v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Mid Penn manages its exposure to certain interest rate risks through the use of derivative financial instruments; however, none are entered into for speculative purposes. During the three months ended June 30, 2026, Mid Penn had outstanding derivative contracts designated as hedges. Mid Penn’s free-standing derivative financial instruments are required to be carried at their fair value on the Consolidated Balance Sheets.
Loan-level Interest Rate Swaps
Mid Penn enters into loan-level interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. Mid Penn simultaneously enters into loan-level interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of the offsetting customer and dealer counterparty swap agreements is that the customer pays a fixed rate of interest, while Mid Penn receives a floating rate. Mid Penn’s loan-level interest rate swaps are considered derivatives but are not accounted for using hedge accounting. These transactions are structured as back-to-back arrangements with offsetting terms; however, the Corporation remains exposed to credit risk associated with both the customer and dealer counterparties.
Information related to loan-level interest rate swaps is set forth in the following table:
(Dollars in thousands)June 30, 2026December 31, 2025
 Loan-level interest rate swaps
      Notional amount $377,297 $287,251 
      Estimated fair value in Other Assets$7,565 $8,796 
      Estimated fair value in Other Liabilities$7,565 $8,796 
Cash Flow Hedges of Interest Rate Risk

Mid Penn’s objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements. To accomplish this objective, Mid Penn primarily uses derivatives designed as cash flow hedges as part of its interest rate risk management strategy.

Cash Flow Hedges of Brokered Certificates of Deposit:
Mid Penn designated an interest rate swap as a cash flow hedge for certain brokered certificates of deposit. The interest rate swap was terminated during the three months ended June 30, 2026.
(Dollars in thousands)June 30, 2026December 31, 2025
 Cash flow hedges
      Notional amount $— $75,000 
     Weighted-average remaining term (years) — 0.84
     Pay fixed rate (weighted-average)— %3.81 %
     Receive variable rate (weighted average)— %3.52 %
     Estimated fair value (1)
$— $211 
(1) Estimated fair value, net of accrued interest receivable, is disclosed in Other Assets on the Consolidated Balance Sheet.
Cash Flow Hedge of Variable-Rate Loans:
During the three months ended June 30, 2026, Mid Penn designated an interest rate floor as a cash flow hedge of forecasted interest cash flows associated on certain variable-rate loans.

(Dollars in thousands)June 30, 2026December 31, 2025
 Cash flow hedges
Notional amount$200,000 $— 
Weighted-average remaining term (years)2.92— 
 Floor strike rate (weighted-average)
3.50 %— %
Underlying variable rate (weighted-average)
3.86 %— %
 Estimated fair value (1)
$1,550 $— 
(1) Estimated fair value, net of accrued interest receivable, is disclosed in Other Assets on the Consolidated Balance Sheet.

For derivatives designated and qualifying as cash flow hedges of interest rate risk, the unrealized gain or loss is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on Mid Penn’s variable-rate liabilities. During the next twelve months, Mid Penn estimates that an additional $622 thousand will be reclassified to interest expense.