NBT Bancorp in Norwich, New York, has made no secret of its desire to expand in New England. It took a big step in that direction Monday, announcing a $204 million all-stock deal for Salisbury Bancorp in Lakeville, Connecticut.
A merger with the $1.5 billion-asset Salisbury, parent to Salisbury Bank, would give NBT and its NBT Bank subsidiary seven branches in Massachusetts and Connecticut. Salisbury operates another seven branches in upstate New York.
Currently Salisbury holds a 9% share of the $6.3 billion of bank deposits in Litchfield County, as well as a 3% share of the $4.9 billion of deposits in Berkshire County, Massachusetts, according to the Federal Deposit Insurance Corp.
"We are very excited to partner with Salisbury and to extend our footprint into their attractive and complementary markets," NBT President and CEO John H. Watt said in a press release.
The transaction, expected to close in the second quarter, would be the $11.6 billion-asset NBT's first bank acquisition since 2013, when it purchased the $1.4 billion-asset Alliance Bank in Syracuse, New York.
Under the terms of Monday's deal, NBT has agreed to pay Salisbury investors 5.83 million shares of stock valued at $204 million. That consideration amounts to $35 per Salisbury share, or 186% of tangible book value. NBT is projecting an earn-back period of less than 18 months, as well as 9.8% earnings accretion in the first full year after closing.
Residential and commercial real estate lending are two-thirds of Salisbury's $1.2 billion-asset loan portfolio, so the planned acquisition would result in slight increases in concentration in both categories at the post-merger NBT. Even so, NBT isn't planning any major changes to the operation it would inherit from Salisbury.
"We like their broad participation," NBT Chief Financial Officer Scott Kingsley said Monday on the conference call. "They're good at a lot of the things we're good at."
With a larger pro forma balance sheet behind them, Salisbury bankers can pursue deals they couldn't handle at a smaller bank, Kingsley added.
NBT was also attracted by Salisbury's wealth business, which reported $1.23 billion of assets under management at the end of the third quarter, and generated revenue totaling $5 million through the first nine months of 2022. The deal would give NBT a broader platform from which to market its wider wealth product set, including retirement plan services, while boosting overall fee revenue.
"This just enhances the noninterest side of revenue," Watt said on the conference call.
NBT said Salisbury CEO Rick Cantele would join its executive management team after the deal closes. Cantele did not comment before deadline.
