UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                    Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Pursuant to §240.14a-12

Norwood Financial Corp.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

  

 

 

(2)

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(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

  

 

 

(4)

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(5)

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☐	Fee paid previously with preliminary materials.

 

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

  

 

 

(2)

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(3)

Filing Party:

  

 

 

(4)

Date Filed:

  

 

 

 

 

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

Dear Shareholder:

On January 8, 2020, Norwood Financial Corp., or Norwood, and UpState New York Bancorp, Inc., or UpState, entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of the two companies. Under the merger agreement, UpState will merge with and into Norwood, with Norwood as the surviving corporation (which we refer to as the “merger”). Following the completion of the merger, USNY Bank, a wholly-owned bank subsidiary of UpState, will merge with and into Wayne Bank, a wholly-owned bank subsidiary of Norwood, with Wayne Bank as the surviving bank (which we refer to as the “bank merger”).

Pursuant to the terms of the merger agreement, shareholders of UpState will have the opportunity to elect to receive for each share of UpState common stock they own, either 0.9390 shares of Norwood common stock or $33.33 in cash, or a combination of both. All shareholder elections will be subject to the allocation and proration procedures set forth in the merger agreement which are intended to ensure that 90% of the shares of UpState will be exchanged for Norwood common stock and 10% of the shares of UpState will be exchanged for cash. In addition to the purchase price per share, UpState may also be permitted, under certain performance conditions, to distribute at the closing of the merger, an additional $0.67 per share in cash to UpState’s shareholders. The transaction is expected to be a tax-free exchange for shareholders of UpState receiving Norwood common stock.

Under the terms of the merger agreement, the cash consideration and the exchange ratio will remain fixed, while the value of the stock consideration will fluctuate with the market price of Norwood common stock. Based on the closing price of Norwood common stock on the NASDAQ Global Market on January 8, 2020, the last trading day before public announcement of the merger agreement, the value of the stock consideration represented approximately $36.55 in value for each share of UpState common stock. In addition, based on the closing price of Norwood common stock on the NASDAQ Global Market on April 15, 2020, the value of the stock consideration represented approximately $21.60 in value for each share of UpState common stock. You should obtain current stock price quotations, if available, for Norwood and UpState common stock. Norwood common stock trades on the NASDAQ Global Market under the symbol “NWFL”. There is no established trading market for UpState common stock. UpState may choose to terminate the merger agreement, including if Norwood’s share price declines to below $31.14 (subject to customary anti-dilution adjustments) as of the first date when all regulatory approvals for the merger have been received, combined with such decline being at least 20% greater than a corresponding decline in the value of the NASDAQ Bank Index, and no adjustment pursuant to a specified formula is made to the exchange ratio by Norwood, as is discussed in further detail beginning on page 97 of this joint proxy statement/prospectus.

Norwood will hold an annual meeting of their shareholders at which, among other things, the merger agreement and other matters will be submitted for approval. UpState will hold a special meeting of their shareholders in connection with the merger and related matters. UpState and Norwood shareholders will be asked to vote to approve the merger agreement and approve related and other matters, as described in the attached joint proxy statement/prospectus. Approval of the merger agreement requires a majority of the votes cast in favor of the proposal by Norwood shareholders and the affirmative vote of a majority of the outstanding shares entitled to vote by the holders of UpState common stock.

The annual meeting of Norwood shareholders will be held on May 26, 2020, at 11:00 a.m., local time, at the administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania.

Norwood is actively monitoring the health and safety concerns and government recommendations and restrictions relating to the COVID-19 pandemic. In the event it is not possible or advisable for us to hold our annual meeting at a physical location, we will host a virtual-only annual meeting. We anticipate making a final decision on our meeting location by May 12, 2020, and will announce our decision by press release and posting on our website at www.waynebank.com/stockholder-services. If you are planning to attend the annual meeting, please be sure to check our website for any updates in the days before our annual meeting or please call us at (570) 253-1455 or (800) 598-5002. As always, we encourage you to vote your shares in advance of the annual meeting.

The special meeting of UpState shareholders will be held on May 26, 2020 at 11:00 a.m., local time, and accessed virtually via the Internet at www.meetingcenter.io/268451970, where you will be able to listen to the meeting live, submit questions and vote online. The online password is USNY2020. Shareholders of record will also need a control number and a password to access the meeting, which can be found on your proxy card. In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our people, including UpState shareholders, and taking into account recent federal, state and local guidance that has been issued, we have determined that the special meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting.

Norwood’s board of directors unanimously recommends that Norwood shareholders vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the Norwood annual meeting.

UpState’s board of directors unanimously recommends that UpState shareholders vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the UpState special meeting.

The attached joint proxy statement/prospectus describes the annual meeting of Norwood, the special meeting of UpState, the merger, the documents related to the merger, and other related matters. It also contains information about Norwood and UpState and related matters. PLEASE CAREFULLY READ THE ENTIRE JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING “RISK FACTORS ” BEGINNING ON PAGE 22, FOR A DISCUSSION OF THE RISKS RELATING TO THE MERGER. You can also obtain information about Norwood from documents that Norwood has publicly filed with the Securities and Exchange Commission.

 

Lewis J. Critelli		R. Michael Briggs
President and Chief Executive Officer		President
Norwood Financial Corp.		UpState New York Bancorp, Inc.

Neither the Securities and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved of the merger, the issuance of the Norwood common stock in connection with the merger or the other transactions described in this joint proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings accounts, deposits or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This joint proxy statement/prospectus is dated April 17, 2020, and is first being mailed or otherwise delivered to shareholders of Norwood and UpState on or about April 21, 2020.

REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Norwood from documents filed with the Securities and Exchange Commission (which we refer to as the “SEC”) that are not included in or delivered with this joint proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by Norwood at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this joint proxy statement/prospectus, at no cost by contacting Norwood at the following address:

Norwood Financial Corp.

717 Main Street,

Honesdale, Pennsylvania 18431

Telephone: (570) 253-1455

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of your respective meeting of shareholders. This means that Norwood shareholders requesting documents must do so by May 19, 2020, in order to receive them before the Norwood annual meeting, and UpState shareholders requesting documents must also do so by May 19, 2020, in order to receive them before the UpState special meeting.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated April 17, 2020, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document, and neither the mailing of this document to Norwood shareholders or UpState shareholders, nor the issuance by Norwood of shares of Norwood common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding UpState has been provided by UpState and information contained in this document regarding Norwood has been provided by Norwood.

Please see “Where You Can Find More Information” for more details.

NORWOOD FINANCIAL CORP.

717 MAIN STREET

HONESDALE, PENNSYLVANIA 18431

(570) 253-1455

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 26, 2020

 

The 2020 Annual Meeting of Stockholders of Norwood Financial Corp., will be held at the administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania on May 26, 2020, at 11:00 a.m., local time, for the following purposes:

 

1.

To elect three directors;

 

2.

To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated January 8, 2020, by and among Norwood Financial Corp., Wayne Bank, UpState New York Bancorp, Inc. and USNY Bank, under which UpState New York Bancorp, Inc. will merge with and into Norwood Financial Corp.;

 

3.

To ratify the appointment of S.R. Snodgrass, P.C. as our independent auditors for the fiscal year ending December 31, 2020;

 

4.

To consider and vote upon a proposal to adjourn, postpone or continue the annual meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement; and

 

5.

To approve a non-binding advisory resolution on executive compensation.

all as set forth in the joint proxy statement/prospectus accompanying this notice, and to transact any other business that may properly come before the annual meeting. The Board of Directors is not aware of any other business to come before the annual meeting. Stockholders of record at the close of business on April 15, 2020, are the stockholders entitled to notice of and to vote at the annual meeting and any adjournments thereof.

We are actively monitoring the health and safety concerns and government recommendations and restrictions relating to the COVID-19 pandemic. In the event it is not possible or advisable for us to hold our annual meeting at a physical location, we will host a virtual-only annual meeting. We anticipate making a final decision on our meeting location by May 12, 2020, and will announce our decision by press release and posting on our website at www.waynebank.com/stockholder-services. If you are planning to attend the annual meeting, please be sure to check our website for any updates in the days before our annual meeting or please call us at (570) 253-1455 or (800) 598-5002. As always, we encourage you to vote your shares in advance of the annual meeting.

A copy of our Annual Report for the year ended December 31, 2019, is enclosed.

Your vote is important, regardless of the number of shares you own. We encourage you to vote by proxy so that your shares will be represented and voted at the annual meeting even if you cannot attend. All stockholders of record can vote by written proxy card. Also, you may vote in person at the annual meeting if you so choose. However, if you are a stockholder whose shares are not registered in your own name, you will need additional documentation from your record holder to vote personally at the annual meeting.

 

Honesdale, Pennsylvania

April 21, 2020

 

Important Notice Regarding Internet Availability of Proxy Materials For the Shareholder Meeting to be Held on May 26, 2020

The Proxy Statement and Annual Report to Stockholders are available on the Stockholder Services Page of our website at www.waynebank.com/stockholder-services

UPSTATE NEW YORK BANCORP, INC.

389 Hamilton Street

Geneva, New York 14456

(315 ) 789- 1500

 

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On May 26, 2020

 

NOTICE IS HEREBY GIVEN, that a special meeting of shareholders of UpState New York Bancorp, Inc. (“UpState”) will be held on May 26, 2020 at 11:00 a.m., local time, and accessed virtually via the Internet at www.meetingcenter.io/268451970, where you will be able to listen to the meeting live, submit questions and vote online. The online password is USNY2020. Shareholders of record will also need a control number and a password to access the meeting, which can be found on your proxy card. In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our people, including UpState shareholders, and taking into account recent federal, state and local guidance that has been issued, we have determined that the special meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. The special meeting is being held, for the following purposes:

 

1.

To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated January 8, 2020, by and among Norwood Financial Corp., Wayne Bank, UpState and USNY Bank, under which UpState will merge with and into Norwood Financial Corp.; and

 

2.

To consider and vote upon a proposal to adjourn, postpone or continue the special meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement.

Shareholders of record at the close of business on April 15, 2020 are entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof. The enclosed joint proxy statement/prospectus describes the merger agreement in detail, and a copy of the merger agreement is annexed as Annex A to the joint proxy statement/prospectus and incorporated by reference therein.

The board of directors of UpState New York Bancorp, Inc. unanimously recommends that UpState’s shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the adjournment proposal described above.

Your vote is very important. Your proxy is being solicited by the board of directors of UpState. The proposal to approve the merger agreement must be approved by the affirmative vote of a majority of the outstanding shares at the special meeting. Whether or not you expect to attend the special meeting in person or virtually, please complete, sign and date the accompanying proxy card and return it in the enclosed postage prepaid envelope or vote by telephone or on the internet. You may revoke your proxy by written notice to UpState, by submitting a proxy card dated as of a later date, by subsequently voting by telephone or on the internet or by voting in person or online at the special meeting.

Under New York law, if the merger is completed, UpState shareholders of record who do not vote to approve the merger agreement and otherwise comply with the applicable provisions of New York law pertaining to dissenters’ rights will be entitled to exercise dissenters’ rights and obtain payment in cash for the fair value of their shares of UpState common stock by following the procedures set forth in detail in the enclosed joint proxy statement/prospectus. A copy of the section of the New York Business Corporation Law pertaining to dissenters’ rights is included as Annex D to the accompanying joint proxy statement/prospectus.

 

Geneva, New York

April 21, 2020

TABLE OF CONTENTS

 

		Page
QUESTIONS AND ANSWERS		1
SUMMARY		10
SELECTED HISTORICAL FINANCIAL DATA FOR NORWOOD		20
SELECTED HISTORICAL FINANCIAL DATA FOR UPSTATE		21
RISK FACTORS		22
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		27
MARKET VALUE OF SECURITIES		29
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA		30
THE NORWOOD ANNUAL MEETING OF STOCKHOLDERS		32
THE UPSTATE SPECIAL MEETING OF SHAREHOLDERS		54
THE MERGER AND THE MERGER AGREEMENT		57
General		57
Background of the Merger		57
UpState’s Reasons for the Merger; Recommendation of UpState’s Board of Directors		60
Norwood’s Reasons for the Merger; Recommendation of Norwood’s Board of Directors		63
Opinion of UpState’s Financial Advisor		64
Opinion of Norwood’s Financial Advisor		73
Consideration to be Received in the Merger		82
Election Procedures; Surrender of Stock Certificates		83
Allocation Procedures		84
Exchange Procedures		84
Accounting Treatment		85
Material United States Federal Income Tax Consequences of the Merger		85
Regulatory Matters Relating to the Merger		89
Interests of Norwood’s Directors and Executive Officers in the Merger		90
Interests of UpState’s Directors and Executive Officers in the Merger		90
Employee Matters		92
Time of Completion		92
Conditions to Completing the Merger		92
Conduct of Business Before Completion of the Merger		93
Covenants of UpState and Norwood in the Merger Agreement		95
Representations and Warranties Made by UpState and Norwood in the Merger Agreement		96
Terminating the Merger Agreement		97
Termination Fee		98
Expenses		98
Changing the Terms of the Merger Agreement		98
Dissenters’ Rights of Appraisal		98
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA		101
COMPARISON OF SHAREHOLDERS’ RIGHTS		109
DESCRIPTION OF NORWOOD CAPITAL STOCK		113
CERTAIN ANTI-TAKEOVER PROVISIONS OF NORWOOD’S AMENDED AND RESTATED ARTICLES OF INCORPORATION AND BYLAWS		114
BUSINESS OF UPSTATE		117
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF UPSTATE		118
SECURITY OWNERSHIP OF UPSTATE DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS		124
EXPERTS		125
LEGAL MATTERS		125
OTHER MATTERS		125
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE		127
WHERE YOU CAN FIND MORE INFORMATION		128
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF UPSTATE NEW YORK BANCORP, INC.		129

ANNEXES

 

QUESTIONS AND ANSWERS

The following are answers to certain questions that you may have regarding the merger and the Norwood annual meeting or the UpState special meeting. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in documents incorporated by reference into this joint proxy statement/prospectus and in the annexes to this joint proxy statement/prospectus.

 

Q:

Why am I receiving this document?

A: Norwood and UpState have agreed to combine under the terms of a merger agreement that is described in this joint proxy statement/prospectus. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. In order to complete the merger, Norwood and UpState shareholders must vote to approve the merger agreement and the merger. Norwood is holding an annual meeting of shareholders to obtain this approval. UpState is holding a special meeting of shareholders to obtain this approval. This joint proxy statement/prospectus contains important information about the merger, the merger agreement, the annual meeting, the special meeting, and other related matters, and you should read it carefully.

 

Q:

What will happen to UpState as a result of the merger?

A: If the merger is completed, UpState will merge with and into Norwood and its separate corporate existence will end. In addition, immediately following the merger, USNY Bank will merge with and into Wayne Bank with Wayne Bank being the surviving bank.

 

Q:

What will UpState shareholders receive in the merger?

A: If the merger agreement is approved and the merger is subsequently completed, each outstanding share of UpState common stock (other than any dissenting shares) will be converted into the right to receive either:

 

•

$33.33 in cash, without interest, which we refer to as the “cash consideration”; or

 

•

0.9390 of a share of Norwood common stock, which we refer to as the “stock consideration,”

in each case, subject to adjustment, election and allocation procedures specified in the merger agreement.

As of the end of the month immediately prior to the closing date of the merger, if UpState’s actual equity, as adjusted as provided in the merger agreement (“Actual Equity”), is greater than the target equity as set forth in Column A of Appendix I of the merger agreement for the respective month end (“Target Equity”), then the per share offer price would be increased by an amount equal to (i) Actual Equity minus the Target Equity divided by (ii) 2,208,000 (the “Per Share Increase”). In no event will the Per Share Increase be greater than $0.67 in cash and in no case less than $0.00, resulting in the cash consideration as increased by the Per Share Increase having a maximum value of $34.00 per share for each USNY share. Recipients of the stock consideration will receive the Per Share Increase, if applicable, in cash.

Shareholders may elect to receive all cash, all stock, or cash for some shares and stock for the remainder of the shares they own, subject to adjustment, election and allocation procedures specified in the merger agreement. The ability to receive all stock, all cash or a mix of both may depend on the elections of other UpState shareholders. The allocation of the mix of consideration payable to UpState shareholders in the merger will not be known until Norwood tallies the results of the cash/stock elections made by all UpState shareholders. No guarantee can be made that you will receive the amounts of cash or stock that you elect.

 

Q:

Will UpState shareholders receive the form of consideration they elect?

A: Each UpState shareholder may not receive the form of consideration that it elects in the merger. The allocation procedures in the merger agreement provide that the aggregate number of shares of UpState common stock to be converted into the right to receive cash consideration, including dissenting shares, will equal 10% of the outstanding shares of UpState common stock, and the number of shares to be converted into Norwood common stock will equal 90% of the outstanding UpState common stock. Pursuant to this limitation, if the aggregate number of shares with respect to which a valid cash

 

1

consideration election is made, together with any dissenting shares, is greater than 10% of the outstanding shares of UpState common stock, a pro rata portion of those shares will be converted into the right to receive Norwood common stock such that the number of shares of UpState common stock converted into the cash consideration equals 10% of the total. Similarly, if the number of shares pursuant to which a valid cash consideration election is made, together with any dissenting shares, is less than 10% of the outstanding shares of UpState common stock, first such number of shares for which no election has been made and then, if necessary, such number of shares for which a stock consideration election has been made will be converted, as necessary, such that the number of shares of UpState common stock to be converted into cash in the transaction does not exceed 10%.

 

Q:

How do UpState shareholders register their election for cash, Norwood common stock or a combination thereof?

A: Each UpState shareholder should complete and return an election form, along with the UpState stock certificate(s), according to the instructions included with the form. The election form will be provided to UpState shareholders under separate cover. The election deadline will be 5:00 p.m., Eastern Time, on the date specified in the election form. If you own shares of UpState common stock in “street name” through a bank, broker or other financial institution and you wish to make an election, you should seek instructions from the financial institution holding your shares concerning how to make an election. If you do not send in the election form with your stock certificate(s) by the election deadline, you will be treated as though you had not made an election.

 

Q:

What happens if an UpState shareholder does not make a valid election as to whether to receive cash or stock?

A: If an UpState shareholder does not return a properly completed election form by the election deadline specified in the election form, such shareholder’s shares of UpState common stock will be considered “non-election shares” and will be converted into the right to receive the stock consideration or the cash consideration according to the allocation procedures specified in the merger agreement.

 

Q:

When will the merger be completed?

A: We expect the merger will be completed when all of the conditions to completion contained in the merger agreement are satisfied or waived, including the receipt of required regulatory approvals and the approval of the merger agreement by Norwood shareholders at the annual meeting and by UpState shareholders at the special meeting. We currently expect to complete the merger during the third calendar quarter of 2020. However, because fulfillment of some of the conditions to completion of the merger, such as the receipt of required regulatory approvals, are not entirely within our control, we cannot predict the actual timing.

 

Q:

What happens if the merger is not completed?

A: If the merger is not completed, UpState shareholders will not receive any consideration for their shares of common stock in connection with the merger. Instead, UpState will remain an independent company. Under specified circumstances, UpState may be required to pay to Norwood a fee with respect to the termination of the merger agreement, as described under “The Merger and the Merger Agreement — Termination Fee.”

 

Q:

Who is being asked to approve matters in connection with the merger?

A: Norwood shareholders are being asked to (i) elect three directors; (ii) approve the merger agreement; (iii) ratify the appointment of S.R. Snodgrass, P.C. as Norwood’s independent auditors for its fiscal year ending December 31, 2020; (iv) approve a proposal to adjourn, postpone or continue the annual meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement; and (v) approve a non-binding advisory resolution on executive compensation. UpState shareholders are being asked (i) to vote to approve the merger agreement and (ii) to approve a proposal to adjourn the special meeting, if necessary, to solicit additional proxies. With respect to UpState, under New York law, the merger cannot be completed unless a majority of the outstanding shares of UpState common stock are voted to adopt the merger agreement and the merger. With respect to Norwood, under the Rules of the Nasdaq Stock Market, approval of the merger agreement requires a majority of the votes cast in favor of the proposal by Norwood shareholders. The boards of directors of Norwood and UpState are using this joint proxy statement/prospectus to obtain approval of the merger agreement at their respective meetings of their shareholders.

 

2

Q:

Should UpState shareholders send in their stock certificates with their proxy card?

A: No. An election form and transmittal materials, with instructions for their completion, will be provided to UpState shareholders under separate cover and the stock certificates should be sent at that time.

 

Q:

What are the material United States federal income tax consequences of the merger to UpState shareholders?

A: Norwood and UpState will not be required to complete the merger unless they receive legal opinions from their respective counsel to the effect that the merger will qualify as a tax-free reorganization for United States federal income tax purposes. Provided that the merger qualifies as a reorganization for United States federal income tax purposes, the specific tax consequences of the merger to an UpState shareholder will depend upon the form of consideration such shareholder will receive in the merger (i.e., cash, stock or a combination thereof).

The consequences of the merger to any particular shareholder will depend on that shareholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the merger.

For a more detailed discussion of the material United States federal income tax consequences of the transaction, see “The Merger and the Merger Agreement — Material United States Federal Income Tax Consequences of the Merger.”

 

Q:

Are UpState shareholders entitled to dissenters’ appraisal rights?

A: Yes. Under New York law, record holders of UpState common stock who submit a written objection, including notice of an intent to dissent, and do not vote in favor of the proposal to adopt the merger agreement will be entitled to seek dissenters’ appraisal rights in connection with the merger, and if the merger is completed, to obtain payment in cash equal to the fair value of their shares of UpState common stock instead of the merger consideration. To exercise their appraisal rights, UpState shareholders must strictly follow the procedures prescribed by New York law. These procedures are summarized in this joint proxy statement/prospectus. In addition, the text of the applicable provisions of New York law is included as Annex D to this document. Failure to strictly comply with these provisions will result in the loss of appraisal rights. For a more complete description of appraisal rights, please refer to the section entitled “The Merger and the Merger Agreement — Dissenters’ Rights of Appraisal.”

 

Q:

Are there any risks that I should consider in deciding whether to vote for approval of the merger-related proposals?

A: Yes. You should read and carefully consider the risk factors set forth in the section of this joint proxy statement/prospectus entitled “Risk Factors” beginning on page 22.

 

Q:

When and where will Norwood shareholders meet?

A: The annual meeting of Norwood shareholders will be held at the administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania on May 26, 2020, at 11:00 a.m., local time. We are actively monitoring the health and safety concerns and government recommendations and restrictions relating to the COVID-19 pandemic. In the event it is not possible or advisable for us to hold our annual meeting at a physical location, we will host a virtual-only annual meeting. We anticipate making a final decision on our meeting location by May 12, 2020, and will announce our decision by press release and posting on our website at www.waynebank.com/stockholder-services. If you are planning to attend the annual meeting, please be sure to check our website for any updates in the days before our annual meeting or please call us at (570) 253-1455 or (800) 598-5002. As always, we encourage you to vote your shares in advance of the annual meeting.

 

Q:

When and where will UpState shareholders meet?

A: UpState will hold a special meeting of its shareholders on May 26, 2020, at 11:00 a.m., local time, and accessed virtually via the Internet at www.meetingcenter.io/268451970, where you will be able to listen to the meeting live, submit questions and vote online. The online password is USNY2020. Shareholders of record will also need a control number and a password to access the meeting, which can be found on your proxy card. In light of the COVID-19 outbreak, for the safety of all of our people, including UpState shareholders, and taking into account recent federal, state and local guidance that has been issued, the UpState board of directors has determined that the special meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting.

 

3

Q:

What do I need in order to attend the UpState special meeting virtually?

A: Shareholders may attend and participate in the UpState special meeting by visiting www.meetingcenter.io/268451970. To participate in the special meeting, you will need to review the information included on your proxy card. The password for the meeting is USNY2020. Shareholders of record will also need a control number to access the special meeting which can be found on your proxy card.

If you hold your shares through an intermediary, such as a bank or broker, you must (1) obtain a written legal proxy from such intermediary and (2) register in advance using the instructions below.

We encourage you to access the meeting before the start time of 11:00 a.m., Eastern Time, on May 26, 2020. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on May 26, 2020. Please follow the instructions as outlined in this proxy statement and your proxy card.

 

Q:

How do I register to attend the special meeting virtually on the Internet?

A: If you are a registered shareholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the special meeting virtually on the Internet. Please follow the instructions on the proxy card that you received.

If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the special meeting virtually on the Internet. To register to attend the special meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your UpState holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 22, 2020.

You will receive a confirmation of your registration by email after we receive your registration materials.

Requests for registration should be directed to us at the following:

 

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By email — Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com

 

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By mail — Please enclose an image of your legal proxy addressed to:

Computershare

UpState New York Bancorp Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

 

Q:

Why is the special meeting only being held online?

A: In light of the COVID-19 outbreak, for the safety of all of our people, including UpState shareholders, and taking into account recent federal, state and local guidance that has been issued, the UpState board of directors has determined that the special meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting.

 

Q:

What matters are Norwood shareholders being asked to approve at the annual meeting pursuant to the joint proxy statement/prospectus?

Norwood shareholders are being asked to (i) elect three directors; (ii) approve the merger agreement; (iii) ratify the appointment of S.R. Snodgrass, P.C. as Norwood’s independent auditors for its fiscal year ending December 31, 2020; (iv) approve a proposal to adjourn, postpone or continue the annual meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement; and (v) approve a non-binding advisory resolution on executive compensation.

 

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Q:

What matters are UpState shareholders being asked to approve at the special meeting pursuant to the joint proxy statement/prospectus?

A: UpState shareholders are being asked to adopt the merger agreement and approve the transactions contemplated by the merger agreement, including the merger. UpState shareholders also are being asked to approve a proposal to adjourn, postpone or continue the special meeting, if necessary, to solicit additional proxies in favor of adoption of the merger agreement.

 

Q:

How may I vote my shares online at the virtual UpState special meeting?

If you hold shares of UpState common stock as the shareholder of record, you have the right to vote those shares at the UpState special meeting. Please visit www.meetingcenter.io/268451970 to participate in the special meeting. You will need to review the information included on your proxy card. The password for the meeting is USNY2020. Shareholders of record will also need a control number to access the meeting, which can be found on your proxy card.

If you are a beneficial owner and hold shares of UpState common stock in street name, you must obtain a written legal proxy from your bank, brokerage firm or other nominee authorizing you to vote those shares online at the special meeting. You cannot vote the shares you beneficially own through the online voting platform unless you have a written legal proxy from your bank, brokerage firm or other nominee to do so. If you obtain a written legal proxy, please follow the instructions above under “How do I register to attend the special meeting virtually on the Internet?”

Even if you plan to attend the UpState special meeting online, you should submit a proxy card or voting instruction form for your shares in advance, so that your vote will be counted if you later decide not to attend the special meeting online.

 

Q:

What does Norwood’s Board of Directors recommend with respect to the proposals?

A: Norwood’s board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are fair to and in the best interests of Norwood and its shareholders and unanimously recommends that Norwood shareholders vote “FOR” the merger agreement and “FOR” the adjournment proposal. Norwood’s board of directors also unanimously recommends that Norwood shareholders vote “FOR” its nominees for election as directors, “FOR” the ratification of the appointment of S.R. Snodgrass, P.C. as Norwood’s independent auditors for its fiscal year ending December 31, 2020, and “FOR” the non-binding advisory resolution on executive compensation.

 

Q:

What does UpState’s Board of Directors recommend with respect to the proposals?

A: UpState’s board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are fair to and in the best interests of UpState and its shareholders and unanimously recommends that UpState shareholders vote “FOR” the merger agreement and “FOR” the adjournment proposal.

 

Q:

Did the Board of Directors of Norwood receive an opinion from a financial advisor with respect to the merger?

A: Yes. On January 8, 2020, The Kafafian Group, Inc. which we refer to in this joint proxy statement/prospectus as “Kafafian,” rendered its written opinion to the board of directors of Norwood that, as of such date and based upon and subject to the factors and assumptions described to the Norwood board of directors during its presentation and set forth in the opinion, the consideration in the proposed merger was fair, from a financial point of view, to holders of Norwood common stock. You should read and carefully consider the description of Kafafian’s opinion and analysis set forth in the section of this joint proxy statement/prospectus entitled “The Merger and the Merger Agreement — Opinion of Norwood’s Financial Advisor.” The full text of Kafafian’s written opinion is attached as Annex B to this joint proxy statement/prospectus. Norwood shareholders are urged to read the opinion in its entirety.

 

Q:

Did the Board of Directors of UpState receive an opinion from a financial advisor with respect to the merger?

A: Yes. On January 8, 2020, Boenning & Scattergood, Inc., which we refer to in this joint proxy statement/prospectus as “Boenning,” rendered its written opinion to the board of directors of UpState that, as of such date and based upon and subject to the factors and assumptions described to the UpState board of directors during its presentation and set forth in the opinion,

 

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the consideration in the proposed merger was fair, from a financial point of view, to holders of UpState common stock. You should read and carefully consider the description of Boenning’s opinion and analysis set forth in the section of this joint proxy statement/prospectus entitled “The Merger and the Merger Agreement — Opinion of UpState’s Financial Advisor.” The full text of Boenning’s written opinion is attached as Annex C to this joint proxy statement/prospectus. UpState shareholders are urged to read the opinion in its entirety.

 

Q:

Who can vote at Norwood’s annual meeting?

A: Holders of record of Norwood common stock at the close of business on April 15, 2020, which is the record date for the Norwood annual meeting, are entitled to vote at the annual meeting.

 

Q:

Who can vote at the UpState special meeting?

A: Holders of record of UpState common stock at the close of business on April 15, 2020, which is the record date for the UpState special meeting, are entitled to vote at the special meeting.

 

Q:

How many votes must be represented in person or by proxy (online if we host a virtual only meeting) at the Norwood annual meeting to have a quorum?

A: The holders of a majority of the shares of Norwood common stock outstanding and entitled to vote at the annual meeting, present in person (online if we host a virtual only meeting), or represented by proxy will constitute a quorum at the annual meeting.

 

Q:

How many votes must be represented online or by proxy at the UpState special meeting to have a quorum?

A: The holders of a majority of the shares of UpState common stock outstanding and entitled to vote at the special meeting, present online or represented by proxy, will constitute a quorum at the special meeting.

 

Q:

What vote by Norwood shareholders is required to approve each of the proposals?

A: Norwood directors are elected by a plurality of votes. Approval of the merger agreement requires a majority of the votes cast in favor of the proposal by Norwood shareholders entitled to vote on the proposal. Ratification of the selection of Norwood’s independent auditors, approval of the adjournment proposal and approval of the non-binding advisory resolution on executive compensation will require the affirmative vote of a majority of the votes cast at the Norwood annual meeting, assuming a quorum is present. Abstentions and broker non-votes will have no effect on the merger agreement proposal, the ratification of the selection of independent auditors, the adjournment proposal or the non-binding advisory resolution on executive compensation proposal. As of the record date for the annual meeting, directors and executive officers of Norwood, together with their affiliates, had sole or shared voting power over approximately 6.67% of the Norwood common stock outstanding and entitled to vote at the annual meeting. Directors and executive officers of UpState, together with their affiliates, do not have sole or shared voting power over any shares of Norwood common stock entitled to vote at the Norwood annual meeting.

 

Q:

What vote by UpState shareholders is required to approve each of the proposals?

A: Approval of the merger agreement will require the affirmative vote of the holders of a majority of the outstanding shares of UpState entitled to vote on the proposal. Approval of the adjournment proposal will require the affirmative vote of a majority of the votes cast at the UpState special meeting assuming a quorum is present. Abstentions and broker non-votes will have the same effect as voting against the merger agreement proposal but will have no effect on the adjournment proposal.

As of the record date for the special meeting, directors and executive officers of UpState, together with their affiliates, had sole or shared voting power over approximately 22.3% of the UpState common stock outstanding and entitled to vote at the special meeting. Directors and executive officers of Norwood, together with their affiliates, do not have sole or shared voting power over any shares of UpState common stock entitled to vote at the UpState special meeting.

 

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Q:

How may the Norwood shareholders vote their shares for the proposals being presented at the Norwood annual meeting?

A: Norwood shareholders may vote by completing, signing, dating and returning the proxy card in the enclosed prepaid return envelope as soon as possible. This will enable their shares to be represented and voted at the annual meeting. Norwood shareholders may also vote by telephone or on the internet by following the instructions on the proxy card.

 

Q:

How may the UpState shareholders vote their shares for the proposals being presented at the special meeting?

A: UpState shareholders may vote by completing, signing, dating and returning the proxy card in the enclosed prepaid return envelope as soon as possible. This will enable their shares to be represented and voted at the special meeting. UpState shareholders may also vote by telephone or on the internet by following the instructions on the proxy card.

 

Q:

Will a broker or bank holding shares in “street name” for a Norwood shareholder automatically vote those shares for a shareholder at the Norwood annual meeting?

A: No. A broker or bank WILL NOT be able to vote your shares with respect to the merger agreement proposal, the election of Norwood directors or the non-binding advisory resolution on executive compensation without first receiving instructions from you on how to vote. If your Norwood shares are held in “street name,” you will receive separate voting instructions with your proxy materials. It is therefore important that you provide timely instruction to your broker or bank to ensure that all shares of Norwood common stock that you own are voted at the annual meeting.

 

Q:

Will a broker or bank holding shares in “street name” for an UpState shareholder automatically vote those shares for a shareholder at the UpState special meeting?

A: No. A broker or bank WILL NOT be able to vote your shares with respect to the merger agreement proposal without first receiving instructions from you on how to vote. If your UpState shares are held in “street name,” you will receive separate voting instructions with your proxy materials. It is therefore important that you provide timely instruction to your broker or bank to ensure that all shares of UpState common stock that you own are voted at the special meeting.

 

Q:

Will Norwood shareholders be able to vote their shares in person (online only if we host a virtual only meeting) at the Norwood annual meeting?

A: Yes. Submitting a proxy will not affect the right of any Norwood shareholder to vote in person (online only if we host a virtual only meeting) at the Norwood annual meeting. However, if a Norwood shareholder holds shares in “street name,” the shareholder must first ask its broker or bank how to vote those shares in person (online only if we host a virtual only meeting) at the Norwood annual meeting and obtain a “legal proxy.”

 

Q:

Will UpState shareholders be able to vote their shares online at the UpState special meeting?

A: Yes. Submitting a proxy will not affect the right of any UpState shareholder to vote online at the special meeting. However, if an UpState shareholder holds shares in “street name,” the shareholder must first ask its broker or bank how to vote those shares online at the UpState special meeting and obtain a “legal proxy.”

 

Q:

What do Norwood shareholders need to do now?

A: After carefully reading and considering the information contained in this joint proxy statement/prospectus, please vote your shares promptly. If you hold your shares of Norwood common stock as a shareholder of record, you should complete, sign, date and promptly return the enclosed proxy card or vote by telephone or on the internet. The proxy card will instruct the persons named on the proxy card to vote your Norwood shares at the annual meeting as you direct. If you sign and send in a proxy card or vote by telephone or on the internet and do not indicate how you wish to vote, the proxy will be voted “FOR” all of the Norwood annual meeting proposals. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. Submitting your proxy card, voting by telephone or on the internet or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the Norwood annual meeting.

 

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Q:

What do UpState shareholders need to do now?

A: After carefully reading and considering the information contained in this joint proxy statement/prospectus, please vote your shares promptly. If you hold your shares of UpState common stock as a shareholder of record, you should complete, sign, date and promptly return the enclosed proxy card or vote by telephone or on the internet. The proxy card will instruct the persons named on the proxy card to vote your UpState shares at the special meeting as you direct. If you sign and send in a proxy card or vote by telephone or on the internet and do not indicate how you wish to vote, the proxy will be voted “FOR” all of the UpState special meeting proposals. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. Submitting your proxy card, voting by telephone or on the internet or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the special meeting.

 

Q:

What should a Norwood shareholder do if he or she receives more than one set of voting materials?

A: As a Norwood shareholder, you may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple Norwood proxy cards or voting instruction cards. For example, if you hold your Norwood shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold Norwood shares. If you are a holder of record and your Norwood shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus in the section entitled “The Norwood Annual Meeting of Stockholders.”

 

Q:

What should an UpState shareholder do if he or she receives more than one set of voting materials?

A: As an UpState shareholder, you may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple UpState proxy cards or voting instruction cards. For example, if you hold your UpState shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold UpState shares. If you are a holder of record and your UpState shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus in the section entitled “The UpState Special Meeting of Shareholders.”

 

Q:

May a Norwood shareholder change or revoke the shareholder’s vote after submitting a proxy?

A: Yes. If you are a record holder of Norwood common stock, you can change your vote by:

 

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providing written notice of revocation to the Secretary of Norwood prior to the time the Norwood annual meeting begins;

 

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submitting a later dated, signed and dated proxy card prior to the time the Norwood annual meeting begins (any earlier proxies will be revoked automatically);

 

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voting again by telephone or on the internet prior to the time the Norwood annual meeting begins (any earlier proxies will be revoked automatically); or

 

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attending the Norwood annual meeting in person or virtually and voting in person or online. Any earlier proxy will be revoked. However, simply attending the annual meeting in person or virtually without voting will not revoke your proxy.

If you have instructed a bank or broker to vote your shares, you must follow your bank’s or broker’s directions to change your vote.

 

Q:

May an UpState shareholder change or revoke the shareholder’s vote after submitting a proxy?

A: Yes. If you are a record holder of UpState common stock, you can change your vote by:

 

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providing written notice of revocation to the Secretary of UpState prior to the time the UpState special meeting begins;

 

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submitting a later dated, signed and dated proxy card prior to the time the UpState special meeting begins (any earlier proxies will be revoked automatically);

 

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voting again by telephone or on the internet prior to the time the UpState special meeting begins (any earlier proxies will be revoked automatically); or

 

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attending the UpState special meeting virtually and voting online. Any earlier proxy will be revoked. However, simply attending the special meeting virtually without voting will not revoke your proxy.

If you have instructed a bank or broker to vote your shares, you must follow your bank’s or broker’s directions to change your vote.

You should send any notice of revocation or your completed new proxy card, as the case may be, to Georgeson, UpState’s proxy solicitor, as follows:

Georgeson

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

upstatenewyorkbank@georgeson.com

Shareholders, Banks and Brokers

Call Toll Free:

866-767-8989

 

Q:

What happens if I sell my shares of UpState common stock before the special meeting?

A: The record date for UpState shareholders entitled to vote at the special meeting is earlier than both the date of the special meeting and the completion of the merger. If you transfer your UpState shares of common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares.

 

Q:

Who can help answer my questions about the Norwood annual meeting?

A: If you have any questions about the merger or the Norwood annual meeting, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact Norwood at (800) 598-5002 (toll free) or (570) 253-1455.

 

Q:

Who can help answer my questions about the UpState special meeting?

A: If you have any questions about the merger or the UpState special meeting, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact UpState’s proxy solicitor, Georgeson, at (866) 767-8989 (toll free).

 

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RISK FACTORS

In addition to the other information contained in this joint proxy statement/prospectus or in any of the documents incorporated by reference herein, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in deciding whether to vote for adoption of the merger agreement. You should also consider the other information in this joint proxy statement/prospectus. For a discussion of the business of Norwood and of some important factors to consider in connection with that business, see the section of this joint proxy statement/prospectus entitled “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference.”

Risks Related to the Merger

UpState Shareholders May Not Receive the Form of Merger Consideration They Elect.

The merger agreement contains provisions relating to adjustment, election and allocation of the merger consideration under certain circumstances. The allocation procedures are intended to provide that the aggregate number of shares of UpState common stock converted into the right to receive cash consideration, including dissenting shares, will equal 10% of the shares of UpState common stock outstanding.

Norwood common stock may be issued to UpState shareholders who make cash elections if the cash consideration pool is oversubscribed, so that aggregate cash consideration payable to UpState shareholders in the merger will not exceed the aggregate cash limit. Similarly, cash may be paid to UpState shareholders who make stock elections if the cash consideration pool is undersubscribed so that the aggregate stock consideration paid in the merger will not exceed the aggregate stock consideration limit. In addition, the aggregate cash consideration pool may be decreased, and the aggregate stock consideration pool may be increased, in order for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

Since the cash consideration will be paid for only approximately 10% of the UpState shares outstanding at the effective time of the merger, it is possible that the cash consideration pool will be oversubscribed and UpState shareholders who elect to receive the cash consideration will receive a mix of cash and stock consideration in the merger. It is also possible that the cash consideration pool could be undersubscribed and that UpState shareholders who elect to receive the stock consideration will receive a mix of cash and stock in exchange for their shares. The allocation of the mix of consideration payable to UpState shareholders in the merger will not be known until Norwood tallies the results of the cash/stock elections made by UpState shareholders. UpState shareholders may not receive the amounts of cash or stock they elected. Accordingly, if there is an oversubscription of cash or an oversubscription of stock, it is likely that UpState shareholders will not receive a portion of the merger consideration in the form that they elect, which could result in, among other things, tax consequences that differ from those that would have resulted had such shareholders received the form of consideration they elected.

UpState Shareholders May Not Receive an Increase in the Per Share Offer Price.

The merger agreement provides that if UpState meets the financial performance conditions set forth in Appendix I to the merger agreement as of the end of the month immediately prior to the closing date of the merger, the per share merger consideration would be increased by up to $0.67 in cash, resulting in the cash consideration as increased by the per share increase having a maximum value of $34.00 per share for each USNY share. Recipients of the stock consideration will receive the per share increase in cash. There can be no assurances, however, that UpState will achieve the financial performance conditions set forth in the merger agreement or that UpState shareholders will receive an increase in the amount of consideration offered in the merger.

Because the Market Price of Norwood Common Stock May Fluctuate, UpState Shareholders Cannot be Sure of the Value of the Stock Consideration They May Receive.

UpState shareholders may elect to receive cash, stock or cash for some shares and Norwood common stock for others in the merger. The exchange ratio of 0.9390 of a share of Norwood common stock per share of UpState common stock at which Norwood is issuing its shares as part of the merger consideration is fixed (subject to customary anti-dilution adjustments and potential adjustment in certain circumstances involving a decline in Norwood’s stock price that exceeds a specified index).

 

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Consequently, changes in the price of Norwood common stock prior to completion of the merger will affect the value of any shares of Norwood common stock that UpState shareholders may receive upon completion of the merger. The value of the Norwood stock consideration will vary from the date of the announcement of the merger agreement, the date that this joint proxy statement/prospectus was mailed, the date of the special meeting and the date the merger is completed and thereafter. At the time that the merger is completed, the value of the stock consideration could be more or less than the value of the cash consideration. Accordingly, at the time of the UpState special meeting, you will not know or be able to determine the value of the Norwood common stock you may receive upon completion of the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the respective businesses, operations and prospects, and regulatory considerations of Norwood and UpState. Many of these factors are beyond Norwood’s and UpState’s control.

UpState Shareholders Who Make Elections May Be Unable to Sell Their Shares in the Market Pending the Merger.

UpState shareholders may elect to receive cash, stock or cash for some shares and Norwood common stock for others in the merger by completing an election form that will be sent under separate cover. Elections will require that shareholders making the election turn in their UpState stock certificates. This means that during the time between when the election is made and the date the merger is completed, UpState shareholders will be unable to sell their UpState common stock. If the merger is unexpectedly delayed, this period could extend for a significant period of time. UpState shareholders can shorten the period during which they cannot sell their shares by delivering their election shortly before the election deadline. However, elections received after the election deadline will not be accepted or honored.

UpState Shareholders Will Have a Reduced Ownership and Voting Interest After the Merger and Will Exercise Less Influence Over Management.

UpState shareholders currently have the right to vote in the election of the board of directors of UpState and on other matters affecting UpState. Upon the completion of the merger, each UpState shareholder who receives shares of Norwood common stock will become a shareholder of Norwood with a percentage ownership of Norwood that is smaller than the shareholder’s percentage ownership of UpState. It is currently expected that the former shareholders of UpState as a group will receive shares in the merger constituting approximately 29% of the outstanding shares of Norwood common stock immediately after the merger. Because of this, UpState shareholders may have less influence on the management and policies of Norwood than they now have on the management and policies of UpState.

Norwood Shareholders Will Have Reduced Ownership and Voting Power After the Merger.

Norwood shareholders currently control 100% of the outstanding common stock of Norwood and have the exclusive right to vote in the election of the board of directors of Norwood and on all other matters affecting Norwood. Under the merger agreement, 90% of the consideration in the merger must be paid in shares of Norwood common stock. It is currently expected that the shareholders of UpState as a group will receive shares in the merger constituting approximately 29% of Norwood’s outstanding shares of Norwood prior to the merger. As a result, current Norwood shareholders will own approximately 71% of Norwood’s outstanding shares of common stock after completion of the merger. As a result, Norwood shareholders may have less influence on the management and policies of Norwood than they now have.

Norwood May Fail to Realize the Anticipated Benefits of the Merger.

The success of the merger will depend on, among other things, Norwood’s ability to realize anticipated cost savings and to combine the businesses of Wayne Bank and USNY Bank in a manner that permits growth opportunities and does not materially disrupt the existing customer relationships of USNY Bank or result in decreased revenues due to any loss of customers. If Norwood is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

Norwood and UpState have operated and, until the completion of the merger, will continue to operate, independently. Certain employees of UpState may not be employed after the merger. In addition, employees of UpState that Norwood wishes to retain may elect to terminate their employment as a result of the merger, which could delay or disrupt the integration process. It is possible that the integration process could result in the disruption of Norwood’s or UpState’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Norwood or UpState to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger.

 

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Regulatory Approvals May Not Be Received, May Take Longer than Expected or May Impose Conditions that Are Not Presently Anticipated or Cannot Be Met.

Before the transactions contemplated in the merger agreement, including the merger, may be completed, various approvals must be obtained from the bank regulatory and other governmental authorities. These governmental entities may impose conditions on the completion of the merger or require changes to the terms of the merger agreement. Although the parties do not currently expect that any such conditions or changes would be imposed, such conditions or changes may be imposed, and such conditions or changes could have the effect of delaying completion of the transactions contemplated in the merger agreement or imposing additional costs on or limiting Norwood’s revenues, any of which might have a material adverse effect on Norwood following the merger. In addition, the regulatory approvals may not be received at any time, may not be received in a timely fashion, and may contain conditions on the completion of the merger.

The Merger Agreement May Be Terminated in Accordance with Its Terms and the Merger May Not Be Completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: approval of the merger agreement by Norwood and UpState shareholders, regulatory approvals, absence of orders prohibiting the completion of the merger, effectiveness of the registration statement of which this joint proxy statement/prospectus is a part, approval of the shares of Norwood common stock to be issued to UpState shareholders for listing on the NASDAQ Global Market, the continued accuracy of the representations and warranties by both parties and the performance by both parties of their covenants and agreements, and the receipt by both parties of legal opinions from their respective tax counsels. Furthermore, there shall not have occurred any Material Adverse Effect (as defined in the merger agreement) with respect to UpState, Norwood or their subsidiaries.

In addition, certain circumstances exist whereby UpState may choose to terminate the merger agreement, including if Norwood’s share price declines to below $30.91 (subject to customary anti-dilution adjustments) as of the first date when all regulatory approvals for the merger have been received, combined with such decline being at least 20% greater than a corresponding decline in the value of the NASDAQ Bank Index, and no adjustment pursuant to a specified formula is made to the exchange ratio by Norwood. See “The Merger and the Merger Agreement — Terminating the Merger Agreement” beginning on page 97 for a more complete discussion of the circumstances under which the merger agreement could be terminated. Therefore, the conditions to closing of the merger may not be fulfilled and the merger may not be completed.

Termination of the Merger Agreement Could Negatively Impact UpState.

If the merger agreement is terminated, there may be various consequences, including:

 

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UpState’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger; and

 

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the market price of UpState common stock might decline to the extent that the current market price reflects a market assumption that the merger will be completed.

If the merger agreement is terminated and UpState’s board of directors seeks another merger or business combination, UpState shareholders cannot be certain that UpState will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Norwood has agreed to provide in the merger.

If the merger agreement is terminated under certain circumstances, UpState may be required to pay a termination fee of $3.2 million to Norwood. See “The Merger and the Merger Agreement — Termination Fee” beginning on page 98.

UpState Will Be Subject to Business Uncertainties and Contractual Restrictions While the Merger is Pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on UpState and consequently on Norwood. These uncertainties may impair UpState’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with UpState to seek to change existing business relationships with UpState. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, Norwood’s business following the

 

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merger could be negatively impacted. In addition, the merger agreement restricts UpState from making certain acquisitions and taking other specified actions until the merger occurs without the consent of Norwood. These restrictions may prevent UpState from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger and the Merger Agreement — Conduct of Business Before Completion of the Merger” beginning on page 93 for a description of the restrictive covenants to which UpState is subject.

The Merger Agreement Limits UpState’s Ability to Pursue Alternatives to the Merger.

The merger agreement contains “no-shop” provisions that, subject to limited exceptions, limit UpState’s ability to initiate, solicit, encourage or facilitate any inquiries or competing third-party proposals, or engage in any negotiations, or provide any confidential information, or have any discussions with any person relating to a proposal to acquire all or a significant part of UpState. In addition, UpState has agreed to pay Norwood a termination fee in the amount of $3.2 million in the event that Norwood or UpState terminates the merger agreement for certain reasons. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of UpState from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire UpState than it might otherwise have proposed to pay. Until the merger agreement is approved by UpState shareholders, UpState can consider and participate in discussions and negotiations with respect to an alternative unsolicited bona fide acquisition proposal (subject to its obligation to pay a termination fee under certain circumstances) so long as the UpState board of directors determines in good faith (after consultation with and considering the advice of legal counsel and its financial advisor) that it is legally necessary to do so to comply with its fiduciary duties to UpState shareholders under New York law and that such alternative acquisition proposal constitutes a superior proposal. UpState has agreed to keep Norwood apprised of developments, discussions and negotiations relating to any such acquisition proposal.

Interests of Norwood’s Directors and Executive Officers in the Merger.

In considering the recommendation of the board of directors of Norwood to adopt the merger agreement, you should be aware that executive officers and directors of Norwood have interests in the merger that may be different from, or in addition to, the interests of Norwood shareholders generally. These interests include, among others, continued service as a director, continued employment for executive officers of Norwood, and rights to ongoing indemnification and insurance coverage by the surviving corporation for acts or omissions occurring prior to the merger. For information concerning these interests, please see the discussion under the caption “The Merger-Interests of Norwood’s Directors and Executive Officers in the Merger” on page 90 of this joint proxy statement/prospectus.

Interests of UpState’s Directors and Executive Officers in the Merger.

In considering the recommendation of the board of directors of UpState to adopt the merger agreement, you should be aware that the interests of some of the directors and executive officers of UpState may be different from those of UpState shareholders, and directors and officers of UpState may be participants in arrangements that are different from, or are in addition to, those of UpState shareholders generally. For information concerning these interests, please see the discussion under the caption “The Merger-Interests of UpState’s Directors and Executive Officers in the Merger” beginning on page 90 of this joint proxy statement/prospectus.

The Shares of Norwood Common Stock to Be Received by UpState Shareholders as a Result of the Merger Will Have Rights Different from the Shares of UpState Common Stock.

Upon completion of the merger, the rights of former UpState shareholders who become Norwood shareholders will be governed by the Pennsylvania Business Corporation Law and the amended and restated articles of incorporation and bylaws of Norwood. The rights associated with UpState common stock are different from the rights associated with Norwood common stock. See “Comparison of Shareholders’ Rights” beginning on page 109 for a discussion of the different rights associated with Norwood common stock.

The Unaudited Pro Forma Combined Financial Information Included in this Joint Proxy Statement/Prospectus Is Preliminary and the Actual Financial Condition and Results of Operations After the Merger May Differ Materially.

The unaudited pro forma combined financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Norwood’s actual financial condition or results of

 

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operations would have been had the merger been completed on the dates indicated. The pro forma combined financial information reflects adjustments, which are based upon preliminary estimates, to record the UpState identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of UpState as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Combined Financial Data” beginning on page 101.

The fairness opinion obtained by UpState from its financial advisor will not reflect changes in circumstances subsequent to the date of the fairness opinion.

Boenning, UpState’s financial advisor in connection with the merger, has delivered to the board of directors of UpState its opinion dated as of January 8, 2020. The opinion of Boenning stated that as of such date, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to the holders of the outstanding shares of UpState common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The opinion does not reflect changes that may occur or may have occurred after the date of the opinion, including changes to the operations and prospects of Norwood or UpState, changes in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors on which the opinion is based, may materially alter or affect the relative values of Norwood and UpState.

The recent global coronavirus outbreak may pose risks and could harm business and results of operations for each of Norwood and UpState and the combined company following the completion of the merger.

In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since first being reported in China, the coronavirus has spread to additional countries including the United States. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus outbreak on businesses of Norwood, UpState and the combined company, and there is no guarantee that efforts by Norwood, UpState and the combined company to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

The ultimate risk posed by coronavirus remains highly uncertain; however, reports as of the date of this proxy statement/prospectus suggest that COVID-19 spreads more quickly and has a higher mortality rate than flu-like epidemics of the recent past. COVID-19 therefore poses a material risk to the business, financial condition and results of operations of both Norwood and UpState and potentially could create risks for the combined company, including:

 

•

risks to the capital markets that may impact the performance of the investment securities portfolios of Norwood and UpState;

 

•

effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the companies’ financial reporting and internal controls;

 

•

declines in demand for loans and other banking services and products, as well as a decline in the credit quality of our loan portfolio, owing to the effects of COVID-19 in the markets served by Norwood and UpState;

 

•

declines in demand resulting from adverse impacts of the disease on businesses deemed to be “non-essential” by governments in the markets served by Norwood and UpState; and

 

•

increasing or protracted volatility in the price of Norwood common stock.

These factors, together or in combination with other events or occurrences not yet known or anticipated, could adversely affect the value of the merger consideration or could delay or prevent the consummation of the merger and the related transactions. If Norwood or UpState is unable to recover from a business disruption on a timely basis, the merger and the combined company’s business and financial conditions and results of operations following the completion of the merger would be adversely affected. The merger and efforts to integrate the businesses of Norwood and UpState may also be delayed and adversely affected by the coronavirus outbreak, and become more costly. Each of Norwood, UpState and the combined company may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect its financial condition and results of operations.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference into this joint proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as “anticipate”, “estimate”, “continue”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “objective”, “goal”, “positions”, “prospects”, “potential”, “will”, “would”, “should”, “could”, “may” and words and terms of similar substance used in connection with any discussions regarding timing of completion of the merger, expected benefits of the merger and the future operating or financial performance of Norwood, UpState or the combined company identify forward-looking statements. All forward-looking statements are management’s present expectations or forecasts of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the factors relating to the merger discussed under the caption “Risk Factors” beginning on page 22 and the factors previously disclosed in Norwood’s reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

•

the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the merger agreement;

 

•

the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the future, including litigation related to the merger;

 

•

delays in completing the merger;

 

•

the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the merger) and shareholder approvals or to satisfy any of the other conditions to the closing of the merger on a timely basis or at all;

 

•

the possibility that the anticipated benefits of the merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength or weakness of the economy and competitive factors in the area where Norwood and UpState do business;

 

•

the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

•

diversion of management’s attention from ongoing business operations and opportunities;

 

•

potential adverse reactions or changes to business or employee relationships and customer relationships, including those resulting from the announcement or completion of the merger;

 

•

the ability to complete the merger and integration of Norwood and UpState successfully;

 

•

the challenges of integrating, retaining and hiring key personnel;

 

•

failure to attract new customers or retain existing customers in the manner anticipated;

 

•

any interruption or breach of security as a result of systems integration resulting in failures or disruptions in customer account management, general ledger, deposit, loan or other systems;

 

•

the uncertainty of the value of the merger consideration that UpState shareholders will receive in the merger due to a fixed exchange ratio and changes in Norwood’s stock price before closing, including as a result of the financial performance of Norwood or UpState prior to closing;

 

•

the dilution caused by Norwood’s issuance of additional shares of its common stock in connection with the merger;

 

•

operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which Norwood and UpState are highly dependent;

 

•

changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental or legislative action and other changes pertaining to banking, securities, taxation and financial accounting and reporting, environmental protection and insurance, and the ability to comply with such changes in a timely manner;

 

•

changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Department of the Treasury and the FRB;

 

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•

changes in interest rates, which may affect Norwood’s or UpState’s net income and other future cash flows, or the market value of Norwood’s or UpState’s assets, including their investment securities;

 

•

changes in accounting principles, policies, practices or guidelines;

 

•

changes in Norwood’s credit ratings or in Norwood’s ability to access the capital markets;

 

•

natural disasters, pandemics, war or terrorist activities; and

 

•

other economic, competitive, governmental, regulatory, technological and geopolitical factors affecting Norwood’s or UpState’s operations, pricing and services.

For any forward-looking statements made in this joint proxy statement/prospectus or in any documents incorporated by reference into this joint proxy statement/prospectus, Norwood and UpState claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the dates of the documents incorporated by reference in this joint proxy statement/prospectus. Except as required by applicable law, neither Norwood nor UpState undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that Norwood has filed with the SEC as described under “Where You Can Find More Information” beginning on page 128.

 

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MARKET VALUE OF SECURITIES

Norwood. Norwood’s common stock is traded on the NASDAQ Global Market under the symbol “NWFL”. As of close of business on April 15, 2020, there were approximately 2,600 shareholders based on information from our transfer agent and recent mailings to Norwood stockholders. The following table sets forth the price range and cash dividends declared per share regarding Norwood common stock for the periods indicated:

 

		Closing Price Range								Cash dividends declared per share
		High				Low
Year 2020
First Quarter		$	39.03			$	24.37			$	0.25
Second Quarter (through April 15, 2020)		$	26.59			$	23.00				—
Year 2019
First Quarter		$	33.00			$	28.08			$	0.24
Second Quarter			34.97				31.00				0.24
Third Quarter			35.90				29.76				0.24
Fourth Quarter			39.25				30.39				0.25
Year 2018
First Quarter		$	33.00			$	28.85			$	0.22
Second Quarter			38.86				29.02				0.22
Third Quarter			40.41				34.51				0.22
Fourth Quarter			39.06				30.30				0.24

UpState. An active trading market does not currently exist for UpState common stock. As of April 15, 2020, there were approximately 545 holders of record of UpState common stock.

 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The following table sets forth historical per share information for Norwood and UpState and additional information as if the companies had been combined for the periods shown, which we refer to as “pro forma” information.

Pursuant to the terms of the merger agreement, shareholders of UpState will have the opportunity to elect to receive for each share of UpState stock they own, either 0.9390 shares of Norwood common stock or $33.33 in cash. The merger agreement also sets forth election allocations that are subject to allocation and proration procedures intended to ensure that, in the aggregate, 90% of the outstanding shares of the UpState common stock will be converted into Norwood common stock, and 10% will be converted into cash. Based on the merger allocation requirements, this pro forma information assumes 1,987,200 of the 2,208,000 shares of UpState common stock outstanding as of December 31, 2019 would be exchanged for Norwood common stock, with the balance of the outstanding UpState shares being exchanged for cash of $7.4 million. In addition to the purchase price per share, UpState may also be permitted, under certain performance conditions, to distribute at the closing of the merger, a special cash dividend of up to an additional $0.67 per share or $1.5 million to UpState’s shareholders. This pro forma information assumes that the special cash dividend of $1.5 million was paid at closing. The transaction is expected to be a tax-free exchange for shareholders of UpState receiving Norwood common stock. The shares of Norwood common stock issued for the merger consideration in the pro forma data were assumed to be recorded at a fair value of $38.90 per share, which represents Norwood’s common stock closing price per share as of December 31, 2019.

The UpState pro forma equivalent per share amounts are calculated by multiplying the Norwood pro forma combined book value per share, cash dividends per share and net income per share by the exchange ratio of 0.9390 so that the per share amounts equate to the respective values for one share of UpState common stock. The unaudited pro forma Norwood per share equivalents are calculated by combining the Norwood historical share amounts with pro forma amounts from UpState, assuming the exchange ratio of 0.9390.

We present below for Norwood and UpState historical, unaudited pro forma combined and pro forma equivalent per share financial data for the years ended December 31, 2018 and 2019. This data should be read together with the selected historical financial data of Norwood and UpState and the unaudited pro forma combined financial statements included in this document. This data should also be read together with Norwood’s consolidated financial statements and related notes which are incorporated by reference herein and UpState’s consolidated financial statements and related notes beginning on page F-1 of this joint proxy statement/prospectus. The per share data is not necessarily indicative of the operating results that Norwood would have achieved had it completed the merger as of the beginning of the periods presented and should not be considered as representative of future operations.

Unaudited Pro Forma Per Share Data

For The Twelve Months Ended December 31, 2019

($ in Thousands, Except Per Share Data)

 

		Norwood Historical				UpState Historical				Pro Forma Combined (1)(2)(3)				Pro Forma Equivalent UpState Share(4)
Earnings per share:
For the year ended December 31, 2019
Net income per share (basic)		$	2.27			$	2.12			$	2.38			$	2.24
Net income per share (diluted)			2.25				2.12				2.37				2.22
Cash dividends per share		$	0.97			$	—			$	0.97			$	0.91
Book value per common share as of December 31, 2019		$	21.67			$	21.03			$	25.39			$	23.84
Tangible book value per common share as of December 31, 2019		$	19.89			$	21.03			$	18.70			$	17.56

 

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Unaudited Pro Forma Per Share Data

For The Twelve Months Ended December 31, 2018

($ in Thousands, Except Per Share Data)

 

		Norwood Historical				UpState Historical				Pro Forma Combined (1)(2)(3)				Pro Forma Equivalent UpState Share(4)
Earnings per share:
For the year ended December 31, 2018
Net income per share (basic)		$	2.19			$	2.58			$	2.44			$	2.29
Net income per share (diluted)		$	2.17			$	2.58			$	2.42			$	2.27
Cash dividends per share		$	0.90			$	—			$	0.90			$	0.85
Book value per common share as of December 31, 2018		$	19.43			$	18.76			$	22.14			$	20.79
Tangible book value per common share as of December 31, 2018		$	17.58			$	18.76			$	15.64			$	14.68

 

(1)

The pro forma combined basic earnings and diluted earnings per share of Norwood common stock is based on the pro forma combined net income for Norwood and UpState divided by the pro forma common shares or diluted common shares of the combined entities. The pro forma information includes adjustments related to the fair value of assets and liabilities UpState and is subject to adjustment as additional information becomes available and as a final merger date analyses are performed.

(2)	The pro forma earnings do not include anticipated cost savings or revenue enhancements, nor does it include one-time merger-related expenses which will be expensed against income.

(3)

The pro forma combined balance sheet and book value per share data does include the impact of merger-related expenses on the balance sheet with UpState’s after tax charges currently estimated at $3.6 million, illustrated as a pro forma fair value liability accrual, Norwood’s after-tax estimated charges of $1.6 million, illustrated as a pro forma adjustment to retained earnings, and the payment of a special cash dividend of $.067 per share or $1.5 million to UpState’s stockholders. The pro forma combined book value and tangible book value per share of Norwood common stock is based on the pro forma combined common stockholders’ equity of Norwood and UpState divided by total pro forma common shares of the combined entities.

(4)	Pro forma equivalent UpState per share amount is calculated by multiplying the pro forma combined per share amount by the exchange ratio of 0.9390 in accordance with the reorganization agreement.

 

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THE NORWOOD ANNUAL MEETING OF STOCKHOLDERS

Norwood is first mailing this joint proxy statement/prospectus to you as a Norwood shareholder on or about April 21, 2020. With this joint proxy statement/prospectus, Norwood is sending you a notice of the Norwood annual meeting of stockholders and a form of proxy that is solicited by Norwood’s board of directors. The Norwood annual meeting will be held at the administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania on May 26, 2020, at 11:00 a.m., local time.

We are actively monitoring the health and safety concerns and government recommendations and restrictions relating to the COVID-19 pandemic. In the event it is not possible or advisable for us to hold our annual meeting at a physical location, we will host a virtual-only annual meeting. We anticipate making a final decision on our meeting location by May 12, 2020, and will announce our decision by press release and posting on our website at www.waynebank.com/stockholder-services. If you are planning to attend the annual meeting, please be sure to check our website for any updates in the days before our annual meeting or please call us at (570) 253-1455 or (800) 598-5002. As always, we encourage you to vote your shares in advance of the annual meeting.

Matters to be Considered

The purpose of the Norwood annual meeting of stockholders is to elect three directors; to vote on the adoption of the merger agreement; to ratify the appointment of S.R. Snodgrass, P.C. as Norwood’s independent auditors for the fiscal year ending December 31, 2020; to vote on a proposal to adjourn, postpone or continue the annual meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement; and to vote on a non-binding advisory resolution on executive compensation.

Who Can Vote at the Annual Meeting

You are only entitled to vote at the annual meeting if our records show that you held shares of Norwood common stock, $0.10 par value, as of the close of business on April 15, 2020 (the “Norwood record date”). If your shares are held by a broker or other intermediary, you can only vote your shares at the annual meeting if you have a properly executed proxy from the record holder of your shares (or their designee). For directions to the annual meeting, please visit our website at www.waynebank.com/honesdale-map. As of the Norwood record date, a total of 6,330,561 shares of Norwood common stock were outstanding. Each share of Norwood common stock has one vote in each matter presented.

Voting by Proxy

The Norwood board of directors is sending you this joint proxy statement/prospectus for the purpose of requesting that you allow your shares of Norwood common stock to be represented at the annual meeting by the persons named in the Norwood board of directors’ form of proxy. Norwood stockholders of record may vote by proxy in any of three different ways:

 

•

Voting by Telephone. Call the toll-free number on the enclosed proxy card and follow the instructions in the recorded message. You will need to have your proxy card with you when you call.

 

•

Voting on the Internet. Go to www.investorvote.com/nwfl and follow the instructions. You will need to have your proxy card with you when you link to the internet voting site.

 

•

Voting by Mail. Complete, sign, date and return the enclosed proxy card in the envelope provided.

All shares of Norwood common stock represented at the annual meeting by properly executed or authenticated and dated proxies will be voted according to the instructions indicated on the form of proxy. If you return a proxy without giving voting instructions, your shares will be voted as recommended by Norwood’s board of directors. The Norwood board of directors recommends a vote “FOR” each of its nominees for director, “FOR” the adoption of the merger agreement, “FOR” ratification of the appointment of S.R. Snodgrass, P.C. as our independent auditors for the fiscal year ending December 31, 2020, “FOR” the proposal to adjourn, postpone or continue the annual meeting, if necessary, to permit further solicitation of proxies in favor of adopting the merger agreement and “FOR” the proposal to approve a non-binding advisory resolution on executive compensation.

If any matters not described in this joint proxy statement/prospectus are properly presented at the annual meeting, the persons named in the Norwood board of directors’ form of proxy will vote your shares as determined by a majority of the

 

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board of directors. If the annual meeting is postponed or adjourned, your Norwood common stock may be voted by the persons named in the Norwood board of directors’ form of proxy on the new annual meeting dates as well, unless you have revoked your proxy or the board of directors sets a new record date. Norwood does not know of any other matters to be presented at the annual meeting.

You may revoke your proxy at any time before the vote is taken at the Norwood annual meeting. To revoke your proxy you must either advise Norwood’s Secretary in writing before your Norwood common stock has been voted at the annual meeting, deliver a later-dated proxy, or attend the annual meeting and vote your shares in person or online if we hold a virtual only meeting. Attendance at the annual meeting in person or online will not by itself revoke your proxy.

If you hold your Norwood common stock in “street name,” you will receive instructions from your broker, bank or other nominee that you must follow in order to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via the telephone or the Internet. Please see the instruction form provided by your broker, bank or other nominee that accompanies this joint proxy statement/prospectus.

Internet Access to Proxy Materials

Copies of this joint proxy statement/prospectus and the 2019 Annual Report to Stockholders are available on the Stockholder Services page of Norwood’s website at www.waynebank.com/stockholder-services. Stockholders can elect to receive future proxy statements and annual reports over the internet rather than in printed form. Stockholders of record can make this election by calling toll-free to 1 (800) 598-5002, sending an email to info@waynebank.com, or by following the instructions on the Stockholder Services page at www.waynebank.com/stockholder-services. If you hold your shares in street name, please refer to the information provided by your broker, bank or other nominee for instructions on how to elect to access future proxy materials over the internet.

Participants in the Wayne Bank Employee Stock Ownership Plan

The enclosed proxy card also serves as a voting instruction form for participants in the Wayne Bank Employee Stock Ownership Plan (the “ESOP”), and reflects all shares participants may vote under the ESOP. ESOP participants may also give voting instructions by telephone or by internet as provided in the form. Under the terms of the ESOP, all shares held by the ESOP are voted by the ESOP trustees, but each participant in the ESOP may direct the trustees on how to vote the shares of Norwood common stock allocated to his or her ESOP account. Unallocated shares and allocated shares for which no timely voting instructions are received will be voted by the ESOP trustees in the same proportion as the shares for which the trustees have received timely voting instructions, provided that in the absence of any voting directions as to allocated stock, the board of directors of Wayne Bank will direct the ESOP trustees as to the voting of all shares of stock in the ESOP. The deadline for returning your voting instruction form to the ESOP trustees by mail is May 15, 2020.

Vote Required

The Norwood annual meeting can only transact business if a majority of the outstanding shares of Norwood common stock entitled to vote are represented at the annual meeting. If you return valid proxy instructions or attend the annual meeting in person, your shares will be counted for purposes of determining whether there is a quorum even if you abstain or withhold your vote or do not vote your shares at the annual meeting. Under Pennsylvania law, if a proxy casts a vote for a matter on the agenda, the stockholder represented by that proxy is considered present for purposes of a quorum. Broker non-votes will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not have discretionary voting power with respect to the agenda item and has not received voting instructions from the beneficial owner.

In voting on the election of directors, you may vote in favor of a nominee or withhold your vote from a nominee. There is no cumulative voting in the election of directors. Directors must be elected by a plurality of the votes cast at the annual meeting. This means that the nominees receiving the greatest number of votes will be elected. Votes that are withheld and broker non-votes will have no effect on the outcome of the election.

In voting (i) to approve the merger agreement, (ii) to ratify the appointment of S.R. Snodgrass, P.C. as our independent auditors, (iii) to approve the proposal to adjourn, postpone or continue the annual meeting, or (iv) to approve a non-binding advisory resolution on executive compensation, you may vote in favor of the proposals, against the proposals or abstain from

 

33

voting. To be approved, these proposals require the affirmative vote of a majority of the votes cast at the annual meeting. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the voting on these proposals.

Principal Holders of Norwood Common Stock

Persons and groups beneficially owning more than 5% of Norwood common stock are required to report on their ownership to the SEC. A person is the beneficial owner of shares of Norwood common stock over which he or she has or shares voting or investment power or which he or she has the right to acquire at any time within 60 days from the Norwood record date. As of the Norwood record date, no persons or groups were known to Norwood to beneficially own more than 5% of Norwood common stock.

 

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NORWOOD PROPOSAL I — ELECTION OF NORWOOD DIRECTORS

The Norwood board of directors currently consists of nine members, each of whom also serves as a director of Wayne Bank. Norwood’s amended and restated articles of incorporation provide that the board of directors must be divided into three classes as nearly equal in number as possible. At each annual meeting of stockholders, each of the successors of the directors whose terms expire at the meeting will be elected to serve for a term of three years expiring at the third annual meeting of stockholders following the annual meeting of stockholders at which the successor director was elected.

Joseph W. Adams, Kevin M. Lamont and Dr. Kenneth A. Phillips (collectively, the “Norwood Nominees”) have been nominated by the board of directors for terms of three years each. The Norwood Nominees currently serve as directors of Norwood and have consented to serve, if elected.

The persons named as proxies in the Norwood board of directors’ form of proxy intend to vote for the election of the Norwood Nominees, unless the proxy is marked to indicate that such authorization is expressly withheld. Should any of the Norwood Nominees withdraw or be unable to serve (which the board of directors does not expect) or should any other vacancy occur in the board of directors, it is the intention of the persons named in the board of directors’ form of proxy to vote for the election of such person as may be recommended to the board of directors by the Norwood Nominating Committee of the board. If there is no substitute nominee, the size of the Norwood board of directors may be reduced.

 

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The following table sets forth the names, ages, positions with Norwood, terms and length of board service, number of shares owned and percentage ownership of Norwood common stock for: (i) each of the persons nominated for election as directors of Norwood at the Norwood annual meeting; (ii) each other director of Norwood who will continue to serve as director after the annual meeting; and (iii) each executive officer who is not a director. Beneficial ownership of the directors and executive officers of Norwood as a group is also set forth below.

 

Name and Position(s) with Company		Age(1)				Year First Elected or Appointed(2)				Current Term Expires				Common Stock Beneficially Owned as of Record Date(3)(4)				Percent of Class
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2023
Joseph W. Adams			57				2015				2020				48,267	(5)				*
Director
Kevin M. Lamont			61				2011				2020				131,867	(5)				2.03%
Director
Dr. Kenneth A. Phillips			69				1988				2020				15,381					*
Director
DIRECTORS CONTINUING IN OFFICE
Lewis J. Critelli			60				2009				2021				73,887					1.14%
President, Chief Executive Officer and Director
William W. Davis, Jr.			75				1996				2021				49,029	(5)				*
Director and Chairman of the Board
Meg L. Hungerford			43				2017				2021				3,492					*
Director
Dr. Andrew A. Forte			61				2007				2022				17,946					*
Director and Vice Chairman of the Board
Ralph A. Matergia			70				2004				2022				18,680	(5)				*
Director
Susan Campfield			62				2006				2022				6,137					*
Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
William S. Lance			60				Na				Na				12,485					*
Executive Vice President, Chief Financial Officer and Secretary
James F. Burke			51				Na				Na				11,566					*
Executive Vice President and Chief Lending Officer
Robert J. Mancuso			62				Na				Na				9,426					*
Executive Vice President and Chief Operating Officer
John F. Carmody			50				Na				Na				19,562					*
Executive Vice President and Chief Credit Officer
John H. Sanders			62				Na				Na				16,224					*
Senior Vice President, Retail Lending Manager
All directors, nominees and executive officers as a group (14 persons)															433,949					6.67%

 

 

*	Less than 1% of the Common Stock outstanding.

(1)	As of December 31, 2019.

(2)	Refers to the year the individual first became a director of Norwood or Wayne Bank.

(3)

Unless otherwise noted, the directors, executive officers and group named in the table have sole or shared voting power or investment power with respect to the shares listed in the table. The share amounts include shares of common stock that the following persons may acquire through the exercise of stock options within 60 days of the Norwood record date: Joseph W. Adams – 1.300; Lewis J. Critelli – 21,825; Susan Campfield – 4,375; William W. Davis, Jr., – 1,300;

 

(footnotes continued on following page)

 

 

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