WOODSVILLE — After 138 years as an independent bank — and the oldest in the Upper Valley — Woodsville Guaranty Savings Bank is merging with a Maine bank that in recent years has made a push into New Hampshire and Vermont.

Woodsville Guaranty and Bar Harbor Bankshares, parent of Bar Harbor Bank & Trust, have signed a definitive merger agreement in which Bar Harbor will acquire Woodsville’s parent, Guaranty Bancorp, in an all-stock deal valued at about $41.6 million, the banks announced in a March 11 news release.

The combination will add nine local Woodsville branches in Grafton County — including those in Hanover, Piermont and Woodsville — to Bar Harbor’s current 16 branches in the Upper Valley that the Bar Harbor-based bank acquired in its acquisition of the former Lake Sunapee Bank in 2016.

Both Woodsville and Bar Harbor said no branches will close and there would no layoffs among “customer facing” employees. But there likely will be some jobs eliminated in back-office bank operations as those functions can be handled by Bar Harbor’s existing capacity. The merger is expected to close in the second half of the year. 

James Graham, chief executive of Woodsville Guaranty, said he hopes they will be able “minimize the loss of staff” by transitioning them into open positions at both banks, helped in part by Bar Harbor’s “much greater embrace with remote workers.”

Graham said that combining with a larger bank that shares its values will be a plus for customers. It will allow Woodsville to write bigger consumer and commercial loans in addition to affording greater advancement opportunities for Woodsville employees, he told the Valley News last week.

“We were not looking to sell,” Graham said. “We received unsolicited offers from three different banks and Bar Harbor's offer was one that we would have a very hard time saying ‘no’ to.”

Graham declined to identify who submitted the other two offers, but said they all rolled in following the election of Donald Trump as president in November, which he attributed to an expectation of “a less conservative regulatory administration.”

Unlike Woodsville, Bar Harbor has the ability to issue commercial loans of up to $60 million, enabling it to bankroll a variety of businesses, from real estate to manufacturing and technology.

That makes Bar Harbor competitive with banking giants like Bank of America, said Bar Harbor CEO Curtis Simard, meaning businesses in the Upper Valley will be able to call upon a regional bank with roots in the community rather than rely upon a national giant.

In terms of deposits, Woodsville is the third-largest, at $530 million, among the Upper Valley’s five independent banks, following Mascoma Bank ($2.6 billion) and Ledyard Bank ($811 million), but ahead of Claremont Savings Bank ($417 million) and Sugar River Bank ($341 million).

Another issue the merger resolves is the “liquidity problem” among the bank’s approximately 260 shareholders, some of whom are descendents of the bank’s original founding shareholders more than a century ago.

As a relatively small community bank, Woodsville’s stock is not easily tradable, and the merger with Bar Harbor — valued at $56.94 per share, provides shareholders with about a 30% premium over present value.

“There wasn’t pressure, but there was always the question,” Graham said. “And the one question about shareholder liquidity is just one we couldn’t solve.”

Although Woodsville Guaranty will pass out of local control — and the branches rebranded under the Bar Harbor name — Graham said he is comfortable that they are joining an organization which benefits both customers and employees.

“How they treat their employees, how they respect their customer, respect their communities, the things they do internally for staff development, these are all things that are very similar between our two organizations,” said Graham, who will step down from an executive role with the bank upon closing but join Bar Harbor’s board.

Simard, who has been leading the Maine bank’s expansion into New Hampshire and Vermont markets, said that “life and work balance” is a key personnel policy at Bar Harbor, which he believes sets it apart from bigger regional and national banks. 

“We all live in northern New England and none of us are dying to run down to Boston to get jobs there,” Simard said when asked to describe the “cultural alignment” shared by the two banks.

Importantly, given the current political climate, Simard said that Bar Harbor would not back away from both bank’s stated diversity policies (Woodsville has a stated Vendor Diversity Program that seeks to include “the broadest range of people, ideas, products, and services possible” by “reaching out to diversity-owned businesses to afford them equal opportunity to participate in our procurement processes”). 

“We have a full DEI (Diversity, Equity and Inclusion) and ESG (Environmental, Social, and Governance) program,” Simard said. “We have large institutional shareholders who, frankly, will voice their displeasure if they don't feel like we're really committed enough to ESG and DEI,” and who could, he added, “sell the stock if we are not doing what they want us to do.”

Contact John Lippman at jlippman@vnews.com.