Norwood Financial to acquire PB Bankshares in cash, stock transaction

Norwood Financial (NWFL) and PB Bankshares announced that both companies’ boards of directors have unanimously approved an agreement and plan of merger pursuant to which Presence will merge with and into Norwood. As of March 31, Norwood Financial had consolidated assets of $2.4B. Presence had assets of $467M as of March 31. In connection with the merger of the holding companies, Presence’s subsidiary, Presence Bank, will be merged into Wayne Bank. The combined company will have approximately $3B in assets. Under the terms of the merger agreement, 80% of Presence’s common shares will be converted into Norwood Financial common stock while the remaining 20% will be exchanged for cash. Presence’s shareholders will have the option to elect to receive either 0.7850 shares of Norwood Financial common stock or $19.75 in cash for each common share of Presence they own. The election is subject to proration to ensure that, in the aggregate, 80% of the transaction consideration will be paid in the form of Norwood Financial common stock. All options to purchase Presence’s common stock will be cashed out upon completion of the merger. Based on the closing price $26.65 for Norwood Financial Common Stock on July 3, 2025, the transaction would have an aggregate value of approximately $54.9M. The purchase price reflects a multiple of 106.6% of Presence’s March 31, tangible book value and a 2.3% core deposit premium. Following completion of the transaction, Presence shareholders who elect to receive common stock share consideration will receive a quarterly cash dividend equal to approximately 24c per Norwood Financial share of common stock based on Norwood Financial’s current quarterly dividend of 31c per share of common stock. This dividend reflects a yield of 3.6% based on Norwood Financial’s closing price of $26.65 on July 3. Holders of Presence’s common stock prior to the consummation of the merger will own approximately 14% of Norwood Financial’s common stock outstanding immediately following the completion of the merger. The merger is expected to be approximately 10% accretive to earnings per share in 2026, while resulting in 4.2% tangible book value dilution as of the closing date and a tangible book value earn back of 2.5 years. The parties have agreed that two non-employee Presence Bank board members will be joining the Norwood Financial and Wayne Bank boards, with one member joining for a term of two years and the other joining for three years. Concurrent with the entering into of the agreement, Presence president and CEO, Janak Amin, entered into an employment agreement and a non-competition and non-solicitation agreement with Norwood Financial and Wayne Bank. In addition, selected Presence executives are expected to continue employment with Norwood Financial moving forward. The merger is subject to the satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by Presence’s shareholders. It is expected that the transaction will close in either late 4th quarter of 2025 or early 1st quarter of 2026.