10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

 (Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-13677

MID PENN BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Pennsylvania	25-1666413
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
349 Union Street Millersburg, Pennsylvania	17061
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code 1.866.642.7736

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ☑    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One).

Large accelerated filer   ☐     Accelerated Filer   ☐     Non-accelerated Filer  ☐      Smaller Reporting Company  ☑

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ☐     No   ☑

As of May 15, 2015, the registrant had 4,222,693 shares of common stock outstanding.

MID PENN BANCORP, INC.

FORM 10-Q

TABLE OF CONTENTS

PART 1 – FINANCIAL INFORMATION			2
	Item 1 – Financial Statements		2
		Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014 (Unaudited)	2
		Consolidated Statements of Income for the Three Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	3
		Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	4
		Consolidated Statements of Changes in Shareholders’ Equity for theThree Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	5
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	6
		Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
	Item 3 – Quantitative and Qualitative Disclosures about Market Risk		41
	Item 4 – Controls and Procedures		41
PART II – OTHER INFORMATION			42
	Item 1 – Legal Proceedings		42
	Item 1A – Risk Factors		42
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		42
	Item 3 – Defaults upon Senior Securities		42
	Item 4 – Mine Safety Disclosures		42
	Item 5 – Other Information		42
	Item 6 – Exhibits		42
	Signatures		43

Unless the context otherwise requires, the terms “Mid Penn”, “we”, “us”, and “our” refer to Mid Penn Bancorp, Inc. and its consolidated subsidiaries

1

MID PENN BANCORP, INC.Consolidated Balance Sheets (Unaudited)

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)	March 31, 2015		December 31, 2014
ASSETS
Cash and due from banks	$	12,716	$	8,869
Interest-bearing balances with other financial institutions		1,101		1,013
Federal funds sold		378		-
Total cash and cash equivalents		14,195		9,882
Interest-bearing time deposits with other financial institutions		5,669		5,772
Available for sale investment securities		142,680		141,634
Loans and leases, net of unearned interest		695,153		571,533
Less:  Allowance for loan and lease losses		(6,566)		(6,716)
Net loans and leases		688,587		564,817
Bank premises and equipment, net		14,096		12,225
Restricted investment in bank stocks		3,517		3,181
Foreclosed assets held for sale		722		565
Accrued interest receivable		3,394		3,058
Deferred income taxes		2,363		2,125
Goodwill		3,613		1,016
Core deposit and other intangibles, net		752		187
Cash surrender value of life insurance		12,304		8,575
Other assets		3,257		2,620
Total Assets	$	895,149	$	755,657
LIABILITIES & SHAREHOLDERS’ EQUITY
Deposits:
Noninterest bearing demand	$	94,427	$	60,613
Interest bearing demand		230,204		222,712
Money Market		217,674		197,418
Savings		57,519		32,394
Time		159,222		124,785
Total Deposits		759,046		637,922
Short-term borrowings		621		578
Long-term debt		56,480		52,961
Accrued interest payable		498		349
Other liabilities		5,421		4,717
Total Liabilities		822,066		696,527
Shareholders' Equity:
Series B Preferred stock, par value $1.00; liquidation value $1,000; authorized 5,000 shares;
7% non-cumulative dividend; 5,000 shares issued and outstanding at March 31, 2015 and
at December 31, 2014; total redemption value $5,100,000		5,000		5,000
Series C Preferred stock, par value $1.00; liquidation value $1,000; authorized 1,750 shares;
1% non-cumulative dividend; 1,750 shares issued and outstanding at March 31, 2015 and
0 shares issued and outstanding at December 31, 2014; total redemption value $1,750,000		1,750		-
Common stock, par value $1.00; authorized 10,000,000 shares; 4,222,693 shares
issued and outstanding at March 31, 2015 and 3,497,829 at December 31, 2014		4,223		3,498
Additional paid-in capital		40,493		29,902
Retained earnings		19,743		19,217
Accumulated other comprehensive income		1,874		1,513
Total Shareholders’ Equity		73,083		59,130
Total Liabilities and Shareholders' Equity	$	895,149	$	755,657

The accompanying notes are an integral part of these consolidated financial statements.

2

MID PENN BANCORP, INC.Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2015		2014
INTEREST INCOME
Interest & fees on loans and leases	$	7,154	$	6,540
Interest on interest-bearing balances		11		10
Interest and dividends on investment securities:
U.S. Treasury and government agencies		331		277
State and political subdivision obligations, tax-exempt		531		519
Other securities		131		34
Total Interest Income		8,158		7,380
INTEREST EXPENSE
Interest on deposits		914		978
Interest on short-term borrowings		11		14
Interest on long-term debt		195		116
Total Interest Expense		1,120		1,108
Net Interest Income		7,038		6,272
PROVISION FOR LOAN AND LEASE LOSSES		300		547
Net Interest Income After Provision for Loan and Lease Losses		6,738		5,725
NONINTEREST INCOME
Income from fiduciary activities		127		158
Service charges on deposits		150		127
Net gain on sales of investment securities		177		150
Earnings from cash surrender value of life insurance		56		51
Mortgage banking income		67		38
ATM debit card interchange income		155		126
Merchant services income		50		67
Net gain on sales of SBA loans		-		51
Other income		167		126
Total Noninterest Income		949		894
NONINTEREST EXPENSE
Salaries and employee benefits		3,195		2,548
Occupancy expense, net		454		382
Equipment expense		313		301
Pennsylvania Bank Shares tax expense		115		99
FDIC Assessment		139		132
Legal and professional fees		143		97
Director fees and benefits expense		83		79
Marketing and advertising expense		88		48
Software licensing		319		237
Telephone expense		123		96
Loss on sale/write-down of foreclosed assets		32		87
Intangible amortization		9		7
Loan collection costs		80		71
Merger and acquisition expense		909		-
Other expenses		638		554
Total Noninterest Expense		6,640		4,738
INCOME BEFORE PROVISION FOR INCOME TAXES		1,047		1,881
Provision for income taxes		84		370
NET INCOME		963		1,511
Series B preferred stock dividends		87		87
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	876	$	1,424
PER COMMON SHARE DATA:
Basic Earnings Per Common Share	$	0.23	$	0.41
Cash Dividends	$	0.10	$	0.05

The accompanying notes are an integral part of these consolidated financial statements.

3

MID PENN BANCORP, INC.                            Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)	Three Months Ended March 31,
	2015		2014
Net income	$	963	$	1,511
Other comprehensive income:
Unrealized gains arising during the period on available for sale
securities, net of income taxes of $244 and $599, respectively		475		1,162
Reclassification adjustment for net gain on sales of available for sale securities
included in net income, net of income taxes of ($60) and ($51), respectively   (1) (3)		(117)		(99)
Change in defined benefit plans, net of income taxes of $1 and $1, respectively   (2) (3)		3		2
Total other comprehensive income		361		1,065
Total comprehensive income	$	1,324	$	2,576

(1) Amounts are included in net gain on sales of investment securities on the Consolidated Statements of Income as a separate element within total noninterest income

(2) Amounts are included in the computation of net periodic benefit cost and are included in salaries and employee benefits on the Consolidated Statements of Income as a separate element within total noninterest expense

(3) Income tax amounts are included in the provision for income taxes in the Consolidated Statements of Income

The accompanying notes are an integral part of these consolidated financial statements.

4

MID PENN BANCORP, INC.Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

FOR THE THREE MONTHS ENDEDMARCH 31, 2015 AND 2014

(Dollars in thousands)									Accumulated
					Additional				Other		Total
	Preferred		Common		Paid-in		Retained		Comprehensive		Shareholders'
	Stock		Stock		Capital		Earnings		(Loss) Income		Equity
Balance, January 1, 2015	$	5,000	$	3,498	$	29,902	$	19,217	$	1,513	$	59,130
Net income		-		-		-		963		-		963
Total other comprehensive income, net of taxes		-		-		-		-		361		361
Employee Stock Purchase Plan (1,013 shares)		-		1		15		-		-		16
Common stock dividends		-		-		-		(350)		-		(350)
Series B preferred stock dividends		-		-		-		(87)		-		(87)
SBLF preferred stock in connection with Phoenix acquisition		1,750		-		-		-		-		1,750
Common stock issued to Phoenix shareholders		-		724		10,568		-		-		11,292
Restricted stock compensation expense		-		-		8		-		-		8
Balance, March 31, 2015	$	6,750	$	4,223	$	40,493	$	19,743	$	1,874	$	73,083
Balance, January 1, 2014	$	5,000	$	3,494	$	29,853	$	15,441	$	(872)	$	52,916
Net income		-		-		-		1,511		-		1,511
Total other comprehensive income, net of taxes		-		-		-		-		1,065		1,065
Employee Stock Purchase Plan (985 shares)		-		1		13		-		-		14
Common stock dividends		-		-		-		(174)		-		(174)
Series B preferred stock dividends		-		-		-		(87)		-		(87)
Balance, March 31, 2014	$	5,000	$	3,495	$	29,866	$	16,691	$	193	$	55,245

The accompanying notes are an integral part of these consolidated financial statements.

5

MID PENN BANCORP, INC.Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)	Three Months Ended March 31,
	2015		2014
Operating Activities:
Net Income	$	963	$	1,511
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan and lease losses		300		547
Depreciation		314		313
Amortization of intangibles		13		4
Net amortization of security premiums		384		43
Gain on sales of investment securities		(177)		(150)
Earnings on cash surrender value of life insurance		(56)		(51)
SBA loans originated for sale		-		(468)
Proceeds from sales of SBA loans originated for sale		-		519
Gain on sale of loans		-		(51)
Loss on sale / write-down of foreclosed assets		32		87
Restricted stock compensation expense		8		-
Deferred income tax benefit		(76)		(28)
Decrease (increase) in accrued interest receivable		52		(200)
Increase in other assets		(47)		(152)
Increase in accrued interest payable		117		93
Decrease in other liabilities		(40)		(282)
Net Cash Provided By Operating Activities		1,787		1,735
Investing Activities:
Net decrease in interest-bearing time deposits with other financial institutions		103		2,190
Proceeds from the maturity of investment securities		2,594		3,375
Proceeds from the sale of investment securities		16,091		7,199
Purchases of investment securities		(8,065)		(7,462)
Net cash received from acquisition		8,118		-
Redemptions (purchases) of restricted investment in bank stock		173		(177)
Net increase in loans and leases		(13,579)		(3,982)
Purchases of bank premises and equipment		(393)		(499)
Proceeds from sale of foreclosed assets		27		64
Net Cash Provided By Investing Activities		5,069		708
Financing Activities:
Net decrease in deposits		(2,114)		(1,455)
Net increase in short-term borrowings		43		4,711
Series B preferred stock dividend paid		(87)		(87)
Common stock dividend paid		(350)		(174)
Employee Stock Purchase Plan		16		14
Long-term debt repayment		(51)		(45)
Net Cash (Used In) Provided By Financing Activities		(2,543)		2,964
Net increase in cash and cash equivalents		4,313		5,407
Cash and cash equivalents, beginning of year		9,882		8,623
Cash and cash equivalents, end of year	$	14,195	$	14,030

6

MID PENN BANCORP, INC.Consolidated Statements of Cash Flows (Unaudited)

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	971	$	1,015
Income taxes paid	$	100	$	-
Supplemental Noncash Disclosures:
Loan transfers to foreclosed assets held for sale	$	216	$	264

Assets, Liabilities, and Equity in Connection with Merger:
(Dollars in thousands)
Assets Acquired:
Securities	$	11,331	$	-
Loans		110,707		-
Restricted stock		509		-
Property and equipment		1,792		-
Accrued interest receivable		388		-
Core deposit and other intangible assets		578		-
Bank-owned life insurance		3,673		-
Other assets		933		-
	$	129,911	$	-
Liabilities Assumed:
Deposits	$	123,238	$	-
Accrued interest payable		32		-
Long-term debt		3,570		-
Other liabilities		744		-
	$	127,584	$	-
Equity Acquired:
Preferred stock	$	1,750	$	-

The accompanying notes are an integral part of these consolidated financial statements.

7

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

(1)          Basis of Presentation

The accompanying consolidated financial statements include the accounts of Mid Penn Bancorp, Inc. and its wholly-owned subsidiaries, Mid Penn Bank (“Bank”), and the Bank’s wholly-owned subsidiary Mid Penn Insurance Services, LLC (collectively, “Mid Penn”).  All material intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Mid Penn believes the information presented is not misleading and the disclosures are adequate.  For comparative purposes, the March 31, 2014 and December 31, 2014 balances have been reclassified to conform to the 2014 presentation.  Such reclassifications had no impact on net income. The results of operations for interim periods are not necessarily indicative of operating results expected for the full year.  These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2014.

Mid Penn has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2015, for items that should potentially be recognized or disclosed in these consolidated financial statements.  The evaluation was conducted through the date these consolidated financial statements were issued.

(2)           Merger

On March 1, 2015, Mid Penn consummated the merger with Phoenix Bancorp, Inc. (“Phoenix”), a Pennsylvania corporation.  Under the terms of a merger agreement between the parties, Phoenix merged with, and into Mid Penn, with Mid Penn continuing as the surviving entity.  Simultaneously with the consummation of the foregoing merger, Miners Bank (“Miners”), a Pennsylvania-state chartered bank and wholly-owned subsidiary of Phoenix, merged with and into Mid Penn Bank, a Pennsylvania-state chartered bank and wholly-owned subsidiary of Mid Penn.

As part of this transaction, Phoenix shareholders received either 3.167 shares of Mid Penn’s common stock or $51.60 in cash in exchange for each share of Phoenix common stock.  Holders of contingent rights issued by Phoenix received approximately 0.414 shares of Mid Penn’s common stock as settlement of such rights.  As a result, Mid Penn issued 723,851 shares of common stock with an acquisition date fair value of approximately $11,292,000, based on Mid Penn’s closing stock price of $15.60 on February 27, 2015, and cash of  $2,949,000.  Including an insignificant amount of cash paid in lieu of fractional shares, the fair value of total consideration paid was $14,241,000.

Additionally, as part of this transaction, on March 1, 2015, Mid Penn assumed all of the liabilities and obligations of Phoenix with respect to 1,750 shares of Phoenix’s preferred stock issued to the United States Treasury (“Treasury”)  in connection with the Small Business Lending Fund and issued 1,750 shares of Mid Penn’s Senior Non-Cumulative Perpetual Preferred Stock, Series C, having a $1,000 liquidation preference per share (the “SBLF Preferred Shares”), to the Treasury.  The SBLF Preferred Shares qualify as Tier 1 Capital and have terms and conditions identical to those shares of preferred stock issued by Phoenix to the Treasury.

The assets and liabilities of Miners and Phoenix were recorded on the consolidated balance sheet at their estimated fair value as of March 1, 2015, and their results of operations have been included in the consolidated income statement since such date.

Included in the purchase price was goodwill and a core deposit intangible of $2,597,000 and $578,000, respectively.  The core deposit intangible will be amortized over a ten-year period using a sum of the year’s digits basis.  The goodwill will not be amortized, but will be measured annually for impairment or more frequently if circumstances require.  Core deposit intangible amortization expense projected for the succeeding five years beginning 2015 is estimated to be $88,000, $96,000, $86,000, $75,000, and $65,000 per year, respectively, and $168,000 in total for years after 2019.

8

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

The allocation of the purchase price is as follows:

(Dollars in thousands)
Purchase price assigned to Phoenix common shares exchanged for 723,851 Mid Penn common shares	$	11,292
Purchase price assigned to Phoenix common shares exchanged for cash		2,949
Total purchase price		14,241
Phoenix net assets acquired:
Tangible Common Equity		12,292
Estimated adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(982)
Associated deferred income taxes		334
Fair value adjustment to net assets acquired, net of tax		(648)
Total Phoenix net assets acquired		11,644
Goodwill resulting from the merger	$	2,597

While Mid Penn believes that the accounting for the merger is complete, ASC 805 allows for adjustments to goodwill for a period of up to one year after the merger date for information that becomes available that reflects circumstances at the merger date.  The following table summarizes the estimated fair value of the assets acquired and liabilities and equity assumed.

(Dollars in thousands)
Total purchase price	$	14,241
Net assets acquired:
Cash and cash equivalents		11,067
Investment securities		11,331
Restricted stock		509
Loans		110,707
Bank owned life insurance		3,673
Premises and equipment		1,792
Accrued interest receivable		388
Core deposit and other intangibles		578
Other assets		933
Deposits		(123,238)
FHLB borrowings		(3,570)
Accrued interest payable		(32)
Other liabilities		(744)
Preferred stock		(1,750)
		11,644
Goodwill	$	2,597

The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $113,090,000.  The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at March 1, 2015	$	113,090
Market rate adjustment		222
Credit fair value adjustment on pools of homogeneous loans		(1,462)
Credit fair value adjustment on impaired loans		(1,143)
Fair value of purchased loans at March 1, 2015	$	110,707

The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the started rates of the acquired loans.  The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from the loan inception to the acquisition date.  The credit adjustment on impaired loans is derived

9

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

in accordance with ASC 310-30-30 and represents the portion of the loan balance that has been deemed uncollectible based on our expectations of future cash flows for each respective loan.

The information about the acquired Phoenix impaired loan portfolio as of March 1, 2015 is as follows:

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	3,548
Contractual cash flows not expected to be collected (nonaccretable discount)		(663)
Expected cash flows at acquisition		2,885
Interest component of expected cash flows (accretable discount)		(480)
Fair value of acquired loans	$	2,405

The following table presents pro forma information as if the merger between Mid Penn and Phoenix had been completed on January 1, 2014.  The pro forma information does not necessarily reflect the results of operations that would have occurred had Mid Penn merged with Phoenix at the beginning of 2014.  Supplemental pro forma earnings for 2015 were adjusted to exclude $909,000 of merger related costs incurred in the first three months of 2015; the results for the first three months of 2014 were adjusted to include these charges.  The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies, or other factors.

(Dollars in thousands)	March 31, 2015		March 31, 2014
Net interest income after loan loss provision	$	7,374	$	7,050
Noninterest income		1,014		1,129
Noninterest expense		6,815		7,548
Net income available to common shareholders		1,276		543
Net income per common share		0.30		0.13

The amount of total revenue, consisting of interest income plus noninterest income, as well as the net income specifically related to Phoenix for the period beginning March 1, 2015, included in the consolidated statements of income of Mid Penn for the three months ended March 31, 2015, was $495,000 and $50,000, respectively. 

(3)           Investment Securities

Securities to be held for indefinite periods, but not intended to be held to maturity, are classified as available for sale and carried at fair value.  Securities held for indefinite periods include securities that management intends to use as part of its asset and liability management strategy and that may be sold in response to liquidity needs, changes in interest rates, resultant prepayment risk, and other factors related to interest rate and resultant prepayment risk changes.

Realized gains and losses on dispositions are based on the net proceeds and the amortized cost of the securities sold, using the specific identification method.  Unrealized gains and losses on investment securities available for sale are based on the difference between amortized cost and fair value of each security.  These gains and losses are credited or charged to other comprehensive income, whereas realized gains and losses flow through the Corporation’s consolidated statements of income.

Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities, clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired.  For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery.  These steps are done before assessing whether the entity will recover the cost basis of the investment.

In instances when a determination is made that other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, this guidance changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors.  The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings.  The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

10

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intent and ability to hold the securities until recovery of unrealized losses.

At March 31, 2015 and December 31, 2014, amortized cost, fair value, and unrealized gains and losses on investment securities are as follows:

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
March 31, 2015
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,337	$	1,026	$	16	$	27,347
Mortgage-backed U.S. government agencies		36,938		250		140		37,048
State and political subdivision obligations		74,162		2,077		242		75,997
Equity securities		2,239		70		21		2,288
	$	139,676	$	3,423	$	419	$	142,680

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2014
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,343	$	752	$	29	$	27,066
Mortgage-backed U.S. government agencies		33,763		190		177		33,776
State and political subdivision obligations		77,482		2,007		318		79,171
Equity securities		1,584		60		23		1,621
	$	139,172	$	3,009	$	547	$	141,634

Estimated fair values of debt securities are based on quoted market prices, where applicable.  If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, adjusted for differences between the quoted instruments and the instruments being valued.

Investment securities having a fair value of $127,164,000 at March 31, 2015 and $134,740,000  at  December 31, 2014, were pledged to secure public deposits and other borrowings.

Mid Penn realized gross gains of $177,000and $150,000on sales of securities available for sale during the three months ended March 31, 2015 and March 31, 2014.  Mid Penn realized gross losses on the sale of securities available for sale of $0 during the three months ended March 31, 2015and March 31, 2014.

The following table presents gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2015and December 31, 2014.

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
March 31, 2015	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	4	$	4,397	$	16	$	-	$	-	$	4,397	$	16
Mortgage-backed U.S. government agencies	17		9,881		66		2,968		74		12,849		140
State and political subdivision obligations	25		8,463		48		4,592		194		13,055		242
Equity securities	2		-		-		596		21		596		21
Total temporarily impaired
available for sale securities	48	$	22,741	$	130	$	8,156	$	289	$	30,897	$	419

11

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
December 31, 2014	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	5	$	6,059	$	29	$	-	$	-	$	6,059	$	29
Mortgage-backed U.S. government agencies	20		9,511		62		4,416		115		13,927		177
State and political subdivision obligations	37		4,444		33		13,947		285		18,391		318
Equity securities	2		-		-		583		23		583		23
Total temporarily impaired
available for sale securities	64	$	20,014	$	124	$	18,946	$	423	$	38,960	$	547

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis; and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, and the financial condition and near term prospects of the issuer.  In addition, for debt securities, the Corporation considers (a) whether management has the intent to sell the security, (b) it is more likely than not that management will be required to sell the security prior to its anticipated recovery, and (c) whether management expects to recover the entire amortized cost basis.  For equity securities, management considers the intent and ability to hold securities until recovery of unrealized losses.

The majority of the investment portfolio is comprised of mortgage-backed U.S. government agencies and state and political subdivision obligations with school districts and municipal authorities throughout the U.S.  For the investment securities with an unrealized loss, Mid Penn has concluded, based on its analysis, that the unrealized losses in the investments are primarily caused by the movement of interest rates, and the contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment.

At March 31, 2015,  46 debt securities and 2 equity security with unrealized losses totaling $419,000 depreciated 1.36% from their amortized cost basis.  At March 31, 2015, unrealized losses for twelve months or longer totaled $289,000 of which the majority was attributed to state and political subdivision obligations with $194,000 in unrealized losses.  At December 31, 2014,  62 debt securities and 2 equity security with unrealized losses totaling $547,000 depreciated 1.40% from their amortized cost basis.  At December 31, 2014, unrealized losses for twelve months or longer totaled $423,000 of which the majority was attributed to mortgage,-backed U.S. government agencies and state and political subdivision obligations with $115,000 and $285,000 in unrealized losses, respectively. 

Because Mid Penn does not intend to sell these investments and it is not likely it will be required to sell these investments before a recovery of fair value, which may be maturity, Mid Penn does not consider the securities with unrealized losses to be other-than-temporarily impaired as losses relate to changes in interest rates and not erosion of credit quality.

The table below is the maturity distribution of investment securities at amortized cost and fair value.

(Dollars in thousands)	March 31, 2015
	Amortized		Fair
	Cost		Value
Due in 1 year or less	$	1,488	$	1,516
Due after 1 year but within 5 years		14,470		15,068
Due after 5 years but within 10 years		48,039		49,435
Due after 10 years		36,502		37,325
		100,499		103,344
Mortgage-backed securities		36,938		37,048
Equity securities		2,239		2,288
	$	139,676	$	142,680

12

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

(4)           Loans and Allowance for Loan and Lease Losses

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. These amounts are generally being amortized over the contractual life of the loan.  Premiums and discounts on purchased loans are amortized as adjustments to interest income using the effective yield method.

The loan portfolio is segmented into commercial and consumer loans.  Commercial loans consist of the following classes: commercial and industrial, commercial real estate, commercial real estate-construction and lease financing.  Consumer loans consist of the following classes: residential mortgage loans, home equity loans and other consumer loans.

For all classes of loans, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days or more past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan and lease losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.  The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Commercial and industrial

Mid Penn originates commercial and industrial loans.  Most of the Bank’s commercial and industrial loans have been extended to finance local and regional businesses and include short-term loans to finance machinery and equipment purchases, inventory, and accounts receivable.  Commercial loans also involve the extension of revolving credit for a combination of equipment acquisitions and working capital in expanding companies.

The maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment.  Generally, the maximum term on non-mortgage lines of credit is one year.  The loan-to-value ratio on such loans and lines of credit generally may not exceed 80% of the value of the collateral securing the loan.  The Bank’s commercial business lending policy includes credit file documentation and analysis of the borrower’s character, capacity to repay the loan, the adequacy of the borrower’s capital and collateral as well as an evaluation of conditions affecting the borrower.  Analysis of the borrower’s past, present, and future cash flows is also an important aspect of the Bank’s current credit analysis.  Nonetheless, such loans are believed to carry higher credit risk than more traditional investments.

Commercial and industrial loans typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business.  As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself, which, in turn, is likely to be dependent upon the general economic environment.  Mid Penn’s commercial and industrial loans are usually, but not always, secured by business assets and personal guarantees.  However, the collateral securing the loans may depreciate over time, may be difficult to appraise, and may fluctuate in value based on the success of the business.

Commercial real estate and commercial real estate - construction

Commercial real estate and commercial real estate construction loans generally present a higher level of risk than loans secured by one to four family residences.  This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans.  In addition, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project.  If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Lease financing

Mid Penn originates leases for select commercial and state and municipal government lessees.  The nature of the leased asset is often subject to rapid depreciation in salvage value over a relatively short time frame or may be of an industry specific nature, making appraisal or liquidation of the asset difficult.  These factors have led the Bank to severely curtail the origination of new leases to state or municipal government agencies where default risk is extremely limited and to only the most credit-worthy commercial customers.  These commercial customers are primarily leasing fleet vehicles for use in their primary line of business, mitigating some of the asset

13

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

value concerns within the portfolio.  Leasing has been a declining percentage of the Mid Penn’s portfolio since 2006, representing 0.15% of the portfolio at March 31, 2015.

Residential mortgage

Mid Penn offers a wide array of residential mortgage loans for both permanent structures and those under construction.  The Bank’s residential mortgage originations are secured primarily by properties located in its primary market and surrounding areas.  Residential mortgage loans have terms up to a maximum of 30 years and with loan to value ratios up to 100% of the lesser of the appraised value of the security property or the contract price.  Private mortgage insurance is generally required in an amount sufficient to reduce the Bank’s exposure to at or below the 85% loan to value level.  Residential mortgage loans generally do not include prepayment penalties.

In underwriting residential mortgage loans, the Bank evaluates both the borrower’s ability to make monthly payments and the value of the property securing the loan.  Most properties securing real estate loans made by Mid Penn are appraised by independent fee appraisers.  The Bank generally requires borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan.  Real estate loans originated by the Bank generally contain a “due on sale” clause allowing the Bank to declare the unpaid principal balance due and payable upon the sale of the security property.

The Bank underwrites residential mortgage loans to the standards established by the secondary mortgage market, i.e., Fannie Mae, Ginnie Mae, Freddie Mac, or Pennsylvania Housing Finance Agency standards, with the intention of selling the majority of residential mortgages originated into the secondary market.  In the event that the facts and circumstances surrounding a residential mortgage application do not meet all underwriting conditions of the secondary mortgage market, the Bank will evaluate the failed conditions and the potential risk of holding the residential mortgage in the Bank’s portfolio rather than rejecting the loan request.  In the event that the loan is held in the Bank’s portfolio, the interest rate on the residential mortgage would be increased to compensate for the added portfolio risk.

Consumer, including home equity

Mid Penn offers a variety of secured consumer loans, including home equity, automobile, and deposit secured loans.  In addition, the Bank offers other secured and unsecured consumer loans.  Most consumer loans are originated in Mid Penn’s primary market and surrounding areas. 

The largest component of Mid Penn’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit.  Substantially all home equity loans and lines of credit are secured by second mortgages on principal residences.  The Bank will lend amounts, which, together with all prior liens, typically may be up to 85% of the appraised value of the property securing the loan.  Home equity term loans may have maximum terms up to 20 years while home equity lines of credit generally have maximum terms of five years.

Consumer loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower.  The underwriting standards employed by the Bank for consumer loans include an application, a determination of the applicant’s payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan.  Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, in relation to the proposed loan amount.

Consumer loans may entail greater credit risk than do residential mortgage loans, particularly in the case of consumer loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment.  In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance.  In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.  Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Junior liens inherently have more credit risk by virtue of the fact that another financial institution may have a higher security position in the case of foreclosure liquidation of collateral to extinguish the debt.  Generally, foreclosure actions could become more prevalent if the real estate market continues to be weak and property values deteriorate.

Allowance for Loan and Lease Losses

The allowance for credit losses consists of the allowance for loan and lease losses and the reserve for unfunded lending commitments. The allowance for loan and lease losses (“allowance”) represents management’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated

14

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

balance sheet.  The allowance is increased by the provision for loan and lease losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely.  Non-residential consumer loans are generally charged off no later than 120 days past due on a contractual basis, earlier in the event of bankruptcy, or if there is an amount deemed uncollectible.  Because all identified losses are immediately charged off, no portion of the allowance is restricted to any individual loan or groups of loans, and the entire allowance is available to absorb any and all loan losses.

The allowance for credit losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a monthly evaluation of the adequacy of the allowance.  The allowance is based on Mid Penn’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value, or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity and other consumer loans.  These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors.  These qualitative risk factors include changes in economic conditions, fluctuations in loan quality measures, changes in the experience of the lending staff and loan review systems, growth or changes in the mix of loans originated, and shifting industry or portfolio concentrations.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Mid Penn considers a commercial loan (consisting of commercial and industrial, commercial real estate, commercial real estate-construction, and lease financing loan classes) to be impaired when it becomes 90 days or more past due and not in the process of collection.  This methodology assumes the borrower cannot or will not continue to make additional payments.  At that time the loan would be considered collateral dependent as the discounted cash flow (“DCF”) method indicates no operating income is available for evaluating the collateral position; therefore, all impaired loans are deemed to be collateral dependent.

In addition, Mid Penn’s rating system assumes any loans classified as substandard non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

Mid Penn evaluates loans for charge-off on a monthly basis.  Policies that govern the recommendation for charge-off are unique to the type of loan being considered.  Commercial loans rated as nonaccrual or lower will first have a collateral evaluation completed in accordance with the guidance on impaired loans.  Once the collateral evaluation has been completed, a specific allocation of allowance is made based upon the results of the evaluation.  In the event the loan is unsecured, the loan would have been charged-off at the recognition of impairment.  If the loan is secured, it will undergo a 90 day waiting period to ensure the collateral shortfall identified in the evaluation is accurate and then charged down by the specific allocation. Once the charge down is taken, the remaining balance remains an impaired loan with the original terms and interest rate intact (not restructured).  Commercial loans secured by real estate rated as impaired will also have an initial collateral evaluation completed in accordance with the guidance on impaired loans.  An updated real estate valuation is ordered and the collateral evaluation is modified to reflect any variations in value.  A specific allocation of allowance is made for any anticipated collateral shortfall and a 90 day waiting period begins to ensure the accuracy of the collateral shortfall.  The loan is then charged down by the specific allocation.  Once the charge down is taken, the remaining balance remains an impaired loan with the original terms and interest rate intact (not restructured).  The process of charge-off for residential mortgage loans begins upon a loan becoming delinquent for 90 days and not in the process of collection.  The existing appraisal is reviewed and a lien search is obtained to determine lien position and any instances of intervening liens.  A new appraisal of the property will be ordered if deemed necessary by management and a collateral evaluation is completed. The loan will then be charged down to the value indicated in the evaluation.  Consumer loans (including home equity loans and other consumer loans) are recommended for charge-off after reaching delinquency of 90 days and the loan is not in the process of collection.  The entire balance of the consumer loan is recommended for charge-off at this point.

As noted above, Mid Penn assesses a specific allocation for commercial loans prior to charging down or charging off the loan.  Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact (not restructured).  In addition, Mid Penn takes a preemptive step when any commercial loan becomes classified under its internal classification system.  A preliminary collateral evaluation in accordance with the guidance on impaired loans is prepared using the existing collateral information in the loan file.  This process allows Mid Penn to review both the credit and documentation files to

15

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

determine the status of the information needed to make a collateral evaluation.  This collateral evaluation is preliminary but allows Mid Penn to determine if any potential collateral shortfalls exist.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as impaired.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.  The credit department employs an electronic tracking system to monitor the receipt of and need for updated appraisals.  To date, there have been no significant time lapses noted with the above processes. 

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.

For impaired loans with no valuation allowance required, Mid Penn’s practice of obtaining independent third party market valuations on the subject property within 30 days of being placed on non-accrual status sometimes indicates that the loan to value ratio is sufficient to obviate the need for a specific allocation in spite of significant deterioration in real estate values in Mid Penn’s primary market area.  These circumstances are determined on a case by case analysis of the impaired loans.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 18 months for possible revaluation by an independent third party.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Mid Penn does not separately identify individual residential mortgage loans, home equity loans and other consumer loans for impairment disclosures, unless such loans are the subject of a troubled debt restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the borrowers have been granted concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.   Loans classified as troubled debt restructurings are designated as impaired.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors, and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments.  Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful, and loss.  Loans criticized as special mention have potential weaknesses that deserve management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.  Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses.  Any loans not classified as noted above are rated pass.

In addition, Federal and State regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan and lease losses and may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management.  Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

Acquired Loans

Loans that Mid Penn acquires in connection with acquisitions are recorded at fair value with no carryover of the related allowance for loan losses.  Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

16

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan.  The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount.  The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan.  Subsequent decreases to the expected cash flows will require Mid Penn to evaluate the need for an additional allowance for credit losses.  Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount which Mid Penn will then reclassify as accretable discount that will be recognized into interest income over the remaining life of the loan. 

Acquired loans that met the criteria for impaired or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent if Mid Penn expects to fully collect the new carrying value (i.e. fair value) of the loans.  As such, Mid Penn may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount.  In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment. 

Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30, but for which a discount is attributable at least in part to credit quality, are also accounted for in accordance with this guidance.  As a result, related discounts are recognized subsequently through accretion based on the contractual cash flows of the acquired loans.

The classes of the loan portfolio, summarized by the aggregate pass rating and the classified ratings of special mention, substandard, and doubtful within Mid Penn’s internal risk rating system as of March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)			Special
March 31, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	156,220	$	2,684	$	1,350	$	-	$	160,254
Commercial real estate		322,756		6,955		10,936		-		340,647
Commercial real estate - construction		60,149		237		-		-		60,386
Lease financing		1,016		-		-		-		1,016
Residential mortgage		95,731		359		1,443		-		97,533
Home equity		31,372		344		394		-		32,110
Consumer		3,207		-		-		-		3,207
	$	670,451	$	10,579	$	14,123	$	-	$	695,153

(Dollars in thousands)			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	117,166	$	654	$	1,190	$	-	$	119,010
Commercial real estate		280,817		4,859		11,681		-		297,357
Commercial real estate - construction		55,834		242		-		-		56,076
Lease financing		1,121		-		-		-		1,121
Residential mortgage		64,900		252		1,290		-		66,442
Home equity		28,167		138		201		-		28,506
Consumer		3,021		-		-		-		3,021
	$	551,026	$	6,145	$	14,362	$	-	$	571,533

17

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

Impaired loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

	March 31, 2015						December 31, 2014
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	30	$	64	$	-	$	395	$	430	$	-
Acquired with credit deterioration*		272		272		-		-		-		-
Commercial real estate:
Commercial real estate		1,895		4,453		-		1,971		4,481		-
Acquired with credit deterioration*		1,675		1,675		-		-		-		-
Residential mortgage:
Residential mortgage		935		1,011		-		1,146		1,286		-
Acquired with credit deterioration*		425		425		-		-		-		-
Home equity:
Home equity		40		56		-		29		88		-
Acquired with credit deterioration*		21		21		-		-		-		-
With an allowance recorded:
Commercial and industrial	$	580	$	591	$	223	$	223	$	231	$	137
Commercial real estate		5,163		5,380		1,103		6,954		7,255		1,382
Residential mortgage		31		32		23		-		-		-
Home equity		206		208		139		211		213		115
Total:
Commercial and industrial	$	882	$	927	$	223	$	618	$	661	$	137
Commercial real estate		8,733		11,508		1,103		8,925		11,736		1,382
Residential mortgage		1,391		1,468		23		1,146		1,286		-
Home equity		267		285		139		240		301		115

* Loans acquired with credit deterioration are presented net of credit fair value adjustment.

18

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2015 and March 31, 2014 are summarized as follows:

	March 31, 2015				March 31, 2014
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	31	$	-	$	190	$	-
Acquired with credit deterioration		55		-		-		-
Commercial real estate:
Commercial real estate		1,933		-		2,697		-
Acquired with credit deterioration		335		-		-		-
Residential mortgage:
Residential mortgage		932		-		263		-
Acquired with credit deterioration		85		-		-		-
Home equity:
Home equity		32		-		27		-
Acquired with credit deterioration		4		-		-		-
With an allowance recorded:
Commercial and industrial	$	583	$	-	$	74	$	-
Commercial real estate		5,177		-		7,059		-
Residential mortgage		16		-		-		-
Home equity		208		-		47		-
Total:
Commercial and industrial	$	669	$	-	$	264	$	-
Commercial real estate		7,445		-		9,756		-
Residential mortgage		1,033		-		263		-
Home equity		244		-		74		-

19

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

Non-accrual loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	March 31, 2015		December 31, 2014
Commercial and industrial	$	449	$	267
Commercial real estate		5,452		7,249
Residential mortgage		1,249		1,152
Home equity		267		239
	$	7,417	$	8,907

The performance and credit quality of the loan portfolio is also monitored by the 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 March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)
March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial:
Commercial and industrial	$	246	$	-	$	92	$	338	$	159,644	$	159,982	$	-
Acquired with credit deterioration		-		-		-		-		272		272		-
Commercial real estate:
Commercial real estate		301		288		5,168		5,757		333,215		338,972		-
Acquired with credit deterioration		-		316		50		366		1,309		1,675		50
Commercial real estate - construction:
Commercial real estate - construction		-		-		-		-		60,386		60,386		-
Lease financing:
Lease financing		-		-		-		-		1,016		1,016		-
Residential mortgage:
Residential mortgage		552		78		896		1,526		95,582		97,108		-
Acquired with credit deterioration		64		-		244		308		117		425		-
Home equity:
Home equity		50		-		166		216		31,873		32,089		-
Acquired with credit deterioration		-		-		21		21		-		21		-
Consumer:
Consumer		-		-		-		-		3,207		3,207		-
Total	$	1,213	$	682	$	6,637	$	8,532	$	686,621	$	695,153	$	50

(Dollars in thousands)
December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial	$	172	$	290	$	87	$	549	$	118,461	$	119,010	$	-
Commercial real estate		403		197		6,585		7,185		290,172		297,357		-
Commercial real estate - construction		-		-		-		-		56,076		56,076		-
Lease financing		-		-		-		-		1,121		1,121		-
Residential mortgage		328		82		1,117		1,527		64,915		66,442		-
Home equity		93		63		157		313		28,193		28,506		-
Consumer		6		-		-		6		3,015		3,021		-
Total	$	1,002	$	632	$	7,946	$	9,580	$	561,953	$	571,533	$	-

20

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

The following tables summarize the allowance for loan and lease losses and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the period ended, March 31, 2015	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Charge-offs		-		(450)		-		-		(1)		(29)		(5)		-		(485)
Recoveries		-		2		-		-		-		29		4		-		35
Provisions		246		149		2		(1)		95		(134)		3		(60)		300
Ending balance	$	1,639	$	3,626	$	35	$	1	$	544	$	519	$	37	$	165	$	6,566

Ending balance: individually evaluated for impairment	$	223	$	1,103	$	-	$	-	$	23	$	139	$	-	$	-	$	1,488
Ending balance: collectively evaluated for impairment	$	1,416	$	2,523	$	35	$	1	$	521	$	380	$	37	$	165	$	5,078
Ending balance: acquired with credit deterioration	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Loans receivables:
Ending balance	$	160,254	$	340,647	$	60,386	$	1,016	$	97,533	$	32,110	$	3,207	$	-	$	695,153
Ending balance: individually evaluated  for impairment	$	610	$	7,058	$	-	$	-	$	966	$	246	$	-	$	-	$	8,880
Ending balance: collectively evaluated for impairment	$	159,372	$	331,914	$	60,386	$	1,016	$	96,142	$	31,843	$	3,207	$	-	$	683,880
Ending balance: acquired with credit deterioration	$	272	$	1,675	$	-	$	-	$	425	$	21	$	-	$	-	$	2,393

(Dollars in thousands)
As of, and for the period ended, March 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,187	$	4,006	$	9	$	-	$	581	$	441	$	72	$	21	$	6,317
Charge-offs		(40)		(368)		-		-		(59)		-		(16)		-		(483)
Recoveries		3		-		-		-		-		-		39		-		42
Provisions		40		348		4		1		19		(12)		(27)		174		547
Ending balance	$	1,190	$	3,986	$	13	$	1	$	541	$	429	$	68	$	195	$	6,423

Ending balance: individually evaluated for impairment	$	66	$	1,792	$	-	$	-	$	-	$	8	$	-	$	-	$	1,866
Ending balance: collectively evaluated for impairment	$	1,124	$	2,194	$	13	$	1	$	541	$	421	$	68	$	195	$	4,557
Loans receivables:
Ending balance	$	106,033	$	296,103	$	46,849	$	1,496	$	68,321	$	26,464	$	4,473	$	-	$	549,739
Ending balance: individually evaluated  for impairment	$	269	$	10,014	$	-	$	-	$	260	$	71	$	-	$	-	$	10,614
Ending balance: collectively evaluated for impairment	$	105,764	$	286,089	$	46,849	$	1,496	$	68,061	$	26,393	$	4,473	$	-	$	539,125

21

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)
December 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Ending balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Ending balance: individually evaluated for impairment	$	137	$	1,382	$	-	$	-	$	-	$	115	$	-	$	-	$	1,634
Ending balance: collectively evaluated for impairment	$	1,256	$	2,543	$	33	$	2	$	450	$	538	$	35	$	225	$	5,082
Loans receivables:
Ending balance	$	119,010	$	297,357	$	56,076	$	1,121	$	66,442	$	28,506	$	3,021	$	-	$	571,533
Ending balance: individually evaluated  for impairment	$	618	$	8,925	$	-	$	-	$	1,146		240	$	-	$	-	$	10,929
Ending balance: collectively evaluated for impairment	$	118,392	$	288,432	$	56,076	$	1,121	$	65,296	$	28,266	$	3,021	$	-	$	560,604

The recorded investments in troubled debt restructured loans at March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)	Pre-Modification		Post-Modification
March 31, 2015	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	20
Commercial real estate		9,518		7,628		6,357
Residential mortgage		733		727		601
	$	10,291	$	8,390	$	6,978

(Dollars in thousands)	Pre-Modification		Post-Modification
December 31, 2014	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	23
Commercial real estate		11,189		9,443		8,005
Residential mortgage		903		897		713
Home equity		50		7		5
	$	12,182	$	10,382	$	8,746

Mid Penn entered into forbearance agreements on all loans currently classified as troubled debt restructures 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.

Mid Penn’s troubled debt restructured loans at March 31, 2015 totaled $6,978,000, of which six loans totaling $1,994,000 represented accruing impaired loans in compliance with the terms of the modification.  Of the $1,994,000, three are accruing impaired residential mortgages to unrelated borrowers totaling $69,000 and the other three are accruing impaired commercial real estate loans spread among two relationships totaling $1,925,000.  The remaining $4,984,000, representing 11 loans among seven relationships, are nonaccrual impaired loans, and resulted in a collateral evaluation in accordance with the guidance on impaired loans.  One large relationship accounts for $3,123,000 of the $4,984,000 nonaccrual impaired troubled debt restructured loan total.

At December 31, 2014, Mid Penn’s troubled debt restructured loans totaled $8,746,000, of which six loans totaling $2,035,000, represented accruing impaired loans in compliance with the terms of the modification.  Of the $2,035,000, three are accruing impaired residential mortgages to unrelated borrowers totaling $71,000 and the other three are accruing impaired commercial real estate loans spread among two relationships totaling $1,964,000.  The remaining $6,711,000, representing 14 loans among nine relationships, are nonaccrual impaired loans, and resulted in a collateral evaluation in accordance with the guidance on impaired loans.  Two large relationships account for $4,680,000 of the $6,711,000 nonaccrual impaired troubled debt restructured loan total.

22

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

As a result of the evaluations at March 31, 2015 and March 31, 2014, a specific allocation and, subsequently, charge-offs have been taken as appropriate.  As of March 31, 2015 and March 31, 2014, charge-offs associated with troubled debt restructured loans while under forbearance agreement totaled $0 and there were no defaulted troubled debt restructured loans as all troubled debt restructured loans were current with respect to their associated forbearance agreements.  As of March 31, 2015, one forbearance agreement was negotiated during 2008, 10 forbearance agreements were negotiated during 2009, three forbearance agreements were negotiated in 2013, and three forbearance agreements were negotiated during 2014.

There were no new loans modified during the three months ended March 31, 2015 and 2014 that resulted in troubled debt restructurings.  There were two troubled debt restructured loans to unrelated borrowers that defaulted within twelve months of restructure totaling $3,412,000 for the three months ended March 31, 2015, while there were none for the three month ended March 31, 2014.

Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process at March 31, 2015 and December 31, 2014 totaled $277,000 and $485,000, respectively.

The following table provides activity for the accretable yield of purchased impaired loans for the quarter ended March 31, 2015:

(Dollars in thousands)
Accretable yield, January 1, 2015	$	-
Acquisition of impaired loans		480
Accretable yield amortized to interest income		(12)
Reclassification from nonaccretable difference (1)		-
Accretable yield, March 31, 2015	$	468

(1) Reclassification from non-accretable difference represents an increase to the estimated cash flows to be collected on the underlying   portfolio.

(5)        Fair Value Measurement

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.  This guidance provides additional information on determining when the volume and level of activity for the asset or liability has significantly decreased.  The guidance also includes information on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability.  When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance.

This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly.  In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly.  The guidance provides a list of circumstances that may indicate that a transaction is not orderly.  A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability.  Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own belief about the assumptions market participants would use in pricing the asset or liability based upon the best information available in the circumstances.  Fair value measurement and disclosure guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  An asset’s or liability’s placement in the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement or disclosure.  The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets that are accessible at the measurement date for

 identical, unrestricted assets or liabilities;

23

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

Level 2 Inputs - Quoted prices in markets that are not active, or inputs that are observable either directly or

 indirectly, for substantially the full term of the asset or liability;

Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value

 measurement and unobservable (i.e., supported by little or no market activity).

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

There were no transfers of assets between fair value Level 1 and Level 2 for the three months ended March 31, 2015.  The following tables illustrate the assets measured at fair value on a recurring basis segregated by hierarchy fair value levels.

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,347	$	-	$	27,347	$	-
Mortgage-backed U.S. government agencies		37,048		-		37,048		-
State and political subdivision obligations		75,997		-		75,997		-
Equity securities		2,288		1,218		1,070		-
	$	142,680	$	1,218	$	141,462	$	-

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,066	$	-	$	27,066	$	-
Mortgage-backed U.S. government agencies		33,776		-		33,776		-
State and political subdivision obligations		79,171		-		79,171		-
Equity securities		1,621		561		1,060		-
	$	141,634	$	561	$	141,073	$	-

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, when there is evidence of impairment).

The following tables illustrate the assets measured at fair value on a nonrecurring basis segregated by hierarchy fair value levels.

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	5,265	$	-	$	-	$	5,265
Foreclosed Assets Held for Sale		393		-		-		393
Mortgage Servicing Rights		182		-		-		182

24

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	6,664	$	-	$	-	$	6,664
Foreclosed Assets Held for Sale		142		-		-		142
Mortgage Servicing Rights		187		-		-		187

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Mid Penn has utilized Level 3 inputs to determine the fair value as of March 31, 2015 and December 31, 2014.

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
March 31, 2015	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	5,265	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		393	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		182	Multiple of annual service fee	Estimated prepayment speed based on rate and term	240% - 400%	352%

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
December 31, 2014	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	6,664	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		142	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		187	Multiple of annual service fee	Estimated prepayment speed based on rate and term	210% - 400%	353%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

(2) 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.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The following methodologies and assumptions were used to estimate the fair value of Mid Penn’s financial instruments:

Cash and Cash Equivalents:

The carrying value of cash and cash equivalents is considered to be a reasonable estimate of fair value.

Interest-bearing Balances with other Financial Institutions:

The estimate of fair value was determined by comparing the present value of quoted interest rates on like deposits with the weighted average yield and weighted average maturity of the balances.

Securities Available for Sale:

The fair value of 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

25

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

securities without relying exclusively on quoted market prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted prices. 

Impaired Loans:

Mid Penn’s rating system assumes any loans classified as substandard and non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as substandard non-accrual.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.   Mid Penn considers the estimates used in its impairment analysis to be Level 3 inputs.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 18 months for possible revaluation by an independent third party.

Loans:

For variable-rate loans that reprice frequently and which entail no significant changes in credit risk, carrying values approximated fair value.  The fair value of other loans are estimated by calculating the present value of the cash flow difference between the current rate and the market rate, for the average maturity, discounted quarterly at the market rate.

Foreclosed Assets Held for Sale:

Certain assets included in foreclosed assets held for sale are carried at fair value and accordingly is presented as measured on a non-recurring basis.  Values are estimated using Level 3 inputs, based on appraisals that consider the sales prices of property in the proximate vicinity.

Accrued Interest Receivable and Payable:

The carrying amount of accrued interest receivable and payable approximates their fair values.

Restricted Investment in Bank Stocks:

The carrying amount of required and restricted investment in correspondent bank stock approximates fair value, and considers the limited marketability of such securities.

Mortgage Servicing Rights:

The fair value of servicing rights is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date.

Deposits: 

The fair value for demand deposits (e.g., interest and noninterest checking, savings, and money market deposit accounts) is by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts).  Fair value for fixed-rate certificates of deposit was estimated using a discounted cash flow calculation by combining all fixed-rate certificates into a pool with a weighted average yield and a weighted average maturity for the pool and comparing the pool with interest rates currently being offered on a similar maturity.

Short-term Borrowings:

Because of time to maturity, the estimated fair value of short-term borrowings approximates the book value.

Long-term Debt:

The estimated fair values of long-term debt were determined using discounted cash flow analysis, based on currently available borrowing rates for similar types of borrowing arrangements.

26

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

Commitments to Extend Credit and Letters of Credit:

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present credit worthiness of the counterparties.  The fair value of guarantees and letters of credit is based on fees currently charged for similar agreements.

The following table summarizes the carrying value and fair value of financial instruments at March 31, 2015 and December 31, 2014.

(Dollars in thousands)	March 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and cash equivalents	$	14,195	$	14,195	$	9,882	$	9,882
Interest-bearing time balances with other financial institutions		5,669		5,669		5,772		5,772
Investment securities		142,680		142,680		141,634		141,634
Net loans and leases		688,587		696,138		564,817		572,487
Restricted investment in bank stocks		3,517		3,517		3,181		3,181
Accrued interest receivable		3,394		3,394		3,058		3,058
Mortgage servicing rights		182		182		187		187
Financial liabilities:
Deposits	$	759,046	$	760,676	$	637,922	$	639,226
Short-term borrowings		621		621		578		578
Long-term debt		56,480		56,093		52,961		52,514
Accrued interest payable		498		498		349		349
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Financial standby letters of credit		-		-		-		-

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of March 31, 2015 and December 31, 2014.  Carrying values approximate fair values for cash and cash equivalents, interest-bearing time balances with other financial institutions, restricted investment in bank stocks, mortgage servicing rights, accrued interest receivable and payable, and short-term borrowings.  Other than cash and cash equivalents, which are considered Level 1 Inputs and mortgage servicing rights, which are Level 3 inputs, these instruments are Level 2 Inputs.  These tables exclude financial instruments for which the carrying amount approximates fair value.

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
March 31, 2015	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	688,587	$	696,138	$	-	$	-	$	696,138
Financial instruments - liabilities
Deposits	$	759,046	$	760,676	$	-	$	760,676	$	-
Long-term debt		56,480		56,093		-		56,093		-

27

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
December 31, 2014	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	564,817	$	572,487	$	-	$	-	$	572,487
Financial instruments - liabilities
Deposits	$	637,922	$	639,226	$	-	$	639,226	$	-
Long-term debt		52,961		52,514		-		52,514		-

(6)         Guarantees

In the normal course of business, Mid Penn makes various commitments and incurs certain contingent liabilities, which are not reflected in the accompanying consolidated financial statements.  The commitments include various guarantees and commitments to extend credit.  Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Mid Penn evaluates each customer’s credit-worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the customer.  Standby letters of credit and financial guarantees written are conditional commitments to guarantee the performance of a customer to a third party.  Those guarantees are primarily issued to support public and private borrowing arrangements.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.  Mid Penn had $9,963,000 and $9,837,000 standby letters of credit outstanding as of March 31, 2015 and December 31, 2014, respectively.  Mid Penn does not anticipate any losses because of these transactions.  The current amount of the liability as of March 31, 2015 for payment under standby letters of credit issued was not material.

(7)        Defined Benefit Plans

Mid Penn has an unfunded noncontributory defined benefit retirement plan for directors.  The plan provides defined benefits based on years of service.  In addition, Mid Penn sponsors a defined benefit health care plan that provides post-retirement medical benefits and life insurance to qualifying full-time employees.  These health care and life insurance plans are noncontributory.  A December 31 measurement date for the plans is used.

The components of net periodic benefit costs from these benefit plans are as follows:

	Three Months Ended March 31,
(Dollars in thousands)	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Service cost	$	8	$	8	$	3	$	3
Interest cost		11		13		8		9
Amortization of prior service cost		4		3		-		-
Net periodic benefit cost	$	23	$	24	$	11	$	12

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MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

(8)           Accumulated Other Comprehensive Income

The components of accumulated other comprehensiveincome, net of taxes, are as follows:

(Dollars in thousands)	Unrealized Gain on Securities		Defined Benefit Plans Liabilities		Accumulated Other Comprehensive Income
Balance - March 31, 2015	$	1,984	$	(110)	$	1,874
Balance - December 31, 2014	$	1,626	$	(113)	$	1,513

(9)           Common Stock

On June 25, 2014, the 2014 Restricted Stock Plan was registered, which awards shall not exceed, in the aggregate 100,000 shares of common stock.  The Plan was established for employees and directors of Mid Penn and the Bank, selected by the Compensation Committee of the Board of Directors, to advance the best interest of Mid Penn and its shareholders.  The Plan provides those persons who have a responsibility for its growth with additional incentives by allowing them to acquire an ownership interest in Mid Penn and thereby encouraging them to contribute to the success of the company.  As of March 31, 2015, 3,500 shares have been granted under the plan, which resulted in $8,000 of compensation expense.

(10)         Preferred Stock

Small Business Lending Fund

On March 1, 2015, Mid Penn assumed all of the issued and outstanding shares of Phoenix with respect to 1,750 shares of Phoenix’s preferred stock issued to the Treasury in connection with the Small Business Lending Fund and issued 1,750 shares of Mid Penn’s SBLF Preferred Shares having a $1,000 liquidation preference per share, to the Treasury.  The SBLF Preferred Shares qualify as Tier 1 Capital and have terms and conditions identical to those shares of preferred stock issued by Phoenix to the Treasury.  Mid Penn will pay noncumulative dividends payable quarterly on January 1, April 1, July 1, and October 1 of each year.  The current dividend rate is 1.00% per annum for payment dates up to and including January 1, 2016.  Following this date, the dividend rate will increase to 9% per annum thereafter.  

The SBLF Preferred Shares may be redeemed at any time at the option of Mid Penn, subject to the approval of the appropriate federal banking agency.  All redemptions must be made at a per share redemption price equal to 100% of the liquidation preference, plus accrued and unpaid dividends as of the date of the redemption (“Redemption Date”) for the quarter that includes the Redemption Date, and a pro rata portion of any lending incentive fee.  All redemptions must be in amounts equal to at least 25% of the number of originally issued shares, or 100% of the then outstanding shares, if less than 25% of the number of originally issued shares.

Stock Issued Under Private Placement Offering

On September 26, 2012, Mid Penn filed with the Pennsylvania Department of State a Statement with Respect to Shares which, effective upon filing, designated a series of preferred stock as “7% Non-Cumulative Non-Voting Non-Convertible Perpetual Preferred Stock, Series B” (“Series B Preferred Stock”), and set forth the voting and other powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions of the Series B Preferred Stock.

Mid Penn sold shares of its Series B Preferred Stock, in transactions exempt from registration under the Securities Act of 1933, pursuant to Section 4(a)(2) thereof.

Between September 26, 2012 and December 31, 2012, Mid Penn sold 4,880 shares of its Series B Preferred Stock for total gross proceeds of $4,880,000, which have been offset by issuance costs of $50,000.  On January 3, 2013, 120 additional shares were sold resulting in total gross proceeds of $5,000,000 for the Series B Preferred Stock offering.

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MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

The following table summarizes the Series B Preferred Stock shares sold and the gross proceeds received through the private placement offering as of March 31, 2015:

(Dollars in thousands)
Period	Shares	Gross Proceeds
September 26, 2012 - September 30, 2012	345	$	345,000
October 1, 2012 - December 31, 2012	4,535		4,535,000
January 1, 2013 - December 31, 2013	120		120,000
January 1, 2014 - December 31, 2014	-		-
January 1, 2015 - March 31, 2015	-		-
Total	5,000	$	5,000,000

The annual dividend rate for the Series B Preferred Stock is 7% per annum of the liquidation preference of the Series B Preferred Stock or $70.00 per annum for each share of Series B Preferred Stock.  The Board of Directors must approve each dividend payment from legally available funds.  Dividends are payable to holders of record of the Series B Preferred Stock as they appear on our books on the record dates fixed by our Board of Directors.  Dividends on any of Series B Preferred Stock are non-cumulative.  If and when dividends are declared, they will be paid on February 15, May 15, August 15, and November 15 of each year.  If a dividend payment date is not a business day, the dividend will be paid on the immediately preceding business day but no additional dividend payment will be prorated from the date of purchase to the first dividend payment date over a quarterly dividend period of 90 days.

Mid Penn may redeem shares of its Series B Preferred Stock at its option, in whole or in part, at any time subject to prior approval of the Federal Reserve Board, if then required, at a redemption price of $1,020 per share of Series B Preferred Stock plus an amount equal to any declared but unpaid dividends and in accordance with the terms and conditions set forth in a Certificate of Designations for the Series B Preferred Stock as filed with the Pennsylvania Department of State.

(11)Earnings per Common Share

Earnings per share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each of the years presented.  The following data show the amounts used in computing basic and diluted earnings per share.

The computations of basic earnings per common share follow:

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2015		2014
Net Income	$	963	$	1,511
Less:  Dividends on Series B preferred stock		87		87
Net income available to common shareholders	$	876	$	1,424
Weighted average common shares outstanding		3,747,167		3,494,408
Basic earnings per common share	$	0.23	$	0.41

Mid Penn did not have dilutive securities outstanding as of March 31, 2015 and 2014.

(12)          Recent Accounting Pronouncements

ASU 2014-09:The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) Update 2014-09, Revenue from Contracts with Customers (Topic 606).

The amendments in this Update establish a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

30

MID PENN BANCORP, INC.Notes to Consolidated Financial Statements (Unaudited)

The ASU is effective for annual periods beginning after December 15, 2016, including interim periods therein. Three basic transition methods are available – full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the this alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. GAAP at the date of initial application (e.g. January 1, 2017) and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. That is, prior years would not be restated and additional disclosures would be required to enable users of the financial statements to understand the impact of adopting the new standard in the current year compared to prior years that are presented under legacy U.S. GAAP. Early adoption is prohibited. In April 2015, the FASB proposed a one-year delay of the effective date of the revenue recognition standard.  The deferral would require public entities to apply the new revenue standard for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein.  Public entities would be permitted to elect to early adopt for annual reporting periods beginning after December 15, 2016. 

ASU 2014-17: The FASB issued ASU Update 2014-17, Business Combinations (Topic 805):  Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force).

The ASU amends Topic 805 so that a reporting entity that is a business or nonprofit activity (an “acquiree”) has the option to apply pushdown accounting to its separate financial statements when an acquirer obtains control of the acquiree.  The option is available for each individual change-in-control event.  Control has the same meaning as a “controlling financial interest” under Topic 810, such that pushdown accounting may be applied if an acquirer obtains control through a simple majority of the outstanding voting shares of the acquiree (e.g., 51%).  Similarly, a Variable Interest Entity is considered an “acquiree” of its primary beneficiary and may also elect pushdown accounting.

If the acquiree elects to apply pushdown accounting, it must do so as of the acquisition date of the change-in-control event.  Further, any subsidiary of the acquiree may elect to apply pushdown accounting to its separate financial statements, regardless of whether the acquiree elects to apply pushdown accounting. Upon election, the acquiree would adjust its standalone financial statements to reflect the acquirer’s new basis in the acquired entity’s assets and liabilities, and would provide relevant disclosures under Topic 805 to enable users to evaluate the effect of pushdown accounting.  The ASU became effective upon issuance on November 18, 2014.  After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event.

Mid Penn is currently evaluating the effects these Updates will have on its consolidated financial statements.

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MID PENN BANCORP, INC.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is Management’s Discussion of Consolidated Financial Condition as of March 31, 2015, compared to year-end 2014, and the Results of Operations for the three months ended March 31, 2015, compared to the same period in 2014.  The comparability of the financial condition and results of operations as of and for the three month periods ended March 31, 2015 and 2014, in general, have been impacted by the acquisition of Phoenix.  The recorded amounts of assets purchased and liabilities assumed in the Phoenix acquisition may be adjusted for up to one year subsequent to the acquisition.  Such adjustments, if any, are not expected to be significant.

This discussion should be read in conjunction with the financial tables, statistics, and the audited financial statements and notes thereto included in Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2014.  The results of operations for interim periods are not necessarily indicative of operating results expected for the full year.

Certain of the matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mid Penn to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  The words “expect”, “anticipates”, “intend”, “plan”, “believe”, “estimate”, and similar expressions are intended to identify such forward-looking statements.

Mid Penn’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

· the effects of future economic conditions on Mid Penn and its customers;

· governmental monetary and fiscal policies, as well as legislative and regulatory changes;

· future actions or inactions of the United States government, including a failure to increase the government debt limit or a prolonged shutdown of the federal government;

· possible impacts of the capital and liquidity requirements imposed by Basel III standards and other regulatory pronouncements, regulations and rules;

· the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, Financial Accounting Standards Board, and other accounting standard setters;

· the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;

· the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Mid Penn’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;

· the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;

· technological changes;

· acquisitions and integration of acquired businesses, which may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

· loss of certain key officers;

· results of the regulator examination and supervision process;

· the failure of assumptions underlying the establishment of reserves for loan and lease losses and estimations of values of collateral and various financial assets and liabilities;

· acts of war or terrorism;

· our ability to maintain compliance with the exchange rules of the NASDAQ Stock Market, Inc.;

· our ability to maintain the value and image of our brand and protect our intellectual property rights;

· disruptions due to flooding, severe weather, or other natural disasters of Acts of God;

· volatilities in the securities markets; and

· slow economic conditions.

Mid Penn undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report.  Readers should carefully review the risk factors described in the documents that Mid Penn periodically files with the SEC, including Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2014.

Critical Accounting Estimates

Mid Penn’s consolidated financial statements are prepared in accordance with GAAP and conform to general practices within the banking industry.  Application of these principles involves significant judgments and estimates by management that have a material impact on the carrying value of certain assets and liabilities.  The judgments and estimates Mid Penn used are based on historical experiences and other

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MID PENN BANCORP, INC.

factors, which are believed to be reasonable under the circumstances.  Because of the nature of the judgments and estimates that Mid Penn has made, actual results could differ from these judgments and estimates, which could have a material impact on the carrying values of assets and liabilities and the results of our operations.

Management of Mid Penn considers the accounting judgments relating to the allowance for loan and lease losses, the evaluation of the Corporation’s investment securities for other-than-temporary impairment, and the valuation of assets acquired and liabilities assumed to be the accounting areas that require the most subjective and complex judgments.

The allowance for loan and lease losses represents management’s estimate of probable incurred credit losses inherent in the loan and lease portfolio. Determining the amount of the allowance for loan and lease losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change.  The loan and lease portfolio also represents the largest asset type on the consolidated balance sheet.  Throughout the remainder of this report, the terms “loan” or “loans” refers to both loans and leases.

Valuations for the investment portfolio are determined using quoted market prices, where available.  If quoted market prices are not available, investment valuation is based on pricing models, quotes for similar investment securities, and observable yield curves and spreads.  In addition to valuation, management must assess whether there are any declines in value below the carrying value of the investments that should be considered other than temporary or otherwise require an adjustment in carrying value and recognition of the loss in the consolidated statement of income.

Valuations of assets acquired and liabilities assumed in business combinations are measured at fair value as of the acquisition date.  In many cases, determining the fair value of the assets acquired and liabilities assumed requires Mid Penn to estimate cash flows expected to result from these assets and liabilities and to discount these cash flows at appropriate rates of interest, which require the utilization of significant estimates and judgment in accounting for the acquisition.

Results of Operations

Overview

Net income available to common shareholders was $876,000, $0.23 basic earnings per common share, for the quarter ended March 31, 2015, as compared to net income available to common shareholders of $1,424,000, or $0.41 basic earnings per common share, for the quarter ended March 31, 2014, a 43.9% decrease.Net income available to common shareholders for the three months ended March 31, 2015 was impacted by $909,000 of merger and acquisition expenses incurred in conjunction with the acquisition of Phoenix Bancorp, Inc. (“Phoenix”) on March 1, 2015.  Excluding these charges, and the corresponding tax impact, net income available to common shareholders for the three months ended March 31, 2015 would have been $1,503,000, an increase of 5.5% over the three months ended March 31, 2014.

Net interest income increased $766,000, or 12.2%, to $7,038,000 for the quarter ended March 31, 2015 from $6,272,000 during the quarter ended March 31, 2014.

The provision for loan and lease losses in the first quarter of 2015 was $300,000, compared to $547,000 in the first quarter of 2014.

Net income as a percent of average assets (return on average assets or “ROA”) and shareholders' equity (return on average equity or “ROE”) were as follows on an annualized basis:

	Three Months Ended March 31,
	2015	2014
Return on average assets	0.49%	0.86%
Return on average equity	6.17%	11.22%

The increase in Mid Penn’s total assets during the first quarter of 2015 was impacted by the inclusion of assets and liabilities from Miners on the balance sheet.  The loan growth came as a result of business development efforts by a more experienced loan team contributing $34,707,000 in net new loan growth and Miners adding an additional $110,707,000. Mid Penn’s investment portfolio increased $21,271,000 from March 31, 2014 to March 31, 2015, primarily to provide pledgeable securities in support of deposit gathering efforts in the public funds sector.  On the liabilities side, Miners contributed $123,238,000 in total deposits to Mid Penn’s $152,371,000 in deposit growth from March 31, 2014 to March 31, 2015.  Short-term borrowings decreased $27,923,000 from $28,544,000 at March 31, 2014 to $621,000 at March 31, 2015, while long-term debt increased $33,380,000 from $23,100,000 at March 31, 2014 to $56,480,000 at March 31, 2015.  This increase is due to the addition of $30,000,000 in FHLB Advance borrowings and $3,570,000 in FHLB advances assumed from Miners.  The long-term debt was added as a prudent and planned asset liability management strategy to take advantage of low long-term borrowing rates and to fund loan growth.

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MID PENN BANCORP, INC.

Net Interest Income/Funding Sources

Net interest income, Mid Penn’s primary source of revenue, is the amount by which interest income on loans and investments exceeds interest incurred on deposits and borrowings.  The amount of net interest income is affected by changes in interest rates and changes in the volume and mix of interest-sensitive assets and liabilities.  Net interest income and corresponding yields are presented in the analysis below on a taxable-equivalent basis.  Income from tax-exempt assets, primarily loans to or securities issued by state and local governments, is adjusted by an amount equivalent to the federal income taxes which would have been paid if the income received on these assets was taxable at the statutory rate of 34%.

For the three months ended March 31, 2015, Mid Penn’s taxable-equivalent net interest margin decreased to 3.97%, from 4.00%, for the three months ended March 31, 2014.  The decline was due to the decrease in the average loan yield from 4.95% for the three months ended March 31, 2014 to 4.81% for the same period in 2015, as well as the increase in the average balance of earning assets over the same periods. 

Although the effective interest rate impact on earning assets and funding sources can be reasonably estimated at current interest rate levels, the options selected by customers, and the future mix of the loan, investment, and deposit products in the Bank's portfolios, may significantly change the estimates used in the simulation models.  In addition, our net interest income may be impacted by further interest rate actions of the Federal Reserve Bank.

Provision for Loan Losses

The provision for loan and lease losses is the expense necessary to maintain the allowance for loan and lease losses at a level adequate to absorb management’s estimate of probable losses in the loan and lease portfolio.  Mid Penn’s provision for loan and lease losses is based upon management’s monthly review of the loan portfolio.  The purpose of the review is to assess loan quality, identify impaired loans and leases, analyze delinquencies, ascertain loan and lease growth, evaluate potential charge-offs and recoveries, and assess general economic conditions in the markets Mid Penn serves.

Mid Penn has maintained the allowance for loan and lease losses in accordance with Mid Penn’s assessment process, which takes into consideration the risk characteristics of the loan and lease portfolio, the growth in the loan and lease portfolio during the first three months of 2015, and shifting collateral values from December 31, 2014 to March 31, 2015. 

Following its model for loan and lease loss allowance adequacy, management recorded a $300,000 provision for the three months ended March 31, 2015, as compared to a provision of $547,000 for the three months ended March 31, 2014.  The allowance for loan and lease losses as a percentage of total loans was 0.94% at March 31, 2015, compared to 1.18% at December 31, 2014.  This improvement was mainly due to the addition of the Miners loan portfolio without a corresponding allowance for loan and lease losses in conformity with purchase accounting treatment.  For further discussion of factors affecting the provision for loan and lease losses please see Credit Quality, Credit Risk, and Allowance for Loan and Lease Losses in the Financial Condition section of this Management’s Discussion and Analysis.

Noninterest Income

Noninterest income increased $55,000, or 6.2%, during the first quarter of 2015 versus the same period in 2014.  The following components of noninterest income showed significant changes:

(Dollars in Thousands)	Three Months Ended March 31,
	2015		2014		$ Variance		% Variance
Income from fiduciary activities	$	127	$	158	$	(31)	-19.6%
Service charges on deposits		150		127		23	18.1%
Net gain on sales of investment securities		177		150		27	18.0%
Mortgage banking income		67		38		29	76.3%
ATM debit card interchange income		155		126		29	23.0%
Merchant services income		50		67		(17)	-25.4%
Net gain on sales of loans		-		51		(51)	-100.0%
Other income		167		126		41	32.5%

Income from fiduciary activities decreased during the three months ended March 31, 2015 versus the same period in 2014 due to a change in the commission structure.  During the three months ended March 31, 2015, Mid Penn saw increased service charges on deposits due to the addition of revenue from the Miners franchise.  During the first quarter of 2015, Mid Penn took advantage of opportunities within its investment portfolio to better align the portfolio for a rising interest rate environment thereby increasing realized gains on sales of investments.  Mortgage banking income increased in the three months ended March 31, 2015 over March 31, 2014.  Mortgage activity in the first quarter of 2014 was depressed throughout our market area due to harsh winter weather conditions.  ATM debit card interchange income increased during the first quarter of 2015 versus the comparable period in 2014 due to enhanced activity year over year.  Merchant services income decreased for the three months

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MID PENN BANCORP, INC.

ended March 31, 2015 versus the same period in 2014.  This variance is the result of increased competition in that business line.  Mid Penn recorded no net gain on sales of Small Business Association (“SBA”) loans during the current quarter.  Other income increased in the three months ended March 31, 2015 versus the same period in 2014 due to increased letter of credit fee income and the reimbursement of unclaimed funds from the flexible spending and dental reimbursement Plans from the 2013-2014 plan year, as well as the addition of Miners other noninterest income in March of 2015.

Noninterest Expenses

Noninterest expenses decreased $1,902,000, or 40.1%, during the first quarter of 2015, versus the same period in 2014.  The changes were primarily a result of the following components of noninterest expense:

(Dollars in Thousands)	Three Months Ended March 31,
	2015		2014		$ Variance		% Variance
Salaries and employee benefits	$	3,195	$	2,548	$	647	25.4%
Occupancy expense, net		454		382		72	18.8%
Pennsylvania Bank Shares tax expense		115		99		16	16.2%
Legal and professional fees		143		97		46	47.4%
Marketing and advertising expense		88		48		40	83.3%
Software licensing		319		237		82	34.6%
Telephone expense		123		96		27	28.1%
Loss on sale/write-down of foreclosed assets		32		87		(55)	-63.2%
Merger and acquisition expense		909		-		909	N/A
Other expenses		638		554		84	15.2%

Salaries and employee benefits increased during the three months ended March 31, 2015 versus the same period in 2014.  The increase during the first quarter of 2015 was driven by the addition of the Miners employees to Mid Penn’s employee pool, an increase in staffing levels due to Mid Penn’s entry into the Lancaster County market, and an increase in lending personnel and support staff to augment the expanding reach of Mid Penn.  Occupancy, PA bank shares tax, marketing and advertising, computer, telephone, and other expenses all saw increases related to the inclusion of the Miners normal operating expenses to Mid Penn’s expense stream during the quarter.  Legal and professional fees increased during the three months ended March 31, 2015 compared to the three months ended March 31, 2014 due to the increase in consultant fees incurred with the implementation of Mid Penn’s mobile banking app and new payroll system in current quarter.  Loss on sale/write-down of foreclosed assets improved during the three months ended March 31, 2015 versus the same periods in 2014.  Activity was confined primarily to the write-down of foreclosed assets as a result of updated appraisals on subject properties within the portfolio and only modest losses on property liquidations during the current quarter.  Merger and acquisition expenses of $909,000 in connection with the acquisition of Phoenix were incurred during the three months ended March 31, 2015.  Management believes that the recognition of expenses in connection with the Phoenix acquisition is substantially complete.

Income Taxes

The provision for income taxes was $84,000 for the three months ended March 31, 2015, as compared to the provision for income taxes of $370,000 in the same period last year.  The effective tax rate for the three months ended March 31, 2015, was 8.1% compared to 19.7% for the three months ended March 31, 2014.  This decrease was caused by the $909,000 in merger expenses incurred during the first quarter of 2015.  Of the $909,000 total, $829,000 was deemed a deductible expense thereby substantially decreasing Mid Penn’s total book tax expense for the three months ended March 31, 2015.  Mid Penn also had $86,000 more in tax exempt income in the three months ended March 31, 2015 versus the three months ended March 31, 2014.  Generally, our effective tax rate is below the statutory rate due to earnings on tax-exempt loans, investments, and bank-owned life insurance, as well as the impact of tax credits.  The realization of deferred tax assets is dependent on future earnings.  Mid Penn currently anticipates that future earnings will be adequate to fully utilize deferred tax assets.

Financial Condition

Loans

During the first three months of 2015, Mid Penn experienced an increase in loans outstanding of $123,620,000, or 21.6%, with Miners contributing $110,707,000 of the increase, mainly in the commercial real estate, commercial and industrial and residential mortgage categories.  Overall, commercial real estate and commercial and industrial loans accounted for the majority of Mid Penn’s loan growth as noted in the table below.

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MID PENN BANCORP, INC.

(Dollars in thousands)	March 31, 2015			December 31, 2014
	Amount		%	Amount		%
Commercial and industrial	$	160,254	23.1%	$	119,010	20.8%
Commercial real estate		340,647	49.0%		297,357	52.0%
Commercial real estate - construction		60,386	8.7%		56,076	9.8%
Lease financing		1,016	0.1%		1,121	0.2%
Residential mortgage		97,533	14.0%		66,442	11.6%
Home equity		32,110	4.6%		28,506	5.0%
Consumer		3,207	0.5%		3,021	0.6%
	$	695,153	100.0%	$	571,533	100.0%

Most of Mid Penn’s lending activities are with customers located within the trading area of Dauphin County, lower Northumberland County, western Schuylkill County and eastern Cumberland County, Pennsylvania.  This region currently, and historically, has lower unemployment than the U.S. as a whole.  This is due in part to a diversified manufacturing and services base and the presence of state government offices which help shield the local area from national trends.  At March 31, 2015, the unadjusted unemployment rate for the Harrisburg/Carlisle area was 4.5% versus the seasonally adjusted national unemployment rate of 5.5%.

Credit Quality, Credit Risk, and Allowance for Loan and Lease Losses

During the first three months of 2015, Mid Penn had net charge-offs of $450,000 compared to net charge-offs of $441,000 during the same period of 2014.  Loans charged off during the first three months of 2015 were comprised of three loans to unrelated borrowers.  There was one commercial real estate loan for $450,000, one home equity loan for $29,000 and one residential real estate loan for $1,000.  The remaining $5,000 was comprised of deposit account charge-offs.  Mid Penn may need to make future adjustments to the allowance and the provision for loan and lease losses if economic conditions or loan credit quality differs substantially from the assumptions used in making Mid Penn’s evaluation of the level of the allowance for loan losses as compared to the balance of outstanding loans.

Changes in the allowance for loan and lease losses for the three months ended March 31, 2015 and 2014 are summarized as follows:

(Dollars in thousands)	Three Months Ended March 31,
	2015		2014
Average total loans outstanding (net of unearned interest)	$	615,607	$	544,914
Period ending total loans outstanding (net of unearned interest)		695,153		549,739
Balance, beginning of period		6,716		6,317
Loans charged off during period		(485)		(483)
Recoveries of loans previously charged off		35		42
Net chargeoffs		(450)		(441)
Provision for loan and lease losses		300		547
Balance, end of period	$	6,566	$	6,423
Ratio of net loans charged off to average loans outstanding (annualized)		0.30%		0.33%
Ratio of allowance for loan losses to net loans at end of period		0.94%		1.17%

Other than as described herein, Mid Penn does not believe there are any trends, events or uncertainties that are reasonably expected to have a material impact on future results of operations, liquidity, or capital resources.  Further, based on known information, Mid Penn believes that the effects of current and past economic conditions and other unfavorable business conditions may influence certain borrowers’ abilities to comply with their repayment terms.  Mid Penn continues to monitor closely the financial strength of these borrowers.  Mid Penn does not engage in practices which may be used to artificially shield certain borrowers from the negative economic or business cycle effects that may compromise their ability to repay.  Mid Penn does not normally structure construction loans with interest reserve components.  Mid Penn has not in the past performed any commercial real estate or other type loan workouts whereby an existing loan was restructured into multiple new loans.  Also, Mid Penn does not extend loans at maturity solely due to the existence of guarantees, without recognizing the credit as impaired.  While the existence of a guarantee may be a mitigating factor in determining the proper level of allowance once impairment has been identified, the guarantee does not affect the impairment analysis.

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MID PENN BANCORP, INC.

At March 31, 2015, total nonperforming loans amounted to $9,411,000, or 1.35% of loans and leases net of unearned income, as compared to levels of $10,942,000, or 1.91%, at December 31, 2014 and $11,550,000, or 2.10%, at March 31, 2014.  The inclusion of Miners loan portfolio aided in decreasing Mid Penn’s nonperforming ratios.

(Dollars in thousands)
	March 31, 2015		December 31, 2014		March 31, 2014
Nonperforming Assets:
Nonaccrual loans	$	7,417	$	8,907	$	10,744
Accruing troubled debt restructured loans		1,994		2,035		806
Total nonperforming loans		9,411		10,942		11,550
Foreclosed real estate		722		565		1,078
Total non-performing assets		10,133		11,507		12,628
Accruing loans 90 days or more past due		50		-		-
Total risk elements	$	10,183	$	11,507	$	12,628
Nonperforming loans as a % of total
loans outstanding		1.35%		1.91%		2.10%
Nonperforming assets as a % of total
loans outstanding and other real estate		1.46%		2.01%		2.29%
Ratio of allowance for loan losses
to nonperforming loans		69.77%		61.37%		55.61%

In the table above, loans renegotiated with borrowers represent Mid Penn’s accruing troubled debt restructured loans.  Troubled debt restructured loans that are no longer accruing interest are included in nonaccrual loans.

Mid Penn assesses a specific allocation for both commercial loans and commercial real estate loans prior to charging down or charging off the loan.  Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact and is not treated as a restructured credit.  The following table provides additional analysis of partially charged-off loans.

(Dollars in thousands)
	March 31, 2015		December 31, 2014
Period ending total loans outstanding (net of unearned interest)	$	695,153	$	571,533
Allowance for loan and lease losses		6,566		6,716
Total Nonperforming loans		9,411		10,942
Nonperforming and impaired loans with partial charge-offs		2,261		2,441
Ratio of nonperforming loans with partial charge-offs
to total loans		0.33%		0.43%
Ratio of nonperforming loans with partial charge-offs
to total nonperforming loans		24.03%		22.31%
Coverage ratio net of nonperforming loans with
partial charge-offs		91.83%		79.00%
Ratio of total allowance to total loans less
nonperforming loans with partial charge-offs		0.95%		1.18%

Mid Penn has not experienced any additional charge-offs on loans for which a partial charge-off had originally been taken.

Mid Penn considers a commercial loan or commercial real estate loan to be impaired when it becomes 90 days or more past due and not in the process of collection.  This methodology assumes the borrower cannot or will not continue to make additional payments.  At that time the loan would be considered collateral dependent as the discounted cash flow (“DCF”) method indicates no operating income is available for evaluating the collateral position; therefore, all impaired loans are deemed to be collateral dependent. 

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MID PENN BANCORP, INC.

Mid Penn evaluates loans for charge-off on a monthly basis.  Policies that govern the recommendation for charge-off are unique to the type of loan being considered.  Commercial loans rated as nonaccrual or lower will first have a collateral evaluation completed in accordance with the guidance on impaired loans.  Once the collateral evaluation has been completed, a specific allocation of allowance is made based upon the results of the evaluation.  In the event the loan is unsecured, the loan would have been charged-off at the recognition of impairment.  If the loan is secured, it will undergo a 90 day waiting period to ensure the collateral shortfall identified in the evaluation is accurate and then charged down by the specific allocation. Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact (not restructured).  Commercial real estate loans rated as impaired will also have an initial collateral evaluation completed in accordance with the guidance on impaired loans.  An updated real estate valuation is ordered and the collateral evaluation is modified to reflect any variations in value.  A specific allocation of allowance is made for any anticipated collateral shortfall and a 90-day waiting period begins to ensure the accuracy of the collateral shortfall.  The loan is then charged down by the specific allocation.  Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact (not restructured).  The process of charge-off for residential mortgage loans begins upon a loan becoming delinquent for 90 days and not in the process of collection.  The existing appraisal is reviewed and a lien search is obtained to determine lien position and any instances of intervening liens.  A new appraisal of the property will be ordered if deemed necessary by management and a collateral evaluation is completed. The loan will then be charged down to the value indicated in the evaluation.  Consumer loans are recommended for charge-off after reaching delinquency of 90 days and the loan is not in the process of collection.  The entire balance of the consumer loan is recommended for charge-off at this point.

As noted above, Mid Penn assesses a specific allocation for both commercial loans and commercial real estate loans prior to charging down or charging off the loan.  Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact (not restructured).  In addition, Mid Penn takes a preemptive step when any commercial loan or commercial real estate loan becomes classified under its internal classification system.  A preliminary collateral evaluation in accordance with the guidance on impaired loans is prepared using the existing collateral information in the loan file.  This process allows Mid Penn to review both the credit and documentation files to determine the status of the information needed to make a collateral evaluation.  This collateral evaluation is preliminary but allows Mid Penn to determine if any potential collateral shortfalls exist.

Larger groups of small-balance loans, such as residential mortgages and consumer installment loans are collectively evaluated for impairment.  Accordingly, individual consumer and residential loans are not separately identified for impairment disclosures unless such loans are the subject of a restructuring agreement.

Mid Penn’s rating system assumes any loans classified as substandard and non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as substandard non-accrual.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.  The credit department employs an electronic tracking system to monitor the receipt of and need for updated appraisals.  To date, there have been no significant time lapses noted with the above processes. 

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.  

For impaired loans with no valuation allowance required, Mid Penn’s practice of obtaining independent third party market valuations on the subject property within 30 days of being placed on non-accrual status sometimes indicates that the loan to value ratio is sufficient to obviate the need for a specific allocation in spite of significant deterioration in real estate values in Mid Penn’s primary market area.  These circumstances are determined on a case by case analysis of the impaired loans.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 12 months for possible revaluation by an independent third party. 

Excluding the loans acquired with credit deterioration of which none were subsequently impaired after being acquired as of March 31, 2015, Mid Penn had several loan relationships, with an aggregate carrying balance of $8,880,000, deemed impaired.  This pool of loans was further broken down into a group of loans with an aggregate carrying balance of $5,980,000 for which specific allocations totaling $1,488,000 were included within the loan loss reserve for these loans.  The remaining $2,900,000 of loans required no specific allocation within the loan loss reserve.  The $8,880,000 pool of impaired loan relationships was comprised of $7,058,000 in commercial real estate relationships, $966,000 in residential relationships, $610,000 in commercial and industrial relationships, and $246,000 in home equity relationships.  There were specific allocations of $1,103,000 against the commercial real estate relationships with $730,000 of this total to one borrower.  There was also $223,000 against the commercial and industrial relationships, $139,000 against the home equity relationships, and $23,000 against residential

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MID PENN BANCORP, INC.

relationships.  Management currently believes that the specific reserves are adequate to cover probable future losses related to these relationships.

The allowance for loan losses is a reserve established in the form of a provision expense for loan and lease losses and is reduced by loan charge-offs net of recoveries.  In conjunction with an internal loan review function that operates independently of the lending function, management monitors the loan portfolio to identify risk on a monthly basis so that an appropriate allowance is maintained.  Based on an evaluation of the loan portfolio, management presents a monthly review of the allowance for loan and lease losses to the Board of Directors, indicating any changes in the allowance since the last review.  In making the evaluation, management considers the results of recent regulatory examinations, which typically include a review of the allowance for loan and lease losses an integral part of the examination process.  

In establishing the allowance, management evaluates on a quantitative basis individual classified loans and nonaccrual loans, and determines an aggregate reserve for those loans based on that review.  In addition, an allowance for the remainder of the loan and lease portfolio is determined based on historical loss experience within certain components of the portfolio.  These allocations may be modified if current conditions indicate that loan and lease losses may differ from historical experience.

In addition, a portion of the allowance is established for losses inherent in the loan and lease portfolio which have not been identified by the quantitative processes described above.  This determination inherently involves a higher degree of subjectivity, and considers risk factors that may not have yet manifested themselves in historical loss experience.  These factors include:

· Changes in local, regional, and national economic and business conditions affecting the collectability of the portfolio, the values of underlying collateral, and the condition of various market segments.

· Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans.

· Changes in the experience, ability, and depth of lending management and other relevant staff as well as the quality of the institution’s loan review system.

· Changes in the nature and volume of the portfolio and the terms of loans generally offered.

· The existence and effect of any concentrations of credit and changes in the level of such concentrations.

While the allowance for loan and lease losses is maintained at a level believed to be adequate by management for covering estimated losses in the loan and lease portfolio, determination of the allowance is inherently subjective, as it requires estimates, all of which may be susceptible to significant change.  Changes in these estimates may impact the provisions charged to expense in future periods. 

Management believes, based on information currently available, that the allowance for loan and lease losses of $6,566,000 is adequate as of March 31, 2015.

Liquidity

Mid Penn’s objective is to maintain adequate liquidity to meet funding needs at a reasonable cost and to provide contingency plans to meet unanticipated funding needs or a loss of funding sources, while minimizing interest rate risk.  Adequate liquidity provides resources for credit needs of borrowers, for depositor withdrawals and for funding corporate operations.  Sources of liquidity are as follows:

· A growing core deposit base;

· Proceeds from the sale or maturity of investment securities;

· Proceeds from interest-bearing time deposits with other financial institutions;

· Payments received on loans and mortgage-backed securities;

· Overnight correspondent bank borrowings on various credit lines; and,

· Borrowing capacity available from the FHLB.

Major sources of cash in the first quarter of 2015 came from the sale of investment securities of $16,091,000 and the net cash received from acquisitions of $8,118,000.

Major uses of cash in the first quarter of 2015 were the increase in net loans and leases of $13,579,000 and the purchases of investment securities of $8,065,000.

Major sources of cash in the first quarter of 2014 came from the sale of investment securities of $7,199,000, the maturities of investment securities and interest-bearing time deposits with other financial institutions totaling $5,565,000, and the increase in short-term borrowings of $4,711,000.

Major uses of cash in the first quarter of 2014 were the purchases of investment securities of $7,462,000, the increase in net loans and leases of $3,982,000, and the decrease in time deposits of $3,389,000.

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MID PENN BANCORP, INC.

Mid Penn believes its core deposits are stable even in periods of changing interest rates.  Liquidity is measured and monitored daily, allowing management to better understand and react to balance sheet trends.  These measurements indicate that liquidity generally remains stable and exceeds our minimum defined levels of adequacy.  Other than the trends of continued competitive pressures and volatile interest rates, there are no known demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way.

On a quarterly basis, a comprehensive liquidity analysis is reviewed by the Asset Liability Committee and Board of Directors.  The analysis provides a summary of the current liquidity measurements, projections, and future liquidity positions given various levels of liquidity stress.  Management also maintains a detailed Contingency Funding Plan designed to respond to an overall decline in the financial condition of the banking industry or a problem specific to Mid Penn.

Capital Resources

Shareholders' equity, or capital, is evaluated in relation to total assets and the risk associated with those assets.  The greater a corporation’s capital resources, the more likely it is to meet its cash obligations and absorb unforeseen losses.  Too much capital, however, indicates that not enough of the corporation’s earnings have been invested in the continued growth of the business or paid to shareholders.  The buildup makes it difficult for a corporation to offer a competitive return on the shareholders’ capital going forward.  For these reasons capital adequacy has been, and will continue to be, of paramount importance.

Shareholders’ equity increased during the three months ended March 31, 2015 by $13,953,000, or 23.6%, from December 31, 2014.  Capital has been positively impacted in 2015 by positive earnings available to common shareholders of $876,000 and accumulated other comprehensive income of $361,000.  All of Mid Penn’s investment securities are classified as available for sale, making this portion of the balance sheet more sensitive to the changing market value of investments.  Also positively impacting capital during the quarter was the issuance of approximately 723,851 shares of common stock to fund the acquisition of Phoenix Bancorp, Inc.  This transaction added an additional $11,292,000 to shareholders’ equity.  As part of the acquisition, Mid Penn also issued SBLF preferred stock totaling $1,750,000.

Banks are evaluated for capital adequacy based on the ratio of capital to risk-weighted assets and total assets.  The risk-based capital standards require all banks to have Tier 1 capital of at least 4.0% and total capital (including Tier 1 capital) of at least 8.0% of risk-weighted assets.  The capital standard based on average assets, also known as the “leverage ratio”, requires all, but the most highly-rated banks, to have Tier 1 capital of at least 4.0% of total average assets.  At March 31, 2015, Mid Penn met the definition of a “well-capitalized” institution.

The following table illustrates the Bank’s capital ratios, which are not materially different from Mid Penn’s ratios.  As noted below, the Bank maintained the following regulatory capital levels, leverage ratios, and risk-based capital ratios as of March 31, 2015 and December 31, 2014.

(Dollars in thousands)	Capital Adequacy
							To Be Well-Capitalized
							Under Prompt
				Minimum Capital			Corrective
	Actual:			Required:			Action Provisions:
	Amount		Ratio	Amount		Ratio	Amount		Ratio
As of March 31, 2015:
Tier 1 Capital (to Average Assets)	$	67,164	8.4%	$	31,907	4.0%	$	39,883	5.0%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		67,164	10.1%		-			-
Tier 1 Capital (to Risk Weighted Assets)		67,164	10.1%		26,660	4.0%		39,990	6.0%
Total Capital (to Risk Weighted Assets)		73,730	11.1%		53,320	8.0%		66,650	10.0%
As of December 31, 2014:
Tier 1 Capital (to Average Assets)	$	56,647	7.5%	$	30,360	4.0%	$	37,950	5.0%
Tier 1 Capital (to Risk Weighted Assets)		56,647	10.2%		22,295	4.0%		33,442	6.0%
Total Capital (to Risk Weighted Assets)		63,423	11.4%		44,590	8.0%		55,737	10.0%

Regulatory Capital Changes

In July 2013, the federal banking agencies issued final rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act. The phase-in period for community banking organizations begins January 1, 2015, while larger institutions (generally those with assets of $250 billion or more) must begin compliance on January 1, 2014. The final rules call for the following capital requirements:

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MID PENN BANCORP, INC.

· A minimum ratio of common tier 1 capital to risk-weighted assets of 4.5%.

· A minimum ratio of tier 1 capital to risk-weighted assets of 6%.

· A minimum ratio of total capital to risk-weighted assets of 8% (no change from the current rule).

· A minimum leverage ratio of 4%.

In addition, the final rules establishes a common equity tier 1 capital conservation buffer of 2.5% of risk-weighted assets applicable to all banking organizations. If a banking organization fails to hold capital above the minimum capital ratios and the capital conservation buffer, it will be subject to certain restrictions on capital distributions and discretionary bonus payments. The phase-in period for the capital conservation and countercyclical capital buffers for all banking organizations will begin on January 1, 2016.

Under the proposed rules, accumulated other comprehensive income (AOCI) would have been included in a banking organization’s common equity tier 1 capital. The final rules allow community banks to make a one-time election not to include these additional components of AOCI in regulatory capital and instead use the existing treatment under the general risk-based capital rules that excludes most AOCI components from regulatory capital. The opt-out election must be made in the first call report or FR Y-9 series report that is filed after the financial institution becomes subject to the final rule.  Mid Penn elected to opt-out.

The final rules permanently grandfather non-qualifying capital instruments (such as trust preferred securities and cumulative perpetual preferred stock) issued before May 19, 2010 for inclusion in the tier 1 capital of banking organizations with total consolidated assets less than $15 billion as of December 31, 2009 and banking organizations that were mutual holding companies as of May 19, 2010.

The proposed rules would have modified the risk-weight framework applicable to residential mortgage exposures to require banking organizations to divide residential mortgage exposures into two categories in order to determine the applicable risk weight. In response to commenter concerns about the burden of calculating the risk weights and the potential negative effect on credit availability, the final rules do not adopt the proposed risk weights but retain the current risk weights for mortgage exposures under the general risk-based capital rules.

Consistent with the Dodd-Frank Act, the new rules replace the ratings-based approach to securitization exposures, which is based on external credit ratings, with the simplified supervisory formula approach in order to determine the appropriate risk weights for these exposures.  Alternatively, banking organizations may use the existing gross-ups approach to assign securitization exposures to a risk weight category or choose to assign such exposures a 1,250% risk weight.

Under the new rules, mortgage servicing assts (MSAs) and certain deferred tax assets (DTAs) are subject to stricter limitations than those applicable under the current general risk-based capital rule.  The new rules also increase the risk weights for past-due loans, certain risk weights and credit conversion factors.

Small Business Lending Fund Program Participation

On March 1, 2015, Mid Penn assumed all of the issued and outstanding shares of Phoenix with respect to 1,750 shares of Phoenix’s preferred stock issued to the Treasury in connection with the Small Business Lending Fund and issued 1,750 shares of Mid Penn’s SBLF Preferred Shares, having a $1,000 liquidation preference per share, to the Treasury.  The SBLF Preferred Shares qualify as Tier 1 Capital and have terms and conditions identical to those shares of preferred stock issued by Phoenix to Treasury.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in market risk since December 31, 2014, as reported in Mid Penn’s Form 10-K filed with the SEC on March 20, 2015.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Mid Penn maintains controls and procedures designed to ensure that information required to be disclosed in the reports that Mid Penn files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.  Based upon their evaluation of those controls and procedures as of March 31, 2015, Mid Penn’s management, with the participation of the Principal Executive Officer and Principal Financial and Accounting Officer, concluded that the disclosure controls and procedures were effective as of such date.

Changes in Internal Controls

During the three months ended March 31, 2015, there were no changes in Mid Penn’s internal control over financial reporting, that have materially affected, or are reasonable likely to materially affect, Mid Penn’s internal control over financial reporting.

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MID PENN BANCORP, INC.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEDINGS

Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position of Mid Penn or its subsidiaries taken as a whole.  There are no proceedings pending other than ordinary routine litigation occurring in the normal course of business. In addition, management does not know of any material proceedings contemplated by governmental authorities against Mid Penn or any of its properties.

ITEM 1A–RISK FACTORS

Management has reviewed the risk factors that were previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2014.  There are no material changes from the risk factors as previously disclosed in the Form 10-K.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 - MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5 – OTHER INFORMATION

None

ITEM 6 – EXHIBITS

· Exhibit 3(i) – The Registrant’s amended Articles of Incorporation (Incorporated by reference to Exhibit 3(i) to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2009.)

· Exhibit 3(ii) – Statement with Respect to Shares for Series B Preferred Stock.  (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 28, 2012.)

· Exhibit 3(iii) – The Registrant’s By-laws (Incorporated by reference to Exhibit 3(ii) to Registrant’s Current Report on form 8-K filed with the Securities and Exchange Commission on August 30, 2010.) 

· Exhibit 11 – Statement re:  Computation of Per Share Earnings.  (Incorporated by reference to Part I Item 1 of this Quarterly Report on Form 10-Q.)

· Exhibit 31.1 – Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002.

· Exhibit 31.2 - Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act of 2002.

· Exhibit 32 – Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.

· Exhibit 101.LAB – XBRL Taxonomy Extension Label Linkbase

· Exhibit 101.PRE – XBRL Taxonomy Extension Presentation Linkbase

· Exhibit 101.INS – XBRL Instance Document

· Exhibit 101.SCH – XBRL Taxonomy Extension Schema

· Exhibit 101.CAL – XBRL Taxonomy Extension Calculation Linkbase

· Exhibit 101.DEF – XBRL Taxonomy Extension Definition Linkbase

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MID PENN BANCORP, INC.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Mid Penn Bancorp, Inc. (Registrant)
By:	/s/ Rory G. Ritrievi
	Rory G. Ritrievi
	President and CEO
	(Principal Executive Officer)
Date:	May 15, 2015
By:	/s/ Edward P. Williams
	Edward P. Williams
	Interim Principal Financial Officer
Date:	May 15, 2015

43

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES

13A-14(A)/15D-14(A) AS ADDED BY SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Rory G. Ritrievi, certify that:

1.I have reviewed this report on Form 10-Q of Mid Penn Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/s/ Rory G. Ritrievi
	President and CEO
Date:	May 15, 2015

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES

13A-14(A)/15D-14(A) AS ADDED BY SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Edward P. Williams, certify that:

1.I have reviewed this report on Form 10-Q of Mid Penn Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/s/ Edward P. Williams
	Interim Principal Financial Officer
Date:	May 15, 2015

EX-32

Exhibit 32

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADDED BY SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Mid Penn Bancorp, Inc. (the “Corporation”) on Form 10-Q for the period ending March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rory G. Ritrievi, President and CEO, and I, Edward P. Williams,  Interim Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as added pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

2. To my knowledge, the information contained in the Report fairly presents, in all material respects the financial condition and results of operations of Mid Penn Bancorp, Inc. as of the dates and for the periods expressed in the Report. 

By:	/s/ Rory G. Ritrievi
	President and CEO
Date:	May 15, 2015

By:	/s/ Edward P. Williams
	Interim Principal Financial Officer
Date:	May 15, 2015

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Investment Securities (Unrealized Gain (Loss) on Investments) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Amortized Cost	$ 139,676	$ 139,172
Unrealized Gains	3,423	3,009
Unrealized Losses	419	547
Available for sale Securities, Fair Value	142,680	141,634
U.S. Treasury and U.S. government agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost	26,337	26,343
Unrealized Gains	1,026	752
Unrealized Losses	16	29
Available for sale Securities, Fair Value	27,347	27,066
Mortgage-backed U.S. Government Agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost	36,938	33,763
Unrealized Gains	250	190
Unrealized Losses	140	177
Available for sale Securities, Fair Value	37,048	33,776
State and municipal [Member]
Schedule of Investments [Line Items]
Amortized Cost	74,162	77,482
Unrealized Gains	2,077	2,007
Unrealized Losses	242	318
Available for sale Securities, Fair Value	75,997	79,171
Equity Securities [Member]
Schedule of Investments [Line Items]
Amortized Cost	2,239	1,584
Unrealized Gains	70	60
Unrealized Losses	21	23
Available for sale Securities, Fair Value	$ 2,288	$ 1,621

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Fair Value Measurement (Fair Value, by Balance Sheet Grouping) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets: Cash and cash equivalents	$ 14,195	$ 9,882
Financial Assets: Interest-bearing time balances with other financial institutions	5,669	5,772
Available-for-sale Securities	142,680	141,634
Financial Assets: Net loans and leases	696,138	572,487
Financial Assets: Restricted investment in bank stocks	3,517	3,181
Financial Assets: Accrued interest receivable	3,394	3,058
Financial Assets: Mortgage servicing rights	182	187
Financial Liabilities: Deposits	760,676	639,226
Financial Liabilities: Short-term borrowings	621	578
Financial Liabilities: Long-term debt	56,093	52,514
Financial Liabilities: Accrued interest payable	498	349
Financial Assets: Cash and cash equivalents, Carrying Value	14,195	9,882
Financial Assets: Interest bearing time balances with other financial institutions, Carrying Value	5,669	5,772
Financial Assets: Net loans and leases, Carrying Value	688,587	564,817
Financial Assets: Restricted investment in bank stocks, Carrying Value	3,517	3,181
Financial Assets: Acrued interest receivable, Carrying Value	3,394	3,058
Financial Assets: Mortgage Servicing Rights, Carrying Value	182	187
Financial Liabilities: Deposits, Carrying Value	759,046	637,922
Financial Liabilities: Short-term borrowings, Carrying Value	621	578
Financial Liabilities: Long-term debt, Carrying Value	56,480	52,961
Financial Liabilities: Accrued interest payable, Carrying Value	498	349
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,218	561
Financial Assets: Net loans and leases
Financial Liabilities: Deposits
Financial Liabilities: Long-term debt
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	141,462	141,073
Financial Assets: Net loans and leases
Financial Liabilities: Deposits	760,676	639,226
Financial Liabilities: Long-term debt	56,093	52,514
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets: Net loans and leases	696,138	572,487
Financial Liabilities: Deposits
Financial Liabilities: Long-term debt
Commitments to Extend Credit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Off-balance sheet financial instruments	0	0
Off-balance sheet financial instruments, Carrying Value	0	0
Standby Letters of Credit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Off-balance sheet financial instruments	0	0
Off-balance sheet financial instruments, Carrying Value	$ 0	$ 0

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Loans and Allowance for Loan and Lease Losses (Allowance For Loan Losses And Recorded Investment In Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	$ 6,716	$ 6,317
Charge-offs	(485)	(483)
Recoveries	35	42
Provision for loan and lease losses	300	547
Allowance for Loan Losses, Ending Balance	6,566	6,423
Allowance for loan losses: Ending balance: individually evaluated for impairment	1,488	1,866	1,634
Allowance for loan losses: Ending balance: collectively evaluated for impairment	5,078	4,557	5,082
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	695,153	549,739	571,533
Loans receivables: Ending balance: individually evaluated for impairment	8,880	10,614	10,929
Loans Receivable: Ending balance: collectively evaluated for impairment	683,880	539,125	560,604
Loans receivables, Ending balance: acquired with credit deterioration	2,393
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	653	441
Charge-offs	(29)
Recoveries	29
Provision for loan and lease losses	(134)	(12)
Allowance for Loan Losses, Ending Balance	519	429
Allowance for loan losses: Ending balance: individually evaluated for impairment	139	8	115
Allowance for loan losses: Ending balance: collectively evaluated for impairment	380	421	538
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	32,110	26,464	28,506
Loans receivables: Ending balance: individually evaluated for impairment	246	71	240
Loans Receivable: Ending balance: collectively evaluated for impairment	31,843	26,393	28,266
Loans receivables, Ending balance: acquired with credit deterioration	21
Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	450	581
Charge-offs	(1)	(59)
Provision for loan and lease losses	95	19
Allowance for Loan Losses, Ending Balance	544	541
Allowance for loan losses: Ending balance: individually evaluated for impairment	23
Allowance for loan losses: Ending balance: collectively evaluated for impairment	521	541	450
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	97,533	68,321	66,442
Loans receivables: Ending balance: individually evaluated for impairment	966	260	1,146
Loans Receivable: Ending balance: collectively evaluated for impairment	96,142	68,061	65,296
Loans receivables, Ending balance: acquired with credit deterioration	425
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	1,393	1,187
Charge-offs		(40)
Recoveries		3
Provision for loan and lease losses	246	40
Allowance for Loan Losses, Ending Balance	1,639	1,190
Allowance for loan losses: Ending balance: individually evaluated for impairment	223	66	137
Allowance for loan losses: Ending balance: collectively evaluated for impairment	1,416	1,124	1,256
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	160,254	106,033	119,010
Loans receivables: Ending balance: individually evaluated for impairment	610	269	618
Loans Receivable: Ending balance: collectively evaluated for impairment	159,372	105,764	118,392
Loans receivables, Ending balance: acquired with credit deterioration	272
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	3,925	4,006
Charge-offs	(450)	(368)
Recoveries	2
Provision for loan and lease losses	149	348
Allowance for Loan Losses, Ending Balance	3,626	3,986
Allowance for loan losses: Ending balance: individually evaluated for impairment	1,103	1,792	1,382
Allowance for loan losses: Ending balance: collectively evaluated for impairment	2,523	2,194	2,543
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	340,647	296,103	297,357
Loans receivables: Ending balance: individually evaluated for impairment	7,058	10,014	8,925
Loans Receivable: Ending balance: collectively evaluated for impairment	331,914	286,089	288,432
Loans receivables, Ending balance: acquired with credit deterioration	1,675
Commercial real estate construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	33	9
Provision for loan and lease losses	2	4
Allowance for Loan Losses, Ending Balance	35	13
Allowance for loan losses: Ending balance: collectively evaluated for impairment	35	13	33
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	60,386	46,849	56,076
Loans Receivable: Ending balance: collectively evaluated for impairment	60,386	46,849	56,076
Lease financing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	2
Provision for loan and lease losses	(1)	1
Allowance for Loan Losses, Ending Balance	1	1
Allowance for loan losses: Ending balance: collectively evaluated for impairment	1	1	2
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	1,016	1,496	1,121
Loans Receivable: Ending balance: collectively evaluated for impairment	1,016	1,496	1,121
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	35	72
Charge-offs	(5)	(16)
Recoveries	4	39
Provision for loan and lease losses	3	(27)
Allowance for Loan Losses, Ending Balance	37	68
Allowance for loan losses: Ending balance: collectively evaluated for impairment	37	68	35
Allowance for loan losses: Ending balance: collectively evaluated for impairment
Loans receivables, Ending Balance	3,207	4,473	3,021
Loans Receivable: Ending balance: collectively evaluated for impairment	3,207	4,473	3,021
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, Beginning Balance	225	21
Provision for loan and lease losses	(60)	174
Allowance for Loan Losses, Ending Balance	165	195
Allowance for loan losses: Ending balance: collectively evaluated for impairment	165	195	225
Allowance for loan losses: Ending balance: collectively evaluated for impairment

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Guarantees (Narrative) (Details) (Standby Letters of Credit [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Standby Letters of Credit [Member]
Guarantor Obligations [Line Items]
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 9,963	$ 9,837

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Loans and Allowance for Loan and Lease Losses (Nonaccrual Loans By Classes Of The Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 7,417	$ 8,907
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	267	239
Residential mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,249	1,152
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	449	267
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 5,452	$ 7,249

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Merger (Estimated Fair Value of Assets Acquired) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Mar. 01, 2015	Mar. 31, 2015	Dec. 31, 2014
Net assets acquired:
Goodwill		$ 3,613	$ 1,016
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Total purchase price	14,241	14,241
Net assets acquired:
Cash and cash equivalents		11,067
Investment securities		11,331
Restricted stock		509
Loans	110,707	110,707
Bank owned life insurance		3,673
Premises and equipment		1,792
Accrued interest receivable		388
Core deposit and other intangibles		578
Other assets		933
Deposits		(123,238)
FHLB borrowings		(3,570)
Accrued interest payable		(32)
Other liabilities		(744)
Preferred stock		(1,750)
Total net assets acquired		11,644
Goodwill		$ 2,597

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Accumulated Other Comprehensive Income (Accumulated Other Comprehensive Income, Net of Taxes) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income [Abstract]
Unrealized (Loss) Gains on Securities	$ 1,984	$ 1,626
Defined Benefit Plan Liability	(110)	(113)
Accumulated Other Comprehensive Income (Loss)	$ 1,874	$ 1,513

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Loans and Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2015

Loans and Allowance for Loan and Lease Losses [Abstract]

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

The classes of the loan portfolio, summarized by the aggregate pass rating and the classified ratings of special mention, substandard, and doubtful within Mid Penn’s internal risk rating system as of March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)			Special
March 31, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	156,220	$	2,684	$	1,350	$	-	$	160,254
Commercial real estate		322,756		6,955		10,936		-		340,647
Commercial real estate - construction		60,149		237		-		-		60,386
Lease financing		1,016		-		-		-		1,016
Residential mortgage		95,731		359		1,443		-		97,533
Home equity		31,372		344		394		-		32,110
Consumer		3,207		-		-		-		3,207
	$	670,451	$	10,579	$	14,123	$	-	$	695,153

(Dollars in thousands)			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	117,166	$	654	$	1,190	$	-	$	119,010
Commercial real estate		280,817		4,859		11,681		-		297,357
Commercial real estate - construction		55,834		242		-		-		56,076
Lease financing		1,121		-		-		-		1,121
Residential mortgage		64,900		252		1,290		-		66,442
Home equity		28,167		138		201		-		28,506
Consumer		3,021		-		-		-		3,021
	$	551,026	$	6,145	$	14,362	$	-	$	571,533

Impaired Loans by Loan Portfolio Class

Impaired loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

	March 31, 2015						December 31, 2014
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	30	$	64	$	-	$	395	$	430	$	-
Acquired with credit deterioration*		272		272		-		-		-		-
Commercial real estate:
Commercial real estate		1,895		4,453		-		1,971		4,481		-
Acquired with credit deterioration*		1,675		1,675		-		-		-		-
Residential mortgage:
Residential mortgage		935		1,011		-		1,146		1,286		-
Acquired with credit deterioration*		425		425		-		-		-		-
Home equity:
Home equity		40		56		-		29		88		-
Acquired with credit deterioration*		21		21		-		-		-		-
With an allowance recorded:
Commercial and industrial	$	580	$	591	$	223	$	223	$	231	$	137
Commercial real estate		5,163		5,380		1,103		6,954		7,255		1,382
Residential mortgage		31		32		23		-		-		-
Home equity		206		208		139		211		213		115
Total:
Commercial and industrial	$	882	$	927	$	223	$	618	$	661	$	137
Commercial real estate		8,733		11,508		1,103		8,925		11,736		1,382
Residential mortgage		1,391		1,468		23		1,146		1,286		-
Home equity		267		285		139		240		301		115

* Loans acquired with credit deterioration are presented net of credit fair value adjustment.

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2015 and March 31, 2014 are summarized as follows:

	March 31, 2015				March 31, 2014
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	31	$	-	$	190	$	-
Acquired with credit deterioration		55		-		-		-
Commercial real estate:
Commercial real estate		1,933		-		2,697		-
Acquired with credit deterioration		335		-		-		-
Residential mortgage:
Residential mortgage		932		-		263		-
Acquired with credit deterioration		85		-		-		-
Home equity:
Home equity		32		-		27		-
Acquired with credit deterioration		4		-		-		-
With an allowance recorded:
Commercial and industrial	$	583	$	-	$	74	$	-
Commercial real estate		5,177		-		7,059		-
Residential mortgage		16		-		-		-
Home equity		208		-		47		-
Total:
Commercial and industrial	$	669	$	-	$	264	$	-
Commercial real estate		7,445		-		9,756		-
Residential mortgage		1,033		-		263		-
Home equity		244		-		74		-

Non-accrual Loans by Classes of the Loan Portfolio

Non-accrual loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	March 31, 2015		December 31, 2014
Commercial and industrial	$	449	$	267
Commercial real estate		5,452		7,249
Residential mortgage		1,249		1,152
Home equity		267		239
	$	7,417	$	8,907

Loan Portfolio Summarized by the Past Due Status

(Dollars in thousands)	March 31, 2015		December 31, 2014
Commercial and industrial	$	449	$	267
Commercial real estate		5,452		7,249
Residential mortgage		1,249		1,152
Home equity		267		239
	$	7,417	$	8,907

The performance and credit quality of the loan portfolio is also monitored by the 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 March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)
March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial:
Commercial and industrial	$	246	$	-	$	92	$	338	$	159,644	$	159,982	$	-
Acquired with credit deterioration		-		-		-		-		272		272		-
Commercial real estate:
Commercial real estate		301		288		5,168		5,757		333,215		338,972		-
Acquired with credit deterioration		-		316		50		366		1,309		1,675		50
Commercial real estate - construction:
Commercial real estate - construction		-		-		-		-		60,386		60,386		-
Lease financing:
Lease financing		-		-		-		-		1,016		1,016		-
Residential mortgage:
Residential mortgage		552		78		896		1,526		95,582		97,108		-
Acquired with credit deterioration		64		-		244		308		117		425		-
Home equity:
Home equity		50		-		166		216		31,873		32,089		-
Acquired with credit deterioration		-		-		21		21		-		21		-
Consumer:
Consumer		-		-		-		-		3,207		3,207		-
Total	$	1,213	$	682	$	6,637	$	8,532	$	686,621	$	695,153	$	50

(Dollars in thousands)
December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial	$	172	$	290	$	87	$	549	$	118,461	$	119,010	$	-
Commercial real estate		403		197		6,585		7,185		290,172		297,357		-
Commercial real estate - construction		-		-		-		-		56,076		56,076		-
Lease financing		-		-		-		-		1,121		1,121		-
Residential mortgage		328		82		1,117		1,527		64,915		66,442		-
Home equity		93		63		157		313		28,193		28,506		-
Consumer		6		-		-		6		3,015		3,021		-
Total	$	1,002	$	632	$	7,946	$	9,580	$	561,953	$	571,533	$	-

Allowance for Loan Losses and Recorded Investment in Financing Receivables

The following tables summarize the allowance for loan and lease losses and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the period ended, March 31, 2015	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Charge-offs		-		(450)		-		-		(1)		(29)		(5)		-		(485)
Recoveries		-		2		-		-		-		29		4		-		35
Provisions		246		149		2		(1)		95		(134)		3		(60)		300
Ending balance	$	1,639	$	3,626	$	35	$	1	$	544	$	519	$	37	$	165	$	6,566

Ending balance: individually evaluated for impairment	$	223	$	1,103	$	-	$	-	$	23	$	139	$	-	$	-	$	1,488
Ending balance: collectively evaluated for impairment	$	1,416	$	2,523	$	35	$	1	$	521	$	380	$	37	$	165	$	5,078
Ending balance: acquired with credit deterioration	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Loans receivables:
Ending balance	$	160,254	$	340,647	$	60,386	$	1,016	$	97,533	$	32,110	$	3,207	$	-	$	695,153
Ending balance: individually evaluated  for impairment	$	610	$	7,058	$	-	$	-	$	966	$	246	$	-	$	-	$	8,880
Ending balance: collectively evaluated for impairment	$	159,372	$	331,914	$	60,386	$	1,016	$	96,142	$	31,843	$	3,207	$	-	$	683,880
Ending balance: acquired with credit deterioration	$	272	$	1,675	$	-	$	-	$	425	$	21	$	-	$	-	$	2,393

(Dollars in thousands)
As of, and for the period ended, March 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,187	$	4,006	$	9	$	-	$	581	$	441	$	72	$	21	$	6,317
Charge-offs		(40)		(368)		-		-		(59)		-		(16)		-		(483)
Recoveries		3		-		-		-		-		-		39		-		42
Provisions		40		348		4		1		19		(12)		(27)		174		547
Ending balance	$	1,190	$	3,986	$	13	$	1	$	541	$	429	$	68	$	195	$	6,423

Ending balance: individually evaluated for impairment	$	66	$	1,792	$	-	$	-	$	-	$	8	$	-	$	-	$	1,866
Ending balance: collectively evaluated for impairment	$	1,124	$	2,194	$	13	$	1	$	541	$	421	$	68	$	195	$	4,557
Loans receivables:
Ending balance	$	106,033	$	296,103	$	46,849	$	1,496	$	68,321	$	26,464	$	4,473	$	-	$	549,739
Ending balance: individually evaluated  for impairment	$	269	$	10,014	$	-	$	-	$	260	$	71	$	-	$	-	$	10,614
Ending balance: collectively evaluated for impairment	$	105,764	$	286,089	$	46,849	$	1,496	$	68,061	$	26,393	$	4,473	$	-	$	539,125

(Dollars in thousands)
December 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Ending balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Ending balance: individually evaluated for impairment	$	137	$	1,382	$	-	$	-	$	-	$	115	$	-	$	-	$	1,634
Ending balance: collectively evaluated for impairment	$	1,256	$	2,543	$	33	$	2	$	450	$	538	$	35	$	225	$	5,082
Loans receivables:
Ending balance	$	119,010	$	297,357	$	56,076	$	1,121	$	66,442	$	28,506	$	3,021	$	-	$	571,533
Ending balance: individually evaluated  for impairment	$	618	$	8,925	$	-	$	-	$	1,146		240	$	-	$	-	$	10,929
Ending balance: collectively evaluated for impairment	$	118,392	$	288,432	$	56,076	$	1,121	$	65,296	$	28,266	$	3,021	$	-	$	560,604

Troubled Debt Restructurings

The recorded investments in troubled debt restructured loans at March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)	Pre-Modification		Post-Modification
March 31, 2015	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	20
Commercial real estate		9,518		7,628		6,357
Residential mortgage		733		727		601
	$	10,291	$	8,390	$	6,978

(Dollars in thousands)	Pre-Modification		Post-Modification
December 31, 2014	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	23
Commercial real estate		11,189		9,443		8,005
Residential mortgage		903		897		713
Home equity		50		7		5
	$	12,182	$	10,382	$	8,746

Schedule of Accretion of Purchase Impaired Loan

The following table provides activity for the accretable yield of purchased impaired loans for the quarter ended March 31, 2015:

(Dollars in thousands)
Accretable yield, January 1, 2015	$	-
Acquisition of impaired loans		480
Accretable yield amortized to interest income		(12)
Reclassification from nonaccretable difference (1)		-
Accretable yield, March 31, 2015	$	468

(1) Reclassification from non-accretable difference represents an increase to the estimated cash flows to be collected on the underlying   portfolio

XML

Loans and Allowance for Loan and Lease Losses (Schedule of Accretion of Purchase Impaired Loan) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Loans and Allowance for Loan and Lease Losses [Abstract]
Accretable yield, beginning balance
Acquisition of impaired loans	480
Accretable yield amortized to interest income	(12)
Reclassification from nonaccretable difference		[1]
Accretable yield, ending balance	$ 468

[1] (1) Reclassification from non-accretable difference represents an increase to the estimated cash flows to be collected on the underlying portfolio.

XML

Loans and Allowance for Loan and Lease Losses (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015 loan	Mar. 31, 2014 loan	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 6,978,000		$ 8,746,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down	0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	2	0
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	3,412,000
Foreclosure proceedings in process	277,000		485,000
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan Terms	5 years
Loan To Value Ratio	85.00%
Financing Receivable, Modifications, Recorded Investment			5,000
Impaired Financing Receivable, Interest Income, Cash Basis Method
Six Borrowers [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			2,035,000
Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan Terms	30 years
Loan To Value Ratio	100.00%
Loan To Value Ratio, Exposure After Private Mortgage Insurance	85.00%
Financing Receivable, Modifications, Recorded Investment	601,000		713,000
Impaired Financing Receivable, Interest Income, Cash Basis Method
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan Terms	1 year
Loan To Value Ratio	80.00%
Financing Receivable, Modifications, Recorded Investment	20,000		23,000
Impaired Financing Receivable, Interest Income, Cash Basis Method
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,357,000		8,005,000
Impaired Financing Receivable, Interest Income, Cash Basis Method
Lease financing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Portfolio Percentage	0.15%
Nonaccruing [Member] | Two Large Relationships [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment			4,680,000
Nonaccruing [Member] | 11 Loans with 7 Relationships [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	4,984,000
Nonaccruing [Member] | 1 Large Relationship [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,123,000
Nonaccruing [Member] | 14 Loans with 9 Relationships [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment			6,711,000
Accruing [Member] | 2 Relationship [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment			1,964,000
Accruing [Member] | Six Borrowers [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,994,000
Accruing [Member] | Six Borrowers [Member] | Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			71,000
Accruing [Member] | Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	69,000
Accruing [Member] | Commercial real estate [Member] | Two Large Relationships [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 1,925,000
Maximum [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan Terms	20 years

XML

Merger (Schedule of Balance Sheet related to Business Combination) (Details) (Phoenix Bancorp Inc. [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Mar. 01, 2015
Phoenix Bancorp Inc. [Member]
Net assets acquired:
Investment securities	$ 11,331
Loans	110,707	110,707
Restricted stock	509
Premises and equipment	1,792
Accrued interest receivable	388
Core deposit and other intangibles	578
Bank owned life insurance	3,673
Other assets	933
Total assets acquired	129,911
Liabilities Assumed:
Deposits	123,238
Accrued interest payable	32
Long-term debt	3,570
Other liabilities	744
Total liabilities assumed	127,584
Preferred stock	$ (1,750)

XML

Fair Value Measurement (Fair Value Measurements, Nonrecurring) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 5,265	$ 6,664
Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	393	142
Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	182	187
Level 3 [Member] | Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	5,265	6,664
Level 3 [Member] | Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	393	142
Level 3 [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 182	$ 187

XML

Preferred Stock (Proceeds from Private Placement) (Details) (Preferred Class B [Member], USD $)	0 Months Ended		3 Months Ended			12 Months Ended	30 Months Ended
	Jan. 03, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2012	Jan. 03, 2013	Dec. 31, 2013	Mar. 31, 2015
Preferred Class B [Member]
Shares issued	120	345	4,535	4,880		120	5,000
Proceeds from issuance of private placement		$ 345,000	$ 4,535,000	$ 4,880,000	$ 5,000,000	$ 120,000	$ 5,000,000

XML

Loans and Allowance for Loan and Lease Losses (Loan Portfolio Summarized By The Past Due Status) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	$ 1,213	$ 1,002
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due	682	632
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	6,637	7,946
Total Past Due	8,532	9,580
Financing Receivable, Recorded Investment, Current	686,621	561,953
Total Loans	695,153	571,533	549,739
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	50
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due		93
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due		63
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due		157
Total Past Due		313
Financing Receivable, Recorded Investment, Current		28,193
Total Loans	32,110	28,506	26,464
Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	21
Total Past Due	21
Total Loans	21
Excluded Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	50
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	166
Total Past Due	216
Financing Receivable, Recorded Investment, Current	31,873
Total Loans	32,089
Residential mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due		328
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due		82
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due		1,117
Total Past Due		1,527
Financing Receivable, Recorded Investment, Current		64,915
Total Loans	97,533	66,442	68,321
Residential mortgages [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	64
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	244
Total Past Due	308
Financing Receivable, Recorded Investment, Current	117
Total Loans	425
Residential mortgages [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	552
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due	78
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	896
Total Past Due	1,526
Financing Receivable, Recorded Investment, Current	95,582
Total Loans	97,108
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due		172
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due		290
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due		87
Total Past Due		549
Financing Receivable, Recorded Investment, Current		118,461
Total Loans	160,254	119,010	106,033
Commercial and industrial [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	272
Total Loans	272
Commercial and industrial [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	246
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	92
Total Past Due	338
Financing Receivable, Recorded Investment, Current	159,644
Total Loans	159,982
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due		403
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due		197
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due		6,585
Total Past Due		7,185
Financing Receivable, Recorded Investment, Current		290,172
Total Loans	340,647	297,357	296,103
Commercial real estate [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due	316
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	50
Total Past Due	366
Financing Receivable, Recorded Investment, Current	1,309
Total Loans	1,675
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	50
Commercial real estate [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	301
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due	288
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	5,168
Total Past Due	5,757
Financing Receivable, Recorded Investment, Current	333,215
Total Loans	338,972
Commercial real estate construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current		56,076
Total Loans	60,386	56,076	46,849
Commercial real estate construction [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	60,386
Total Loans	60,386
Lease financing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	1,016	1,121
Total Loans	1,016	1,121	1,496
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due		6
Total Past Due		6
Financing Receivable, Recorded Investment, Current	3,207	3,015
Total Loans	$ 3,207	$ 3,021	$ 4,473

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating Activities:
Net Income	$ 963	$ 1,511
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses	300	547
Depreciation	314	313
Amortization of intangibles	13	4
Net amortization of securities premiums	384	43
Gain on sales of investment securities	(177)	(150)
Earnings on cash surrender value of life insurance	(56)	(51)
SBA loans originated for sale		(468)
Proceeds from sales of SBA loans originated for sale		519
Gain on sale of loans		(51)
Loss on sale / write-down of foreclosed assets	32	87
Restricted stock compensation expense	8
Deferred income tax benefit	(76)	(28)
Decrease (increase) in accrued interest receivable	52	(200)
Increase in other assets	(47)	(152)
Increase in accrued interest payable	117	93
Decrease in other liabilities	(40)	(282)
Net Cash Provided by Operating Activities	1,787	1,735
Investing Activities:
Net decrease in interest-bearing time deposits with other financial institutions	103	2,190
Proceeds from the maturity of investment securities	2,594	3,375
Proceeds from the sale of investment securities	16,091	7,199
Purchases of investment securities	(8,065)	(7,462)
Net cash received from acquisition	8,118
Redemptions (purchases) of restricted investment in bank stocks	173	(177)
Net increase in loans and leases	(13,579)	(3,982)
Purchases of bank premises and equipment	(393)	(499)
Proceeds from sale of foreclosed assets	27	64
Net Cash Provided By Investing Activities	5,069	708
Financing Activities:
Net decrease in deposits	(2,114)	(1,455)
Net increase in short-term borrowings	43	4,711
Preferred stock dividend paid	(87)	(87)
Common stock dividend paid	(350)	(174)
Employee Stock Purchase Plan	16	14
Long-term debt repayment	(51)	(45)
Net Cash (Used In) Provided by Financing Activities	(2,543)	2,964
Net increase in cash and cash equivalents	4,313	5,407
Cash and cash equivalents, beginning of year	9,882	8,623
Cash and cash equivalents, end of period	14,195	14,030
Supplemental Disclosures of Cash Flow Information:
Interest paid	971	1,015
Income taxes paid	100
Supplemental Noncash Disclosures:
Loan transfers to foreclosed assets held for sale	$ 216	$ 264

XML

Earnings per Common Share (Basic and Diluted Earnings Per Share Computation) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 963	$ 1,511
Net income available to common shareholders	876	1,424
Weighted average common shares outstanding	3,747,167	3,494,408
Basic earnings per common share	$ 0.23	$ 0.41
Series B Preferred Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dividends on preferred stock	$ 87	$ 87

XML

Loans and Allowance for Loan and Lease Losses (Classes Of The Loan Portfolio Summarized By The Aggregate Risk Rating) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 695,153	$ 571,533	$ 549,739
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	32,110	28,506	26,464
Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	97,533	66,442	68,321
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	160,254	119,010	106,033
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	340,647	297,357	296,103
Commercial real estate construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	60,386	56,076	46,849
Lease financing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,016	1,121	1,496
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,207	3,021	4,473
Pass [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	670,451	551,026
Pass [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	31,372	28,167
Pass [Member] | Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	95,731	64,900
Pass [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	156,220	117,166
Pass [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	322,756	280,817
Pass [Member] | Commercial real estate construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	60,149	55,834
Pass [Member] | Lease financing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,016	1,121
Pass [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,207	3,021
Special Mention [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	10,579	6,145
Special Mention [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	344	138
Special Mention [Member] | Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	359	252
Special Mention [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,684	654
Special Mention [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	6,955	4,859
Special Mention [Member] | Commercial real estate construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	237	242
Substandard [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	14,123	14,362
Substandard [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	394	201
Substandard [Member] | Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,443	1,290
Substandard [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,350	1,190
Substandard [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	10,936	11,681
Doubtful [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Residential mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Commercial real estate construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Lease financing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 0	$ 0

XML

Preferred Stock (Tables) (Preferred Class B [Member])

3 Months Ended

Mar. 31, 2015

Preferred Class B [Member]

Proceeds from Private Placement

The following table summarizes the Series B Preferred Stock shares sold and the gross proceeds received through the private placement offering as of March 31, 2015:

(Dollars in thousands)
Period	Shares	Gross Proceeds
September 26, 2012 - September 30, 2012	345	$	345,000
October 1, 2012 - December 31, 2012	4,535		4,535,000
January 1, 2013 - December 31, 2013	120		120,000
January 1, 2014 - December 31, 2014	-		-
January 1, 2015 - March 31, 2015	-		-
Total	5,000	$	5,000,000

XML

Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2015

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income, Net of Taxes

(Dollars in thousands)	Unrealized Gain on Securities		Defined Benefit Plans Liabilities		Accumulated Other Comprehensive Income
Balance - March 31, 2015	$	1,984	$	(110)	$	1,874
Balance - December 31, 2014	$	1,626	$	(113)	$	1,513

XML

Defined Benefit Plans (Net Periodic Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	$ 8	$ 8
Interest Cost	11	13
Amortization of prior service cost	4	3
Net periodic postretirement benefit cost	23	24
Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	3	3
Interest Cost	8	9
Net periodic postretirement benefit cost	$ 11	$ 12

XML

Loans and Allowance for Loan and Lease Losses (Impaired Loans by Loan Portfolio Class) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Residential mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Recorded Investment	$ 31
Impaired Loans with Allowance: Unpaid Principal Balance	32
Impaired Loans with Allowance: Related Allowance	23
Impaired Loans: Total Recorded Investment	1,391	1,146
Impaired Loans: Total Unpaid Principal Balance	1,468	1,286
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Recorded Investment	580	223
Impaired Loans with Allowance: Unpaid Principal Balance	591	231
Impaired Loans with Allowance: Related Allowance	223	137
Impaired Loans: Total Recorded Investment	882	618
Impaired Loans: Total Unpaid Principal Balance	927	661
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Recorded Investment	5,163	6,954
Impaired Loans with Allowance: Unpaid Principal Balance	5,380	7,255
Impaired Loans with Allowance: Related Allowance	1,103	1,382
Impaired Loans: Total Recorded Investment	8,733	8,925
Impaired Loans: Total Unpaid Principal Balance	11,508	11,736
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Recorded Investment	206	211
Impaired Loans with Allowance: Unpaid Principal Balance	208	213
Impaired Loans with Allowance: Related Allowance	139	115
Impaired Loans: Total Recorded Investment	267	240
Impaired Loans: Total Unpaid Principal Balance	285	301
Acquired with Credit Deterioration [Member] | Residential mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	425
Impaired Loans with No Allowance: Unpaid Principal Balance	425
Acquired with Credit Deterioration [Member] | Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	272
Impaired Loans with No Allowance: Unpaid Principal Balance	272
Acquired with Credit Deterioration [Member] | Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	1,675
Impaired Loans with No Allowance: Unpaid Principal Balance	1,675
Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	21
Impaired Loans with No Allowance: Unpaid Principal Balance	21
Excluded Acquired with Credit Deterioration [Member] | Residential mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	935	1,146
Impaired Loans with No Allowance: Unpaid Principal Balance	1,011	1,286
Excluded Acquired with Credit Deterioration [Member] | Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	30	395
Impaired Loans with No Allowance: Unpaid Principal Balance	64	430
Excluded Acquired with Credit Deterioration [Member] | Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	1,895	1,971
Impaired Loans with No Allowance: Unpaid Principal Balance	4,453	4,481
Excluded Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	40	29
Impaired Loans with No Allowance: Unpaid Principal Balance	$ 56	$ 88

XML

Earnings per Common Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings per Common Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computations of basic earnings per common share follow:

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2015		2014
Net Income	$	963	$	1,511
Less:  Dividends on Series B preferred stock		87		87
Net income available to common shareholders	$	876	$	1,424
Weighted average common shares outstanding		3,747,167		3,494,408
Basic earnings per common share	$	0.23	$	0.41

XML

Merger (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 01, 2015	Dec. 31, 2014	Feb. 27, 2015
Business Acquisition [Line Items]
Goodwill	$ 3,613			$ 1,016
Net Income (Loss) Attributable to Parent	963	1,511
Series C Preferred Stock [Member]
Business Acquisition [Line Items]
Preferred Stock, Shares Issued	1,750			0
Preferred Stock, Liquidation Preference Per Share	$ 1,000
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Ratio of conversion of acquiree's shares to entity's shares			3.167
Per share price			$ 51.60		$ 15.60
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	11,292		11,292
Payments to Acquire Businesses, Gross			2,949
Business Combination, Consideration Transferred	14,241		14,241
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	723,851		723,851
Shares Of Acquirer Ratio Of Common Stock			0.414
Goodwill	2,597
Business Combination, Acquired Receivables, Fair Value			113,090
Business Acquisition, Transaction Costs	909
Revenues	495
Net Income (Loss) Attributable to Parent	50
Phoenix Bancorp Inc. [Member] | Core Deposits [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired	578
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year	88
Finite-Lived Intangible Assets, Amortization Expense, Year Two	96
Finite-Lived Intangible Assets, Amortization Expense, Year Three	86
Finite-Lived Intangible Assets, Amortization Expense, Year Four	75
Finite-Lived Intangible Assets, Amortization Expense, Year Five	65
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	$ 168
Phoenix Bancorp Inc. [Member] | Series C Preferred Stock [Member]
Business Acquisition [Line Items]
Preferred Stock, Shares Issued	1,750
Preferred Stock, Liquidation Preference Per Share	$ 1,000

XML

Consolidated Statements of Changes in Shareholders' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements of Changes in Shareholder's Equity [Abstract]
Stock Issued During Period, Shares, Employee Stock Purchase Plans	1,013	985

XML

Merger (Allocation of the Purchase Price) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended
	Mar. 01, 2015	Mar. 31, 2015	Dec. 31, 2014
Estimated adjustments to reflect assets acquired and liabilities assumed at fair value [Abstract]
Goodwill resulting from the merger		$ 3,613	$ 1,016
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Purchase price assigned to common shares exchanged for 723,851 Company common shares	11,292	11,292
Purchase price assigned to common shares exchanged for cash		2,949
Total purchase price	14,241	14,241
Net assets acquired:
Tagible Common Equity		12,292
Estimated adjustments to reflect assets acquired and liabilities assumed at fair value [Abstract]
Total fair value adjustments		(982)
Associated deferred income taxes		334
Fair value adjustment to net assets acquired, net of tax		(648)
Total net assets acquired		11,644
Goodwill resulting from the merger		$ 2,597
Shares exchanged	723,851	723,851

XML

Investment Securities (Schedule of Fair Value and Unrealized Loss on Investments in a Continuous Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015 security	Dec. 31, 2014 security
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	48	64
Less than 12 Months: Fair Value	$ 22,741	$ 20,014
Less than 12 Months: Unrealized Losses	130	124
12 Months or More: Fair Value	8,156	18,946
12 Months or More: Unrealized Losses	289	423
Total: Fair Value	30,897	38,960
Total: Unrealized Losses	419	547
U.S. Treasury and U.S. government agencies [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	4	5
Less than 12 Months: Fair Value	4,397	6,059
Less than 12 Months: Unrealized Losses	16	29
Total: Fair Value	4,397	6,059
Total: Unrealized Losses	16	29
Mortgage-backed U.S. Government Agencies [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	17	20
Less than 12 Months: Fair Value	9,881	9,511
Less than 12 Months: Unrealized Losses	66	62
12 Months or More: Fair Value	2,968	4,416
12 Months or More: Unrealized Losses	74	115
Total: Fair Value	12,849	13,927
Total: Unrealized Losses	140	177
State and municipal [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	25	37
Less than 12 Months: Fair Value	8,463	4,444
Less than 12 Months: Unrealized Losses	48	33
12 Months or More: Fair Value	4,592	13,947
12 Months or More: Unrealized Losses	194	285
Total: Fair Value	13,055	18,391
Total: Unrealized Losses	242	318
Equity Securities [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	2	2
12 Months or More: Fair Value	596	583
12 Months or More: Unrealized Losses	21	23
Total: Fair Value	596	583
Total: Unrealized Losses	$ 21	$ 23

XML

Fair Value Measurement (Fair Value Inputs, Assets, Quantitative Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	5,265		6,664
Fair Value Measurements, Valuation Techniques	Appraisal of collateral (1)	[1]
Fair Value Disclosure, Unbservable Input Range	Appraisal adjustments (2)	[2]
Impaired Loan [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	5,265		6,664
Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	393		142
Fair Value Measurements, Valuation Techniques	Appraisal of collateral (1), (3)	[1],[3]
Fair Value Disclosure, Unbservable Input Range	Appraisal adjustments (2)	[2]
Foreclosed Assets Held for Sale [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	393		142
Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	182		187
Fair Value Measurements, Valuation Techniques	Multiple of annual service fee
Fair Value Disclosure, Unbservable Input Range	Estimated prepayment speed based on rate and term
Mortgage Servicing Rights [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	182		187
Unobservable Input - Appraisal Adjustments [Member] | Minimum [Member] | Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	10.00%		10.00%
Unobservable Input - Appraisal Adjustments [Member] | Minimum [Member] | Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	15.00%		15.00%
Unobservable Input - Appraisal Adjustments [Member] | Maximum [Member] | Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	95.00%		95.00%
Unobservable Input - Appraisal Adjustments [Member] | Maximum [Member] | Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	40.00%		40.00%
Unobservable Input - Appraisal Adjustments [Member] | Weighted Average [Member] | Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	32.00%		32.00%
Unobservable Input - Appraisal Adjustments [Member] | Weighted Average [Member] | Foreclosed Assets Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	27.00%		27.00%
Unobservable Input Estimated Prepayment Speed [Member] | Minimum [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Prepayment Rate	240.00%		210.00%
Unobservable Input Estimated Prepayment Speed [Member] | Maximum [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Prepayment Rate	400.00%		400.00%
Unobservable Input Estimated Prepayment Speed [Member] | Weighted Average [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Prepayment Rate	352.00%		353.00%

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

[2] 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.

[3] Includes qualitative adjustments by management and estimated liquidation expenses.

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 12,716	$ 8,869
Interest-bearing balances with other financial institutions	1,101	1,013
Federal funds sold	378
Total cash and cash equivalents	14,195	9,882
Interest-bearing time deposits with other financial institutions	5,669	5,772
Available-for-sale investment securities	142,680	141,634
Loans and leases, net of unearned interest	695,153	571,533
Less: Allowance for loan and lease losses	(6,566)	(6,716)
Net loans and leases	688,587	564,817
Bank premises and equipment, net	14,096	12,225
Restricted investment in bank stocks	3,517	3,181
Foreclosed assets held for sale	722	565
Accrued interest receivable	3,394	3,058
Deferred income taxes	2,363	2,125
Goodwill	3,613	1,016
Core deposit and other intangibles, net	752	187
Cash surrender value of life insurance	12,304	8,575
Other assets	3,257	2,620
Total Assets	895,149	755,657
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits: Noninterest-bearing demand	94,427	60,613
Deposits: Interest-bearing demand	230,204	222,712
Deposits: Money Market	217,674	197,418
Deposits: Savings	57,519	32,394
Deposits: Time	159,222	124,785
Total Deposits	759,046	637,922
Short-term borrowings	621	578
Long-term debt	56,480	52,961
Accrued interest payable	498	349
Other liabilities	5,421	4,717
Total Liabilities	822,066	696,527
Shareholders' Equity:
Common stock, par value $1.00 per share; authorized 10,000,000 shares; 4,222,693 shares issued and outstanding at March 31, 2015 and 3,497,829 shares at December 31, 2014	4,223	3,498
Additional paid-in capital	40,493	29,902
Retained earnings	19,743	19,217
Accumulated other comprehensive income	1,874	1,513
Total Shareholders' Equity	73,083	59,130
Total Liabilities and Shareholders' Equity	895,149	755,657
Series B Preferred Stock [Member]
Shareholders' Equity:
Preferred stock	5,000	5,000
Series C Preferred Stock [Member]
Shareholders' Equity:
Preferred stock	$ 1,750

XML

Loans and Allowance for Loan and Lease Losses (Average Recorded Investment Of Impaired Loans And Related Interest Income By Loan Portfolio Class) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Average Recorded Investment	$ 208	$ 47
Impaired Loans with Allowance: Interest Income Recognized
Impaired Financing Receivable, Average Recorded Investment, Total	244	74
Impaired Financing Receivable, Interest Income Recognized, Total
Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	4
Impaired Loans with No Allowance: Interest Income Recognized
Excluded Acquired with Credit Deterioration [Member] | Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	32	27
Impaired Loans with No Allowance: Interest Income Recognized
Residential mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Average Recorded Investment	16
Impaired Loans with Allowance: Interest Income Recognized
Impaired Financing Receivable, Average Recorded Investment, Total	1,033	263
Impaired Financing Receivable, Interest Income Recognized, Total
Residential mortgages [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	85
Impaired Loans with No Allowance: Interest Income Recognized
Residential mortgages [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	932	263
Impaired Loans with No Allowance: Interest Income Recognized
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Average Recorded Investment	583	74
Impaired Loans with Allowance: Interest Income Recognized
Impaired Financing Receivable, Average Recorded Investment, Total	669	264
Impaired Financing Receivable, Interest Income Recognized, Total
Commercial and industrial [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	55
Impaired Loans with No Allowance: Interest Income Recognized
Commercial and industrial [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	31	190
Impaired Loans with No Allowance: Interest Income Recognized
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Allowance: Average Recorded Investment	5,177	7,059
Impaired Loans with Allowance: Interest Income Recognized
Impaired Financing Receivable, Average Recorded Investment, Total	7,445	9,756
Impaired Financing Receivable, Interest Income Recognized, Total
Commercial real estate [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	335
Impaired Loans with No Allowance: Interest Income Recognized
Commercial real estate [Member] | Excluded Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	1,933	2,697
Impaired Loans with No Allowance: Interest Income Recognized

XML

Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Consolidated Statements of Comprehensive Income (Parenthetical) [Abstract]
Unrealized gains (losses) arising during the period on available for sale securities, tax	$ 244		$ 599
Reclassification adjustment for net gain on sales of available for sale securities included in net income, tax	(60)	[1]	(51)	[1]
Change in defined benefit plans, tax	$ 1	[1]	$ 1	[1]

[1] Income tax amounts are included in the provision for income taxes in the Consolidated Statements of Income

XML

Preferred Stock (Small Business Lending Fund) (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Preferred Stock [Member] | Phoenix Bancorp Inc. [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Issued	1,750
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Issued	1,750	0
Preferred Stock, Liquidation Preference Per Share	$ 1,000
Preferred Stock, Dividend Rate, Percentage	1.00%
Preferred stock percentage of liquidation preference.	100.00%
Preferred stock liquidation incremental percentage	25.00%
Preferred stock liquidation percentage of less than 25% of original issued shares	100.00%
Series C Preferred Stock [Member] | Scenario, Plan [Member]
Class of Stock [Line Items]
Preferred Stock, Dividend Rate, Percentage	9.00%
Series C Preferred Stock [Member] | Phoenix Bancorp Inc. [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Issued	1,750
Preferred Stock, Liquidation Preference Per Share	$ 1,000

XML

Merger (Fair Value of Loans Acquired) (Details) (Phoenix Bancorp Inc. [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Contractually required principal and interest at acquisition	$ 3,548
Contractual cash flows not expected to be collected (nonaccretable discount)	(663)
Expected cash flows at acquisition	2,885
Interest component of expected cash flows (accretable discount)	(480)
Fair value of acquired loans	$ 2,405

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Fair Value Measurement (Policy)

3 Months Ended

Mar. 31, 2015

Fair Value Measurement [Abstract]

Fair Value Measurement

The following methodologies and assumptions were used to estimate the fair value of Mid Penn’s financial instruments:

Cash and Cash Equivalents:

The carrying value of cash and cash equivalents is considered to be a reasonable estimate of fair value.

Interest-bearing Balances with other Financial Institutions:

The estimate of fair value was determined by comparing the present value of quoted interest rates on like deposits with the weighted average yield and weighted average maturity of the balances.

Securities Available for Sale:

The fair value of 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. 

Impaired Loans:

Mid Penn’s rating system assumes any loans classified as substandard and non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as substandard non-accrual.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.   Mid Penn considers the estimates used in its impairment analysis to be Level 3 inputs.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 18 months for possible revaluation by an independent third party.

Loans:

For variable-rate loans that reprice frequently and which entail no significant changes in credit risk, carrying values approximated fair value.  The fair value of other loans are estimated by calculating the present value of the cash flow difference between the current rate and the market rate, for the average maturity, discounted quarterly at the market rate.

Foreclosed Assets Held for Sale:

Certain assets included in foreclosed assets held for sale are carried at fair value and accordingly is presented as measured on a non-recurring basis.  Values are estimated using Level 3 inputs, based on appraisals that consider the sales prices of property in the proximate vicinity.

Accrued Interest Receivable and Payable:

The carrying amount of accrued interest receivable and payable approximates their fair values.

Restricted Investment in Bank Stocks:

The carrying amount of required and restricted investment in correspondent bank stock approximates fair value, and considers the limited marketability of such securities.

Mortgage Servicing Rights:

The fair value of servicing rights is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date.

Deposits: 

The fair value for demand deposits (e.g., interest and noninterest checking, savings, and money market deposit accounts) is by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts).  Fair value for fixed-rate certificates of deposit was estimated using a discounted cash flow calculation by combining all fixed-rate certificates into a pool with a weighted average yield and a weighted average maturity for the pool and comparing the pool with interest rates currently being offered on a similar maturity.

Short-term Borrowings:

Because of time to maturity, the estimated fair value of short-term borrowings approximates the book value.

Long-term Debt:

The estimated fair values of long-term debt were determined using discounted cash flow analysis, based on currently available borrowing rates for similar types of borrowing arrangements.

Commitments to Extend Credit and Letters of Credit:

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present credit worthiness of the counterparties.  The fair value of guarantees and letters of credit is based on fees currently charged for similar agreements.

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Merger (Pro Forma Information) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Business Acquisition [Line Items]
Net interest income after loan loss provision	$ 6,738	$ 5,725
Noninterest income	949	894
Noninterest expense	6,640	4,738
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Net interest income after loan loss provision	7,374	7,050
Noninterest income	1,014	1,129
Noninterest expense	6,815	7,548
Net income available to common shareholders	$ 1,276	$ 543
Net income per common share	$ 0.30	$ 0.13

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Investment Securities (Tables)

3 Months Ended

Mar. 31, 2015

Investment Securities [Abstract]

Unrealized Gain (Loss) on Investments

At March 31, 2015 and December 31, 2014, amortized cost, fair value, and unrealized gains and losses on investment securities are as follows:

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
March 31, 2015
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,337	$	1,026	$	16	$	27,347
Mortgage-backed U.S. government agencies		36,938		250		140		37,048
State and political subdivision obligations		74,162		2,077		242		75,997
Equity securities		2,239		70		21		2,288
	$	139,676	$	3,423	$	419	$	142,680

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2014
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,343	$	752	$	29	$	27,066
Mortgage-backed U.S. government agencies		33,763		190		177		33,776
State and political subdivision obligations		77,482		2,007		318		79,171
Equity securities		1,584		60		23		1,621
	$	139,172	$	3,009	$	547	$	141,634

Schedule of Fair Value and Unrealized Loss on Investments in a Continuous Unrealized Loss Position

The following table presents gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2015 and December 31, 2014.

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
March 31, 2015	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	4	$	4,397	$	16	$	-	$	-	$	4,397	$	16
Mortgage-backed U.S. government agencies	17		9,881		66		2,968		74		12,849		140
State and political subdivision obligations	25		8,463		48		4,592		194		13,055		242
Equity securities	2		-		-		596		21		596		21
Total temporarily impaired
available for sale securities	48	$	22,741	$	130	$	8,156	$	289	$	30,897	$	419

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
December 31, 2014	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	5	$	6,059	$	29	$	-	$	-	$	6,059	$	29
Mortgage-backed U.S. government agencies	20		9,511		62		4,416		115		13,927		177
State and political subdivision obligations	37		4,444		33		13,947		285		18,391		318
Equity securities	2		-		-		583		23		583		23
Total temporarily impaired
available for sale securities	64	$	20,014	$	124	$	18,946	$	423	$	38,960	$	547

Investments Classified by Contractual Maturity Date

The table below is the maturity distribution of investment securities at amortized cost and fair value.

(Dollars in thousands)	March 31, 2015
	Amortized		Fair
	Cost		Value
Due in 1 year or less	$	1,488	$	1,516
Due after 1 year but within 5 years		14,470		15,068
Due after 5 years but within 10 years		48,039		49,435
Due after 10 years		36,502		37,325
		100,499		103,344
Mortgage-backed securities		36,938		37,048
Equity securities		2,239		2,288
	$	139,676	$	142,680

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Consolidated Statements of Changes In Shareholders' Equity (USD $) In Thousands	Series B Preferred Stock [Member] Retained Earnings [Member]	Series B Preferred Stock [Member]	Series C Preferred Stock [Member] Preferred Stock [Member]	Series C Preferred Stock [Member]	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2013					$ 5,000	$ 3,494	$ 29,853	$ 15,441	$ (872)	$ 52,916
Net income								1,511		1,511
Total other comprehensive income (loss), net of taxes									1,065	1,065
Employee Stock Purchase Plan						1	13			14
Common stock dividends								(174)		(174)
Preferred stock dividends	(87)	(87)
Balance at Mar. 31, 2014					5,000	3,495	29,866	16,691	193	55,245
Balance at Dec. 31, 2014					5,000	3,498	29,902	19,217	1,513	59,130
Net income								963		963
Total other comprehensive income (loss), net of taxes									361	361
Employee Stock Purchase Plan						1	15			16
Common stock dividends								(350)		(350)
Preferred stock issuance			1,750	1,750
Preferred stock dividends	(87)	(87)
Common stock issued to acquirees' shareholders, value						724	10,568			11,292
Restricted stock compensation expense							8			8
Balance at Mar. 31, 2015					$ 6,750	$ 4,223	$ 40,493	$ 19,743	$ 1,874	$ 73,083

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Consolidated Balance Sheets (Parenthetical) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Common Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Common Stock, Shares Authorized	10,000,000	10,000,000
Common Stock, Shares, Issued	4,222,693	3,497,829
Common Stock, Shares, Outstanding	4,222,693	3,497,829
Series B Preferred Stock [Member]
Preferred stock, par value	$ 1.00	$ 1.00
Preferred Stock, Shares Authorized	5,000	5,000
Preferred Stock, Dividend Rate, Percentage	7.00%	7.00%
Preferred Stock, Shares Issued	5,000	5,000
Preferred Stock, Shares Outstanding	5,000	5,000
Preferred Stock, Redemption Amount	$ 5,100,000	$ 5,100,000
Preferred Stock, Liquidation Preference Per Share	$ 1,000	$ 1,000
Series C Preferred Stock [Member]
Preferred stock, par value	$ 1.00
Preferred Stock, Shares Authorized	1,750
Preferred Stock, Dividend Rate, Percentage	1.00%
Preferred Stock, Shares Issued	1,750	0
Preferred Stock, Shares Outstanding	1,750	0
Preferred Stock, Redemption Amount	$ 1,750,000
Preferred Stock, Liquidation Preference Per Share	$ 1,000

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2015

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

(8)           Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, net of taxes, are as follows:

(Dollars in thousands)	Unrealized Gain on Securities		Defined Benefit Plans Liabilities		Accumulated Other Comprehensive Income
Balance - March 31, 2015	$	1,984	$	(110)	$	1,874
Balance - December 31, 2014	$	1,626	$	(113)	$	1,513

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 15, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015
Entity Registrant Name	MID PENN BANCORP INC
Entity Central Index Key	0000879635
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,222,693

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Common Stock

3 Months Ended

Mar. 31, 2015

Common Stock [Abstract]

Common Stock

(9)           Common Stock

On June 25, 2014, the 2014 Restricted Stock Plan was registered, which awards shall not exceed, in the aggregate 100,000 shares of common stock.  The Plan was established for employees and directors of Mid Penn and the Bank, selected by the Compensation Committee of the Board of Directors, to advance the best interest of Mid Penn and its shareholders.  The Plan provides those persons who have a responsibility for its growth with additional incentives by allowing them to acquire an ownership interest in Mid Penn and thereby encouraging them to contribute to the success of the company.  As of March 31, 2015, 3,500 shares have been granted under the plan, which resulted in $8,000 of compensation expense.

XML

Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
INTEREST INCOME
Interest & fees on loans and leases	$ 7,154	$ 6,540
Interest on interest-bearing balances	11	10
Interest and dividends on investment securities:
U.S. Treasury and government agencies	331	277
State and political subdivision obligations, tax-exempt	531	519
Other securities	131	34
Total Interest Income	8,158	7,380
INTEREST EXPENSE
Interest on deposits	914	978
Interest on short-term borrowings	11	14
Interest on long-term debt	195	116
Total Interest Expense	1,120	1,108
Net Interest Income	7,038	6,272
PROVISION FOR LOAN AND LEASE LOSSES	300	547
Net Interest Income After Provision for Loan and Lease Losses	6,738	5,725
NONINTEREST INCOME
Income from fiduciary activities	127	158
Service charges on deposits	150	127
Net gain on sales of investment securities	177	150
Earnings from cash surrender value of life insurance	56	51
Mortgage banking income	67	38
ATM debit card interchange income	155	126
Merchant services income	50	67
Net gain on sales of SBA loans		51
Other income	167	126
Total Noninterest Income	949	894
NONINTEREST EXPENSE
Salaries and employee benefits	3,195	2,548
Occupancy expense, net	454	382
Equipment expense	313	301
Pennsylvania Bank Shares tax expense	115	99
FDIC Assessment	139	132
Legal and professional fees	143	97
Director fees and benefits expense	83	79
Marketing and advertising expense	88	48
Software licensing	319	237
Telephone expense	123	96
Loss on sale / write-down of foreclosed assets	32	87
Intangible amortization	9	7
Loan collection costs	80	71
Merger and acquisition expense	909
Other expenses	638	554
Total Noninterest Expense	6,640	4,738
INCOME BEFORE PROVISION FOR INCOME TAXES	1,047	1,881
Provision for income taxes	84	370
NET INCOME	963	1,511
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	876	1,424
PER COMMON SHARE DATA:
Basic Earnings Per Common Share	$ 0.23	$ 0.41
Cash Dividends	$ 0.10	$ 0.05
Series B Preferred Stock [Member]
NONINTEREST EXPENSE
Preferred stock dividends	$ 87	$ 87

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Investment Securities

3 Months Ended

Mar. 31, 2015

Investment Securities [Abstract]

Investment Securities

(3)           Investment Securities

Securities to be held for indefinite periods, but not intended to be held to maturity, are classified as available for sale and carried at fair value.  Securities held for indefinite periods include securities that management intends to use as part of its asset and liability management strategy and that may be sold in response to liquidity needs, changes in interest rates, resultant prepayment risk, and other factors related to interest rate and resultant prepayment risk changes.

Realized gains and losses on dispositions are based on the net proceeds and the amortized cost of the securities sold, using the specific identification method.  Unrealized gains and losses on investment securities available for sale are based on the difference between amortized cost and fair value of each security.  These gains and losses are credited or charged to other comprehensive income, whereas realized gains and losses flow through the Corporation’s consolidated statements of income.

Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities, clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired.  For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery.  These steps are done before assessing whether the entity will recover the cost basis of the investment.

In instances when a determination is made that other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, this guidance changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors.  The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings.  The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intent and ability to hold the securities until recovery of unrealized losses.

At March 31, 2015 and December 31, 2014, amortized cost, fair value, and unrealized gains and losses on investment securities are as follows:

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
March 31, 2015
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,337	$	1,026	$	16	$	27,347
Mortgage-backed U.S. government agencies		36,938		250		140		37,048
State and political subdivision obligations		74,162		2,077		242		75,997
Equity securities		2,239		70		21		2,288
	$	139,676	$	3,423	$	419	$	142,680

(Dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2014
Available for sale securities:
U.S. Treasury and U.S. government agencies	$	26,343	$	752	$	29	$	27,066
Mortgage-backed U.S. government agencies		33,763		190		177		33,776
State and political subdivision obligations		77,482		2,007		318		79,171
Equity securities		1,584		60		23		1,621
	$	139,172	$	3,009	$	547	$	141,634

Estimated fair values of debt securities are based on quoted market prices, where applicable.  If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, adjusted for differences between the quoted instruments and the instruments being valued.

Investment securities having a fair value of $127,164,000 at March 31, 2015 and $134,740,000 at December 31, 2014, were pledged to secure public deposits and other borrowings.

Mid Penn realized gross gains of $177,000 and $150,000 on sales of securities available for sale during the three months ended March 31, 2015 and March 31, 2014.  Mid Penn realized gross losses on the sale of securities available for sale of $0 during the three months ended March 31, 2015 and March 31, 2014.

The following table presents gross unrealized losses and fair value of investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2015 and December 31, 2014.

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
March 31, 2015	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	4	$	4,397	$	16	$	-	$	-	$	4,397	$	16
Mortgage-backed U.S. government agencies	17		9,881		66		2,968		74		12,849		140
State and political subdivision obligations	25		8,463		48		4,592		194		13,055		242
Equity securities	2		-		-		596		21		596		21
Total temporarily impaired
available for sale securities	48	$	22,741	$	130	$	8,156	$	289	$	30,897	$	419

(Dollars in thousands)		Less Than 12 Months				12 Months or More				Total
December 31, 2014	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale securities:
U.S. Treasury and U.S. government agencies	5	$	6,059	$	29	$	-	$	-	$	6,059	$	29
Mortgage-backed U.S. government agencies	20		9,511		62		4,416		115		13,927		177
State and political subdivision obligations	37		4,444		33		13,947		285		18,391		318
Equity securities	2		-		-		583		23		583		23
Total temporarily impaired
available for sale securities	64	$	20,014	$	124	$	18,946	$	423	$	38,960	$	547

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis; and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, and the financial condition and near term prospects of the issuer.  In addition, for debt securities, the Corporation considers (a) whether management has the intent to sell the security, (b) it is more likely than not that management will be required to sell the security prior to its anticipated recovery, and (c) whether management expects to recover the entire amortized cost basis.  For equity securities, management considers the intent and ability to hold securities until recovery of unrealized losses.

The majority of the investment portfolio is comprised of mortgage-backed U.S. government agencies and state and political subdivision obligations with school districts and municipal authorities throughout the U.S.  For the investment securities with an unrealized loss, Mid Penn has concluded, based on its analysis, that the unrealized losses in the investments are primarily caused by the movement of interest rates, and the contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment.

At March 31, 2015, 46 debt securities and 2 equity security with unrealized losses totaling $419,000 depreciated1.36% from their amortized cost basis.  At March 31, 2015, unrealized losses for twelve months or longer totaled $289,000 of which the majority was attributed to state and political subdivision obligations with $194,000 in unrealized losses.  At December 31, 2014, 62 debt securities and 2 equity security with unrealized losses totaling $547,000 depreciated 1.40% from their amortized cost basis.  At December 31, 2014, unrealized losses for twelve months or longer totaled $423,000 of which the majority was attributed to mortgage,-backed U.S. government agencies and state and political subdivision obligations with $115,000 and $285,000 in unrealized losses, respectively. 

Because Mid Penn does not intend to sell these investments and it is not likely it will be required to sell these investments before a recovery of fair value, which may be maturity, Mid Penn does not consider the securities with unrealized losses to be other-than-temporarily impaired as losses relate to changes in interest rates and not erosion of credit quality.

The table below is the maturity distribution of investment securities at amortized cost and fair value.

(Dollars in thousands)	March 31, 2015
	Amortized		Fair
	Cost		Value
Due in 1 year or less	$	1,488	$	1,516
Due after 1 year but within 5 years		14,470		15,068
Due after 5 years but within 10 years		48,039		49,435
Due after 10 years		36,502		37,325
		100,499		103,344
Mortgage-backed securities		36,938		37,048
Equity securities		2,239		2,288
	$	139,676	$	142,680

XML

Merger

3 Months Ended

Mar. 31, 2015

Merger [Abstract]

Merger

(2)           Merger

On March 1, 2015, Mid Penn consummated the merger with Phoenix Bancorp, Inc. (“Phoenix”), a Pennsylvania corporation.  Under the terms of a merger agreement between the parties, Phoenix merged with, and into Mid Penn, with Mid Penn continuing as the surviving entity.  Simultaneously with the consummation of the foregoing merger, Miners Bank (“Miners”), a Pennsylvania-state chartered bank and wholly-owned subsidiary of Phoenix, merged with and into Mid Penn Bank, a Pennsylvania-state chartered bank and wholly-owned subsidiary of Mid Penn.

As part of this transaction, Phoenix shareholders received either 3.167 shares of Mid Penn’s common stock or $51.60 in cash in exchange for each share of Phoenix common stock.  Holders of contingent rights issued by Phoenix received approximately 0.414 shares of Mid Penn’s common stock as settlement of such rights.  As a result, Mid Penn issued 723,851 shares of common stock with an acquisition date fair value of approximately $11,292,000, based on Mid Penn’s closing stock price of $15.60 on February 27, 2015, and cash of  $2,949,000.  Including an insignificant amount of cash paid in lieu of fractional shares, the fair value of total consideration paid was $14,241,000.

Additionally, as part of this transaction, on March 1, 2015, Mid Penn assumed all of the liabilities and obligations of Phoenix with respect to 1,750 shares of Phoenix’s preferred stock issued to the United States Treasury (“Treasury”)  in connection with the Small Business Lending Fund and issued 1,750 shares of Mid Penn’s Senior Non-Cumulative Perpetual Preferred Stock, Series C, having a $1,000 liquidation preference per share (the “SBLF Preferred Shares”), to the Treasury.  The SBLF Preferred Shares qualify as Tier 1 Capital and have terms and conditions identical to those shares of preferred stock issued by Phoenix to the Treasury.

The assets and liabilities of Miners and Phoenix were recorded on the consolidated balance sheet at their estimated fair value as of March 1, 2015, and their results of operations have been included in the consolidated income statement since such date.

Included in the purchase price was goodwill and a core deposit intangible of $2,597,000 and $578,000, respectively.  The core deposit intangible will be amortized over a ten-year period using a sum of the year’s digits basis.  The goodwill will not be amortized, but will be measured annually for impairment or more frequently if circumstances require.  Core deposit intangible amortization expense projected for the succeeding five years beginning 2015 is estimated to be $88,000,  $96,000,  $86,000,  $75,000, and $65,000 per year, respectively, and $168,000 in total for years after 2019.

The allocation of the purchase price is as follows:

(Dollars in thousands)
Purchase price assigned to Phoenix common shares exchanged for 723,851 Mid Penn common shares	$	11,292
Purchase price assigned to Phoenix common shares exchanged for cash		2,949
Total purchase price		14,241
Phoenix net assets acquired:
Tangible Common Equity		12,292
Estimated adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(982)
Associated deferred income taxes		334
Fair value adjustment to net assets acquired, net of tax		(648)
Total Phoenix net assets acquired		11,644
Goodwill resulting from the merger	$	2,597

While Mid Penn believes that the accounting for the merger is complete, ASC 805 allows for adjustments to goodwill for a period of up to one year after the merger date for information that becomes available that reflects circumstances at the merger date.  The following table summarizes the estimated fair value of the assets acquired and liabilities and equity assumed.

(Dollars in thousands)
Total purchase price	$	14,241
Net assets acquired:
Cash and cash equivalents		11,067
Investment securities		11,331
Restricted stock		509
Loans		110,707
Bank owned life insurance		3,673
Premises and equipment		1,792
Accrued interest receivable		388
Core deposit and other intangibles		578
Other assets		933
Deposits		(123,238)
FHLB borrowings		(3,570)
Accrued interest payable		(32)
Other liabilities		(744)
Preferred stock		(1,750)
		11,644
Goodwill	$	2,597

The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $113,090,000.  The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at March 1, 2015	$	113,090
Market rate adjustment		222
Credit fair value adjustment on pools of homogeneous loans		(1,462)
Credit fair value adjustment on impaired loans		(1,143)
Fair value of purchased loans at March 1, 2015	$	110,707

The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the started rates of the acquired loans.  The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from the loan inception to the acquisition date.  The credit adjustment on impaired loans is derived in accordance with ASC 310-30-30 and represents the portion of the loan balance that has been deemed uncollectible based on our expectations of future cash flows for each respective loan.

The information about the acquired Phoenix impaired loan portfolio as of March 1, 2015 is as follows:

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	3,548
Contractual cash flows not expected to be collected (nonaccretable discount)		(663)
Expected cash flows at acquisition		2,885
Interest component of expected cash flows (accretable discount)		(480)
Fair value of acquired loans	$	2,405

The following table presents pro forma information as if the merger between Mid Penn and Phoenix had been completed on January 1, 2014.  The pro forma information does not necessarily reflect the results of operations that would have occurred had Mid Penn merged with Phoenix at the beginning of 2014.  Supplemental pro forma earnings for 2015 were adjusted to exclude $909,000 of merger related costs incurred in the first three months of 2015; the results for the first three months of 2014 were adjusted to include these charges.  The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies, or other factors.

(Dollars in thousands)	March 31, 2015		March 31, 2014
Net interest income after loan loss provision	$	7,374	$	7,050
Noninterest income		1,014		1,129
Noninterest expense		6,815		7,548
Net income available to common shareholders		1,276		543
Net income per common share		0.30		0.13

The amount of total revenue, consisting of interest income plus noninterest income, as well as the net income specifically related to Phoenix for the period beginning March 1, 2015, included in the consolidated statements of income of Mid Penn for the three months ended March 31, 2015, was $495,000 and $50,000, respectively. 

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Merger (Tables)

3 Months Ended

Mar. 31, 2015

Merger [Abstract]

Allocation of the Purchase Price

The allocation of the purchase price is as follows:

(Dollars in thousands)
Purchase price assigned to Phoenix common shares exchanged for 723,851 Mid Penn common shares	$	11,292
Purchase price assigned to Phoenix common shares exchanged for cash		2,949
Total purchase price		14,241
Phoenix net assets acquired:
Tangible Common Equity		12,292
Estimated adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(982)
Associated deferred income taxes		334
Fair value adjustment to net assets acquired, net of tax		(648)
Total Phoenix net assets acquired		11,644
Goodwill resulting from the merger	$	2,597

Summary of the Estimated Fair Value of the Assets Acquired and Liabilities and Equity Assumed

The following table summarizes the estimated fair value of the assets acquired and liabilities and equity assumed.

(Dollars in thousands)
Total purchase price	$	14,241
Net assets acquired:
Cash and cash equivalents		11,067
Investment securities		11,331
Restricted stock		509
Loans		110,707
Bank owned life insurance		3,673
Premises and equipment		1,792
Accrued interest receivable		388
Core deposit and other intangibles		578
Other assets		933
Deposits		(123,238)
FHLB borrowings		(3,570)
Accrued interest payable		(32)
Other liabilities		(744)
Preferred stock		(1,750)
		11,644
Goodwill	$	2,597

Fair Value Adjustments Made to the Amortized Cost Basis, Presented at the Fair Value of Loans Acquired

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at March 1, 2015	$	113,090
Market rate adjustment		222
Credit fair value adjustment on pools of homogeneous loans		(1,462)
Credit fair value adjustment on impaired loans		(1,143)
Fair value of purchased loans at March 1, 2015	$	110,707

Fair Value of the Loans Acquired

The information about the acquired Phoenix impaired loan portfolio as of March 1, 2015 is as follows:

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	3,548
Contractual cash flows not expected to be collected (nonaccretable discount)		(663)
Expected cash flows at acquisition		2,885
Interest component of expected cash flows (accretable discount)		(480)
Fair value of acquired loans	$	2,405

Pro Forma Information

(Dollars in thousands)	March 31, 2015		March 31, 2014
Net interest income after loan loss provision	$	7,374	$	7,050
Noninterest income		1,014		1,129
Noninterest expense		6,815		7,548
Net income available to common shareholders		1,276		543
Net income per common share		0.30		0.13

Schedule of Balance Sheet relate to Business Combination

Assets, Liabilities, and Equity in Connection with Merger:
(Dollars in thousands)
Assets Acquired:
Securities	$	11,331	$	-
Loans		110,707		-
Restricted stock		509		-
Property and equipment		1,792		-
Accrued interest receivable		388		-
Core deposit and other intangible assets		578		-
Bank-owned life insurance		3,673		-
Other assets		933		-
	$	129,911	$	-
Liabilities Assumed:
Deposits	$	123,238	$	-
Accrued interest payable		32		-
Long-term debt		3,570		-
Other liabilities		744		-
	$	127,584	$	-
Equity Acquired:
Preferred stock	$	1,750	$	-

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Preferred Stock (Preferred Class A [Member])

3 Months Ended

Mar. 31, 2015

Preferred Class A [Member]

Preferred Stock

(10)         Preferred Stock

Small Business Lending Fund

On March 1, 2015, Mid Penn assumed all of the issued and outstanding shares of Phoenix with respect to 1,750 shares of Phoenix’s preferred stock issued to the Treasury in connection with the Small Business Lending Fund and issued 1,750 shares of Mid Penn’s SBLF Preferred Shares having a $1,000 liquidation preference per share, to the Treasury.  The SBLF Preferred Shares qualify as Tier 1 Capital and have terms and conditions identical to those shares of preferred stock issued by Phoenix to the Treasury.  Mid Penn will pay noncumulative dividends payable quarterly on January 1, April 1, July 1, and October 1 of each year.  The current dividend rate is 1.00% per annum for payment dates up to and including January 1, 2016.  Following this date, the dividend rate will increase to 9% per annum thereafter.  

The SBLF Preferred Shares may be redeemed at any time at the option of Mid Penn, subject to the approval of the appropriate federal banking agency.  All redemptions must be made at a per share redemption price equal to 100% of the liquidation preference, plus accrued and unpaid dividends as of the date of the redemption (“Redemption Date”) for the quarter that includes the Redemption Date, and a pro rata portion of any lending incentive fee.  All redemptions must be in amounts equal to at least 25% of the number of originally issued shares, or 100% of the then outstanding shares, if less than 25% of the number of originally issued shares.

Stock Issued Under Private Placement Offering

On September 26, 2012, Mid Penn filed with the Pennsylvania Department of State a Statement with Respect to Shares which, effective upon filing, designated a series of preferred stock as “7% Non-Cumulative Non-Voting Non-Convertible Perpetual Preferred Stock, Series B” (“Series B Preferred Stock”), and set forth the voting and other powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions of the Series B Preferred Stock.

Mid Penn sold shares of its Series B Preferred Stock, in transactions exempt from registration under the Securities Act of 1933, pursuant to Section 4(a)(2) thereof.

Between September 26, 2012 and December 31, 2012, Mid Penn sold 4,880 shares of its Series B Preferred Stock for total gross proceeds of $4,880,000, which have been offset by issuance costs of $50,000.  On January 3, 2013, 120 additional shares were sold resulting in total gross proceeds of $5,000,000 for the Series B Preferred Stock offering.

The following table summarizes the Series B Preferred Stock shares sold and the gross proceeds received through the private placement offering as of March 31, 2015:

(Dollars in thousands)
Period	Shares	Gross Proceeds
September 26, 2012 - September 30, 2012	345	$	345,000
October 1, 2012 - December 31, 2012	4,535		4,535,000
January 1, 2013 - December 31, 2013	120		120,000
January 1, 2014 - December 31, 2014	-		-
January 1, 2015 - March 31, 2015	-		-
Total	5,000	$	5,000,000

The annual dividend rate for the Series B Preferred Stock is 7% per annum of the liquidation preference of the Series B Preferred Stock or $70.00 per annum for each share of Series B Preferred Stock.  The Board of Directors must approve each dividend payment from legally available funds.  Dividends are payable to holders of record of the Series B Preferred Stock as they appear on our books on the record dates fixed by our Board of Directors.  Dividends on any of Series B Preferred Stock are non-cumulative.  If and when dividends are declared, they will be paid on February 15, May 15, August 15, and November 15 of each year.  If a dividend payment date is not a business day, the dividend will be paid on the immediately preceding business day but no additional dividend payment will be prorated from the date of purchase to the first dividend payment date over a quarterly dividend period of 90 days.

Mid Penn may redeem shares of its Series B Preferred Stock at its option, in whole or in part, at any time subject to prior approval of the Federal Reserve Board, if then required, at a redemption price of $1,020 per share of Series B Preferred Stock plus an amount equal to any declared but unpaid dividends and in accordance with the terms and conditions set forth in a Certificate of Designations for the Series B Preferred Stock as filed with the Pennsylvania Department of State.

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Guarantees

3 Months Ended

Mar. 31, 2015

Guarantees [Abstract]

Guarantees

(6)         Guarantees

In the normal course of business, Mid Penn makes various commitments and incurs certain contingent liabilities, which are not reflected in the accompanying consolidated financial statements.  The commitments include various guarantees and commitments to extend credit.  Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Mid Penn evaluates each customer’s credit-worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the customer.  Standby letters of credit and financial guarantees written are conditional commitments to guarantee the performance of a customer to a third party.  Those guarantees are primarily issued to support public and private borrowing arrangements.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.  Mid Penn had $9,963,000 and $9,837,000 standby letters of credit outstanding as of March 31, 2015 and December 31, 2014, respectively.  Mid Penn does not anticipate any losses because of these transactions.  The current amount of the liability as of March 31, 2015 for payment under standby letters of credit issued was not material.

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Preferred Stock (Stock Issued Under Private Placement Offering) (Narrative) (Details) (Preferred Class B [Member], USD $)	0 Months Ended		3 Months Ended				12 Months Ended	30 Months Ended
	Jan. 03, 2013	Sep. 30, 2012	Mar. 31, 2015	Dec. 31, 2012	Dec. 31, 2012	Jan. 03, 2013	Dec. 31, 2013	Mar. 31, 2015
Preferred Class B [Member]
Shares issued	120	345		4,535	4,880		120	5,000
Proceeds from issuance of private placement		$ 345,000		$ 4,535,000	$ 4,880,000	$ 5,000,000	$ 120,000	$ 5,000,000
Payments of Stock Issuance Costs					$ 50,000
Preferred Stock, Dividend Rate, Percentage			7.00%
Preferred Stock, Dividend Rate, Per Share Amount			$ 70.00
Preferred Stock, Dividend Payment Terms			Dividends on any of Series B Preferred Stock are non-cumulative. If and when dividends are declared, they will be paid on February 15, May 15, August 15, and November 15 of each year
Preferred Stock, Redemption Price Per Share			$ 1,020					$ 1,020

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Loans and Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2015

Loans and Allowance for Loan and Lease Losses [Abstract]

Loans and Allowance for Loan and Lease Losses

(4)           Loans and Allowance for Loan and Lease Losses

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. These amounts are generally being amortized over the contractual life of the loan.  Premiums and discounts on purchased loans are amortized as adjustments to interest income using the effective yield method.

The loan portfolio is segmented into commercial and consumer loans.  Commercial loans consist of the following classes: commercial and industrial, commercial real estate, commercial real estate-construction and lease financing.  Consumer loans consist of the following classes: residential mortgage loans, home equity loans and other consumer loans.

For all classes of loans, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days or more past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan and lease losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.  The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Commercial and industrial

Mid Penn originates commercial and industrial loans.  Most of the Bank’s commercial and industrial loans have been extended to finance local and regional businesses and include short-term loans to finance machinery and equipment purchases, inventory, and accounts receivable.  Commercial loans also involve the extension of revolving credit for a combination of equipment acquisitions and working capital in expanding companies.

The maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment.  Generally, the maximum term on non-mortgage lines of credit is one year.  The loan-to-value ratio on such loans and lines of credit generally may not exceed 80% of the value of the collateral securing the loan.  The Bank’s commercial business lending policy includes credit file documentation and analysis of the borrower’s character, capacity to repay the loan, the adequacy of the borrower’s capital and collateral as well as an evaluation of conditions affecting the borrower.  Analysis of the borrower’s past, present, and future cash flows is also an important aspect of the Bank’s current credit analysis.  Nonetheless, such loans are believed to carry higher credit risk than more traditional investments.

Commercial and industrial loans typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business.  As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself, which, in turn, is likely to be dependent upon the general economic environment.  Mid Penn’s commercial and industrial loans are usually, but not always, secured by business assets and personal guarantees.  However, the collateral securing the loans may depreciate over time, may be difficult to appraise, and may fluctuate in value based on the success of the business.

Commercial real estate and commercial real estate - construction

Commercial real estate and commercial real estate construction loans generally present a higher level of risk than loans secured by one to four family residences.  This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans.  In addition, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project.  If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Lease financing

Mid Penn originates leases for select commercial and state and municipal government lessees.  The nature of the leased asset is often subject to rapid depreciation in salvage value over a relatively short time frame or may be of an industry specific nature, making appraisal or liquidation of the asset difficult.  These factors have led the Bank to severely curtail the origination of new leases to state or municipal government agencies where default risk is extremely limited and to only the most credit-worthy commercial customers.  These commercial customers are primarily leasing fleet vehicles for use in their primary line of business, mitigating some of the asset value concerns within the portfolio.  Leasing has been a declining percentage of the Mid Penn’s portfolio since 2006, representing 0.15% of the portfolio at March 31, 2015.

Residential mortgage

Mid Penn offers a wide array of residential mortgage loans for both permanent structures and those under construction.  The Bank’s residential mortgage originations are secured primarily by properties located in its primary market and surrounding areas.  Residential mortgage loans have terms up to a maximum of 30 years and with loan to value ratios up to 100% of the lesser of the appraised value of the security property or the contract price.  Private mortgage insurance is generally required in an amount sufficient to reduce the Bank’s exposure to at or below the 85% loan to value level.  Residential mortgage loans generally do not include prepayment penalties.

In underwriting residential mortgage loans, the Bank evaluates both the borrower’s ability to make monthly payments and the value of the property securing the loan.  Most properties securing real estate loans made by Mid Penn are appraised by independent fee appraisers.  The Bank generally requires borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan.  Real estate loans originated by the Bank generally contain a “due on sale” clause allowing the Bank to declare the unpaid principal balance due and payable upon the sale of the security property.

The Bank underwrites residential mortgage loans to the standards established by the secondary mortgage market, i.e., Fannie Mae, Ginnie Mae, Freddie Mac, or Pennsylvania Housing Finance Agency standards, with the intention of selling the majority of residential mortgages originated into the secondary market.  In the event that the facts and circumstances surrounding a residential mortgage application do not meet all underwriting conditions of the secondary mortgage market, the Bank will evaluate the failed conditions and the potential risk of holding the residential mortgage in the Bank’s portfolio rather than rejecting the loan request.  In the event that the loan is held in the Bank’s portfolio, the interest rate on the residential mortgage would be increased to compensate for the added portfolio risk.

Consumer, including home equity

Mid Penn offers a variety of secured consumer loans, including home equity, automobile, and deposit secured loans.  In addition, the Bank offers other secured and unsecured consumer loans.  Most consumer loans are originated in Mid Penn’s primary market and surrounding areas. 

The largest component of Mid Penn’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit.  Substantially all home equity loans and lines of credit are secured by second mortgages on principal residences.  The Bank will lend amounts, which, together with all prior liens, typically may be up to 85% of the appraised value of the property securing the loan.  Home equity term loans may have maximum terms up to 20 years while home equity lines of credit generally have maximum terms of five years.

Consumer loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower.  The underwriting standards employed by the Bank for consumer loans include an application, a determination of the applicant’s payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan.  Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, in relation to the proposed loan amount.

Consumer loans may entail greater credit risk than do residential mortgage loans, particularly in the case of consumer loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment.  In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance.  In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.  Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Junior liens inherently have more credit risk by virtue of the fact that another financial institution may have a higher security position in the case of foreclosure liquidation of collateral to extinguish the debt.  Generally, foreclosure actions could become more prevalent if the real estate market continues to be weak and property values deteriorate.

Allowance for Loan and Lease Losses

The allowance for credit losses consists of the allowance for loan and lease losses and the reserve for unfunded lending commitments. The allowance for loan and lease losses (“allowance”) represents management’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated balance sheet.  The allowance is increased by the provision for loan and lease losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely.  Non-residential consumer loans are generally charged off no later than 120 days past due on a contractual basis, earlier in the event of bankruptcy, or if there is an amount deemed uncollectible.  Because all identified losses are immediately charged off, no portion of the allowance is restricted to any individual loan or groups of loans, and the entire allowance is available to absorb any and all loan losses.

The allowance for credit losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a monthly evaluation of the adequacy of the allowance.  The allowance is based on Mid Penn’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value, or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity and other consumer loans.  These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors.  These qualitative risk factors include changes in economic conditions, fluctuations in loan quality measures, changes in the experience of the lending staff and loan review systems, growth or changes in the mix of loans originated, and shifting industry or portfolio concentrations.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Mid Penn considers a commercial loan (consisting of commercial and industrial, commercial real estate, commercial real estate-construction, and lease financing loan classes) to be impaired when it becomes 90 days or more past due and not in the process of collection.  This methodology assumes the borrower cannot or will not continue to make additional payments.  At that time the loan would be considered collateral dependent as the discounted cash flow (“DCF”) method indicates no operating income is available for evaluating the collateral position; therefore, all impaired loans are deemed to be collateral dependent.

In addition, Mid Penn’s rating system assumes any loans classified as substandard non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

Mid Penn evaluates loans for charge-off on a monthly basis.  Policies that govern the recommendation for charge-off are unique to the type of loan being considered.  Commercial loans rated as nonaccrual or lower will first have a collateral evaluation completed in accordance with the guidance on impaired loans.  Once the collateral evaluation has been completed, a specific allocation of allowance is made based upon the results of the evaluation.  In the event the loan is unsecured, the loan would have been charged-off at the recognition of impairment.  If the loan is secured, it will undergo a 90 day waiting period to ensure the collateral shortfall identified in the evaluation is accurate and then charged down by the specific allocation. Once the charge down is taken, the remaining balance remains an impaired loan with the original terms and interest rate intact (not restructured).  Commercial loans secured by real estate rated as impaired will also have an initial collateral evaluation completed in accordance with the guidance on impaired loans.  An updated real estate valuation is ordered and the collateral evaluation is modified to reflect any variations in value.  A specific allocation of allowance is made for any anticipated collateral shortfall and a 90 day waiting period begins to ensure the accuracy of the collateral shortfall.  The loan is then charged down by the specific allocation.  Once the charge down is taken, the remaining balance remains an impaired loan with the original terms and interest rate intact (not restructured).  The process of charge-off for residential mortgage loans begins upon a loan becoming delinquent for 90 days and not in the process of collection.  The existing appraisal is reviewed and a lien search is obtained to determine lien position and any instances of intervening liens.  A new appraisal of the property will be ordered if deemed necessary by management and a collateral evaluation is completed. The loan will then be charged down to the value indicated in the evaluation.  Consumer loans (including home equity loans and other consumer loans) are recommended for charge-off after reaching delinquency of 90 days and the loan is not in the process of collection.  The entire balance of the consumer loan is recommended for charge-off at this point.

As noted above, Mid Penn assesses a specific allocation for commercial loans prior to charging down or charging off the loan.  Once the charge down is taken, the remaining balance remains a nonperforming loan with the original terms and interest rate intact (not restructured).  In addition, Mid Penn takes a preemptive step when any commercial loan becomes classified under its internal classification system.  A preliminary collateral evaluation in accordance with the guidance on impaired loans is prepared using the existing collateral information in the loan file.  This process allows Mid Penn to review both the credit and documentation files to determine the status of the information needed to make a collateral evaluation.  This collateral evaluation is preliminary but allows Mid Penn to determine if any potential collateral shortfalls exist.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as impaired.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.  The credit department employs an electronic tracking system to monitor the receipt of and need for updated appraisals.  To date, there have been no significant time lapses noted with the above processes. 

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.

For impaired loans with no valuation allowance required, Mid Penn’s practice of obtaining independent third party market valuations on the subject property within 30 days of being placed on non-accrual status sometimes indicates that the loan to value ratio is sufficient to obviate the need for a specific allocation in spite of significant deterioration in real estate values in Mid Penn’s primary market area.  These circumstances are determined on a case by case analysis of the impaired loans.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 18 months for possible revaluation by an independent third party.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Mid Penn does not separately identify individual residential mortgage loans, home equity loans and other consumer loans for impairment disclosures, unless such loans are the subject of a troubled debt restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the borrowers have been granted concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.   Loans classified as troubled debt restructurings are designated as impaired.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors, and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments.  Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful, and loss.  Loans criticized as special mention have potential weaknesses that deserve management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.  Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses.  Any loans not classified as noted above are rated pass.

In addition, Federal and State regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan and lease losses and may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management.  Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

Acquired Loans

Loans that Mid Penn acquires in connection with acquisitions are recorded at fair value with no carryover of the related allowance for loan losses.  Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan.  The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount.  The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan.  Subsequent decreases to the expected cash flows will require Mid Penn to evaluate the need for an additional allowance for credit losses.  Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount which Mid Penn will then reclassify as accretable discount that will be recognized into interest income over the remaining life of the loan. 

Acquired loans that met the criteria for impaired or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent if Mid Penn expects to fully collect the new carrying value (i.e. fair value) of the loans.  As such, Mid Penn may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount.  In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment. 

Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30, but for which a discount is attributable at least in part to credit quality, are also accounted for in accordance with this guidance.  As a result, related discounts are recognized subsequently through accretion based on the contractual cash flows of the acquired loans.

The classes of the loan portfolio, summarized by the aggregate pass rating and the classified ratings of special mention, substandard, and doubtful within Mid Penn’s internal risk rating system as of March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)			Special
March 31, 2015	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	156,220	$	2,684	$	1,350	$	-	$	160,254
Commercial real estate		322,756		6,955		10,936		-		340,647
Commercial real estate - construction		60,149		237		-		-		60,386
Lease financing		1,016		-		-		-		1,016
Residential mortgage		95,731		359		1,443		-		97,533
Home equity		31,372		344		394		-		32,110
Consumer		3,207		-		-		-		3,207
	$	670,451	$	10,579	$	14,123	$	-	$	695,153

(Dollars in thousands)			Special
December 31, 2014	Pass		Mention		Substandard		Doubtful		Total
Commercial and industrial	$	117,166	$	654	$	1,190	$	-	$	119,010
Commercial real estate		280,817		4,859		11,681		-		297,357
Commercial real estate - construction		55,834		242		-		-		56,076
Lease financing		1,121		-		-		-		1,121
Residential mortgage		64,900		252		1,290		-		66,442
Home equity		28,167		138		201		-		28,506
Consumer		3,021		-		-		-		3,021
	$	551,026	$	6,145	$	14,362	$	-	$	571,533

Impaired loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

	March 31, 2015						December 31, 2014
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	30	$	64	$	-	$	395	$	430	$	-
Acquired with credit deterioration*		272		272		-		-		-		-
Commercial real estate:
Commercial real estate		1,895		4,453		-		1,971		4,481		-
Acquired with credit deterioration*		1,675		1,675		-		-		-		-
Residential mortgage:
Residential mortgage		935		1,011		-		1,146		1,286		-
Acquired with credit deterioration*		425		425		-		-		-		-
Home equity:
Home equity		40		56		-		29		88		-
Acquired with credit deterioration*		21		21		-		-		-		-
With an allowance recorded:
Commercial and industrial	$	580	$	591	$	223	$	223	$	231	$	137
Commercial real estate		5,163		5,380		1,103		6,954		7,255		1,382
Residential mortgage		31		32		23		-		-		-
Home equity		206		208		139		211		213		115
Total:
Commercial and industrial	$	882	$	927	$	223	$	618	$	661	$	137
Commercial real estate		8,733		11,508		1,103		8,925		11,736		1,382
Residential mortgage		1,391		1,468		23		1,146		1,286		-
Home equity		267		285		139		240		301		115

* Loans acquired with credit deterioration are presented net of credit fair value adjustment.

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2015 and March 31, 2014 are summarized as follows:

	March 31, 2015				March 31, 2014
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Commercial and industrial	$	31	$	-	$	190	$	-
Acquired with credit deterioration		55		-		-		-
Commercial real estate:
Commercial real estate		1,933		-		2,697		-
Acquired with credit deterioration		335		-		-		-
Residential mortgage:
Residential mortgage		932		-		263		-
Acquired with credit deterioration		85		-		-		-
Home equity:
Home equity		32		-		27		-
Acquired with credit deterioration		4		-		-		-
With an allowance recorded:
Commercial and industrial	$	583	$	-	$	74	$	-
Commercial real estate		5,177		-		7,059		-
Residential mortgage		16		-		-		-
Home equity		208		-		47		-
Total:
Commercial and industrial	$	669	$	-	$	264	$	-
Commercial real estate		7,445		-		9,756		-
Residential mortgage		1,033		-		263		-
Home equity		244		-		74		-

Non-accrual loans by loan portfolio class as of March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	March 31, 2015		December 31, 2014
Commercial and industrial	$	449	$	267
Commercial real estate		5,452		7,249
Residential mortgage		1,249		1,152
Home equity		267		239
	$	7,417	$	8,907

The performance and credit quality of the loan portfolio is also monitored by the 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 March 31, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)
March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial:
Commercial and industrial	$	246	$	-	$	92	$	338	$	159,644	$	159,982	$	-
Acquired with credit deterioration		-		-		-		-		272		272		-
Commercial real estate:
Commercial real estate		301		288		5,168		5,757		333,215		338,972		-
Acquired with credit deterioration		-		316		50		366		1,309		1,675		50
Commercial real estate - construction:
Commercial real estate - construction		-		-		-		-		60,386		60,386		-
Lease financing:
Lease financing		-		-		-		-		1,016		1,016		-
Residential mortgage:
Residential mortgage		552		78		896		1,526		95,582		97,108		-
Acquired with credit deterioration		64		-		244		308		117		425		-
Home equity:
Home equity		50		-		166		216		31,873		32,089		-
Acquired with credit deterioration		-		-		21		21		-		21		-
Consumer:
Consumer		-		-		-		-		3,207		3,207		-
Total	$	1,213	$	682	$	6,637	$	8,532	$	686,621	$	695,153	$	50

(Dollars in thousands)
December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans Receivable > 90 Days and Accruing
Commercial and industrial	$	172	$	290	$	87	$	549	$	118,461	$	119,010	$	-
Commercial real estate		403		197		6,585		7,185		290,172		297,357		-
Commercial real estate - construction		-		-		-		-		56,076		56,076		-
Lease financing		-		-		-		-		1,121		1,121		-
Residential mortgage		328		82		1,117		1,527		64,915		66,442		-
Home equity		93		63		157		313		28,193		28,506		-
Consumer		6		-		-		6		3,015		3,021		-
Total	$	1,002	$	632	$	7,946	$	9,580	$	561,953	$	571,533	$	-

The following tables summarize the allowance for loan and lease losses and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the period ended, March 31, 2015	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Charge-offs		-		(450)		-		-		(1)		(29)		(5)		-		(485)
Recoveries		-		2		-		-		-		29		4		-		35
Provisions		246		149		2		(1)		95		(134)		3		(60)		300
Ending balance	$	1,639	$	3,626	$	35	$	1	$	544	$	519	$	37	$	165	$	6,566

Ending balance: individually evaluated for impairment	$	223	$	1,103	$	-	$	-	$	23	$	139	$	-	$	-	$	1,488
Ending balance: collectively evaluated for impairment	$	1,416	$	2,523	$	35	$	1	$	521	$	380	$	37	$	165	$	5,078
Ending balance: acquired with credit deterioration	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Loans receivables:
Ending balance	$	160,254	$	340,647	$	60,386	$	1,016	$	97,533	$	32,110	$	3,207	$	-	$	695,153
Ending balance: individually evaluated  for impairment	$	610	$	7,058	$	-	$	-	$	966	$	246	$	-	$	-	$	8,880
Ending balance: collectively evaluated for impairment	$	159,372	$	331,914	$	60,386	$	1,016	$	96,142	$	31,843	$	3,207	$	-	$	683,880
Ending balance: acquired with credit deterioration	$	272	$	1,675	$	-	$	-	$	425	$	21	$	-	$	-	$	2,393

(Dollars in thousands)
As of, and for the period ended, March 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	1,187	$	4,006	$	9	$	-	$	581	$	441	$	72	$	21	$	6,317
Charge-offs		(40)		(368)		-		-		(59)		-		(16)		-		(483)
Recoveries		3		-		-		-		-		-		39		-		42
Provisions		40		348		4		1		19		(12)		(27)		174		547
Ending balance	$	1,190	$	3,986	$	13	$	1	$	541	$	429	$	68	$	195	$	6,423

Ending balance: individually evaluated for impairment	$	66	$	1,792	$	-	$	-	$	-	$	8	$	-	$	-	$	1,866
Ending balance: collectively evaluated for impairment	$	1,124	$	2,194	$	13	$	1	$	541	$	421	$	68	$	195	$	4,557
Loans receivables:
Ending balance	$	106,033	$	296,103	$	46,849	$	1,496	$	68,321	$	26,464	$	4,473	$	-	$	549,739
Ending balance: individually evaluated  for impairment	$	269	$	10,014	$	-	$	-	$	260	$	71	$	-	$	-	$	10,614
Ending balance: collectively evaluated for impairment	$	105,764	$	286,089	$	46,849	$	1,496	$	68,061	$	26,393	$	4,473	$	-	$	539,125

(Dollars in thousands)
December 31, 2014	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Lease financing		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Ending balance	$	1,393	$	3,925	$	33	$	2	$	450	$	653	$	35	$	225	$	6,716
Ending balance: individually evaluated for impairment	$	137	$	1,382	$	-	$	-	$	-	$	115	$	-	$	-	$	1,634
Ending balance: collectively evaluated for impairment	$	1,256	$	2,543	$	33	$	2	$	450	$	538	$	35	$	225	$	5,082
Loans receivables:
Ending balance	$	119,010	$	297,357	$	56,076	$	1,121	$	66,442	$	28,506	$	3,021	$	-	$	571,533
Ending balance: individually evaluated  for impairment	$	618	$	8,925	$	-	$	-	$	1,146		240	$	-	$	-	$	10,929
Ending balance: collectively evaluated for impairment	$	118,392	$	288,432	$	56,076	$	1,121	$	65,296	$	28,266	$	3,021	$	-	$	560,604

The recorded investments in troubled debt restructured loans at March 31, 2015 and December 31, 2014 are as follows:

(Dollars in thousands)	Pre-Modification		Post-Modification
March 31, 2015	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	20
Commercial real estate		9,518		7,628		6,357
Residential mortgage		733		727		601
	$	10,291	$	8,390	$	6,978

(Dollars in thousands)	Pre-Modification		Post-Modification
December 31, 2014	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	40	$	35	$	23
Commercial real estate		11,189		9,443		8,005
Residential mortgage		903		897		713
Home equity		50		7		5
	$	12,182	$	10,382	$	8,746

Mid Penn entered into forbearance agreements on all loans currently classified as troubled debt restructures 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.

Mid Penn’s troubled debt restructured loans at March 31, 2015 totaled $6,978,000, of which six loans totaling $1,994,000 represented accruing impaired loans in compliance with the terms of the modification.  Of the $1,994,000, three are accruing impaired residential mortgages to unrelated borrowers totaling $69,000 and the other three are accruing impaired commercial real estate loans spread among two relationships totaling $1,925,000.  The remaining $4,984,000, representing 11 loans among seven relationships, are nonaccrual impaired loans, and resulted in a collateral evaluation in accordance with the guidance on impaired loans.  One large relationship accounts for $3,123,000 of the $4,984,000 nonaccrual impaired troubled debt restructured loan total.

At December 31, 2014, Mid Penn’s troubled debt restructured loans totaled $8,746,000, of which six loans totaling $2,035,000, represented accruing impaired loans in compliance with the terms of the modification.  Of the $2,035,000, three are accruing impaired residential mortgages to unrelated borrowers totaling $71,000 and the other three are accruing impaired commercial real estate loans spread among two relationships totaling $1,964,000.  The remaining $6,711,000, representing 14 loans among nine relationships, are nonaccrual impaired loans, and resulted in a collateral evaluation in accordance with the guidance on impaired loans.  Two large relationships account for $4,680,000 of the $6,711,000 nonaccrual impaired troubled debt restructured loan total.

As a result of the evaluations at March 31, 2015 and March 31, 2014, a specific allocation and, subsequently, charge-offs have been taken as appropriate.  As of March 31, 2015 and March 31, 2014, charge-offs associated with troubled debt restructured loans while under forbearance agreement totaled $0 and there were no defaulted troubled debt restructured loans as all troubled debt restructured loans were current with respect to their associated forbearance agreements.  As of March 31, 2015, one forbearance agreement was negotiated during 2008, 10 forbearance agreements were negotiated during 2009, three forbearance agreements were negotiated in 2013, and three forbearance agreements were negotiated during 2014.

There were no new loans modified during the three months ended March 31, 2015 and 2014 that resulted in troubled debt restructurings.  There were two troubled debt restructured loans to unrelated borrowers that defaulted within twelve months of restructure totaling $3,412,000 for the three months ended March 31, 2015, while there were none for the three month ended March 31, 2014.

Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process at March 31, 2015 and December 31, 2014 totaled $277,000 and $485,000, respectively.

The following table provides activity for the accretable yield of purchased impaired loans for the quarter ended March 31, 2015:

(Dollars in thousands)
Accretable yield, January 1, 2015	$	-
Acquisition of impaired loans		480
Accretable yield amortized to interest income		(12)
Reclassification from nonaccretable difference (1)		-
Accretable yield, March 31, 2015	$	468

(1) Reclassification from non-accretable difference represents an increase to the estimated cash flows to be collected on the underlying   portfolio.

XML

Fair Value Measurement

3 Months Ended

Mar. 31, 2015

Fair Value Measurement [Abstract]

Fair Value Measurement

(5)        Fair Value Measurement

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.  This guidance provides additional information on determining when the volume and level of activity for the asset or liability has significantly decreased.  The guidance also includes information on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability.  When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance.

This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly.  In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly.  The guidance provides a list of circumstances that may indicate that a transaction is not orderly.  A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability.  Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own belief about the assumptions market participants would use in pricing the asset or liability based upon the best information available in the circumstances.  Fair value measurement and disclosure guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  An asset’s or liability’s placement in the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement or disclosure.  The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets that are accessible at the measurement date for

 identical, unrestricted assets or liabilities;

Level 2 Inputs - Quoted prices in markets that are not active, or inputs that are observable either directly or

 indirectly, for substantially the full term of the asset or liability;

Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value

 measurement and unobservable (i.e., supported by little or no market activity).

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

There were no transfers of assets between fair value Level 1 and Level 2 for the three months ended March 31, 2015.  The following tables illustrate the assets measured at fair value on a recurring basis segregated by hierarchy fair value levels.

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,347	$	-	$	27,347	$	-
Mortgage-backed U.S. government agencies		37,048		-		37,048		-
State and political subdivision obligations		75,997		-		75,997		-
Equity securities		2,288		1,218		1,070		-
	$	142,680	$	1,218	$	141,462	$	-

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,066	$	-	$	27,066	$	-
Mortgage-backed U.S. government agencies		33,776		-		33,776		-
State and political subdivision obligations		79,171		-		79,171		-
Equity securities		1,621		561		1,060		-
	$	141,634	$	561	$	141,073	$	-

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, when there is evidence of impairment).

The following tables illustrate the assets measured at fair value on a nonrecurring basis segregated by hierarchy fair value levels.

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	5,265	$	-	$	-	$	5,265
Foreclosed Assets Held for Sale		393		-		-		393
Mortgage Servicing Rights		182		-		-		182

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	6,664	$	-	$	-	$	6,664
Foreclosed Assets Held for Sale		142		-		-		142
Mortgage Servicing Rights		187		-		-		187

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Mid Penn has utilized Level 3 inputs to determine the fair value as of March 31, 2015 and December 31, 2014.

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
March 31, 2015	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	5,265	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		393	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		182	Multiple of annual service fee	Estimated prepayment speed based on rate and term	240% - 400%	352%

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
December 31, 2014	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	6,664	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		142	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		187	Multiple of annual service fee	Estimated prepayment speed based on rate and term	210% - 400%	353%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

(2) 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.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The following methodologies and assumptions were used to estimate the fair value of Mid Penn’s financial instruments:

Cash and Cash Equivalents:

The carrying value of cash and cash equivalents is considered to be a reasonable estimate of fair value.

Interest-bearing Balances with other Financial Institutions:

The estimate of fair value was determined by comparing the present value of quoted interest rates on like deposits with the weighted average yield and weighted average maturity of the balances.

Securities Available for Sale:

The fair value of 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. 

Impaired Loans:

Mid Penn’s rating system assumes any loans classified as substandard and non-accrual to be impaired, and all of these loans are considered collateral dependent; therefore, all of Mid Penn’s impaired loans, whether reporting a specific allocation or not, are considered collateral dependent.

It is Mid Penn’s policy to obtain updated third party valuations on all impaired loans collateralized by real estate within 30 days of the credit being classified as substandard non-accrual.  Prior to receipt of the updated real estate valuation Mid Penn will use any existing real estate valuation to determine any potential allowance issues; however no allowance recommendation will be made until which time Mid Penn is in receipt of the updated valuation.

In some instances Mid Penn is not holding real estate as collateral and is relying on business assets (personal property) for repayment.  In these circumstances a collateral inspection is performed by Mid Penn personnel to determine an estimated value.  The value is based on net book value, as provided by the financial statements, and discounted accordingly based on determinations made by management.  Occasionally, Mid Penn will employ an outside service to provide a fair estimate of value based on auction sales or private sales.  Management reviews the estimates of these third parties and discounts them accordingly based on management’s judgment, if deemed necessary.   Mid Penn considers the estimates used in its impairment analysis to be Level 3 inputs.

Mid Penn actively monitors the values of collateral on impaired loans.  This monitoring may require the modification of collateral values over time or changing circumstances by some factor, either positive or negative, from the original values.  All collateral values will be assessed by management at least every 18 months for possible revaluation by an independent third party.

Loans:

For variable-rate loans that reprice frequently and which entail no significant changes in credit risk, carrying values approximated fair value.  The fair value of other loans are estimated by calculating the present value of the cash flow difference between the current rate and the market rate, for the average maturity, discounted quarterly at the market rate.

Foreclosed Assets Held for Sale:

Certain assets included in foreclosed assets held for sale are carried at fair value and accordingly is presented as measured on a non-recurring basis.  Values are estimated using Level 3 inputs, based on appraisals that consider the sales prices of property in the proximate vicinity.

Accrued Interest Receivable and Payable:

The carrying amount of accrued interest receivable and payable approximates their fair values.

Restricted Investment in Bank Stocks:

The carrying amount of required and restricted investment in correspondent bank stock approximates fair value, and considers the limited marketability of such securities.

Mortgage Servicing Rights:

The fair value of servicing rights is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date.

Deposits: 

The fair value for demand deposits (e.g., interest and noninterest checking, savings, and money market deposit accounts) is by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts).  Fair value for fixed-rate certificates of deposit was estimated using a discounted cash flow calculation by combining all fixed-rate certificates into a pool with a weighted average yield and a weighted average maturity for the pool and comparing the pool with interest rates currently being offered on a similar maturity.

Short-term Borrowings:

Because of time to maturity, the estimated fair value of short-term borrowings approximates the book value.

Long-term Debt:

The estimated fair values of long-term debt were determined using discounted cash flow analysis, based on currently available borrowing rates for similar types of borrowing arrangements.

Commitments to Extend Credit and Letters of Credit:

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present credit worthiness of the counterparties.  The fair value of guarantees and letters of credit is based on fees currently charged for similar agreements.

The following table summarizes the carrying value and fair value of financial instruments at March 31, 2015 and December 31, 2014.

(Dollars in thousands)	March 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and cash equivalents	$	14,195	$	14,195	$	9,882	$	9,882
Interest-bearing time balances with other financial institutions		5,669		5,669		5,772		5,772
Investment securities		142,680		142,680		141,634		141,634
Net loans and leases		688,587		696,138		564,817		572,487
Restricted investment in bank stocks		3,517		3,517		3,181		3,181
Accrued interest receivable		3,394		3,394		3,058		3,058
Mortgage servicing rights		182		182		187		187
Financial liabilities:
Deposits	$	759,046	$	760,676	$	637,922	$	639,226
Short-term borrowings		621		621		578		578
Long-term debt		56,480		56,093		52,961		52,514
Accrued interest payable		498		498		349		349
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Financial standby letters of credit		-		-		-		-

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of March 31, 2015 and December 31, 2014.  Carrying values approximate fair values for cash and cash equivalents, interest-bearing time balances with other financial institutions, restricted investment in bank stocks, mortgage servicing rights, accrued interest receivable and payable, and short-term borrowings.  Other than cash and cash equivalents, which are considered Level 1 Inputs and mortgage servicing rights, which are Level 3 inputs, these instruments are Level 2 Inputs.  These tables exclude financial instruments for which the carrying amount approximates fair value.

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
March 31, 2015	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	688,587	$	696,138	$	-	$	-	$	696,138
Financial instruments - liabilities
Deposits	$	759,046	$	760,676	$	-	$	760,676	$	-
Long-term debt		56,480		56,093		-		56,093		-

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
December 31, 2014	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	564,817	$	572,487	$	-	$	-	$	572,487
Financial instruments - liabilities
Deposits	$	637,922	$	639,226	$	-	$	639,226	$	-
Long-term debt		52,961		52,514		-		52,514		-

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Defined Benefit Plans

3 Months Ended

Mar. 31, 2015

Defined Benefit Plans [Abstract]

Defined Benefit Plans

(7)        Defined Benefit Plans

Mid Penn has an unfunded noncontributory defined benefit retirement plan for directors.  The plan provides defined benefits based on years of service.  In addition, Mid Penn sponsors a defined benefit health care plan that provides post-retirement medical benefits and life insurance to qualifying full-time employees.  These health care and life insurance plans are noncontributory.  A December 31 measurement date for the plans is used.

The components of net periodic benefit costs from these benefit plans are as follows:

	Three Months Ended March 31,
(Dollars in thousands)	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Service cost	$	8	$	8	$	3	$	3
Interest cost		11		13		8		9
Amortization of prior service cost		4		3		-		-
Net periodic benefit cost	$	23	$	24	$	11	$	12

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Merger (Fair Value Adjustments) (Details) (Phoenix Bancorp Inc. [Member], USD $) In Thousands, unless otherwise specified	0 Months Ended
	Mar. 01, 2015	Mar. 31, 2015
Phoenix Bancorp Inc. [Member]
Business Acquisition [Line Items]
Gross amortized cost basis	$ 113,090
Market rate adjustment	222
Credit fair value adjustment on pools of homogeneous loans	(1,462)
Credit fair value adjustment on impaired loans	(1,143)
Fair value of purchased loans	$ 110,707	$ 110,707

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Fair Value Measurement (Assets Measured at Fair Value on Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 142,680	$ 141,634
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,218	561
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	141,462	141,073
U.S. Treasury and U.S. government agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	27,347	27,066
U.S. Treasury and U.S. government agencies [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	27,347	27,066
Mortgage-backed U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	37,048	33,776
Mortgage-backed U.S. Government Agencies [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	37,048	33,776
State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	75,997	79,171
State and municipal [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	75,997	79,171
Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	2,288	1,621
Equity Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,218	561
Equity Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 1,070	$ 1,060

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

(12)          Recent Accounting Pronouncements

ASU 2014-09:  The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) Update 2014-09, Revenue from Contracts with Customers (Topic 606).

The amendments in this Update establish a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The ASU is effective for annual periods beginning after December 15, 2016, including interim periods therein. Three basic transition methods are available – full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the this alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. GAAP at the date of initial application (e.g. January 1, 2017) and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. That is, prior years would not be restated and additional disclosures would be required to enable users of the financial statements to understand the impact of adopting the new standard in the current year compared to prior years that are presented under legacy U.S. GAAP. Early adoption is prohibited. In April 2015, the FASB proposed a one-year delay of the effective date of the revenue recognition standard.  The deferral would require public entities to apply the new revenue standard for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein.  Public entities would be permitted to elect to early adopt for annual reporting periods beginning after December 15, 2016. 

ASU 2014-17: The FASB issued ASU Update 2014-17, Business Combinations (Topic 805):  Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force).

The ASU amends Topic 805 so that a reporting entity that is a business or nonprofit activity (an “acquiree”) has the option to apply pushdown accounting to its separate financial statements when an acquirer obtains control of the acquiree.  The option is available for each individual change-in-control event.  Control has the same meaning as a “controlling financial interest” under Topic 810, such that pushdown accounting may be applied if an acquirer obtains control through a simple majority of the outstanding voting shares of the acquiree (e.g., 51%).  Similarly, a Variable Interest Entity is considered an “acquiree” of its primary beneficiary and may also elect pushdown accounting.

If the acquiree elects to apply pushdown accounting, it must do so as of the acquisition date of the change-in-control event.  Further, any subsidiary of the acquiree may elect to apply pushdown accounting to its separate financial statements, regardless of whether the acquiree elects to apply pushdown accounting.  Upon election, the acquiree would adjust its standalone financial statements to reflect the acquirer’s new basis in the acquired entity’s assets and liabilities, and would provide relevant disclosures under Topic 805 to enable users to evaluate the effect of pushdown accounting.  The ASU became effective upon issuance on November 18, 2014.  After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event.

Mid Penn is currently evaluating the effects these Updates will have on its consolidated financial statements.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Measurement [Abstract]

Assets Measured at Fair Value on a Recurring Basis

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,347	$	-	$	27,347	$	-
Mortgage-backed U.S. government agencies		37,048		-		37,048		-
State and political subdivision obligations		75,997		-		75,997		-
Equity securities		2,288		1,218		1,070		-
	$	142,680	$	1,218	$	141,462	$	-

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	27,066	$	-	$	27,066	$	-
Mortgage-backed U.S. government agencies		33,776		-		33,776		-
State and political subdivision obligations		79,171		-		79,171		-
Equity securities		1,621		561		1,060		-
	$	141,634	$	561	$	141,073	$	-

Fair Value Measurements, Nonrecurring

			Fair value measurements at March 31, 2015 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	5,265	$	-	$	-	$	5,265
Foreclosed Assets Held for Sale		393		-		-		393
Mortgage Servicing Rights		182		-		-		182

			Fair value measurements at December 31, 2014 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	6,664	$	-	$	-	$	6,664
Foreclosed Assets Held for Sale		142		-		-		142
Mortgage Servicing Rights		187		-		-		187

Fair Value Inputs, Assets, Quantitative Information

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
March 31, 2015	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	5,265	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		393	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		182	Multiple of annual service fee	Estimated prepayment speed based on rate and term	240% - 400%	352%

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
December 31, 2014	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired Loans	$	6,664	Appraisal of collateral (1)	Appraisal adjustments (2)	10% - 95%	32%
Foreclosed Assets Held for Sale		142	Appraisal of collateral (1), (3)	Appraisal adjustments (2)	15% - 40%	27%
Mortgage Servicing Rights		187	Multiple of annual service fee	Estimated prepayment speed based on rate and term	210% - 400%	353%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level 3 inputs which are not observable.

(2) 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.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

Fair Value, by Balance Sheet Grouping

(Dollars in thousands)	March 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and cash equivalents	$	14,195	$	14,195	$	9,882	$	9,882
Interest-bearing time balances with other financial institutions		5,669		5,669		5,772		5,772
Investment securities		142,680		142,680		141,634		141,634
Net loans and leases		688,587		696,138		564,817		572,487
Restricted investment in bank stocks		3,517		3,517		3,181		3,181
Accrued interest receivable		3,394		3,394		3,058		3,058
Mortgage servicing rights		182		182		187		187
Financial liabilities:
Deposits	$	759,046	$	760,676	$	637,922	$	639,226
Short-term borrowings		621		621		578		578
Long-term debt		56,480		56,093		52,961		52,514
Accrued interest payable		498		498		349		349
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Financial standby letters of credit		-		-		-		-

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
March 31, 2015	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	688,587	$	696,138	$	-	$	-	$	696,138
Financial instruments - liabilities
Deposits	$	759,046	$	760,676	$	-	$	760,676	$	-
Long-term debt		56,480		56,093		-		56,093		-

					Fair Value Measurements
					Quoted Prices
					in Active Markets				Significant
(Dollars in thousands)					for Identical Assets		Significant Other		Unobservable
	Carrying				or Liabilities		Observable Inputs		Inputs
December 31, 2014	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	564,817	$	572,487	$	-	$	-	$	572,487
Financial instruments - liabilities
Deposits	$	637,922	$	639,226	$	-	$	639,226	$	-
Long-term debt		52,961		52,514		-		52,514		-

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Loans and Allowance for Loan and Lease Losses (Troubled Debt Restructurings) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 10,291,000	$ 12,182,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	8,390,000	10,382,000
Financing Receivable, Modifications, Recorded Investment	6,978,000	8,746,000
Home Equity/ Home Equity Lines of Credit [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment		50,000
Financing Receivable, Modifications, Post-Modification Recorded Investment		7,000
Financing Receivable, Modifications, Recorded Investment		5,000
Residential mortgages [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment	733,000	903,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	727,000	897,000
Financing Receivable, Modifications, Recorded Investment	601,000	713,000
Commercial and industrial [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment	40,000	40,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	35,000	35,000
Financing Receivable, Modifications, Recorded Investment	20,000	23,000
Commercial real estate [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment	9,518,000	11,189,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	7,628,000	9,443,000
Financing Receivable, Modifications, Recorded Investment	$ 6,357,000	$ 8,005,000

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Investment Securities (Investments Classified by Contractual Maturity Date) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Available for sale Securities, Amortized Cost, Due in 1 year or less	$ 1,488
Available for sale Securities, Amortized Cost, Due after 1 year but within 5 years	14,470
Available for sale Securities, Amortized Cost, Due after 5 years but within 10 years	48,039
Available for sale Securities, Amortized Cost, Due after 10 years	36,502
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost Basis, Total	100,499
Equity Securities, Amortized Cost	2,239
Available-for-sale Securities, Amortized Cost Basis	139,676	139,172
Available for sale Securities, Fair Value, Due in 1 year or less	1,516
Available for sale Securities, Fair Value, Due after 1 year but within 5 years	15,068
Available for sale Securities, Fair Value, Due after 5 years but within 10 years	49,435
Available for sale Securities, Fair Value, Due after 10 years	37,325
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Fair Value, Total	103,344
Equity Securities, Fair Value	2,288
Available for sale Securities, Fair Value	142,680	141,634
Mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Available for sale Securities without a Single Maturity Date, Amortized Cost	36,938
Available for sale securities without a Single Maturity Date, Fair Value	$ 37,048

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 963		$ 1,511
Other comprehensive income (loss):
Unrealized gains arising during the period on available for sale securities, net of income taxes of $244 and $599, respectively	475		1,162
Reclassification adjustment for net gain on sales of available for sale securities included in net income, net of income taxes of ($60) and ($51), respectively	(117)	[1],[2]	(99)	[1],[2]
Change in defined benefit plans, net of income taxes of $1 and $1, respectively	3	[2],[3]	2	[2],[3]
Total other comprehensive income	361		1,065
Total comprehensive income	$ 1,324		$ 2,576

[1] Amounts are included in net gain on sales of investment securities on the Consolidated Statements of Income as a separate element within total noninterest income

[2] Income tax amounts are included in the provision for income taxes in the Consolidated Statements of Income

[3] Amounts are included in the computation of net periodic benefit cost and are included in salaries and employee benefits on the Consolidated Statements of Income as a separate element within total noninterest expense

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Basis of Presentation [Abstract]

Basis of Presentation

(1)          Basis of Presentation

The accompanying consolidated financial statements include the accounts of Mid Penn Bancorp, Inc. and its wholly-owned subsidiaries, Mid Penn Bank (“Bank”), and the Bank’s wholly-owned subsidiary Mid Penn Insurance Services, LLC (collectively, “Mid Penn”).  All material intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Mid Penn believes the information presented is not misleading and the disclosures are adequate.  For comparative purposes, the March 31, 2014 and December 31, 2014 balances have been reclassified to conform to the 2014 presentation.  Such reclassifications had no impact on net income. The results of operations for interim periods are not necessarily indicative of operating results expected for the full year.  These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Mid Penn’s Annual Report on Form 10-K for the year ended December 31, 2014.

Mid Penn has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2015, for items that should potentially be recognized or disclosed in these consolidated financial statements.  The evaluation was conducted through the date these consolidated financial statements were issued.

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Common Stock (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Jun. 24, 2014
Class of Stock [Line Items]
Common Stock, Shares Authorized but Unissued	10,000,000	10,000,000
2014 Restricted Stock Plan [Member]
Class of Stock [Line Items]
Shares authorized per plan			100,000
Shares granted	3,500
Allocated share-based compensation expense	$ 8,000

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Defined Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2015

Defined Benefit Plans [Abstract]

Schedule of Net Periodic Benefit Costs

The components of net periodic benefit costs from these benefit plans are as follows:

	Three Months Ended March 31,
(Dollars in thousands)	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Service cost	$	8	$	8	$	3	$	3
Interest cost		11		13		8		9
Amortization of prior service cost		4		3		-		-
Net periodic benefit cost	$	23	$	24	$	11	$	12

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Investment Securities (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015 security	Mar. 31, 2014	Dec. 31, 2014 security	Dec. 31, 2013 security
Schedule of Investments [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 127,164		$ 134,740
Available-for-sale Securities, Gross Realized Gains	177	150
Available-for-sale Securities, Gross Realized Losses	0	0
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	48		64
Available-for-sale, Securities in Unrealized Loss Positions, Depreciation Percentage	1.36%		1.40%
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	289		423
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	419		547
Debt Securities [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	46			62
Equity Securities [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	2		2
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	21		23
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	21		23
State and municipal [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	25		37
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	194		285
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	242		318
Mortgage-backed U.S. Government Agencies [Member]
Schedule of Investments [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	17		20
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	74		115
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 140		$ 177

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Earnings per Common Share

3 Months Ended

Mar. 31, 2015

Earnings per Common Share [Abstract]

Earnings per Common Share

(11)Earnings per Common Share

Earnings per share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each of the years presented.  The following data show the amounts used in computing basic and diluted earnings per share.

The computations of basic earnings per common share follow:

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2015		2014
Net Income	$	963	$	1,511
Less:  Dividends on Series B preferred stock		87		87
Net income available to common shareholders	$	876	$	1,424
Weighted average common shares outstanding		3,747,167		3,494,408
Basic earnings per common share	$	0.23	$	0.41

Mid Penn did not have dilutive securities outstanding as of March 31, 2015 and 2014.