Stock Yards Bancorp Reports Third Quarter Earnings of $28.5 Million or $0.97 per Diluted Share

Rhea-AI Summary

Stock Yards Bancorp, Inc. (SYBT) reported a record third-quarter net income of $28.5 million, or $0.97 per diluted share, a significant increase from $23.2 million, or $0.87 per diluted share, in Q3 2021. Key factors include a remarkable $213 million organic loan growth and net interest margin expansion to 3.46%. Total assets rose to $7.55 billion, driven by strong loan production amid challenging market conditions. Despite a slight deposit contraction of 1%, non-interest income surged by 41% to $24.9 million, reflecting robust client growth and increased fees.

Positive

• Record net income of $28.5 million, up 23% year-over-year.
• Organic loan growth of $213 million, a 4% increase from the previous quarter.
• Net interest income rose by 37% to $62.4 million.
• Improved net interest margin increased to 3.46%.
• Non-interest income surged by 41% to $24.9 million.

Negative

• Total deposits decreased by $48 million, or 1%, linked quarter.
• Provision for credit loss expense rose to $4.8 million amid strong loan growth.

Third Quarter Profits Reflect Strong Organic Loan Growth and Net Interest Margin Expansion

LOUISVILLE, Ky., Oct. 26, 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 third quarter ended September 30, 2022, of $28.5 million, or $0.97 per diluted share. This compares to net income of $23.2 million, or $0.87 per diluted share, for the third quarter of 2021. Organic loan growth across all markets and expanded net interest margin (NIM) contributed to strong third quarter 2022 operating results.

(dollar amounts in thousands, except per share data)	3Q22				2Q22				3Q21
Net income	$	28,455			$	26,794			$	23,162
Net income per share, diluted		0.97				0.91				0.87
Net interest income	$	62,376			$	56,984			$	45,483
Provision for credit loss expense(6)		4,803				(200	)			(1,525	)
Non-interest income		24,864				21,940				17,614
Non-interest expenses		44,873				44,675				34,558
Net interest margin		3.46	%			3.20	%			3.14	%
Efficiency ratio(4)		51.30	%			56.42	%			54.63	%
Tangible common equity to tangible assets(1)		6.78	%			7.00	%			8.64	%
Annualized return on average equity(7)		14.85	%			14.34	%			13.92	%
Annualized return on average assets(7)		1.47	%			1.40	%			1.50	%

“Stock Yards delivered the best third quarter in our history, highlighted by outstanding quarterly loan production and significant non-interest revenue generation,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “Record linked third quarter net loan growth (excluding PPP loans) of $213 million was well diversified within all loan categories and across all of our markets. On the linked quarter, non-interest bearing deposit growth of $79 million was offset by seasonal declines in public funds, leading to an overall $48 million contraction in total deposits. While we chose to proactively raise stated deposit rates and time deposit offering rates in July, the decline in total deposits was tied to anticipated time deposit runoff and the previously mentioned decline in public funds. Additionally, our NIM benefitted from the interest rate increases enacted by the Federal Reserve Board (FRB) during the quarter, and we are well-positioned to benefit even further from anticipated future rate increases in the months ahead.

“We continue to make progress with the integration of our merger with Commonwealth Bancshares (Commonwealth) that we closed in March of this year,” Hillebrand continued. “During the quarter, we executed several cost saving measures and disposed of certain overlapping properties, resulting in a non-recurring pre-tax gain of $3.1 million. 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.”

At September 30, 2022, the Company had $7.55 billion in assets, $5.07 billion in loans and $6.50 billion in total deposits. The Company’s combined enterprise, which encompasses 73 branch offices across three contiguous states, will continue to benefit from a diversified geographic footprint and provide significant growth opportunities in both the banking and wealth management arenas.

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

• Total loans, excluding PPP loans, grew a record $213 million, or 4%, on a linked quarter basis. Excluding the first quarter acquisition, loans grew by $395 million, or 10%, during the first nine months of 2022. Total loan production remained strong for the third consecutive quarter.
• Deposit balances contracted $48 million, or 1%, on a linked quarter basis. When segmenting the fluctuation by deposit type, the largest declines were in interest bearing demand deposits which were largely influenced by seasonal declines in public funds and time deposits. These declines were offset by over $79 million in growth in non-interest bearings deposits during the quarter.
• The Company increased all stated interest bearing demand deposit and savings account rates along with time deposit offering rates during the third quarter.
• Net interest income increased $16.9 million, or 37%, for the third quarter of 2022 compared to the third quarter a year ago, consistent with the $1.42 billion, or 25%, increase in average earning assets and to a lesser extent, the FRB interest rate hikes.
• NIM improved for the third consecutive quarter, increasing 26 basis points on a linked quarter basis to 3.46%.
• Current credit quality remains quite solid, however consistent with very strong loan growth and to a lesser extent, the increase in the projected unemployment rate forecast used in modeling, $4.8 million of net credit loss expense⁽⁶⁾ was recorded for the third quarter of 2022.
• Non-interest income increased by $7.3 million, or 41%, over the third quarter of 2021, as customer expansion and recent acquisitions once again drove record quarterly credit card income and treasury management fees. Also, as previously mentioned, the Company disposed of certain overlapping acquired properties, resulting in a non-recurring pre-tax gain of $3.1 million.
• Despite strong net new business growth, significant declines in both fixed income and equity markets drove linked quarter contraction in wealth management assets under management and asset-based fees, leading to the first quarterly revenue decline in seven consecutive quarters. Additionally, a significant spike in long-term mortgage rates stunted mortgage banking origination volume during the quarter.
• Total non-interest expenses remained controlled and consistent with management expectations.
• Tangible book value per share was $16.98⁽¹⁾ at September 30, 2022, compared to $17.59⁽¹⁾ at June 30, 2022, and $19.63⁽¹⁾ at September 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 (AOCI). During the first nine months of 2022, equity was reduced by $120 million as a result of unrealized losses in the available for sale debt securities portfolio. 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.

Hillebrand concluded, “The strong results for the third quarter reflect the solid execution of our strategic plan by our dedicated team. I am also pleased to note that during the quarter we were one of only 35 banks in the U.S. to be named a “Sm-All Star” in Piper Sandler’s annual list of top-performing small-cap banks. This elite annual list reflects the top 10% of the industry across a number of metrics including growth, profitability, credit quality and capital strength. We have now been named a Sm-All Star five times - 2008, 2011, 2019, 2020 and now 2022. We are honored to be recognized and are confident in our ability to continue to deliver value to our shareholders.”

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

Net interest income, the Company’s largest source of revenue, increased 37%, or $16.9 million, to $62.4 million, primarily due to higher interest income on non-PPP loans. Organic growth, and to a greater extent the recent acquisitions, have boosted net interest income over the past 12 months.

• Total interest income increased by $20.5 million, or 44%, to $67.4 million.
  • Interest income on loans increased $13.4 million, or 31%, over the prior year quarter. Consistent with the $1.03 billion 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 54 basis points over the past 12 months to 4.52%. PPP interest and fee income totaled $703,000 and $4.4 million for the third quarters of 2022 and 2021, respectively.
  • Interest income on debt securities increased $4.7 million compared to the third quarter of 2021, driven by average balance growth of $735 million and significantly improved yields on recent purchases stemming from rising rates.
  • Interest income on overnight funds increased $2.2 million over the prior year quarter. The FRB has increased the rate paid on reserve balances meaningfully during 2022, which has significantly benefitted interest income.
• Total interest expense increased $3.6 million to $5.0 million, as the cost of interest bearing liabilities increased 27 basis points to 0.43%.
• NIM increased 32 basis points to 3.46% for the third quarter of 2022, from 3.14% for the third quarter a year ago, primarily due to higher loan yields which more than offset lower fee income recognition from the slowdown of forgiveness within the PPP loan portfolio.

The Company recorded $4.8 million in provision for credit losses⁽⁶⁾ during the third quarter of 2022, which included a $4.1 million provision for credit losses on loans and $700,000 provision for credit loss expense for off-balance sheet exposures. Significant loan growth during the quarter and to a lesser extent, the increase in the unemployment projection, drove additional provision expense within the CECL allowance model. The increase in provision for credit loss expense for off-balance sheet exposures was attributed to both increased loan production and credit availability.

Non-interest income increased $7.3 million, or 41%, to $24.9 million, with the recent acquisitions contributing significantly to revenue growth.

• Wealth management and trust income ended the third quarter of 2022 at $9.2 million, increasing $2.0 million, or 28%, over the third quarter a year ago. Despite growth in net new business, significant declines in both fixed income and equity markets drove linked quarter compression in wealth management assets under management and asset-based fees.
• Card income increased $823,000, or 21%, over the third quarter of 2021, as card activity continues to benefit from generally strong spending trends and overall inflation in the marketplace.
• Treasury management fees increased $450,000, or 25%, driven by increased transaction volume, new product sales and both organic and acquisition-related customer base expansion. Continued calling efforts and the Company’s ability to generate new fee income has been the catalyst for this growth trend.
• Mortgage banking income, which primarily consists of gain on sale of loans, net servicing income and mortgage servicing rights amortization, totaled $703,000 for the third quarter of 2022, down $212,000, or 23%, compared to the third quarter a year ago. Overall volume in 2022 has cooled consistent with rising interest rates, while income levels have benefitted from better loan pricing and increased net servicing income related to the recently acquired loan servicing portfolio.
• The Company disposed of certain overlapping properties acquired from the March acquisition, resulting in a non-recurring pre-tax gain of $3.1 million during the third quarter of 2022.
  

Non-interest expenses increased $10.3 million compared to the third quarter of 2021, to $44.9 million.

• Compensation expense increased $5.7 million, or 33%, primarily due to the increase in full time equivalent employees associated with the recent acquisitions. Full time equivalent employees increased to 1,028 at September 30, 2022 from 793 at September 30, 2021.
• Employee benefits increased $517,000, or 14%, compared to the third 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 $1.0 million, or 38%, compared to the third quarter a year ago. In connection with the recent acquisition, a total of ten branches were added in addition to operational buildings.
• Technology and communication expenses, which includes computer software amortization, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources, increased $574,000, or 18%, consistent with an increase in customer accounts and core system upgrades.
• Marketing and business development expense increased $233,000, or 23%, primarily due to increased travel, customer entertainment, community support and advertising expenses associated primarily with sales force expansion.
• Intangible amortization expense increased $1.3 million consistent with the increase in customer intangible assets related to the first quarter acquisition.
• Other non-interest expenses increased $507,000, or 26%, primarily due to increased card rewards expense, fraud losses and insurance captive expense.
  

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

Total assets increased $1.37 billion, or 22%, year over year to $7.55 billion, boosted by the recent acquisition and strong organic growth.

Total loans increased $884 million year over year, or 21%, to $5.07 billion. Excluding the PPP loan portfolio, total loans increased $1.10 billion, or 28%, over the past 12 months, with approximately $630 million of the growth attributable to the first quarter acquisition. Further, loan pipelines, while not quite at recent levels, remain on target with our projections set for 2022.

Total investment securities have increased $557 million, or 52%, year over prior year, as the Company added $247 million in securities in the first quarter Commonwealth acquisition and deployed a significant amount of excess cash into securities.

Total deposits increased $1.16 billion, or 22%, over the past 12 months, with approximately $1.12 billion of the growth assumed in the recent acquisition.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the third quarter of 2022, the Company recorded net loan charge-offs of $382,000, compared to net loan charge-offs of $1.9 million in the third quarter of 2021. Non-performing loans were $10.6 million, or 0.21%⁽²⁾ of total loans outstanding (excluding PPP) compared to $5.0 million, or 0.13%⁽²⁾ of total loans (excluding PPP) outstanding at September 30, 2021. The ratio of allowance for credit losses to loans (excluding PPP) ended at 1.39%⁽²⁾ at September 30, 2022 compared to 1.43%⁽²⁾ at September 30, 2021.

At September 30, 2022, the Company continued to be “well-capitalized,” the highest regulatory capital rating for financial institutions, with all capital ratios remaining strong. Total equity to assets was 9.63%⁽¹⁾ and the tangible common equity ratio was 6.78%⁽¹⁾ at September 30, 2022, compared to 10.73%⁽¹⁾ and 8.64%⁽¹⁾ at September 30, 2021, respectively. The increase in interest rates during 2022 have led to outsized unrealized losses within the available for sale debt securities portfolio, with the decline in AOCI driving down the tangible common equity ratio.

In August 2022, the board of directors increased the quarterly cash dividend to $0.29 per common share. The dividend was paid October 3, 2022, to shareholders of record as of September 19, 2022.

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

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

Net interest income increased $5.4 million, or 9%, over the prior quarter to $62.4 million, led by the increase in earning assets and to a lesser extent rising rates. NIM improved for the second consecutive quarter, increasing 26 basis points on a linked quarter basis to 3.46%.

Despite solid ongoing credit quality statistics, the Company recorded credit loss expense during the third quarter consistent with strong loan growth and to a lesser extent, an increase in the projected unemployment rate forecast used in modeling. During the third quarter, the Company recorded $4.8 million in provision for credit loss expense, which included a $4.1 million provision for credit losses on loans and a $700,000 provision for credit losses expense for off-balance sheet exposures. During the second quarter of 2022, 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 associated with release of specific reserves related to several recently acquired loans and a $500,000 provision for credit losses on off-balance sheet exposures.

Non-interest income increased $2.9 million, or 13%, to $24.9 million. As previously mentioned, the Company disposed of certain overlapping acquired properties, resulting in a non-recurring pre-tax gain of $3.1 million during the third quarter of 2022.

Non-interest expenses increased $198,000 to $44.9 million.

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

Total assets decreased $29 million on a linked quarter basis to $7.55 billion.

Total loans (excluding PPP) increased a record $213 million, or 4%, on a linked quarter basis, with meaningful increases across all major loan categories. Total line of credit usage declined to 40% as of September 30, 2022, compared to 41% as of June 30, 2022. Commercial and industrial line usage declined to 30% as of September 30, 2022, compared to 31% as of June 30, 2022.

Total deposits decreased $48 million, or 1%, on a linked quarter basis attributable to seasonal reductions in public funds, time deposit maturities and other fluctuations.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.55 billion in assets, was incorporated in 1988 as a bank holding company. It is the parent company of Stock Yards Bank & Trust Company, which was established in 1904. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “SYBT.”

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

Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2022 Earnings Release
(In thousands unless otherwise noted)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
Income Statement Data		2022			2021			2022			2021
Net interest income, fully tax equivalent (3)		$	62,608		$	45,643		$	168,797		$	125,178
Interest income:
Loans		$	56,750		$	43,307		$	152,105		$	120,402
Federal funds sold and interest bearing due from banks		2,450			208			3,845			358
Mortgage loans held for sale		103			53			177			175
Securities		8,107			3,380			20,375			8,633
Total interest income		67,410			46,948			176,502			129,568
Interest expense:
Deposits		4,449			1,403			7,390			4,348
Securities sold under agreements to repurchase and
other short-term borrowings		226			11			322			27
Federal Home Loan Bank advances		-			51			-			301
Subordinated debentures		359			-			670			-
Total interest expense		5,034			1,465			8,382			4,676
Net interest income		62,376			45,483			168,120			124,892
Provision for credit losses (6)		4,803			(1,525)			6,882			1,147
Net interest income after provision for credit losses		57,573			47,008			161,238			123,745
Non-interest income:
Wealth management and trust services		9,152			7,128			26,890			20,234
Deposit service charges		2,179			1,768			6,103			3,945
Debit and credit card income		4,710			3,887			13,577			9,444
Treasury management fees		2,221			1,771			6,312			5,041
Mortgage banking income		703			915			3,001			3,662
Net investment product sales commissions and fees		892			780			2,230			1,789
Bank owned life insurance		516			275			1,052			642
Gain (Loss) on sale of premises and equipment		3,074			-			3,074			-
Other		1,417			1,090			3,768			2,489
Total non-interest income		24,864			17,614			66,007			47,246
Non-interest expenses:
Compensation		23,069			17,381			63,242			45,888
Employee benefits		4,179			3,662			13,147			10,290
Net occupancy and equipment		3,767			2,732			10,455			7,021
Technology and communication		3,747			3,173			11,150			8,189
Debit and credit card processing		1,437			1,479			4,439			3,160
Marketing and business development		1,244			1,011			3,461			2,357
Postage, printing and supplies		903			630			2,461			1,499
Legal and professional		774			700			2,451			1,828
FDIC Insurance		847			387			2,028			1,141
Amortization of investments in tax credit partnerships		88			53			265			315
Capital and deposit based taxes		722			556			1,822			1,541
Merger expenses		-			525			19,500			19,025
Federal Home Loan Bank early termination penalty		-			-			-			474
Intangible amortization		1,610			290			3,934			494
Other		2,486			1,979			7,490			4,486
Total non-interest expenses		44,873			34,558			145,845			107,708
Income before income tax expense		37,564			30,064			81,400			63,283
Income tax expense		9,024			6,902			18,016			13,227
Net income		28,540			23,162			63,384			50,056
Less: income attributed to non-controlling interest		85			-			229			-
Net income available to stockholders		$	28,455		$	23,162		$	63,155		$	50,056
Net income per share - Basic		$	0.98		$	0.87		$	2.22		$	2.05
Net income per share - Diluted		0.97			0.87			2.20			2.03
Cash dividend declared per share		0.29			0.28			0.85			0.82
Weighted average shares - Basic		29,144			26,485			28,509			24,360
Weighted average shares - Diluted		29,404			26,726			28,752			24,602
								September 30,
Balance Sheet Data								2022			2021
Investment securities								$	1,627,298		$	1,070,148
Loans								5,072,877			4,189,117
Allowance for credit losses on loans								70,083			56,533
Total assets								7,554,210			6,181,188
Non-interest bearing deposits								2,200,041			1,744,790
Interest bearing deposits								4,300,732			3,597,234
Federal Home Loan Bank advances								-			10,000
Subordinated debentures								26,244			-
Stockholders' equity								727,754			663,547
Total shares outstanding								29,242			26,585
Book value per share (1)								$	24.84		$	24.96
Tangible common equity per share (1)								16.98			19.63
Market value per share								68.01			58.65
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2022 Earnings Release
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
Average Balance Sheet Data		2022			2021			2022			2021
Federal funds sold and interest bearing due from banks		$	442,880		$	532,549		$	557,578		$	361,713
Mortgage loans held for sale		8,694			8,875			9,542			10,703
Investment securities		1,769,597			1,034,712			1,631,212			831,229
Federal Home Loan Bank stock		11,712			11,364			12,015			11,312
Loans		4,948,898			4,173,260			4,726,371			3,876,639
Total interest earning assets		7,181,781			5,760,760			6,936,718			5,091,596
Total assets		7,661,720			6,139,176			7,398,311			5,364,121
Interest bearing deposits		4,444,983			3,525,785			4,370,839			3,134,978
Total deposits		6,614,263			5,297,217			6,409,007			4,652,401
Securities sold under agreement to repurchase and other short term borrowings		148,734			82,048			133,360			68,485
Federal Home Loan Bank advances		-			10,000			-			19,398
Subordinated debentures		26,210			-			20,191			-
Total interest bearing liabilities		4,619,927			3,617,833			4,524,390			3,222,861
Total stockholders' equity		760,322			660,099			738,391			541,238
Performance Ratios
Annualized return on average assets (7)		1.47%			1.50%			1.14%			1.25%
Annualized return on average equity (7)		14.85%			13.92%			11.44%			12.37%
Net interest margin, fully tax equivalent		3.46%			3.14%			3.25%			3.29%
Non-interest income to total revenue, fully tax equivalent		28.43%			27.85%			28.11%			27.40%
Efficiency ratio, fully tax equivalent (4)		51.30%			54.63%			62.11%			62.47%
Capital Ratios
Total stockholders' equity to total assets (1)								9.63%			10.73%
Tangible common equity to tangible assets (1)								6.78%			8.64%
Average stockholders' equity to average assets								9.98%			10.09%
Total risk-based capital								12.16%			12.61%
Common equity tier 1 risk-based capital								10.69%			11.69%
Tier 1 risk-based capital								11.13%			11.69%
Leverage								8.85%			8.98%
Loan Segmentation
Commercial real estate - non-owner occupied								$	1,415,180		$	1,142,647
Commercial real estate - owner occupied								819,727			652,631
Commercial and industrial								1,170,241			910,923
Commercial and industrial - PPP								19,469			231,335
Residential real estate - owner occupied								557,638			398,069
Residential real estate - non-owner occupied								302,936			277,045
Construction and land development								414,632			303,642
Home equity lines of credit								199,485			140,027
Consumer								138,843			104,629
Leases								13,959			12,348
Credit cards								20,767			15,821
Total loans and leases								$	5,072,877		$	4,189,117
Asset Quality Data
Non-accrual loans								$	10,580		$	5,036
Troubled debt restructurings								-			13
Loans past due 90 days or more and still accruing								32			-
Total non-performing loans								10,612			5,049
Other real estate owned								996			7,229
Total non-performing assets								$	11,608		$	12,278
Non-performing loans to total loans (2)								0.21%			0.12%
Non-performing assets to total assets								0.15%			0.20%
Allowance for credit losses on loans to total loans (2)								1.38%			1.35%
Allowance for credit  losses on loans to average loans								1.48%			1.46%
Allowance for credit losses on loans to non-performing loans								660%			1120%
Net (charge-offs) recoveries		$	(382)		$	(1,891)		$	152		$	(4,641)
Net (charge-offs) recoveries to average loans (5)		-0.01%			-0.05%			0.00%			-0.12%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2022 Earnings Release
		Quarterly Comparison
Income Statement Data		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Net interest income, fully tax equivalent  (3)		$	62,608		$	57,244		$	48,944		$	46,328		$	45,643
Net interest income		$	62,376		$	56,984		$	48,760		$	46,182		$	45,483
Provision for credit losses (6)		4,803			(200)			2,279			(1,900)			(1,525)
Net interest income after provision for credit losses		57,573			57,184			46,481			48,082			47,008
Non-interest income:
Wealth management and trust services		9,152			9,495			8,243			7,379			7,128
Deposit service charges		2,179			2,061			1,863			1,907			1,768
Debit and credit card income		4,710			4,748			4,119			4,012			3,887
Treasury management fees		2,221			2,187			1,904			1,871			1,771
Mortgage banking income		703			1,295			1,003			1,062			915
Net investment product sales commissions and fees		892			731			607			764			780
Bank owned life insurance		516			270			266			272			275
Gain (Loss) on sale of premises and equipment		3,074			-			-			-			-
Other		1,417			1,153			1,198			1,337			1,090
Total non-interest income		24,864			21,940			19,203			18,604			17,614
Non-interest expenses:
Compensation		23,069			22,204			17,969			17,146			17,381
Employee benefits		4,179			4,429			4,539			3,189			3,662
Net occupancy and equipment		3,767			3,663			3,025			2,667			2,732
Technology and communication		3,747			3,984			3,419			2,956			3,173
Debit and credit card processing		1,437			1,665			1,337			1,334			1,479
Marketing and business development		1,244			1,445			772			1,793			1,011
Postage, printing and supplies		903			825			733			714			630
Legal and professional		774			1,027			650			755			700
FDIC Insurance		847			536			645			706			387
Amortization of investments in tax credit partnerships		88			89			88			52			53
Capital and deposit based taxes		722			582			518			549			556
Merger expenses		-			-			19,500			-			525
Intangible amortization		1,610			1,611			713			275			290
Other		2,486			2,615			2,389			2,436			1,979
Total non-interest expenses		44,873			44,675			56,297			34,572			34,558
Income before income tax expense		37,564			34,449			9,387			32,114			30,064
Income tax expense		9,024			7,547			1,445			7,525			6,902
Net income		28,540			26,902			7,942			24,589			23,162
Less: income attributed to non-controlling interest		85			108			36			-			-
Net income available to stockholders		$	28,455		$	26,794		$	7,906		$	24,589		$	23,162
Net income per share - Basic		$	0.98		$	0.92		$	0.29		$	0.93		$	0.87
Net income per share - Diluted		0.97			0.91			0.29			0.92			0.87
Cash dividend declared per share		0.29			0.28			0.28			0.28			0.28
Weighted average shares - Basic		29,144			29,131			27,230			26,492			26,485
Weighted average shares - Diluted		29,404			29,346			27,485			26,800			26,726
		Quarterly Comparison
Balance Sheet Data		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Cash and due from banks		$	93,948		$	88,422		$	109,799		$	62,304		$	84,520
Federal funds sold and interest bearing due from banks		235,973			485,447			641,892			898,888			500,421
Mortgage loans held for sale		5,230			10,045			9,323			8,614			10,201
Investment securities		1,627,298			1,625,488			1,698,546			1,180,298			1,070,148
Federal Home Loan Bank stock		10,928			13,811			13,811			9,376			9,376
Loans		5,072,877			4,877,324			4,847,683			4,169,303			4,189,117
Allowance for credit losses on loans		70,083			66,362			67,067			53,898			56,533
Goodwill		202,524			202,524			202,524			135,830			135,830
Total assets		7,554,210			7,583,105			7,777,152			6,646,025			6,181,188
Non-interest bearing deposits		2,200,041			2,121,304			2,089,072			1,755,754			1,744,790
Interest bearing deposits		4,300,732			4,427,826			4,656,419			4,031,760			3,597,234
Securities sold under agreements to repurchase		124,567			161,512			142,146			75,466			74,406
Federal funds purchased		8,970			8,771			8,920			10,374			10,908
Subordinated debentures		26,244			26,144			26,045			-			-
Stockholders' equity		727,754			747,131			758,143			675,869			663,547
Total shares outstanding		29,242			29,243			29,220			26,596			26,585
Book value per share (1)		24.89			$	25.55		$	25.95		$	25.41		$	24.96
Tangible common equity per share (1)		16.98			17.59			17.92			20.09			19.63
Market value per share		68.01			59.82			52.90			63.88			58.65
Capital Ratios
Total stockholders' equity to total assets (1)		9.63%			9.85%			9.75%			10.17%			10.73%
Tangible common equity to tangible assets (1)		6.78%			7.00%			6.94%			8.22%			8.64%
Average stockholders' equity to average assets		9.92%			9.79%			10.24%			10.43%			10.75%
Total risk-based capital		12.16%			12.27%			12.14%			12.79%			12.61%
Common equity tier 1 risk-based capital		10.69%			10.81%			10.66%			11.94%			11.69%
Tier 1 risk-based capital		11.13%			11.26%			11.12%			11.94%			11.69%
Leverage		8.85%			8.58%			9.34%			8.86%			8.98%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Third Quarter 2022 Earnings Release
		Quarterly Comparison
Average Balance Sheet Data		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Federal funds sold and interest bearing due from banks		$	442,880		$	561,101		$	671,263		$	699,222		$	532,549
Mortgage loans held for sale		8,694			11,303			8,629			12,556			8,875
Investment securities		1,769,597			1,741,844			1,321,551			1,099,235			1,034,712
Loans		4,948,898			4,846,013			4,377,930			4,172,676			4,173,260
Total interest earning assets		7,181,781			7,174,072			6,389,882			5,993,065			5,760,760
Total assets		7,661,720			7,651,332			6,872,273			6,406,612			6,139,176
Interest bearing deposits		4,444,983			4,515,563			4,148,716			3,798,666			3,525,785
Total deposits		6,614,263			6,639,458			5,966,178			5,559,577			5,297,217
Securities sold under agreement to repurchase and federal funds purchased		148,734			149,747			101,075			86,911			82,048
Subordinated debentures		26,210			26,111			8,052			-			-
Total interest bearing liabilities		4,619,927			4,691,421			4,257,843			3,892,751			3,617,833
Total stockholders' equity		760,322			749,445			703,929			668,287			660,099
Performance Ratios
Annualized return on average assets (7)		1.47%			1.40%			0.47%			1.52%			1.50%
Annualized return on average equity (7)		14.85%			14.34%			4.55%			14.60%			13.92%
Net interest margin, fully tax equivalent		3.46%			3.20%			3.11%			3.07%			3.14%
Non-interest income to total revenue, fully tax equivalent		28.43%			27.71%			28.18%			28.65%			27.85%
Efficiency ratio, fully tax equivalent (4)		51.30%			56.42%			82.61%			53.24%			54.63%
Loans Segmentation
Commercial real estate - non-owner occupied		$	1,415,180		$	1,397,330		$	1,397,633		$	1,128,244		$	1,142,647
Commercial real estate - owner occupied		819,727			787,559			803,181			678,405			652,631
Commercial and industrial		1,170,241			1,090,404			1,083,980			967,022			910,923
Commercial and industrial - PPP		19,469			36,767			71,361			140,734			231,335
Residential real estate - owner occupied		557,638			533,577			492,123			400,695			398,069
Residential real estate - non-owner occupied		302,936			293,852			297,127			281,018			277,045
Construction and land development		414,632			372,197			346,372			299,206			303,642
Home equity lines of credit		199,485			192,102			186,024			138,976			140,027
Consumer		138,843			137,278			135,198			104,294			104,629
Leases		13,959			14,611			13,952			13,622			12,348
Credit cards		20,767			21,647			20,732			17,087			15,821
Total loans and leases		$	5,072,877		$	4,877,324		$	4,847,683		$	4,169,303		$	4,189,117
Asset Quality Data
Non-accrual loans		$	10,580		$	7,827		$	12,494		$	6,712		$	5,036
Troubled debt restructurings		-			-			10			12			13
Loans past due 90 days or more and still accruing		32			1,176			300			684			-
Total non-performing loans		10,612			9,003			12,804			7,408			5,049
Other real estate owned		996			7,601			7,156			7,212			7,229
Total non-performing assets		$	11,608		$	16,604		$	19,960		$	14,620		$	12,278
Non-performing loans to total loans (2)		0.21%			0.18%			0.26%			0.18%			0.12%
Non-performing assets to total assets		0.15%			0.22%			0.26%			0.22%			0.20%
Allowance for credit losses on loans to total loans (2)		1.38%			1.36%			1.38%			1.29%			1.35%
Allowance for credit losses on loans to average loans		1.42%			1.37%			1.53%			1.29%			1.35%
Allowance for credit losses on loans to non-performing loans		660%			737%			524%			728%			1120%
Net (charge-offs) recoveries		$	(382)		$	(5)		$	540		$	(1,535)		$	(1,891)
Net (charge-offs) recoveries to average loans (5)		-0.01%			0.00%			0.01%			-0.04%			-0.05%
Other Information
Total assets under management (in millions)		$	6,293		$	6,555		$	7,305		$	4,801		$	4,506
Full-time equivalent employees		1,028			1,018			997			820			793
(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)		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Total stockholders' equity - GAAP (a)		$	727,754		$	747,131		$	758,143		$	675,869		$	663,547
Less: Goodwill		(202,524)			(202,524)			(202,524)			(135,830)			(135,830)
Less: Core deposit and other intangibles		(28,747)			(30,357)			(31,968)			(5,596)			(5,871)
Tangible common equity - Non-GAAP (c)		$	496,483		$	514,250		$	523,651		$	534,443		$	521,846
Total assets - GAAP (b)		$	7,554,210		$	7,583,105		$	7,777,152		$	6,646,025		$	6,181,188
Less: Goodwill		(202,524)			(202,524)			(202,524)			(135,830)			(135,830)
Less: Core deposit and other intangibles		(28,747)			(30,357)			(31,968)			(5,596)			(5,871)
Tangible assets - Non-GAAP (d)		$	7,322,939		$	7,350,224		$	7,542,660		$	6,504,599		$	6,039,487
Total stockholders' equity to total assets - GAAP (a/b)		9.63%			9.85%			9.75%			10.17%			10.73%
Tangible common equity to tangible assets - Non-GAAP (c/d)		6.78%			7.00%			6.94%			8.22%			8.64%
Total shares outstanding (e)		29,242			29,243			29,220			26,596			26,585
Book value per share - GAAP (a/e)		$	24.89		$	25.55		$	25.95		$	25.41		$	24.96
Tangible common equity per share - Non-GAAP (c/e)		16.98			17.59			17.92			20.09			19.63
(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)		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Total Loans - GAAP (a)		$	5,072,877		$	4,877,324		$	4,847,683		$	4,169,303		$	4,189,117
Less: PPP loans		(19,469)			(36,767)			(71,361)			(140,734)			(231,335)
Total non-PPP Loans - Non-GAAP (b)		$	5,053,408		$	4,840,557		$	4,776,322		$	4,028,569		$	3,957,782
Allowance for credit losses on loans (c)		$	70,083		$	66,362		$	67,067		$	53,898		$	56,533
Total non-performing loans (d)		10,612			9,003			12,804			7,408			5,049
Allowance for credit losses on loans to total loans - GAAP (c/a)		1.38%			1.36%			1.38%			1.29%			1.35%
Allowance for credit losses on loans to total loans - Non-GAAP (c/b)		1.39%			1.37%			1.40%			1.34%			1.43%
Non-performing loans to total loans - GAAP (d/a)		0.21%			0.18%			0.26%			0.18%			0.12%
Non-performing loans to total loans - Non-GAAP (d/b)		0.21%			0.19%			0.27%			0.18%			0.13%
(3) - Interest income on a FTE basis includes the additional amount of interest income that would have been earned if investments in certain tax-exempt interest earning assets had been made in assets subject to federal, state and local taxes yielding the same after-tax income.
(4) - The efficiency ratio, a non-GAAP measure, equals total non-interest expenses divided by the sum of net interest income (FTE) and non-interest income. In addition to the efficiency ratio presented, Bancorp considers an adjusted efficiency ratio to be important because it provides a comparable ratio after eliminating net gains (losses) on sales, calls, and impairment of investment securities, as well as net gains (losses) on sales of acquired premises and equipment, if applicable, and the fluctuation in non-interest expenses related to amortization of investments in tax credit partnerships and non-recurring merger expenses.
		Quarterly Comparison
(Dollars in thousands)		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Total non-interest expenses (a)		$	44,873		$	44,675		$	56,297		$	34,572		$	34,558
Less: Non-recurring merger expenses		-			-			(19,500)			-			(525)
Less: Amortization of investments in tax credit partnerships		(88)			(89)			(88)			(52)			(53)
Total non-interest expenses - Non-GAAP (c)		$	44,785		$	44,586		$	36,709		$	34,520		$	33,980
Total net interest income, fully tax equivalent		$	62,608		$	57,244		$	48,944		$	46,328		$	45,643
Total non-interest income		24,864			21,940			19,203			18,604			17,614
Total revenue - Non-GAAP (b)		87,472			79,184			68,147			64,932			63,257
Less: Gain/loss on sale of acquired premises and equipment		(3,074)			-			-			-			-
Less: Gain/loss on sale of securities		-			-			-			-			-
Total adjusted revenue - Non-GAAP (d)		$	84,398		$	79,184		$	68,147		$	64,932		$	63,257
Efficiency ratio - Non-GAAP (a/b)		51.30%			56.42%			82.61%			53.24%			54.63%
Adjusted efficiency ratio - Non-GAAP (c/d)		53.06%			56.31%			53.87%			53.16%			53.72%
(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)		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Provision for credit losses - loans		$	4,103		$	(700)		$	2,679		$	(1,100)		$	(1,000)
Provision for credit losses - off balance sheet exposures		700			500			(400)			(800)			(525)
Total provision for credit losses		$	4,803		$	(200)		$	2,279		$	(1,900)		$	(1,525)
(7) - Return on average assets equals net income divided by total average assets, annualized to reflect a full year return on average assets. Similarly, return on average equity equals net income divided by total average equity, annualized to reflect a full year return on average equity.As a result of the substantial impact of non-recurring items related to the Commonwealth Bancshares and Kentucky Bancshares acquisitions, Bancorp considers adjusted return on average assets and return on average equity ratios important, as they reflect performance after removing certain merger-related sales of premises and equipment, expenses and purchase accounting adjustments.
		Quarterly Comparison
(Dollars in thousands)		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Net income attributable to stockholders - GAAP (a)		$	28,455		$	26,794		$	7,906		$	24,589		$	23,162
Add: Non-recurring merger expenses		-			-			19,500			-			525
Add: Provision for credit losses on acquired loans		-			-			4,429			-			-
Less: Gain/loss on sale of premises and equipment		(3,074)			-			-			-			-
Less: Tax effect of adjustments to net income		738			-			(3,717)			-			(121)
Total net income - Non-GAAP (b)		$	26,119		$	26,794		$	28,118		$	24,589		$	23,577
Total average assets (c)		$	7,661,720		$	7,651,332		$	6,872,273		$	6,406,612		$	6,139,176
Total average stockholder equity (d )		760,322			749,445			703,929			668,287			660,099
Return on average assets - GAAP (a/c)		1.47%			1.40%			0.47%			1.52%			1.50%
Return on average assets - Non-GAAP (b/c)		1.35%			1.40%			1.66%			1.52%			1.52%
Return on average equity - GAAP (a/d)		14.85%			14.34%			4.55%			14.60%			13.92%
Return on average equity - Non-GAAP (b/d)		13.63%			14.34%			16.20%			14.60%			14.17%

 

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 2022?

Stock Yards Bancorp reported earnings of $28.5 million, or $0.97 per diluted share for Q3 2022.

How did Stock Yards Bancorp's net interest margin change in Q3 2022?

The net interest margin increased to 3.46% in Q3 2022, up from 3.14% in Q3 2021.

What contributed to the increase in non-interest income for SYBT in Q3 2022?

Non-interest income rose by 41% to $24.9 million, significantly driven by customer expansion and increased fees.

Did Stock Yards Bancorp face any deposit challenges in Q3 2022?

Yes, total deposits decreased by $48 million, or 1%, largely due to seasonal declines in public funds.

What was the provision for credit loss expense for SYBT in Q3 2022?

The provision for credit loss expense was $4.8 million in Q3 2022.