LOUISVILLE, Ky. — Stock Yards Bancorp Inc., the Louisville-based parent company of Stock Yards Bank & Trust Company, and Kentucky Bancshares Inc., parent company of Kentucky Bank, jointly announced they have signed of a definitive agreement for Stock Yards Bancorp to acquire Kentucky Bancshares.
The combined stock and cash transaction are expected to close during the second quarter of 2021, subject to the approval of Kentucky Bancshares shareholders and completion of customary regulatory approval and closing conditions.
Kentucky Bancshares, headquartered in Paris, Ky., is the holding company for Kentucky Bank, which operates 19 branches in 11 communities throughout Central Kentucky serving the Lexington metropolitan statistical area and each of its contiguous counties. As of Dec. 31, 2020, Kentucky Bancshares reported $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 on Dec. 31. 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 over $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 “Day 2” accounting treatment.
In addition, two directors that previously served on the 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.