GlobeNewswire Inc | Jan 27, 2021 07:00AM EST

January 27, 2021

LOUISVILLE, Ky., Jan. 27, 2021 (GLOBE NEWSWIRE) -- 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 earnings for the fourth quarter ended December 31, 2020. Net income for the fourth quarter increased 7% to $17.7 million, or $0.78 per diluted share, compared with net income of $16.6 million, or $0.73 per diluted share, for the fourth quarter of 2019.

Net income for 2020 was $58.9 million, or $2.59 per diluted share, compared to $66.1 million, or $2.89 per diluted share, in 2019. Operating results for the year were lower compared to the record results posted in 2019, primarily due to pandemic-related increases in loan loss provisioning.

(dollar amounts in thousands, 4Q20 3Q20 4Q19except per share data)Net interest income $ 36,252 $ 33,695 $ 32,756 Provision for credit losses 1,400 4,418 - Non-interest income 13,698 13,043 12,987 Non-interest expenses 28,129 26,196 26,153 Income before income tax expense 20,421 16,124 19,590 Income tax expense 2,685 1,591 2,941 Net income $ 17,736 $ 14,533 $ 16,649 Net income per share, diluted $ 0.78 $ 0.64 $ 0.73 Net interest margin 3.35 % 3.26 % 3.71 %Efficiency ratio 56.26 % 55.96 % 57.11 %Tangible common equity to tangible 9.28 % 9.52 % 10.55 %assets^(1)Annualized return on average 16.27 % 13.57 % 16.48 %equityAnnualized return on average 1.56 % 1.34 % 1.78 %assets

Stock Yards Bancorp delivered record earnings in the fourth quarter 2020, driven by an expanded balance sheet fueled by record quarterly loan growth, strong revenue and solid credit quality, said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. The unprecedented events in 2020 and the beginning of 2021 have brought serious economic, health and personal challenges to us all. Given the ongoing impacts of a global pandemic, we remain focused on supporting our customers, communities and employees.

Since April, our active participation in the Small Business Administrations (SBA) Paycheck Protection Program (PPP) has helped service the needs of our customers and our local communities. Our success in executing this relief effort allowed us to assist nearly 3,400 customers and originate $657 million in loans while adding new relationships with strong future growth opportunities. As a result, we recorded interest and fee income related to PPP loans of $13.6 million during 2020. Approximately 46% of the net deferred fee income related to the PPP loan portfolio was recognized in 2020, with a significant portion of the remaining net deferred fees expected to be recognized in the first half of 2021.

The first round of PPP expired on August 8, 2020 and as of year-end, we had submitted 520 forgiveness applications to the SBA totaling $170 million and received payment from the SBA for 333 borrowers. Approximately $2.1 million of the income recognized during the fourth quarter related to loan payoffs (fee acceleration). We have $10.5 million in net unrecognized fees related to the PPP that would be recognized in income immediately once the loans are paid off or forgiven by the SBA.

The Consolidated Appropriations Act was signed into law on December 27, 2020, providing new COVID-19 stimulus relief and it included $284 billion allocated for a second round of PPP lending through March 31, 2021. The program offers new PPP loans for companies that did not receive PPP funds in 2020 in addition to second draw loans targeted at hard-hit businesses that have exhausted their initial PPP proceeds. While we are very early in the process, we anticipate successfully executing this new round of relief efforts and helping our customers and communities. With the new provisions for this second draw, we believe the earnings potential is meaningful, but will likely not meet the level of contribution from the initial PPP loan program, said Hillebrand.

Despite solid traditional credit metrics, under the CECL methodology we recorded a significant provision for credit losses during the past year. The 2020 provision for credit losses was $16.9 million, compared to $1.0 million in 2019, based on the expected impact of the COVID-19 pandemic on forecasted unemployment and changing macro-economic conditions, as well as qualitative factor adjustments. We feel that we are well positioned as we navigate through the pandemic, having built up significant loan loss reserves, excluding PPP loans, of 1.74%(2) at December 31, 2020, said Hillebrand.

Additional key factors impacting the fourth quarter of 2020 results included:

-- Record diluted quarterly EPS exceeding the previous record set in the third quarter of 2019. -- Record quarterly loan growth and loan production, concentrated in the commercial & industrial, construction & land development and commercial real estate lending portfolios on a linked quarter basis. -- COVID-19 related loan deferrals declined significantly to 1.24% of total loans at the end of the fourth quarter of 2020 from 4.25% of total loans three months earlier. -- Deposit balances remained at record levels, as consumers and businesses continued to build cash reserves. -- Net interest income increased $3.5 million, or 11%, over the fourth quarter of 2019, driven by PPP related fees and a significant decline in cost of funds. -- Net interest margin (NIM) compressed 36 basis points to 3.35% compared to the fourth quarter a year ago. NIM continued to be negatively impacted by loan yield contraction driven by low yielding PPP loans, lower interest rates and excess balance sheet liquidity. -- Lower linked quarter loan loss provisioning. -- Non-interest income increased over the fourth quarter of 2019, reflecting higher debit/credit card income, growing treasury management fees and continued strong mortgage banking income. While slowly rebounding, deposit service charges continue to be impacted by the pandemic and changes in customer behavior remain subdued. -- Non-interest expenses reflected moderate increases in compensation, technology and communication and FDIC insurance premiums. Tax credit amortization expense increased $2.1 million related to the completion of a large tax project during the fourth quarter of 2020. Also, an overall increase in line of credit usage led to a reduction in the reserve for off-balance sheet credit exposures.

Highlights for the year ended December 31, 2020:

-- Record total revenue, comprising fully taxable equivalent net interest income and non-interest income, of nearly $188 million. -- Deposit growth and loan production surpassed record levels. -- Record WM&T services income of $23.4 million boosted by record new business generation and historic market performance. -- Despite the pandemic, card income, treasury management fees and brokerage income continued to set new highs.

Hillebrand added, We were honored to be recognized nationally for our customer service and for our performance metrics in 2020. In December, we were recognized by Bank Director for our track record of successfully managing the Bank through economic cycles based on our total shareholder return over the 20-year period ended June 30, 2020, ranking #12 on the list of nationally recognized financial institutions. In September, we were named to Newsweeks Americas Best Banks 2021 list as the best small bank in the state of Kentucky. Additionally, in September we were named once again to the prestigious Piper Sandler Bank and Thrift Sm-All Stars: Class of 2020 list, being one of only 35 institutions to receive this honor. Being recognized for these awards is great affirmation of our extraordinary staff and their commitment to supporting our customers and communities.

Results of Operations Fourth Quarter 2020 Compared with Fourth Quarter 2019

Net interest income the Companys largest source of revenue increased $3.5 million, or 11%, to $36.3 million, driven primarily by PPP loans and related fees and a significant decline in cost of funds.

-- Total interest income increased $508,000, or 1%, to $38.3 million, primarily due to a 5% increase in interest income on loans resulting from PPP interest/fee income partly offset by continued yield contraction. -- Interest expense declined $3.0 million, or 59%, to $2.1 million. Interest expense on deposits decreased $2.7 million, or 60%, as the cost of interest bearing deposits declined to 0.27% in the fourth quarter of 2020 from 0.79% in the fourth quarter a year ago. The decline in interest bearing deposit costs more than offset the significant increase in average balances, as the Bank benefited from strategically lowering stated deposit rates in tandem with the 225 basis point drop in the Federal Reserves short-term interest rates between August of 2019 and March of 2020. -- NIM decreased 36 basis points to 3.35% for the fourth quarter of 2020 from 3.71%. The NIM contraction was primarily driven by lower interest rates, coupled with higher levels of excess balance sheet liquidity. The Company has maintained significantly higher levels of balance sheet liquidity driven in part by the funding of PPP loans through deposit growth. The PPP loan portfolio had a 9 basis point positive impact to NIM, while excess liquidity had a 18 basis point negative impact.

Loan loss provisioning for the fourth quarter of 2020 reflected record quarter loan growth and was positively impacted by improvement in the future unemployment forecast offset by qualitative factors in the allowance for credit loss model.

Non-interest income increased $711,000, or 5%, to $13.7 million.

-- Deposit service charges decreased $319,000, or 23%, primarily related to a decline in non-sufficient funds fees collected and an overall shift in pandemic related customer behavior. -- Debit/credit card income increased $110,000, or 5%. Card income, which fell drastically in April, rebounded in June, and continued to climb through the end of the fourth quarter. -- Treasury management fees increased by $137,000, or 10%, primarily due to strong product sales and customer base expansion. This activity offset the significant decline in pandemic related transaction volume during the year. -- Mortgage banking revenue increased $778,000, or 84%, to $1.7 million for the fourth quarter of 2020. Continued low long-term mortgage rates continued to entice mortgage refinancing and produced a record number of loan sales. -- Net investment product sales commissions and fees increased $109,000, or 29%, boosted by increased customer trading activity.

Non-interest expenses increased $2.0 million, or 8%, to $28.1 million.

-- Compensation expense increased $599,000, or 4%, primarily due to annual merit-based salary increases, an increase in full time equivalent employees, and increased incentive compensation. -- Employee benefits decreased $337,000, or 13%, primarily due to lower than projected health insurance expense, partially offset by elevated 401(k) expense tied to the increase in full time equivalent employees. -- Technology and communication expense for the fourth quarter of 2020 increased $639,000, or 39%, compared with the prior year quarter, consistent with expanding customer-facing software and system functionality, as well as increased licensing and maintenance expense, higher mortgage loan processing expenses, treasury management customer expansion and the migration to a hosted core environment during the third quarter of 2020. -- Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business, continued to be significantly below the prior period based on reduced travel and customer entertainment expense.

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

Total loans increased $687 million, or 24%, to $3.5 billion. Excluding the PPP loan portfolio, total loans increased $136 million, or 5%, during the year, with $122 million of growth in the commercial real estate portfolio and $28 million of growth in residential real estate loans, partially offset by a $37 million decrease in the commercial & industrial portfolio tied to line of credit usage.

The Company has made short-term loan modifications involving primarily full-payment deferrals in response to requests from borrowers who experienced business or personal cash flow interruptions related to the pandemic. Through the close of the fourth quarter, there were approximately $37 million in full payment deferral balances, with the largest concentration in the commercial real estate portfolio. Pursuant to the CARES Act, these loan deferrals are not included in non-performing loan statistics.

Full payment loan deferral balances have fluctuated as follows:

($'s in millions) Total Deferrals % of Total Loans*December 31, 2020 $ 37 1.24 %November 30, 2020 41 1.42 %October 31, 2020 65 2.28 %September 30, 2020 120 4.25 %June 30, 2020 502 17.72 % * Excluding PPP loans

The Companys management team continues to analyze the evolving economic conditions in its markets while closely monitoring credit metrics, particularly related to the following segments comprising deferrals in the Banks portfolio:

(in millions) December 31, 2020 September 30, 2020Lodging/hotel $ 16 $ 30Residential real estate secured 2 18Real estate/land development 1 12Retail center 2 12Parking lot/parking garage/storage - 11Tradeshows/events 8 10Other 8 27 Total Deferrals $ 37 $ 120

Asset quality, which has trended within a narrow range over the past several years, remained strong. Non-performing loans were $13.2 million, or 0.44%(2) of total loans (excluding PPP) outstanding compared to $12.1 million, or 0.42% of total loans outstanding at December 31, 2019.

Non-accrual loans increased $156,000 during the fourth quarter over the prior quarter and increased $1 million compared to a year ago. Approximately $10 million of the non-accrual loan balance at December 31, 2020 relates to one commercial real estate non-owner occupied relationship that was placed on non-accrual status during the second quarter.

During the fourth quarter of 2020, the Company recorded net loan recoveries totaling $19,000 compared to net loan charge-offs of $86,000 in the fourth quarter of 2019.

Total deposits increased $855 million, or 27%, from December 31, 2019 to December 31, 2020, with non-interest bearing deposits representing $377 million of the increase. The mix of deposits has also improved with higher-cost time deposits declining $40 million during 2020. Both period end and average deposit balances ended at record levels at December 31, 2020. Federal programs such as the PPP and stimulus checks have boosted deposit balances.

At December 31, 2020, the Company remained well capitalized, the highest regulatory capital rating for financial institutions, with increases in all regulatory capital ratios. Total equity to assets was 9.56% and the tangible common equity ratio was 9.28%(1) at December 31, 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.

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

No shares were repurchased in 2020 and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan which expires in May 2021.

Results of Operations Fourth Quarter 2020 Compared with Third Quarter 2020

Net interest income increased $2.6 million over the prior quarter to $36.3 million, led by loan growth, PPP fee recognition and the continued decline in cost of funds.

Loan provisioning in 2020 has been significantly impacted by the economic crisis and its impact upon the future unemployment forecast within the allowance for credit loss model, qualitative factor adjustments and loan growth.

Non-interest income increased $655,000 to $13.7 million. Increases in wealth management and trust service fees, debit/credit card income and higher treasury management fees more than offset a modest fourth quarter reduction in mortgage banking income.

Non-interest expenses increased $1.9 million to $28.1 million.

-- Compensation expense increased $772,000 to $14.1 million compared with the third quarter of 2020 due to increased incentive compensation. -- Employee benefits decreased $680,000 primarily due to lower than projected health insurance expense. -- Improvement in line of credit usage led to a reduction in the reserve for off-balance sheet credit exposure of $900,000 during the fourth quarter. On a linked quarter basis, this expense category improved by $1.5 million.

Financial Condition December 31, 2020, Compared with September 30, 2020

Total assets increased $244 million on a linked quarter basis to $4.6 billion, reflecting significant increases in both loans and investment securities.

Total loans increased $59 million on a linked quarter basis to $3.5 billion at quarter end and the deployment of excess liquidity led to a $158 million increase in securities. Total line of credit usage increased to 38% as of December31, 2020, from 37% at September 30, 2020. C&I line usage increased to 28% as of December 31, 2020, compared to 26% at September 30, 2020.

Total deposits increased $234 million, or 6%, on a linked quarter basis due to higher deposit levels consistent with the seasonal increase in public funds and growth in balances with both existing and new customers. The economic slow-down and uncertainty surrounding the pandemic has resulted in the customer base maintaining generally higher deposit balances.

Stockholders equity increased $12 million in the fourth quarter of 2020 compared with the prior quarter, with net income of $17.7 million and the positive change in equity related to the Banks investment portfolio offset by dividends declared.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $4.6 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 Companys 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 Companys 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 Companys 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 Companys customers; the effects of government stimulus programs such as the Consolidated Appropriations Act; the effects of the FRBs 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 Companys non-performing assets, the demand for the Companys loans or its other products and services, other aspects of the Companys business and operations, and financial markets and economic growth, and other risks detailed in the Companys 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 Companys Form 10-Q for the three months ended September 30, 2020 and Form 10-K for the year ended December31, 2019.

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

Stock YardsBancorp, Inc.Financial Information(unaudited)Fourth Quarter2020 Earnings Release(In thousandsunless otherwisenoted) Three Months Ended Twelve Months Ended December 31, December 31,Income 2020 2019 2020 2019Statement Data Net interestincome, fully $ 36,301 $ 32,810 $ $ tax equivalent 136,133 125,571(3)Interest income:Loans $ 36,007 $ 34,393 $ $ 137,699 134,469Federal fundssold andinterest 65 804 738 2,933bearing duefrom banksMortgage loans 174 61 533 182held for saleSecurities 2,093 2,573 8,901 10,308Total interest 38,339 37,831 147,871 147,892incomeInterest expense:Deposits 1,802 4,526 10,478 20,560Securitiessold under agreements torepurchase andothershort-term 8 63 72 318borrowingsFederal HomeLoan Bank(FHLB) 277 486 1,400 1,666advances andotherlong-term debtTotal interest 2,087 5,075 11,950 22,544expenseNet interest 36,252 32,756 135,921 125,348incomeProvision for 1,400 - 16,918 1,000credit lossesNet interestincome after 34,852 32,756 119,003 124,348provision forcredit lossesNon-interest income:Wealthmanagement and 5,805 5,804 23,406 22,643trust servicesDepositservice 1,080 1,399 4,161 5,193chargesDebit andcredit card 2,219 2,109 8,480 8,123incomeTreasurymanagement 1,506 1,369 5,407 4,992feesMortgage 1,708 930 6,155 2,934banking incomeNet investmentproduct sales 487 378 1,775 1,498commissionsand feesBank owned 166 182 693 1,031life insuranceOther 727 816 1,822 3,014Totalnon-interest 13,698 12,987 51,899 49,428incomeNon-interest expenses:Compensation 14,072 13,473 51,368 50,319Employee 2,173 2,510 11,064 10,691benefitsNet occupancy 2,209 2,374 8,414 8,379and equipmentTechnology and 2,275 1,636 8,500 7,098communicationDebit andcredit card 698 613 2,606 2,493processingMarketing andbusiness 835 1,367 2,383 3,627developmentPostage,printing and 423 434 1,778 1,652suppliesLegal and 597 433 2,392 3,014professionalAmortizationof investments 2,955 837 3,096 1,078in tax creditpartnershipsCapital anddeposit based 1,055 1,006 4,386 3,870taxesCredit lossexpense foroff-balance (900) - 1,500 -sheetexposuresOther 1,737 1,470 5,672 5,895Totalnon-interest 28,129 26,153 103,159 98,116expensesIncome beforeincome tax 20,421 19,590 67,743 75,660expenseIncome tax 2,685 2,941 8,874 9,593expenseNet income $ 17,736 $ 16,649 $ $ 58,869 66,067 Net income per $ $ $ $ share - Basic 0.79 0.74 2.61 2.92Net income pershare - 0.78 0.73 2.59 2.89DilutedCash dividenddeclared per 0.27 0.27 1.08 1.04share Weightedaverage shares 22,593 22,493 22,563 22,598- BasicWeightedaverage shares 22,794 22,760 22,768 22,865- Diluted December 31,Balance Sheet 2020 2019Data Loans $ 3,531,596 $ 2,845,016Allowance for 51,920 26,791credit lossesTotal assets 4,608,629 3,724,197Non-interestbearing 1,187,057 810,475depositsInterestbearing 2,801,577 2,323,463depositsFHLB advances 31,639 79,953Stockholders' 440,701 406,297equityTotal shares 22,692 22,604outstandingBook value per $ $ share (1) 19.42 17.97Tangiblecommon equity 18.78 17.32per share (1)Market value 40.48 41.06per share Stock YardsBancorp, Inc.Financial Information(unaudited)Fourth Quarter2020 Earnings Release Three Months Ended Twelve Months Ended December 31, December 31,AverageBalance Sheet 2020 2019 2020 2019Data Federal fundssold and interest $ 271,277 $ 187,865 $ 229,905 $ 136,514bearing duefrom banksMortgage loans 28,951 5,889 20,156 3,836held for saleAvailable forsale debt 510,677 476,360 453,082 436,511securitiesFHLB stock 11,284 11,317 11,284 10,858Loans 3,483,298 2,828,142 3,304,909 2,702,626Total interest 4,305,487 3,509,573 4,019,336 3,290,345earning assetsTotal assets 4,512,874 3,709,250 4,217,593 3,480,998Interestbearing 2,689,103 2,284,195 2,507,545 2,143,993depositsTotal deposits 3,888,247 3,108,640 3,608,487 2,909,096Securitiessold under agreement torepurchase andothershort-term 55,825 49,881 49,820 49,737borrowingsFHLB advancesand other 48,771 80,457 61,483 71,677long-termborrowingsTotal interestbearing 2,793,699 2,414,533 2,618,848 2,265,407liabilitiesTotalstockholders' 433,596 400,870 420,119 386,563equity Performance RatiosAnnualizedreturn on 1.56% 1.78% 1.40% 1.90%average assetsAnnualizedreturn on 16.27% 16.48% 14.01% 17.09%average equityNet interestmargin, fully 3.35% 3.71% 3.39% 3.82%tax equivalentNon-interestincome tototal revenue, 27.40% 28.36% 27.60% 28.24%fully taxequivalentEfficiencyratio, fully 56.26% 57.11% 54.86% 56.07%tax equivalent(4) Capital Ratios Totalstockholders'equity to 9.56% 10.91%total assets(1)Tangiblecommon equity 9.28% 10.55%to tangibleassets (1)Averagestockholders' 9.96% 11.10%equity toaverage assetsTotalrisk-based 13.36% 12.85%capitalCommon equitytier 1 12.23% 12.02%risk-basedcapitalTier 1risk-based 12.23% 12.02%capitalLeverage 9.57% 10.60% Loan SegmentationCommercialreal estate - $ $ non-owner 833,470 746,283occupiedCommercialreal estate - 508,672 474,329owner occupiedCommercial and 802,422 838,800industrialCommercial andindustrial - 550,186 -PPPResidentialreal estate - 239,191 217,606owner occupiedResidentialreal estate - 140,930 134,995non-owneroccupiedConstructionand land 291,764 255,816developmentHome equitylines of 95,366 103,854creditConsumer 44,606 47,467Leases 14,786 16,003Credit cards - 10,203 9,863commercialTotal loans $ 3,531,596 $ 2,845,016and leases Asset Quality DataNon-accrual $ $ loans 12,514 11,494Troubled debt 16 34restructuringsLoans past due90 days or 649 535more and stillaccruingTotalnon-performing 13,179 12,063loansOther real 281 493estate ownedTotal non-performing $ 13,460 $ 12,556assetsNon-performingloans to total 0.37% 0.42%loansNon-performingassets to 0.29% 0.34%total assetsAllowance forcredit losses 1.47% 0.94%on loans tototal loansAllowance forcredit losses 1.57% 0.99%on loans toaverage loansAllowance forcredit losseson loans to 394% 222%non-performingloansNet (charge-offs) $ 19 $ (86) $ (1,645) $ 257recoveriesNet(charge-offs)recoveries to 0.00% 0.00% -0.05% 0.01%average loans(5) Stock YardsBancorp, Inc.Financial Information(unaudited)Fourth Quarter2020 Earnings Release Quarterly ComparisonIncome 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19Statement Data Net interestincome, fully tax $ 36,301 $ 33,768 $ 33,573 $ 32,494 $ 32,810equivalent(3)Net interest $ 36,252 $ 33,695 $ 33,528 $ $ income 32,446 32,756Provision for 1,400 4,418 5,550 5,550 -credit lossesNet interestincome after 34,852 29,277 27,978 26,896 32,756provision forcredit lossesNon-interest income:Wealthmanagement and 5,805 5,657 5,726 6,218 5,804trust servicesDepositservice 1,080 998 800 1,283 1,399chargesDebit andcredit card 2,219 2,218 2,063 1,980 2,109incomeTreasurymanagement 1,506 1,368 1,249 1,284 1,369feesMortgage 1,708 1,979 1,622 846 930banking incomeNet investmentproduct sales 487 431 391 466 378commissionsand feesBank owned 166 172 176 179 182life insuranceOther 727 220 595 280 816Totalnon-interest 13,698 13,043 12,622 12,536 12,987incomeNon-interest expenses:Compensation 14,072 13,300 11,763 12,233 13,473Employee 2,173 2,853 2,871 3,167 2,510benefitsNet occupancy 2,209 2,235 2,089 1,881 2,374and equipmentTechnology and 2,275 2,265 1,947 2,013 1,636communicationDebit andcredit card 698 649 603 656 613processingMarketing andbusiness 835 523 465 560 1,367developmentPostage,printing and 423 472 442 441 434suppliesLegal and 597 544 628 623 433professionalAmortizationof investments 2,955 52 53 36 837in tax creditpartnershipsCapital anddeposit based 1,055 1,076 1,225 1,030 1,006taxesCredit lossexpense foroff-balance (900) 550 1,475 375 -sheetexposuresOther 1,737 1,677 1,323 935 1,470Totalnon-interest 28,129 26,196 24,884 23,950 26,153expensesIncome beforeincome tax 20,421 16,124 15,716 15,482 19,590expenseIncome tax 2,685 1,591 2,348 2,250 2,941expenseNet income $ 17,736 $ 14,533 $ 13,368 $ $ 13,232 16,649 Net income per $ $ $ $ $ share - Basic 0.79 0.64 0.59 0.59 0.74Net income pershare - 0.78 0.64 0.59 0.58 0.73DilutedCash dividenddeclared per 0.27 0.27 0.27 0.27 0.27share Weightedaverage shares 22,593 22,582 22,560 22,516 22,493- BasicWeightedaverage shares 22,794 22,802 22,739 22,736 22,760- Diluted Quarterly ComparisonBalance Sheet 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19Data Cash and due $ 43,179 $ 49,517 $ 46,362 $ $ from banks 47,662 46,863Federal fundssold andinterest 274,766 241,486 178,032 206,849 202,861bearing duefrom banksMortgage loans 22,547 23,611 17,364 8,141 8,748held for saleAvailable forsale debt 586,978 429,184 485,249 445,813 470,738securitiesFHLB stock 11,284 11,284 11,284 11,284 11,284Loans 3,531,596 3,472,481 3,464,077 2,937,366 2,845,016Allowance for 51,920 50,501 47,708 42,143 26,791credit lossesTotal assets 4,608,629 4,365,129 4,334,533 3,784,586 3,724,197Non-interestbearing 1,187,057 1,180,001 1,205,253 858,883 810,475depositsInterestbearing 2,801,577 2,574,517 2,521,903 2,339,995 2,323,463depositsSecuritiessold under 47,979 40,430 42,722 32,366 31,985agreements torepurchaseFederal funds 11,464 9,179 8,401 9,747 10,887purchasedFHLB advances 31,639 56,536 61,432 69,191 79,953Stockholders' 440,701 428,598 420,231 409,702 406,297equityTotal shares 22,692 22,692 22,667 22,665 22,604outstandingBook value per $ $ $ $ $ share (1) 19.42 18.89 18.54 18.08 17.97Tangiblecommon equity 18.78 18.25 17.89 17.43 17.32per share (1)Market value 40.48 34.04 40.20 28.93 41.06per share Capital Ratios Totalstockholders'equity to 9.56% 9.82% 9.69% 10.83% 10.91%total assets(1)Tangiblecommon equity 9.28% 9.52% 9.39% 10.48% 10.55%to tangibleassets (1)Averagestockholders' 9.61% 9.85% 9.66% 10.88% 10.81%equity toaverage assetsTotalrisk-based 13.36% 13.79% 13.50% 12.75% 12.85%capitalCommon equitytier 1 12.23% 12.61% 12.39% 11.81% 12.02%risk-basedcapitalTier 1risk-based 12.23% 12.61% 12.39% 11.81% 12.02%capitalLeverage 9.57% 9.70% 9.50% 10.78% 10.60% Stock YardsBancorp, Inc.Financial Information(unaudited)Fourth Quarter2020 Earnings Release Quarterly ComparisonAverageBalance Sheet 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19Data Federal fundssold and interest $ 271,277 $ 194,100 $ 285,617 $ 168,563 $ 187,865bearing duefrom banksMortgage loans 28,951 28,520 18,010 4,953 5,889held for saleAvailable forsale debt 510,677 442,089 412,368 449,610 476,360securitiesLoans 3,483,298 3,444,407 3,396,767 2,891,668 2,828,142Total interest 4,305,487 4,120,400 4,124,046 3,526,078 3,509,573earning assetsTotal assets 4,512,874 4,325,500 4,317,430 3,710,119 3,709,250Interestbearing 2,689,103 2,521,838 2,500,315 2,316,774 2,284,195depositsTotal deposits 3,888,247 3,707,845 3,713,451 3,120,242 3,108,640Securitiessold under agreement torepurchase andothershort-term 55,825 49,709 49,940 43,739 49,881borrowingsFHLB advances 48,771 59,487 63,896 73,939 80,457Total interestbearing 2,793,699 2,631,034 2,614,151 2,434,452 2,414,533liabilitiesTotalstockholders' 433,596 426,049 416,920 403,702 400,870equity Performance RatiosAnnualizedreturn on 1.56% 1.34% 1.25% 1.43% 1.78%average assetsAnnualizedreturn on 16.27% 13.57% 12.90% 13.18% 16.48%average equityNet interestmargin, fully 3.35% 3.26% 3.27% 3.71% 3.71%tax equivalentNon-interestincome tototal revenue, 27.40% 27.86% 27.32% 27.84% 28.36%fully taxequivalentEfficiencyratio, fully 56.26% 55.96% 53.87% 53.19% 57.11%tax equivalent(4) Loans SegmentationCommercialreal estate - $ 833,470 $ 828,328 $ 815,464 $ $ non-owner 799,284 746,283occupiedCommercialreal estate - 508,672 492,825 472,457 476,534 474,329owner occupiedCommercial and 802,422 731,850 764,480 883,868 838,800industrialCommercial andindustrial - 550,186 642,056 630,082 - -PPPResidentialreal estate - 239,191 211,984 215,891 219,221 217,606owner occupiedResidentialreal estate - 140,930 143,149 139,121 134,734 134,995non-owneroccupiedConstructionand land 291,764 257,875 255,447 246,040 255,816developmentHome equitylines of 95,366 97,150 103,672 107,121 103,854creditConsumer 44,606 44,161 43,758 44,939 47,467Leases 14,786 13,981 14,843 15,476 16,003Credit cards - 10,203 9,122 8,862 10,149 9,863commercialTotal loans $ 3,531,596 $ 3,472,481 $ 3,464,077 $ 2,937,366 $ 2,845,016and leases Asset Quality DataNon-accrual $ 12,514 $ 12,358 $ 14,262 $ $ loans 4,235 11,494Troubled debt 16 18 45 52 34restructuringsLoans past due90 days or 649 1,152 48 1,762 535more and stillaccruingTotalnon-performing 13,179 13,528 14,355 6,049 12,063loansOther real 281 612 493 493 493estate ownedTotal non-performing $ 13,460 $ 14,140 $ 14,848 $ 6,542 $ 12,556assetsNon-performingloans to total 0.37% 0.39% 0.41% 0.21% 0.42%loansNon-performingassets to 0.29% 0.32% 0.34% 0.17% 0.34%total assetsAllowance forcredit losses 1.47% 1.45% 1.38% 1.43% 0.94%on loans tototal loansAllowance forcredit losses 1.49% 1.47% 1.40% 1.46% 0.95%on loans toaverage loansAllowance forcredit losseson loans to 394% 373% 332% 697% 222%non-performingloansNet (charge-offs) $ 19 $ (1,625) $ 15 $ (54) $ (86)recoveriesNet(charge-offs)recoveries to 0.00% -0.05% 0.00% 0.00% 0.00%average loans(5) Other InformationTotal assetsunder $ $ $ $ $ management (in 3,852 3,414 3,204 2,961 3,320millions)Full-timeequivalent 641 626 620 618 615employees (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. Bancorpprovides the tangible book value per share, a non-GAAP measure, in addition tothose defined by banking regulators, because of its widespread use by investorsas a means to evaluate capital adequacy: Quarterly Comparison(In thousands,except per 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19share data) Totalstockholders' $ 440,701 $ 428,598 $ 420,231 $ $ equity - GAAP 409,702 406,297(a)Less: Goodwill (12,513) (12,513) (12,513) (12,513) (12,513)Less: Coredeposit (1,962) (2,042) (2,122) (2,203) (2,285)intangibleTangible common equity $ 426,226 $ 414,043 $ 405,596 $ 394,986 $ 391,499- Non-GAAP (c) Total assets - $ 4,608,629 $ 4,365,129 $ 4,334,533 $ 3,784,586 $ 3,724,197GAAP (b)Less: Goodwill (12,513) (12,513) (12,513) (12,513) (12,513)Less: Coredeposit (1,962) (2,042) (2,122) (2,203) (2,285)intangibleTangibleassets - $ 4,594,154 $ 4,350,574 $ 4,319,898 $ 3,769,870 $ 3,709,399Non-GAAP (d) Totalstockholders'equity to 9.56% 9.82% 9.69% 10.83% 10.91%total assets -GAAP (a/b)Tangiblecommon equityto tangible 9.28% 9.52% 9.39% 10.48% 10.55%assets -Non-GAAP (c/d) Total shares outstanding 22,692 22,692 22,667 22,665 22,604(e) Book value per share - GAAP $ 19.42 $ 18.89 $ 18.54 $ 18.08 $ 17.97(a/e)Tangiblecommon equity 18.78 18.25 17.89 17.43 17.32per share -Non-GAAP (c/e) (2) - Allowance for credit losses on loans to total non-PPP loans representsthe allowance for credit losses, divided by total loans less PPP loans.Non-performing loans to total non-PPP loans represents non-performing loans,divided by total loans less PPP loans. Bancorp believes these non-GAAPdisclosures are important because it provides a comparable ratio aftereliminating the PPP loans, which are fully guaranteed by the U.S. SBA and havenot been allocated for within the allowance for credit losses and are not atrisk of non-performance. Quarterly Comparison(Dollars in 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19thousands) Total Loans - $ 3,531,596 $ 3,472,481 $ 3,464,077 $ 2,937,366 $ 2,845,016GAAP (a)Less: PPP (550,186) (642,056) (630,082) - -loansTotal non-PPPLoans - 2,981,410 $ 2,830,425 $ 2,833,995 $ 2,937,366 $ 2,845,016Non-GAAP (b) Allowance for credit losses $ 51,920 $ 50,501 $ 47,708 $ 42,143 $ 26,791(c)Non-performing 13,179 13,528 14,355 6,049 12,063loans (d) Allowance forcredit losseson loans to 1.47% 1.45% 1.38% 1.43% 0.94%total loans -GAAP (c/a)Allowance forcredit losseson loans to 1.74% 1.78% 1.68% 1.43% 0.94%total loans -Non-GAAP (c/b) Non-performingloans to total 0.37% 0.39% 0.41% 0.21% 0.42%loans - GAAP(d/a)Non-performingloans to total 0.44% 0.48% 0.51% 0.21% 0.42%loans -Non-GAAP (d/b) (3) - Interest income on a fully tax equivalent basis includes the additionalamount of interest income that would have been earned if investments in certaintax-exempt interest earning assets had been made in assets subject to federal,state and local taxes yielding the same after-tax income. (4) - The efficiency ratio, a non-GAAP measure, equals total non-interestexpenses divided by the sum of fully tax equivalent net interest income andnon-interest income. The ratio excludes net gains (losses) on sales, calls, andimpairment of investment securities, if applicable. In addition to theefficiency ratio normally presented, Bancorp considers an adjusted efficiencyratio. Bancorp believes this ratio is important because it provides acomparable ratio after eliminating the fluctuation in non-interest expensesrelated to amortization of investments in tax credit partnerships. Quarterly Comparison(Dollars in 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19thousands) Totalnon-interest $ 28,129 $ 26,196 $ 24,884 $ $ expenses - 23,950 26,153GAAP (a)Less:Amortizationof investments (2,955) (52) (53) (36) (837)in tax creditpartnershipsTotalnon-interest $ 25,174 $ 26,144 $ 24,831 $ $ expenses - 23,914 25,316Non-GAAP (c) Total netinterest $ 36,301 $ 33,768 $ 33,573 $ $ income, fully 32,494 32,810tax equivalentTotalnon-interest 13,698 13,043 12,622 12,536 12,987incomeLess: Gain/loss on sale - - - - -of securitiesTotal revenue $ 49,999 $ 46,811 $ 46,195 $ $ - GAAP (b) 45,030 45,795 Efficiencyratio - GAAP 56.26% 55.96% 53.87% 53.19% 57.11%(a/b)Efficiencyratio - 50.35% 55.85% 53.75% 53.11% 55.28%Non-GAAP (c/b) (5) - Quarterly net (charge-offs)recoveries to average loans ratios are not annualized.