Loans and Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2018

Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract]

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

The classes of the loan portfolio, summarized by the pass rating (net of deferred fees and costs of $479,000 as of June 30, 2018 and $464,000 as of December 31, 2017), and the classified ratings of special mention and substandard within Mid Penn’s internal risk rating system as of June 30, 2018 and December 31, 2017, are as follows:

(Dollars in thousands)			Special
June 30, 2018	Pass		Mention		Substandard		Total
Commercial and industrial	$	197,102	$	2,420	$	5,202	$	204,724
Commercial real estate		565,517		1,807		8,632		575,956
Commercial real estate - construction		82,323		—		367		82,690
Lease financing		153		—		—		153
Residential mortgage		118,779		262		1,219		120,260
Home equity		47,732		4		79		47,815
Consumer		4,881		—		—		4,881
	$	1,016,487	$	4,493	$	15,499	$	1,036,479

(Dollars in thousands)			Special
December 31, 2017	Pass		Mention		Substandard		Total
Commercial and industrial	$	182,168	$	453	$	5,412	$	188,033
Commercial real estate		505,397		1,435		8,180		515,012
Commercial real estate - construction		61,667		182		487		62,336
Lease financing		229		—		—		229
Residential mortgage		97,814		157		1,062		99,033
Home equity		41,479		105		309		41,893
Consumer		3,868		—		—		3,868
	$	892,622	$	2,332	$	15,450	$	910,404

Impaired Loans by Loan Portfolio Class

Impaired loans by loan portfolio class as of June 30, 2018 and December 31, 2017 are summarized as follows:

	June 30, 2018						December 31, 2017
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	13	$	—
Commercial real estate		1,711		2,357		—		3,424		4,056		—
Commercial real estate - construction		—		—		—		—		—		—
Lease financing		—		—		—		—		—		—
Residential mortgage		728		852		—		760		877		—
Home equity		8		107		—		260		295		—
Consumer		—		—		—		—		—		—

With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	23	$	23	$	—	$	—	$	—	$	—
Commercial real estate		1,466		1,466		—		555		555		—
Commercial real estate - construction		—		—		—		—		—		—
Lease financing		—		—		—		—		—		—
Residential mortgage		493		493		—		306		306		—
Home equity		—		—		—		—		—		—
Consumer		—		—		—		—		—		—

With an allowance recorded:
Commercial and industrial	$	4,324	$	4,410	$	282	$	4,434	$	4,460	$	136
Commercial real estate		550		602		238		1,423		1,589		293
Commercial real estate - construction		367		370		54		487		492		100
Lease financing		—		—		—		—		—		—
Residential mortgage		—		—		—		—		—		—
Home equity		—		—		—		—		—		—
Consumer		—		—		—		—		—		—

Total Impaired Loans:
Commercial and industrial	$	4,347	$	4,433	$	282	$	4,434	$	4,473	$	136
Commercial real estate		3,727		4,425		238		5,402		6,200		293
Commercial real estate - construction		367		370		54		487		492		100
Lease financing		—		—		—		—		—		—
Residential mortgage		1,221		1,345		—		1,066		1,183		—
Home equity		8		107		—		260		295		—
Consumer		—		—		—		—		—		—

Average Recorded Investment Of Impaired Loans And Related Interest Income By Loan Portfolio Class

The average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2018 and 2017 are summarized as follows:

	Three Months Ended
	June 30, 2018				June 30, 2017
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	36	$	—
Commercial real estate		2,650		3		644		110
Commercial real estate - construction		—		—		473		—
Lease financing		—		—		—		—
Residential mortgage		699		7		860		7
Home equity		95		—		90		—
Consumer		—		—		—		—

With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	23	$	—	$	—	$	—
Commercial real estate		1,455		7		644		110
Commercial real estate - construction		—		—		326		2
Lease financing		—		—		—		—
Residential mortgage		639		—		—		—
Home equity		—		—		—		—
Consumer		—		—		—		—

With an allowance recorded:
Commercial and industrial	$	4,349	$	—	$	—	$	—
Commercial real estate		1,029		—		2,792		—
Commercial real estate - construction		367		—		240		—
Lease financing		—		—		—		—
Residential mortgage		—		—		66		—
Home equity		—		—		—		—
Consumer		—		—		—		—

Total Impaired Loans:
Commercial and industrial	$	4,372	$	—	$	36	$	—
Commercial real estate		5,134		10		4,080		220
Commercial real estate - construction		367		—		1,039		2
Lease financing		—		—		—		—
Residential mortgage		1,338		7		926		7
Home equity		95		—		90		—
Consumer		—		—		—		—

	Six Months Ended
	June 30, 2018				June 30, 2017
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	18	$	—
Commercial real estate		2,306		3		524		279
Commercial real estate - construction		17		—		313		—
Lease financing		—		—		—		—
Residential mortgage		796		14		843		18
Home equity		208		—		101		2
Consumer		—		—		—		—

With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	20	$	—	$	—	$	—
Commercial real estate		2,001		14		738		110
Commercial real estate - construction		—		—		—		—
Lease financing		—		—		—		—
Residential mortgage		1,086		—		350		—
Home equity		—		—		—		—
Consumer		—		—		—		—

With an allowance recorded:
Commercial and industrial	$	3,519	$	—	$	—	$	—
Commercial real estate		1,367		—		2,660		—
Commercial real estate - construction		366		—		144		—
Lease financing		—		—		—		—
Residential mortgage		—		—		40		—
Home equity		—		—		—		—
Consumer		—		—		—		—

Total Impaired Loans:
Commercial and industrial	$	3,539	$	—	$	18	$	—
Commercial real estate		5,674		17		3,922		389
Commercial real estate - construction		383		—		457		—
Lease financing		—		—		—		—
Residential mortgage		1,882		14		1,233		18
Home equity		208		—		101		2
Consumer		—		—		—		—

Non-accrual Loans by Classes of the Loan Portfolio

Nonaccrual loans by loan portfolio class as of June 30, 2018 and December 31, 2017 are summarized as follows:

(Dollars in thousands)	June 30, 2018		December 31, 2017
Commercial and industrial	$	4,347	$	4,434
Commercial real estate		3,215		4,902
Commercial real estate - construction		367		487
Residential mortgage		675		492
Home equity		8		260
	$	8,612	$	10,575

Loan Portfolio Summarized by the Past Due Status

The classes of the loan portfolio summarized by the past due status as of June 30, 2018 and December 31, 2017 are summarized as follows:


(Dollars in thousands)	30-59		60-89		Greater
	Days Past		Days Past		than 90		Total Past
June 30, 2018	Due		Due		Days		Due		Current		Total Loans
Commercial and industrial	$	193	$	5	$	4,324	$	4,522	$	200,179	$	204,701
Commercial real estate		757		1,468		276		2,501		571,989		574,490
Commercial real estate - construction		859		-		367		1,226		81,464		82,690
Lease financing		-		-		-		-		153		153
Residential mortgage		183		62		164		409		119,358		119,767
Home equity		35		-		-		35		47,780		47,815
Consumer		-		9		-		9		4,872		4,881
Loans acquired with credit deterioration:
Commercial and industrial		-		23		-		23		-		23
Commercial real estate		-		25		901		926		540		1,466
Commercial real estate - construction		-		-		-		-		-		-
Lease financing		-		-		-		-		-		-
Residential mortgage		20		10		198		228		265		493
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	2,047	$	1,602	$	6,230	$	9,879	$	1,026,600	$	1,036,479


(Dollars in thousands)	30-59		60-89		Greater
	Days Past		Days Past		than 90		Total Past
December 31, 2017	Due		Due		Days		Due		Current		Total Loans
Commercial and industrial	$	4,439	$	16	$	-	$	4,455	$	183,578	$	188,033
Commercial real estate		-		-		3,669		3,669		510,788		514,457
Commercial real estate - construction		-		-		487		487		61,849		62,336
Lease financing		-		-		-		-		229		229
Residential mortgage		310		467		177		954		97,773		98,727
Home equity		54		98		250		402		41,491		41,893
Consumer		3		-		-		3		3,865		3,868
Loans acquired with credit deterioration:
Commercial and industrial		-		-		-		-		-		-
Commercial real estate		500		-		55		555		-		555
Commercial real estate - construction		-		-		-		-		-		-
Lease financing		-		-		-		-		-		-
Residential mortgage		-		31		193		224		82		306
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	5,306	$	612	$	4,831	$	10,749	$	899,655	$	910,404

Allowance and Recorded Investment in Financing Receivables

The following tables summarize the allowance and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the three months ended, June 30, 2018	Commercial and industrial			Commercial real estate			Commercial real estate - construction			Lease financing		Residential mortgage			Home equity			Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
April 1, 2018	$	1,977		$	4,653		$	183		$	-	$	452		$	391		$	4		$	6		$	7,666
Charge-offs		(129	)		-			(40	)		-		(3	)		(91	)		(4	)		-			(267	)
Recoveries		-			788			-			-		-			-			2			-			790
Provisions		272			(718	)		3			-		(8	)		120			2			329			-
Ending balance,
June 30, 2018	$	2,120		$	4,723		$	146		$	-	$	441		$	420		$	4		$	335		$	8,189

(Dollars in thousands)
As of, and for the six months ended, June 30, 2018	Commercial and industrial			Commercial real estate			Commercial real estate - construction			Lease financing		Residential mortgage			Home equity			Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
January 1, 2018	$	1,795		$	4,435		$	178		$	-	$	428		$	423		$	3		$	344		$	7,606
Charge-offs		(129	)		-			(40	)		-		(5	)		(167	)		(10	)		-			(351	)
Recoveries		-			805			-			-		-			-			4			-			809
Provisions		454			(517	)		8			-		18			164			7			(9	)		125
Ending balance,
June 30, 2018		2,120			4,723			146			-		441			420			4			335			8,189
Individually evaluated for impairment		282			238			54			-		-			-			-			-			574
Ending balance:
Collectively evaluated for impairment	$	1,838		$	4,485		$	92		$	-	$	441		$	420		$	4		$	335		$	7,615

Loans receivables:
Ending balance	$	204,724		$	575,956		$	82,690		$	153	$	120,260		$	47,815		$	4,881		$	-		$	1,036,479
Ending balance: Individually evaluated for impairment		4,324			2,261			367			-		728			8			-			-			7,688
Ending balance: Acquired with credit deterioration		23			1,466			-			-		493			-			-			-			1,982
Ending balance: Collectively evaluated for impairment	$	200,377		$	572,229		$	82,323		$	153	$	119,039		$	47,807		$	4,881		$	-		$	1,026,809

(Dollars in thousands)
December 31, 2017	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance,
January 1, 2017	$	1,795	$	4,435	$	178	$	-	$	428	$	423	$	3	$	344	$	7,606
Ending balance: Individually evaluated for impairment		136		293		100		-		-		-		-		-		529
Ending balance:
Collectively evaluated for impairment	$	1,659	$	4,142	$	78	$	-	$	428	$	423	$	3	$	344	$	7,077

Loans receivable:
Beginning balance,
January 1, 2017	$	188,033	$	515,012	$	62,336	$	229	$	99,033	$	41,893	$	3,868	$	-	$	910,404
Ending balance: Individually evaluated for impairment		4,434		4,847		487		-		760		260		-		-		10,788
Ending balance: Acquired with credit deterioration		-		555		-		-		306		-		-		-		861
Ending balance:
Collectively evaluated for impairment	$	183,599	$	509,610	$	61,849	$	229	$	97,967	$	41,633	$	3,868	$	-	$	898,755

(Dollars in thousands)
As of, and for the three months ended, June 30, 2017	Commercial and industrial			Commercial real estate			Commercial real estate - construction			Lease financing		Residential mortgage			Home equity		Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
April 1, 2017	$	1,630		$	4,715		$	101		$	1	$	532		$	364	$	3		$	274		$	7,620
Charge-offs		-			(30	)		-			-		-			-		(10	)		-			(40	)
Recoveries		3			22			-			-		2			5		1			-			33
Provisions		(5	)		274			39			-		5			35		10			(258	)		100
Ending balance,
June 30, 2017	$	1,628		$	4,981		$	140		$	1	$	539		$	404	$	4		$	16		$	7,713

(Dollars in thousands)
As of, and for the six months ended, June 30, 2017	Commercial and industrial			Commercial real estate			Commercial real estate - construction			Lease financing		Residential mortgage			Home equity		Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
January 1, 2017	$	1,580		$	4,323		$	144		$	1	$	541		$	379	$	3		$	212		$	7,183
Charge-offs		(12	)		(30	)		-			-		(18	)		-		(16	)		-			(76	)
Recoveries		7			361			-			-		4			5		4			-			381
Provisions		53			327			(4	)		-		12			20		13			(196	)		225
Ending balance,
June 30, 2017		1,628			4,981			140			1		539			404		4			16			7,713
Ending balance: Individually evaluated for impairment		-			893			70			-		66			-		-			-			1,029
Ending balance:
Collectively evaluated for impairment	$	1,628		$	4,088		$	70		$	1	$	473		$	404	$	4		$	16		$	6,684

Loans receivables:
Ending balance	$	181,368		$	482,141		$	53,305		$	307	$	102,637		$	38,671	$	3,878		$	-		$	862,307
Ending balance: Individually evaluated for impairment		-			3,651			571			-		968			327		-			-			5,517
Ending balance: Acquired with credit deterioration		-			573			-			-		324			-		-			-			897
Ending balance: Collectively evaluated for impairment	$	181,368		$	477,917		$	52,734		$	307	$	101,345		$	38,344	$	3,878		$	-		$	855,893

Troubled Debt Restructurings

The recorded investments in troubled debt restructured loans at June 30, 2018 and December 31, 2017 are as follows:

(Dollars in thousands)	Pre-Modification		Post-Modification
June 30, 2018	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	4,110	$	4,460	$	4,324
Commercial real estate		2,670		2,571		1,984
Residential mortgage		677		675		528
Home equity		14		14		3
	$	7,471	$	7,720	$	6,839

(Dollars in thousands)	Pre-Modification		Post-Modification
December 31, 2017	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	4,110	$	4,460	$	4,434
Commercial real estate		5,735		5,581		4,593
Residential mortgage		677		675		540
Home equity		14		14		4
	$	10,536	$	10,730	$	9,571

Schedule of Accretion of Purchased Impaired Loan

The following tables provide activity for the accretable yield of acquired impaired loans from both the Phoenix Bancorp, Inc. (2015) and Scottdale (2018) acquisitions for the three and six months ended June 30, 2018.

(Dollars in thousands)
Accretable yield, April 1, 2018	$	336
Accretable yield amortized to interest income		(36	)
Reclassification from nonaccretable difference (a)		-
Accretable yield, June 30, 2018	$	300

(Dollars in thousands)

Accretable yield, January 1, 2018	$	67
Acquisition of impaired loans	$	305
Accretable yield amortized to interest income		(72	)
Reclassification from nonaccretable difference (a)		-
Accretable yield, June 30, 2018	$	300

(a)

Reclassification from non-accretable difference represents an increase to the estimated cash flows to be collected on the underlying portfolio.