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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Assets Measured at Fair Value on a Recurring Basis

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, 2020 using:

 

(Dollars in thousands)

 

Total carrying value at

 

 

Quoted prices in active markets

 

 

Significant other

observable inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

March 31, 2020

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed U.S. government agencies

 

 

3,662

 

 

 

—

 

 

 

3,662

 

 

 

—

 

State and political subdivision obligations

 

 

16,118

 

 

 

—

 

 

 

16,118

 

 

 

—

 

Corporate debt securities

 

 

7,640

 

 

 

—

 

 

 

7,640

 

 

 

—

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

515

 

 

 

515

 

 

 

—

 

 

 

—

 

Total

 

$

27,935

 

 

$

515

 

 

$

27,420

 

 

$

—

 

 

 

 

 

 

 

 

 

Fair value measurements at December 31, 2019 using:

 

(Dollars in thousands)

 

Total carrying value at

 

 

Quoted prices in active markets

 

 

Significant other

observable inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

December 31, 2019

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

22,830

 

 

$

—

 

 

$

22,830

 

 

$

—

 

Mortgage-backed U.S. government agencies

 

 

12,890

 

 

 

—

 

 

 

12,890

 

 

 

—

 

State and political subdivision obligations

 

 

30

 

 

 

—

 

 

 

30

 

 

 

—

 

Corporate debt securities

 

 

1,259

 

 

 

—

 

 

 

1,259

 

 

 

—

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

507

 

 

 

507

 

 

 

—

 

 

 

—

 

Total

 

$

37,516

 

 

$

507

 

 

$

37,009

 

 

$

—

 
Fair Value Measurements, Nonrecurring

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, 2020 using:

 

(Dollars in thousands)

 

Total carrying value at

 

 

Quoted prices in active markets

 

 

Significant other

observable inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

March 31, 2020

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Impaired Loans

 

$

727

 

 

$

—

 

 

$

—

 

 

$

727

 

Foreclosed Assets Held for Sale

 

 

122

 

 

 

—

 

 

 

—

 

 

 

122

 

 

 

 

 

 

 

 

Fair value measurements at December 31, 2019 using:

 

(Dollars in thousands)

 

Total carrying value at

 

 

Quoted prices in active markets

 

 

Significant other

observable inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

December 31, 2019

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Impaired Loans

 

$

271

 

 

$

—

 

 

$

—

 

 

$

271

 

Foreclosed Assets Held for Sale

 

 

122

 

 

 

—

 

 

 

—

 

 

 

122

 
Fair Value Measurement Inputs and Valuation Techniques

 


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.

 

(Dollars in thousands)

 

Quantitative Information about Level 3 Fair Value Measurements

 

March 31, 2020

 

Fair Value Estimate

 

 

Valuation Technique

 

Unobservable Input

 

Range

 

Weighted Average

 

Impaired Loans

 

$

727

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

1% - 86%

 

20%

 

Foreclosed Assets Held for Sale

 

 

122

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

8% - 27%

 

16%

 

 

(Dollars in thousands)

 

Quantitative Information about Level 3 Fair Value Measurements

 

December 31, 2019

 

Fair Value Estimate

 

 

Valuation Technique

 

Unobservable Input

 

Range

 

Weighted Average

 

Impaired Loans

 

$

271

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

26% - 85%

 

36%

 

Foreclosed Assets Held for Sale

 

 

122

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

8% - 27%

 

16%

 

 

 

(a)

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

 

(b)

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.

 
Fair Value, by Balance Sheet Grouping

The following table summarizes the carrying value and fair value of financial instruments at March 31, 2020 and December 31, 2019.

 

(Dollars in thousands)

March 31, 2020

 

 

December 31, 2019

 

 

Carrying

 

 

Fair

 

 

Carrying

 

 

Fair

 

 

Value

 

 

Value

 

 

Value

 

 

Value

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

140,758

 

 

$

140,758

 

 

$

139,030

 

 

$

139,030

 

Available-for-sale investment securities

 

27,420

 

 

 

27,420

 

 

 

37,009

 

 

 

37,009

 

Held-to-maturity investment securities

 

167,963

 

 

 

170,399

 

 

 

136,477

 

 

 

137,476

 

Equity securities

 

515

 

 

 

515

 

 

 

507

 

 

 

507

 

Loans held for sale

 

15,534

 

 

 

15,793

 

 

 

8,422

 

 

 

8,630

 

Net loans and leases

 

1,788,135

 

 

 

1,855,681

 

 

 

1,753,241

 

 

 

1,789,402

 

Restricted investment in bank stocks

 

4,555

 

 

 

4,555

 

 

 

4,902

 

 

 

4,902

 

Accrued interest receivable

 

8,786

 

 

 

8,786

 

 

 

2,810

 

 

 

2,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

1,973,281

 

 

 

1,984,080

 

 

$

1,912,394

 

 

$

1,916,624

 

Long-term debt (a)

 

19,834

 

 

 

21,774

 

 

 

29,352

 

 

 

30,216

 

Subordinated debt

 

42,059

 

 

 

40,578

 

 

 

27,070

 

 

 

25,273

 

Accrued interest payable

 

2,478

 

 

 

2,478

 

 

 

2,208

 

 

 

2,208

 

 

(a)

Long-term debt excludes finance lease obligations.
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of March 31, 2020 and December 31, 2019.  Carrying values approximate fair values for cash and cash equivalents, restricted investment in bank stocks, 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, not previously disclosed.

 

 

 

 

 

 

 

 

 

 

 

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, 2020

 

Amount

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity investment

   securities

 

$

167,963

 

 

$

170,399

 

 

$

—

 

 

$

170,399

 

 

$

—

 

Loans held for sale

 

$

15,534

 

 

$

15,793

 

 

 

—

 

 

 

15,793

 

 

 

—

 

Net loans and leases

 

 

1,788,135

 

 

 

1,855,681

 

 

 

—

 

 

 

—

 

 

 

1,855,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments -

   liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,973,281

 

 

$

1,984,080

 

 

$

—

 

 

$

1,984,080

 

 

$

—

 

Long-term debt (a)

 

 

19,834

 

 

 

21,774

 

 

 

—

 

 

 

21,774

 

 

 

—

 

Subordinated debt

 

 

42,059

 

 

 

40,578

 

 

 

—

 

 

 

40,578

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

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, 2019

 

Amount

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity investment

   securities

 

$

136,477

 

 

$

137,476

 

 

$

—

 

 

$

137,476

 

 

$

—

 

Loans held for sale

 

 

8,422

 

 

 

8,630

 

 

 

—

 

 

 

8,630

 

 

 

—

 

Net loans and leases

 

 

1,753,241

 

 

 

1,789,402

 

 

 

—

 

 

 

—

 

 

 

1,789,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments -

   liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,912,394

 

 

$

1,916,624

 

 

$

—

 

 

$

1,916,624

 

 

$

—

 

Long-term debt (a)

 

 

29,352

 

 

 

30,216

 

 

 

—

 

 

 

30,216

 

 

 

—

 

Subordinated debt

 

 

27,070

 

 

 

25,273

 

 

 

—

 

 

 

25,273

 

 

 

—

 

 

 

(a)

Long-term debt excludes finance lease obligations.