Mid Penn’s Reasons for the Merger The board of directors and senior management of Mid Penn periodically review and evaluate the economic and regulatory environments in which Mid Penn and its affiliated companies operate. Part of this review in recent years has included an acknowledgement of the effects of additional oversight and regulation on revenues, expenses and capital requirements for financial institutions, particularly community banks, as a result of the passage in 2010 of the Dodd-Frank Act and other factors, and consideration of competitive factors. The board of directors and senior management generally believe that greater size and scale can help a community-oriented financial institution address the costs of anticipated additional regulation, as well as provide additional revenue opportunities and provide a platform to compete more effectively with larger financial institutions. In light of these observations, Mid Penn has elected to pursue a controlled growth strategy, which may include both organic growth and the targeted acquisition of other financial institutions with strong performance characteristics in alignment with Mid Penn’s community banking philosophy. Mid Penn entered into the merger agreement to further implement this strategy, as well as to provide additional opportunities for revenue growth. Mid Penn’s board of directors reviewed and discussed the transaction with senior management, as well as Mid Penn’s financial advisor, Stephens, and Mid Penn’s legal advisor in unanimously determining that the merger was advisable and in the best interests of Mid Penn and its shareholders. In reaching its determination, the Mid Penn board of directors considered a number of factors, including the following material factors: • information regarding the business operations, management, financial condition, asset quality, product offerings, and prospects of William Penn based on, among other things, presentations by management and Mid Penn’s financial advisor, Stephens; • the anticipated operating efficiencies, cost savings (estimated to be approximately $9.8 million, or 45%, on a pre-tax basis) and opportunities for revenue enhancements of the combined company following the completion of the merger, and the likelihood that they would be achieved after the merger; • the expectation that the transaction will be accretive from an earnings per share perspective (exclusive of non-recurring transaction costs) for the pro forma company in the first full year after completion and have a tangible book value dilution earn back period of less than 2.4 years; • the board’s view that William Penn’s product offerings and business mix are compatible with those of Mid Penn and provide Mid Penn with opportunities to accelerate loan growth, as well as opportunities to enhance non-interest income growth by expanding Mid Penn’s insurance, wealth management, and mortgage banking activities; • the attractiveness of William Penn’s stable low-cost deposit base, especially when taking into consideration the current rising interest rate environment; • the board’s view that the merger presents the opportunity to more readily deploy the excess capital and liquidity generated by the 2024 public offering of common stock; • the board’s view that the combined company will have the potential for a stronger competitive position in a market place where relatively greater size and scale may become increasingly more important factors for financial performance and success; • the effectiveness of the merger as a method of implementing and accelerating Mid Penn’s strategies for expanding Mid Penn’s franchise in the broader Philadelphia region including Bucks County and southern and central New Jersey; • the board’s view that the transaction will provide an increase in shareholder value and enhance shareholder returns; • the expectation that talented and experienced executives of William Penn will bring their industry and market knowledge to Mid Penn; 70
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