due to assets continuing to reprice at higher rates during 2024 and the first quarter of 2025, continued discipline on new loan pricing, and an increase in Fed Funds Sold.

Average investment securities increased $23.9 million and the yield on those investment securities increased 23 bps during the first quarter of 2025 compared to the first quarter of 2024, increasing interest income due to volume by $179 thousand, and increasing interest income due to rates by $302 thousand.

For the three months ended June 30, 2025, net interest income was $48.2 million compared to net interest income of $38.8 million for the three months ended June 30, 2024.

The tax-equivalent net interest margin for the three months ended June 30, 2025 was 3.44% compared to 3.12% for the second quarter of 2024, representing a 32 bp increase compared to the same period in 2024.

The yield on interest-earning assets remained relatively flat at 5.69% for the quarter ended June 30, 2025.

However we continue to see increases in interest income on loans and Federal Funds Sold due to higher balances from prior quarters.

Average investment securities increased $43.9 million and the yield on those investment securities increased 33 bps during the second quarter of 2025 compared to the second quarter of 2024, increasing interest income $320 thousand due to volume, and $522 thousand due to rates.

Average loans increased $371.3 million, and the yield on those loans increased 5 bps, contributing $5.7 million and $721 thousand, respectively, to the increase in interest income.

Interest expense decreased $2.5 million during the first quarter of 2025 compared to the first quarter of 2024.

The rate of interest-bearing liabilities decreased from 3.24% for the first quarter of 2024 to 2.95% for the first quarter of 2025.

The decrease in the rate was primarily a result of a decrease in short-term borrowings, a decrease in long term debt, and a

MID PENN BANCORP, INC.

decrease in time deposits.

Interest expense decreased $659 thousand during the second quarter of 2025 compared to the second quarter of 2024.

The rate of interest-bearing liabilities decreased from 3.28% for the second quarter of 2024 to 2.89% for the second quarter of 2025.

The decrease in the rate was primarily a result of a decrease in short-term borrowings, a decrease in long term debt, and a decrease in time deposits.

Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits.

MID PENN BANCORP, INC.

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

In addition, our net interest income may be impacted by further interest rate actions of the Federal Reserve’s FOMC.

MID PENN BANCORP, INC.

Average Balances, Income and Interest Rates on a Taxable-Equivalent Basis

For the Six Months Ended June 30,

(Dollars in thousands) Average Balance Interest Yield/

Rate Average Balance Interest Yield/

Interest Bearing Balances $ 22,039 $ 280 2.56 % $ 37,809 $ 750 3.99 %

Investment Securities:

Taxable 577,401 8,879 3.10 536,711 7,501 2.81

Tax-Exempt 68,476 692 2.04 75,219 747 2.00

Total Investment Securities 645,877 9,571 2.99 611,930 8,248 2.71

Federal Funds Sold 130,482 2,689 4.16 14,902 418 5.64

Loans, net of unearned income 4,592,890 139,006 6.10 4,323,594 129,332 6.02

Restricted Investment in Bank Stocks 7,022 218 6.26 17,752 682 7.73

Total Interest-earning Assets 5,398,310 151,764 5.67 5,005,987 139,430 5.60

Cash and Due from Banks 45,175 38,658

Other Assets 321,923 304,644

Total Assets $ 5,765,408 $ 5,349,289

LIABILITIES & SHAREHOLDERS' EQUITY:

Interest-bearing Demand $ 1,087,426 $ 9,635 1.79 % $ 935,596 $ 8,361 1.80 %

Money Market 1,102,641 15,291 2.80 892,525 12,600 2.84

Savings 284,428 124 0.09 284,662 124 0.09

Time 1,663,995 34,195 4.14 1,489,345 33,710 4.55

Total Interest-bearing Deposits 4,138,490 59,245 2.89 3,602,128 54,795 3.06

Short-term borrowings 16,106 376 4.71 278,869 7,770 5.60

Long-term debt 23,475 509 4.37 32,220 795 4.96

Subordinated debt 45,462 919 4.08 46,199 848 3.69

Total Interest-bearing Liabilities 4,223,533 61,049 2.91 3,959,416 64,208 3.26

Noninterest-bearing Demand 783,561 779,758

Other Liabilities 92,560 60,277

Shareholders' Equity 665,754 549,838

Total Liabilities & Shareholders' Equity $ 5,765,408 $ 5,349,289

Net Interest Income $ 90,715 $ 75,222

Taxable Equivalent Adjustment (1) 487 513

Net Interest Income (taxable-equivalent basis) $ 91,202 $ 75,735

Total Yield on Earning Assets 5.67 % 5.60 %

Rate on Supporting Liabilities 2.91 3.26

Average Interest Spread 2.75 2.34

Net Interest Margin (1) 3.41 3.04

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

(2) Annualized ratios

MID PENN BANCORP, INC.

The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the six months ended June 30, 2025 in comparison to the same period in 2024:

Six Months Ended

June 30, 2025 vs.

June 30, 2024

(Dollars in thousands) Increase (decrease)

Volume Rate Net

INTEREST INCOME:

Interest Bearing Balances $ (312) $ (158) $ (470)

Investment Securities:

Taxable 567 811 1,378

Tax-Exempt (67) 12 (55)

Total Investment Securities 500 823 1,323

Federal Funds Sold 3,233 (962) 2,271

Loans, net of unearned income 8,033 1,641 9,674

Restricted Investment Bank Stocks (411) (53) (464)

Total Interest Income 11,043 1,291 12,334

INTEREST EXPENSE:

Interest Bearing Deposits:

Interest Bearing Demand 1,353 (79) 1,274

Money Market 2,958 (267) 2,691

Savings — — —

Time 3,942 (3,457) 485

Total Interest-Bearing Deposits 8,253 (3,803) 4,450

Short-term Borrowings (6,134) (1,260) (7,394)

Long-term Debt (215) (71) (286)

Subordinated Debt (13) 84 71

Total Interest Expense 1,891 (5,050) (3,159)

NET INTEREST INCOME $ 9,152 $ 6,341 $ 15,493

For the six months ended June 30, 2025, net interest income was $90.7 million compared to net interest income of $75.2 million for the six months ended June 30, 2024.

FTE net interest income was $91.2 million for the six months ended June 30, 2025, an increase of $15.5 million, or 20.4%, compared to the same period of June 30, 2024.

Mid Penn’s FTE net interest margin for the six months ended June 30, 2025 was 3.41% compared to 3.04% for the same period of June 30, 2024, representing a 36 bp increase compared to the same period in 2024, primarily a result of a decrease in short-term borrowings, a decrease in long term debt, and a decrease in time deposits.

The higher yields and the growth in interest-earning assets contributed $1.3 million and $11.0 million, respectively, to the increase in interest income.

The yield on interest-earning assets increased 7 bps to 5.67% for the six months ended June 30, 2025 compared to 5.60% for the same period of 2024.

Average interest-earning assets increased $10.9 million, or 7.8%, during the six months ended June 30, 2025 compared to the same period of 2024.

Average investment securities increased $33.9 million, or 5.5%, and the yield on those investment securities increased 28 bps, contributing $500 thousand and $823 thousand, respectively, to interest income.

Average loans increased $269.3

MID PENN BANCORP, INC.

million, and the yield on those loans increased 9 bps contributing $8.0 million and $1.6 million, respectively, to the increase in interest income.

Interest expense decreased $3.2 million during the first six months of 2025 compared to the same period of 2024.

The rate of interest-bearing liabilities decreased from 3.26% for the first six months of 2024 to 2.91% for the first six months of 2025.

The decrease in the rate was driven by the Bank lowering rates in response to the Federal Reserve interest rate cuts in the third and fourth quarters of 2024..

The rate on average interest-bearing deposits decreased 35 bps, reducing interest expense by $3.8 million during the six months ended June 30, 2025 compared to the same period in 2024.

In addition, average short-term borrowings decreased to $16.1 million, deducting $7.4 million to interest expense during the six months ended June 30, 2025 compared to the same period in 2024.

Provision for Credit Losses - Loans

The provision for credit losses on loans was $321 thousand for the three months ended March 31, 2025 compared to a benefit of $619 thousand for the three months ended March 31, 2024.

The increase in provision was driven by an increase in loss factors across certain portfolios.

Noninterest Income

For the three months ended March 31, 2025, noninterest income totaled $5.2 million, a decrease of $598 thousand, or 10.2%, compared to noninterest income of $5.8 million for the three months ended March 31, 2024.

The provision for credit losses on loans was $2.2 million for the three months ended June 30, 2025 compared to $1.8 million for the three months ended June 30, 2024.

The increase in provision was driven by a $2.3 million reserve established for non-PCD (Purchased Credit Deteriorated) loans acquired in the William Penn acquisition, offset by a decrease in concentration risk across the non owner-occupied commercial real estate and multifamily portfolios.

The provision for credit losses on loans was $2.6 million for the six months ended June 30, 2025 compared to a provision of $1.2 million for the same period in 2024.

The increase in provision was primarily driven by a $2.3 million reserve established for non-PCD loans acquired in the William Penn acquisition, offset by an $866 thousand decrease in reserve required for individually analyzed loans.

For the three months ended June 30, 2025, noninterest income totaled $6.1 million, an increase of $814 thousand, or 15.3%, compared to noninterest income of $5.3 million for the three months ended June 30, 2024.

The increase is primarily due to a $277 thousand increase in fiduciary and wealth management, a $190 thousand increase in earnings from the cash surrender value of life insurance as a result of policies assumed during the William Penn acquisition, and a $219 thousand increase in other miscellaneous noninterest income, driven by a $146 thousand increase in insurance commissions and a $63 thousand increase in ATM surcharge fees.

The following table and explanations that follow provide additional analysis of noninterest income:

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in Thousands) 2025 2024 $ Variance % Variance

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Total $ 6,143 $ 5,329 $ 814 15.3 %

MID PENN BANCORP, INC.

Six Months Ended June 30,

(Dollars in Thousands) 2025 2024 $ Variance % Variance

Fiduciary and wealth management $ 2,546 $ 2,261 $ 285 12.6 %

ATM debit card interchange 1,877 1,918 (41) (2.1)

Service charges on deposits 1,214 1,048 166 15.8

Mortgage banking 1,267 1,052 215 20.4

Mortgage hedging (16) — (16) N/M

Net gain on sales of SBA loans 120 181 (61) (33.7)

Earnings from cash surrender value of life insurance 765 585 180 30.8

Other 3,609 4,121 (512) (12.4)

Total $ 11,382 $ 11,166 $ 216 1.9 %

For the six months ended June 30, 2025, noninterest income totaled $11.4 million, an increase of $216 thousand, or 1.9%, compared to noninterest income of $11.2 million for the six months ended June 30, 2024.

Noninterest Expense

For the three months ended March 31, 2025, noninterest expense totaled $30.6 million, an increase of $2.1 million, or 7.4%, compared to noninterest expense of $28.5 million for the same period in 2024.

For the three months ended June 30, 2025, noninterest expense totaled $47.8 million, an increase of $19.6 million, or 69.4%, compared to noninterest expense of $28.2 million for the same period in 2024.

Merger and acquisition expenses increased $11.0 million, which includes $10.5 million of merger related expenses related to the William Penn acquisition and $164 thousand related to the Charis Insurance Group acquisition.

Salaries and benefits increased $5.2 million for the three months ended June 30, 2025 compared to the same period in 2024.

The increase is attributable to (i) equity-based compensation expense for stock options and restricted stock awards totaling $2.0 million that were recognized during the second quarter of 2025.

(Future expected compensation expense related to these awards is approximately $753 thousand for the third quarter of 2025 and $2.2 million over the remaining vesting periods);

(ii) the retail staff additions at the twelve retail locations added through the William Penn acquisition;

and (iii) the retention of various William Penn team members through the completion of systems integration, which occurred on June 20, 2025.

Software licensing and utilization costs increased $1.1 million compared to the same period in 2024.

The increase reflects additional costs to (i) license the additional William Penn branches;

and (ii) upgrades to internal systems, including network storage, cybersecurity, and data security enhancements in response to the Bank's larger size and increased IT complexity.

MID PENN BANCORP, INC.

The following table and explanations that follow provide additional analysis of noninterest expense:

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in Thousands) 2025 2024 $ Variance % Variance

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Total Noninterest Expense $ 47,798 $ 28,224 $ 19,574 69.4 %

The provision for income taxes was $3.1 million for the three months ended March 31, 2025 compared to $2.6 million for the same period in 2024.

The provision for income taxes for the three months ended March 31, 2025 reflects a combined Federal and State effective tax rate of 18.2% and 17.5%, for the three months ended March 31, 2025 and March 31, 2024, respectively.

For the six months ended June 30, 2025, noninterest expense totaled $78.4 million, an increase of $21.7 million, or 38.2%, compared to noninterest expense of $56.7 million for the six months ended June 30, 2024.

Software licensing and utilization costs increased $1.5 million for the six months ended June 30, 2025, compared to the same period in 2024, reflecting the same Q2 drivers noted above.

These include the onboarding of newly acquired William Penn branches, investments in IT infrastructure and cybersecurity.

Occupancy expenses increased $796 thousand for the six months ended June 30, 2025, compared to the same period in 2024.

The increase was driven by the facility operating costs of the additional retail locations added through the William Penn acquisition.

MID PENN BANCORP, INC.

Six Months Ended June 30,

(Dollars in Thousands) 2025 2024 $ Variance % Variance

Salaries and employee benefits $ 37,062 $ 30,995 $ 6,067 19.6 %

Software licensing and utilization 5,846 4,328 1,518 35.1

Occupancy expense, net 4,639 3,843 796 20.7

Equipment expense 2,342 2,509 (167) (6.7)

Shares tax 1,525 1,121 404 36.0

Legal and professional fees 1,819 1,687 132 7.8

ATM/card processing 1,354 1,044 310 29.7

Intangible amortization 1,172 853 319 37.4

FDIC Assessment 1,984 2,177 (193) (8.9)

Gain on sale of foreclosed assets, net (28) 42 (70) (166.7)

Merger and acquisition expense 11,325 — 11,325 N/M

Other expenses 9,400 8,145 1,255 15.4

Total Noninterest Expense $ 78,440 $ 56,744 $ 21,696 38.2 %

The benefit for income taxes was $480 thousand for the three months ended June 30, 2025 compared to a provision of $2.5 million for the same period in 2024.

The benefit for income taxes for the six months ended June 30, 2025 reflects a combined Federal and State effective tax rate of 12.2% and 17.5%, for the six months ended June 30, 2025 and June 30, 2024, respectively.

Generally, Mid Penn’s effective tax rate is below the federal statutory rate due to earnings on tax-exempt loans, investments, and earnings from the cash surrender value of life insurance, as well as the impact of federal income tax credits, including those awarded from Mid Penn’s low-income housing investments.

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Financial Condition

Mid Penn’s total assets were $5.5 billion as of March 31, 2025, reflecting an increase of $75.1 million, or 1.4%, compared to total assets of $5.5 billion as of December 31, 2024.

The increase was primarily driven by organic loan growth, and an increase in Fed Funds Sold.

Mid Penn’s total assets were $6.4 billion as of June 30, 2025, reflecting an increase of $883.6 million, or 16.2%, compared to total assets of $5.5 billion as of December 31, 2024.

The increase was primarily driven by an increase in loans as a result of the William Penn acquisition, an increase in available for sale investment securities, and an increase in Fed Funds Sold.

Investment Securities

Mid Penn’s investment portfolio is utilized primarily to support overall liquidity and interest rate risk management, to provide collateral supporting pledging requirements for public funds on deposit, and to generate additional interest income within reasonable risk parameters.

The carrying value of total investment securities as of March 31, 2025 were $633.6 million compared to $642.9 million as of December 31, 2024.

The carrying value of total investment securities as of June 30, 2025 were $768.8 million compared to $642.9 million as of December 31, 2024.

Mid Penn does not intend to grow the investment portfolio beyond levels necessary to support pledging requirements.

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Thru Ten Years After Ten

As of March 31, 2025 Amount Weighted Average Yield Amount Weighted Average Yield Amount Weighted Average Yield Amount Weighted Average Yield

As of June 30, 2025 Amount Weighted Average Yield Amount Weighted Average Yield Amount Weighted Average Yield Amount Weighted Average Yield

Available for sale securities, at fair value:

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Loans, net of unearned income

Total loans, net of unearned income, as of March 31, 2025 were $4.5 billion compared to $4.4 billion as of December 31, 2024.

The growth of $48.1 million, or 1.1%, since December 31, 2024 was primarily the result of organic loan growth across the commercial real estate and commercial and industrial portfolios, offset by decreases in residential and other construction loan portfolios.

Total loans, net of unearned income, as of June 30, 2025 were $4.8 billion compared to $4.4 billion as of December 31, 2024.

The growth of $389.8 million, or 8.8%, since December 31, 2024 was primarily the result of the addition of William Penn acquisition loans of $405.3 million.

MID PENN BANCORP, INC.

March 31, 2025 December 31, 2024 Change in Balance

June 30, 2025 December 31, 2024 Change in Balance

(Dollars in thousands) Balance % of Total Loans Balance % of Total Loans $ %

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$ 4,832,898 100.0 % $ 4,443,070 100.0 % $ 389,828 8.8 %

The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area of the Pennsylvania counties of Berks, Blair, Bucks, Chester, Clearfield, Cumberland, Dauphin, Delaware, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with Camden, Middlesex and Monmouth counties of New Jersey.

The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area of the Pennsylvania counties of Berks, Blair, Bucks, Chester, Clearfield, Cumberland, Dauphin, Delaware, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Philadelphia, Schuylkill and Westmoreland, along with Burlington, Camden, Mercer, Middlesex and Monmouth counties of New Jersey.

Commercial real estate, construction, and land development loans are collateralized mainly by mortgages on the income-producing real estate or land involved.

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

(Dollars in thousands) March 31, 2025 December 31, 2024

(Dollars in thousands) June 30, 2025 December 31, 2024

Commercial Real Estate Balance % of portfolio Weighted Average LTV (2)

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(In Thousands)

As of March 31, 2025 One Year

As of June 30, 2025 One Year

and Less One to

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Three Months Ended

June 30, Six Months Ended

(Dollars in thousands) 2025 2024 2025 2024

Balance, beginning of period $ 35,838 $ 33,524 $ 35,514 $ 34,187

Purchase credit deteriorated loans 343 — 343 —

Loans charged off during period (909) (62) (924) (112)

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Provision/(benefit) for credit losses - loans (1)

2,245 1,782 2,566 1,163

Balance, end of period $ 37,615 $ 35,288 $ 37,615 $ 35,288

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Ratio of ACL - loans to net loans at end of period 0.78 % 0.81 % 0.78 % 0.81 %

(1) Includes a $2.3 million initial provision related to non-PCD loans acquired in the William Penn acquisition in the second quarter of 2025.

MID PENN BANCORP, INC.

The following table presents the change in nonperforming asset categories as of March 31, 2025, December 31, 2024, and March 31, 2024.

(Dollars in thousands) March 31, 2025 December 31, 2024 March 31, 2024

The following table presents the change in nonperforming asset categories as of June 30, 2025, December 31, 2024, and June 30, 2024.

(Dollars in thousands) June 30, 2025 December 31, 2024 June 30, 2024

Non-performing Assets:

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Ratio of ACL-loans to non-performing loans 206.49 % 157.07 % 352.92 %

Total nonperforming assets were $25.4 million at March 31, 2025, an increase compared to nonperforming assets of $22.7 million at December 31, 2024.

The increase during the first quarter of 2025 is primarily related to the addition of three commercial loans with a combined balance of $7.0 million being placed on nonaccrual in the first quarter of 2025, offset by the payoff of two commercial loans with a combined balance of $3.0 million in the first quarter of 2025.

Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.50% at March 31, 2025, compared to 0.52% and 0.38% as of December 31, 2024 and March 31, 2024.

Total nonperforming assets were $28.0 million at June 30, 2025, an increase compared to nonperforming assets of $22.7 million at December 31, 2024.

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

a triggering event.

At March 31, 2025, Mid Penn had goodwill of $128.2 million and Mid Penn's stock continues to trade below book value, warranting additional analysis.

At June 30, 2025, Mid Penn had goodwill of $135.5 million and Mid Penn's stock continues to trade below book value, warranting additional analysis.

Management has reviewed actual earnings in relation to forecasted earnings, liquidity levels, changes in deposit balances, and credit quality, among others.

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Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2025.

Total deposits increased $42.3 million, or 0.9%, from $4.7 billion on December 31, 2024, to $4.7 billion at March 31, 2025.

The growth was driven by a $55.5 million increase in interest bearing accounts, and a $29.1 million increase in noninterest bearing accounts, offset by a $42.3 million decrease in time deposits.

Total deposits increased $759.7 million, or 16.2%, from $4.7 billion on December 31, 2024, to $5.4 billion at June 30, 2025.

The growth was driven by a $453.0 million increase in interest bearing accounts, and a $97.9 million increase in noninterest bearing accounts, offset by a $208.8 million increase in time deposits.

These increases were partially driven by William Penn acquisition deposits of $619.8 million

MID PENN BANCORP, INC.

Average balances and average interest rates applicable to deposits by major classification:

March 31, 2025 December 31, 2024 Change

June 30, 2025 December 31, 2024 Change

(Dollars in thousands) Balance Rate Balance Rate $ %

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$ 4,922,051 2.43 % $ 4,513,008 2.58 % $ 409,043 9.06 %

As of March 31, 2025, uninsured deposits were approximately $1.5 billion compared to $1.4 billion as of December 31, 2024.

The maturities of the uninsured time deposits as of March 31, 2025 were as follows:

As of June 30, 2025, uninsured deposits were approximately $1.6 billion compared to $1.4 billion as of December 31, 2024.

The maturities of the uninsured time deposits as of June 30, 2025 were as follows:

(In thousands) 2025

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Over twelve months 847

Total short-term borrowings increased $23.0 million, or 1150.0%, from December 31, 2024.

The increase in short-term borrowings was driven by our objective to maintain a strong unencumbered liquid assets ratio, ensuring the availability of high-quality liquidity to meet potential near-term obligations.

Short term FHLB borrowings increased $25.0 million, offset by a decrease of $2.0 million in FHLB overnight borrowings.

Total long-term borrowings were $23.5 million at March 31, 2025, a decrease of $114 thousand from December 31, 2024.

Total short-term borrowings decreased $2.0 million, or 100.0%, from December 31, 2024.

The decrease in short-term borrowings was driven by our objective to maintain a strong unencumbered liquid assets ratio, ensuring the availability of high-quality liquidity to meet potential near-term obligations.

Total long-term borrowings were $23.4 million at June 30, 2025, a decrease of $229 thousand from December 31, 2024.

Mid Penn’s objective is to maintain adequate liquidity to meet funding needs at a reasonable cost and to provide contingency plans to meet unanticipated funding needs or a loss of funding sources, while minimizing interest rate risk.

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The analysis provides a summary of the current liquidity measurements, projections, and future liquidity positions given various levels of liquidity stress.

Management also maintains a detailed Contingency Funding Plan

Management also maintains a detailed Contingency Funding Plan designed to respond to overall stress in the financial condition of the banking industry or a prospective liquidity problem specific to Mid Penn.

MID PENN BANCORP, INC.

designed to respond to overall stress in the financial condition of the banking industry or a prospective liquidity problem specific to Mid Penn.

The Consolidated Statements of Cash Flows provide additional information.

Mid Penn’s operating activities during the three months ended March 31, 2025 provided $11.5 million of cash, mainly due to net income.

Cash used in investing activities during the three months ended March 31, 2025 was $36.3 million, mainly the result of the net increase in loans.

Cash provided by financing activities during the three months ended March 31, 2025 totaled $61.5 million, primarily the result of an increase in net deposits.

Mid Penn’s operating activities during the six months ended June 30, 2025 provided $40.5 million of cash, mainly due to net income.

Cash used in investing activities during the six months ended June 30, 2025 was $102.8 million, mainly the result of the net increase in loans.

Cash provided by financing activities during the six months ended June 30, 2025 totaled $123.0 million, primarily the result of an increase in net deposits.

Regulatory Capital

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The minimum capital to risk-weighted assets requirements, including the capital conservation buffers, which became effective for Mid Penn and the Bank on January 1, 2016, are illustrated below.

At March 31, 2025, regulatory capital ratios for both Mid Penn and the Bank met the definition of a "well-capitalized" institution under the regulatory framework for prompt corrective action and exceeded the minimum capital requirements under Basel III.

At June 30, 2025, regulatory capital ratios for both Mid Penn and the Bank met the definition of a "well-capitalized" institution under the regulatory framework for prompt corrective action and exceeded the minimum capital requirements under Basel III.

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

March 31, 2025 December 31, 2024 Regulatory Minimum for Capital Adequacy Fully Phased-In, with Capital Conversation Buffers

June 30, 2025 December 31, 2024 Regulatory Minimum for Capital Adequacy Fully Phased-In, with Capital Conversation Buffers

Total Risk-Based Capital (to Risk-Weighted Assets) 14.40 % 13.98 % 10.50 % 4.00 %

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Tier I Leverage Capital (to Average Assets) 10.63 9.98 4.00 10.50

As of March 31, 2025 and December 31, 2024, Mid Penn and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized".

As of June 30, 2025 and December 31, 2024, Mid Penn and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized".

However, future changes in regulations could increase capital requirements and may have an adverse effect on capital resources.

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Accordingly, capital management practices have been, and will continue to be, of paramount importance to Mid Penn.

Shareholders’ equity increased by $12.9 million, or 2.0%, from $655.0 million as of December 31, 2024 to $667.9 million as of March 31, 2025, primarily due to earnings of $13.7 million.

Shareholders’ equity increased by $120.7 million, or 18.4%, from $655.0 million as of December 31, 2024 to $775.7 million as of June 30, 2025, primarily due to common stock issued to William Penn shareholders in the amount of $99.7 million and year to date earnings of $18.5 million.

MID PENN BANCORP, INC.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis