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Loans and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans and Allowance for Loan Losses Loans and Allowance for Loan Losses
Mid Penn’s loan portfolio by type is summarized by loans (net of deferred fees and costs of $3.9 million and $6.3 million as of December 31, 2022 and 2021, respectively) rated as "pass" and loans classified as "special mention" and "substandard" within Mid Penn’s internal risk rating system are as follows as of December 31:
(In thousands)PassSpecial
Mention		SubstandardTotal
2022
Commercial and industrial$582,540 $4,212 $9,290 $596,042 
Commercial real estate2,018,088 12,325 22,521 2,052,934 
Commercial real estate - construction438,990 2,256 — 441,246 
Residential mortgage299,288 3,104 2,994 305,386 
Home equity109,971 — 864 110,835 
Consumer7,676 — — 7,676 
  Total loans$3,456,553 $21,897 $35,669 $3,514,119 
(In thousands)PassSpecial
Mention		SubstandardTotal
2021
Commercial and industrial$606,484 $10,321 $2,757 $619,562 
Commercial real estate1,601,196 35,508 31,438 1,668,142 
Commercial real estate - construction371,337 — 1,397 372,734 
Residential mortgage319,862 294 3,067 323,223 
Home equity106,853 534 2,919 110,306 
Consumer10,429 — — 10,429 
Total loans$3,016,161 $46,657 $41,578 $3,104,396 
PPP loans, net of deferred fees, totaling $2.6 million and $111.3 million as of December 31, 2022 and 2021, respectively, are included in commercial and industrial loans in the tables above. All PPP loans are fully guaranteed by the SBA;
therefore, all PPP loans outstanding (net of the related deferred PPP fees) are classified as "pass" within Mid Penn’s internal risk rating system as of December 31, 2022.
The Bank has granted loans to certain of its executive officers, directors, and their related interests. The aggregate amount of these loans was $30.7 million and $14.7 million at December 31, 2022 and 2021, respectively. During 2022, $21.2 million of new loans, advances and loans to new related parties were extended and repayments totaled $5.2 million. None of these loans were past due, in non-accrual status, or restructured at December 31, 2022.
Mid Penn had no loans classified as "Doubtful" as of December 31, 2022 and 2021. There was $122 thousand and $729 thousand in loans for which formal foreclosure proceedings were in process at December 31, 2022 and 2021, respectively.
Impaired loans by loan portfolio class are summarized as follows:
December 31, 2022December 31, 2021
(In thousands)Recorded InvestmentUnpaid Principal BalanceRelated AllowanceRecorded InvestmentUnpaid Principal BalanceRelated Allowance
With no related allowance recorded:
Commercial and industrial$— $18 $— $— $31 $— 
Commercial real estate2,093 2,514 — 854 1,243 — 
Commercial real estate - construction— 2 — 22 27 — 
Residential mortgage1,079 1,129 — 1,259 1,295 — 
Home equity33 34 — 2,377 2,377 — 
With no related allowance recorded and acquired with credit deterioration:
Commercial real estate$2,537 $3,532 $— $2,231 $2,909 $— 
Commercial real estate - construction— — — 1,196 1,469 — 
Residential mortgage1,014 1,559 — 1,362 1,847 — 
Home equity126 154 — 86 111 — 
With an allowance recorded:
Commercial and industrial$1,222 $1,703 $801 $308 $339 $67 
Commercial real estate230 235 64 287 359 121 
Home equity252 252 22 — — — 
Total Impaired Loans:
Commercial and industrial$1,222 $1,721 $801 $308 $370 $67 
Commercial real estate4,860 6,281 64 3,372 4,511 121 
Commercial real estate - construction— 2 — 1,218 1,496 — 
Residential mortgage2,093 2,688 — 2,621 3,142 — 
Home equity411 440 22 2,463 2,488 — 
The average recorded investment of impaired loans and related interest income recognized are summarized as follows for the years ended December 31:
202220212020
(In thousands)Average Recorded
Investment		Interest Income
Recognized		Average Recorded
Investment		Interest Income
Recognized		Average Recorded
Investment		Interest Income
Recognized
With no related allowance recorded:
Commercial and industrial$45 $— $303 $2 $1,136 $— 
Commercial real estate907 — 2,308 2 9,379 5 
Commercial real estate - construction89 — 26 — 44 — 
Residential mortgage845 23 974 26 998 26 
Home equity468 185 2,367 2 1,801 — 
With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial$— $— $— $— $1 $— 
Commercial real estate2,893 — 1,485 — 1,423 — 
Commercial real estate - construction— — 122 — — — 
Residential mortgage1,165 — 401 — 361 — 
Home equity129 — 8 — 1 — 
With an allowance recorded:
Commercial and industrial$847 $— $211 $— $205 $— 
Commercial real estate167 — 1,011 — 752 — 
Home equity153 — — — — — 
Total:
Commercial and industrial$892 $— $514 $2 $1,342 $— 
Commercial real estate3,967 — 4,804 2 11,554 5 
Commercial real estate - construction89 — 148 — 44 — 
Residential mortgage2,010 23 1,375 26 1,359 26 
Home equity750 185 2,375 2 1,802 — 
The following table provides activity for the accretable yield of purchased impaired loans for the years ended:
December 31,
(In thousands)20222021
Accretable yield, beginning of period$580 $40 
Acquisition of impaired loans— 541 
Accretable yield amortized to interest income(261)(1)
Accretable yield, end of period$319 $580 
Non-accrual loans by loan portfolio class, including loans acquired with credit deterioration, are summarized as follows as of December 31:
(In thousands)20222021
Commercial and industrial$1,222 $308 
Commercial real estate4,864 3,372 
Commercial real estate - construction— 1,218 
Residential mortgage1,698 2,186 
Home equity411 2,463 
$8,195 $9,547 
If non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if held for part of the period, Mid Penn would have recorded interest income on these loans of $280 thousand, $177 thousand, and $638 thousand, in the years ended December 31, 2022, 2021, and 2020, respectively. Mid Penn has no commitments to lend additional funds to borrowers with impaired or non-accrual loans.
The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The classes of the loan portfolio summarized by the past due status as of December 31 are summarized as follows:
(In thousands)30-59
Days Past
Due		60-89
Days Past
Due		Greater
than 90
Days		Total Past
Due		CurrentTotal LoansLoans
Receivable
> 90 Days and
Accruing
2022
Commercial and industrial$1,808 $3 $1,854 $3,665 $592,377 $596,042 $654 
Commercial real estate1,792 — 1,438 3,230 2,047,167 2,050,397 — 
Commercial real estate - construction2,258 — — 2,258 438,988 441,246 — 
Residential mortgage2,642 872 415 3,929 300,443 304,372 — 
Home equity1,184 83 255 1,522 109,187 110,709 — 
Consumer44 19 — 63 7,613 7,676 — 
Loans acquired with credit deterioration:
Commercial real estate78 — 826 904 1,633 2,537 — 
Residential mortgage223 228 209 660 354 1,014 — 
Home equity— — 32 32 94 126 — 
Total$10,029 $1,205 $5,029 $16,263 $3,497,856 $3,514,119 $654 
(In thousands)30-59
Days Past
Due		60-89
Days Past
Due		Greater
than 90
Days		Total Past
Due		CurrentTotal LoansLoans
Receivable >
90 Days and
Accruing
2021
Commercial and industrial$1,378 $62 $404 $1,844 $617,718 $619,562 $96 
Commercial real estate32 55 769 856 1,665,055 1,665,911 — 
Commercial real estate - construction— — 205 205 371,333 371,538 205 
Residential mortgage1,246 205 1,002 2,453 319,408 321,861 212 
Home equity403 — 2,377 2,780 107,440 110,220 — 
Consumer6 2 2 10 10,419 10,429 2 
Loans acquired with credit deterioration:
Commercial real estate— 3 1,628 1,631 600 2,231 — 
Commercial real estate - construction— — — — 1,196 1,196 — 
Residential mortgage54 — 818 872 490 1,362 — 
Home equity— — — — 86 86 — 
Total$3,119 $327 $7,205 $10,651 $3,093,745 $3,104,396 $515 
Activity in the allowance for loan losses for the years ended December 31, 2022, 2021, and 2020, and the recorded investment in loans receivable as of December 31, 2022, 2021, and 2020 are as follows:
(In thousands)Commercial
and
industrial		Commercial
real
estate		Commercial
real estate -
construction		Residential
mortgage		Home
equity		ConsumerUnallocatedTotal
Balance at December 31, 2019$2,341 $6,259 $51 $417 $442 $2 $3 $9,515 
Loans charged off(45)(258)(7)(4)— (58)— (372)
Recoveries 3 1 2 3 3 27 — 39 
Provisions767 2,653 88 13 62 30 587 4,200 
Balance at December 31, 20203,066 8,655 134 429 507 1 590 13,382 
Loans charged off(866)(1,044)(23)(13)— (42)— (1,988)
Recoveries13 207 8 11 — 19 — 258 
Provisions (credits)1,226 1,597 (81)32 53 24 94 2,945 
Balance at December 31, 20213,439 9,415 38 459 560 2 684 14,597 
Loans charged off(1)(7)— (25)(1)(97)— (131)
Recoveries13 128 24 2 2 22 — 191 
Provisions (credits)1,142 3,606 (62)222 100 102 (810)4,300 
Balance at December 31, 2022$4,593 $13,142 $— $658 $661 $29 $(126)$18,957 
(In thousands)
Allowance for Loan Losses at December 31, 2022Commercial
and
industrial		Commercial
real
estate		Commercial
real estate -
construction		Residential
mortgage		Home
equity		ConsumerUnallocatedTotal
Collectively evaluated for impairment$3,792 $13,078 $— $658 $639 $29 $(126)$18,070 
Individually evaluated for impairment801 64 — — 22 — — 887 
$4,593 $13,142 $— $658 $661 $29 $(126)$18,957 
Loans, Net of Unearned Interest
Collectively evaluated for impairment$594,820 $2,048,074 $441,246 $303,293 $110,424 $7,676 $— $3,505,533 
Individually evaluated for impairment1,222 2,323 — 1,079 285 — — 4,909 
Acquired with credit deterioration— 2,537 — 1,014 126 — 3,677 
$596,042 $2,052,934 $441,246 $305,386 $110,835 $7,676 $— $3,514,119 
(In thousands)
Allowance for Loan Losses at December 31, 2021Commercial
and
industrial		Commercial
real
estate		Commercial
real estate -
construction		Residential
mortgage		Home
equity		ConsumerUnallocatedTotal
Collectively evaluated for impairment$3,372 $9,294 $38 $459 $560 $2 $684 $14,409 
Individually evaluated for impairment67 121 — — — — — 188 
$3,439 $9,415 $38 $459 $560 $2 $684 $14,597 
Loans, Net of Unearned Interest
Collectively evaluated for impairment$619,254 $1,664,770 $371,516 $320,602 $107,843 $10,429 $— $3,094,414 
Individually evaluated for impairment308 1,141 22 1,259 2,377 — — 5,107 
Acquired with credit deterioration— 2,231 1,196 1,362 86 — — 4,875 
$619,562 $1,668,142 $372,734 $323,223 $110,306 $10,429 $— $3,104,396 
The recorded investments in troubled debt restructured loans at December 31 are as follows:
(In thousands)Pre-Modification
Outstanding Recorded Investment		Post-Modification
Outstanding Recorded Investment		Recorded Investment
December 31, 2022
Commercial real estate$851 $815 $109 
Residential mortgage590 590 415 
$1,441 $1,405 $524 
(In thousands)Pre-Modification
Outstanding Recorded Investment		Post-Modification
Outstanding Recorded Investment		Recorded Investment
December 31, 2021
Commercial and industrial$8 $8 $5 
Commercial real estate1,214 1,115 320 
Commercial real estate - construction40 40 22 
Residential mortgage647 645 472 
$1,909 $1,808 $819 
As of December 31, 2022 and 2021, there were no defaulted troubled debt restructured loans, as all troubled debt restructured loans were current with respect to their associated forbearance agreements. There were also no defaults on troubled debt restructured loans within twelve months of restructure during 2022 and 2021.
Mid Penn entered into forbearance agreements on all loans currently classified as troubled debt restructurings and all of these agreements have resulted in additional principal repayment. The terms of these forbearance agreements vary whereby principal payments have been decreased, interest rates have been reduced and/or the loan will be repaid as collateral is sold.
There were no loans modified in 2022 and 2021 that resulted in troubled debt restructurings. The following table summarizes the loans whose terms have been modified resulting in troubled debt restructurings during the year ended December 31, 2020:
(In thousands)Number of ContractsPre-Modification
Outstanding Recorded
Investment		Post-Modification
Outstanding Recorded
Investment		Recorded Investment
December 31, 2020
Commercial real estate1$593 $593 $535 
Residential mortgage251 51 47 
3$644 $644 $582 
The CARES Act, signed into law in March 2020, along with a joint agency statement issued by banking agencies, provided that short-term modifications made in response to COVID-19 to current and performing borrowers did not need to be accounted for as troubled debt restructurings. Depending upon the specific needs and circumstances affecting each borrower, the majority of these modifications ranged from deferrals of both principal and interest payments, with some borrowers reverting to interest-only payments. The majority of the deferrals were granted for a period of three months, but some as long as six months, depending upon management’s specific evaluation of each borrower’s circumstances. Interest continued to accrue on loans modified under the CARES Act during the deferral period. During 2020, Mid Penn had provided loan modifications meeting the CARES Act qualifications to over 1,000 borrowers. Mid Penn made no loan such modifications during 2021 and 2022. As of December 31, 2022, there was no principal balance of loans remaining in this CARES Act qualifying deferment status. As of December 31, 2021, the principal balance of loans remaining in this CARES Act qualifying deferment status totaled $3.6 million, or less than 1% of the total loan portfolio. Borrowers granted a CARES Act deferral have returned to regular payment status.