MID PENN BANCORP INCMPB
MID PENN BANCORP INC Commitments Disclosure
Commitments and Contingencies
Mid Penn is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer unless there is a violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Mid Penn evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the customer. Standby letters of credit and financial guarantees written are conditional commitments to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Mid Penn had $66.5 million and $64.3 million of standby letters of credit outstanding as of December 31, 2025 and December 31, 2024, respectively. Mid Penn does not anticipate any losses resulting from these transactions. The amount of the liability as of December 31, 2025 and December 31, 2024 for payment under standby letters of credit issued was not considered material.
Mid Penn is required to estimate expected credit losses for OBS credit exposures which are not unconditionally cancellable. Mid Penn maintains a separate ACL on OBS credit exposures, including unfunded loan commitments and letters of credit, which is included in other liabilities on the accompanying Consolidated Balance Sheets.
The ACL - OBS is adjusted as a provision for OBS commitments in noninterest expense. The estimate includes consideration of the likelihood that funding will occur, an estimate of exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates derived from the same models and approaches used for Mid Penn's other loan portfolio segments described in "Note 4 - Loans and Allowance for Credit Losses - Loans" above, as these unfunded commitments share similar risk characteristics with these loan portfolio segments.
The ACL - OBS as of December 31, 2025 and December 31, 2024 was $2.9 million. The benefit for OBS for the year ended December 31, 2025 was $26 thousand. On January 1, 2023 in conjunction with adopting ASC 326, Mid Penn recorded an additional $3.1 million of provision for OBS which was included in the adoption cumulative effect adjustment.
The following table presents the activity in the ACL - OBS by segment for the year ended December 31, 2025 and December 31, 2024:
| (In thousands) | Balance as of December 31, 2024 | (Benefit)/Provision for Credit Loss (1) | Balance as of December 31, 2025 | |||||||||||||||||
| 1-4 Family Rental | $ | 16 | $ | (4) | $ | 12 | ||||||||||||||
| Commercial and industrial | 1,165 | 292 | 1,457 | |||||||||||||||||
| CRE NonOwner Occupied | 132 | 2 | 134 | |||||||||||||||||
| CRE Owner Occupied | 98 | (5) | 93 | |||||||||||||||||
| Consumer | 3 | — | 3 | |||||||||||||||||
| Farmland | 92 | 5 | 97 | |||||||||||||||||
| HELOC & Junior Liens | 92 | 38 | 130 | |||||||||||||||||
| Multifamily | 27 | (15) | 12 | |||||||||||||||||
| Other Construction & Land | 792 | (50) | 742 | |||||||||||||||||
| Residential Construction | 516 | (287) | 229 | |||||||||||||||||
| Residential First Liens | 6 | (2) | 4 | |||||||||||||||||
| $ | 2,939 | $ | (26) | $ | 2,913 | |||||||||||||||
(1) Includes the impact of the William Penn Acquisition on April 30, 2025.
| (In thousands) | Balance as of December 31, 2023 | (Benefit)/Provision for Credit Loss | Balance as of December 31, 2024 | |||||||||||||||||
| 1-4 Family Rental | $ | 11 | $ | 5 | $ | 16 | ||||||||||||||
| Commercial and industrial | 1,270 | (105) | 1,165 | |||||||||||||||||
| CRE NonOwner Occupied | 113 | 19 | 132 | |||||||||||||||||
| CRE Owner Occupied | 106 | (8) | 98 | |||||||||||||||||
| Consumer | 3 | — | 3 | |||||||||||||||||
| Farmland | 108 | (16) | 92 | |||||||||||||||||
| HELOC & Junior Liens | 100 | (8) | 92 | |||||||||||||||||
| Multifamily | 24 | 3 | 27 | |||||||||||||||||
| Other Construction & Land | 1,036 | (244) | 792 | |||||||||||||||||
| Residential Construction | 778 | (262) | 516 | |||||||||||||||||
| Residential First Liens | 18 | (12) | 6 | |||||||||||||||||
| $ | 3,567 | $ | (628) | $ | 2,939 | |||||||||||||||
Litigation
Mid Penn and its subsidiaries are subject to various pending and threatened legal proceedings or other matters arising out of the normal conduct of business in which claims for monetary damages are asserted. As of the date of this report, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of such pending or threatened matters will be material to Mid Penn’s consolidated financial position. On at least a quarterly basis, Mid Penn assesses its liabilities and contingencies in connection with such matters. For those matters where it is probable that Mid Penn will incur losses and the amounts of the losses can be reasonably estimated, Mid Penn records an expense and corresponding liability in its consolidated financial statements. To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable. The range of losses for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate. This is based on information currently available to Mid Penn and involves elements of judgment and significant uncertainties. While Mid Penn does not believe that the outcome of pending or threatened litigation or other matters will be material to Mid Penn’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future. In addition, regardless of the ultimate outcome of any such legal proceeding, inquiry or investigation, any such matter could cause Mid Penn to incur additional expenses, which could be significant, and possibly material, to Mid Penn’s results of operations in any future period.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 19, 2019 | |
| 2017 | Mar 13, 2018 | |
| 2016 | Mar 23, 2017 | |
| 2015 | Mar 17, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.