United States

Stock Yards Bancorp Reports Record 2022 Earnings and Strong Fourth Quarter Earnings of $29.8 Million or $1.01 Per Diluted Share

Results Highlighted by Continued Strong Organic Loan Growth and Net Interest Margin Expansion

LOUISVILLE, Ky., Jan. 25, 2023 (GLOBE NEWSWIRE) — Stock Yards Bancorp, Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust Company, with offices in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets, today reported record earnings for the fourth quarter ended December 31, 2022, of $29.8 million, or $1.01 per diluted share. This compares to net income of $24.6 million, or $0.92 per diluted share, for the fourth quarter of 2021. Organic loan growth across all markets and expanded net interest margin (NIM) contributed to strong fourth quarter 2022 operating results.

       
(dollar amounts in thousands, except per share data)   4Q22     3Q22     4Q21  
Net income $ 29,817   $ 28,455   $ 24,589  
Net income per share, diluted   1.01     0.97     0.92  
       
Net interest income $ 65,263   $ 62,376   $ 46,182  
Provision for credit loss expense(6)   3,375     4,803     (1,900 )
Non-interest income   23,142     24,864     18,604  
Non-interest expenses   45,946     44,873     34,572  
       
Net interest margin   3.64 %   3.46 %   3.07 %
Efficiency ratio(4)   51.85 %   51.30 %   53.24 %
Tangible common equity to tangible assets(1)   7.44 %   6.78 %   8.22 %
Annualized return on average equity(7)   15.99 %   14.85 %   14.60 %
Annualized return on average assets(7)   1.56 %   1.47 %   1.52 %
       

“We delivered excellent fourth quarter and full year 2022 results, highlighted by strong loan growth, NIM expansion and improving capital levels since our merger earlier this past year,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “Strong fourth quarter net loan growth (excluding PPP loans) of $134 million was well diversified within loan categories and across all of our markets. While we generated the strongest annual organic loan growth year in our history, we anticipate overall growth moderating towards historical averages in 2023. On the linked quarter, total deposits declined $110 million, primarily due to the contraction in non-interest bearing demand deposit balances. While we are not seeing fallout within our customer base, we anticipate deposit pricing to be a challenge to future NIM expansion.”

“Non-interest income for the fourth quarter aligned with the prior quarter, and significantly exceeded the same period of the prior year. Solid wealth management and trust fees along with record treasury management and card income served to cap off a strong fee income year for us,” continued Hillebrand. “Similar to the prior quarter, we executed several cost saving measures related to our first quarter Commonwealth Bancshares acquisition and disposed of certain overlapping properties, resulting in a non-recurring pre-tax gain of $1.3 million. Additionally, we sold our interest in an investment advisor subsidiary that we acquired from Commonwealth, resulting in a non-recurring pre-tax loss of $870,000. This line of business was not within our geographic footprint and did not ultimately align with our long-term strategic model.”

At December 31, 2022, the Company had $7.50 billion in assets, $5.21 billion in loans and $6.39 billion in total deposits. The Company’s combined enterprise, which encompasses 73 branch offices across three contiguous states, will continue to benefit from a diversified geographic footprint and provide significant growth opportunities in both the banking and wealth management arenas.

Key factors contributing to the fourth quarter of 2022 results included:

  • Total loans, excluding PPP loans, grew $134 million, or 3%, on a linked quarter basis. Total loan production remained strong for the fourth consecutive quarter.
  • Deposit balances declined $110 million, or 2%, on a linked quarter basis, as non-interest bearing demand deposit balances contracted $250 million offset by increases in interest bearing demand deposits.
  • Net interest income increased $19.1 million, or 41%, for the fourth quarter of 2022 compared to the fourth quarter a year ago, consistent with the $1.14 billion, or 19%, increase in average earning assets and the increase in spread. Higher loan yields and volume more than offset significantly lower fee income recognition from the declining PPP loan portfolio.
  • NIM improved for the fourth consecutive quarter, increasing 18 basis points on a linked quarter basis to 3.64%.
  • Current credit quality remains solid; however, consistent with strong loan growth and the increase in the projected unemployment rate forecast used in modeling, $3.4 million of net credit loss expense(6) was recorded for the fourth quarter of 2022. Included in credit loss expense for the fourth quarter of 2022 was a $1.6 million specific reserve for a commercial real estate loan.
  • Non-interest income increased by $4.5 million, or 24%, over the fourth quarter of 2021, as customer expansion and recent acquisitions once again drove record quarterly card income and treasury management fees. Also, as previously mentioned, the Company disposed of certain overlapping acquired properties, resulting in a non-recurring pre-tax gain of $1.3 million.
  • Net new business growth and market improvement in both the fixed income and equity markets drove linked quarter improvements in wealth management and trust income, as well as growth in assets under management.
  • The Company sold its partial interest in an investment advisor subsidiary that was acquired from Commonwealth Bancshares in March of 2022, realizing a non-recurring pre-tax loss of $870,000 during the quarter.
  • Total non-interest expenses remained controlled and consistent with management expectations, generating an efficiency ratio of 51.85%(4) for the fourth quarter of 2022.
  • Tangible book value per share was $18.50(1) at December 31, 2022, compared to $16.98(1) at September 30, 2022, and $20.09(1) at December 31, 2021. During 2022, tangible common equity and tangible book value have been significantly impacted by the marked increase in interest rates and the related negative impact on accumulated other comprehensive income/loss, leading to a $108 million reduction in equity, primarily as a result of unrealized losses in the available for sale debt securities portfolio. These securities, which management has the ability and intent to hold to maturity, are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses.

Highlights for the year ended December 31, 2022:

  • Nine months of activity generated by the Commonwealth Bancshares merger exceeded management expectations and boosted overall operating results.
  • Loans (excluding PPP) grew $1.16 billion, or 29%, over the past 12 months with $630 million of the growth attributed to the acquisition.
  • Excluding the acquisition, organic loan growth totaled $529 million, or 13%, over the past 12 months.
  • Inclusive of the first quarter acquisition, deposit balances grew by $604 million, or 10%, over the past 12 months. Non-interest bearing deposits and interest bearing demand deposits represented $194 million and $410 million of the growth, respectively.
  • Higher loan yield expansion accompanied with a reduction in excess balance sheet liquidity led to NIM expanding 13 basis points in 2022 over 2021.
  • Wealth management and trust income reached and surpassed record levels during the year, increasing $8.5 million, or 31%, over the past 12 months, with net new business more than offsetting the current market volatility.
  • Customer expansion and transaction growth have led to record 2022 card and treasury management income.

Hillebrand said, “In November, we were once again nationally recognized by American Banker Magazine as one of the Best Banks to Work for in 2022. The Best Banks to Work For program identifies and honors U.S. banks for outstanding employee satisfaction. In addition, in September, we were one of 35 banks in the U.S. to be named a “Sm-All Star” in Piper Sandler’s annual list of top-performing small-cap banks. This elite annual list reflects the top 10% of the industry across a number of metrics including growth, profitability, credit quality and capital strength. We have now been named a Sm-All Star five times – 2008, 2011, 2019, 2020 and 2022. These recognitions are an honor and a testament to the dedication of our employees, who continue to work purposefully to support our communities.”

“During the fourth quarter of 2022, we published our inaugural Environmental, Social and Governance (“ESG”) Corporate Responsibility Report,” Hillebrand continued. “While ESG reporting is not mandatory, we believe it provides important information on our operations and management priorities. This report identifies ongoing practices and recent accomplishments in the areas of environmental risk and impact management, social responsibility, including diversity, equity and inclusion, and governance. We hold a strong commitment to developing and maintaining a solid ESG program, and this report allows us to give our stakeholders an even more transparent look into our best practices.”

To learn more about the Bank’s ESG efforts and view the report, please visit the ESG report tab under Resources at www.syb.com.

Results of Operations – Fourth Quarter 2022 Compared with Fourth Quarter 2021

Net interest income, the Company’s largest source of revenue, increased 41%, or $19.1 million, to $65.3 million, primarily due to average earning asset growth and rate increases. Organic growth, and to a greater extent the recent acquisitions, have boosted net interest income over the past 12 months.

  • Total interest income increased by $27.6 million, or 58%, to $75.2 million.
    • Interest income on loans increased $20.4 million, or 47%, over the prior year quarter. Consistent with the $1.07 billion increase in average non-PPP loans, and interest rate increases, the average quarterly yield earned on non-PPP loans increased 103 basis points over the past 12 months to 5.00%. PPP interest and fee income totaled $118,000 and $3.7 million for the fourth quarters of 2022 and 2021, respectively.
    • Interest income on debt securities increased $5.5 million compared to the fourth quarter of 2021, driven by average balance growth of $687 million and significantly improved yields on recent purchases stemming from rising rates.
    • Interest income on overnight funds increased $1.9 million over the prior year quarter. The FRB has increased the rate paid on reserve balances meaningfully during 2022, which has significantly benefitted interest income.
  • Total interest expense increased $8.6 million to $9.9 million, as the cost of interest bearing liabilities increased 72 basis points to 0.86%.
  • NIM expanded 57 basis points to 3.64% for the fourth quarter of 2022, from 3.07% for the fourth quarter a year ago, primarily due to higher loan yields and volume, which more than offset significantly lower fee income recognition from the declining PPP loan portfolio.

The Company recorded $3.4 million in provision for credit losses(6) during the fourth quarter of 2022, which included a $3.6 million provision for credit losses on loans and a $225,000 benefit to credit loss expense for off-balance sheet exposures. Significant loan growth during the quarter and the increase in the unemployment projection drove additional provision expense within the CECL allowance model. In addition, the Bank recorded a $1.6 million specific reserve for a commercial real estate loan during the fourth quarter of 2022. This was the primary driver of the increase in non-performing loans for the quarter.

Non-interest income increased $4.5 million, or 24%, to $23.1 million, with the recent acquisitions contributing significantly to revenue growth.

  • Wealth management and trust income ended the fourth quarter of 2022 at $9.2 million, increasing $1.8 million, or 25%, over the fourth quarter of 2021. Net new business growth and market improvement in both fixed income and equity markets drove the linked quarter improvement in assets under management and asset-based fees.
  • Card income increased $1.0 million, or 26%, over the fourth quarter of 2021, as card activity continues to benefit from generally strong spending trends and customer expansion.
  • Treasury management fees increased $407,000, or 22%, driven by increased transaction volume, expanded foreign exchange income, new product sales and both organic and acquisition-related customer base expansion. Continued calling efforts and the Company’s ability to generate new fee income has been the catalyst for this growth trend.
  • Mortgage banking income, which primarily consists of gain on sale of loans, net servicing income and mortgage servicing rights amortization, totaled $209,000 for the fourth quarter of 2022, down significantly compared to the fourth quarter a year ago. Overall volume in 2022 has cooled dramatically consistent with rising interest rates.
  • Consistent with the third quarter of 2022, the Company disposed of certain overlapping properties acquired from the March Commonwealth acquisition, resulting in a non-recurring pre-tax gain of $1.3 million during the fourth quarter of 2022.

Non-interest expenses increased $11.4 million, or 33%, compared to the fourth quarter of 2021, to $45.9 million.

  • Compensation and employee benefits expense increased $6.3 million, or 36%, primarily due to the increase in full time equivalent employees associated with the recent acquisitions. Consistent with organic and acquisition related expansion, full time equivalent employees increased to 1,040 at December 31, 2022 from 820 at December 31, 2021.
  • Net occupancy and equipment expenses increased $1.2 million, or 44%, compared to the fourth quarter a year ago. In connection with the recent acquisition, a total of ten branches were added in addition to operational buildings.
  • Technology and communication expenses, which includes computer software amortization, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources, increased $791,000, or 27%, consistent with an increase in customer accounts and core system upgrades.
  • Intangible amortization expense increased $1.3 million consistent with the increase in customer intangible assets related to the first quarter acquisition.
  • The Company sold its partial interest in an investment adviser subsidiary that was acquired from Commonwealth Bancshares in March of 2022, realizing a non-recurring pre-tax loss of $870,000 during the quarter.
  • Other non-interest expenses increased $606,000, or 25%, primarily due to increased credit card rewards expense, and fraud losses.

Financial Condition – December 31, 2022 Compared with December 31, 2021

Total assets increased $850 million, or 13%, year over year to $7.50 billion, boosted by stellar organic growth and the recent acquisition.

Total loans increased $1.04 billion year over year, or 25%, to $5.21 billion. Excluding the PPP loan portfolio, total loans increased $1.2 billion, or 29%, over the past 12 months, with approximately $630 million of the growth attributable to the first quarter acquisition.

Total investment securities have increased $438 million, or 37%, year over prior year, as the Company added $247 million in securities in the first quarter Commonwealth acquisition and deployed a significant amount of excess cash into securities during the first part of the year.

Inclusive of the Commonwealth acquisition, total deposits increased $604 million, or 10%, over the past 12 months.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the fourth quarter of 2022, the Company recorded net loan charge-offs of $152,000, compared to $1.5 million in the fourth quarter of 2021. Non-performing loans totaled $15.1 million, or 0.29% of total loans outstanding compared to $7.4 million, or 0.18% of total loans outstanding at December 31, 2021. The ratio of allowance for credit losses to loans (excluding PPP) ended at 1.42%(2) at December 31, 2022 compared to 1.34%(2) at December 31, 2021.

At December 31, 2022, the Company continued to be “well-capitalized,” the highest regulatory capital rating for financial institutions, with all capital ratios remaining strong. Total equity to assets was 10.14%(1) and the tangible common equity ratio was 7.44%(1) at December 31, 2022, compared to 10.17%(1) and 8.22%(1) at December 31, 2021, respectively. The increase in interest rates during 2022 have led to outsized unrealized losses within the available for sale debt securities portfolio, with the decline in accumulated other comprehensive income/loss driving down the tangible common equity ratio.

In November 2022, the board of directors declared a quarterly cash dividend of $0.29 per common share. The dividend was paid December 30, 2022, to shareholders of record as of December 19, 2022.

No shares were repurchased in 2022 or 2021 and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan, which expires in May 2023.

Results of Operations – Fourth Quarter 2022 Compared with Third Quarter 2022

Net interest income increased $2.9 million, or 5%, over the prior quarter to $65.3 million, led by the increase in earning assets and rising rates. NIM improved for the fourth consecutive quarter, increasing 18 basis points on a linked quarter basis to 3.64%.

The Company recorded $3.4 million in provision for credit losses(6) during the fourth quarter of 2022, which included a $3.6 million provision for credit losses on loans and a $225,000 benefit to credit loss expense for off-balance sheet exposures. Solid loan growth during the quarter and the increase in the unemployment projection drove provision expense within the CECL allowance model. In addition, the Bank recorded a $1.6 million specific reserve for a commercial real estate loan. During the third quarter of 2022, the Company recorded $4.8 million in provision for credit loss expense, which included a $4.1 million provision for credit losses on loans and a $700,000 provision for credit loss expense for off-balance sheet exposures.

Non-interest income decreased $1.7 million, or 7%, to $23.1 million on the linked quarter. As previously mentioned, the Company disposed of certain overlapping acquired properties, resulting in a non-recurring pre-tax gain of $1.3 million during the fourth quarter of 2022 compared to a $3.1 million similar gain during the third quarter of 2022. While mortgage banking income declined $494,000 on the linked quarter, card income and wealth management and trust income increased $336,000 and $69,000, respectively.

Non-interest expenses increased $1.1 million to $45.9 million led by the previously mentioned loss recorded on the disposition of the Company’s interest in an investment advisor subsidiary.

Financial Condition – December 31, 2022 Compared with September 30, 2022

Total assets decreased $58 million, or 1%, on a linked quarter basis to $7.50 billion.

Total loans (excluding PPP) increased $134 million, or 3%, on a linked quarter basis, with meaningful increases across the Commercial & Industrial, Construction & Land Development and Residential Real Estate portfolios. Total line of credit usage reached its highest level in two years, increasing to 42% as of December 31, 2022, compared to 40% as of September 30, 2022. Commercial and industrial line usage increased to 33% as of December 31, 2022, compared to 30% as of September 30, 2022.

Total deposits decreased $110 million, or 2%, on a linked quarter basis, with non-interest bearing demand deposit balances contracting $250 million. Total interest bearing deposits increased $140 million, on a linked quarter basis, led by a $203 million increase in interest bearing demand deposit accounts offset by contraction in savings, money market and time deposits.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.50 billion in assets, was incorporated in 1988 as a bank holding company. It is the parent company of Stock Yards Bank & Trust Company, which was established in 1904. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “SYBT.”

This report contains forward-looking statements under the Private Securities Litigation Reform Act that involve risks and uncertainties. Although the Company’s management believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Therefore, there can be no assurance the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from those discussed in forward-looking statements include, but are not limited to: economic conditions both generally and more specifically in the markets in which the Company and its banking subsidiary operates; competition for the Company’s customers from other providers of financial services; changes in, or forecasts of, future political and economic conditions, inflation and efforts to control it; government legislation and regulation, which change and over which the Company has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of the Company’s customers; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. Refer to Stock Yards’ Annual Report on Form 10-K for the year ended December 31, 2021, as well as its other filings with the SEC for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
Fourth Quarter 2022 Earnings Release                        
(In thousands unless otherwise noted)                        
    Three Months Ended   Twelve Months Ended        
    December 31,   December 31,        
Income Statement Data   2022   2021   2022   2021        
                         
Net interest income, fully tax equivalent (3)   $ 65,469   $ 46,328   $ 234,267   $ 171,508        
Interest income:                        
Loans   $ 64,033   $ 43,671   $ 216,138   $ 164,073        
Federal funds sold and interest bearing due from banks   2,173   287   6,018   645        
Mortgage loans held for sale   13   74   190   249        
Securities   8,931   3,476   29,306   12,109        
Total interest income   75,150   47,508   251,652   177,076        
Interest expense:                        
Deposits   9,022   1,279   16,412   5,627        
Securities sold under agreements to repurchase and                        
other short-term borrowings   399   11   721   38        
Federal Home Loan Bank advances   12   36   12   337        
Subordinated debentures   454     1,124          
Total interest expense   9,887   1,326   18,269   6,002        
Net interest income   65,263   46,182   233,383   171,074        
Provision for credit losses (6)   3,375   (1,900)   10,257   (753)        
Net interest income after provision for credit losses   61,888   48,082   223,126   171,827        
Non-interest income:                        
Wealth management and trust services   9,221   7,379   36,111   27,613        
Deposit service charges   2,183   1,907   8,286   5,852        
Debit and credit card income   5,046   4,012   18,623   13,456        
Treasury management fees   2,278   1,871   8,590   6,912        
Mortgage banking income   209   1,062   3,210   4,724        
Net investment product sales commissions and fees   833   764   3,063   2,553        
Bank owned life insurance   545   272   1,597   914        
Gain (Loss) on sale of premises and equipment   1,295   (37)   4,369   (78)        
Other   1,532   1,374   5,300   3,904        
Total non-interest income   23,142   18,604   89,149   65,850        
Non-interest expenses:                        
Compensation   23,398   17,146   86,640   63,034        
Employee benefits   3,421   3,189   16,568   13,479        
Net occupancy and equipment   3,843   2,667   14,298   9,688        
Technology and communication   3,747   2,956   14,897   11,145        
Debit and credit card processing   1,470   1,334   5,909   4,494        
Marketing and business development   1,544   1,793   5,005   4,150        
Postage, printing and supplies   893   714   3,354   2,213        
Legal and professional   492   755   2,943   2,583        
FDIC Insurance   730   706   2,758   1,847        
Amortization of investments in tax credit partnerships   88   52   353   367        
Capital and deposit based taxes   799   549   2,621   2,090        
Merger expenses       19,500   19,025        
Federal Home Loan Bank early termination penalty         474        
Intangible amortization   1,610   276   5,544   770        
Loss on disposition of Landmark Financial Advisors   870     870          
Other   3,041   2,435   10,531   6,921        
Total non-interest expenses   45,946   34,572   191,791   142,280        
Income before income tax expense   39,084   32,114   120,484   95,397        
Income tax expense   9,174   7,525   27,190   20,752        
Net income   29,910   24,589   93,294   74,645        
Less: income attributed to non-controlling interest   93     322          
Net income available to stockholders   $ 29,817   $ 24,589   $ 92,972   $ 74,645        
                         
Net income per share – Basic   $ 1.02   $ 0.93   $ 3.24   $ 3.00        
Net income per share – Diluted   1.01   0.92   3.21   2.97        
Cash dividend declared per share   0.29   0.28   1.14   1.10        
                         
Weighted average shares – Basic   29,157   26,492   28,672   24,898        
Weighted average shares – Diluted   29,428   26,800   28,922   25,156        
                         
        December 31,        
Balance Sheet Data           2022   2021        
                         
Investment securities           $ 1,617,834   $ 1,180,298        
Loans           5,205,918   4,169,303        
Allowance for credit losses on loans           73,531   53,898        
Total assets           7,496,261   6,646,025        
Non-interest bearing deposits           1,950,198   1,755,754        
Interest bearing deposits           4,441,054   4,031,760        
Federal Home Loan Bank advances           50,000          
Subordinated debentures           26,343          
Stockholders’ equity           760,432   675,869        
Total shares outstanding           29,259   26,596        
Book value per share (1)           $ 25.99   $ 25.41        
Tangible common equity per share (1)           18.50   20.09        
Market value per share           64.98   63.88        
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
Fourth Quarter 2022 Earnings Release                        
                         
    Three Months Ended   Twelve Months Ended        
    December 31,   December 31,        
Average Balance Sheet Data   2022   2021   2022   2021        
                         
Federal funds sold and interest bearing due from banks   $ 235,448   $ 699,222   $ 477,341   $ 446,783        
Mortgage loans held for sale   6,735   12,556   8,835   11,170        
Investment securities   1,786,383   1,099,235   1,670,324   898,934        
Federal Home Loan Bank stock   10,928   9,376   11,741   10,824        
Loans   5,094,356   4,172,676   4,819,124   3,951,257        
Total interest earning assets   7,133,850   5,993,065   6,987,365   5,318,968        
Total assets   7,559,260   5,935,146   7,438,880   5,626,886        
Interest bearing deposits   4,428,582   3,798,666   4,385,393   3,302,262        
Total deposits   6,526,440   5,559,577   6,438,606   4,881,057        
Securities sold under agreement to repurchase and other short term borrowings   117,138   86,911   122,154   73,130        
Federal Home Loan Bank advances   1,087   7,174   274   16,317        
Subordinated debentures   26,309     21,733          
Total interest bearing liabilities   4,582,005   3,892,751   4,538,911   3,391,709        
Total stockholders’ equity   740,007   668,287   738,798   573,261        
                         
Performance Ratios                        
Annualized return on average assets (7)   1.56%   1.52%   1.25%   1.33%        
Annualized return on average equity (7)   15.99%   14.60%   12.58%   13.02%        
Net interest margin, fully tax equivalent   3.64%   3.07%   3.35%   3.22%        
Non-interest income to total revenue, fully tax equivalent   27.56%   28.65%   26.12%   27.74%        
Efficiency ratio, fully tax equivalent (4)   51.85%   53.24%   59.30%   59.94%        
                         
Capital Ratios                        
Total stockholders’ equity to total assets (1)           10.14%   10.17%        
Tangible common equity to tangible assets (1)           7.44%   8.22%        
Average stockholders’ equity to average assets           9.93%   10.19%        
Total risk-based capital           12.54%   12.79%        
Common equity tier 1 risk-based capital           11.47%   11.94%        
Tier 1 risk-based capital           11.04%   11.94%        
Leverage           9.33%   8.86%        
                         
Loan Segmentation                        
Commercial real estate – non-owner occupied           $ 1,397,346   $ 1,128,244        
Commercial real estate – owner occupied           834,629   678,405        
Commercial and industrial           1,230,976   967,022        
Commercial and industrial – PPP           18,593   140,734        
Residential real estate – owner occupied           591,515   400,695        
Residential real estate – non-owner occupied           313,248   281,018        
Construction and land development           445,690   299,206        
Home equity lines of credit           200,725   138,976        
Consumer           139,461   104,294        
Leases           13,322   13,622        
Credit cards           20,413   17,087        
Total loans and leases           $ 5,205,918   $ 4,169,303        
                         
Asset Quality Data                        
Non-accrual loans           $ 14,242   $ 6,712        
Troubled debt restructurings             12        
Loans past due 90 days or more and still accruing           892   684        
Total non-performing loans           15,134   7,408        
Other real estate owned           677   7,212        
Total non-performing assets           $ 15,811   $ 14,620        
Non-performing loans to total loans (2)           0.29%   0.18%        
Non-performing assets to total assets           0.21%   0.22%        
Allowance for credit losses on loans to total loans (2)           1.41%   1.29%        
Allowance for credit losses on loans to average loans           1.53%   1.36%      
Allowance for credit losses on loans to non-performing loans           486%   728%        
Net (charge-offs) recoveries   $ (152)   $ (1,535)   $ 1   $ (6,176)        
Net (charge-offs) recoveries to average loans (5)   0.00%   -0.04%   0.00%   -0.16%        
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
Fourth Quarter 2022 Earnings Release                        
                         
    Quarterly Comparison    
Income Statement Data   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Net interest income, fully tax equivalent (3)   $ 65,469   $ 62,608   $ 57,244   $ 48,944   $ 46,328    
Net interest income   $ 65,263   $ 62,376   $ 56,984   $ 48,760   $ 46,182    
Provision for credit losses (6)   3,375   4,803   (200)   2,279   (1,900)    
Net interest income after provision for credit losses   61,888   57,573   57,184   46,481   48,082    
Non-interest income:                        
Wealth management and trust services   9,221   9,152   9,495   8,243   7,379    
Deposit service charges   2,183   2,179   2,061   1,863   1,907    
Debit and credit card income   5,046   4,710   4,748   4,119   4,012    
Treasury management fees   2,278   2,221   2,187   1,904   1,871    
Mortgage banking income   209   703   1,295   1,003   1,062    
Net investment product sales commissions and fees   833   892   731   607   764    
Bank owned life insurance   545   516   270   266   272    
Gain (Loss) on sale of premises and equipment   1,295   3,074       (37)    
Other   1,532   1,417   1,153   1,198   1,374    
Total non-interest income   23,142   24,864   21,940   19,203   18,604    
Non-interest expenses:                        
Compensation   23,398   23,069   22,204   17,969   17,146    
Employee benefits   3,421   4,179   4,429   4,539   3,189    
Net occupancy and equipment   3,843   3,767   3,663   3,025   2,667    
Technology and communication   3,747   3,747   3,984   3,419   2,956    
Debit and credit card processing   1,470   1,437   1,665   1,337   1,334    
Marketing and business development   1,544   1,244   1,445   772   1,793    
Postage, printing and supplies   893   903   825   733   714    
Legal and professional   492   774   1,027   650   755    
FDIC Insurance   730   847   536   645   706    
Amortization of investments in tax credit partnerships   88   88   89   88   52    
Capital and deposit based taxes   799   722   582   518   549    
Merger expenses         19,500      
Intangible amortization   1,610   1,610   1,611   713   275    
Loss on disposition of Landmark Financial Advisors   870            
Other   3,041   2,486   2,615   2,389   2,436    
Total non-interest expenses   45,946   44,873   44,675   56,297   34,572    
Income before income tax expense   39,084   37,564   34,449   9,387   32,114    
Income tax expense   9,174   9,024   7,547   1,445   7,525    
Net income   29,910   28,540   26,902   7,942   24,589    
Less: income attributed to non-controlling interest   93   85   108   36      
Net income available to stockholders   $ 29,817   $ 28,455   $ 26,794   $ 7,906   $ 24,589    
                         
                         
Net income per share – Basic   $ 1.02   $ 0.98   $ 0.92   $ 0.29   $ 0.93    
Net income per share – Diluted   1.01   0.97   0.91   0.29   0.92    
Cash dividend declared per share   0.29   0.29   0.28   0.28   0.28    
                         
Weighted average shares – Basic   29,157   29,144   29,131   27,230   26,492    
Weighted average shares – Diluted   29,428   29,404   29,346   27,485   26,800    
                         
    Quarterly Comparison    
Balance Sheet Data   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Cash and due from banks   $ 82,515   $ 93,948   $ 88,422   $ 109,799   $ 62,304    
Federal funds sold and interest bearing due from banks   84,852   235,973   485,447   641,892   898,888    
Mortgage loans held for sale   2,606   5,230   10,045   9,323   8,614    
Investment securities   1,617,834   1,627,298   1,625,488   1,698,546   1,180,298    
Federal Home Loan Bank stock   10,928   10,928   13,811   13,811   9,376    
Loans   5,205,918   5,072,877   4,877,324   4,847,683   4,169,303    
Allowance for credit losses on loans   73,531   70,083   66,362   67,067   53,898    
Goodwill   194,074   202,524   202,524   202,524   135,830    
Total assets   7,496,261   7,554,210   7,583,105   7,777,152   6,646,025    
Non-interest bearing deposits   1,950,198   2,200,041   2,121,304   2,089,072   1,755,754    
Interest bearing deposits   4,441,054   4,300,732   4,427,826   4,656,419   4,031,760    
Securities sold under agreements to repurchase   133,342   124,567   161,512   142,146   75,466    
Federal funds purchased   8,789   8,970   8,771   8,920   10,374    
Federal Home Loan Bank advances   50,000            
Subordinated debentures   26,343   26,244   26,144   26,045      
Stockholders’ equity   760,432   727,754   747,131   758,143   675,869    
Total shares outstanding   29,259   29,242   29,243   29,220   26,596    
Book value per share (1)   25.99   $ 24.89   $ 25.55   $ 25.95   $ 25.41    
Tangible common equity per share (1)   18.50   16.98   17.59   17.92   20.09    
Market value per share   64.98   68.01   59.82   52.90   63.88    
                         
Capital Ratios                        
Total stockholders’ equity to total assets (1)   10.14%   9.63%   9.85%   9.75%   10.17%    
Tangible common equity to tangible assets (1)   7.44%   6.78%   7.00%   6.94%   8.22%    
Average stockholders’ equity to average assets   9.79%   9.92%   9.79%   10.24%   10.43%    
Total risk-based capital   12.54%   12.16%   12.27%   12.14%   12.79%    
Common equity tier 1 risk-based capital   11.47%   10.69%   10.81%   10.66%   11.94%    
Tier 1 risk-based capital   11.04%   11.13%   11.26%   11.12%   11.94%    
Leverage   9.33%   8.85%   8.58%   9.34%   8.86%    
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
Fourth Quarter 2022 Earnings Release                        
                         
    Quarterly Comparison    
Average Balance Sheet Data   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Federal funds sold and interest bearing due from banks   $ 235,448   $ 442,880   $ 561,101   $ 671,263   $ 699,222    
Mortgage loans held for sale   6,735   8,694   11,303   8,629   12,556    
Investment securities   1,786,383   1,769,597   1,741,844   1,321,551   1,099,235    
Loans   5,094,356   4,948,898   4,846,013   4,377,930   4,172,676    
Total interest earning assets   7,133,850   7,181,781   7,174,072   6,389,882   5,993,065    
Total assets   7,559,260   7,661,720   7,651,332   6,872,273   6,406,612    
Interest bearing deposits   4,428,582   4,444,983   4,515,563   4,148,716   3,798,666    
Total deposits   6,526,440   6,614,263   6,639,458   5,966,178   5,559,577    
Securities sold under agreement to repurchase and federal funds purchased   117,138   148,734   149,747   101,075   86,911    
Federal Home Loan Bank advances   1,087         7,174    
Subordinated debentures   26,309   26,210   26,111   8,052      
Total interest bearing liabilities   4,582,005   4,619,927   4,691,421   4,257,843   3,892,751    
Total stockholders’ equity   740,007   760,322   749,445   703,929   668,287    
                         
Performance Ratios                        
Annualized return on average assets (7)   1.56%   1.47%   1.40%   0.47%   1.52%    
Annualized return on average equity (7)   15.99%   14.85%   14.34%   4.55%   14.60%    
Net interest margin, fully tax equivalent   3.64%   3.46%   3.20%   3.11%   3.07%    
Non-interest income to total revenue, fully tax equivalent   27.56%   28.43%   27.71%   28.18%   28.65%    
Efficiency ratio, fully tax equivalent (4)   51.85%   51.30%   56.42%   82.61%   53.24%    
                         
Loans Segmentation                        
Commercial real estate – non-owner occupied   $ 1,397,346   $ 1,415,180   $ 1,397,330   $ 1,397,633   $ 1,128,244    
Commercial real estate – owner occupied   834,629   819,727   787,559   803,181   678,405    
Commercial and industrial   1,230,976   1,170,241   1,090,404   1,083,980   967,022    
Commercial and industrial – PPP   18,593   19,469   36,767   71,361   140,734    
Residential real estate – owner occupied   591,515   557,638   533,577   492,123   400,695    
Residential real estate – non-owner occupied   313,248   302,936   293,852   297,127   281,018    
Construction and land development   445,690   414,632   372,197   346,372   299,206    
Home equity lines of credit   200,725   199,485   192,102   186,024   138,976    
Consumer   139,461   138,843   137,278   135,198   104,294    
Leases   13,322   13,959   14,611   13,952   13,622    
Credit cards   20,413   20,767   21,647   20,732   17,087    
Total loans and leases   $ 5,205,918   $ 5,072,877   $ 4,877,324   $ 4,847,683   $ 4,169,303    
                         
Asset Quality Data                        
Non-accrual loans   $ 14,242   $ 10,580   $ 7,827   $ 12,494   $ 6,712    
Troubled debt restructurings         10   12    
Loans past due 90 days or more and still accruing   892   32   1,176   300   684    
Total non-performing loans   15,134   10,612   9,003   12,804   7,408    
Other real estate owned   677   996   7,601   7,156   7,212    
Total non-performing assets   $ 15,811   $ 11,608   $ 16,604   $ 19,960   $ 14,620    
Non-performing loans to total loans (2)   0.29%   0.21%   0.18%   0.26%   0.18%    
Non-performing assets to total assets   0.21%   0.15%   0.22%   0.26%   0.22%    
Allowance for credit losses on loans to total loans (2)   1.41%   1.38%   1.36%   1.38%   1.29%    
Allowance for credit losses on loans to average loans   1.44%   1.42%   1.37%   1.53%   1.29%    
Allowance for credit losses on loans to non-performing loans   486%   660%   737%   524%   728%    
Net (charge-offs) recoveries   $ (152)   $ (382)   $ (5)   $ 540   $ (1,535)    
Net (charge-offs) recoveries to average loans (5)   0.00%   -0.01%   0.00%   0.01%   -0.04%    
                         
Other Information                        
Total assets under management (in millions)   $ 6,585   $ 6,293   $ 6,555   $ 7,305   $ 4,801    
Full-time equivalent employees   1,040   1,028   1,018   997   820    
                         
(1) – The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) to tangible stockholders’ equity, a non-GAAP disclosure. Bancorp provides the tangible book value per share, a non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy:    
    Quarterly Comparison    
(In thousands, except per share data)   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Total stockholders’ equity – GAAP (a)   $ 760,432   $ 727,754   $ 747,131   $ 758,143   $ 675,869    
Less: Goodwill   (194,074)   (202,524)   (202,524)   (202,524)   (135,830)    
Less: Core deposit and other intangibles   (24,990)   (28,747)   (30,357)   (31,968)   (5,596)    
Tangible common equity – Non-GAAP (c)   $ 541,368   $ 496,483   $ 514,250   $ 523,651   $ 534,443    
                         
Total assets – GAAP (b)   $ 7,496,261   $ 7,554,210   $ 7,583,105   $ 7,777,152   $ 6,646,025    
Less: Goodwill   (194,074)   (202,524)   (202,524)   (202,524)   (135,830)    
Less: Core deposit and other intangibles   (24,990)   (28,747)   (30,357)   (31,968)   (5,596)    
Tangible assets – Non-GAAP (d)   $ 7,277,197   $ 7,322,939   $ 7,350,224   $ 7,542,660   $ 6,504,599    
                         
Total stockholders’ equity to total assets – GAAP (a/b)   10.14%   9.63%   9.85%   9.75%   10.17%    
Tangible common equity to tangible assets – Non-GAAP (c/d)   7.44%   6.78%   7.00%   6.94%   8.22%    
                         
Total shares outstanding (e)   29,259   29,242   29,243   29,220   26,596    
                         
Book value per share – GAAP (a/e)   $ 25.99   $ 24.89   $ 25.55   $ 25.95   $ 25.41    
Tangible common equity per share – Non-GAAP (c/e)   18.50   16.98   17.59   17.92   20.09    
                         
(2) – Allowance for credit losses on loans to total non-PPP loans represents the allowance for credit losses on loans, divided by total loans less PPP loans. Non-performing loans to total non-PPP loans represents non-performing loans, divided by total loans less PPP loans. Bancorp believes these non-GAAP disclosures are important because they provide a comparable ratio after eliminating the PPP loans, which are fully guaranteed by the U.S. SBA and have not been allocated for within the allowance for credit losses on loans and are not at risk of non-performance.    
    Quarterly Comparison    
(Dollars in thousands)   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Total Loans – GAAP (a)   $ 5,205,918   $ 5,072,877   $ 4,877,324   $ 4,847,683   $ 4,169,303    
Less: PPP loans   (18,593)   (19,469)   (36,767)   (71,361)   (140,734)    
Total non-PPP Loans – Non-GAAP (b)   $ 5,187,325   $ 5,053,408   $ 4,840,557   $ 4,776,322   $ 4,028,569    
                         
Allowance for credit losses on loans (c)   $ 73,531   $ 70,083   $ 66,362   $ 67,067   $ 53,898    
Total non-performing loans (d)   15,134   10,612   9,003   12,804   7,408    
                         
Allowance for credit losses on loans to total loans – GAAP (c/a)   1.41%   1.38%   1.36%   1.38%   1.29%    
Allowance for credit losses on loans to total loans – Non-GAAP (c/b)   1.42%   1.39%   1.37%   1.40%   1.34%    
                         
Non-performing loans to total loans – GAAP (d/a)   0.29%   0.21%   0.18%   0.26%   0.18%    
Non-performing loans to total loans – Non-GAAP (d/b)   0.29%   0.21%   0.19%   0.27%   0.18%    
                         
(3) – Interest income on a FTE basis includes the additional amount of interest income that would have been earned if investments in certain tax-exempt interest earning assets had been made in assets subject to federal, state and local taxes yielding the same after-tax income.    
                         
(4) – The efficiency ratio, a non-GAAP measure, equals total non-interest expenses divided by the sum of net interest income (FTE) and non-interest income. In addition to the efficiency ratio presented, Bancorp considers an adjusted efficiency ratio to be important because it provides a comparable ratio after eliminating net gains (losses) on sales, calls, and impairment of investment securities, as well as net gains (losses) on sales of acquired premises and equipment and disposition of any acquired assets, if applicable, and the fluctuation in non-interest expenses related to amortization of investments in tax credit partnerships and non-recurring merger expenses.    
    Quarterly Comparison    
(Dollars in thousands)   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Total non-interest expenses (a)   $ 45,946   $ 44,873   $ 44,675   $ 56,297   $ 34,572    
Less: Non-recurring merger expenses         (19,500)      
Less: Loss on disposition of Landmark Financial Advisors   (870)            
Less: Amortization of investments in tax credit partnerships   (88)   (88)   (89)   (88)   (52)    
Total non-interest expenses – Non-GAAP (c)   $ 44,988   $ 44,785   $ 44,586   $ 36,709   $ 34,520    
                         
Total net interest income, fully tax equivalent   $ 65,469   $ 62,608   $ 57,244   $ 48,944   $ 46,328    
Total non-interest income   23,142   24,864   21,940   19,203   18,604    
Total revenue – Non-GAAP (b)   88,611   87,472   79,184   68,147   64,932    
Less: Gain/loss on sale of acquired premises and equipment   (1,295)   (3,074)          
Less: Gain/loss on sale of securities              
Total adjusted revenue – Non-GAAP (d)   $ 87,316   $ 84,398   $ 79,184   $ 68,147   $ 64,932    
                         
Efficiency ratio – Non-GAAP (a/b)   51.85%   51.30%   56.42%   82.61%   53.24%    
Adjusted efficiency ratio – Non-GAAP (c/d)   51.52%   53.06%   56.31%   53.87%   53.16%    
                         
                         
(5) – Quarterly net (charge-offs) recoveries to average loans ratios are not annualized.                      
                         
(6) – Detail of Provision for credit losses follows:    
    Quarterly Comparison    
(in thousands)   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Provision for credit losses – loans   $ 3,600   $ 4,103   $ (700)   $ 2,679   $ (1,100)    
Provision for credit losses – off balance sheet exposures   (225)   700   500   (400)   (800)    
Total provision for credit losses   $ 3,375   $ 4,803   $ (200)   $ 2,279   $ (1,900)    
                         
(7) – Return on average assets equals net income divided by total average assets, annualized to reflect a full year return on average assets. Similarly, return on average equity equals net income divided by total average equity, annualized to reflect a full year return on average equity. As a result of the substantial impact of non-recurring items related to the Commonwealth Bancshares and Kentucky Bancshares acquisitions, Bancorp considers adjusted return on average assets and return on average equity ratios important, as they reflect performance after removing certain merger-related sales of premises and equipment, expenses and purchase accounting adjustments.    
    Quarterly Comparison    
(Dollars in thousands)   12/31/22   9/30/22   6/30/22   3/31/22   12/31/21    
                         
Net income attributable to stockholders – GAAP (a)   $ 29,817   $ 28,455   $ 26,794   $ 7,906   $ 24,589    
Add: Non-recurring merger expenses         19,500      
Add: Provision for credit losses on acquired loans         4,429      
Add: Loss on disposition of Landmark Financial Advisors   870            
Less: Gain/loss on sale of premises and equipment   (1,295)   (3,074)          
Less: Tax effect of adjustments to net income   100   738     (3,717)      
Total net income – Non-GAAP (b)   $ 29,492   $ 26,119   $ 26,794   $ 28,118   $ 24,589    
                         
Total average assets (c)   $ 7,559,260   $ 7,661,720   $ 7,651,332   $ 6,872,273   $ 6,406,612    
                         
Total average stockholder equity (d )   740,007   760,322   749,445   703,929   668,287    
                         
Return on average assets – GAAP (a/c)   1.56%   1.47%   1.40%   0.47%   1.52%    
Return on average assets – Non-GAAP (b/c)   1.55%   1.35%   1.40%   1.66%   1.52%    
                         
Return on average equity – GAAP (a/d)   15.99%   14.85%   14.34%   4.55%   14.60%    
Return on average equity – Non-GAAP (b/d)   15.81%   13.63%   14.34%   16.20%   14.60%    

Contact: T. Clay Stinnett
  Executive Vice President,
  Treasurer and Chief Financial Officer
  (502) 625-0890

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