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Fair Value Measurements (Tables)
12 Months Ended
Dec. 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 December 31, 2020 using:

 

(Dollars in thousands)

 

Total

carrying

value at

 

 

Quoted prices

in active

markets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

December 31, 2020

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed U.S. government agencies

 

$

2

 

 

$

 

 

$

2

 

 

$

 

Corporate debt securities

 

 

5,746

 

 

 

 

 

 

5,746

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

515

 

 

 

515

 

 

 

 

 

 

 

Interest rate swap agreements

 

 

489

 

 

 

 

 

 

489

 

 

 

 

 

 

$

6,752

 

 

$

515

 

 

$

6,237

 

 

$

 

 

 

 

 

 

 

 

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 debt 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

 

 

 

 

 

 

 

 

 

$

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 December 31, 2020 using:

 

(Dollars in thousands)

 

Total

carrying

value at

 

 

Quoted

prices

in active

markets

 

 

Significant

other

observable

inputs

 

 

Significant

unobservable

inputs

 

Assets:

 

December 31, 2020

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Impaired Loans

 

$

800

 

 

$

 

 

$

 

 

$

800

 

Foreclosed Assets Held for Sale

 

 

77

 

 

 

 

 

 

 

 

 

77

 

 

 

 

 

 

 

 

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

 

December 31, 2020

 

Fair Value

Estimate

 

 

Valuation

Technique

 

Unobservable

Input

 

Range

 

Weighted

Average

 

Impaired Loans

 

$

800

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

25%-100%

 

40%

 

Foreclosed Assets Held for Sale

 

 

77

 

 

Appraisal of collateral (a), (b)

 

Appraisal adjustments (b)

 

27%-27%

 

27%

 

 

 

(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 December 31, 2020 and 2019.

 

(Dollars in thousands)

 

December 31, 2020

 

 

December 31, 2019

 

 

 

Carrying

 

 

Fair

 

 

Carrying

 

 

Fair

 

 

 

Value

 

 

Value

 

 

Value

 

 

Value

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

303,724

 

 

$

303,724

 

 

$

139,030

 

 

$

139,030

 

Available for sale investment securities

 

 

5,748

 

 

 

5,748

 

 

 

37,009

 

 

 

37,009

 

Held to maturity investment securities

 

 

128,292

 

 

 

132,794

 

 

 

136,477

 

 

 

137,476

 

Loans held for sale

 

 

25,506

 

 

 

26,262

 

 

 

8,422

 

 

 

8,630

 

Equity securities

 

 

515

 

 

 

515

 

 

 

507

 

 

 

507

 

Net loans and leases

 

 

2,370,659

 

 

 

2,444,105

 

 

 

1,753,241

 

 

 

1,789,402

 

Restricted investment in bank stocks

 

 

7,594

 

 

 

7,594

 

 

 

4,902

 

 

 

4,902

 

Accrued interest receivable

 

 

3,619

 

 

 

3,619

 

 

 

2,810

 

 

 

2,810

 

Interest rate swap agreements

 

 

489

 

 

 

489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

2,474,580

 

 

$

2,496,799

 

 

$

1,912,394

 

 

$

1,916,624

 

Short-term borrowings

 

 

125,617

 

 

 

125,617

 

 

 

 

 

 

 

Long-term debt (a)

 

 

71,648

 

 

 

70,498

 

 

 

29,352

 

 

 

30,216

 

Subordinated debt

 

 

44,580

 

 

 

43,098

 

 

 

27,070

 

 

 

25,273

 

Accrued interest payable

 

 

2,007

 

 

 

2,007

 

 

 

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 presents the carrying amount, fair value, and placement in the fair value hierarchy of Mid Penn’s financial instruments as of December 31, 2020 and 2019.  Carrying values approximate fair values for cash and cash equivalents, equity securities, restricted investment in bank stocks, accrued interest receivable and payable, interest rate swap agreements and short-term borrowings.  Other than cash and cash equivalents, which are considered as valued using Level 1 Inputs, these instruments are valued using Level 2 Inputs.  The following tables exclude financial instruments for which the placement in the fair value hierarchy has been disclosed elsewhere or for which the carrying amount approximates fair value.

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Quoted Prices

 

 

Significant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in Active Markets

 

 

Other

 

 

Significant

 

 

 

 

 

 

 

 

 

 

 

for Identical Assets

 

 

Observable

 

 

Unobservable

 

 

 

Carrying

 

 

Fair

 

 

or Liabilities

 

 

Inputs

 

 

Inputs

 

December 31, 2020

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity investment securities

 

$

128,292

 

 

$

132,794

 

 

$

 

 

$

132,794

 

 

$

 

Loans held for sale

 

 

25,506

 

 

 

26,262

 

 

 

 

 

 

26,262

 

 

 

 

Net loans and leases

 

 

2,370,659

 

 

 

2,444,105

 

 

 

 

 

 

 

 

 

2,444,105

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

2,474,580

 

 

$

2,496,799

 

 

$

 

 

$

2,496,799

 

 

$

 

Long-term debt (a)

 

 

71,648

 

 

 

70,498

 

 

 

 

 

 

70,498

 

 

 

 

Subordinated debt

 

 

44,580

 

 

 

43,098

 

 

 

 

 

 

43,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Quoted Prices

 

 

Significant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in Active Markets

 

 

Other

 

 

Significant

 

 

 

 

 

 

 

 

 

 

 

for Identical Assets

 

 

Observable

 

 

Unobservable

 

 

 

Carrying

 

 

Fair

 

 

or Liabilities

 

 

Inputs

 

 

Inputs

 

December 31, 2019

 

Amount

 

 

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

 

 

29,352

 

 

 

30,216

 

 

 

 

 

 

30,216

 

 

 

 

Subordinated debt

 

 

27,070

 

 

 

25,273

 

 

 

 

 

 

25,273