The Federal Reserve has approved the application of Peoples Bancorp Inc. to merge with Citizens National Corporation and acquire its subsidiary, Citizens Bank of Kentucky, Inc. The proposed transaction would result in Peoples Bancorp controlling approximately $8.2 billion in consolidated deposits, representing less than 1% of the total deposits of insured depository institutions in the United States. In Kentucky, the combined organization would control approximately $2.2 billion in deposits, representing 1.8% of the total deposits of insured depository institutions in the state.
The Federal Reserve considered the competitive effects of the proposal in three banking markets: the Lexington, Kentucky, market; the Pikeville, Kentucky, market; and the Huntington-Ashland, West Virginia-Kentucky-Ohio market. The Board found that the proposal would not have a significantly adverse effect on competition in the Lexington and Huntington-Ashland markets. However, in the Pikeville market, the concentration levels would exceed the thresholds in the 1995 Bank Merger Guidelines, warranting a detailed review.
The Board considered factors that mitigate the competitive effects of the proposal, including the presence of a qualifying credit union in the Pikeville market and the availability of small business loan originations data. The Department of Justice conducted a review of the potential competitive effects of the proposal and did not conclude that it would have a significantly adverse effect on competition.
The Federal Reserve also considered the financial, managerial, and other supervisory factors of the proposal. Peoples Bancorp and Peoples Bank are well capitalized and would remain so upon consummation of the proposal. The proposed transaction is structured as a combination of a share exchange and cash distribution, with a subsequent merger of Citizens Bank with and into Peoples Bank. The Board found that the capital, asset quality, earnings, and liquidity of Peoples Bancorp and Peoples Bank are consistent with approval, and that the institutions have adequate resources to absorb the related costs of the proposal and to complete the integration of the institutions' operations.
The Board also considered the managerial resources of the organizations involved and of the proposed combined organization. Peoples Bancorp and Peoples Bank are each considered to be well managed, and the combined organization's proposed directors and senior executive officers have knowledge of and experience in the banking and financial services sectors.