GlobeNewswire Inc | Jan 26, 2022 07:30AM EST

January 26, 2022

LOUISVILLE, Ky., Jan. 26, 2022 (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, Indiana and Cincinnati, Ohio metropolitan markets, today reported earnings for the fourth quarter ended December 31, 2021. Net income for the fourth quarter was $24.6 million, or $0.92 per diluted share, compared with net income of $17.7 million, or $0.78 per diluted share, for the fourth quarter of 2020. Net income for the twelve months ended December 31, 2021 ended at a record $74.6 million, or $2.97 per diluted share, compared to $58.9 million, or $2.59 per diluted share, in 2020. Strong organic balance sheet growth across all markets, the successful entry into the Central/Eastern Kentucky market and record levels of non-interest income highlighted by card income, wealth management and trust and treasury management, contributed to a strong 2021.

(dollar amountsin thousands, 4Q21 3Q21 4Q20 except per sharedata)Net interest $ 46,182 $ 45,483 $ 36,252 incomeProvision forcredit loss (1,900 ) (1,525 ) 500 expense^(6)Non-interest 18,604 17,614 13,698 incomeNon-interest 34,572 34,558 29,029 expensesIncome beforeincome tax 32,114 30,064 20,421 expenseIncome tax 7,525 6,902 2,685 expenseNet income $ 24,589 $ 23,162 $ 17,736 Net income per $ $ $ share, diluted 0.92 0.87 0.78Net interest 3.07 % 3.14 % 3.35 %marginEfficiency ratio 53.24 % 54.63 % 58.06 %^(4)Tangible commonequity to 8.22 % 8.64 % 9.28 %tangible assets^(1)Annualizedreturn on 14.60 % 13.92 % 16.27 %average equity^(7)Annualizedreturn on 1.52 % 1.50 % 1.56 %average assets^(7)

We delivered excellent fourth quarter and full year 2021 results, highlighted by strong organic loan growth, record loan production and solid revenue growth, both organically and from acquired assets, said James A. (Ja) Hillebrand, Chairman and Chief Executive Officer. Additionally, we reported record non-interest income during the quarter, a complement to our diversified income revenue streams. Treasury management fees and card income reached record levels at year-end due to increases in new business, volume and usage, while wealth management and trust income also generated record results, driven by record net new business development and strong market appreciation. We achieved this growth while keeping operating expenses under control.

In addition to growing the company organically, our successful entry into the Central/Eastern Kentucky market, through our merger with Kentucky Bancshares in the second quarter, contributed significantly to our 2021 operating results, Hillebrand continued. The merger has exceeded our expectations and was a meaningful driver of our record results for the year. Additionally, this new market provides tremendous opportunity for future growth by increasing our scale and reach. We are exceptionally pleased with the progress we have made through the dedicated efforts of our employees. We anticipate, similar to our prior successful mergers, the merger with Kentucky Bancshares will result in significant benefits in 2022 and beyond.

At December 31, 2021, the Company had $6.65 billion in assets, $4.17 billion in loans and $5.79 billion in total deposits. The combined enterprise, with 63 branch offices, has and will continue to benefit from a diversified geographic footprint that provides significant growth opportunities in both the banking and wealth management arenas.

Following the success of our prior mergers, we are confident that our announced merger with Commonwealth Bancshares, Inc. (Commonwealth) will provide exceptional opportunities to generate additional growth going forward. This combination brings together two Louisville based community banks who are like-minded with complementary cultures. The transaction not only builds upon our already prominent market share in the Louisville market, as Commonwealth is the largest privately-held bank headquartered in the Louisville MSA, but also expands our presence in the attractive Shelby County and Northern Kentucky markets. We have received regulatory approvals from the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation and are currently awaiting regulatory holding company approval from the Federal Reserve Board. At this juncture, we anticipate closing sometime during the first quarter of 2022, concluded Hillebrand.

Commonwealth, headquartered in Louisville, Kentucky, operates 15 retail branches, including nine in Jefferson County, four in Shelby County and two in Northern Kentucky. As of December 31, 2021, Commonwealth reported approximately $1.31 billion in assets, $680 million in loans, $1.15 billion in deposits and $88 million in tangible common equity. Commonwealth also maintains a Wealth Management and Trust Department with total assets under management of $2.73 billion at December 31, 2021.

Additional key factors contributing to the fourth quarter of 2021 results included:

-- Organic loan growth (excluding PPP), totaled $71 million for the fourth quarter of 2021. Loan balances across all four primary markets ended at historical highs at December 31, 2021. -- Deposit growth was robust at $446 million on a linked quarter basis. -- Total interest income increased $9.2 million, or 24%, for the fourth quarter of 2021 compared to the fourth quarter of 2020. -- Interest income on non-PPP loans increased $10.1 million, or 34%, over the fourth quarter of 2020, with a large portion of the increase representing the Central/Eastern Kentucky market contribution. Additionally, significant fluctuation in PPP-related income had a major impact on the comparison between periods. PPP interest/fee income totaled $3.7 million and $6.1 million for the fourth quarters of 2021 and 2020, respectively. -- Interest expense declined $761,000, or 36%, as the Bank benefited from lower stated interest rates on interest bearing deposits and the decline in FHLB advances. -- Despite an 18 basis point benefit from the PPP loan portfolio for the fourth quarter of 2021, net interest margin (NIM) continued to be negatively impacted by loan yield contraction and significant ongoing levels of excess balance sheet liquidity. -- Consistent with further improvement and stabilization in the Federal Reserve unemployment forecast, solid credit quality statistics and increased credit line utilization, a net reduction of $1.9 million in credit loss reserves was recorded for the fourth quarter of 2021, compared to a net reserve build of $500,000 for the fourth quarter of 2020. -- Non-interest income increased 36% over the fourth quarter of 2020 boosted by solid contributions from Central/Eastern Kentucky, along with strong growth in legacy income sources. Significant growth in assets under management tied to record net new business and strong market performance resulted in record wealth management and trust income of $7.4 million for the quarter and record ending assets under management of $4.80 billion. Deposit service charges, enhanced by the Central/Eastern Kentucky market and continued recovery from the pandemic, increased 77% over the fourth quarter of 2020. Card income and treasury management fees once again set historic quarterly records, representing 81% and 24% increases over the fourth quarter of 2020, respectively. Consistent with the continued decline in loan origination volume, mortgage banking income was down 38% quarter over prior year quarter.

Highlights for the year ended December 31, 2021:

-- Seven months of activity generated by the Kentucky Bancshares merger exceeded management expectations and stood out as a meaningful contributor to operating results. -- Loans (excluding PPP) grew $1.05 billion over the past twelve months with $756 million of the growth attributed to the Central/Eastern Kentucky market. -- Excluding the Central/Eastern Kentucky market, the legacy bank grew loans by 10%, or $291 million. Loan balances across all markets ended the year at historic highs. -- Deposit balances grew by $1.80 billion over the past twelve months with $1.08 billion of the growth attributed to the Central/Eastern Kentucky market. Non-interest bearing deposits and interest bearing demand deposits represented $569 million and $776 million of the growth, respectively. -- In 2021, PPP income totaled $22.0 million, compared to $13.6 million for 2020. Going into 2022, approximately $4.6 million in net unrecognized PPP fee income remains to be recognized. -- Since the early part of 2020, ongoing loan yield contraction accompanied with significant excess balance sheet liquidity has led to NIM compression. -- Wide fluctuations within the provision for credit losses over recent periods are consistent with the pandemic and subsequent recovery, Central/Eastern Kentucky market expansion, legacy bank net loan growth and other factors within the CECL allowance for credit loss model. Steady improvement within the Federal Reserves forecast of future unemployment throughout 2021 further led to the release of credit loss reserves. -- Wealth management income reached and surpassed record levels over the past six consecutive quarters, with assets under management soaring $949 million over the past twelve months. Record net new business and market performance have served to elevate asset-based fees. -- Recovery from pandemic levels and the entrance into Central/Eastern Kentucky have significantly boosted deposit fees. -- Customer expansion and transaction growth have led to record 2021 card and treasury management income. -- Brokerage income ended the year strong, reflective of the Central/Eastern Kentucky contribution and higher trading volumes.

Hillebrand added, In November, we were one of 25 banks with asset size between $3 billion to $10 billion that were nationally recognized by American Banker Magazine as one of the Best Banks to Work for in 2021. The Best Banks to Work For program identifies and honors U.S. banks for outstanding employee satisfaction. In addition, in March, we were one of 30 financial institutions recognized in the inaugural Hovde High Performer List, based on our prior year results. Criteria to be admitted included market capitalization below $1 billion, above median average pre-provision ROA, loan and deposit growth and tangible book value growth. These recognitions are an honor and a testament to the dedication of our employees, who continue to work diligently to support our communities.

Results of Operations Fourth Quarter 2021 Compared with Fourth Quarter 2020

Net interest income, the Companys largest source of revenue, increased 27%, or $9.9 million, to $46.2 million, driven by higher interest income on non-PPP loans and the continued decline in cost of funds.

-- Total interest income increased by $9.2 million, or 24%, to $47.5 million, primarily due to increased interest income on non-PPP loans, partly offset by continued earning-asset yield contraction. -- Total interest expense declined 36%, to $1.3 million. Interest expense on deposits decreased $523,000, or 29%, as the cost of interest bearing deposits declined to 0.13% in the fourth quarter of 2021 from 0.27% in the fourth quarter a year ago, as the Company continued to benefit significantly from the strategic lowering of stated deposit rates. Average interest bearing deposit balances, predominantly demand accounts, surged $1.11 billion, or 41%, consistent with the Central/Eastern Kentucky market expansion. -- NIM decreased 28 basis points to 3.07% for the fourth quarter of 2021 from 3.35% for the fourth quarter a year ago. During the quarter, forgiveness within the PPP loan portfolio and related fee income recognition had an 18 basis point positive impact to NIM. Overall NIM continues to be negatively impacted by loan yield contraction and significant ongoing excess balance sheet liquidity, which represented a 35 basis point negative impact compared to a year ago. -- Interest income on non-PPP loans increased $10.1 million, or 34%, over the prior year quarter. Despite a $1.12 billion, or 39%, increase in average non-PPP loans, significant rate contraction impacted the portfolio, with the average quarterly yield earned on non-PPP loans contracting 16 basis points over the past twelve months to 3.98%. PPP interest and fee income totaled $3.7 million and $6.1 million for the fourth quarters of 2021 and 2020, respectively. -- Interest income on debt securities increased $1.4 million, or 68%, compared to the fourth quarter of 2020. Despite a $589 million increase in average balance of securities, the corresponding interest income increase was muted by the overall decline in rates earned.

The Company recorded a net benefit of $1.9 million for credit losses during the fourth quarter of 2021, which included a $1.1 million benefit to provision for credit losses for loans and a $800,000 net benefit to provision for credit losses for off-balance sheet exposures consistent with the improvement in underlying CECL model factors along with increased line utilization in the Commercial & Industrial portfolio during the quarter.

Non-interest income increased $4.9 million, or 36%, to $18.6 million.

-- Wealth management and trust income totaled a record $7.4 million for the fourth quarter of 2021, increasing $1.6 million, or 27%, over the fourth quarter a year ago. Significant growth in assets under management tied to record net new business and strong market performance served to boost asset-based fees and led to an increase of assets under management by $949 million over the past twelve months. -- Retail deposit service charges increased $827,000 compared to the fourth quarter a year ago, a period severely impacted by the pandemic. The increase also reflects the expansion into Central/Eastern Kentucky. -- Card income increased $1.8 million, or 81%, over the fourth quarter of 2020. Growth trends in both debit and credit card portfolios remain positive, as card income benefited significantly from improving economic activity, with consumers and businesses increasing their spending, complimented by a meaningful contribution from the Central/Eastern Kentucky market. -- Treasury management fees increased by $365,000, or 24%, 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 income, which primarily consists of gain on sale of loans, servicing income and mortgage servicing rights amortization, was $1.1 million for the fourth quarter of 2021, down 38% from the fourth quarter a year ago primarily due to a decline in mortgage originations stemming from a rising rate environment that has cooled.

Non-interest expenses increased $5.5 million to $34.6 million.

-- Compensation and employee benefits expense increased $4.1 million, or 25%, primarily due to the increase in full time equivalent employees associated with the merger. Full time equivalent employees increased to 820 at December 31, 2021, from 641 at December 31, 2020, as the Bank added 184 associates in connection with its expansion into Central/Eastern Kentucky. -- Net occupancy and equipment expenses increased $530,000, or 25%, as 19 branches were added with the second quarter expansion into Central/Eastern Kentucky. -- Technology and communication expenses, which include computer software amortization, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources, increased $609,000, or 26%. The majority of the increase related to the merger, as the system conversion did not occur until late August. -- Card processing expense increased $636,000, consistent with the card income revenue trend discussed throughout. -- Marketing and business development expense, which includes all costs associated with promoting the Bank, community investment, retaining customers and acquiring new business increased $958,000, compared to the fourth quarter a year ago, a period significantly impacted by the pandemic. Consistent with the Companys strategic plan, a significant investment was made to advertise and promote the Bank in the Central/Eastern Kentucky market in the fourth quarter of 2021. In addition, the Company increased its contribution to the Banks foundation established to support various community initiatives, due to outstanding 2021 operational results. -- Capital and deposit tax declined $506,000, or 48%, as the Company has transitioned to record Kentucky state income tax as a component of tax expense. -- A large tax credit was completed during the fourth quarter a year ago, leading to $2.9 million in additional tax credit amortization expense for that period. -- Other non-interest expenses increased $1.3 million, or 92%, primarily due to merger related items such as core deposit intangible amortization, increased card rewards expense and insurance captive expenses.

Financial Condition December 31, 2021 Compared with December 31, 2020

Total assets increased $2.04 billion year over year, or 44%, to $6.65 billion boosted by the merger and strong organic growth.

Total loans increased $638 million year over year, or 18%, to $4.17 billion. Excluding the PPP loan portfolio, total loans increased $1.05 billion, or 35%, over the past twelve months. Approximately $756 million of the year over year growth was associated with the Central/Eastern Kentucky market and $291 million, or 10%, related to legacy bank growth. Total line of credit usage increased to 41% as of December31, 2021, from 38% at December 31, 2020, with commercial and industrial line usage increasing meaningfully, but remaining below pre-pandemic levels.

The Company acquired nearly $400 million in debt securities related to the current year merger and has deployed $192 million of excess cash into securities in 2021, contributing significantly to the $593 million of growth in the investment portfolio over the past twelve months.

Total deposits increased $1.80 billion, or 45%, from December 31, 2020 to December 31, 2021, with non-interest bearing deposits representing $569 million of the growth. Both period end and average deposit balances ended at record levels at December 31, 2021, as the Central/Eastern Kentucky market added approximately $1.08 billion to total deposits.

Asset quality, which has trended within a narrow range over the past several years, has remained solid. During the fourth quarter of 2021, the Company recorded net loan charge-offs of $1.5 million compared to net loan recoveries of $19,000 in the fourth quarter of 2020. Non-performing loans totaled $7 million, or 0.18%(2) of total loans outstanding (excluding PPP) compared to $13 million, or 0.44%(2) of total loans (excluding PPP) outstanding at December 31, 2020. These strong metrics along with an improving economic forecast, resulted in a ratio of allowance for credit losses to loans (excluding PPP) of 1.34%(2) at December 31, 2021.

At December 31, 2021, the Company remained well-capitalized, the highest regulatory capital rating for financial institutions. Total equity to assets was 10.17% and the tangible common equity ratio was 8.22%(1) at December 31, 2021, compared to 9.56%(1) and 9.28%(1), respectively, at December 31, 2020.

In November, 2021, the board of directors declared a cash dividend of $0.28 per common share. The dividend was paid on December 31, 2021, to stockholders of record as of December 20, 2021.

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 Fourth Quarter 2021 Compared with Third Quarter 2021

Net interest income increased $699,000, or 2%, over the prior quarter to $46.2 million, consistent with the continued decline in cost of funds and organic loan growth. While overall NIM was challenged by increased levels of excess liquidity, loan yield contraction showed signs of stabilization in the fourth quarter of 2021.

Due to continued improvement in the unemployment forecast combined with solid traditional credit metrics, the Company recorded a $1.1 million benefit to provision for credit losses on loans in the fourth quarter of 2021. During the third quarter of 2021, the Company recorded a net benefit of $1.0 million to provision for credit losses on loans.

Non-interest income increased $990,000, or 6%, to $18.6 million. Higher card income, deposit service fees, wealth management and trust service fees, treasury management fees and mortgage banking income all contributed to the quarterly increase.

Non-interest expenses remained flat compared to the prior quarter at $34.6 million.

Financial Condition December 31, 2021, Compared with September 30, 2021

Total assets increased $465 million on a linked quarter basis to $6.65 billion, reflecting organic increases in loans and investment securities.

Total loans (excluding PPP) increased $71 million, or 2%, on a linked quarter basis. Total line of credit usage was 41% as of December31, 2021 and unchanged compared to September 30, 2021. While remaining well below pre-pandemic levels, commercial and industrial line usage increased to 32% at year-end compared to 29% at September 30, 2021.

Total deposits increased $445 million, or 8%, on a linked quarter basis, due to higher deposit levels consistent with the seasonal increase in public funds and growth in balances for both existing and new customers.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $6.65 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: the possibility that any of the anticipated benefits of the proposed Commonwealth Bancshares merger will not be realized or will not be realized within the expected time period; the risk that integration of Commonwealth 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; 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; 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. Refer to Stock Yards Annual Report on Form 10-K for the year ended December 31, 2020, 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.

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



Stock Yards Bancorp, Inc. Financial Information (unaudited)Fourth Quarter 2021 Earnings Release(In thousands unless otherwise noted) Three Months Ended Twelve Months Ended December 31, December 31, Income Statement 2021 2020 2021 2020 Data Net interestincome, fully $ 46,328 $ 36,301 $ 171,508 $ 136,133 tax equivalent(3)Interest income: Loans $ 43,671 $ 36,007 $ 164,073 $ 137,699 Federal fundssold and 287 65 645 738 interest bearingdue from banksMortgage loans 74 174 249 533 held for saleSecurities 3,476 2,093 12,109 8,901 Total interest 47,508 38,339 177,076 147,871 incomeInterest expense:Deposits 1,279 1,802 5,627 10,478 Securities soldunder agreements to repurchaseandother short-term 11 8 38 72 borrowingsFederal HomeLoan Bank 36 277 337 1,400 advancesTotal interest 1,326 2,087 6,002 11,950 expenseNet interest 46,182 36,252 171,074 135,921 incomeProvision forcredit losses (1,900 ) 500 (753 ) 18,418 (6)Net interestincome after 48,082 35,752 171,827 117,503 provision forcredit lossesNon-interest income:Wealthmanagement and 7,379 5,805 27,613 23,406 trust servicesDeposit service 1,907 1,080 5,852 4,161 chargesDebit and credit 4,012 2,219 13,456 8,480 card incomeTreasury 1,871 1,506 6,912 5,407 management feesMortgage banking 1,062 1,708 4,724 6,155 incomeNet investmentproduct sales 764 487 2,553 1,775 commissions andfeesBank owned life 272 166 914 693 insuranceOther 1,337 727 3,826 1,822 Totalnon-interest 18,604 13,698 65,850 51,899 incomeNon-interest expenses:Compensation 17,146 14,072 63,034 51,368 Employee 3,189 2,173 13,479 11,064 benefitsNet occupancy 2,667 2,137 9,688 8,182 and equipmentTechnology and 2,956 2,347 11,145 8,732 communicationDebit and credit 1,334 698 4,494 2,606 card processingMarketing andbusiness 1,793 835 4,150 2,383 developmentPostage,printing and 714 423 2,213 1,778 suppliesLegal and 755 597 2,583 2,392 professionalFDIC Insurance 706 323 1,847 1,217 Amortization ofinvestments in 52 2,955 367 3,096 tax creditpartnershipsCapital anddeposit based 549 1,055 2,090 4,386 taxesMerger expenses - - 19,025 - Federal HomeLoan Bank early - - 474 - terminationpenaltyOther 2,711 1,414 7,691 4,455 Totalnon-interest 34,572 29,029 142,280 101,659 expensesIncome beforeincome tax 32,114 20,421 95,397 67,743 expenseIncome tax 7,525 2,685 20,752 8,874 expenseNet income $ 24,589 $ 17,736 $ 74,645 $ 58,869 Net income per $ 0.93 $ 0.79 $ 3.00 $ 2.61 share - BasicNet income per 0.92 0.78 2.97 2.59 share - DilutedCash dividenddeclared per 0.28 0.27 1.10 1.08 share Weighted average 26,492 22,593 24,898 22,563 shares - BasicWeighted average 26,800 22,794 25,156 22,768 shares - Diluted December 31, Balance Sheet 2021 2020 Data Loans $ 4,169,303 $ 3,531,596 Allowance forcredit losses on 53,898 51,920 loansTotal assets 6,646,025 4,608,629 Non-interest 1,755,754 1,187,057 bearing depositsInterest bearing 4,031,760 2,801,577 depositsFederal HomeLoan Bank - 31,639 advancesStockholders' 675,869 440,701 equityTotal shares 26,596 22,692 outstandingBook value per $ 25.41 $ 19.42 share (1)Tangible commonequity per share 20.09 18.78 (1)Market value per 63.88 40.48 share Stock Yards Bancorp, Inc. Financial Information (unaudited)Fourth Quarter 2021 Earnings Release Three Months Ended Twelve Months Ended December 31, December 31, Average Balance 2021 2020 2021 2020 Sheet Data Federal fundssold and $ 699,222 $ 271,277 $ 446,783 $ 229,905 interest bearingdue from banksMortgage loans 12,556 28,951 11,170 20,156 held for saleAvailable forsale debt 1,099,235 510,677 898,934 453,082 securitiesFederal Home 9,376 11,284 10,824 11,284 Loan Bank stockLoans 4,172,676 3,483,298 3,951,257 3,304,909 Total interest 5,993,065 4,305,487 5,318,968 4,019,336 earning assetsTotal assets 6,406,612 4,512,874 5,626,886 4,217,593 Interest bearing 3,798,666 2,689,103 3,302,262 2,507,545 depositsTotal deposits 5,559,577 3,888,247 4,881,057 3,608,487 Securities soldunder agreementto repurchase 86,911 55,825 73,130 49,820 and other shortterm borrowingsFederal HomeLoan Bank 7,174 48,771 16,317 61,483 advancesTotal interestbearing 3,892,751 2,793,699 3,391,709 2,618,848 liabilitiesTotalstockholders' 668,287 433,596 573,261 420,119 equity Performance RatiosAnnualizedreturn on 1.52 % 1.56 % 1.33 % 1.40 % average assets(7)Annualizedreturn on 14.60 % 16.27 % 13.02 % 14.01 % average equity(7)Net interestmargin, fully 3.07 % 3.35 % 3.22 % 3.39 % tax equivalentNon-interestincome to total 28.65 % 27.40 % 27.74 % 27.60 % revenue, fullytax equivalentEfficiencyratio, fully tax 53.24 % 58.06 % 59.94 % 54.06 % equivalent (4) Capital Ratios Totalstockholders' 10.17 % 9.56 % equity to totalassets (1)Tangible commonequity to 8.22 % 9.28 % tangible assets(1)Averagestockholders' 10.19 % 9.96 % equity toaverage assetsTotal risk-based 12.79 % 13.36 % capitalCommon equitytier 1 11.94 % 12.23 % risk-basedcapitalTier 1risk-based 11.94 % 12.23 % capitalLeverage 8.86 % 9.57 % Loan SegmentationCommercial realestate - $ 1,128,244 $ 833,470 non-owneroccupiedCommercial realestate - owner 678,405 508,672 occupiedCommercial and 967,022 775,154 industrialCommercial and 140,734 550,186 industrial - PPPResidential realestate - owner 400,695 239,191 occupiedResidential realestate - 281,018 140,930 non-owneroccupiedConstruction and 299,206 291,764 land developmentHome equity 138,976 95,366 lines of creditConsumer 104,294 71,874 Leases 13,622 14,786 Credit cards 17,087 10,203 Total loans and $ 4,169,303 $ 3,531,596 leases Asset Quality DataNon-accrual $ 6,712 $ 12,514 loansTroubled debt 12 16 restructuringsLoans past due90 days or more 684 649 and stillaccruingTotalnon-performing 7,408 13,179 loansOther real 7,212 281 estate ownedTotalnon-performing $ 14,620 $ 13,460 assetsNon-performingloans to total 0.18 % 0.37 % loans (2)Non-performingassets to total 0.22 % 0.29 % assetsAllowance forcredit losses on 1.29 % 1.47 % loans to totalloans (2)Allowance forcredit losses 1.36 % 1.57 % on loans toaverage loansAllowance forcredit losses onloans to 728 % 394 % non-performingloansNet(charge-offs) $ (1,535 ) $ 19 $ (6,176 ) $ (1,645 ) recoveriesNet(charge-offs)recoveries to -0.04 % 0.00 % -0.16 % -0.05 % average loans(5) Stock YardsBancorp, Inc.Financial Information(unaudited)Fourth Quarter2021 Earnings Release Quarterly ComparisonIncome Statement 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20Data Net interestincome, fully $ 46,328 $ 45,643 $ 41,661 $ 37,874 $ 36,301 tax equivalent(3)Net interest $ 46,182 $ 45,483 $ 41,584 $ 37,825 $ 36,252 incomeProvision forcredit losses (1,900 ) (1,525 ) 4,147 (1,475 ) 500 (6)Net interestincome after 48,082 47,008 37,437 39,300 35,752 provision forcredit lossesNon-interest income:Wealthmanagement and 7,379 7,128 6,858 6,248 5,805 trust servicesDeposit service 1,907 1,768 1,233 944 1,080 chargesDebit and credit 4,012 3,887 3,284 2,273 2,219 card incomeTreasury 1,871 1,771 1,730 1,540 1,506 management feesMortgage banking 1,062 915 1,303 1,444 1,708 incomeNet investmentproduct sales 764 780 545 464 487 commissions andfeesBank owned life 272 275 206 161 166 insuranceOther 1,337 1,090 629 770 727 Totalnon-interest 18,604 17,614 15,788 13,844 13,698 incomeNon-interest expenses:Compensation 17,146 17,381 15,680 12,827 14,072 Employee 3,189 3,662 3,367 3,261 2,173 benefitsNet occupancy 2,667 2,732 2,244 2,045 2,137 and equipmentTechnology and 2,956 3,173 2,670 2,346 2,347 communicationDebit and credit 1,334 1,479 976 705 698 card processingMarketing andbusiness 1,793 1,011 822 524 835 developmentPostage,printing and 714 630 460 409 423 suppliesLegal and 755 700 666 462 597 professionalFDIC Insurance 706 387 349 405 323 Amortization ofinvestments in 52 53 231 31 2,955 tax creditpartnershipsCapital anddeposit based 549 556 527 458 1,055 taxesMerger expenses - 525 18,100 400 - Federal HomeLoan Bank early - - 474 - - terminationpenaltyOther 2,711 2,269 1,611 1,100 1,414 Totalnon-interest 34,572 34,558 48,177 24,973 29,029 expensesIncome beforeincome tax 32,114 30,064 5,048 28,171 20,421 expenseIncome tax 7,525 6,902 864 5,461 2,685 expenseNet income $ 24,589 $ 23,162 $ 4,184 $ 22,710 $ 17,736 Net income per $ 0.93 $ 0.87 $ 0.17 $ 1.00 $ 0.79 share - BasicNet income per 0.92 0.87 0.17 0.99 0.78 share - DilutedCash dividenddeclared per 0.28 0.28 0.27 0.27 0.27 share Weighted average 26,492 26,485 23,932 22,622 22,593 shares - BasicWeighted average 26,800 26,726 24,171 22,865 22,794 shares - Diluted Quarterly ComparisonBalance Sheet 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20Data Cash and due $ 62,304 $ 84,520 $ 58,477 $ 43,061 $ 43,179 from banksFederal fundssold and 898,888 500,421 481,716 289,920 274,766 interest bearingdue from banksMortgage loans 8,614 10,201 5,420 6,579 22,547 held for saleAvailable forsale debt 1,180,298 1,070,148 1,006,908 672,167 586,978 securitiesFederal Home 9,376 9,376 14,475 10,228 11,284 Loan Bank stockLoans 4,169,303 4,189,117 4,206,392 3,635,156 3,531,596 Allowance forcredit losses on 53,898 56,533 59,424 50,714 51,920 loansGoodwill 135,830 135,830 136,529 12,513 12,513 Total assets 6,646,025 6,181,188 6,088,072 4,794,075 4,608,629 Non-interest 1,755,754 1,744,790 1,743,953 1,370,183 1,187,057 bearing depositsInterest bearing 4,031,760 3,597,234 3,516,153 2,829,779 2,801,577 depositsSecurities soldunder agreements 75,466 74,406 63,942 51,681 47,979 to repurchaseFederal funds 10,374 10,908 10,947 8,642 11,464 purchasedFederal HomeLoan Bank - 10,000 10,000 24,180 31,639 advancesStockholders' 675,869 663,547 651,089 443,232 440,701 equityTotal shares 26,596 26,585 26,588 22,781 22,692 outstandingBook value per $ 25.41 $ 24.96 $ 24.49 $ 19.46 $ 19.42 share (1)Tangible commonequity per share 20.09 19.63 19.16 18.82 18.78 (1)Market value per 63.88 58.65 50.89 51.06 40.48 share Capital Ratios Totalstockholders' 10.17 % 10.73 % 10.69 % 9.25 % 9.56 %equity to totalassets (1)Tangible commonequity to 8.22 % 8.64 % 8.57 % 8.97 % 9.28 %tangible assets(1)Averagestockholders' 10.43 % 10.75 % 9.88 % 9.44 % 9.61 %equity toaverage assetsTotal risk-based 12.79 % 12.61 % 12.80 % 13.39 % 13.36 %capitalCommon equitytier 1 11.94 % 11.69 % 11.79 % 12.32 % 12.23 %risk-basedcapitalTier 1risk-based 11.94 % 11.69 % 11.79 % 12.32 % 12.23 %capitalLeverage 8.86 % 8.98 % 10.26 % 9.46 % 9.57 % Stock Yards Bancorp, Inc. Financial Information (unaudited)Fourth Quarter 2021 Earnings Release Quarterly ComparisonAverage Balance 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20Sheet Data Federal fundssold and $ 699,222 $ 532,549 $ 313,954 $ 235,370 $ 271,277 interest bearingdue from banksMortgage loans 12,556 8,875 8,678 14,618 28,951 held for saleAvailable forsale debt 1,099,235 1,034,712 793,696 661,175 510,677 securitiesLoans 4,172,676 4,173,260 3,844,662 3,605,760 3,483,298 Total interest 5,993,065 5,760,760 4,972,914 4,527,563 4,305,487 earning assetsTotal assets 6,406,612 6,139,176 5,226,654 4,710,836 4,512,874 Interest bearing 3,798,666 3,525,785 3,055,360 2,815,986 2,689,103 depositsTotal deposits 5,559,577 5,297,917 4,552,583 4,094,179 3,888,247 Securities soldunder agreementto repurchase 86,911 82,048 66,591 56,536 55,825 and federalfunds purchasedFederal HomeLoan Bank 7,174 10,000 19,135 29,270 48,771 advancesTotal interestbearing 3,892,751 3,617,833 3,141,086 2,901,792 2,793,699 liabilitiesTotalstockholders' 668,287 660,099 516,427 444,821 433,596 equity Performance RatiosAnnualizedreturn on 1.52 % 1.50 % 0.32 % 1.96 % 1.56 %average assets(7)Annualizedreturn on 14.60 % 13.92 % 3.25 % 20.71 % 16.27 %average equity(7)Net interestmargin, fully 3.07 % 3.14 % 3.36 % 3.39 % 3.35 %tax equivalentNon-interestincome to total 28.65 % 27.85 % 27.48 % 26.77 % 27.40 %revenue, fullytax equivalentEfficiencyratio, fully tax 53.24 % 54.63 % 83.86 % 48.29 % 58.06 %equivalent (4) Loans SegmentationCommercial realestate - $ 1,128,244 $ 1,142,647 $ 1,170,461 $ 876,523 $ 833,470 non-owneroccupiedCommercial realestate - owner 678,405 652,631 604,120 527,316 508,672 occupiedCommercial and 967,022 910,923 845,038 742,505 775,154 industrialCommercial and 140,734 231,335 377,021 612,885 550,186 industrial - PPPResidential realestate - owner 400,695 398,069 377,783 262,516 239,191 occupiedResidential realestate - 281,018 277,045 273,782 136,380 140,930 non-owneroccupiedConstruction and 299,206 303,642 281,149 281,815 291,764 land developmentHome equity 138,976 140,027 142,468 91,233 95,366 lines of creditConsumer 104,294 104,629 105,439 78,326 71,874 Leases 13,622 12,348 14,171 14,115 14,786 Credit cards 17,087 15,821 14,960 11,542 10,203 Total loans and $ 4,169,303 $ 4,189,117 $ 4,206,392 $ 3,635,156 $ 3,531,596 leases Asset Quality DataNon-accrual $ 6,712 $ 5,036 $ 12,814 $ 12,913 $ 12,514 loansTroubled debt 12 13 14 15 16 restructuringsLoans past due90 days or more 684 - 1,050 1,377 649 and stillaccruingTotalnon-performing 7,408 5,049 13,878 14,305 13,179 loansOther real 7,212 7,229 648 281 281 estate ownedTotalnon-performing $ 14,620 $ 12,278 $ 14,526 $ 14,586 $ 13,460 assetsNon-performingloans to total 0.18 % 0.12 % 0.33 % 0.39 % 0.37 %loans (2)Non-performingassets to total 0.22 % 0.20 % 0.24 % 0.30 % 0.29 %assetsAllowance forcredit losses on 1.29 % 1.35 % 1.41 % 1.40 % 1.47 %loans to totalloans (2)Allowance forcredit losses on 1.29 % 1.35 % 1.55 % 1.41 % 1.49 %loans to averageloansAllowance forcredit losses onloans to 728 % 1120 % 428 % 355 % 394 %non-performingloansNet(charge-offs) $ (1,535 ) $ (1,891 ) $ (2,743 ) $ (6 ) $ 19 recoveriesNet(charge-offs)recoveries to -0.04 % -0.05 % -0.07 % 0.00 % 0.00 %average loans(5) Other InformationTotal assetsunder management $ 4,801 $ 4,506 $ 4,440 $ 3,989 $ 3,852 (in millions)Full-timeequivalent 820 794 823 638 641 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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20data) Totalstockholders' $ 675,869 $ 663,547 $ 651,089 $ 443,232 $ 440,701 equity - GAAP(a)Less: Goodwill (135,830 ) (135,830 ) (136,529 ) (12,513 ) (12,513 )Less: Coredeposit (5,596 ) (5,871 ) (5,162 ) (1,885 ) (1,962 )intangibleTangible commonequity - $ 534,443 $ 521,846 $ 509,398 $ 428,834 $ 426,226 Non-GAAP (c) Total assets - $ 6,646,025 $ 6,181,188 $ 6,088,072 $ 4,794,075 $ 4,608,629 GAAP (b)Less: Goodwill (135,830 ) (135,830 ) (136,529 ) (12,513 ) (12,513 )Less: Coredeposit (5,596 ) (5,871 ) (5,162 ) (1,885 ) (1,962 )intangibleTangible assets $ 6,504,599 $ 6,039,487 $ 5,946,381 $ 4,779,677 $ 4,594,154 - Non-GAAP (d) Totalstockholders'equity to total 10.17 % 10.73 % 10.69 % 9.25 % 9.56 %assets - GAAP (a/b)Tangible commonequity to 8.22 % 8.64 % 8.57 % 8.97 % 9.28 %tangible assets- Non-GAAP (c/d) Total shares 26,596 26,585 26,588 22,781 22,692 outstanding (e) Book value pershare - GAAP (a/ $ 25.41 $ 24.96 $ 24.49 $ 19.46 $ 19.42 e)Tangible commonequity per share 20.09 19.63 19.16 18.82 18.78 - 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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20thousands) Total Loans - $ 4,169,303 $ 4,189,117 $ 4,206,392 $ 3,635,156 $ 3,531,596 GAAP (a)Less: PPP loans (140,734 ) (231,335 ) (377,021 ) (612,885 ) (550,186 )Total non-PPPLoans - Non-GAAP $ 4,028,569 $ 3,957,782 $ 3,829,371 $ 3,022,271 $ 2,981,410 (b) Allowance forcredit losses on $ 53,898 $ 56,533 $ 59,424 $ 50,714 $ 51,920 loans (c)Totalnon-performing 7,408 5,049 13,878 14,305 13,179 loans (d) Allowance forcredit losses onloans to total 1.29 % 1.35 % 1.41 % 1.40 % 1.47 %loans - GAAP (c/a)Allowance forcredit losses onloans to total 1.34 % 1.43 % 1.55 % 1.68 % 1.74 %loans - Non-GAAP(c/b) Non-performingloans to total 0.18 % 0.12 % 0.33 % 0.39 % 0.37 %loans - GAAP (d/a)Non-performingloans to total 0.18 % 0.13 % 0.36 % 0.47 % 0.44 %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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20thousands) Totalnon-interest $ 34,572 $ 34,558 $ 48,177 $ 24,973 $ 29,029 expenses - GAAP(a)Less:Non-recurring - (525 ) (18,100 ) (400 ) - merger expensesLess:Amortization ofinvestments in (52 ) (53 ) (231 ) (31 ) (2,955 )tax creditpartnershipsTotalnon-interest $ 34,520 $ 33,980 $ 29,846 $ 24,542 $ 26,074 expenses -Non-GAAP (c) Total netinterest income, $ 46,328 $ 45,643 $ 41,661 $ 37,874 $ 36,301 fully taxequivalentTotalnon-interest 18,604 17,614 15,788 13,844 13,698 incomeLess: Gain/losson sale of - - - - - securitiesTotal revenue - $ 64,932 $ 63,257 $ 57,449 $ 51,718 $ 49,999 GAAP (b) Efficiency ratio 53.24 % 54.63 % 83.86 % 48.29 % 58.06 %- GAAP (a/b)Efficiency ratio 53.16 % 53.72 % 51.95 % 47.45 % 52.15 %- Non-GAAP (c/b) Twelve months ended (Dollars in 12/31/21 12/31/20 thousands) Totalnon-interest $ 142,280 $ 101,659 expenses - GAAP(a)Less:Non-recurring (19,025 ) - merger expensesLess:Amortization ofinvestments in (367 ) (3,096 ) tax creditpartnershipsTotalnon-interest $ 122,888 $ 98,563 expenses -Non-GAAP (c) Total netinterest income, $ 171,508 $ 136,133 fully taxequivalentTotalnon-interest 65,850 51,899 incomeLess: Gain/losson sale of - - securitiesTotal revenue - $ 237,358 $ 188,032 GAAP (b) Efficiency ratio 59.94 % 54.06 % - GAAP (a/b)Efficiency ratio 51.77 % 52.42 % - Non-GAAP (c/b) (5) - Quarterly net (charge-offs) recoveries to average loans ratios are notannualized. (6) - Detail of Provision for credit losses follows: Quarterly Comparison(in thousands) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Provision forcredit losses - $ (1,100 ) $ (1,000 ) $ 4,697 $ (1,200 ) $ 1,400 loansProvision forcredit losses - (800 ) (525 ) (550 ) (275 ) (900 )off balancesheet exposuresTotal provisionfor credit $ (1,900 ) $ (1,525 ) $ 4,147 $ (1,475 ) $ 500 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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20thousands) Net income, as $ 24,589 $ 23,162 $ 4,184 $ 22,710 $ 17,736 reported (a)Add:Non-recurring - 525 18,100 400 - merger expensesAdd: Provisionfor credit - - 7,397 - - losses onnon-PCD loansLess: Tax effectof adjustments - (121 ) (4,360 ) (78 ) - to net incomeTotal net income $ 24,589 $ 23,577 $ 24,327 $ 23,026 $ 17,736 - Non-GAAP (b) Total average $ 6,406,612 $ 6,139,176 $ 5,226,654 $ 4,710,836 $ 4,512,874 assets (c) Total average 668,287 660,099 516,427 444,821 433,596 equity (d ) Return onaverage assets - 1.52 % 1.50 % 0.32 % 1.96 % 1.56 %GAAP (a/c)Return onaverage assets - 1.52 % 1.52 % 1.87 % 1.98 % 1.56 %Non-GAAP (b/c) Return onaverage equity - 14.60 % 13.92 % 3.25 % 20.71 % 16.23 %GAAP (a/d)Return onaverage equity - 14.60 % 14.17 % 18.89 % 20.99 % 16.23 %Non-GAAP (b/d)