Mid Penn invests in Low-Income Housing Tax Credit ("LIHTC") partnerships that are considered variable interest entities ("VIEs") under ASC 810, Consolidation. These partnerships are formed to develop and operate affordable housing projects that qualify for federal tax credits under Section 42 of the Internal Revenue Code.

The Company evaluates its LIHTC investments to determine whether it has a controlling financial interest in the partnerships. A controlling financial interest exists if the Company:

•Has the power to direct activities that most significantly impact the entity's economic performance; and

•Has the obligation to absorb losses or the right to receive benefits that could be significant.

Based on this assessment, Mid Penn has determined that it is not the primary beneficiary of the LIHTC partnerships, as it does not control the significant operating decisions. Therefore, these entities are not consolidated in the financial statements.

Mid Penn accounts for its LIHTC investments using the proportional amortization method under ASC 323-740, Investments - Equity method and Joint Ventures: Investments in Qualified Affordable Housing Projects. Under this method:

•The initial investment is recorded as an asset with Other Assets on the balance sheet.

•Tax credits and other tax benefits are recognized as a reduction of income tax expense.

•The investment is amortized over the period in which the tax credits are received, with amortization recorded as a component of income tax expense.

The investments in these unconsolidated entities are reflected in other assets on the Consolidated Balance Sheet, and are summarized for the periods below:


	For the Year Ended
(in thousands)	December 31, 2024		December 31, 2023
Income tax benefits	$	2,163	$	1,337
Amortization of LIHTC investments	2,290		1,625

LIHTC investments are periodically assessed for impairment. No impairment losses were recognized for the years ended December 31, 2024 and 2023.