Under the terms of the merger agreement, 1st Colonial shareholders could elect to receive either 0.6945 of a share of Mid Penn common stock or $18.50 in cash for each 1st Colonial share, subject to proration so that, in the aggregate, 60% of the consideration was paid in Mid Penn stock and 40% in cash. Based on Mid Penn's closing share price of $30.31 on September 23, 2025, this implied a value of approximately $20.03 per 1st Colonial share and an aggregate transaction value of approximately $101 million. The investor presentation disclosed implied pricing multiples of 1.16x 1st Colonial's tangible book value per share and 11.6x its trailing-twelve-month earnings per share. All outstanding 1st Colonial stock options were to be cashed out at closing. The transaction was structured so that 1st Colonial would merge with and into Mid Penn, followed by the merger of 1st Colonial Community Bank into Mid Penn Bank, and was intended to qualify as a tax-free reorganization for 1st Colonial shareholders receiving Mid Penn stock. Following closing, 1st Colonial shareholders were expected to own approximately 8% of Mid Penn's outstanding common stock.
Mid Penn disclosed expected fully phased-in cost savings equal to 40% of 1st Colonial's noninterest expense base, with 80% of those savings phased in during 2026. The company estimated one-time merger-related charges of approximately $12 million pre-tax (about $9.6 million after-tax), to be fully reflected in pro forma tangible book value. Other purchase-accounting marks disclosed in the investor presentation included a gross credit mark of $7.9 million (1.25% of loans held for investment, split evenly between purchase-credit-deteriorated and non-PCD loans), a loan interest-rate write-down of $28.3 million pre-tax (4.5% of loans held for investment, accreted over seven years), a core deposit intangible of $14.3 million (2.5% of non-time deposits, amortized over ten years), and a day-two CECL reserve estimate of $3.9 million.
On financial impact, Mid Penn disclosed in the investor presentation approximately 10% EPS accretion in 2026 and approximately 14% EPS accretion in 2027 (full-year 2027 estimated earnings accretion), approximately 6% dilution to tangible book value per share at close with an estimated earnback period of approximately 3.4 years (crossover method), a projected internal rate of return of approximately 24% (assuming a 10.0x terminal P/E multiple and 8.5% minimum TCE/TA), pro forma CET1 of approximately 11.7%, and pro forma TCE ratio of approximately 9.4% excluding a stated CECL double count. The deal was expected to be immediately accretive to Mid Penn's estimated earnings per share.
1st Colonial, founded in 2000, operated three full-service branches and one loan production office in the greater Philadelphia area. As of June 30, 2025, 1st Colonial reported approximately $877 million in total assets, $743 million in total deposits and $640 million (reported as $639 million in the investor presentation) in gross loans, with a 0.93% year-to-date ROAA and 0.52% nonperforming-assets-to-assets ratio. On a pro forma basis combining the two companies as of June 30, 2025, Mid Penn disclosed total assets of more than $7.2 billion, total deposits of approximately $6.2 billion, gross loans of more than $5.4 billion, and more than 60 total branch locations. Concurrently with signing, 1st Colonial President and CEO Robert B. White entered into an employment agreement to become Senior Executive Vice President, Greater Philadelphia Metro Area Market President and Senior Risk Advisor of Mid Penn Bank, and one 1st Colonial-nominated director was to join the Mid Penn board at closing.
Keefe, Bruyette & Woods, A Stifel Company, acted as exclusive financial advisor to Mid Penn, and Holland & Knight LLP acted as Mid Penn's legal advisor. Stephens Inc. acted as exclusive financial advisor to 1st Colonial and rendered a fairness opinion to 1st Colonial's board, and Stradley Ronon Stevens & Young, LLP acted as 1st Colonial's legal advisor.
Mid Penn filed a Form S-4 registration statement on November 24, 2025 (File No. 333-291759, amended December 18, 2025) to register the shares of Mid Penn common stock issuable in the merger, which included a proxy statement for 1st Colonial and a prospectus for Mid Penn. On February 11, 2026, the companies announced that 1st Colonial shareholders had overwhelmingly approved the merger at a special meeting, with 3,993,902 shares voted in favor against 456 against and zero abstentions, representing over 80% of outstanding shares present at the meeting (over 99% of votes cast were in favor).
The transaction closed after the close of business on February 27, 2026. At closing, Mid Penn disclosed the cash-and-stock transaction was valued at approximately $106.1 million, reflecting movement in Mid Penn's stock price between signing and closing (versus the approximately $101 million value disclosed at announcement based on the September 23, 2025 stock price). The consolidated company had approximately $7 billion in total assets and Mid Penn's branch count increased to 62 retail locations. In connection with the merger, Thomas R. Brugger, a former 1st Colonial director, was appointed to the Mid Penn and Mid Penn Bank boards effective as of the merger's effective time. Mid Penn confirmed the same financial and legal advisors served through closing: Keefe, Bruyette & Woods, A Stifel Company for Mid Penn, Holland & Knight LLP as Mid Penn's legal advisor, Stephens Inc. for 1st Colonial (including the fairness opinion), and Stradley Ronon Stevens & Young, LLP as 1st Colonial's legal advisor.