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Stock Yards Bancorp Reports Record 2022 Earnings and Strong Fourth Quarter Earnings of $29.8 Million or $1.01 Per Diluted Share

Globe Newswire 25-Jan-2023 7:30 AM

LOUISVILLE, Ky., Jan. 25, 2023 (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 record earnings for the fourth quarter ended December 31, 2022, of $29.8 million, or $1.01 per diluted share. This compares to net income of $24.6 million, or $0.92 per diluted share, for the fourth quarter of 2021. Organic loan growth across all markets and expanded net interest margin (NIM) contributed to strong fourth quarter 2022 operating results.

    
(dollar amounts in thousands, except per share data) 4Q22  3Q22  4Q21 
Net income$29,817 $28,455 $24,589 
Net income per share, diluted 1.01  0.97  0.92 
    
Net interest income$65,263 $62,376 $46,182 
Provision for credit loss expense(6) 3,375  4,803  (1,900)
Non-interest income 23,142  24,864  18,604 
Non-interest expenses 45,946  44,873  34,572 
    
Net interest margin 3.64% 3.46% 3.07%
Efficiency ratio(4) 51.85% 51.30% 53.24%
Tangible common equity to tangible assets(1) 7.44% 6.78% 8.22%
Annualized return on average equity(7) 15.99% 14.85% 14.60%
Annualized return on average assets(7) 1.56% 1.47% 1.52%
    

"We delivered excellent fourth quarter and full year 2022 results, highlighted by strong loan growth, NIM expansion and improving capital levels since our merger earlier this past year," said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. "Strong fourth quarter net loan growth (excluding PPP loans) of $134 million was well diversified within loan categories and across all of our markets. While we generated the strongest annual organic loan growth year in our history, we anticipate overall growth moderating towards historical averages in 2023. On the linked quarter, total deposits declined $110 million, primarily due to the contraction in non-interest bearing demand deposit balances. While we are not seeing fallout within our customer base, we anticipate deposit pricing to be a challenge to future NIM expansion."

"Non-interest income for the fourth quarter aligned with the prior quarter, and significantly exceeded the same period of the prior year. Solid wealth management and trust fees along with record treasury management and card income served to cap off a strong fee income year for us," continued Hillebrand. "Similar to the prior quarter, we executed several cost saving measures related to our first quarter Commonwealth Bancshares acquisition and disposed of certain overlapping properties, resulting in a non-recurring pre-tax gain of $1.3 million. Additionally, we sold our interest in an investment advisor subsidiary that we acquired from Commonwealth, resulting in a non-recurring pre-tax loss of $870,000. This line of business was not within our geographic footprint and did not ultimately align with our long-term strategic model."

At December 31, 2022, the Company had $7.50 billion in assets, $5.21 billion in loans and $6.39 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.

Key factors contributing to the fourth quarter of 2022 results included:

  • Total loans, excluding PPP loans, grew $134 million, or 3%, on a linked quarter basis. Total loan production remained strong for the fourth consecutive quarter.
  • Deposit balances declined $110 million, or 2%, on a linked quarter basis, as non-interest bearing demand deposit balances contracted $250 million offset by increases in interest bearing demand deposits.
  • Net interest income increased $19.1 million, or 41%, for the fourth quarter of 2022 compared to the fourth quarter a year ago, consistent with the $1.14 billion, or 19%, increase in average earning assets and the increase in spread. Higher loan yields and volume more than offset significantly lower fee income recognition from the declining PPP loan portfolio.
  • NIM improved for the fourth consecutive quarter, increasing 18 basis points on a linked quarter basis to 3.64%.
  • Current credit quality remains solid; however, consistent with strong loan growth and the increase in the projected unemployment rate forecast used in modeling, $3.4 million of net credit loss expense(6) was recorded for the fourth quarter of 2022. Included in credit loss expense for the fourth quarter of 2022 was a $1.6 million specific reserve for a commercial real estate loan.
  • Non-interest income increased by $4.5 million, or 24%, over the fourth quarter of 2021, as customer expansion and recent acquisitions once again drove record quarterly 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 $1.3 million.
  • Net new business growth and market improvement in both the fixed income and equity markets drove linked quarter improvements in wealth management and trust income, as well as growth in assets under management.
  • The Company sold its partial interest in an investment advisor subsidiary that was acquired from Commonwealth Bancshares in March of 2022, realizing a non-recurring pre-tax loss of $870,000 during the quarter.
  • Total non-interest expenses remained controlled and consistent with management expectations, generating an efficiency ratio of 51.85%(4) for the fourth quarter of 2022.
  • Tangible book value per share was $18.50(1) at December 31, 2022, compared to $16.98(1) at September 30, 2022, and $20.09(1) at December 31, 2021. During 2022, tangible common equity and tangible book value have been significantly impacted by the marked increase in interest rates and the related negative impact on accumulated other comprehensive income/loss, leading to a $108 million reduction in equity, primarily as a result of unrealized losses in the available for sale debt securities portfolio. These securities, which management has the ability and intent to hold to maturity, 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.

Highlights for the year ended December 31, 2022:

  • Nine months of activity generated by the Commonwealth Bancshares merger exceeded management expectations and boosted overall operating results.
  • Loans (excluding PPP) grew $1.16 billion, or 29%, over the past 12 months with $630 million of the growth attributed to the acquisition.
  • Excluding the acquisition, organic loan growth totaled $529 million, or 13%, over the past 12 months.
  • Inclusive of the first quarter acquisition, deposit balances grew by $604 million, or 10%, over the past 12 months. Non-interest bearing deposits and interest bearing demand deposits represented $194 million and $410 million of the growth, respectively.
  • Higher loan yield expansion accompanied with a reduction in excess balance sheet liquidity led to NIM expanding 13 basis points in 2022 over 2021.
  • Wealth management and trust income reached and surpassed record levels during the year, increasing $8.5 million, or 31%, over the past 12 months, with net new business more than offsetting the current market volatility.
  • Customer expansion and transaction growth have led to record 2022 card and treasury management income.

Hillebrand said, "In November, we were once again nationally recognized by American Banker Magazine as one of the Best Banks to Work for in 2022. The Best Banks to Work For program identifies and honors U.S. banks for outstanding employee satisfaction. In addition, in September, we were one of 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 2022. These recognitions are an honor and a testament to the dedication of our employees, who continue to work purposefully to support our communities."

"During the fourth quarter of 2022, we published our inaugural Environmental, Social and Governance ("ESG") Corporate Responsibility Report," Hillebrand continued. "While ESG reporting is not mandatory, we believe it provides important information on our operations and management priorities. This report identifies ongoing practices and recent accomplishments in the areas of environmental risk and impact management, social responsibility, including diversity, equity and inclusion, and governance. We hold a strong commitment to developing and maintaining a solid ESG program, and this report allows us to give our stakeholders an even more transparent look into our best practices."

To learn more about the Bank's ESG efforts and view the report, please visit the ESG report tab under Resources at www.syb.com.

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

Net interest income, the Company's largest source of revenue, increased 41%, or $19.1 million, to $65.3 million, primarily due to average earning asset growth and rate increases. 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 $27.6 million, or 58%, to $75.2 million.
    • Interest income on loans increased $20.4 million, or 47%, over the prior year quarter. Consistent with the $1.07 billion increase in average non-PPP loans, and interest rate increases, the average quarterly yield earned on non-PPP loans increased 103 basis points over the past 12 months to 5.00%. PPP interest and fee income totaled $118,000 and $3.7 million for the fourth quarters of 2022 and 2021, respectively.
    • Interest income on debt securities increased $5.5 million compared to the fourth quarter of 2021, driven by average balance growth of $687 million and significantly improved yields on recent purchases stemming from rising rates.
    • Interest income on overnight funds increased $1.9 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 $8.6 million to $9.9 million, as the cost of interest bearing liabilities increased 72 basis points to 0.86%.
  • NIM expanded 57 basis points to 3.64% for the fourth quarter of 2022, from 3.07% for the fourth quarter a year ago, primarily due to higher loan yields and volume, which more than offset significantly lower fee income recognition from the declining PPP loan portfolio.

The Company recorded $3.4 million in provision for credit losses(6) during the fourth quarter of 2022, which included a $3.6 million provision for credit losses on loans and a $225,000 benefit to credit loss expense for off-balance sheet exposures. Significant loan growth during the quarter and the increase in the unemployment projection drove additional provision expense within the CECL allowance model. In addition, the Bank recorded a $1.6 million specific reserve for a commercial real estate loan during the fourth quarter of 2022. This was the primary driver of the increase in non-performing loans for the quarter.

Non-interest income increased $4.5 million, or 24%, to $23.1 million, with the recent acquisitions contributing significantly to revenue growth.

  • Wealth management and trust income ended the fourth quarter of 2022 at $9.2 million, increasing $1.8 million, or 25%, over the fourth quarter of 2021. Net new business growth and market improvement in both fixed income and equity markets drove the linked quarter improvement in assets under management and asset-based fees.
  • Card income increased $1.0 million, or 26%, over the fourth quarter of 2021, as card activity continues to benefit from generally strong spending trends and customer expansion.
  • Treasury management fees increased $407,000, or 22%, driven by increased transaction volume, expanded foreign exchange income, 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 $209,000 for the fourth quarter of 2022, down significantly compared to the fourth quarter a year ago. Overall volume in 2022 has cooled dramatically consistent with rising interest rates.
  • Consistent with the third quarter of 2022, the Company disposed of certain overlapping properties acquired from the March Commonwealth acquisition, resulting in a non-recurring pre-tax gain of $1.3 million during the fourth quarter of 2022.

Non-interest expenses increased $11.4 million, or 33%, compared to the fourth quarter of 2021, to $45.9 million.

  • Compensation and employee benefits expense increased $6.3 million, or 36%, primarily due to the increase in full time equivalent employees associated with the recent acquisitions. Consistent with organic and acquisition related expansion, full time equivalent employees increased to 1,040 at December 31, 2022 from 820 at December 31, 2021.
  • Net occupancy and equipment expenses increased $1.2 million, or 44%, compared to the fourth 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 $791,000, or 27%, consistent with an increase in customer accounts and core system upgrades.
  • Intangible amortization expense increased $1.3 million consistent with the increase in customer intangible assets related to the first quarter acquisition.
  • The Company sold its partial interest in an investment adviser subsidiary that was acquired from Commonwealth Bancshares in March of 2022, realizing a non-recurring pre-tax loss of $870,000 during the quarter.
  • Other non-interest expenses increased $606,000, or 25%, primarily due to increased credit card rewards expense, and fraud losses.

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

Total assets increased $850 million, or 13%, year over year to $7.50 billion, boosted by stellar organic growth and the recent acquisition.

Total loans increased $1.04 billion year over year, or 25%, to $5.21 billion. Excluding the PPP loan portfolio, total loans increased $1.2 billion, or 29%, over the past 12 months, with approximately $630 million of the growth attributable to the first quarter acquisition.

Total investment securities have increased $438 million, or 37%, 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 during the first part of the year.

Inclusive of the Commonwealth acquisition, total deposits increased $604 million, or 10%, over the past 12 months.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the fourth quarter of 2022, the Company recorded net loan charge-offs of $152,000, compared to $1.5 million in the fourth quarter of 2021. Non-performing loans totaled $15.1 million, or 0.29% of total loans outstanding compared to $7.4 million, or 0.18% of total loans outstanding at December 31, 2021. The ratio of allowance for credit losses to loans (excluding PPP) ended at 1.42%(2) at December 31, 2022 compared to 1.34%(2) at December 31, 2021.

At December 31, 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 10.14%(1) and the tangible common equity ratio was 7.44%(1) at December 31, 2022, compared to 10.17%(1) and 8.22%(1) at December 31, 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 accumulated other comprehensive income/loss driving down the tangible common equity ratio.

In November 2022, the board of directors declared a quarterly cash dividend of $0.29 per common share. The dividend was paid December 30, 2022, to shareholders of record as of December 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 – Fourth Quarter 2022 Compared with Third Quarter 2022

Net interest income increased $2.9 million, or 5%, over the prior quarter to $65.3 million, led by the increase in earning assets and rising rates. NIM improved for the fourth consecutive quarter, increasing 18 basis points on a linked quarter basis to 3.64%.

The Company recorded $3.4 million in provision for credit losses(6) during the fourth quarter of 2022, which included a $3.6 million provision for credit losses on loans and a $225,000 benefit to credit loss expense for off-balance sheet exposures. Solid loan growth during the quarter and the increase in the unemployment projection drove provision expense within the CECL allowance model. In addition, the Bank recorded a $1.6 million specific reserve for a commercial real estate loan. During the third quarter of 2022, 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 loss expense for off-balance sheet exposures.

Non-interest income decreased $1.7 million, or 7%, to $23.1 million on the linked quarter. As previously mentioned, the Company disposed of certain overlapping acquired properties, resulting in a non-recurring pre-tax gain of $1.3 million during the fourth quarter of 2022 compared to a $3.1 million similar gain during the third quarter of 2022. While mortgage banking income declined $494,000 on the linked quarter, card income and wealth management and trust income increased $336,000 and $69,000, respectively.

Non-interest expenses increased $1.1 million to $45.9 million led by the previously mentioned loss recorded on the disposition of the Company's interest in an investment advisor subsidiary.

Financial Condition – December 31, 2022 Compared with September 30, 2022

Total assets decreased $58 million, or 1%, on a linked quarter basis to $7.50 billion.

Total loans (excluding PPP) increased $134 million, or 3%, on a linked quarter basis, with meaningful increases across the Commercial & Industrial, Construction & Land Development and Residential Real Estate portfolios. Total line of credit usage reached its highest level in two years, increasing to 42% as of December 31, 2022, compared to 40% as of September 30, 2022. Commercial and industrial line usage increased to 33% as of December 31, 2022, compared to 30% as of September 30, 2022.

Total deposits decreased $110 million, or 2%, on a linked quarter basis, with non-interest bearing demand deposit balances contracting $250 million. Total interest bearing deposits increased $140 million, on a linked quarter basis, led by a $203 million increase in interest bearing demand deposit accounts offset by contraction in savings, money market and time deposits.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.50 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)            
Fourth Quarter 2022 Earnings Release            
(In thousands unless otherwise noted)            
  Three Months Ended Twelve Months Ended    
  December 31, December 31,    
Income Statement Data 2022 2021 2022 2021    
             
Net interest income, fully tax equivalent (3) $65,469 $46,328 $234,267 $171,508    
Interest income:            
Loans $ 64,033 $ 43,671 $ 216,138 $ 164,073    
Federal funds sold and interest bearing due from banks 2,173 287 6,018 645    
Mortgage loans held for sale 13 74 190 249    
Securities 8,931 3,476 29,306 12,109    
Total interest income 75,150 47,508 251,652 177,076    
Interest expense:            
Deposits 9,022 1,279 16,412 5,627    
Securities sold under agreements to repurchase and            
other short-term borrowings 399 11 721 38    
Federal Home Loan Bank advances 12 36 12 337    
Subordinated debentures 454 - 1,124 -    
Total interest expense 9,887 1,326 18,269 6,002    
Net interest income 65,263 46,182 233,383 171,074    
Provision for credit losses (6) 3,375 (1,900) 10,257 (753)    
Net interest income after provision for credit losses 61,888 48,082 223,126 171,827    
Non-interest income:            
Wealth management and trust services 9,221 7,379 36,111 27,613    
Deposit service charges 2,183 1,907 8,286 5,852    
Debit and credit card income 5,046 4,012 18,623 13,456    
Treasury management fees 2,278 1,871 8,590 6,912    
Mortgage banking income 209 1,062 3,210 4,724    
Net investment product sales commissions and fees 833 764 3,063 2,553    
Bank owned life insurance 545 272 1,597 914    
Gain (Loss) on sale of premises and equipment 1,295 (37) 4,369 (78)    
Other 1,532 1,374 5,300 3,904    
Total non-interest income 23,142 18,604 89,149 65,850    
Non-interest expenses:            
Compensation 23,398 17,146 86,640 63,034    
Employee benefits 3,421 3,189 16,568 13,479    
Net occupancy and equipment 3,843 2,667 14,298 9,688    
Technology and communication 3,747 2,956 14,897 11,145    
Debit and credit card processing 1,470 1,334 5,909 4,494    
Marketing and business development 1,544 1,793 5,005 4,150    
Postage, printing and supplies 893 714 3,354 2,213    
Legal and professional 492 755 2,943 2,583    
FDIC Insurance 730 706 2,758 1,847    
Amortization of investments in tax credit partnerships 88 52 353 367    
Capital and deposit based taxes 799 549 2,621 2,090    
Merger expenses - - 19,500 19,025    
Federal Home Loan Bank early termination penalty - - - 474    
Intangible amortization 1,610 276 5,544 770    
Loss on disposition of Landmark Financial Advisors 870 - 870 -    
Other 3,041 2,435 10,531 6,921    
Total non-interest expenses 45,946 34,572 191,791 142,280    
Income before income tax expense 39,084 32,114 120,484 95,397    
Income tax expense 9,174 7,525 27,190 20,752    
Net income 29,910 24,589 93,294 74,645    
Less: income attributed to non-controlling interest 93 - 322 -    
Net income available to stockholders $29,817 $24,589 $92,972 $74,645    
             
Net income per share - Basic $1.02 $0.93 $3.24 $3.00    
Net income per share - Diluted 1.01 0.92 3.21 2.97    
Cash dividend declared per share 0.29 0.28 1.14 1.10    
             
Weighted average shares - Basic 29,157 26,492 28,672 24,898    
Weighted average shares - Diluted 29,428 26,800 28,922 25,156    
             
    December 31,    
Balance Sheet Data     2022 2021    
             
Investment securities     $1,617,834 $1,180,298    
Loans     5,205,918 4,169,303    
Allowance for credit losses on loans     73,531 53,898    
Total assets     7,496,261 6,646,025    
Non-interest bearing deposits     1,950,198 1,755,754    
Interest bearing deposits     4,441,054 4,031,760    
Federal Home Loan Bank advances     50,000 -    
Subordinated debentures     26,343 -    
Stockholders' equity     760,432 675,869    
Total shares outstanding     29,259 26,596    
Book value per share (1)     $25.99 $25.41    
Tangible common equity per share (1)     18.50 20.09    
Market value per share     64.98 63.88    
             
Stock Yards Bancorp, Inc. Financial Information (unaudited)            
Fourth Quarter 2022 Earnings Release            
             
  Three Months Ended Twelve Months Ended    
  December 31, December 31,    
Average Balance Sheet Data 2022 2021 2022 2021    
             
Federal funds sold and interest bearing due from banks $235,448 $699,222 $477,341 $446,783    
Mortgage loans held for sale 6,735 12,556 8,835 11,170    
Investment securities 1,786,383 1,099,235 1,670,324 898,934    
Federal Home Loan Bank stock 10,928 9,376 11,741 10,824    
Loans 5,094,356 4,172,676 4,819,124 3,951,257    
Total interest earning assets 7,133,850 5,993,065 6,987,365 5,318,968    
Total assets 7,559,260 5,935,146 7,438,880 5,626,886    
Interest bearing deposits 4,428,582 3,798,666 4,385,393 3,302,262    
Total deposits 6,526,440 5,559,577 6,438,606 4,881,057    
Securities sold under agreement to repurchase and other short term borrowings 117,138 86,911 122,154 73,130    
Federal Home Loan Bank advances 1,087 7,174 274 16,317    
Subordinated debentures 26,309 - 21,733 -    
Total interest bearing liabilities 4,582,005 3,892,751 4,538,911 3,391,709    
Total stockholders' equity 740,007 668,287 738,798 573,261    
             
Performance Ratios            
Annualized return on average assets (7) 1.56% 1.52% 1.25% 1.33%    
Annualized return on average equity (7) 15.99% 14.60% 12.58% 13.02%    
Net interest margin, fully tax equivalent 3.64% 3.07% 3.35% 3.22%    
Non-interest income to total revenue, fully tax equivalent 27.56% 28.65% 26.12% 27.74%    
Efficiency ratio, fully tax equivalent (4) 51.85% 53.24% 59.30% 59.94%    
             
Capital Ratios            
Total stockholders' equity to total assets (1)     10.14% 10.17%    
Tangible common equity to tangible assets (1)     7.44% 8.22%    
Average stockholders' equity to average assets     9.93% 10.19%    
Total risk-based capital     12.54% 12.79%    
Common equity tier 1 risk-based capital     11.47% 11.94%    
Tier 1 risk-based capital     11.04% 11.94%    
Leverage     9.33% 8.86%    
             
Loan Segmentation            
Commercial real estate - non-owner occupied     $1,397,346 $1,128,244    
Commercial real estate - owner occupied     834,629 678,405    
Commercial and industrial     1,230,976 967,022    
Commercial and industrial - PPP     18,593 140,734    
Residential real estate - owner occupied     591,515 400,695    
Residential real estate - non-owner occupied     313,248 281,018    
Construction and land development     445,690 299,206    
Home equity lines of credit     200,725 138,976    
Consumer     139,461 104,294    
Leases     13,322 13,622    
Credit cards     20,413 17,087    
Total loans and leases     $5,205,918 $4,169,303    
             
Asset Quality Data            
Non-accrual loans     $14,242 $6,712    
Troubled debt restructurings     - 12    
Loans past due 90 days or more and still accruing     892 684    
Total non-performing loans     15,134 7,408    
Other real estate owned     677 7,212    
Total non-performing assets     $15,811 $14,620    
Non-performing loans to total loans (2)     0.29% 0.18%    
Non-performing assets to total assets     0.21% 0.22%    
Allowance for credit losses on loans to total loans (2)     1.41% 1.29%    
Allowance for credit losses on loans to average loans     1.53% 1.36%   
Allowance for credit losses on loans to non-performing loans     486% 728%    
Net (charge-offs) recoveries $(152) $(1,535) $1 $(6,176)    
Net (charge-offs) recoveries to average loans (5) 0.00% -0.04% 0.00% -0.16%    
             
Stock Yards Bancorp, Inc. Financial Information (unaudited)            
Fourth Quarter 2022 Earnings Release            
             
  Quarterly Comparison  
Income Statement Data 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Net interest income, fully tax equivalent (3) $65,469 $62,608 $57,244 $48,944 $46,328  
Net interest income $65,263 $62,376 $56,984 $48,760 $46,182  
Provision for credit losses (6) 3,375 4,803 (200) 2,279 (1,900)  
Net interest income after provision for credit losses 61,888 57,573 57,184 46,481 48,082  
Non-interest income:            
Wealth management and trust services 9,221 9,152 9,495 8,243 7,379  
Deposit service charges 2,183 2,179 2,061 1,863 1,907  
Debit and credit card income 5,046 4,710 4,748 4,119 4,012  
Treasury management fees 2,278 2,221 2,187 1,904 1,871  
Mortgage banking income 209 703 1,295 1,003 1,062  
Net investment product sales commissions and fees 833 892 731 607 764  
Bank owned life insurance 545 516 270 266 272  
Gain (Loss) on sale of premises and equipment 1,295 3,074 - - (37)  
Other 1,532 1,417 1,153 1,198 1,374  
Total non-interest income 23,142 24,864 21,940 19,203 18,604  
Non-interest expenses:            
Compensation 23,398 23,069 22,204 17,969 17,146  
Employee benefits 3,421 4,179 4,429 4,539 3,189  
Net occupancy and equipment 3,843 3,767 3,663 3,025 2,667  
Technology and communication 3,747 3,747 3,984 3,419 2,956  
Debit and credit card processing 1,470 1,437 1,665 1,337 1,334  
Marketing and business development 1,544 1,244 1,445 772 1,793  
Postage, printing and supplies 893 903 825 733 714  
Legal and professional 492 774 1,027 650 755  
FDIC Insurance 730 847 536 645 706  
Amortization of investments in tax credit partnerships 88 88 89 88 52  
Capital and deposit based taxes 799 722 582 518 549  
Merger expenses - - - 19,500 -  
Intangible amortization 1,610 1,610 1,611 713 275  
Loss on disposition of Landmark Financial Advisors 870 - - - -  
Other 3,041 2,486 2,615 2,389 2,436  
Total non-interest expenses 45,946 44,873 44,675 56,297 34,572  
Income before income tax expense 39,084 37,564 34,449 9,387 32,114  
Income tax expense 9,174 9,024 7,547 1,445 7,525  
Net income 29,910 28,540 26,902 7,942 24,589  
Less: income attributed to non-controlling interest 93 85 108 36 -  
Net income available to stockholders $29,817 $28,455 $26,794 $7,906 $24,589  
             
             
Net income per share - Basic $1.02 $0.98 $0.92 $0.29 $0.93  
Net income per share - Diluted 1.01 0.97 0.91 0.29 0.92  
Cash dividend declared per share 0.29 0.29 0.28 0.28 0.28  
             
Weighted average shares - Basic 29,157 29,144 29,131 27,230 26,492  
Weighted average shares - Diluted 29,428 29,404 29,346 27,485 26,800  
             
  Quarterly Comparison  
Balance Sheet Data 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Cash and due from banks $82,515 $93,948 $88,422 $109,799 $62,304  
Federal funds sold and interest bearing due from banks 84,852 235,973 485,447 641,892 898,888  
Mortgage loans held for sale 2,606 5,230 10,045 9,323 8,614  
Investment securities 1,617,834 1,627,298 1,625,488 1,698,546 1,180,298  
Federal Home Loan Bank stock 10,928 10,928 13,811 13,811 9,376  
Loans 5,205,918 5,072,877 4,877,324 4,847,683 4,169,303  
Allowance for credit losses on loans 73,531 70,083 66,362 67,067 53,898  
Goodwill 194,074 202,524 202,524 202,524 135,830  
Total assets 7,496,261 7,554,210 7,583,105 7,777,152 6,646,025  
Non-interest bearing deposits 1,950,198 2,200,041 2,121,304 2,089,072 1,755,754  
Interest bearing deposits 4,441,054 4,300,732 4,427,826 4,656,419 4,031,760  
Securities sold under agreements to repurchase 133,342 124,567 161,512 142,146 75,466  
Federal funds purchased 8,789 8,970 8,771 8,920 10,374  
Federal Home Loan Bank advances 50,000 - - - -  
Subordinated debentures 26,343 26,244 26,144 26,045 -  
Stockholders' equity 760,432 727,754 747,131 758,143 675,869  
Total shares outstanding 29,259 29,242 29,243 29,220 26,596  
Book value per share (1) 25.99 $24.89 $25.55 $25.95 $25.41  
Tangible common equity per share (1) 18.50 16.98 17.59 17.92 20.09  
Market value per share 64.98 68.01 59.82 52.90 63.88  
             
Capital Ratios            
Total stockholders' equity to total assets (1) 10.14% 9.63% 9.85% 9.75% 10.17%  
Tangible common equity to tangible assets (1) 7.44% 6.78% 7.00% 6.94% 8.22%  
Average stockholders' equity to average assets 9.79% 9.92% 9.79% 10.24% 10.43%  
Total risk-based capital 12.54% 12.16% 12.27% 12.14% 12.79%  
Common equity tier 1 risk-based capital 11.47% 10.69% 10.81% 10.66% 11.94%  
Tier 1 risk-based capital 11.04% 11.13% 11.26% 11.12% 11.94%  
Leverage 9.33% 8.85% 8.58% 9.34% 8.86%  
             
Stock Yards Bancorp, Inc. Financial Information (unaudited)            
Fourth Quarter 2022 Earnings Release            
             
  Quarterly Comparison  
Average Balance Sheet Data 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Federal funds sold and interest bearing due from banks $235,448 $442,880 $561,101 $671,263 $699,222  
Mortgage loans held for sale 6,735 8,694 11,303 8,629 12,556  
Investment securities 1,786,383 1,769,597 1,741,844 1,321,551 1,099,235  
Loans 5,094,356 4,948,898 4,846,013 4,377,930 4,172,676  
Total interest earning assets 7,133,850 7,181,781 7,174,072 6,389,882 5,993,065  
Total assets 7,559,260 7,661,720 7,651,332 6,872,273 6,406,612  
Interest bearing deposits 4,428,582 4,444,983 4,515,563 4,148,716 3,798,666  
Total deposits 6,526,440 6,614,263 6,639,458 5,966,178 5,559,577  
Securities sold under agreement to repurchase and federal funds purchased 117,138 148,734 149,747 101,075 86,911  
Federal Home Loan Bank advances 1,087 - - - 7,174  
Subordinated debentures 26,309 26,210 26,111 8,052 -  
Total interest bearing liabilities 4,582,005 4,619,927 4,691,421 4,257,843 3,892,751  
Total stockholders' equity 740,007 760,322 749,445 703,929 668,287  
             
Performance Ratios            
Annualized return on average assets (7) 1.56% 1.47% 1.40% 0.47% 1.52%  
Annualized return on average equity (7) 15.99% 14.85% 14.34% 4.55% 14.60%  
Net interest margin, fully tax equivalent 3.64% 3.46% 3.20% 3.11% 3.07%  
Non-interest income to total revenue, fully tax equivalent 27.56% 28.43% 27.71% 28.18% 28.65%  
Efficiency ratio, fully tax equivalent (4) 51.85% 51.30% 56.42% 82.61% 53.24%  
             
Loans Segmentation            
Commercial real estate - non-owner occupied $1,397,346 $1,415,180 $1,397,330 $1,397,633 $1,128,244  
Commercial real estate - owner occupied 834,629 819,727 787,559 803,181 678,405  
Commercial and industrial 1,230,976 1,170,241 1,090,404 1,083,980 967,022  
Commercial and industrial - PPP 18,593 19,469 36,767 71,361 140,734  
Residential real estate - owner occupied 591,515 557,638 533,577 492,123 400,695  
Residential real estate - non-owner occupied 313,248 302,936 293,852 297,127 281,018  
Construction and land development 445,690 414,632 372,197 346,372 299,206  
Home equity lines of credit 200,725 199,485 192,102 186,024 138,976  
Consumer 139,461 138,843 137,278 135,198 104,294  
Leases 13,322 13,959 14,611 13,952 13,622  
Credit cards 20,413 20,767 21,647 20,732 17,087  
Total loans and leases $5,205,918 $5,072,877 $4,877,324 $4,847,683 $4,169,303  
             
Asset Quality Data            
Non-accrual loans $14,242 $10,580 $7,827 $12,494 $6,712  
Troubled debt restructurings - - - 10 12  
Loans past due 90 days or more and still accruing 892 32 1,176 300 684  
Total non-performing loans 15,134 10,612 9,003 12,804 7,408  
Other real estate owned 677 996 7,601 7,156 7,212  
Total non-performing assets $15,811 $11,608 $16,604 $19,960 $14,620  
Non-performing loans to total loans (2) 0.29% 0.21% 0.18% 0.26% 0.18%  
Non-performing assets to total assets 0.21% 0.15% 0.22% 0.26% 0.22%  
Allowance for credit losses on loans to total loans (2) 1.41% 1.38% 1.36% 1.38% 1.29%  
Allowance for credit losses on loans to average loans 1.44% 1.42% 1.37% 1.53% 1.29%  
Allowance for credit losses on loans to non-performing loans 486% 660% 737% 524% 728%  
Net (charge-offs) recoveries $(152) $(382) $(5) $540 $(1,535)  
Net (charge-offs) recoveries to average loans (5) 0.00% -0.01% 0.00% 0.01% -0.04%  
             
Other Information            
Total assets under management (in millions) $6,585 $6,293 $6,555 $7,305 $4,801  
Full-time equivalent employees 1,040 1,028 1,018 997 820  
             
(1) - The following table provides a reconciliation of total stockholders' equity in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") to tangible stockholders' equity, a non-GAAP disclosure. Bancorp provides the tangible book value per share, a non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy:  
  Quarterly Comparison  
(In thousands, except per share data) 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Total stockholders' equity - GAAP (a) $760,432 $727,754 $747,131 $758,143 $675,869  
Less: Goodwill (194,074) (202,524) (202,524) (202,524) (135,830)  
Less: Core deposit and other intangibles (24,990) (28,747) (30,357) (31,968) (5,596)  
Tangible common equity - Non-GAAP (c) $541,368 $496,483 $514,250 $523,651 $534,443  
             
Total assets - GAAP (b) $7,496,261 $7,554,210 $7,583,105 $7,777,152 $6,646,025  
Less: Goodwill (194,074) (202,524) (202,524) (202,524) (135,830)  
Less: Core deposit and other intangibles (24,990) (28,747) (30,357) (31,968) (5,596)  
Tangible assets - Non-GAAP (d) $7,277,197 $7,322,939 $7,350,224 $7,542,660 $6,504,599  
             
Total stockholders' equity to total assets - GAAP (a/b) 10.14% 9.63% 9.85% 9.75% 10.17%  
Tangible common equity to tangible assets - Non-GAAP (c/d) 7.44% 6.78% 7.00% 6.94% 8.22%  
             
Total shares outstanding (e) 29,259 29,242 29,243 29,220 26,596  
             
Book value per share - GAAP (a/e) $25.99 $24.89 $25.55 $25.95 $25.41  
Tangible common equity per share - Non-GAAP (c/e) 18.50 16.98 17.59 17.92 20.09  
             
(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) 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Total Loans - GAAP (a) $5,205,918 $5,072,877 $4,877,324 $4,847,683 $4,169,303  
Less: PPP loans (18,593) (19,469) (36,767) (71,361) (140,734)  
Total non-PPP Loans - Non-GAAP (b) $5,187,325 $5,053,408 $4,840,557 $4,776,322 $4,028,569  
             
Allowance for credit losses on loans (c) $73,531 $70,083 $66,362 $67,067 $53,898  
Total non-performing loans (d) 15,134 10,612 9,003 12,804 7,408  
             
Allowance for credit losses on loans to total loans - GAAP (c/a) 1.41% 1.38% 1.36% 1.38% 1.29%  
Allowance for credit losses on loans to total loans - Non-GAAP (c/b) 1.42% 1.39% 1.37% 1.40% 1.34%  
             
Non-performing loans to total loans - GAAP (d/a) 0.29% 0.21% 0.18% 0.26% 0.18%  
Non-performing loans to total loans - Non-GAAP (d/b) 0.29% 0.21% 0.19% 0.27% 0.18%  
             
(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 and disposition of any acquired assets, 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) 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Total non-interest expenses (a) $45,946 $44,873 $44,675 $56,297 $34,572  
Less: Non-recurring merger expenses - - - (19,500) -  
Less: Loss on disposition of Landmark Financial Advisors (870) - - - -  
Less: Amortization of investments in tax credit partnerships (88) (88) (89) (88) (52)  
Total non-interest expenses - Non-GAAP (c) $44,988 $44,785 $44,586 $36,709 $34,520  
             
Total net interest income, fully tax equivalent $65,469 $62,608 $57,244 $48,944 $46,328  
Total non-interest income 23,142 24,864 21,940 19,203 18,604  
Total revenue - Non-GAAP (b) 88,611 87,472 79,184 68,147 64,932  
Less: Gain/loss on sale of acquired premises and equipment (1,295) (3,074) - - -  
Less: Gain/loss on sale of securities - - - - -  
Total adjusted revenue - Non-GAAP (d) $87,316 $84,398 $79,184 $68,147 $64,932  
             
Efficiency ratio - Non-GAAP (a/b) 51.85% 51.30% 56.42% 82.61% 53.24%  
Adjusted efficiency ratio - Non-GAAP (c/d) 51.52% 53.06% 56.31% 53.87% 53.16%  
             
             
(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) 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Provision for credit losses - loans $3,600 $4,103 $(700) $2,679 $(1,100)  
Provision for credit losses - off balance sheet exposures (225) 700 500 (400) (800)  
Total provision for credit losses $3,375 $4,803 $(200) $2,279 $(1,900)  
             
(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) 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21  
             
Net income attributable to stockholders - GAAP (a) $29,817 $28,455 $26,794 $7,906 $24,589  
Add: Non-recurring merger expenses - - - 19,500 -  
Add: Provision for credit losses on acquired loans - - - 4,429 -  
Add: Loss on disposition of Landmark Financial Advisors 870 - - - -  
Less: Gain/loss on sale of premises and equipment (1,295) (3,074) - - -  
Less: Tax effect of adjustments to net income 100 738 - (3,717) -  
Total net income - Non-GAAP (b) $29,492 $26,119 $26,794 $28,118 $24,589  
             
Total average assets (c) $7,559,260 $7,661,720 $7,651,332 $6,872,273 $6,406,612  
             
Total average stockholder equity (d ) 740,007 760,322 749,445 703,929 668,287  
             
Return on average assets - GAAP (a/c) 1.56% 1.47% 1.40% 0.47% 1.52%  
Return on average assets - Non-GAAP (b/c) 1.55% 1.35% 1.40% 1.66% 1.52%  
             
Return on average equity - GAAP (a/d) 15.99% 14.85% 14.34% 4.55% 14.60%  
Return on average equity - Non-GAAP (b/d) 15.81% 13.63% 14.34% 16.20% 14.60%  


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


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