#USA #Merger Agreement #Northwest Bancshares #Penns Woods Bancorp #Columbus, Ohio

Merger Announcement: Northwest Bancshares Acquires Penns Woods Bancorp

In a significant move aimed at expanding its market presence, Northwest Bancshares, Inc., headquartered in Columbus, Ohio, has announced an agreement to acquire Penns Woods Bancorp, Inc. based in Williamsport, Pennsylvania. The merger, valued at approximately $270.4 million, marks a strategic step for Northwest to enhance its business footprint in North Central and Northeastern Pennsylvania.

The merger agreement was made official on December 17, 2024, and entails an all-stock transaction where Penns Woods shareholders will receive shares of Northwest common stock at a ratio of 2.385 to 1. This deal is expected to elevate Northwest’s total assets to over $17 billion, positioning it among the largest 100 banks in the United States.

As of September 30, 2024, Penns Woods reported total assets of $2.3 billion, with deposits totaling $1.7 billion and loans extending to $1.9 billion. The merger is poised to propel Northwest’s banking services into a broader market, adding 24 new branch locations across several counties including Blair, Centre, and Luzerne. With this integration, Northwest will operate more than 150 financial centers across four states, enhancing its capacity to serve its communities.

Strategic Advantages and Financial Insights
Significant gains are anticipated from this merger. Northwest’s CEO, Louis J. Torchio, expressed excitement about this partnership, highlighting the reputation of Penns Woods’ institutions, Jersey Shore State Bank and Luzerne Bank. He emphasized that the transaction is a cornerstone of Northwest’s long-term growth strategy, providing vast opportunities to further serve existing customers and reach new markets. The financial arrangements offer a premium, where Penns Woods shares will be valued at $34.44 each based on Northwest’s recent stock prices, translating to a 139.0% multiple of tangible book value.

Richard A. Grafmyre, CEO of Penns Woods, echoed this sentiment, indicating that this merger positions both institutions for growth and enhances capabilities for their respective customers. The merger intends to create a more robust banking entity with heightened service offerings.

Projected Timeline and Future Steps
The completion of this transaction is forecasted for the third quarter of 2025, contingent upon obtaining necessary regulatory approvals and the consent of Penns Woods shareholders. Post-merger, Jersey Shore State Bank and Luzerne Bank branches will transition into Northwest Bank branches, further solidifying Northwest’s market position.

Additionally, it’s noteworthy that Northwest anticipates this merger will be 23% accretive to fully diluted earnings per share by 2026. The tangible book value dilution is estimated at about 9%, with an earn-back period of under 3 years. The stability and capital ratios of the merged entity are projected to exceed well-capitalized regulatory benchmarks, underscoring a solid financial base.

With dedicated financial and legal advisors from Janney Montgomery Scott, LLC, and Dinsmore Shohl LLP representing Northwest, and Stephens Inc. along with Stevens Lee, P.C. catering to Penns Woods, the groundwork is being effectively set for this notable merger.

In Conclusion
Both Northwest Bancshares and Penns Woods Bancorp members highlight a future brimming with opportunities for growth and enhanced customer engagement. This merger is not just about expansion but also about delivering superior financial services and community dedication, a principle both organizations hold dear. With anticipated shareholder dividends increasing from $0.32 to $0.48 based on Northwest's current quarterly dividend, this merger promises attractive returns for existing investors post-completion.

This merger represents a noteworthy chapter in the banking sector, propelling the aggregated institution into a new era of service and outreach within Pennsylvania and beyond.