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Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2021

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, 2021 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2021		(Level 1)		(Level 2)		(Level 3)
Loans held for sale	$	11,514	$	—	$	11,514	$	—
Available-for-sale debt securities:
Mortgage-backed U.S. government agencies		49,480		—		49,480		—
State and political subdivision obligations		3,914		—		3,914		—
Corporate debt securities		9,468		—		9,468		—
Other assets:
Equity securities		500		500		—		—
Interest rate swap agreements		629		—		629		—
Mortgage banking derivative assets		88		—		88		—
	$	63,991	$	500	$	63,491	$	—

			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, 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, 2021 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2021		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	508	$	—	$	—	$	508

			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 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, 2021

Fair Value

Estimate

Valuation

Technique

Unobservable

Input

Range

Weighted

Average

Impaired Loans

508

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

21%-69%

30%

(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

Appraisal of collateral (a), (b)

Appraisal adjustments (b)

27%-27%

27%

(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, 2021 and 2020.

(Dollars in thousands)	December 31, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and cash equivalents	$	913,752	$	913,752	$	303,724	$	303,724
Available for sale investment securities		62,862		62,862		5,748		5,748
Held to maturity investment securities		329,257		330,626		128,292		132,794
Loans held for sale		11,514		11,787		25,506		26,262
Equity securities		500		500		515		515
Net loans and leases		3,089,799		3,118,416		2,370,659		2,444,105
Restricted investment in bank stocks		9,134		9,134		7,594		7,594
Accrued interest receivable		10,779		10,779		3,619		3,619
Interest rate swap agreements		629		629		489		489
Mortgage banking derivative assets		88		88		—		—

Financial liabilities:
Deposits	$	4,002,016	$	4,046,217	$	2,474,580	$	2,496,799
Short-term borrowings		—		—		125,617		125,617
Long-term debt (a)		77,890		77,455		71,648		70,498
Subordinated debt		74,274		74,553		44,580		43,098
Accrued interest payable		1,791		1,791		2,007		2,007

(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, 2021 and 2020. Carrying values approximate fair values for cash and cash equivalents, loans held for sale, equity securities, restricted investment in bank stocks, accrued interest receivable and payable, interest rate swap agreements, mortgage banking derivatives, 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, 2021	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Held-to-maturity investment securities	$	329,257	$	330,626	$	—	$	330,626	$	—
Net loans and leases		3,089,799		3,118,416		—		—		3,118,416
Financial instruments - liabilities
Deposits	$	4,002,016	$	4,046,217	$	—	$	4,046,217	$	—
Long-term debt (a)		77,890		77,455		—		77,455		—
Subordinated debt		74,274		74,553		—		74,553		—

					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		71,648		70,498		—		70,498		—
Subordinated debt		44,580		43,098		—		43,098		—