Dive Brief:

• Honesdale, Pennsylvania-based Norwood Financial Corp. has agreed to buy in-state peer Coatesville-based PB Bankshares and its subsidiary, Presence Bank, in a deal valued at $54.9 million, the companies announced Monday.
• Following the transaction, the combined entity will have $3 billion in assets and expand Norwood’s subsidiary, Wayne Bank, by adding four branches to the acquirer’s existing 30-branch network in central and southeastern Pennsylvania.
• The deal is expected to close late in the fourth quarter of 2025 or early in the first quarter of 2026, the companies said.

Dive Insight:

“Presence is a growing and respected institution located within the most demographically attractive markets in Pennsylvania,” James O. Donnelly, CEO of Norwood, said in a statement. “Joining these institutions provides Wayne Bank with the opportunity to deepen Presence Bank’s relationships with its customers, given our broader product mix and larger balance sheet.”

The deal is a combination of 80% stock and 20% cash. Presence shareholders can choose either 0.7850 shares of Norwood common stock per Presence share or $19.75 in cash per Presence share, the companies said. All Presence stock options will be cashed out upon completion of the merger. 

After the merger, Presence Bank will merge into Wayne Bank.

The deal value was determined based on Norwood’s share price as of July 3 and reflects 106.6% of Presence's tangible book value as of March 31, and a 2.3% core deposit premium. Presence shareholders receiving stock will get quarterly dividends of roughly $0.24 per share, representing a 3.6% yield.

Following the merger's completion, Presence shareholders will own roughly 14% of the combined company. The deal is expected to be roughly 10% accretive to earnings per share in 2026 while leading to a 4.2% tangible book value dilution at closing and a tangible book value earn back period of 2½ years.

Analysts at Stephens view Presence as a “growth story in high quality southeast PA markets with a 5 yr. asset growth.”

Under the terms of the deal, two non-employee Presence Bank board members will join the Norwood and Wayne Bank boards – one for a two-year term and the other for a three-year term.

Janak Amin, CEO of Presence, will join Wayne Bank as executive vice president and chief operating officer. Additionally, selected Presence executives will remain with Norwood, the companies said.

Amin said the deal “will result in an enhanced customer experience for our commercial base and the opportunity to augment the retail portion of our business with their product set and consumer verticals.”