SYBT Stock Yards Bancorp Inc

Stock Yards Bancorp, Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust Company, with offices in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets, today reported earnings for the second quarter ended June 30, 2023, of $27.7 million, or $0.94 per diluted share. This compares to net income of $26.8 million, or $0.91 per diluted share, for the second quarter of 2022. The results for the second quarter of 2023 included strong loan growth and record levels of non-interest income, highlighted by treasury management fees and wealth management and trust income.

(dollar amounts in thousands, except per share data)	2Q23			1Q23			2Q22
Net income	$	27,664		$	29,048		$	26,794
Net income per share, diluted		0.94			0.99			0.91
Net interest income	$	60,929		$	63,072		$	56,984
Provision for credit losses(1)		2,350			2,625			(200	)
Non-interest income		23,085			22,047			21,940
Non-interest expenses		46,025			45,314			44,675
Net interest margin		3.42	%		3.59	%		3.20	%
Efficiency ratio(2)		54.69	%		53.13	%		56.42	%
Tangible common equity to tangible assets(3)		7.87	%		7.74	%		7.00	%
Annualized return on average assets(4)		1.46	%		1.55	%		1.40	%
Annualized return on average equity(4)		13.87	%		15.15	%		14.34	%

“We are delighted by continued strong loan demand from the customers we serve. While the economic outlook remains difficult to forecast, the current brisk lending environment in our markets is encouraging,” said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. “We remain positive about the opportunities in our markets, as loan pipelines and overall business activity remain solid. Total loans, excluding PPP loans, increased $571 million, or 12%, over the last 12 months, while growing $178 million during the second quarter. While our loan growth stands out given the current environment, I am most pleased to report that our credit quality metrics remain outstanding – with past dues and classified loans reaching three year lows. On the linked quarter, total deposits declined $149 million, as deposit pricing pressures persist. Although total interest bearing deposits have not fluctuated as widely as non-interest bearing deposits, we experienced anticipated public funds run off in addition to a significant shift in the mix of interest bearing deposits, which is driving up the overall cost of funds. Despite the noted quarterly deposit contraction, we are not seeing fallout in our overall customer base.”

“Recurring non-interest income once again set a quarterly record, led by gains in several categories and is a complement to our diversified revenue streams,” continued Hillebrand. “Treasury management fees climbed to record levels at quarter-end, primarily driven by increased demand and customer expansion. In addition, wealth management and trust reached new highs, with net new business growth and market appreciation contributing to the record results. Notwithstanding the current strong financial results, we remain cautious in our outlook for the remainder of the year, particularly with the challenging interest rate environment and continuing national recessionary fears. During uncertain and challenging economic times, we remain focused on our business model, which emphasizes strong, full customer relationships. Our history of success as a community bank is rooted in the unwavering, unified mission of providing exceptional service to our customers and meeting all of their banking needs. For nearly 120 years we have stayed true to this simple mission, through all economic cycles.”

At June 30, 2023, the Company had $7.73 billion in assets, $5.42 billion in loans and $6.21 billion in total deposits. The Company’s combined enterprise, which encompasses 72 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 second quarter of 2023 results included:

• Total loans, excluding PPP loans, increased $571 million, or 12%, over the last 12 months, while growing $178 million, or 3%, on the linked quarter. Loan production set a new quarterly record during the second quarter of 2023. The yield earned on loans, excluding PPP loans, increased to 5.50% for the second quarter of 2023 – the highest level earned since mid-2011.
• Deposit balances declined $149 million, or 2%, on the linked quarter, as non-interest bearing demand deposit balances contracted $79 million and interest bearing deposits declined $70 million.
  • Contraction in interest bearing demand deposit, savings and money market portfolios more than offset a $119 million increase in time deposits.
  • As expected, public funds accounts contracted $84 million on the linked quarter.
  • Given the current interest rate environment, the change in deposit mix continues to place pressure on funding costs.
• Net interest income increased $3.9 million, or 7%, for the second quarter of 2023 compared to the second quarter a year ago.
• Compared to the second quarter of 2022, net interest margin (NIM) increased 22 basis points. NIM declined 17 basis points on the linked quarter to 3.42%, as the rising cost of funds outpaced earning asset yields.
• With continued strong credit quality statistics, the Bank recorded a provision for credit losses(1) of $2.4 million for the second quarter of 2023, consistent with strong loan growth.
• Non-interest income increased by $1.1 million, or 5%, over the second quarter of 2022, as customer expansion enhanced fee income. Net new business growth and equity market improvement drove record wealth management and trust income, and treasury management fees once again set a quarterly record.
• Total non-interest expenses remained well-controlled and consistent with management expectations.
• Tangible common equity per share(3) was $20.17 at June 30, 2023, compared to $19.66 at March 31, 2023, and $17.59 at June 30, 2022. Over the past several quarters, tangible common equity and tangible book value have been impacted by the marked increase in interest rates and the related negative impact on accumulated other comprehensive income/loss, 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, have a long history of no credit losses and a current duration of 3.5 years.

Hillebrand concluded, “In May, we were named a winner of the 2022 Raymond James Community Bankers Cup, which recognizes the top 10% of community banks with assets between $500 million and $10 billion based on various profitability, operational efficiency and balance sheet metrics. Only 22 banks in the nation received this award and we were the only bank in Indiana, Kentucky and Ohio to be honored. This recognition not only reflects the success of our Company, but the dedication that we have to providing high quality service to the community.” Stock Yards Bancorp has been named to the Raymond James Community Bankers Cup eight times.

Results of Operations – Second Quarter 2023 Compared with Second Quarter 2022

Net interest income, the Company’s largest source of revenue, increased 7%, or $3.9 million, to $60.9 million. Strong organic loan expansion has boosted net interest income over the past 12 months.

• Total interest income increased by $24.0 million, or 41%, to $83.1 million.
  • Interest income and fees on loans increased $21.7 million, or 43%, over the prior year quarter. Consistent with the $481 million, or 10%, increase in average non-PPP loans and interest rate expansion, the average quarterly yield earned on non-PPP loans increased 129 basis points, or 31%, over the past 12 months to 5.49%. PPP interest and fee income totaled $51,000 and $1.2 million for the second quarters of 2023 and 2022, respectively. As of June 30, 2023, approximately $123,000 in PPP deferred fees remained to be recognized.
  • Interest income on securities increased $1.7 million compared to the second quarter of 2022. While average securities balances have declined $23 million, or 1%, over the past 12 months, the rate earned has increased 36 bps to 2.05% - consistent with higher yields earned on securities purchased in 2022.
  • Despite a $429 million decline in average balances, interest income on overnight funds increased $551,000 over the prior year quarter. The Federal Reserve Bank (FRB) has increased the rate paid on reserve balances meaningfully during the last several quarters, which has significantly benefitted income.
• Total interest expense increased $20.0 million to $22.1 million, as the cost of interest bearing liabilities increased 163 basis points to 1.81%.
  • Interest expense on deposits increased $15.3 million over the past 12 months, as the overall cost of interest bearing deposits increased from 0.16% at 2Q22 to 1.55%. Along with cost of funds expansion, the Bank has experienced declines in average deposits along with changes in the mix of deposits. Average interest bearing deposit balances decreased $101 million, or 2%, from the second quarter of 2022 to the second quarter of 2023, with non-time deposits (interest bearing demand savings and money markets) compressing $246 million and time deposits increasing $145 million.
  • Interest expense on Federal Home Loan Bank (FHLB) advances totaled $4.0 million for the second quarter of 2023. On February 6, 2023, the Bank borrowed $100 million from the FHLB with a five-year term and a net cost of 3.55%, after including the benefit of the related interest rate swap. The remainder of the FHLB advances held at quarter end had overnight maturities.
• NIM expanded 22 basis points to 3.42% for the second quarter of 2023, from 3.20% for the second quarter a year ago. Despite the margin expansion, higher loan yields and volume were offset by higher deposit rates and changes within the deposit portfolio mix.

The Company recorded $2.4 million in provision for credit losses(1) during the second quarter of 2023, which included a $2.2 million provision for credit losses on loans and $200,000 of credit loss expense for off-balance sheet exposures. Although the credit quality statistics remain strong, the Company recorded credit loss expense based upon strong loan growth, qualitative factor adjustments, minimal net charge-offs and improvement in the Company’s unemployment forecast. For the second quarter of 2022, consistent with net recoveries and solid credit quality statistics, the Company recorded a $700,000 reduction in provision for credit losses on loans offset by a $500,000 provision for credit losses for off balances sheet exposures.

Non-interest income increased $1.1 million, or 5%, to $23.1 million.

• Wealth management and trust income ended the second quarter of 2023 at a record $10.1 million, increasing $651,000, or 7%, over the second quarter of 2022. Net new business growth and strong equity market performance boosted income over the previous record set in the first quarter.
• Treasury management fees increased $362,000, or 17%, driven by increased transaction volume, modified fee schedules, strong foreign exchange income, new product sales and both organic and acquisition-related customer base expansion. New and renewed interest in sweep services, given the current rate environment, continues to boost income.
• Mortgage banking income, which primarily consists of gain on sale of loans, net servicing income and mortgage servicing rights amortization, totaled $1.0 million for the second quarter of 2023, compared to $1.3 million for the second quarter a year ago. While total income has lagged over the prior year quarter, the Company has benefited from the increased market value of the loans held in the pipeline.

Non-interest expenses increased $1.4 million, or 3%, compared to the second quarter of 2022, to $46.0 million.

• Total compensation and employee benefits expense increased $535,000, or 2%, compared to the second quarter of 2022, consistent with annual merit increases and an increase in full time equivalent employees.
• 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 $235,000, or 6%, consistent with customer expansion and system upgrades.
• FDIC insurance expense increased $243,000, or 45%, compared to the second quarter a year ago due to the increased base rate assessment imposed by the FDIC in addition to balance sheet growth.
• Tax credit amortization expense increased $235,000 compared to the second quarter of 2022 primarily due to the addition of new tax credit projects in 2023.
• Intangible amortization expense decreased $439,000, or 27%, consistent with the decrease in customer intangible assets related to the first quarter 2022 acquisition.

Financial Condition – June 30, 2023 Compared with June 30, 2022

Total assets increased $149 million, or 2%, year over year to $7.73 billion.

Total loans increased $541 million, or 11%, to $5.42 billion, led by expansion in most major loan categories. Excluding the PPP loan portfolio, total loans increased $571 million, or 12% over the past 12 months.

Total investment securities, which spiked during the second quarter of 2021 and the first quarter of 2022 due to acquisitions, decreased $83 million, or 5%, year over year. Higher yielding investment purchases made in 2022 have boosted the overall portfolio yield to 2.05% during the second quarter of 2023, from 1.69% in the second quarter of 2022. In 2023, cash flows from the investment portfolio have been utilized to fund loan growth and provide liquidity in lieu of redeployment.

Total deposits contracted $341 million, or 5%, over the past 12 months, led by a $355 million decline in non-interest bearing demand deposits, partially offset by interest bearing demand and time deposit expansion. Approximately $90 million of the decline was associated with seasonal public funds account balances.

Asset quality has remained solid with past dues and classified loans reaching three year lows. During the second quarter of 2023, the Company recorded net loan charge-offs of $113,000, compared to net loan charge-offs of $5,000 in the second quarter of 2022. Non-performing loans(5) totaled $18 million, or 0.33% of total loans outstanding compared to $9 million, or 0.18% of total loans outstanding at June 30, 2022. The ratio of allowance for credit losses to loans (5) ended at 1.43% at June 30, 2023 compared to 1.36% at June 30, 2022.

At June 30, 2023, 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(1) was 10.45% and the tangible common equity ratio(1) was 7.87%(1) at June 30, 2023, compared to 9.85% and 7.00% at June 30, 2022, respectively. The increase in interest rates over the last 12 months have led to outsized unrealized losses within the available for sale debt securities portfolio, with the decline in accumulated other comprehensive income/loss putting pressure on the tangible common equity ratio, which has been steadily improving post acquisition activity.

In May 2023, the board of directors declared a quarterly cash dividend of $0.29 per common share. The dividend was paid July 3, 2023, to shareholders of record as of June 20, 2023.

No shares have been purchased since 2020, and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan, which expires in May 2025.

Results of Operations – Second Quarter 2023 Compared with First Quarter 2023

Net interest income declined $2.1 million, or 3%, over the prior quarter to $60.9 million. NIM declined 17 basis points on the linked quarter to 3.42%, as the cost of funds growth outpaced earning asset yield growth.

The Company recorded $2.4 million in provision for credit losses(1) during the second quarter of 2023, which included a $2.2 million provision for credit losses on loans and $200,000 of credit loss expense for off-balance sheet exposures. During the first quarter of 2023, the Company recorded $2.6 million in provision for credit losses, which included a $2.3 million provision for credit losses on loans and a $375,000 credit loss expense for off-balance sheet exposures.

Non-interest income increased $1.0 million, or 5%, to $23.1 million on the linked quarter, consistent with expansion in wealth management and trust, treasury and card income.

Non-interest expenses increased $711,000, or 2%, to $46.0 million, as increased compensation, marketing and card processing more than off-set declines in FDIC insurance and net occupancy expense.

Financial Condition – June 30, 2023 Compared with March 31, 2023

Total assets increased $65 million on the linked quarter to $7.73 billion.

Total loans increased $176 million, or 3%, on the linked quarter, led by increases in the Commercial Real Estate and Residential Real Estate loan portfolios. Total line of credit usage was 40.1% as of June 30, 2023, compared to 41.1% as of March 31, 2023 – driven by strong production (new lines that have yet to fund). Commercial and industrial line usage was 29.6% as of June 30, 2023, compared to 30.5% as of March 31, 2023.

Total deposits decreased $149 million, or 2%, on the linked quarter, with non-interest bearing demand deposit balances contracting $79 million. Total interest bearing deposits decreased $70 million, on the linked quarter, as a $119 million increase in time deposits was offset by contraction in interest bearing demand deposit, savings and money market accounts. Excluding the public funds decline, total deposits decreased $65 million on the linked quarter.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $7.73 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, 2022, 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.

Contact:

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

Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2023 Earnings Release
(In thousands unless otherwise noted)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
Income Statement Data		2023		2022		2023		2022
Net interest income, fully tax equivalent (6)		$ 61,074		$ 57,244		$ 124,319		$ 106,189
Interest income:
Loans		$ 72,308		$ 50,612		$ 141,095		$ 95,355
Federal funds sold and interest bearing due from banks		1,664		1,113		3,245		1,395
Mortgage loans held for sale		77		50		118		74
Securities		9,014		7,333		18,072		12,268
Total interest income		83,063		59,108		162,530		109,092
Interest expense:
Deposits		17,081		1,770		30,580		2,941
Securities sold under agreements to repurchase and
other short-term borrowings		546		76		1,179		96
Federal Home Loan Bank advances		3,962		-		5,696		-
Subordinated debentures		545		278		1,074		311
Total interest expense		22,134		2,124		38,529		3,348
Net interest income		60,929		56,984		124,001		105,744
Provision for credit losses (1)		2,350		(200)		4,975		2,079
Net interest income after provision for credit losses		58,579		57,184		119,026		103,665
Non-interest income:
Wealth management and trust services		10,146		9,495		19,673		17,738
Deposit service charges		2,201		2,061		4,350		3,924
Debit and credit card income		4,712		4,748		9,194		8,867
Treasury management fees		2,549		2,187		4,867		4,091
Mortgage banking income		1,030		1,295		2,068		2,298
Net investment product sales commissions and fees		800		731		1,554		1,338
Bank owned life insurance		559		270		1,108		536
Gain (Loss) on sale of premises and equipment		-		(2)		(2)		(28)
Other		1,088		1,155		2,320		2,379
Total non-interest income		23,085		21,940		45,132		41,143
Non-interest expenses:
Compensation		22,107		22,204		44,003		40,173
Employee benefits		5,061		4,429		10,114		8,968
Net occupancy and equipment		3,739		3,663		7,638		6,688
Technology and communication		4,219		3,984		8,470		7,403
Debit and credit card processing		1,706		1,665		3,125		3,002
Marketing and business development		1,784		1,445		2,879		2,217
Postage, printing and supplies		889		825		1,763		1,558
Legal and professional		819		1,027		1,616		1,677
FDIC Insurance		779		536		1,914		1,181
Amortization of investments in tax credit partnerships		324		89		647		177
Capital and deposit based taxes		607		582		1,246		1,100
Merger expenses		-		-		-		19,500
Intangible amortization		1,172		1,611		2,352		2,324
Other		2,819		2,615		5,572		5,004
Total non-interest expenses		46,025		44,675		91,339		100,972
Income before income tax expense		35,639		34,449		72,819		43,836
Income tax expense		7,975		7,547		16,107		8,992
Net income		27,664		26,902		56,712		34,844
Less: net income attributed to non-controlling interest		-		108		-		144
Net income available to stockholders		$ 27,664		$ 26,794		$ 56,712		$ 34,700
Net income per share - Basic		$ 0.95		$ 0.92		$ 1.94		$ 1.23
Net income per share - Diluted		0.94		0.91		1.93		1.22
Cash dividend declared per share		0.29		0.28		0.58		0.56
Weighted average shares - Basic		29,223		29,131		29,200		28,186
Weighted average shares - Diluted		29,340		29,346		29,353		28,421
						June 30,
Balance Sheet Data						2023		2022
Investment securities						$ 1,542,753		$ 1,625,488
Loans						5,418,609		4,877,324
Allowance for credit losses on loans						77,710		66,362
Total assets						7,732,552		7,583,105
Non-interest bearing deposits						1,766,132		2,121,304
Interest bearing deposits						4,442,248		4,427,826
Federal Home Loan Bank advances						400,000		-
Stockholders' equity						808,082		747,131
Total shares outstanding						29,323		29,243
Book value per share (3)						$ 27.56		$ 25.55
Tangible common equity per share (3)						20.17		17.59
Market value per share						45.37		59.82
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2023 Earnings Release
		Three Months Ended				Six Months Ended
		June 30,				June 30,
Average Balance Sheet Data		2023		2022		2023		2022
Federal funds sold and interest bearing due from banks		$ 131,958		$ 561,101		$ 136,369		$ 615,878
Mortgage loans held for sale		8,420		11,303		7,446		9,974
Investment securities		1,719,045		1,741,844		1,736,734		1,560,873
Federal Home Loan Bank stock		25,074		13,811		20,311		12,169
Loans		5,286,597		4,846,013		5,261,876		4,613,264
Total interest earning assets		7,171,094		7,174,072		7,162,736		6,812,158
Total assets		7,594,901		7,651,332		7,587,211		7,264,423
Interest bearing deposits		4,414,599		4,515,563		4,447,194		4,333,153
Total deposits		6,195,937		6,639,458		6,276,748		6,304,678
Securities sold under agreement to repurchase and other short term borrowings		126,653		149,747		132,440		125,545
Federal Home Loan Bank advances		348,352		-		256,215		-
Subordinated debentures		26,508		26,111		26,458		17,132
Total interest bearing liabilities		4,916,112		4,691,421		4,862,307		4,475,830
Total stockholders' equity		799,886		749,445		788,782		727,244
Performance Ratios
Annualized return on average assets (4)		1.46%		1.40%		1.51%		0.96%
Annualized return on average equity (4)		13.87%		14.34%		14.50%		9.62%
Net interest margin, fully tax equivalent		3.42%		3.20%		3.50%		3.14%
Non-interest income to total revenue, fully tax equivalent		27.43%		27.71%		26.63%		27.93%
Efficiency ratio, fully tax equivalent (2)		54.69%		56.42%		53.90%		68.53%
Capital Ratios
Total stockholders' equity to total assets (3)						10.45%		9.85%
Tangible common equity to tangible assets (3)						7.87%		7.00%
Average stockholders' equity to average assets						10.40%		10.01%
Total risk-based capital						12.78%		12.27%
Common equity tier 1 risk-based capital						11.20%		10.81%
Tier 1 risk-based capital						11.61%		11.26%
Leverage						9.83%		8.58%
Loan Segmentation
Commercial real estate - non-owner occupied						$ 1,477,733		$ 1,397,330
Commercial real estate - owner occupied						873,980		787,559
Commercial and industrial						1,226,554		1,090,404
Commercial and industrial - PPP						7,088		36,767
Residential real estate - owner occupied						664,870		533,577
Residential real estate - non-owner occupied						338,727		293,852
Construction and land development						451,324		372,197
Home equity lines of credit						202,574		192,102
Consumer						139,602		137,278
Leases						13,967		14,611
Credit cards						22,190		21,647
Total loans and leases						$ 5,418,609		$ 4,877,324
Asset Quality Data
Non-accrual loans						$ 17,364		$ 7,827
Troubled debt restructurings						-		-
Loans past due 90 days or more and still accruing						437		1,176
Total non-performing loans						17,801		9,003
Other real estate owned						677		7,601
Total non-performing assets						$ 18,478		$ 16,604
Non-performing loans to total loans (5)						0.33%		0.18%
Non-performing assets to total assets						0.24%		0.22%
Allowance for credit losses on loans to total loans (5)						1.43%		1.36%
Allowance for credit losses on loans to average loans						1.48%		1.44%
Allowance for credit losses on loans to non-performing loans						437%		737%
Net (charge-offs) recoveries		$ (113)		$ (5)		$ (221)		$ 535
Net (charge-offs) recoveries to average loans (7)		0.00%		0.00%		0.00%		0.01%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2023 Earnings Release
		Quarterly Comparison
Income Statement Data		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Net interest income, fully tax equivalent (6)		$ 61,074		$ 63,245		$ 65,469		$ 62,608		$ 57,244
Net interest income		$ 60,929		$ 63,072		$ 65,263		$ 62,376		$ 56,984
Provision for credit losses (1)		2,350		2,625		3,375		4,803		(200)
Net interest income after provision for credit losses		58,579		60,447		61,888		57,573		57,184
Non-interest income:
Wealth management and trust services		10,146		9,527		9,221		9,152		9,495
Deposit service charges		2,201		2,149		2,183		2,179		2,061
Debit and credit card income		4,712		4,482		5,046		4,710		4,748
Treasury management fees		2,549		2,318		2,278		2,221		2,187
Mortgage banking income		1,030		1,038		209		703		1,295
Net investment product sales commissions and fees		800		754		833		892		731
Bank owned life insurance		559		549		545		516		270
Gain (Loss) on sale of premises and equipment		-		(2)		1,295		3,074		(2)
Other		1,088		1,232		1,532		1,417		1,155
Total non-interest income		23,085		22,047		23,142		24,864		21,940
Non-interest expenses:
Compensation		22,107		21,896		23,398		23,069		22,204
Employee benefits		5,061		5,053		3,421		4,179		4,429
Net occupancy and equipment		3,739		3,899		3,843		3,767		3,663
Technology and communication		4,219		4,251		3,747		3,747		3,984
Debit and credit card processing		1,706		1,419		1,470		1,437		1,665
Marketing and business development		1,784		1,095		1,544		1,244		1,445
Postage, printing and supplies		889		874		893		903		825
Legal and professional		819		797		492		774		1,027
FDIC Insurance		779		1,135		730		847		536
Amortization of investments in tax credit partnerships		324		323		88		88		89
Capital and deposit based taxes		607		639		799		722		582
Merger expenses		-		-		-		-		-
Intangible amortization		1,172		1,180		1,610		1,610		1,611
Loss on disposition of Landmark Financial Advisors		-		-		870		-		-
Other		2,819		2,753		3,041		2,486		2,615
Total non-interest expenses		46,025		45,314		45,946		44,873		44,675
Income before income tax expense		35,639		37,180		39,084		37,564		34,449
Income tax expense		7,975		8,132		9,174		9,024		7,547
Net income		27,664		29,048		29,910		28,540		26,902
Less: net income attributed to non-controlling interest		-		-		93		85		108
Net income available to stockholders		$ 27,664		$ 29,048		$ 29,817		$ 28,455		$ 26,794
Net income per share - Basic		$ 0.95		$ 1.00		$ 1.02		$ 0.98		$ 0.92
Net income per share - Diluted		0.94		0.99		1.01		0.97		0.91
Cash dividend declared per share		0.29		0.29		0.29		0.29		0.28
Weighted average shares - Basic		29,223		29,178		29,157		29,144		29,131
Weighted average shares - Diluted		29,340		29,365		29,428		29,404		29,346
		Quarterly Comparison
Balance Sheet Data		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Cash and due from banks		$ 111,126		$ 87,922		$ 82,515		$ 93,948		$ 88,422
Federal funds sold and interest bearing due from banks		103,204		229,076		84,852		235,973		485,447
Mortgage loans held for sale		7,069		6,397		2,606		5,230		10,045
Investment securities		1,542,753		1,600,603		1,617,834		1,627,298		1,625,488
Federal Home Loan Bank stock		27,366		23,226		10,928		10,928		13,811
Loans		5,418,609		5,243,104		5,205,918		5,072,877		4,877,324
Allowance for credit losses on loans		77,710		75,673		73,531		70,083		66,362
Goodwill		194,074		194,074		194,074		202,524		202,524
Total assets		7,732,552		7,667,648		7,496,261		7,554,210		7,583,105
Non-interest bearing deposits		1,766,132		1,845,302		1,950,198		2,200,041		2,121,304
Interest bearing deposits		4,442,248		4,511,893		4,441,054		4,300,732		4,427,826
Securities sold under agreements to repurchase		138,347		104,578		133,342		124,567		161,512
Federal funds purchased		11,646		14,745		8,789		8,970		8,771
Federal Home Loan Bank advances		400,000		275,000		50,000		-		-
Subordinated debentures		26,541		26,442		26,343		26,244		26,144
Stockholders' equity		808,082		794,368		760,432		727,754		747,131
Total shares outstanding		29,323		29,324		29,259		29,242		29,243
Book value per share (3)		$ 27.56		$ 27.09		$ 25.99		$ 24.89		$ 25.55
Tangible common equity per share (3)		20.17		19.66		18.50		16.98		17.59
Market value per share		45.37		55.14		64.98		68.01		59.82
Capital Ratios
Total stockholders' equity to total assets (3)		10.45%		10.36%		10.14%		9.63%		9.85%
Tangible common equity to tangible assets (3)		7.87%		7.74%		7.44%		6.78%		7.00%
Average stockholders' equity to average assets		10.53%		10.26%		9.79%		9.92%		9.79%
Total risk-based capital		12.78%		12.91%		12.54%		12.16%		12.27%
Common equity tier 1 risk-based capital		11.20%		11.30%		11.04%		10.69%		10.81%
Tier 1 risk-based capital		11.61%		11.73%		11.47%		11.13%		11.26%
Leverage		9.83%		9.56%		9.33%		8.85%		8.58%
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2023 Earnings Release
		Quarterly Comparison
Average Balance Sheet Data		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Federal funds sold and interest bearing due from banks		$ 131,958		$ 140,831		$ 235,448		$ 442,880		$ 561,101
Mortgage loans held for sale		8,420		6,460		6,735		8,694		11,303
Investment securities		1,719,045		1,754,620		1,786,383		1,769,597		1,741,844
Loans		5,286,597		5,236,879		5,094,356		4,948,898		4,846,013
Total interest earning assets		7,171,094		7,154,286		7,133,850		7,181,781		7,174,072
Total assets		7,594,901		7,579,439		7,559,260		7,661,720		7,651,332
Interest bearing deposits		4,414,599		4,480,151		4,428,582		4,444,983		4,515,563
Total deposits		6,195,937		6,358,458		6,526,440		6,614,263		6,639,458
Securities sold under agreement to repurchase and federal funds purchased		126,653		138,292		126,027		148,734		149,747
Federal Home Loan Bank advances		348,352		163,056		1,087		-		-
Subordinated debentures		26,508		26,408		26,309		26,210		26,111
Total interest bearing liabilities		4,916,112		4,807,907		4,582,005		4,619,927		4,691,421
Total stockholders' equity		799,886		777,555		740,007		760,322		749,445
Performance Ratios
Annualized return on average assets (4)		1.46%		1.55%		1.56%		1.47%		1.40%
Annualized return on average equity (4)		13.87%		15.15%		15.99%		14.85%		14.34%
Net interest margin, fully tax equivalent		3.42%		3.59%		3.64%		3.46%		3.20%
Non-interest income to total revenue, fully tax equivalent		27.43%		25.85%		27.56%		28.43%		27.71%
Efficiency ratio, fully tax equivalent (2)		54.69%		53.13%		51.85%		51.30%		56.42%
Loans Segmentation
Commercial real estate - non-owner occupied		$ 1,477,733		$ 1,421,660		$ 1,397,346		$ 1,415,180		$ 1,397,330
Commercial real estate - owner occupied		873,980		850,766		834,629		819,727		787,559
Commercial and industrial		1,226,554		1,205,222		1,230,976		1,170,241		1,090,404
Commercial and industrial - PPP		7,088		9,557		18,593		19,469		36,767
Residential real estate - owner occupied		664,870		620,417		591,515		557,638		533,577
Residential real estate - non-owner occupied		338,727		323,519		313,248		302,936		293,852
Construction and land development		451,324		439,673		445,690		414,632		372,197
Home equity lines of credit		202,574		200,933		200,725		199,485		192,102
Consumer		139,602		136,412		139,461		138,843		137,278
Leases		13,967		13,207		13,322		13,959		14,611
Credit cards		22,190		21,738		20,413		20,767		21,647
Total loans and leases		$ 5,418,609		$ 5,243,104		$ 5,205,918		$ 5,072,877		$ 4,877,324
Asset Quality Data
Non-accrual loans		$ 17,364		$ 17,389		$ 14,242		$ 10,580		$ 7,827
Troubled debt restructurings		-		-		-		-		-
Loans past due 90 days or more and still accruing		437		894		892		32		1,176
Total non-performing loans		17,801		18,283		15,134		10,612		9,003
Other real estate owned		677		677		677		996		7,601
Total non-performing assets		$ 18,478		$ 18,960		$ 15,811		$ 11,608		$ 16,604
Non-performing loans to total loans (5)		0.33%		0.35%		0.29%		0.21%		0.18%
Non-performing assets to total assets		0.24%		0.25%		0.21%		0.15%		0.22%
Allowance for credit losses on loans to total loans (5)		1.44%		1.44%		1.41%		1.38%		1.36%
Allowance for credit losses on loans to average loans		1.47%		1.45%		1.44%		1.42%		1.37%
Allowance for credit losses on loans to non-performing loans		437%		414%		486%		660%		737%
Net (charge-offs) recoveries		$ (113)		$ (108)		$ (152)		$ (382)		$ (5)
Net (charge-offs) recoveries to average loans (7)		-0.00%		-0.00%		-0.00%		-0.01%		-0.00%
Other Information
Total assets under management (in millions)		$ 6,976		$ 6,764		$ 6,585		$ 6,293		$ 6,555
Full-time equivalent employees		1,064		1,044		1,040		1,028		1,018
(1) - Detail of Provision for credit losses follows:
(in thousands)		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Provision for credit losses - loans		$ 2,150		$ 2,250		$ 3,600		$ 4,103		$ (700)
Provision for credit losses - off balance sheet exposures		200		375		(225)		700		500
Total provision for credit losses		$ 2,350		$ 2,625		$ 3,375		$ 4,803		$ (200)
(2) - 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 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 merger-related expenses.
		Quarterly Comparison
(Dollars in thousands)		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Total non-interest expenses (a)		$ 46,025		$ 45,314		$ 45,946		$ 44,873		$ 44,675
Less: Loss on disposition of Landmark Financial Advisors		-		-		(870)		-		-
Less: Amortization of investments in tax credit partnerships		(324)		(323)		(88)		(88)		(89)
Total non-interest expenses - Non-GAAP (c)		$ 45,701		$ 44,991		$ 44,988		$ 44,785		$ 44,586
Total net interest income, fully tax equivalent		$ 61,074		$ 63,245		$ 65,469		$ 62,608		$ 57,244
Total non-interest income		23,085		22,047		23,142		24,864		21,940
Total revenue - Non-GAAP (b)		84,159		85,292		88,611		87,472		79,184
Less: Gain/loss on sale of premises and equipment		-		2		(1,295)		(3,074)		-
Less: Gain/loss on sale of securities		-		-		-		-		-
Total adjusted revenue - Non-GAAP (d)		$ 84,159		$ 85,294		$ 87,316		$ 84,398		$ 79,184
Efficiency ratio - Non-GAAP (a/b)		54.69%		53.13%		51.85%		51.30%		56.42%
Adjusted efficiency ratio - Non-GAAP (c/d)		54.30%		52.75%		51.52%		53.06%		56.31%
(3) - The following table provides a reconciliation of total stockholders’ equity in accordance with 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)		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Total stockholders' equity - GAAP (a)		$ 808,082		$ 794,368		$ 760,432		$ 727,754		$ 747,131
Less: Goodwill		(194,074)		(194,074)		(194,074)		(202,524)		(202,524)
Less: Core deposit and other intangibles		(22,638)		(23,810)		(24,990)		(28,747)		(30,357)
Tangible common equity - Non-GAAP (c)		$ 591,370		$ 576,484		$ 541,368		$ 496,483		$ 514,250
Total assets - GAAP (b)		$ 7,732,552		$ 7,667,648		$ 7,496,261		$ 7,554,210		$ 7,583,105
Less: Goodwill		(194,074)		(194,074)		(194,074)		(202,524)		(202,524)
Less: Core deposit and other intangibles		(22,638)		(23,810)		(24,990)		(28,747)		(30,357)
Tangible assets - Non-GAAP (d)		$ 7,515,840		$ 7,449,764		$ 7,277,197		$ 7,322,939		$ 7,350,224
Total stockholders' equity to total assets - GAAP (a/b)		10.45%		10.36%		10.14%		9.63%		9.85%
Tangible common equity to tangible assets - Non-GAAP (c/d)		7.87%		7.74%		7.44%		6.78%		7.00%
Total shares outstanding (e)		29,323		29,324		29,259		29,242		29,243
Book value per share - GAAP (a/e)		$ 27.56		$ 27.09		$ 25.99		$ 24.89		$ 25.55
Tangible common equity per share - Non-GAAP (c/e)		20.17		19.66		18.50		16.98		17.59
(4) - 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 net gains (losses) on certain sales of premises and equipment and the disposition of any acquired assets, merger-related expenses and purchase accounting adjustments.
		Quarterly Comparison
(Dollars in thousands)		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Net income attributable to stockholders - GAAP (a)		$ 27,664		$ 29,048		$ 29,817		$ 28,455		$ 26,794
Add: Loss on disposition of Landmark Financial Advisors		-		-		870		-		-
Less: Gain/loss on sale of premises and equipment		-		2		(1,295)		(3,074)		-
Less: Tax effect of adjustments to net income		-		-		100		738		-
Total net income - Non-GAAP (b)		$ 27,664		$ 29,050		$ 29,492		$ 26,119		$ 26,794
Total average assets (c)		$ 7,594,901		$ 7,579,439		$ 7,559,260		$ 7,661,720		$ 7,651,332
Total average stockholder equity (d)		799,886		777,555		740,007		760,322		749,445
Return on average assets - GAAP (a/c)		1.46%		1.55%		1.56%		1.47%		1.40%
Return on average assets - Non-GAAP (b/c)		1.46%		1.55%		1.55%		1.35%		1.40%
Return on average equity - GAAP (a/d)		13.87%		15.15%		15.99%		14.85%		14.34%
Return on average equity - Non-GAAP (b/d)		13.87%		15.15%		15.81%		13.63%		14.34%
(5) - 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)		6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Total Loans - GAAP (a)		$ 5,418,609		$ 5,243,104		$ 5,205,918		$ 5,072,877		$ 4,877,324
Less: PPP loans		(7,088)		(9,557)		(18,593)		(19,469)		(36,767)
Total non-PPP Loans - Non-GAAP (b)		$ 5,411,521		$ 5,233,547		$ 5,187,325		$ 5,053,408		$ 4,840,557
Allowance for credit losses on loans (c)		$ 77,710		$ 75,673		$ 73,531		$ 70,083		$ 66,362
Total non-performing loans (d)		17,801		18,283		15,134		10,612		9,003
Allowance for credit losses on loans to total loans - GAAP (c/a)		1.43%		1.44%		1.41%		1.38%		1.36%
Allowance for credit losses on loans to total loans - Non-GAAP (c/b)		1.44%		1.45%		1.42%		1.39%		1.37%
Non-performing loans to total loans - GAAP (d/a)		0.33%		0.35%		0.29%		0.21%		0.18%
Non-performing loans to total loans - Non-GAAP (d/b)		0.33%		0.35%		0.29%		0.21%		0.19%
(6) - 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.
(7) - Quarterly net (charge-offs) recoveries to average loans ratios are not annualized.