Overview

Mid Penn Bancorp, Inc. is a financial holding company that 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. The company also earns revenue through fees and gains on asset sales. Mid Penn operates primarily in central and southeastern Pennsylvania, along with select counties in New Jersey.

Financial Performance Summary

For the first quarter of 2026, Mid Penn reported net income of $8.7 million, or $0.36 per diluted share, compared to $13.7 million, or $0.71 per share, in the same period of 2025. The decrease was driven by higher noninterest expenses, including $7.4 million in merger and acquisition costs related to the acquisitions of 1st Colonial Bancorp and Cumberland Advisors.

Net Interest Income and Margin

Mid Penn’s net interest margin increased to 3.80% in Q1 2026, up from 3.37% in Q1 2025. This was driven by higher yields on loans and investments, as well as a reduction in the cost of funds. Total loans grew 13.3% from year-end 2025, primarily due to the 1st Colonial acquisition, which added $647.1 million in loans. Deposits also grew 14.5% over the same period, with the 1st Colonial acquisition contributing $747.1 million in new deposits.

Asset Quality

The allowance for credit losses (ACL) increased to $41.1 million, or 0.75% of total loans, at March 31, 2026, compared to $36.1 million, or 0.74%, at year-end 2025. This increase was largely due to the initial allowance recorded for the 1st Colonial loan portfolio. Net charge-offs were $1.0 million in Q1 2026, compared to net recoveries of $3 thousand in Q1 2025.

Nonperforming assets increased to $38.1 million, or 0.69% of total loans and foreclosed real estate, at March 31, 2026, up from $30.8 million, or 0.63%, at year-end 2025. This was primarily due to the addition of $7.4 million in nonaccrual loans from the 1st Colonial acquisition.

Noninterest Income and Expense

Noninterest income totaled $9.6 million in Q1 2026, up from $5.2 million in Q1 2025. This increase was driven by higher fiduciary and wealth management income, earnings from life insurance, and other noninterest income.

Noninterest expense increased $21.3 million, or 69.6%, to $52.0 million in Q1 2026. This was largely due to $7.4 million in merger and acquisition costs, a $7.0 million increase in salaries and benefits, and higher costs for software, occupancy, and other expenses related to the acquisitions.

Liquidity and Capital

Mid Penn’s current liquidity, including cash equivalents and borrowing capacity, totaled $1.5 billion at March 31, 2026, representing 144.8% of uninsured and uncollateralized deposits and approximately 25.0% of total deposits.

As of March 31, 2026, Mid Penn and the Bank maintained regulatory capital ratios that exceeded the well-capitalized thresholds, with a Total Risk-Based Capital ratio of 13.58% and a Tier 1 Leverage ratio of 11.40%.

Strengths and Weaknesses

Strengths:

• Strong net interest margin and loan/deposit growth driven by acquisitions
• Diversified revenue streams, including wealth management and insurance commissions
• Solid capital and liquidity positions

Weaknesses:

• Elevated noninterest expenses due to merger and acquisition costs
• Increase in nonperforming assets, primarily from the 1st Colonial acquisition
• Potential for further interest rate volatility to impact net interest income

Outlook

Mid Penn’s financial performance in the first quarter of 2026 reflects the impact of its recent acquisitions, which have expanded the company’s geographic footprint and diversified its revenue streams. However, the higher noninterest expenses associated with these transactions have weighed on profitability in the short term.

Looking ahead, Mid Penn will need to successfully integrate the 1st Colonial and Cumberland Advisors operations to fully realize the benefits of these acquisitions and drive sustainable earnings growth. The company’s ability to maintain strong asset quality and control costs will also be critical, especially in the face of a potentially volatile interest rate environment.

Overall, Mid Penn appears well-positioned for the future, with a solid capital base, ample liquidity, and a diversified business model. However, the company will need to carefully manage the integration and operational challenges associated with its recent growth initiatives to deliver consistent financial performance and shareholder value.