Stock Yards Bancorp Reports Second Quarter Earnings of $26.8 Million or $0.91 Per Diluted Share

Jul 27th, 2022 11:30 EST

LOUISVILLE, Ky., July 27, 2022 (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 earnings for the second quarter ended June 30, 2022, of $26.8 million, or $0.91 per diluted share. This compares to net income of $4.2 million, or $0.17 per diluted share, for the second quarter of 2021, which reflected $18.1 million in merger expenses and $7.4 million in merger related credit loss expense tied to the prior year Kentucky Bancshares acquisition. Solid organic loan growth across all markets and increased levels of non-interest income contributed to the second quarter 2022 results.

    
(dollar amounts in thousands, except per share data)2Q22 1Q22 2Q21 
Net income$26,794  $7,906  $4,184  
Net income per share, diluted 0.91   0.29   0.17  
    
Net interest income$56,984  $48,760  $41,584  
Provision for credit loss expense(6) (200)  2,279   4,147  
Non-interest income 21,940   19,203   15,788  
Non-interest expenses 44,675   56,297   48,177  
    
Net interest margin 3.20%  3.11%  3.36% 
Efficiency ratio(4) 56.42%  82.61%  83.86% 
Tangible common equity to tangible assets(1) 7.00%  6.94%  8.57% 
Annualized return on average equity(7) 14.34%  4.55%  3.25% 
Annualized return on average assets(7) 1.40%  0.47%  0.32% 
    

“We delivered solid earnings for the second quarter highlighted by the second highest quarterly loan production in our history and significant non-interest income generation,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “On the heels of a record first quarter of legacy loan growth, second quarter loan growth (excluding PPP loans) totaled $64 million and was well diversified across all of our markets. While we anticipated rising interest rates to negatively impact our loan pipelines, this has not been the case as our pipelines to date have remained healthy.”

“Similar to the last several quarters, we again reported record non-interest income for the second quarter of 2022, a compliment to our diversified income revenue streams,” said Hillebrand. “Card income and treasury management fees climbed to new levels at quarter-end, primarily due to increases in new business, volume and usage. Given the volatile stock market during the first half of the year, we are encouraged by the growth in wealth management and trust income, as fee growth was driven by net customer expansion during the quarter. Additionally, our net interest margin (NIM) benefitted from the interest rate increases enacted by the Federal Reserve Bank (FRB) during the quarter, and we are well-positioned to benefit even further from anticipated future rate increases in the months ahead.”

“In addition to organic growth, I am excited to report our first full quarter reflecting our successful merger with Commonwealth Bancshares (Commonwealth),” Hillebrand continued. “We completed the Commonwealth core conversion at the end of the first quarter and the acquisition is contributing nicely to our operating results. We are a significantly different company today than we were just two years ago. There is still plenty of work to do, but I’m excited about the opportunities this transformation provides for continued long-term growth.”

At June 30, 2022, the Company had $7.58 billion in assets, $4.88 billion in loans and $6.55 billion in total deposits. The Company’s combined enterprise, which encompasses 73 branch offices across three states, will continue to benefit from a diversified geographic footprint and provide significant growth opportunities in both the banking and wealth management arenas.

Additional key factors contributing to the second quarter of 2022 results included:

  • Loan growth (excluding PPP loans) totaled $64 million, or 1%, on a linked quarter basis. Excluding the Commonwealth acquisition, legacy loans grew by $182 million, or 5%, during the first six months of 2022. Second quarter loan production marked the second highest result in the Company’s history behind the first quarter of 2022.
  • Deposit balances contracted by $196 million, or 3%, on a linked quarter basis, attributable to seasonal public funds, time maturities and other deposit fluctuations.
  • Net interest income increased $15.4 million, or 37%, for the second quarter of 2022 compared to the second quarter a year ago, consistent with the $2.20 billion, or 44%, increase in average earning assets and to a lesser the extent, the FRB interest rate hikes.
  • NIM improved for the second consecutive quarter, increasing nine basis points on a linked quarter basis to 3.20%.
  • Despite a slightly worsening economic forecast and qualitative factor additions requiring an increase in provision levels, a $200,000 net reduction in credit loss expense was recorded for the second quarter of 2022, as the release of specific reserves related to several recently acquired loans more than offset any required increases. 
  • Non-interest income increased by $6.2 million, or 39%, over the second quarter of 2021, as customer expansion and recent acquisitions once again drove record quarterly wealth management and trust income, card income and treasury management fees.
  • Total non-interest expenses remained controlled and consistent with expectations.
  • Tangible book value per share was $17.59(1) at June 30, 2022, compared to $17.92(1) at March 31, 2022, and $19.16(1) at June 30, 2021. During 2022, tangible common equity and tangible book value have been impacted by the marked increase in interest rates and the related negative impact on accumulated other comprehensive income. During the first six months of 2022, equity was reduced by $80 million as a result of unrealized losses in the available for sale debt securities portfolio (net of tax). These securities 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.

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

Net interest income, the Company’s largest source of revenue, increased 37%, or $15.4 million, to $57.0 million, driven by higher interest income on non-PPP loans. Organic growth, and to a greater extent the Central/Eastern Kentucky market expansion, have boosted net interest income over the past 12 months.

  • Total interest income increased by $16.0 million, or 37%, to $59.1 million.
    • Interest income on non-PPP loans increased $16.4 million, or 49%, over the prior year quarter. Consistent with the $1.46 billion, or 44%, increase in average non-PPP loans, and to a lesser extent recent interest rate increases, the average quarterly yield earned on non-PPP loans increased 15 basis points over the past 12 months to 4.15%. PPP interest and fee income totaled $1.2 million and $6.9 million for the second quarters of 2022 and 2021, respectively.
    • Interest income on debt securities increased $4.5 million compared to the second quarter of 2021. While the average balance of securities increased $948 million over the prior year quarter, the yield earned increased 27 basis points to 1.69%.
  • Total interest expense increased $606,000, or 40%, to $2.1 million, as the cost of interest bearing liabilities declined one basis point to 0.18%.
  • NIM decreased 16 basis points to 3.20% for the second quarter of 2022, from 3.36% for the second quarter a year ago. During the quarter, the slowdown of forgiveness within the PPP loan portfolio and related fee income recognition resulted in only a six basis point positive impact to NIM, compared to a 48 basis point positive impact to NIM in the second quarter a year ago.

The Company recorded a net benefit of $200,000 for credit losses during the second quarter of 2022, which included a $700,000 benefit to provision for credit losses on loans and $500,000 provision for credit loss expense for off-balance sheet exposures. While the national unemployment rate remained unchanged at 3.6%, the FRB’s June forecast of future unemployment deteriorated from the March forecast, resulting in additional provision for credit loss expense for loans within the CECL allowance model. However, the negative impact of the economic forecast update was more than offset by the release of approximately $3.0 million of specific reserves for individual recently acquired loans that paid off during the quarter, with no loss or charge-off realized by the Company. The increase in provision for credit loss expense for off-balance sheet exposures was attributed to both increased production and credit availability.

Non-interest income increased $6.2 million, or 39%, to $21.9 million, with the recent acquisitions contributing significantly to revenue growth.

  • Wealth management and trust income ended very strong at $9.5 million for the second quarter of 2022, increasing $2.6 million, or 38%, over the second quarter a year ago. The benefit from net new business growth has served to offset lower market performance, which compressed assets under management.
  • Card income increased $1.5 million, or 45%, over the second quarter of 2021, as card activity continues to benefit from generally strong spending trends and overall inflation in the marketplace.
  • Treasury management fees increased $457,000, or 26%, driven by increased transaction volume, new product sales and customer base expansion. Continued calling efforts and the Company’s ability to generate new fee income has been the catalyst for this remarkable growth.
  • Mortgage banking income, which primarily consists of gain on sale of loans, net servicing income and mortgage servicing rights amortization, was $1.3 million for the second quarter of 2022, unchanged from the second quarter a year ago. Overall volume in 2022 has cooled consistent with rising interest rates, while income levels benefitted from better loan pricing and increased net servicing income related to the Commonwealth loan servicing portfolio.

Non-interest expenses declined $3.5 million compared to the second quarter of 2021, to $44.7 million.

  • Compensation expense increased $6.5 million, or 42%, primarily due to the increase in full time equivalent employees associated with the recent acquisitions. Full time equivalent employees increased to 1,018 at June 30, 2022 from 823 at June 30, 2021.
  • Employee benefits increased $1.1 million, or 32%, compared to the second quarter of 2021, mainly due to the elevated health insurance, 401(k) and payroll tax expenses associated with the above-mentioned increase in full time equivalent employees.
  • Net occupancy and equipment expenses increased $1.4 million, or 63%, compared to the second quarter a year ago. In connection with the Commonwealth and Kentucky Bancshares acquisitions, a total of 30 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 $1.3 million, or 49%, consistent with an increase in customer accounts through acquisition and organic growth, and core system upgrades.
  • Card processing expense increased $689,000 consistent with the card income revenue trend discussed previously.
  • Marketing and business development expense increased $623,000, or 76%, primarily due to increased travel, customer entertainment, community support and advertising expenses.
  • Intangible amortization expense increased $1.5 million consistent with the increase in customer intangible assets related to the Commonwealth acquisition.
  • Other non-interest expenses increased $1.1 million, or 76%, primarily due to increased card rewards expense, fraud losses and insurance captive expense.

Financial Condition – June 30, 2022 Compared with June 30, 2021

Total assets increased $1.50 billion, or 25%, year over year to $7.58 billion, boosted by the Commonwealth acquisition and strong organic growth.

Total loans increased $671 million year over year, or 16%, to $4.88 billion. Excluding the PPP loan portfolio, total loans increased $1.01 billion, or 26%, over the past 12 months, with approximately $630 million of the growth attributable to the Commonwealth acquisition.

Total investment securities have increased $619 million, or 61%, year over prior year, as the Company acquired $247 million in securities with the Commonwealth acquisition and deployed a significant amount of excess cash into securities.

Total deposits increased $1.29 billion, or 25%, from June 30, 2021 to June 30, 2022, with approximately $1.12 billion of the growth associated with the Commonwealth acquisition.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the second quarter of 2022, the Company recorded net loan charge-offs of $5,000, compared to net loan charge-offs of $2.7 million in the second quarter of 2021. Non-performing loans improved to $9.0 million, or 0.19%(2) of total loans outstanding (excluding PPP) compared to $13.9 million, or 0.36%(2) of total loans (excluding PPP) outstanding at June 30, 2021. The ratio of allowance for credit losses to loans (excluding PPP) ended at 1.37%(2) at June 30, 2022 compared to 1.55%(2) at June 30, 2021.

At June 30, 2022, the Company remained “well-capitalized,” the highest regulatory capital rating for financial institutions. Total equity to assets was 9.85%(1) and the tangible common equity ratio was 7.00%(1) at June 30, 2022, compared to 10.69%(1) and 8.57%(1), respectively, at June 30, 2021. The increase in interest rates during the second quarter led to outsized unrealized losses within the available for sale debt securities portfolio, with the $80 million decline in accumulated other comprehensive income driving down the tangible common equity ratio.

In May 2022, the board of directors declared a cash dividend of $0.28 per common share. The dividend was paid July 1, 2022, to shareholders of record as of June 20, 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 – Second Quarter 2022 Compared with First Quarter 2022

Net interest income increased $8.2 million, or 17%, over the prior quarter to $57.0 million, led by the Commonwealth acquisition and organic loan growth. NIM improved for the second consecutive quarter, increasing nine basis points on a linked quarter basis to 3.20%.

The Company recorded a net benefit of $200,000 for credit losses, which included a $700,000 benefit to provision for credit losses on loans and a $500,000 provision for credit losses expense for off-balance sheet exposures. During the first quarter of 2022, the Company recorded a net $2.3 million provision for credit losses, which included a $1.8 million benefit to provision for credit losses on loans and $400,000 benefit to provision for credit losses on off-balance sheet exposures. The reductions were consistent with further stabilization in the FRB’s unemployment forecast, net recoveries, and solid credit quality statistics and were offset by $4.4 million of credit loss expense recorded on loans acquired from Commonwealth.

Non-interest income increased $2.7 million, or 14%, to $21.9 million. Higher wealth management and trust income, card income and treasury management fees all contributed to the quarterly increase.

Non-interest expenses decreased $11.6 million, or 21%, to $44.7 million. There were no merger expenses in the second quarter of 2022, compared with $19.5 million of related expenses in the prior quarter. Compensation expense increased $4.2 million, to $22.2 million compared with the first quarter of 2022, due to the addition of full time equivalent employees in association with the Commonwealth acquisition.

Financial Condition – June 30, 2022, Compared with March 31, 2022

Total assets decreased $194 million, or 2%, on a linked quarter basis to $7.58 billion.

Total loans (excluding PPP) increased $64 million, or 1%, on a linked quarter basis. Total line of credit usage was 41% as of June 30, 2022 and unchanged compared to March 31, 2022. Commercial and industrial line usage declined to 31% as of June 30, 2022, compared to 32% as of March 31, 2022.

Total deposits decreased $196 million, or 3%, on a linked quarter basis attributable to seasonal public funds, time deposit maturities and other fluctuations.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.58 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 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)                 
Second Quarter 2022 Earnings Release                 
(In thousands unless otherwise noted)                 
  Three Months Ended  Six Months Ended      
  June 30,  June 30,      
Income Statement Data 2022  2021  2022  2021      
                  
Net interest income, fully tax equivalent (3) $57,244  $41,661  $106,188  $79,535      
Interest income:                 
Loans $50,612  $40,095  $95,355  $77,095      
Federal funds sold and interest bearing due from banks 1,113  84  1,395  150      
Mortgage loans held for sale 50  58  74  122      
Securities 7,333  2,865  12,268  5,253      
Total interest income 59,108  43,102  109,092  82,620      
Interest expense:                 
Deposits 1,770  1,435  2,941  2,945      
Securities sold under agreements to repurchase and other short-term borrowings 76  9  96  16      
Federal Home Loan Bank advances -  74  -  250      
Subordinated debentures 278  -  311  -      
Total interest expense 2,124  1,518  3,348  3,211      
Net interest income 56,984  41,584  105,744  79,409      
Provision for credit losses (6)  (200)  4,147  2,079  2,672      
Net interest income after provision for credit losses 57,184  37,437  103,665  76,737      
Non-interest income:                 
Wealth management and trust services 9,495  6,858  17,738  13,106      
Deposit service charges 2,061  1,233  3,924  2,177      
Debit and credit card income 4,748  3,284  8,867  5,557      
Treasury management fees 2,187  1,730  4,091  3,270      
Mortgage banking income 1,295  1,303  2,298  2,747      
Net investment product sales commissions and fees 731  545  1,338  1,009      
Bank owned life insurance 270  206  536  367      
Other 1,153  629  2,351  1,399      
Total non-interest income 21,940  15,788  41,143  29,632      
Non-interest expenses:                 
Compensation 22,204  15,680  40,173  28,507      
Employee benefits 4,429  3,367  8,968  6,628      
Net occupancy and equipment 3,663  2,244  6,688  4,289      
Technology and communication 3,984  2,670  7,403  5,016      
Debit and credit card processing 1,665  976  3,002  1,681      
Marketing and business development 1,445  822  2,217  1,346      
Postage, printing and supplies 825  460  1,558  869      
Legal and professional 1,027  666  1,677  1,128      
FDIC Insurance 536  349  1,181  754      
Amortization of investments in tax credit partnerships 89  231  177  262      
Capital and deposit based taxes 582  527  1,100  985      
Merger expenses -  18,100  19,500  18,500      
Federal Home Loan Bank early termination penalty -  474  -  474      
Intangible amortization 1,611  127  2,324  204      
Other 2,615  1,484  5,004  2,507      
Total non-interest expenses 44,675  48,177  100,972  73,150      
Income before income tax expense 34,449  5,048  43,836  33,219      
Income tax expense 7,547  864  8,992  6,325      
Net income 26,902  4,184  34,844  26,894      
Less: income attributed to non-controlling interest 108  -  144  -      
Net income available to stockholders $26,794  $4,184  $34,700  $26,894      
                  
Net income per share - Basic $0.92  $0.17  $1.23  $1.14      
Net income per share - Diluted 0.91  0.17  1.22  1.13      
Cash dividend declared per share 0.28  0.27  0.56  0.54      
                  
Weighted average shares - Basic 29,131  24,140  28,186  23,489      
Weighted average shares - Diluted 29,346  24,379  28,421  23,731      
                  
      June 30,      
Balance Sheet Data        2022  2021      
                  
Investment securities       $1,625,488  $1,006,908      
Loans       4,877,324  4,206,392      
Allowance for credit losses on loans       66,362  59,424      
Total assets       7,583,105  6,088,072      
Non-interest bearing deposits       2,121,304  1,743,953      
Interest bearing deposits       4,427,826  3,516,153      
Federal Home Loan Bank advances       -  10,000      
Subordinated debentures       26,144  -      
Stockholders' equity       747,131  651,089      
Total shares outstanding       29,243  26,588      
Book value per share (1)       $25.55  $24.49      
Tangible common equity per share (1)       17.59  19.16      
Market value per share       59.82  50.89      
                  
Stock Yards Bancorp, Inc. Financial Information (unaudited)                 
Second Quarter 2022 Earnings Release                 
                  
  Three Months Ended  Six Months Ended      
  June 30,  June 30,      
Average Balance Sheet Data 2022  2021  2022  2021      
                  
Federal funds sold and interest bearing due from banks $561,101  $313,954  $615,878  $274,880      
Mortgage loans held for sale 11,303  8,678  9,974  11,632      
Investment securities 1,741,844  793,696  1,560,873  727,801      
Federal Home Loan Bank stock 13,811  11,924  12,169  11,285      
Loans 4,846,013  3,844,662  4,613,264  3,725,871      
Total interest earning assets 7,174,072  4,972,914  6,812,158  4,751,469      
Total assets 7,651,332  5,226,654  7,264,423  4,970,172      
Interest bearing deposits 4,515,563  3,055,360  4,333,153  2,936,334      
Total deposits 6,639,458  4,552,583  6,304,678  4,324,647      
Securities sold under agreement to repurchase and other short term borrowings 149,747  66,591  125,545  61,592      
Federal Home Loan Bank advances -  19,135  -  24,174      
Subordinated debentures 26,111  -  17,132  -      
Total interest bearing liabilities 4,691,421  3,141,086  4,475,830  3,022,100      
Total stockholders' equity 749,445  516,427  727,244  480,822      
                  
Performance Ratios                 
Annualized return on average assets (7)  1.40%   0.32%   0.96%   1.09%      
Annualized return on average equity (7)  14.34%   3.25%   9.62%   11.28%      
Net interest margin, fully tax equivalent  3.20%   3.36%   3.14%   3.38%      
Non-interest income to total revenue, fully tax equivalent  27.71%   27.48%   27.93%   27.14%      
Efficiency ratio, fully tax equivalent (4)  56.42%   83.86%   68.53%   67.01%      
                  
Capital Ratios                 
Total stockholders' equity to total assets (1)        9.85%   10.69%      
Tangible common equity to tangible assets (1)        7.00%   8.57%      
Average stockholders' equity to average assets        10.01%   9.67%      
Total risk-based capital        12.27%   12.80%      
Common equity tier 1 risk-based capital        10.81%   11.79%      
Tier 1 risk-based capital        11.26%   11.79%      
Leverage        8.58%   10.26%      
                  
Loan Segmentation                 
Commercial real estate - non-owner occupied       $1,397,330  $1,170,461      
Commercial real estate - owner occupied       787,559  604,120      
Commercial and industrial       1,090,404  845,038      
Commercial and industrial - PPP       36,767  377,021      
Residential real estate - owner occupied       533,577  377,783      
Residential real estate - non-owner occupied       293,852  273,782      
Construction and land development       372,197  281,149      
Home equity lines of credit       192,102  142,468      
Consumer       137,278  105,439      
Leases       14,611  14,171      
Credit cards       21,647  14,960      
Total loans and leases       $4,877,324  $4,206,392      
                  
Asset Quality Data                 
Non-accrual loans       $7,827  $12,814      
Troubled debt restructurings       -  14      
Loans past due 90 days or more and still accruing       1,176  1,050      
Total non-performing loans       9,003  13,878      
Other real estate owned       7,601  648      
Total non-performing assets       $16,604  $14,526      
Non-performing loans to total loans (2)        0.18%   0.33%      
Non-performing assets to total assets        0.22%   0.24%      
Allowance for credit losses on loans to total loans (2)        1.36%   1.41%      
Allowance for credit losses on loans to average loans        1.44%   1.59%     
Allowance for credit losses on loans to non-performing loans        737%   428%      
Net (charge-offs) recoveries $(5) $(2,744) $535  $(2,750)     
Net (charge-offs) recoveries to average loans (5) -0.00%  -0.07%   0.01%  -0.07%      
                  
Stock Yards Bancorp, Inc. Financial Information (unaudited)                 
Second Quarter 2022 Earnings Release                 
                  
      
                  
  Quarterly Comparison  
Income Statement Data 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Net interest income, fully tax equivalent (3) $57,244  $48,944  $46,328  $45,643  $41,661   
Net interest income $56,984  $48,760  $46,182  $45,483  $41,584   
Provision for credit losses (6)  (200)  2,279   (1,900)   (1,525)  4,147   
Net interest income after provision for credit losses 57,184  46,481  48,082  47,008  37,437   
Non-interest income:                 
Wealth management and trust services 9,495  8,243  7,379  7,128  6,858   
Deposit service charges 2,061  1,863  1,907  1,768  1,233   
Debit and credit card income 4,748  4,119  4,012  3,887  3,284   
Treasury management fees 2,187  1,904  1,871  1,771  1,730   
Mortgage banking income 1,295  1,003  1,062  915  1,303   
Net investment product sales commissions and fees 731  607  764  780  545   
Bank owned life insurance 270  266  272  275  206   
Other 1,153  1,198  1,337  1,090  629   
Total non-interest income 21,940  19,203  18,604  17,614  15,788   
Non-interest expenses:                 
Compensation 22,204  17,969  17,146  17,381  15,680   
Employee benefits 4,429  4,539  3,189  3,662  3,367   
Net occupancy and equipment 3,663  3,025  2,667  2,732  2,244   
Technology and communication 3,984  3,419  2,956  3,173  2,670   
Debit and credit card processing 1,665  1,337  1,334  1,479  976   
Marketing and business development 1,445  772  1,793  1,011  822   
Postage, printing and supplies 825  733  714  630  460   
Legal and professional 1,027  650  755  700  666   
FDIC Insurance 536  645  706  387  349   
Amortization of investments in tax credit partnerships 89  88  52  53  231   
Capital and deposit based taxes 582  518  549  556  527   
Merger expenses -  19,500  -  525  18,100   
Federal Home Loan Bank early termination penalty -  -  -  -  474   
Intangible amortization 1,611  713  275  290  127   
Other 2,615  2,389  2,436  1,979  1,484   
Total non-interest expenses 44,675  56,297  34,572  34,558  48,177   
Income before income tax expense 34,449  9,387  32,114  30,064  5,048   
Income tax expense 7,547  1,445  7,525  6,902  864   
Net income 26,902  7,942  24,589  23,162  4,184   
Less: income attributed to non-controlling interest 108  36  -  -  -   
Net income available to stockholders $26,794  $7,906  $24,589  $23,162  $4,184   
                  
                  
Net income per share - Basic $0.92  $0.29  $0.93  $0.87  $0.17   
Net income per share - Diluted 0.91  0.29  0.92  0.87  0.17   
Cash dividend declared per share 0.28  0.28  0.28  0.28  0.27   
                  
Weighted average shares - Basic 29,131  27,230  26,492  26,485  24,140   
Weighted average shares - Diluted 29,346  27,485  26,800  26,726  24,379   
                  
   
                  
  Quarterly Comparison  
Balance Sheet Data 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Cash and due from banks $88,422  $109,799  $62,304  $84,520  $58,477   
Federal funds sold and interest bearing due from banks 485,447  641,892  898,888  500,421  481,716   
Mortgage loans held for sale 10,045  9,323  8,614  10,201  5,420   
Investment securities 1,625,488  1,698,546  1,180,298  1,070,148  1,006,908   
Federal Home Loan Bank stock 13,811  13,811  9,376  9,376  14,475   
Loans 4,877,324  4,847,683  4,169,303  4,189,117  4,206,392   
Allowance for credit losses on loans 66,362  67,067  53,898  56,533  59,424   
Goodwill 202,524  202,524  135,830  135,830  136,529   
Total assets 7,583,105  7,777,152  6,646,025  6,181,188  6,088,072   
Non-interest bearing deposits 2,121,304  2,089,072  1,755,754  1,744,790  1,743,953   
Interest bearing deposits 4,427,826  4,656,419  4,031,760  3,597,234  3,516,153   
Securities sold under agreements to repurchase 161,512  142,146  75,466  74,406  63,942   
Federal funds purchased 8,771  8,920  10,374  10,908  10,947   
Federal Home Loan Bank advances -  -  -  10,000  10,000   
Subordinated debentures 26,144  26,045  -  -  -   
Stockholders' equity 747,131  758,143  675,869  663,547  651,089   
Total shares outstanding 29,243  29,220  26,596  26,585  26,588   
Book value per share (1) $25.55  $25.95  $25.41  $24.96  $24.49   
Tangible common equity per share (1) 17.59  17.92  20.09  19.63  19.16   
Market value per share 59.82  52.90  63.88  58.65  50.89   
                  
Capital Ratios                 
Total stockholders' equity to total assets (1)  9.85%   9.75%   10.17%   10.73%   10.69%   
Tangible common equity to tangible assets (1)  7.00%   6.94%   8.22%   8.64%   8.57%   
Average stockholders' equity to average assets  9.79%   10.24%   10.43%   10.75%   9.88%   
Total risk-based capital  12.27%   12.14%   12.79%   12.61%   12.80%   
Common equity tier 1 risk-based capital  10.81%   10.66%   11.94%   11.69%   11.79%   
Tier 1 risk-based capital  11.26%   11.12%   11.94%   11.69%   11.79%   
Leverage  8.58%   9.34%   8.86%   8.98%   10.26%   
                  
Stock Yards Bancorp, Inc. Financial Information (unaudited)                 
Second Quarter 2022 Earnings Release                 
                  
   
                  
  Quarterly Comparison  
Average Balance Sheet Data 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Federal funds sold and interest bearing due from banks $561,101  $671,263  $699,222  $532,549  $313,954   
Mortgage loans held for sale 11,303  8,629  12,556  8,875  8,678   
Investment securities 1,741,844  1,321,551  1,099,235  1,034,712  793,696   
Loans 4,846,013  4,377,930  4,172,676  4,173,260  3,844,662   
Total interest earning assets 7,174,072  6,389,882  5,993,065  5,760,760  4,972,914   
Total assets 7,651,332  6,872,273  6,406,612  6,139,176  5,226,654   
Interest bearing deposits 4,515,563  4,148,716  3,798,666  3,525,785  3,055,360   
Total deposits 6,639,458  5,966,178  5,559,577  5,297,917  4,552,583   
Securities sold under agreement to repurchase and federal funds purchased 149,747  101,075  86,911  82,048  66,591   
Federal Home Loan Bank advances -  -  7,174  10,000  19,135   
Subordinated debentures 26,111  8,052  -  -  -   
Total interest bearing liabilities 4,691,421  4,257,843  3,892,751  3,617,833  3,141,086   
Total stockholders' equity 749,445  703,929  668,287  660,099  516,427   
                  
Performance Ratios                 
Annualized return on average assets (7)  1.40%   0.47%   1.52%   1.50%   0.32%   
Annualized return on average equity (7)  14.34%   4.55%   14.60%   13.92%   3.25%   
Net interest margin, fully tax equivalent  3.20%   3.11%   3.07%   3.14%   3.36%   
Non-interest income to total revenue, fully tax equivalent  27.71%   28.18%   28.65%   27.85%   27.48%   
Efficiency ratio, fully tax equivalent (4)  56.42%   82.61%   53.24%   54.63%   83.86%   
                  
Loans Segmentation                 
Commercial real estate - non-owner occupied $1,397,330  $1,397,633  $1,128,244  $1,142,647  $1,170,461   
Commercial real estate - owner occupied 787,559  803,181  678,405  652,631  604,120   
Commercial and industrial 1,090,404  1,083,980  967,022  910,923  845,038   
Commercial and industrial - PPP 36,767  71,361  140,734  231,335  377,021   
Residential real estate - owner occupied 533,577  492,123  400,695  398,069  377,783   
Residential real estate - non-owner occupied 293,852  297,127  281,018  277,045  273,782   
Construction and land development 372,197  346,372  299,206  303,642  281,149   
Home equity lines of credit 192,102  186,024  138,976  140,027  142,468   
Consumer 137,278  135,198  104,294  104,629  105,439   
Leases 14,611  13,952  13,622  12,348  14,171   
Credit cards 21,647  20,732  17,087  15,821  14,960   
Total loans and leases $4,877,324  $4,847,683  $4,169,303  $4,189,117  $4,206,392   
                  
Asset Quality Data                 
Non-accrual loans $7,827  $12,494  $6,712  $5,036  $12,814   
Troubled debt restructurings -  10  12  13  14   
Loans past due 90 days or more and still accruing 1,176  300  684  -  1,050   
Total non-performing loans 9,003  12,804  7,408  5,049  13,878   
Other real estate owned 7,601  7,156  7,212  7,229  648   
Total non-performing assets $16,604  $19,960  $14,620  $12,278  $14,526   
Non-performing loans to total loans (2)  0.18%   0.26%   0.18%   0.12%   0.33%   
Non-performing assets to total assets  0.22%   0.26%   0.22%   0.20%   0.24%   
Allowance for credit losses on loans to total loans (2)  1.36%   1.38%   1.29%   1.35%   1.41%   
Allowance for credit losses on loans to average loans  1.37%   1.53%   1.29%   1.35%   1.55%   
Allowance for credit losses on loans to non-performing loans  737%   524%   728%   1120%   428%   
Net (charge-offs) recoveries $(5)  $540  $(1,535) $(1,891) $(2,744)  
Net (charge-offs) recoveries to average loans (5) -0.00%   0.01%  -0.04%  -0.05%  -0.07%   
                  
Other Information                 
Total assets under management (in millions) $6,555  $7,305  $4,801  $4,506  $4,440   
Full-time equivalent employees 1,018  997  820  794  823   
                  
(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) 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Total stockholders' equity - GAAP (a) $747,131  $758,143  $675,869  $663,547  $651,089   
Less: Goodwill  (202,524)   (202,524)   (135,830)   (135,830)   (136,529)   
Less: Core deposit and other intangibles  (30,357)   (31,968)   (5,596)   (5,871)   (5,162)   
Tangible common equity - Non-GAAP (c) $514,250  $523,651  $534,443  $521,846  $509,398   
                  
Total assets - GAAP (b) $7,583,105  $7,777,152  $6,646,025  $6,181,188  $6,088,072   
Less: Goodwill  (202,524)   (202,524)   (135,830)   (135,830)   (136,529)   
Less: Core deposit and other intangibles  (30,357)   (31,968)   (5,596)   (5,871)   (5,162)   
Tangible assets - Non-GAAP (d) $7,350,224  $7,542,660  $6,504,599  $6,039,487  $5,946,381   
                  
Total stockholders' equity to total assets - GAAP (a/b)  9.85%   9.75%   10.17%   10.73%   10.69%   
Tangible common equity to tangible assets - Non-GAAP (c/d)  7.00%   6.94%   8.22%   8.64%   8.57%   
                  
Total shares outstanding (e) 29,243  29,220  26,596  26,585  26,588   
                  
Book value per share - GAAP (a/e) $25.55  $25.95  $25.41  $24.96  $24.49   
Tangible common equity per share - Non-GAAP (c/e) 17.59  17.92  20.09  19.63  19.16   
                  
(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) 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Total Loans - GAAP (a) $4,877,324  $4,847,683  $4,169,303  $4,189,117  $4,206,392   
Less: PPP loans  (36,767)   (71,361)   (140,734)   (231,335)   (377,021)   
Total non-PPP Loans - Non-GAAP (b) $4,840,557  $4,776,322  $4,028,569  $3,957,782  $3,829,371   
                  
Allowance for credit losses on loans (c) $66,362  $67,067  $53,898  $56,533  $59,424   
Total non-performing loans (d) 9,003  12,804  7,408  5,049  13,878   
                  
Allowance for credit losses on loans to total loans - GAAP (c/a)  1.36%   1.38%   1.29%   1.35%   1.41%   
Allowance for credit losses on loans to total loans - Non-GAAP (c/b)  1.37%   1.40%   1.34%   1.43%   1.55%   
                  
Non-performing loans to total loans - GAAP (d/a)  0.18%   0.26%   0.18%   0.12%   0.33%   
Non-performing loans to total loans - Non-GAAP (d/b)  0.19%   0.27%   0.18%   0.13%   0.36%   
                  
(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. The ratio excludes net gains (losses) on sales, calls, and impairment of investment securities, if applicable. In addition to the efficiency ratio presented, Bancorp considers an adjusted efficiency ratio to be important because it provides a comparable ratio after eliminating 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) 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Total non-interest expenses - GAAP (a) $44,675  $56,297  $34,572  $34,558  $48,177   
Less: Non-recurring merger expenses -   (19,500)  -   (525)   (18,100)   
Less: Amortization of investments in tax credit partnerships  (89)   (88)   (52)   (53)   (231)   
Total non-interest expenses - Non-GAAP (c) $44,586  $36,709  $34,520  $33,980  $29,846   
                  
Total net interest income, fully tax equivalent $57,244  $48,944  $46,328  $45,643  $41,661   
Total non-interest income 21,940  19,203  18,604  17,614  15,788   
Less: Gain/loss on sale of securities -  -  -  -  -   
Total revenue - GAAP (b) $79,184  $68,147  $64,932  $63,257  $57,449   
                  
Efficiency ratio - GAAP (a/b)  56.42%   82.61%   53.24%   54.63%   83.86%   
Efficiency ratio - Non-GAAP (c/b)  56.31%   53.87%   53.16%   53.72%   51.95%   
                  
                  
(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) 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Provision for credit losses - loans $(700) $2,679  $(1,100) $(1,000) $4,697   
Provision for credit losses - off balance sheet exposures 500   (400)   (800)   (525)   (550)   
Total provision for credit losses $(200) $2,279  $(1,900) $(1,525) $4,147   
                  
    
(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 expenses and purchase accounting adjustments.    
      
  Quarterly Comparison   
(Dollars in thousands) 6/30/22  3/31/22  12/31/21  9/30/21  6/30/21   
                  
Net income attributable stockholders - GAAP (a) $26,794  $7,906  $24,589  $23,162  $4,184   
Add: Non-recurring merger expenses -  19,500  -  525  18,100   
Add: Provision for credit losses on acquired loans -  4,429  -  -  7,397   
Less: Tax effect of adjustments to net income -   (3,717)  -   (121)   (4,360)   
Total net income - Non-GAAP (b) $26,794  $28,118  $24,589  $23,577  $24,327   
                  
Total average assets (c) $7,651,332  $6,872,273  $6,406,612  $6,139,176  $5,226,654   
                  
Total average stockholder equity (d) 749,445  703,929  668,287  660,099  516,427   
                  
Return on average assets - GAAP (a/c)  1.40%   0.47%   1.52%   1.50%   0.32%   
Return on average assets - Non-GAAP (b/c)  1.40%   1.66%   1.52%   1.52%   1.87%   
                  
Return on average equity - GAAP (a/d)  14.34%   4.55%   14.60%   13.92%   3.25%   
Return on average equity - Non-GAAP (b/d)  14.34%   16.20%   14.60%   14.17%   18.89%   

 

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

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