LOUISVILLE, PARIS, Ky. (WTVQ) – Stock Yards Bancorp, Inc., the parent company of Stock Yards Bank & Trust Company, and Kentucky Bancshares, Inc., the parent company of Kentucky Bank, jointly announced Wednesday, the signing of an agreement for Stock Yardsto acquire Kentucky Bancshares.
The combined stock and cash transaction is expected to close during the second quarter of 2021, subject to approval of Kentucky Bancshares shareholders and completion of regulatory approval and closing.
Kentucky Bancshares, headquartered in Paris, Kentucky, is the holding company for Kentucky Bank, which operates 19 branches in 11 communities throughout central Kentucky serving the Lexington, Kentucky metropolitan statistical area and each of its contiguous counties.
As of December 31, 2020, Kentucky Bancshares reported approximately $1.2 billion in assets, $767 million in loans, $979 million in deposits and $114 million in tangible common equity.
Kentucky Bancshares also maintains a Wealth Management and Trust Department with total assets under management of $258 million at December 31, 2020.
The combined franchise will serve customers through 63 branches with total assets of approximately $5.9 billion, $4.3 billion in gross loans, $5.0 billion in deposits and more than $4.1 billion in trust assets under management.
Under the terms of the merger agreement, Kentucky Bancshares’ shareholders will have the right to receive 0.64 shares of Stock Yards Bancorp’s common stock and $4.75 in cash for each share of common stock of Kentucky Bancshares with total consideration to consist of approximately 85% stock and 15% cash.
Based upon the closing price of Stock Yards Bancorp common stock of $42.24 on January 25, 2021, the implied per share purchase price is $31.78, with an aggregate transaction value of approximately $190 million.
First full year earnings (2022) per share accretion is estimated at approximately 12.5% and the tangible book value per share dilution is expected to be earned back in approximately 2.5 years under the crossover method including Current Expected Credit Loss (CECL) “Day 2” accounting treatment.
“We are thrilled to welcome Kentucky Bancshares and its employees to the Stock Yards team,” commented James A. (Ja) Hillebrand, Chairman and Chief Executive Officer of Stock Yards Bancorp. “This transaction expands our presence into the attractive Central Kentucky market and represents a complementary fit, both strategically and culturally, with our business model. The combination of our two organizations provides the opportunity to create efficiencies and enhance the value of the combined company while offering Kentucky Bank customers broader product offerings, increased lending capabilities and an expanded branch delivery system that stretches throughout the Louisville, Indianapolis and Northern Kentucky/Cincinnati metropolitan markets. Also, I am very excited to announce that Louis Prichard, President and Chief Executive Officer of Kentucky Bancshares, will serve as our new Central Kentucky Market President.”
“Stock Yards is an excellent match for us,” said Prichard. “This combination allows us to partner with a strong community bank that is focused on providing outstanding customer service, a deep commitment to the communities they serve and offers an excellent environment for our employees. We are proud of our long history of developing genuine, lasting relationships with our clients while supporting our market area. We look forward to working with the management team at Stock Yards to expand the scope of our products and services to better serve Central Kentucky’s residents and businesses.”
In addition, two directors that previously served on Kentucky Bancshares Board of Directors will be added to the Stock Yards Board – Shannon B. Arvin, President and Chief Executive Officer of Keeneland Association, Inc. and Edwin S. Saunier, President of Saunier North American, Inc.
Keefe Bruyette & Woods, A Stifel Company, served as financial advisor and Frost Brown Todd PLLC acted as legal counsel to Stock Yards Bancorp, Inc. Raymond James served as financial advisor and Stoll Keenon Ogden PLLC acted as legal counsel to Kentucky Bancshares, Inc.