As of March 31, 2022 and December 31, 2021, the types of loans in Mid Penn’s portfolio, summarized using Mid Penn’s internal risk rating system between those rated “pass” (net of deferred fees and costs of $3,619,000 as of March 31, 2022 and $6,264,000 as of December 31, 2021), which comprise the vast majority of the portfolio, and those classified as “special mention” and “substandard”, are as follows:

All PPP loans, whether disbursed in 2020 or 2021, are included in commercial and industrial loans and are fully guaranteed by the SBA; therefore, all PPP loans outstanding (net of the related deferred PPP fees) are classified as “pass” within Mid Penn’s internal risk rating system as of March 31, 2022.

Mid Penn had no loans classified as “doubtful” as of March 31, 2022 and December 31, 2021.

Impaired loans by loan portfolio class as of March 31, 2022 and December 31, 2021 are summarized as follows:

	March 31, 2022						December 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	31	$	—
Commercial real estate		821		1,213		—		854		1,243		—
Commercial real estate - construction		—		5		—		22		27		—
Residential mortgage		1,338		1,377		—		1,259		1,295		—
Home equity		99		99		—		2,377		2,377		—
Consumer		—		—		—		—		—		—

With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate		2,109		2,826		—		2,231		2,909		—
Commercial real estate - construction		1,221		1,463		—		1,196		1,469		—
Residential mortgage		1,285		1,863		—		1,362		1,847		—
Home equity		85		107		—		86		111		—
Consumer		—		—		—		—		—		—

With an allowance recorded:
Commercial and industrial	$	523	$	554	$	75	$	308	$	339	$	67
Commercial real estate		280		345		114		287		359		121
Commercial real estate - construction		—		—		—		—		—		—
Residential mortgage		—		—		—		—		—		—
Home equity		—		—		—		—		—		—
Consumer		—		—		—		—		—		—

Total Impaired Loans:
Commercial and industrial	$	523	$	554	$	75	$	308	$	370	$	67
Commercial real estate		3,210		4,384		114		3,372		4,511		121
Commercial real estate - construction		1,221		1,468		—		1,218		1,496		—
Residential mortgage		2,623		3,240		—		2,621		3,142		—
Home equity		184		206		—		2,463		2,488		—
Consumer		—		—		—		—		—		—

The average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2022 and 2021 are summarized as follows:

	Three Months Ended
	March 31, 2022				March 31, 2021
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	—	$	—	$	753	$	—
Commercial real estate		838		—		4,405		—
Commercial real estate - construction		11		—		31		—
Residential mortgage		1,346		6		787		8
Home equity		1,237		84		2,350		—
Consumer		—		—		—		—

With no related allowance recorded and acquired with credit deterioration:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate		2,186		—		1,414		—
Commercial real estate - construction		1,205		—		—		—
Residential mortgage		1,335		—		317		—
Home equity		85		—		—		—
Consumer		—		—		—		—

With an allowance recorded:
Commercial and industrial	$	528	$	—	$	157	$	—
Commercial real estate		283		—		880		—
Commercial real estate - construction		—		—		—		—
Residential mortgage		—		—		—		—
Home equity		—		—		—		—
Consumer		—		—		—		—

Total Impaired Loans:
Commercial and industrial	$	528	$	—	$	910	$	—
Commercial real estate		3,307		—		6,699		—
Commercial real estate - construction		1,216		—		31		—
Residential mortgage		2,681		6		1,104		8
Home equity		1,322		84		2,350		—
Consumer		—		—		—		—

Nonaccrual loans by loan portfolio class, including loans acquired with credit deterioration, as of March 31, 2022 and December 31, 2021 are summarized as follows:

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, 2022 and December 31, 2021 are summarized as follows:

													Loans
(Dollars in thousands)	30-59		60-89		Greater								Receivable >
	Days Past		Days Past		than 90		Total Past						90 Days and
March 31, 2022	Due		Due		Days		Due		Current		Total Loans		Accruing
Commercial and industrial	$	1,053	$	220	$	436	$	1,709	$	584,735	$	586,444	$	133
Commercial real estate		315		40		679		1,034		1,719,525		1,720,559		—
Commercial real estate - construction		220		—		—		220		380,690		380,910		—
Residential mortgage		1,218		148		876		2,242		301,784		304,026		—
Home equity		829		—		255		1,084		112,350		113,434		—
Consumer		12		—		—		12		11,446		11,458		—
Loans acquired with credit deterioration:
Commercial and industrial		—		—		—		—		—		—		—
Commercial real estate		18		—		1,532		1,550		559		2,109		—
Commercial real estate - construction		—		—		—		—		1,221		1,221		—
Residential mortgage		166		—		421		587		698		1,285		—
Home equity		14		—		56		70		15		85		—
Consumer		—		—		—		—		—		—		—
Total	$	3,845	$	408	$	4,255	$	8,508	$	3,113,023	$	3,121,531	$	133

													Loans
(Dollars in thousands)	30-59		60-89		Greater								Receivable >
	Days Past		Days Past		than 90		Total Past						90 Days and
December 31, 2021	Due		Due		Days		Due		Current		Total Loans		Accruing
Commercial and industrial	$	1,378	$	62	$	404	$	1,844	$	617,718	$	619,562	$	96
Commercial real estate		32		55		769		856		1,665,055		1,665,911		—
Commercial real estate - construction		—		—		205		205		371,333		371,538		205
Residential mortgage		1,246		205		1,002		2,453		319,408		321,861		212
Home equity		403		—		2,377		2,780		107,440		110,220		—
Consumer		6		2		2		10		10,419		10,429		2
Loans acquired with credit deterioration:
Commercial and industrial		—		—		—		—		—		—		—
Commercial real estate		—		3		1,628		1,631		600		2,231		—
Commercial real estate - construction		—		—		—		—		1,196		1,196		—
Residential mortgage		54		—		818		872		490		1,362		—
Home equity		—		—		—		—		86		86		—
Consumer		—		—		—		—		—		—		—
Total	$	3,119	$	327	$	7,205	$	10,651	$	3,093,745	$	3,104,396	$	515

The allowance for loan losses and the related loan loss provision for the periods presented reflect Mid Penn’s continued application of the incurred loss method for estimating credit losses, as Mid Penn is not required to adopt the current expected credit loss (“CECL”) accounting standard until January 1, 2023, and Mid Penn has not elected to early adopt CECL. PPP loans, both those disbursed in 2020 and those disbursed in 2021, are included in the commercial and industrial classification and, as the PPP loans are fully guaranteed by the Small Business Administration, no allowance for loan losses was recorded against the $34,124,000 balance of PPP loans outstanding (net of related deferred PPP fees) as of March 31, 2022.

The following tables summarize the allowance and recorded investments in loans receivable.

(Dollars in thousands)
As of, and for the three months ended, March 31, 2022	Commercial and industrial		Commercial real estate		Commercial real estate - construction			Residential mortgage		Home equity		Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
January 1, 2022	$	3,439	$	9,415	$	38		$	459	$	560	$	2		$	684		$	14,597
Charge-offs		—		—		—			—		—		(57	)		—			(57	)
Recoveries		13		65		24			—		1		4			—			107
Provisions (credits)		359		511		(21	)		24		1		53			(427	)		500
Ending balance,
March 31, 2022		3,811		9,991		41			483		562		2			257			15,147
Individually evaluated for impairment		75		114		—			—		—		—			—			189
Ending balance:
Collectively evaluated for impairment	$	3,736	$	9,877	$	41		$	483	$	562	$	2		$	257		$	14,958

Loans receivables:
Ending balance	$	586,444	$	1,722,668	$	382,131		$	305,311	$	113,519	$	11,458		$	—		$	3,121,531
Ending balance: individually evaluated for impairment		523		1,101		—			1,338		99		—			—			3,061
Ending balance: acquired with credit deterioration		—		2,109		1,221			1,285		85		—			—			4,700
Ending balance: collectively evaluated for impairment	$	585,921	$	1,719,458	$	380,910		$	302,688	$	113,335	$	11,458		$	—		$	3,113,770

(Dollars in thousands)
December 31, 2021	Commercial and industrial		Commercial real estate		Commercial real estate - construction		Residential mortgage		Home equity		Consumer		Unallocated		Total
Allowance for loan and lease losses:
Ending balance	$	3,439	$	9,415	$	38	$	459	$	560	$	2	$	684	$	14,597
Ending balance: individually evaluated for impairment		67		121		—		—		—		—		—		188
Ending balance: collectively evaluated for impairment	$	3,372	$	9,294	$	38	$	459	$	560	$	2	$	684	$	14,409

Loans receivable:
Ending balance	$	619,562	$	1,668,142	$	372,734	$	323,223	$	110,306	$	10,429	$	—	$	3,104,396
Ending balance: individually evaluated for impairment		308		1,141		22		1,259		2,377		—		—		5,107
Ending balance: acquired with credit deterioration		—		2,231		1,196		1,362		86		—		—		4,875
Ending balance: collectively evaluated for impairment	$	619,254	$	1,664,770	$	371,516	$	320,602	$	107,843	$	10,429	$	—	$	3,094,414

(Dollars in thousands)
As of, and for the three months ended, March 31, 2021	Commercial and industrial			Commercial real estate		Commercial real estate - construction			Residential mortgage			Home equity		Consumer			Unallocated			Total
Allowance for loan and lease losses:
Beginning balance,
January 1, 2021	$	3,066		$	8,655	$	134		$	429		$	507	$	1		$	590		$	13,382
Charge-offs		(859	)		—		—			(3	)		—		(3	)		—			(865	)
Recoveries		1			56		—			9			—		8			—			74
Provisions (credits)		780			233		(12	)		3			21		(5	)		(20	)		1,000
Ending balance,
March 31, 2021		2,988			8,944		122			438			528		1			570			13,591
Individually evaluated for impairment		68			263		—			—			—		—			—			331
Ending balance:
collectively evaluated for impairment	$	2,920		$	8,681	$	122		$	438		$	528	$	1		$	570		$	13,260

Loans receivables:
Ending balance	$	964,045		$	1,135,660	$	264,945		$	197,788		$	75,423	$	8,375		$	—		$	2,646,236
Ending balance: individually evaluated for impairment		368			1,469		30			758			2,334		—			—			4,959
Ending balance: acquired with credit deterioration		—			1,408		—			309			—		—			—			1,717
Ending balance: collectively evaluated for impairment	$	963,677		$	1,132,783	$	264,915		$	196,721		$	73,089	$	8,375		$	—		$	2,639,560

Mid Penn entered into forbearance or modification agreements on loans currently classified as troubled debt restructures, and these agreements have resulted in additional principal repayment. The terms of these forbearance agreements vary and generally involve modifications from the original loan agreements, including either a reduction in the amount of principal payments for certain or extended periods, interest rate reductions, and/or the intent for the loan to be repaid as collateral is sold.

Mid Penn’s troubled debt restructured loans at March 31, 2022 totaled $774,000 and included: (i) two accruing impaired residential mortgage loans to unrelated borrowers in compliance with the terms of the modifications totaling $430,000, and (ii) $344,000 of troubled debt restructurings attributable to six loans among four relationships which were classified as nonaccrual impaired based upon a collateral evaluation in accordance with the guidance on impaired loans. The balance of these nonaccrual impaired troubled debt restructured loans as of March 31, 2022 was comprised of $309,000 in commercial real estate loans amongst two borrowers and two residential mortgage loans for $35,000. As of March 31, 2022, there were no defaulted troubled debt restructured loans, as all troubled debt restructured loans were current with respect to their associated forbearance agreements. In addition to contractual paydowns, the decrease in Mid Penn’s troubled debt restructured loan balance since December 31, 2021 reflects the successful workout of two nonaccrual impaired loans.

Mid Penn’s troubled debt restructured loans at December 31, 2021 totaled $819,000, and included (i) two accruing impaired residential mortgage loans to unrelated borrowers in compliance with the terms of the modifications totaling $435,000, and (ii) $384,000 of troubled debt restructurings attributable to eight loans among six relationships which were classified as nonaccrual impaired based upon a collateral evaluation in accordance with the guidance on impaired loans. The balance of these nonaccrual impaired troubled debt restructured loans as of December 31, 2021 was comprised of $320,000 in commercial real estate loans amongst two borrowers, one commercial real estate construction loan for $22,000, two residential mortgage loans for $37,000, and one commercial and industrial loan for $5,000. As of December 31, 2021, 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 2021.

The recorded investments in troubled debt restructured loans at March 31, 2022 and December 31, 2021 are as follows:

The CARES Act, along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as troubled debt restructurings. Depending upon the specific needs and circumstances affecting each borrower, the majority of these modifications ranged from deferrals of both principal and interest payments, with some borrowers reverting to interest-only payments. The majority of the deferrals granted by Mid Penn were for a period of three months, but some as long as six months, depending upon management’s specific evaluation of each borrower’s circumstances. Interest does continue to accrue on loans modified under the CARES Act during the deferral period. The principal balance of loans remaining in a CARES Act qualifying deferment status totaled $3,571,000, or less than 1 percent of the total loan portfolio, as of March 31, 2022 and December 31, 2021. One loan remains in deferment status, and the remainder of borrowers who were granted a CARES Act deferral have returned to regular payment status. Mid Penn remains in communication with the borrower still in deferral status to assess the ongoing credit standing of the borrowers, and may make further adjustments to a borrower’s relationship at some future time if warranted for the specific situation.

The following tables provide activity for the accretable yield of acquired impaired loans from the Phoenix (March 2015), Scottdale (January 2018), First Priority (July 2018), and Riverview (November 2021) acquisitions for the three months ended March 31, 2022 and 2021.