GlobeNewswire Inc | Jul 28, 2021 07:30AM EDT

July 28, 2021

LOUISVILLE, Ky., July 28, 2021 (GLOBE NEWSWIRE) -- Stock Yards Bancorp, Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust Company, with offices in Louisville, Central and Eastern Kentucky, as well as the Indianapolis and Cincinnati metropolitan markets, today reported earnings for the second quarter ended June 30, 2021. Net income for the second quarter was $4.2 million, or $0.17 per diluted share, reflecting $18.1 million in merger expenses and $7.4 million in merger related credit loss expense for the quarter. This compares to net income of $13.4 million, or $0.59 per diluted share, for the second quarter of 2020. The results for the second quarter of 2021 also included strong organic loan growth and record levels of non-interest income highlighted by wealth management and trust along with card income and treasury management fees.

(dollar amounts in thousands, except per 2Q21 1Q21 2Q20share data)Net interest income $ 41,584 $ 37,825 $ 33,528 Provision for credit loss expense^(6) 4,147 (1,475 ) 7,025 Non-interest income 15,788 13,844 12,622 Non-interest expenses 48,177 24,973 23,409 Income before income tax expense 5,048 28,171 15,716 Income tax expense 864 5,461 2,348 Net income $ 4,184 $ 22,710 $ 13,368 Net income per share, diluted $ 0.17 $ 0.99 $ 0.59 Net interest margin 3.36 % 3.39 % 3.27 %Efficiency ratio^(4) 83.86 % 48.29 % 50.67 %Tangible common equity to tangible assets^ 8.57 % 8.97 % 9.39 %(1)Annualized return on average equity^(7^) 3.25 % 20.71 % 12.90 %Annualized return on average assets^(7^) 0.32 % 1.96 % 1.25 %

The highlight of the second quarter was completing the acquisition of Kentucky Bancshares, said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. The merger added $1.3 billion in assets, $742 million in loans, and $1.0 billion in total deposits to our quarter end balances, and is already having an impact on our operating results, increasing the scale and reach of the Company and providing tremendous opportunity for future revenue growth. This strategic combination enhances our entry into the attractive Central and Eastern Kentucky markets, including the Lexington MSA, Kentuckys second largest market. While costs associated with the merger impacted second quarter earnings, we believe that the majority of merger related expenses are behind us.

We are on track for our system conversion scheduled for August, Hillebrand continued. Although additional work remains to complete the full integration of the two companies and realize the expected operating synergies, we are exceptionally pleased with the progress we have made through the dedicated efforts of our employees and expect that, similar to our two prior acquisitions, the acquisition of Kentucky Bancshares will result in significant benefits to our expanding group of clients, communities, employees and shareholders.

With the completion of the Kentucky Bancshares acquisition, at June 30, 2021, the Company had $6.1 billion in assets, $4.2 billion in net loans and $5.3 billion in total deposits. The combined enterprise, with 63 branch offices, has and will continue to benefit from a diversified geographic footprint with significant growth opportunities.

Another key activity for the first half of 2021 related to the additional COVID-19 stimulus relief, which was signed into law in late 2020, and allowed for a second round of PPP funding through early May. Consistent with the first round, our team of lenders rose to the challenge. Our participation in the second round of PPP once again stood out in our markets driving PPP loan originations over $900 million in total. Our expertise and ultimate success in helping our customers not only allowed us to close over 2,100 loans with total originations in excess of $260 million for the second round, but also added new client relationships with strong future growth opportunities, said Hillebrand.

Due to further economic forecast improvements, updates to our modeling and continued solid performance of the loan portfolio during the current quarter, we recorded a net benefit of $2.7 million to provision for credit losses for legacy Stock Yards loan portfolio, excluding loans acquired from Kentucky Bancshares. This compares to $5.6 million in credit loss expense for loans in the second quarter a year ago. Additionally, in accordance with CECL, we added an additional $7.4 million in merger related credit loss expense associated with the non-Purchase Credit Deteriorated Kentucky Bancshares loans we acquired, bringing our total allowance for credit losses on loans to $59 million. We feel that we are well-positioned for future growth, having established credit loan loss reserves to total loans (excluding PPP loans), of 1.55%(2) at June 30, 2021, said Hillebrand.

Additional key factors impacting the second quarter of 2021 results included:

-- Loan growth within the legacy Stock Yards portfolio, excluding loans acquired from Kentucky Bancshares and PPP loans, totaled $81 million, or 3%, compared to the first quarter of 2021 and $269 million, or 10%, compared to the second quarter a year ago. -- Average legacy Stock Yards loan balance growth totaled $109 million compared to the first quarter of 2021 and $220 million compared to the second quarter a year ago. -- Despite ongoing loan yield contraction, net interest income increased $8.1 million, or 24%, boosted by $6.9 million in PPP income, the aforementioned organic loan growth and a $1.5 million decline in funding costs. -- Driven by a 20 basis point benefit from PPP loans, net interest margin (NIM) expanded nine basis points to 3.36% compared to the second quarter a year ago. Excluding the PPP benefit, NIM continued to be negatively impacted by loan yield contraction accompanied with significant ongoing excess balance sheet liquidity. -- Net provision for credit losses totaled $4.1 million in the second quarter of 2021 versus $7.0 million in the second quarter of 2020. Included in these totals, credit loss reserves for off-balance sheet credit exposures reflected a net reduction of $550,000 for the second quarter of 2021 compared to net build of $1.5 million for the second quarter of 2020. -- Non-interest income increased 25% over the second quarter of 2020, reflecting record debit/credit card income and record treasury management fees. Significant growth in assets under management and strong market performance served to elevate wealth management and trust services income to a record quarter. Deposit service charges increased 54% due largely to the impact of the pandemic to the prior period.

Results of Operations Second Quarter 2021 Compared with Second Quarter 2020

Net interest income the Companys largest source of revenue increased $8.1 million, or 24%, to $41.6 million, driven primarily by PPP loan fees and a significant decline in cost of funds.

-- Total interest income rose $6.6 million, or 18%, to $43.1 million, primarily due to an increase in interest income on loans resulting from strong PPP income, partly offset by continued yield contraction. -- With regard to the first round of PPP lending, as of June 30, 2021 approximately 82% of total loan originations (in terms of dollars) had been forgiven by the SBA and another 10% have been submitted for forgiveness. With regard to fee income, approximately 95% of the $19.6 million in fee income received has been recognized life to date. -- The second round of PPP expired on May 5, 2021. The Bank has received $12.3 million in fees that will be recognized over the earlier of 5 years or at loan forgiveness. As second round borrowers are not required to make payments for 16 months, it is probable that a significant portion of the borrowing base will seek forgiveness in early to mid-2022. -- Interest expense declined 49%, to $1.5 million. Interest expense on deposits decreased $1.2 million, or 45%, as the cost of interest bearing deposits declined to 0.19% in the second quarter of 2021 from 0.42% in the second quarter a year ago. While average interest bearing deposit balances surged $555 million, or 22%, the Company significantly benefited from the strategic lowering of stated deposit rates in 2019 and early 2020 in tandem with the Federal Reserves short-term interest rate moves and the corresponding lowering of CD offering rates. -- NIM increased nine basis points to 3.36% for the second quarter of 2021 from 3.27% for the second quarter a year ago. During the quarter, forgiveness within the PPP loan portfolio and related fee income recognition had a 20 basis point positive impact to NIM. NIM continues to be negatively impacted by loan yield contraction and significant ongoing excess balance sheet liquidity which represented an 18 basis point negative impact.

The Company recorded a net $4.1 million provision to credit loss expense during the second quarter of 2021, which included a $2.7 million benefit to provision for credit losses for legacy Stock Yards loans and a $7.4 million provision for credit losses for acquired loans. In addition, during the second quarter of 2021 the Company recorded a $550,000 net benefit to provision for credit losses for off-balance sheet exposures consistent with improvement in underlying CECL model factors.

Non-interest income increased $3.2 million, or 25%, to $15.8 million.

-- Wealth management and trust income totaled a record $6.9 million for the second quarter of 2021, increasing $1.1 million, or 20%, over the second quarter a year ago. Record net new business growth, significant growth in assets under management and record market performance served to elevate asset-based fees and boost income. -- Retail deposit service charges increased $433,000, or 54%, compared to the second quarter a year ago, a period severely impacted by the pandemic. -- Debit/credit card income increased $1.2 million, or 59%, over the second quarter of 2020. Growth trends in both portfolios remain positive, as card income benefitted significantly from continued increases in economic activity with consumers and businesses increasing their spending activities. -- Treasury management fees increased by $481,000, or 39%, driven by increased transaction volume, new product sales and customer base expansion. In addition, calling efforts to existing customers have led to significant increases in online services, reporting, ACH origination, remote deposit and fraud mitigation services. -- Mortgage banking revenue was $1.3 million for the second quarter of 2021. Home purchase and refinance application volume remained steady throughout the quarter.

Non-interest expenses increased $24.8 million, to $48.2 million, with $20.4 million of the increase associated with the Kentucky Bancshares merger.

-- Compensation expense increased $3.9 million, or 33%, primarily due to the increase in full time equivalent employees. Full time equivalent employees increased from 620 at June 30, 2020 to 823 at June 30, 2021, as the Bank added 189 associates in connection with the Kentucky Bancshares acquisition, contributing $973,000 to the total compensation increase. Additional incentive compensation of $2.1 million was accrued in the second quarter of 2021 consistent with the Companys operating performance. -- Employee benefits increased $496,000, or 17%, primarily due to elevated 401(k) and payroll tax expenses associated with the above mentioned increase in full time equivalent employees. -- Net occupancy and equipment expenses increased $207,000, or 10%, as 19 branches were added in the current quarter acquisition. -- Technology and communication expense for the second quarter of 2021 increased $671,000, or 34%, consistent with expanded data storage and increased expenses related to the third quarter 2020 switch to a hosted core system. Additional technology expense of $307,000 was added related to the acquisition during the quarter, mostly attributable to the running of separate core banking systems until the third quarter conversion. -- Card processing expense increased $373,000, or 62%, consistent with the income trend noted above. -- Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business increased $357,000, or 77%, compared to the second quarter a year ago which included the peak of the pandemic. -- Capital and deposit tax declined $698,000, or 57%, as the Company has transitioned to record Kentucky state income tax as a component of tax expense. -- Merger expenses totaled $18.1 million in the second quarter of 2021. Substantially all of the merger expenses related to the Kentucky Bancshares acquisition were recognized during the second quarter of 2021 and the Company expects remaining expenses will be minimal over the remainder of the year. -- During the second quarter of 2021, the Company paid off $14 million of term FHLB advances prior to their maturity and incurred an early termination fee of $474,000.

Financial Condition June 30, 2021 Compared with June 30, 2020

Total loans increased $742 million year over year, or 21%, to $4.2 billion. Excluding the PPP loan portfolio, total loans increased $995 million, or 35%, during the year, with $487 million of growth in the commercial real estate portfolio, $108 million of growth in the commercial and industrial portfolio and $297 million of growth in residential real estate loans. Credit line usage improved during the second quarter, while remaining well below pre-pandemic levels.

The Company acquired nearly $400 million in securities related to the Kentucky Bancshares acquisition and sold approximately $92 million during the second quarter contributing significantly to the $522 million of growth in the portfolio over the past twelve months.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the second quarter of 2021, the Company recorded net loan charge-offs of $2.7 million, primarily related to one commercial real estate relationship that had been fully reserved for in 2020. This compared to net loan recoveries of $15,000 in the second quarter of 2020. Non-performing loans were $13.9 million, or 0.36%(2), of total loans (excluding PPP) outstanding compared to $14.4 million, or 0.51%(2), of total loans (excluding PPP) outstanding at June 30, 2020.

Total deposits increased $1.5 billion, or 41%, from June 30, 2020 to June 30, 2021, with non-interest bearing deposits representing $539 million of the increase. Excluding deposits added from the Kentucky Bancshares acquisition, total deposits increased $512 million year over year, with non-interest bearing deposits representing $184 million of the increase. Both period end and average deposit balances ended at record levels at June 30, 2021. Federal programs such as the PPP and stimulus checks have boosted deposit balances.

At June 30, 2021, the Company remained well capitalized, the highest regulatory capital rating for financial institutions. Total equity to assets was 10.69% and the tangible common equity ratio was 8.57%(1) at June 30, 2021, compared to 9.69% and 9.39%(1), respectively, at June 30, 2020.

In June 2021, the Board of Directors continued the prior quarter dividend rate of $0.27 per common share. The Company will continue to evaluate dividend rate increases in relation to maintaining strong capital levels.

No shares were repurchased in the current year and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan which expires in May 2023.

Results of Operations Second Quarter 2021 Compared with First Quarter 2021

Net interest income increased $3.8 million, or 10%, over the prior quarter to $41.6 million, led by the acquisition, organic loan growth, PPP fee recognition and the continued decline in cost of funds.

As previously discussed, the Company recorded $4.1 million in provision for credit loss expense during the second quarter of 2021 compared to a $1.2 million benefit to provision for credit loss expense for loans in the prior quarter. In addition, consistent with improvement in underlying CECL model factors, a net benefit was recorded to provision for credit losses for off-balance sheet exposures of $550,000 and $275,000 in the second quarter of 2021 and first quarter of 2021, respectively.

Non-interest income increased $1.9 million, or 14%, to $15.8 million. Record wealth management and trust service fees, debit/credit card income and treasury management fees more than offset a modest second quarter reduction in mortgage banking and other non-interest income.

Non-interest expenses increased $23.2 million, or 93%, to $48.2 million with $20.4 million of the increase associated with the Kentucky Bancshares acquisition. Merger expenses totaled $18.1 million in the second quarter of 2021, compared to $400,000 of merger expenses in the prior quarter.

Compensation expense increased $2.9 million, to $15.7 million compared with the first quarter of 2021, due to the addition of 189 full time equivalent employees in association with the acquisition and additional incentive compensation accrued during the current quarter.

Financial Condition June 30, 2021, Compared with March 31, 2021

Total assets increased $1.3 billion on a linked quarter basis to $6.1 billion, reflecting the acquisition of Kentucky Bancshares, as well as significant increases in organic loans and investment securities.

Total loans increased $571 million on a linked quarter basis to $4.2 billion at quarter end and the deployment of excess liquidity combined with the addition of the Kentucky Bancshares securities portfolio led to a $335 million increase in securities. Total line of credit usage increased to 39% as of June30, 2021, from 37% at March 31, 2021 with commercial and industrial line usage increasing meaningfully, but still well below pre-pandemic levels.

Total deposits increased $1.1 billion, or 25%, on a linked quarter basis due in part to the acquisition of Kentucky Bancshares, but also as a result of organic growth in deposit balances with both existing and new customers. Federal programs such as the PPP, stimulus checks and increased unemployment benefits have boosted deposit balances in 2021. Additionally, economic uncertainty surrounding the pandemic has resulted in a portion of the customer base maintaining generally higher deposit balances.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $6.1 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.

Forward-looking Statements

Certain statements contained in this communication, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, certain plans, expectations, goals, projections and benefits relating to the merger transaction between Stock Yards and Kentucky Bancshares, which are subject to numerous assumptions, risks and uncertainties. Words or phrases such as anticipate, believe, aim, can, conclude, continue, could, estimate, expect, foresee, goal, intend, may, might, outlook, possible, plan, predict, project, potential, seek, should, target, will, will likely, would, or the negative of these terms or other comparable terminology, as well as similar expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not historical facts but instead express only managements beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of the managements control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. In addition to factors disclosed in reports filed by Stock Yards with the SEC, risks and uncertainties for Stock Yards include but are not limited to: the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; the risk that integration of Kentucky Bancshares operations with those of Stock Yards will be materially delayed or will be more costly or difficult than expected; diversion of management's attention from ongoing business operations and opportunities due to the merger; the challenges of integrating and retaining key employees; the effect of the announcement of the merger on the combined company's respective customer and employee relationships and operating results; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; dilution caused by Stock Yards issuance of additional shares of Stock Yards common stock in connection with the merger; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and the business, results of operations and financial condition of the combined company; and general competitive, economic, political and market conditions and fluctuations. All forward-looking statements included in this communication are made as of the date hereof and are based on information available at that time. Except as required by law, Stock Yards assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date the forward-looking statements were made.

Please refer to Stock Yards Annual Report on Form 10-K for the year ended December 31, 2020, and its Quarterly Report on Form 10-Q for the three months ended March 31, 2021, as well as its other filings with the SEC for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter2021 Earnings Release(In thousandsunless otherwise noted) Three Months Ended Six Months Ended June 30, June 30,Income Statement 2021 2020 2021 2020Data Net interestincome, fully $ 41,661 $ 33,573 $ 79,535 $ 66,066 tax equivalent(3)Interest income: Loans $ 40,095 $ 34,099 $ 77,095 $ 67,848 Federal fundssold and 84 88 150 619 interest bearingdue from banksMortgage loans 58 125 122 186 held for saleSecurities 2,865 2,194 5,253 4,735 Total interest 43,102 36,506 82,620 73,388 incomeInterest expense:Deposits 1,435 2,607 2,945 6,569 Securities soldunder agreementsto repurchase 9 10 16 55 and othershort-termborrowingsFederal HomeLoan Bank (FHLB) 74 361 250 790 advancesTotal interest 1,518 2,978 3,211 7,414 expenseNet interest 41,584 33,528 79,409 65,974 incomeProvision forcredit losses 4,147 7,025 2,672 12,950 (6)Net interestincome after 37,437 26,503 76,737 53,024 provision forcredit lossesNon-interest income:Wealthmanagement and 6,858 5,726 13,106 11,944 trust servicesDeposit service 1,233 800 2,177 2,083 chargesDebit and credit 3,284 2,063 5,557 4,043 card incomeTreasury 1,730 1,249 3,270 2,533 management feesMortgage banking 1,303 1,622 2,747 2,468 incomeNet investmentproduct sales 545 391 1,009 857 commissions andfeesBank owned life 206 176 367 355 insuranceOther 629 595 1,399 875 Totalnon-interest 15,788 12,622 29,632 25,158 incomeNon-interest expenses:Compensation 15,680 11,763 28,507 23,996 Employee 3,367 2,871 6,628 6,038 benefitsNet occupancy 2,244 2,037 4,289 3,868 and equipmentTechnology and 2,670 1,999 5,016 4,062 communicationDebit and credit 976 603 1,681 1,259 card processingMarketing andbusiness 822 465 1,346 1,025 developmentPostage,printing and 460 442 869 883 suppliesLegal and 666 628 1,128 1,251 professionalFDIC Insurance 349 330 754 459 Amortization ofinvestments in 231 53 262 89 tax creditpartnershipsCapital anddeposit based 527 1,225 985 2,255 taxesMerger expenses 18,100 - 18,500 - Federal HomeLoan Bank early 474 - 474 - terminationpenaltyOther 1,611 993 2,711 1,799 Totalnon-interest 48,177 23,409 73,150 46,984 expensesIncome beforeincome tax 5,048 15,716 33,219 31,198 expenseIncome tax 864 2,348 6,325 4,598 expenseNet income $ 4,184 $ 13,368 $ 26,894 $ 26,600 Net income per $ 0.17 $ 0.59 $ 1.14 $ 1.18 share - BasicNet income per 0.17 0.59 1.13 1.17 share - DilutedCash dividenddeclared per 0.27 0.27 0.54 0.54 share Weighted average 24,140 22,560 23,489 22,538 shares - BasicWeighted average 24,379 22,739 23,731 22,737 shares - Diluted June 30,Balance Sheet 2021 2020Data Loans $ 4,206,392 $ 3,464,077 Allowance forcredit losses on 59,424 47,708 loansTotal assets 6,088,072 4,334,533 Non-interest 1,743,953 1,205,253 bearing depositsInterest bearing 3,516,153 2,521,903 depositsFHLB advances 10,000 61,432 Stockholders' 651,089 420,231 equityTotal shares 26,588 22,667 outstandingBook value per $ 24.49 $ 18.54 share (1)Tangible commonequity per share 19.16 17.89 (1)Market value per 50.89 40.20 share Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter2021 Earnings Release Three Months Ended Six Months Ended June 30, June 30,Average Balance 2021 2020 2021 2020Sheet Data Federal fundssold and $ 313,954 $ 285,617 $ 274,880 $ 227,090 interest bearingdue from banksMortgage loans 8,678 18,010 11,632 11,481 held for saleAvailable forsale debt 793,696 412,368 727,801 429,525 securitiesFHLB stock 11,924 11,284 11,285 11,284 Loans 3,844,662 3,396,767 3,725,871 3,144,218 Total interest 4,972,914 4,124,046 4,751,469 3,823,598 earning assetsTotal assets 5,226,654 4,317,430 4,970,172 4,013,775 Interest bearing 3,055,360 2,500,315 2,936,334 2,408,545 depositsTotal deposits 4,552,583 3,713,451 4,324,647 3,416,847 Securities soldunder agreementto repurchase 66,591 49,940 61,592 46,840 and other shortterm borrowingsFHLB advances 19,135 63,896 24,174 68,918 Total interestbearing 3,141,086 2,614,151 3,022,100 2,524,303 liabilitiesTotalstockholders' 516,427 416,920 480,822 410,311 equity Performance RatiosAnnualizedreturn on 0.32 % 1.25 % 1.09 % 1.33 %average assets(7)Annualizedreturn on 3.25 % 12.90 % 11.28 % 13.04 %average equity(7)Net interestmargin, fully 3.36 % 3.27 % 3.38 % 3.47 %tax equivalentNon-interestincome to total 27.48 % 27.32 % 27.14 % 27.58 %revenue, fullytax equivalentEfficiencyratio, fully tax 83.86 % 50.67 % 67.01 % 51.50 %equivalent (4) Capital Ratios Totalstockholders' 10.69 % 9.69 %equity to totalassets (1)Tangible commonequity to 8.57 % 9.39 %tangible assets(1)Averagestockholders' 9.67 % 10.22 %equity toaverage assetsTotal risk-based 12.80 % 13.50 %capitalCommon equitytier 1 11.79 % 12.39 %risk-basedcapitalTier 1risk-based 11.79 % 12.39 %capitalLeverage 10.26 % 9.50 % Loan SegmentationCommercial realestate - $ 1,170,461 $ 815,464 non-owneroccupiedCommercial realestate - owner 604,120 472,457 occupiedCommercial and 872,306 764,480 industrialCommercial and 377,021 630,082 industrial - PPPResidential realestate - owner 377,783 215,891 occupiedResidential realestate - 273,782 139,121 non-owneroccupiedConstruction and 281,149 255,447 land developmentHome equity 142,468 103,672 lines of creditConsumer 78,171 43,758 Leases 14,171 14,843 Credit cards - 14,960 8,862 commercialTotal loans and $ 4,206,392 $ 3,464,077 leases Asset Quality DataNon-accrual $ 12,814 $ 14,262 loansTroubled debt 14 45 restructuringsLoans past due90 days or more 1,050 48 and stillaccruingTotalnon-performing 13,878 14,355 loansOther real 648 493 estate ownedTotalnon-performing $ 14,526 $ 14,848 assetsNon-performingloans to total 0.33 % 0.41 %loans (2)Non-performingassets to total 0.24 % 0.34 %assetsAllowance forcredit losses on 1.41 % 1.38 %loans to totalloans (2)Allowance forcredit losses on 1.59 % 1.52 % loans to averageloansAllowance forcredit losses onloans to 428 % 332 %non-performingloansNet(charge-offs) $ (2,743 ) $ 15 $ (2,749 ) $ (39 )recoveriesNet(charge-offs)recoveries to -0.07 % 0.00 % -0.07 % 0.00 %average loans(5) Stock Yards Bancorp, Inc. Financial Information (unaudited)Second Quarter2021 Earnings Release Quarterly ComparisonIncome Statement 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20Data Net interestincome, fully $ 41,661 $ 37,874 $ 36,301 $ 33,768 $ 33,573 tax equivalent(3)Net interest $ 41,584 $ 37,825 $ 36,252 $ 33,695 $ 33,528 incomeProvision forcredit losses 4,147 (1,475 ) 500 4,968 7,025 (6)Net interestincome after 37,437 39,300 35,752 28,727 26,503 provision forcredit lossesNon-interest income:Wealthmanagement and 6,858 6,248 5,805 5,657 5,726 trust servicesDeposit service 1,233 944 1,080 998 800 chargesDebit and credit 3,284 2,273 2,219 2,218 2,063 card incomeTreasury 1,730 1,540 1,506 1,368 1,249 management feesMortgage banking 1,303 1,444 1,708 1,979 1,622 incomeNet investmentproduct sales 545 464 487 431 391 commissions andfeesBank owned life 206 161 166 172 176 insuranceOther 629 770 727 220 595 Totalnon-interest 15,788 13,844 13,698 13,043 12,622 incomeNon-interest expenses:Compensation 15,680 12,827 14,072 13,300 11,763 Employee 3,367 3,261 2,173 2,853 2,871 benefitsNet occupancy 2,244 2,045 2,137 2,177 2,037 and equipmentTechnology and 2,670 2,346 2,347 2,323 1,999 communicationDebit and credit 976 705 698 649 603 card processingMarketing andbusiness 822 524 835 523 465 developmentPostage,printing and 460 409 423 472 442 suppliesLegal and 666 462 597 544 628 professionalFDIC Insurance 349 405 323 435 330 Amortization ofinvestments in 231 31 2,955 52 53 tax creditpartnershipsCapital anddeposit based 527 458 1,055 1,076 1,225 taxesMerger expenses 18,100 400 - - - Federal HomeLoan Bank early 474 - - - - terminationpenaltyOther 1,611 1,100 1,414 1,242 993 Totalnon-interest 48,177 24,973 29,029 25,646 23,409 expensesIncome beforeincome tax 5,048 28,171 20,421 16,124 15,716 expenseIncome tax 864 5,461 2,685 1,591 2,348 expenseNet income $ 4,184 $ 22,710 $ 17,736 $ 14,533 $ 13,368 Net income per $ 0.17 $ 1.00 $ 0.79 $ 0.64 $ 0.59 share - BasicNet income per 0.17 0.99 0.78 0.64 0.59 share - DilutedCash dividenddeclared per 0.27 0.27 0.27 0.27 0.27 share Weighted average 24,140 22,622 22,593 22,582 22,560 shares - BasicWeighted average 24,379 22,865 22,794 22,802 22,739 shares - Diluted Quarterly ComparisonBalance Sheet 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20Data Cash and due $ 58,477 $ 43,061 $ 43,179 $ 49,517 $ 46,362 from banksFederal fundssold and 481,716 289,920 274,766 241,486 178,032 interest bearingdue from banksMortgage loans 5,420 6,579 22,547 23,611 17,364 held for saleAvailable forsale debt 1,006,908 672,167 586,978 429,184 485,249 securitiesFHLB stock 14,475 10,228 11,284 11,284 11,284 Loans 4,206,392 3,635,156 3,531,596 3,472,481 3,464,077 Allowance forcredit losses on 59,424 50,714 51,920 50,501 47,708 loansTotal assets 6,088,072 4,794,075 4,608,629 4,365,129 4,334,533 Non-interest 1,743,953 1,370,183 1,187,057 1,180,001 1,205,253 bearing depositsInterest bearing 3,516,153 2,829,779 2,801,577 2,574,517 2,521,903 depositsSecurities soldunder agreements 63,942 51,681 47,979 40,430 42,722 to repurchaseFederal funds 10,947 8,642 11,464 9,179 8,401 purchasedFHLB advances 10,000 24,180 31,639 56,536 61,432 Stockholders' 651,089 443,232 440,701 428,598 420,231 equityTotal shares 26,588 22,781 22,692 22,692 22,667 outstandingBook value per $ 24.49 $ 19.46 $ 19.42 $ 18.89 $ 18.54 share (1)Tangible commonequity per share 19.16 18.82 18.78 18.25 17.89 (1)Market value per 50.89 51.06 40.48 34.04 40.20 share Capital Ratios Totalstockholders' 10.69 % 9.25 % 9.56 % 9.82 % 9.69 %equity to totalassets (1)Tangible commonequity to 8.57 % 8.97 % 9.28 % 9.52 % 9.39 %tangible assets(1)Averagestockholders' 9.88 % 9.44 % 9.61 % 9.85 % 9.66 %equity toaverage assetsTotal risk-based 12.80 % 13.39 % 13.36 % 13.79 % 13.50 %capitalCommon equitytier 1 11.79 % 12.32 % 12.23 % 12.61 % 12.39 %risk-basedcapitalTier 1risk-based 11.79 % 12.32 % 12.23 % 12.61 % 12.39 %capitalLeverage 10.26 % 9.46 % 9.57 % 9.70 % 9.50 % Stock Yards Bancorp, Inc. Financial Information (unaudited) Second Quarter2021 Earnings Release Quarterly ComparisonAverage Balance 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20Sheet Data Federal fundssold and $ 313,954 $ 235,370 $ 271,277 $ 194,100 $ 285,617 interest bearingdue from banksMortgage loans 8,678 14,618 28,951 28,520 18,010 held for saleAvailable forsale debt 793,696 661,175 510,677 442,089 412,368 securitiesLoans 3,844,662 3,605,760 3,483,298 3,444,407 3,396,767 Total interest 4,972,914 4,527,563 4,305,487 4,120,400 4,124,046 earning assetsTotal assets 5,226,654 4,710,836 4,512,874 4,325,500 4,317,430 Interest bearing 3,055,360 2,815,986 2,689,103 2,521,838 2,500,315 depositsTotal deposits 4,552,583 4,094,179 3,888,247 3,707,845 3,713,451 Securities soldunder agreement 66,591 56,536 55,825 49,709 49,940 to repurchaseFHLB advances 19,135 29,270 48,771 59,487 63,896 Total interestbearing 3,141,086 2,901,792 2,793,699 2,631,034 2,614,151 liabilitiesTotalstockholders' 516,427 444,821 433,596 426,049 416,920 equity Performance RatiosAnnualizedreturn on 0.32 % 1.96 % 1.56 % 1.34 % 1.25 %average assets(7)Annualizedreturn on 3.25 % 20.71 % 16.27 % 13.57 % 12.90 %average equity(7)Net interestmargin, fully 3.36 % 3.39 % 3.35 % 3.26 % 3.27 %tax equivalentNon-interestincome to total 27.48 % 26.77 % 27.40 % 27.86 % 27.32 %revenue, fullytax equivalentEfficiencyratio, fully tax 83.86 % 48.29 % 58.06 % 54.79 % 50.67 %equivalent (4) Loans SegmentationCommercial realestate - $ 1,170,461 $ 876,523 $ 833,470 $ 828,328 $ 815,464 non-owneroccupiedCommercial realestate - owner 604,120 527,316 508,672 492,825 472,457 occupiedCommercial and 872,306 769,773 802,422 731,850 764,480 industrialCommercial and 377,021 612,885 550,186 642,056 630,082 industrial - PPPResidential realestate - owner 377,783 262,516 239,191 211,984 215,891 occupiedResidential realestate - 273,782 136,380 140,930 143,149 139,121 non-owneroccupiedConstruction and 281,149 281,815 291,764 257,875 255,447 land developmentHome equity 142,468 91,233 95,366 97,150 103,672 lines of creditConsumer 78,171 51,058 44,606 44,161 43,758 Leases 14,171 14,115 14,786 13,981 14,843 Credit cards - 14,960 11,542 10,203 9,122 8,862 commercialTotal loans and $ 4,206,392 $ 3,635,156 $ 3,531,596 $ 3,472,481 $ 3,464,077 leases Asset Quality DataNon-accrual $ 12,814 $ 12,913 $ 12,514 $ 12,358 $ 14,262 loansTroubled debt 14 15 16 18 45 restructuringsLoans past due90 days or more 1,050 1,377 649 1,152 48 and stillaccruingTotalnon-performing 13,878 14,305 13,179 13,528 14,355 loansOther real 648 281 281 612 493 estate ownedTotalnon-performing $ 14,526 $ 14,586 $ 13,460 $ 14,140 $ 14,848 assetsNon-performingloans to total 0.33 % 0.39 % 0.37 % 0.39 % 0.41 %loans (2)Non-performingassets to total 0.24 % 0.30 % 0.29 % 0.32 % 0.34 %assetsAllowance forcredit losses on 1.41 % 1.40 % 1.47 % 1.45 % 1.38 %loans to totalloans (2)Allowance forcredit losses on 1.55 % 1.41 % 1.49 % 1.47 % 1.40 %loans to averageloansAllowance forcredit losses onloans to 428 % 355 % 394 % 373 % 332 %non-performingloansNet(charge-offs) $ (2,743 ) $ (6 ) $ 19 $ (1,625 ) $ 15 recoveriesNet(charge-offs)recoveries to -0.07 % 0.00 % 0.00 % -0.05% 0.00 %average loans(5) Other InformationTotal assetsunder management $ 4,440 $ 3,989 $ 3,852 $ 3,414 $ 3,204 (in millions)Full-timeequivalent 823 638 641 626 620 employees (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 share 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20data) Totalstockholders' $ 651,089 $ 443,232 $ 440,701 $ 428,598 $ 420,231 equity - GAAP(a)Less: Goodwill (136,529 ) (12,513 ) (12,513 ) (12,513 ) (12,513 )Less: Coredeposit (5,162 ) (1,885 ) (1,962 ) (2,042 ) (2,122 )intangibleTangible commonequity - $ 509,398 $ 428,834 $ 426,226 $ 414,043 $ 405,596 Non-GAAP (c) Total assets - $ 6,088,072 $ 4,794,075 $ 4,608,629 $ 4,365,129 $ 4,334,533 GAAP (b)Less: Goodwill (136,529 ) (12,513 ) (12,513 ) (12,513 ) (12,513 )Less: Coredeposit (5,162 ) (1,885 ) (1,962 ) (2,042 ) (2,122 )intangibleTangible assets $ 5,946,381 $ 4,779,677 $ 4,594,154 $ 4,350,574 $ 4,319,898 - Non-GAAP (d) Totalstockholders'equity to total 10.69 % 9.25 % 9.56 % 9.82 % 9.69 %assets - GAAP (a/b)Tangible commonequity to 8.57 % 8.97 % 9.28 % 9.52 % 9.39 %tangible assets- Non-GAAP (c/d) Total shares 26,588 22,781 22,692 22,692 22,667 outstanding (e) Book value pershare - GAAP (a/ $ 24.49 $ 19.46 $ 19.42 $ 18.89 $ 18.54 e)Tangible commonequity per share 19.16 18.82 18.78 18.25 17.89 - Non-GAAP (c/e) (2) - Allowance for credit losses on loans to total non-PPP loans representsthe allowance for credit losses on loans, divided by total loans less PPPloans. Non-performing loans to total non-PPP loans represents non-performingloans, divided by total loans less PPP loans. Bancorp believes these non-GAAPdisclosures are important because they provide 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 on loans and arenot at risk of non-performance. Quarterly Comparison(Dollars in 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 thousands) Total Loans - $ 4,206,392 $ 3,635,156 $ 3,531,596 $ 3,472,481 $ 3,464,077 GAAP (a)Less: PPP loans (377,021 ) (612,885 ) (550,186 ) (642,056 ) (630,082 )Total non-PPPLoans - Non-GAAP 3,829,371 3,022,271 2,981,410 2,830,425 2,833,995 (b) Allowance forcredit losses on $ 59,424 $ 50,714 $ 51,920 $ 50,501 $ 47,708 loans (c)Non-performing 13,878 14,305 13,179 13,528 14,355 loans (d) Allowance forcredit losses onloans to total 1.41 % 1.40 % 1.47 % 1.45 % 1.38 %loans - GAAP (c/a)Allowance forcredit losses onloans to total 1.55 % 1.68 % 1.74 % 1.78 % 1.68 %loans - Non-GAAP(c/b) Non-performingloans to total 0.33 % 0.39 % 0.37 % 0.39 % 0.41 %loans - GAAP (d/a)Non-performingloans to total 0.36 % 0.47 % 0.44 % 0.48 % 0.51 %loans - Non-GAAP(d/b) (3) - Interest income on a FTE basis includes the additional amount of interestincome that would have been earned if investments in certain tax-exemptinterest earning assets had been made in assets subject to federal, state andlocal taxes yielding the same after-tax income. (4) - The efficiency ratio, a non-GAAP measure, equals total non-interestexpenses divided by the sum of net interest income (FTE) and non-interestincome. The ratio excludes net gains (losses) on sales, calls, and impairmentof investment securities, if applicable. In addition to the efficiency ratiopresented, Bancorp considers an adjusted efficiency ratio to be importantbecause it provides a comparable ratio after eliminating the fluctuation innon-interest expenses related to amortization of investments in tax creditpartnerships and non-recurring merger expenses. Quarterly Comparison(Dollars in 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 thousands) Totalnon-interest $ 48,177 $ 24,973 $ 29,029 $ 25,646 $ 23,409 expenses - GAAP(a)Less:Non-recurring (18,100 ) (400 ) - - - merger expensesLess:Amortization ofinvestments in (231 ) (31 ) (2,955 ) (52 ) (53 )tax creditpartnershipsTotalnon-interest $ 29,846 $ 24,542 $ 26,074 $ 25,594 $ 23,356 expenses -Non-GAAP (c) Total netinterest income, $ 41,661 $ 37,874 $ 36,301 $ 33,768 $ 33,573 fully taxequivalentTotalnon-interest 15,788 13,844 13,698 13,043 12,622 incomeLess: Gain/losson sale of - - - - - securitiesTotal revenue - $ 57,449 $ 51,718 $ 49,999 $ 46,811 $ 46,195 GAAP (b) Efficiency ratio 83.86 % 48.29 % 58.06 % 54.79 % 50.67 %- GAAP (a/b)Efficiency ratio 51.95 % 47.45 % 52.15 % 54.68 % 50.56 %- Non-GAAP (c/b) (5) - Quarterly net (charge-offs) recoveries to average loans ratios are notannualized. (6) - Effective for the three month period ended March 31, 2020, the Companyhas reclassified credit loss expense for off-balance sheet exposures fromnon-interest expense to provision for credit losses and combined this with theprovision for losses on loans on the face of the income statement. Quarterly Comparison(in thousands) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Provision forcredit losses - $ 4,697 $ (1,200 ) $ 1,400 $ 4,418 $ 5,550 loansProvision forcredit losses - (550 ) (275 ) (900 ) 550 1,475 off balancesheet exposuresTotal provisionfor credit 4,147 (1,475 ) 500 4,968 7,025 losses (7) - Return on average assets equals net income divided by total averageassets, annualized to reflect a full year return on average assets. Similarly,return on average equity equals net income divided by total average equity,annualized to reflect a full year return on average equity. As a result of thesubstantial impact that non-recurring items related to the Kentucky Bancsharesacquisition had on results for the three and six months ended June 30, 2021,Bancorp considers adjusted return on average assets and return on averageequity ratios important as they reflect performance after removing certainmerger expenses and purchase accounting adjustments. Quarterly Comparison(Dollars in 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20thousands) Net income, as $ 4,184 $ 22,710 $ 17,736 $ 14,533 $ 13,368 reported (a)Add:Non-recurring 18,100 400 - - - merger expensesAdd: Provisionfor credit 7,397 - - - - losses onnon-PCD loansLess: Tax effectof adjustments (5,354 ) (84 ) - - - to net incomeTotal net income $ 24,327 $ 23,026 $ 17,736 $ 14,533 $ 13,368 - Non-GAAP (b) Total average $ 5,226,654 $ 4,710,836 $ 4,512,874 $ 4,325,500 $ 4,317,430 assets (c) Total average 516,427 444,821 433,596 426,049 416,920 equity (d ) Return onaverage assets - 0.32 % 1.96 % 1.56 % 1.34 % 1.25 %GAAP (a/c)Return onaverage assets - 1.87 % 1.98 % 1.56 % 1.34 % 1.25 %Non-GAAP (b/c) Return onaverage equity - 3.25 % 20.71 % 16.27 % 13.57 % 12.90 %GAAP (a/d)Return onaverage equity - 18.89 % 20.71 % 16.27 % 13.57 % 12.90 %Non-GAAP (b/d)

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