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Norwood Financial Corp to Acquire PB Bankshares, Inc.

Norwood Financial Corp announces merger with PB Bankshares, expanding its market presence.

News Summary

Norwood Financial Corp has announced its acquisition of PB Bankshares, Inc., the parent company of Presence Bank, in a merger valued at approximately $54.9 million. This strategic move is expected to enhance Norwood’s assets significantly as it prepares to expand its market reach in Central and Southeastern Pennsylvania. Following the merger, Presence Bank shareholders will hold about 14% of the new entity, and the deal could lead to a 10% increase in earnings per share by 2026.

Honesdale, PA – Norwood Financial Corp has announced its plans to acquire PB Bankshares, Inc., the parent company of Presence Bank, in a merger valued at approximately $54.9 million. This strategic move marks a significant expansion for Norwood, which is headquartered in Honesdale, Pennsylvania, as it prepares to merge with the Coatesville-based bank.

As part of the merger agreement, 80% of Presence Bank’s common shares will be converted into Norwood Financial common stock. The remaining 20% is set to be exchanged for cash, giving shareholders of Presence Bank a choice to either receive 0.7850 shares of Norwood common stock or $19.75 in cash per share. Furthermore, all existing stock options for Presence will be converted into cash upon the completion of the merger.

The proposed transaction will combine Norwood’s current assets, which total $2.4 billion, with the $467 million assets of Presence Bank. Once merged, the resulting entity will boast approximately $3.0 billion in assets. Following the merger, the shareholders of Presence Bank will hold around 14% of the newly formed company.

Financial Details of the Merger

The deal reflects a valuation equivalent to 106.6% of Presence’s tangible book value as of March 31, 2025, which includes a 2.3% core deposit premium. For those shareholders who decide to opt for stock, they can expect to receive quarterly dividends estimated at approximately $0.24 per share, yielding a rate of about 3.6%.

Future Projections and Opportunities

Market analysts view this merger as a promising growth opportunity for Norwood Financial as they gain access to attractive markets within Central and Southeastern Pennsylvania. The merger is projected to enhance the company’s earnings significantly, with expectations of being about 10% accretive to earnings per share by 2026.

Impact on Capital Structure

However, the merger will initially result in a 4.2% tangible book value dilution at the time of closing, with a tangible book value earn-back period estimated to be around 2.5 years.

Board and Management Changes

Following the merger, two non-employee board members from Presence Bank will join the boards of both Norwood Financial and its subsidiary, Wayne Bank, for terms of two and three years, respectively. Additionally, Janak Amin, the current CEO of Presence Bank, will transition to become the Executive Vice President and Chief Operating Officer at Wayne Bank after the merger’s finalization. Selected executives from Presence will also retain their positions within Norwood Financial after the merger.

Regulatory Approvals and Timeline

For the merger to proceed, it will require customary regulatory approvals, as well as consent from shareholders of Presence Bank. The anticipated timeline for closing the transaction is projected to take place in the late fourth quarter of 2025 or the early first quarter of 2026.

This merger represents a significant step for Norwood Financial Corp as it expands its footprint and strengthens its market position in the Pennsylvania banking sector.