Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

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, 2017 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	38,730	$	—	$	38,730	$	—
Mortgage-backed U.S. government agencies		25,831		—	$	25,831		—
State and political subdivision obligations		27,043		—	$	27,043		—
Corporate debt securities		1,005		—	$	1,005		—
Equity securities		856		856		—		—
	$	93,465	$	856	$	92,609	$	—

			Fair value measurements at December 31, 2016 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and U.S. government agencies	$	47,012	$	1,864	$	45,148	$	—
Mortgage-backed U.S. government agencies		25,619		—		25,619		—
State and political subdivision obligations		58,838		—		58,838		—
Corporate debt securities		1,000		—		1,000		—
Equity securities		1,156		1,056		100		—
	$	133,625	$	2,920	$	130,705	$	—

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, 2017 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	6,090	$	—	$	—	$	6,090
Foreclosed Assets Held for Sale		—		—		—		—
Mortgage Servicing Rights		126		—		—		126

			Fair value measurements at December 31, 2016 using:
(Dollars in thousands)	Total carrying value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
Assets:	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Impaired Loans	$	2,404	$	—	$	—	$	2,404
Foreclosed Assets Held for Sale		135		—		—		135
Mortgage Servicing Rights		144		—		—		144

Fair Value Inputs, Assets, Quantitative Information

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, 2017

Fair Value

Estimate

Valuation

Technique

Unobservable

Input

Range

Weighted

Average

Impaired Loans

6,090

Appraisal of collateral (a)

Appraisal adjustments (b)

6% - 51%

28%

Foreclosed Assets Held for Sale

—

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

0% - 0%

Mortgage Servicing Rights

126

Multiple of annual service fee

Estimated prepayment speed based on rate and term

70% - 100%

98%

(Dollars in thousands)

Quantitative Information about Level 3 Fair Value Measurements

December 31, 2016

Fair Value

Estimate

Valuation

Technique

Unobservable

Input

Range

Weighted

Average

Impaired Loans

2,404

Appraisal of collateral (a)

Appraisal adjustments (b)

11% - 70%

30%

Foreclosed Assets Held for Sale

135

Appraisal of collateral (a), (c)

Appraisal adjustments (b)

26% - 31%

27%

Mortgage Servicing Rights

144

Multiple of annual service fee

Estimated prepayment speed based on rate and term

70% - 100%

98%

(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.

(c)

Includes qualitative adjustments by management and estimated liquidation expenses.

Fair Value, by Balance Sheet Grouping

The following table summarizes the carrying value and fair value of financial instruments at December 31, 2017 and 2016.

(Dollars in thousands)	December 31, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and cash equivalents	$	23,514	$	23,514	$	45,973	$	45,973
Available for sale investment securities		93,465		93,465		133,625		133,625
Held to maturity investment securities		101,356		100,483		—		—
Net loans and leases		902,798		917,081		806,741		824,293
Restricted investment in bank stocks		4,384		4,384		2,443		2,443
Accrued interest receivable		4,564		4,564		3,928		3,928
Mortgage servicing rights		126		126		144		144

Financial liabilities:
Deposits	$	1,023,568	$	1,026,830	$	935,373	$	935,075
Short-term borrowings		34,611		34,611		—		—
Long-term debt		12,352		11,692		13,581		13,614
Subordinated debt		17,338		17,358		7,414		7,534
Accrued interest payable		645		645		515		515

Off-balance sheet financial instruments:
Commitments to extend credit	$	—	$	—	$	—	$	—
Financial standby letters of credit		—		—		—		—

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, 2017 and 2016. Carrying values approximate fair values for cash and cash equivalents, interest-bearing time balances with other financial institutions, 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, these instruments are 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, 2017	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	902,798	$	917,081	$	—	$	—	$	917,081

Financial instruments - liabilities
Deposits	$	1,023,568	$	1,026,830	$	—	$	1,026,830	$	—
Long-term debt		12,352		11,692		—		11,692		—
Subordinated debt		17,338		17,358		—		—		17,358

					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, 2016	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial instruments - assets
Net loans and leases	$	806,741	$	824,293	$	—	$	—	$	824,293

Financial instruments - liabilities
Deposits	$	935,373	$	935,075	$	—	$	935,075	$	—
Long-term debt		13,581		13,614		—		13,614		—
Subordinated debt		7,414		7,534		—		—		7,534