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Stock Yards (SYBT) Completes Commonwealth Bancshares Acquisition

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Stock Yards Bancorp, Inc. (SYBT - Free Report) announced the completion of its Commonwealth Bancshares, Inc buyout following the regulatory nod from the Fed in mid-February.

Nonetheless, both banks will continue to operate through their respective trust branches, checks, and online and mobile banking until the system integration is completed on Mar 28, 2022.

The acquisition of Commonwealth Bankshares, announced on Aug 3, 2021, was earlier expected to close during the fourth quarter of 2021.

Stock Yards has a presence in Louisville, KY; and central, eastern and northern Kentucky, besides other metropolitan cities. Commonwealth Bancshares, on the other hand, operates through 15 retail branches, nine of which are in Jefferson County, four in Shelby County and two in Northern Kentucky. Hence, the merger will expand Stock Yards' presence in Shelby County and strengthen its footprint in the Northern Kentucky markets.

The combined company will serve customers through 79 branches, with total assets approximating $7.4 billion, $4.9 billion in gross loans, $6.4 billion in deposits and $7.0 billion in trust assets under management, as per its merger announcement in August 2021.

When the stock-and-cash deal was announced, the companies expected an approximate transaction value of $153 million. Synergies from the acquisition were expected to result in earnings per share accretion of approximately 12% in 2023. The companies expect to earn back tangible book value per share dilution in less than two years.

The merger will significantly bolster Stock Yards’ wealth management capabilities by adding $2.6 billion in wealth and trust assets, besides making the company the largest bank-owned Trust company in the state. This is expected to bode well for the combined company’s long-term prospects.

Over the past month, shares of SYBT have declined 9% compared with the 10.3% decline of the industry it belongs to.

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Stock Yards currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Inorganic Growth Efforts by Other Firms

While rampant political and regulatory scrutiny of large bank mergers and acquisitions might aggravate the execution risk for future deals, it is not discouraging banks from consolidation activities.

Last week, First Horizon Corporation (FHN - Free Report) and TD Bank Group (TD - Free Report) signed a definitive agreement whereby the latter will acquire FHN in an all-cash deal valued at $13.4 billion or $25 for each FHN common share.

TD anticipates the FHN acquisition to close by Nov 1, 2022.

The buyout is subject to customary closing conditions, including approvals from First Horizon's shareholders, and the U.S. and Canadian regulatory authorities.

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