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Loans and Allowance for Credit Losses - Loans
 3 Months Ended
Mar. 31, 2025
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans and Allowance for Credit Losses - Loans Loans and Allowance for Credit Losses - Loans
Loans, net of unearned income, are summarized as follows by portfolio segment:
(In thousands)March 31, 2025December 31, 2024
Commercial real estate
CRE Nonowner Occupied$1,272,153 $1,251,010 
CRE Owner Occupied654,305 624,007 
Multifamily410,531 412,900 
Farmland226,033 224,709 
Total Commercial real estate2,563,022 2,512,626 
Commercial and industrial
720,695 705,392 
Construction
Residential Construction88,196 99,399 
Other Construction321,015 326,171 
Total Construction409,211 425,570 
Residential mortgage
1-4 Family 1st Lien312,162 313,592 
1-4 Family Rental339,880 336,636 
HELOC and Junior Liens139,380 140,392 
Total Residential Mortgage791,422 790,620 
Consumer6,817 8,862 
Total loans$4,491,167 $4,443,070 

Total loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs. Net deferred loan fees were $3.3 million and $3.8 million as of March 31, 2025 and December 31, 2024, respectively.
Accrued interest receivable is not included in the amortized cost basis of Mid Penn's loans. Accrued interest receivable for loans totaled $23.5 million and $22.9 million as of March 31, 2025 and December 31, 2024, respectively, with no related ACL and was reported in other assets on the accompanying Consolidated Balance Sheet.
Past Due and Nonaccrual Loans
The performance and credit quality of the loan portfolio is also monitored by 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, 2025 and December 31, 2024, are summarized as follows:
(In thousands)30-59
Days Past
Due		60-89
Days Past
Due		Greater
than 90
Days		Total Past
Due		CurrentTotal LoansLoans
Receivable
> 90 Days and
Accruing
March 31, 2025
Commercial real estate
CRE Nonowner Occupied$1,746 $— $13,919 $15,665 $1,256,488 $1,272,153 $— 
CRE Owner Occupied2,176 — 298 2,474 651,831 654,305 — 
Multifamily— — — — 410,531 410,531 — 
Farmland1 — — 1 226,032 226,033 — 
Total Commercial real estate3,923 — 14,217 18,140 2,544,882 2,563,022 — 
Commercial and industrial112 35 797 944 719,751 720,695 3 
Construction
Residential Construction— — — — 88,196 88,196 — 
Other Construction— — — — 321,015 321,015 — 
Total Construction— — — — 409,211 409,211 — 
Residential mortgage
1-4 Family 1st Lien583 79 386 1,048 311,114 312,162 — 
1-4 Family Rental— 4 125 129 339,751 339,880 — 
HELOC and Junior Liens649 — 1,433 2,082 137,298 139,380 — 
Total Residential Mortgage1,232 83 1,944 3,259 788,163 791,422 — 
Consumer— — — — 6,817 6,817 — 
Total$5,267 $118 $16,958 $22,343 $4,468,824 $4,491,167 $3 
(In thousands)30-59
Days Past
Due		60-89
Days Past
Due		Greater
than 90
Days		Total Past
Due		CurrentTotal LoansLoans
Receivable
> 90 Days and
Accruing
December 31, 2024
Commercial real estate
CRE Nonowner Occupied$1,281 $1,515 $11,658 $14,454 $1,236,556 $1,251,010 $— 
CRE Owner Occupied39 51 262 352 623,655 624,007 — 
Multifamily— — — — 412,900 412,900 — 
Farmland184 — — 184 224,525 224,709 — 
Total Commercial real estate1,504 1,566 11,920 14,990 2,497,636 2,512,626 — 
Commercial and industrial74 3 794 871 704,521 705,392 — 
Construction
Residential Construction— — — — 99,399 99,399 — 
Other Construction— — — — 326,171 326,171 — 
Total Construction— — — — 425,570 425,570 — 
Residential mortgage
1-4 Family 1st Lien2,853 220 516 3,589 310,003 313,592 — 
1-4 Family Rental374 7 137 518 336,118 336,636 — 
HELOC and Junior Liens724 209 2,157 3,090 137,302 140,392 — 
Total Residential Mortgage3,951 436 2,810 7,197 783,423 790,620 — 
Consumer20 — — 20 8,842 8,862 — 
Total$5,549 $2,005 $15,524 $23,078 $4,419,992 $4,443,070 $— 
Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due. Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of March 31, 2025 and December 31, 2024 are summarized as follows:
March 31, 2025December 31, 2024
(In thousands)With a Related AllowanceWithout a Related AllowanceTotalWith a Related AllowanceWithout a Related AllowanceTotal
Commercial real estate
CRE Nonowner Occupied3,677 10,242 13,919 2,622 11,153 13,775 
CRE Owner Occupied— 2,032 2,032 — 546 546 
Multifamily— 147 147 — 154 154 
Total Commercial real estate3,677 12,421 16,098 2,622 11,853 14,475 
Commercial and industrial4,989 611 5,600 758 3,894 4,652 
Construction
Residential Construction— — — — — — 
Other Construction— — — — — — 
Total Construction— — — — — — 
Residential mortgage
1-4 Family 1st Lien— 654 654 — 1,028 1,028 
1-4 Family Rental— 160 160 — 176 176 
HELOC and Junior Liens— 1,533 1,533 — 2,279 2,279 
Total Residential Mortgage$— $2,347 $2,347 $— $3,483 $3,483 
Consumer— — — — — — 
Total loans$8,666 $15,379 $24,045 $3,380 $19,230 $22,610 
The amount of interest income recognized on nonaccrual loans was approximately $127 thousand and $159 thousand during the three months ended March 31, 2025 and 2024, respectively.
Credit Quality Indicators
Mid Penn categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. On a minimum of a quarterly basis, Mid Penn analyzes loans individually to classify the loans according to their credit risk. The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal.
PASS - This type of classification consists of 6 subcategories:    
Nominal Risk / Pass - This loan classification is a credit extension of the highest quality.
Moderate Risk / Pass - This type of classification has strong financial ratios, substantial debt capacity, and low leverage with a very favorable comparison to industry peers or better than average improving trends are necessary to be in this classification.
Good Acceptable Risk / Pass - The Borrower in this rating classification is a reasonable credit risk having financial ratios on par with its peers and demonstrates slightly improving trends over time; they list good quality assets and fairly low leverage plus ample debt capacity.
Average Acceptable Risk / Pass - This type of classification has financial ratios and assets are of above average quality, the leverage is worse than average compared to industry standards; the Borrower should have a good repayment history and possess consistent earnings with some growth.
Marginally Acceptable Risk / Pass - This type of classification has financial ratios consistent with industry averages, assets of average quality with ascertainable values, acceptable leverage, moderate capital assets and an acceptable reliance on trade debt; the Borrower demonstrates marginally adequate earnings, cash flow and debt service plus positive trends.
Weak/Monitor Risk (Watch list) / Pass - This type of classification has financial ratios that are slightly below standard industry averages and assets are below average quality with unstable values; fixed assets could be near or at the end of their useful life and liabilities may not match the asset structure.

SPECIAL MENTION - These credits have developing weaknesses deserving extra attention from the lender and lending management. They are currently protected, but potentially weak. The weakness may be cash flow, leverage, liquidity, management, industry or other factors which may, if not checked or corrected, weaken the asset or inadequately protect the Bank’s credit position at some future date.

SUBSTANDARD - These credit extensions also have well-defined weaknesses, which are inadequately protected by the current worth and debt service capacity of the Borrower, or the collateral pledged, if any. The repayment of principal and interest as originally intended can be jeopardized by defined weaknesses related to adverse financial, managerial, economic, market or political conditions.

DOUBTFUL - These credits have definite weaknesses inherent in Substandard loans with added characteristics that are severe enough to make further collection in full highly questionable and improbable based on the current trends.

LOSS. These loans are considered uncollectible and no longer a viable asset of the Bank. They lack an identifiable source of repayment based on an inability to generate sufficient cash flow to service the debt. All trends are negative and the damage to the financial condition of the Borrower cannot be reversed now or in the near future.
The following table presents risk ratings by loan portfolio segment and origination year, which is the year of origination or renewal.
March 31, 2025
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized
Cost Basis
(In thousands)20252024202320222021PriorTotal
CRE Nonowner Occupied
Pass$20,673 $85,769 $197,443 $339,713 $150,865 $440,272 $11,179 $1,245,914 
Special mention— — — — — 4,418 — 4,418 
Substandard or lower— — 1,540 1,280 — 19,001 — 21,821 
Total CRE Nonowner Occupied20,673 85,769 198,983 340,993 150,865 463,691 11,179 1,272,153 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — 1 — 1 
Net charge offs— — — — — 1 — 1 
CRE Owner Occupied
Pass33,854 61,419 104,424 104,367 64,246 263,242 14,350 645,902 
Special mention— — — 4,943 174 1,001 — 6,118 
Substandard or lower— — — — 235 2,050 — 2,285 
Total CRE Owner Occupied33,854 61,419 104,424 109,310 64,655 266,293 14,350 654,305 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
Multifamily
Pass2,943 4,854 66,143 118,458 100,824 113,606 3,505 410,333 
Special mention— — — — — 51 — 51 
Substandard or lower— — — — — 147 — 147 
Total Multifamily2,943 4,854 66,143 118,458 100,824 113,804 3,505 410,531 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net charge offs— — — — — — — — 
Farmland
Pass7,125 28,095 29,605 54,696 40,912 48,779 13,224 222,436 
Special mention— — 127 — 1,153 2,129 188 3,597 
Substandard or lower— — — — — — — — 
Total Farmland7,125 28,095 29,732 54,696 42,065 50,908 13,412 226,033 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net charge offs— — — — — — — — 
Commercial and industrial
Pass53,535 111,556 100,212 71,545 52,191 103,350 217,835 710,224 
Special mention— 120 56 213 62 2,451 4,585 7,487 
Substandard or lower— — — — 785 1,599 600 2,984 
Total commercial and industrial53,535 111,676 100,268 71,758 53,038 107,400 223,020 720,695 
Gross charge offs— — — — — — — — 
Current period recoveries— — 1 — — 5 — 6 
Net charge offs— — 1 — — 5 — 6 
Residential Construction
Pass1,923 38,527 36,783 2,952 — — 8,011 88,196 
Special mention— — — — — — — — 
Substandard or lower— — — — — — — — 
Total Residential Construction1,923 38,527 36,783 2,952 — — 8,011 88,196 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
Other Construction
Pass20,573 69,098 74,600 97,132 10,927 21,577 27,108 321,015 
Special mention— — — — — — — — 
Substandard or lower— — — — — — — — 
Total Other Construction20,573 69,098 74,600 97,132 10,927 21,577 27,108 321,015 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
1-4 Family 1st Lien
Performing15,389 18,710 59,014 44,951 34,232 135,632 2,354 310,282 
Non-performing— — — — — 1,880 — 1,880 
Total 1-4 Family 1st Lien15,389 18,710 59,014 44,951 34,232 137,512 2,354 312,162 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — 2 — 2 
Net recoveries— — — — — 2 — 2 
1-4 Family Rental
Performing9,308 24,953 49,924 93,316 57,899 101,725 1,896 339,021 
Non-performing— — 147 — — 712 — 859 
Total 1-4 Family Rental9,308 24,953 50,071 93,316 57,899 102,437 1,896 339,880 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
HELOC and Junior Liens
Performing1,230 5,023 15,743 9,347 4,810 12,693 87,297 136,143 
Non-performing— 1,000 101 — — 1,135 1,001 3,237 
Total HELOC and Junior Liens1,230 6,023 15,844 9,347 4,810 13,828 88,298 139,380 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net charge offs— — — — — — — — 
Consumer
Performing1,379 1,566 915 316 365 265 2,011 6,817 
Non-performing— — — — — — — — 
Total consumer1,379 1,566 915 316 365 265 2,011 6,817 
Gross charge offs— — — — — (15)— (15)
Current period recoveries— — — — — 9 — 9 
Net charge offs— — — — — (6)— (6)
Total
Pass$140,626 $399,318 $609,210 $788,863 $419,965 $990,826 $295,212 $3,644,020 
Special mention— 120 183 5,156 1,389 10,050 4,773 21,671 
Substandard or lower— — 1,540 1,280 1,020 22,797 600 27,237 
Performing27,306 50,252 125,596 147,930 97,306 250,315 93,558 792,263 
Nonperforming— 1,000 248 — — 3,727 1,001 5,976 
Total$167,932 $450,690 $736,777 $943,229 $519,680 $1,277,715 $395,144 $4,491,167 
December 31, 2024
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized
Cost Basis
(In thousands)20242023202220212020PriorTotal
CRE Nonowner Occupied
Pass$85,501 $176,018 $343,072 $152,157 $130,650 $325,478 $11,732 $1,224,608 
Special mention— — — — — 3,105 — 3,105 
Substandard or lower— 1,515 1,260 — 3,281 17,241 — 23,297 
Total CRE Nonowner Occupied85,501 177,533 344,332 152,157 133,931 345,824 11,732 1,251,010 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — 2 — 2 
Net recoveries— — — — — 2 — 2 
CRE Owner Occupied
Pass52,922 99,065 106,876 66,160 77,774 199,725 11,630 614,152 
Special mention— 222 4,991 227 — 2,133 — 7,573 
Substandard or lower— — — 194 — 2,088 — 2,282 
Total CRE Owner Occupied52,922 99,287 111,867 66,581 77,774 203,946 11,630 624,007 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — 4 — 4 
Net recoveries— — — — — 4 — 4 
Multifamily
Pass4,843 66,119 118,568 101,871 40,450 78,070 2,771 412,692 
Special mention— — — — — 54 — 54 
Substandard or lower— — — — — 154 — 154 
Total Multifamily4,843 66,119 118,568 101,871 40,450 78,278 2,771 412,900 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net charge offs— — — — — — — — 
Farmland
Pass27,449 31,259 56,178 42,693 25,119 24,729 14,801 222,228 
Special mention— 128 — — — 2,163 190 2,481 
Substandard or lower— — — — — — — — 
Total Farmland27,449 31,387 56,178 42,693 25,119 26,892 14,991 224,709 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net charge offs— — — — — — — — 
Commercial and industrial
Pass114,175 106,657 78,702 54,312 21,532 92,723 222,525 690,626 
Special mention— 62 503 31 — 3,534 4,498 8,628 
Substandard or lower— — — 892 1,168 1,632 2,446 6,138 
Total commercial and industrial114,175 106,719 79,205 55,235 22,700 97,889 229,469 705,392 
Gross charge offs— (201)— — (206)(412)— (819)
Current period recoveries— — — — — 1 — 1 
Net charge offs— (201)— — (206)(411)— (818)
Residential construction
Pass34,275 37,222 15,559 — — 2,007 10,336 99,399 
Special mention— — — — — — — — 
Substandard or lower— — — — — — — — 
Total Residential construction34,275 37,222 15,559 — — 2,007 10,336 99,399 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
Other construction
Pass66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 
Special mention— — — — — — — — 
Substandard or lower— — — — — — — — 
Total Other construction66,711 94,619 104,439 11,664 10,983 11,928 25,827 326,171 
Gross charge offs— — — — — — — — 
Current period recoveries— — — — — — — — 
Net recoveries— — — — — — — — 
1-4 Family 1st Lien
Performing27,580 59,762 45,946 34,743 42,727 98,891 2,915 312,564 
Non-performing— — — — 211 817 — 1,028 
Total 1-4 Family 1st Lien27,580 59,762 45,946 34,743 42,938 99,708 2,915 313,592 
Gross charge offs— — — — — (7)— (7)
Current period recoveries— — — — — 16 — 16 
Net recoveries— — — — — 9 — 9 
1-4 Family Rental
Performing28,735 51,488 88,594 59,397 35,222 69,890 2,009 335,335 
Non-performing— 147 — — 595 559 — 1,301 
Total 1-4 Family Rental28,735 51,635 88,594 59,397 35,817 70,449 2,009 336,636 
Gross charge offs— — — — — (2)— (2)
Current period recoveries— — — — — 22 — 22 
Net recoveries— — — — — 20 — 20 
HELOC and Junior Liens
Performing6,096 16,125 9,856 4,845 2,182 10,887 88,122 138,113 
Non-performing— 21 — — — 1,257 1,001 2,279 
Total HELOC and Junior Liens6,096 16,146 9,856 4,845 2,182 12,144 89,123 140,392 
Gross charge offs— — (21)— — — — (21)
Current period recoveries— — — — — — — — 
Net charge offs— — (21)— — — — (21)
Consumer
Performing4,214 972 354 394 107 234 2,587 8,862 
Non-performing— — — — — — — — 
Total consumer4,214 972 354 394 107 234 2,587 8,862 
Gross charge offs— — (2)— — (50)— (52)
Current period recoveries— — 1 — — 38 — 39 
Net charge offs— — (1)— — (12)— (13)
Total
Pass$385,876 $610,959 $823,394 $428,857 $306,508 $734,660 $299,622 $3,589,876 
Special mention— 412 5,494 258 — 10,989 4,688 21,841 
Substandard or lower— 1,515 1,260 1,086 4,449 21,115 2,446 31,871 
Performing66,625 128,347 144,750 99,379 80,238 179,902 95,633 794,874 
Nonperforming— 168 — — 806 2,633 1,001 4,608 
Total$452,501 $741,401 $974,898 $529,580 $392,001 $949,299 $403,390 $4,443,070 
Mid Penn had no loans classified as "doubtful" as of March 31, 2025 and December 31, 2024. There was $109 thousand and $861 thousand in loans for which formal foreclosure proceedings were in process at March 31, 2025 and December 31, 2024, respectively.
Collateral-Dependent Loans
A financial asset is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of financial assets deemed collateral-dependent, Mid Penn elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, Mid Penn records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent financial assets consists of various types of real estate, including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land. Total collateral-dependent loans as of March 31, 2025 were $24.0 million.
Allowance for Credit Losses

Mid Penn’s ACL - loans methodology follows guidance within FASB ASC Subtopic 326-20. The ACL - loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the loan portfolio is continuously monitored by management and is reflected within the ACL - loans. The ACL - loans is an estimate of expected losses inherent within Mid Penn’s existing loan portfolio. The ACL - loans is adjusted through the PCL and reduced by the charge off of loan amounts, net of recoveries.
The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Mid Penn’s loan portfolio segments. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the allowance is complex and requires judgement by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense.
Mid Penn estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Mid Penn uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the allowance is based on general economic conditions and other internal and external factors affecting Mid Penn as a whole, as well as specific loans. Factors considered include the following: lending process, concentrations of credit, and peer group divergence. The quantitative and qualitative portions of the allowance are added together to determine the total ACL, which reflects management’s expectations of future conditions based on reasonable and supportable forecasts.
The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan purpose codes and similar risk characteristics.
The commercial real estate and residential mortgage loan portfolio segments include loans for both commercial and residential properties that are secured by real estate. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and, if applicable, guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance, in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered when applicable. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.
The commercial and industrial loan portfolio segment includes commercial loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory, equipment and fixed asset purchases that are secured by those assets, and term financing for those within Mid Penn’s geographic markets. Mid Penn’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information, and evaluation of underlying collateral to support the credit.
The consumer loan portfolio segment is comprised of loans which are underwritten after evaluating a borrower’s capacity, credit and collateral. Several factors are considered when assessing a borrower’s capacity, including the borrower’s employment, income, current debt, assets and level of equity in the property. Credit is assessed using a credit report that provides credit scores and the borrower’s current and past information about their credit history. Loan-to-value and debt-to-income ratios, loan amount and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends, such as conditions that negatively affect housing prices and demand and levels of unemployment.
Mid Penn utilizes a DCF method to estimate the quantitative portion of the allowance for credit losses for loan pools. The DCF is based off of historical losses, including peer data, which is correlated to national unemployment and GDP.
The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.
Mid Penn determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the portfolio extend beyond this forecast period, Mid Penn uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans.
Qualitative factors used in the ACL methodology include the following:
•Lending process
•Concentrations of credit
•Peer Group Divergence
The ACL for individual loans, such as non-accrual and PCD, that do not share risk characteristics with other loans is measured as the difference between the discounted value of expected future cash flows, based on the effective interest rate at origination, and the amortized cost basis of the loan, or the net realizable value. The ACL is the difference between the loan’s net realizable value and its amortized cost basis (net of previous charge-offs and deferred loan fees and costs), except for collateral-dependent loans. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or the "as is" value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on a regular basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Mid Penn’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of the expected credit loss is charged off.
Mid Penn may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine whether there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, Mid Penn takes into consideration loan grades, past due and nonaccrual status. Mid Penn may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, and number of times past due. At the purchase or acquisition date, the amortized cost basis of PCD loans is equal to the purchase price and an initial estimate of credit losses. The initial recognition of expected credit losses on PCD loans has no
impact on net income. When the initial measurement of expected credit losses on PCD loans is calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the PCL. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan.
Loans are charged off against the ACL-loans, with any subsequent recoveries credited back to the ACL-loans account. Expected recoveries may not exceed the aggregate of amounts previously charged off and expected to be charged off.
The following tables present the activity in the ACL - loans by portfolio segment for the three months ended March 31, 2025 and the three months ended March 31, 2024:
(In thousands)Balance at
December 31, 2024		Charge offsRecoveriesNet loans (charged off) recovered
Provision/(Benefit) for credit losses
Three Months Ended
March 31, 2025
Commercial Real Estate
CRE Nonowner Occupied11,047 — 1 1 (668)10,380 
CRE Owner Occupied5,243 — — — 479 5,722 
Multifamily3,432 — — — (108)3,324 
Farmland1,932 — — — 143 2,075 
Commercial and industrial7,122 — 6 6 736 7,864 
Construction
Residential Construction931 — — — (101)830 
Other Construction2,131 — — — (232)1,899 
Residential Mortgage
1-4 Family 1st Lien1,503 — 2 2 77 1,582 
1-4 Family Rental1,756 — — — (16)1,740 
HELOC and Junior Liens392 — — — 12 404 
Consumer25 (15)9 (6)(1)18 
Total35,514 (15)18 3 321 35,838 
(In thousands)Balance at
December 31, 2023		Charge offsRecoveriesNet loans (charged off) recovered
(Benefit)/Provision for credit losses
Three Months Ended
March 31, 2024
Commercial Real Estate
CRE Nonowner Occupied$10,267 $— $— $— $150 $10,417 
CRE Owner Occupied5,646 — — — (44)5,602 
Multifamily2,202 — — — 168 2,370 
Farmland2,064 — — — (62)2,002 
Commercial and industrial7,131 — — — (631)6,500 
Construction
Residential Construction1,256 — — — (80)1,176 
Other Construction2,146 — — — 25 2,171 
Residential Mortgage
1-4 Family 1st Lien1,207 (7)— (7)71 1,271 
1-4 Family Rental1,859 — — — (320)1,539 
HELOC and Junior Liens389 (21)— (21)89 457 
Consumer20 (22)6 (16)15 19 
Total$34,187 $(50)$6 $(44)$(619)$33,524 
The following table presents the ACL for loans and the amortized cost basis of the loans by the measurement methodology used as of March 31, 2025 and December 31, 2024:

(In thousands)ACL - LoansLoans
March 31, 2025Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal ACL - LoansCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal Loans
Commercial real estate
CRE Nonowner Occupied$8,823 $1,557 $10,380 $1,258,234 $13,919 $1,272,153 
CRE Owner Occupied5,722 — 5,722 652,273 2,032 654,305 
Multifamily3,324 — 3,324 410,384 147 410,531 
Farmland2,075 — 2,075 226,033 — 226,033 
Commercial and industrial7,038 826 7,864 715,095 5,600 720,695 
Construction
Residential Construction830 — 830 88,196 — 88,196 
Other Construction1,899 — 1,899 321,015 — 321,015 
Residential mortgage
1-4 Family 1st Lien1,582 — 1,582 311,508 654 312,162 
1-4 Family Rental1,740 — 1,740 339,720 160 339,880 
HELOC and Junior Liens404 — 404 137,847 1,533 139,380 
Consumer18 — 18 6,817 — 6,817 
Total$33,455 $2,383 $35,838 $4,467,122 $24,045 $4,491,167 

(In thousands)ACL - LoansLoans
December 31, 2024Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal ACL - LoansCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal Loans
Commercial real estate
CRE Nonowner Occupied$9,945 $1,102 $11,047 $1,237,235 $13,775 $1,251,010 
CRE Owner Occupied5,243 — 5,243 623,461 546 624,007 
Multifamily3,432 — 3,432 412,746 154 412,900 
Farmland1,932 — 1,932 224,709 — 224,709 
Commercial and industrial6,785 337 7,122 700,740 4,652 705,392 
Construction
Residential Construction931 — 931 99,399 — 99,399 
Other Construction2,131 — 2,131 326,171 — 326,171 
Residential mortgage
1-4 Family 1st Lien1,503 — 1,503 312,564 1,028 313,592 
1-4 Family Rental1,756 — 1,756 336,460 176 336,636 
HELOC and Junior Liens392 — 392 138,113 2,279 140,392 
Consumer25 — 25 8,862 — 8,862 
Total$34,075 $1,439 $35,514 $4,420,460 $22,610 $4,443,070 
Modifications to Borrowers Experiencing Financial Difficulty
From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, or a combination thereof, among other things.

There were no new modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2025.

Information related to loans modified (by type of modification) for the three months ended March 31, 2024, whereby the borrower was experiencing financial difficulty at the time of modification, is set forth in the following table:

(In thousands)Interest OnlyTerm ExtensionCombination:
Interest Only and
Term Extension		Total% of Total Class of Financing Receivable
Three months ended March 31, 2024
HELOC and Junior Liens$— $— $92 $92 0.01 
Total Residential Mortgage— — 92 92 0.01 
Total$— $— $92 $92 



The financial effects of the interest-only loan modifications reduced the monthly payment amounts for the borrower and the term extensions in the table above added 2.0 years to the life of the loan, which also reduced the monthly payment amounts for the borrower.
As of March 31, 2025, there were no defaulted troubled debt restructured loans, as all troubled debt restructured loans were current with respect to their associated forbearance agreements. There were also no defaults on troubled debt restructured loans within twelve months of restructure during 2024.