THE MERGER Background of the Merger During the course of developing its strategic plan, Mid Penn’s board of directors and senior management team regularly consider various strategies for creating additional shareholder value, including growth through the expansion of its customer base in existing markets, as well as growth through acquisition of banks or business lines in existing or other markets. As part of this strategic planning process, Mid Penn routinely evaluates possible business combinations, and has completed five acquisitions in recent years—Phoenix Bancorp, Inc. in March 2015, The Scottdale Bank & Trust Co. in January 2018, First Priority Financial Corp. in July 2018, Riverview Financial Corporation in November 2021 and Brunswick Bancorp in May 2023. The William Penn board of directors has regularly reviewed and discussed William Penn’s business strategy, performance and prospects in the context of the national and local economic environment, developments in the regulation of financial institutions and the competitive landscape. Among other things, these reviews and discussions have included possible strategic initiatives available to William Penn, such as capital management strategies, potential acquisitions, and business combinations involving other financial institutions. These reviews and discussions included analyses of the mergers and acquisitions environment, including multiples and premiums being paid, and an assessment of potential partners for William Penn. In connection with the evaluation of these strategic alternatives, Kenneth J. Stephon, the Chairman, President and Chief Executive Officer of William Penn, has had, from time to time, informal discussions with representatives of other financial institutions, including Mid Penn, and has regularly updated the William Penn board of directors regarding such discussions. On March 25, 2024, the William Penn board of directors held a regular meeting that was attended by representatives of Piper Sandler & Co. (“Piper Sandler”), financial advisor to William Penn, and Kilpatrick Townsend & Stockton LLP (“Kilpatrick”), special legal counsel to William Penn. At the meeting, representatives of Piper Sandler led a discussion with the board of directors regarding the then current mergers and acquisitions market with respect to financial institutions generally and William Penn in particular. As part of this discussion, representatives of Piper Sandler reviewed with William Penn’s board of directors a group of potential counterparties, an analysis of each institution’s capacity to pay for shares of William Penn common stock in a merger transaction, and identified one potential merger partner (“Company A”) that had expressed an interest in exploring a business combination with William Penn and that had the capacity to pay a premium for shares of William Penn common stock. Representatives of Piper Sandler communicated to the William Penn board of directors that many of the remaining financial institutions in the group would not be viable merger partners for William Penn at the time because of the weakness in their respective stock prices and the overall market conditions for bank merger activity. The William Penn board of directors then considered William Penn’s prospects for organic growth and the potential strategic business combination of William Penn with another financial institution. The William Penn board of directors also discussed the risks and challenges associated with the path of independence and organic growth, including the challenges that the recent interest rate environment has caused for smaller institutions such as William Penn, and the potential benefits associated with various strategic business combinations. Representatives of Kilpatrick reviewed with the board of directors the fiduciary duties of directors under Maryland law, including the fiduciary duties of directors in the context of a change in control. Following thorough discussion and deliberation, and after all questions posed by the directors had been answered by management, representatives of Piper Sandler or Kilpatrick, as appropriate, the William Penn board of directors unanimously agreed that it was in the best interests of William Penn’s shareholders and other constituents for William Penn to explore a potential business combination. The board of directors then discussed Company A in greater detail, including its financial condition, experienced management team, successful acquisition history and potential capacity to pay a premium for shares of William Penn common stock. Following this discussion, the William Penn board of directors directed Mr. Stephon to contact the Chief Executive Officer of Company A to ascertain Company A’s level of interest in pursuing a potential business combination transaction with William Penn. 49
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