DeWitt, N.Y.-based Community Bank System Inc.'s acquisition of South Burlington, Vt.-based Merchants Bancshares Inc. could be delayed until the third quarter of 2017, management said Jan. 23.

During the company's fourth-quarter earnings call, Community Bank System President and CEO Mark Tryniski said a "baseless protest" was filed with the Federal Reserve by a "serial activist" Friday, Jan. 20. Tryniski said the transaction is otherwise progressing well and integration efforts are underway. The $304.7 million deal was initially expected to close during the second quarter, but could now be delayed until early in the third quarter of 2017, he said.

Tryniski added that the company has some familiarity with the "applications as it relates to the regulators," because similar comments were made during its acquisition of Oneida Financial Corp. that it completed in December 2015. The Oneida Financial deal was delayed after a New York-based nonprofit organization, Inner City Press/Fair Finance Watch, questioned Community Bank's fair lending policies.

"We are still trying to work through it and understand it," Tryniski said, adding that the company is still aiming for its original closing date. "We're hopeful that this one will move through the process a bit more efficiently than it did with the Oneida transaction."

When completed, the deal will allow Community Bank System to enter Vermont with 31 branches and Massachusetts with one branch.

The company's acquisition of Northeast Retirement Services Inc., a financial technology company, was announced in December 2016. That deal is expected to close in the first quarter of 2017.

Tryniski called both deals "strategically important transactions." As the $8.7 billion company approaches the $10 billion threshold, Tryniski said the company has continued to invest in improving its infrastructure and systems, including those linked to DFAST requirements. He said the company will be disciplined rather than aggressive when it comes to future M&A activity.

"It doesn't really matter just to ask whether we're trading at a higher multiple or lower multiple," he added. "It certainly makes potential strategic opportunities more valuable, but we wouldn't ever consider doing something we wouldn't otherwise do solely because our shares are trading at a premium to the market."

Community Bank System reported net income of $26.4 million, or 59 cents per share, during the fourth quarter of 2016. That compares to net income of $20.1 million, or 47 cents per share, during the fourth quarter of 2015.