Loans and Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2019

Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract]

Type of Loan Portfolio Summarized by the Aggregate Risk Rating

The types of loans in Mid Penn’s portfolio, summarized by those rated as “pass” (net of deferred fees and costs of $898,000 as of June 30, 2019 and $647,000 as of December 31, 2018), and the loans classified as “special mention” and “substandard” within Mid Penn’s internal risk rating system as of June 30, 2019 and December 31, 2018, are as follows:

(Dollars in thousands)			Special
June 30, 2019	Pass		Mention		Substandard		Total
Commercial and industrial	$	288,672	$	2,845	$	9,754	$	301,271
Commercial real estate		871,633		2,672		9,012		883,317
Commercial real estate - construction		173,860		—		40		173,900
Lease financing		—		—		—		—
Residential mortgage		246,651		144		2,319		249,114
Home equity		70,373		—		69		70,442
Consumer		10,129		—		—		10,129
	$	1,661,318	$	5,661	$	21,194	$	1,688,173

(Dollars in thousands)			Special
December 31, 2018	Pass		Mention		Substandard		Total
Commercial and industrial	$	276,690	$	2,769	$	7,059	$	286,518
Commercial real estate		850,150		2,432		8,787		861,369
Commercial real estate - construction		141,806		—		367		142,173
Lease financing		53		—		—		53
Residential mortgage		251,151		147		2,245		253,543
Home equity		70,004		—		92		70,096
Consumer		10,315		—		—		10,315
	$	1,600,169	$	5,348	$	18,550	$	1,624,067

Impaired Loans by Loan Portfolio Class

Impaired loans by loan portfolio class as of June 30, 2019 and December 31, 2018 are summarized as follows:

	June 30, 2019						December 31, 2018
(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 real estate		2,236		2,584		—		2,007		2,276		—
Commercial real estate - construction		40		—		—		—		—		—
Lease financing		—		—		—		—		—		—
Residential mortgage		897		991		—		657		811		—
Home equity		28		29		—		30		106		—
Consumer		—		—		—		—		—		—
With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	29	$	29	$	—	$	28	$	28	$	—
Commercial real estate		1,616		1,616		—		1,563		1,563		—
Commercial real estate - construction		—		—		—		—		—		—
Lease financing		—		—		—		—		—		—
Residential mortgage		1,234		1,234		—		1,208		1,208		—
Home equity		4		4		—		4		4		—
Consumer		—		—		—		—		—		—
With an allowance recorded:
Commercial and industrial	$	76	$	281	$	13	$	4,527	$	4,635	$	500
Commercial real estate		509		509		243		721		721		204
Commercial real estate - construction		—		23		—		367		370		38
Lease financing		—		—		—		—		—		—
Residential mortgage		—		—		—		—		—		—
Home equity		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total Impaired Loans:
Commercial and industrial	$	105	$	310	$	13	$	4,555	$	4,663	$	500
Commercial real estate		4,361		4,709		243		4,291		4,560		204
Commercial real estate - construction		40		23		—		367		370		38
Lease financing		—		—		—		—		—		—
Residential mortgage		2,131		2,225		—		1,865		2,019		—
Home equity		32		33		—		34		110		—
Consumer		—		—		—		—		—		—

Average Recorded Investment Of Impaired Loans And Related Interest Income By Loan Portfolio Class

The average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2019 and 2018 are summarized as follows:

	Three Months Ended
	June 30, 2019				June 30, 2018
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate		2,273		—		2,650		3
Commercial real estate - construction		40		—		—		—
Lease financing		—		—		—		—
Residential mortgage		880		7		699		7
Home equity		29		—		95		—
Consumer		—		—		—		—
With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	29	$	—	$	23	$	—
Commercial real estate		1,602		—		1,455		7
Commercial real estate - construction		—		—		—		—
Lease financing		—		—		—		—
Residential mortgage		1,222		—		639		—
Home equity		4		—		—		—
Consumer		—		—		—		—
With an allowance recorded:
Commercial and industrial	$	140	$	—	$	4,349	$	—
Commercial real estate		513		—		1,029		—
Commercial real estate - construction		183		—		367		—
Lease financing		—		—		—		—
Residential mortgage		—		—		—		—
Home equity		—		—		—		—
Consumer		—		—		—		—
Total Impaired Loans:
Commercial and industrial	$	169	$	—	$	4,372	$	—
Commercial real estate		4,388		—		5,134		10
Commercial real estate - construction		223		—		367		—
Lease financing		—		—		—		—
Residential mortgage		2,102		7		1,338		7
Home equity		33		—		95		—
Consumer		—		—		—		—

	Six Months Ended
	June 30, 2019				June 30, 2018
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate		2,289		—		2,306		3
Commercial real estate - construction		27		—		17		—
Lease financing		—		—		—		—
Residential mortgage		857		14		796		14
Home equity		29		—		208		—
Consumer		—		—		—		—
With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	29	$	—	$	20	$	—
Commercial real estate		1,589		—		2,001		14
Commercial real estate - construction		—		—		—		—
Lease financing		—		—		—		—
Residential mortgage		1,219		—		1,086		—
Home equity		4		—		—		—
Consumer		—		—		—		—
With an allowance recorded:
Commercial and industrial	$	1,603	$	3	$	3,519	$	—
Commercial real estate		477		—		1,367		—
Commercial real estate - construction		245		—		366		—
Lease financing		—		—		—		—
Residential mortgage		—		—		—		—
Home equity		—		—		—		—
Consumer		—		—		—		—
Total Impaired Loans:
Commercial and industrial	$	1,632	$	3	$	3,539	$	—
Commercial real estate		4,355		—		5,674		17
Commercial real estate - construction		272		—		383		—
Lease financing		—		—		—		—
Residential mortgage		2,076		14		1,882		14
Home equity		33		—		208		—
Consumer		—		—		—		—

Non-accrual Loans by Classes of the Loan Portfolio Including Loans Acquired With Credit Deterioration

Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of June 30, 2019 and December 31, 2018 are summarized as follows:

(Dollars in thousands)	June 30, 2019		December 31, 2018
Commercial and industrial	$	105	$	4,555
Commercial real estate		4,360		4,291
Commercial real estate - construction		40		367
Residential mortgage		1,628		1,502
Home equity		32		34
	$	6,165	$	10,749

Loan Portfolio Summarized by the Past Due Status

The classes of the loan portfolio summarized by the past due status as of June 30, 2019 and December 31, 2018 are summarized as follows:

													Loans
(Dollars in thousands)	30-59		60-89		Greater								Receivable >
	Days Past		Days Past		than 90		Total Past						90 Days and
June 30, 2019	Due		Due		Days		Due		Current		Total Loans		Accruing
Commercial and industrial	$	277	$	—	$	76	$	353	$	300,889	$	301,242	$	—
Commercial real estate		225		635		1,953		2,813		878,888		881,701		—
Commercial real estate - construction		—		—		40		40		173,860		173,900		—
Lease financing		—		—		—		—		—		—		—
Residential mortgage		87		—		380		467		247,413		247,880		—
Home equity		18		10		—		28		70,410		70,438		—
Consumer		5		3		—		8		10,121		10,129		—
Loans acquired with credit deterioration:
Commercial and industrial		—		24		5		29		—		29		—
Commercial real estate		—		—		1,050		1,050		566		1,616		—
Commercial real estate - construction		—		—		—		—		—		—		—
Lease financing		—		—		—		—		—		—		—
Residential mortgage		17		70		832		919		315		1,234		—
Home equity		—		—		—		—		4		4		—
Consumer		—		—		—		—		—		—		—
Total	$	629	$	742	$	4,336	$	5,707	$	1,682,466	$	1,688,173	$	—

													Loans
(Dollars in thousands)	30-59		60-89		Greater								Receivable >
	Days Past		Days Past		than 90		Total Past						90 Days and
December 31, 2018	Due		Due		Days		Due		Current		Total Loans		Accruing
Commercial and industrial	$	17	$	—	$	4,527	$	4,544	$	281,946	$	286,490	$	—
Commercial real estate		685		—		458		1,143		858,663		859,806		—
Commercial real estate - construction		—		—		367		367		141,806		142,173		—
Lease financing		—		—		—		—		53		53		—
Residential mortgage		461		—		277		738		251,597		252,335		—
Home equity		166		22		25		213		69,879		70,092		—
Consumer		57		5		—		62		10,253		10,315		—
Loans acquired with credit deterioration:
Commercial and industrial		23		5		—		28		—		28		—
Commercial real estate		29		—		1,534		1,563		—		1,563		—
Commercial real estate - construction		—		—		—		—		—		—		—
Lease financing		—		—		—		—		—		—		—
Residential mortgage		19		57		913		989		219		1,208		—
Home equity		—		—		4		4		—		4		—
Consumer		—		—		—		—		—		—		—
Total	$	1,457	$	89	$	8,105	$	9,651	$	1,614,416	$	1,624,067	$	—

Allowance and Recorded Investment in Financing Receivables

The following tables summarize the allowance and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the three months ended, June 30, 2019	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,
April 1, 2019	$	2,443		$	5,031		$	81		$	—	$	477		$	450		$	6		$	14		$	8,502
Charge-offs		(205	)		—			(20	)		—		—			—			(38	)		—			(263	)
Recoveries		42			15			—			—		—			1			9			—			67
Provisions		168			266			(16	)		—		(1	)		31			30			(13	)		465
Ending balance,
June 30, 2019	$	2,448		$	5,312		$	45		$	—	$	476		$	482		$	7		$	1		$	8,771
(Dollars in thousands)
As of, and for the six months ended, June 30, 2019	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,
January 1, 2019	$	2,391		$	4,703		$	75		$	—	$	453		$	528		$	7		$	240		$	8,397
Charge-offs		(205	)		(12	)		(40	)		—		—			—			(47	)		—			(304	)
Recoveries		43			33			—			—		—			1			11			—			88
Provisions		219			588			10			—		23			(47	)		36			(239	)		590
Ending balance,
June 30, 2019		2,448			5,312			45			—		476			482			7			1			8,771
Individually evaluated for impairment		13			243			—			—		—			—			—			—			256
Ending balance:
collectively evaluated for impairment	$	2,435		$	5,069		$	45		$	—	$	476		$	482		$	7		$	1		$	8,515
Loans receivables:
Ending balance	$	301,271		$	883,317		$	173,900		$	—	$	249,114		$	70,442		$	10,129		$	—		$	1,688,173
Ending balance: individually evaluated for impairment		76			2,745			40			—		897			28			—			—			3,786
Ending balance: acquired with credit deterioration		29			1,616			—			—		1,234			4			—			—			2,883
Ending balance: collectively evaluated for impairment	$	301,166		$	878,956		$	173,860		$	—	$	246,983		$	70,410		$	10,129		$	—		$	1,681,504

(Dollars in thousands)
December 31, 2018	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	$	2,391	$	4,703	$	75	$	—	$	453	$	528	$	7	$	240	$	8,397
Ending balance: individually evaluated for impairment		500		204		38		—		—		—		—		—		742
Ending balance: collectively evaluated for impairment	$	1,891	$	4,499	$	37	$	—	$	453	$	528	$	7	$	240	$	7,655
Loans receivable:
Ending balance	$	286,518	$	861,369	$	142,173	$	53	$	253,543	$	70,096	$	10,315	$	—	$	1,624,067
Ending balance: individually evaluated for impairment		4,527		2,728		367		—		811		30		—		—		8,463
Ending balance: acquired with credit deterioration		28		1,563		—		—		1,208		4		—		—		2,803
Ending balance: collectively evaluated for impairment	$	281,963	$	857,078	$	141,806	$	53	$	251,524	$	70,062	$	10,315	$	—	$	1,612,801

(Dollars in thousands)
As of, and for the three months ended, June 30, 2018	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,
April 1, 2018	$	1,977		$	4,653		$	183		$	—	$	452		$	391		$	4		$	6		$	7,666
Charge-offs		(129	)		—			(40	)		—		(3	)		(91	)		(4	)		—			(267	)
Recoveries		—			788			—			—		—			—			2			—			790
Provisions		272			(718	)		3			—		(8	)		120			2			329			—
Ending balance,
June 30, 2018	$	2,120		$	4,723		$	146		$	—	$	441		$	420		$	4		$	335		$	8,189
(Dollars in thousands)
As of, and for the six months ended, June 30, 2018	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,
January 1, 2018		1,795			4,435			178			—		428			423			3			344		$	7,606
Charge-offs		(129	)		—			(40	)		—		(5	)		(167	)		(10	)		—			(351	)
Recoveries		—			805			—			—		—			—			4			—			809
Provisions		454			(517	)		8			—		18			164			7			(9	)		125
Ending balance,
June 30, 2018		2,120			4,723			146			—		441			420			4			335			8,189
Individually evaluated for impairment		282			238			54			—		—			—			—			—			574
Ending balance:
collectively evaluated for impairment	$	1,838		$	4,485		$	92		$	—	$	441		$	420		$	4		$	335		$	7,615
Loans receivables:
Ending balance	$	204,724		$	575,956		$	82,690		$	153	$	120,260		$	47,815		$	4,881		$	—		$	1,036,479
Ending balance: individually evaluated for impairment		4,324			2,261			367			—		728			8			—			—			7,688
Ending balance: acquired with credit deterioration		23			1,466			—			—		493			—			—			—			1,982
Ending balance: collectively evaluated for impairment	$	200,377		$	572,229		$	82,323		$	153	$	119,039		$	47,807		$	4,881		$	—		$	1,026,809

Troubled Debt Restructurings

The recorded investments in troubled debt restructured loans at June 30, 2019 and December 31, 2018 are as follows:

(Dollars in thousands)	Pre-Modification		Post-Modification
June 30, 2019	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial real estate	$	2,940	$	2,841	$	2,162
Residential mortgage		677		675		503
	$	3,617	$	3,516	$	2,665

(Dollars in thousands)	Pre-Modification		Post-Modification
December 31, 2018	Outstanding Recorded Investment		Outstanding Recorded Investment		Recorded Investment
Commercial and industrial	$	4,110	$	4,460	$	4,302
Commercial real estate		2,940		2,841		2,201
Residential mortgage		677		675		516
Home equity		14		14		1
	$	7,741	$	7,990	$	7,020

Schedule of Accretion of Purchased Impaired Loan

The following tables provide activity for the accretable yield of acquired impaired loans from the Phoenix Bancorp, Inc. (March 2015), Scottdale (January 2018), and First Priority (July 2018) acquisitions for the three and six months ended June 30, 2019.

(Dollars in thousands)
	Three Months Ended June 30,
	2019			2018
Accretable yield, beginning of period	$	254		$	336
Accretable yield amortized to interest income		(57	)		(36	)
Accretable yield, end of period	$	197		$	300

(Dollars in thousands)	Six Months Ended June 30,
	2019			2018
Accretable yield, beginning of period	$	309		$	67
Acquisition of impaired loans		—			305
Accretable yield amortized to interest income		(112	)		(72	)
Accretable yield, end of period	$	197		$	300