Regulatory Matters

12 Months Ended

Dec. 31, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Matters

Regulatory Matters

The Corporation 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 the Corporation'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.

As of December 31, 2023 and 2022, the Corporation and the Bank met all capital adequacy requirements and the Bank was considered "well-capitalized". However, future changes in regulations could increase capital requirements and may have an adverse effect on capital resources.

Minimum regulatory capital requirements established by Basel III rules require the Corporation 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. The rules provide that the failure to maintain the "capital conservation buffer" results in restrictions on capital distributions and discretionary cash bonus payments to executive officers. As a result, under the Basel III Rules, if the Bank fails to maintain the required minimum capital conservation buffer, the Corporation will be subject to limits, and possibly prohibitions, on its ability to obtain capital distributions from the Bank. If the Corporation does not receive sufficient cash dividends from the Bank, it may not have sufficient funds to pay dividends on its common stock, service its debt obligations or repurchase its common stock.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans, or advances. The amount of dividends that may be paid from the Bank to the Corporation in any calendar year is limited to the Bank’s current year’s net profits, combined with the retained net profits of the preceding two years. For the year ended December 31, 2023, $46.1 million of undistributed earnings of the Bank, included in the consolidated shareholders’ equity balance, was available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements below.

The following tables present the regulatory capital levels, leverage ratios, and risk-based capital ratios as of December 31:

	Actual				Minimum for Basel III Capital Adequacy				To Be Well-Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Mid Penn Bancorp, Inc.
2023
Tier 1 Capital (to Average Assets)	$	427,353	8.3	%	$	204,935	4.0	%	N/A		N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)	427,353		9.8		305,083		7.0		N/A		N/A
Tier 1 Capital (to Risk Weighted Assets)	427,353		9.8		370,458		8.5		N/A		N/A
Total Capital (to Risk Weighted Assets)	510,734		11.7		457,624		10.5		N/A		N/A
Mid Penn Bank
2023
Tier 1 Capital (to Average Assets)	$	458,077	8.9	%	$	204,777	4.0	%	$	255,971	5.0	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)	458,077		10.5		304,788		7.0		283,018		6.5
Tier 1 Capital (to Risk Weighted Assets)	458,077		10.5		370,100		8.5		348,330		8.0
Total Capital (to Risk Weighted Assets)	495,104		11.4		457,182		10.5		435,412		10.0
Mid Penn Bancorp, Inc.
2022
Tier 1 Capital (to Average Assets)	$	410,494	9.6	%	$	171,500	4.0	%	N/A		N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)	410,494		11.2		257,130		7.0		N/A		N/A
Tier 1 Capital (to Risk Weighted Assets)	410,494		11.2		312,229		8.5		N/A		N/A
Total Capital (to Risk Weighted Assets)	484,477		13.2		385,695		10.5		N/A		N/A
Mid Penn Bank
2022
Tier 1 Capital (to Average Assets)	$	463,964	10.8	%	$	171,398	4.0	%	$	214,248	5.0	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)	463,964		12.6		256,895		7.0		238,545		6.5
Tier 1 Capital (to Risk Weighted Assets)	463,964		12.6		311,943		8.5		293,594		8.0
Total Capital (to Risk Weighted Assets)	483,006		13.2		385,342		10.5		$	366,992	10.0