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.
Conference Call / Investor
Presentation Stock Yards executive management will host a
conference call to discuss the strategic and financial implications
of the transaction on Tuesday, August 3, 2021 at 11:00 a.m. (EDT).
The call will also be broadcast live via the internet.
Interested investors may listen to the call live
via webcast by visiting www.syb.com and clicking on the Investor
Relations tab. Investment professionals are invited to call the
toll-free dial-in number: 1-866-652-5200. A telephone replay will
be available for two weeks at 1-877-344-7529 using the access code
10159253 and the webcast will be archived on the Company’s website
www.syb.com for 90 days. A copy of the investor presentation is
also available on the Company’s website www.syb.com.
About Stock Yards Bancorp,
Inc.:Louisville, Kentucky-based Stock Yards Bancorp, Inc.
with $6.1 billion in assets, was incorporated in 1988 as a bank
holding company. It is the parent company of Stock Yards Bank &
Trust Company, which was established in 1904. The Company's common
shares trade on the NASDAQ Global Select Market under the symbol
SYBT. For more information about Stock Yards, visit the Company’s
website at www.syb.com.
About Commonwealth Bancshares,
Inc.:Commonwealth Bancshares has $1.3 billion in assets,
and manages $2.6 billion in wealth and trust assets, including $200
million of assets in association with its Bowling Green partner,
Landmark Financial Advisors. Commonwealth Bank & Trust, founded
in 1881, is headquartered in Louisville, Kentucky and currently
operates 14 retail branches across Jefferson and Shelby Counties
and two branches in Northern Kentucky. For more information about
Commonwealth, visit its website at www.cbandt.com.
Forward-Looking Statements
Certain statements contained in this
communication, which are not statements of historical fact,
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
include, but are not limited to, certain plans, expectations,
goals, projections, and benefits relating to the proposed merger
transaction between Stock Yards Bancorp, Inc. (“Stock Yards”) and
Commonwealth Bancshares, Inc. (“Commonwealth”) which are subject to
numerous assumptions, risks and uncertainties. Words or phrases
such as “anticipate,” “believe,” “aim,” “can,” “conclude,”
“continue,” “could,” “estimate,” “expect,” “foresee,” “goal,”
“intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,”
“project,” “potential,” “seek,” “should,” “target,” “will,” “will
likely,” “would,” or the negative of these terms or other
comparable terminology, as well as similar expressions, are
intended to identify forward-looking statements but are not the
exclusive means of identifying such statements. Please refer to
Stock Yards’ Annual Report on Form 10-K for the year ended December
31, 2020, and its Quarterly Report on Form 10-Q for the three
months ended March 31, 2021, as well as its other filings with the
SEC for a more detailed discussion of risks, uncertainties and
factors that could cause actual results to differ from those
discussed in the forward-looking statements.
Forward-looking statements are not historical
facts but instead express only management’s beliefs regarding
future results or events, many of which, by their nature, are
inherently uncertain and outside of the management’s control. It is
possible that actual results and outcomes may differ, possibly
materially, from the anticipated results or outcomes indicated in
these forward-looking statements. In addition to factors disclosed
in reports filed by Stock Yards with the SEC, risks and
uncertainties for Stock Yards, Commonwealth and the combined
company include, but are not limited to: the possibility that some
or all of the anticipated benefits of the proposed merger will not
be realized or will not be realized within the expected time
period; the risk that integration of Commonwealth’s operations with
those of Stock Yards will be materially delayed or will be more
costly or difficult than expected; the parties’ inability to meet
expectations regarding the timing, completion and accounting and
tax treatments of the merger; the inability to complete the merger
due to the failure of Commonwealth’s shareholders to adopt the
merger agreement; the failure to satisfy other conditions to
completion of the merger, including receipt of required regulatory
and other approvals; the failure of the proposed transaction to
close for any other reason; diversion of management's attention
from ongoing business operations and opportunities due to the
merger; the challenges of integrating and retaining key employees;
the effect of the announcement of the merger on Stock Yards’,
Commonwealth’s or the combined company’s respective customer and
employee relationships and operating results; the possibility that
the merger may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; dilution
caused by Stock Yards’ issuance of additional shares of Stock Yards
common stock in connection with the merger; the magnitude and
duration of the COVID-19 pandemic and its impact on the global
economy and financial market conditions and the business, results
of operations and financial condition of Stock Yards, Commonwealth
and the combined company; and general competitive, economic,
political and market conditions and fluctuations. All
forward-looking statements included in this communication are made
as of the date hereof and are based on information available at
that time. Except as required by law, neither Stock Yards nor
Commonwealth assumes any obligation to update any forward-looking
statement to reflect events or circumstances that occur after the
date the forward-looking statements were made.
Additional Information Regarding the Proposed
Transaction
This communication in respect of the proposed
merger transaction between Stock Yards and Commonwealth is for
informational purposes only and is neither an offer to purchase nor
a solicitation of an offer to sell any securities. In connection
with the proposed transaction, Stock Yards and Commonwealth will
prepare a proxy statement of Commonwealth that also constitutes an
offering circular of Stock Yards which, when finalized, will be
sent to the shareholders of Commonwealth seeking their approval of
the merger-related proposals. The shares of Stock Yards common
stock to be issued to Commonwealth shareholders in the proposed
merger will not be registered under the Securities Act of 1933, as
amended, or under any state securities laws, and those shares may
not be offered or sold absent registration or an applicable
exemption from the registration requirements of the Securities Act,
which will be more fully described in the proxy statement/offering
circular. The proxy statement/offering circular will be delivered
to Commonwealth Shareholders when available. This communication is
not a substitute for the proxy statement/offering circular or any
other document that Stock Yards may file with the SEC. COMMONWEALTH
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/OFFERING
CIRCULAR, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED
WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT STOCK YARDS, COMMONWEALTH AND THE PROPOSED TRANSACTION. Other
documents relating to the merger transaction filed by Stock Yards
can be obtained free of charge from the SEC’s website at
www.sec.gov. Documents filed by Stock Yards also can be obtained
free of charge by accessing Stock Yards’ website at www.syb.com
under the tab “Investors Relations” and then under “SEC Filings.”
Alternatively, these documents and the proxy statement/offering
circular, when available, can be obtained free of charge from Stock
Yards upon written request to Stock Yards, Attention: Chief
Financial Officer, 1040 East Main Street, Louisville, Kentucky
40206 or by calling (502) 582-2571, or to Commonwealth, Attention:
Chief Financial Officer, 4350 Brownsboro Road Suite 310,
Louisville, Kentucky 40207 or by calling (502) 259-2200.
Participants in the Solicitation
Stock Yards, Commonwealth and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from Commonwealth’s shareholders in
connection with the proposed transaction. Information about the
directors and executive officers of Stock Yards and their ownership
of Stock Yards common stock is set forth in the definitive proxy
statement for Stock Yards’ 2021 annual meeting of shareholders, as
previously filed with the SEC on March 12, 2021, and Stock Yards’
Annual Report on Form 10-K for the year ended December 31, 2020, as
previously filed with the SEC on February 26, 2021, as well as
other documents filed with the SEC. Information about the directors
and executive officers of Commonwealth and their ownership of
Commonwealth common stock, as well as additional information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by securities
holdings or otherwise, will be included in the proxy
statement/offering circular when it becomes available. You may
obtain free copies of these documents from Stock Yards or
Commonwealth using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and shall
not constitute an offer to sell or the solicitation of an offer to
buy securities nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction. This communication is also
not a solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise. No offer of securities or
solicitation will be made except by means of the proxy
statement/offering circular described in the preceding
paragraphs.
Non-GAAP Measures
This communication contains certain
non-generally accepted accounting principle (“GAAP”) financial
measures of Stock Yards and Commonwealth determined by methods
other than in accordance with GAAP. Non-GAAP financial measures are
utilized to provide meaningful supplemental information regarding
performance. Stock Yards believes these non-GAAP measures are
beneficial in assessing operating results and related trends, and
when planning and forecasting future periods. These non-GAAP
disclosures should be considered in addition to, and not as a
substitute for or preferable to, financial results determined in
accordance with GAAP. The non-GAAP financial measures used may
differ from the non-GAAP financial measures other financial
institutions use to measure their results of operations.
Contact: |
T. Clay
Stinnett |
|
Stock Yards Bancorp, Inc. |
|
Executive Vice President, Treasurer |
|
and Chief Financial Officer |
|
(502) 625-0890 |
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