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Investment Securities | 12 Months Ended
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Dec. 31, 2019
Securities Financing Transactions Disclosures [Abstract] |
Investment Securities | (6)Investment Securities The majority of the investment portfolio is comprised of securities issued by U.S. government agencies and state and political subdivision obligations. The amortized cost, fair value, and unrealized gains and losses on investment securities at December 31, 2019 and December 31, 2018 are as follows:
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
December 31, 2019 |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies |  | $ | 22,894 |  |  | $ | 6 |  |  | $ | 70 |  |  | $ | 22,830 |
Mortgage-backed U.S. government agencies |  |  | 12,996 |  |  |  | 7 |  |  |  | 113 |  |  |  | 12,890 |
State and political subdivision obligations |  |  | 30 |  |  |  | — |  |  |  | — |  |  |  | 30 |
Corporate debt securities |  |  | 1,250 |  |  |  | 9 |  |  |  | — |  |  |  | 1,259 |
Total available for sale securities |  |  | 37,170 |  |  |  | 22 |  |  |  | 183 |  |  |  | 37,009 |
Held to maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  |  | 50,210 |  |  |  | 46 |  |  |  | 220 |  |  |  | 50,036 |
Mortgage-backed U.S. government agencies |  |  | 42,098 |  |  |  | 95 |  |  |  | 102 |  |  |  | 42,091 |
State and political subdivision obligations |  |  | 44,169 |  |  |  | 1,193 |  |  |  | 13 |  |  |  | 45,349 |
Total held to maturity securities |  |  | 136,477 |  |  |  | 1,334 |  |  |  | 335 |  |  |  | 137,476 |
Total |  | $ | 173,647 |  |  | $ | 1,356 |  |  | $ | 518 |  |  | $ | 174,485 |
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
December 31, 2018 |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies |  | $ | 43,270 |  |  | $ | 10 |  |  | $ | 1,708 |  |  | $ | 41,572 |
Mortgage-backed U.S. government agencies |  |  | 39,865 |  |  |  | — |  |  |  | 1,016 |  |  |  | 38,849 |
State and political subdivision obligations |  |  | 30,642 |  |  |  | 11 |  |  |  | 1,397 |  |  |  | 29,256 |
Corporate debt securities |  |  | 2,250 |  |  |  | — |  |  |  | 4 |  |  |  | 2,246 |
Total available-for-sale debt securities |  |  | 116,027 |  |  |  | 21 |  |  |  | 4,125 |  |  |  | 111,923 |
Held-to-maturity debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  |  | 16,985 |  |  |  | 14 |  |  |  | 143 |  |  |  | 16,856 |
Mortgage-backed U.S. government agencies |  |  | 65,812 |  |  |  | 46 |  |  |  | 1,310 |  |  |  | 64,548 |
State and political subdivision obligations |  |  | 84,034 |  |  |  | 457 |  |  |  | 842 |  |  |  | 83,649 |
Corporate debt securities |  |  | 1,539 |  |  |  | — |  |  |  | 10 |  |  |  | 1,529 |
Total held-to-maturity debt securities |  |  | 168,370 |  |  |  | 517 |  |  |  | 2,305 |  |  |  | 166,582 |
Total |  | $ | 284,397 |  |  | $ | 538 |  |  | $ | 6,430 |  |  | $ | 278,505 |
Estimated fair values of debt securities are based on quoted market prices, where applicable. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, adjusted for differences between the quoted instruments and the instruments being valued. Please refer to Note 14, Fair Value Measurement, for more information on the fair value of investment securities. During the fourth quarter of 2019, Mid Penn early adopted Accounting Standards Update (“ASU”) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments), and as part of the adoption, reclassified 113 held-to-maturity debt securities with an aggregate amortized cost of $67,096,000 to the available for sale category. All 113 securities were subsequently sold during the fourth quarter and Mid Penn recognized a pre-tax gain on the sales of $1,779,000. Please refer to Note 24, Recent Accounting Pronouncements, for more information regarding the adoption of ASU 2019-04. Investment securities having a fair value of $147,283,000 at December 31, 2019, and $214,239,000 at December 31, 2018, were pledged primarily to secure public fund deposits. Mid Penn also obtains letters of credit from the Federal Home Loan Bank of Pittsburgh (“FHLB”) to secure certain public fund deposits of municipality and school district customers who agree to use of the FHLB letters of credit. These FHLB letter of credit commitments totaled $169,051,000 as of December 31, 2019 and $36,850,000 as of December 31, 2018. The following table presents gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018.
(Dollars in thousands) |  | Less Than 12 Months |  |  | 12 Months or More |  |  | Total |
December 31, 2019 |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies |  | 4 |  | $ | 4,652 |  |  | $ | 24 |  |  | 7 |  | $ | 11,982 |  |  | $ | 46 |  |  | 11 |  | $ | 16,634 |  |  | $ | 70 |
Mortgage-backed U.S. government agencies |  | 1 |  |  | 1,643 |  |  |  | 4 |  |  | 14 |  |  | 10,603 |  |  |  | 109 |  |  | 15 |  |  | 12,246 |  |  |  | 113 |
Total temporarily impaired available for sale securities |  | 5 |  |  | 6,295 |  |  |  | 28 |  |  | 21 |  |  | 22,585 |  |  |  | 155 |  |  | 26 |  |  | 28,880 |  |  |  | 183 |
Held to maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | 18 |  | $ | 29,024 |  |  | $ | 219 |  |  | 1 |  | $ | 2,999 |  |  | $ | 1 |  |  | 19 |  | $ | 32,023 |  |  | $ | 220 |
Mortgage-backed U.S. government agencies |  | 6 |  |  | 8,445 |  |  |  | 35 |  |  | 13 |  |  | 11,050 |  |  |  | 67 |  |  | 19 |  |  | 19,495 |  |  |  | 102 |
State and political subdivision obligations |  | 3 |  |  | 1,383 |  |  |  | 13 |  |  | 0 |  |  | — |  |  |  | — |  |  | 3 |  |  | 1,383 |  |  |  | 13 |
Total temporarily impaired held to maturity securities |  | 27 |  |  | 38,852 |  |  |  | 267 |  |  | 14 |  |  | 14,049 |  |  |  | 68 |  |  | 41 |  |  | 52,901 |  |  |  | 335 |
Total |  | 32 |  | $ | 45,147 |  |  | $ | 295 |  |  | 35 |  | $ | 36,634 |  |  | $ | 223 |  |  | 67 |  | $ | 81,781 |  |  | $ | 518 |
(Dollars in thousands) |  | Less Than 12 Months |  |  | 12 Months or More |  |  | Total |
December 31, 2018 |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Securities |  | Fair Value |  |  | Unrealized Losses |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies |  | 0 |  | $ | — |  |  | $ | — |  |  | 21 |  | $ | 38,386 |  |  | $ | 1,708 |  |  | 21 |  | $ | 38,386 |  |  | $ | 1,708 |
Mortgage-backed U.S. government agencies |  | 11 |  |  | 16,740 |  |  |  | 163 |  |  | 19 |  |  | 22,093 |  |  |  | 853 |  |  | 30 |  |  | 38,833 |  |  |  | 1,016 |
State and political subdivision obligations |  | 3 |  |  | 1,751 |  |  |  | 23 |  |  | 51 |  |  | 24,520 |  |  |  | 1,374 |  |  | 54 |  |  | 26,271 |  |  |  | 1,397 |
Corporate debt securities |  | 2 |  |  | 1,996 |  |  |  | 4 |  |  | 0 |  |  | — |  |  |  | — |  |  | 2 |  |  | 1,996 |  |  |  | 4 |
Total temporarily impaired available for sale securities |  | 16 |  |  | 20,487 |  |  |  | 190 |  |  | 91 |  |  | 84,999 |  |  |  | 3,935 |  |  | 107 |  |  | 105,486 |  |  |  | 4,125 |
Held to maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | 1 |  | $ | 1,985 |  |  | $ | 10 |  |  | 3 |  | $ | 8,852 |  |  | $ | 133 |  |  | 4 |  | $ | 10,837 |  |  | $ | 143 |
Mortgage-backed U.S. government agencies |  | 10 |  |  | 16,165 |  |  |  | 79 |  |  | 35 |  |  | 42,431 |  |  |  | 1,231 |  |  | 45 |  |  | 58,596 |  |  |  | 1,310 |
State and political subdivision obligations |  | 26 |  |  | 11,321 |  |  |  | 111 |  |  | 77 |  |  | 29,460 |  |  |  | 731 |  |  | 103 |  |  | 40,781 |  |  |  | 842 |
Corporate debt securities |  | 1 |  |  | 1,529 |  |  |  | 10 |  |  | 0 |  |  | — |  |  |  | — |  |  | 1 |  |  | 1,529 |  |  |  | 10 |
Total temporarily impaired held to maturity securities |  | 38 |  |  | 31,000 |  |  |  | 210 |  |  | 115 |  |  | 80,743 |  |  |  | 2,095 |  |  | 153 |  |  | 111,743 |  |  |  | 2,305 |
Total |  | 54 |  | $ | 51,487 |  |  | $ | 400 |  |  | 206 |  | $ | 165,742 |  |  | $ | 6,030 |  |  | 260 |  | $ | 217,229 |  |  | $ | 6,430 |
Management evaluates securities for other-than-temporary impairment at least on quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, and the financial condition and near term prospects of the issuer. In addition, for debt securities, Mid Penn considers (a) whether management has the intent to sell the security, (b) it is more likely than not that management will be required to sell the security prior to its anticipated recovery, and (c) whether management expects to recover the entire amortized cost basis. For equity securities, management considers the intent and ability to hold securities until recovery of unrealized losses. At December 31, 2019, the majority of the unrealized losses on securities in an unrealized loss position were attributed to U.S. government agencies and mortgage-back U.S. government agencies. At December 31, 2018, the majority of the unrealized losses on securities in an unrealized loss position were attributed to state and political subdivision obligations, mortgage-back U.S. government agencies, and U.S. government agencies. Mid Penn had no securities considered by management to be other-than-temporarily impaired as of December 31, 2019 and December 31, 2018, and did not record any securities impairment charges in the respective periods ended on these dates. Mid Penn does not consider the securities with unrealized losses on the respective dates to be other-than-temporarily impaired as the unrealized losses were deemed to be temporary changes in value related to market movements in interest yields at various periods similar to the maturity dates of holdings in the investment portfolio, and not reflective of an erosion of credit quality. Gross realized gains and losses on sales of available-for-sale securities for the years ended December 31, 2019, 2018, and 2017 are shown in the table below.
(Dollars in thousands) | For the year ended December 31, |
| 2019 |  |  | 2018 |  |  |  | 2017 |
Realized gains | $ | 1,951 |  |  | $ | 150 |  |  | $ | 246 |
Realized losses |  | (73 | ) |  |  | (13 | ) |  |  | (204 | )
Net gains | $ | 1,878 |  |  | $ | 137 |  |  | $ | 42 |
The table below illustrates the maturity distribution of investment securities at amortized cost and fair value at December 31, 2019.
(Dollars in thousands) |  | Available for Sale |  |  | Held to Maturity |
|  | Amortized |  |  | Fair |  |  | Amortized |  |  | Fair |
December 31, 2019 |  | Cost |  |  | Value |  |  | Cost |  |  | Value |
Due in 1 year or less |  | $ | 4,047 |  |  | $ | 4,032 |  |  | $ | 3,994 |  |  | $ | 3,999 |
Due after 1 year but within 5 years |  |  | 8,399 |  |  |  | 8,385 |  |  |  | 16,423 |  |  |  | 16,637 |
Due after 5 years but within 10 years |  |  | 11,728 |  |  |  | 11,702 |  |  |  | 73,962 |  |  |  | 74,749 |
Due after 10 years |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 24,174 |  |  |  | 24,119 |  |  |  | 94,379 |  |  |  | 95,385 |
Mortgage-backed securities |  |  | 12,996 |  |  |  | 12,890 |  |  |  | 42,098 |  |  |  | 42,091 |
|  | $ | 37,170 |  |  | $ | 37,009 |  |  | $ | 136,477 |  |  | $ | 137,476 |

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