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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

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 September 30, 2020 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		September 30, 2020				(Level 1)				(Level 2)				(Level 3)
Available-for-sale securities:
Mortgage-backed U.S. government agencies		$	2			$	—			$	2			$	—
Corporate debt securities			8,335				—				8,335				—
Other assets:
Equity securities			1,522				1,522				—				—
Interest rate swap agreements			213				—				213				—
Total		$	10,072			$	1,522			$	8,550			$	—

						Fair value measurements at December 31, 2019 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2019				(Level 1)				(Level 2)				(Level 3)
Available-for-sale securities:
U.S. government agencies		$	22,830			$	—			$	22,830			$	—
Mortgage-backed U.S. government agencies			12,890				—				12,890				—
State and political subdivision obligations			30				—				30				—
Corporate debt securities			1,259				—				1,259				—
Other assets:
Equity securities			507				507				—				—
Total		$	37,516			$	507			$	37,009			$	—

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 September 30, 2020 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		September 30, 2020				(Level 1)				(Level 2)				(Level 3)
Impaired Loans		$	398			$	—			$	—			$	398
Foreclosed Assets Held for Sale			121				—				—				121

						Fair value measurements at December 31, 2019 using:
(Dollars in thousands)		Total carrying value at				Quoted prices in active markets				Significant other observable inputs				Significant unobservable inputs
Assets:		December 31, 2019				(Level 1)				(Level 2)				(Level 3)
Impaired Loans		$	271			$	—			$	—			$	271
Foreclosed Assets Held for Sale			122				—				—				122

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

September 30, 2020

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

398

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

25% - 88%

34%

Foreclosed Assets Held for Sale

121

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

27% - 27%

27%

(Dollars in thousands)

Quantitative Information about Level 3 Fair Value Measurements

December 31, 2019

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired Loans

$

271

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

26% - 85%

36%

Foreclosed Assets Held for Sale

122

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

8% - 27%

16%

(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.

Fair Value, by Balance Sheet Grouping

The following table summarizes the carrying value and fair value of financial instruments at September 30, 2020 and December 31, 2019.

(Dollars in thousands)	September 30, 2020								December 31, 2019
	Carrying				Fair				Carrying				Fair
	Value				Value				Value				Value
Financial assets:
Cash and cash equivalents	$	195,357			$	195,357			$	139,030			$	139,030
Available-for-sale investment securities		8,337				8,337				37,009				37,009
Held-to-maturity investment securities		140,474				144,708				136,477				137,476
Equity securities		1,522				1,522				507				507
Loans held for sale		30,938				31,586				8,422				8,630
Net loans and leases		2,509,657				2,596,329				1,753,241				1,789,402
Restricted investment in bank stocks		7,726				7,726				4,902				4,902
Accrued interest receivable		14,663				14,663				2,810				2,810
Interest rate swap agreements		213				213				—				—
Financial liabilities:
Deposits	$	2,456,398				2,465,117			$	1,912,394			$	1,916,624
Short-term borrowings		203,842				203,842				—				—
Long-term debt (a)		71,711				71,243				29,352				30,216
Subordinated debt		41,972				40,352				27,070				25,273
Accrued interest payable		2,840				2,840				2,208				2,208

(a) Long-term debt excludes finance lease obligations.

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 September 30, 2020 and December 31, 2019.  Carrying values approximate fair values for cash and cash equivalents, 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 and mortgage servicing rights, which are Level 3 Inputs, these instruments are Level 2 Inputs. These tables exclude financial instruments for which the carrying amount approximates fair value, not previously disclosed.

										Fair Value Measurements
										Quoted Prices
										in Active Markets								Significant
(Dollars in thousands)										for Identical Assets				Significant Other				Unobservable
		Carrying								or Liabilities				Observable Inputs				Inputs
September 30, 2020		Amount				Fair Value				(Level 1)				(Level 2)				(Level 3)
Financial instruments - assets
Held-to-maturity investment    securities		$	140,474			$	144,708			$	—			$	144,708			$	—
Loans held for sale			30,938				31,586				—				31,586				—
Net loans and leases			2,509,657				2,596,329				—				—				2,596,329
Financial instruments -    liabilities
Deposits		$	2,456,398			$	2,465,117			$	—			$	2,465,117			$	—
Long-term debt (a)			71,711				71,243				—				71,243				—
Subordinated debt			41,972				40,352				—				40,352				—

										Fair Value Measurements
										Quoted Prices
										in Active Markets								Significant
(Dollars in thousands)										for Identical Assets				Significant Other				Unobservable
		Carrying								or Liabilities				Observable Inputs				Inputs
December 31, 2019		Amount				Fair Value				(Level 1)				(Level 2)				(Level 3)
Financial instruments - assets
Held-to-maturity investment    securities		$	136,477			$	137,476			$	—			$	137,476			$	—
Loans held for sale			8,422				8,630				—				8,630				—
Net loans and leases			1,753,241				1,789,402				—				—				1,789,402
Financial instruments -    liabilities
Deposits		$	1,912,394			$	1,916,624			$	—			$	1,916,624			$	—
Long-term debt (a)			29,352				30,216				—				30,216				—
Subordinated debt			27,070				25,273				—				25,273				—

(a) Long-term debt excludes finance lease obligations.

X

- Definition

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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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 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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