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Business Combinations | 6 Months Ended
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Jun. 30, 2025
Business Combination [Abstract] |
Business Combinations | Business Combinations Commonwealth Benefits Group Acquisition On July 31, 2024, Mid Penn acquired the insurance business and related accounts of a full-service employee benefits firm that serves mid to large employers across central and eastern Pennsylvania, northern Maryland, and northern Virginia, for a purchase price of $2.0 million at closing and an additional $800 thousand potentially payable pursuant to a three year earnout. Mid Penn has recognized total goodwill of $1.1 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair value of identifiable assets acquired. Mid Penn incurred expenses related to the Commonwealth Benefits Group acquisition of $545 thousand for the year ended December 31, 2024, which is included in noninterest expense in the Consolidated Statements of Income. 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 has recognized total goodwill of $1.6 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair value of identifiable assets acquired. Mid Penn incurred expenses related to the Charis Insurance Group acquisition of $164 thousand for the six months ended June 30, 2025, which is included in noninterest expense in the Consolidated Statements of Income. 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. The merger was an all-stock transaction valued at approximately $103.2 million, based on the company's common stock closing price of $29.05 on April 30, 2025. Each share of William Penn common stock issued and outstanding as of April 30, 2025, was converted into 0.426 shares of Mid Penn common stock. As a result of the acquisition, Mid Penn issued 3,506,795 shares of Mid Penn common stock as consideration for the $103.2 million purchase price. The Company also granted replacement awards for 538,447 stock options, with a fair value of $3.1 million to continuing employees of William Penn. Of this amount, $1.3 million related to pre-combination vesting and was included in purchase price consideration, and $1.8 million related to post-combination vesting and will be recognized as expense of the combined company over the remaining vesting period. Mid Penn has recognized total Goodwill of $5.7 million, and a core deposit intangible asset of $9.0 million as a result of this acquisition. This is calculated as the excess of both the 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. Mid Penn incurred expenses related to the William Penn acquisition of $10.8 million and $11.2 million for the three and six months ended June 30, 2025, respectively, which is 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 William Penn Acquisition, Mid Penn acquired PCD loans and leases of $358 thousand. The non-credit discount on the PCD loans and leases was $15 thousand and the Day 1 fair value was $343 thousand. The initial provision expense for non-PCD loans associated with the William Penn Acquisition was $2.3 million. Estimated fair values of the assets acquired and liabilities assumed in the William Penn Acquisition as of the closing date are as follows:
(In thousands) |
Assets acquired: |
Cash and cash equivalents | $ | 41,404 |
Federal funds sold | 553 |
Investment securities | 186,564 |
Loans | 405,271 |
Core deposit intangible | 9,002 |
Premises and equipment | 6,858 |
Operating lease right of use asset | 6,340 |
Cash surrender value of life insurance | 42,928 |
Deferred income taxes | 15,399 |
Accrued interest receivable | 2,271 |
Other assets | 11,094 |
Total assets acquired | $ | 727,684 |
Liabilities assumed: |
Deposits: |
Noninterest-bearing demand | $ | 61,677 |
Interest-bearing demand | 121,521 |
Money Market | 178,285 |
Savings | 76,983 |
Time | 181,293 |
Operating lease liability | 6,340 |
Accrued interest payable | 29 |
Other liabilities | 4,052 |
Total liabilities assumed | $ | 630,181 |
Consideration transferred | $ | 103,213 |
Fair value of common stock issued | 103,206 |
Cash paid in lieu of fractional shares | 7 |
Total | $ | 103,213 |
Reconciliation to Consideration Transferred: |
Total assets acquired | $ | 727,684 |
Total liabilities assumed | 630,181 |
Net assets acquired | 97,503 |
Goodwill | 5,710 |
Consideration transferred | $ | 103,213 |
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 April 30, 2025 through June 30, 2025, William Penn contributed approximately $4.4 million of total revenue and $693 thousand of net income to Mid Penn's consolidated results for the three months ended June 30, 2025. The following supplemental pro forma information presents certain financial results for the three and six months ended June 30, 2025 and 2024 as if the merger of William Penn was effective as of January 1, 2024. 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.
(In thousands) | Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net interest income after provision for credit losses - loans | $ | 49,705 |  |  | $ | 41,445 |  |  | $ | 96,429 |  |  | $ | 83,024 |
Noninterest income | 7,741 |  |  | 5,962 |  |  | 12,517 |  |  | 12,627 |
Noninterest expense | 47,876 |  |  | 33,443 |  |  | 78,619 |  |  | 67,034 |
Net income | $ | 5,642 |  |  | $ | 11,494 |  |  | $ | 18,932 |  |  | $ | 23,638 |

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