Mid Penn Bancorp (MPB) risk factors, FY2024 10-K

Risks Related to Our Primary Business and Industry

1. 01Mid Penn is subject to interest rate risk
2. 02Mid Penn is subject to credit risk
3. 03The allowance for credit losses may not be sufficient to cover actual loan losses
4. 04Competition from other financial institutions may adversely affect Mid Penn’s and the Bank’s profitability
5. 05The discontinuance of LIBOR presents risks to the financial instruments originated, held or serviced by Mid Penn that use LIBOR as a reference rate
6. 06The administrator of LIBOR ceased publishing most non-USD LIBOR settings beginning on January 1, 2022, and as of July 1, 2023, the overnight one-month, three-month, six-month, and 12-month USD LIBOR settings were no longer published
7. 07The Basel III capital requirements require Mid Penn to maintain higher levels of capital, which could reduce profitability
8. 08Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans
9. 09Acts of terrorism, natural disasters, global climate change, pandemics and global conflicts may have a negative impact on our business and operations
10. 10If Mid Penn’s information systems are interrupted or sustain a breach in security, those events may negatively affect Mid Penn’s financial performance and reputation
11. 11Mid Penn’s business operations and interaction with customers are increasingly done via technology and electronic delivery channels, and this has increased risks related to cyber-attacks and cyber incidents
12. 12We are required to make a number of judgments in applying generally accepted accounting standards, and different estimates and assumptions in the application of these accounting standards could result in a decrease in capital and/or other material changes to our reports of financial condition and results of operations
13. 13Mid Penn’s mortgage banking income may experience significant volatility
14. 14Mid Penn’s profitability depends significantly on economic conditions in Pennsylvania
15. 15Mid Penn is subject to claims and litigation pertaining to fiduciary responsibility
16. 16Mid Penn operates in a highly regulated environment and may be adversely affected by changes in federal, state and local laws and regulations
17. 17The soundness of other financial institutions may adversely affect Mid Penn
18. 18Volatility in financial markets and the economy may have materially adverse effects on our liquidity and financial condition
19. 19Mid Penn’s banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments which may adversely affect its earnings
20. 20If we conclude that there is a decline in the value of any of our AFS investment securities, we may be required to record an allowance for credit losses where periodic changes are recognized in earnings
21. 21Mid Penn is subject to environmental, social and governance ("ESG") risks that could adversely affect our results of operations, reputation, and the market price of our securities
22. 22Mid Penn is subject to environmental liability risk associated with lending activities
23. 23Mid Penn’s financial performance may suffer if its information technology is unable to keep pace with its growth or industry developments
24. 24Growing by acquisition entails certain risks, and difficulties in integrating past or future acquisitions could adversely affect our business
25. 25Further, the asset quality or other financial characteristics of an acquired company may deteriorate from the date a merger or other acquisition agreement is entered into and when the transaction is completed or the post-merger period
26. 26We plan to pursue a growth strategy and there are risks associated with rapid growth
27. 27The value of our goodwill and other intangible assets may decline in the future

Risks Related to the Merger

1. 28Failure to complete the Merger could negatively affect our market price, future business and financial results
2. 29Regulatory waivers and approvals may not be received or may be received and subsequently expire, be revoked or be amended to impose conditions that are not presently anticipated or cannot be met
3. 30Combining Mid Penn and William Penn may be more difficult, costly or time consuming than expected, and we may fail to realize the anticipated benefits of the Merger
4. 31We are not currently able to predict the outcome of any suit arising out of or relating to the proposed Merger that may be filed in the future. If any complaints are filed, absent allegations that are material, We will not necessarily announce such filings
5. 32We will be subject to various uncertainties while the Merger is pending that could adversely affect our financial results or the anticipated benefits of the Merger
6. 33William Penn may have liabilities that are not known to us
7. 34We expect to incur substantial transaction costs in connection with the Merger
8. 35The Merger may be completed on different terms from those contained in the Merger Agreement
9. 36The Merger will not be completed unless important conditions are satisfied or waived, including approval of the Merger Agreement by our shareholders and William Penn’s shareholders

Risks Related to Mid Penn Common Stock

1. 37The trading volume in Mid Penn’s common stock is less than that of other larger financial services companies
2. 38The market price of Mid Penn common stock may fluctuate significantly, and this may make it difficult for investors to resell shares of common stock owned by them at times or at prices they find attractive
3. 39Mid Penn may need to, or be required to, raise additional capital in the future, and capital may not be available when needed and on terms favorable to current stockholders
4. 40Offerings of debt, which would be senior to Mid Penn’s common stock upon liquidation, and/or preferred equity securities which may be senior to our common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of our common stock
5. 41Pennsylvania Business Corporation Law and various anti-takeover provisions under our articles of incorporation and bylaws could impede the takeover of Mid Penn
6. 42Mid Penn’s common stock is not insured by any governmental entity
7. 43Mid Penn’s controls and procedures may fail or be circumvented
8. 44Mid Penn may not be able to attract and retain skilled personnel