MID PENN BANCORP INC

MID PENN BANCORP INC: Material Event - Acquisition Completed

MID PENN BANCORP INC has finalized a significant strategic acquisition. This summary provides a clear and concise overview of the key details, designed for investors seeking straightforward information.

1. Event Description: Acquisition Completed

MID PENN BANCORP INC completed its acquisition of 1st Colonial Bancorp, Inc. on February 27, 2024. This transaction involved both cash and stock, with 1st Colonial shareholders receiving a combination of cash and MID PENN stock for their shares. Immediately following the completion, 1st Colonial Community Bank legally merged into Mid Penn Bank. The companies initially announced this agreement on September 24, 2023.

2. Event Date/Timeline

The acquisition closed on February 27, 2024. The initial agreement was announced on September 24, 2023.

3. Impact Assessment: Strategic Growth, Market Expansion, and Stakeholder Impact

MID PENN acquired 1st Colonial to significantly expand its market presence and strengthen its position. This move allows Mid Penn to grow across central and southeastern Pennsylvania, gaining new customers, branches, and talent in key growth markets. The acquisition aims to create greater scale, diversify revenue streams, and achieve operational efficiencies, ultimately increasing profitability and competitiveness.

The Combined Entity's Scale: This acquisition significantly expands MID PENN's operations. The combined institution will operate with approximately:

• $5.5 billion in total assets
• $4.4 billion in deposits
• $3.8 billion in loans It will also manage 55 financial centers across its expanded service area. This larger scale solidifies Mid Penn's standing as a leading community bank in the region, enabling it to serve more customers and offer a broader range of services.

Impact on Stakeholders:

• Employees: Former 1st Colonial employees have joined the MID PENN team. Integration efforts prioritize retaining talent and ensuring a smooth transition into the larger organization.
• Customers: Customers of 1st Colonial Community Bank will transition to Mid Penn Bank. The bank is committed to making this process as seamless as possible for their accounts, loans, and services.
• Local Communities: Communities previously served by 1st Colonial will now benefit from the resources and expanded offerings of a larger, combined banking presence.
• Shareholders: Existing MID PENN shareholders will experience some dilution due to the issuance of new shares. Thomas R. Brugger, a former director of 1st Colonial, has joined MID PENN's board of directors, contributing valuable expertise to the combined company.

Looking Ahead: Integration Process With the legal merger complete, the focus shifts to integrating the two banks. This involves combining computer systems, harmonizing product offerings, rebranding 1st Colonial branches to Mid Penn, and fully merging operational teams. This integration process is expected to take several months. While integration can present challenges, the goal is to minimize disruption and maximize the benefits of the combined entity.

4. Financial Impact

The total transaction was valued at approximately $90.25 million. For each share of 1st Colonial stock, shareholders received a mixed consideration:

• 60% of their shares converted into MID PENN stock at an exchange ratio of 0.6945 shares of Mid Penn for each 1st Colonial share.
• The remaining 40% were bought out for cash at $18.50 per share.

In total, MID PENN issued approximately 2.11 million new shares of its common stock and paid roughly $37.5 million in cash to complete the deal. This issuance of new shares will result in some dilution for existing Mid Penn shareholders.

MID PENN anticipates realizing approximately $3.5 million in annual cost savings from operational efficiencies and synergies once the integration is complete. The company also expects to incur integration costs during the transition period.

5. Key Takeaways for Investors

For long-term investors, the central question remains whether this acquisition will truly make MID PENN a stronger, more profitable company. With the deal now complete, investors should closely monitor future earnings reports, which will reflect the combined entity's performance.

Key areas to watch include:

• The progress of the integration process.
• Any reported integration costs.
• Customer retention rates.
• The realization of projected cost savings and revenue synergies.

Investors should also consider potential integration risks, such as technology hurdles, employee retention challenges, and customer attrition, which are common in mergers. The addition of an experienced director like Thomas Brugger to the board offers a positive step for governance and strategic direction as the combined company moves forward.