SecProbe.io

June 29, 2010

Kevin W. Laudenslager Chief Financial Officer Mid Penn Bancorp, Inc. 349 Union Street Millersburg, Pennsylvania  17061
Re: Mid Penn Bancorp, Inc.
Form 10-K for the fiscal year ended December 31, 2009 Form 10-Q for the fiscal quarter ended March 31, 2010
  File No. 001-13677

Dear Mr. Laudenslager:
 We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within te n business days by providing the requested
information, including a draft of your proposed disclosures to be made in future filings, or by
advising us when you will provide the requested  response.  If you do not believe our comments
apply to your facts and circumstances or do not believe future revisions are appropriate, please
tell us why in your response.
 After reviewing the information you provide in response to these comments, including
the draft of your proposed disclosures, we may have additional comments.
            Form 10-K for the fiscal year ended December 31, 2009

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations
General
 1. We note your quantification relating to certain negative trends experien ced within your loan
portfolio in recent periods– in particular, the significant increa se in the provision for loan
losses and the portion of this attributed to comm ercial and real estate  construction lending.
We also note that you have significantly increased thes e types of lending.   In future filings,
please consider addressing management’s decision to increase or decrea se lending to certain
segments.   In addition, please consider includi ng more disclosure rega rding trends specific
to your market area that may arise from depende nce on any particular type of employment,
unemployment and income levels, occupancy rates,  real estate values and population trends.

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010
Page 2

  Loans, page 24

 2. We note that approximately 70% of your loan  portfolio consisted of commercial and
commercial real estate loans at December 31, 2009.  Given the relatively high level of credit
risk typically associated with  these types of lending products, please tell us and consider
revising future filings to disclose the followi ng information to the extent that you have a
significant amount of construction loans with inte rest reserves:

• The amount of interest reserves recognized  during the periods presented, the amount of
capitalized interest recorded in your loan por tfolio, and the amount of  these loans that are
non-performing;

• Your policy for recognizing inte rest income on these loans;

• How you monitor the projects throughout their lives to make sure the properties are
moving along as planned to ensu re appropriateness of conti nuing to capitalize interest;

• Whether you have extended, renewed or restru ctured terms of the related loans and the
reasons for the changes;
 • Your underwriting process for these loans and any specific differences as compared to
loans without interest reserves; and

• Whether there were any situations where additional interest reserves were advanced to
keep a loan from becoming nonperforming.

3. Please tell us and consider revising your future filings to disclose whether you have
performed any commercial real estate or othe r type of loan workouts whereby an existing
loan was restructured into multiple new loans (i .e., A Note/B Note structure).  To the extent
that you have performed these types of workout s, please provide us with and revise your
future filings to disclose the following:

• Quantify the amount of loans that have been restructured using this type of workout
strategy in each period presented.

• Discuss the benefits of this workout strate gy, including the impact on interest income and
credit classification.

• Discuss the general terms of  the new loans and how the A note and B note differ;
particularly whether the A note is underw ritten in accordance with your customary
underwriting standards and at  current market rates.

• Clarify whether the B note is immedi ately charged-off upon restructuring.

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010
Page 3

• Describe your nonaccrual polic ies at the time of modifica tion and subsequent to the
modification.  Specifically disclose whethe r you consider the tota l amount contractually
due in your non-accrual evaluation and how  you consider the borrower’s payment
performance prior to the modification.

• Confirm that the A note is classified as a troubled debt restruct uring and explain your
policy for removing such loans from troubl ed debt restructuring classification.

4. Please tell us, and consider revising future filin gs to disclose, whether you have noticed an
increase in any loan categories such as commercial loans or any other applicable loans, such
as construction loans, that have been extended at maturity for which you have not considered
the loans to be impaired due to the existence of guarantees.  If so, please provide us with the following information and consider enhancing your disclosure in future filings accordingly:

• The types of extensions being made, whethe r loan terms are being adjusted from the
original terms, and whether you consider thes e types of loans as collateral-dependent;

• To the extent you extend commercial loans at or  near maturity at the existing loan rate
due to the existence of a guarantee, tell us how  you consider whether it is a troubled debt
restructuring;

• In detail, how you evaluate the financial wh erewithal of the guar antor, addressing the
type of financial information reviewed, how current and objec tive the information
reviewed is, and how often the review is performed;

• How you evaluate the guarantor’s reputation and willingness to work with you and how
this translates into your determination of the ultimate provision or charge-off recorded;

• How many times you have sought performance u nder the guarantee di scussing the extent
of the successes.  As part of your respons e, discuss the decision making process you go
through in deciding whether to pursue the guarantor and whether there are circumstances
you would not seek to en force the guarantee;

• Quantify the dollar amount of commercial loan s in which your carrying value is in excess
of the appraised value but not considered impair ed due to the existenc e of guarantees; and

• When the impaired loan is carried at a value th at is in excess of the appraised value due to
the guarantee from the borrower, address in detail how you evaluate and determine the realizable value of the borrower guarantee. Specifically discuss the extent of your
willingness to enforce the guarantee.

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010
Page 4

  Consolidated Financial Statements

Notes to Consolidated Financial Statements
Note 8: Allowance for Loan and Lease Losses, page 48
 5. We note the substantial increase in charge -offs during the year ended December 31, 2009,
and in particular during the fourth quarter of 2009.  We also note the si gnificant decrease in
your ratio of allowance for loan losses to non-performing loans from 132.20% at December
31, 2008 to 36.53% at March 31, 2010.  In order to  provide more transparent disclosure
surrounding your accounting policy for charge-offs and the impact that charge-offs may have had on certain asset quality ratios, please tell us and revise future filings to disclose the following:

• Your charge-off policy for each type of loan and whether you have revised these policies;

• The triggering events or other facts and ci rcumstances that impacted your decision to
charge-off all of a loan or a portion of a lo an as compared to recording a specific or
general reserve;

• How partial charge-offs on non-performing loan s impact the coverage ratio (ratio of
allowance for loan losses to non-performing loans) and other credit loss statistics and
trends.  For example, please consider disc losing the following information / ratios:

o The amount of non-performing and impaired  loans for which you have recorded
partial charge-offs;

o The ratio of non-performing loans for wh ich you have recorded  partial charge-
offs to total loans;

o The ratio of non-performing loans for wh ich you have recorded  partial charge-
offs to total non-performing loans;

o The charge-off rate for non-performing loan s for which you have recorded partial
charge-offs;

o The coverage ratio net of non-performing loans for which you have recorded a partial charge-off; and

o The ratio of the total allowance divided by (total loans less non-performing loans
for which you have recorded partial charged-offs).

To the extent you have a significant amount of impaired loans with no valuation allowance
required for which partial charge-offs have not been recognized, please clarify how you

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010
Page 5

measured impairment on these loans and reconcile the significant deterioration in real estate
values in your primary market ar ea with your impairment conclusions.

Impaired loans, page 48

6. We note your disclosures on pages 27 and 52 of the December 31, 2009 Form 10-K describing your methodology for measuring loan s for impairment and your disclosure on
page 21 of the March 31, 2010 Form 10-Q that you had approximately $8.0 million of impaired loans with a specific valuation allowance of $2.4 milli on and $10.2 million in
impaired loans without specific valuation a llowances at March 31, 2010.  Please provide us
with the following information and re vise your future filings accordingly:

• The amount and / or percentage  of loans that were considered collateral dependent;

• The amount of loans measured using each  of the methodologies described on pages 27
and 52 of the December 31, 2009 Form 10-K (i.e., customized collateral value discounting analysis vs. apprai sals performed by independent  licensed appraisers) or any
other methodologies (e.g., present value of expe cted cash flows discounted at the loan’s
effective interest rate, loan’s observable market price, etc);

• As it relates to collateral dependent loans, a comprehens ive discussion of the methods
used to estimate the fair value, including an in-depth discussion that bridges the gap
between your disclosure on page 27, which states that the fair value of the impaired loans
is based primarily upon the fair value of the underlying collateral using Level 3 inputs comprised of customized collateral value di scounting analyses” and that on page 52, the
fair value of the collateral is determined  through appraisals perf ormed by independent
licensed appraisers”.  When describing the appraisal process, pl ease address how often
you obtain updated appraisals for your collat eral and in the event you use automated
valuation methodologies, procedures you pe rform to validate the results of these
valuation methodologies in the event they are not based on current appraisal data;

• The approximate amount or percentage of im paired loans for which the Company relied
on current third party appraisals of the collatera l to assist in measuring impairment versus
those for which current apprai sals were not available;

• The typical timing surrounding the recogni tion of a collateral dependent lending
relationship and respective loans as nonpe rforming, when you order and receive an
appraisal, and the subsequent recognition of any provision or related charge-off. In this
regard, tell us if there have been any significant time lapses during this process;

• In more detail, the procedures you perform to  monitor these loans be tween the receipt of
an original appraisal and the updated appraisal;

• Whether you have charged-off an amount differe nt from what was determined to be the
fair value of the collateral as presented in the appraisal for any pe riod presented.  If so,

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010
Page 6

please tell us the amount of the difference and corresponding reasons for the difference,
as applicable;
• How you account for any partially charged-off loans subsequent to receiving an updated
appraisal. In this regard, specifically tell us your policies regarding whether or not these
loans return to performing or remain non-performing status, in additi on to whether or not
any of the terms of the original  loans have been modified (e .g. loan extension, changes to
interest rates, etc);

• In the event that you do not use external appraisals to fair value the underlying collateral
for impaired loans or in cases where the appr aisal has not been updated to reflect current
market conditions, please provide us with  a comprehensive response which discusses
your process and procedures for estimating the fa ir value of the collat eral for these loans;
and
• For those loans you determined that no speci fic valuation allowance was necessary, the
substantive reasons to su pport this conclusion.

In the event these policies vary by loan t ype, please consider providing disaggregated
disclosures to explain your policy for measur ing impairment.  In addition, please provide
similarly enhanced disclosure in your fair value footnote as it relates to these assets that are
measured at fair value on a nonrecurring basis.
Note 11 – Short-term Borrowings, page 49

7. Please tell us, and revise future filings to disclose, whether you account for your repurchase
agreements as collateralized financing transactio ns or sales.  For those repurchase agreements
accounted for as sales, please quantify the am ount of qualifying for sales accounting at each
quarterly balance sheet date for each of the past three years as well as the average quarterly balance of repurchase agreements qualifying for sales accounting for each of the past three
years.  In addition, if appli cable, please provide a detailed analysis suppor ting your use of
sales accounting and describe th e business reasons for structuri ng any repurchase agreements
as sales transactions versus collateralized financings.  To the extent the amounts accounted
for as sales transactions have varied over th e past three years, discuss the reasons for
quarterly changes in the amount s qualifying for sales accounting.
 Signature Page

 8. Please note the signature requirements for Form  10-K.  The principal accounting officer or
the person serving in that cap acity must be identified.
               We urge all persons who are res ponsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are

Kevin W. Laudenslager
Mid Penn Bancorp, Inc. June 29, 2010 Page 7

in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.                In responding to our comments, please provide a written statement from the company
acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclo sure in the filing;

• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of  the United States.

You may contact Benjamin Phi ppen at (202) 551-3697 or John P. Nolan, Senior Assistant
Chief Accountant at (202) 551-3423 if you have que stions regarding comments on the financial
statements and related matters.  Please contac t David Lyon at (202) 551- 3421 or me at (202)
551-3464 with any other questions.
Sincerely,

Kathryn McHale Senior Attorney Advisor

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