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Fair Value Measurement (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2017

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Assets Measured at Fair Value on a Recurring Basis

The following tables illustrate the assets measured at fair value on a recurring basis segregated by hierarchy fair value levels.

						Fair value measurements at June 30, 2017 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		June 30, 2017				(Level 1)				(Level 2)				(Level 3)
Available-for-sale securities:
U.S. Treasury and U.S. government agencies		$	41,771			$	—			$	41,771			$	—
Mortgage-backed U.S. government agencies			28,239				—				28,239				—
State and political subdivision obligations			39,095				—				39,095				—
Corporate debt securities			1,105								1,105
Equity securities			1,143				1,143				—				—
Total		$	111,353			$	1,143			$	110,210			$	—

						Fair value measurements at December 31, 2016 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2016				(Level 1)				(Level 2)				(Level 3)
Available-for-sale securities:
U.S. Treasury and U.S. government agencies		$	47,012			$	1,864			$	45,148			$	—
Mortgage-backed U.S. government agencies			25,619				—				25,619				—
State and political subdivision obligations			58,838				—				58,838				—
Corporate debt securities			1,100				—				1,100
Equity securities			1,056				1,056				—				—
Total		$	133,625			$	2,920			$	130,705			$	—

The following tables illustrate the assets measured at fair value on a recurring basis segregated by hierarchy fair value levels:

						Fair value measurements at December 31, 2016 using:
		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
(Dollars in thousands)		December 31, 2016				(Level 1)				(Level 2)				(Level 3)
Assets:
U.S. Treasury and U.S. government agencies		$	47,012			$	1,864			$	45,148			$	—
Mortgage-backed U.S. government agencies			25,619				—				25,619				—
State and political subdivision obligations			58,838				—				58,838				—
Corporate debt securities			1,000				—				1,000				—
Equity securities			1,156				1,056				100				—
		$	133,625			$	2,920			$	130,705			$	—

						Fair value measurements at December 31, 2015 using:
		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
(Dollars in thousands)		December 31, 2015				(Level 1)				(Level 2)				(Level 3)
Assets:
U.S. Treasury and U.S. government agencies		$	26,990			$	1,861			$	25,129			$	—
Mortgage-backed U.S. government agencies			38,804				—				38,804				—
State and political subdivision obligations			66,617				—				66,617				—
Corporate debt securities			2,070				—				2,070				—
Equity securities			1,240				1,240				—				—
		$	135,721			$	3,101			$	132,620			$	—

Fair Value Measurements, Nonrecurring

The following tables illustrate the assets measured at fair value on a nonrecurring basis segregated by hierarchy fair value levels.

						Fair value measurements at June 30, 2017 using:
(Dollars in thousands) Assets:		Total carrying value at June 30, 2017				Quoted prices in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Impaired Loans		$	2,061			$	—			$	—			$	2,061
Foreclosed Assets Held for Sale			—				—				—				—
Mortgage Servicing Rights			135				—				—				135

						Fair value measurements at December 31, 2016 using:
(Dollars in thousands) Assets:		Total carrying value at December 31, 2016				Quoted prices in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Impaired Loans		$	2,404			$	—			$	—			$	2,404
Foreclosed Assets Held for Sale			135				—				—				135
Mortgage Servicing Rights			144				—				—				144

The following tables illustrate the assets measured at fair value on a nonrecurring basis segregated by hierarchy fair value levels.

						Fair value measurements at December 31, 2016 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
		December 31, 2016				(Level 1)				(Level 2)				(Level 3)
Assets:
Impaired Loans		$	2,404			$	—			$	—			$	2,404
Foreclosed Assets Held for Sale			135				—				—				135
Mortgage Servicing Rights			144				—				—				144

						Fair value measurements at December 31, 2015 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
		December 31, 2015				(Level 1)				(Level 2)				(Level 3)
Assets:
Impaired Loans		$	2,088			$	—			$	—			$	2,088
Foreclosed Assets Held for Sale			453				—				—				453
Mortgage Servicing Rights			174				—				—				174

Fair Value Inputs, Assets, Quantitative Information

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Mid Penn has utilized Level 3 inputs to determine the fair value.

(Dollars in thousands)

Quantitative Information about Level 3 Fair Value Measurements

June 30, 2017

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

2,061

Appraisal of collateral (a)

Appraisal adjustments (b)

26% - 43%

35%

Foreclosed Assets Held for Sale

—

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

0% - 0%

0%

Mortgage Servicing Rights

135

Multiple of annual service fee

Estimated prepayment speed based on rate and term

210% - 400%

365%

(Dollars in thousands)

Quantitative Information about Level 3 Fair Value Measurements

December 31, 2016

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

2,404

Appraisal of collateral (a)

Appraisal adjustments (b)

11% - 70%

30%

Foreclosed Assets Held for Sale

135

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

26% - 31%

27%

Mortgage Servicing Rights

144

Multiple of annual service fee

Estimated prepayment speed based on rate and term

210% - 400%

365%

(a) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

(b) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal. Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received, or age of the appraisal.

(c) Includes qualitative adjustments by management and estimated liquidation expenses.

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Mid Penn has utilized Level 3 inputs to determine the fair value.

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands) December 31, 2016

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

2,404

Appraisal of collateral (a)

Appraisal adjustments (b)

11% -70%

30%

Foreclosed Assets Held for Sale

135

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

26% - 31%

27%

Mortgage Servicing Rights

144

Multiple of annual service fee

Estimated prepayment speed based on rate and term

210% - 400%

365%

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands) December 31, 2015

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

2,088

Appraisal of collateral (a)

Appraisal adjustments (b)

11% - 60%

30%

Foreclosed Assets Held for Sale

453

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

17% - 27%

26%

Mortgage Servicing Rights

174

Multiple of annual service fee

Estimated prepayment speed based on rate and term

210% - 400%

360%

(a) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

(b) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal. Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received, or age of the appraisal.

(c) Includes qualitative adjustments by management and estimated liquidation expenses.

Fair Value, by Balance Sheet Grouping

The following table summarizes the carrying value and fair value of financial instruments at June 30, 2017 and December 31, 2016.

(Dollars in thousands)		June 30, 2017								December 31, 2016
		Carrying Value				Fair Value				Carrying Value				Fair Value
Financial assets:
Cash and cash equivalents		$	29,179			$	29,179			$	45,973			$	45,973
Available-for-sale investment securities			111,353				111,353				133,625				133,625
Held-to-maturity investment securities			71,096				71,199				—				—
Loans held for sale			2,369				2,369				1,959				1,959
Net loans and leases			854,594				874,192				806,741				824,293
Restricted investment in bank stocks			3,985				3,985				2,443				2,443
Accrued interest receivable			3,991				3,991				3,928				3,928
Mortgage servicing rights			135				135				144				144
Financial liabilities:
Deposits		$	987,468			$	988,200			$	935,373			$	935,075
Short-term borrowings			21,468				21,468				—				—
Long-term debt			13,467				12,149				13,581				13,614
Subordinated debt			7,419				7,420				7,414				7,534
Accrued interest payable			788				788				515				515
Off-balance sheet financial instruments:
Commitments to extend credit		$	—			$	—			$	—			$	—
Financial standby letters of credit			—				—				—				—

The following table summarizes the carrying value and fair value of financial instruments at December 31, 2016 and 2015.

(Dollars in thousands)		December 31, 2016								December 31, 2015
		Carrying Value				Fair Value				Carrying Value				Fair Value
Financial assets:
Cash and cash equivalents		$	45,973			$	45,973			$	13,284			$	13,284
Interest-bearing time balances with other financial institutions			—				—				4,317				4,317
Available for sale investment securities			133,625				133,625				135,721				135,721
Net loans and leases			806,741				824,293				730,345				738,773
Restricted investment in bank stocks			2,443				2,443				4,266				4,266
Accrued interest receivable			3,928				3,928				3,813				3,813
Mortgage servicing rights			144				144				174				174
Financial liabilities:
Deposits		$	935,373			$	935,075			$	777,043			$	777,320
Short-term borrowings			—				—				31,596				31,596
Long-term debt			13,581				13,614				40,305				39,626
Subordinated debt			7,414				7,534				7,500				7,500
Accrued interest payable			515				515				390				390
Off-balance sheet financial instruments:
Commitments to extend credit		$	—			$	—			$	—			$	—
Financial standby letters of credit			—				—				—				—

Schedule of Fair Value, Assets and Liabilities Measured on Recurring 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 June 30, 2017 and December 31, 2016.  

										Fair Value Measurements
(Dollars in thousands) June 30, 2017		Carrying Amount				Fair Value				Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial instruments—assets
Held-to-maturity investment securities		$	71,096			$	71,199			$	—			$	71,199			$	—
Net loans and leases			854,594				874,192				—				—				874,192
Financial instruments—liabilities
Deposits		$	987,468			$	988,200			$	—			$	988,200			$	—
Short-term borrowings			21,468				21,468								21,468
Long-term debt			13,467				12,149				—				12,149				—
Subordinated debt			7,419				7,420				—				7,420				—

										Fair Value Measurements
(Dollars in thousands) December 31, 2016		Carrying Amount				Fair Value				Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial instruments—assets
Net loans and leases		$	806,741			$	824,293			$	—			$	—			$	824,293
Financial instruments—liabilities
Deposits		$	935,373			$	935,075			$	—			$	935,075			$	—
Long-term debt			13,581				13,614				—				13,614				—
Subordinated debt		$	7,414			$	7,534							$	7,534

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of December 31, 2016 and 2015. Carrying values approximate fair values for cash and cash equivalents, interest-bearing time balances with other financial institutions, restricted investment in bank stocks, mortgage servicing rights, accrued interest receivable and payable, short-term borrowings, and subordinated debt. Other than cash and cash equivalents, which are considered Level 1 Inputs, these instruments are Level 2 Inputs. The following tables exclude financial instruments for which the placement in the fair value hierarchy has been disclosed elsewhere or for which the carrying amount approximates fair value.

										Fair Value Measurements
(Dollars in thousands) December 31, 2016		Carrying Amount				Fair Value				Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial instruments—assets
Net loans and leases		$	806,741			$	824,293			$	—			$	—			$	824,293
Financial instruments—liabilities
Deposits		$	935,373			$	935,075			$	—			$	935,075			$	—
Long-term debt			13,581				13,614				—				13,614				—

										Fair Value Measurements
(Dollars in thousands) December 31, 2015		Carrying Amount				Fair Value				Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Financial instruments—assets
Net loans and leases		$	730,345			$	738,773			$	—			$	—			$	738,773
Financial instruments—liabilities
Deposits		$	777,043			$	777,320			$	—			$	777,320			$	—
Long-term debt			40,305				39,626				—				39,626				—

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- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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Tabular disclosure of quantitative information about the inputs used in the fair value measurement of assets. This disclosure may include, but is not limited to, the fair value of the asset, valuation technique used to measure fair value, the inputs used to measure fair value, the ranges of the inputs, and the weighted averages of the inputs.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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