Stock Yards acquires Kentucky Bank

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By Lorie Hailey and Mark Green

Stock Yards Bank & Trust is making a major expansion into the central Kentucky market after spending its first 117 years as a major member of the Louisville banking market. SYB completed the acquisition of Paris-based Kentucky Bank in June, and this month the latter’s 19 branches become Stock Yards operations.

SYB entered 2021 with 44 offices in the Louisville, Cincinnati and Indianapolis markets and grew earnings per share in 28 of the past 32 years.

The Kentucky Bank deal is a good match, according to state banking experts, that puts SYB in a highly desirable new market without duplicating locations.

“This one is a perfect match for Stock Yards,” said Ballard W. Cassady Jr., president and CEO of the Kentucky Bankers Association. “It puts them in this central Kentucky market – it’s a great market – with a good bank in places where they needed locations.”

Banks always want to grow and prefer to grow organically, but acquisition may be the best option when market demographics make significant growth unlikely.

“It was a great opportunity for Stock Yards Bank and a great opportunity for Kentucky Bank shareholders,” Cassady said.
James “Ja” Hillebrand, Chairman and CEO of Stock Yards Bank, said the banks share a unique alignment of core values, business philosophies and service models – a community banking approach based on building relationships at long term and investment in the community.

Both banks have similar deep roots in Kentucky. Stock Yards Bank traces its history back to 1904, when it opened up to the farming and agribusiness industries as Bourbon Stock Yards in Louisville. Kentucky Bank was born in Paris in 1851, serving the agricultural economy of the region.

Both banks have well-established wealth management operations.

“Kentucky Bank fits perfectly into the way Stock Yards does business,” Hillebrand said. The acquisition of Kentucky Bank “allows us to expand into a new market, provides our existing customers with more banking options in the area, and allows us to enhance our services in the central and eastern Kentucky market. “.

The merger allows for broader product offerings, increased lending capacity and expands the branch service delivery system for existing customers of both banks as well as new customers, Hillebrand said.

“Furthermore, the larger organization provides us with solid growth opportunities and a platform for future expansion,” he said.
Together, the two banks have $5.8 billion in assets.

This is Stock Yards’ third acquisition since 2013. It acquired The Bank of Oldham County in 2013 and King Southern Bank in Nelson County in 2019. The Kentucky Bank acquisition furthers Stock Yards’ goal of remain independent and focused on community service, Hillebrand said. .

“We are still focused on an organic growth strategy, which means we will grow our bank one customer at a time, one branch at a time, but opportunities have arisen within another institution to help us grow. develop further,” he said.

Businesses and individuals still need a bank big enough to weather unexpected events and support customers through tough times, said Louis Pritchard, president and CEO of Kentucky Bank.

“We believe this merger will provide the operational scale, lending capacity, expanded product offerings and technology of a larger institution coupled with the community banking model that both banks have always valued. powerful formula to provide enhanced banking services to the central Kentucky market,” he said.

Prichard will join Stock Yards Bank as president of Central Kentucky Market and serve on the bank’s management committees, including operations, lending, strategic planning, interest rates and human resources.

Pandemic underlined personalized service
Financial institutions have been a lifeline for businesses during the height of the COVID-19 pandemic, whether helping with Paycheck Protection Program (PPP) loans or helping individuals manage their day-to-day finances, Hillebrand said.

“I think the COVID-19 pandemic has frankly highlighted the value of community banking and how important it is to have a relationship with your local banker,” he said.

Stock Yards Bank was an active participant in the PPP. It has facilitated and issued about $1 billion in PPP loans, Hillebrand said.

Banks lent their money to cover a range of business costs associated with keeping employees on their private payrolls; the federal government repays a fixed amount of loans to companies that have complied with PPP rules. Some $800 billion in PPP loans have been guaranteed nationwide, according to the Small Business Administration.

After initially serving existing customers, Stock Yards Bank opened its expertise in guiding PPP loans to new customers and attracted more than 600 new business customers during the two rounds of loans authorized and financed by the Congress. Bank staff worked around the clock for the first three weeks of the program to process the loans, Hillebrand said.

This response to the pandemic demonstrates the value of community banking, he said, by providing access to solutions and technology delivered in a personalized and accessible way.

“Community banking means that when people come to our branches, we have to make sure that we have enough people and the right experienced people in those branches to meet all of their needs,” he said. “We can’t send them to an 800 number. We can’t let them wait in long lines. We have to make sure we have enough staff in those branches.

Lots of interest in mergers and acquisitions
The banking sector normally sees both new entrants and consolidations. Cassady is monitoring activity across the state and the country and said discussions of mergers and acquisitions are a trend “that continues everywhere … mainly due to the cost of banking, changes in technology, the difficulty of … keeping up with the Joneses.”

There are always economies of scale to be had in meeting ever-increasing compliance obligations.

“If you take a look at everyday community banking — which we have a lot of in Kentucky — every time you add a new regulation, a new accounting principle (to provide data), other things that they talk about at Washington (or ) to the IRS, environmental issues, (the) costs are going up,” Cassady said. “The bigger you are, the easier you can handle.”

He described the merger with Kentucky Bank as “a great move by Stock Yards Bank. Kentucky Bank was an extremely well run bank.
Kentucky is a big market for banks, Cassady said. While other states are much larger in dollar terms, the conservative principles that define Commonwealth banking practices produce steady, reliable growth without major ups and downs. He pitted the Bluegrass State against Texas, whose large energy and technology sectors are producing a growth curve with big ups and downs.
“Kentucky is diverse: plain vanilla can taste good sometimes,” he said.

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