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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Mid Penn manages its exposure to certain interest rate risks through the use of derivatives; however, none are entered into for speculative purposes. During the year ended December 31, 2024, Mid Penn entered into outstanding derivative contracts designated as hedges. Mid Penn’s free-standing derivative financial instruments are required to be carried at their fair value on the Consolidated Balance Sheets.
Mortgage Banking Derivative Financial Instruments
In connection with its mortgage banking activities, Mid Penn entered into commitments to originate certain fixed-rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, Mid Penn entered into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may have also be in the form of commitments to sell individual mortgage loans at a fixed price at a future date. The amount necessary to settle each interest rate lock was based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. During the year ended December 31, 2023, Mid Penn did not participate in mortgage banking derivative activities.
Information related to mortgage banking derivative activity is set forth in the following table:
December 31, 2024December 31, 2023
(In thousands)Notional AmountAsset (Liability) Fair Value Notional AmountAsset (Liability) Fair Value
Interest Rate Lock Commitments
Positive Fair Values$120 $1 $— $— 
Negative Fair Values 1,084 (4)— — 
Forward Commitments
Positive Fair Values2,380 7 — — 
Negative Fair Values$1,167 $(6)$— $— 
For the year ended December 31, 2024, 2023, and 2022, Mid Penn recorded net gains from mortgage banking hedging activity of $10 thousand, $324 thousand, and $1.5 million, respectively.
The following table presents derivative financial instruments and the amount of the net gains or losses recognized within other noninterest income on the Consolidated Statements of Income for the years ended December 31:
(In thousands)20242023
Interest Rate Lock Commitments$(3)$37 
Forward Commitments14 287 
Total$11 $324 
Loan-level Interest Rate Swaps
Mid Penn enters into loan-level interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. Mid Penn simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of the offsetting customer and dealer counterparty swap agreements is that the customer pays a fixed rate of interest and Mid Penn receives a floating rate. Mid Penn’s loan-level interest rate swaps are considered derivatives but are not accounted for using hedge accounting.

Information related to loan level swaps is set forth in the following table:
(Dollars in thousands)December 31, 2024December 31, 2023
 Interest rate swaps on loans with customers
      Notional amount $217,150 $187,192 
      Weighted average remaining term (years) 5.116.24
      Receive fixed rate (weighted average) 4.68 %4.59 %
      Pay variable rate (weighted average)6.64 %7.50 %
      Estimated fair value (1)
$11,118 $10,484 
(Dollars in thousands)December 31, 2024December 31, 2023
 Interest rate swaps on loans with correspondents
      Notional amount $217,150 $187,192 
      Weighted average remaining term (years) 5.116.24
      Receive variable rate (weighted average) 6.64 %7.50 %
      Pay fixed rate (weighted average)4.68 %4.59 %
      Estimated fair value (2)
$11,118 $10,484 
(1) The net amount of the estimated fair value is disclosed in Other Liabilities on the Consolidated Balance Sheet.
(2) The net amount of the estimated fair value is disclosed in Other Assets on the Consolidated Balance Sheet.
Cash Flow Hedges of Interest Rate Risk

Mid Penn’s objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements. To accomplish this objective, Mid Penn primarily uses interest rate swaps as part of its interest rate risk management strategy. During the year ended December 31, 2024, Mid Penn entered into interest rate swaps designated as cash flow hedges to hedge the cash flows associated with existing brokered CDs.

Information related to cash flow hedges is set forth in the following table:

(Dollars in thousands)December 31, 2024December 31, 2023
 Cash flow hedges
      Notional amount $295,000 $190,000 
      Weighted average remaining term (years) 1.552.22
      Pay fixed rate (weighted average) 3.64 %3.74 %
      Receive variable rate (weighted average)4.10 %4.07 %
      Estimated fair value (1)
$2,590 $1,460 
(1) Estimated fair value, net of accrued interest receivable, is disclosed in Other Assets on the Consolidated Balance Sheet.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on Mid Penn’s variable-rate liabilities. During the next twelve months ended December 31, 2025, Mid Penn estimates that an additional $1.4 million will be reclassified as a decrease to interest expense.