Stock Yards Creates Kentucky’s Premier Community Banking Franchise and Adds Significant Wealth and Trust Assets
Stock Yards Bancorp and Commonwealth Bancshares to Merge. (Credit: Tumisu from Pixabay.)
Stock Yards Bancorp, Inc. (“Stock Yards” or the “Company”) (NASDAQ: SYBT), the parent company of Stock Yards Bank & Trust Company today announced the signing of a definitive agreement for Stock Yards to acquire Commonwealth Bancshares, Inc. (“Commonwealth”), the parent company of Commonwealth Bank & Trust. The combined stock and cash transaction is expected to close during the fourth quarter of 2021, subject to approval of Commonwealth shareholders and completion of customary regulatory approval and closing conditions.
Management will host a conference call and webcast today at 11:00 a.m. (EDT) to discuss the proposed merger. Please see the Conference Call/Investor Presentation section for complete details.
Commonwealth, headquartered in Louisville, Kentucky, operates 16 total retail branches including 10 branches in Jefferson County, four in Shelby County and two in Northern Kentucky. As of June 30, 2021, Commonwealth reported approximately $1.3 billion in assets, $733 million in loans, $1.1 billion in deposits and $86 million in tangible common equity. Commonwealth also maintains a Wealth Management and Trust Department with total assets under management of $2.6 billion at June 30, 2021. The combined franchise will serve customers through 79 branches with total assets of approximately $7.4 billion, $4.9 billion in gross loans, $6.4 billion in deposits and $7.0 billion in trust assets under management.
Under the terms of the merger agreement, Commonwealth shareholders will have the right to receive 0.9267 shares of Stock Yards common stock and $11.20 in cash for each share of Commonwealth common stock with total consideration to consist of approximately 80% stock and 20% cash. Based upon the closing price of Stock Yards common stock of $47.64 on July 30, 2021, the implied per share purchase price is $55.35, with an aggregate transaction value of approximately $153 million. First full year earnings (2023) per share accretion is estimated at approximately 12% and the tangible book value per share dilution is expected to be earned back in less than two years under the crossover method including Current Expected Credit Loss (CECL) “Day 2” accounting treatment.
“We are excited to have Commonwealth and its dedicated employees join the Stock Yards team,” commented James A. (Ja) Hillebrand, Chairman and Chief Executive Officer of Stock Yards. “This combination brings together two local community banks based in Louisville, who are very like-minded with similar cultures. The transaction builds upon our market share in the Louisville market, as Commonwealth is the largest privately-held bank headquartered in the Louisville MSA, while also expanding our presence in Shelby County and Northern Kentucky. Additionally, and just as important, this combination significantly bolsters our wealth management capabilities, adding $2.6 billion in wealth and trust assets, and making Stock Yards the largest bank-owned Trust company in the state. We look forward to offering Commonwealth customers the same level of customer service they have come to expect, with an enhanced branch delivery system that stretches throughout Louisville, central, eastern and northern Kentucky, as well as the Cincinnati and Indianapolis metropolitan markets.”
John W. Key, President and CEO of Commonwealth commented, “Both banks have always been focused on providing great customer service, a strong commitment to the communities where they operate and an excellent environment for employees to perform and advance. We look forward to working with the management team at Stock Yards to create the leading community bank in the region.”
In addition, Laura Wells, who currently serves on Commonwealth’s Board of Directors, will be added to the Stock Yards Board following completion of the transaction.
Stephens Inc. served as financial advisor and Frost Brown Todd PLLC acted as legal counsel to Stock Yards. Keefe Bruyette & Woods, A Stifel Company, served as financial advisor and Squire Patton Boggs acted as legal counsel to Commonwealth.
Source: Company Press Release