UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

Filed by the Registrant x

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

 

 

 

Payment of filing fee (Check the appropriate box):

 

 

 

 

 

 

 

William Penn Bancorp, Inc.

8150 Route 13

Levittown, Pennsylvania 19057

(215) 945-1200

 

 

 

October 16, 2008

 

 

Dear Fellow Stockholder:

 

You are cordially invited to attend the 2008 Annual Meeting of Stockholders of William Penn Bancorp, Inc., the holding company for William Penn Bank, FSB. The Annual Meeting will be held at the Hampton Inn & Suites Newtown, 1000 Stoney Hill Road, Yardley, Pennsylvania on Thursday, November 6, 2008 at 10:00 a.m., Eastern Time.

 

The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the meeting. During the meeting, we will also report on the operations of the Company. Directors and officers of the Company will be present to respond to any questions stockholders may have.

 

WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. Your vote is important, regardless of the number of shares you own. Voting by proxy will not prevent you from voting in person but will assure that your vote is counted if you are unable to attend the meeting. On behalf of your Board of Directors, we thank you for your interest and support.

 

Sincerely,

 

/s/  Charles Corcoran

 

Charles Corcoran

President and Chief Executive Officer

 

 

 

 

William Penn Bancorp, Inc.

8150 Route 13

Levittown, Pennsylvania 19057

(215) 945-1200

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON NOVEMBER 6, 2008

 

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of William Penn Bancorp, Inc. will be held at the Hampton Inn & Suites Newtown, 1000 Stoney Hill Road, Yardley, Pennsylvania on Thursday, November 6, 2008 at 10:00 a.m., Eastern Time, for the following purposes:

 

 

 

Any action may be taken on any one of the above proposals at the Annual Meeting on the date specified above or on any date or dates to which, by original or later adjournment, the Annual Meeting may be adjourned. Only stockholders of record at the close of business on September 26, 2008 are entitled to vote at the Annual Meeting and any adjournments thereof.

 

You are requested to complete and sign the accompanying proxy card which is solicited by the Board of Directors and to mail it promptly in the accompanying envelope. The proxy card will not be used if you attend the Annual Meeting and vote in person.

 

 

 

Levittown, Pennsylvania

October 16, 2008

 

IMPORTANT: IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE ENCLOSED PROXY CARD IS ACCOMPANIED BY A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

 

PROXY STATEMENT

of

WILLIAM PENN BANCORP, INC.

8150 Route 13

Levittown, Pennsylvania 19057

(215) 945-1200

 

ANNUAL MEETING OF STOCKHOLDERS

November 6, 2008

 

GENERAL

 

This proxy statement is being furnished to stockholders of William Penn Bancorp, Inc. by the Company’s Board of Directors in connection with its solicitation of proxies for use at the 2008 Annual Meeting of Stockholders to be held at the Hampton Inn & Suites Newtown, 1000 Stoney Hill Road, Yardley, Pennsylvania on Thursday, November 6, 2008 at 10:00 a.m., Eastern Time. This proxy statement and the accompanying form of proxy are first being mailed to stockholders on or about October 16, 2008.

 

VOTING AND PROXY PROCEDURES

 

Who Can Vote at the Annual Meeting

You are only entitled to vote at the Annual Meeting if our records show that you held shares of our common stock, $.01 par value (the “Common Stock”), as of the close of business on September 26, 2008 (the “Record Date”). If your shares are held by a broker or other intermediary, you can only vote your shares in person at the Annual Meeting if you have a properly executed proxy from the record holder of your shares (or their designee). As of the Record Date, a total of 3,641,018 shares of Common Stock were outstanding. Each share of Common Stock has one vote in each matter presented.

Voting by Proxy

The Board of Directors is sending you this Proxy Statement for the purpose of requesting that you allow your shares of Common Stock to be represented at the Annual Meeting by the persons named in the enclosed Proxy Card. All shares of Common Stock represented at the Annual Meeting by properly executed and dated proxies will be voted according to the instructions indicated on the Proxy Card. If you sign, date and return the Proxy Card without giving voting instructions, your shares will be voted as recommended by the Company’s Board of Directors. The Board of Directors recommends a vote “FOR” each of its nominees for director and “FOR” the ratification of the appointment of S.R. Snodgrass, A.C. as the Company’s independent auditors for the fiscal year ending June 30, 2009.

If any matters not described in this Proxy Statement are properly presented at the Annual Meeting, the persons named in the Proxy Card will vote your shares as determined by a majority of the Board of Directors. This includes a motion to adjourn the Annual Meeting to solicit additional proxies. If the Annual Meeting is postponed or adjourned, your Common Stock may be voted by the persons named in the Proxy Card on the new Annual Meeting dates as well, unless you have revoked your proxy. The Company does not know of any other matters to be presented at the Annual Meeting.

 

 

You may revoke your proxy at any time before the vote is taken at the Annual Meeting. To revoke your proxy you must either advise the Company’s Secretary in writing before your Common Stock has been voted at the Annual Meeting, deliver a later-dated proxy, or attend the Annual Meeting and vote your shares in person. Attendance at the Annual Meeting will not in itself revoke your proxy.

If you hold your Common Stock in “street name,” you will receive instructions from your broker, bank or other nominee that you must follow in order to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via the telephone or the Internet. Please see the instruction form provided by your broker, bank or other nominee that accompanies this Proxy Statement. If you wish to change your voting instructions after you have returned a voting instruction form to your broker, bank or other nominee, you must contact your broker, bank or other nominee.

 

Participants in the William Penn Bank, FSB Employee Stock Ownership Plan and 401(k) Retirement Savings Plan

 

If you are a participant in the William Penn Bank, FSB Employee Stock Ownership Plan (the “ESOP”) or hold Common Stock through the William Penn Bank, FSB 401(k) Retirement Savings Plan (the “401(k) Plan”), you will receive a voting instruction form from each plan that reflects all shares you may vote under these plans. Under the terms of the ESOP, all shares held by the ESOP are voted by the ESOP trustees, but each participant in the ESOP may direct the trustees on how to vote the shares of Common Stock allocated to his or her account. Unallocated shares and allocated shares for which no timely voting instructions are received will be voted by the ESOP trustees as directed by the ESOP Committee consisting of the outside directors of the Board. Under the terms of the 401(k) Plan, you are entitled to direct the trustee how to vote the shares of Common Stock credited to your account in the 401(k) Plan. The 401(k) Plan trustee will vote all shares for which it does not receive timely instructions from participants at the direction of the Company’s Board of Directors or the Plan Committee of the Board. The deadline for returning your voting instruction form to the trustees of the ESOP and 401(k) Plan is October 26, 2008.

Vote Required

The Annual Meeting can only transact business if a majority of the outstanding shares of Common Stock entitled to vote is represented at the Annual Meeting. If you return a valid proxy or attend the Annual Meeting in person, your shares will be counted for purposes of determining whether there is a quorum even if you abstain or withhold your vote or do not vote your shares at the Annual Meeting. Broker non-votes will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not have discretionary voting power with respect to the agenda item and has not received voting instructions from the beneficial owner.

In voting on the election of directors, you may vote in favor of all nominees, withhold votes as to all nominees, or vote in favor of all nominees except nominees you specify as to which you withhold your vote. There is no cumulative voting in the election of directors. Directors must be elected by a plurality of the votes cast at the Annual Meeting. This means that the nominees receiving the greatest number of votes will be elected. Votes that are withheld and broker non-votes will have no effect on the outcome of the election.

In voting to ratify the appointment of S.R. Snodgrass, A.C. as independent auditors for the 2009 fiscal year, you may vote in favor of the proposal, against the proposal or abstain from voting. To be approved, this proposal requires the affirmative vote of a majority of the votes cast at the Annual

 

 

Meeting. Broker non-votes and abstentions will not be counted as votes cast on the proposal and therefore will have no effect on the outcome of the voting on this proposal.

 

PRINCIPAL HOLDERS OF OUR COMMON STOCK

 

The following table sets forth, as of the Record Date, certain information as to those persons who were known to be the beneficial owners of more than five percent (5%) of the Company’s outstanding shares of Common Stock and as to the shares of Common Stock beneficially owned by all executive officers and directors of the Company as a group.

 

 

____________________

           

(footnotes continued on following page)

 

 

       

 

PROPOSAL I – ELECTION OF DIRECTORS

 

The Company’s Board of Directors is composed of five members. Under the Company’s Bylaws, directors are divided into three classes, as nearly equal in number as possible. Each class serves for a three-year term, with one class of directors elected at each annual meeting. The Board of Directors has nominated directors Craig Burton and Glenn Davis (the “Nominees”) to serve as directors for additional three-year terms.

 

Each of the Nominees has consented to be named in this proxy statement and to serve, if elected. If any Nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute as the Board of Directors may recommend. At this time, the Board knows of no reason why any Nominee might be unavailable to serve.

 

Under our Bylaws, directors are elected by a plurality of the votes cast at an Annual Meeting at which a quorum is present. Votes that are not cast at the Annual Meeting, either because of abstentions or broker non-votes, are not considered in determining the number of votes which have been cast for or withheld from a nominee. Unless otherwise specified on the proxy, it is intended that the persons named in the proxies solicited by the Board will vote for the election of the named Nominees.

 

The following table sets forth the names of the Board’s nominees for election as directors of the Company, of those directors who will continue to serve as such after the Annual Meeting and for each executive officer who is not a director. Also set forth is certain other information with respect to each person’s age, their positions with the Company, the year he or she first became a director of the Company’s wholly owned subsidiary, William Penn Bank, FSB (the “Bank” or “William Penn”), the expiration of his or her term as a director, and the number and percentage of shares of the Common Stock beneficially owned. All current directors were initially appointed as directors of the Company in 2008 in connection with the Company’s incorporation and also serve as directors of William Penn, MHC.

 

 

 

______________________

 

The principal occupation of each director and executive officer of the Company for the last five years is set forth below.

 

Craig Burton is aPartner in Burton & Browse LLP, Certified Public Accountants, located in Newtown, Pennsylvania. He is a certified public accountant.

 

Glenn Davis is the retired president of Davis Pontiac, Inc. (auto dealership) in Richboro, Pennsylvania.

 

Charles Corcoran is our President and Chief Executive Officer. He joined the Bank in 1979, was elected to the Board of Directors in 1989 and became president in 1993. Mr. Corcoran also serves as our principal financial officer and as a director of the William Penn Bank Community Foundation.

 

 

William B.K. Parry, Jr. is President ofWilliam B. Parry & Son, Ltd. (insurance agency) Langhorne, Pennsylvania.

 

William J. Feeney is a retired Police Chief, Richboro, Pennsylvania. Mr. Feeney is the owner of Occasions of Naples, Inc. (flowers and gifts) located in Naples, Florida.

 

Executive Officers Who Are Not Directors

 

James D. Douglas is our Vice President and serves as the chief lending officer. He also serves as a director of the William Penn Bank Community Foundation. Mr. Douglas joined the Bank in 1978.

Terry L. Sager is our Corporate Secretary and Treasurer. She is a certified public accountant and served as our principal accounting officer until July 2008. She is also responsible for human resources and employee benefits. She also serves as a director of the William Penn Bank Community Foundation. Ms. Sager joined the Bank in 1987.

Aswini U. Hiremath was appointed chief accounting officer in July 2008. Prior to joining the Company’s accounting staff in January, 2008, Ms. Hiremath had been a staff accountant at Sterling Bank, Mount Laurel, New Jersey, since 2006. Prior to Sterling, she had been employed at William Penn Bank, FSB.

 

CORPORATE GOVERNANCE

Director Independence

The Board of Directors has determined that Directors Feeney, Parry, Davis and Burton would be considered independent under the independence standards of The Nasdaq Stock Market if the Common Stock were listed thereon. In determining which directors are independent, the Board of Directors considered the deposit and other relationships which directors have with the Bank as well as the relationships described under “Related Party Transactions” but determined that these relationships did not affect their independence. Any loans and deposits made by or accepted by the Bank were on substantially the same terms that would be granted to other customers with similar credit or deposit balances. The Board of Directors also considered the commissions paid to William B. Parry and Son, Ltd. of which Director Parry is president and determined that such commissions were not sufficient to impair Mr. Parry’s independence under the rules of The Nasdaq Stock Market. The Board, however, determined that such commissions would cause him not to be considered independent for purposes of the independence standards applicable to members of the audit committee of a listed company under the Sarbanes-Oxley Act of 2002. There are no members of the Audit Committee other than Mr. Parry who would not meet the independence standards of The Nasdaq Stock Market for Audit Committee members and no members of the Audit Committee who could only serve under exceptions to these standards.

 

Director Attendance

 

Our Board of Directors holds regular and special meetings as needed. During the fiscal year ended June 30, 2008, the Company’s Board of Directors met two times and the Bank’s Board of Directors held 24 regular meetings. No director attended fewer than 75% of the total number of meetings of the Board of Directors held during fiscal year 2008 and the total number of meetings held by all committees on which the director served during the year. We encourage directors to attend annual meetings of stockholders. This will be the Company’s first annual meeting of stockholders. Accordingly, no information on director attendance of the prior years attendance is available.

 

 

 

Committees of the Board of Directors

 

In addition to various other board committees, William Penn Bancorp, Inc. has an Audit Committee, a Compensation Committee and a Nominating Committee as described below. Prior to completion of the mutual holding company reorganization, these functions were performed by committees of the Bank’s Board of Directors.

 

Audit Committee. The Audit Committee consists of Directors Feeney, Davis, Burton and Parry. The Board of Directors has determined that Mr. Burton is an audit committee financial expert within the meaning of the regulations of the Securities and Exchange Commission. The Board of Directors has determined that each of the members of the Audit Committee, including Mr. Burton, would be independent in accordance with the listing requirements for The Nasdaq Stock Market, including the requirements specifically applicable to audit committee members of listed companies, except for Mr. Parry. The committee meets quarterly with the internal auditors. This committee’s main responsibilities include oversight of the external and internal auditors and review of audit reports. The Company has adopted a written charter for the Audit Committee, a copy of which is attached as Appendix A to this proxy statement. A current copy of the Audit Committee charter is not available on our website. The Audit Committee met four times during fiscal year 2008.

 

Personnel Committee. The Personnel Committee acts as a compensation committee and consists of Directors Feeney, Davis, Burton and Parry. This committee meets annually and as needed. The responsibilities of this committee include review of salary and bonus recommendations made by management. President Corcoran makes salary recommendations to the Personnel Committee but does not participate in committee decisions regarding his own compensation. The Personnel Committee does not use consultants, but relies on peer bank information regarding salary levels when reviewing recommendations. The Board of Directors has not adopted a charter for the Personnel Committee. The Personnel Committee met once during fiscal year 2008.

 

Nominating Committee and Director Nominations Process. William Penn Bancorp, Inc. does not have a standing nominating committee or committee performing similar functions. In accordance with the Bylaws, the full Board of Directors acts as a nominating committee for the selection of management’s nominees for director and each director participates in the nomination process. All nominees are approved by a majority of the independent directors. The Board of Directors believes that its procedures provide adequate assurance that nominations are approved by independent directors. The Board of Directors will consider director candidates recommended by stockholders. Any such recommendations must be submitted to the Secretary at least 120 days prior to the date of the Annual Meeting and should include the nominee’s name and qualifications for board membership. The Board believes that all nominees for director, including stockholder nominees, should have the highest personal and professional ethics and integrity; substantial business or other professional experience in the primary market area served by the Bank; commitment to enhancing the business and prospects of the Bank; ability to work with existing board members and management; ability to make appropriate level of commitment of time and resources to their duties as director; an understanding of banking and financial matters and the role of directors in the management of the Company; and substantial personal investment in the Common Stock. All Board nominees for election at this year’s annual meeting are incumbent directors standing for re-election. The Board of Directors met once as a nominating committee in August, 2008 to make nominations for the 2008 Annual Meeting but did not meet as a nominating committee during fiscal year 2008.

 

 

Communications with Directors

 

The Board of Directors has not adopted a formal process for stockholders to send communications to the Board of Directors or individual directors in view of the infrequency of such communications. Stockholders who wish to communicate with the Board of Directors should send their communications to the Secretary at the Company’s main office, 8150 Route 13, Levittown, Pennsylvania 19057.

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table. The following table sets forth the cash and non-cash compensation awarded to or earned during the last two fiscal years by our principal executive officer and for the most highly compensated executive officer other than the principal executive officer whose total compensation (excluding compensation attributable to non-qualified deferred compensation earnings) during the fiscal year ended June 30, 2008 exceeded $100,000 for services rendered in all capacities to William Penn Bancorp, Inc. and William Penn Bank, FSB.

 

 

___________________

 

 

Retirement and Other Arrangements. The Company has various arrangements with Messrs. Corcoran and Douglas pursuant to which they may become eligible for retirement benefits or payments in connection with a termination of their employment or a change in control of the Company.

 

Deferred Compensation Plan. William Penn Bank, FSB maintains a deferred compensation plan for officers, which permits participants in the plan to defer a portion of their compensation. Such deferred amounts are maintained as a book reserve and are credited annually with an investment return equal to the highest rate offered by the Bank on its certificates of deposit. Normal retirement age is 65. Upon normal retirement age, death or disability, the participant will receive 120 monthly installments. If the participant is terminated for other than attainment of age 65, death, or disability, the amounts deferred shall continue to be invested and held until the participant reaches age 65. If the participant dies before receiving the 120 monthly payments, the designated beneficiary shall receive the remaining value in a lump sum within

 

 

60 days. Installment payments to be made to the participant shall commence on the first day of the month next following the date of the termination of the participant’s employment. In the event of a change-in-control, the participant is entitled to take a lump sum distribution of the amount in their account.

 

Mr. Corcoran is the only officer participating in the deferred compensation plan for officers. He did not, however, defer any of his salary for the fiscal year ended June 30, 2008. The amounts credited to his account under this plan for those years in which he does defer a portion of his salary earn interest at a rate adjusted annually equal to the highest rate offered by the Bank on its certificates of deposit as adjusted on December 31^st of each year. The current rate on earnings under the plan is 4.4%.

 

401(k) Retirement Savings Plan.We maintain a tax-qualified defined contribution retirement savings plan (the “401(k) Plan”), for all employees of the Bank who have satisfied the plan’s eligibility requirements. Participants become eligible to participate in the plan on the first day of the calendar quarter that coincides with or next follows their attainment of age 18 and completion of one year of service. Eligible employees may contribute up to 50% of their compensation to the plan on a pre-tax basis, subject to limitations imposed by the Internal Revenue Code of 1986, as amended. Under the plan, the Bank makes matching contributions equal to 25% of participants’ elective deferrals, up to a maximum of 12% of annual compensation. Participants are 100% vested in their salary deferrals as well as the Bank’s contributions. Participants have individual accounts under the plan and may direct the investment of their accounts among a variety of investment funds, including a William Penn Bancorp, Inc. Stock Fund. The stock fund permits participants to invest their 401(k) plan funds in the Common Stock.

 

Pension Plan. Until January 2008, William PennBank, FSB maintained a qualified noncontributory defined benefit pension plan for eligible employees. All employees who worked for a period of one year of service were eligible to accrue benefits under the pension plan. Annual contributions to the pension plan were made in order to satisfy the actuarially determined minimum funding requirements in accordance with the Employee Retirement Income Security Act of 1974, as amended.

 

Under the plan’s pension formula, annual retirement income was equal to 47% of highest average pay, multiplied by a fraction based on actual years of credited service divided by the years of credited service up to the normal retirement date of age 65. The pension plan provided for early retirement at age 55 with a reduced benefit. The accrued benefit is further pro-rated for years of service less than 30 at age 65.

 

Average pay equaled the highest average of total annual pay during any five consecutive calendar years within the last ten years. Credited service meant uninterrupted years and months of employment with William Penn during which a participant received pay for at least 1,000 hours of employment.

 

In March 2008, the present value of accrued benefits were paid out to participants in the Plan.

 

Employee Stock Ownership Plan.In connection with the minority stock offering, the Bank established the William Penn Bank, FSB Employee Stock Ownership Plan (the “ESOP”) for the exclusive benefit of participating employees of the Bank. Participating employees are full-time employees who have completed at least one year of service and have attained the age of 21.

 

The ESOP is funded by contributions made by the Bank in cash or Common Stock. Benefits may be paid either in shares of Common Stock or in cash. The ESOP borrowed funds with which to acquire 8% of the aggregate shares sold in the offering including shares contributed to the William Penn Bank Community Foundation. The loan is secured by the shares purchased and earnings of employee stock

 

 

ownership plan assets. Shares purchased with loan proceeds are held in a suspense account for allocation among participants as the loan is repaid.

 

Contributions to the ESOP and shares released from the suspense account will be allocated annually among participants on the basis of total taxable cash compensation. All participants must have completed a year of service during the plan year, or have terminated employment following death, disability or retirement, in order to receive an allocation. Employment service before the adoption of the ESOP is credited for the purposes of vesting. Contributions to the ESOP by the Bank are discretionary. In the event of the acquisition of the Bank or its common stock by an unrelated third party, the ESOP shall terminate and all participant accounts shall become fully vested and non-forfeitable.

 

The Board of Directors has appointed the non-employee directors to a committee that will administer the ESOP and serve as its trustees. The trustees must vote all allocated shares as directed by plan participants. Unallocated shares and allocated shares for which no timely direction is received will be voted as directed by the Board of Directors or the ESOP committee, subject to the trustees’ fiduciary duties.

 

Employment Agreements. We do not currently have employment or severance/change in control agreements with any of our employees. The Board of Directors may, however, consider the implementation of agreements with key personnel in order to ensure the Bank can retain such individuals.

 

DIRECTOR COMPENSATION

Set forth below is a table providing information concerning the compensation of the directors of William Penn Bancorp, Inc. who are not Named Executive Officers for the last completed fiscal year.

 

 

____________________

* Mr. Heefner resigned from the Board effective June 18, 2008.

 

Board Fees. Directors currently are paid a fee of $1,100 per month as board fees. There are two meetings each month. The Chairman receives an extra $150 per month ($1,800 annually). Fees for board meetings represent $13,200 of the total amount shown below for each director other than Mr. Feeney, who currently serves as Chairman. Directors receive $600 per month for attendance at meetings of the Asset Liability Committee and/or the Asset Review Committee, both of which meet monthly. Directors receive $600 for attendance at meetings of the Personnel Committee, which meets annually, and $600 for attendance at meetings of the Audit Committee, which meets quarterly. Each director’s fiscal 2008 compensation includes $10,200 of committee meeting fees.

 

Each director of the Bank also serves on the Boards of Directors of William Penn Bancorp, Inc. and William Penn, MHC. At this time, however, no additional compensation is paid for service on those

 

 

Boards; the directors will be compensated only by the Bank. Mr. Corcoran, who is the only director at this time who is also an employee, is not compensated for serving as a director.

 

Deferred Compensation Plan for Directors. The Bank has established a deferred compensation plan for its directors. Under the deferred compensation plan, the director may defer all or part of his annual compensation as a director. The principal amount of compensation deferred together with the interest accrued on that amount will earn a return at a rate equal to the highest rate offered on William Penn certificates of deposit on December 31, adjusted annually. The earnings rate on deferrals is currently 4.4%. The participant, or, in the even of his/her death, his/her beneficiary, shall receive distributions beginning on the first day of the first month after the earlier of (i) the participant’s death or (ii) the later of (1) the participant’s ceasing for any reason (other than death) to be a member of the Board of Directors of William Penn or (2) the participant reaching age 70. The deferred compensation plan is payable either in (1) a lump sum payment, (2) 120 equal monthly payments or (3) equal installments. In the event of death, the payments will be made to a designated beneficiary. The participant may request a withdrawal under the deferred compensation plan for a severe hardship prior to age 70.

 

All amounts deferred by directors during the fiscal year ended June 30, 2008 are included within the fees earned or paid in cash for fiscal 2008 as shown in the directors’ compensation table above.

 

Directors Consultation and Retirement Plan. The Bank’s Directors Consultation and Retirement Plan provides retirement benefits to the directors of the Bank who are not employees. The retirement benefit is calculated as the average of the director’s total monthly compensation during the 60 calendar months prior to retirement, or $900 if greater, times a percentage (if less then 10 years of service - 0%, 10 but less than 15 years - 50%, and 15 or more years -100%).

 

The benefit is payable upon attainment of ten years of service as a director. Such benefit is payable for 120 months. Upon the death of a participant who is receiving benefit payments under the plan prior to his or her death, the remaining number of benefit payments to be made under the plan shall be paid to the beneficiary after the participant’s death. Upon the death of a participant who is not receiving benefit payments under the plan prior to his or her death, the beneficiary shall receive 120 monthly payments. If a beneficiary dies after the participant but prior to receiving all payments under the plan, then the remaining payments will continue to be paid to the beneficiary’s estate in the form of a lump-sum payment.

 

Upon a change in control if the director suffers a termination of service, then the director shall be presumed to have 15 years of service as of such date of change in control and shall receive a lump sum payment equal to the present value of the payment. Upon a disability, the director shall be presumed to have 10 years of service and shall receive benefits on the first day of the calendar month after the disability.

 

RELATED PARTY TRANSACTIONS

 

William Penn Bank originates loans and extends credit to its directors, executive officers and their family members in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with parties not related to William Penn Bank. These loans do not involve more than the normal risk of collectibility or present other unfavorable features.

 

 

The Bank has an employee loan program whereby employees, excluding executive officers, may obtain a discounted interest rate on their home mortgage loan compared to those prevailing at the time for comparable loans with persons not related to William Penn Bank. The following information is furnished with regard to loans outstanding under this program to executive officers All such loans were originated prior to their becoming executive officers.

 

 

 

PROPOSAL II – RATIFICATION APPOINTMENT OF

INDEPENDENT AUDITORS

 

S.R. Snodgrass, A.C. served as the Company’s independent auditors for the last fiscal year and the Board of Directors has appointed S.R. Snodgrass, A.C. to serve as the Company’s independent auditors for the current fiscal year subject to ratification of their appointment by stockholders. The engagement of S.R. Snodgrass, A.C. was approved in advance by the Audit Committee of the Board of Directors. A representative of S.R. Snodgrass, A.C. is expected to attend the Annual Meeting and therefore will have an opportunity to make a statement and will be available to respond to appropriate questions from stockholders.

 

Beard Miller Company LLP (“Beard Miller”) served as the Company’s independent auditors for the fiscal year ended June 30, 2007. On May 21, 2008, the Company’s Board of Directors approved the dismissal of Beard Miller as the Company's independent certifying accountant. Beard Miller’s report on the Company's consolidated financial statements for the two fiscal years ended June 30, 2007 and 2006, did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended June 30, 2007 and 2006, as well as the interim period through their dismissal, there were no disagreements or “reportable events” of the kind described in Item 304(a)(1)(v) of Regulation S-K between the Company and Beard Miller on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Beard Miller, would have caused them to make a reference to the subject matter of the disagreements or reportable events in connection with its reports.

 

Fees paid by the Company to its principal accountant for professional services for each of the last two fiscal years are set forth below:

 

 

Audit Fees include fees billed by the Company’s independent auditors for professional services rendered for the audit of the Company’s annual financial statements and reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q filed during the fiscal years ended June 30, 2008 and 2007.

 

 

 

Audit-Related Fees include fees billed by the Company’s independent auditors for services provided for the years ended June 30, 2008 and 2007. The services comprising these fees consisted of consultation concerning financial accounting and reporting standards and services related to the various registration statements filed with the Securities and Exchange Commission in connection with the stock offering of the Company.

 

Tax Fees primarily include fees associated with tax audits, tax compliance, tax consulting, as well as tax planning. This category also includes services related to tax disclosure and filing requirements.

 

All Other Fees are fees billed for professional services other than those listed under Audit Fees, Audit-Related Fees and Tax Fees.

 

The Audit Committee has pre-approved all audit and non-audit services provided by the independent auditor and has not adopted pre-approval procedures for this purpose. There were no non-audit services described above that were not recognized as such at the time of the engagement and were approved after the fact pursuant to paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X.

Ratification of the appointment of the independent auditors requires the affirmative vote of a majority of the votes cast in person or by proxy by the stockholders at the Annual Meeting. The Board of Directors recommends that stockholders vote “FOR” the ratification of the appointment of S.R. Snodgrass, A.C. as the Company’s independent auditors for the 2009 fiscal year.

 

AUDIT COMMITTEE REPORT

 

The Audit Committee has reviewed and discussed the audited financial statements of the Company with management and has discussed with S.R. Snodgrass, A.C., the Company’s independent registered public accounting firm, the matters required to be discussed under Statement of Auditing Standards No. 61 (“SAS 61”). In addition, the Audit Committee received from S.R. Snodgrass, A.C. the written disclosures and the letter required to be delivered by S.R. Snodgrass, A.C. under Independence Standards Board Standard No. 1 (“ISB Standard No. 1”) and has discussed with representatives of S.R. Snodgrass, A.C. their independence.

 

The Audit Committee has reviewed the non-audit services currently provided by the Company’s independent registered public accounting firm and has considered whether the provision of such services is compatible with maintaining the independence of the Company’s independent registered public accounting firm.

 

Based on its review of the financial statements, its discussion with S.R. Snodgrass, A.C. regarding SAS 61, and the written materials provided by S.R. Snodgrass, A.C. under ISB Standard No. 1 and the related discussion with S.R. Snodgrass, A.C. of their independence, the Audit Committee has recommended that the audited financial statements of the Company be included in its Annual Report on Form 10-K for the year ended June 30, 2008, for filing with the Securities and Exchange Commission.

 

 

 

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Securities and Exchange Commission regulations require the Company’s officers, directors and persons who own more than 10% of the outstanding Common Stock to file reports detailing their ownership and changes of ownership in the Common Stock, and to furnish the Company with copies of these reports. Based solely on its review of the reports received during the past fiscal year or with respect to the last fiscal year or written representations from these persons that they were not required to file annual reports of change in beneficial ownership, the Company believes that during fiscal year 2008, all of its officers, directors and all of its stockholders owning in excess of 10% of the outstanding Common Stock have complied with these reporting requirements.

 

OTHER MATTERS

 

The Board of Directors is not aware of any business to come before the Annual Meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the Annual Meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the determination of the Board of Directors.

 

MISCELLANEOUS

 

The Company will bear the cost of soliciting proxies. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Common Stock. In addition to solicitations by mail, directors, officers and regular employees of the Company may solicit proxies personally or by telegraph or telephone without additional compensation.

 

ANNUAL REPORT TO STOCKHOLDERS

 

The Company’s 2008 Annual Report to Stockholders, including financial statements, is being mailed to all stockholders of record as of the Record Date. Any stockholder who has not received a copy of the Annual Report may obtain a copy by writing to the Secretary of the Company. The Annual Report is not to be treated as a part of the proxy solicitation materials or as having been incorporated herein by reference. A copy of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission will be furnished without charge to stockholders as of the Record Date, upon written request to the Secretary, William Penn Bancorp, Inc., 8150 Route 13, Levittown, Pennsylvania 19057.

 

 

STOCKHOLDER PROPOSALS

 

To be eligible for inclusion in the Company’s proxy materials for next year’s Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be received at the Company’s main office at 8150 Route 13, Levittown, Pennsylvania 19057 no later than June 19, 2009. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934. Stockholder proposals, other than those submitted pursuant to the Exchange Act, to be considered at such Annual Meeting, must be stated in writing, delivered or mailed to the Secretary of the Company at least five days prior to date of the annual meeting.

 

 

Levittown, Pennsylvania

October 16, 2008

 

 

APPENDIX A

 

William Penn Bancorp, Inc.

Audit Committee Charter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b. External Auditors

 

 

 

c. Internal Auditors

 

 

d. Internal Controls