Stock Yards Bancorp Reports First Quarter Earnings

LOUISVILLE, Ky., April 27, 2022 (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, Indiana and Cincinnati, Ohio metropolitan markets, today reported earnings for the first quarter ended March 31, 2022. Net income for the first quarter of 2022 was $7.9 million, or $0.29 per diluted share, reflecting $19.5 million in merger expenses and $4.4 million in merger related credit loss expense for the quarter. This compares to net income of $22.7 million, or $0.99 per diluted share, for the first quarter of 2021. The results for the first quarter of 2022 also included strong organic loan growth and record levels of non-interest income highlighted by wealth management and trust income, card income and treasury management fees.

       
(dollar amounts in thousands, except per share data) 1Q22 4Q21 1Q21
Net income $ 7,906   $ 24,589   $ 22,710  
Net income per share, diluted           0.29             0.92             0.99  
       
Net interest income $         48,760   $         46,182   $         37,825  
Provision for credit loss expense(6)   2,279     (1,900 )   (1,475 )
Non-interest income   19,203     18,604     13,844  
Non-interest expenses   56,297     34,572     24,973  
       
Net interest margin   3.11 %   3.07 %   3.39 %
Efficiency ratio(4)   82.61 %   53.24 %   48.29 %
Tangible common equity to tangible assets(1)   6.94 %   8.22 %   8.97 %
Annualized return on average equity(7)   4.55 %   14.60 %   20.71 %
Annualized return on average assets(7)   0.47 %   1.52 %   1.96 %
       

“Our first quarter operating results continued to reflect strong organic loan growth, record quarterly loan production and solid revenue generation,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “Similar to last quarter, we reported record non-interest income during the first quarter of 2022, a complement to our diversified income revenue streams. Card income and treasury management fees climbed to record levels at quarter-end, primarily due to increases in new business, volume and usage. Given the volatile stock market during the first three months of the year, we are very encouraged by the growth in wealth management and trust income, as the growth in assets under management and fee income was driven significantly by customer expansion. Despite quarter over prior year quarter lower yields on interest earning assets, net interest margin (NIM) improved on a linked quarter basis. With the recent rate increase enacted by the Federal Reserve at the end of the quarter, we anticipate further improvement in our NIM in future periods, especially with the probability of additional rate increases throughout the year.

“The highlight of the first quarter was the March 7th completion of the Commonwealth Bancshares acquisition, which added $1.34 billion in assets, $632 million in loans net of purchase accounting marks, $1.12 billion in total deposits and $2.93 billion in wealth management and trust assets under management. The acquisition is already positively impacting our operating results by increasing our scale and reach, as Commonwealth was the largest privately-held bank headquartered in the Louisville MSA. The transaction, which not only builds upon our already prominent market share in the Louisville market, expands our presence in the attractive Shelby County and Northern Kentucky markets and provides a solid opportunity for future growth.

“In addition to completing the acquisition, we also completed our core conversion at the end of the current quarter. Although additional work remains to complete the full integration of the two companies and fully realize the expected operating synergies, we expect that, similar to our three prior successful acquisitions, the Commonwealth Bancshares acquisition will result in significant benefits to our expanding group of clients, communities and employees. While costs associated with the merger significantly impacted first quarter earnings, they remained in line with our expectations, and we believe the majority of merger related expenses are behind us,” Hillebrand concluded.

At March 31, 2022, the Company had $7.77 billion in assets, $4.85 billion in loans and $6.75 billion in total deposits. The combined enterprise, with 73 branch offices, has and will continue to benefit from a diversified geographic footprint that provides significant growth opportunities in both the banking and wealth management arenas.

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

  • Loan growth within the legacy Stock Yards portfolio, excluding PPP loans and loans acquired from Commonwealth Bancshares, totaled $118 million, or 3%, compared to the fourth quarter of 2021. Legacy loan growth for the first three months of 2022 represented the strongest first quarter in the Company’s history.
  • Deposit balances grew by $958 million during the first quarter of 2022, as over $1.12 billion in deposits assumed from the Commonwealth Bancshares acquisition were partially offset by anticipated seasonal legacy deposit run-off.
  • Despite a significant slowdown in PPP income recognition, net interest income increased $10.9 million, or 29%, for the first quarter of 2022, compared to the first quarter a year ago, with a sizable portion of the increase representing the Central/Eastern Kentucky market contribution. The Company entered the Central/Eastern Kentucky market in May 2021 in conjunction with the Kentucky Bancshares merger.
  • After several quarters of NIM being negatively impacted by loan yield contraction and significant ongoing levels of excess balance sheet liquidity, NIM improved four basis points on a linked quarter basis.
  • Consistent with further stabilization in the Federal Reserve unemployment forecast, net recoveries and solid credit quality statistics, a net reduction of $1.7 million in credit loss expense on loans and $400,000 reduction in credit losses on off-balance sheet exposures was recorded for the first quarter of 2022. These reductions were offset by $4.4 million in credit loss expense recorded on loans acquired from Commonwealth Bancshares.
  • Non-interest income increased by $5.4 million, or 39%, over the first quarter of 2021, as customer expansion and recent acquisitions drove record quarterly wealth management and trust income, card income and treasury management fees.
  • Despite significant non-interest expenses associated with the Commonwealth Bancshares acquisition, total company non-interest expenses remained controlled and consistent with expectations.
  • Tangible book value per share was $17.92 at March 31, 2022, compared to $20.09 at December 31, 2021, and $18.82 at March 31, 2021. The decrease in tangible book value per share during the current quarter was attributable to the Commonwealth Bancshares acquisition and to a greater extent a $50 million decline in accumulated other comprehensive income. The significant increase in interest rates during March led to outsized unrealized losses within 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. Accordingly, there is a zero credit loss expectation on these securities.

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

Net interest income, the Company’s largest source of revenue, increased 29%, or $10.9 million, to $48.8 million, driven by higher interest income on non-PPP loans and the continued decline in cost of funds. Organic growth and to a greater extent the Central/Eastern Kentucky market expansion have boosted net interest income over the past 12 months.

  • Total interest income increased by $10.5 million, or 26%, to $50.0 million, primarily due to increased interest income on non-PPP loans generated by organic growth and the Central/Eastern Kentucky market expansion.
  • Total interest expense declined 28%, to $1.2 million. Interest expense on deposits decreased $339,000, or 22%, as the cost of interest bearing deposits declined to 0.11% in the first quarter of 2022, from 0.22% in the first quarter a year ago, as the Company continued to benefit significantly from the strategic lowering of stated deposit rates. Average interest bearing deposit balances, predominantly demand accounts, have surged $1.33 billion, or 47%, consistent with the current year and prior year acquisitions. In addition, a $293,000 interest expense reduction was posted during first quarter of 2022 consistent with purchase accounting adjustments associated with the recent acquisitions.
  • NIM decreased 28 basis points to 3.11% for the first quarter of 2022, from 3.39% for the first quarter a year ago. During the quarter, forgiveness within the PPP loan portfolio and related fee income recognition had a 13 basis point positive impact to NIM, compared to a 21 basis point positive impact to NIM in the first quarter a year ago. Overall, NIM continues to be negatively impacted by loan yield contraction and significant ongoing excess balance sheet liquidity, the latter of which represented a 30 basis point negative impact to NIM in the first quarter of 2022, compared to a 13 basis point negative impact to NIM in the first quarter a year ago.
  • Interest income on non-PPP loans increased $11.9 million, or 40%, over the prior year quarter primarily attributed to the Central/Eastern Kentucky contribution. Despite a $1.30 billion, or 43%, increase in average non-PPP loans, rate contraction impacted the portfolio, with the average quarterly yield earned on non-PPP loans contracting 10 basis points over the past 12 months to 3.99%. PPP interest and fee income totaled $2.8 million and $7.0 million for the first quarters of 2022 and 2021, respectively.
  • Interest income on debt securities increased $2.6 million, or 111%, compared to the first quarter of 2021. While the average balance of securities increased $660 million over the prior year quarter, the yield earned increased 8 basis points to 1.51%.

The Company recorded a net $2.3 million provision to credit losses during the first quarter of 2022, which included a $1.7 million benefit to provision for credit losses on loans and $400,000 benefit to provision for credit losses on off-balance sheet exposures. The reductions were consistent with further stabilization in the Federal Reserve unemployment forecast, net recoveries, and solid credit quality statistics and were offset by $4.4 million of credit loss expense recorded on loans acquired from Commonwealth Bancshares.

Non-interest income increased $5.4 million, or 39%, to $19.2 million, with the recent acquisitions contributing significantly to the increase.

  • Wealth management and trust income set a new quarterly record at $8.5 million for the first quarter of 2022, increasing $2.2 million, or 36%, over the first quarter a year ago. Growth in assets under management, tied to the addition of Commonwealth Bancshares and significant growth in legacy business, served to boost asset-based fees and led to an increase in assets under management of $3.60 billion, or 90%, over the past 12 months. The March acquisition of Commonwealth Bancshares contributed meaningfully to first quarter 2022 wealth management and trust income.
  • Card income increased $1.8 million, or 81%, over the first quarter of 2021, setting a quarterly record at $4.1 million. Growth trends in both debit and credit card portfolios remain positive, as card income benefited significantly from improving economic activity, with consumers and businesses increasing their spend, complimented by a meaningful contribution from the Central/Eastern Kentucky market.
  • Treasury management fees increased by $364,000, or 24%, to a record $1.9 million 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 and wire 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 $1.0 million for the first quarter of 2022, down 31% from the first quarter a year ago, primarily due to a decline in mortgage originations stemming from the increase in long-term interest rates.

Non-interest expenses increased $31.3 million to $56.3 million, with $19.5 million of the increase associated with non-recurring merger expenses.

  • Compensation expense increased $5.1 million, or 40%, primarily due to the increase in full time equivalent employees associated with the recent acquisitions, as well as annual merit-based salary increases. Full time equivalent employees increased to 997 at March 31, 2022, from 638 at March 31, 2021, as the Bank added 190 associates in connection with the Commonwealth Bancshares merger and 182 associates in connection with its expansion into Central/Eastern Kentucky.
  • Employee benefits increased $1.3 million, or 39%, compared to the first 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 $980,000, or 48%, consistent with significant acquisition related branch expansion.
  • Technology and communication expenses, which includes computer software amortization, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources, increased $1.1 million, or 46%, consistent with branch expansion and core system upgrades.
  • Card processing expense increased $632,000, consistent with the card income revenue trend discussed previously.
  • Merger expenses totaled $19.5 million in the first quarter of 2022. Substantially all of the merger expenses related to the Commonwealth Bancshares acquisition have been recognized and the Company expects remaining merger related expenses will be minimal over the remainder of the year.
  • Intangible amortization expense increased $636,000, consistent with the Commonwealth Bancshares core deposit intangible and customer lists.
  • Other non-interest expenses increased $1.4 million primarily due to increased card rewards and insurance captive expenses.

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

Total assets increased $2.98 billion, or 62%, year over year to $7.77 billion boosted by the two recent acquisitions and strong organic growth.

Total loans increased $1.21 billion year over year, or 33%, to $4.85 billion. Excluding the PPP loan portfolio, total loans increased $1.75 billion, or 58%, over the past 12 months, with approximately $1.39 billion of combined growth attributable to the Commonwealth Bancshares acquisition and Central/Eastern Kentucky market expansion.

The Company acquired $647 million in securities in the recent acquisitions and has deployed $847 million of excess cash into securities over the past 12 months.

Total deposits increased $2.55 billion, or 61%, from March 31, 2021 to March 31, 2022, with non-interest bearing deposits representing $719 million of the growth. Both period end and average deposit balances ended at record levels at March 31, 2022, as the Commonwealth Bancshares merger added approximately $1.12 billion to total deposits.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the first quarter of 2022, the Company recorded net recoveries of $539,000, compared to net loan charge-offs of $6,000 in the first quarter of 2021. Non-performing loans totaled $13 million, or 0.27%(2) of total loans outstanding (excluding PPP) compared to $14 million, or 0.47%(2) of total loans (excluding PPP) outstanding at March 31, 2021. These strong metrics along with an improving economic forecast offset by purchase accounting adjustments, resulted in a ratio of allowance for credit losses to loans (excluding PPP) of 1.40%(2) at March 31, 2022 compared to 1.68%(2) at March 31, 2021.

At March 31, 2022, the Company remained “well-capitalized,” the highest regulatory capital rating for financial institutions. Total equity to assets was 9.71%(1) and the tangible common equity ratio was 6.94%(1) at March 31, 2022, compared to 9.25%(1) and 8.97%(1), respectively, at March 31, 2021. The significant increase in interest rates during March led to outsized unrealized losses within the available for sale debt securities portfolio, with a $50 million decline in accumulated other comprehensive income driving down the tangible common equity ratio.

In February 2022, the board of directors declared a cash dividend of $0.28 per common share. The dividend was paid April 1, 2022, to shareholders of record as of March 21, 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 – First Quarter 2022 Compared with Fourth Quarter 2021

Net interest income increased $2.6 million, or 6%, over the prior quarter to $48.8 million, led by the Commonwealth Bancshares acquisition, organic loan growth and the continued decline in cost of funds. While overall NIM was challenged by increased levels of excess liquidity, loan yields showed signs of stabilization in the first quarter of 2022.

As previously discussed, the Company recorded a net $2.3 million provision to credit losses during the first quarter of 2022, which included a $1.7 million benefit to provision for credit losses on loans and $400,000 benefit to provision credit losses on off-balance sheet exposures. The reductions were consistent with further stabilization in the Federal Reserve unemployment forecast, net recoveries, and solid credit quality statistics and were offset by $4.4 million of credit loss expense recorded on loans acquired from Commonwealth Bancshares. During the fourth quarter of 2021, the Company recorded a net benefit of $1.9 million for credit losses, which included a $1.1 million benefit to provision for credit losses on loans and a $800,000 net benefit to provision for credit losses on off-balance sheet exposures consistent with the improvement in underlying CECL model factors along with increased line utilization in the Commercial & Industrial portfolio during the quarter.

Non-interest income increased $599,000, or 3%, to $19.2 million. Higher wealth management and trust income, card income and treasury management fees all contributed to the quarterly increase.

Non-interest expenses increased $21.7 million, or 63%, to $56.3 million, with $19.5 million of the increase associated with non-recurring merger expenses. Compensation expense increased $823,000, to $18.0 million compared with the fourth quarter of 2022, due to the addition of 190 full time equivalent employees in association with the Commonwealth Bancshares acquisition and annual merit increases.

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

Total assets increased $1.13 billion, or 17% on a linked quarter basis to $7.77 billion, reflecting the acquisition of Commonwealth Bancshares, as well as organic increases in loans and investment securities.

Total loans (excluding PPP) increased $748 million, or 19%, on a linked quarter basis, with the Commonwealth Bancshares merger contributing $632 million of the total loan growth. Total line of credit usage was 41% as of March 31, 2022, and unchanged compared to December 31, 2021. Commercial and industrial line usage was 32% as of March 31, 2022, and also unchanged compared to December 31, 2021.

Total deposits increased $958 million, or 17%, on a linked quarter basis due in part to the acquisition of Commonwealth Bancshares offset by anticipated seasonal legacy deposit run-off.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.77 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: the possibility that any of the anticipated benefits of the Commonwealth Bancshares merger will not be realized or will not be realized within the expected time period; the risk that integration of Commonwealth Bancshares’ 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 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; economic conditions both generally and more specifically in the markets in which the Company and its subsidiary operates; competition for the Company’s customers from other providers of financial services; changes in, or forecasts of, future political and economic conditions, inflation and efforts to control it; government legislation and regulation, which change and over which the Company has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of the Company’s customers; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. Refer to Stock Yards’ Annual Report on Form 10-K for the year ended December 31, 2021, as well as its other filings with the SEC for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

Stock Yards Bancorp, Inc. Financial Information (unaudited)              
First Quarter 2022 Earnings Release              
(In thousands unless otherwise noted)                  
    Three Months Ended            
    March 31,            
Income Statement Data   2022   2021                
                         
Net interest income, fully tax equivalent (3)   $ 48,944   $ 37,874                
Interest income:                        
Loans   $ 44,743   $ 37,000                
Federal funds sold and interest bearing due from banks   282   66                
Mortgage loans held for sale   24   64                
Securities   4,935   2,388                
Total interest income   49,984   39,518                
Interest expense:                        
Deposits   1,171   1,510                
Securities sold under agreements to repurchase and                        
other short-term borrowings   20   7                
Federal Home Loan Bank advances     176                
Subordinated debentures   33                  
Total interest expense   1,224   1,693                
Net interest income   48,760   37,825                
Provision for credit losses (6)   2,279   (1,475)                
Net interest income after provision for credit losses   46,481   39,300                
Non-interest income:                        
Wealth management and trust services   8,469   6,248                
Deposit service charges   1,863   944                
Debit and credit card income   4,119   2,273                
Treasury management fees   1,904   1,540                
Mortgage banking income   1,003   1,444                
Net investment product sales commissions and fees   607   464                
Bank owned life insurance   266   161                
Other   972   770                
Total non-interest income   19,203   13,844                
Non-interest expenses:                        
Compensation   17,969   12,827                
Employee benefits   4,539   3,261                
Net occupancy and equipment   3,025   2,045                
Technology and communication   3,419   2,346                
Debit and credit card processing   1,337   705                
Marketing and business development   772   524                
Postage, printing and supplies   733   409                
Legal and professional   650   462                
FDIC Insurance   645   405                
Amortization of investments in tax credit partnerships   88   31                
Capital and deposit based taxes   518   458                
Merger expenses   19,500   400                
Intangible amortization   713   77                
Other   2,389   1,023                
Total non-interest expenses   56,297   24,973                
Income before income tax expense   9,387   28,171                
Income tax expense   1,445   5,461                
Net income   7,942   22,710                
Less: net income attributed to non-controlling interest   36                  
Net income attributed to stockholders   $ 7,906   $ 22,710                
                         
Net income per share – Basic   $ 0.29   $ 1.00                
Net income per share – Diluted   0.29   0.99                
Cash dividend declared per share   0.28   0.27                
                         
Weighted average shares – Basic   27,230   22,622                
Weighted average shares – Diluted   27,485   22,865                
                         
    March 31,            
Balance Sheet Data   2022   2021                
                         
Investment securities   $ 1,698,546   $ 672,167                
Loans   4,847,683   3,635,156                
Allowance for credit losses on loans   67,067   50,714                
Total assets   7,774,057   4,794,075                
Non-interest bearing deposits   2,089,072   1,370,183                
Interest bearing deposits   4,656,419   2,829,779                
Federal Home Loan Bank advances     24,180                
Subordinated debentures   26,045                  
Stockholders’ equity   755,048   443,232                
Total shares outstanding   29,220   22,781                
Book value per share (1)   $ 25.84   $ 19.46                
Tangible common equity per share (1)   17.92   18.82                
Market value per share   52.90   51.06                
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
First Quarter 2022 Earnings Release                        
                         
    Three Months Ended            
    March 31,            
Average Balance Sheet Data   2022   2021                
                         
Federal funds sold and interest bearing due from banks   $ 671,263   $ 235,370                
Mortgage loans held for sale   8,629   14,618                
Investment securities   1,321,551   661,175                
Federal Home Loan Bank stock   10,509   10,640                
Loans   4,377,930   3,605,760                
Total interest earning assets   6,389,882   4,527,563                
Total assets   6,872,273   4,710,836                
Interest bearing deposits   4,148,716   2,815,986                
Total deposits   5,966,178   4,094,179                
Securities sold under agreement to repurchase and other short term borrowings   101,075   56,536                
Federal Home Loan Bank advances     29,270                
Subordinated debentures   8,052                  
Total interest bearing liabilities   4,257,843   2,901,792                
Total stockholders’ equity   703,929   444,821                
                         
Performance Ratios                        
Annualized return on average assets (7)   0.47%   1.96%                
Annualized return on average equity (7)   4.55%   20.71%                
Net interest margin, fully tax equivalent   3.11%   3.39%                
Non-interest income to total revenue, fully tax equivalent   28.18%   26.77%                
Efficiency ratio, fully tax equivalent (4)   82.61%   48.29%                
                         
Capital Ratios                        
Total stockholders’ equity to total assets (1)   9.71%   9.25%                
Tangible common equity to tangible assets (1)   6.94%   8.97%                
Average stockholders’ equity to average assets   10.24%   9.44%                
Total risk-based capital   12.14%   13.39%                
Common equity tier 1 risk-based capital   10.66%   12.32%                
Tier 1 risk-based capital   11.12%   12.32%                
Leverage   9.34%   9.46%                
                         
Loan Segmentation                        
Commercial real estate – non-owner occupied   $ 1,397,633   $ 876,523                
Commercial real estate – owner occupied   803,181   527,316                
Commercial and industrial   1,083,980   769,773                
Commercial and industrial – PPP   71,361   612,885                
Residential real estate – owner occupied   492,123   262,516                
Residential real estate – non-owner occupied   297,127   136,380                
Construction and land development   346,372   281,815                
Home equity lines of credit   186,024   91,233                
Consumer   135,198   51,058                
Leases   13,952   14,115                
Credit cards   20,732   11,542                
Total loans and leases   $ 4,847,683   $ 3,635,156                
                         
Asset Quality Data                        
Non-accrual loans   $ 12,494   $ 12,913                
Troubled debt restructurings   10   15                
Loans past due 90 days or more and still accruing   300   1,377                
Total non-performing loans   12,804   14,305                
Other real estate owned   7,156   281                
Total non-performing assets   $ 19,960   $ 14,586                
Non-performing loans to total loans (2)   0.26%   0.39%                
Non-performing assets to total assets   0.26%   0.30%                
Allowance for credit losses on loans to total loans (2)   1.38%   1.40%                
Allowance for credit losses on loans to average loans   1.53%   1.41%              
Allowance for credit losses on loans to non-performing loans   524%   355%                
Net (charge-offs) recoveries   $ 539   $ (6)                
Net (charge-offs) recoveries to average loans (5)   0.01%   -0.00%                
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
First Quarter 2022 Earnings Release                        
                         
    Quarterly Comparison    
Income Statement Data   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Net interest income, fully tax equivalent (3)   $ 48,944   $ 46,328   $ 45,643   $ 41,661   $ 37,874    
Net interest income   $ 48,760   $ 46,182   $ 45,483   $ 41,584   $ 37,825    
Provision for credit losses (6)   2,279   (1,900)   (1,525)   4,147   (1,475)    
Net interest income after provision for credit losses   46,481   48,082   47,008   37,437   39,300    
Non-interest income:                        
Wealth management and trust services   8,469   7,379   7,128   6,858   6,248    
Deposit service charges   1,863   1,907   1,768   1,233   944    
Debit and credit card income   4,119   4,012   3,887   3,284   2,273    
Treasury management fees   1,904   1,871   1,771   1,730   1,540    
Mortgage banking income   1,003   1,062   915   1,303   1,444    
Net investment product sales commissions and fees   607   764   780   545   464    
Bank owned life insurance   266   272   275   206   161    
Other   972   1,337   1,090   629   770    
Total non-interest income   19,203   18,604   17,614   15,788   13,844    
Non-interest expenses:                        
Compensation   17,969   17,146   17,381   15,680   12,827    
Employee benefits   4,539   3,189   3,662   3,367   3,261    
Net occupancy and equipment   3,025   2,667   2,732   2,244   2,045    
Technology and communication   3,419   2,956   3,173   2,670   2,346    
Debit and credit card processing   1,337   1,334   1,479   976   705    
Marketing and business development   772   1,793   1,011   822   524    
Postage, printing and supplies   733   714   630   460   409    
Legal and professional   650   755   700   666   462    
FDIC Insurance   645   706   387   349   405    
Amortization of investments in tax credit partnerships   88   52   53   231   31    
Capital and deposit based taxes   518   549   556   527   458    
Merger expenses   19,500     525   18,100   400    
Federal Home Loan Bank early termination penalty         474      
Intangible amortization   713   275   290   127   77    
Other   2,389   2,436   1,979   1,484   1,023    
Total non-interest expenses   56,297   34,572   34,558   48,177   24,973    
Income before income tax expense   9,387   32,114   30,064   5,048   28,171    
Income tax expense   1,445   7,525   6,902   864   5,461    
Net income   7,942   24,589   23,162   4,184   22,710    
Less: net income attributed to non-controlling interest   36            
Net income attributed to stockholders   $ 7,906   $ 24,589   $ 23,162   $ 4,184   $ 22,710    
                         
                         
Net income per share – Basic   $ 0.29   $ 0.93   $ 0.87   $ 0.17   $ 1.00    
Net income per share – Diluted   0.29   0.92   0.87   0.17   0.99    
Cash dividend declared per share   0.28   0.28   0.28   0.27   0.27    
                         
Weighted average shares – Basic   27,230   26,492   26,485   23,932   22,622    
Weighted average shares – Diluted   27,485   26,800   26,726   24,171   22,865    
                         
    Quarterly Comparison    
Balance Sheet Data   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Cash and due from banks   $ 109,799   $ 62,304   $ 84,520   $ 58,477   $ 43,061    
Federal funds sold and interest bearing due from banks   641,892   898,888   500,421   481,716   289,920    
Mortgage loans held for sale   9,323   8,614   10,201   5,420   6,579    
Investment securities   1,698,546   1,180,298   1,070,148   1,006,908   672,167    
Federal Home Loan Bank stock   13,811   9,376   9,376   14,475   10,228    
Loans   4,847,683   4,169,303   4,189,117   4,206,392   3,635,156    
Allowance for credit losses on loans   67,067   53,898   56,533   59,424   50,714    
Goodwill   199,429   135,830   135,830   136,529   12,513    
Total assets   7,774,057   6,646,025   6,181,188   6,088,072   4,794,075    
Non-interest bearing deposits   2,089,072   1,755,754   1,744,790   1,743,953   1,370,183    
Interest bearing deposits   4,656,419   4,031,760   3,597,234   3,516,153   2,829,779    
Securities sold under agreements to repurchase   142,146   75,466   74,406   63,942   51,681    
Federal funds purchased   8,920   10,374   10,908   10,947   8,642    
Federal Home Loan Bank advances       10,000   10,000   24,180    
Subordinated debentures   26,045            
Stockholders’ equity   755,048   675,869   663,547   651,089   443,232    
Total shares outstanding   29,220   26,596   26,585   26,588   22,781    
Book value per share (1)   $ 25.84   $ 25.41   $ 24.96   $ 24.49   $ 19.46    
Tangible common equity per share (1)   17.92   20.09   19.63   19.16   18.82    
Market value per share   52.90   63.88   58.65   50.89   51.06    
                         
Capital Ratios                        
Total stockholders’ equity to total assets (1)   9.71%   10.17%   10.73%   10.69%   9.25%    
Tangible common equity to tangible assets (1)   6.94%   8.22%   8.64%   8.57%   8.97%    
Average stockholders’ equity to average assets   10.24%   10.43%   10.75%   9.88%   9.44%    
Total risk-based capital   12.14%   12.79%   12.61%   12.80%   13.39%    
Common equity tier 1 risk-based capital   10.66%   11.94%   11.69%   11.79%   12.32%    
Tier 1 risk-based capital   11.12%   11.94%   11.69%   11.79%   12.32%    
Leverage   9.34%   8.86%   8.98%   10.26%   9.46%    
                         
Stock Yards Bancorp, Inc. Financial Information (unaudited)                        
First Quarter 2022 Earnings Release                        
                         
    Quarterly Comparison    
Average Balance Sheet Data   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Federal funds sold and interest bearing due from banks   $ 671,263   $ 699,222   $ 532,549   $ 313,954   $ 235,370    
Mortgage loans held for sale   8,629   12,556   8,875   8,678   14,618    
Investment securities   1,321,551   1,099,235   1,034,712   793,696   661,175    
Loans   4,377,930   4,172,676   4,173,260   3,844,662   3,605,760    
Total interest earning assets   6,389,882   5,993,065   5,760,760   4,972,914   4,527,563    
Total assets   6,872,273   6,406,612   6,139,176   5,226,654   4,710,836    
Interest bearing deposits   4,148,716   3,798,666   3,525,785   3,055,360   2,815,986    
Total deposits   5,966,178   5,559,577   5,297,917   4,552,583   4,094,179    
Securities sold under agreement to repurchase and federal funds purchased   101,075   86,911   82,048   66,591   56,536    
Federal Home Loan Bank advances     7,174   10,000   19,135   29,270    
Subordinated debentures   8,052            
Total interest bearing liabilities   4,257,843   3,892,751   3,617,833   3,141,086   2,901,792    
Total stockholders’ equity   703,929   668,287   660,099   516,427   444,821    
                         
Performance Ratios                        
Annualized return on average assets (7)   0.47%   1.52%   1.50%   0.32%   1.96%    
Annualized return on average equity (7)   4.55%   14.60%   13.92%   3.25%   20.71%    
Net interest margin, fully tax equivalent   3.11%   3.07%   3.14%   3.36%   3.39%    
Non-interest income to total revenue, fully tax equivalent   28.18%   28.65%   27.85%   27.48%   26.77%    
Efficiency ratio, fully tax equivalent (4)   82.61%   53.24%   54.63%   83.86%   48.29%    
                         
Loans Segmentation                        
Commercial real estate – non-owner occupied   $ 1,397,633   $ 1,128,244   $ 1,142,647   $ 1,170,461   $ 876,523    
Commercial real estate – owner occupied   803,181   678,405   652,631   604,120   527,316    
Commercial and industrial   1,083,980   967,022   910,923   845,038   742,505    
Commercial and industrial – PPP   71,361   140,734   231,335   377,021   612,885    
Residential real estate – owner occupied   492,123   400,695   398,069   377,783   262,516    
Residential real estate – non-owner occupied   297,127   281,018   277,045   273,782   136,380    
Construction and land development   346,372   299,206   303,642   281,149   281,815    
Home equity lines of credit   186,024   138,976   140,027   142,468   91,233    
Consumer   135,198   104,294   104,629   105,439   78,326    
Leases   13,952   13,622   12,348   14,171   14,115    
Credit cards   20,732   17,087   15,821   14,960   11,542    
Total loans and leases   $ 4,847,683   $ 4,169,303   $ 4,189,117   $ 4,206,392   $ 3,635,156    
                         
Asset Quality Data                        
Non-accrual loans   $ 12,494   $ 6,712   $ 5,036   $ 12,814   $ 12,913    
Troubled debt restructurings   10   12   13   14   15    
Loans past due 90 days or more and still accruing   300   684     1,050   1,377    
Total non-performing loans   12,804   7,408   5,049   13,878   14,305    
Other real estate owned   7,156   7,212   7,229   648   281    
Total non-performing assets   $ 19,960   $ 14,620   $ 12,278   $ 14,526   $ 14,586    
Non-performing loans to total loans (2)   0.26%   0.18%   0.12%   0.33%   0.39%    
Non-performing assets to total assets   0.26%   0.22%   0.20%   0.24%   0.30%    
Allowance for credit losses on loans to total loans (2)   1.38%   1.29%   1.35%   1.41%   1.40%    
Allowance for credit losses on loans to average loans   1.53%   1.29%   1.35%   1.55%   1.41%    
Allowance for credit losses on loans to non-performing loans   524%   728%   1120%   428%   355%    
Net (charge-offs) recoveries   $ 539   $ (1,535)   $ (1,891)   $ (2,743)   $ (6)    
Net (charge-offs) recoveries to average loans (5)   0.01%   -0.04%   -0.05%   -0.07%   -0.00%    
                         
Other Information                        
Total assets under management (in millions)   $ 7,587   $ 4,801   $ 4,506   $ 4,440   $ 3,989    
Full-time equivalent employees   997   820   794   823   638    
                         
(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)   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Total stockholders’ equity – GAAP (a)   $ 755,048   $ 675,869   $ 663,547   $ 651,089   $ 443,232    
  Less: Goodwill   (199,429)   (135,830)   (135,830)   (136,529)   (12,513)    
  Less: Core deposit and other intangibles   (31,968)   (5,596)   (5,871)   (5,162)   (1,885)    
Tangible common equity – Non-GAAP (c)   $ 523,651   $ 534,443   $ 521,846   $ 509,398   $ 428,834    
                         
Total assets – GAAP (b)   $ 7,774,057   $ 6,646,025   $ 6,181,188   $ 6,088,072   $ 4,794,075    
  Less: Goodwill   (199,429)   (135,830)   (135,830)   (136,529)   (12,513)    
  Less: Core deposit and other intangibles   (31,968)   (5,596)   (5,871)   (5,162)   (1,885)    
Tangible assets – Non-GAAP (d)   $ 7,542,660   $ 6,504,599   $ 6,039,487   $ 5,946,381   $ 4,779,677    
                         
Total stockholders’ equity to total assets – GAAP (a/b)   9.71%   10.17%   10.73%   10.69%   9.25%    
Tangible common equity to tangible assets – Non-GAAP (c/d)   6.94%   8.22%   8.64%   8.57%   8.97%    
                         
Total shares outstanding (e)   29,220   26,596   26,585   26,588   22,781    
                         
Book value per share – GAAP (a/e)   $ 25.84   $ 25.41   $ 24.96   $ 24.49   $ 19.46    
Tangible common equity per share – Non-GAAP (c/e)   17.92   20.09   19.63   19.16   18.82    
                         
(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)   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Total Loans – GAAP (a)   $ 4,847,683   $ 4,169,303   $ 4,189,117   $ 4,206,392   $ 3,635,156    
Less: PPP loans   (71,361)   (140,734)   (231,335)   (377,021)   (612,885)    
Total non-PPP Loans – Non-GAAP (b)   $ 4,776,322   $ 4,028,569   $ 3,957,782   $ 3,829,371   $ 3,022,271    
                         
Allowance for credit losses on loans (c)   $ 67,067   $ 53,898   $ 56,533   $ 59,424   $ 50,714    
Total non-performing loans (d)   12,804   7,408   5,049   13,878   14,305    
                         
Allowance for credit losses on loans to total loans – GAAP (c/a)   1.38%   1.29%   1.35%   1.41%   1.40%    
Allowance for credit losses on loans to total loans – Non-GAAP (c/b)   1.40%   1.34%   1.43%   1.55%   1.68%    
                         
Non-performing loans to total loans – GAAP (d/a)   0.26%   0.18%   0.12%   0.33%   0.39%    
Non-performing loans to total loans – Non-GAAP (d/b)   0.27%   0.18%   0.13%   0.36%   0.47%    
                         
(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)   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Total non-interest expenses – GAAP (a)   $ 56,297   $ 34,572   $ 34,558   $ 48,177   $ 24,973    
Less: Non-recurring merger expenses   (19,500)     (525)   (18,100)   (400)    
Less: Amortization of investments in tax credit partnerships   (88)   (52)   (53)   (231)   (31)    
Total non-interest expenses – Non-GAAP (c)   $ 36,709   $ 34,520   $ 33,980   $ 29,846   $ 24,542    
                         
Total net interest income, fully tax equivalent   $ 48,944   $ 46,328   $ 45,643   $ 41,661   $ 37,874    
Total non-interest income   19,203   18,604   17,614   15,788   13,844    
Less: Gain/loss on sale of securities              
Total revenue – GAAP (b)   $ 68,147   $ 64,932   $ 63,257   $ 57,449   $ 51,718    
                         
Efficiency ratio – GAAP (a/b)   82.61%   53.24%   54.63%   83.86%   48.29%    
Efficiency ratio – Non-GAAP (c/b)   53.87%   53.16%   53.72%   51.95%   47.45%    
                         
                         
(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)   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Provision for credit losses – loans   $ 2,679   $ (1,100)   $ (1,000)   $ 4,697   $ (1,200)    
Provision for credit losses – off balance sheet exposures   (400)   (800)   (525)   (550)   (275)    
Total provision for credit losses   $ 2,279   $ (1,900)   $ (1,525)   $ 4,147   $ (1,475)    
                         
(7) – Return on average assets equals net income divided by total average assets, annualized to reflect a full year return on average assets. Similarly, return on average equity equals net income divided by total average equity, annualized to reflect a full year return on average equity. As a result of the substantial impact of non-recurring items related to the Commonwealth Bancshares and Kentucky Bancshares acquisitions, Bancorp considers adjusted return on average assets and return on average equity ratios important, as they reflect performance after removing certain merger expenses and purchase accounting adjustments.    
    Quarterly Comparison    
(Dollars in thousands)   3/31/22   12/31/21   9/30/21   6/30/21   3/31/21    
                         
Net income attributable stockholders – GAAP (a)   $ 7,906   $ 24,589   $ 23,162   $ 4,184   $ 22,710    
Add: Non-recurring merger expenses   19,500     525   18,100   400    
Add: Provision for credit losses on acquired loans   4,429       7,397      
Less: Tax effect of adjustments to net income   (3,717)     (121)   (4,360)   (78)    
Total net income – Non-GAAP (b)   $ 28,118   $ 24,589   $ 23,577   $ 24,327   $ 23,026    
                         
Total average assets (c)   $ 6,872,273   $ 6,406,612   $ 6,139,176   $ 5,226,654   $ 4,710,836    
                         
Total average stockholder equity (d )   703,929   668,287   660,099   516,427   444,821    
                         
Return on average assets – GAAP (a/c)   0.47%   1.52%   1.50%   0.32%   1.96%    
Return on average assets – Non-GAAP (b/c)   1.66%   1.52%   1.52%   1.87%   1.98%    
                         
Return on average equity – GAAP (a/d)   4.55%   14.60%   13.92%   3.25%   20.71%    
Return on average equity – Non-GAAP (b/d)   16.20%   14.60%   14.17%   18.89%   20.99%    

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

Source link