Norwood Financial Corp.
Merger With
North Penn Bancorp, Inc.
December 15, 2010
Forward Looking Statement
Statements contained in this presentation that are not historical facts are forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, possible delays in completing
the merger, difficulties in achieving cost savings from the merger or in achieving such cost savings within
the expected time frame, and difficulties in integrating North Penn Bank into Wayne Bank, as well as factors
discussed in documents filed by Norwood Financial Corp. or North Penn Bancorp, Inc. with the Securities and
Exchange Commission (SEC) from time to time. Neither Norwood Financial Corp. nor North Penn Bancorp,
Inc. undertakes and both specifically disclaim any obligation to update any forward-looking statement,
whether written or oral, that may be made from time to time by or on behalf of Norwood Financial Corp. or
North Penn Bancorp, Inc.
term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, possible delays in completing
the merger, difficulties in achieving cost savings from the merger or in achieving such cost savings within
the expected time frame, and difficulties in integrating North Penn Bank into Wayne Bank, as well as factors
discussed in documents filed by Norwood Financial Corp. or North Penn Bancorp, Inc. with the Securities and
Exchange Commission (SEC) from time to time. Neither Norwood Financial Corp. nor North Penn Bancorp,
Inc. undertakes and both specifically disclaim any obligation to update any forward-looking statement,
whether written or oral, that may be made from time to time by or on behalf of Norwood Financial Corp. or
North Penn Bancorp, Inc.
Norwood Financial Corp. will file a Registration Statement on Form S-4 with the SEC, which will contain the
proxy materials of North Penn Bancorp, Inc. and certain other information regarding Norwood Financial Corp.
These proxy materials will set forth complete details of the merger. Investors are urged to carefully read the
proxy materials when filed with the SEC, as they will contain important information. Investors will be able to
obtain a copy of the proxy materials free of charge at the SEC’s website at www.sec.gov. The materials may
also be obtained for free by directing a written request to Norwood Financial Corp., 717 Main Street,
Honesdale, PA 18431, Attention: Corporate Secretary, or to North Penn Bancorp, 216 Adams Avenue,
Scranton, PA 18503, Attention: Corporate Secretary. Investors should read the proxy materials before
making a decision regarding the merger.
proxy materials of North Penn Bancorp, Inc. and certain other information regarding Norwood Financial Corp.
These proxy materials will set forth complete details of the merger. Investors are urged to carefully read the
proxy materials when filed with the SEC, as they will contain important information. Investors will be able to
obtain a copy of the proxy materials free of charge at the SEC’s website at www.sec.gov. The materials may
also be obtained for free by directing a written request to Norwood Financial Corp., 717 Main Street,
Honesdale, PA 18431, Attention: Corporate Secretary, or to North Penn Bancorp, 216 Adams Avenue,
Scranton, PA 18503, Attention: Corporate Secretary. Investors should read the proxy materials before
making a decision regarding the merger.
Norwood Financial Corp. and North Penn Bancorp, Inc. and their directors and executive officers may be
deemed to be “participants” in North Penn Bancorp, Inc.’s solicitation of proxies in connection with the
proposed merger. Information regarding directors and executive officers of Norwood Financial Corp. may be
found in Norwood Financial Corp.’s proxy statement for its 2010 annual meeting of shareholders dated March
22, 2010, as filed with the SEC. Information regarding directors and executive officers of North Penn
Bancorp, Inc. may be found in North Penn Bancorp, Inc.’s proxy statement for its 2010 annual meeting of
shareholders dated April 20, 2010, as filed with the SEC. Copies of the proxy statements are available free
of charge at the SEC’s website (www.sec.gov). Additional information regarding the interests of such
participants will be included in the proxy statement/prospectus and the other relevant documents filed with
the SEC when they become available.
deemed to be “participants” in North Penn Bancorp, Inc.’s solicitation of proxies in connection with the
proposed merger. Information regarding directors and executive officers of Norwood Financial Corp. may be
found in Norwood Financial Corp.’s proxy statement for its 2010 annual meeting of shareholders dated March
22, 2010, as filed with the SEC. Information regarding directors and executive officers of North Penn
Bancorp, Inc. may be found in North Penn Bancorp, Inc.’s proxy statement for its 2010 annual meeting of
shareholders dated April 20, 2010, as filed with the SEC. Copies of the proxy statements are available free
of charge at the SEC’s website (www.sec.gov). Additional information regarding the interests of such
participants will be included in the proxy statement/prospectus and the other relevant documents filed with
the SEC when they become available.
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Transaction Highlights and Rationale
§ Creates the Third Largest Independent Banking Franchise in
Northeastern Pennsylvania by Assets
Northeastern Pennsylvania by Assets
Ø $692.9 million in consolidated assets
Ø 16 branches
§ Highly Complementary to Existing Norwood Market
Ø Provides access to affluent, higher populated markets west of Norwood’s
existing franchise
existing franchise
Ø Fills in and expands market in higher growth southern markets
§ Attractive Valuation
Ø 128.3% premium to North Penn’s Tangible Book Value per Share
Ø 4.7% core deposit premium
§ Manageable Size
Ø $164.5 million in assets and five branch locations with no complex business
or product sets to integrate
or product sets to integrate
§ Scarcity Value
Ø North Penn represents one of the few “acquirable” institutions in existing
and complementary markets for Norwood
and complementary markets for Norwood
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Transaction Highlights and Rationale
§ Attractive Deposit Base with Emphasis on Commercial Banking
Ø North Penn’s core non-maturity deposits account for approximately 60% of
total deposits
total deposits
Ø Strong focus on commercial based, relationship banking
§ Strong Growth Characteristics
Ø Loan growth December 2007 to September 2010 was 23%.
Ø Deposit growth December 2007 to September 2010 was 63%.
§ Favorable Financial Transaction Metrics
Ø Accretive to Norwood earnings per share starting in the first full year of
consolidated operations
consolidated operations
Ø Minimally dilutive to Norwood’s pro forma tangible book per share
Ø Norwood retains strong pro forma capital levels
§ Capacity For Cross Selling
Ø Ability to introduce trust and related services to North Penn’s customer base
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Acquisition of North Penn
Transaction: | Norwood Financial Corp. (“NWFL”) will acquire 100% of the stock of North Penn Bancorp, Inc. (“NPBP”) |
Consideration: | Shareholders of NPBP will be eligible to receive cash, NWFL common stock(1), or a mix of both valued at $19.12 per share. The stock portion(1), of the total consideration equates to 55%. |
Transaction Value: | $27.1 million(2) |
Key Provisions: | NPBP will be merged into Wayne Bank and its offices will be rebranded as Wayne Bank |
Board Representation: | One board seat will be provided to a current NPBP director |
Due Diligence: | Completed comprehensive due diligence, including detailed review of loan utilizing NWFL senior personnel |
Termination Fee: | $1.125 million |
Conditions to Closing: | Customary regulatory and NPBP shareholder approval |
Expected Closing: | Second Quarter of 2011 |
(1) Based on a fixed exchange ratio of 0.6829 and a market price of $28.00 for NWFL common stock.
(2) Includes values associated with NPBP outstanding stock options and restricted stock awards.
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Overview of North Penn Bancorp, Inc.
Source: SNL Financial
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Expanding Geographic Footprint
Source: SNL Financial; Deposits as of June 30, 2010.
Norwood Financial Corp.
North Penn Bancorp Inc.
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Enhanced Market Share
§ Natural Market Extension Further Into Northeastern
Pennsylvania
Pennsylvania
Ø Entry into Scranton Market Area
Ø Enhances market share into growth market of Monroe county
* Reflects combined deposit levels of both institutions.
Source: SNL Financial as of June 30, 2010.
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Deal Metrics
§ Multiples being paid are comparable to the medians seen in
acquisitions of other Northeast Pennsylvania thrifts
acquisitions of other Northeast Pennsylvania thrifts
Purchase Price Overview ($000s in thousands) | |
Purchase Price: | |
Common Stock (1) | $24,572 |
Stock Options (2) | $1,551 |
Restricted Stock Awards (3) | $975 |
Total Purchase Price | $27,098 |
Purchase Price to NPBP’s:(4) | |
Tangible Book Value | 128.3% |
LTM Net Income | 20.5x |
Core Deposit Premium | 4.7% |
(1) Based on 1,285,148 common shares outstanding.
(2) Based on 157, 632 granted stock options with an average weighted price of $9.28 per share.
(3) Based on 50,981 unvested restricted stock awards.
(4) Based on GAAP common share results and a market price of $28.00 for NWFL common stock.
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Pro Forma Financial Impact
§ Earnings impact:
Ø Slightly dilutive to 2011 EPS recognizing a less than full year of consolidated
results
results
Ø Accretive to estimated 2012 EPS with full year consolidated results
§ Capital position:
§ Pro forma capital ratios well in excess of regulatory guidelines
§ Pro forma Shareholder base
Ø 532,286 shares issued to fund acquisition
Ø NWFL pro forma ownership of 83.8% and NPBP pro forma ownership of 16.2%
As of 9/30/2010 | Pro Forma 9/30/2010 | “Well Capitalized” | |
BV per Share | $24.79 | $24.65 | -- |
TBV per Share | $24.79 | $22.90 | -- |
TCE/TA | 12.8% | 11.0% | -- |
Leverage Ratio | 12.2% | 10.4% | 5.00% |
Tier 1 Capital | 18.1% | 14.8% | 6.00% |
Total Capital | 19.4% | 15.8% | 10.00% |
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Stockholders or others seeking information regarding the Company may
call or write:
call or write:
Norwood Financial Corp.
Investor Relations
717 Main Street
Honesdale, Pennsylvania 18431
www.waynebank.com
info@waynebank.com
Lewis J. Critelli President & Chief Executive Officer (570) 253-8512 | William S. Lance Senior Vice President & Chief Financial Officer (570) 253-8505 |
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