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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

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 December 31, 2018 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2018				(Level 1)				(Level 2)				(Level 3)
Available-for-sale debt securities:
U.S. Treasury and U.S. government agencies		$	41,572			$	—			$	41,572			$	—
Mortgage-backed U.S. government agencies			38,849				—				38,849				—
State and political subdivision obligations			29,256				—				29,256				—
Corporate debt securities			2,246				—				2,246				—
Other assets:
Equity securities			492				492				—				—
		$	112,415			$	492			$	111,923			$	—

						Fair value measurements at December 31, 2017 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2017				(Level 1)				(Level 2)				(Level 3)
Available-for-sale debt securities:
U.S. Treasury and U.S. government agencies		$	38,730			$	—			$	38,730			$	—
Mortgage-backed U.S. government agencies			25,831				—				25,831				—
State and political subdivision obligations			27,043				—				27,043				—
Corporate debt securities			1,355				—				1,355				—
Other assets:
Equity securities			506				506				—				—
		$	93,465			$	506			$	92,959			$	—

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 December 31, 2018 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2018				(Level 1)				(Level 2)				(Level 3)
Impaired Loans		$	4,935			$	—			$	—			$	4,935
Foreclosed Assets Held for Sale			581				—				—				581

						Fair value measurements at December 31, 2017 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2017				(Level 1)				(Level 2)				(Level 3)
Impaired Loans		$	6,090			$	—			$	—			$	6,090
Foreclosed Assets Held for Sale			—				—				—				—

Fair Value Measurement Inputs and Valuation Techniques

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

December 31, 2018

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

4,935

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

26% -100%

40%

Foreclosed Assets Held for Sale

581

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

17% - 17%

17%

(Dollars in thousands)

Quantitative Information about Level 3 Fair Value Measurements

December 31, 2017

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

6,090

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

6% - 51%

28%

Foreclosed Assets Held for Sale

—

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

0% - 0%

0%

(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 December 31, 2018 and 2017.

(Dollars in thousands)		December 31, 2018								December 31, 2017
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
Financial assets:
Cash and cash equivalents		$	40,065			$	40,065			$	23,514			$	23,514
Available for sale investment securities			111,923				111,923				93,465				93,465
Held to maturity investment securities			168,370				166,582				101,356				100,483
Loans held for sale			1,702				1,702				1,040				1,040
Equity securities			492				492				506				506
Net loans and leases			1,615,670				1,622,287				902,798				917,081
Restricted investment in bank stocks			6,646				6,646				4,384				4,384
Accrued interest receivable			8,244				8,244				4,564				4,564
Mortgage servicing rights			101				101				126				126
Financial liabilities:
Deposits		$	1,726,026			$	1,725,674			$	1,023,568			$	1,026,830
Short-term borrowings			43,100				43,100				34,611				34,611
Long-term debt			48,024				44,585				12,352				11,692
Subordinated debt			27,082				24,881				17,338				17,358
Accrued interest payable			2,262				2,262				645				645

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

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, 2018 and 2017.  Carrying values approximate fair values for cash and cash equivalents, interest-bearing time balances with other financial institutions, restricted investment in bank stocks, accrued interest receivable and payable, and short-term borrowings.  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)										Quoted Prices				Significant
										in Active Markets				Other				Significant
										for Identical Assets				Observable				Unobservable
		Carrying				Fair				or Liabilities				Inputs				Inputs
December 31, 2018		Amount				Value				(Level 1)				(Level 2)				(Level 3)
Financial instruments - assets
Held-to-maturity investment securities		$	168,370			$	166,582			$	—			$	166,582			$	—
Net loans and leases			1,615,670				1,622,287				—				—				1,622,287
Financial instruments - liabilities
Deposits		$	1,726,026			$	1,725,674			$	—			$	1,725,674			$	—
Long-term debt			48,024				44,585				—				44,585				—
Subordinated debt			27,082				24,881				—				24,881				—

										Fair Value Measurements
(Dollars in thousands)										Quoted Prices						Significant
										in Active Markets						Other				Significant
										for Identical Assets						Observable				Unobservable
		Carrying				Fair				or Liabilities						Inputs				Inputs
December 31, 2017		Amount				Value				(Level 1)						(Level 2)				(Level 3)
Financial instruments - assets
Held-to-maturity investment securities		$	101,356			$	100,483			$	—					$	100,483			$	—
Net loans and leases			902,798				917,081				—						—				917,081
Financial instruments - liabilities
Deposits		$	1,023,568			$	1,026,830			$	—					$	1,026,830			$	—
Long-term debt			12,352				11,692				—						11,692				—
Subordinated debt			17,338				17,358				—						17,358				—

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Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

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