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Fair Value Measurement | 12 Months Ended
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Dec. 31, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurement | Fair Value Measurement The following tables illustrate the assets measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets:
|  | 2022
(In thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Available-for-sale securities: |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | $ | — |  |  | $ | 34,914 |  |  | $ | — |  |  | $ | 34,914 |
Mortgage-backed U.S. government agencies |  | — |  |  | 166,915 |  |  | — |  |  | 166,915 |
State and political subdivision obligations |  | — |  |  | 3,539 |  |  | — |  |  | 3,539 |
Corporate debt securities |  | — |  |  | 32,510 |  |  | — |  |  | 32,510 |
Equity securities |  | 430 |  |  | — |  |  | — |  |  | 430 |
Loans held for sale |  | — |  |  | 2,475 |  |  | — |  |  | 2,475 |
Other assets: |  |  |  |  |  |  |  |
Interest rate swap agreements |  | — |  |  | 11,697 |  |  | — |  |  | 11,697 |
Mortgage banking derivative assets, net |  | — |  |  | 6 |  |  | — |  |  | 6 |
Total |  | $ | 430 |  |  | $ | 252,056 |  |  | $ | — |  |  | $ | 252,486 |
|  | 2021
(In thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Available-for-sale securities: |  |  |  |  |  |  |  |
Mortgage-backed U.S. government agencies |  | $ | — |  |  | $ | 49,480 |  |  | $ | — |  |  | $ | 49,480 |
State and political subdivision obligations |  | — |  |  | 3,914 |  |  | — |  |  | 3,914 |
Corporate debt securities |  | — |  |  | 9,468 |  |  | — |  |  | 9,468 |
Equity securities |  | 500 |  |  | — |  |  | — |  |  | 500 |
Loans held for sale |  | — |  |  | 11,514 |  |  | — |  |  | 11,514 |
Other assets: |  |  |  |  |  |  |  |
Interest rate swap agreements |  | — |  |  | 102 |  |  | — |  |  | 102 |
Mortgage banking derivative assets, net |  | — |  |  | 53 |  |  | — |  |  | 53 |
Total |  | $ | 500 |  |  | $ | 74,531 |  |  | $ | — |  |  | $ | 75,031 |
See "Note 1 - Summary of Significant Accounting Policies," for additional details on the fair value hierarchy. There were no transfers of assets between fair value Level 1 and Level 2 for the years ended December 31, 2022 or 2021. The valuation methodologies and assumptions used to estimate the fair value for the items in the preceding tables are as follows: Available for sale investment securities - The fair value of equity and debt securities classified as available for sale is determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather, relying on the securities’ relationship to other benchmark quoted prices. Equity securities - The fair value of equity securities with readily determinable fair values is recorded on the Consolidated Balance Sheet, with realized and unrealized gains and losses reported in other expense on the Consolidated Statements of Income. Loans held for sale - This category includes mortgage loans held for sale that are measured at fair value. Fair values as of December 31, 2022 were measured as the price that secondary market investors were offering for loans with similar characteristics. Loan-level interest rate swaps - are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do however have comparable, observable inputs in which an alternative pricing sources values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2. Mortgage banking derivatives - represent the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors and the fair value of interest rate swaps. The fair values of the Corporation’s interest rate locks, forward commitments and interest rate swaps represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. These characteristics classify interest rate swap agreements as Level 2. See "Note 12 - Derivative Financial Instruments," for additional information. Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, upon their acquisition or when there is evidence of impairment). The following table illustrates Level 3 financial instruments measured at fair value on a nonrecurring basis as of December 31:
(In thousands) |  | 2022 |  | 2021
Impaired loans (1) |  | $ | 938 |  |  | $ | 508 |
Foreclosed assets held for sale |  | 43 |  |  | — |
(1) Includes impaired loans reporting a specific allocation or that have been partially charged-off. Impaired loans - All performing troubled debt restructured loans and loans classified as non-accrual are deemed to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allowance allocation or not, are considered collateral dependent. Mid Penn utilized level 3 inputs such as independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable. 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. As of December 31, 2022 and 2021, the range of the discount of the appraisals was 22% - 84% and 21% - 69%, respectively. The weighted average of the discount was 55% and 30%, as of December 31, 2022 and 2021, respectively. Foreclosed assets held for sale - Values are based on appraisals that consider the sales prices of property in the proximate vicinity. The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of December 31:
|  | 2022
|  |  |  | Estimated Fair Value
(In thousands) |  | Carrying Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial instruments - assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 60,881 |  |  | $ | 60,881 |  |  | $ | — |  |  | $ | — |  |  | $ | 60,881 |
Available-for-sale investment securities |  | 237,878 |  |  | — |  |  | 237,878 |  |  | — |  |  | 237,878 |
Held-to-maturity investment securities |  | 399,494 |  |  | — |  |  | 348,505 |  |  | — |  |  | 348,505 |
Equity securities |  | 430 |  |  | 430 |  |  | — |  |  | — |  |  | 430 |
Loans held for sale |  | 2,475 |  |  | — |  |  | 2,475 |  |  | — |  |  | 2,475 |
Net loans |  | 3,495,162 |  |  | — |  |  | — |  |  | 3,439,948 |  |  | 3,439,948 |
Restricted investment in bank stocks |  | 8,315 |  |  | 8,315 |  |  | — |  |  | — |  |  | 8,315 |
Accrued interest receivable |  | 18,405 |  |  | 18,405 |  |  | — |  |  | — |  |  | 18,405 |
Interest rate swap agreements |  | 11,697 |  |  | — |  |  | 11,697 |  |  | — |  |  | 11,697 |
Mortgage banking derivative assets |  | 46 |  |  | — |  |  | 46 |  |  | — |  |  | 46 |
Financial instruments - liabilities |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 3,778,331 |  |  | $ | — |  |  | $ | 3,761,260 |  |  | $ | — |  |  | $ | 3,761,260 |
Short-term debt |  | 102,647 |  |  | — |  |  | 102,647 |  |  | — |  |  | 102,647 |
Long-term debt (1) |  | 1,119 |  |  | — |  |  | 1,069 |  |  | — |  |  | 1,069 |
Subordinated debt |  | 56,941 |  |  | — |  |  | 55,917 |  |  | — |  |  | 55,917 |
Accrued interest payable |  | 2,303 |  |  | 2,303 |  |  | — |  |  | — |  |  | 2,303 |
Interest rate swap agreements |  | 11,697 |  |  | — |  |  | 11,697 |  |  | — |  |  | 11,697 |
Mortgage banking derivative liabilities |  | 40 |  |  | — |  |  | 40 |  |  | — |  |  | 40 |
|  | 2021
|  |  |  | Estimated Fair Value
(In thousands) |  | Carrying Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial instruments - assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 913,752 |  |  | $ | 913,752 |  |  | $ | — |  |  | $ | — |  |  | $ | 913,752 |
Available-for-sale investment securities |  | 62,862 |  |  | — |  |  | 62,862 |  |  | — |  |  | 62,862 |
Held-to-maturity investment securities |  | 329,257 |  |  | — |  |  | 330,626 |  |  | — |  |  | 330,626 |
Equity securities |  | 500 |  |  | 500 |  |  | — |  |  | — |  |  | 500 |
Loans held for sale |  | 11,514 |  |  | — |  |  | 11,514 |  |  | — |  |  | 11,514 |
Net loans |  | 3,089,799 |  |  | — |  |  | — |  |  | 3,118,416 |  |  | 3,118,416 |
Restricted investment in bank stocks |  | 9,134 |  |  | 9,134 |  |  | — |  |  | — |  |  | 9,134 |
Accrued interest receivable |  | 10,779 |  |  | 10,779 |  |  | — |  |  | — |  |  | 10,779 |
Interest rate swap agreements |  | 1,808 |  |  | — |  |  | 1,808 |  |  | — |  |  | 1,808 |
Mortgage banking derivative assets |  | 75 |  |  | — |  |  | 75 |  |  | — |  |  | 75 |
Financial instruments - liabilities |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 4,002,016 |  |  | $ | — |  |  | $ | 4,046,217 |  |  | $ | — |  |  | $ | 4,046,217 |
Long-term debt (1) |  | 77,890 |  |  | — |  |  | 77,455 |  |  | — |  |  | 77,455 |
Subordinated debt |  | 74,274 |  |  | — |  |  | 74,553 |  |  | — |  |  | 74,553 |
Accrued interest payable |  | 1,791 |  |  | 1,791 |  |  | — |  |  | — |  |  | 1,791 |
Interest rate swap agreements |  | 1,808 |  |  | — |  |  | 1,808 |  |  | — |  |  | 1,808 |
Mortgage banking derivative liabilities |  | 22 |  |  | — |  |  | 22 |  |  | — |  |  | 22 |
(1)Long-term debt excludes finance lease obligations The Bank’s outstanding and unfunded credit commitments and financial standby letters of credit were deemed to have no significant fair value as of December 31, 2022 and 2021.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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