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Stock Yards Bancorp Reports Record Fourth Quarter Earnings of $17.7 Million or $0.78 Per Diluted Share

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Stock Yards Bancorp, Inc.
·35 min read
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Highlighted by Record Loan Growth

LOUISVILLE, Ky., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Stock Yards Bancorp, Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust Company, with offices in the Louisville, Indianapolis and Cincinnati metropolitan markets, today reported record earnings for the fourth quarter ended December 31, 2020. Net income for the fourth quarter increased 7% to $17.7 million, or $0.78 per diluted share, compared with net income of $16.6 million, or $0.73 per diluted share, for the fourth quarter of 2019.

Net income for 2020 was $58.9 million, or $2.59 per diluted share, compared to $66.1 million, or $2.89 per diluted share, in 2019. Operating results for the year were lower compared to the record results posted in 2019, primarily due to pandemic-related increases in loan loss provisioning.

(dollar amounts in thousands, except per share data)

4Q20

3Q20

4Q19

Net interest income

$

36,252

$

33,695

$

32,756

Provision for credit losses

1,400

4,418

-

Non-interest income

13,698

13,043

12,987

Non-interest expenses

28,129

26,196

26,153

Income before income tax expense

20,421

16,124

19,590

Income tax expense

2,685

1,591

2,941

Net income

$

17,736

$

14,533

$

16,649

Net income per share, diluted

$

0.78

$

0.64

$

0.73

Net interest margin

3.35

%

3.26

%

3.71

%

Efficiency ratio

56.26

%

55.96

%

57.11

%

Tangible common equity to tangible assets(1)

9.28

%

9.52

%

10.55

%

Annualized return on average equity

16.27

%

13.57

%

16.48

%

Annualized return on average assets

1.56

%

1.34

%

1.78

%

“Stock Yards Bancorp delivered record earnings in the fourth quarter 2020, driven by an expanded balance sheet fueled by record quarterly loan growth, strong revenue and solid credit quality,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “The unprecedented events in 2020 and the beginning of 2021 have brought serious economic, health and personal challenges to us all. Given the ongoing impacts of a global pandemic, we remain focused on supporting our customers, communities and employees.

“Since April, our active participation in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) has helped service the needs of our customers and our local communities. Our success in executing this relief effort allowed us to assist nearly 3,400 customers and originate $657 million in loans while adding new relationships with strong future growth opportunities. As a result, we recorded interest and fee income related to PPP loans of $13.6 million during 2020. Approximately 46% of the net deferred fee income related to the PPP loan portfolio was recognized in 2020, with a significant portion of the remaining net deferred fees expected to be recognized in the first half of 2021.

“The first round of PPP expired on August 8, 2020 and as of year-end, we had submitted 520 forgiveness applications to the SBA totaling $170 million and received payment from the SBA for 333 borrowers. Approximately $2.1 million of the income recognized during the fourth quarter related to loan payoffs (fee acceleration). We have $10.5 million in net unrecognized fees related to the PPP that would be recognized in income immediately once the loans are paid off or forgiven by the SBA.”

The Consolidated Appropriations Act was signed into law on December 27, 2020, providing new COVID-19 stimulus relief and it included $284 billion allocated for a second round of PPP lending through March 31, 2021. The program offers new PPP loans for companies that did not receive PPP funds in 2020 in addition to “second draw” loans targeted at hard-hit businesses that have exhausted their initial PPP proceeds. “While we are very early in the process, we anticipate successfully executing this new round of relief efforts and helping our customers and communities. With the new provisions for this second draw, we believe the earnings potential is meaningful, but will likely not meet the level of contribution from the initial PPP loan program,” said Hillebrand.

“Despite solid traditional credit metrics, under the CECL methodology we recorded a significant provision for credit losses during the past year. The 2020 provision for credit losses was $16.9 million, compared to $1.0 million in 2019, based on the expected impact of the COVID-19 pandemic on forecasted unemployment and changing macro-economic conditions, as well as qualitative factor adjustments. We feel that we are well positioned as we navigate through the pandemic, having built up significant loan loss reserves, excluding PPP loans, of 1.74%(2) at December 31, 2020,” said Hillebrand.

Additional key factors impacting the fourth quarter of 2020 results included:

  • Record diluted quarterly EPS exceeding the previous record set in the third quarter of 2019.

  • Record quarterly loan growth and loan production, concentrated in the commercial & industrial, construction & land development and commercial real estate lending portfolios on a linked quarter basis.

  • COVID-19 related loan deferrals declined significantly to 1.24% of total loans at the end of the fourth quarter of 2020 from 4.25% of total loans three months earlier.

  • Deposit balances remained at record levels, as consumers and businesses continued to build cash reserves.

  • Net interest income increased $3.5 million, or 11%, over the fourth quarter of 2019, driven by PPP related fees and a significant decline in cost of funds.

  • Net interest margin (NIM) compressed 36 basis points to 3.35% compared to the fourth quarter a year ago. NIM continued to be negatively impacted by loan yield contraction driven by low yielding PPP loans, lower interest rates and excess balance sheet liquidity.

  • Lower linked quarter loan loss provisioning.

  • Non-interest income increased over the fourth quarter of 2019, reflecting higher debit/credit card income, growing treasury management fees and continued strong mortgage banking income. While slowly rebounding, deposit service charges continue to be impacted by the pandemic and changes in customer behavior remain subdued.

  • Non-interest expenses reflected moderate increases in compensation, technology and communication and FDIC insurance premiums. Tax credit amortization expense increased $2.1 million related to the completion of a large tax project during the fourth quarter of 2020. Also, an overall increase in line of credit usage led to a reduction in the reserve for off-balance sheet credit exposures.

Highlights for the year ended December 31, 2020:

  • Record total revenue, comprising fully taxable equivalent net interest income and non-interest income, of nearly $188 million.

  • Deposit growth and loan production surpassed record levels.

  • Record WM&T services income of $23.4 million boosted by record new business generation and historic market performance.

  • Despite the pandemic, card income, treasury management fees and brokerage income continued to set new highs.

Hillebrand added, “We were honored to be recognized nationally for our customer service and for our performance metrics in 2020. In December, we were recognized by Bank Director for our track record of successfully managing the Bank through economic cycles based on our total shareholder return over the 20-year period ended June 30, 2020, ranking #12 on the list of nationally recognized financial institutions. In September, we were named to Newsweek’s America’s Best Banks 2021 list as the best small bank in the state of Kentucky. Additionally, in September we were named once again to the prestigious Piper Sandler Bank and Thrift Sm-All Stars: Class of 2020 list, being one of only 35 institutions to receive this honor. Being recognized for these awards is great affirmation of our extraordinary staff and their commitment to supporting our customers and communities.”

Results of Operations – Fourth Quarter 2020 Compared with Fourth Quarter 2019

Net interest income – the Company’s largest source of revenue – increased $3.5 million, or 11%, to $36.3 million, driven primarily by PPP loans and related fees and a significant decline in cost of funds.

  • Total interest income increased $508,000, or 1%, to $38.3 million, primarily due to a 5% increase in interest income on loans resulting from PPP interest/fee income partly offset by continued yield contraction.

  • Interest expense declined $3.0 million, or 59%, to $2.1 million. Interest expense on deposits decreased $2.7 million, or 60%, as the cost of interest bearing deposits declined to 0.27% in the fourth quarter of 2020 from 0.79% in the fourth quarter a year ago. The decline in interest bearing deposit costs more than offset the significant increase in average balances, as the Bank benefited from strategically lowering stated deposit rates in tandem with the 225 basis point drop in the Federal Reserve’s short-term interest rates between August of 2019 and March of 2020.

  • NIM decreased 36 basis points to 3.35% for the fourth quarter of 2020 from 3.71%. The NIM contraction was primarily driven by lower interest rates, coupled with higher levels of excess balance sheet liquidity. The Company has maintained significantly higher levels of balance sheet liquidity driven in part by the funding of PPP loans through deposit growth. The PPP loan portfolio had a 9 basis point positive impact to NIM, while excess liquidity had a 18 basis point negative impact.

Loan loss provisioning for the fourth quarter of 2020 reflected record quarter loan growth and was positively impacted by improvement in the future unemployment forecast offset by qualitative factors in the allowance for credit loss model.

Non-interest income increased $711,000, or 5%, to $13.7 million.

  • Deposit service charges decreased $319,000, or 23%, primarily related to a decline in non-sufficient funds fees collected and an overall shift in pandemic related customer behavior.

  • Debit/credit card income increased $110,000, or 5%. Card income, which fell drastically in April, rebounded in June, and continued to climb through the end of the fourth quarter.

  • Treasury management fees increased by $137,000, or 10%, primarily due to strong product sales and customer base expansion. This activity offset the significant decline in pandemic related transaction volume during the year.

  • Mortgage banking revenue increased $778,000, or 84%, to $1.7 million for the fourth quarter of 2020. Continued low long-term mortgage rates continued to entice mortgage refinancing and produced a record number of loan sales.

  • Net investment product sales commissions and fees increased $109,000, or 29%, boosted by increased customer trading activity.

Non-interest expenses increased $2.0 million, or 8%, to $28.1 million.

  • Compensation expense increased $599,000, or 4%, primarily due to annual merit-based salary increases, an increase in full time equivalent employees, and increased incentive compensation.

  • Employee benefits decreased $337,000, or 13%, primarily due to lower than projected health insurance expense, partially offset by elevated 401(k) expense tied to the increase in full time equivalent employees.

  • Technology and communication expense for the fourth quarter of 2020 increased $639,000, or 39%, compared with the prior year quarter, consistent with expanding customer-facing software and system functionality, as well as increased licensing and maintenance expense, higher mortgage loan processing expenses, treasury management customer expansion and the migration to a hosted core environment during the third quarter of 2020.

  • Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business, continued to be significantly below the prior period based on reduced travel and customer entertainment expense.

Financial Condition – December 31, 2020 Compared with December 31, 2019

Total loans increased $687 million, or 24%, to $3.5 billion. Excluding the PPP loan portfolio, total loans increased $136 million, or 5%, during the year, with $122 million of growth in the commercial real estate portfolio and $28 million of growth in residential real estate loans, partially offset by a $37 million decrease in the commercial & industrial portfolio tied to line of credit usage.

The Company has made short-term loan modifications involving primarily full-payment deferrals in response to requests from borrowers who experienced business or personal cash flow interruptions related to the pandemic. Through the close of the fourth quarter, there were approximately $37 million in full payment deferral balances, with the largest concentration in the commercial real estate portfolio. Pursuant to the CARES Act, these loan deferrals are not included in non-performing loan statistics.

Full payment loan deferral balances have fluctuated as follows:

($'s in millions)

Total Deferrals

% of Total Loans*

December 31, 2020

$

37

1.24

%

November 30, 2020

41

1.42

%

October 31, 2020

65

2.28

%

September 30, 2020

120

4.25

%

June 30, 2020

502

17.72

%

* Excluding PPP loans

The Company’s management team continues to analyze the evolving economic conditions in its markets while closely monitoring credit metrics, particularly related to the following segments comprising deferrals in the Bank’s portfolio:

(in millions)

December 31, 2020

September 30, 2020

Lodging/hotel

$

16

$

30

Residential real estate secured

2

18

Real estate/land development

1

12

Retail center

2

12

Parking lot/parking garage/storage

-

11

Tradeshows/events

8

10

Other

8

27

Total Deferrals

$

37

$

120

Asset quality, which has trended within a narrow range over the past several years, remained strong. Non-performing loans were $13.2 million, or 0.44%(2) of total loans (excluding PPP) outstanding compared to $12.1 million, or 0.42% of total loans outstanding at December 31, 2019.

Non-accrual loans increased $156,000 during the fourth quarter over the prior quarter and increased $1 million compared to a year ago. Approximately $10 million of the non-accrual loan balance at December 31, 2020 relates to one commercial real estate non-owner occupied relationship that was placed on non-accrual status during the second quarter.

During the fourth quarter of 2020, the Company recorded net loan recoveries totaling $19,000 compared to net loan charge-offs of $86,000 in the fourth quarter of 2019.

Total deposits increased $855 million, or 27%, from December 31, 2019 to December 31, 2020, with non-interest bearing deposits representing $377 million of the increase. The mix of deposits has also improved with higher-cost time deposits declining $40 million during 2020. Both period end and average deposit balances ended at record levels at December 31, 2020. Federal programs such as the PPP and stimulus checks have boosted deposit balances.

At December 31, 2020, the Company remained “well capitalized,” the highest regulatory capital rating for financial institutions, with increases in all regulatory capital ratios. Total equity to assets was 9.56% and the tangible common equity ratio was 9.28%(1) at December 31, 2020, compared to 10.91% and 10.55%(1), respectively, at December 31, 2019, with the decline attributable to the January 1, 2020 CECL adoption, the prior year acquisition and the impact of loan growth.

In December 2020, the Board of Directors continued the dividend rate of $0.27 per common share initially set in November 2019. The Company is committed to maintaining its current dividend level and will continue to evaluate the related impact on capital levels quarterly.

No shares were repurchased in 2020 and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan which expires in May 2021.

Results of Operations – Fourth Quarter 2020 Compared with Third Quarter 2020

Net interest income increased $2.6 million over the prior quarter to $36.3 million, led by loan growth, PPP fee recognition and the continued decline in cost of funds.

Loan provisioning in 2020 has been significantly impacted by the economic crisis and its impact upon the future unemployment forecast within the allowance for credit loss model, qualitative factor adjustments and loan growth.

Non-interest income increased $655,000 to $13.7 million. Increases in wealth management and trust service fees, debit/credit card income and higher treasury management fees more than offset a modest fourth quarter reduction in mortgage banking income.

Non-interest expenses increased $1.9 million to $28.1 million.

  • Compensation expense increased $772,000 to $14.1 million compared with the third quarter of 2020 due to increased incentive compensation.

  • Employee benefits decreased $680,000 primarily due to lower than projected health insurance expense.

  • Improvement in line of credit usage led to a reduction in the reserve for off-balance sheet credit exposure of $900,000 during the fourth quarter. On a linked quarter basis, this expense category improved by $1.5 million.

Financial Condition December 31, 2020, Compared with September 30, 2020

Total assets increased $244 million on a linked quarter basis to $4.6 billion, reflecting significant increases in both loans and investment securities.

Total loans increased $59 million on a linked quarter basis to $3.5 billion at quarter end and the deployment of excess liquidity led to a $158 million increase in securities. Total line of credit usage increased to 38% as of December 31, 2020, from 37% at September 30, 2020. C&I line usage increased to 28% as of December 31, 2020, compared to 26% at September 30, 2020.

Total deposits increased $234 million, or 6%, on a linked quarter basis due to higher deposit levels consistent with the seasonal increase in public funds and growth in balances with both existing and new customers. The economic slow-down and uncertainty surrounding the pandemic has resulted in the customer base maintaining generally higher deposit balances.

Stockholders’ equity increased $12 million in the fourth quarter of 2020 compared with the prior quarter, with net income of $17.7 million and the positive change in equity related to the Bank’s investment portfolio offset by dividends declared.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $4.6 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; 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; the effects of government stimulus programs such as the Consolidated Appropriations Act; the effects of the FRB’s benchmark interest rate cuts on liquidity and margins; the potential adverse effects of the coronavirus or any other pandemic on the ability of borrowers to satisfy their obligations to the Company, the level of the Company’s non-performing assets, the demand for the Company’s loans or its other products and services, other aspects of the Company’s business and operations, and financial markets and economic growth, 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. See “Risk Factors” outlined in the Company’s Form 10-Q for the three months ended September 30, 2020 and Form 10-K for the year ended December 31, 2019.

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


Stock Yards Bancorp, Inc. Financial Information (unaudited)

Fourth Quarter 2020 Earnings Release

(In thousands unless otherwise noted)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Income Statement Data

2020

2019

2020

2019

Net interest income, fully tax equivalent (3)

$

36,301

$

32,810

$

136,133

$

125,571

Interest income:

Loans

$

36,007

$

34,393

$

137,699

$

134,469

Federal funds sold and interest bearing due from banks

65

804

738

2,933

Mortgage loans held for sale

174

61

533

182

Securities

2,093

2,573

8,901

10,308

Total interest income

38,339

37,831

147,871

147,892

Interest expense:

Deposits

1,802

4,526

10,478

20,560

Securities sold under agreements to repurchase and

other short-term borrowings

8

63

72

318

Federal Home Loan Bank (FHLB) advances and other long-term debt

277

486

1,400

1,666

Total interest expense

2,087

5,075

11,950

22,544

Net interest income

36,252

32,756

135,921

125,348

Provision for credit losses

1,400

-

16,918

1,000

Net interest income after provision for credit losses

34,852

32,756

119,003

124,348

Non-interest income:

Wealth management and trust services

5,805

5,804

23,406

22,643

Deposit service charges

1,080

1,399

4,161

5,193

Debit and credit card income

2,219

2,109

8,480

8,123

Treasury management fees

1,506

1,369

5,407

4,992

Mortgage banking income

1,708

930

6,155

2,934

Net investment product sales commissions and fees

487

378

1,775

1,498

Bank owned life insurance

166

182

693

1,031

Other

727

816

1,822

3,014

Total non-interest income

13,698

12,987

51,899

49,428

Non-interest expenses:

Compensation

14,072

13,473

51,368

50,319

Employee benefits

2,173

2,510

11,064

10,691

Net occupancy and equipment

2,209

2,374

8,414

8,379

Technology and communication

2,275

1,636

8,500

7,098

Debit and credit card processing

698

613

2,606

2,493

Marketing and business development

835

1,367

2,383

3,627

Postage, printing and supplies

423

434

1,778

1,652

Legal and professional

597

433

2,392

3,014

Amortization of investments in tax credit partnerships

2,955

837

3,096

1,078

Capital and deposit based taxes

1,055

1,006

4,386

3,870

Credit loss expense for off-balance sheet exposures

(900)

-

1,500

-

Other

1,737

1,470

5,672

5,895

Total non-interest expenses

28,129

26,153

103,159

98,116

Income before income tax expense

20,421

19,590

67,743

75,660

Income tax expense

2,685

2,941

8,874

9,593

Net income

$

17,736

$

16,649

$

58,869

$

66,067

Net income per share - Basic

$

0.79

$

0.74

$

2.61

$

2.92

Net income per share - Diluted

0.78

0.73

2.59

2.89

Cash dividend declared per share

0.27

0.27

1.08

1.04

Weighted average shares - Basic

22,593

22,493

22,563

22,598

Weighted average shares - Diluted

22,794

22,760

22,768

22,865

December 31,

Balance Sheet Data

2020

2019

Loans

$

3,531,596

$

2,845,016

Allowance for credit losses

51,920

26,791

Total assets

4,608,629

3,724,197

Non-interest bearing deposits

1,187,057

810,475

Interest bearing deposits

2,801,577

2,323,463

FHLB advances

31,639

79,953

Stockholders' equity

440,701

406,297

Total shares outstanding

22,692

22,604

Book value per share (1)

$

19.42

$

17.97

Tangible common equity per share (1)

18.78

17.32

Market value per share

40.48

41.06

Stock Yards Bancorp, Inc. Financial Information (unaudited)

Fourth Quarter 2020 Earnings Release

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Average Balance Sheet Data

2020

2019

2020

2019

Federal funds sold and interest bearing due from banks

$

271,277

$

187,865

$

229,905

$

136,514

Mortgage loans held for sale

28,951

5,889

20,156

3,836

Available for sale debt securities

510,677

476,360

453,082

436,511

FHLB stock

11,284

11,317

11,284

10,858

Loans

3,483,298

2,828,142

3,304,909

2,702,626

Total interest earning assets

4,305,487

3,509,573

4,019,336

3,290,345

Total assets

4,512,874

3,709,250

4,217,593

3,480,998

Interest bearing deposits

2,689,103

2,284,195

2,507,545

2,143,993

Total deposits

3,888,247

3,108,640

3,608,487

2,909,096

Securities sold under agreement to repurchase and

other short-term borrowings

55,825

49,881

49,820

49,737

FHLB advances and other long-term borrowings

48,771

80,457

61,483

71,677

Total interest bearing liabilities

2,793,699

2,414,533

2,618,848

2,265,407

Total stockholders' equity

433,596

400,870

420,119

386,563

Performance Ratios

Annualized return on average assets

1.56%

1.78%

1.40%

1.90%

Annualized return on average equity

16.27%

16.48%

14.01%

17.09%

Net interest margin, fully tax equivalent

3.35%

3.71%

3.39%

3.82%

Non-interest income to total revenue, fully tax equivalent

27.40%

28.36%

27.60%

28.24%

Efficiency ratio, fully tax equivalent (4)

56.26%

57.11%

54.86%

56.07%

Capital Ratios

Total stockholders' equity to total assets (1)

9.56%

10.91%

Tangible common equity to tangible assets (1)

9.28%

10.55%

Average stockholders' equity to average assets

9.96%

11.10%

Total risk-based capital

13.36%

12.85%

Common equity tier 1 risk-based capital

12.23%

12.02%

Tier 1 risk-based capital

12.23%

12.02%

Leverage

9.57%

10.60%

Loan Segmentation

Commercial real estate - non-owner occupied

$

833,470

$

746,283

Commercial real estate - owner occupied

508,672

474,329

Commercial and industrial

802,422

838,800

Commercial and industrial - PPP

550,186

-

Residential real estate - owner occupied

239,191

217,606

Residential real estate - non-owner occupied

140,930

134,995

Construction and land development

291,764

255,816

Home equity lines of credit

95,366

103,854

Consumer

44,606

47,467

Leases

14,786

16,003

Credit cards - commercial

10,203

9,863

Total loans and leases

$

3,531,596

$

2,845,016

Asset Quality Data

Non-accrual loans

$

12,514

$

11,494

Troubled debt restructurings

16

34

Loans past due 90 days or more and still accruing

649

535

Total non-performing loans

13,179

12,063

Other real estate owned

281

493

Total non-performing assets

$

13,460

$

12,556

Non-performing loans to total loans

0.37%

0.42%

Non-performing assets to total assets

0.29%

0.34%

Allowance for credit losses on loans to total loans

1.47%

0.94%

Allowance for credit losses on loans to average loans

1.57%

0.99%

Allowance for credit losses on loans to non-performing loans

394%

222%

Net (charge-offs) recoveries

$

19

$

(86)

$

(1,645)

$

257

Net (charge-offs) recoveries to average loans (5)

0.00%

0.00%

-0.05%

0.01%

Stock Yards Bancorp, Inc. Financial Information (unaudited)

Fourth Quarter 2020 Earnings Release

Quarterly Comparison

Income Statement Data

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Net interest income, fully tax equivalent (3)

$

36,301

$

33,768

$

33,573

$

32,494

$

32,810

Net interest income

$

36,252

$

33,695

$

33,528

$

32,446

$

32,756

Provision for credit losses

1,400

4,418

5,550

5,550

-

Net interest income after provision for credit losses

34,852

29,277

27,978

26,896

32,756

Non-interest income:

Wealth management and trust services

5,805

5,657

5,726

6,218

5,804

Deposit service charges

1,080

998

800

1,283

1,399

Debit and credit card income

2,219

2,218

2,063

1,980

2,109

Treasury management fees

1,506

1,368

1,249

1,284

1,369

Mortgage banking income

1,708

1,979

1,622

846

930

Net investment product sales commissions and fees

487

431

391

466

378

Bank owned life insurance

166

172

176

179

182

Other

727

220

595

280

816

Total non-interest income

13,698

13,043

12,622

12,536

12,987

Non-interest expenses:

Compensation

14,072

13,300

11,763

12,233

13,473

Employee benefits

2,173

2,853

2,871

3,167

2,510

Net occupancy and equipment

2,209

2,235

2,089

1,881

2,374

Technology and communication

2,275

2,265

1,947

2,013

1,636

Debit and credit card processing

698

649

603

656

613

Marketing and business development

835

523

465

560

1,367

Postage, printing and supplies

423

472

442

441

434

Legal and professional

597

544

628

623

433

Amortization of investments in tax credit partnerships

2,955

52

53

36

837

Capital and deposit based taxes

1,055

1,076

1,225

1,030

1,006

Credit loss expense for off-balance sheet exposures

(900)

550

1,475

375

-

Other

1,737

1,677

1,323

935

1,470

Total non-interest expenses

28,129

26,196

24,884

23,950

26,153

Income before income tax expense

20,421

16,124

15,716

15,482

19,590

Income tax expense

2,685

1,591

2,348

2,250

2,941

Net income

$

17,736

$

14,533

$

13,368

$

13,232

$

16,649

Net income per share - Basic

$

0.79

$

0.64

$

0.59

$

0.59

$

0.74

Net income per share - Diluted

0.78

0.64

0.59

0.58

0.73

Cash dividend declared per share

0.27

0.27

0.27

0.27

0.27

Weighted average shares - Basic

22,593

22,582

22,560

22,516

22,493

Weighted average shares - Diluted

22,794

22,802

22,739

22,736

22,760

Quarterly Comparison

Balance Sheet Data

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Cash and due from banks

$

43,179

$

49,517

$

46,362

$

47,662

$

46,863

Federal funds sold and interest bearing due from banks

274,766

241,486

178,032

206,849

202,861

Mortgage loans held for sale

22,547

23,611

17,364

8,141

8,748

Available for sale debt securities

586,978

429,184

485,249

445,813

470,738

FHLB stock

11,284

11,284

11,284

11,284

11,284

Loans

3,531,596

3,472,481

3,464,077

2,937,366

2,845,016

Allowance for credit losses

51,920

50,501

47,708

42,143

26,791

Total assets

4,608,629

4,365,129

4,334,533

3,784,586

3,724,197

Non-interest bearing deposits

1,187,057

1,180,001

1,205,253

858,883

810,475

Interest bearing deposits

2,801,577

2,574,517

2,521,903

2,339,995

2,323,463

Securities sold under agreements to repurchase

47,979

40,430

42,722

32,366

31,985

Federal funds purchased

11,464

9,179

8,401

9,747

10,887

FHLB advances

31,639

56,536

61,432

69,191

79,953

Stockholders' equity

440,701

428,598

420,231

409,702

406,297

Total shares outstanding

22,692

22,692

22,667

22,665

22,604

Book value per share (1)

$

19.42

$

18.89

$

18.54

$

18.08

$

17.97

Tangible common equity per share (1)

18.78

18.25

17.89

17.43

17.32

Market value per share

40.48

34.04

40.20

28.93

41.06

Capital Ratios

Total stockholders' equity to total assets (1)

9.56%

9.82%

9.69%

10.83%

10.91%

Tangible common equity to tangible assets (1)

9.28%

9.52%

9.39%

10.48%

10.55%

Average stockholders' equity to average assets

9.61%

9.85%

9.66%

10.88%

10.81%

Total risk-based capital

13.36%

13.79%

13.50%

12.75%

12.85%

Common equity tier 1 risk-based capital

12.23%

12.61%

12.39%

11.81%

12.02%

Tier 1 risk-based capital

12.23%

12.61%

12.39%

11.81%

12.02%

Leverage

9.57%

9.70%

9.50%

10.78%

10.60%

Stock Yards Bancorp, Inc. Financial Information (unaudited)

Fourth Quarter 2020 Earnings Release

Quarterly Comparison

Average Balance Sheet Data

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Federal funds sold and interest bearing due from banks

$

271,277

$

194,100

$

285,617

$

168,563

$

187,865

Mortgage loans held for sale

28,951

28,520

18,010

4,953

5,889

Available for sale debt securities

510,677

442,089

412,368

449,610

476,360

Loans

3,483,298

3,444,407

3,396,767

2,891,668

2,828,142

Total interest earning assets

4,305,487

4,120,400

4,124,046

3,526,078

3,509,573

Total assets

4,512,874

4,325,500

4,317,430

3,710,119

3,709,250

Interest bearing deposits

2,689,103

2,521,838

2,500,315

2,316,774

2,284,195

Total deposits

3,888,247

3,707,845

3,713,451

3,120,242

3,108,640

Securities sold under agreement to repurchase and

other short-term borrowings

55,825

49,709

49,940

43,739

49,881

FHLB advances

48,771

59,487

63,896

73,939

80,457

Total interest bearing liabilities

2,793,699

2,631,034

2,614,151

2,434,452

2,414,533

Total stockholders' equity

433,596

426,049

416,920

403,702

400,870

Performance Ratios

Annualized return on average assets

1.56%

1.34%

1.25%

1.43%

1.78%

Annualized return on average equity

16.27%

13.57%

12.90%

13.18%

16.48%

Net interest margin, fully tax equivalent

3.35%

3.26%

3.27%

3.71%

3.71%

Non-interest income to total revenue, fully tax equivalent

27.40%

27.86%

27.32%

27.84%

28.36%

Efficiency ratio, fully tax equivalent (4)

56.26%

55.96%

53.87%

53.19%

57.11%

Loans Segmentation

Commercial real estate - non-owner occupied

$

833,470

$

828,328

$

815,464

$

799,284

$

746,283

Commercial real estate - owner occupied

508,672

492,825

472,457

476,534

474,329

Commercial and industrial

802,422

731,850

764,480

883,868

838,800

Commercial and industrial - PPP

550,186

642,056

630,082

-

-

Residential real estate - owner occupied

239,191

211,984

215,891

219,221

217,606

Residential real estate - non-owner occupied

140,930

143,149

139,121

134,734

134,995

Construction and land development

291,764

257,875

255,447

246,040

255,816

Home equity lines of credit

95,366

97,150

103,672

107,121

103,854

Consumer

44,606

44,161

43,758

44,939

47,467

Leases

14,786

13,981

14,843

15,476

16,003

Credit cards - commercial

10,203

9,122

8,862

10,149

9,863

Total loans and leases

$

3,531,596

$

3,472,481

$

3,464,077

$

2,937,366

$

2,845,016

Asset Quality Data

Non-accrual loans

$

12,514

$

12,358

$

14,262

$

4,235

$

11,494

Troubled debt restructurings

16

18

45

52

34

Loans past due 90 days or more and still accruing

649

1,152

48

1,762

535

Total non-performing loans

13,179

13,528

14,355

6,049

12,063

Other real estate owned

281

612

493

493

493

Total non-performing assets

$

13,460

$

14,140

$

14,848

$

6,542

$

12,556

Non-performing loans to total loans

0.37%

0.39%

0.41%

0.21%

0.42%

Non-performing assets to total assets

0.29%

0.32%

0.34%

0.17%

0.34%

Allowance for credit losses on loans to total loans

1.47%

1.45%

1.38%

1.43%

0.94%

Allowance for credit losses on loans to average loans

1.49%

1.47%

1.40%

1.46%

0.95%

Allowance for credit losses on loans to non-performing loans

394%

373%

332%

697%

222%

Net (charge-offs) recoveries

$

19

$

(1,625)

$

15

$

(54)

$

(86)

Net (charge-offs) recoveries to average loans (5)

0.00%

-0.05%

0.00%

0.00%

0.00%

Other Information

Total assets under management (in millions)

$

3,852

$

3,414

$

3,204

$

2,961

$

3,320

Full-time equivalent employees

641

626

620

618

615

(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)

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Total stockholders' equity - GAAP (a)

$

440,701

$

428,598

$

420,231

$

409,702

$

406,297

Less: Goodwill

(12,513)

(12,513)

(12,513)

(12,513)

(12,513)

Less: Core deposit intangible

(1,962)

(2,042)

(2,122)

(2,203)

(2,285)

Tangible common equity - Non-GAAP (c)

$

426,226

$

414,043

$

405,596

$

394,986

$

391,499

Total assets - GAAP (b)

$

4,608,629

$

4,365,129

$

4,334,533

$

3,784,586

$

3,724,197

Less: Goodwill

(12,513)

(12,513)

(12,513)

(12,513)

(12,513)

Less: Core deposit intangible

(1,962)

(2,042)

(2,122)

(2,203)

(2,285)

Tangible assets - Non-GAAP (d)

$

4,594,154

$

4,350,574

$

4,319,898

$

3,769,870

$

3,709,399

Total stockholders' equity to total assets - GAAP (a/b)

9.56%

9.82%

9.69%

10.83%

10.91%

Tangible common equity to tangible assets - Non-GAAP (c/d)

9.28%

9.52%

9.39%

10.48%

10.55%

Total shares outstanding (e)

22,692

22,692

22,667

22,665

22,604

Book value per share - GAAP (a/e)

$

19.42

$

18.89

$

18.54

$

18.08

$

17.97

Tangible common equity per share - Non-GAAP (c/e)

18.78

18.25

17.89

17.43

17.32

(2) - Allowance for credit losses on loans to total non-PPP loans represents the allowance for credit losses, 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 it provides 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 and are not at risk of non-performance.

Quarterly Comparison

(Dollars in thousands)

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Total Loans - GAAP (a)

$

3,531,596

$

3,472,481

$

3,464,077

$

2,937,366

$

2,845,016

Less: PPP loans

(550,186)

(642,056)

(630,082)

-

-

Total non-PPP Loans - Non-GAAP (b)

2,981,410

$

2,830,425

$

2,833,995

$

2,937,366

$

2,845,016

Allowance for credit losses (c)

$

51,920

$

50,501

$

47,708

$

42,143

$

26,791

Non-performing loans (d)

13,179

13,528

14,355

6,049

12,063

Allowance for credit losses on loans to total loans - GAAP (c/a)

1.47%

1.45%

1.38%

1.43%

0.94%

Allowance for credit losses on loans to total loans - Non-GAAP (c/b)

1.74%

1.78%

1.68%

1.43%

0.94%

Non-performing loans to total loans - GAAP (d/a)

0.37%

0.39%

0.41%

0.21%

0.42%

Non-performing loans to total loans - Non-GAAP (d/b)

0.44%

0.48%

0.51%

0.21%

0.42%

(3) - Interest income on a fully tax equivalent 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 fully tax equivalent net interest income 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 normally presented, Bancorp considers an adjusted efficiency ratio. Bancorp believes this ratio is important because it provides a comparable ratio after eliminating the fluctuation in non-interest expenses related to amortization of investments in tax credit partnerships.

Quarterly Comparison

(Dollars in thousands)

12/31/20

9/30/20

6/30/20

3/31/20

12/31/19

Total non-interest expenses - GAAP (a)

$

28,129

$

26,196

$

24,884

$

23,950

$

26,153

Less: Amortization of investments in tax credit partnerships

(2,955)

(52)

(53)

(36)

(837)

Total non-interest expenses - Non-GAAP (c)

$

25,174

$

26,144

$

24,831

$

23,914

$

25,316

Total net interest income, fully tax equivalent

$

36,301

$

33,768

$

33,573

$

32,494

$

32,810

Total non-interest income

13,698

13,043

12,622

12,536

12,987

Less: Gain/loss on sale of securities

-

-

-

-

-

Total revenue - GAAP (b)

$

49,999

$

46,811

$

46,195

$

45,030

$

45,795

Efficiency ratio - GAAP (a/b)

56.26%

55.96%

53.87%

53.19%

57.11%

Efficiency ratio - Non-GAAP (c/b)

50.35%

55.85%

53.75%

53.11%

55.28%

(5) - Quarterly net (charge-offs) recoveries to average loans ratios are not annualized.