Lakeville-based Salisbury Bancorp, the parent company of Salisbury Bank & Trust (above), is planning to acquire Canaan National Bank.

A 156-year-old bank in the sparsely populated northwest corner of Connecticut is branching out in search of new commercial opportunities. Salisbury Bancorp, the parent company of Salisbury Bank & Trust, took another step toward acquiring Canaan National Bank last month after the state Department of Banking issued an order not to disapprove the transaction.

The acquisition will help Lakeville-based Salisbury Bank move into New York state and southwestern Massachusetts, said President and Chief Executive Officer John Perotti.

“This was a kind of natural extension,” he said.

Bank analyst John Carusone, president of the Bank Analysis Center in Hartford, agreed. The two banks have been neighbors and rivals for years and the acquisition will extend Salisbury Bank’s footprint into surrounding areas, Carusone said. The two banks also have similar cultures and managerial styles, he noted.

“It’s a natural market extension for Salisbury,” he agreed.

Canaan National Bank has its main office in Canaan and a branch in Egremont, Mass. The executives of Salisbury Bank intend to keep those offices and have offered every employee at Canaan National a position at the new bank, Perotti said. Those employees include Canaan National’s President and Chief Executive Officer Gerard Baldwin, who will serve as Salisbury Bank’s executive vice president in charge of community lending development.

Baldwin is experienced in commercial lending and is familiar with some of the communities surrounding Canaan, Salisbury and Salisbury’s separate taxing district of Lakeville, where Salisbury Bank’s headquarters are located. He used to work in Torrington and is also knowledgeable about communities in New York state near the border of Litchfield County, where Perotti would like to see future expansion, Perotti said.

“He’s very capable and very known in the area,” Perotti said.

Culture Club

Perotti’s decision to try to retain all of Canaan National Bank’s employees is reflective of the culture of the close-knit communities of northwestern Litchfield County, Carusone said.

“The culture of rural Litchfield County doesn’t lend itself to a scorched-earth policy,” he said.

Perotti knows that culture well. He has spent 30 years at Salisbury Bank and has watched it grow from a small bank with around $20 million in assets to what Carusone calls a high-performing community bank with around $308 million in assets. It has remained an in-market, community bank, Perotti said, but the bank’s executives long have been searching for ways to grow. The bank has been a stock company from its inception, but has grown enough to be listed on the American Stock Exchange, Perotti said.

“We’ve always been looking for opportunities to expand,” he said.

The bank’s expansion began in 1925 when its parent company, Salisbury Savings Society, merged with another company. In 1963, the bank opened a branch in Salisbury; in 1983, it opened the Sharon branch. The bank bought a Canaan branch of People’s Bank several years ago and opened its third branch there.

The acquisition of Canaan National Bank is the next step in Salisbury Bank’s slow but steady expansion. The rural character of the area makes expansion difficult at times and the lack of industry there make it hard for banks to make money in the lucrative commercial lending area, Perotti said. He calls northwestern Litchfield County an area of “limited rooftops,” where homes are spread far apart and industry is scarce. The area used to be heavily farmed, but most farmers have since sold their land, although there are some gentleman farmers left, Perotti said. The area’s character also has changed in recent decades with the influx of second-home owners from New York City, Perotti said.

“They’re good community citizens and they’ve enhanced the quality of life in the area,” he said.

But that still means little industry, so although Salisbury Bank’s executives want to see more commercial lending in the future, the bank has found success with its Trust Department, which has more than $400 million in assets, Perotti said. The acquisition of Canaan National will add clients to Salisbury Bank’s trust, Carusone said.

Perotti and Baldwin first negotiated the acquisition in November of last year, according to Perotti.

“We are very excited about this combination as it represents the merger of two long-standing community-focused organizations,” Perotti said in a prepared statement. “We will be better positioned to expand our Massachusetts presence and serve customers throughout the Tri-State region with the high-quality personal service that only community banks can offer. Canaan has been run by a respected management team whom we look forward to working with as we continue to grow and serve our communities.

“This acquisition meets several objectives for Salisbury and is expected to be accretive to earnings within the first year following consummation. Canaan’s branch in southwestern Massachusetts will provide a base for expanding our presence in Berkshire County.

“Together, we have a strong base of talented employees to provide outstanding customer service and an expanded array of financial products and services. Finally, our proximity and shared familiarity with the Tri-State region reduces execution risk.”

“We are extremely pleased to partner with Salisbury,” Baldwin said in a prepared statement. “It is a high-quality organization that will continue to serve our customers, employees and communities with the same care and commitment as Canaan. We believe that Salisbury is well suited to carry on our bank’s motto: ‘No account too small to care for or too large to handle’ … As a competitor, I have been very impressed with their team of lenders, officers and customer service personnel and I look forward to working with them. This partnership is excellent news for our shareholders, customers and the communities Canaan serves.”

Salisbury Bank will have about $416 million in assets after the acquisition becomes final, which likely will be in September, Perotti said.