NEW YORK--(BUSINESS WIRE)--
On March 11, 2025, Bar Harbor, ME-based Bar Harbor Bankshares (NYSE American: BHB) ("Bar Harbor"), parent company of Bar Harbor Bank & Trust, and Woodsville, NH-based Guaranty Bancorp, Inc. (OTC: GUAA) ("Guaranty"), parent company of Woodsville Guaranty Savings Bank, jointly announced that they had entered into a definitive agreement pursuant to which Guaranty would merge with and into Bar Harbor Bankshares and Woodsville Guaranty Savings Bank would merge with and into Bar Harbor Bank & Trust. The transaction, valued at $41.6 million (P/TBV: 1.3x), is an all-stock deal expected to close in 2H25 pending regulatory approval. Under the agreement, James Graham, Guaranty President and CEO, would be appointed to Bar Harbor's board of directors.
In our view, the proposed acquisition is in line with Bar Harbor's overall growth strategy of expansion into contiguous markets through both acquisitive and organic means. The transaction allows BHB to expand its footprint in New Hampshire, notably, in the Lebanon-Claremont MSA, while providing solid opportunities for commercial growth and expansion of its fee-based business lines while focusing on a commitment to community banking. The acquisition is expected to add approximately $675 million in assets to BHB's balance sheet at close, with proforma $4.8 billion in total assets, $3.6 billion in loans, and $3.9 billion in deposits, as well as adding 9 branch locations in New Hampshire. The combined company’s pro forma financial projections include strong profitability metrics following the close of the transaction, in part, due to expected cost savings of approximately 40% of Guaranty's operating base, with the combined company estimating 100% of the savings to be recognized in 2026. In addition to the cost savings, earnings should receive a temporary boost from accretion income, with BHB reporting an estimated $41.6 million in interest rate marks on the loan portfolio (accreted over six years).
Regarding credit quality, both institutions have reflected solid asset quality performance over time, including nominal credit loss history, which is underpinned by disciplined underwriting and conservative management teams that have extensive knowledge of operating markets. The proforma loan portfolio is not expected to change materially as both institutions have complementary loan mixes, with investor CRE remaining the largest component at ~40% of total loans (including multifamily), followed by residential loans at 35%, and C&I at 14%. BHB conducted a review of the loan portfolio and expects to record a total gross pre-tax credit mark of $4.3 million (1%), along with a Day 2 CECL adjustment of $4.3 million in relation to the transaction. With respect to deposit mix, GUAA maintains a diversified deposit base with contained deposit costs of 1.39% and NIB deposits representing 16% of total deposits. Moreover, Bar Harbor has managed solid capital metrics with a CET1 ratio of 11.4% at 4Q24, though this ratio is expected to decline to 10.3% at closing. Nonetheless, the pro forma earnings profile should enable meaningful rebuild of capital following the acquisition. Overall, we believe that the proposed acquisition complements BHB's growth strategy, and while there is an inherent level of integration risk involved with any bank M&A transaction, such risk is somewhat mitigated by management's previous M&A integration experience.
About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
An email has been sent to your address with instructions for changing your password.
There is no user registered with this email.
Sign Up
To create a free account, please fill out the form below.
Thank you for signing up!
A confirmation email has been sent to your email address. Please check your email and follow the instructions in the message to complete the registration process. If you do not receive the email, please check your spam folder or contact us for assistance.
Welcome to our platform!
Oops!
Something went wrong while trying to create your new account. Please try again and if the problem persist, Email Us to receive support.
