Stock Yards Bancorp Reports Record Second Quarter and Year-to-Date Results

Date : 07/24/2019 @ 11:00AM
Source : Business Wire
Stock : Stock Yards Bancorp Inc (SYBT)
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Stock Yards Bancorp Reports Record Second Quarter and Year-to-Date Results

Stock Yards Bancorp (NASDAQ:SYBT)
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6 Months : From May 2019 to Nov 2019

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Record Loan Production; Record Diluted Earnings Per Share, Both Including and Excluding Non-Recurring Items

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 record results for both the second quarter and six months ended June 30, 2019. Total revenue, comprising net interest income and non-interest income, increased 7% to $43.0 million for the second quarter of 2019 from $40.1 million for the second quarter of 2018. Net income before income taxes increased 5% to $17.6 million for the second quarter of 2019 from $16.7 million for the comparable quarter, despite incurring $1.3 million in one-time transaction costs related to the acquisition of King Bancorp, Inc. Net income for the second quarter of 2019, which includes a non‑recurring state income tax benefit, rose 22% to $16.5 million or $0.72 per diluted share from $13.6 million or $0.59 per diluted share for the second quarter of 2018.

 

 

 

 

(dollar amounts in thousands, except per share data)

2Q19

1Q19

2Q18

Net interest income

$

30,774

 

$

29,657

 

$

28,674

 

Provision for loan and lease losses

 

 

600

 

 

1,235

 

Non-interest income

 

12,263

 

 

11,062

 

 

11,435

 

Non-interest expenses

 

25,464

 

 

22,639

 

 

22,136

 

Income before income tax expense

 

17,573

 

 

17,480

 

 

16,738

 

Income tax expense

 

1,030

 

 

1,839

 

 

3,159

 

Net income

$

16,543

 

$

15,641

 

$

13,579

 

Net income per share, diluted

$

0.72

 

$

0.68

 

$

0.59

 

Net interest margin

 

3.81

%

 

3.89

%

 

3.88

%

Efficiency ratio

 

59.09

%

 

55.52

%

 

55.07

%

Tangible common equity to tangible assets (1)

 

10.85

%

 

11.47

%

 

10.35

%

Annualized return on average equity

 

17.40

%

 

17.09

%

 

15.94

%

Annualized return on average assets

 

1.93

%

 

1.94

%

 

1.74

%

 

 

 

Key factors affecting the Company’s results for the second quarter of 2019 included:

  • Successful completion of the acquisition of King Bancorp, Inc. and its subsidiary, King Southern Bank (KSB);
  • Average loans increased $128 million year over year, contributing to the 7% increase in net interest income on a comparable quarter basis;
  • Continued robust legacy loan production (excluding the KSB acquisition) led to both year-to-date and quarter-to-date records, with loan payoffs/pay-downs trending lower in the second quarter of 2019;
  • Legacy net loan growth (excluding the KSB acquisition) was $77 million for the second quarter of 2019 compared to $66 million for the same period in 2018;
  • Credit quality metrics remained sound, as the Company did not record a provision for loan and lease losses in the second quarter;
  • Wealth Management and Trust (WM&T) services income rose consistent with increased new business generation and strong market performance for the quarter;
  • Card income and treasury management fees, bolstered by increased volume and usage, continued to stand out as diversifying non-interest revenue streams, representing a combined 27% of total non-interest income compared to 21% two years ago;
  • One-time pre-tax KSB acquisition transaction costs totaled $1.3 million, a $0.05 impact to net income per diluted share for the second quarter of 2019;
  • The effective income tax rate declined to 5.9% for the second quarter of 2019, primarily due to a Kentucky tax law change allowing a bank holding company’s net operating losses to offset against net revenues generated by the bank, beginning in 2021. The Bank recognized a non-recurring state deferred tax asset and corresponding state income tax benefit, the effect of which added $0.11 to net income per diluted share for the second quarter 2019; and
  • Excluding the two non-recurring items above, the Company would have reported record net income per diluted share for the second quarter 2019.

“As our record results reflect, Stock Yards Bancorp had a very successful second quarter,” said James A. (Ja) Hillebrand, Chief Executive Officer. “We posted solid net income, return on average assets and return on average equity. Record loan production and strong net loan growth drove the net interest income increase of $2.1 million or 7% compared with the second quarter of 2018. Our loan portfolio increased $186 million compared to June 30, 2018, and $216 million compared to December 31, 2018, with $160 million of this growth in both comparisons attributable to the KSB acquisition. Moreover, we ended the second quarter with a very robust loan pipeline leading into the summer months, positioning the Company for continued heightened loan production. Despite such growth, we are committed to preserving credit quality, as evidenced by our key metrics that remain at sound levels and are some of the highest among community banks.

“Non-interest income remained strong and continues to represent diversified revenue streams poised for attractive and predictable long-term growth,” Hillebrand continued. “The WM&T group, with approximately $3.1 billion of assets under management, continued to be a leading source of fee income, with revenues increasing 6% versus the year-earlier period and contributing 46% of total non-interest income in the second quarter of 2019. Debit/credit card income and treasury management fees combined grew 20% to account for 27% of second quarter 2019 total non-interest income. These diverse sources of revenue remain key to long-term stability in our growth and demonstrate our sound business model.”

Hillebrand also noted that, as a result of the KSB transaction and proximity of acquired branch locations to existing Stock Yards branch locations, the Company expects to divest three acquired branch locations in Louisville during the third quarter of 2019. Also in the third quarter, the Company will open a new branch location in Mt. Washington, Bullitt County, an area that has expanded significantly over the last several years and represents a natural extension of the Company’s concentrated presence in metropolitan Louisville.

In closing, Hillebrand said, “The outstanding results for the second quarter reflect healthy economies in our geographic locations, diversified revenue streams, the hard work of over 600 dedicated employees and solid execution of our strategic business plan. As evidenced by the second quarter authorization of a share repurchase plan, our Board is also highly optimistic about the Company’s future. I am pleased to announce that we have repurchased approximately 107 thousand shares of stock at a weighted average cost of $34.15 per share during the quarter. We are excited about the remainder of the year, supported by attractive business fundamentals, a robust loan production pipeline and the opportunity to welcome our new KSB customers to our broad suite of product offerings. Considering the solid fundamentals driving our business, the economic vibrancy of the markets we serve, and the opportunities we continue to see ahead as we pursue long-term growth, we remain confident about our future and our ability to continue to reward our shareholders for their loyalty.”

Second Quarter 2019 Compared with Second Quarter 2018

Net interest income – the Company’s largest source of revenue – increased approximately $2.1 million or 7% to $30.8 million.

  • Net interest margin decreased seven basis points to 3.81% from 3.88% primarily due to the following:
    • While the Company has not aggressively pursued deposits since mid-2018, nor has it significantly raised rates, the Company experienced a natural shift in deposits from non‑interest bearing accounts to interest bearing accounts during the period;
    • Asset yields were impacted by the downward trending of the overall rate environment during 2019, as fixed rate loan pricing and LIBOR based loans were impacted;
    • The second quarter 2018 margin was elevated by prepayment fees collected, with a much lighter impact experienced in the second quarter of 2019; and
    • The KSB portfolio mix of earning assets and interest bearing liabilities had a slight negative impact on margin overall.
  • Interest income rose $5.0 million or 16%, driven by higher market interest rates and increased average loan volume. The KSB portfolio contributed $110 million in average loans and generated $1.6 million in interest income for the second quarter of 2019.
  • As anticipated, interest expense increased $2.9 million or 86% during the second quarter due to growth of deposits – primarily time deposits – resulting from a prior-year deposit-gathering campaign. Also, approximately $530 thousand of the second quarter interest expense increase related to the KSB portfolio, which was concentrated in time deposits with higher costs.

Non-interest income increased $828 thousand or 7% to $12.3 million.

  • WM&T income rose 6% due to increased new business generation and strong market performance for the quarter;
  • The Company maintained its strategic focus of growing the debit/credit card and treasury management non-interest income revenue streams, which combined to increase 20%.

Non-interest expenses increased $3.3 million or 15% to $25.5 million.

  • The Company incurred $1.3 million in pre-tax one-time transaction costs related to its acquisition of KSB, a $0.05 impact to earnings per diluted share for the second quarter of 2019.
  • Compensation expense for the second quarter of 2019 increased $1.0 million or 9% compared with the prior-year quarter, with approximately $550 thousand of the increase attributable to KSB staff additions and restructuring charges. The remainder of the increase related to the addition of new legacy employees to support strategic growth initiatives and regular annual salary increases.
  • Legal and professional fees increased $1.0 million during the second quarter of 2019, with nearly $900 thousand of the increase associated with the KSB acquisition.

The Company’s effective tax rate declined to 5.9% from 18.9%.

  • During the second quarter of 2019, Kentucky tax law changed to allow a bank holding company’s net operating losses to offset against net revenues generated by the bank, beginning in 2021. In connection with this change, the Bank recognized a non-recurring state deferred tax asset and corresponding state income tax benefit, the effect of which added $0.11 to net income per diluted share for the second quarter of 2019.

June 30, 2019 Compared with June 30, 2018

Total loans increased $186 million or 7% to $2.8 billion.

  • Approximately $160 million in loans were added in connection with the KSB acquisition.
  • Excluding the KSB acquisition, the loan portfolio grew by a net $55 million during the first six months of 2019, bolstered by record loan production of $446 million.

Total deposits increased $343 million or 14% to $2.9 billion.

  • Approximately $116 million in deposits were added in connection with the KSB acquisition.
  • Time deposits have increased $184 million or 73%, as the Bank pursued aggressive term funding in the first part of 2018.
  • Core deposits, which exclude brokered deposits and time deposits greater than $250 thousand, represented 97% of total deposits.

Asset quality, which has remained exceptional and has trended within a narrow range over the past several years, remains sound. While the Company is pleased with this performance, management recognizes the cyclical nature of banking and believes asset quality metrics will normalize over the long term, which will eventually result in higher provisioning for loan and lease losses.

  • Non-performing loans (NPLs) were $3.9 million or 0.14% of total loans outstanding versus $7.4 million or 0.29% of total loans outstanding.
  • Non-performing assets (NPAs), which include NPLs along with other real estate owned and repossessed assets, were $4.5 million or 0.13% of total assets versus $7.7 million or 0.23% of total assets.
  • Based on net charge-offs of $48 thousand in the second quarter of 2019, combined with other considerations, including the overall level of risk in the portfolio, the Company did not record a provision for loan and lease losses in the second quarter of 2019 versus $1.2 million in the second quarter of 2018.
  • The allowance for loan and lease losses relative to total end-of-period loans remained flat at 0.96%.

The Company remained “well capitalized” – the highest capital rating for financial institutions.

  • Total equity to assets was 11.24% and tangible common equity ratio was 10.85%,(1) compared to 10.40% and 10.35%, respectively, with the fluctuation primarily associated with the KSB acquisition.
  • Even with its strong capital position, the Company continues to consistently achieve industry-leading returns on equity due to its superior earnings performance.
  • In addition to a substantial and sustained dividend payout ratio, the Company continues to pursue other strategies to enhance stockholder value, such as the previously mentioned share repurchase plan. In May 2019, the Board of Directors increased the quarterly cash dividend 4% to $0.26 per common share. Stock Yards Bancorp has now raised its quarterly dividend rate a total of 11 times since 2014, including two increases during 2018 and each of the previous four years.

Second Quarter 2019 Compared to First Quarter 2019

Net interest margin decreased eight basis points to 3.81% from 3.89% primarily due to the following:

  • The Company continued to experience a natural shift in deposits from non-interest bearing accounts to interest bearing accounts during the period.
  • Asset yields were impacted by the downward trending of the overall rate environment, as fixed rate loan pricing and LIBOR based loans were impacted.
  • The first quarter 2019 margin was elevated by prepayment fees collected, with a much lighter impact experienced in the second quarter.
  • The KSB portfolio mix of earning assets and interest bearing liabilities had a slight negative impact on margin overall.

Net interest income increased 4%.

  • The KSB portfolio contributed $110 million in average loans and generated $1.6 million in interest income for the second quarter, offset by approximately $530 thousand in interest expense.

Non-interest income increased 11%.

  • WM&T income rose 4% due to increased new business generation and strong market performance for the quarter;
  • Debit/credit card income increased $424 thousand or 24%, consistent with growth and usage in the program, in addition to incentives paid to the Company by its credit card processor.
  • Consistent with the decline in long-term fixed rates, mortgage banking income finished the spring/early summer season higher than the first quarter of 2019.

Non-interest expenses increased 12%.

  • As previously noted, the Company completed its acquisition of KSB on May 1, 2019. As a result, the Company incurred $1.3 million in pre-tax acquisition-related expenses, professional fees and compensation-related expenses. In addition, approximately $400 thousand in ongoing KSB non-interest expenses were recorded.

The Company’s effective tax rate declined to 5.9% for the second quarter of 2019 from 10.5% for the first quarter of 2019.

  • During the second quarter of 2019, Kentucky tax law changed to allow a bank holding company’s net operating losses to offset against net revenues generated by the bank, beginning in 2021. In connection with this change, the Bank recognized a non-recurring state deferred tax asset and corresponding state income tax benefit, the effect of which added $0.11 to net income per diluted share for the second quarter of 2019.
  • Also, as previously disclosed, beginning in 2021, the Kentucky franchise tax will be replaced with a 5% income-based tax. Associated with this change, the Bank recognized a non-recurring state deferred tax asset and corresponding state income tax benefit, the effect of which added $0.06 to net income per diluted share for the first quarter of 2019.

June 30, 2019 Compared to March 31, 2019

Total loans increased $238 million or 9%.

  • Approximately $160 million in loans were added in connection with the KSB acquisition.
  • The Company experienced legacy loan growth of $77 million during the second quarter of 2019 compared to net contraction of $22 million for the first quarter of 2019.
  • After strong production during the second quarter, loan pipelines remain robust headed into the third quarter of 2019.

Total deposits increased $131 million or 5%.

  • The linked-quarter increase in total deposits related primarily to the KSB acquisition, which contributed $116 million in total deposits.

Asset quality remained at historically strong levels.

  • NPLs were $3.9 million or 0.14% of total loans outstanding versus $3.8 million or 0.15% of total loans outstanding.
  • NPAs were $4.5 million or 0.13% of total assets versus $4.6 million or 0.14% of total assets.
  • Net charge-offs were $48 thousand compared with net loan loss recoveries of $330 thousand.
  • There was no loan loss provision in the second quarter of 2019, compared with a provision for loan and lease losses of $600 thousand in the first quarter of 2019.
  • The allowance for loan and lease losses relative to total end-of-period loans was 0.96%, a decrease of nine basis points.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $3.5 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 Global Select 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; 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, 2018.

Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter 2019 Earnings Release (In thousands unless otherwise noted)

Three Months Ended

 

Six Months Ended

June 30,

 

June 30,

Income Statement Data

2019

 

2018

 

2019

 

2018

  Net interest income, fully tax equivalent (2)

$

30,829

$

28,759

$

60,542

$

56,161

Interest income: Loans and leases

$

33,419

$

29,456

$

64,963

$

56,518

Federal funds sold and interest bearing due from banks

 

830

 

163

 

1,563

 

431

Mortgage loans held for sale

 

43

 

44

 

80

 

79

Securities

 

2,676

 

2,341

 

5,391

 

4,720

Total interest income

 

36,968

 

32,004

 

71,997

 

61,748

Interest expense: Deposits

 

5,652

 

2,674

 

10,718

 

4,751

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

 

92

 

427

 

177

 

550

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

 

450

 

229

 

671

 

464

Total interest expense

 

6,194

 

3,330

 

11,566

 

5,765

Net interest income

 

30,774

 

28,674

 

60,431

 

55,983

Provision for loan and lease losses

 

-

 

1,235

 

600

 

1,970

Net interest income after provision for loan and lease losses

 

30,774

 

27,439

 

59,831

 

54,013

Non-interest income: Wealth management and trust services

 

5,662

 

5,344

 

11,101

 

10,844

Deposit service charges

 

1,336

 

1,447

 

2,583

 

2,858

Debit and credit card income

 

2,168

 

1,689

 

3,912

 

3,197

Treasury management fees

 

1,202

 

1,113

 

2,359

 

2,160

Mortgage banking income

 

796

 

746

 

1,278

 

1,322

Net investment product sales commissions and fees

 

364

 

397

 

720

 

801

Bank owned life insurance

 

184

 

191

 

362

 

378

Other

 

551

 

508

 

1,010

 

784

Total non-interest income

 

12,263

 

11,435

 

23,325

 

22,344

Non-interest expenses: Compensation

 

12,715

 

11,703

 

24,516

 

22,673

Employee benefits

 

2,908

 

2,512

 

5,550

 

5,145

Net occupancy and equipment

 

1,976

 

1,811

 

3,834

 

3,629

Technology and communication

 

1,848

 

1,685

 

3,621

 

3,315

Debit and credit card processing

 

631

 

579

 

1,218

 

1,145

Marketing and business development

 

903

 

805

 

1,528

 

1,451

Postage, printing, and supplies

 

410

 

400

 

816

 

791

Legal and professional

 

1,523

 

504

 

2,057

 

997

FDIC insurance

 

248

 

238

 

486

 

480

Amortization/impairment of investments in tax credit partnerships

 

52

 

58

 

104

 

58

Capital and deposit based taxes

 

967

 

862

 

1,871

 

1,714

Other

 

1,283

 

979

 

2,502

 

1,765

Total non-interest expenses

 

25,464

 

22,136

 

48,103

 

43,163

Income before income tax expense

 

17,573

 

16,738

 

35,053

 

33,194

Income tax expense

 

1,030

 

3,159

 

2,869

 

6,211

Net income

$

16,543

$

13,579

$

32,184

$

26,983

  Net income per share - Basic

$

0.73

$

0.60

$

1.42

$

1.19

Net income per share - Diluted

 

0.72

 

0.59

 

1.40

 

1.17

Cash dividend declared per share

 

0.26

 

0.23

 

0.51

 

0.46

  Weighted average shares - Basic

 

22,689

 

22,625

 

22,675

 

22,601

Weighted average shares - Diluted

 

22,949

 

22,967

 

22,948

 

22,959

 

June 30,

Balance Sheet Data

2019

 

2018

  Loans and leases

$

2,763,880

$

2,577,960

Allowance for loan and lease losses

 

26,416

 

24,873

Total assets

 

3,463,823

 

3,323,840

Non-interest bearing deposits

 

777,652

 

715,974

Interest bearing deposits

 

2,105,801

 

1,824,487

FHLB advances

 

84,279

 

48,821

Stockholders' equity

 

389,365

 

345,515

Total shares outstanding

 

22,721

 

22,746

Book value per share (1)

$

17.14

$

15.19

Tangible common equity per share (1)

 

16.46

 

15.11

Market value per share

 

36.15

 

38.15

Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter 2019 Earnings Release  

Three Months Ended

Six Months Ended

June 30,

June 30,

Average Balance Sheet Data

2019

2018

2019

2018

  Federal funds sold and interest bearing due from banks

$

137,130

 

$

36,985

 

$

129,701

 

$

53,991

 

Mortgage loans held for sale

 

3,794

 

 

2,975

 

 

2,766

 

 

2,539

 

Securities available for sale

 

435,391

 

 

401,369

 

 

436,498

 

 

409,494

 

FHLB stock and other securities

 

10,590

 

 

8,925

 

 

10,392

 

 

8,310

 

Loans and leases

 

2,668,058

 

 

2,540,537

 

 

2,603,878

 

 

2,495,868

 

Total earning assets

 

3,244,941

 

 

2,973,704

 

 

3,173,069

 

 

2,952,638

 

Total assets

 

3,436,175

 

 

3,132,494

 

 

3,354,172

 

 

3,111,807

 

Interest bearing deposits

 

2,112,768

 

 

1,846,730

 

 

2,080,976

 

 

1,869,864

 

Total deposits

 

2,867,360

 

 

2,548,372

 

 

2,805,872

 

 

2,555,738

 

Securities sold under agreement to repurchase other short-term borrowings

 

51,743

 

 

 

150,173

 

 

 

50,357

 

 

 

124,000

 

FHLB advances and other long-term borrowings

 

74,420

 

 

48,929

 

 

61,264

 

 

49,087

 

Total interest bearing liabilities

 

2,238,931

 

 

2,045,832

 

 

2,192,597

 

 

2,042,951

 

Total stockholders' equity

 

381,270

 

 

341,637

 

 

376,198

 

 

339,117

 

  Performance Ratios Annualized return on average assets

 

1.93

%

 

1.74

%

 

1.93

%

 

1.75

%

Annualized return on average equity

 

17.40

%

 

15.94

%

 

17.25

%

 

16.05

%

Net interest margin, fully tax equivalent

 

3.81

%

 

3.88

%

 

3.85

%

 

3.84

%

Non-interest income to total revenue, fully tax equivalent

 

28.46

%

 

28.45

%

 

27.81

%

 

28.46

%

Efficiency ratio, fully tax equivalent (3)

 

59.09

%

 

55.07

%

 

57.36

%

 

54.98

%

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

 

11.24

%

 

10.40

%

Tangible common equity to tangible assets (1)

 

10.85

%

 

10.35

%

Average stockholders' equity to average assets

 

11.22

%

 

10.90

%

Total risk-based capital

 

12.67

%

 

13.06

%

Common equity tier 1 risk-based capital

 

11.82

%

 

12.18

%

Tier 1 risk-based capital

 

11.82

%

 

12.18

%

Leverage

 

10.91

%

 

11.19

%

  Loans by Type Commercial and industrial

$

860,085

 

$

855,015

 

Construction and land development

 

257,801

 

 

238,224

 

Real estate mortgage - commercial investment

 

696,421

 

 

622,777

 

Real estate mortgage - owner occupied commercial

 

452,719

 

 

420,999

 

Real estate mortgage - 1-4 family residential

 

338,957

 

 

277,735

 

Home equity - first lien

 

46,012

 

 

53,257

 

Home equity - junior lien

 

67,948

 

 

66,323

 

Consumer

 

43,937

 

 

43,630

 

Total loans and leases

$

2,763,880

 

$

2,577,960

 

  Asset Quality Data Non-accrual loans

$

3,030

 

$

6,422

 

Troubled debt restructurings

 

37

 

 

817

 

Loans past due 90 days or more and still accruing

 

861

 

 

134

 

Total non-performing loans

 

3,928

 

 

7,373

 

Other real estate owned

 

563

 

 

360

 

Total non-performing assets

$

4,491

 

$

7,733

 

Non-performing loans to total loans

 

0.14

%

 

0.29

%

Non-performing assets to total assets

 

0.13

%

 

0.23

%

Allowance for loan and lease losses to total loans

 

0.96

%

 

0.96

%

Allowance for loan and lease losses to average loans

 

1.01

%

 

1.00

%

Allowance for loan and lease losses to non-performing loans

 

673

%

 

337

%

Net charge-offs (recoveries)

$

48

 

$

565

 

$

(282

)

$

1,982

 

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

 

0.00

%

 

0.02

%

 

-0.01

%

 

0.08

%

Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter 2019 Earnings Release   Quarterly Comparison Income Statement Data 6/30/19 3/31/19 12/31/18 9/30/18 6/30/18   Net interest income, fully tax equivalent (2)

$

30,829

 

$

29,713

 

$

29,972

 

$

28,590

 

$

28,759

 

Net interest income

$

30,774

 

$

29,657

 

$

29,912

 

$

28,521

 

$

28,674

 

Provision for loan and lease losses

 

-

 

 

600

 

 

-

 

 

735

 

 

1,235

 

Net interest income after provision for loan and lease losses

 

30,774

 

 

29,057

 

 

29,912

 

 

27,786

 

 

27,439

 

Non-interest income: Wealth management and trust services

 

5,662

 

 

5,439

 

 

5,312

 

 

5,380

 

 

5,344

 

Deposit service charges

 

1,336

 

 

1,247

 

 

1,419

 

 

1,482

 

 

1,447

 

Debit and credit card income

 

2,168

 

 

1,744

 

 

1,813

 

 

1,759

 

 

1,689

 

Treasury management fees

 

1,202

 

 

1,157

 

 

1,260

 

 

1,151

 

 

1,113

 

Mortgage banking income

 

796

 

 

482

 

 

534

 

 

712

 

 

746

 

Net investment product sales commissions and fees

 

364

 

 

356

 

 

432

 

 

444

 

 

397

 

Bank owned life insurance

 

184

 

 

178

 

 

565

 

 

186

 

 

191

 

Other

 

551

 

 

459

 

 

241

 

 

312

 

 

508

 

Total non-interest income

 

12,263

 

 

11,062

 

 

11,576

 

 

11,426

 

 

11,435

 

Non-interest expenses: Compensation

 

12,715

 

 

11,801

 

 

11,824

 

 

11,607

 

 

11,703

 

Employee benefits

 

2,908

 

 

2,642

 

 

2,452

 

 

2,501

 

 

2,512

 

Net occupancy and equipment

 

1,976

 

 

1,858

 

 

2,110

 

 

1,914

 

 

1,811

 

Technology and communication

 

1,848

 

 

1,773

 

 

1,660

 

 

1,595

 

 

1,685

 

Debit and credit card processing

 

631

 

 

587

 

 

594

 

 

588

 

 

579

 

Marketing and business development

 

903

 

 

625

 

 

908

 

 

740

 

 

805

 

Postage, printing, and supplies

 

410

 

 

406

 

 

397

 

 

370

 

 

400

 

Legal and professional

 

1,523

 

 

534

 

 

1,116

 

 

501

 

 

504

 

FDIC insurance

 

248

 

 

238

 

 

243

 

 

238

 

 

238

 

Amortization/impairment of investments in tax credit partnerships

 

52

 

 

52

 

 

1,179

 

 

-

 

 

58

 

Capital and deposit based taxes

 

967

 

 

904

 

 

873

 

 

738

 

 

862

 

Other

 

1,283

 

 

1,219

 

 

1,209

 

 

989

 

 

979

 

Total non-interest expenses

 

25,464

 

 

22,639

 

 

24,565

 

 

21,781

 

 

22,136

 

Income before income tax expense

 

17,573

 

 

17,480

 

 

16,923

 

 

17,431

 

 

16,738

 

Income tax expense

 

1,030

 

 

1,839

 

 

2,265

 

 

3,555

 

 

3,159

 

Net income

$

16,543

 

$

15,641

 

$

14,658

 

$

13,876

 

$

13,579

 

  Net income per share - Basic

$

0.73

 

$

0.69

 

$

0.65

 

$

0.61

 

$

0.60

 

Net income per share - Diluted

 

0.72

 

 

0.68

 

 

0.64

 

 

0.60

 

 

0.59

 

Cash dividend declared per share

 

0.26

 

 

0.25

 

 

0.25

 

 

0.25

 

 

0.23

 

  Weighted average shares - Basic

 

22,689

 

 

22,661

 

 

22,638

 

 

22,636

 

 

22,625

 

Weighted average shares - Diluted

 

22,949

 

 

22,946

 

 

22,907

 

 

22,968

 

 

22,967

 

  Quarterly Comparison Balance Sheet Data 6/30/19 3/31/19 12/31/18 9/30/18 6/30/18   Cash and due from banks

$

51,264

 

$

44,014

 

$

51,892

 

$

66,029

 

$

44,052

 

Federal funds sold and interest bearing due from banks

 

64,775

 

 

67,326

 

 

147,047

 

 

54,451

 

 

10,948

 

Mortgage loans held for sale

 

3,922

 

 

2,981

 

 

1,675

 

 

2,533

 

 

2,053

 

Securities available for sale

 

423,579

 

 

507,131

 

 

436,995

 

 

550,091

 

 

574,570

 

FHLB stock and other securities

 

11,316

 

 

9,779

 

 

10,370

 

 

10,370

 

 

10,370

 

Loans and leases

 

2,763,880

 

 

2,525,709

 

 

2,548,171

 

 

2,534,483

 

 

2,577,960

 

Allowance for loan and lease losses

 

26,416

 

 

26,464

 

 

25,534

 

 

25,222

 

 

24,873

 

Total assets

 

3,463,823

 

 

3,281,016

 

 

3,302,924

 

 

3,324,797

 

 

3,323,840

 

Non-interest bearing deposits

 

777,652

 

 

698,783

 

 

711,023

 

 

705,386

 

 

715,974

 

Interest bearing deposits

 

2,105,801

 

 

2,053,757

 

 

2,083,333

 

 

1,892,652

 

 

1,824,487

 

Securities sold under agreements to repurchase

 

33,809

 

 

34,633

 

 

36,094

 

 

53,883

 

 

58,808

 

Federal funds purchased and other short-term borrowings

 

12,012

 

 

12,218

 

 

10,247

 

 

231,344

 

 

286,460

 

FHLB advances

 

84,279

 

 

47,853

 

 

48,177

 

 

48,500

 

 

48,821

 

Stockholders' equity

 

389,365

 

 

377,994

 

 

366,500

 

 

352,980

 

 

345,515

 

Total shares outstanding

 

22,721

 

 

22,823

 

 

22,749

 

 

22,746

 

 

22,746

 

Book value per share (1)

$

17.14

 

$

16.56

 

$

16.11

 

$

15.52

 

$

15.19

 

Tangible common equity per share (1)

 

16.46

 

 

16.49

 

 

16.03

 

 

15.44

 

 

15.11

 

Market value per share

 

36.15

 

 

33.81

 

 

32.80

 

 

36.30

 

 

38.15

 

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

 

11.24

%

 

11.52

%

 

11.10

%

 

10.62

%

 

10.40

%

Tangible common equity to tangible assets (1)

 

10.85

%

 

11.47

%

 

11.05

%

 

10.57

%

 

10.35

%

Average stockholders' equity to average assets

 

11.10

%

 

11.34

%

 

10.99

%

 

11.14

%

 

10.91

%

Total risk-based capital

 

12.67

%

 

14.04

%

 

13.91

%

 

13.50

%

 

13.06

%

Common equity tier 1 risk-based capital

 

11.82

%

 

13.11

%

 

13.00

%

 

12.61

%

 

12.18

%

Tier 1 risk-based capital

 

11.82

%

 

13.11

%

 

13.00

%

 

12.61

%

 

12.18

%

Leverage

 

10.91

%

 

11.57

%

 

11.33

%

 

11.40

%

 

11.19

%

Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter 2019 Earnings Release   Quarterly Comparison Average Balance Sheet Data 6/30/19 3/31/19 12/31/18 9/30/18 6/30/18   Federal funds sold and interest bearing due from banks

$

137,130

 

$

122,189

 

$

86,725

 

$

73,196

 

$

36,985

 

Mortgage loans held for sale

 

3,794

 

 

1,727

 

 

2,140

 

 

2,980

 

 

2,975

 

Securities available for sale

 

435,391

 

 

437,619

 

 

468,856

 

 

372,251

 

 

401,369

 

Loans and leases

 

2,668,058

 

 

2,538,940

 

 

2,539,750

 

 

2,547,474

 

 

2,540,537

 

Total earning assets

 

3,244,941

 

 

3,100,352

 

 

3,096,931

 

 

2,990,401

 

 

2,973,704

 

Total assets

 

3,436,175

 

 

3,271,257

 

 

3,260,322

 

 

3,153,406

 

 

3,132,494

 

Interest bearing deposits

 

2,112,768

 

 

2,048,830

 

 

2,012,489

 

 

1,874,853

 

 

1,846,730

 

Total deposits

 

2,867,360

 

 

2,743,701

 

 

2,738,678

 

 

2,590,156

 

 

2,548,372

 

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

 

51,743

 

 

48,956

 

 

67,731

 

 

116,287

 

 

150,173

 

FHLB advances

 

74,420

 

 

47,962

 

 

48,287

 

 

48,612

 

 

48,929

 

Total interest bearing liabilities

 

2,238,931

 

 

2,145,748

 

 

2,128,507

 

 

2,039,752

 

 

2,045,832

 

Total stockholders' equity

 

381,270

 

 

371,070

 

 

358,293

 

 

351,376

 

 

341,637

 

  Performance Ratios Annualized return on average assets

 

1.93

%

 

1.94

%

 

1.78

%

 

1.75

%

 

1.74

%

Annualized return on average equity

 

17.40

%

 

17.09

%

 

16.23

%

 

15.67

%

 

15.94

%

Net interest margin, fully tax equivalent

 

3.81

%

 

3.89

%

 

3.84

%

 

3.79

%

 

3.88

%

Non-interest income to total revenue, fully tax equivalent

 

28.46

%

 

27.13

%

 

27.86

%

 

28.55

%

 

28.45

%

Efficiency ratio, fully tax equivalent (3)

 

59.09

%

 

55.52

%

 

55.52

%

 

59.12

%

 

55.07

%

  Loans by Type Commercial and industrial

$

860,085

 

$

827,747

 

$

833,524

 

$

816,252

 

$

855,015

 

Construction and land development

 

257,801

 

 

244,548

 

 

255,142

 

 

233,107

 

 

238,224

 

Real estate mortgage - commercial investment

 

696,421

 

 

586,648

 

 

588,610

 

 

630,000

 

 

622,777

 

Real estate mortgage - owner occupied commercial

 

452,719

 

 

428,163

 

 

426,373

 

 

420,098

 

 

420,999

 

Real estate mortgage - 1-4 family residential

 

338,957

 

 

277,847

 

 

276,017

 

 

274,409

 

 

277,735

 

Home equity - first lien

 

46,012

 

 

48,656

 

 

49,500

 

 

46,062

 

 

53,257

 

Home equity - junior lien

 

67,948

 

 

66,837

 

 

70,947

 

 

67,105

 

 

66,323

 

Consumer

 

43,937

 

 

45,263

 

 

48,058

 

 

47,450

 

 

43,630

 

Total loans and leases

$

2,763,880

 

$

2,525,709

 

$

2,548,171

 

$

2,534,483

 

$

2,577,960

 

  Asset Quality Data Non-accrual loans

$

3,030

 

$

3,273

 

$

2,611

 

$

3,982

 

$

6,422

 

Troubled debt restructurings

 

37

 

 

39

 

 

42

 

 

792

 

 

817

 

Loans past due 90 days or more and still accruing

 

861

 

 

454

 

 

745

 

 

212

 

 

134

 

Total non-performing loans

 

3,928

 

 

3,766

 

 

3,398

 

 

4,986

 

 

7,373

 

Other real estate owned

 

563

 

 

878

 

 

1,018

 

 

1,604

 

 

360

 

Total non-performing assets

$

4,491

 

$

4,644

 

$

4,416

 

$

6,590

 

$

7,733

 

Non-performing loans to total loans

 

0.14

%

 

0.15

%

 

0.13

%

 

0.20

%

 

0.29

%

Non-performing assets to total assets

 

0.13

%

 

0.14

%

 

0.13

%

 

0.20

%

 

0.23

%

Allowance for loan and lease losses to total loans

 

0.96

%

 

1.05

%

 

1.00

%

 

1.00

%

 

0.96

%

Allowance for loan and lease losses to average loans

 

0.99

%

 

1.04

%

 

1.01

%

 

1.00

%

 

0.98

%

Allowance for loan and lease losses to non-performing loans

 

673

%

 

703

%

 

751

%

 

506

%

 

337

%

Net charge-offs (recoveries)

$

48

 

$

(330

)

$

(312

)

$

386

 

$

565

 

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

 

0.00

%

 

-0.01

%

 

-0.01

%

 

0.02

%

 

0.02

%

  Other Information Total assets under management (in millions)

$

3,068

 

$

2,970

 

$

2,765

 

$

2,969

 

$

2,852

 

Full-time equivalent employees

 

615

 

 

596

 

 

591

 

 

593

 

 

581

 

(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. The Company 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 6/30/19 3/31/19 12/31/18 9/30/18 6/30/18   Total stockholders' equity - GAAP (a)

$

389,365

 

$

377,994

 

$

366,500

 

$

352,980

 

$

345,515

 

Less: Goodwill

 

(12,825

)

 

(682

)

 

(682

)

 

(682

)

 

(682

)

Less: Core deposit intangible

 

(2,462

)

 

(1,015

)

 

(1,057

)

 

(1,098

)

 

(1,139

)

Tangible common equity - Non-GAAP (c)

$

374,078

 

$

376,297

 

$

364,761

 

$

351,200

 

$

343,694

 

  Total assets - GAAP (b)

$

3,463,823

 

$

3,281,016

 

$

3,302,924

 

$

3,324,797

 

$

3,323,840

 

Less: Goodwill

 

(12,825

)

 

(682

)

 

(682

)

 

(682

)

 

(682

)

Less: Core deposit intangible

 

(2,462

)

 

(1,015

)

 

(1,057

)

 

(1,098

)

 

(1,139

)

Tangible assets - Non-GAAP (d)

$

3,448,536

 

$

3,279,319

 

$

3,301,185

 

$

3,323,017

 

$

3,322,019

 

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

 

11.24

%

 

11.52

%

 

11.10

%

 

10.62

%

 

10.40

%

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

 

10.85

%

 

11.47

%

 

11.05

%

 

10.57

%

 

10.35

%

  Total shares outstanding (e)

 

22,721

 

 

22,823

 

 

22,749

 

 

22,746

 

 

22,746

 

  Book value per share - GAAP (a/e)

$

17.14

 

$

16.56

 

$

16.11

 

$

15.52

 

$

15.19

 

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

 

16.46

 

 

16.49

 

 

16.03

 

 

15.44

 

 

15.11

 

  (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 expense 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.

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

 

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

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