Stock Yards Bancorp Reports Strong Third Quarter Earnings of $23.2 Million or $0.86 Per Diluted Share

Rhea-AI Summary

Stock Yards Bancorp (SYBT) reported a strong third quarter, ending September 30, 2021, with net income of $23.2 million, or $0.86 per diluted share, up from $14.5 million, or $0.64 per diluted share, in Q3 2020. The results were driven by robust organic loan growth of $128 million and record operating income, fueled by wealth management and trust services. Total assets increased by $1.8 billion to $6.2 billion, while total deposits rose by $1.6 billion, reflecting continued strong financial performance.

Positive

• Net income rose 60% to $23.2 million from $14.5 million YoY.
• Organic loan growth reached $128 million, marking the second-largest growth quarter in company history.
• Non-interest income increased 35% to $17.6 million over Q3 2020, boosted by wealth management and trust services.
• Successful merger with Kentucky Bancshares and upcoming merger with Commonwealth Bancshares expected to enhance revenue and market presence.

Negative

• Net interest margin (NIM) decreased to 3.14% from 3.26% YoY, impacted by loan yield contraction.
• Non-interest expenses rose 36% to $34.6 million compared to Q3 2020, driven by increased compensation costs.

Third Quarter Highlighted by Solid Organic Loan Growth and Record Levels of Operating Income

LOUISVILLE, Ky., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Stock Yards Bancorp, Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust Company, with offices in Louisville, Central and Eastern Kentucky, as well as the Indianapolis and Cincinnati metropolitan markets, today reported earnings for the third quarter ended September 30, 2021. Net income for the third quarter was $23.2 million, or $0.86 per diluted share, compared with net income of $14.5 million, or $0.64 per diluted share, for the third quarter of 2020. Strong organic loan growth across all markets and record levels of operating (non-interest) income highlighted by wealth management and trust, card income and treasury management fees, contributed to strong profitability for the quarter.

(dollar amounts in thousands, except per share data)		3Q21				2Q21				3Q20
Net interest income	$	45,483			$	41,584			$	33,695
Provision for credit loss expense(6)		(1,525	)			4,147				4,968
Non-interest income		17,614				15,788				13,043
Non-interest expenses		34,558				48,177				25,646
Income before income tax expense		30,064				5,048				16,124
Income tax expense		6,902				864				1,591
Net income	$	23,162			$	4,184			$	14,533
Net income per share, diluted	$	0.86			$	0.17			$	0.64
Net interest margin		3.14	%			3.36	%			3.26	%
Efficiency ratio(4)		54.63	%			83.86	%			54.79	%
Tangible common equity to tangible assets(1)		8.64	%			8.57	%			9.52	%
Annualized return on average equity(7)		13.92	%			3.25	%			13.57	%
Annualized return on average assets(7)		1.50	%			0.32	%			1.34	%

“We delivered strong earnings for the third quarter, highlighted by strong organic loan growth, record loan production, solid revenue growth from both organic and acquired assets and record operating income,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “In addition to solid organic growth, our successful merger with Kentucky Bancshares early in the second quarter of this year has contributed nicely to top line revenue growth. Further, we are confident that our recently announced merger of Commonwealth Bancshares, Inc. (Commonwealth) will provide tremendous opportunities to generate additional growth going forward. This combination brings together two Louisville based community banks who are like-minded with similar cultures. The transaction not only builds upon our already prominent market share in the Louisville market, as Commonwealth is the largest privately-held bank headquartered in the Louisville MSA, but also expands our presence in the attractive Shelby County and Northern Kentucky markets. Additionally, and just as important, this combination bolsters our wealth management capabilities, adding significant wealth and trust assets. We remain on track to welcome Commonwealth to the Stock Yards family with an anticipated legal closing date during the fourth quarter.”

Commonwealth, headquartered in Louisville, Kentucky, operates 15 retail branches, including 9 in Jefferson County, four in Shelby County and two in Northern Kentucky. As of September 30, 2021, Commonwealth reported approximately $1.2 billion in assets, $711 million in loans (excluding PPP), $1.0 billion in deposits and $89 million in tangible common equity. Commonwealth also maintains a Wealth Management and Trust Department with total assets under management of $2.6 billion at September 30, 2021.

“During the third quarter, we completed our system conversion of Kentucky Bancshares and the majority of the costs associated with the merger were recognized during the second quarter. Although additional work remains to complete the full integration of the two companies and realize all expected operating synergies, we are exceptionally pleased with the progress we have made through the dedicated efforts of our employees. We anticipate, similar to our two prior successful mergers, the merger with Kentucky Bancshares will result in significant benefits to our expanding group of clients, communities, employees and shareholders,” said Hillebrand.

“With loans growing by approximately $750 million and deposits by approximately $1 billion, the Kentucky Bancshares merger, which was completed on May 31, 2021, is already having a significant impact on our operating results -  increasing our scale and reach and providing tremendous opportunity for future growth,” said Hillebrand. With the completion of the merger, at September 30, 2021, the Company had $6.2 billion in assets, $4.1 billion in net loans and $5.3 billion in total deposits. The combined enterprise, with 63 branch offices, has and will continue to benefit from a diversified geographic footprint with significant growth opportunities.

“Due to further economic forecast improvements and continued solid performance of the loan portfolio during the current quarter, we recorded a net benefit of $1.5 million to provision for credit loss expense during the third quarter. This compares to a $5.0 million net provision expense in the third quarter a year ago. We feel that we are well-positioned for future growth, having established credit loss reserves to total loans (excluding PPP loans), of 1.43%⁽²⁾ at September 30, 2021,” concluded Hillebrand.

Additional key factors contributing to the third quarter of 2021 results included:

• Organic loan growth, excluding PPP loans, totaled $128 million for the third quarter of 2021 – the second largest growth quarter in the company’s history behind the fourth quarter of 2020. Over the past twelve months, organic growth in loans totaled $254 million, or 9%, with $28 million of the growth attributed to the new Central Kentucky market.
• Ending loan balances across all four primary markets (Louisville, Cincinnati, Indianapolis and Central Kentucky) were at historical highs at quarter end.
• Deposit growth remained strong at $82 million on a linked quarter basis.
• Interest income on non-PPP loans increased $9.2 million, or 31%, over the third quarter of 2020 with $7.7 million of the increase representing the Central Kentucky contribution. Significant rate contraction continued to impact the loan portfolio. PPP interest/fee income totaled $4.4 million and $4.2 million for the third quarters of 2021 and 2020, respectively.
• Despite a 14 basis point benefit from PPP loans, net interest margin (NIM) continued to be negatively impacted by loan yield contraction and significant ongoing levels of excess balance sheet liquidity.
• Consistent with stabilization in the Federal Reserve Board unemployment forecast, solid credit quality statistics and a decline in available credit, a net reduction of $1.5 million in credit loss reserves was recorded for the third quarter of 2021, compared to a net reserve build of $5.0 million for the third quarter of 2020.
• Non-interest income increased 35% over the third quarter of 2020, boosted by a $3.0 million Central Kentucky contribution. Significant growth in assets under management tied to record net new business and strong market performance served to boost asset-based fees and wealth management and trust services income to a record quarter. Deposit service charges increased significantly, or 77% over the third quarter of 2020, a period significantly impacted by the pandemic. Card income and treasury management fees once again set historic quarterly records, representing 75% and 29% increases over the third quarter of 2020, respectively. The significant decline in mortgage banking income of 54% was consistent with a nearly 50% decline in origination volume. Brokerage income increased 81%, the strongest quarterly performance in over five years.
• The increase in non-interest expenses primarily related to higher compensation expenses, correlating with the increase in full time equivalent employees and increased incentive compensation tied to Company performance.

Results of Operations – Third Quarter 2021 Compared with Third Quarter 2020

Net interest income – the Company’s largest source of revenue – increased 35%, or $11.8 million, to $45.5 million, driven by higher interest income on non-PPP loans and the continued decline in cost of funds.

• Total interest income increased by $10.8 million, or 30%, to $46.9 million, primarily due to increased interest income on non-PPP loans, partly offset by continued earning-asset yield contraction.
• Total interest expense declined 40%, to $1.5 million. Interest expense on deposits decreased $704,000, or 33%, as the cost of interest bearing deposits declined to 0.16% in the third quarter of 2021 from 0.33% in the third quarter a year ago. While average interest bearing deposit balances surged, demand accounts increased $555 million, or 48%, as the Company continued to benefit significantly from the strategic lowering of stated deposit rates.
• NIM decreased 12 basis points to 3.14% for the third quarter of 2021 from 3.26% for the third quarter a year ago. During the quarter, forgiveness within the PPP loan portfolio and related fee income recognition had a 14 basis point positive impact to NIM. However, overall NIM continues to be negatively impacted by loan yield contraction and significant ongoing excess balance sheet liquidity, which represented a 26 basis point negative impact.
• Interest income on non-PPP loans increased $9.2 million, or 31%, quarter over prior year quarter, with $7.7 million of the increase representing the Central Kentucky market contribution. Despite a $1.01 billion increase in average non-PPP loans, significant rate contraction has continued to impact the portfolio, with the average quarterly yield earned on non-PPP loans contracting 24 basis points over the past 12 months to 3.98%. PPP interest/fee income totaled $4.4 million and $4.2 million for the third quarters of 2021 and 2020, respectively.
• Despite a $931 million combined quarter over prior year quarter increase in average balance of overnight funds and securities, corresponding interest income increased only $1.5 million, attributable to the decline in rates earned.
• Interest expense on FHLB advances declined $282,000, or 85%, consistent with the $49 million, or 83%, decline in average balance from the third quarter of 2020 to the third quarter of 2021. The Bank has not replaced any matured advances in 2020 and 2021.

The Company recorded a net benefit of $1.5 million for credit losses during the third quarter of 2021, which included a $1.0 million benefit to provision for credit losses for loans and a $525,000 net benefit to provision for credit losses for off-balance sheet exposures consistent with improvement in underlying CECL model factors.

Non-interest income increased $4.6 million, or 35%, to $17.6 million.

• Wealth management and trust income totaled a record $7.1 million for the third quarter of 2021, increasing $1.5 million, or 26%, over the third quarter a year ago. Significant growth in assets under management tied to record net new business and strong market performance served to boost asset-based fees and wealth management and trust services income to a record quarter. In addition, the new Central Kentucky market boosted assets under management by $250 million at September 30, 2021.
• Retail deposit service charges increased $770,000 compared to the third quarter a year ago, a period severely impacted by the pandemic.
• Card income increased $1.7 million, or 75%, over the third quarter of 2020. Growth trends in both portfolios remain positive, as card income benefitted significantly from improving economic activity, with consumers and businesses increasing their spending activities, complimented by a meaningful contribution from Central Kentucky.
• Treasury management fees increased by $403,000, or 29%, driven by increased transaction volume, new product sales and customer base expansion. In addition, calling efforts to existing customers have led to significant increases in online services, reporting, ACH origination, remote deposit and fraud mitigation services.
• Mortgage banking income, which primarily consists of gain on sale of loans, servicing income and mortgage servicing rights amortization, was $915,000 for the third quarter of 2021, down 54% from the third quarter a year ago primarily due to a significant decline in loans sold and higher mortgage rates.
  

Non-interest expenses increased $8.9 million, to $34.6 million.

• Compensation expense increased $4.1 million, or 31%, primarily due to the increase in full time equivalent employees. Full time equivalent employees increased to 794 at quarter end from 626 at September 30, 2020, as the Bank added 156 associates in connection with its expansion into Central Kentucky, contributing $2.9 million to the total compensation increase. Contributing to the increase, additional incentive compensation of $949,000 was expensed in the third quarter of 2021, consistent with the Company’s operating performance.
• Employee benefits increased $809,000, or 28%, primarily due to higher health insurance expense, 401(k) matching and payroll tax expenses associated with the above-mentioned increase in full time equivalent employees.
• Net occupancy and equipment expenses increased $555,000, or 25%, as 19 branches were added with the second quarter expansion into Central Kentucky.
• Technology and communication expenses, which include 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 $850,000, or 37%. The majority of the increase related to the merger, as the system conversion did not occur until late August.
• Card processing expense increased $830,000, consistent with the card income trend noted above. Expense related to the Central Kentucky market totaled $651,000 for the third quarter of 2021.
• Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business increased $488,000, or 93%, compared to the third quarter a year ago, a period significantly impacted by the pandemic.
• Capital and deposit tax declined $520,000, or 48%, as the Company has transitioned to record Kentucky state income tax as a component of tax expense.
• Merger expenses totaled $525,000 for the third quarter of 2021 and related to the pending Commonwealth merger.
• Other non-interest expenses increased $1.0 million, or 83%, primarily due to merger related items such as core deposit intangible amortization and insurance captive expenses.
  

Financial Condition – September 30, 2021 Compared with September 30, 2020

Total assets increased $1.8 billion year over year, or 42%, to $6.2 billion.

Total loans increased $717 million year over year, or 21%, to $4.2 billion. Excluding the PPP loan portfolio, total loans increased $1.1 billion, or 40%, over the past twelve months, with approximately $750 million of growth associated with the Central Kentucky market. Total line of credit usage increased to 41% as of September 30, 2021, from 37% at September 30, 2020, with commercial and industrial line usage increasing meaningfully, but remaining well below pre-pandemic levels.

The Company acquired nearly $400 million in securities related to the current year merger and has deployed $325 million of excess cash into securities in 2021, contributing significantly to the $641 million of growth in the investment portfolio over the past twelve months.

Total deposits increased $1.6 billion, or 42%, from September 30, 2020, to September 30, 2021, with non-interest bearing deposits representing $565 million of the growth. Both period end and average deposit balances ended at record levels at September 30, 2021, as Federal programs such as the PPP and stimulus checks have boosted deposit balances.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the third quarter of 2021, the Company recorded net loan charge-offs of $1.9 million, primarily related to one Central Kentucky commercial real estate relationship where the charged off amount  had been fully reserved for at the time of merger. This compared to net loan charge-offs of $1.6 million in the third quarter of 2020. Non-performing loans totaled $5 million, or 0.13%⁽²⁾ of total loans (excluding PPP) outstanding compared to $14 million, or 0.48%⁽²⁾ of total loans (excluding PPP) outstanding at September 30, 2020.

At September 30, 2021, the Company remained “well-capitalized,” the highest regulatory capital rating for financial institutions. Total equity to assets was 10.73% and the tangible common equity ratio was 8.64%⁽¹⁾ at September 30, 2021, compared to 9.82%⁽¹⁾ and 9.52%⁽¹⁾, respectively, at December 31, 2020 and September 30, 2020.

In August, 2021, the Board of Directors increased its cash dividend rate to $0.28 per common share. The dividend was paid on October 1, 2021, to stockholders of record as of September 20, 2021.

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

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

Net interest income increased $3.9 million, or 9%, over the prior quarter to $45.5 million, led by the merger, organic loan growth, PPP fee recognition and the continued decline in cost of funds.

Due to continued improvement in the unemployment forecast combined with solid traditional credit metrics, the Company recorded a $1.0 million benefit to provision for credit losses on loans in the third quarter of 2021. During the second quarter of 2021, the Company recorded a net benefit of $2.7 million to provision for credit losses for legacy Stock Yards loan portfolio and an additional $7.4 million in merger related credit loss expense associated with the acquired non-Purchase Credit Deteriorated loan portfolio.

Non-interest income increased $1.8 million, or 12%, to $17.6 million. Higher card income, deposit service fees, wealth management and trust service fees and treasury management fees more than offset the reduction in mortgage banking income. During the third quarter of 2021, the Company benefitted from three full months of Central Kentucky operations compared to one month during the second quarter of 2021.

Non-interest expenses decreased $13.6 million, or 28%, to $34.6 million, with the majority of the decrease associated with the Central Kentucky market expansion. Merger expenses totaled $525,000 in the third quarter of 2021 and related primarily to the pending Commonwealth merger, compared to $18.1 million of merger expenses related to the Kentucky Bancshares merger in the second quarter. Compensation expense increased $1.7 million, to $17.4 million compared with the second quarter of 2021, due to the addition of 156 full time equivalent employees in association with the Central Kentucky expansion and additional incentive compensation recorded during the current quarter tied to Company performance.

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

Total assets increased $93 million on a linked quarter basis to $6.2 billion, reflecting organic increases in loans and investment securities.

Total loans decreased $17 million on a linked quarter basis to $4.2 billion at quarter end. Total loans excluding the PPP portfolio increased $128 million, or 3%, on a linked quarter basis. Total line of credit usage increased to 41% as of September 30, 2021, from 39% at June 30, 2021, with commercial and industrial line usage increasing meaningfully, but remaining well below pre-pandemic levels.

Total deposits increased $82 million, or 2%, on a linked quarter basis, as a result of organic growth in deposit balances with both existing and new customers.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $6.2 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.”

Forward-looking Statements

Certain statements contained in this communication, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, certain plans, expectations, goals, projections and benefits relating to the merger transaction between Stock Yards and Kentucky Bancshares, which are subject to numerous assumptions, risks and uncertainties. Words or phrases such as “anticipate,” “believe,” “aim,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or the negative of these terms or other comparable terminology, as well as similar expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of the management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. In addition to factors disclosed in reports filed by Stock Yards with the SEC, risks and uncertainties for Stock Yards include but are not limited to: the possibility that any of the anticipated benefits of the recent Kentucky Bancshares merger and proposed Commonwealth Bancshares merger will not be realized or will not be realized within the expected time period; the risk that integration of acquired operations with those of Stock Yards will be materially delayed or will be more costly or difficult than expected; diversion of management's attention from ongoing business operations and opportunities due to the merger; the challenges of integrating and retaining key employees; the effect of the announcement of the merger on the combined company's respective customer and employee relationships and operating results; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; dilution caused by Stock Yards’ issuance of additional shares of Stock Yards common stock in connection with the merger; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and the business, results of operations and financial condition of the combined company; and general competitive, economic, political and market conditions and fluctuations. All forward-looking statements included in this communication are made as of the date hereof and are based on information available at that time. Except as required by law, Stock Yards assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date the forward-looking statements were made.

Please refer to Stock Yards’ Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the three and six months ended June 30, 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)
Third Quarter 2021 Earnings Release
(In thousands unless otherwise noted)
						Three Months Ended								Nine Months Ended
						September 30,								September 30,
Income Statement Data							2021				2020				2021				2020
Net interest income, fully tax equivalent (3)						$	45,643			$	33,768			$	125,178			$	99,834
Interest income:
Loans						$	43,307			$	33,844			$	120,402			$	101,692
Federal funds sold and interest bearing due from banks							208				54				358				673
Mortgage loans held for sale							53				173				175				359
Securities							3,380				2,073				8,633				6,808
Total interest income							46,948				36,144				129,568				109,532
Interest expense:
Deposits							1,403				2,107				4,348				8,676
Securities sold under agreements to repurchase and
other short-term borrowings							11				9				27				64
Federal Home Loan Bank advances							51				333				301				1,123
Total interest expense							1,465				2,449				4,676				9,863
Net interest income							45,483				33,695				124,892				99,669
Provision for credit losses (6)							(1,525	)			4,968				1,147				17,918
Net interest income after provision for credit losses							47,008				28,727				123,745				81,751
Non-interest income:
Wealth management and trust services							7,128				5,657				20,234				17,601
Deposit service charges							1,768				998				3,945				3,081
Debit and credit card income							3,887				2,218				9,444				6,261
Treasury management fees							1,771				1,368				5,041				3,901
Mortgage banking income							915				1,979				3,662				4,447
Net investment product sales commissions and fees							780				431				1,789				1,288
Bank owned life insurance							275				172				642				527
Other							1,090				220				2,489				1,095
Total non-interest income							17,614				13,043				47,246				38,201
Non-interest expenses:
Compensation							17,381				13,300				45,888				37,296
Employee benefits							3,662				2,853				10,290				8,891
Net occupancy and equipment							2,732				2,177				7,021				6,045
Technology and communication							3,173				2,323				8,189				6,385
Debit and credit card processing							1,479				649				3,160				1,908
Marketing and business development							1,011				523				2,357				1,548
Postage, printing and supplies							630				472				1,499				1,355
Legal and professional							700				544				1,828				1,795
FDIC Insurance							387				435				1,141				894
Amortization of investments in tax credit partnerships							53				52				315				141
Capital and deposit based taxes							556				1,076				1,541				3,331
Merger expenses							525				-				19,025				-
Federal Home Loan Bank early termination penalty							-				-				474				-
Other							2,269				1,242				4,980				3,041
Total non-interest expenses							34,558				25,646				107,708				72,630
Income before income tax expense							30,064				16,124				63,283				47,322
Income tax expense							6,902				1,591				13,227				6,189
Net income						$	23,162			$	14,533			$	50,056			$	41,133
Net income per share - Basic						$	0.87			$	0.64			$	2.04			$	1.82
Net income per share - Diluted							0.86				0.64				2.02				1.81
Cash dividend declared per share							0.28				0.27				0.82				0.81
Weighted average shares - Basic							26,688				22,582				24,567				22,553
Weighted average shares - Diluted							26,929				22,802				24,809				22,759
														September 30,
Balance Sheet Data															2021				2020
Loans														$	4,189,117			$	3,472,481
Allowance for credit losses on loans															56,533				50,501
Total assets															6,181,188				4,365,129
Non-interest bearing deposits															1,744,790				1,180,001
Interest bearing deposits															3,597,234				2,574,217
Federal Home Loan Bank advances															10,000				56,356
Stockholders' equity															663,547				428,598
Total shares outstanding															26,585				22,692
Book value per share (1)														$	24.96			$	18.89
Tangible common equity per share (1)															19.63				18.25
Market value per share															58.65				34.04
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2021 Earnings Release
						Three Months Ended								Nine Months Ended
						September 30,								September 30,
Average Balance Sheet Data							2021				2020				2021				2020
Federal funds sold and interest bearing due from banks						$	532,549			$	194,100			$	361,713			$	216,014
Mortgage loans held for sale							8,875				28,520				10,703				17,202
Available for sale debt securities							1,034,712				442,089				831,229				433,744
Federal Home Loan Bank stock							11,364				11,284				11,312				11,284
Loans							4,173,260				3,444,407				3,876,639				3,245,011
Total interest earning assets							5,760,760				4,120,400				5,091,596				3,923,255
Total assets							6,139,176				4,325,500				5,364,121				4,118,441
Interest bearing deposits							3,525,785				2,521,838				3,134,978				2,446,585
Total deposits							5,297,917				3,707,845				4,652,401				3,514,554
Securities sold under agreement to repurchase and other short term borrowings							82,048				49,709				68,485				47,803
Federal Home Loan Bank advances							10,000				59,487				19,398				65,751
Total interest bearing liabilities							3,617,833				2,631,034				3,222,861				2,560,139
Total stockholders' equity							660,099				426,049				541,238				415,595
Performance Ratios
Annualized return on average assets (7)							1.50	%			1.34	%			1.25	%			1.33	%
Annualized return on average equity (7)							13.92	%			13.57	%			12.37	%			13.22	%
Net interest margin, fully tax equivalent							3.14	%			3.26	%			3.29	%			3.40	%
Non-interest income to total revenue, fully tax equivalent							27.85	%			27.86	%			27.40	%			27.67	%
Efficiency ratio, fully tax equivalent (4)							54.63	%			54.79	%			62.47	%			52.62	%
Capital Ratios
Total stockholders' equity to total assets (1)															10.73	%			9.82	%
Tangible common equity to tangible assets (1)															8.64	%			9.52	%
Average stockholders' equity to average assets															10.09	%			10.09	%
Total risk-based capital															12.61	%			13.79	%
Common equity tier 1 risk-based capital															11.69	%			12.61	%
Tier 1 risk-based capital															11.69	%			12.61	%
Leverage															8.98	%			9.70	%
Loan Segmentation
Commercial real estate - non-owner occupied														$	1,142,647			$	828,328
Commercial real estate - owner occupied															652,631				492,825
Commercial and industrial															910,923				704,582
Commercial and industrial - PPP															231,335				642,056
Residential real estate - owner occupied															398,069				211,984
Residential real estate - non-owner occupied															277,045				143,149
Construction and land development															303,642				257,875
Home equity lines of credit															140,027				97,150
Consumer															104,629				71,429
Leases															12,348				13,981
Credit cards - commercial															15,821				9,122
Total loans and leases														$	4,189,117			$	3,472,481
Asset Quality Data
Non-accrual loans														$	5,036			$	12,358
Troubled debt restructurings															13				18
Loans past due 90 days or more and still accruing															-				1,152
Total non-performing loans															5,049				13,528
Other real estate owned															7,229				612
Total non-performing assets														$	12,278			$	14,140
Non-performing loans to total loans (2)															0.12	%			0.39	%
Non-performing assets to total assets															0.20	%			0.32	%
Allowance for credit losses on loans to total loans (2)															1.35	%			1.45	%
Allowance for credit  losses on loans to average loans															1.46	%			1.56	%
Allowance for credit losses on loans to non-performing loans															1120	%			373	%
Net (charge-offs) recoveries						$	(1,891	)		$	(1,625	)		$	(4,640	)		$	(1,664	)
Net (charge-offs) recoveries to average loans (5)							-0.05	%			-0.05	%			-0.12	%			-0.05	%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2021 Earnings Release
		Quarterly Comparison
Income Statement Data		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Net interest income, fully tax equivalent  (3)		$	45,643			$	41,661			$	37,874			$	36,301			$	33,768
Net interest income		$	45,483			$	41,584			$	37,825			$	36,252			$	33,695
Provision for credit losses (6)			(1,525	)			4,147				(1,475	)			500				4,968
Net interest income after provision for credit losses			47,008				37,437				39,300				35,752				28,727
Non-interest income:
Wealth management and trust services			7,128				6,858				6,248				5,805				5,657
Deposit service charges			1,768				1,233				944				1,080				998
Debit and credit card income			3,887				3,284				2,273				2,219				2,218
Treasury management fees			1,771				1,730				1,540				1,506				1,368
Mortgage banking income			915				1,303				1,444				1,708				1,979
Net investment product sales commissions and fees			780				545				464				487				431
Bank owned life insurance			275				206				161				166				172
Other			1,090				629				770				727				220
Total non-interest income			17,614				15,788				13,844				13,698				13,043
Non-interest expenses:
Compensation			17,381				15,680				12,827				14,072				13,300
Employee benefits			3,662				3,367				3,261				2,173				2,853
Net occupancy and equipment			2,732				2,244				2,045				2,137				2,177
Technology and communication			3,173				2,670				2,346				2,347				2,323
Debit and credit card processing			1,479				976				705				698				649
Marketing and business development			1,011				822				524				835				523
Postage, printing and supplies			630				460				409				423				472
Legal and professional			700				666				462				597				544
FDIC Insurance			387				349				405				323				435
Amortization of investments in tax credit partnerships			53				231				31				2,955				52
Capital and deposit based taxes			556				527				458				1,055				1,076
Merger expenses			525				18,100				400				-				-
Federal Home Loan Bank early termination penalty			-				474				-				-				-
Other			2,269				1,611				1,100				1,414				1,242
Total non-interest expenses			34,558				48,177				24,973				29,029				25,646
Income before income tax expense			30,064				5,048				28,171				20,421				16,124
Income tax expense			6,902				864				5,461				2,685				1,591
Net income		$	23,162			$	4,184			$	22,710			$	17,736			$	14,533
Net income per share - Basic		$	0.87			$	0.17			$	1.00			$	0.79			$	0.64
Net income per share - Diluted			0.86				0.17				0.99				0.78				0.64
Cash dividend declared per share			0.28				0.27				0.27				0.27				0.27
Weighted average shares - Basic			26,688				24,140				22,622				22,593				22,582
Weighted average shares - Diluted			26,929				24,379				22,865				22,794				22,802
		Quarterly Comparison
Balance Sheet Data		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Cash and due from banks		$	84,520			$	58,477			$	43,061			$	43,179			$	49,517
Federal funds sold and interest bearing due from banks			500,421				481,716				289,920				274,766				241,486
Mortgage loans held for sale			10,201				5,420				6,579				22,547				23,611
Available for sale debt securities			1,070,148				1,006,908				672,167				586,978				429,184
Federal Home Loan Bank stock			9,376				14,475				10,228				11,284				11,284
Loans			4,189,117				4,206,392				3,635,156				3,531,596				3,472,481
Allowance for credit losses on loans			56,533				59,424				50,714				51,920				50,501
Goodwill			135,830				136,529				12,513				12,513				12,513
Total assets			6,181,188				6,088,072				4,794,075				4,608,629				4,365,129
Non-interest bearing deposits			1,744,790				1,743,953				1,370,183				1,187,057				1,180,001
Interest bearing deposits			3,597,234				3,516,153				2,829,779				2,801,577				2,574,517
Securities sold under agreements to repurchase			74,406				63,942				51,681				47,979				40,430
Federal funds purchased			10,908				10,947				8,642				11,464				9,179
Federal Home Loan Bank advances			10,000				10,000				24,180				31,639				56,536
Stockholders' equity			663,547				651,089				443,232				440,701				428,598
Total shares outstanding			26,585				26,588				22,781				22,692				22,692
Book value per share (1)		$	24.96			$	24.49			$	19.46			$	19.42			$	18.89
Tangible common equity per share (1)			19.63				19.16				18.82				18.78				18.25
Market value per share			58.65				50.89				51.06				40.48				34.04
Capital Ratios
Total stockholders' equity to total assets (1)			10.73	%			10.69	%			9.25	%			9.56	%			9.82	%
Tangible common equity to tangible assets (1)			8.64	%			8.57	%			8.97	%			9.28	%			9.52	%
Average stockholders' equity to average assets			10.75	%			9.88	%			9.44	%			9.61	%			9.85	%
Total risk-based capital			12.61	%			12.80	%			13.39	%			13.36	%			13.79	%
Common equity tier 1 risk-based capital			11.69	%			11.79	%			12.32	%			12.23	%			12.61	%
Tier 1 risk-based capital			11.69	%			11.79	%			12.32	%			12.23	%			12.61	%
Leverage			8.98	%			10.26	%			9.46	%			9.57	%			9.70	%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2021 Earnings Release
		Quarterly Comparison
Average Balance Sheet Data		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Federal funds sold and interest bearing due from banks		$	532,549			$	313,954			$	235,370			$	271,277			$	194,100
Mortgage loans held for sale			8,875				8,678				14,618				28,951				28,520
Available for sale debt securities			1,034,712				793,696				661,175				510,677				442,089
Loans			4,173,260				3,844,662				3,605,760				3,483,298				3,444,407
Total interest earning assets			5,760,760				4,972,914				4,527,563				4,305,487				4,120,400
Total assets			6,139,176				5,226,654				4,710,836				4,512,874				4,325,500
Interest bearing deposits			3,525,785				3,055,360				2,815,986				2,689,103				2,521,838
Total deposits			5,297,917				4,552,583				4,094,179				3,888,247				3,707,845
Securities sold under agreement to repurchase			82,048				66,591				56,536				55,825				49,709
Federal Home Loan Bank advances			10,000				19,135				29,270				48,771				59,487
Total interest bearing liabilities			3,617,833				3,141,086				2,901,792				2,793,699				2,631,034
Total stockholders' equity			660,099				516,427				444,821				433,596				426,049
Performance Ratios
Annualized return on average assets (7)			1.50	%			0.32	%			1.96	%			1.56	%			1.34	%
Annualized return on average equity (7)			13.92	%			3.25	%			20.71	%			16.27	%			13.57	%
Net interest margin, fully tax equivalent			3.14	%			3.36	%			3.39	%			3.35	%			3.26	%
Non-interest income to total revenue, fully tax equivalent			27.85	%			27.48	%			26.77	%			27.40	%			27.86	%
Efficiency ratio, fully tax equivalent (4)			54.63	%			83.86	%			48.29	%			58.06	%			54.79	%
Loans Segmentation
Commercial real estate - non-owner occupied		$	1,142,647			$	1,170,461			$	876,523			$	833,470			$	828,328
Commercial real estate - owner occupied			652,631				604,120				527,316				508,672				492,825
Commercial and industrial			910,923				845,038				742,505				775,154				704,582
Commercial and industrial - PPP			231,335				377,021				612,885				550,186				642,056
Residential real estate - owner occupied			398,069				377,783				262,516				239,191				211,984
Residential real estate - non-owner occupied			277,045				273,782				136,380				140,930				143,149
Construction and land development			303,642				281,149				281,815				291,764				257,875
Home equity lines of credit			140,027				142,468				91,233				95,366				97,150
Consumer			104,629				105,439				78,326				71,874				71,429
Leases			12,348				14,171				14,115				14,786				13,981
Credit cards - commercial			15,821				14,960				11,542				10,203				9,122
Total loans and leases		$	4,189,117			$	4,206,392			$	3,635,156			$	3,531,596			$	3,472,481
Asset Quality Data
Non-accrual loans		$	5,036			$	12,814			$	12,913			$	12,514			$	12,358
Troubled debt restructurings			13				14				15				16				18
Loans past due 90 days or more and still accruing			-				1,050				1,377				649				1,152
Total non-performing loans			5,049				13,878				14,305				13,179				13,528
Other real estate owned			7,229				648				281				281				612
Total non-performing assets		$	12,278			$	14,526			$	14,586			$	13,460			$	14,140
Non-performing loans to total loans (2)			0.12	%			0.33	%			0.39	%			0.37	%			0.39	%
Non-performing assets to total assets			0.20	%			0.24	%			0.30	%			0.29	%			0.32	%
Allowance for credit losses on loans to total loans (2)			1.35	%			1.41	%			1.40	%			1.47	%			1.45	%
Allowance for credit losses on loans to average loans			1.35	%			1.55	%			1.41	%			1.49	%			1.47	%
Allowance for credit losses on loans to non-performing loans			1120	%			428	%			355	%			394	%			373	%
Net (charge-offs) recoveries		$	(1,891	)		$	(2,743	)		$	(6	)		$	19			$	(1,625	)
Net (charge-offs) recoveries to average loans (5)			-0.05	%			-0.07	%			0.00	%			0.00	%			-0.05	%
Other Information
Total assets under management (in millions)		$	4,506			$	4,440			$	3,989			$	3,852			$	3,414
Full-time equivalent employees			794				823				638				641				626
(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)		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Total stockholders' equity - GAAP (a)		$	663,547			$	651,089			$	443,232			$	440,701			$	428,598
Less: Goodwill			(135,830	)			(136,529	)			(12,513	)			(12,513	)			(12,513	)
Less: Core deposit intangible			(5,871	)			(5,162	)			(1,885	)			(1,962	)			(2,042	)
Tangible common equity - Non-GAAP (c)		$	521,846			$	509,398			$	428,834			$	426,226			$	414,043
Total assets - GAAP (b)		$	6,181,188			$	6,088,072			$	4,794,075			$	4,608,629			$	4,365,129
Less: Goodwill			(135,830	)			(136,529	)			(12,513	)			(12,513	)			(12,513	)
Less: Core deposit intangible			(5,871	)			(5,162	)			(1,885	)			(1,962	)			(2,042	)
Tangible assets - Non-GAAP (d)		$	6,039,487			$	5,946,381			$	4,779,677			$	4,594,154			$	4,350,574
Total stockholders' equity to total assets - GAAP (a/b)			10.73	%			10.69	%			9.25	%			9.56	%			9.82	%
Tangible common equity to tangible assets - Non-GAAP (c/d)			8.64	%			8.57	%			8.97	%			9.28	%			9.52	%
Total shares outstanding (e)			26,585				26,588				22,781				22,692				22,692
Book value per share - GAAP (a/e)		$	24.96			$	24.49			$	19.46			$	19.42			$	18.89
Tangible common equity per share - Non-GAAP (c/e)			19.63				19.16				18.82				18.78				18.25
(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)		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Total Loans - GAAP (a)		$	4,189,117			$	4,206,392			$	3,635,156			$	3,531,596			$	3,472,481
Less: PPP loans			(231,335	)			(377,021	)			(612,885	)			(550,186	)			(642,056	)
Total non-PPP Loans - Non-GAAP (b)		$	3,957,782			$	3,829,371			$	3,022,271			$	2,981,410			$	2,830,425
Allowance for credit losses on loans (c)		$	56,533			$	59,424			$	50,714			$	51,920			$	50,501
Total non-performing loans (d)			5,049				13,878				14,305				13,179				13,528
Allowance for credit losses on loans to total loans - GAAP (c/a)			1.35	%			1.41	%			1.40	%			1.47	%			1.45	%
Allowance for credit losses on loans to total loans - Non-GAAP (c/b)			1.43	%			1.55	%			1.68	%			1.74	%			1.78	%
Non-performing loans to total loans - GAAP (d/a)			0.12	%			0.33	%			0.39	%			0.37	%			0.39	%
Non-performing loans to total loans - Non-GAAP (d/b)			0.13	%			0.36	%			0.47	%			0.44	%			0.48	%
(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)		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Total non-interest expenses - GAAP  (a)		$	34,558			$	48,177			$	24,973			$	29,029			$	25,646
Less: Non-recurring merger expenses			(525	)			(18,100	)			(400	)			-				-
Less: Amortization of investments in tax credit partnerships			(53	)			(231	)			(31	)			(2,955	)			(52	)
Total non-interest expenses - Non-GAAP (c)		$	33,980			$	29,846			$	24,542			$	26,074			$	25,594
Total net interest income, fully tax equivalent		$	45,643			$	41,661			$	37,874			$	36,301			$	33,768
Total non-interest income			17,614				15,788				13,844				13,698				13,043
Less: Gain/loss on sale of securities			-				-				-				-				-
Total revenue - GAAP (b)		$	63,257			$	57,449			$	51,718			$	49,999			$	46,811
Efficiency ratio - GAAP (a/b)			54.63	%			83.86	%			48.29	%			58.06	%			54.79	%
Efficiency ratio - Non-GAAP (c/b)			53.72	%			51.95	%			47.45	%			52.15	%			54.68	%
		Nine months ended				Nine months ended
(Dollars in thousands)		9/30/21				9/30/20
Total non-interest expenses - GAAP  (a)		$	107,708			$	72,630
Less: Non-recurring merger expenses			(19,025	)			-
Less: Amortization of investments in tax credit partnerships			(315	)			(141	)
Total non-interest expenses - Non-GAAP (c)		$	88,368			$	72,489
Total net interest income, fully tax equivalent		$	125,178			$	99,834
Total non-interest income			47,246				38,201
Less: Gain/loss on sale of securities			-				-
Total revenue - GAAP (b)		$	172,424			$	138,035
Efficiency ratio - GAAP (a/b)			62.47	%			52.62	%
Efficiency ratio - Non-GAAP (c/b)			51.25	%			52.51	%
(5) - Quarterly net (charge-offs) recoveries to average loans ratios are not annualized.
(6) - Effective for the three month period ended March 31, 2020, the Company has reclassified credit loss expense for off-balance sheet exposures from non-interest expense to provision for credit losses and combined this with the provision for losses on loans on the face of the income statement.
		Quarterly Comparison
(in thousands)		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Provision for credit losses - loans		$	(1,000	)		$	4,697			$	(1,200	)		$	1,400			$	4,418
Provision for credit losses - off balance sheet exposures			(525	)			(550	)			(275	)			(900	)			550
Total provision for credit losses		$	(1,525	)		$	4,147			$	(1,475	)		$	500			$	4,968
(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 that non-recurring items related to the Kentucky Bancshares acquisition had on results for the three and six months ended June 30, 2021, 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)		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Net income, as reported (a)		$	23,162			$	4,184			$	22,710			$	17,736			$	14,533
Add: Non-recurring merger expenses			525				18,100				400				-				-
Add: Provision for credit losses on non-PCD loans			-				7,397				-				-				-
Less: Tax effect of adjustments to net income			(110	)			(5,354	)			(84	)			-				-
Total net income - Non-GAAP (b)		$	23,577			$	24,327			$	23,026			$	17,736			$	14,533
Total average assets (c)		$	6,139,176			$	5,226,654			$	4,710,836			$	4,512,874			$	4,325,500
Total average equity (d )			660,099				516,427				444,821				433,596				426,049
Return on average assets - GAAP (a/c)			1.50	%			0.32	%			1.96	%			1.56	%			1.34	%
Return on average assets - Non-GAAP (b/c)			1.52	%			1.87	%			1.98	%			1.56	%			1.34	%
Return on average equity - GAAP (a/d)			13.92	%			3.25	%			20.71	%			16.27	%			13.57	%
Return on average equity - Non-GAAP (b/d)			14.17	%			18.89	%			20.71	%			16.27	%			13.57	%

 

Contact:

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

FAQ

What were Stock Yards Bancorp's earnings for Q3 2021?

Stock Yards Bancorp reported net income of $23.2 million or $0.86 per diluted share for Q3 2021.

How did Stock Yards Bancorp's loan growth perform in Q3 2021?

The company experienced organic loan growth of $128 million in Q3 2021.

What is the current net interest margin for Stock Yards Bancorp?

As of Q3 2021, Stock Yards Bancorp reported a net interest margin of 3.14%.

What is the impact of the recent mergers on Stock Yards Bancorp?

The merger with Kentucky Bancshares and the pending merger with Commonwealth Bancshares are expected to enhance revenue and market share.

What was the status of Stock Yards Bancorp's total assets in Q3 2021?

Total assets increased by $1.8 billion to $6.2 billion year over year as of September 30, 2021.