Mid Penn Bancorp MPB Form 10-Q filing Q1 FY2026

Unless the context otherwise requires, the terms "Mid Penn", "Corporation" "we", "us", and "our" refer to Mid Penn Bancorp, Inc. and its consolidated wholly-owned banking subsidiary and nonbank subsidiaries.

GLOSSARY OF DEFINED ACRONYMS AND TERMS

MID PENN BANCORP, INC.

PART 1 – FINANCIAL INFORMATION

The accompanying notes are an integral part of these unaudited consolidated financial statements.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) The change in defined benefit plans consists primarily of unrecognized actuarial gains on defined benefit plans during the period.

(2) The reclassification adjustment for benefit plans includes settlement gains, amortization of prior service costs, and amortization of net gain or loss. Amounts are included in other income on the Consolidated Statements of Income within total noninterest income.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) Shares issued on January 1, 2026 and February 27, 2026 as a result of the Cumberland Advisors and 1st Colonial acquisitions. See "Note 2 - Business Combinations" to the Consolidated Financial Statements for more information.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) Includes the impact of the 1st Colonial acquisition on February 27, 2026 and the Cumberland Advisors acquisition on January 1, 2026. See "Note 2 - Business Combinations" to the Consolidated Financial Statements for more information.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

Mid Penn Bancorp, Inc. ("Mid Penn" or the "Corporation"), through operations conducted by Mid Penn Bank (the "Bank") and its nonbank subsidiaries, engages in a full-service commercial banking and trust business, making available to the community a wide range of financial services, including, but not limited to, mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development loans, loans to non-profit entities and local government loans, and various types of time and demand deposits including but not limited to, checking accounts, savings accounts, clubs, money market deposit accounts, certificates of deposit, and Individual Retirement Accounts ("IRA"). In addition, the Bank provides a full range of trust and wealth management services through its Trust Department. Deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") to the extent provided by law.

Mid Penn also fulfills the insurance needs of both existing and potential customers through MPB Risk Services, LLC, doing business as MPB Insurance and Risk Management.

The financial services are provided to individuals, partnerships, non-profit organizations, and corporations through its retail banking offices located throughout Pennsylvania, with a minor portion in New Jersey.

Basis of Presentation

For all periods presented, the accompanying Consolidated Financial Statements include the accounts of Mid Penn Bancorp, Inc., its wholly-owned subsidiary, Mid Penn Bank, and five wholly-owned nonbank subsidiaries, MPB Realty, LLC, MPB Financial Services, LLC, which includes Cumberland Advisors, LLC and MPB Risk Services, LLC, and MPB Launchpad Fund I, LLC. As of March 31, 2026, the accounts and activities of these nonbank subsidiaries were not material to warrant separate disclosure or segment reporting. As a result, Mid Penn has only one reportable segment for financial reporting purposes. All intercompany accounts and transactions have been eliminated in consolidation.

Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. Mid Penn believes the information presented is not misleading, and the disclosures are adequate. In the opinion of management, all adjustments necessary for fair presentation of the periods presented have been reflected in the accompanying consolidated financial statements. All such adjustments are of a normal, recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2025 Annual Report.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Material estimates subject to significant change include the allowance for credit losses, expected cash flows on acquired loans, business combination fair value computations, and the valuation of goodwill and other intangible assets.

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Recent Accounting Pronouncements

Accounting Standards Adopted in 2026

ASU 2025-08 - The FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans

The amendments in this ASU apply to all entities subject to the guidance in Topic 326, including public business entities, private companies, and not-for-profit entities. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this ASU should be applied prospectively to loans that are acquired on or after the initial application date. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance.

Effective January 1, 2026, the Corporation adopted ASU 2025-08. Adoption resulted in the recognition of an initial allowance for credit losses on applicable purchased loans, including purchased seasoned loans ("PSL loans"), and will affect the accounting for future loan acquisitions. The impact of adoption is reflected in the ACL rollforward in "Note 4 - Loans and Allowance for Credit Losses". The adoption did not result in a cumulative-effect adjustment to beginning retained earnings.

Accounting Standards Pending Adoption

ASU 2024-03: The FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

The amendments in the ASU improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 is not expected to have a significant impact on the Corporation's financial statements.

ASU 2025-01 - The FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date

The amendments in the ASU clarify the effective date of ASU 2024-03 which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in the ASU are effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. ASU 2025-01 is not expected to have a significant impact on the Corporation's financial statements.

ASU 2025-09 - The FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements

The amendments in this ASU refine hedge accounting guidance to better align accounting with risk management strategies. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods therein. Early adoption is permitted. ASU 2025-09 is not expected to have a significant impact on the Corporation's financial statements.

Management does not expect the adoption of any other recently issued accounting standards to have a material impact on the Corporation's consolidated financial statements.

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Note 2 - Business Combinations

Cumberland Advisors, Inc. Acquisition

On January 1, 2026, Mid Penn completed its acquisition of Cumberland Advisors, Inc., a registered investment advisory firm, for total consideration of $5.5 million. As a result of the acquisition, Mid Penn paid holders of Cumberland Advisors, Inc. common stock $1.6 million in cash and issued 127,009 shares of Mid Penn common stock.

As of March 31, 2026, Cumberland had approximately $2.8 billion in assets under management. In connection with the acquisition, Cumberland was merged into a newly formed Mid Penn acquisition subsidiary and now operates as Cumberland Advisors, LLC.

Mid Penn recognized goodwill of $5.1 million, and a customer list intangible of $2.1 million as a result of the acquisition.

Mid Penn incurred merger-related expenses related to the Cumberland Advisors acquisition of $544 thousand for the three months ended March 31, 2026, which is included in noninterest expense in the Consolidated Statements of Income.

1st Colonial Bancorp, Inc. Acquisition

On February 27, 2026, Mid Penn completed its acquisition of 1st Colonial Bancorp, Inc., through the merger of 1st Colonial with and into Mid Penn. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

In connection with the merger, Mid Penn issued 2,111,076 shares of Mid Penn common stock and paid holders of 1st Colonial common stock approximately $37.5 million in cash. Each share of Mid Penn common stock outstanding prior to the merger remained outstanding and unaffected by the merger.

Mid Penn recognized goodwill of $15.3 million, and a core deposit intangible asset of $17.3 million as a result of this acquisition. This is calculated as the excess of consideration exchanged and liabilities assumed compared to the fair value of identifiable assets acquired. Goodwill is primarily comprised of expected synergies, the assembled workforce, and expanded market presence. Goodwill is not deductible for income tax purposes.

Mid Penn incurred merger-related expenses related to 1st Colonial acquisition of $7.2 million for the three months ended March 31, 2026, which are included in noninterest expense in the Consolidated Statements of Income.

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. Mid Penn considers various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment.

As part of the 1st Colonial acquisition, Mid Penn acquired PSL and PCD loans of $599.4 million and $7.4 million, respectively. The day 1 allowance recorded at acquisition was $4.4 million, including $977 thousand related to PCD loans. The related fair value adjustment reflected both expected credit losses recognized at acquisition and other loan valuation factors, including interest rate risk and liquidity considerations.

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The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:

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The fair values of assets acquired and liabilities assumed are based on preliminary estimates and, as permitted under GAAP, Mid Penn has up to twelve months following the date of the merger to finalize the fair values of the acquired assets and assumed liabilities related to the merger. During this measurement period, Mid Penn may record subsequent adjustments to goodwill for provisional amounts recorded at the merger date, with provisional merger-related tax adjustments.

From the acquisition date of February 27, 2026 through March 31, 2026, 1st Colonial contributed approximately $2.5 million of total revenue and $1.3 million of net income to Mid Penn's consolidated results for the three months ended March 31, 2026.

The following supplemental pro forma information presents selected financial results for the three months ended March 31, 2026 and 2025 as if the merger of 1st Colonial was effective as of January 1, 2025. The supplemental unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the results of operations of the combined company that would have been achieved for the periods presented had the transaction been completed as of the date indicated or that may be achieved in the future.

William Penn Acquisition

On April 30, 2025, Mid Penn completed its acquisition of 100% of the outstanding shares of William Penn through the merger of William Penn with and into Mid Penn.

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

Mid Penn recognized total goodwill of $6.9 million, and a core deposit intangible asset of $9.0 million as a result of this acquisition. This is calculated as the excess of consideration exchanged and liabilities assumed compared to the fair value of identifiable assets acquired. Goodwill is primarily comprised of expected synergies and an assembled workforce. Goodwill is not deductible for income tax purposes.

The purchase accounting for the transaction was finalized as of December 31, 2025, and no material measurement adjustments were recorded during the three months ended March 31, 2026.

Charis Insurance Group, Inc. Acquisition

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

Mid Penn recognized total goodwill of $1.6 million, which is calculated as the excess of consideration exchanged and liabilities assumed compared to the fair value of identifiable assets acquired.

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Note 3 - Investment Securities

AFS Securities

As of March 31, 2026, the fair value of AFS securities totaled $484.1 million. As of March 31, 2026, no securities were identified that violated credit loss triggers; therefore, no discounted cash flow analysis was required. As of March 31, 2026, the Corporation recorded no allowance for credit losses on any available-for-sale debt securities.

Accrued interest receivable is excluded from the estimate of credit losses for AFS securities. As of March 31, 2026, accrued interest receivable totaled $3.1 million for AFS securities, and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet.

HTM Securities

As of March 31, 2026, Mid Penn’s HTM securities totaled $341.0 million. The Corporation primarily held highly rated HTM securities, including taxable and tax-exempt securities issued mainly by the U.S government, state governments, and political subdivisions. As of March 31, 2026, the majority of Mid Penn's HTM securities were rated investment grade, generally A1/BBB by Moody's and/or Standard & Poor's ratings services. Credit ratings of HTM securities, which are a key factor in estimating expected credit losses, are reviewed on a quarterly basis. Management has the intent and ability to hold these securities to maturity.

As of March 31, 2026, there were no HTM securities that were past due 30 days or more as to principal or interest payments. Additionally, Mid Penn had no HTM securities classified as nonaccrual as of March 31, 2026. As of March 31, 2026, the Corporation recorded no allowance for credit losses on any held-to-maturity debt securities.

Accrued interest receivable is excluded from the estimate of credit losses for HTM securities. As of March 31, 2026, accrued interest receivable totaled $1.9 million for HTM securities and was reported in accrued interest receivable on the accompanying Consolidated Balance Sheet.

The following tables set forth the amortized cost and estimated fair value of investment securities for the periods presented:

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Estimated fair values of debt securities are based on quoted market prices, where applicable. If quoted market prices are not available, fair values are based on quoted market prices of instruments of a similar type, credit quality and structure, adjusted for differences between the quoted instruments and the instruments being valued. See "Note 8 - Fair Value Measurement," for additional information.

Investment securities having a fair value of $541.8 million as of March 31, 2026 and $544.7 million as of December 31, 2025 were pledged primarily to secure public deposits, some Trust department deposit accounts, and certain other borrowings. In accordance with legal provisions for alternatives other than pledging of investments, Mid Penn also obtains letters of credit from the FHLB to secure certain public deposits. These FHLB letter of credit commitments totaled $406.5 million as of March 31, 2026 and $162.5 million as of December 31, 2025.

The following tables present gross unrealized losses and fair value of debt investment securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the periods presented:

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As of March 31, 2026 and December 31, 2025, the majority of the unrealized losses on securities in an unrealized loss position were attributable to U.S. Treasury and U.S. government agencies, and mortgage-backed U.S. government agencies.

The Corporation evaluates debt securities for credit losses in accordance with ASC 326. Mid Penn had no securities considered by management to be credit related losses as of March 31, 2026 and December 31, 2025, and did not record any securities losses in the respective periods ended on these dates. Mid Penn does not consider the securities with unrealized losses on the respective dates to be credit related losses as the unrealized losses were deemed to be temporary changes in value related to market movements in interest yields at various periods similar to the maturity dates of holdings in the investment portfolio, and not reflective of an erosion of credit quality.

There were no gross realized gains on the sale of AFS securities as of March 31, 2026 and December 31, 2025, respectively.

The table below illustrates the contractual maturity of debt investment securities at amortized cost and estimated fair value. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay with or without call or prepayment penalties.

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Note 4 - Loans and Allowance for Credit Losses - Loans

Loans, net of unearned income, are summarized as follows by portfolio segment:

Total loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs. Net deferred loan fees were $2.9 million and $2.8 million as of March 31, 2026 and December 31, 2025, respectively.

Accrued interest receivable is not included in the amortized cost basis of Mid Penn's loans. Accrued interest receivable for loans totaled $27.5 million and $25.7 million as of March 31, 2026 and December 31, 2025, respectively, with no related ACL and was reported in other assets on the accompanying Consolidated Balance Sheet.

Past Due and Nonaccrual Loans

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The classes of the loan portfolio summarized by the past due status as of March 31, 2026 and December 31, 2025, are summarized as follows:

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Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due. There were no loans greater than 90 days past due and still accruing as of March 31, 2026 and December 31, 2025.

Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of March 31, 2026 and December 31, 2025 are summarized as follows:

The amount of interest income recognized on nonaccrual loans was approximately $94 thousand and $127 thousand during the three months ended March 31, 2026 and 2025, respectively.

Credit Quality Indicators

Mid Penn categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. On a minimum of a quarterly basis, Mid Penn analyzes loans individually to classify the loans as to their credit risk. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal.

PASS - This type of classification consists of 6 subcategories:

Nominal Risk / Pass - This loan classification is a credit extension of the highest quality.

Moderate Risk / Pass - This type of classification has strong financial ratios, substantial debt capacity, and low leverage with a very favorable comparison to industry peers or better than average improving trends.

Good Acceptable Risk / Pass - This type of classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; the Borrower lists good quality assets with relatively low leverage and ample debt capacity.

Average Acceptable Risk / Pass - This type of classification has financial ratios and assets that are of above average quality; however, the leverage is worse than average compared to industry standards; the Borrower should have a good repayment history and possess consistent earnings with some growth.

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Marginally Acceptable Risk / Pass - This type of classification has financial ratios consistent with industry averages, assets of average quality with ascertainable values, acceptable leverage, moderate capital assets and an acceptable reliance on trade debt; however, the Borrower demonstrates marginally adequate earnings, cash flow and debt service plus positive trends.

Weak/Monitor Risk (Watch list) / Pass - This type of classification has financial ratios that are slightly below standard industry averages and assets are below average quality with unstable values; fixed assets could be near or at the end of their useful life and liabilities may not match the asset structure.

SPECIAL MENTION - These credits have developing weaknesses deserving extra attention from the lender and lending management. They are currently protected, but potentially weak. The weakness may be cash flow, leverage, liquidity, management, industry or other factors which may, if not checked or corrected, weaken the asset or inadequately protect the Bank’s credit position at some future date.

SUBSTANDARD - These credit extensions also have well-defined weaknesses, which are inadequately protected by the current worth and debt service capacity of the Borrower, or the collateral pledged, if any. The repayment of principal and interest as originally intended can be jeopardized by defined weaknesses related to adverse financial, managerial, economic, market or political conditions.

DOUBTFUL - These credits have definite weaknesses inherent in Substandard loans with added characteristics that are severe enough to make further collection in full highly questionable and improbable based on the current trends.

LOSS. These loans are considered uncollectible and no longer a viable asset of the Bank. They lack an identifiable source of repayment based on an inability to generate sufficient cash flow to service their debt. All trends are negative and the damage to the financial condition of the Borrower cannot be reversed now or in the near future.

The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal:

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Mid Penn had no loans classified as "doubtful" as of March 31, 2026 and December 31, 2025. There was $160 thousand and $567 thousand in mortgage loans for which formal foreclosure proceedings were in process at March 31, 2026 and December 31, 2025, respectively.

Collateral-Dependent Loans

A financial asset is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of financial assets deemed collateral-dependent, Mid Penn elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, Mid Penn records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent financial assets consists of various types of real estate, including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land. Total collateral-dependent loans as of March 31, 2026 were $29.6 million.

Allowance for Credit Losses

Mid Penn’s ACL - loans methodology follows guidance within FASB ASC Subtopic 326-20. The ACL - loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL - loans. The ACL - loans is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL - loans is adjusted through the PCL and reduced by the charge off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.

Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and peer group divergence. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects management’s expectations of future conditions based on reasonable and supportable forecasts.

The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan purpose codes and similar risk characteristics.

The commercial real estate and residential mortgage loan portfolio segments include loans for both commercial and residential properties that are secured by real estate. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and, if applicable, guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance, in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered when applicable. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.

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The commercial and industrial loan portfolio segment includes commercial loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory, equipment and fixed asset purchases that are secured by those assets, and term financing for those within Mid Penn’s geographic markets. Mid Penn’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information, and evaluation of underlying collateral to support the credit.

The consumer loan portfolio segment is comprised of loans which are underwritten after evaluating a borrower’s capacity, credit and collateral. Several factors are considered when assessing a borrower’s capacity, including the borrower’s employment, income, current debt, assets and level of equity in the property. Credit is assessed using a credit report that provides credit scores and the borrower’s current and past information about their credit history. Loan-to-value and debt-to-income ratios, loan amount and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends, such as conditions that negatively affect housing prices and demand and levels of unemployment.

Mid Penn utilizes a DCF method to estimate the quantitative portion of the allowance for credit losses for its loan pools. The DCF is based off of historical losses, including peer data, which is correlated to national unemployment and GDP.

The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These expected cash flows are discounted using the loan’s effective interest rate to estimate the quantitative allowance for credit losses. The prepayment studies are updated quarterly by a third-party for each applicable pool.

Mid Penn determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the loans held-for-investment (LHFI) portfolio extend beyond this forecast period, Mid Penn uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans.

Qualitative factors used in the ACL methodology include the following:

• Changes in lending policies, procedures, and underwriting standards
• Changes in portfolio composition and concentrations of credit
• Peer group trends and divergence

The ACL for individual loans, such as non-accrual and PCD, that do not share risk characteristics with other loans is measured as the difference between the discounted value of expected future cash flows, based on the effective interest rate at origination, and the amortized cost basis of the loan, or the net realizable value. The ACL is the difference between the loan’s net realizable value and its amortized cost basis (net of previous charge-offs and deferred loan fees and costs), except for collateral-dependent loans. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or the "as is" value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on a regular basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Mid Penn’s Real Estate Administration Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of the expected credit loss is charged off.

Mid Penn may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine whether there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, Mid Penn takes into consideration loan grades, past due and nonaccrual status. Mid Penn may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, and

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number of times past due. At the purchase or acquisition date, the amortized cost basis of PCD loans is equal to the purchase price and an initial estimate of credit losses. The initial recognition of expected credit losses on PCD loans has no impact on net income. When the initial measurement of expected credit losses on PCD loans is calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the PCL. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan.

Effective January 1, 2026, the Corporation adopted ASU 2025-08 for applicable purchased seasoned loans ("PSL loans"), under which an initial allowance for credit losses is recognized at acquisition and incorporated into the initial amortized cost basis of the loans, rather than recognized through a Day 1 provision expense. The impact of adoption is reflected in the ACL rollforward in this Note and is further discussed in "Note 1 - Summary of Significant Accounting Policies".

Loans are charged off against the ACL, with any subsequent recoveries credited back to the ACL account. Expected recoveries may not exceed the aggregate of amounts previously charged off and expected to be charged off.

The following tables present the activity in the ACL - loans by portfolio segment for the three months ended March 31, 2026 and the three months ended March 31, 2025:

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The following table presents the ACL for loans and the amortized cost basis of loans as of March 31, 2026 and December 31, 2025:

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Modifications to Borrowers Experiencing Financial Difficulty

From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, or a combination thereof, among other things.

Information related to loans modified for the three months ended March 31, 2026, whereby the borrower was experiencing financial difficulty at the time of modification, is set forth in the following table:

There were no loan modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2025.

The financial effects of the loan modifications reduced the monthly payment amounts for the borrower and the term extensions in the table above added a weighted-average of 2.0 years to the life of the loans, which also reduced the monthly payment amounts for the borrowers.

As of March 31, 2026, there were no defaults on loans modified to borrowers experiencing financial difficulty within the twelve months following modification.

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Note 5 - Deposits

Deposits consisted of the following as of March 31, 2026 and December 31, 2025:

The scheduled maturities of time deposits as of March 31, 2026 were as follows:

Mid Penn had $132.7 million of brokered certificates of deposits as of March 31, 2026 and $97.5 million as of December 31, 2025. As of March 31, 2026 and December 31, 2025, Mid Penn had $112.7 million and $83.2 million, respectively, of Certificate of Deposit Account Registry ("CDAR") deposits.

MID PENN BANCORP, INC.

Note 6 - Derivative Financial Instruments

Mid Penn manages its exposure to certain interest rate risks through the use of derivative financial instruments; however, none are entered into for speculative purposes. During the three months ended March 31, 2026, Mid Penn had outstanding derivative contracts designated as hedges. Mid Penn’s free-standing derivative financial instruments are required to be carried at their fair value on the Consolidated Balance Sheets.

Loan-level Interest Rate Swaps

Mid Penn enters into loan-level interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. Mid Penn simultaneously enters into loan-level interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of the offsetting customer and dealer counterparty swap agreements is that the customer pays a fixed rate of interest, while Mid Penn receives a floating rate. Mid Penn’s loan-level interest rate swaps are considered derivatives but are not accounted for using hedge accounting. These transactions are structured as back-to-back arrangements with offsetting terms; however, the Corporation remains exposed to credit risk associated with both the customer and dealer counterparties.

Information related to loan-level interest rate swaps is set forth in the following table:

(1) The net amount of the estimated fair value is disclosed in Other Liabilities on the Consolidated Balance Sheet.

(2) The net amount of the estimated fair value is disclosed in Other Assets on the Consolidated Balance Sheet.

Cash Flow Hedges of Interest Rate Risk

Mid Penn’s objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements. To accomplish this objective, Mid Penn primarily uses interest rate swaps as part of its interest rate risk management strategy. During the three months ended March 31, 2026, Mid Penn had interest rate swaps designated as cash flow hedges to hedge the cash flows associated with existing brokered CDs.

Information related to cash flow hedges is set forth in the following table:

MID PENN BANCORP, INC.

(1) Estimated fair value, net of accrued interest receivable, is disclosed in Other Assets on the Consolidated Balance Sheet.

For derivatives designated and qualifying as cash flow hedges of interest rate risk, the unrealized gain or loss is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on Mid Penn’s variable-rate liabilities. During the next twelve months, Mid Penn estimates that an additional $59 thousand will be reclassified to interest expense.

Note 7 - Accumulated Other Comprehensive Loss (Income)

The components of accumulated other comprehensive loss (income), net of taxes, are as follows:

MID PENN BANCORP, INC.

Note 8 - Fair Value Measurement

Mid Penn uses estimates of fair value in applying various accounting standards to its consolidated financial statements on either a recurring or non-recurring basis. Fair value is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. Mid Penn groups its assets and liabilities measured at fair value in three hierarchy levels, based on the observability and transparency of the inputs. The fair value hierarchy is as follows:

Level 1 - Inputs that represent quoted prices for identical instruments in active markets.

Level 2 - Inputs that represent quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Inputs that are largely unobservable, as little or no market data exists for the instrument being valued.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

There were no transfers of assets between fair value Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2026 or the year ended December 31, 2025.

The following tables illustrate the assets and liabilities measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets:

MID PENN BANCORP, INC.

The valuation methodologies and assumptions used to estimate the fair value for the items in the preceding tables are as follows:

Available-for-sale investment securities - The fair value of equity and debt securities classified as available-for-sale is determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2). Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather, relying on the securities’ relationship to other benchmark quoted prices.

Equity securities - The fair value of equity securities with readily determinable fair values is recorded on the Consolidated Balance Sheet, with realized and unrealized gains and losses reported in other expense on the Consolidated Statements of Income. These securities consist primarily of publicly traded equity securities and are classified within Level 1 in the fair value hierarchy.

Loans held-for-sale - This category includes mortgage loans held-for-sale that are measured at fair value on a recurring basis. Fair values as of March 31, 2026 were measured as the price that secondary market investors were offering for loans with similar characteristics.

Derivative instruments - Interest rate swaps are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as active or liquid as those for more mature Level 1 markets. These markets do, however, have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2.

Mortgage banking derivatives - represent the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors and the fair value of interest rate swaps. The fair values of Mid Penn’s interest rate locks, forward commitments and interest rate swaps represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. These characteristics classify mortgage banking derivatives as Level 3.

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis. These instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, upon acquisition or when there is evidence of impairment).

The following table illustrates financial instruments measured at fair value on a nonrecurring basis:

Net loans - This category consists of loans that were individually evaluated for credit losses, net of the related ACL, and have been classified as Level 3 assets. All of Mid Penn’s individually evaluated loans for 2026 and 2025, whether reporting

a specific allowance allocation or not, are considered collateral-dependent. Mid Penn utilized Level 3 inputs such as independent appraisals of the underlying collateral, which generally includes Level 3 inputs which are not observable. Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses.

Foreclosed assets held-for-sale - Values are based on appraisals that consider the sales prices of property in the proximate vicinity.

MID PENN BANCORP, INC.

The following table presents additional information about the valuation techniques for level 3 assets measured at fair value on a nonrecurring basis:

The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn's financial instruments as of the periods presented:

(1) Long-term debt excludes finance lease obligations.

MID PENN BANCORP, INC.

(1) Long-term debt excludes finance lease obligations.

The Bank’s outstanding and unfunded credit commitments and financial standby letters of credit were deemed to have no significant fair value as of March 31, 2026 and December 31, 2025.

Note 9 - Commitments and Contingencies

Guarantees and commitments to extend credit

Mid Penn is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer unless there is a violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Mid Penn evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the customer. Standby letters of credit and financial guarantees written are conditional commitments to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Mid Penn had $65.1 million and $66.5 million of standby letters of credit outstanding as of March 31, 2026 and December 31, 2025, respectively. Mid Penn does not anticipate any losses resulting from these transactions. The amount of the liability as of March 31, 2026 and December 31, 2025 for payment under standby letters of credit issued was not considered material.

Mid Penn is required to estimate expected credit losses for OBS credit exposures which are not unconditionally cancellable. Mid Penn maintains a separate ACL on credit-related OBS commitments, including unfunded loan commitments and letters of credit, which is included in other liabilities on the accompanying Consolidated Balance Sheets.

The ACL - OBS is adjusted as a provision for OBS commitments in provision for credit losses. The estimate includes consideration of the likelihood that funding will occur, an estimate of exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates derived from the same models and approaches used for Mid Penn's other loan portfolio segments described in "Note 4 - Loans and Allowance for Credit Losses - Loans" above, as these unfunded commitments share similar risk characteristics with these loan portfolio segments.

MID PENN BANCORP, INC.

The ACL - OBS was $3.1 million and $2.9 million as of March 31, 2026 and December 31, 2025, respectively. A benefit for credit losses related to credit commitments of $54 thousand and $20 thousand was recorded for the three months ended March 31, 2026 and March 31, 2025, respectively.

The following table presents the activity in the ACL - OBS by segment for the three months ended March 31, 2026:

(1) Includes commitments on loans acquired in the 1st Colonial acquisition on February 27, 2026. These commitments are included in the allowance for off-balance sheet credit exposures as of March 31, 2026.

Litigation

Mid Penn and its subsidiaries are subject to various pending and threatened legal proceedings or other matters arising out of the normal conduct of business in which claims for monetary damages are asserted. As of the date of this report, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of such pending or threatened matters will be material to Mid Penn’s consolidated financial position. On at least a quarterly basis, Mid Penn assesses its liabilities and contingencies in connection with such matters. For those matters where it is probable that Mid Penn will incur losses and the amounts of the losses can be reasonably estimated, Mid Penn records an expense and corresponding liability in its consolidated financial statements. To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable. The range of losses for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate. This is based on information currently available to Mid Penn and involves elements of judgment and significant uncertainties.

MID PENN BANCORP, INC.

While Mid Penn does not believe that the outcome of pending or threatened litigation or other matters will be material to Mid Penn’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future. In addition, regardless of the ultimate outcome of any such legal proceeding, inquiry or investigation, any such matter could cause Mid Penn to incur additional expenses, which could be significant, and possibly material, to Mid Penn’s results of operations in any future period.

Note 10 - Debt

Short-term FHLB and Correspondent Bank Borrowings

Total short-term borrowings were $31.5 million and $20.8 million as of March 31, 2026 and December 31, 2025, respectively. Short-term borrowings generally consist of federal funds purchased and advances from the FHLB with an original maturity of less than one year. Federal funds purchased from correspondent banks mature in one business day and are repriced daily based on the federal funds rate. Advances from the FHLB are collateralized by the Bank’s investment in FHLB common stock and by a blanket lien on selected loan receivables comprised principally of real estate secured loans. As of March 31, 2026, the amount of loans pledged totaled $2.7 billion. As of March 31, 2026, the Bank's unused short-term borrowing capacity with the FHLB totaled $1.5 billion (equal to $1.9 billion of maximum borrowing capacity, less the aggregate amount of FHLB letters of credit securing public funds deposits, and other FHLB advances and obligations outstanding) upon satisfaction of any stock purchase requirements of the FHLB.

The Bank also maintained unused overnight lines of credit with other correspondent banks totaling $35.0 million as of March 31, 2026. No draws have been made on these lines of credit as of March 31, 2026 and December 31, 2025, respectively.

Long-term Debt

The following table presents a summary of long-term debt as of March 31, 2026 and December 31, 2025:

As a member of the FHLB, the Bank can access a number of credit products which are utilized to provide liquidity. As of March 31, 2026 and December 31, 2025, the Bank had long-term debt outstanding in the amount of $3.0 million and $23.1 million, respectively, consisting of FHLB fixed rate instruments, and a finance lease liability.

The FHLB fixed rate instruments are secured under the terms of a blanket collateral agreement with the FHLB consisting of FHLB stock and qualifying Mid Penn loan receivables, principally real estate secured loans. Mid Penn also obtains letters of credit from the FHLB to secure certain public fund deposits of municipalities and school district customers, which are used as a legally allowable alternative to investment in securities. These FHLB letter of credit commitments totaled $406.5 million and $162.5 million as of March 31, 2026 and December 31, 2025, respectively.

MID PENN BANCORP, INC.

Note 11 - Subordinated Debt

Subordinated Debt Assumed November 2021 with the Riverview Acquisition

On November 30, 2021, Mid Penn completed its acquisition of Riverview and assumed $25.0 million of Subordinated Notes (the "Riverview Notes"). In accordance with purchase accounting principles, the Riverview Notes were recorded at fair value, including a premium of $2.3 million. The notes were treated as Tier 2 capital for regulatory reporting purposes.

The Riverview Notes were issued by Riverview on October 6, 2020 in a private placement to certain qualified institutional buyers and accredited institutional investors. The Riverview Notes had a maturity date of October 15, 2030 and initially bore interest at a fixed rate of 5.75% per annum before converting to a floating rate prior to redemption. The Riverview Notes were redeemable beginning October 15, 2025, and Mid Penn redeemed all of the Riverview Notes on such date.

Subordinated Debt Issued December 2020

On December 22, 2020, Mid Penn issued $12.2 million of subordinated notes due December 2030 (the "December 2020 Notes") in a private placement to accredited investors. The December 2020 Notes were treated as Tier 2 capital for regulatory capital purposes.

The December 2020 Notes initially bore interest at a fixed rate of 4.5% per annum before converting to a floating rate prior to redemption. The December 2020 Notes became redeemable beginning December 31, 2025, and Mid Penn redeemed all of the December 2020 Notes on such date.

Subordinated Debt Issued March 2020

On March 20, 2020, Mid Penn issued $15.0 million of subordinated notes due March 2030 (the "March 2020 Notes") in a private placement to accredited investors. The March 2020 Notes were treated as Tier 2 capital for regulatory capital purposes.

The March 2020 Notes initially bore interest at a fixed rate of 4.0% per annum before converting to a floating rate prior to redemption. The March 2020 Notes became redeemable on March 30, 2025 and Mid Penn redeemed all of the March 2020 Notes in full on June 30, 2025.

Outstanding Balance

As of March 31, 2026, the Corporation had no subordinated debt outstanding.

Note 12 - Common Stock and Equity Incentive Plans

Treasury Stock Repurchase Program

Mid Penn adopted a treasury stock repurchase program ("Program") initially effective March 19, 2020. On April 21, 2026, the Board of Directors renewed the Program through April 30, 2027 and approved an increase in repurchase authorization permitting the repurchase of up to an additional $50.0 million of Mid Penn’s outstanding common stock. Under the Program, Mid Penn conducts repurchases of its common stock through open market transactions (which may be by means of a trading plan adopted under SEC Rule 10b5-1) or in privately negotiated transactions. Repurchases under the Program are made at the discretion of management and are subject to market conditions and other factors. There is no guarantee as to the exact number of shares that Mid Penn may repurchase. The Program is able to be modified, suspended or terminated at any time, at Mid Penn’s discretion, based upon a number of factors, including liquidity, market conditions, the availability of alternative investment opportunities and other factors Mid Penn deems appropriate. The Program does not obligate Mid Penn to repurchase any shares.

No shares were repurchased in the three months ended March 31, 2026. As of March 31, 2026, Mid Penn had repurchased an aggregate total of 519,891 shares of common stock at an average price of $23.65 per share under the Program.

MID PENN BANCORP, INC.

Dividend Reinvestment Plan

The amended and restated Dividend Reinvestment Plan of Mid Penn Bancorp, Inc. allows holders of the Corporation's common shares to purchase additional shares of the Corporation's common stock, par value $1.00 per share. Under the plan, participants may have cash dividends on all of their shares automatically reinvested, and each participating shareholder may also make optional cash contributions to purchase additional shares.

As of March 31, 2026, participants in the plan held 496,255 shares of the Corporation's common stock.

Equity Incentive Plans

The Corporation recognizes stock-based compensation expense for equity awards based on the grant-date fair value of the awards. Compensation expense is recognized on a straight-line basis over the requisite service period and is included in salaries and benefits expense in the Consolidated Statements of Income.

On May 9, 2023, shareholders approved the 2023 Stock Incentive Plan, which authorizes Mid Penn to grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. The 2023 Plan was established for employees and directors of Mid Penn and the Bank, selected by the Compensation Committee of the Board of Directors, to incentivize the further success of the Corporation, and replaced the 2014 Restricted Stock Plan. The aggregate number of shares of common stock available for issuance under the Plans is 550,000 shares.

As of March 31, 2026, a total of 314,804 restricted shares were granted under the Plans, of which 110,845 shares were unvested. The Plan's shares granted and vested resulted in $689 thousand and $239 thousand in stock-based compensation expense for the three months ended March 31, 2026 and 2025, respectively.

Stock-based compensation expense relating to restricted stock is calculated using grant date fair value and is recognized on a straight-line basis over the vesting periods of the awards. Restricted shares granted to employees vest in equal amounts on the anniversary of the grant date over the vesting period and the expense is a component of salaries and benefits expense on the Consolidated Statement of Income. The employee grant vesting period is determined by the terms of each respective grant, with vesting periods generally between one and four years. Restricted shares granted to directors have a twelve-month vesting period, and the expense is a component of directors’ fees and benefits within the other expense line item on the Consolidated Statement of Income.

Equity Awards Assumed from William Penn Acquisition

In connection with the acquisition of William Penn on April 30, 2025, the Corporation issued 3,506,795 shares of common stock as purchase consideration and assumed outstanding equity awards of William Penn, resulting in the issuance of 538,447 stock options and 215,386 restricted stock units "RSUs" of which 129,776 stock options and 53,822 restricted stock units remained unvested as of March 31, 2026.

Compensation expense for stock options was $131 thousand for the three months ended March 31, 2026. As of March 31, 2026, unrecognized compensation expense related to unvested options was $645 thousand. Compensation expense for restricted stock awards was $183 thousand for the three months ended March 31, 2026. As of March 31, 2026, unrecognized compensation cost related to unvested restricted stock was $894 thousand.

The assumed awards are subject to the original vesting terms and conditions included in the William Penn stock-based compensation plan.

Stock Appreciation Rights Issued in Connection with the Cumberland Advisors Acquisition

Stock appreciation rights issued in the acquisition of Cumberland Advisors are being accounted for as post-combination compensation expense and will be recognized over the applicable service period. The stock appreciation rights have a maximum aggregate value of $1.2 million to be exercisable between the first and third anniversary of the closing date of the transaction.

MID PENN BANCORP, INC.

Note 13 - Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding plus the effect of potentially dilutive common shares, which include stock options and unvested restricted stock awards, using the treasury stock method.

The following data sets forth the computation of basic and diluted earnings per common share:

Anti-dilutive shares are common stock equivalents with weighted-average exercise prices in excess of the weighted-average market value for the periods presented. There were no anti-dilutive stock options excluded from diluted earnings per share for the three months ended March 31, 2026 or March 31, 2025. Dilutive common stock equivalents included assumed equity awards acquired in the William Penn acquisition.

As part of the acquisition of William Penn on April 30, 2025, the Company issued 3,506,795 shares of common stock as purchase consideration, and assumed outstanding equity awards of William Penn, consisting of 538,447 stock options and 215,386 restricted stock units (RSUs).

As part of the acquisition of Cumberland Advisors on January 1, 2026, Mid Penn issued 127,009 shares of common stock as purchase consideration.

As part of the acquisition of 1st Colonial on February 27, 2026, Mid Penn issued 2,111,076 shares of common stock as purchase consideration. These shares contributed to the increase in weighted-average shares outstanding for the quarter ended March 31, 2026.

MID PENN BANCORP, INC.

Note 14 - Segment Reporting

Mid Penn operates as a single reportable segment, providing a broad range of banking and financial services to individuals, businesses, and institutional clients. These services include commercial and consumer lending, deposit products, wealth management, insurance, and treasury management solutions. The Chief Executive Officer and the Chief Financial Officer together act as Mid Penn Chief Operating Decision Makers ("CODM"). The CODM regularly evaluates financial performance and allocates resources on a consolidated basis.

The following table presents financial information reviewed by the CODM in assessing performance and allocating resources:

Other Segment Information

Revenue Composition: Mid Penn generates revenue primarily from net interest income and non-interest income, including fees from deposit accounts, wealth management, insurance, and treasury services.

Capital Allocation & Performance Metrics: The CODM assesses performance based on key financial metrics, including net interest margin, return on average assets ("ROA"), return on average equity ("ROE") and core efficiency ratio.

MID PENN BANCORP, INC.

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

This Management Discussion relates to the Corporation, a financial holding company incorporated in the Commonwealth of Pennsylvania, and its wholly-owned subsidiaries, and should be read in conjunction with the consolidated financial statements and other financial information presented in this report and our Annual Report on Form 10-K for the year ended December 31, 2025.

MID PENN BANCORP, INC.

• impacts of the capital and liquidity requirements imposed by bank regulatory agencies;
• the effect of changes in accounting policies and practices, including the adoption or interpretation of new accounting standards, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, the SEC, and other accounting and reporting rule making authorities;
• the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
• changes in technology;
• our ability to successfully expand our franchise, including through acquisitions or establishing new offices at favorable prices;
• 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 and lease losses, the assessment of potential impairment of investment securities, and estimations of values of collateral and various financial assets and liabilities;
• our ability to maintain compliance with the listing rules of The NASDAQ Stock Market;
• our ability to maintain the value and image of our brand and protect our intellectual property rights;
• volatility in the securities markets;
• disruptions due to flooding, severe weather, or other natural disasters or acts of God;
• acts of war, terrorism, or global military conflict;
• supply chain disruption;
• the risk factors described in Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent filings with the SEC.

The above list of factors that may affect future performance is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with this understanding of inherent uncertainty.

Overview

Mid Penn is a financial holding company incorporated in August 1991 in the Commonwealth of Pennsylvania.

Mid Penn generates the majority of its revenues through net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the net interest margin, which is calculated on a fully taxable-equivalent basis ("FTE") as net interest income as a percentage of average interest-earning assets. Mid Penn also generates revenue through fees earned on the various services and products offered to its customers and through gains on sales of assets, such as loans, investments and properties. Offsetting these revenue sources are provisions for credit losses, non-interest expenses and income taxes.

MID PENN BANCORP, INC.

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

(1) Presented on a FTE basis using a 21% Federal tax rate and statutory interest expense disallowances. See also the "Net Interest Income" section.

(2) Annualized ratios

On February 27, 2026, Mid Penn completed the acquisition of 1st Colonial Bancorp, Inc. ("1st Colonial"), which added total assets of $842.5 million, comprised primarily of $597.5 million of loans. Additionally, on January 1, 2026, Mid Penn completed the acquisition of Cumberland Advisors, Inc. ("Cumberland Advisors"), a registered investment advisory firm, which had approximately $3.2 billion in assets under management, further expanding the Company's wealth management capabilities and fee-based revenue.

On April 30, 2025, Mid Penn completed the William Penn acquisition, which added total assets of $726.5 million, including $405.3 million of loans. This transaction included the acquisition of 12 branches, further expanding Mid Penn's presence in the Philadelphia region and surrounding counties in Pennsylvania and New Jersey. Mid Penn issued 3,506,795 shares of Mid Penn common stock as consideration for the $103.2 million purchase price. The Corporation also granted replacement awards for 538,447 stock options, with a fair value of $3.1 million to continuing employees of William Penn.

Summary of Financial Results

• Net Income Per Share - Mid Penn’s net income available to common shareholders ("earnings") for the three months ended March 31, 2026 was $8.7 million, or $0.36 per basic and diluted common share, compared to earnings of $13.7 million, or $0.71 per both basic and diluted common share for the three months ended March 31, 2025.
• Net Interest Income
  • Net Interest Margin - For the first quarter of 2026, Mid Penn’s net interest margin was 3.80% versus 3.37% for the same period of 2025. The yield on interest-earning assets for the first quarter of 2026 increased 10 basis points from the same period of 2025. The rate on interest-bearing liabilities decreased 43 basis points from the same period of 2025. The increase, compared to the first quarter of 2025, was driven by higher loan and investment securities yields and a reduction in the cost of funds.
  • Loan Growth - Total loans, net of unearned income, as of March 31, 2026 were $5.5 billion compared to $4.9 billion as of December 31, 2025, an increase of $647.1 million, or 13.3%. The growth was primarily driven by the acquisition of 1st Colonial, which contributed to an increase in residential mortgages of $341.1 million, an increase in commercial real estate loans of $245.7 million, an increase in construction loans of $57.7 million, and an increase in commercial and industrial loans of $4.9 million.

MID PENN BANCORP, INC.

• Deposit Growth - Total deposits increased $756.3 million, or 14.5%, from $5.2 billion at December 31, 2025, to $6.0 billion at March 31, 2026. The growth was primarily driven by the acquisition of 1st Colonial, which contributed to an increase of $528.3 million in interest-bearing transaction accounts, an increase of $128.5 million in time deposits, and a $99.5 million increase in non-interest bearing accounts.
• Asset Quality - ACL as of March 31, 2026 was $41.1 million, or 0.75% of total loans, as compared to $36.1 million, or 0.74% of total loans as of December 31, 2025. This increase includes the initial allowance recorded for 1st Colonial loans of $4.4 million.
  • Net Charge-offs/Recoveries - Mid Penn had net loan charge-offs of $1.0 million and net recoveries of $3 thousand for the three months ended March 31, 2026 and 2025, respectively.
  • Non-performing assets - Total non-performing assets were $38.1 million at March 31, 2026, an increase compared to non-performing assets of $30.8 million at December 31, 2025. The increase during the first quarter of 2026 is primarily related to the addition of $7.4 million of nonaccrual loans from the 1st Colonial acquisition. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.70% at March 31, 2026, compared to 0.69% as of December 31, 2025.
  • Provision/Benefit for credit losses - loans - The provision for credit losses - loans was $1.6 million for the three months ended March 31, 2026 compared to a provision of $321 thousand for the same period of 2025. The benefit for credit losses on off-balance sheet credit exposures was $54 thousand for the three months ended March 31, 2026, compared to a benefit of $20 thousand for the same period of 2025. The increase in provision for the three months ended March 31, 2026, was primarily driven by qualitative adjustments to the CRE owner-occupied portfolio, reflecting growth within that segment, offset by decreases due to higher prepayment speeds and a favorable economic forecast.
• Noninterest Income - Noninterest income totaled $9.6 million for the three months ended March 31, 2026 compared to $5.2 million for the same period of 2025. The increase is primarily driven by a $2.5 million increase in fiduciary and wealth management income, a $431 thousand increase in earnings from the cash surrender value of life insurance, a $1.3 million increase in other noninterest income, including a $558 thousand increase in death benefits received, and a $458 thousand increase in insurance commissions.
• Noninterest Expense - Noninterest expense totaled $52.0 million for the three months ended March 31, 2026, an increase of $21.3 million, or 69.6%, compared to noninterest expense of $30.6 million for the same period of 2025.

Merger and acquisition expenses increased $7.4 million to $7.7 million for the three months ended March 31, 2026, driven by $7.2 million related to the 1st Colonial acquisition, $544 thousand related to the Cumberland Advisors acquisition, compared to $314 thousand in the same period of 2025.

Salaries and benefits increased $7.0 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase is attributable to (i) the retail staff additions at the twelve retail locations added through the William Penn acquisition and three retail locations added through the 1st Colonial acquisition; (ii) the retention of various William Penn and 1st Colonial team members through the completion of systems integrations; and (iii) the addition of staff members from the Cumberland Advisors acquisition.

Software licensing and utilization costs increased $1.0 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase reflects additional costs to (i) license the additional William Penn and 1st Colonial branches; and (ii) upgrade internal systems, including network storage, cybersecurity, and data security enhancements in response to the Bank's larger size and increased IT complexity.

Occupancy expenses increased $979 thousand for the three months ended March 31, 2026, compared to the same period in 2025. The increase was driven by the facility operating costs of the additional retail locations added through the William Penn, 1st Colonial, and Cumberland Advisors acquisitions.

MID PENN BANCORP, INC.

• Liquidity - Current liquidity, including cash equivalents and borrowing capacity totaled $1.5 billion, compared to $1.7 billion at December 31, 2025, representing 144.8% of uninsured and uncollateralized deposits and approximately 25.0% of total deposits.

MID PENN BANCORP, INC.

Critical Accounting Estimates

The 2025 Annual Report on Form 10-K includes a summary of critical accounting estimates that Mid Penn considers to be most important to the presentation of its financial condition and results of operations. These estimates require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Management of the Corporation considers the accounting judgments relating to the allowance for credit losses, business combinations, and goodwill impairment to be the accounting area that requires the most subjective and complex judgments. Changes in key assumptions, including economic conditions and other inputs used in these estimates, could have a material impact on the Corporation's results of operations and financial condition.

There have been no material changes to Mid Penn's critical accounting estimates as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.

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. Net interest income is affected by changes in interest rates and changes in average balances (volume) in the various interest-sensitive assets and liabilities. Interest and average rates in the table below are presented on a fully taxable-equivalent basis ("FTE"). Tax-equivalent adjustments were calculated using a statutory corporate tax rate of 21% for the three months ended March 31, 2026 and 2025.

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The following table includes average balances, amounts, and yields of interest income and rates of expense, interest rate spread, and net interest margin for the periods presented:

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

(2) Annualized ratios

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The following table summarizes the changes in interest income and interest expense resulting from changes in average balances, volume, and changes in rates for the three months ended March 31, 2026 in comparison to the same period in 2025:

For the three months ended March 31, 2026, net interest income was $55.3 million compared to net interest income of $42.5 million for the three months ended March 31, 2025. The tax-equivalent net interest margin for the three months ended March 31, 2026 was 3.80% compared to 3.37% for the first quarter of 2025, representing a 43 bp increase compared to the same period in 2025.

The yield on interest-earning assets increased to 5.75% for the quarter ended March 31, 2026, from 5.65% for the quarter ended March 31, 2025. These increases were due to assets continuing to reprice at higher rates during 2025 and the first quarter of 2026, continued discipline on new loan pricing, and an increase in Fed funds sold.

Average investment securities increased $144.2 million and the yield on those investment securities increased 56 bps during the first quarter of 2026 compared to the first quarter of 2025, increasing interest income due to volume by $1.1 million, and increasing interest income due to rates by $1.0 million. Average loans increased $623.6 million, and the yield on those loans increased 8 bps, contributing $9.3 million and $958 thousand, respectively, to the increase in interest income.

Interest expense decreased $559 thousand during the first quarter of 2026 compared to the first quarter of 2025. The rate of interest-bearing liabilities decreased from 2.95% for the first quarter of 2025 to 2.51% for the first quarter of 2026. The

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decrease in the rate was primarily a result of a decrease in short-term borrowings, a decrease in long term debt, and a decrease in time deposits. Mid Penn continued to offer higher rates over the comparable period to both retain and attract deposits.

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

Provision for Credit Losses - Loans

The provision for credit losses on loans was $1.6 million for the three months ended March 31, 2026 compared to a provision of $321 thousand for the three months ended March 31, 2025. The increase in provision was primarily attributable to qualitative adjustments to several segments of the portfolio, offset by reductions due to a favorable economic forecast.

Noninterest Income

For the three months ended March 31, 2026, noninterest income totaled $9.6 million, a increase of $4.4 million, or 83.3%, compared to noninterest income of $5.2 million for the three months ended March 31, 2025. The increase was largely driven by a $2.5 million increase in fiduciary and wealth management income, a $431 thousand increase in earnings from the cash surrender value of life insurance, a $1.3 million increase in other noninterest income, including a $558 thousand increase in death benefits received, and a $458 thousand increase in insurance commissions.

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

Noninterest Expense

For the three months ended March 31, 2026, noninterest expense totaled $52.0 million, an increase of $21.3 million, or 69.6%, compared to noninterest expense of $30.6 million for the same period in 2025. The increase was primarily driven by a $7.4 million increase in merger and acquisition expenses, a $7.0 million increase in salaries and employee benefits, a $1.0 million increase in software licensing, a $979 thousand increase in occupancy expenses, an $872 thousand increase in intangible amortization, an $862 thousand increase in legal and professional fees, and a $2.3 million increase in other noninterest expense, primarily driven by a $1.5 million increase related to a change in methodology for LIHTC amortization, and a $665 thousand in legal settlements.

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

Income Taxes

The provision for income taxes was $2.6 million for the three months ended March 31, 2026 compared to $3.1 million for the same period in 2025. The provision for income taxes for the three months ended March 31, 2026 reflects a combined Federal and State effective tax rate of 23.0% for the three months ended March 31, 2026, compared to 18.2%, for the three months ended March 31, 2025.

Generally, Mid Penn’s effective tax rate is below the federal statutory rate due to earnings on tax-exempt loans, investments, and earnings from the cash surrender value of life insurance, as well as the impact of federal income tax credits, including those awarded from Mid Penn’s low-income housing investments. The effective tax rate for the current period was higher than the federal statutory rate primarily due to the impact of state income taxes. This increase was driven by changes in the Corporation's state apportionment resulting from the acquisition of 1st Colonial, resulting in a higher proportion of income subject to higher state tax rates. The realization of Mid Penn’s deferred tax assets is dependent on future earnings. Mid Penn currently anticipates that future earnings will be adequate to fully realize the currently recorded deferred tax assets.

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that may affect the Company in future periods, including provisions related to business deductions and tax depreciation. These changes did not have a material impact on the Corporation’s federal income tax expense or liability for the three months ended March 31, 2026.

Financial Condition

Mid Penn’s total assets were $7.0 billion as of March 31, 2026, reflecting an increase of $830.9 million, or 13.5%, compared to total assets of $6.1 billion as of December 31, 2025. The increase was primarily driven by an increase in loans as a result of the 1st Colonial acquisition, an increase in available for sale investment securities, and an increase in Fed Funds Sold.

Investment Securities

Mid Penn’s investment portfolio is utilized primarily to support overall liquidity and interest rate risk management, to provide collateral supporting pledging requirements for public funds on deposit, and to generate additional interest income within reasonable risk parameters. The carrying value of total investment securities as of March 31, 2026 were $825.1 million compared to $763.6 million as of December 31, 2025. Mid Penn does not anticipate growth in the investment portfolio beyond levels necessary to support pledging requirements.

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The following table presents the expected maturities of the investment portfolio and the weighted-average yields (calculated based on historical cost):

Loans, net of unearned income

Total loans, net of unearned income, as of March 31, 2026 were $5.5 billion compared to $4.9 billion as of December 31, 2025. The growth of $647.1 million, or 13.3%, since December 31, 2025 was primarily driven by the acquisition of 1st Colonial, which contributed to an increase in residential mortgages of $341.1 million, an increase in commercial real estate loans of $245.7 million, an increase in construction loans of $57.7 million, and an increase in commercial and industrial loans of $4.9 million.

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The majority of the Bank's loan portfolio is to businesses and individuals located within the Bank's primary market area, which consists principally of central and southeastern Pennsylvania, along with select counties in New Jersey. Commercial real estate, construction, and land development loans are collateralized mainly by mortgages on the income-producing real estate or land involved. Commercial, industrial, and agricultural loans are primarily made to business entities and may be secured by business assets, including commercial real estate, or may be unsecured. Residential real estate loans are secured by liens on the residential property. Consumer loans include installment loans, lines of credit and home equity loans. The Bank has no significant concentration of credit to any one borrower. The Bank’s highest concentration of credit by loan type is in commercial real estate.

Credit risk is managed through portfolio diversification, underwriting policies and procedures, and loan monitoring practices. Lenders are provided with detailed underwriting policies for all types of credit risks accepted by the Bank and must obtain appropriate internal approvals for credit extensions. The Bank also maintains strict documentation requirements and robust credit quality assurance practices to identify credit portfolio weaknesses as early as possible, so any exposures that are discovered might be mitigated or potential losses reduced. Most of the Bank's loans are secured by real estate, and the value of this collateral is dependent on and subject to change based on real estate market conditions within its market area.

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

(1) LTV not available for Owner Occupied and Farmland properties.

(2) Weighted average Loan to Value is calculated based on estimated current market values of the properties.

Maturity distribution by contractual maturity date and rate sensitivity information related to the loan portfolio is reflected in the table below:

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Credit Quality, Credit Risk, and Allowance for Credit Losses

Mid Penn’s ACL methodology for loans is based upon guidance within FASB ASC Subtopic 326-20, "Financial Instruments – Credit Losses – Measured at Amortized Cost," as well as regulatory guidance from the FDIC, the Bank's primary federal regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense.

For a complete description of Mid Penn’s ACL-loans methodology and the quantitative and qualitative factors included in the calculation, please see "Note 4 – Loans and Allowance for Credit Losses – Loans" included in Part I. Item 1. – Financial Statements of this report.

Changes in the ACL-loans are summarized as follows:

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The following table presents the change in nonperforming asset categories as of March 31, 2026, December 31, 2025, and March 31, 2025.

Total nonperforming assets were $38.1 million at March 31, 2026, an increase compared to nonperforming assets of $30.8 million at December 31, 2025. The increase during the first quarter of 2026 is primarily driven by the addition of $7.4 million of nonaccrual loans from the 1st Colonial acquisition in the first quarter of 2026. Delinquency, measured as loans past due 30 days or more, as a percentage of total loans was 0.70% at March 31, 2026, compared to 0.69% and 0.50% as of December 31, 2025 and March 31, 2025.

Goodwill

Mid Penn evaluates goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that impairment may be present. Significant negative industry or economic trends, as well as changes in the Corporation's stock price, could represent potential indicators of impairment. Management considered relevant factors, including overall market conditions, and trends in the Corporation's stock price, and concluded that no triggering events had occurred as of March 31, 2026. Management will continue to monitor these factors in future periods. Mid Penn's annual impairment test is scheduled to be conducted as of October 31, 2026.

Deposits

Total deposits increased $756.3 million, or 14.5%, from $5.2 billion on December 31, 2025, to $6.0 billion at March 31, 2026. The growth was primarily driven by the acquisition of 1st Colonial deposits of $747.1 million. These deposits contributed to a $528.3 million increase in interest bearing accounts, $128.5 million increase in time deposits, and a $99.5 million increase in noninterest bearing accounts.

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

As of March 31, 2026, uninsured deposits were approximately $1.0 billion, or 17.3% of total deposits, compared to $1.0 billion, or 19.2% of total deposits, as of December 31, 2025. The maturities of the uninsured time deposits as of March 31, 2026 were as follows:

Borrowings

Total short-term borrowings increased $10.7 million, or 51.2%, from December 31, 2025 to March 31, 2026. The increase in short-term borrowings was driven by our objective to maintain a strong level of unencumbered liquid assets, ensuring the availability of high-quality liquidity to meet potential near-term obligations. Total long-term borrowings were $3.0 million at March 31, 2026, a decrease of $20.1 million from December 31, 2025.

Liquidity

Mid Penn’s objective is to maintain adequate liquidity to meet funding needs at a reasonable cost and to provide contingency plans to meet unanticipated funding needs or a loss of funding sources, while minimizing interest rate risk. Adequate liquidity provides resources for credit needs of borrowers, for depositor withdrawals, and for funding corporate operations. Sources of liquidity are as follows:

• a growing core deposit base;
• proceeds from the sale or maturity of investment securities;
• payments received on loans and mortgage-backed securities;
• overnight correspondent bank borrowings on various credit lines; and
• borrowing capacity available from the FHLB and the Federal Reserve Discount Window available to Mid Penn.

Mid Penn believes its core deposits are generally stable even in periods of changing interest rates. Liquidity is measured and monitored daily, allowing management to better understand and react to balance sheet trends. These measurements indicate that liquidity generally remains stable and exceeds our minimum defined levels of adequacy. Other than the trends of continued competitive pressures and volatile interest rates, and the uncertain impact of the current inflationary environment, there are no known demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way.

On at least a quarterly basis, a comprehensive liquidity analysis is reviewed by the Asset Liability Committee and Board of Directors. The analysis provides a summary of the current liquidity measurements, projections, and future liquidity positions given various levels of liquidity stress. Management also maintains a detailed Contingency Funding Plan

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

The Consolidated Statements of Cash Flows provide additional information. Mid Penn’s operating activities during the three months ended March 31, 2026 provided $14.5 million of cash, mainly due to net income. Cash provided in investing activities during the three months ended March 31, 2026 was $33.9 million, mainly the result of the Cumberland Advisors and 1st Colonial acquisitions. Cash used by financing activities during the three months ended March 31, 2026 totaled $6.1 million, primarily the result of the repayment of long-term borrowings.

Regulatory Capital

Mid Penn and the Bank are subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger certain mandatory, and possibly additional discretionary, actions by the regulators that if, undertaken, could have a direct material effect on Mid Penn's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory account practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Minimum regulatory capital requirements established by Basel III rules require Mid Penn and the Bank to:

• Meet a minimum Common Equity Tier I capital ratio of 4.5% of risk-weighted assets;
• Meet a minimum Tier I capital ratio of 6.0% of risk-weighted assets;
• Meet a minimum Total capital ratio of 8.0% of risk-weighted assets;
• Meet a minimum Tier I leverage capital ratio of 4.0% of average assets;
• Maintain a "capital conservation buffer" of 2.5% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonuses; and
• Comply with the definition of capital to improve the ability of regulatory capital instruments to absorb losses.

The Basel III Rules use a standardized approach for risk weightings that expands the risk-weighting for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off-balance sheet exposures and resulting in higher risk weightings for a variety of asset categories.

Banks are evaluated for capital adequacy by regulatory supervisory agencies based on the ratio of capital to risk-weighted assets and total assets. The minimum capital to risk-weighted assets requirements, including the capital conservation buffers, which became effective for Mid Penn and the Bank on January 1, 2016, are illustrated below.

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

As of March 31, 2026 and December 31, 2025, regulatory capital ratios for both Mid Penn and the Bank met the definition of a "well-capitalized" institution under the regulatory framework for prompt corrective action and exceeded the minimum capital requirements under Basel III. However, future changes in regulations could increase capital requirements and may have an adverse effect on capital resources.

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Shareholders' Equity

Shareholders' equity is evaluated in relation to total assets and the risk associated with those assets, and the desire to collectively maintain and enhance shareholders’ value, and satisfactorily address regulatory capital requirements. Accordingly, capital management practices have been, and will continue to be, of paramount importance to Mid Penn.

Shareholders’ equity increased by $73.3 million, or 9.0%, from $814.1 million as of December 31, 2025 to $887.4 million as of March 31, 2026, reflecting common stock issued in connection with the 1st Colonial and Cumberland Advisors acquisitions totaling $69.6 million and earnings of $8.7 million, partially offset by dividends paid of $6.2 million.

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