Merger announcement - November 15, 2017

It was announced that the Bancorp of Lexington, Inc. and its subsidiary bank, Bank of Lexington has agreed to a sale with First Breckinridge Bancshares, a multi -bank holding company headquartered in Irvington, KY. and Meade Bancorp Inc. its lead bank, as reported by SNL and S & P Global Market Intelligence.

The purchase price or terms of the deal were not disclosed, however SNL stated that valuations for bank and thrift targets in the Midwest between November of 2016 and November of 2017 averaged 161.04% of book, 166.67% of tangible book and had a median of 19.54x last -12- months earnings on an aggregate basis. The transaction is expected to close during the first quarter of 2018 and is subject to shareholder and regulatory approval.

The Lexington bank has three locations including Malabu Drive, Polo Club Lane and Corporate Drive in Lexington, KY. Bank of Lexington is the 6^th largest bank in Fayette County holding a 2.92% share in a county which contains 28 banks with 115 offices.  Other than the Bank of Lexington, only four remaining banks are headquartered in Lexington, Fayette County, Kentucky. Those banks are Central Bank, Bank of the Bluegrass, Forcht Bank and Whitaker Bank.

The Bank of Lexington has assets totaling $260 million with a ROA of around .8%.  Loans for the Lexington based company increased less than 1% this past year.  Deposits increased approximately 2.5%.   The lack of loan growth may have been hampered by their loan to deposit ratio which was in excess of 100% as of June 30, 2017.

The Fayette County SMSA encompasses financial institutions in Fayette, Bourbon, Clark, Jessamine, Scott and Woodford Counties and include familiar cities such as Georgetown, Nicholasville, Winchester, Paris, Versailles, etc.  There are 37 banks and 184 offices with deposits totaling $9.7 Billion which is the second largest in the state. The Lexington market is one of the fastest growing in the state of Kentucky.

Bank of Lexington’s management and lending team have the potential to produce more loans given their ultimate merger with First Breckinridge.

First Breckinridge has slowly been growing its franchise with a unique approach given today’s efficiency focused institutions.  First Breckinridge typically allows their banks to maintain their own charter and name.  While most bankers across the Commonwealth are familiar with that approach, nearly all banks saw it disappear with the efficiency experts of the 90’s.  With Return on Assets more than 1.00%, the bank holding company is doing well compared to some of their peers in even stronger growth markets. 

According to their CEO, Blake Willoughby, the company holds true to their community bank image and culture focusing on serving the local community with local people.  Often-times the banks purchased will be allowed to maintain current management and staff which is very important to the existing customer base of most banks when sold.

The holding company, First Breckinridge Bancshares currently owns five banks with 20 offices in Breckinridge, Warren, Jefferson, Hardin and Grayson Counties and if approved will add their sixth bank with the Lexington purchase in Fayette County.

The current assets of First Breckinridge total approximately $1.1 Billion and the Lexington bank will add another $260 Million once the purchase is approved.