New York-based Community Bank System has agreed to acquire Merchants Bancshares, the parent of Merchants Bank, in a cash-stock deal worth about $304m.

As per the terms of the agreement, Merchant Bancshares shareholders will have the option to receive cash or shares in Community Bank System, or a combination of both. The combined group will have assets exceeding $10bn.

The deal already secured the nod of the boards of directors of both companies. It is anticipated to be completed in the second quarter of 2017, subject to shareholders’ and regulatory approvals.

Community Bank System president and CEO Mark Tryniski said: “We are very excited to be partnering with Merchants Bank, extending our footprint into the attractive Vermont and Western Massachusetts markets.

“Merchants Bank has an impressive history of service to its customers, its communities and its shareholders. More importantly, the organizational values of Merchants Bank, and its people, align very well with those of Community Bank.

“We are delighted to welcome the Merchants team to the Community Bank organization and look forward to the future of the combined company. We are also pleased that Geoffrey Hesslink, President & Chief Executive Officer of Merchants Bank, will become the New England Regional President of our combined organization.”

Merchants Bancshares is the largest statewide independent bank in Vermont, managing about $1.9bn in total assets, $1.5bn in deposits and 32 banking offices.