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What changed in MID PENN BANCORP INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MID PENN BANCORP INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+276 added−271 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-28)

Top changes in MID PENN BANCORP INC's 2024 10-K

276 paragraphs added · 271 removed · 206 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

56 edited+12 added−5 removed113 unchanged
Biggest changeMid Penn Bank Mid Penn Bank was organized in 1868 under a predecessor name, Millersburg Bank, and became a state-chartered bank in 1931. Millersburg Bank obtained trust powers in 1935, at which time its name was changed to Millersburg Trust Company. In 1971, Millersburg Trust Company adopted the name "Mid Penn Bank".
Biggest changeMillersburg Bank obtained trust powers in 1935, at which time its name was changed to Millersburg Trust Company. In 1971, Millersburg Trust Company adopted the name "Mid Penn Bank". Mid Penn’s legal headquarters are located at 2407 Park Drive, Harrisburg, Pennsylvania 17110, and the Bank’s legal headquarters are located at 349 Union Street, Millersburg, Pennsylvania 17061.
Mid Penn Bancorp, Inc. and its wholly owned bank and nonbank subsidiaries are collectively referred to herein as "Mid Penn" or the "Corporation." On December 31, 1991, Mid Penn acquired, as part of the holding company formation, all of the outstanding common stock of Mid Penn Bank, and the Bank became a wholly-owned subsidiary of Mid Penn.
Mid Penn Bancorp, Inc. and its wholly owned bank and nonbank subsidiaries are collectively referred to herein as "Mid Penn" or the "Corporation." On December 31, 1991, Mid Penn acquired, as part of the holding company formation, all of the outstanding common stock of Mid Penn Bank, referred to herein as "The Bank", and the Bank became a wholly-owned subsidiary of Mid Penn.
The Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation supervise the Bank. Deposits of the Bank are insured by the FDIC’s Deposit Insurance Fund to the maximum extent provided by law. In addition, the Bank provides a full range of trust and retail investment services.
The Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation supervise the Bank. Deposits of the Bank are insured by the FDIC’s Deposit Insurance Fund ("DIF") to the maximum extent provided by law. In addition, the Bank provides a full range of trust and retail investment services.
If a banking regulator takes any enforcement action, the value of an equity investment in Mid Penn could be substantially reduced or eliminated. As of December 31, 2023, the Corporation was not subject to any supervisory enforcement actions. Federal and state banking laws contain numerous provisions affecting various aspects of the business and operations of Mid Penn and the Bank.
If a banking regulator takes any enforcement action, the value of an equity investment in Mid Penn could be substantially reduced or eliminated. As of December 31, 2024, the Corporation was not subject to any supervisory enforcement actions. Federal and state banking laws contain numerous provisions affecting various aspects of the business and operations of Mid Penn and the Bank.
Mid Penn’s primary markets reflect a diversified manufacturing and services base across nineteen Pennsylvania counties and two counties in New Jersey, including having several offices in and around the state capital region of Harrisburg. The Bank emphasizes developing long-term customer relationships, maintaining high quality service, and providing prompt responses to customer needs.
Mid Penn’s primary markets reflect a diversified manufacturing and services base across sixteen Pennsylvania counties and two counties in New Jersey, including having several offices in and around the state capital region of Harrisburg. The Bank emphasizes developing long-term customer relationships, maintaining high quality service, and providing prompt responses to customer needs.
Commercial Real Estate Guidance Federal agencies released additional guidance in July 2023, in response to the increased commercial real estate concentrations that have occurred in recent years.
Commercial Real Estate Guidance Federal agencies released additional guidance in July 2023, in response to the increased commercial real estate ("CRE") concentrations that have occurred in recent years.
Business Strategy The Bank provides services to commercial businesses and real estate investors, consumers, nonprofit organizations, and municipalities through its 49 full-service retail banking properties, one loan production office, one wealth management office, two corporate administrations offices, and one operations facility, primarily based in Pennsylvania.
Business Strategy The Bank provides services to commercial businesses and real estate investors, consumers, nonprofit organizations, and municipalities through its 45 full-service retail banking properties, one loan production office, one wealth management office, two corporate administrations offices, and one operations facility, primarily based in Pennsylvania.
Diversity & Inclusion The Corporation believes that a diverse and inclusive workforce fosters an environment where everyone can thrive and be successful. As of December 31, 2023, approximately 65% of our workforce is female. Bank leadership has seen the benefits of Employee Resource Groups ("ERG") within our organization.
Diversity & Inclusion The Corporation believes that a diverse and inclusive workforce fosters an environment where everyone can thrive and be successful. As of December 31, 2024, approximately 65% of our workforce is female. Bank leadership has seen the benefits of Employee Resource Groups ("ERG") within our organization.
Depending upon the financial condition of the holding company and the Bank, the payment of dividends could be deemed by a regulatory agency to constitute such an unsafe or unsound practice. The holding company and the Bank were not subject to any such dividend prohibitions during the years ended December 31, 2023, 2022, and 2021.
Depending upon the financial condition of the holding company and the Bank, the payment of dividends could be deemed by a regulatory agency to constitute such an unsafe or unsound practice. The holding company and the Bank were not subject to any such dividend prohibitions during the years ended December 31, 2024, 2023, and 2022.
Under Title III of the USA Patriot Act, also known as the International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001, all financial institutions, including Mid Penn and the Bank, are required in general to identify their customers, adopt formal and comprehensive anti-money laundering programs, scrutinize or prohibit altogether certain transactions of special concern, and be prepared to respond to inquiries from U.S. law enforcement agencies concerning their customers and their transactions.
Under Title III of the USA Patriot Act, also known as the International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001, all financial institutions, including Mid Penn and the Bank, are required in general to identify their customers, adopt formal and comprehensive anti-money laundering programs, scrutinize or prohibit altogether certain transactions of special concern, and be prepared to respond to 13 MID PENN BANCORP, INC. inquiries from U.S. law enforcement agencies concerning their customers and their transactions.
Combined, the Tier 1 Capital and Tier 2 Capital comprise regulatory "Total Capital". As of December 31, 2023, Mid Penn complied with these risk-based capital requirements. In addition, the Federal Reserve has established minimum leverage ratio requirements for bank holding companies.
Combined, the Tier 1 Capital and Tier 2 Capital comprise regulatory "Total Capital". As of December 31, 2024, Mid Penn complied with these risk-based capital requirements. In addition, the Federal Reserve has established minimum leverage ratio requirements for bank holding companies.
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. As of December 31, 2023, the Bank’s highest concentration of credit is in commercial real estate.
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. As of December 31, 2024, the Bank’s highest concentration of credit is in commercial real estate.
The Bank is subject to similar capital requirements adopted by the FDIC, and as of December 31, 2023, the Bank’s capital levels were sufficient to be considered "well-capitalized". The FDIC has not advised the Bank of any specific minimum leverage ratios.
The Bank is subject to similar capital requirements adopted by the FDIC, and as of December 31, 2024, the Bank’s capital levels were sufficient to be considered "well-capitalized". The FDIC has not advised the Bank of any specific minimum leverage ratios.
Mid Penn has adopted a Code of Ethics that applies to all employees and this document is also available on Mid Penn’s website. The information included on our website is not considered a part of this document. 14 MID PENN BANCORP, INC.
Mid Penn has adopted a Code of Ethics that applies to all employees and this document is also available on Mid Penn’s website. The information included on our website is not considered a part of this document. 16 MID PENN BANCORP, INC.
For the periods reported in this Form 10-K and in the period subsequent to December 31, 2023, up to the date of the filing of this Form 10-K, Mid Penn was not subject to any such bank regulatory orders.
For the periods reported in this Form 10-K and in the period subsequent to December 31, 2024, up to the date of the filing of this Form 10-K, Mid Penn was not subject to any such bank regulatory orders.
The guidance identifies institutions that are potentially exposed to significant CRE concentration risk as those who have experienced rapid growth in CRE lending, have notable exposures to a specific type of CRE, or are approaching, or exceed the following supervisory criteria: • Total loans reported on the Report of Condition for construction, land development, and other land represent 100 percent or more of the institution’s total capital; or • Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months.
The guidance identifies institutions that are potentially exposed to significant CRE concentration risk as those who have experienced rapid growth in CRE lending, have notable exposures to a specific type of CRE, or are approaching, or exceed the following supervisory criteria: • Total loans reported on the Report of Condition for construction, land development, and other land represent 100 percent or more of the institution’s total capital; or • Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months. 11 MID PENN BANCORP, INC.
Mid Penn believes that local relationship building and its prudent approach to lending are important factors in the success and growth of Mid Penn. Human Capital The majority of employees of the Corporation are employed by the Bank, with a shared services agreement to support the operation of the holding company.
Mid Penn believes that local relationship building and its prudent approach to lending are important factors in the success and growth of Mid Penn. 5 MID PENN BANCORP, INC. Human Capital The majority of employees of the Corporation are employed by the Bank, with a shared services agreement to support the operation of the holding company.
It is not possible to reasonably predict the nature, amount, frequency, and impact of future changes in monetary and fiscal policies. 13 MID PENN BANCORP, INC. Environmental Laws Management does not anticipate that compliance with environmental laws and regulations will have any material effect on Mid Penn’s capital, expenditures, earnings, or competitive position.
It is not possible to reasonably predict the nature, amount, frequency, and impact of future changes in monetary and fiscal policies. Environmental Laws Management does not anticipate that compliance with environmental laws and regulations will have any material effect on Mid Penn’s capital, expenditures, earnings, or competitive position.
As of December 31, 2023, the Bank had 612 full-time and 23 part-time employees. Additionally, Mid Penn’s nonbank subsidiaries employed 9 full-time employees and 1 part-time employee as of December 31, 2023. The Corporation and its employees are not subject to a collective bargaining agreement and the Corporation believes it enjoys good relations with its employees.
As of December 31, 2024, the Bank had 591 full-time and 23 part-time employees. Additionally, Mid Penn’s nonbank subsidiaries employed 9 full-time employees and 1 part-time employee as of December 31, 2024. The Corporation and its employees are not subject to a collective bargaining agreement and the Corporation believes it enjoys good relations with its employees.
Mid Penn’s ability to attract retail funds in the future will continue to be impacted by the public’s appetite for the safety of insured or local investments versus the returns offered by alternative choices as part of their personal investment mix.
Mid Penn’s ability to attract retail funds in the future will continue to be impacted by the public’s appetite for the safety of insured or local investments versus the returns offered by alternative choices as part of their personal investment mix. 7 MID PENN BANCORP, INC.
As the interest rate environment changes, Mid Penn’s fair value of securities will change. This difference between the amortized cost and fair value of available-for-sale investment securities, or unrealized loss, amounted to $22.3 million as of December 31, 2023.
As the interest rate environment changes, Mid Penn’s fair value of securities will change. This difference between the amortized cost and fair value of available-for-sale investment securities, or unrealized loss, amounted to $24.3 million as of December 31, 2024.
Anti-tying restrictions (which prohibit conditioning the availability or terms of credit on the purchase of another banking product) further restrict the Bank’s relationships with its customers. The Bank maintains a comprehensive compliance management program to promote its compliance with these and other applicable consumer protection laws and regulations. 11 MID PENN BANCORP, INC.
Anti-tying restrictions (which prohibit conditioning the availability or terms of credit on the purchase of another banking product) further restrict the Bank’s relationships with its customers. The Bank maintains a comprehensive compliance management program to promote its compliance with these and other applicable consumer protection laws and regulations.
However, it will be deemed "undercapitalized" if it fails to meet the minimum capital requirements, "significantly undercapitalized" if it has a Total Risk-Based Capital ratio that is less than 6%, a Tier 1 Risk-Based Capital ratio that is less than 3%, or a leverage ratio that is less than 3%, and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%. 8 MID PENN BANCORP, INC.
However, it will be deemed "undercapitalized" if it fails to meet the minimum capital requirements, "significantly undercapitalized" if it has a Total Risk-Based Capital ratio that is less than 6%, a Tier 1 Risk-Based Capital ratio that is less than 3%, or a leverage ratio that is less than 3%, and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%.
The SEC’s Internet site address is www.sec.gov. Mid Penn’s headquarters are located at 2407 Park Drive, Harrisburg, Pennsylvania 17110, and its telephone number is 1-866-642-7736.
The SEC’s Internet site address is www.sec.gov. 15 MID PENN BANCORP, INC. Mid Penn’s headquarters are located at 2407 Park Drive, Harrisburg, Pennsylvania 17110, and its telephone number is 1-866-642-7736.
Enforcement actions that may be imposed by federal and 6 MID PENN BANCORP, INC. state banking regulators include the imposition of a conservator or receiver, cease-and-desist orders and written agreements, the termination of insurance on deposits, the imposition of civil money penalties, and removal and prohibition orders.
Enforcement actions that may be imposed by federal and state banking regulators include the imposition of a conservator or receiver, cease-and-desist orders and written agreements, the termination of insurance on deposits, the imposition of civil money penalties, and removal and prohibition orders.
In 2022, Mid Penn formalized committee members on our Women’s Leadership Network, Diversity, Equity and Inclusion ("DEI"), and our Culture Committees. Throughout 2023 the company has benefited from the contributions of these groups. Each group allows employees to come together based on shared characteristics to address common challenges and to drive positive impact within the workforce.
In 2022, Mid Penn formalized committee members on our Women’s Leadership Network, Diversity, Equality, and Inclusion ("DEI"), and our Culture Committees. Throughout 2024, the entire organization has benefited from the contributions of these groups. Each group allows employees to come together based on shared characteristics to address common challenges and to drive positive impact within the workforce.
In certain circumstances, repurchases of our common stock may be subject to a prior approval or notice requirement under other regulations or policies of the Federal Reserve. Any redemption or repurchase of preferred stock or subordinated debt remains subject to the prior approval of the Federal Reserve. 9 MID PENN BANCORP, INC.
In certain circumstances, repurchases of our common stock may be subject to a prior approval or notice requirement under other regulations or policies of the Federal Reserve. Any redemption or repurchase of preferred stock or subordinated debt remains subject to the prior approval of the Federal Reserve.
The Bank has adopted policies, procedures and controls to address compliance with the requirements of the USA Patriot Act under the existing regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by the USA Patriot Act and implementing regulations. 12 MID PENN BANCORP, INC.
The Bank has adopted policies, procedures, and controls to address compliance with the requirements of the USA Patriot Act under the existing regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by the USA Patriot Act and implementing regulations.
As of December 31, 2023, the Bank operates 44 full-service retail banking locations in the Pennsylvania counties of Berks, Blair, Bucks, Centre, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with 5 full-service retail banking locations in the New Jersey counties of Middlesex and Monmouth.
As of December 31, 2024, the Bank operates 42 full-service retail banking locations in the Pennsylvania counties of Berks, Blair, Bucks, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with 3 full-service retail banking locations in the New Jersey counties of Middlesex and Monmouth.
Mid Penn maintains both a held-to-maturity investment portfolio and an available-for-sale investment portfolio. Both portfolios are comprised primarily of lower-risk debt securities, including U.S. Treasury and U.S. government agencies, mortgage-backed U.S. government agencies, investment-grade municipal securities, and corporate bonds. The held-to-maturity portfolio was established to support the Bank’s growth in public fund deposits, which may require pledging of investment securities.
Both portfolios are comprised primarily of lower-risk debt securities, including U.S. Treasury and U.S. government agencies, mortgage-backed U.S. government agencies, investment-grade municipal securities, and corporate bonds. The held-to-maturity portfolio was established to support the Bank’s growth in public fund deposits, which may require pledging of investment securities.
As the asset base of the banking industry is larger than the deposit base, the range of assessment rates is a low of 2.5 bp and a high of 45 bp, per $100 of assets.
As the asset base of the banking industry is larger than the deposit base, the range of assessment rates is a low of 2.5 bp and a high of 45 bp, per $100 of assets. 12 MID PENN BANCORP, INC.
Investment Activities Mid Penn’s securities portfolio is a source for both liquidity and interest earnings and serves to support pledging requirements on public funds deposits through investments in primarily higher-quality, fixed-income debt securities. Mid Penn does not have any significant non-governmental concentrations within its investment securities portfolio. 5 MID PENN BANCORP, INC.
Investment Activities Mid Penn’s securities portfolio is a source for both liquidity and interest earnings and serves to support pledging requirements on public funds deposits through investments in primarily higher-quality, fixed-income debt securities. Mid Penn does not have any significant non-governmental concentrations within its investment securities portfolio. Mid Penn maintains both a held-to-maturity investment portfolio and an available-for-sale investment portfolio.
On an after-tax basis, this unrealized loss on available-for-sale securities resulted in an increase to shareholders’ equity, through the accumulated other comprehensive loss component, of $2.0 million. As of December 31, 2023, there was no allowance for credit losses on either the held-to-maturity or available-for-sale investment portfolios.
On an after-tax basis, this unrealized loss on available-for-sale securities resulted in a decrease to shareholders’ equity, through the accumulated other comprehensive loss component, of $1.6 million. As of December 31, 2024, there was no allowance for credit losses on either the held-to-maturity or available-for-sale investment portfolios.
As of December 31, 2023, the Corporation and the Bank exceeded the minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III Rules. The Basel III Rules provide for a number of required deductions from and adjustments to CET1.
As of December 31, 2024, the Corporation and the Bank exceeded the minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III Rules. 10 MID PENN BANCORP, INC. The Basel III Rules provide for a number of required deductions from and adjustments to CET1.
Furthermore, the requirements indicate that the Federal Reserve will continue to consider a "Tangible Tier 1 Leverage Ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity. As of December 31, 2023, Mid Penn has met these leverage requirements, and the Federal Reserve has not advised Mid Penn of any specific minimum Tier 1 leverage ratio requirement.
Leverage Ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity. As of December 31, 2024, Mid Penn has met these leverage requirements, and the Federal Reserve has not advised Mid Penn of any specific minimum Tier 1 leverage ratio requirement.
The Federal Reserve also makes policy that applies to the declaration and distribution of dividends by financial and bank holding companies. The BHCA restricts a financial or bank holding company’s ability to acquire control of additional banks. In addition, the BHCA restricts the activities in which financial or bank holding companies may engage directly or through nonbank subsidiaries.
The Federal Reserve also makes policy that applies to the declaration and distribution of dividends by financial and bank holding companies. The BHCA restricts a financial or bank holding company’s ability to acquire control of additional banks.
Benefits On an ongoing basis, we further promote the health and wellness of our employees by strongly encouraging work-life balance. Our benefits package includes health care coverage, retirement benefits, life and disability insurance, tuition-reimbursement, parental leave, wellness programs, and paid time off. Retention Employee retention helps us operate efficiently and offers continuity to our customers and the community.
Our benefits package includes health care coverage, retirement benefits, life and disability insurance, tuition-reimbursement, parental leave, wellness programs, and paid time off. Retention Employee retention helps us operate efficiently and offers continuity to our customers and the community.
The requirements also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets.
The requirements also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the requirements indicate that the Federal Reserve will continue to consider a "Tangible Tier 1 9 MID PENN BANCORP, INC.
Our Culture Committee has focused on contributing to a positive organizational culture by fostering open communication, 4 MID PENN BANCORP, INC. collaboration, and a sense of community; this sense of community is important to Mid Penn as we continue to expand geographically.
Our Culture Committee has focused on contributing to a positive organizational culture by fostering open communication, collaboration, and a sense of community; this sense of community is important to Mid Penn as we continue to expand geographically. The Culture Committee also supports wellness initiatives by creating initiatives, programs, and resources to encourage physical, mental, and emotional wellness.
The Scottdale Merger resulted in the addition of five branches in Western Pennsylvania operating as "Scottdale Bank & Trust, a Division of Mid Penn Bank". On July 31, 2018, Mid Penn completed its acquisition of First Priority Financial Corp.
On January 8, 2018, Mid Penn completed its acquisition of The Scottdale Bank and Trust Company ("Scottdale") through the merger of Scottdale with and into the Bank (the "Scottdale Merger"). The Scottdale Merger resulted in the addition of five branches in Western Pennsylvania operating as "Scottdale Bank & Trust, a Division of Mid Penn Bank".
Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial institutions are frequently made in Congress and the various bank regulatory agencies. Mid Penn cannot predict the likelihood of any major changes or the impact such changes might have on Mid Penn, the Bank, or the nonbank subsidiaries.
Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial institutions are 14 MID PENN BANCORP, INC. frequently made in Congress and the various bank regulatory agencies.
The First Priority Merger resulted in the addition of eight offices in Southeastern Pennsylvania operating as "First Priority Bank, a Division of Mid Penn Bank". On November 30, 2021, Mid Penn completed its acquisition of Riverview Financial Corporation, the holding company for Riverview Bank, through the merger of Riverview with and into Mid Penn.
On November 30, 2021, Mid Penn completed its acquisition of Riverview Financial Corporation, the holding company for Riverview Bank, through the merger of Riverview with and into Mid Penn. In connection with the Riverview Acquisition , Riverview Bank was merged with and into the Bank, with the Bank as the surviving institution.
This transaction included the acquisition of 5 branches and extended Mid Penn's footprint into Middlesex and Monmouth counties in central New Jersey. Additional information related to the recent acquisitions can be found in "Note 2 - Business Combinations", to the Consolidated Financial Statements contained in Part II, Item of this report.
Additional information related to the recent acquisitions can be found in "Note 2 - Business Combinations", to the Consolidated Financial Statements contained in Part II, Item of this report.
Gramm-Leach-Bliley Financial Modernization Act Under the Gramm-Leach-Bliley Financial Modernization Act ("GLB"), bank holding companies that meet certain management, capital, and Community Reinvestment Act standards, are permitted to elect to become financial holding companies.
In addition, the BHCA restricts the activities in which financial or bank holding companies may engage directly or through nonbank subsidiaries. 8 MID PENN BANCORP, INC. Gramm-Leach-Bliley Financial Modernization Act Under the Gramm-Leach-Bliley Financial Modernization Act ("GLB"), bank holding companies that meet certain management, capital, and Community Reinvestment Act standards, are permitted to elect to become financial holding companies.
Mid Penn made the election given the Corporation’s growth and the intended broadening spectrum of financial product and service offerings to potentially include, but not be limited to, insurance and wealth management services. 7 MID PENN BANCORP, INC.
The required filing supporting this election was a declaration that the bank holding company wished to become a financial holding company and met all applicable requirements. Mid Penn made the election given the Corporation’s growth and the intended broadening spectrum of financial product and service offerings to potentially include, but not be limited to, insurance and wealth management services.
("First Priority") pursuant to which First Priority was merged with and into Mid Penn (the "First Priority Merger"), with Mid Penn being the surviving corporation in the First Priority Merger. As part of this acquisition, First Priority’s banking subsidiary, First Priority Bank, was merged with and into the Bank.
As part of this acquisition, First Priority’s banking subsidiary, First Priority Bank, was merged with and into the Bank. The First Priority Merger resulted in the addition of eight offices in Southeastern Pennsylvania.
("Phoenix") by Mid Penn, Phoenix’s wholly-owned banking subsidiary, Miners Bank, was merged with and into the Bank, with the Bank being the surviving charter. On January 8, 2018, Mid Penn completed its acquisition of The Scottdale Bank and Trust Company ("Scottdale") through the merger of Scottdale with and into the Bank (the "Scottdale Merger").
On March 1, 2015, in connection with the acquisition of Phoenix Bancorp, Inc. ("Phoenix") by Mid Penn, Phoenix’s wholly-owned banking subsidiary, Miners Bank, was merged with and into the Bank, with the Bank being the surviving charter.
Mid Penn’s primary business consists of attracting deposits and loans from the Bank’s network of community banking offices.
One new full-service retail banking location opened in Camden County, New Jersey in January 2025. Mid Penn’s primary business consists of attracting deposits and loans from the Bank’s network of community banking offices.
On December 30, 2022, Mid Penn purchased the assets of Managing Partners, Inc. ("MPI Acquisition") in a business combination. Managing Partners, Inc. was an independent insurance agency that serviced the Central Pennsylvania area.
The Riverview merger resulted in the addition of twenty-three community banking offices and three limited purpose offices across Western Pennsylvania. 4 MID PENN BANCORP, INC. On December 30, 2022, Mid Penn purchased the assets of Managing Partners, Inc., an independent insurance agency that serviced the Central Pennsylvania area.
The education and development of our employees is a priority, and we continue to invest in tools, education programs, certifications and continuing education to help our employees build their knowledge, skills and experience. We provide in-house training to employees on a variety of topics, including leadership and professional development, cybersecurity, risk, compliance and technology.
Education and Development We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion within the organization. The education and development of our employees is a priority, and we continue to invest in tools, education programs, certifications, and continuing education to help our employees build their knowledge, skills and experience.
At December 31, 2023, Mid Penn had total consolidated assets of $5.3 billion with total deposits of $4.3 billion and total shareholders’ equity of $542.4 million. The holding company and its nonbank subsidiaries currently do not own or lease any real property. The Bank owns or leases the banking offices as identified in Part I, Item 2.
The holding company and its nonbank subsidiaries currently do not own or lease any real property. The Bank owns or leases the banking offices as identified in Part I, Item 2. Mid Penn Bank Mid Penn Bank was organized in 1868 under a predecessor name, Millersburg Bank, and became a state-chartered bank in 1931.
Mid Penn’s primary business is to supervise and coordinate the business of the Bank and its nonbank subsidiaries, and to provide them with the capital and resources to fulfill their respective missions. Mid Penn’s consolidated financial condition and results of operations consist almost entirely of that of the Bank, which is managed as a single business segment.
As of December 31, 2024, the accounts and activities of these nonbank subsidiaries were not material to warrant separate disclosure or segment reporting. Mid Penn’s primary business is to supervise and coordinate the business of the Bank and its nonbank subsidiaries, and to provide them with the capital and resources to fulfill their respective missions.
In 2023, our employees demonstrated their commitment to our communities by personally giving more than $69 thousand to charitable organizations within Mid Penn’s footprint through our Dress Down Friday program. Lending Activities The Bank offers a variety of loan products to its customers, including commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans.
In 2024, our employees demonstrated their commitment to our communities by personally giving more than $69 thousand to charitable organizations within Mid Penn’s footprint through our Dress Down Friday program. 6 MID PENN BANCORP, INC.
The mix of commercial real estate and construction portfolios in relation to the total portfolio increased 33.61% and 1.93%, respectively from December 31, 2022 to December 31, 2023. Non-owner occupied office commercial real estate exposure represents 7.1% of total loan balances and is primarily limited to suburban offices. 10 MID PENN BANCORP, INC.
Commercial real estate loans increased 9.2% from December 31, 2023 to December 31, 2024. Commercial real estate loans were the largest driver of the $190.3 million growth in the total loan portfolio. Non-owner occupied commercial real estate loan exposure represents 28.2% of total loan balances and is primarily limited to suburban offices.
We have found that employees who belong to any of our ERGs are more engaged, are developing leadership skills, and are gaining new experiences through volunteer and networking opportunities. Education and Development We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion within the organization.
The committee aims to support healthy work-life balance, understand and better utilize our benefit programs, and foster a positive, wellness-oriented workplace culture. We have found that employees who belong to any of our ERGs are more engaged, are developing leadership skills, and are gaining new experiences through volunteer and networking opportunities.
We have found that our Women’s Leadership Network has provided a sense of belonging and camaraderie for our primarily female workforce. Our DEI group has laid the groundwork to help create a more diverse and inclusive workplace by promoting understanding, respect, and awareness of different cultures, backgrounds, and perspectives.
We have found that our Women’s Leadership Network has provided a sense of belonging and camaraderie for our primarily female workforce. The Women’s Leadership group has expanded its reach by creating a subgroup called MPB Moms.
Removed
During the year ended December 31, 2020, Mid Penn established three nonbank subsidiaries, including MPB Financial Services, LLC, under which two additional nonbank subsidiaries have been established: (i) MPB Wealth Management, LLC, created to expand the wealth management function and services of the Corporation, and (ii) MPB Risk Services, LLC, created to fulfill the insurance needs of both existing and potential customers of the Corporation.
Added
In addition to Mid Penn Bank, Mid Penn maintains five wholly-owned nonbanks subsidiaries: MPB Financial Services, LLC, which serves as the mid-tier holding company for MPB Risk Services, LLC, a licensed insurance producer, MPB Wealth Management, LLC (which ceased operating during the first quarter of 2024), and MPB Launchpad Fund I, LLC, which was formed to hold certain financial holding company eligible investments; and MPB Realty Holding, LLC, which was formed for purposes of holding certain assets acquired for debts previously contracted.
Removed
During the year ended December 31, 2021, Mid Penn formed MPB Launchpad Fund I, LLC to hold certain financial holding company eligible investments. As of December 31, 2023, the accounts and activities of these nonbank subsidiaries were not material to warrant separate disclosure or segment reporting.
Added
Mid Penn’s consolidated financial condition and results of operations consist almost entirely of that of the Bank, which is managed as a single business segment. At December 31, 2024, Mid Penn had total consolidated assets of $5.5 billion with total deposits of $4.7 billion and total shareholders’ equity of $655.0 million.
Removed
Mid Penn’s legal headquarters are located at 2407 Park Drive, Harrisburg, Pennsylvania 17110 and the Bank’s legal headquarters are located at 349 Union Street, Millersburg, Pennsylvania 17061. On March 1, 2015, in connection with the acquisition of Phoenix Bancorp, Inc.
Added
On July 31, 2018, Mid Penn completed its acquisition of First Priority Financial Corp. pursuant to which First Priority was merged with and into Mid Penn (the "First Priority Merger"), with Mid Penn being the surviving corporation in the First Priority Merger.
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In connection with the Riverview Acquisition , Riverview Bank was merged with and into the Bank, with the Bank as the surviving institution. The Riverview merger resulted in the addition of twenty-three community banking offices and three limited purpose offices across Western Pennsylvania. 3 MID PENN BANCORP, INC.
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This transaction included the acquisition of five branches and extended Mid Penn's footprint into Middlesex and Monmouth counties in central New Jersey.
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The required filing supporting this election was a declaration that the bank holding company wished to become a financial holding company and met all applicable requirements.
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On July 31, 2024, Mid Penn acquired the insurance business and related accounts of, Commonwealth Benefits Group, a full-service employee benefits firm that served mid to large employers across central and eastern Pennsylvania, northern Maryland, and northern Virginia, for a purchase price of $2.0 million at closing and an additional $800 thousand potentially payable pursuant to a three year earnout.
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On October 31, 2024, Mid Penn entered into an Agreement and Plan of Merger with William Penn Bancorporation pursuant to which William Penn will merge with and into Mid Penn in an all-stock transaction valued at approximately $107 million, based on Mid Penn’s closing stock price as of October 30, 2024.
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The Merger has been approved unanimously by each company’s board of directors and is expected to close in the first half of 2025. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Mid Penn and William Penn shareholders.
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Under the terms of the Merger Agreement, shareholders of William Penn will have the right to receive, for each share of common stock, par value $0.01 per share, of William Penn, 0.426 shares of Mid Penn common stock (the “Exchange Ratio”) and cash in lieu of fractional shares, subject to adjustment and proration as described in the Merger Agreement.
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This group serves as a community for mothers to connect, share like experiences and offer support to each other as they balance their personal and professional lives. Our DEI group has laid the groundwork to help create a more diverse and inclusive workplace by promoting understanding, respect, and awareness of different cultures, backgrounds, and perspectives.
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We provide in-house training to employees on a variety of topics, including leadership and professional development, cybersecurity, risk, compliance, and technology. Benefits On an ongoing basis, we promote the health and wellness of our employees by strongly encouraging work-life balance.
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Lending Activities The Bank offers a variety of loan products to its customers, including commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans.
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Mid Penn cannot predict the likelihood of any major changes or the impact such changes might have on Mid Penn, the Bank, or the nonbank subsidiaries.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn determining whether to approve a proposed bank acquisition, bank regulators will consider, among other factors, the effect of the acquisition on competition and future prospects. Regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations.
Biggest changeGenerally, Mid Penn must receive federal and state regulatory approval before it can acquire a bank or bank holding company. In determining whether to approve a proposed bank acquisition, bank regulators will consider, among other factors, the effect of the acquisition on competition and future prospects.
Under the new CECL model, financial institutions are required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan. The ACL on loans and leases represents management’s estimate of all expected credit losses over the expected contractual life of our existing portfolio loans.
Under the CECL model, financial institutions are required to use historical information, current conditions, and reasonable forecasts to estimate the expected loss over the life of the loan. The ACL on loans and leases represents management’s estimate of all expected credit losses over the expected contractual life of our existing portfolio loans.
An increase in non-performing loans or collateral value deficiencies could result in a net loss of earnings from these loans, an increase in the provision for credit losses on loans and an increase in loan charge-offs, all of which could have a material adverse effect on Mid Penn’s financial condition and results of operations. 15 MID PENN BANCORP, INC.
An increase in non-performing loans or collateral value deficiencies could result in a net loss of earnings from these loans, an increase in the provision for credit losses on loans 17 MID PENN BANCORP, INC. and an increase in loan charge-offs, all of which could have a material adverse effect on Mid Penn’s financial condition and results of operations.
Mid Penn’s profitability depends significantly on economic conditions in Pennsylvania. Unlike larger or regional financial institutions that are more geographically diversified, Mid Penn’s success is dependent to a significant degree on economic conditions in Pennsylvania, especially in the nineteen counties and the specific markets primarily served by Mid Penn.
Mid Penn’s profitability depends significantly on economic conditions in Pennsylvania. Unlike larger or regional financial institutions that are more geographically diversified, Mid Penn’s success is dependent to a significant degree on economic conditions in Pennsylvania, especially in the eighteen counties and the specific markets primarily served by Mid Penn.
The occurrence of any failures, interruptions, or security breaches of Mid Penn’s information systems and data could damage Mid Penn’s reputation, cause Mid Penn to incur additional expenses, result in online services or other businesses becoming inoperable, subject Mid Penn to regulatory sanctions or additional regulatory scrutiny, or expose Mid Penn to civil litigation and possible financial liability, any of which could have a material adverse effect on Mid Penn’s financial condition and results of operations.
The occurrence of any failures, interruptions, or security breaches of Mid Penn’s information systems and data could damage Mid Penn’s reputation, cause Mid Penn to incur additional expenses, result in online services or other businesses becoming inoperable, subject Mid Penn to regulatory sanctions or additional regulatory scrutiny, or expose Mid Penn to civil litigation and possible financial liability, any of which could have a material adverse effect on Mid Penn’s financial condition and results of operations. 20 MID PENN BANCORP, INC.
If Mid Penn issues preferred stock in the future that has a preference over its common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if preferred stock is issued with voting rights that dilute the voting power of common stock, the rights of holders of Mid Penn’s common stock or the market price of the common stock could be adversely affected.
If Mid Penn issues preferred stock in the future that has a preference over its common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if preferred stock is issued with voting rights that dilute the voting power of common stock, the rights of holders of Mid Penn’s common stock or the market price of the common stock could be adversely affected. 29 MID PENN BANCORP, INC.
The administrator of LIBOR ceased publishing most non-USD LIBOR settings beginning on January 1, 2022, and as of July 1, 2023, the overnight one-month, three-month, six-month and 12-month USD LIBOR settings will no longer be published. Currently, SOFR is the alternative reference rate replacing LIBOR for most types of transactions.
The administrator of LIBOR ceased publishing most non-USD LIBOR settings beginning on January 1, 2022, and as of July 1, 2023, the overnight one-month, three-month, six-month, and 12-month USD LIBOR settings were no longer published. Currently, SOFR is the alternative reference rate replacing LIBOR for most types of transactions.
Any failure or circumvention of Mid Penn’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on Mid Penn’s business, results of operations, and financial condition. Mid Penn may not be able to attract and retain skilled personnel. 26 MID PENN BANCORP, INC.
Any failure or circumvention of Mid Penn’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on Mid Penn’s business, results of operations, and financial condition. Mid Penn may not be able to attract and retain skilled personnel.
Mid Penn’s ability to pay dividends on its common stock, and principal and interest on its subordinated notes, depends primarily on dividends from its banking subsidiary, which is subject to regulatory limits. Mid Penn is a bank holding company and its operations are conducted primarily by its banking subsidiary.
Mid Penn’s ability to pay dividends on its common stock, and principal and interest on its subordinated notes, depends primarily on dividends from its banking subsidiary, which is subject to regulatory limits. 28 MID PENN BANCORP, INC. Mid Penn is a bank holding company and its operations are conducted primarily by its banking subsidiary.
Mid Penn depends on the accuracy and completeness of information about customers and counterparties. In deciding whether to extend credit or enter into other transactions, Mid Penn may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information.
Mid Penn depends on the accuracy and completeness of information about customers and counterparties. 18 MID PENN BANCORP, INC. In deciding whether to extend credit or enter into other transactions, Mid Penn may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on Mid Penn’s financial condition and results of operations. Mid Penn’s financial performance may suffer if its information technology is unable to keep pace with its growth or industry developments.
The remediation costs and any other financial liabilities associated 24 MID PENN BANCORP, INC. with an environmental hazard could have a material adverse effect on Mid Penn’s financial condition and results of operations. Mid Penn’s financial performance may suffer if its information technology is unable to keep pace with its growth or industry developments.
To combat against these attacks, Mid Penn has certain security systems and policies and procedures in place to prevent or limit the effect of the possible security breach of 19 MID PENN BANCORP, INC. its information systems and it has insurance against some cyber-risks and attacks.
To combat against these attacks, Mid Penn has certain security systems and policies and procedures in place to prevent or limit the effect of the possible security breach of its information systems and it has insurance against some cyber-risks and attacks.
If we conclude that there is a decline in the value of any of our investment securities, we are required to record an allowance for credit losses where periodic changes are recognized in earnings.
If we conclude that there is a decline in the value of any of our AFS investment securities, we may be required to record an allowance for credit losses where periodic changes are recognized in earnings.
As of December 31, 2023, approximately 81% of the Bank’s loan portfolio consisted of commercial real estate, commercial and industrial, and construction loans. These types of loans are generally viewed as having more risk of default than residential real estate loans or secured consumer loans. Commercial loans are also typically larger than residential real estate loans and consumer loans.
As of December 31, 2024, approximately 82% of the Bank’s loan portfolio consisted of commercial real estate, commercial and industrial, and construction loans. These types of loans are generally viewed as having more risk of default than residential real estate loans or secured consumer loans. Commercial loans are also typically larger than residential real estate loans and consumer loans.
Furthermore, a capital raise through issuance of additional shares may have an adverse impact on Mid Penn’s stock price. New investors also may have rights, preferences and privileges senior to Mid Penn’s current common stockholders, which may adversely impact its current common stockholders. 25 MID PENN BANCORP, INC.
Furthermore, a capital raise through issuance of additional shares may have an adverse impact on Mid Penn’s stock price. New investors also may have rights, preferences, and privileges senior to Mid Penn’s current common stockholders, which may adversely impact its current common stockholders.
However, if other banks or financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition. 21 MID PENN BANCORP, INC.
However, if other banks or financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.
During a lapse of funding, such as a government shutdown, the SBA may not be able to engage in such interaction which may have a material adverse effect on our financial condition and the demand for our services could decline.
During a lapse of funding, such as a government shutdown, the SBA may not be able to 19 MID PENN BANCORP, INC. engage in such interaction which may have a material adverse effect on our financial condition and the demand for our services could decline.
This, in turn, could have an adverse effect on Mid Penn’s ability to attract and retain customers and employees and could have a negative impact on the market price for our securities. 22 MID PENN BANCORP, INC.
This, in turn, could have an adverse effect on Mid Penn’s ability to attract and retain customers and employees and could have a negative impact on the market price for our securities.
Mid Penn’s common stock is listed for trading on NASDAQ (symbol: MPB); however, the trading volume in its common stock is less than that of other larger financial services companies.
Risks Related to Mid Penn Common Stock The trading volume in Mid Penn’s common stock is less than that of other larger financial services companies. Mid Penn’s common stock is listed for trading on NASDAQ (symbol: MPB); however, the trading volume in its common stock is less than that of other larger financial services companies.
The amount of credit loss Mid Penn records will be limited to the amount by which the amortized cost exceeds the fair value.
The amount of credit loss Mid Penn records will be limited to the amount by which the amortized cost exceeds the fair value. 23 MID PENN BANCORP, INC.
The banking industry is affected by general economic conditions, including the effects of 20 MID PENN BANCORP, INC. inflation, recession, unemployment, real estate values, trends in national and global economics, and other factors beyond our control.
The banking industry is affected by general economic conditions, including the effects of inflation, recession, unemployment, real estate values, trends in national and global economics, and other factors beyond our control.
Mid Penn anticipates that the FDIC will impose additional special assessments on all banks in order to replenish the DIF. Mid Penn generally is unable to control the amount of premiums or special assessments that its banking subsidiary is required to pay for FDIC insurance.
Mid Penn anticipates that the FDIC will impose additional special assessments on all banks in order to replenish the DIF. Mid Penn generally is unable to control the amount of premiums or special assessments that its banking subsidiary is required to pay for FDIC insurance. As of December 31, 2024, Mid Penn has not been subject to additional special assessments.
We intend to pursue a growth plan consistent with our prior business strategy, including growth by acquisition, as well as leveraging our existing branch network or adding new branch locations or offices and personnel in current and adjacent markets we choose to serve. The Scottdale, First Priority, and Riverview mergers and Brunswick Bancorp acquisition are reflective of our growth strategy.
We intend to pursue a growth plan consistent with our prior business strategy, including growth by acquisition, as well as leveraging our existing branch network or adding new branch locations or offices and personnel in current and adjacent markets we choose to serve.
As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. Our SBA lending program depends on interaction with the SBA, which is an independent agency of the federal government.
Our SBA lending program is dependent upon the federal government. As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
Mid Penn could be required to repurchase mortgage loans or indemnify mortgage loan purchasers due to breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could have a material adverse impact on our liquidity, results of operations and financial condition. Mid Penn originates and sells a significant amount of residential mortgage loans into the secondary market.
Mid Penn could be required to repurchase mortgage loans or indemnify mortgage loan purchasers due to breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could have a material adverse impact on our liquidity, results of operations and financial condition. 21 MID PENN BANCORP, INC.
The recent Scottdale, First Priority, and Riverview mergers, the Brunswick Bancorp acquisition, and any future mergers or acquisitions, involve numerous risks including difficulties in integrating the culture, operations, technologies and personnel of the acquired companies, the diversion of management’s attention from other business concerns and the potential loss of customers.
Our recent acquisitions, and any future acquisitions, involve numerous risks including difficulties in integrating the culture, operations, technologies and personnel of the acquired companies, the diversion of management’s attention from other business concerns and the potential loss of customers.
When Mid Penn sells mortgage loans, Mid Penn is required to make customary representations and warranties to purchasers about the mortgage loans and the manner in which they were originated.
Mid Penn originates and sells a significant amount of residential mortgage loans into the secondary market. When Mid Penn sells mortgage loans, Mid Penn is required to make customary representations and warranties to purchasers about the mortgage loans and the manner in which they were originated.
Other changes in laws or regulations could cause Mid Penn’s third-party service providers and other vendors to increase the prices they charge to Mid Penn and negatively affect Mid Penn’s expenses and financial results. The soundness of other financial institutions may adversely affect Mid Penn. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Other changes in laws or regulations could cause Mid Penn’s third-party service providers and other vendors to increase the prices they charge to Mid Penn and negatively affect Mid Penn’s expenses and financial results. 22 MID PENN BANCORP, INC. The soundness of other financial institutions may adversely affect Mid Penn.
In addition, these or similar events may impact economic growth negatively, which could have an adverse effect on our business and operations and may have other adverse effects on us in ways that we are unable to predict. The impact of and response to the COVID-19 pandemic could adversely affect Mid Penn’s business, financial condition, and results of operations.
In addition, these or similar events may impact economic growth negatively, which could have an adverse effect on our business and operations and may have other adverse effects on us in ways that we are unable to predict.
Any such losses could have a material adverse effect on Mid Penn’s financial condition and results of operations. During 2023, five banks either failed or were sold in an FDIC-assisted transaction. Mid Penn did not have any direct exposure to any of the affected banks.
Many of these transactions expose Mid Penn to credit risk and losses in the event of a default by a counterparty or client. Any such losses could have a material adverse effect on Mid Penn’s financial condition and results of operations. During 2023, five banks either failed or were sold in an FDIC-assisted transaction.
There can be no assurance that Mid Penn will be able to effectively keep pace with these technological advancements or the related substantial costs and investments required, which could adversely affect its financial condition and results of operations. 23 MID PENN BANCORP, INC.
There can be no assurance that Mid Penn will be able to effectively keep pace with these technological advancements or the related substantial costs and investments required, which could adversely affect its financial condition and results of operations. Growing by acquisition entails certain risks, and difficulties in integrating past or future acquisitions could adversely affect our business.
Mid Penn has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose Mid Penn to credit risk and losses in the event of a default by a counterparty or client.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. Mid Penn has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients.
Maintaining higher levels of capital potentially reduces opportunities to leverage interest-earning assets, which could limit the net interest income and profitability of Mid Penn, and adversely impact our financial condition and results of operations.
Maintaining higher levels of capital potentially reduces opportunities to leverage interest-earning assets, which could limit the net interest income and profitability of Mid Penn, and adversely impact our financial condition and results of operations. Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans.
As of December 31, 2023, we had $127.0 million of goodwill and $6.5 million of other intangible assets.
As of December 31, 2024, we had $128.2 million of goodwill and $6.2 million of other intangible assets.
The Federal Reserve raised interest rates in 2022 and 2023 to curb inflation, which is likely to drive down the prices of income or dividend-paying securities. The risk that interest rates may remain volatile is pronounced.
In 2024, the Federal Reserve cut interest rates three times in response to cooling inflation and a weakening labor market, after raising interest rates in 2023 and 2022 to curb inflation, which was expected to drive down the prices of income or dividend-paying securities. The risk that interest rates may remain volatile is pronounced.
These reforms may cause such benchmarks to perform differently than in the past or have other consequences, which cannot be predicted. On July 27, 2017, the United Kingdom’s Financial Conduct Authority ("FCA"), which regulates LIBOR, publicly announced that it intended to stop persuading or compelling banks to submit LIBOR rates after 2021.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority ("FCA"), which regulates LIBOR, publicly announced that it intended to stop persuading or compelling banks to submit LIBOR rates after 2021.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on Mid Penn’s business and, in turn, Mid Penn’s financial condition and results of operations. 16 MID PENN BANCORP, INC.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on Mid Penn’s business and, in turn, Mid Penn’s financial condition and results of operations. The discontinuance of LIBOR presents risks to the financial instruments originated, held or serviced by Mid Penn that use LIBOR as a reference rate.
Adverse events or circumstances could impact the recoverability of these intangible assets including loss of core deposits, significant losses of customer accounts and/or balances, increased competition or adverse changes in the 24 MID PENN BANCORP, INC. economy.
Adverse events or circumstances could impact the recoverability of these intangible assets including loss of core deposits, significant losses of customer accounts and/or balances, increased competition, or adverse changes in the economy. To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge would be recorded, which could have a material adverse effect on our results of operations.
Mid Penn has also completed four other merger acquisitions in recent years (The Scottdale Bank & Trust Company and First Priority Financial Corp. in 2018, Riverview Financial Corporation on November 30, 2021, and Managing Partners, Inc on December 30, 2022). Generally, Mid Penn must receive federal and state regulatory approval before it can acquire a bank or bank holding company.
Mid Penn has completed four other whole bank merger acquisitions in recent years (The Scottdale Bank & Trust Company and First Priority Financial Corp. in 2018, Riverview Financial Corporation on November 30, 2021, and Brunswick Bancorp on May 19, 2023), as well as two nonbank acquisitions.
We cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted.
Regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations. We cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted.
The discontinuance of LIBOR presents risks to the financial instruments originated, held or serviced by Mid Penn that use LIBOR as a reference rate. The London Interbank Offered Rate ("LIBOR") and certain other "benchmarks" are the subject of recent national, international, and other regulatory guidance and proposals for reform.
The London Interbank Offered Rate ("LIBOR") and certain other "benchmarks" are the subject of recent national, international, and other regulatory guidance and proposals for reform. These reforms may cause such benchmarks to perform differently than in the past or have other consequences, which cannot be predicted.
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As a participating lender in the SBA Paycheck Protection Program ("PPP"), we are subject to additional risks of litigation from our clients or other parties regarding our processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties.
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Our SBA lending program depends on interaction with the SBA, which is an independent agency of the federal government.
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Under the Paycheck Protection Program (PPP), small businesses and other entities and individuals were permitted to apply for loans from existing SBA lenders and other approved regulated lenders that enrolled in the program, subject to numerous limitations and eligibility criteria. We participated as a lender in the PPP, which commenced on April 3, 2020.
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Mid Penn did not have any direct exposure to any of the affected banks.
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We have credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by us, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP.
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On November 1, 2024, Mid Penn announced the signing of a definitive merger agreement to acquire William Penn Bancorporation and its wholly-owned subsidiary, William Penn Bank.
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In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded, or serviced by us, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us.
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Our recent acquisitions and the pending William Penn acquisition are reflective of our growth strategy. 25 MID PENN BANCORP, INC.
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As of December 31, 2023, Mid Penn had $1.4 million of PPP loans yet to be forgiven. 17 MID PENN BANCORP, INC. Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans. Our SBA lending program is dependent upon the federal government.
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Risks Related to the Merger Failure to complete the Merger could negatively affect our market price, future business and financial results. Although we anticipate closing the Merger in the second quarter of 2025, we cannot guarantee when, or whether, the Merger will be completed.
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The impact and response to the COVID-19 pandemic has negatively impacted economic and commercial activity and financial markets. Measures to contain the virus, such as stay-at-home orders, travel restrictions, closure of non-essential businesses, occupancy limitations and social distancing requirements, resulted in significant business and operational disruptions, including business closures, and mass layoffs and furloughs.
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If the Merger is not completed for any reason, we will be subject to a number of material risks, including the following: • Costs related to the Merger, such as legal, accounting and financial advisory fees, and, in specific circumstances, additional reimbursement and termination fees, must be paid even if the Merger is not completed. • Declines in our market price to the extent that the current market price of our common stock already reflects a market assumption that the Merger will be completed. • The diversion of management’s attention from the day-to-day business operations and the potential disruption to each company’s employees and business relationships during the period before the completion of the Merger may make it difficult to regain financial and market positions if the Merger does not occur. • Becoming subject to litigation related to any failure to complete the Merger.
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Though most restrictions have been lifted or eased and consumer and business spending and unemployment levels have improved significantly, the economic recovery has been uneven, with industries such as travel, entertainment, hospitality and food service lagging.
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Regulatory waivers and approvals may not be received or may be received and subsequently expire, be revoked or be amended to impose conditions that are not presently anticipated or cannot be met.
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Supply chain disruptions precipitated by the abrupt economic slowdown have contributed to increased costs, lost revenue, and inflationary pressures for many segments of the economy. Further, a significant number of workers left their jobs during the COVID-19 pandemic, leading to wage inflation in many industries as businesses attempt to fill vacant positions.
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Before the transactions contemplated in the Merger Agreement, including the Merger, may be completed, various waivers, approvals or consents must be obtained from various bank regulatory and other authorities, including the Board of Governors of the Federal Reserve System, the FDIC, and the Pennsylvania Department of Banking and Securities.
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In addition, an increase in the remote work force resulting from the COVID-19 pandemic and the potential for a long-term change in remote work practices may also increase risks related to cybersecurity and information security. The operation of a hybrid workplace may negatively impact Mid Penn’s ability to attract and retain qualified personnel.
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In determining whether to grant these approvals, regulatory authorities consider a variety of factors, including the regulatory standing of each party.
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Differences in the 18 MID PENN BANCORP, INC. demands, expectations and priorities of the workforce may require Mid Penn to rethink and amend its recruiting and retention strategies in order to attract and keep new employees. The extent to which the effects of the COVID-19 pandemic will continue to affect our business is unknown.
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These approvals could be delayed or not obtained at all, including due to any or all of the following: an adverse development in any party’s regulatory standing or any other factors considered by regulators in granting such approvals; governmental, political, or community group inquiries, investigations or opposition; or changes in legislation or the political or regulatory environment generally, including as a result of changes of the U.S. executive administration, or Congressional leadership and regulatory agency leadership.
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The lasting impact of the COVID-19 pandemic could: • reduce the demand for loans and other financial services; • result in increases in loan delinquencies, problem assets, and foreclosures; • cause the value of collateral for loans, especially real estate, to decline in value; • reduce the availability and productivity of our employees; • cause our vendors and counterparties to be unable to meet existing obligations to us; • negatively impact the business and operations of third-party service providers that perform critical services for our business; • cause the value of our securities portfolio to decline; and • cause the net worth and liquidity of loan guarantors to decline, impairing their ability to honor commitments to us.
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Even if the approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the Merger Agreement.
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Any one or a combination of the above events could have a material, adverse effect on Mid Penn’s business, financial condition, and results of operations. Interest rate volatility stemming from COVID-19 could negatively affect our net interest income, lending activities, deposits and profitability.
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There can be no assurance that regulators will not impose any such conditions, limitations, obligations, or restrictions or that such conditions, limitations, obligations, or restrictions will not have the 26 MID PENN BANCORP, INC. effect of delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the Merger or otherwise reduce the anticipated benefits of the Merger if the Merger were completed successfully within the expected timeframe.
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Our net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19.
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In addition, there can be no assurance that any such conditions, limitations, obligations, or restrictions will not result in the delay or abandonment of the Merger. The completion of the Merger is conditioned on the receipt of the requisite regulatory approvals without the imposition of any materially burdensome regulatory condition and the expiration of all statutory waiting periods.
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In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25%, citing concerns about the impact of COVID-19 on markets and stress in the energy sector.
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Additionally, the completion of the Merger is conditioned on the absence of certain orders, injunctions, or decrees issued by any court or any governmental entity of competent jurisdiction that would prevent, prohibit, or make illegal the completion of the Merger or any of the other transactions contemplated by the Merger Agreement.
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In a series of moves beginning March 17, 2022 through July 25, 2023 intended to curb increasing inflation, the Federal Reserve increased the federal funds rate to a target range of 5.25% to 5.5%. A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies.
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Despite the parties’ expected commitment to use their reasonable best efforts to respond to any request for information and resolve any objection that may be asserted by any governmental entity with respect to the Merger Agreement, neither party is required under the terms of the Merger Agreement to take any action, commit to take any action, or agree to any condition or restriction in connection with obtaining these approvals, that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the proposed Merger.
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Higher income volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in current fair market values of our assets.
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Further, such approvals are subject to expiration if the transaction is not consummated within the time period provided in the approval. Combining Mid Penn and William Penn may be more difficult, costly or time consuming than expected, and we may fail to realize the anticipated benefits of the Merger.
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Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition.
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The success of the Merger will depend on, among other things, our ability to integrate William Penn into our business in a manner that facilitates growth opportunities and achieves the anticipated benefits of the Merger.
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Similar and even more expansive initiatives are expected under the current administration, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting practices, and credit portfolio concentrations management practices.
Added
If we are not able to successfully achieve these objectives, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost and savings and anticipated benefits of the Merger could be less than anticipated, and integration may result in additional unforeseen expenses.
Removed
Growing by acquisition entails certain risks, and difficulties in integrating past or future acquisitions could adversely affect our business. On May 19, 2023, Mid Penn's acquisition of Brunswick Bancorp and its wholly-owned subsidiary, Brunswick Bank & Trust Company, was completed.
Added
Litigation relating to the Merger could require us to incur significant costs and suffer management distraction, as well as delay and/or enjoin the Merger. We are not currently able to predict the outcome of any suit arising out of or relating to the proposed Merger that may be filed in the future.
Removed
To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge would be recorded, which could have a material adverse effect on our results of operations. Risks Related to Mid Penn Common Stock The trading volume in Mid Penn’s common stock is less than that of other larger financial services companies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Chief Information Security Officer has 20 years of experience and is accompanied by an Information Security Officer with ten years of experience in the field. With over twenty years of experience providing secure networks for the banking industry, the Information Technology Operations Manager is highly skilled in network security and risk mitigation.
Biggest changeThe Chief Information Security Officer has 20 years of experience and is accompanied by an Information Security Officer with eleven years of experience in the field. With more than 15 years of experience in information technology and network security, the Information Technology Operations Manager is highly skilled in network security and risk mitigation.
However, our commitment is to maintain a careful balance between innovation and risk mitigation. To achieve this, we have developed a risk appetite that aligns with our strategic goals and regulatory requirements. This framework encourages innovation while ensuring our risks are well-understood, measured, and managed. 28 MID PENN BANCORP, INC.
However, our commitment is to maintain a careful balance between innovation and risk mitigation. To achieve this, we have developed a risk appetite that aligns with our strategic goals and regulatory requirements. This framework encourages innovation while ensuring our risks are well-understood, measured, and managed. 31 MID PENN BANCORP, INC.
The company's cybersecurity strategy is actively overseen and guided by the Board of Directors through a quarterly subcommittee meeting with the full Board engaged annually. Executive management provides cybersecurity and risk management updates to the Board through the Risk Committee and the Technology Steering Committee. Information Technology knowledge is considered a core competency by eight of fifteen Board members.
The company's cybersecurity strategy is actively overseen and guided by the Board of Directors through a quarterly subcommittee meeting with the full Board engaged annually. Executive management provides cybersecurity and risk management updates to the Board through the Risk Committee and the Technology Steering Committee. Information Technology knowledge is considered a core competency by eight of eleven Board members.
Additionally, we regularly conduct social engineering tests on our employees to keep them sharp and alert for threats through email, text messages, and voice calls. Mid Penn did not experience a material incident to our computer systems or networks in 2023.
Additionally, we regularly conduct social engineering tests on our employees to keep them sharp and alert for threats through email, text messages, and voice calls. Mid Penn did not experience a material incident to our computer systems or networks in 2024.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Bank owned 28 of those locations and leased 21 locations. All real estate owned by Mid Penn is free and clear of encumbrances. Mid Penn’s leases expire at various dates through the year 2039 and generally include options to renew.
Biggest changeAs of December 31, 2024, the Bank’s retail office network was comprised of 45 full-service retail locations. The Bank owned 26 of those locations and leased 19 locations. All real estate owned by Mid Penn is free and clear of encumbrances. Mid Penn’s leases expire at various dates through the year 2039 and generally include options to renew.
Additionally, the Bank owns one building in Halifax, Pennsylvania that serves as an operational support facility and one building in Harrisburg, Pennsylvania that serves as corporate administrative and operational support offices. Administrative space is also leased in Pottsville, Lancaster, Clearfield and Chambersburg, Pennsylvania. As of December 31, 2023, the Bank’s retail office network was comprised of 49 full-service retail locations.
Additionally, the Bank owns one building in Halifax, Pennsylvania that serves as an operational support facility and one building in Harrisburg, Pennsylvania that serves as corporate administrative and operational support offices. Administrative space is also leased in Malvern, Pottsville, Lancaster, Clearfield and Chambersburg, Pennsylvania.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn addition, management does not know of any material proceedings contemplated by governmental authorities against Mid Penn, the Bank, or any of its properties.
Biggest changeIn addition, management does not know of any material proceedings contemplated by governmental authorities against Mid Penn or any of its properties.
Removed
ITEM 3. LEGAL PROCEEDINGS Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position of the Corporation. Mid Penn and the Bank have no proceedings pending other than ordinary, routine litigation occurring in the normal course of business.
Added
ITEM 3. LEGAL PROCEEDINGS Mid Penn and its subsidiaries are subject to various pending and threatened legal proceedings or other matters arising out of the normal conduct of business in which claims for monetary damages are asserted.
Added
As of the date of this report, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of such pending or threatened matters will be material to Mid Penn’s consolidated financial position. On at least a quarterly basis, Mid Penn assesses its liabilities and contingencies in connection with such matters.
Added
For those matters where it is probable that Mid Penn will incur losses and the amounts of the losses can be reasonably estimated, Mid Penn records an expense and corresponding liability in its consolidated financial statements. To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable.
Added
The range of losses for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate. This is based on information currently available to Mid Penn and involves elements of judgment and significant uncertainties.
Added
While Mid Penn does not believe that the outcome of pending or threatened litigation or other matters will be material to Mid Penn’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.
Added
In addition, regardless of the ultimate outcome of any such legal proceeding, inquiry or investigation, any such matter could cause Mid Penn to incur additional expenses, which could be significant, and possibly material, to Mid Penn’s results of operations in any future period.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndex 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Mid Penn Bancorp, Inc. 100.00 129.12 101.73 152.16 147.69 124.02 Current Peers (1) 100.00 127.28 100.92 154.07 142.61 147.00 Prior Peers (2) 100.00 123.31 92.01 129.81 122.04 121.37 KBW NASDAQ Bank Index Return 100.00 132.14 114.13 154.13 117.56 111.93 (1) Current Peers includes AMAL, CCNE, CHCO, CNOB, FCF, FFIC, FISI, KRNY, MCB, NFBK, ORRF, PGC, STBA, TBBK, TMP, TRST, UVSP and WASH; Excludes CATC due to announced merger with EBC (2) Prior Peers includes ACNB, AROW, CARE, CCNE, CHCO, CNOB, CZNC, EBTC, FCF, FISI, FLIC, FRBK, FRST, LBAI, ORRF, PFIS, PGC, SMMF, STBA, TMP and UVSP; Excludes CATC due to announced merger with EBC Note: Peer group returns reflect average total return of respective peer group In accordance with the rules of the SEC, this section, captioned "Stock Performance Graph," is not incorporated by reference into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933.
Biggest changeIndex 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Mid Penn Bancorp, Inc. 100.00 78.79 117.84 114.38 96.05 117.89 Current Peers (1) 100.00 79.03 112.09 106.63 104.92 118.63 Prior Peers (2) 100.00 78.92 118.12 110.33 112.74 131.54 KBW NASDAQ Bank Index Return 100.00 86.37 116.64 88.97 84.71 112.44 (1) Current Peers includes AROW, CCNE, CHMG, CNOB, CZFS, CZNC, FCF, FFIC, FISI, FRBA, LNKB, ORRF, PFIS, PGC, SHBI, STBA, TMP, UNTY and UVSP; Excludes FLIC due to pending merger with CNOB (2) Prior Peers includes AMAL, CCNE, CHCO, CNOB, FCF, FFIC, FISI, KRNY, MCB, NFBK, ORRF, PGC, STBA, TBBK, TMP, TRST, UVSP and WASH; Excludes CATC due to completed merger with EBC Note: Peer group returns reflect average total return of respective peer group In accordance with the rules of the SEC, this section, captioned "Stock Performance Graph," is not incorporated by reference into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933.
Stock Performance Graph As of December 31, 2023, to better align with the Company's direct competitors, the Company has chosen to change the composition of its peer group for the performance graph below. The total shareholder return is based on a $100 investment on December 31, 2018.
Stock Performance Graph As of December 31, 2024, to better align with the Company's direct competitors, the Company has chosen to change the composition of its peer group for the performance graph below. The total shareholder return is based on a $100 investment on December 31, 2019.
The Repurchase Program was extended through May 11, 2024 by Mid Penn’s Board of Directors on May 11, 2023. Under the Repurchase Program, Mid Penn may conduct repurchases of its common stock through open market transactions (which may be by means of a trading plan adopted under SEC Rule 10b5-1) or in privately negotiated transactions.
The Repurchase Program was extended through April 24, 2025 by Mid Penn’s Board of Directors on April 24, 2024. Under the Repurchase Program, Mid Penn may conduct repurchases of its common stock through open market transactions (which may be by means of a trading plan adopted under SEC Rule 10b5-1) or in privately negotiated transactions.
Annual Meeting: The Annual Meeting of the Shareholders of Mid Penn is expected to be held virtually at 10:00 a.m. on Tuesday, May 14, 2024.
Annual Meeting: The Annual Meeting of the Shareholders of Mid Penn is expected to be held virtually at 10:00 a.m. on Tuesday, May 13, 2025.
Number of Shareholders: As of March 28, 2024, there were approximately 4,400 shareholders of record of Mid Penn’s common stock. Dividends: Mid Penn’s dividend payout philosophy looks to provide reasonable quarterly cash returns to shareholders while still retaining sufficient earnings to finance future growth and maintain sound capital levels.
Number of Shareholders: As of March 13, 2025, there were approximately 5,000 shareholders of record of Mid Penn’s common stock. Dividends: Mid Penn’s dividend payout philosophy looks to provide reasonable quarterly cash returns to shareholders while still retaining sufficient earnings to finance future growth and maintain sound capital levels.
There were 12,500 shares repurchased during the fourth quarter of 2023: October 2023 November 2023 December 2023 Number of shares repurchased — 2,500 10,000 Securities Authorized for Issuance under Equity Compensation Plans: Information regarding the Corporation’s equity compensation plans is included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. 30 MID PENN BANCORP, INC.
The Repurchase Program had approximately $5.0 million remaining available for repurchase as of December 31, 2024. Securities Authorized for Issuance under Equity Compensation Plans: Information regarding the Corporation’s equity compensation plans is included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. 33 MID PENN BANCORP, INC.
During the year ended December 31, 2023, Mid Penn repurchased 216,879 shares of common stock at an average price of $22.31 per share under the Repurchase Program. The Repurchase Program had $5.3 million remaining available for repurchase as of December 31, 2023.
During the year ended December 31, 2024, Mid Penn repurchased 15,500 shares of common stock at an average price of $20.81 per share. No shares were purchased during the fourth quarter of 2024. As of December 31, 2024, Mid Penn had repurchased 440,722 shares of common stock at an average price of $22.78 per share under the Program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMid Penn’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation: • the effects of future economic conditions on Mid Penn, the Bank, its nonbank subsidiaries, and their 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 Mid Penn’s 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 Mid Penn Bank’s capital stock is currently subject, or imposition of any additional taxes on the capital stock of Mid Penn or Mid Penn 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 the regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, the SEC, and other accounting and reporting standard setters; • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; • technological changes; • our ability to implement business strategies, including our acquisition strategy; • our ability to successfully expand our franchise, including 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 failure of assumptions underlying the establishment of reserves for loan 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 NASDAQ; • 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; and • the factors described in Item 1A of this Annual Report.
Biggest changeThe 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 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; • 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, including litigation related to the Merger; • changes in technology; • 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; 35 MID PENN BANCORP, INC.
Management’s Discussion and Analysis This Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of Mid Penn’s Consolidated Financial Statements from the view of management and should be read in conjunction with the Consolidated Financial Statements of the Corporation and Notes thereto and other detailed information appearing elsewhere in this Annual Report on Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of Mid Penn’s Consolidated Financial Statements from the view of management and should be read in conjunction with the Consolidated Financial Statements of the Corporation and Notes thereto and other detailed information appearing elsewhere in this Annual Report on Form 10-K.
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.
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.
Item 1. – Financial Statements of this report. Upon the adoption of FASB ASC Topic 326 on January 1, 2023, Mid Penn recorded an overall increase of $15.0 million to the ACL on January 1, 2023 as a result of the adoption of CECL. Retained earnings decreased $11.5 million and deferred tax assets increased by $3.1 million.
Item 1. – Financial Statements of this report. Upon the adoption of FASB ASC 326 on January 1, 2023, Mid Penn recorded an overall increase of $15.0 million to the ACL on January 1, 2023 as a result of the adoption of CECL. Retained earnings decreased $11.5 million and deferred tax assets increased by $3.1 million.
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. Mid Penn’s investment portfolio includes both held-to-maturity securities and available-for-sale securities. 44 MID PENN BANCORP, INC.
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. Mid Penn’s investment portfolio includes both held-to-maturity securities and available-for-sale securities. 49 MID PENN BANCORP, INC.
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. 51 MID PENN BANCORP, INC.
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. 56 MID PENN BANCORP, INC.
Tax-equivalent adjustments were calculated using a statutory corporate tax rate of 21% for the years ended December 31, 2023, 2022 and 2021. For purposes of calculating loan yields, average loan balances include non-accrual loans.
Tax-equivalent adjustments were calculated using a statutory corporate tax rate of 21% for the years ended December 31, 2024, 2023 and 2022. For purposes of calculating loan yields, average loan balances include non-accrual loans.
For details on the variances of noninterest expense for the year ended December 31, 2022 compared to the year ended December 31, 2021 refer to the "Noninterest Expense" section of the Management's Discussion and Analysis in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
For details on the variances of noninterest expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 refer to the "Noninterest Expense" section of the Management's Discussion and Analysis in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
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. 46 MID PENN BANCORP, INC.
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. 51 MID PENN BANCORP, INC.
In addition, our net interest income may be impacted by further interest rate actions of the Federal Reserve’s FOMC. 39 MID PENN BANCORP, INC.
In addition, our net interest income may be impacted by further interest rate actions of the Federal Reserve’s FOMC. 43 MID PENN BANCORP, INC.
Management of the Corporation considers the accounting judgments relating to the allowance for credit losses 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 and goodwill impairment to be the accounting area that requires the most subjective and complex judgments.
Management’s Discussion and Analysis The volume analysis of changes in net interest income as of December 31 are as follows: Years Ended December 31, 2023 vs. December 31, 2022 Years ended December 31, 2022 vs.
Management’s Discussion and Analysis The volume analysis of changes in net interest income as of December 31 are as follows: Years Ended December 31, 2024 vs. December 31, 2023 Years ended December 31, 2023 vs.
Tax-exempt income is shown on a tax equivalent basis using a statutory corporate tax rate of 21% for the years ended December 31, 2023, 2022 and 2021. For the year ended December 31, 2023, Mid Penn’s FTE net interest margin was 3.26% versus 3.59% for the year ended December 31, 2022 and 3.30% for the year ended December 31, 2021.
Tax-exempt income is shown on a tax equivalent basis using a statutory corporate tax rate of 21% for the years ended December 31, 2024, 2023 and 2022. For the year ended December 31, 2024, Mid Penn’s FTE net interest margin was 3.11% versus 3.26% for the year ended December 31, 2023 and 3.59% for the year ended December 31, 2022.
The Corporation 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 Corporation 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. 36 MID PENN BANCORP, INC.
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, Centre, Chester, Clearfield, Cumberland, Dauphin, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland and 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, Fayette, Huntingdon, Lancaster, Lehigh, Luzerne, Montgomery, Perry, Schuylkill and Westmoreland, along with Middlesex and Monmouth counties of New Jersey.
All written or oral forward-looking statements attributable to Mid Penn are expressly qualified in their entirety by these cautionary factors. 32 MID PENN BANCORP, INC.
All written or oral forward-looking statements attributable to Mid Penn are expressly qualified in their entirety by these cautionary factors.
The comparability of the results of operations for the year ended 2023, compared to 2022 and 2021, in general, have been materially impacted by the Brunswick Acquisition, which closed on May 19, 2023.
The comparability of the results of operations for the years ended 2024 and 2023, compared to 2022, in general, have been materially impacted by the Brunswick Acquisition, which closed on May 19, 2023.
The provision for income taxes for the year ended December 31, 2023 reflects an effective combined Federal and state tax rate ("ETR") of 16.3%, compared to an ETR of 18.6% for the year ended December 31, 2022 .
The provision for income taxes for the year ended December 31, 2024 reflects an effective combined Federal and state tax rate ("ETR") of 17.6%, compared to an ETR of 16.3% for the year ended December 31, 2023 .
Mid Penn maintained regulatory capital levels, leverage ratios, and risk-based capital ratios as of December 31, 2023 and 2022, as follows: December 31, 2023 December 31, 2022 Regulatory Minimum for Capital Adequacy Tier I Leverage Capital (to Average Assets) 8.32 % 9.57 % 4.00 % Common Equity Tier I (to Risk-Weighted Assets) 9.78 11.18 7.00 Tier I Risk-Based Capital (to Risk-Weighted Assets) 9.78 11.18 8.50 Total Risk-Based Capital (to Risk-Weighted Assets) 11.69 13.19 10.50 As of December 31, 2023 and December 31, 2022, Mid Penn and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized".
Mid Penn maintained regulatory capital levels, leverage ratios, and risk-based capital ratios as of December 31, 2024 and 2023, as follows: December 31, 2024 December 31, 2023 Regulatory Minimum for Capital Adequacy Tier I Leverage Capital (to Average Assets) 9.98 % 8.32 % 4.00 % Common Equity Tier I (to Risk-Weighted Assets) 12.09 9.78 7.00 Tier I Risk-Based Capital (to Risk-Weighted Assets) 12.09 9.78 8.50 Total Risk-Based Capital (to Risk-Weighted Assets) 13.98 % 11.69 % 10.50 % As of December 31, 2024 and December 31, 2023, Mid Penn and the Bank met all capital adequacy requirements, and the Bank was considered "well-capitalized".
The increase in the rate was primarily a result of a shift in the mix of deposits from demand, money market and savings to higher yielding time deposits. Mid Penn continued to offer higher rates to both retain and attract deposits.
The increase in the rate was primarily a result of deposit growth and a shift in the mix of deposits from noninterest-bearing to higher yielding demand, money market and time deposits. Mid Penn continued to offer higher rates to both retain and attract deposits.
Management’s Discussion and Analysis The following table presents the expected maturities of the investment portfolio and the weighted average yields (calculated based on historical cost and tax-equivalent basis assuming a 21% tax rate) as of December 31, 2023: Maturing (In Thousands) One Year and Less After One Year thru Five Years After Five Years Thru Ten Years After Ten Years As of December 31, 2023 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.
Management’s Discussion and Analysis The following table presents the expected maturities of the investment portfolio and the weighted average yields (calculated based on historical cost and net of tax) as of December 31, 2024: Maturing (In Thousands) One Year and Less After One Year thru Five Years After Five Years Thru Ten Years After Ten Years As of December 31, 2024 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.
See also the "Net Interest Income" section. During the second quarter of 2023, Mid Penn completed the Brunswick Acquisition, which added total assets of $391.9 million comprised primarily of $324.5 million of loans. This transaction resulted in the addition of 5 branches in central New Jersey.
See also the "Net Interest Income" section. (2) Annualized ratios During the second quarter of 2023, Mid Penn completed the Brunswick Acquisition, which added total assets of $390.7 million comprised primarily of $324.5 million of loans. This transaction resulted in the addition of 5 branches in central New Jersey.
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.
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- 48 MID PENN BANCORP, INC. Management’s Discussion and Analysis income housing investments.
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. 48 MID PENN BANCORP, INC.
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.
Management’s Discussion and Analysis As of December 31, 2023, uninsured deposits were approximately $1.2 billion compared to $1.6 billion as of December 31, 2022.
Management’s Discussion and Analysis As of December 31, 2024, uninsured deposits were approximately $1.4 billion compared to $1.2 billion as of December 31, 2023.
In addition, average short-term borrowings of $107.3 million were used to help fund loan growth, contributing to the $6.6 million increase in interest expense on short-term borrowings for the year ended December 31, 2023 as compared to 2022.
In addition, average short-term borrowings of $190.9 million were used to help fund loan growth, contributing to the $3.5 million increase in interest expense on short-term borrowings for the year ended December 31, 2024 as compared to 2023.
Deposits and Other Funding Sources Mid Penn's primary source of funds are retail deposits from businesses, public funds depositors, and consumers in its market area. For the year ended December 31, 2023, deposits totaled $4.3 billion, an increase of $567.9 million, or 15.0%.
Deposits and Other Funding Sources Mid Penn's primary source of funds are retail deposits from businesses, public funds depositors, and consumers in its market area. For the year ended December 31, 2024, deposits totaled $4.7 billion, an increase of $343.7 million, or 7.9%, compared to $4.3 billion as of December 31, 2023.
For details on the variances of noninterest income for the year ended December 31, 2022 compared to the year ended December 31, 2021 refer to the "Noninterest Income" section of the Management's Discussion and Analysis in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 42 MID PENN BANCORP, INC.
For details on the variances of noninterest income for the year ended December 31, 2023 compared to the year ended December 31, 2022 refer to the "Noninterest Income" section of the Management's Discussion and Analysis in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Summary of Financial Results • Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the year ended December 31, 2023 was $37.4 million or $2.29 per common share basic and diluted, compared to earnings of $54.8 million or $3.44 per common share basic and diluted for the year ended December 31, 2022.
Summary of Financial Results • Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the year ended December 31, 2024 was $49.4 million or $2.90 per common share basic and diluted, compared to earnings of $37.4 million or $2.29 per common share basic and diluted for the year ended December 31, 2023.
To the extent actual outcomes differ from management estimates, additional PCL may be required that would adversely impact earnings in future periods. The allowance for credit losses - Loans was $34.2 million as of December 31, 2023, an increase of $15.2 million, or 80.3%, compared to $19.0 million as of December 31, 2022.
To the extent actual outcomes differ from management estimates, additional PCL may be required that would adversely impact earnings in future periods. The allowance for credit losses - Loans was $35.5 million as of December 31, 2024, an increase of $1.3 million, or 3.9%, compared to $34.2 million as of December 31, 2023.
The following table presents a summary of the Corporation's earnings and selected performance ratios: December 31, 2023 2022 2021 Net Income $ 37,397 $ 54,806 $ 29,319 Diluted EPS $ 2.29 $ 3.44 $ 2.71 Dividends Declared $ 0.80 $ 0.80 $ 0.79 Return on average assets 0.77 % 1.22 % 0.83 % Return on average equity 7.16 % 10.98 % 8.91 % Net interest margin (1) 3.26 % 3.59 % 3.30 % Non-performing assets to total assets 0.27 % 0.21 % 0.22 % Net charge-off to average loans 0.009 % (0.002) % 0.068 % (1) Presented on a FTE basis using a 21% Federal tax rate and statutory interest expense disallowances.
Management’s Discussion and Analysis The following table presents a summary of the Corporation's earnings and selected performance ratios: December 31, 2024 2023 2022 Net Income $ 49,437 $ 37,397 $ 54,806 Diluted EPS $ 2.90 $ 2.29 $ 3.44 Dividends Declared $ 0.80 $ 0.80 $ 0.80 Return on average assets (2) 0.91 % 0.77 % 1.22 % Return on average equity (2) 8.61 % 7.16 % 10.98 % Net interest margin (1) 3.11 % 3.26 % 3.59 % Non-performing assets to total assets 0.41 % 0.27 % 0.21 % Net charge-off to average loans 0.019 % 0.009 % (0.002) % (1) Presented on a FTE basis using a 21% Federal tax rate and statutory interest expense disallowances.
Management’s Discussion and Analysis The following table represents non-performing assets as of: December 31, (Dollars in thousands) 2023 2022 2021 Non-performing Assets: Total non-performing loans $ 14,216 $ 8,585 $ 9,982 Foreclosed real estate 293 43 — Total non-performing assets 14,509 8,628 9,982 Accruing loans 90 days or more past due — 654 515 Total risk elements $ 14,509 $ 9,282 $ 10,497 Non-performing loans as a percentage of total loans outstanding 0.33 % 0.24 % 0.32 % Non-performing assets as a percentage of total loans outstanding and foreclosed real estate 0.34 % 0.25 % 0.32 % Non-accrual loans as a percentage of total loans 0.33 % 0.23 % 0.31 % Allowance for credit losses as a percentage of total loans 0.80 % 0.54 % 0.47 % Allowance for credit losses as a percentage of non-accrual loans 240.48 % 231.33 % 152.90 % Ratio of ACL to non-performing loans 240.48 % 220.82 % 146.23 % Total nonperforming assets were $14.5 million at December 31, 2023, an increase compared to nonperforming assets of $8.6 million at December 31, 2022.
Management’s Discussion and Analysis The following table represents non-performing assets as of: December 31, (Dollars in thousands) 2024 2023 2022 Non-performing Assets: Total non-accrual loans $ 22,610 $ 14,216 $ 8,585 Foreclosed real estate 44 293 43 Total non-performing assets 22,654 14,509 8,628 Accruing loans 90 days or more past due — — 654 Total risk elements $ 22,654 $ 14,509 $ 9,282 Non-accrual loans as a percentage of total loans outstanding 0.51 % 0.33 % 0.24 % Non-performing assets as a percentage of total loans outstanding and foreclosed real estate 0.51 % 0.34 % 0.25 % Allowance for credit losses as a percentage of total loans 0.80 % 0.80 % 0.54 % Ratio of ACL to non-performing loans 157.07 % 240.48 % 220.82 % Total nonperforming assets were $22.7 million at December 31, 2024, an increase compared to nonperforming assets of $14.5 million at December 31, 2023.
The guidance in FASB ASC 326 replaces Mid Penn’s previous incurred loss methodology with a methodology that reflects the current expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit losses.
The guidance in FASB ASC 326 replaced Mid Penn’s previous incurred loss methodology with a methodology that reflects the current expected credit losses and requires consideration of a broader range of reasonable and supportable information 53 MID PENN BANCORP, INC. Management’s Discussion and Analysis to determine credit losses.
(2) Weighted average Loan to Value is calculated based on estimated current market values of the properties. 47 MID PENN BANCORP, INC.
(2) Weighted average Loan to Value is calculated based on estimated current market values of the properties.
Mid Penn’s operating activities during the year ended December 31, 2023 provided $51.9 million of cash, mainly due to net income. Cash used in investing activities during the year ended December 31, 2023 was $408.5 million, mainly the result of the net increase in loans.
Mid Penn’s operating activities during the year ended December 31, 2024 provided $51.4 million of cash, mainly due to net income. Cash used in investing activities during the year ended December 31, 2024 was $208.7 million, mainly the result of the net increase in loans.
Refer to Note 2 - Business Combinations for further details. Results of Operations Net Interest Income Net interest income, Mid Penn's primary source of earnings, represents the difference between interest income received on loans, investments, and overnight funds, and interest expense paid on deposits and short- and long-term borrowings.
Results of Operations Net Interest Income Net interest income, Mid Penn's primary source of earnings, represents the difference between interest income received on loans, investments, and overnight funds, and interest expense paid on deposits and short- and long-term borrowings.
At December 31, 2023, the unrealized loss on AFS investment securities resulted in a positive impact to shareholders’ equity of $2.0 million (comprised of a gross unrealized gain on securities of $2.1 million net of a deferred income tax cost of $144 thousand).
At December 31, 2024, the unrealized loss on AFS investment securities resulted in a negative impact to shareholders’ equity of $1.6 million (comprised of a gross unrealized loss on securities of $2.0 million, net of deferred income tax).
The PCL for the year ended December 31, 2023 includes an initial provision for credit losses on non-PCD loans acquired in the Brunswick Acquisition of $2.0 million. • Noninterest Income - Noninterest income totaled $20.0 million for the year ended December 31, 2023, a $3.6 million, or 15.4%, decrease compared to the year ended December 31, 2022.
The PCL for the year ended December 31, 2023 includes an initial provision for credit losses on non-PCD loans acquired in the Brunswick Acquisition of $2.0 million. • Noninterest Income - Noninterest income totaled $22.5 million for the year ended December 31, 2024, a $2.5 million, or 12.4%, increase compared to the year ended December 31, 2023.
At December 31, 2022, the unrealized loss on AFS investment securities resulted in a negative impact to shareholders’ equity of $19.1 million (comprised of a gross unrealized loss on securities of $24.1 million and net of a deferred income tax benefit of $5.1 million). Mid Penn does not have any significant concentrations of non-governmental securities within its investment portfolio.
At December 31, 2023, the unrealized gain on AFS investment securities resulted in a positive impact to shareholders’ equity of $2.0 million (comprised of a gross unrealized gain on securities of $2.1 million, net of deferred income tax). Mid Penn does not have any significant concentrations of non-governmental securities within its investment portfolio.
Management’s Discussion and Analysis While management uses the best information known to it in order to make ACL valuations, adjustments to the ACL may be necessary based on changes in economic and other conditions, changes in the composition of the loan portfolio, or changes in accounting guidance.
The CECL estimate is highly sensitive to the economic forecasts used to develop the estimate. While management uses the best information known to it in order to make ACL valuations, adjustments to the ACL may be necessary based on changes in economic and other conditions, changes in the composition of the loan portfolio, or changes in accounting guidance.
Loan fees of $4.6 million, $8.4 million and $25.5 million are included with loan interest income in the following table for the years ended December 31, 2023, 2022, and 2021, respectively.
Loan fees of $4.8 million, $4.6 million and $8.4 million are included with loan interest income in the following table for the years ended December 31, 2024, 2023, and 2022, respectively. 40 MID PENN BANCORP, INC.
The yield on interest-earning assets increased 121 basis point(s) ("bp") in 2023 compared to 2022 and the rate on interest-bearing liabilities increased 197 bp in 2023 compared to 2022. ◦ Loan Growth - Total loans, net of unearned income, as of December 31, 2023 were $4.3 billion compared to $3.5 billion as of December 31, 2022 , an increase of $738.7 million, or 21.0%.
The yield on interest-earning assets increased 44 basis point(s) ("bp") for the year ended December 31, 2024 compared to the year ended December 31, 2023 and the rate on interest-bearing liabilities increased 70 bp for the year ended December 31, 2024 compared to the year ended December 31, 2023. ◦ Loan Growth - Total loans, net of unearned income, as of December 31, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023 , an increase of $190.3 million, or 4.5%.
The yield on average total loans, net, increased from 4.68% for 2022 to 5.65% for 2023. The increase in the yield was primarily the result of the higher interest rate environment during 2023. 38 MID PENN BANCORP, INC.
The yield on average total loans, net, increased from 5.65% for 2023 to 6.07% for 2024. The increase in the yield was primarily the result of the higher interest rate environment during 2024.
The increase was primarily the result of the CECL implementation in 2023. Goodwill Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible, a triggering event.
The increase was primarily the result of an increase in the reserve for individually analyzed loans during the fourth quarter of 2024. Goodwill Mid Penn evaluates goodwill annually for impairment unless events occur which indicate that impairment is possible, a triggering event.
The following table represents the analysis of the allowance for credit losses: Years ended December 31, (In Thousands) 2023 2022 2021 Balance, beginning of year $ 18,957 $ 14,597 $ 13,382 Loans charged off: Commercial real estate 16 7 1,044 Commercial and industrial 238 1 866 Construction — — 23 Residential mortgage 13 26 13 Consumer 135 97 42 Total loans charged off 402 131 1,988 Recoveries on loans previously charged off: Commercial real estate — 128 207 Commercial and industrial — 13 13 Construction — 24 8 Residential mortgage 38 4 11 Consumer 32 22 19 Total loans recovered 70 191 258 Net charge-offs (recoveries) 332 (60) 1,730 Provision for loan losses 3,295 4,300 2,945 Impact from the adoption of CECL $ 11,931 $ — $ — Purchase Credit Deteriorated loans $ 336 $ — $ — Balance, end of year $ 34,187 $ 18,957 $ 14,597 40 MID PENN BANCORP, INC.
Management’s Discussion and Analysis The following table represents the analysis of the allowance for credit losses: Years ended December 31, (In Thousands) 2024 2023 2022 Balance, beginning of year $ 34,187 $ 18,957 $ 14,597 Loans charged off: Commercial real estate CRE Nonowner Occupied — — 7 CRE Owner Occupied — 16 — Total Commercial real estate — 16 7 Commercial and industrial 819 238 1 Residential mortgage 1-4 Family 1st Lien 7 13 25 1-4 Family Rental 2 — — HELOC and Junior Liens 21 — 1 Total residential mortgage 30 13 26 Consumer 52 135 97 Total loans charged off 901 402 131 Recoveries on loans previously charged off: Commercial real estate CRE Nonowner Occupied 2 — — CRE Owner Occupied 4 — 128 Total commercial real estate 6 — 128 Commercial and industrial 1 — 13 Construction Other Construction — — 24 Total construction — — 24 Residential mortgage 1-4 Family 1st Lien 16 7 2 1-4 Family Rental 22 31 — HELOC and Junior Liens — — 2 Total residential mortgage 38 38 4 Consumer 39 32 22 Total loans recovered 84 70 191 Net charge-offs (recoveries) 817 332 (60) Provision for loan losses 2,144 3,295 4,300 Impact from the adoption of CECL — 11,931 — Purchase Credit Deteriorated loans — 336 — Balance, end of year $ 35,514 $ 34,187 $ 18,957 45 MID PENN BANCORP, INC.
Interest income increased $30.0 million as the result of a $406.9 million, or 9.1%, increase in average interest-earning assets in 2023 compared to 2022 and increased $40.8 million as the result of a 121 bp increase in the yield on interest-earning assets in 2023 compared to 2022.
Interest income increased $30.3 million as the result of a $538.2 million, or 11.9%, increase in average interest-earning assets in 2024 compared to 2023, and increased $20.0 million as the result of a 44 bp increase in the yield on interest-earning assets in 2024 compared to 2023.
Income Taxes The provision for income taxes was $7.3 million during the year ended December 31, 2023 , a decrease of $5.2 million compared to $12.5 million for the same period in 2022.
Income Taxes The provision for income taxes was $10.6 million during the year ended December 31, 2024 , an increase of $3.3 million compared to $7.3 million for the same period in 2023 .
Cash provided by financing activities during the year ended December 31, 2023 totaled $392.5 million, primarily the result of an increase in net deposits. The net cash received from the Brunswick Acquisition totaled $1.1 million.
Cash provided by financing activities during the year ended December 31, 2024 totaled $131.2 million, primarily the result of an increase in net deposits.
Management’s Discussion and Analysis The following table represents the Commercial Real Estate portfolio by property type as of December 31, 2023: (Dollars in thousands) December 31, 2023 Commercial Real Estate Balance % of portfolio Weighted Average LTV (2) Owner Occupied (1) $ 627,995 27.4 % N/A Farmland (1) 212,690 9.2 N/A Multifamily 308,886 13.4 58.9 Non Owner Occupied Retail 414,485 18.0 51.0 Office 301,810 13.1 64.4 Industrial 156,075 6.8 49.3 Hospitality 137,718 6.0 49.4 Flex 39,374 1.7 56.0 Mobile Home Park 21,298 0.9 68.4 Health Care 15,618 0.7 54.6 Other Property Types 65,257 2.8 43.2 Total Commercial Real Estate $ 2,301,206 100.0 % 55.4 % (1) LTV not available for Owner Occupied and Farmland properties.
Management’s Discussion and Analysis The following table represents the Commercial Real Estate portfolio by property type along with the weighted average loan to value as of December 31, 2024: (Dollars in thousands) December 31, 2024 December 31, 2023 Commercial Real Estate Balance % of portfolio Weighted Average LTV (2) Balance % of portfolio Weighted Average LTV (2) Owner Occupied (1) $ 624,007 24.8 % N/A $ 629,904 27.5 % N/A Farmland (1) 224,709 8.9 N/A 212,690 9.2 N/A Multifamily 412,900 16.4 63.8 309,059 13.4 58.9 Non Owner Occupied Retail 426,171 17.0 60.3 414,485 18.0 51.0 Office 296,468 11.8 63.2 301,810 13.1 64.4 Industrial 161,683 6.4 53.2 156,075 6.8 49.3 Hospitality 152,060 6.1 51.2 137,718 6.0 49.4 Flex 44,187 1.8 44.2 39,374 1.7 56.0 Mobile Home Park 17,748 0.7 67.7 21,298 0.9 68.4 Health Care 14,511 0.6 55.3 15,618 0.7 54.6 Other Property Types 138,182 5.5 64.1 63,175 2.7 43.2 Total Commercial Real Estate $ 2,512,626 100.0 % 59.9 % $ 2,301,206 100.0 % 55.4 % (1) LTV not available for Owner Occupied and Farmland properties.
The greater the Corporation’s capital resources, the more likely it is to meet its cash obligations and absorb unforeseen losses. Capital management practices have been, and will continue to be, of paramount importance to the Corporation in support of both its regulatory capital requirements and its shareholders.
Capital management practices have been, and will continue to be, of paramount importance to the Corporation in support of both its regulatory capital requirements and its shareholders.
The Federal Reserve’s Federal Open Market Committee ("FOMC") increased rates four times during 2023.
The Federal Reserve’s Federal Open Market Committee ("FOMC") decreased rates three times during 2024.
Management’s Discussion and Analysis Average balances, effective interest differential and interest yields for the years ended December 31: Average Balances, Income and Interest Rates 2023 2022 2021 (Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate ASSETS: Interest Bearing Balances $ 24,270 $ 361 1.49 % $ 26,633 $ 69 0.26 % $ 15,916 $ 13 0.08 % Investment Securities: Taxable 544,896 15,141 2.78 500,156 11,663 2.33 124,692 2,257 1.81 Tax-Exempt 78,163 1,949 2.49 78,039 1,895 2.43 57,361 1,420 2.48 Total Investment Securities 623,059 17,090 2.74 578,195 13,558 2.34 182,053 3,677 2.02 Federal Funds Sold 7,161 373 5.21 311,989 1,826 0.59 567,647 809 0.14 Loans, Net 3,868,307 218,462 5.65 3,217,282 150,636 4.68 2,539,074 119,082 4.69 Restricted Investment in Bank Stocks 11,121 864 7.77 6,045 289 4.78 7,351 345 4.69 Total Interest-earning Assets 4,533,918 237,150 5.23 4,140,144 166,378 4.02 3,312,041 123,926 3.74 Cash and Due from Banks 49,503 63,608 38,517 Other Assets 299,666 272,422 169,946 Total Assets $ 4,883,087 $ 4,476,174 $ 3,520,504 LIABILITIES & SHAREHOLDERS' EQUITY: Interest-bearing Demand $ 950,326 $ 13,893 1.46 % $ 1,051,605 $ 3,847 0.37 % $ 688,595 $ 2,330 0.34 % Money Market 926,034 21,424 2.31 1,040,762 5,277 0.51 842,107 3,157 0.37 Savings 312,053 230 0.07 355,229 193 0.05 218,546 237 0.11 Time 1,116,552 43,749 3.92 524,944 4,827 0.92 451,277 5,603 1.24 Total Interest-bearing Deposits 3,304,965 79,296 2.40 2,972,540 14,144 0.48 2,200,525 11,327 0.51 Short-term borrowings 107,323 7,087 6.60 11,914 441 3.70 153,850 539 0.35 Long-term debt 45,304 975 2.15 23,344 352 1.51 75,483 821 1.09 Subordinated debt and trust preferred securities 49,328 2,008 4.07 70,583 2,830 4.01 47,116 2,067 4.39 Total Interest-bearing Liabilities 3,506,920 89,366 2.55 3,078,381 17,767 0.58 2,476,974 14,754 0.60 Noninterest-bearing Demand 800,582 848,991 684,022 Other Liabilities 53,530 49,864 30,433 Shareholders' Equity 522,055 498,938 329,075 Total Liabilities & Shareholders' Equity $ 4,883,087 $ 4,476,174 $ 3,520,504 Net Interest Income (taxable-equivalent basis) $ 147,784 $ 148,611 $ 109,172 Taxable Equivalent Adjustment (1) (811) (778) (604) Net Interest Income $ 146,973 $ 147,833 $ 108,568 Total Yield on Earning Assets 5.23 % 4.02 % 3.74 % Rate on Supporting Liabilities 2.55 0.58 0.60 Average Interest Spread 2.68 3.44 3.15 Net Interest Margin 3.26 3.59 3.30 (1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances. 37 MID PENN BANCORP, INC.
Management’s Discussion and Analysis The following table includes average balances, effective interest differential and interest yields for the years ended December 31: Average Balances, Income and Interest Rates 2024 2023 2022 (Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate ASSETS: Interest Bearing Balances $ 30,576 $ 1,127 3.69 % $ 24,270 $ 361 1.49 % $ 26,633 $ 69 0.26 % Investment Securities: Taxable 543,157 15,254 2.81 544,896 15,141 2.78 500,156 11,663 2.33 Tax-Exempt 73,834 1,464 1.98 78,163 1,540 2.49 78,039 1,497 2.43 Total Investment Securities 616,991 16,718 2.71 623,059 16,681 2.68 578,195 13,160 2.34 Federal Funds Sold 36,436 1,928 5.29 7,161 373 5.21 311,989 1,826 0.59 Loans, net of unearned income 4,373,922 265,522 6.07 3,868,307 218,060 5.65 3,217,282 150,256 4.68 Restricted Investment in Bank Stocks 14,155 1,288 9.10 11,121 864 7.77 6,045 289 4.78 Total Interest-earning Assets 5,072,080 286,583 5.65 4,533,918 236,339 5.21 4,140,144 165,600 4.02 Cash and Due from Banks 39,995 49,503 63,608 Other Assets 300,904 299,666 272,422 Total Assets $ 5,412,979 $ 4,883,087 $ 4,476,174 LIABILITIES & SHAREHOLDERS' EQUITY: Interest-bearing Demand $ 1,001,813 $ 19,001 1.90 % $ 950,326 $ 13,893 1.46 % $ 1,051,605 $ 3,847 0.37 % Money Market 913,311 26,580 2.91 926,034 21,424 2.31 1,040,762 5,277 0.51 Savings 275,692 244 0.09 312,053 230 0.07 355,229 193 0.05 Time 1,541,654 70,495 4.57 1,116,552 43,749 3.92 524,944 4,827 0.92 Total Interest-bearing Deposits 3,732,470 116,320 3.12 3,304,965 79,296 2.40 2,972,540 14,144 0.48 Short-term borrowings 190,885 10,575 5.54 107,323 7,087 6.60 11,914 441 3.70 Long-term debt 27,937 1,321 4.73 45,304 975 2.15 23,344 352 1.51 Subordinated debt and trust preferred securities 46,045 1,696 3.68 49,328 2,008 4.07 70,583 2,830 4.01 Total Interest-bearing Liabilities 3,997,337 129,912 3.25 3,506,920 89,366 2.55 3,078,381 17,767 0.58 Noninterest-bearing Demand 780,538 800,582 848,991 Other Liabilities 62,820 53,530 49,864 Shareholders' Equity 572,284 522,055 498,938 Total Liabilities & Shareholders' Equity $ 5,412,979 $ 4,883,087 $ 4,476,174 Net Interest Income $ 156,671 $ 146,973 $ 147,833 Taxable Equivalent Adjustment (1) 1,018 811 778 Net Interest Income (taxable-equivalent basis) $ 157,689 $ 147,784 $ 148,611 Total Yield on Earning Assets 5.65 % 5.21 % 4.02 % Rate on Supporting Liabilities 3.25 2.55 0.58 Average Interest Spread 2.40 2.66 3.44 Net Interest Margin (1) 3.11 3.26 3.59 (1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances. 41 MID PENN BANCORP, INC.
ACL at December 31, 2023 was $34.2 million, or 0.80% of total loans, as compared to $19.0 million, or 0.54% of total loans at December 31, 2022. ◦ Net Recoveries/Charge-offs - Mid Penn had net loan charge-offs of $332 thousand and net loan recoveries of $60 thousand for the years ended December 31, 2023 and 2022, respectively. ◦ Non-performing assets - Total non-performing assets were $14.5 million at December 31, 2023, an increase compared to non-performing assets of $9.3 million at December 31, 2022.
Management’s Discussion and Analysis ◦ Net Charge-offs/Recoveries - Mid Penn had net loan charge-offs of $817 thousand and net loan charge-offs of $332 thousand for the years ended December 31, 2024 and 2023, respectively. ◦ Non-performing assets - Total non-performing assets were $22.7 million at December 31, 2024, an increase compared to non-performing assets of $14.5 million at December 31, 2023.
Non-owner occupied office commercial real estate exposure represents 7.1% of total loan balances and is primarily limited to suburban offices. ◦ Deposit Growth - Total deposits increased $567.9 million, or 15.0%, from $3.8 billion at December 31, 2022, to $4.3 billion at December 31, 2023.
Non-owner occupied office commercial real estate exposure represents 28.2% of total loan balances and is primarily limited to suburban offices. ◦ Deposit Growth - Total deposits increased $343.7 million, or 7.9%, from $4.3 billion at December 31, 2023, to $4.7 billion at December 31, 2024. • Asset Quality - ACL at December 31, 2024 was $35.5 million, or 0.80% of total loans, as compared to $34.2 million, or 0.80% of total loans at December 31, 2023. 37 MID PENN BANCORP, INC.
The decrease to net interest margin was primarily a result of an increase in funding costs and growth in average interest-bearing liabilities, partially offset by higher yields on interest-earning assets and growth in average interest-earning assets. As previously noted, the FOMC has increased rates four times during 2023.
The decrease to net interest margin was primarily a result of an increase in funding costs and growth in average interest-bearing liabilities, partially offset by higher yields on interest-earning assets and growth in average interest-earning assets. Average total loans, net, increased $505.6 million , or 13.1%, contributing $28.6 million to the increase in interest income.
Management’s Discussion and Analysis Noninterest expense and variance analysis as of December 31: Years Ended December 31, (In Thousands) 2023 2022 2021 $ Variance 2023 vs. 2022 % Variance 2023 vs. 2022 Salaries and employee benefits $ 59,345 $ 52,601 $ 41,711 $ 6,744 12.8 % Software licensing and utilization 7,927 7,524 6,332 403 5.4 Occupancy expense, net 7,349 6,900 5,527 449 6.5 Equipment expense 5,121 4,493 3,101 628 14.0 Shares tax 2,713 2,786 800 (73) (2.6) Legal and professional fees 2,945 2,761 1,979 184 6.7 ATM/card processing 2,108 2,139 1,053 (31) (1.4) Intangible amortization 1,780 2,012 1,180 (232) (11.5) FDIC assessment 3,500 1,594 1,888 1,906 119.6 (Gain) loss on sale or write-down of foreclosed assets, net (144) (133) (25) (11) 8.3 Merger and acquisition expense 5,544 294 3,067 5,250 1785.7 Post-acquisition restructuring expense 2,952 329 9,880 2,623 797.3 Other expenses 17,852 16,543 14,612 1,309 7.9 Total Noninterest Expense $ 118,992 $ 99,843 $ 91,105 19,149 19.2 % N/M - Not Meaningful For the year ended December 31, 2023, noninterest expense totaled $119.0 million, an increase of $19.1 million, or 19.2%, compared to noninterest expense of $99.8 million for the year ended December 31, 2022.
Noninterest expense and variance analysis as of December 31: Years Ended December 31, (In Thousands) 2024 2023 2022 $ Variance 2024 vs. 2023 % Variance 2024 vs. 2023 Salaries and employee benefits $ 64,098 $ 59,345 $ 52,601 $ 4,753 8.0 % Software licensing and utilization 9,300 7,927 7,524 1,373 17.3 Occupancy expense, net 7,571 7,349 6,900 222 3.0 Equipment expense 4,928 5,121 4,493 (193) (3.8) Shares tax 2,350 2,713 2,786 (363) (13.4) Legal and professional fees 4,306 2,945 2,761 1,361 46.2 ATM/card processing 2,284 2,108 2,139 176 8.3 Intangible amortization 1,784 1,780 2,012 4 0.2 FDIC assessment 4,170 3,500 1,594 670 19.1 (Gain) loss on sale or write-down of foreclosed assets, net 80 (144) (133) 224 N/M Merger and acquisition expense 545 5,544 294 (4,999) (90.2) Post-acquisition restructuring expense — 2,952 329 (2,952) (100.0) Other expenses 16,200 17,448 16,139 (1,248) (7.2) Total Noninterest Expense $ 117,616 $ 118,588 $ 99,439 $ (972) (0.8) % N/M - Not Meaningful For the year ended December 31, 2024, noninterest expense totaled $117.6 million, a decrease of $1.0 million, or 0.8%, compared to noninterest expense of $118.6 million for the year ended December 31, 2023.
The results for the year ended December 31, 2023 were favorably impacted by loan growth, interest income growth and the Brunswick Acquisition.
The results for the year ended December 31, 2024 were favorably impacted by loan growth, and interest income growth. • Net Interest Income ◦ Net Interest Margin - For the year ended December 31, 2024, Mid Penn’s FTE net interest margin was 3.11% versus 3.26% for the year ended December 31, 2023.
Subordinated debt and trust preferred securities totaled $46.4 million as of December 31, 2023 compared to $56.9 million as of December 31, 2022. In April 2023, Mid Penn redeemed $10.0 million subordinated debt issued in December of 2017. See "Note 11 - Subordinated Debt and Trust Preferred Securities " , within Item 8, Notes to Consolidated Financial Statements.
In April 2023, Mid Penn redeemed $10.0 million subordinated debt issued in December of 2017. See "Note 11 - Subordinated Debt and Trust Preferred Securities " , within Item 8, Notes to Consolidated Financial Statements. Shareholders' Equity and Capital Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets.
Included in the $15.0 million increase to the ACL was $3.1 million for certain OBS credit exposures that were previously recognized in other liabilities before the adoption of CECL.
Included in the $15.0 million increase to the ACL was $3.1 million for certain OBS credit exposures that were previously recognized in other liabilities before the adoption of CECL. The ACL and the related PCL for the year ended December 31, 2022 reflects Mid Penn’s application of the incurred loss method for estimating credit losses. 54 MID PENN BANCORP, INC.
The decrease in provision for the twelve months ended December 31, 2023, is primarily due to improved performance in Commercial and Industrial loans partially offset by increased delinquencies in the Commercial Real Estate portfolio. Prior to 2023, ACL and related provision are presented in accordance with the previous accounting guidance using the incurred loss method.
The decrease in provision for the year ended December 31, 2024, is primarily due to a decrease in loss factors across most portfolios. Prior to 2023, ACL and related provision are presented in accordance with the previous accounting guidance using the incurred loss method.
The maturities of the uninsured time deposits as of December 31, 2023 were as follows: (In thousands) 2023 Three months or less $ 142,824 Over three months to six months 99,461 Over six months to twelve months 52,564 Over twelve months 39,689 $ 334,538 Short-term borrowings as of December 31, 2023 totaled $241.5 million, compared to $102.6 million as of December 31, 2022 and consisted of $166.5 million of FHLB overnight borrowings and $75.0 million of other FHLB Short Term borrowings.
The maturities of the uninsured time deposits as of December 31, 2024 were as follows: (In thousands) 2024 Three months or less $ 183,138 Over three months to six months 89,493 Over six months to twelve months 72,526 Over twelve months 15,552 $ 360,709 Short-term borrowings as of December 31, 2024 totaled $2.0 million, compared to $241.5 million as of December 31, 2023, and consisted of $2.0 million of FHLB overnight borrowings.
The loan growth occurred primarily within Mid Penn’s commercial real estate loan portfolio. As mentioned above, $324.5 million, or 43.9%, of that growth was a result of the Brunswick Acquisition. The mix of commercial real estate and construction portfolios in relation to the total portfolio increased 33.61% and 1.93%, respectively from December 31, 2022 to December 31, 2023.
The loan growth occurred primarily within Mid Penn’s commercial real estate loan portfolio. The mix of commercial real estate and commercial portfolios in relation to the total change in the loan portfolio increased 111.1% and 15.9%, respectively from December 31, 2023 to December 31, 2024.
For the year ended December 31, 2023, the provision for credit losses was $3.3 million, a decrease of 23.4% compared to a provision for credit losses of $4.3 million for the year ended December 31, 2022.
Management’s Discussion and Analysis Provision for Credit Losses - Loans The provision for credit losses on loans was $2.1 million for the year ended December 31, 2024, a decrease of $1.2 million or 34.9% compared to a provision for credit losses of $3.3 million for the year ended December 31, 2023.
For the year ended December 31, 2023, Mid Penn had net charge-offs of $332 thousand compared to net recoveries of $60 thousand and net charge-offs of $1.7 million for the years ended December 31, 2022 and 2021, respectively. A summary of charge-offs and recoveries of loans and the provision for loan losses is shown in the table below.
For the year ended December 31, 2024, Mid Penn had net charge-offs of $817 thousand compared to net charge-offs of $332 thousand for the year ended December 31, 2023, and net recoveries of $60 thousand for the year ended December 31, 2022 .
The cost of interest-bearing liabilities increased to 2.55% in 2023 from 0.58% in 2022 and 0.60% in 2021. The rate on total interest-bearing deposits increased to 2.40% in 2023 from 0.48% in 2022 and 0.51% in 2021.
Management’s Discussion and Analysis Interest expense for 2024 increased by $40.5 million or 45.4% when compared to 2023. The cost of interest-bearing liabilities increased to 3.25% in 2024 from 2.55% in 2023 and 0.58% in 2022. The rate on total interest-bearing deposits increased to 3.12% in 2024 from 2.40% in 2023 and 0.48% in 2022.
Management’s Discussion and Analysis Loans The following table presents the ending balance of loans outstanding, by type, as of December 31: 2023 2022 Change in Balance (Dollars in thousands) Balance % of Total Loans Balance % of Total Loans $ % Commercial real estate CRE Nonowner Occupied $ 1,149,553 27.0 % $ 1,184,306 33.7 % $ (34,753) (2.9) % CRE Owner Occupied 629,904 14.8 488,551 13.9 141,353 28.9 Multifamily 309,059 7.3 197,620 5.6 111,439 56.4 Farmland 212,690 5.0 182,457 5.2 30,233 16.6 Total Commercial Real Estate 2,301,206 54.1 2,052,934 58.4 248,272 12.1 Commercial and industrial 675,079 15.9 596,042 17.0 79,037 13.3 Construction Residential Construction 92,843 2.2 90 — 92,753 103058.9 Other Construction 362,624 8.5 441,156 12.6 (78,532) (17.8) Total Construction 455,467 10.7 441,246 12.6 14,221 3.2 Residential mortgage 1-4 Family 1st Lien 339,142 8.0 305,386 8.7 33,756 11.1 1-4 Family Rental 341,937 8.0 — — 341,937 100.0 HELOC and Junior Liens 132,795 3.1 110,835 3.2 21,960 19.8 Total Residential Mortgage 813,874 19.1 416,221 11.8 397,653 95.5 Consumer 7,166 0.2 7,676 0.2 (510) (6.6) $ 4,252,792 100.0 % $ 3,514,119 100.0 % $ 738,673 21.0 % Total loans, net of unearned income, as of December 31, 2023 were $4.3 billion compared to $3.5 billion as of December 31, 2022, an increase of $738.7 million.
Management’s Discussion and Analysis Loans, net of unearned income The following table presents the ending balance of loans outstanding, by type, as of December 31: 2024 2023 Change in Balance (Dollars in thousands) Balance % of Total Loans Balance % of Total Loans $ % Commercial real estate CRE Nonowner Occupied $ 1,251,010 28.1 % $ 1,149,553 27.0 % $ 101,457 8.8 % CRE Owner Occupied 624,007 14.0 629,904 14.8 (5,897) (0.9) Multifamily 412,900 9.3 309,059 7.3 103,841 33.6 Farmland 224,709 5.1 212,690 5.0 12,019 5.7 Total Commercial Real Estate 2,512,626 56.5 2,301,206 54.1 211,420 9.2 Commercial and industrial 705,392 15.9 675,079 15.9 30,313 4.5 Construction Residential Construction 99,399 2.2 92,843 2.2 6,556 7.1 Other Construction 326,171 7.3 362,624 8.5 (36,453) (10.1) Total Construction 425,570 9.5 455,467 10.7 (29,897) (6.6) Residential mortgage 1-4 Family 1st Lien 313,592 7.1 339,142 8.0 (25,550) (7.5) 1-4 Family Rental 336,636 7.6 341,937 8.0 (5,301) (1.6) HELOC and Junior Liens 140,392 3.2 132,795 3.1 7,597 5.7 Total Residential Mortgage 790,620 17.9 813,874 19.1 (23,254) (2.9) Consumer 8,862 0.2 7,166 0.2 1,696 23.7 $ 4,443,070 100.0 % $ 4,252,792 100.0 % $ 190,278 4.5 % Total loans, net of unearned income, as of December 31, 2024 were $4.4 billion compared to $4.3 billion as of December 31, 2023, an increase of $190.3 million.
Critical Accounting Estimates Mid Penn’s Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and conform to general practices within the banking industry. Application of certain principles involves significant judgments and estimates by management that have a material impact on the carrying value of certain assets and liabilities.
In connection with this acquisition, Brunswick Bank, a wholly-owned subsidiary of Brunswick, merged with and into Mid Penn Bank, a wholly-owned subsidiary of Mid Penn. Critical Accounting Estimates Mid Penn’s Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and conform to general practices within the banking industry.
The decrease was primarily attributable to a $1.2 million decrease in mortgage hedging, and a $1.8 million decrease in other miscellaneous income. • Noninterest Expense - Noninterest expense totaled $119.0 million, an increase of $19.1 million, or 19.2%, compared to noninterest expense of $99.8 million for the year ended December 31, 2022.
The increase was primarily attributable to a $2.2 million increase in other miscellaneous income, driven by increases in Bank-owned life insurance benefits received, and a $1.1 million increase in mortgage banking income, partially offset by a $379 thousand decrease in fiduciary and wealth management and a $314 thousand decrease in mortgage hedging. • Noninterest Expense - Noninterest expense totaled $117.6 million, a decrease of $972 thousand, or 0.8%, compared to noninterest expense of $118.6 million for the year ended December 31, 2023.
The risk associated with standby letters of credit is essentially the same as the credit risk involved in loan extensions to customers. Standby letters of credit increased to $62.2 million at December 31, 2023, from $57.2 million at December 31, 2022.
As of December 31, 2024, commitments to extend credit amounted to $1.2 billion compared to $1.5 billion as of December 31, 2023. Mid Penn also issues standby letters of credit to its customers. The risk associated with standby letters of credit is essentially the same as the credit risk involved in loan extensions to customers.
Interest rates do not necessarily move in the same direction or at the same magnitude as the prices of other goods and services. As discussed previously, management seeks to manage the relationship between interest sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation. 52 MID PENN BANCORP, INC.
Interest rates do not necessarily move in the same direction or at the same magnitude as the prices of other goods and services. As discussed 57 MID PENN BANCORP, INC.
Shareholders' Equity and Capital Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets. The detailed computation of Mid Penn’s regulatory capital ratios can be found in "Note 17 - Regulatory Matters " , within Item 8, Notes to Consolidated Financial Statements.
The detailed computation of Mid Penn’s regulatory capital ratios can be found in "Note 17 - Regulatory Matters " , within Item 8, Notes to Consolidated Financial Statements. The greater the Corporation’s capital resources, the more likely it is to meet its cash obligations and absorb unforeseen losses.
December 31, 2021 Increase (decrease) Increase (decrease) (Dollars in thousands) Volume Rate (1) Net Volume Rate (1) Net INTEREST INCOME: Interest Bearing Balances $ (6) $ 298 $ 292 $ 9 $ 47 $ 56 Investment Securities: Taxable 1,042 2,436 3,478 6,796 2,610 9,406 Tax-Exempt 3 51 54 512 (37) 475 Total Investment Securities 1,045 2,487 3,532 7,308 2,573 9,881 Federal Funds Sold (1,798) 345 (1,453) (364) 1,381 1,017 Loans, Net 30,468 37,358 67,826 31,808 (254) 31,554 Restricted Investment Bank Stocks 243 332 575 (61) 5 (56) Total Interest Income 29,952 40,820 70,772 38,700 3,752 42,452 INTEREST EXPENSE: Interest Bearing Deposits: Interest Bearing Demand (375) 10,421 10,046 1,228 289 1,517 Money Market (585) 16,732 16,147 745 1,375 2,120 Savings (22) 59 37 148 (192) (44) Time 5,443 33,479 38,922 915 (1,691) (776) Total Interest-Bearing Deposits 4,461 60,691 65,152 3,036 (219) 2,817 Short-term Borrowings 6,300 346 6,646 (497) 399 (98) Long-term Debt 332 291 623 (567) 98 (469) Subordinated Debt (852) 30 (822) 1,030 (267) 763 Total Interest Expense 10,241 61,358 71,599 3,002 11 3,013 NET INTEREST INCOME $ 19,711 $ (20,538) $ (827) $ 35,698 $ 3,741 $ 39,439 (1) The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column.
December 31, 2022 Increase (decrease) Increase (decrease) (Dollars in thousands) Volume Rate Net Volume Rate Net INTEREST INCOME: Interest Bearing Balances $ 94 $ 672 $ 766 $ (6) $ 298 $ 292 Investment Securities: Taxable (48) 161 113 1,042 2,436 3,478 Tax-Exempt (108) 32 (76) 3 40 43 Total Investment Securities (156) 193 37 1,045 2,476 3,521 Federal Funds Sold 1,525 30 1,555 (1,798) 345 (1,453) Loans, net of unearned income 28,567 18,895 47,462 30,468 37,336 67,804 Restricted Investment Bank Stocks 236 188 424 243 332 575 Total Interest Income 30,266 19,978 50,244 29,952 40,787 70,739 INTEREST EXPENSE: Interest Bearing Deposits: Interest Bearing Demand 752 4,356 5,108 (375) 10,421 10,046 Money Market (294) 5,450 5,156 (585) 16,732 16,147 Savings (25) 39 14 (22) 59 37 Time 16,664 10,082 26,746 5,443 33,479 38,922 Total Interest-Bearing Deposits 17,097 19,927 37,024 4,461 60,691 65,152 Short-term Borrowings 4,629 (1,141) 3,488 6,300 346 6,646 Long-term Debt (373) 719 346 332 291 623 Subordinated Debt (134) (178) (312) (852) 30 (822) Total Interest Expense 21,219 19,327 40,546 10,241 61,358 71,599 NET INTEREST INCOME $ 9,047 $ 651 $ 9,698 $ 19,711 $ (20,571) $ (860) (1) The effect of changing volume and rate, which cannot be segregated, has been allocated entirely to the rate column.
During 2023, FTE net interest income decreased $827 thousand, or 0.6%, compared to 2022.
During 2024, FTE net interest income increased $9.7 million, or 6.6%, compared to 2023.
Average balances and average interest rates applicable to deposits by major classification for the years ended December 31: 2023 2022 Change (Dollars in thousands) Balance Rate Balance Rate $ % Noninterest-bearing demand deposits $ 800,582 0.00 % $ 848,991 0.00 % $ (48,409) (5.70) % Interest-bearing demand deposits 950,326 1.46 1,051,605 0.37 (101,279) (9.63) Money market 926,034 2.31 1,040,762 0.51 (114,728) (11.02) Savings 312,053 0.07 355,229 0.05 (43,176) (12.15) Time 1,116,552 3.92 524,944 0.92 591,608 112.70 $ 4,105,547 1.93 % $ 3,821,531 0.37 % $ 284,016 7.43 % 50 MID PENN BANCORP, INC.
Average balances and average interest rates applicable to deposits by major classification for the years ended December 31: 2024 2023 Change (Dollars in thousands) Balance Rate Balance Rate $ % Noninterest-bearing demand deposits $ 780,538 0.00 % $ 800,582 0.00 % $ (20,044) (2.50) % Interest-bearing demand deposits 1,001,813 1.90 950,326 1.46 51,487 5.42 Money market 913,311 2.91 926,034 2.31 (12,723) (1.37) Savings 275,692 0.09 312,053 0.07 (36,361) (11.65) Time 1,541,654 4.57 1,116,552 3.92 425,102 38.07 $ 4,513,008 2.58 % $ 4,105,547 1.93 % $ 407,461 9.92 % 55 MID PENN BANCORP, INC.
The judgments and estimates used in applying these principles are based on historical experiences and other factors which are believed to be reasonable under the circumstances.
Application of certain principles involves significant judgments and estimates by management that have a material impact on the carrying value of certain assets and liabilities. The judgments and estimates used in applying these principles are based on historical experiences and 38 MID PENN BANCORP, INC. Management’s Discussion and Analysis other factors which are believed to be reasonable under the circumstances.
Contractual Obligations Mid Penn has substantial aggregate contractual obligations to make future cash payments as of December 31, 2023 as outlined below: Total Payments Due by Period (Dollars in thousands) One Year or Less One to Three Years Three to Five Years More than Five Years Operating lease obligations $ 10,261 $ 2,432 $ 3,755 $ 2,279 $ 1,795 Finance lease obligation 4,245 252 519 520 2,954 Certificates of deposit 1,515,596 1,226,790 252,193 33,153 3,460 Long-term debt 55,953 35,310 20,611 28 4 Subordinated debt 46,354 — — — 46,354 $ 1,632,409 $ 1,264,784 $ 277,078 $ 35,980 $ 54,567 Details on expected maturities of investments, loans and deposits are presented in the above sections of Management's Discussion and Analysis.
Contractual Obligations Mid Penn has substantial aggregate contractual obligations to make future cash payments as of December 31, 2024 as outlined below: Total Payments Due by Period (Dollars in thousands) One Year or Less One to Three Years Three to Five Years More than Five Years Operating lease obligations $ 8,978 $ 2,361 $ 4,057 $ 1,943 $ 617 Finance lease obligation 3,992 260 520 535 2,677 Certificates of deposit 1,684,672 1,511,996 152,422 16,530 3,724 Long-term debt 20,586 344 20,241 1 — Subordinated debt 45,741 — — — 45,741 $ 1,763,969 $ 1,514,961 $ 177,240 $ 19,009 $ 52,759 Details on expected maturities of investments, loans and deposits are presented in the above sections of Management's Discussion and Analysis.
Management’s Discussion and Analysis The following table represents the allowance for credit loss as a percentage of total loans: (In Thousands) As of December 31, 2023 Total ACL - Loans Total Loans % of Total Loans Outstanding Allowance as a % of Loan Category Commercial real estate CRE Nonowner Occupied $ 10,267 $ 1,149,553 27.0 % 0.9 % CRE Owner Occupied 5,646 629,904 14.8 0.9 Multifamily 2,202 309,059 7.3 0.7 Farmland 2,064 212,690 5.0 1.0 Commercial and industrial 7,131 675,079 15.9 1.1 Construction Residential Construction 1,256 92,843 2.2 1.4 Other Construction 2,146 362,624 8.5 0.6 Residential mortgage 1-4 Family 1st Lien 1,207 339,142 8.0 0.4 1-4 Family Rental 1,859 341,937 8.0 0.5 HELOC and Junior Liens 389 132,795 3.1 0.3 Consumer 20 7,166 0.2 0.3 Total $ 34,187 $ 4,252,792 100.0 % 0.8 % For a complete description of Mid Penn’s ACL 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.
The following table represents the allowance for credit loss as a percentage of total loans: (In Thousands) As of December 31, 2024 Total ACL - Loans Total Loans % of Total Loans Outstanding Allowance as a % of Loan Category Commercial real estate CRE Nonowner Occupied $ 11,047 $ 1,251,010 28.1 % 0.9 % CRE Owner Occupied 5,243 624,007 14.0 0.8 Multifamily 3,432 412,900 9.3 0.8 Farmland 1,932 224,709 5.1 0.9 Total Commercial real estate 21,654 2,512,626 56.5 0.9 Commercial and industrial 7,122 705,392 15.9 1.0 Construction Residential Construction 931 99,399 2.2 0.9 Other Construction 2,131 326,171 7.3 0.7 Total Construction 3,062 425,570 9.5 0.7 Residential mortgage 1-4 Family 1st Lien 1,503 313,592 7.1 0.5 1-4 Family Rental 1,756 336,636 7.6 0.5 HELOC and Junior Liens 392 140,392 3.2 0.3 Total Residential mortgage 3,651 790,620 17.9 0.5 Consumer 25 8,862 0.2 0.3 Total $ 35,514 $ 4,443,070 100.0 % 0.8 % For a complete description of Mid Penn’s ACL 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.
Shareholders’ equity increased $30.3 million, or 5.9%, to $542.4 million as of December 31, 2023 from $512.1 million as of December 31, 2022, primarily as result of net income, common stock issued to Brunswick shareholders, and restricted stock activity partially offset by a decrease in retained earnings due to the impact of adopting CECL totaling $11.5 million, dividends declared of $13.0 million and share repurchases totaling $4.9 million.
Shareholders’ equity increased $112.7 million, or 20.8%, to $655.0 million as of December 31, 2024 from $542.4 million as of December 31, 2023, primarily as result of completion of the underwritten public offering of 2,375,000 shares of common stock in November 2024, and net income, partially offset by dividends declared of $13.8 million and share repurchases totaling $323 thousand.
Financial Condition Mid Penn’s total assets were $5.3 billion as of December 31, 2023, reflecting an increase of $792.8 million, or 17.6%, compared to total assets of $4.5 billion as of December 31, 2022. Included in total assets as of December 31, 2023 are $1.4 million of PPP loans, net of deferred fees.
Financial Condition Mid Penn’s total assets were $5.5 billion as of December 31, 2024, reflecting an increase of $180.1 million, or 3.4%, compared to total assets of $5.3 billion as of December 31, 2023. The increase was primarily driven by organic loan growth, increases in investment securities, and an increase in Fed Funds Sold.
Comparatively, as of December 31, 2022, Mid Penn had $2.6 million of PPP loans outstanding, net of deferred fees. Investment Securities Mid Penn’s portfolio of held-to-maturity ("HTM") securities, recorded at amortized cost, decreased $366 thousand to $399.1 million as of December 31, 2023, as compared to $399.5 million as of December 31, 2022.
Investment Securities Mid Penn’s portfolio of held-to-maturity ("HTM") securities, recorded at amortized cost, decreased $16.7 million to $382.4 million as of December 31, 2024, as compared to $399.1 million as of December 31, 2023. Mid Penn’s total available-for-sale ("AFS") securities portfolio increased $36.9 million from $223.6 million at December 31, 2023 to $260.5 million at December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed8 unchanged
Biggest changeAt December 31, 2023, all interest rate risk levels according to the model were within the tolerance limits of the Board-approved policy. 53 The following table reflects the effect of hypothetical changes in interest rates: Change in Basis Points % Change in Net Interest Income Policy Risk Limit 400 2.1% ≥ -25% 300 1.7% ≥ -20% 200 1.1% ≥ -15% 100 0.6% ≥ -10% (100) -0.2% ≥ -10% 54 MID PENN BANCORP, INC.
Biggest changeAt December 31, 2024, all interest rate risk levels according to the model were within the tolerance limits of the Board-approved policy. 58 The following table reflects the effect of hypothetical changes in interest rates: Change in Basis Points % Change in Net Interest Income Policy Risk Limit 400 9.0% ≥ -25% 300 6.8% ≥ -20% 200 4.6% ≥ -15% 100 2.4% ≥ -10% (100) (2.3)% ≥ -10% (200) (4.7)% ≥ -15% (300) (7.2)% ≥ -20% (400) (8.2)% ≥ -25% 59 MID PENN BANCORP, INC.
This analysis includes earnings scenarios whereby interest rates are increased by 100, 200, 300, and 400 bp and decreased by 100 bp.
This analysis includes earnings scenarios whereby interest rates are increased by 100, 200, 300, and 400 bp and decreased by 100, 200, 300, and 400 bp.

Other MPB 10-K year-over-year comparisons