MID PENN BANCORP INC 10-Q

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 and our Annual Report on Form 10-K for the year ended December 31, 2024. Caution About Forward-Looking Statements Forward-looking statements involve risks, uncertainties and assumptions. Although Mid Penn generally does not make forward-looking statements unless Mid Penn’s management believes its management has a reasonable basis for doing so, Mid Penn cannot guarantee the accuracy of any forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements due to a number of uncertainties and risks, including the risks described in this Quarterly Report on Form 10-Q, the 2024 Annual Report, and other unforeseen risks. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available by us on Mid Penn’s website or otherwise, and Mid Penn undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. Certain of the matters discussed in this document or in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Exchange Act. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results, 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. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements: • the effects of future economic conditions on Mid Penn, the Bank, our nonbank subsidiaries, and our markets and customers; • governmental monetary and fiscal policies, as well as legislative and regulatory changes; • future actions or inactions of the United States government, including a failure to increase the government debt limit or a prolonged shutdown of the federal government; • business or economic disruption from national or global epidemic or pandemic events; • the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, the value of investment securities, and interest rate protection agreements; • the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; • an increase in the Pennsylvania Bank Shares Tax to which the Bank’s capital stock is currently subject, or imposition of any additional taxes on the capital stock of Mid Penn or the Bank; • impacts of the capital and liquidity requirements imposed by bank regulatory agencies; • the effect of changes in accounting policies and practices, as may be adopted by regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, the SEC, and other accounting and reporting rule making authorities; • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; • changes in technology; 51 Table of Contents MID PENN BANCORP, INC. • our ability to implement business strategies, including our acquisition strategy; • our ability to successfully expand our franchise, including through acquisitions or establishing new offices at favorable prices; • our ability to successfully integrate any banks, companies, offices, assets, liabilities, customers, systems and management personnel we acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames; • potential goodwill impairment charges, or future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames; • our ability to attract and retain qualified management and personnel; • results of regulatory examination and supervision processes; • the possibility of increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the Merger; • potential exposure to unknown or contingent risks and liabilities we have acquired, or may acquire, or target for acquisition, including in connection with the Merger; • the failure of assumptions underlying the establishment of reserves for loan and lease losses, the assessment of potential impairment of investment securities, and estimations of values of collateral and various financial assets and liabilities; • our ability to maintain compliance with the listing rules of The NASDAQ Stock Market; • our ability to maintain the value and image of our brand and protect our intellectual property rights; • volatility in the securities markets; • disruptions due to flooding, severe weather, or other natural disasters or acts of God; • acts of war, terrorism, or global military conflict; • supply chain disruption; • the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent 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. 52 Table of Contents MID PENN BANCORP, INC. Overview Mid Penn is a financial holding company, which generates the majority of its revenues through net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the net interest margin, which is FTE net interest income as a percentage of average interest-earning assets. Mid Penn also generates revenue through fees earned on the various services and products offered to its customers and through gains on sales of assets, such as loans, investments and properties. Offsetting these revenue sources are provisions for credit losses, non-interest expenses and income taxes. The following table presents a summary of Mid Penn's earnings and selected performance ratios: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net Income $ 4,762 $ 11,771 $ 18,504 $ 23,904 Diluted EPS $ 0.22 $ 0.71 $ 0.89 $ 1.44 Dividends Declared $ 0.20 $ 0.20 $ 0.40 $ 0.40 Return on average assets (2) 0.32 % 0.88 % 0.65 % 1.79 % Return on average equity (2) 2.85 % 8.55 % 5.60 % 17.44 % Net interest margin (1)(2) 3.44 % 3.12 % 3.41 % 3.04 % Non-performing assets to total assets 0.44 % 0.19 % 0.44 % 0.19 % 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. See also the "Net Interest Income" section. (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 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 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 53 Table of Contents MID PENN BANCORP, INC. 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. 54 Table of Contents 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. 55 Table of Contents MID PENN BANCORP, INC. Critical Accounting Estimates The 2024 Annual Report on Form 10-K includes a summary of critical accounting estimates that Mid Penn considers to be most important to the presentation of its financial condition and results of operations. 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, 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. Results of Operations Net Interest Income Net interest income, Mid Penn’s primary source of revenue, is the amount by which interest income on loans and investments exceeds interest incurred on deposits and borrowings. The amount of net interest income is affected by changes in interest rates and changes in the volume and mix of interest-sensitive assets and liabilities. Net interest income is also shown on a taxable-equivalent basis in total. Income from tax-exempt assets, primarily loans to or securities issued by state and local governments, is adjusted by an amount equivalent to the federal income taxes which would have been paid if the income received on these assets was taxable at the statutory rate of 21% for the periods presented. 56 Table of Contents MID PENN BANCORP, INC. The following table includes average balances, amounts, and yields of interest income and rates of expense, interest rate spread, and net interest margin for the periods presented: Average Balances, Income and Interest Rates For the Three Months Ended June 30, 2025 June 30, 2024 (Dollars in thousands) Average Balance Interest Yield/ Rate (2) Average Balance Interest Yield/ Rate (2) ASSETS: Interest Bearing Balances $ 23,271 $ 142 2.45 % $ 35,618 $ 347 3.92 % Investment Securities: Taxable 584,919 4,570 3.13 % 533,748 3,701 2.79 % Tax-Exempt 67,186 344 2.05 % 74,425 371 2.00 % Total Investment Securities 652,105 4,914 3.02 % 608,173 4,072 2.69 % Federal Funds Sold 236,037 2,428 4.13 % 19,432 282 5.84 % Loans, net of unearned income 4,724,638 72,469 6.15 % 4,353,360 66,096 6.11 % Restricted Investment in Bank Stocks 6,945 67 3.87 % 16,066 442 11.07 % Total Interest-earning Assets 5,642,996 80,020 5.69 % 5,032,649 71,239 5.69 % Cash and Due from Banks 50,376 39,053 Other Assets 342,673 307,195 Total Assets $ 6,036,045 $ 5,378,897 LIABILITIES & SHAREHOLDERS' EQUITY: Interest-bearing Demand $ 1,123,130 $ 4,954 1.77 % $ 972,852 $ 4,477 1.85 % Money Market 1,179,756 8,350 2.84 % 908,807 6,632 2.94 % Savings 307,634 70 0.09 % 281,560 52 0.07 % Time 1,735,427 17,607 4.07 % 1,510,079 17,302 4.61 % Total Interest-bearing Deposits 4,345,947 30,981 2.86 % 3,673,298 28,463 3.12 % Short-term borrowings 7,418 86 4.65 % 241,713 3,324 5.53 % Long-term debt 23,417 252 4.32 % 23,870 262 4.41 % 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 % Noninterest-bearing Demand 813,807 778,380 Other Liabilities 129,701 61,839 Shareholders' Equity 670,491 553,675 Total Liabilities & Shareholders' Equity $ 6,036,045 $ 5,378,897 Net Interest Income $ 48,206 $ 38,766 Taxable Equivalent Adjustment (1) 245 253 Net Interest Income (taxable-equivalent basis) $ 48,451 $ 39,019 Total Yield on Earning Assets 5.69 % 5.69 % Rate on Supporting Liabilities 2.89 % 3.28 % Average Interest Spread 2.80 % 2.41 % Net Interest Margin (1) 3.44 % 3.12 % (1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances. (2) Annualized ratios 57 Table of Contents 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 June 30, 2025 in comparison to the same period in 2024: Three months ended June 30, 2025 vs. June 30, 2024 Increase (decrease) (Dollars in thousands) Volume Rate Net INTEREST INCOME: Interest Bearing Balances $ (121) $ (84) $ (205) Investment Securities: Taxable 356 513 869 Tax-Exempt (36) 9 (27) Total Investment Securities 320 522 842 Federal Funds Sold 3,152 (1,006) 2,146 Loans 5,652 721 6,373 Restricted Investment Bank Stocks (252) (123) (375) Total Interest Income 8,751 30 8,781 INTEREST EXPENSE: Interest Bearing Deposits: Interest Bearing Demand 693 (216) 477 Money Market 1,983 (265) 1,718 Savings 5 13 18 Time 2,589 (2,284) 305 Total Interest-Bearing Deposits 5,270 (2,752) 2,518 Short-term Borrowings (3,231) (7) (3,238) Long-term Debt (5) (5) (10) Subordinated Debt (8) 79 71 Total Interest Expense 2,026 (2,685) (659) NET INTEREST INCOME $ 6,725 $ 2,715 $ 9,440 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 $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. 58 Table of Contents 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. 59 Table of Contents MID PENN BANCORP, INC. Average Balances, Income and Interest Rates on a Taxable-Equivalent Basis For the Six Months Ended June 30, 2025 2024 (Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate ASSETS: 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 60 Table of Contents 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 61 Table of Contents 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 $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 June 30, (Dollars in Thousands) 2025 2024 $ Variance % Variance Fiduciary and wealth management $ 1,406 $ 1,129 $ 277 24.5 % ATM debit card interchange 958 973 (15) (1.5) Service charges on deposits 652 539 113 21.0 Mortgage banking 676 628 48 7.6 Mortgage hedging (7) — (7) 100.0 Net gain on sales of SBA loans 63 74 (11) (14.9) Earnings from cash surrender value of life insurance 491 301 190 63.1 Other 1,904 1,685 219 13.0 Total $ 6,143 $ 5,329 $ 814 15.3 % 62 Table of Contents 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. 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. Noninterest Expense 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. 63 Table of Contents MID PENN BANCORP, INC. The following table and explanations that follow provide additional analysis of noninterest expense: Three Months Ended June 30, (Dollars in Thousands) 2025 2024 $ Variance % Variance Salaries and employee benefits $ 20,753 $ 15,533 $ 5,220 33.6 % Software licensing and utilization 3,272 2,208 1,064 48.2 Occupancy expense, net 2,365 1,861 504 27.1 Equipment expense 1,248 1,287 (39) (3.0) Shares tax 606 124 482 388.7 Legal and professional fees 993 689 304 44.1 ATM/card processing 621 510 111 21.8 Intangible amortization 744 425 319 75.1 FDIC Assessment 994 1,232 (238) (19.3) Gain on sale of foreclosed assets, net — 42 (42) (100.0) Merger and acquisition expense 11,011 — 11,011 100.0 Other expenses 5,191 4,313 878 20.4 Total Noninterest Expense $ 47,798 $ 28,224 $ 19,574 69.4 % 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. 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. 64 Table of Contents 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 % Income Taxes 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. The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn currently anticipates that future earnings will be adequate to fully realize the currently recorded deferred tax assets. Financial Condition Mid Penn’s total assets were $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 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. 65 Table of Contents MID PENN BANCORP, INC. The following table presents the expected maturities of the investment portfolio and the weighted average yields (calculated based on historical cost): Maturing (In Thousands) One Year and Less After One Year thru Five Years After Five Years Thru Ten Years After Ten Years As of 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: U.S. Treasury and U.S. government agencies $ 996 3.49 % $ 14,509 2.39 % $ 1,876 3.30 % $ — — % Mortgage-backed U.S. government agencies — — — — 5,172 2.52 338,873 3.71 State and political subdivision obligations — — — — 3,038 2.49 629 2.23 Corporate debt securities 5,947 5.15 6,480 4.31 27,225 4.42 — — $ 6,943 4.28 % $ 20,989 3.05 % $ 37,311 3.84 % $ 339,502 3.71 % Held to maturity securities, at amortized cost: U.S. Treasury and U.S. government agencies $ 9,095 3.10 % $ 103,928 1.84 % $ 120,487 2.09 % $ — — % Mortgage-backed U.S. government agencies 17 3.98 2,229 2.96 4,302 2.76 28,360 2.00 State and political subdivision obligations 10,407 2.44 33,398 2.41 15,764 2.36 13,596 2.54 Corporate debt securities 4,000 3.90 9,446 3.92 9,000 3.96 — — $ 23,519 2.79 % $ 149,001 2.08 % $ 149,553 2.33 % $ 41,956 2.18 % Loans, net of unearned income 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. 66 Table of Contents MID PENN BANCORP, INC. June 30, 2025 December 31, 2024 Change in Balance (Dollars in thousands) Balance % of Total Loans Balance % of Total Loans $ % Commercial real estate CRE Nonowner Occupied $ 1,342,512 27.8 % $ 1,251,010 28.1 % $ 91,502 7.3 % CRE Owner Occupied 708,782 14.7 624,007 14.0 84,775 13.6 Multifamily 392,802 8.1 412,900 9.3 (20,098) (4.9) Farmland 227,953 4.7 224,709 5.1 3,244 1.4 Total Commercial Real Estate 2,672,049 55.3 2,512,626 56.5 159,423 6.3 Commercial and industrial 730,560 15.1 705,392 15.9 25,168 3.6 Construction Residential Construction 96,503 2.0 99,399 2.2 (2,896) (2.9) Other Construction 322,642 6.7 326,171 7.3 (3,529) (1.1) Total Construction 419,145 8.7 425,570 9.5 (6,425) (1.5) Residential mortgage 1-4 Family 1st Lien 412,000 8.5 313,592 7.1 98,408 31.4 1-4 Family Rental 417,755 8.6 336,636 7.6 81,119 24.1 HELOC and Junior Liens 173,123 3.6 140,392 3.2 32,731 23.3 Total Residential Mortgage 1,002,878 20.7 790,620 17.9 212,258 26.8 Consumer 8,266 0.2 8,862 0.2 (596) (6.7) $ 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, 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. Commercial, industrial, and agricultural loans are primarily made to business entities and may be secured by business assets, including commercial real estate, or may be unsecured. Residential real estate loans are secured by liens on the residential property. Consumer loans include installment loans, lines of credit and home equity loans. The Bank has no significant concentration of credit to any one borrower. The Bank’s highest concentration of credit by loan type is in commercial real estate. Credit risk is managed through portfolio diversification, underwriting policies and procedures, and loan monitoring practices. Lenders are provided with detailed underwriting policies for all types of credit risks accepted by the Bank and must obtain appropriate internal approvals for credit extensions. The Bank also maintains strict documentation requirements and robust credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible, so any exposures that are discovered might be mitigated or potential losses reduced. The Bank generally secures its loans with real estate, with such collateral values dependent and subject to change based on real estate market conditions within its market area. 67 Table of Contents MID PENN BANCORP, INC. The following table presents the commercial real estate portfolio by property type along with the weighted average loan to value: (Dollars in thousands) June 30, 2025 December 31, 2024 Commercial Real Estate Balance % of portfolio Weighted Average LTV (2) Balance % of portfolio Weighted Average LTV (2) Owner Occupied (1) $ 708,782 26.5 % N/A $ 624,007 24.8 % N/A Farmland (1) 227,953 8.5 N/A 224,709 8.9 N/A Multifamily 392,802 14.7 57.2 412,900 16.4 63.8 Non Owner Occupied Retail 424,082 15.9 53.2 426,171 17.0 60.3 Office 273,019 10.2 63.2 296,468 11.8 63.2 Industrial 183,670 6.9 48.3 161,683 6.4 53.2 Hospitality 161,764 6.1 44.8 152,060 6.1 51.2 Flex 40,442 1.5 40.8 44,187 1.8 44.2 Mobile Home Park 16,175 0.6 58.8 17,748 0.7 67.7 Health Care 13,110 0.5 60.5 14,511 0.6 55.3 Other Property Types 230,250 8.6 57.3 138,182 5.5 64.1 Total Commercial Real Estate $ 2,672,049 100.0 % 54.7 % $ 2,512,626 100.0 % 59.9 % (1) LTV not available for Owner Occupied and Farmland properties. (2) Weighted average Loan to Value is calculated based on estimated current market values of the properties. Maturity distribution by contractual maturity date and rate sensitivity information related to the loan portfolio is reflected in the table below: (In Thousands) As of June 30, 2025 One Year and Less One to Five Years Five to Fifteen Years Over Fifteen Years Total Commercial real estate CRE Nonowner Occupied $ 70,507 $ 482,504 $ 499,459 $ 290,042 $ 1,342,512 CRE Owner Occupied 21,956 109,515 295,103 282,208 708,782 Multifamily 48,722 136,316 100,484 107,280 392,802 Farmland 545 8,819 66,559 152,030 227,953 Total Commercial real estate 141,730 737,154 961,605 831,560 2,672,049 Commercial and industrial 28,051 339,962 118,852 243,695 730,560 Construction Residential Construction 45,081 39,882 10,732 808 96,503 Other Construction 130,623 158,860 19,545 13,614 322,642 Total Construction 175,704 198,742 30,277 14,422 419,145 Residential mortgage 1-4 Family 1st Lien 5,292 32,875 94,413 279,420 412,000 1-4 Family Rental 39,754 31,431 146,643 199,927 417,755 HELOC and Junior Liens 12,923 15,668 44,169 100,363 173,123 Total Residential Mortgage 57,969 79,974 285,225 579,710 1,002,878 Consumer 2,169 1,613 1,530 2,954 8,266 Total loans held in portfolio $ 405,623 $ 1,357,445 $ 1,397,489 $ 1,672,341 $ 4,832,898 68 Table of Contents MID PENN BANCORP, INC. Fixed interest rates: Commercial real estate CRE Nonowner Occupied $ 50,357 $ 230,641 $ 55,451 $ 9,245 $ 345,694 CRE Owner Occupied 14,458 69,889 31,008 3,366 118,721 Multifamily 39,733 80,167 8,398 1,314 129,612 Farmland 532 7,065 7,444 56 15,097 Total Commercial real estate 105,080 387,762 102,301 13,981 609,124 Commercial and industrial 7,005 195,207 22,025 7,748 231,985 Construction Residential Construction 16,203 10,646 3 193 27,045 Other Construction 21,197 23,272 751 792 46,012 Total Construction 37,400 33,918 754 985 73,057 Residential mortgage 1-4 Family 1st Lien 5,073 22,548 70,095 203,277 300,993 1-4 Family Rental 34,633 21,185 15,020 7,419 78,257 HELOC and Junior Liens 1,139 7,148 28,615 3,194 40,096 Total Residential Mortgage 40,845 50,881 113,730 213,890 419,346 Consumer 1,359 1,606 1,390 988 5,343 Total fixed interest rates $ 191,689 $ 669,374 $ 240,200 $ 237,592 $ 1,338,855 Floating interest rates: Commercial real estate CRE Nonowner Occupied $ 20,152 $ 251,862 $ 444,007 $ 280,797 $ 996,818 CRE Owner Occupied 7,498 39,626 264,095 278,842 590,061 Multifamily 8,989 56,149 92,086 105,966 263,190 Farmland 13 1,754 59,115 151,974 212,856 Total Commercial real estate 36,652 349,391 859,303 817,579 2,062,925 Commercial and industrial 21,046 144,755 96,827 235,947 498,575 Construction Residential Construction 28,877 29,238 10,729 614 69,458 Other Construction 109,426 135,588 18,794 12,822 276,630 Total Construction 138,303 164,826 29,523 13,436 346,088 Residential mortgage 1-4 Family 1st Lien 219 10,327 24,318 76,143 111,007 1-4 Family Rental 5,120 10,245 131,624 192,509 339,498 HELOC and Junior Liens 11,784 8,520 15,554 97,169 133,027 Total Residential Mortgage 17,123 29,092 171,496 365,821 583,532 Consumer 810 7 140 1,966 2,923 Total floating interest rates 213,934 688,071 1,157,289 1,434,749 3,494,043 Total fixed and floating interest rates $ 405,623 $ 1,357,445 $ 1,397,489 $ 1,672,341 $ 4,832,898 69 Table of Contents MID PENN BANCORP, INC. Credit Quality, Credit Risk, and Allowance for Credit Losses Mid Penn’s ACL methodology for loans is based upon guidance within FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," as well as regulatory guidance from the FDIC, the Bank's primary federal regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense. For a complete description of Mid Penn’s ACL-loans methodology and the quantitative and qualitative factors included in the calculation, please see "Note 4 – Loans and Allowance for Credit Losses – Loans" included in Part I. Item 1. – Financial Statements of this report. Changes in the ACL-loans are summarized as follows: Three Months Ended June 30, Six Months Ended June 30, (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) Recoveries of loans previously charged off 98 44 116 50 Net recoveries/(charge-offs) (811) (18) (808) (62) 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 Ratio of net (recoveries)/charge-offs to average loans outstanding (annualized) 0.069 % 0.002 % 0.035 % 0.003 % 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. 70 Table of Contents MID PENN BANCORP, INC. 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: Total non-accrual loans $ 18,216 $ 22,610 $ 9,999 Foreclosed real estate 9,816 44 441 Total non-performing assets 28,032 22,654 10,440 Accruing loans 90 days or more past due — — — Total risk elements $ 28,032 $ 22,654 $ 10,440 Non-accrual loans as a percentage of total loans outstanding 0.38 % 0.51 % 0.23 % Non-performing assets as a percentage of total loans outstanding and foreclosed real estate 0.58 % 0.51 % 0.24 % Ratio of ACL-loans to non-performing loans 206.49 % 157.07 % 352.92 % 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. Goodwill Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible: a triggering event. 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. Management has not noted any factors which would indicate that an additional impairment test is necessary. Management will continue to monitor internal metrics and macroeconomic trends to determine if there is likelihood of goodwill impairment. Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2025. 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 71 Table of Contents MID PENN BANCORP, INC. Average balances and average interest rates applicable to deposits by major classification: June 30, 2025 December 31, 2024 Change (Dollars in thousands) Balance Rate Balance Rate $ % Noninterest-bearing demand deposits $ 783,561 0.00 % $ 780,538 0.00 % $ 3,023 0.39 % Interest-bearing demand deposits 1,087,426 1.79 1,001,813 1.90 85,613 8.55 Money market 1,102,641 2.80 913,311 2.91 189,330 20.73 Savings 284,428 0.09 275,692 0.09 8,736 3.17 Time 1,663,995 4.14 1,541,654 4.57 122,341 7.94 $ 4,922,051 2.43 % $ 4,513,008 2.58 % $ 409,043 9.06 % 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 Three months or less $ 134,904 Over three months to six months 230,912 Over six months to twelve months 26,988 Over twelve months 847 $ 393,651 Borrowings 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. Liquidity Mid Penn’s objective is to maintain adequate liquidity to meet funding needs at a reasonable cost and to provide contingency plans to meet unanticipated funding needs or a loss of funding sources, while minimizing interest rate risk. Adequate liquidity provides resources for credit needs of borrowers, for depositor withdrawals, and for funding corporate operations. Sources of liquidity are as follows: • a growing core deposit base; • proceeds from the sale or maturity of investment securities; • payments received on loans and mortgage-backed securities; • overnight correspondent bank borrowings on various credit lines; and • borrowing capacity available from the FHLB and the Federal Reserve Discount Window available to Mid Penn. Mid Penn believes its core deposits are generally stable even in periods of changing interest rates. Liquidity is measured and monitored daily, allowing management to better understand and react to balance sheet trends. These measurements indicate that liquidity generally remains stable and exceeds our minimum defined levels of adequacy. Other than the trends of continued competitive pressures and volatile interest rates, and the uncertain impact of the current inflationary environment, there are no known demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way. On at least a quarterly basis, a comprehensive liquidity analysis is reviewed by the Asset Liability Committee and Board of Directors. The analysis provides a summary of the current liquidity measurements, projections, and future liquidity positions given various levels of liquidity stress. Management also maintains a detailed Contingency Funding Plan designed to respond to overall stress in the financial condition of the banking industry or a prospective liquidity problem specific to Mid Penn. 72 Table of Contents MID PENN BANCORP, INC. The Consolidated Statements of Cash Flows provide additional information. 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 Mid Penn and the Bank are subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger certain mandatory, and possibly additional discretionary, actions by the regulators that if, undertaken, could have a direct material effect on Mid Penn's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory account practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Minimum regulatory capital requirements established by Basel III rules require Mid Penn and the Bank to: • Meet a minimum Common Equity Tier I capital ratio of 4.5% of risk-weighted assets; • Meet a minimum Tier I capital ratio of 6.0% of risk-weighted assets; • Meet a minimum Total capital ratio of 8.0% of risk-weighted assets; • Meet a minimum Tier I leverage capital ratio of 4.0% of average assets; • Maintain a "capital conservation buffer" of 2.5% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonuses; and • Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses. The Basel III Rules use a standardized approach for risk weightings that expands the risk-weighting for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off-balance sheet exposures and resulting in higher risk weightings for a variety of asset categories. Banks are evaluated for capital adequacy by regulatory supervisory agencies based on the ratio of capital to risk-weighted assets and total assets. The minimum capital to risk-weighted assets requirements, including the capital conservation buffers, which became effective for Mid Penn and the Bank on January 1, 2016, are illustrated below. At 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: 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 % Tier I Risk-Based Capital (to Risk-Weighted Assets) 12.82 12.09 8.50 7.00 Common Equity Tier I (to Risk-Weighted Assets) 12.82 12.09 7.00 8.50 Tier I Leverage Capital (to Average Assets) 10.63 9.98 4.00 10.50 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. 73 Table of Contents MID PENN BANCORP, INC. Shareholders' Equity Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets, and the desire to collectively maintain and enhance shareholders’ value, and satisfactorily address regulatory capital requirements. Accordingly, capital management practices have been, and will continue to be, of paramount importance to Mid Penn. 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. 74 Table of Contents MID PENN BANCORP, INC.