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Stock Yards Bancorp Reports Second Quarter Earnings of $13.4 Million or $0.59 Per Diluted Share

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SYBT Reports Record Deposit Growth in a Difficult Operating Environment

Stock Yards Bancorp, Inc. (NASDAQ:SYBT), parent company of Stock Yards Bank & Trust Company, with offices in the Louisville, Indianapolis and Cincinnati metropolitan markets, today reported results for the second quarter ended June 30, 2020. Net income for the second quarter was $13.4 million, or $0.59 per diluted share, compared with net income of $16.5 million, or $0.72 per diluted share, for the second quarter of 2019. The comparability of second quarter net income was impacted by a favorable state tax law change and acquisition deal costs during the second quarter of 2019.

 

 

 

 

 

 

 

(dollar amounts in thousands, except per share data)

 

2Q20

 

1Q20

 

2Q19

Net interest income

 

$ 33,528

 

$ 32,446

 

$ 30,802

Provision for credit losses

 

5,550

 

5,550

 

Non-interest income

 

12,622

 

12,536

 

12,224

Non-interest expenses

 

24,884

 

23,950

 

25,453

Income before income tax expense

 

15,716

 

15,482

 

17,573

Income tax expense

 

2,348

 

2,250

 

1,030

Net income

 

$ 13,368

 

$ 13,232

 

$ 16,543

Net income per share, diluted

 

$ 0.59

 

$ 0.58

 

$ 0.72

Net interest margin

 

3.27%

 

3.71%

 

3.81%

Efficiency ratio

 

53.87%

 

53.19%

 

59.08%

Tangible common equity to tangible assets(1)

 

9.39%

 

10.48%

 

10.85%

Annualized return on average equity

 

12.90%

 

13.18%

 

17.40%

Annualized return on average assets

 

1.25%

 

1.43%

 

1.93%

 

 

 

 

 

 

 

In commenting on the second quarter results, Chief Executive Officer James A. (Ja) Hillebrand said, "In this quarter of significant pandemic-related and broad-based economic challenges, we delivered solid results, as we continued to work diligently to support customers, communities and our employees while prudently managing risk. Our second quarter results reflect the benefit of our diversified business model with pre-tax, pre-provision income increasing 21%(2), led by record mortgage banking income and controlled non-interest expenses when compared to the same quarter last year.

"Our team of lenders rose to the challenge during the quarter, as our participation in the Small Business Administration's (SBA) Paycheck Protection Program (PPP) stood out in our markets. Our expertise, agility and ultimate success in this arena as a community bank not only allowed us to assist over 3,200 customers and originate $647 million in loans, but also add new relationships with strong future growth opportunities.

"Despite minimal charge-offs and sound credit metrics, under the CECL methodology we recorded a significant provision for credit losses during the second quarter based on the predicted impact of the pandemic due to rising unemployment forecasts and changing macro-economic conditions. While we realize the recovery may be a marathon and not a sprint, having significant loan reserves, excluding PPP loans of 1.68%(3), brings a strong sense of comfort as we navigate through the pandemic."

Key factors impacting second quarter of 2020 results included:

  • Record deposit growth of $528 million, or 17%, with the majority of the growth in non-interest bearing products.
  • Loan growth of $527 million for the quarter - aided by PPP originations.
  • Despite significant average loan balance growth over the second quarter of 2019, net interest margin compressed 54 basis points to 3.27%, affected by the 225 basis point drop in the Federal Funds Target Rate (FFTR) over the past 12 months, along with the impact of significant growth in PPP loans and excess liquidity due to deposit growth.
  • A concentration of commercial and industrial (C&I) borrowers paid down their operating lines of credit during the second quarter. The overall decline in line utilization led to the recording of $1.5 million in additional non-interest expense related to credit exposures for unfunded off-balance sheet commitments. The Bank had a total liability of $6 million accrued at June 30, 2020 related to such exposures.
  • Non-interest income increased $398 thousand, or 3%, over the second quarter of 2019, driven by record mortgage banking results and solid performance from the Wealth Management and Trust (WM&T) and Treasury Management areas.
  • Non-interest expenses were well-controlled during the period and declined over the second quarter of 2019, which included acquisition deal costs.

Hillebrand added, "In a very difficult operating environment, we achieved increases in both net interest income, fueled by PPP loan growth and falling deposit costs, and non-interest income led by record mortgage banking income. We have also continued our conservative stance towards credit, preparing our balance sheet for the potential impacts of the pandemic. Also, we were honored to once again be ranked in the top 10% of community banks through the 2019 Raymond James Community Bankers Cup based on profitability, operational efficiency and balance sheet metrics.

"Against the backdrop of the pandemic and disruptions in our geographic locations, our team has focused intently on controlling what we can in order to protect our business. We feel that we have adequately reserved for future contingencies based upon the current economic environment, unemployment forecasts and consumer behavior trends. Further, we have taken full advantage of investments made in technology in order to continue to service and stay connected to our customers, worked aggressively to protect our financial position and taken actions to ensure that we are well-positioned to drive our business forward. We also continue to monitor all state and local developments in order to protect our employees and customers. Based on our strong capital base, diversified loan portfolio, conservative loan underwriting philosophy and multiple sources of revenue, we expect to navigate these uncertain times and, I believe, come out of the current crisis stronger than we entered."

Results of Operations – Second Quarter 2020 Compared with Second Quarter 2019

Net interest income – the Company's largest source of revenue – increased approximately $2.7 million, or 9%, to $33.5 million driven primarily by a 27% increase in average earning assets, offset by a decline in net interest margin.

  • Total interest income declined $490 thousand, or 1%, to $36.5 million, as a 27% increase in average earning assets was more than offset by interest rate contraction.
  • Interest expense decreased $3.2 million, or 52%, to $3.0 million. The decline in interest bearing deposit costs more than offset the significant increase in average balances, as the Bank has benefited from the strategic lowering of stated deposit rates.
  • Net interest margin decreased 54 basis points to 3.27% from 3.81%, as the Federal Reserve dropped short-term rates 225 basis points over the last 12 months. Beyond potential pricing pressure/competition and the absolute low level of rates, the current economic outlook and prospects of a sustained historic low rate environment, the Company has maintained significantly higher levels of excess balance sheet liquidity driven in part by the funding of PPP loans. To date, the Bank has funded PPP loans from deposit growth. The PPP loans had an 11 basis point negative impact to net interest margin, while excess liquidity had an even larger impact.

Loan loss provisioning for the second quarter of 2020 was significantly affected by the economic crisis and corresponding impact on national unemployment forecast adjustments within the CECL model. The provision for the second quarter of 2020 reflected $4.6 million related to the potential impact of the pandemic, offset by a reduction of $1.1 million associated with non-PPP loan portfolio contraction. Additionally, during the second quarter, the Bank recorded a $2.0 million specific reserve related to a commercial real estate (CRE) loan that was placed on non-accrual status.

Non-interest income increased $398 thousand, or 3%, to $12.6 million.

  • WM&T income increased $64 thousand, or 1%, due to the second quarter market rebound that started in April and continued to the end of the quarter.
  • Mortgage banking revenue increased $862 thousand, or 113%, as sustained low mortgage rates continued to entice mortgage refinancing and resulted in a record number of loans sold during the quarter.
  • Deposit service charges decreased $460 thousand, or 37%, and debit/credit card income decreased $105 thousand, or 5%, due to significantly lower transaction volumes in the COVID-19 environment.
  • While the pandemic has also slowed business spending/activity and international trade, treasury management income continues to stand out as a consistent, growing source of revenue for the Company, increasing 4%. The Treasury Management department was able to overcome the significant decline in pandemic-related transaction volume with new product sales and expansion within its customer base. The demand for treasury products has increased during the pandemic, as these products allow customers to operate more efficiently in a decentralized environment.

Non-interest expenses decreased $569 thousand, or 2%, to $24.9 million.

  • Compensation expense for the second quarter of 2020 decreased $952 thousand, or 7%, primarily due to the volume of PPP loan originations and the associated deferred salary costs and a reduction in expected bonus levels compared to 2019, which was a record year. In addition, compensation expense for the same period last year included severance expenses associated with an acquisition.
  • Net occupancy and equipment expenses increased $122 thousand, or 6%, primarily due to branch expansion over the past 12 months.
  • Technology and communication expense for the second quarter of 2020 increased $99 thousand, or 5%, compared with the prior year quarter, consistent with expanding customer facing software/system functionality and the resulting higher licensing/maintenance expense.
  • Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business, decreased $438 thousand in the second quarter of 2020, mainly due to less prospective customer entertainment and travel due to the pandemic.
  • Legal and professional fees decreased $895 thousand, or 59%, as a result of higher levels of professional fees in the prior year period as a result of acquisition expenses.
  • Expenses related to capital and deposit based taxes increased $258 thousand, or 27%, in line with overall balance sheet growth driven by significant loan and deposit growth.
  • Credit loss expense for off-balance sheet credit exposures increased $1.5 million related to the decline in credit line utilization.

Financial Condition – June 30, 2020 Compared with December 31, 2019

Total loans increased $619 million, or 22%, during the first six months of the year. Excluding the PPP loan portfolio, total loans contracted $11 million, with $67 million of growth in the CRE portfolio offset by a $74 million decline in the C&I portfolio – primarily operating lines of credit.

In response to requests from borrowers who experienced business interruptions or personal cash flow interruptions related to the pandemic, the Company has made short-term (predominantly 3 months) loan modifications involving primarily full-payment deferrals. Through the close of the second quarter, approximately $502 million in full payment deferrals had been processed, with the largest concentration in the CRE and C&I segments. Approximately 85% of these short-term deferrals were made during the month of April with the subsequent pace slowing significantly. Pursuant to the CARES Act, these loan deferrals are not included in non-performing loan statistics.

The Company's management team continues to analyze the evolving economic conditions in its markets while closely monitoring credit metrics, particularly related to the following pandemic sensitive industries:

 

 

 

 

 

Industry Segments (dollars in millions)

 

Outstanding

 

% of Total Loans *

 

 

 

 

 

Shopping Centers

 

$

58

 

2.0 %

Lodging / Hotels

 

 

62

 

2.2 %

Nursing homes / Residential Care

 

 

50

 

1.8 %

Recreation / Entertainment

 

 

56

 

2.0 %

Restaurants / Bars

 

 

30

 

1.0 %

Travel Related

 

 

24

 

0.8 %

 

 

 

 

 

* - Total loans exclude PPP loans.

Total deposits increased $593 million, or 19%, from December 31, 2019 to June 30, 2020 with non-interest bearing deposits representing $395 million of the increase. Both period end and average deposit balances ended at record levels at June 30, 2020 in part as a result of the second quarter PPP. Commercial customers who were awarded SBA PPP funding have generally been slow in deploying the funds held on deposit at the Bank. In addition, customers appear to be exhibiting subdued behavior similar to the Great Recession and maintaining higher deposit balances in general.

At June 30, 2020, the Company remained "well capitalized" – the highest regulatory capital rating for financial institutions with increases in all capital ratios with the exception of the leverage ratio due to outsized balance sheet growth attributed to PPP participation. Total equity to assets was 9.69% and the tangible common equity ratio was 9.39%(1) at June 30, 2020, compared to 10.91% and 10.55%(1), respectively, at December 31, 2019, with the decline attributable to the January 1, 2020 CECL adoption, the prior year acquisition and the impact of loan growth – especially PPP. The Company expects to continue to build capital levels given the current environment.

In May 2020, the Company's Board of Directors continued the dividend rate of $0.27 per common share initially set in November 2019. Given the current economic uncertainty, the Company is committed to maintaining its current dividend level and will continue to evaluate the related impact on capital levels quarterly.

Based on recent economic developments and the increased importance of capital preservation, no shares were repurchased in 2020. Approximately 741 thousand shares remain eligible for repurchase under the current buy-back plan.

Results of Operations – Second Quarter 2020 Compared with First Quarter 2020

Net interest income increased $1.1 million over the prior quarter to $33.5 million, reflecting strong average balance sheet growth offset by significant interest rate movement over the same period.

Loan provisioning in 2020 has been significantly impacted by the economic crisis and its impact upon the national unemployment forecast within the CECL model, changes in the loan mix and the addition of a large specific reserve during the second quarter of 2020.

Non-interest income increased $86 thousand to $12.6 million.

  • A significant increase in mortgage banking income was offset by declines in WM&T income and deposit service charges. WM&T income was boosted in the first quarter of 2020 by a large non‑recurring estate fee and deposit service charges reflect changes in customer behavior during the pandemic.
  • Other non-interest income increased $315 thousand primarily due to a fair value adjustment related to a company owned life insurance policy that is tied to stock market performance.

Non-interest expenses increased $934 thousand, or 4%, to $24.9 million.

  • Compensation expense decreased $470 thousand to $11.8 million compared with the first quarter of 2020, due to elevated deferred salary costs associated with PPP loan originations.
  • Marketing and business development expenses declined consistent with less prospective customer entertainment and travel due to the pandemic.
  • Credit loss expense for off-balance sheet credit exposures increased $1.1 million to $1.5 million correlating with the decline in credit line utilization.

Financial Condition – June 30, 2020 Compared with March 31, 2020

Total loans increased $527 million, or 18%, primarily attributable to the PPP program. Excluding the PPP portfolio, total loans contracted $103 million with the largest decline in the C&I category. Total line of credit usage declined significantly to 39% as of June 30, 2020 from 45% at March 31, 2020.

Total deposits increased $528 million, or 17%, on a linked quarter basis. Commercial customers who were awarded SBA PPP funding have generally been cautious in deploying the funds held on deposit at the Bank. In addition, customers appear to be exhibiting subdued behavior and are maintaining higher deposit balances in general.

Stockholders' equity increased $11 million in the second quarter of 2020 compared with the prior quarter, with net income of $13.4 million and the positive change in equity related to the Bank's investment portfolio offset by dividends declared.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $4.3 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 subsidiary operates; competition for the Company's customers from other providers of financial services; 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; the effects of the FRB's benchmark interest rate cuts on liquidity and margins; the potential adverse effects of the coronavirus or any other pandemic on the ability of borrowers to satisfy their obligations to the Company, the level of the Company's non-performing assets, the demand for the Company's loans or its other products and services, other aspects of the Company's business and operations, and financial markets and economic growth, 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. See "Risk Factors" outlined in the Company's Form 10-K for the year ended December 31, 2019.

 
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2020 Earnings Release
(In thousands unless otherwise noted)
Three Months Ended Six Months Ended
June 30, June 30,
Income Statement Data

2020

2019

2020

2019

 
Net interest income, fully tax equivalent (4)

$ 33,573

$ 30,857

$ 66,066

$ 60,597

Interest income:
Loans

$ 34,099

$ 33,447

$ 67,848

$ 65,018

Federal funds sold and interest bearing due from banks

88

830

619

1,563

Mortgage loans held for sale

125

43

186

80

Securities

2,194

2,676

4,735

5,391

Total interest income

36,506

36,996

73,388

72,052

Interest expense:
Deposits

2,607

5,652

6,569

10,718

Securities sold under agreements to repurchase and

other short-term borrowings

10

92

55

177

Federal Home Loan Bank (FHLB) advances and other long-term debt

361

450

790

671

Total interest expense

2,978

6,194

7,414

11,566

Net interest income

33,528

30,802

65,974

60,486

Provision for credit losses

5,550

-

11,100

600

Net interest income after provision for credit losses

27,978

30,802

54,874

59,886

Non-interest income:
Wealth management and trust services

5,726

5,662

11,944

11,101

Deposit service charges

800

1,260

2,083

2,438

Debit and credit card income

2,063

2,168

4,043

3,912

Treasury management fees

1,249

1,202

2,533

2,359

Mortgage banking income

1,622

760

2,468

1,210

Net investment product sales commissions and fees

391

364

857

720

Bank owned life insurance

176

184

355

362

Other

595

624

875

1,130

Total non-interest income

12,622

12,224

25,158

23,232

Non-interest expenses:
Compensation

11,763

12,715

23,996

24,516

Employee benefits

2,871

2,807

6,038

5,362

Net occupancy and equipment

2,089

1,967

3,970

3,816

Technology and communication

1,947

1,848

3,960

3,621

Debit and credit card processing

603

631

1,259

1,218

Marketing and business development

465

903

1,025

1,528

Postage, printing and supplies

442

410

883

816

Legal and professional

628

1,523

1,251

2,057

Amortization of investments in tax credit partnerships

53

52

89

104

Capital and deposit based taxes

1,225

967

2,255

1,871

Credit loss expense for off-balance sheet exposures

1,475

-

1,850

-

Other

1,323

1,630

2,258

3,156

Total non-interest expenses

24,884

25,453

48,834

48,065

Income before income tax expense

15,716

17,573

31,198

35,053

Income tax expense

2,348

1,030

4,598

2,869

Net income

$ 13,368

$ 16,543

$ 26,600

$ 32,184

 
Net income per share - Basic

$ 0.59

$ 0.73

$ 1.18

$ 1.42

Net income per share - Diluted

0.59

0.72

1.17

1.40

Cash dividend declared per share

0.27

0.26

0.54

0.51

 
Weighted average shares - Basic

22,560

22,689

22,538

22,675

Weighted average shares - Diluted

22,739

22,949

22,737

22,948

 
June 30,
Balance Sheet Data

2020

2019

 
Loans

$ 3,464,077

$ 2,763,880

Allowance for credit losses

47,708

26,416

Total assets

4,334,533

3,463,823

Non-interest bearing deposits

1,205,253

777,652

Interest bearing deposits

2,521,903

2,105,801

FHLB advances

61,432

84,279

Stockholders' equity

420,231

389,365

Total shares outstanding

22,667

22,721

Book value per share (1)

$ 18.54

$ 17.14

Tangible common equity per share (1)

17.89

16.46

Market value per share

40.20

36.15

 
 
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2020 Earnings Release
 
Three Months Ended Six Months Ended
June 30, June 30,
Average Balance Sheet Data

2020

2019

2020

2019

 
Federal funds sold and interest bearing due from banks

$ 285,617

$ 137,130

$ 227,090

$ 129,701

Mortgage loans held for sale

18,010

3,794

11,481

2,766

Securities available for sale

412,368

435,391

429,525

436,498

FHLB stock

11,284

10,590

11,284

10,392

Loans

3,396,767

2,658,036

3,144,218

2,593,712

Total earning assets

4,124,046

3,244,941

3,823,598

3,173,069

Total assets

4,317,430

3,436,175

4,013,775

3,354,172

Interest bearing deposits

2,500,315

2,112,768

2,408,545

2,080,976

Total deposits

3,713,451

2,867,360

3,416,847

2,805,872

Securities sold under agreement to repurchase and
other short-term borrowings

49,940

51,743

46,840

50,357

FHLB advances and other long-term borrowings

63,896

74,420

68,918

61,264

Total interest bearing liabilities

2,614,151

2,238,931

2,524,303

2,192,597

Total stockholders' equity

416,920

381,270

410,311

376,198

 
Performance Ratios
Annualized return on average assets

1.25%

1.93%

1.33%

1.93%

Annualized return on average equity

12.90%

17.40%

13.04%

17.25%

Net interest margin, fully tax equivalent

3.27%

3.81%

3.47%

3.85%

Non-interest income to total revenue, fully tax equivalent

27.32%

28.37%

27.58%

27.71%

Efficiency ratio, fully tax equivalent (5)

53.87%

59.08%

53.53%

57.34%

 
Capital Ratios
Total stockholders' equity to total assets (1)

9.69%

11.24%

Tangible common equity to tangible assets (1)

9.39%

10.85%

Average stockholders' equity to average assets

10.22%

11.22%

Total risk-based capital

13.50%

12.67%

Common equity tier 1 risk-based capital

12.39%

11.82%

Tier 1 risk-based capital

12.39%

11.82%

Leverage

9.50%

10.91%

 
Loan Segmentation
Commercial real estate - non-owner occupied

$ 815,464

$ 706,310

Commercial real estate - owner occupied

472,457

440,216

Commercial and industrial

764,480

837,752

Commercial and industrial - PPP

630,082

-

Residential real estate - owner occupied

215,891

247,789

Residential real estate - non-owner occupied

139,121

105,509

Construction and land development

255,447

253,358

Home equity lines of credit

103,672

99,610

Consumer

43,758

43,937

Leases

14,843

21,914

Credit cards - commercial

8,862

7,485

Total loans and leases

$ 3,464,077

$ 2,763,880

 
Asset Quality Data
Non-accrual loans

$ 14,262

$ 3,030

Troubled debt restructurings

45

37

Loans past due 90 days or more and still accruing

48

861

Total non-performing loans

14,355

3,928

Other real estate owned

493

563

Total non-performing assets

$ 14,848

$ 4,491

Non-performing loans to total loans

0.41%

0.14%

Non-performing assets to total assets

0.34%

0.13%

Allowance for credit losses to total loans

1.38%

0.96%

Allowance for credit losses to average loans

1.52%

1.02%

Allowance for credit losses to non-performing loans

332%

673%

Net (charge-offs) recoveries

$ 15

$ (48)

$ (39)

$ 282

Net (charge-offs) recoveries to average loans (6)

0.00%

0.00%

0.00%

0.01%

 
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2020 Earnings Release
 
Quarterly Comparison
Income Statement Data 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Net interest income, fully tax equivalent (4)

$ 33,573

$ 32,494

$ 32,808

$ 32,167

$ 30,857

Net interest income

$ 33,528

$ 32,446

$ 32,756

$ 32,106

$ 30,802

Provision for credit losses

5,550

5,550

-

400

-

Net interest income after provision for credit losses

27,978

26,896

32,756

31,706

30,802

Non-interest income:
Wealth management and trust services

5,726

6,218

5,804

5,738

5,662

Deposit service charges

800

1,283

1,399

1,356

1,260

Debit and credit card income

2,063

1,980

2,109

2,102

2,168

Treasury management fees

1,249

1,284

1,369

1,264

1,202

Mortgage banking income

1,622

846

930

794

760

Net investment product sales commissions and fees

391

466

378

400

364

Bank owned life insurance

176

179

182

487

184

Other

595

280

816

1,068

624

Total non-interest income

12,622

12,536

12,987

13,209

12,224

Non-interest expenses:
Compensation

11,763

12,233

13,473

12,330

12,715

Employee benefits

2,871

3,167

2,510

2,819

2,807

Net occupancy and equipment

2,089

1,881

2,374

2,189

1,967

Technology and communication

1,947

2,013

1,636

1,841

1,848

Debit and credit card processing

603

656

613

662

631

Marketing and business development

465

560

1,367

732

903

Postage, printing and supplies

442

441

434

402

410

Legal and professional

628

623

433

524

1,523

Amortization of investments in tax credit partnerships

53

36

837

137

52

Capital and deposit based taxes

1,225

1,030

1,006

993

967

Credit loss expense for off-balance sheet exposures

1,475

375

-

-

-

Other

1,323

935

1,470

1,269

1,630

Total non-interest expenses

24,884

23,950

26,153

23,898

25,453

Income before income tax expense

15,716

15,482

19,590

21,017

17,573

Income tax expense

2,348

2,250

2,941

3,783

1,030

Net income

$ 13,368

$ 13,232

$ 16,649

$ 17,234

$ 16,543

 
Net income per share - Basic

$ 0.59

$ 0.59

$ 0.74

$ 0.76

$ 0.73

Net income per share - Diluted

0.59

0.58

0.73

0.76

0.72

Cash dividend declared per share

0.27

0.27

0.27

0.26

0.26

 
Weighted average shares - Basic

22,560

22,516

22,493

22,550

22,689

Weighted average shares - Diluted

22,739

22,736

22,760

22,810

22,949

 
Quarterly Comparison
Balance Sheet Data 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Cash and due from banks

$ 46,362

$ 47,662

$ 46,863

$ 68,107

$ 51,264

Federal funds sold and interest bearing due from banks

178,032

206,849

202,861

68,107

64,775

Mortgage loans held for sale

17,364

8,141

8,748

6,329

3,922

Securities available for sale

485,249

445,813

470,738

375,601

423,579

FHLB stock

11,284

11,284

11,284

11,284

11,284

Loans

3,464,077

2,937,366

2,845,016

2,856,664

2,763,880

Allowance for credit losses

47,708

42,143

26,791

26,877

26,416

Total assets

4,334,533

3,784,586

3,724,197

3,533,926

3,463,823

Non-interest bearing deposits

1,205,253

858,883

810,475

795,793

777,652

Interest bearing deposits

2,521,903

2,339,995

2,323,463

2,150,520

2,105,801

Securities sold under agreements to repurchase

42,722

32,366

31,985

33,172

33,809

Federal funds purchased

8,401

9,747

10,887

9,957

12,012

FHLB advances

61,432

69,191

79,953

81,985

84,279

Stockholders' equity

420,231

409,702

406,297

396,111

389,365

Total shares outstanding

22,667

22,665

22,604

22,597

22,721

Book value per share (1)

$ 18.54

$ 18.08

$ 17.97

$ 17.53

$ 17.14

Tangible common equity per share (1)

17.89

17.43

17.32

16.87

16.46

Market value per share

40.20

28.93

41.06

36.69

36.15

 
Capital Ratios
Total stockholders' equity to total assets (1)

9.69%

10.83%

10.91%

11.21%

11.24%

Tangible common equity to tangible assets (1)

9.39%

10.48%

10.55%

10.83%

10.85%

Average stockholders' equity to average assets

9.66%

10.88%

10.81%

11.22%

11.10%

Total risk-based capital

13.50%

12.75%

12.85%

12.53%

12.67%

Common equity tier 1 risk-based capital

12.39%

11.81%

12.02%

11.69%

11.82%

Tier 1 risk-based capital

12.39%

11.81%

12.02%

11.69%

11.82%

Leverage

9.50%

10.78%

10.60%

10.90%

10.91%

 
Stock Yards Bancorp, Inc. Financial Information (unaudited)
Second Quarter 2020 Earnings Release
 
Quarterly Comparison
Average Balance Sheet Data 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Federal funds sold and interest bearing due from banks

$ 285,617

$ 168,563

$ 187,865

$ 98,569

$ 137,130

Mortgage loans held for sale

18,010

4,953

5,889

3,887

3,794

Securities available for sale

412,368

449,610

476,360

396,686

435,391

Loans

3,396,767

2,891,668

2,828,142

2,791,389

2,658,036

Total earning assets

4,124,046

3,526,078

3,509,573

3,301,848

3,244,941

Total assets

4,317,430

3,710,119

3,709,250

3,502,267

3,436,175

Interest bearing deposits

2,500,315

2,316,774

2,284,195

2,127,769

2,112,768

Total deposits

3,713,451

3,120,242

3,108,640

2,912,631

2,867,360

Securities sold under agreement to repurchase and
other short-term borrowings

49,940

43,739

49,881

48,376

51,743

FHLB advances

63,896

73,939

80,457

83,386

74,420

Total interest bearing liabilities

2,614,151

2,434,452

2,414,533

2,259,531

2,238,931

Total stockholders' equity

416,920

403,702

400,870

392,840

381,270

 
Performance Ratios
Annualized return on average assets

1.25%

1.43%

1.78%

1.95%

1.93%

Annualized return on average equity

12.90%

13.18%

16.48%

17.41%

17.40%

Net interest margin, fully tax equivalent

3.27%

3.71%

3.71%

3.87%

3.81%

Non-interest income to total revenue, fully tax equivalent

27.32%

27.84%

28.36%

29.11%

28.37%

Efficiency ratio, fully tax equivalent (5)

53.87%

53.19%

57.11%

52.67%

59.08%

 
Loans Segmentation
Commercial real estate - non-owner occupied

$ 815,464

$ 799,284

$ 746,283

$ 737,464

$ 706,310

Commercial real estate - owner occupied

472,457

476,534

474,329

458,526

440,216

Commercial and industrial

764,480

883,868

838,800

853,901

837,752

Commercial and industrial - PPP

630,082

-

-

-

-

Residential real estate - owner occupied

215,891

219,221

217,606

221,411

247,789

Residential real estate - non-owner occupied

139,121

134,734

134,995

127,934

105,509

Construction and land development

255,447

246,040

255,816

278,910

253,358

Home equity lines of credit

103,672

107,121

103,854

105,935

99,610

Consumer

43,758

44,939

47,467

43,568

43,937

Leases

14,843

15,476

16,003

19,934

21,914

Credit cards - commercial

8,862

10,149

9,863

9,081

7,485

Total loans and leases

$ 3,464,077

$ 2,937,366

$ 2,845,016

$ 2,856,664

$ 2,763,880

 
Asset Quality Data
Non-accrual loans

$ 14,262

$ 4,235

$ 11,494

$ 2,722

$ 3,030

Troubled debt restructurings

45

52

34

35

37

Loans past due 90 days or more and still accruing

48

1,762

535

487

861

Total non-performing loans

14,355

6,049

12,063

3,244

3,928

Other real estate owned

493

493

493

563

563

Total non-performing assets

$ 14,848

$ 6,542

$ 12,556

$ 3,807

$ 4,491

Non-performing loans to total loans

0.41%

0.21%

0.42%

0.11%

0.14%

Non-performing assets to total assets

0.34%

0.17%

0.34%

0.11%

0.13%

Allowance for credit losses to total loans

1.38%

1.43%

0.94%

0.94%

0.96%

Allowance for credit losses to average loans

1.40%

1.46%

0.95%

0.96%

0.99%

Allowance for credit losses to non-performing loans

332%

697%

222%

829%

673%

Net (charge-offs) recoveries

$ 15

$ (54)

$ (86)

$ 61

$ (48)

Net (charge-offs) recoveries to average loans (6)

0.00%

0.00%

0.00%

0.00%

0.00%

 
Other Information
Total assets under management (in millions)

$ 3,204

$ 2,961

$ 3,320

$ 3,116

$ 3,068

Full-time equivalent employees

620

618

615

622

615

 
(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) 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Total stockholders' equity - GAAP (a)

$ 420,231

$ 409,702

$ 406,297

$ 396,111

$ 389,365

Less: Goodwill

(12,513)

(12,513)

(12,513)

(12,593)

(12,826)

Less: Core deposit intangible

(2,122)

(2,203)

(2,285)

(2,373)

(2,461)

Tangible common equity - Non-GAAP (c)

$ 405,596

$ 394,986

$ 391,499

$ 381,145

$ 374,078

 
Total assets - GAAP (b)

$ 4,334,533

$ 3,784,586

$ 3,724,197

$ 3,533,926

$ 3,463,823

Less: Goodwill

(12,513)

(12,513)

(12,513)

(12,593)

(12,826)

Less: Core deposit intangible

(2,122)

(2,203)

(2,285)

(2,373)

(2,461)

Tangible assets - Non-GAAP (d)

$ 4,319,898

$ 3,769,870

$ 3,709,399

$ 3,518,960

$ 3,448,536

 
Total stockholders' equity to total assets - GAAP (a/b)

9.69%

10.83%

10.91%

11.21%

11.24%

Tangible common equity to tangible assets - Non-GAAP (c/d)

9.39%

10.48%

10.55%

10.83%

10.85%

 
Total shares outstanding (e)

22,667

22,665

22,604

22,597

22,721

 
Book value per share - GAAP (a/e)

$ 18.54

$ 18.08

$ 17.97

$ 17.53

$ 17.14

Tangible common equity per share - Non-GAAP (c/e)

17.89

17.43

17.32

16.87

16.46

 
(2) - Pre-tax, pre-provision income is a non-GAAP financial measure. Bancorp believes this non-GAAP metric is important because it provides a comparable basis after eliminating pandemic related loan loss provisioning in 2020 in addition to significant state tax adjustments posted in 2019 related to two separate State tax law changes.
 
Quarterly Comparison
(Dollars in thousands) 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Net interest income

$ 33,528

$ 32,446

$ 32,756

$ 32,106

$ 30,802

Non-interest income

12,622

12,536

12,987

13,209

12,224

Non-interest expenses

24,884

23,950

26,153

23,898

25,453

Pre-tax, pre-provision income - Non-GAAP

$ 21,266

$ 21,032

$ 19,590

$ 21,417

$ 17,573

 
Pre-tax, pre-provision income - Non-GAAP

$ 21,266

$ 21,032

$ 19,590

$ 21,417

$ 17,573

Provision for credit losses

5,550

5,550

-

400

-

Income tax expense

2,348

2,250

2,941

3,783

1,030

Net income - GAAP

$ 13,368

$ 13,232

$ 16,649

$ 17,234

$ 16,543

 
(3) - Allowance to total non-PPP loans represents the allowance for credit losses, divided by total loans less PPP loans. Bancorp believes this non-GAAP ratio is important because it provides 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.
 
Total Loans - GAAP (b)

$ 3,464,077

$ 2,937,366

$ 2,845,016

$ 2,856,664

$ 2,763,880

Less: PPP loans

(630,082)

-

-

-

-

Total non-PPP Loans - Non-GAAP (c)

$ 2,833,995

$ 2,937,366

$ 2,845,016

$ 2,856,664

$ 2,763,880

 
Allowance for credit losses (a)

$ 47,708

$ 42,143

$ 26,791

$ 26,877

$ 26,416

 
Allowance for credit losses to total loans - GAAP (a/b)

1.38%

1.43%

0.94%

0.94%

0.96%

Allowance for credit losses to total loans - Non-GAAP (a/c)

1.68%

1.43%

0.94%

0.94%

0.96%

 
(4) - Interest income on a fully tax equivalent 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.
 
(5) - The efficiency ratio, a non-GAAP measure, equals total non-interest expenses divided by the sum of fully tax equivalent net interest income 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 normally presented, Bancorp considers an adjusted efficiency ratio. Bancorp believes this ratio is important because it provides a comparable ratio after eliminating the fluctuation in non-interest expenses related to amortization of investments in tax credit partnerships.
 
Quarterly Comparison
(Dollars in thousands) 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19
 
Total non-interest expenses - GAAP (a)

$ 24,884

$ 23,950

$ 26,153

$ 23,898

$ 25,453

Less: Amortization of investments in tax credit partnerships

(53)

(36)

(837)

(137)

(52)

Total non-interest expenses - Non-GAAP (c)

$ 24,831

$ 23,914

$ 25,316

$ 23,761

$ 25,401

 
Total net interest income, fully tax equivalent

$ 33,573

$ 32,494

$ 32,808

$ 32,167

$ 30,857

Total non-interest income

12,622

12,536

12,987

13,209

12,224

Less: Gain/loss on sale of securities

-

-

-

-

-

Total revenue - GAAP (b)

$ 46,195

$ 45,030

$ 45,795

$ 45,376

$ 43,081

 
Efficiency ratio - GAAP (a/b)

53.87%

53.19%

57.11%

52.67%

59.08%

Efficiency ratio - Non-GAAP (c/b)

53.75%

53.11%

55.28%

52.36%

58.96%

 
(6) - Quarterly net (charge-offs) recoveries to average loans ratios are not annualized.

 

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