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In Kentucky, New Hazard Bancorp seeking to acquire Hazard Bancorp for $10.5M

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In Kentucky, New Hazard Bancorp seeking to acquire Hazard Bancorp for $10.5M

Lexington, Ky.-based New Hazard Bancorp Inc. in June applied with the Federal Reserve Bank of Cleveland to acquire Hazard, Ky.-based Hazard Bancorp's outstanding capital stock for roughly $10.5 million.

The deal agreement was signed March 21, according to the application submitted with the regulator.

In addition to the cash paid at closing, Hazard Bancorp shareholders are entitled to receive contingent cash payments to be made subsequent to the closing of the transaction. The additional payments will be subject to approval of any special dividend.

The transaction is expected to close at the end of the third quarter or during the fourth quarter. It will result in New Hazard becoming the sole shareholder of Hazard Bancorp unit Peoples Bank & Trust Co. of Hazard.

S&P Global Market Intelligence calculates the deal is 119.3% of common equity and 146.8% of tangible common equity, on an aggregate basis. The deal value is 4.19% of assets, 4.49% of deposits and it has a tangible book premium to core deposits ratio of 1.95%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between March 21, 2018, and March 21, 2019, averaged 159.30% of book and 169.93% of tangible book and had a median of 20.40x last-12-months earnings, on an aggregate basis.

Hazard Bancorp operates seven branches in Perry County, Ky., ranked first with a 39.08% share of approximately $611.46 million in total market deposits.

New Hazard plans to fund the deal with cash from net proceeds in its sale of preferred stock in an offering together with a loan, which is secured by Peoples Bank & Trust common shares, to be made by Bankers' Bank of Kentucky Inc.

Hazard Bancorp will pay New Hazard a termination fee of $350,000 if the deal falls through under certain circumstances.

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