Stock Yards Bancorp Reports First Quarter Earnings of $13.2 Million or $0.59 Per Diluted Share

SYBT Reports Record First Quarter Loan Production, Deposit Growth in a Difficult Operating Environment

LOUISVILLE, Ky.--()--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 first quarter ended March 31, 2020. Net income for the first quarter was $13.2 million or $0.59 per diluted share compared with net income of $15.6 million or $0.68 per diluted share for the first quarter of 2019. As previously disclosed, the first quarter 2019 results included a favorable $1.3 million or $0.06 per diluted share non-recurring state tax adjustment related to a tax law change.

 

 

 

 

 

 

 

(dollar amounts in thousands, except per share data)

 

1Q20

 

4Q19

 

1Q19

Net interest income

 

$

32,446

 

 

$

32,756

 

 

$

29,684

 

Provision for credit losses

 

 

5,550

 

 

 

-

 

 

 

600

 

Non-interest income

 

 

12,536

 

 

 

12,987

 

 

 

11,008

 

Non-interest expenses

 

 

23,950

 

 

 

26,153

 

 

 

22,612

 

Income before income tax expense

 

 

15,482

 

 

 

19,590

 

 

 

17,480

 

Income tax expense

 

 

2,250

 

 

 

2,941

 

 

 

1,839

 

Net income

 

$

13,232

 

 

$

16,649

 

 

$

15,641

 

Net income per share, diluted

 

$

0.59

 

 

$

0.73

 

 

$

0.68

 

Net interest margin

 

 

3.71

%

 

 

3.70

%

 

 

3.89

%

Efficiency ratio

 

 

53.19

%

 

 

57.11

%

 

 

55.49

%

Tangible common equity to tangible assets(1)

 

 

10.48

%

 

 

10.55

%

 

 

11.47

%

Annualized return on average equity

 

 

13.18

%

 

 

16.48

%

 

 

17.09

%

Annualized return on average assets

 

 

1.43

%

 

 

1.78

%

 

 

1.94

%

 

 

 

 

 

 

 

In commenting on the first quarter results, Chief Executive Officer James A. (Ja) Hillebrand said, “Despite minimal charge-offs and strong credit metrics, a significant provision for credit losses was recorded in the first quarter of 2020 based on loan growth and the potential economic effects of the COVID-19 pandemic on the Company’s portfolio. The pandemic has caused severe disruptions to the global economy and the markets in which we operate, capping off what was, up to that point, a great quarter with excellent momentum coming off a record 2019. Our top concerns have shifted to servicing the immediate liquidity needs of our clients, ensuring the health and well-being of our employees and supporting the communities in which we live and serve. Our teams have been working tirelessly to assist clients by executing the SBA Paycheck Protection Program (PPP) enacted as part of the CARES Act stimulus legislation, assisting with payment forbearance as appropriate and other relief programs. We have executed our strategic pandemic plan, which included implementing remote work arrangements to the full extent possible, separating individual departments, operating select branch lobbies by appointment only, fully staffing all branch drive-thru lanes, communicating with and encouraging our customers to use our free self-service tools such as Interactive Teller Machines/Automatic Teller Machines, online banking, mobile banking and bill pay and actively promoting social distancing in all aspects of our everyday business.”

The Company’s management team continues to analyze the evolving economic conditions in our markets while closely monitoring credit metrics, particularly as it relates the following initially identified COVID‑19 sensitive loan segments:

     
Industry Segments (dollars in millions)   Outstanding   % of Total Loans
     
Shopping Centers  

$

58

 

2.0

%

Lodging / Hotels  

 

57

 

1.9

%

Nursing homes / Residential Care  

 

45

 

1.5

%

Recreation / Entertainment  

 

40

 

1.4

%

Bars / Restaurants  

 

27

 

0.9

%

Travel Related  

 

23

 

0.8

%

 

Hillbrand added, “As previously mentioned, we are actively participating in the federal PPP program for our existing client base and expect to fund it with minimal capital impact. Between April 3rd and April 20th, we have approved and the SBA has authorized 2,190 loan requests for approximately $583 million under this program.

“Across our three markets, state issued stay-at-home orders have disrupted non-essential businesses, caused large disruptions in spending and caused widespread furloughs and layoffs within the workforce. In response to requests from borrowers who have experienced pandemic related business or personal cash flow interruptions, and in accordance with recently issued regulatory guidance, we have made short-term loan modifications involving both interest only and full payment deferrals. Through April 20th, approximately $312 million in full payment deferrals had been processed, with the largest concentration in the commercial real estate (CRE) and commercial and industrial (C&I) segments. Loans to dentists/physicians, which the Company believes will not be as severely impacted as those segments noted above, represented the largest concentration within the C&I segment.”

Underlying the major challenges detailed above, since December 31, 2019, mainly in response to COVID‑19, the Federal Reserve Bank (FRB) has lowered the Fed Funds Target Rate (FFTR) on two separate occasions for a total of 150 basis points, with the March 15th movement lowering the FFTR to a range of 0% - 0.25%, the lowest level since late 2015.

Key factors impacting the first quarter of 2020 included:

  • Net loan growth of $92 million versus year-end, with the largest increases in the CRE - non-owner occupied and C&I categories, occurred despite flat line of credit utilization in the first quarter. Robust loan production led to the second highest first quarter loan growth in the Bank’s history. Despite the current pandemic, the Company has not currently experienced significant line of credit drawdowns.
  • Record first quarter deposit growth with the majority of the growth in non-interest bearing products.
  • The first quarter under which we began accounting for credit losses under Accounting Standards Codification 326, Financial Instruments – Credit Losses (CECL). The adoption of this standard increased the opening balance for the allowance for credit losses (ACL) by $8.2 million and reserve for off-balance sheet exposures by $3.5 million as of January 1st. The adoption entries reduced the Company’s retained earnings on a tax-effected basis of $8.8 million, with no impact on earnings. In addition, $1.6 million in non-accretable credit marks allocated to Purchased Credit Deteriorated loans were grossed up between loans and the ACL, with no retained earnings impact.
  • Increased non-interest income of $1.5 million or 14%, with Wealth Management and Trust Group (WM&T) income increasing $779 thousand or 14%, boosted by a large non-recurring estate fee, and mortgage banking income increasing $396 thousand or 88%. Card income and treasury management fees also continued to stand out as diversifying revenue streams, representing a combined 26% of total non-interest income.
  • Well-controlled non-interest expenses despite the addition of personnel and other expenses related to the May 2019 acquisition.

     

In closing, Hillebrand added, “In these very unusual times, our strength and resolve enable us to take exceptional care of our customers, employees and communities. Based on our capital levels, conservative underwriting policies, on and off balance sheet liquidity, strong loan diversification, and current economic conditions within the markets we serve, management expects to navigate the uncertainties associated with the pandemic and remain well-capitalized. We are closely monitoring the rapid developments regarding the pandemic and remain confident in our long-term strategic vision.

“As a final thought, I would like to express my sincere appreciation to every Stock Yards Bancorp employee for their efforts and dedication in serving our customers during this crisis. Just as importantly, I want to express my gratitude to all those on the front lines of the pandemic, especially health care workers and first responders who are there to help all of us, but especially the most vulnerable among us. We will weather this storm together and I believe that Stock Yards Bancorp will emerge from this crisis even stronger.”

Results of Operations - First Quarter 2020 Compared with First Quarter 2019

Net interest income – the Company’s largest source of revenue – increased approximately $2.8 million or 9% to $32.5 million.

  • Net interest margin decreased 18 basis points to 3.71% from 3.89%, as the FRB lowered rates five times over the last 12 months. The Company has followed suit by lowering the stated rates on most types of interest-bearing deposit and certificates of deposit offerings in tandem with the FRB moves. Beginning with the third FRB rate move, the Company was not able to fully offset the decline in loan rates. 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 will likely continue to place pressure on net interest margin. Exacerbating the above, the Company has maintained significantly higher levels of excess balance sheet liquidity during the first quarter of 2020.
  • Total interest income rose $1.8 million or 5% to $36.9 million, driven by an increase in interest income on loans consistent with growth in the portfolio, partially offset by less interest earned on overnight funds and securities, mainly attributable to lower market rates.
  • Interest expense decreased $936 thousand or 17% to $4.4 million. Interest expense on interest bearing deposits declined $1.1 million consistent with the lowering of stated interest rates, partially offset by increased Federal Home Loan Bank interest expense associated with long-term advances assumed in the Company’s 2019 acquisition.

First quarter 2020 results included a provision for credit losses of $5.6 million, representing an increase of $5.0 million over the same period in the prior year. The first quarter 2020 provision reflects the implementation of CECL and the corresponding impact of financial forecasting required. As the primary forecasting tool within the model is the Seasonally Adjusted National Civilian Unemployment Rate, the model called for large increases in the quantitative portion of the calculation which was tempered with qualitative adjustments to account for the massive federal stimulus programs. To a lesser extent, the provision was also impacted by strong growth during the period.

Non-interest income increased $1.5 million or 14% to $12.5 million.

  • WM&T income increased $779 thousand or 14%. Despite a down market that began half way through the first quarter of 2020, the WM&T department was able to offset the decline in fees associated with the market volatility with a large non-recurring estate fee.
  • Mortgage banking revenue increased $396 thousand or 88%, as sustained low long-term rates continued to entice re-financings.
  • Debit/credit card income and treasury management fees combined increased $363 thousand, representing 26% of non-interest income. Treasury management fee growth benefited from the continued expansion of its commercial client base along with sales of additional products to existing customers.
  • Other non-interest income decreased $226 thousand, primarily due to a fair value adjustment related to a company owned life insurance policy that is tied to stock market performance. The prior year period included a $126 thousand incentivization payment received related to a banking center relocation.

Non-interest expenses increased $1.3 million or 6% to $24.0 million.

  • Compensation expense for the first quarter of 2020 increased $432 thousand or 4% compared with the prior-year quarter as a result of an increase in full time equivalent employees associated with the May 2019 acquisition.
  • Employee benefits for the first quarter of 2020 increased $612 thousand or 24% compared with the prior-year quarter due to the increase in full-time equivalent employees associated with the May 2019 acquisition and higher levels of health insurance claims.
  • Technology and communication expense for the first quarter of 2020 increased $240 thousand or 14% 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 include all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business, decreased $65 thousand in the first quarter of 2020, mainly due to the timing of community support spend.
  • Legal and professional fees were elevated in both periods as a result of higher levels of professional fees incurred related to the prior year acquisition, CECL consulting and other miscellaneous consulting projects.
  • FDIC insurance expense decreased $109 thousand, as the Bank benefited from credits released by the FDIC.

Financial Condition – March 31, 2020 Compared with March 31, 2019

Total loans increased $412 million or 16% to $2.9 billion attributable to both the May 2019 acquisition and strong organic loan growth and loan production over the past 12 months.

The ACL to total loans increased 38 basis points to 1.43% from the same period in 2019 due to the CECL adoption, significant loan growth and increased provisioning related to the potential economic effects of the pandemic on the loan portfolio.

Asset quality, which has trended within a narrow range over the past several years, has remained sound and reflected no impact related to the pandemic at March 31, 2020. Non-performing loans were $6 million or 0.21% of total loans outstanding versus $4 million or 0.15% of total loans outstanding a year ago.

Total deposits increased $446 million or 16% to $3.2 billion with growth in balances with both existing and new customers, including the May 2019 acquisition.

The Company remained “well capitalized” – the highest regulatory capital rating for financial institutions. Total equity to assets was 10.83% and the tangible common equity ratio was 10.48%,(1) at March 31, 2020, compared to 11.52% and 11.47%,(1) at March 31, 2019, with the decline attributable to the January 1, 2020 CECL adoption and the prior year acquisition. The Company continues to consistently achieve industry-leading returns on equity due to its strong earnings performance.

In February 2020, the Company’s board of directors continued the higher rate of $0.27 per common share initially set in November 2019. With the November increase, the Company has raised its quarterly dividend rate 12 times since 2013, including two increases during 2019 and each of the previous five years, resulting in a cumulative increase of 93% over that time.

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 - First Quarter 2020 Compared with Fourth Quarter 2019

Net interest income, which decreased slightly during the quarter to $32.5 million, reflected strong average balance sheet growth over the past 12 months offset by significant interest rate movement over the same period.

Non-interest income decreased 3% to $12.5 million.

  • A 7% increase in WM&T income was offset by a slight decrease in debit/credit card income and deposit service charges which correlates closely to customer behavior and the evolving pandemic.
  • Other non-interest income reflects a decline in swap fees collected.

Non-interest expenses decreased 8% to $24.0 million.

  • Compensation expense decreased 9% to $12.2 million compared with the fourth quarter of 2019, which included additional bonus expense tied to record 2019 operating results.
  • Employee benefits expense increased 26% as a result of increased full-time equivalent employees and higher levels of health insurance claims.
  • Net occupancy and equipment expenses declined over the linked quarter consistent with a lease accounting system forecast adjustment.
  • Technology and communication expenses continued to increase as a result of expanding customer facing software/system functionality and the resulting higher licensing/maintenance expense.
  • Marketing and business development expenses included higher community support expenses during the fourth quarter of 2019.
  • The expense levels related to tax credit investments can fluctuate materially from period-to-period based on the timing of project completion and allocation of tax credits.

Financial Condition March 31, 2020 Compared with December 31, 2019

Securities available for sale decreased $25 million during the first quarter of 2020, as cash from maturing short-term securities, coupled with deposit growth, were used to help build balance sheet liquidity.

Total loans increased $92 million or 3% boosted by record first quarter loan production.

The ACL increased $15 million related to the CECL adoption, loan growth and increased provisioning related to the potential economic effects of the pandemic on the loan portfolio.

Total deposits increased $65 million or 2%. Despite elevated levels of seasonal deposits and public funds at year-end, interest bearing and non-interest bearing demand deposit balances increased, as customers have maintained higher levels of liquidity due to economic uncertainty.

Based on the favorable interest rate environment, during the first quarter of 2020, the Company prepaid approximately $10 million in Federal Home Loan Bank advances obtained in its 2019 acquisition without penalty.

Stockholders’ equity increased $3 million in the first quarter of 2020 compared with the prior quarter, with net income of $13.2 million and the positive change in equity related to the Bank’s investment portfolio, offset by CECL related adjustments and dividends declared.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $3.8 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)
First Quarter 2020 Earnings Release
(In thousands unless otherwise noted)
 

Three Months Ended

 

March 31,

Income Statement Data  

2020

 

2019

     
Net interest income, fully tax equivalent (2)  

$

32,494

 

$

29,740

Interest income:    
Loans and leases  

$

33,749

 

$

31,571

Federal funds sold and interest bearing due from banks  

 

531

 

 

733

Mortgage loans held for sale  

 

61

 

 

37

Securities  

 

2,541

 

 

2,715

Total interest income  

 

36,882

 

 

35,056

Interest expense:    
Deposits  

 

3,962

 

 

5,066

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

 

45

 

85

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

 

429

 

 

221

Total interest expense  

 

4,436

 

 

5,372

Net interest income  

 

32,446

 

 

29,684

Provision for credit losses  

 

5,550

 

 

600

Net interest income after provision for credit losses  

 

26,896

 

 

29,084

Non-interest income:    
Wealth management and trust services  

 

6,218

 

 

5,439

Deposit service charges  

 

1,283

 

 

1,178

Debit and credit card income  

 

1,980

 

 

1,744

Treasury management fees  

 

1,284

 

 

1,157

Mortgage banking income  

 

846

 

 

450

Net investment product sales commissions and fees  

 

466

 

 

356

Bank owned life insurance  

 

179

 

 

178

Other  

 

280

 

 

506

Total non-interest income  

 

12,536

 

 

11,008

Non-interest expenses:    
Compensation  

 

12,233

 

 

11,801

Employee benefits  

 

3,167

 

 

2,555

Net occupancy and equipment  

 

1,881

 

 

1,849

Technology and communication  

 

2,013

 

 

1,773

Debit and credit card processing  

 

656

 

 

587

Marketing and business development  

 

560

 

 

625

Postage, printing, and supplies  

 

441

 

 

406

Legal and professional  

 

623

 

 

534

Amortization of investments in tax credit partnerships  

 

36

 

 

52

Capital and deposit based taxes  

 

1,030

 

 

904

Other  

 

1,310

 

 

1,526

Total non-interest expenses  

 

23,950

 

 

22,612

Income before income tax expense  

 

15,482

 

 

17,480

Income tax expense  

 

2,250

 

 

1,839

Net income  

$

13,232

 

$

15,641

     
Net income per share - Basic  

$

0.59

 

$

0.69

Net income per share - Diluted  

 

0.59

 

 

0.68

Cash dividend declared per share  

 

0.27

 

 

0.25

     
Weighted average shares - Basic  

 

22,266

 

 

22,661

Weighted average shares - Diluted  

 

22,487

 

 

22,946

     
 

March 31,

Balance Sheet Data  

2020

 

2019

     
Loans and leases  

$

2,937,366

 

$

2,525,709

Allowance for credit losses  

 

42,143

 

 

26,464

Total assets  

 

3,784,586

 

 

3,281,016

Non-interest bearing deposits  

 

858,883

 

 

698,783

Interest bearing deposits  

 

2,339,995

 

 

2,053,757

FHLB advances  

 

69,191

 

 

47,853

Stockholders' equity  

 

409,702

 

 

377,994

Total shares outstanding  

 

22,665

 

 

22,823

Book value per share (1)  

$

18.08

 

$

16.56

Tangible common equity per share (1)  

 

17.43

 

 

16.49

Market value per share  

 

28.93

 

 

33.81

Stock Yards Bancorp, Inc. Financial Information (unaudited)
First Quarter 2020 Earnings Release
     
 

Three Months Ended

 

March 31,

Average Balance Sheet Data  

2020

 

2019

     
Federal funds sold and interest bearing due from banks  

$

168,563

 

 

$

122,189

 

Mortgage loans held for sale  

 

4,953

 

 

 

1,727

 

Securities available for sale  

 

449,610

 

 

 

437,619

 

FHLB stock  

 

11,284

 

 

 

10,192

 

Loans and leases  

 

2,891,668

 

 

 

2,528,625

 

Total earning assets  

 

3,526,078

 

 

 

3,100,352

 

Total assets  

 

3,710,119

 

 

 

3,271,258

 

Interest bearing deposits  

 

2,316,774

 

 

 

2,048,830

 

Total deposits  

 

3,120,242

 

 

 

2,743,701

 

Securities sold under agreement to repurchase other short-term borrowings

 

43,739

 

 

48,956

 

FHLB advances and other long-term borrowings  

 

73,939

 

 

 

47,962

 

Total interest bearing liabilities  

 

2,434,452

 

 

 

2,145,748

 

Total stockholders' equity  

 

403,702

 

 

 

371,070

 

     
Performance Ratios    
Annualized return on average assets  

 

1.43

%

 

 

1.94

%

Annualized return on average equity  

 

13.18

%

 

 

17.09

%

Net interest margin, fully tax equivalent  

 

3.71

%

 

 

3.89

%

Non-interest income to total revenue, fully    
tax equivalent  

 

27.84

%

 

 

27.01

%

Efficiency ratio, fully tax equivalent (3)  

 

53.19

%

 

 

55.49

%

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

 

10.83

%

 

 

11.52

%

Tangible common equity to tangible assets (1)  

 

10.48

%

 

 

11.47

%

Average stockholders' equity to average assets  

 

10.88

%

 

 

11.34

%

Total risk-based capital  

 

12.75

%

 

 

14.04

%

Common equity tier 1 risk-based capital  

 

11.81

%

 

 

13.11

%

Tier 1 risk-based capital  

 

11.81

%

 

 

13.11

%

Leverage  

 

10.78

%

 

 

11.57

%

     
Loan Segmentation    
Commercial real estate - non-owner occupied  

$

799,284

 

 

$

595,609

 

Commercial real estate - owner occupied  

 

476,534

 

 

 

415,342

 

Commercial and industrial  

 

883,868

 

 

 

804,962

 

Residential real estate - owner occupied  

 

218,585

 

 

 

191,561

 

Residential real estate - non-owner occupied  

 

135,370

 

 

 

99,853

 

Construction and land development  

 

246,040

 

 

 

241,112

 

Home equity lines of credit  

 

107,121

 

 

 

101,889

 

Consumer  

 

44,939

 

 

 

45,262

 

Leases  

 

15,476

 

 

 

22,640

 

Credit cards - commercial  

 

10,149

 

 

 

7,479

 

Total loans and leases  

$

2,937,366

 

 

$

2,525,709

 

     
Asset Quality Data    
Non-accrual loans  

$

4,235

 

 

$

3,273

 

Troubled debt restructurings  

 

52

 

 

 

39

 

Loans past due 90 days or more and still accruing  

 

1,762

 

 

 

454

 

Total non-performing loans  

 

6,049

 

 

 

3,766

 

Other real estate owned  

 

493

 

 

 

878

 

Total non-performing assets  

$

6,542

 

 

$

4,644

 

Non-performing loans to total loans  

 

0.21

%

 

 

0.15

%

Non-performing assets to total assets  

 

0.17

%

 

 

0.14

%

Allowance for credit losses to total loans  

 

1.43

%

 

 

1.05

%

Allowance for credit losses to average loans  

 

1.46

%

 

 

1.05

%

Allowance for credit losses to non-performing loans  

 

697

%

 

 

703

%

Net charge-offs (recoveries)  

$

54

 

 

$

(330

)

Net charge-offs (recoveries) to average loans (4)  

 

0.00

%

 

 

-0.01

%

           
Stock Yards Bancorp, Inc. Financial Information (unaudited)
First Quarter 2020 Earnings Release
           
  Quarterly Comparison
Income Statement Data   3/31/20   12/31/19   9/30/19   6/30/19   3/31/19
           
Net interest income, fully tax equivalent (2)  

$

32,494

 

 

$

32,808

 

 

$

32,167

 

 

$

30,857

 

 

$

29,740

 

Net interest income  

$

32,446

 

 

$

32,756

 

 

$

32,106

 

 

$

30,802

 

 

$

29,684

 

Provision for credit losses  

 

5,550

 

 

 

-

 

 

 

400

 

 

 

-

 

 

 

600

 

Net interest income after provision for credit losses  

 

26,896

 

 

 

32,756

 

 

 

31,706

 

 

 

30,802

 

 

 

29,084

 

Non-interest income:          
Wealth management and trust services  

 

6,218

 

 

 

5,804

 

 

 

5,738

 

 

 

5,662

 

 

 

5,439

 

Deposit service charges  

 

1,283

 

 

 

1,399

 

 

 

1,356

 

 

 

1,260

 

 

 

1,178

 

Debit and credit card income  

 

1,980

 

 

 

2,109

 

 

 

2,102

 

 

 

2,168

 

 

 

1,744

 

Treasury management fees  

 

1,284

 

 

 

1,369

 

 

 

1,264

 

 

 

1,202

 

 

 

1,157

 

Mortgage banking income  

 

846

 

 

 

930

 

 

 

794

 

 

 

760

 

 

 

450

 

Net investment product sales commissions and fees  

 

466

 

 

 

378

 

 

 

400

 

 

 

364

 

 

 

356

 

Bank owned life insurance  

 

179

 

 

 

182

 

 

 

487

 

 

 

184

 

 

 

178

 

Other  

 

280

 

 

 

816

 

 

 

1,068

 

 

 

624

 

 

 

506

 

Total non-interest income  

 

12,536

 

 

 

12,987

 

 

 

13,209

 

 

 

12,224

 

 

 

11,008

 

Non-interest expenses:          
Compensation  

 

12,233

 

 

 

13,473

 

 

 

12,330

 

 

 

12,715

 

 

 

11,801

 

Employee benefits  

 

3,167

 

 

 

2,510

 

 

 

2,819

 

 

 

2,807

 

 

 

2,555

 

Net occupancy and equipment  

 

1,881

 

 

 

2,374

 

 

 

2,189

 

 

 

1,967

 

 

 

1,849

 

Technology and communication  

 

2,013

 

 

 

1,636

 

 

 

1,841

 

 

 

1,848

 

 

 

1,773

 

Debit and credit card processing  

 

656

 

 

 

613

 

 

 

662

 

 

 

631

 

 

 

587

 

Marketing and business development  

 

560

 

 

 

1,367

 

 

 

732

 

 

 

903

 

 

 

625

 

Postage, printing, and supplies  

 

441

 

 

 

434

 

 

 

402

 

 

 

410

 

 

 

406

 

Legal and professional  

 

623

 

 

 

433

 

 

 

524

 

 

 

1,523

 

 

 

534

 

Amortization of investments in tax credit partnerships  

 

36

 

 

 

837

 

 

 

137

 

 

 

52

 

 

 

52

 

Capital and deposit based taxes  

 

1,030

 

 

 

1,006

 

 

 

993

 

 

 

967

 

 

 

904

 

Other  

 

1,310

 

 

 

1,470

 

 

 

1,269

 

 

 

1,630

 

 

 

1,526

 

Total non-interest expenses  

 

23,950

 

 

 

26,153

 

 

 

23,898

 

 

 

25,453

 

 

 

22,612

 

Income before income tax expense  

 

15,482

 

 

 

19,590

 

 

 

21,017

 

 

 

17,573

 

 

 

17,480

 

Income tax expense  

 

2,250

 

 

 

2,941

 

 

 

3,783

 

 

 

1,030

 

 

 

1,839

 

Net income  

$

13,232

 

 

$

16,649

 

 

$

17,234

 

 

$

16,543

 

 

$

15,641

 

           
Net income per share - Basic  

$

0.59

 

 

$

0.74

 

 

$

0.76

 

 

$

0.73

 

 

$

0.69

 

Net income per share - Diluted  

 

0.59

 

 

 

0.73

 

 

 

0.76

 

 

 

0.72

 

 

 

0.68

 

Cash dividend declared per share  

 

0.27

 

 

 

0.27

 

 

 

0.26

 

 

 

0.26

 

 

 

0.25

 

           
Weighted average shares - Basic  

 

22,266

 

 

 

22,493

 

 

 

22,550

 

 

 

22,689

 

 

 

22,661

 

Weighted average shares - Diluted  

 

22,487

 

 

 

22,760

 

 

 

22,810

 

 

 

22,949

 

 

 

22,946

 

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

$

47,662

 

 

$

46,863

 

 

$

68,107

 

 

$

51,264

 

 

$

44,014

 

Federal funds sold and interest bearing due from banks  

 

206,849

 

 

 

202,861

 

 

 

68,107

 

 

 

64,775

 

 

 

67,326

 

Mortgage loans held for sale  

 

8,141

 

 

 

8,748

 

 

 

6,329

 

 

 

3,922

 

 

 

2,981

 

Securities available for sale  

 

445,813

 

 

 

470,738

 

 

 

375,601

 

 

 

423,579

 

 

 

507,131

 

FHLB stock  

 

11,284

 

 

 

11,316

 

 

 

11,316

 

 

 

11,316

 

 

 

9,779

 

Loans and leases  

 

2,937,366

 

 

 

2,845,016

 

 

 

2,856,664

 

 

 

2,763,880

 

 

 

2,525,709

 

Allowance for credit losses  

 

42,143

 

 

 

26,791

 

 

 

26,877

 

 

 

26,416

 

 

 

26,464

 

Total assets  

 

3,784,586

 

 

 

3,724,197

 

 

 

3,533,926

 

 

 

3,463,823

 

 

 

3,281,016

 

Non-interest bearing deposits  

 

858,883

 

 

 

810,475

 

 

 

795,793

 

 

 

777,652

 

 

 

698,783

 

Interest bearing deposits  

 

2,339,995

 

 

 

2,323,463

 

 

 

2,150,520

 

 

 

2,105,801

 

 

 

2,053,757

 

Securities sold under agreements to repurchase  

 

32,366

 

 

 

31,985

 

 

 

33,172

 

 

 

33,809

 

 

 

34,633

 

Federal funds purchased  

 

9,747

 

 

 

10,887

 

 

 

9,957

 

 

 

12,012

 

 

 

12,218

 

FHLB advances  

 

69,191

 

 

 

79,953

 

 

 

81,985

 

 

 

84,279

 

 

 

47,853

 

Stockholders' equity  

 

409,702

 

 

 

406,297

 

 

 

396,111

 

 

 

389,365

 

 

 

377,994

 

Total shares outstanding  

 

22,665

 

 

 

22,604

 

 

 

22,597

 

 

 

22,721

 

 

 

22,823

 

Book value per share (1)  

$

18.08

 

 

$

17.97

 

 

$

17.53

 

 

$

17.14

 

 

$

16.56

 

Tangible common equity per share (1)  

 

17.43

 

 

 

17.32

 

 

 

16.87

 

 

 

16.46

 

 

 

16.49

 

Market value per share  

 

28.93

 

 

 

41.06

 

 

 

36.69

 

 

 

36.15

 

 

 

33.81

 

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

 

10.83

%

 

 

10.91

%

 

 

11.21

%

 

 

11.24

%

 

 

11.52

%

Tangible common equity to tangible assets (1)  

 

10.48

%

 

 

10.55

%

 

 

10.83

%

 

 

10.85

%

 

 

11.47

%

Average stockholders' equity to average assets  

 

10.88

%

 

 

10.81

%

 

 

11.22

%

 

 

11.10

%

 

 

11.34

%

Total risk-based capital  

 

12.75

%

 

 

12.85

%

 

 

12.53

%

 

 

12.67

%

 

 

14.04

%

Common equity tier 1 risk-based capital  

 

11.81

%

 

 

12.02

%

 

 

11.69

%

 

 

11.82

%

 

 

13.11

%

Tier 1 risk-based capital  

 

11.81

%

 

 

12.02

%

 

 

11.69

%

 

 

11.82

%

 

 

13.11

%

Leverage  

 

10.78

%

 

 

10.60

%

 

 

10.90

%

 

 

10.91

%

 

 

11.57

%

           
Stock Yards Bancorp, Inc. Financial Information (unaudited)
First Quarter 2020 Earnings Release
           
 

Quarterly Comparison

Average Balance Sheet Data  

3/31/20

 

12/31/19

 

9/30/19

 

6/30/19

 

3/31/19

           
Federal funds sold and interest bearing due from banks  

$

168,563

 

 

$

187,865

 

 

$

98,569

 

 

$

137,130

 

 

$

122,189

 

Mortgage loans held for sale  

 

4,953

 

 

 

5,889

 

 

 

3,887

 

 

 

3,794

 

 

 

1,727

 

Securities available for sale  

 

449,610

 

 

 

476,360

 

 

 

396,686

 

 

 

435,391

 

 

 

437,619

 

Loans and leases  

 

2,891,668

 

 

 

2,828,142

 

 

 

2,800,445

 

 

 

2,668,058

 

 

 

2,528,625

 

Total earning assets  

 

3,526,078

 

 

 

3,509,573

 

 

 

3,310,904

 

 

 

3,244,941

 

 

 

3,100,352

 

Total assets  

 

3,710,119

 

 

 

3,709,250

 

 

 

3,502,267

 

 

 

3,436,175

 

 

 

3,271,257

 

Interest bearing deposits  

 

2,316,774

 

 

 

2,284,195

 

 

 

2,127,769

 

 

 

2,112,768

 

 

 

2,048,830

 

Total deposits  

 

3,120,242

 

 

 

3,108,640

 

 

 

2,912,631

 

 

 

2,867,360

 

 

 

2,743,701

 

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

 

43,739

 

 

49,881

 

 

48,376

 

 

51,743

 

 

48,956

 

FHLB advances  

 

73,939

 

 

 

80,457

 

 

 

83,386

 

 

 

74,420

 

 

 

47,962

 

Total interest bearing liabilities  

 

2,434,452

 

 

 

2,414,533

 

 

 

2,259,531

 

 

 

2,238,931

 

 

 

2,145,748

 

Total stockholders' equity  

 

403,702

 

 

 

400,870

 

 

 

392,840

 

 

 

381,270

 

 

 

371,070

 

           
Performance Ratios          
Annualized return on average assets  

 

1.43

%

 

 

1.78

%

 

 

1.95

%

 

 

1.93

%

 

 

1.94

%

Annualized return on average equity  

 

13.18

%

 

 

16.48

%

 

 

17.41

%

 

 

17.40

%

 

 

17.09

%

Net interest margin, fully tax equivalent  

 

3.71

%

 

 

3.70

%

 

 

3.86

%

 

 

3.81

%

 

 

3.89

%

Non-interest income to total revenue, fully tax equivalent

 

27.84

%

 

28.36

%

 

29.11

%

 

28.37

%

 

27.01

%

Efficiency ratio, fully tax equivalent (3)  

 

53.19

%

 

 

57.11

%

 

 

52.67

%

 

 

59.08

%

 

 

55.49

%

           
Loans Segmentation          
Commercial real estate - non-owner occupied  

$

799,284

 

 

$

746,283

 

 

$

737,464

 

 

$

706,310

 

 

$

595,609

 

Commercial real estate - owner occupied  

 

476,534

 

 

 

474,329

 

 

 

458,526

 

 

 

440,216

 

 

 

415,342

 

Commercial and industrial  

 

883,868

 

 

 

838,800

 

 

 

853,901

 

 

 

837,752

 

 

 

804,962

 

Residential real estate - owner occupied  

 

218,585

 

 

 

217,606

 

 

 

221,411

 

 

 

247,789

 

 

 

191,561

 

Residential real estate - non-owner occupied  

 

135,370

 

 

 

134,995

 

 

 

127,934

 

 

 

105,509

 

 

 

99,853

 

Construction and land development  

 

246,040

 

 

 

255,816

 

 

 

278,910

 

 

 

253,358

 

 

 

241,112

 

Home equity lines of credit  

 

107,121

 

 

 

103,854

 

 

 

105,935

 

 

 

99,610

 

 

 

101,889

 

Consumer  

 

44,939

 

 

 

47,467

 

 

 

43,568

 

 

 

43,937

 

 

 

45,262

 

Leases  

 

15,476

 

 

 

16,003

 

 

 

19,934

 

 

 

21,914

 

 

 

22,640

 

Credit cards - commercial  

 

10,149

 

 

 

9,863

 

 

 

9,081

 

 

 

7,485

 

 

 

7,479

 

Total loans and leases  

$

2,937,366

 

 

$

2,845,016

 

 

$

2,856,664

 

 

$

2,763,880

 

 

$

2,525,709

 

           
Asset Quality Data          
Non-accrual loans  

$

4,235

 

 

$

11,494

 

 

$

2,722

 

 

$

3,030

 

 

$

3,273

 

Troubled debt restructurings  

 

52

 

 

 

34

 

 

 

35

 

 

 

37

 

 

 

39

 

Loans past due 90 days or more and still accruing  

 

1,762

 

 

 

535

 

 

 

487

 

 

 

861

 

 

 

454

 

Total non-performing loans  

 

6,049

 

 

 

12,063

 

 

 

3,244

 

 

 

3,928

 

 

 

3,766

 

Other real estate owned  

 

493

 

 

 

493

 

 

 

563

 

 

 

563

 

 

 

878

 

Total non-performing assets  

$

6,542

 

 

$

12,556

 

 

$

3,807

 

 

$

4,491

 

 

$

4,644

 

Non-performing loans to total loans  

 

0.21

%

 

 

0.42

%

 

 

0.11

%

 

 

0.14

%

 

 

0.15

%

Non-performing assets to total assets  

 

0.17

%

 

 

0.34

%

 

 

0.11

%

 

 

0.13

%

 

 

0.14

%

Allowance for credit losses to total loans  

 

1.43

%

 

 

0.94

%

 

 

0.94

%

 

 

0.96

%

 

 

1.05

%

Allowance for credit losses to average loans  

 

1.46

%

 

 

0.95

%

 

 

0.96

%

 

 

0.99

%

 

 

1.05

%

Allowance for credit losses to non-performing loans  

 

697

%

 

 

222

%

 

 

829

%

 

 

673

%

 

 

703

%

Net charge-offs (recoveries)  

$

54

 

 

$

86

 

 

$

(61

)

 

$

48

 

 

$

(330

)

Net charge-offs (recoveries) to average loans (4)  

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

-0.01

%

           
Other Information          
Total assets under management (in millions)  

$

2,961

 

 

$

3,320

 

 

$

3,116

 

 

$

3,068

 

 

$

2,970

 

Full-time equivalent employees  

 

618

 

 

 

615

 

 

 

622

 

 

 

615

 

 

 

596

 

(1) - The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) to tangible stockholders’ equity, a non-GAAP disclosure. Bancorp provides the tangible book value per share, a non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy:
  Quarterly Comparison
(In thousands, except per share data)   3/31/20   12/31/19   9/30/19   6/30/19   3/31/19
           
Total stockholders' equity - GAAP (a)  

$

409,702

 

 

$

406,297

 

 

$

396,111

 

 

$

389,365

 

 

$

377,994

 

Less: Goodwill  

 

(12,513

)

 

 

(12,513

)

 

 

(12,593

)

 

 

(12,826

)

 

 

(682

)

Less: Core deposit intangible  

 

(2,203

)

 

 

(2,285

)

 

 

(2,373

)

 

 

(2,461

)

 

 

(1,015

)

Tangible common equity - Non-GAAP (c)  

$

394,986

 

 

$

391,499

 

 

$

381,145

 

 

$

374,078

 

 

$

376,297

 

           
Total assets - GAAP (b)  

$

3,784,586

 

 

$

3,724,197

 

 

$

3,533,926

 

 

$

3,463,823

 

 

$

3,281,016

 

Less: Goodwill  

 

(12,513

)

 

 

(12,513

)

 

 

(12,593

)

 

 

(12,826

)

 

 

(682

)

Less: Core deposit intangible  

 

(2,203

)

 

 

(2,285

)

 

 

(2,373

)

 

 

(2,461

)

 

 

(1,015

)

Tangible assets - Non-GAAP (d)  

$

3,769,870

 

 

$

3,709,399

 

 

$

3,518,960

 

 

$

3,448,536

 

 

$

3,279,319

 

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

 

10.83

%

 

 

10.91

%

 

 

11.21

%

 

 

11.24

%

 

 

11.52

%

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

 

10.48

%

 

 

10.55

%

 

 

10.83

%

 

 

10.85

%

 

 

11.47

%

           
Total shares outstanding (e)  

 

22,665

 

 

 

22,604

 

 

 

22,597

 

 

 

22,721

 

 

 

22,823

 

           
Book value per share - GAAP (a/e)  

$

18.08

 

 

$

17.97

 

 

$

17.53

 

 

$

17.14

 

 

$

16.56

 

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

 

17.43

 

 

 

17.32

 

 

 

16.87

 

 

 

16.46

 

 

 

16.49

 

           
(2) - 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.
           
(3) - 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. The following table reconciles the efficiency ratio calculation to the adjusted efficiency ratio calculation.
           
  Quarterly Comparison
(Dollars in thousands)   3/31/20   12/31/19   9/30/19   6/30/19   3/31/19
           
Total non-interest expenses (a)  

$

23,950

 

 

$

26,153

 

 

$

23,898

 

 

$

25,453

 

 

$

22,612

 

Less: Amortization of investments in tax credit partnerships  

 

(36

)

 

 

(837

)

 

 

(137

)

 

 

(52

)

 

 

(52

)

Total adjusted non-interest expenses (c)  

$

23,914

 

 

$

25,316

 

 

$

23,761

 

 

$

25,401

 

 

$

22,560

 

           
Total net interest income, fully tax equivalent  

$

32,494

 

 

$

32,808

 

 

$

32,167

 

 

$

30,857

 

 

$

29,740

 

Total non-interest income  

 

12,536

 

 

 

12,987

 

 

 

13,209

 

 

 

12,224

 

 

 

11,008

 

Less: Gain/loss on sale of securities  

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total revenue (b)  

$

45,030

 

 

$

45,795

 

 

$

45,376

 

 

$

43,081

 

 

$

40,748

 

           
Efficiency ratio (a) / (b)  

 

53.19

%

 

 

57.11

%

 

 

52.67

%

 

 

59.08

%

 

 

55.49

%

Adjusted Efficiency ratio (c) / (b)  

 

53.11

%

 

 

55.28

%

 

 

52.36

%

 

 

58.96

%

 

 

55.36

%

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

 

Contacts

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

$Cashtags

Contacts

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