COLUMBUS, Ohio - Northwest Bancshares, Inc. (NASDAQ: NASDAQ:NWBI), a bank holding company for Northwest Bank, with a current market capitalization of $1.84 billion and a strong track record of maintaining dividend payments for 30 consecutive years, has announced an all-stock transaction to acquire Penns Woods Bancorp, Inc. (NASDAQ: PWOD), valued at approximately $270.4 million. This merger is expected to significantly bolster Northwest's presence in North Central and Northeastern Pennsylvania. According to InvestingPro data, Northwest's stock has shown remarkable strength with a 36.5% price return over the past six months.
The transaction, unanimously approved by both companies' boards of directors, will result in Northwest issuing shares of its common stock for all outstanding shares of Penns Woods. Penns Woods shareholders will receive 2.385 shares of Northwest stock for each of their shares. The deal is based on Northwest's closing stock price of $14.44 as of Monday, which values Penns Woods shares at $34.44 each. The merger is anticipated to be a tax-free reorganization for the parties involved.
Northwest President and CEO Louis J. Torchio expressed enthusiasm for the partnership, citing the merger as a milestone in Northwest's growth strategy. Richard A. Grafmyre, CEO of Penns Woods, echoed this sentiment, highlighting the benefits of the combined entity for customers, employees, and shareholders. Following the merger, Grafmyre is set to join the boards of Northwest and Northwest Bank.
The combined company will have over $17 billion in pro forma total assets, making it one of the top 100 largest banks in the nation. The merger will expand Northwest's footprint with an additional 24 branch locations across seven Pennsylvania counties, bringing the total to more than 150 financial centers and loan production offices across four states. InvestingPro analysis suggests Northwest is currently trading below its Fair Value, with four analysts recently revising their earnings expectations upward for the upcoming period. Get access to detailed valuation metrics and more financial insights with an InvestingPro subscription.
Financially, Northwest anticipates the transaction to be roughly 23% accretive to its 2026 earnings per share, excluding one-time costs, with a tangible book value dilution of about 9% at closing. The company expects to recover this dilution within three years.
Subject to customary closing conditions, including regulatory approvals and approval by Penns Woods shareholders, the merger is slated for completion in the third quarter of 2025. Upon finalization, Jersey Shore State Bank and Luzerne Bank branches will operate under the Northwest Bank brand. With a healthy dividend yield of 5.54% and a proven track record of profitability over the last twelve months, Northwest continues to demonstrate strong financial fundamentals.
The companies have engaged financial and legal advisors to assist with the merger process. An investor presentation with further details on the transaction is available on Northwest's investor relations website.
This news article is based on a press release statement.
In other recent news, Northwest Bancshares Inc. has announced significant changes to its executive compensation agreements and bylaws. The company's Compensation Committee has updated the employment agreements for President and CEO Louis Torchio and CFO Douglas Schosser to include provisions for annual cash bonuses and long-term equity incentive awards. The amendments introduce a clause where a notice of non-renewal from the company can constitute "Good Reason" for executive departure, subject to other conditions.
In terms of financial outlook, DA Davidson has raised the company's earnings per share (EPS) forecast due to an optimistic net interest margin (NIM) trajectory and improved credit costs. Despite the growth in commercial lending and an improving NIM, DA Davidson maintains a neutral stance on the company's stock, citing limited upside to the new price target and current market valuations.
Northwest Bancshares has also witnessed leadership changes with the appointment of Sean Morrow as Interim Treasurer, Joseph Canfield as the new Chief Accounting Officer, and Urich Bowers as the new Chief Consumer Banking and Strategy Officer. These are among the recent developments at Northwest Bancshares.
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