Pennsylvania’s Norwood Financial to acquire neighboring bank

Norwood Financial in Honesdale, Pennsylvania, is growing its footprint in the eastern part of its home state, agreeing to buy PB Bankshares, in the latest example of how bank mergers and acquisitions are accelerating this year.

Norwood, the $2.4 billion-asset parent company of Wayne Bank, which has 15 branches in Pennsylvania and another 15 in New York, will gain four additional branches, one loan production office and an administration office, all in central and southeastern Pennsylvania, the two companies said Monday in a press release. PB, based in Coatesville, is the parent company of Presence Bank.

PB had $467 million of assets as of March 31, and the combined company would have $3 billion. Norwood has agreed to pay $54.9 million in cash and stock under the deal’s terms.

“Presence is a growing and respected institution located within the most demographically attractive markets in Pennsylvania,” Norwood CEO James Donnelly said in the release. “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.”

To date, there have been 71 bank M&A deals reported this year, versus 63 during the same period last year, Brendan Nosal, an analyst at Hovde, wrote Monday in a research note.

Nosal noted the “particular strength in small [and] midsize deals” in the $100 million-500 million-asset range.

Such deals “are the bread and butter of bank M&A, greasing the acquisition wheels up and down the size spectrum,” Nosal wrote.

Read more on bank M&A: https://www.americanbanker.com/tag/mergers-and-acquisitions

Also on Monday, Baton Rouge, Louisiana-based Business First Bancshares, the parent company of b1BANK, said it would acquire the $752 million-asset Progressive Bancorp in Monroe, Louisiana, for $83 million in stock.

Several deals have received quick regulatory approval since the start of the second Trump administration. Two deals announced in March and one from April — Cadence Bank’s acquisition of Industry Bancshares — closed on July 1, Laurie Havener Hunsicker, an analyst at Seaport Research Partners, said Monday in a note. 

Twelve of the 21 deals announced in January and February have also closed, Hunsicker said.

Pending regulatory approval, the Norwood-PB deal is expected to close during the fourth quarter of this year or early 2026, the companies said in the release. As part of the agreement, PB’s president and CEO, Janak Amin, will join Norwood and serve as its chief operating officer. Norwood does not currently have a COO.

In addition, certain PB executives are expected to join Norwood, the companies said, though they did not provide specifics.

Also as part of the deal, two non-employee members of PB’s board will join Norwood’s board, one for a term of two years and one for three years, the companies said. 

The agreement calls for 80% of PB’s common shares to be converted into Norwood common stock, with the remaining 20% to be exchanged for cash. PB shareholders will have the option to receive either 0.785 shares of Norwood common stock or $19.75 in cash for each PB share they own. Norwood expects the deal to be 10% accretive to earnings per share in 2026. Tangible book value dilution should be 4.2%, with the earn-back of two-and-a-half years.

Norwood has doubled its assets in the past five years. In 2020, it entered upstate New York with the acquisition of UpState New York Bancorp in Geneva. 

Late last year, Norwood completed a $26 million capital raise and said it would use some of the net proceeds to restructure a large portion of its available-for-sale debt securities portfolio. The company also said it would use the proceeds to buy back common stock and support whole-bank and/or branch acquisitions “if opportunities for such transactions become available.”