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Loans and Allowance for Credit Losses - Loans
 12 Months Ended
Dec. 31, 2025
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans and Allowance for Credit Losses - Loans Loans and Allowance for Credit Losses - Loans
Loans, net of unearned income, are summarized as follows by portfolio segment:
(In thousands)December 31, 2025December 31, 2024
Commercial real estate
CRE Nonowner Occupied$1,364,040 $1,251,010 
CRE Owner Occupied718,864 624,007 
Multifamily419,267 412,900 
Farmland227,816 224,709 
Total Commercial real estate2,729,987 2,512,626 
Commercial and industrial
720,031 705,392 
Construction
Residential Construction85,299 99,399 
Other Construction310,390 326,171 
Total Construction395,689 425,570 
Residential mortgage
1-4 Family 1st Lien417,421 313,592 
1-4 Family Rental410,965 336,636 
HELOC and Junior Liens178,116 140,392 
Total Residential Mortgage1,006,502 790,620 
Consumer10,629 8,862 
Total loans$4,862,838 $4,443,070 
Total loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs. Net deferred loan fees were $2.8 million and $3.8 million as of December 31, 2025 and 2024, respectively.
Accrued interest receivable is not included in the amortized cost basis of Mid Penn's loans. As of December 31, 2025, accrued interest receivable for loans totaled $25.7 million with no related ACL and was reported in other assets on the accompanying Consolidated Balance Sheet.
The Bank has granted loans to certain of its executive officers, directors, and their related interests. The aggregate amount of these loans was $11.5 million and $13.8 million as of December 31, 2025 and 2024, respectively. During 2025, $705 thousand of new loans, advances and loans to new related parties were extended and repayments totaled $2.3 million. None of these loans were past due, in nonaccrual status, or restructured as of December 31, 2025.
Past Due and Nonaccrual 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, 2025 and December 31, 2024, 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
December 31, 2025
Commercial real estate
CRE Nonowner Occupied$278 $— $5,144 $5,422 $1,358,618 $1,364,040 $— 
CRE Owner Occupied2,022 58 901 2,981 715,883 718,864 — 
Multifamily— 196 — 196 419,071 419,267 — 
Farmland— 1,581 46 1,627 226,189 227,816 — 
Total Commercial real estate2,300 1,835 6,091 10,226 2,719,761 2,729,987 — 
Commercial and industrial3,740 1,006 6,804 11,550 708,481 720,031 — 
Construction
Residential Construction— — — — 85,299 85,299 — 
Other Construction230 — — 230 310,160 310,390 — 
Total Construction230 — — 230 395,459 395,689 — 
Residential mortgage
1-4 Family 1st Lien4,192 165 484 4,841 412,580 417,421 — 
1-4 Family Rental812 1,054 1,047 2,913 408,052 410,965 — 
HELOC and Junior Liens1,474 486 1,815 3,775 174,341 178,116 — 
Total Residential Mortgage6,478 1,705 3,346 11,529 994,973 1,006,502 — 
Consumer7 14 — 21 10,608 10,629 — 
Total$12,755 $4,560 $16,241 $33,556 $4,829,282 $4,862,838 $— 
(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
December 31, 2024
Commercial real estate
CRE Nonowner Occupied$1,281 $1,515 $11,658 $14,454 $1,236,556 $1,251,010 $— 
CRE Owner Occupied39 51 262 352 623,655 624,007 — 
Multifamily— — — — 412,900 412,900 — 
Farmland184 — — 184 224,525 224,709 — 
Total Commercial real estate1,504 1,566 11,920 14,990 2,497,636 2,512,626 — 
Commercial and industrial74 3 794 871 704,521 705,392 — 
Construction
Residential Construction— — — — 99,399 99,399 — 
Other Construction— — — — 326,171 326,171 — 
Total Construction— — — — 425,570 425,570 — 
Residential mortgage
1-4 Family 1st Lien2,853 220 516 3,589 310,003 313,592 — 
1-4 Family Rental374 7 137 518 336,118 336,636 — 
HELOC and Junior Liens724 209 2,157 3,090 137,302 140,392 — 
Total Residential Mortgage3,951 436 2,810 7,197 783,423 790,620 — 
Consumer20 — — 20 8,842 8,862 — 
Total$5,549 $2,005 $15,524 $23,078 $4,419,992 $4,443,070 $— 
Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due. There were no loans greater than 90 days past due and still accruing as of December 31, 2025 and 2024.
Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of December 31, 2025 and 2024 are summarized as follows:
December 31, 2025December 31, 2024
(In thousands)With a Related AllowanceWithout a Related AllowanceTotalWith a Related AllowanceWithout a Related AllowanceTotal
Commercial real estate
CRE Nonowner Occupied$2,873 $2,271 $5,144 $2,622 $11,153 $13,775 
CRE Owner Occupied509 2,043 2,552 — 546 546 
Multifamily— 131 131 — 154 154 
Farmland— 46 46 — — — 
Total Commercial real estate3,382 4,491 7,873 2,622 11,853 14,475 
Commercial and industrial10,519 398 10,917 758 3,894 4,652 
Residential mortgage
1-4 Family 1st Lien24 1,188 1,212 — 1,028 1,028 
1-4 Family Rental146 949 1,095 — 176 176 
HELOC and Junior Liens— 1,840 1,840 — 2,279 2,279 
Total Residential Mortgage170 3,977 4,147 — 3,483 3,483 
Consumer— 14 14 — — — 
Total loans$14,071 $8,880 $22,951 $3,380 $19,230 $22,610 
During the years ended December 31, 2025 and 2024, the amount of interest income recognized on nonaccrual loans was approximately $1.9 million and $584 thousand, respectively.
Credit Quality Indicators
Mid Penn categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. On a minimum of a quarterly basis, Mid Penn analyzes loans individually to classify the loans as to their credit risk. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal.
PASS - This type of classification consists of 6 subcategories:    
Nominal Risk / Pass - This loan classification is a credit extension of the highest quality.
Moderate Risk / Pass - This type of classification has strong financial ratios, substantial debt capacity, and low leverage with a very favorable comparison to industry peers or better than average improving trends.
Good Acceptable Risk / Pass - This type of classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; the Borrower lists good quality assets with relatively low leverage and ample debt capacity.
Average Acceptable Risk / Pass - This type of classification has financial ratios and assets that are of above average quality; however, the leverage is worse than average compared to industry standards; the Borrower should have a good repayment history and possess consistent earnings with some growth.
Marginally Acceptable Risk / Pass - This type of classification has financial ratios consistent with industry averages, assets of average quality with ascertainable values, acceptable leverage, moderate capital assets and an acceptable reliance on trade debt; however, the Borrower demonstrates marginally adequate earnings, cash flow and debt service plus positive trends.
Weak/Monitor Risk (Watch list) / Pass - This type of classification has financial ratios that are slightly below standard industry averages and assets are below average quality with unstable values; fixed assets could be near or at the end of their useful life and liabilities may not match the asset structure.
SPECIAL MENTION - These credits have developing weaknesses deserving extra attention from the lender and lending management. They are currently protected, but potentially weak. The weakness may be, cash flow, leverage, liquidity, management, industry or other factors which may, if not checked or corrected, weaken the asset or inadequately protect the Bank’s credit position at some future date.
SUBSTANDARD - These credit extensions also have well defined weaknesses, which are inadequately protected by the current worth and debt service capacity of the Borrowers or the collateral pledged, if any. The repayment of principal and interest as originally intended can be jeopardized by defined weaknesses related to adverse financial, managerial, economic, market or political conditions.
DOUBTFUL - These credits have definite weaknesses inherent in Substandard loans with added characteristics that are severe enough to make further collection in full highly questionable and improbable based on the current trends.
LOSS. These loans are considered uncollectible and no longer a viable asset of the Bank. They lack an identifiable source of repayment based on an inability to generate sufficient cash flow to service their debt. All trends are negative and the damage to the financial condition of the Borrower can’t be reversed now or in the near future.
The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal:
December 31, 2025
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized
Cost Basis
(In thousands)20252024202320222021PriorTotal
CRE Nonowner Occupied
Pass$156,421 $98,728 $188,873 $358,610 $156,310 $375,646 $16,109 $1,350,697 
Special mention— — 1,698 — — 90 — 1,788 
Substandard or lower— — 1,540 — — 10,015 — 11,555 
Total CRE Nonowner Occupied156,421 98,728 192,111 358,610 156,310 385,751 16,109 1,364,040 
Gross charge-offs— — — (691)— (394)— (1,085)
Current period recoveries— — — 301 — 4 — 305 
Net charge-offs— — — (390)— (390)— (780)
CRE Owner Occupied
Pass119,632 65,978 97,419 105,690 64,478 239,464 16,370 709,031 
Special mention— — 922 1,576 172 2,939 — 5,609 
Substandard or lower— 181 — 1,888 177 1,978 — 4,224 
Total CRE Owner Occupied119,632 66,159 98,341 109,154 64,827 244,381 16,370 718,864 
Gross charge-offs— (346)— — — — — (346)
Net charge-offs— (346)— — — — — (346)
Multifamily
Pass37,788 4,816 62,305 156,236 68,254 86,424 3,271 419,094 
Special mention— — — — — 42 — 42 
Substandard or lower— — — — — 131 — 131 
Total Multifamily37,788 4,816 62,305 156,236 68,254 86,597 3,271 419,267 
Farmland
Pass29,858 23,228 24,273 51,055 36,651 44,326 15,255 224,646 
Special mention— — 428 — — — — 428 
Substandard or lower— — 397 — 2,299 46 — 2,742 
Total Farmland29,858 23,228 25,098 51,055 38,950 44,372 15,255 227,816 
Commercial and industrial
Pass96,562 89,541 70,773 64,532 41,663 90,534 240,497 694,102 
Special mention— — — 87 — 1,495 — 1,582 
Substandard or lower— 115 15,663 500 1,249 1,299 5,521 24,347 
Total Commercial and industrial96,562 89,656 86,436 65,119 42,912 93,328 246,018 720,031 
Gross charge-offs— — — — — (294)— (294)
Current period recoveries— — 1 — — 8 — 9 
Net charge-offs— — 1 — — (286)— (285)
Residential Construction
Pass29,399 27,382 17,469 351 — — 10,698 85,299 
Total Residential Construction29,399 27,382 17,469 351 — — 10,698 85,299 
Other Construction
Pass64,396 79,617 74,890 42,758 7,790 12,387 28,552 310,390 
Total Other Construction64,396 79,617 74,890 42,758 7,790 12,387 28,552 310,390 
1-4 Family 1st Lien
Performing57,120 28,810 59,920 49,052 38,466 179,375 1,489 414,232 
Nonperforming— — 100 48 — 3,041 — 3,189 
Total 1-4 Family 1st Lien57,120 28,810 60,020 49,100 38,466 182,416 1,489 417,421 
Current period recoveries— — — — — 90 — 90 
Net recoveries— — — — — 90 — 90 
1-4 Family Rental
Performing46,766 22,067 45,885 99,841 59,781 131,001 2,154 407,495 
Nonperforming— — 292 — 1,572 1,606 — 3,470 
Total 1-4 Family Rental46,766 22,067 46,177 99,841 61,353 132,607 2,154 410,965 
HELOC and Junior Liens
Performing8,403 5,050 17,397 8,447 4,815 14,180 115,728 174,020 
Nonperforming— 1,151 93 152 — 1,699 1,001 4,096 
Total HELOC and Junior Liens8,403 6,201 17,490 8,599 4,815 15,879 116,729 178,116 
Consumer
Performing5,143 1,169 829 276 265 702 2,216 10,600 
Nonperforming— — 29 — — — — 29 
Total Consumer5,143 1,169 858 276 265 702 2,216 10,629 
Gross charge-offs— — — — — (98)— (98)
Current period recoveries— — — — — 55 — 55 
Net charge-offs— — — — — (43)— (43)
Total
Pass534,056 389,290 536,002 779,232 375,146 848,781 330,752 3,793,259 
Special mention— — 3,048 1,663 172 4,566 — 9,449 
Substandard or lower— 296 17,600 2,388 3,725 13,469 5,521 42,999 
Performing117,432 57,096 124,031 157,616 103,327 325,258 121,587 1,006,347 
Nonperforming— 1,151 514 200 1,572 6,346 1,001 10,784 
Total$651,488 $447,833 $681,195 $941,099 $483,942 $1,198,420 $458,861 $4,862,838 

December 31, 2024
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized
Cost Basis
(In thousands)20242023202220212020PriorTotal
CRE Nonowner Occupied
Pass$85,501 $176,018 $343,072 $152,157 $130,650 $325,478 $11,732 $1,224,608 
Special mention— — — — — 3,105 — 3,105 
Substandard or lower— 1,515 1,260 — 3,281 17,241 — 23,297 
Total CRE Nonowner Occupied85,501 177,533 344,332 152,157 133,931 345,824 11,732 1,251,010 
Current period recoveries— — — — — 2 — 2 
Net recoveries— — — — — 2 — 2 
CRE Owner Occupied
Pass52,922 99,065 106,876 66,160 77,774 199,725 11,630 614,152 
Special mention— 222 4,991 227 — 2,133 — 7,573 
Substandard or lower— — — 194 — 2,088 — 2,282 
Total CRE Owner Occupied52,922 99,287 111,867 66,581 77,774 203,946 11,630 624,007 
Current period recoveries— — — — — 4 — 4 
Net recoveries— — — — — 4 — 4 
Multifamily
Pass4,843 66,119 118,568 101,871 40,450 78,070 2,771 412,692 
Special mention— — — — — 54 — 54 
Substandard or lower— — — — — 154 — 154 
Total Multifamily4,843 66,119 118,568 101,871 40,450 78,278 2,771 412,900 
Farmland
Pass27,449 31,259 56,178 42,693 25,119 24,729 14,801 222,228 
Special mention— 128 — — — 2,163 190 2,481 
Total Farmland27,449 31,387 56,178 42,693 25,119 26,892 14,991 224,709 
Commercial and industrial
Pass114,175 106,657 78,702 54,312 21,532 92,723 222,525 690,626 
Special mention— 62 503 31 — 3,534 4,498 8,628 
Substandard or lower— — — 892 1,168 1,632 2,446 6,138 
Total Commercial and industrial114,175 106,719 79,205 55,235 22,700 97,889 229,469 705,392 
Gross charge-offs— (201)— — (206)(412)— (819)
Current period recoveries— — — — — 1 — 1 
Net charge-offs— (201)— — (206)(411)— (818)
Residential construction
Pass34,275 37,222 15,559 — — 2,007 10,336 99,399 
Total Residential construction34,275 37,222 15,559 — — 2,007 10,336 99,399 
Other construction
Pass66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 
Total Other construction66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 
1-4 Family 1st Lien
Performing27,580 59,762 45,946 34,743 42,727 98,891 2,915 312,564 
Nonperforming— — — — 211 817 — 1,028 
Total 1-4 Family 1st Lien27,580 59,762 45,946 34,743 42,938 99,708 2,915 313,592 
Gross charge-offs— — — — — (7)— (7)
Current period recoveries— — — — — 16 — 16 
Net recoveries— — — — — 9 — 9 
1-4 Family Rental
Performing28,735 51,488 88,594 59,397 35,222 69,890 2,009 335,335 
Nonperforming— 147 — — 595 559 — 1,301 
Total 1-4 Family Rental28,735 51,635 88,594 59,397 35,817 70,449 2,009 336,636 
Gross charge-offs— — — — — (2)— (2)
Current period recoveries— — — — — 22 — 22 
Net recoveries— — — — — 20 — 20 
HELOC and Junior Liens
Performing6,096 16,125 9,856 4,845 2,182 10,887 88,122 138,113 
Nonperforming— 21 — — — 1,257 1,001 2,279 
Total HELOC and Junior Liens6,096 16,146 9,856 4,845 2,182 12,144 89,123 140,392 
Gross charge-offs— — (21)— — — — (21)
Net charge-offs— — (21)— — — — (21)
Consumer
Performing4,214 972 354 394 107 234 2,587 8,862 
Total Consumer4,214 972 354 394 107 234 2,587 8,862 
Gross charge-offs— — (2)— — (50)— (52)
Current period recoveries— — 1 — — 38 — 39 
Net charge-offs— — (1)— — (12)— (13)
Total
Pass385,876 610,959 823,394 428,857 306,508 734,660 299,622 3,589,876 
Special mention— 412 5,494 258 — 10,989 4,688 21,841 
Substandard or lower— 1,515 1,260 1,086 4,449 21,115 2,446 31,871 
Performing66,625 128,347 144,750 99,379 80,238 179,902 95,633 794,874 
Nonperforming— 168 — — 806 2,633 1,001 4,608 
Total$452,501 $741,401 $974,898 $529,580 $392,001 $949,299 $403,390 $4,443,070 
Mid Penn had no loans classified as "Doubtful" as of December 31, 2025 and 2024. There was $567 thousand and $861 thousand in mortgage loans for which formal foreclosure proceedings were in process as of December 31, 2025 and December 31, 2024, respectively.
Collateral-Dependent Loans
A financial asset is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of financial assets deemed collateral-dependent, Mid Penn elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, Mid Penn records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent financial assets consists of various types of real estate, including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land. Total collateral-dependent loans were $23.0 million as of December 31, 2025 and December 31, 2024.
Allowance for Credit Losses
Mid Penn’s ACL - loans methodology follows guidance within FASB ASC Subtopic 326-20. The ACL - loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL - loans. The ACL - loans is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL - loans is adjusted through the PCL and reduced by the charge off of loan amounts, net of recoveries.
The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.
Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and peer group divergence. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects management’s expectations of future conditions based on reasonable and supportable forecasts.
The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan purpose codes and similar risk characteristics.
The commercial real estate and residential mortgage loan portfolio segments include loans for both commercial and residential properties that are secured by real estate. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and, if applicable, guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance, in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered when applicable. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.
The commercial and industrial loan portfolio segment includes commercial loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory, equipment and fixed asset purchases that are secured by those assets, and term financing for those within Mid Penn’s geographic markets. Mid Penn’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information, and evaluation of underlying collateral to support the credit.
The consumer loan portfolio segment is comprised of loans which are underwritten after evaluating a borrower’s capacity, credit and collateral. Several factors are considered when assessing a borrower’s capacity, including the borrower’s employment, income, current debt, assets and level of equity in the property. Credit is assessed using a credit report that provides credit scores and the borrower’s current and past information about their credit history. Loan-to-value and debt-to-income ratios, loan amount and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends, such as conditions that negatively affect housing prices and demand and levels of unemployment.
Mid Penn utilizes a DCF method to estimate the quantitative portion of the allowance for credit losses for its loan pools. The DCF is based off of historical losses, including peer data, which is correlated to national unemployment and GDP.
The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.
Mid Penn determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the Loans held-for-investment (LHFI) portfolio extend beyond this forecast period, Mid Penn uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans.
Qualitative factors used in the ACL methodology include the following:
•Changes in lending policies, procedures, and underwriting standards
•Changes in portfolio composition and concentrations of credit
•Peer group trends and divergence
The ACL for individual loans, such as nonaccrual and PCD loans, that do not share risk characteristics with other loans is measured as the difference between the discounted value of expected future cash flows, based on the effective interest rate at origination, and the amortized cost basis of the loan, or the net realizable value. The ACL is the difference between the loan’s net realizable value and its amortized cost basis (net of previous charge-offs and deferred loan fees and costs), except for collateral-dependent loans. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or the "as is" value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on a regular basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Mid Penn’s Real Estate Administration Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of the expected credit loss is charged off.
Mid Penn may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine whether there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, Mid Penn takes into consideration loan grades, past due and nonaccrual status. Mid Penn may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, and
number of times past due. At the purchase or acquisition date, the amortized cost basis of PCD loans is equal to the purchase price and an initial estimate of credit losses. The initial recognition of expected credit losses on PCD loans has no impact on net income. When the initial measurement of expected credit losses on PCD loans is calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the PCL. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan.
Loans are charged off against the ACL, with any subsequent recoveries credited back to the ACL account. Expected recoveries may not exceed the aggregate of amounts previously charged off and expected to be charged off.
The following table presents the activity in the ACL - loans by portfolio segment for the year ended December 31, 2025 and 2024:
(In thousands)Balance as of
December 31, 2024		PCD LoansCharge-offsRecoveriesNet Loans (Charged off) Recovered
Provision/(Benefit) for Credit Losses (1)
Balance as of December 31, 2025
Commercial Real Estate
CRE Nonowner Occupied$11,047 $89 $(1,085)$305 $(780)$(439)$9,917 
CRE Owner Occupied5,243 100 (346)— (346)1,098 6,095 
Multifamily3,432 31 — — — (2,020)1,443 
Farmland1,932 — — — — 186 2,118 
Commercial and industrial7,122 36 (294)9 (285)2,386 9,259 
Construction
Residential Construction931 — — — — (454)477 
Other Construction2,131 — — — — (667)1,464 
Residential Mortgage
1-4 Family 1st Lien1,503 37 — 90 90 804 2,434 
1-4 Family Rental1,756 47 — — — 492 2,295 
HELOC and Junior Liens392 3 — — — 164 559 
Consumer25 — (98)55 (43)48 30 
Total$35,514 $343 $(1,823)$459 $(1,364)$1,598 $36,091 
(1) Includes a $2.3 million initial provision on non-PCD loans acquired in the William Penn acquisition
(In thousands)Balance as of
December 31, 2023		Charge-offsRecoveriesNet Loans (Charged off) RecoveredProvision/(Benefit) for Credit LossesBalance as of December 31, 2024
Commercial Real Estate
CRE Nonowner Occupied$10,267 $— $2 $2 $778 $11,047 
CRE Owner Occupied5,646 — 4 4 (407)5,243 
Multifamily2,202 — — — 1,230 3,432 
Farmland2,064 — — — (132)1,932 
Commercial and industrial7,131 (819)1 (818)809 7,122 
Construction
Residential Construction1,256 — — — (325)931 
Other Construction2,146 — — — (15)2,131 
Residential Mortgage
1-4 Family 1st Lien1,207 (7)16 9 287 1,503 
1-4 Family Rental1,859 (2)22 20 (123)1,756 
HELOC and Junior Liens389 (21)— (21)24 392 
Consumer20 (52)39 (13)18 25 
Total$34,187 $(901)$84 $(817)$2,144 $35,514 
The following table presents the ACL for loans and the amortized cost basis of loans as of December 31, 2025 and December 31, 2024:
(In thousands)ACL - LoansLoans
December 31, 2025Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal ACL - LoansCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal Loans
Commercial real estate
CRE Nonowner Occupied$9,374 $543 $9,917 $1,358,896 $5,144 $1,364,040 
CRE Owner Occupied6,020 75 6,095 716,312 2,552 718,864 
Multifamily1,443 — 1,443 419,136 131 419,267 
Farmland2,118 — 2,118 227,770 46 227,816 
Commercial and industrial7,835 1,424 9,259 709,114 10,917 720,031 
Construction
Residential Construction477 — 477 85,299 — 85,299 
Other Construction1,464 — 1,464 310,390 — 310,390 
Residential mortgage
1-4 Family 1st Lien2,434 — 2,434 416,209 1,212 417,421 
1-4 Family Rental2,289 6 2,295 409,870 1,095 410,965 
HELOC and Junior Liens559 — 559 176,276 1,840 178,116 
Consumer30 — 30 10,615 14 10,629 
Total$34,043 $2,048 $36,091 $4,839,887 $22,951 $4,862,838 

(In thousands)ACL - LoansLoans
December 31, 2024Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal ACL - LoansCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal Loans
Commercial real estate
CRE Nonowner Occupied$9,945 $1,102 $11,047 $1,237,235 $13,775 $1,251,010 
CRE Owner Occupied5,243 — 5,243 623,461 546 624,007 
Multifamily3,432 — 3,432 412,746 154 412,900 
Farmland1,932 — 1,932 224,709 — 224,709 
Commercial and industrial6,785 337 7,122 700,740 4,652 705,392 
Construction
Residential Construction931 — 931 99,399 — 99,399 
Other Construction2,131 — 2,131 326,171 — 326,171 
Residential mortgage
1-4 Family 1st Lien1,503 — 1,503 312,564 1,028 313,592 
1-4 Family Rental1,756 — 1,756 336,460 176 336,636 
HELOC and Junior Liens392 — 392 138,113 2,279 140,392 
Consumer25 — 25 8,862 — 8,862 
Total$34,075 $1,439 $35,514 $4,420,460 $22,610 $4,443,070 
Modifications to Borrowers Experiencing Financial Difficulty
From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, or a combination thereof, among other things.
There were no new modifications to borrowers experiencing financial difficulty for the year ended December 31, 2025.
Information related to loans modified (by type of modification) for the year ended December 31, 2024, whereby the borrower was experiencing financial difficulty at the time of modification, is set forth in the following table:
(Dollars in thousands)Interest OnlyTerm ExtensionCombination:
Interest Only and
Term Extension		Total% of Total Class of Financing Receivable
Year ended December 31, 2024
Commercial and industrial$— $— $287 $287 0.04 %
Residential mortgage
1-4 Family Rental— 184 — 184 0.05 %
HELOC and Junior Liens— — 92 92 0.07 %
Total Residential Mortgage— 184 92 276 0.03 %
Total loans$— $184 $379 $563 
The financial effects of the loan modifications reduced the monthly payment amounts for the borrower and the term extensions in the table above added a weighted-average of 2.0 years to the life of the loans, which also reduced the monthly payment amounts for the borrowers.
As of December 31, 2025, 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 2024.