Revenue and Growth - WM&T revenue distinguishes Bancorp from other community banks of similar asset size, providing a strong competitive advantage[29] - Bancorp has seen significant growth in non-interest revenue sources, particularly in treasury management services and debit/credit card services[29] - The company aims to pursue organic growth opportunities while capitalizing on strategic acquisitions to broaden its market presence[30] - The acquisition of KB in Q2 2021 expanded Bancorp's footprint into central and eastern Kentucky, providing broader product offerings and increased lending capabilities[31] - The acquisition of CB in Q1 2022 bolstered Bancorp's market share in Louisville and expanded its presence in Shelby County and northern Kentucky, creating the largest bank-owned trust company in Kentucky[32] Efficiency and Capitalization - The efficiency ratio (FTE) for the years ended December 31, 2022, 2021, and 2020 was 59.30%, 59.94%, and 54.06%, respectively, with elevated ratios in 2022 and 2021 attributed to merger-related expenses[34] - Bancorp's adjusted efficiency ratio (FTE) for the years ended December 31, 2022, 2021, and 2020 was 53.62%, 51.77%, and 52.42%[35] - As of December 31, 2022, Bancorp exceeded the requirements to be considered well-capitalized, maintaining a Common Equity Tier 1 Risk-Based Capital ratio above the minimum 6.5%[57] - The adequately-capitalized minimums, including a 2.5% capital conservation buffer, were 7.0% for Common Equity Tier 1, 8.5% for Tier 1, and 10.5% for Total Risk-Based Capital as of December 31, 2022[58] Risk Factors - Bancorp's allowance for credit losses reflects management's estimate of expected credit losses, which may not be adequate to cover actual losses, potentially impacting earnings[76] - The company is subject to risks from fluctuations in interest rates, which could reduce profitability due to gaps in interest rate sensitivities[69] - Bancorp's mortgage banking business is highly dependent on programs administered by FNMA and FHLMC, with potential adverse effects from changes in these programs[89] - The company is exposed to interest rate risk on loans held for sale and rate lock loan commitments, which could lead to fluctuations in fair value as market interest rates change[93] - Approximately 47% of total deposits are centralized in accounts with balances of $500,000 or greater, categorized as core funds, indicating a reliance on large commercial deposit relationships[103] Market Conditions and Economic Outlook - The Federal Reserve raised the Federal Funds Target Rate (FFTR) by a cumulative 425 basis points in 2022, reaching a range of 4.25% - 4.50%[70] - The economic outlook for 2023 suggests sluggish growth and continued monetary tightening, with potential impacts on borrowers' ability to perform[75] - Income from Wealth Management & Trust (WM&T) constitutes approximately 41% of non-interest income, indicating reliance on market conditions[80] - Bancorp's credit metrics are currently at historically strong levels, but normalization is anticipated over time[78] Operational Challenges - The company experienced record levels of excess liquidity in 2021, which began normalizing in the latter half of 2022, with expectations of continued normalization into 2023[104] - Competitive factors, including the reduction of certain deposit account fees, pose challenges to maintaining deposit-related non-interest income, which has been declining industry-wide[95] - The integration of acquired institutions may present risks, including unanticipated losses and the potential loss of key customers and employees if not managed effectively[97] - The company relies on third-party vendors for processing transactions, and any failure in their controls could disrupt business operations and adversely affect financial condition[111] - The financial services industry is undergoing rapid technological changes, and the company's ability to keep pace with these changes is critical for maintaining competitiveness[113] - Changes in customer behavior towards non-bank alternatives for financial transactions could lead to a loss of fee income, deposits, and loans[114] Regulatory and Compliance Issues - The company is subject to extensive regulation, and any changes in laws or regulations could significantly impact financial condition and results of operations[115] - Increasing scrutiny regarding environmental, social, and governance practices may impose additional costs and risks on the company[119] - Regulatory compliance requirements are increasing, which may impact the company's operations and strategic decisions[19] - The company is aware of potential litigation and governmental investigations that could affect its business[19] - There are concerns regarding the coverage of the company by securities analysts, which may impact market perceptions[19] - The company is monitoring significant acquisitions or business combinations involving competitors that could affect its market position[19] Employee and Service Focus - Approximately 67% of Bancorp's employees are located in Louisville, Kentucky, with a total of 1,040 full-time equivalent employees as of December 31, 2022[38] - The company emphasizes personalized service tailored to individual client needs, enhancing its competitive ability in the market[44] - Bancorp's strategy includes maintaining disciplined underwriting standards and a commitment to operational efficiency[28]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 1-13661 STOCK YARDS BANCORP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) Unaudited interim statements show significant asset growth and lower net income due to the Commonwealth acquisition and merger expenses - The financial statements are presented on a condensed, unaudited basis for the interim period and should be read in conjunction with the 2021 Annual Report on Form 10-K[29](index=29&type=chunk)[30](index=30&type=chunk) - The acquisition of Commonwealth Bancshares, Inc on March 7, 2022, is a significant event impacting the comparability of the financial statements, adding substantial assets and one-time merger expenses[116](index=116&type=chunk)[285](index=285&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew 17% to $7.78 billion, driven by the Commonwealth acquisition which increased loans, deposits, and goodwill Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$7,777,152** | **$6,646,025** | | Total cash and cash equivalents | $751,691 | $961,192 | | Net loans | $4,780,616 | $4,115,405 | | Goodwill | $202,524 | $135,830 | | **Total Liabilities** | **$7,015,932** | **$5,970,156** | | Total deposits | $6,745,491 | $5,787,514 | | **Total Stockholders' Equity** | **$758,143** | **$675,869** | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income fell to $7.9 million due to $19.5 million in merger expenses, despite strong growth in interest and non-interest income Q1 2022 vs Q1 2021 Income Statement Highlights (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Interest Income | $48,760 | $37,825 | | Provision for credit losses | $2,279 | $(1,475) | | Total Non-interest Income | $19,203 | $13,844 | | Total Non-interest Expenses | $56,297 | $24,973 | | *Merger expenses* | *$19,500* | *$400* | | **Net Income Available to Stockholders** | **$7,906** | **$22,710** | | **Diluted EPS** | **$0.29** | **$0.99** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) A comprehensive loss of $41.7 million was driven by a $49.7 million other comprehensive loss from unrealized losses on securities Q1 2022 vs Q1 2021 Comprehensive Income (Loss) (in thousands) | | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $7,942 | $22,710 | | Change in unrealized loss on AFS debt securities (pre-tax) | $(65,379) | $(15,567) | | Total other comprehensive income (loss), net of tax | $(49,659) | $(11,791) | | **Comprehensive income (loss)** | **$(41,717)** | **$10,919** | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity rose to $758.1 million, driven by stock issuance for the acquisition, offset by a large comprehensive loss - The company issued **2,564,000 shares valued at $133.8 million** as part of the consideration for the Commonwealth acquisition[17](index=17&type=chunk) - A significant **other comprehensive loss of $49.7 million** reduced retained earnings, primarily due to unrealized losses on the AFS securities portfolio[17](index=17&type=chunk) - Cash dividends of **$0.28 per share, totaling $8.2 million**, were declared and paid during the quarter[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by $209.5 million, impacted by operating, investing, and financing activities Q1 2022 vs Q1 2021 Cash Flow Summary (in thousands) | Cash Flow From: | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Operating Activities | $3,520 | $27,235 | | Investing Activities | $(35,337) | $(207,647) | | Financing Activities | $(177,684) | $195,448 | | **Net Change in Cash** | **$(209,501)** | **$15,036** | - The Commonwealth acquisition provided **net cash of $349.5 million**, which significantly impacted cash flows from investing activities[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Commonwealth acquisition, loan portfolio growth, and capital adequacy, which remains above regulatory thresholds [Note 1: Summary of Significant Accounting Policies](index=14&type=section&id=(1)%20Summary%20of%20Significant%20Accounting%20Policies) The company operates in two segments and prepares statements under GAAP, with key policies for ACL, CECL, and business acquisitions - Bancorp has two reportable segments: **Commercial Banking and Wealth Management and Trust (WM&T)**[24](index=24&type=chunk)[25](index=25&type=chunk) - Critical accounting policies include the determination of the **Allowance for Credit Losses (ACL)** on loans and goodwill[32](index=32&type=chunk) - The company uses the **Current Expected Credit Loss (CECL) model** for estimating credit losses on financial instruments, employing methodologies like Discounted Cash Flow (DCF) and Static Pool analysis based on loan portfolio segments[58](index=58&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Note 2: Acquisition](index=25&type=section&id=(2)%20Acquisition) Details the Commonwealth acquisition for $168 million, which added $1.34 billion in assets and resulted in $67 million of goodwill - Completed the acquisition of Commonwealth Bancshares, Inc (CB) on March 7, 2022, for total consideration of **$168 million** in a stock and cash transaction[116](index=116&type=chunk) Commonwealth Bancshares, Inc. Acquisition Summary (in thousands) | | Value | | :--- | :--- | | Total assets acquired | $1,336,815 | | Total liabilities assumed | $1,235,596 | | Net assets acquired | $101,219 | | Total consideration | $167,913 | | **Goodwill** | **$66,694** | - The acquisition of Kentucky Bancshares, Inc (KB) was completed on May 31, 2021, for a total consideration of **$233 million**, resulting in **$123 million of goodwill**[128](index=128&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) [Note 4: Loans and Allowance for Credit Losses on Loans](index=35&type=section&id=(4)%20Loans%20and%20Allowance%20for%20Credit%20Losses%20on%20Loans) Total loans grew to $4.85 billion and the ACL increased to $67.1 million, primarily due to the CB acquisition Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Commercial real estate | $2,200,814 | $1,806,649 | | Commercial and industrial | $1,155,341 | $1,107,756 | | Residential real estate | $789,250 | $681,713 | | Construction and land development | $346,372 | $299,206 | | Other | $355,906 | $274,189 | | **Total loans** | **$4,847,683** | **$4,169,303** | Allowance for Credit Losses (ACL) Activity (in thousands) | | Q1 2022 | | :--- | :--- | | Beginning Balance | $53,898 | | Initial Allowance on PCD Loans | $9,950 | | Provision for Credit Losses on Loans | $2,679 | | Net Charge-offs / (Recoveries) | $(540) | | **Ending Balance** | **$67,067** | - **Non-accrual loans increased to $12.5 million** at March 31, 2022, from $6.7 million at December 31, 2021[160](index=160&type=chunk)[161](index=161&type=chunk) [Note 21: Regulatory Matters](index=71&type=section&id=(21)%20Regulatory%20Matters) The company and its bank remain well-capitalized, exceeding all Basel III regulatory capital requirements - Bancorp and the Bank are subject to Basel III capital regulations and **exceed all minimum requirements** to be considered 'well-capitalized'[253](index=253&type=chunk)[254](index=254&type=chunk)[257](index=257&type=chunk) Bank Capital Ratios as of March 31, 2022 | Ratio | Actual | Minimum for Well-Capitalized | | :--- | :--- | :--- | | Common Equity Tier 1 Risk-Based Capital | 10.31% | 6.50% | | Tier 1 Risk-Based Capital | 10.31% | 8.00% | | Total Risk-Based Capital | 11.34% | 10.00% | | Tier 1 Leverage | 8.65% | 5.00% | - The company acquired **$26 million in subordinated debentures** (Trust Preferred Securities) from the CB acquisition, which are treated as Tier 1 Capital[256](index=256&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=77&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Q1 EPS fell 71% due to merger expenses, though core performance was strong with significant growth in net interest income [Acquisition of Commonwealth Bancshares, Inc.](index=80&type=section&id=Acquisition%20of%20Commonwealth%20Bancshares%2C%20Inc.) The acquisition of Commonwealth Bancshares for $168 million added $1.34 billion in assets and incurred $19.5 million in merger costs - The acquisition of Commonwealth Bancshares, Inc (CB) was completed on March 7, 2022, adding **$1.34 billion in assets**, **$632 million in net loans**, and **$2.93 billion in assets under management**[285](index=285&type=chunk) - The transaction resulted in **$67 million of goodwill** and **$19.5 million in pre-tax merger-related expenses** in Q1 2022[286](index=286&type=chunk) [Results of Operations](index=82&type=section&id=Results%20of%20Operations) Q1 results were driven by the CB acquisition, with higher revenues offset by a compressed NIM and significant merger expenses Q1 2022 vs Q1 2021 Performance Overview | (dollars in thousands, except per share data) | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net income attributed to stockholders | $7,906 | $22,710 | -65% | | Diluted earnings per share | $0.29 | $0.99 | -71% | | ROA | 0.47% | 1.96% | -76% | | ROE | 4.55% | 20.71% | -78% | - The significant decrease in net income and profitability ratios was primarily driven by **$19.5 million in merger expenses** and **$4.4 million in credit loss expense** related to the Commonwealth acquisition[296](index=296&type=chunk) [Financial Condition](index=98&type=section&id=Financial%20Condition) The company's financial scale grew significantly due to the CB acquisition, with total assets reaching $7.78 billion - **Total assets increased by $1.13 billion (17%) to $7.78 billion** at March 31, 2022, from December 31, 2021, primarily due to the CB acquisition which added $1.34 billion in assets[374](index=374&type=chunk) - **Total loans increased by $678 million (16%) to $4.85 billion**, driven by $630 million in acquired loans and $118 million in organic growth, net of a $69 million decline in PPP loans[388](index=388&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk) - **Total deposits increased by $958 million (17%) to $6.75 billion**, with the CB acquisition contributing $1.12 billion in deposits at the acquisition date[411](index=411&type=chunk)[412](index=412&type=chunk) [Non-GAAP Financial Measures](index=112&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like tangible common equity and the adjusted efficiency ratio provide insight into core performance Tangible Common Equity (TCE) Reconciliation (Non-GAAP) | (dollars in thousands, except per share data) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total stockholders' equity (GAAP) | $758,143 | $675,869 | | Less: Goodwill & Intangibles | $(234,492) | $(141,426) | | **Tangible common equity (Non-GAAP)** | **$523,651** | **$534,443** | | Tangible common equity to tangible assets | 6.94% | 8.22% | | **Tangible common equity per share** | **$17.92** | **$20.09** | Adjusted Efficiency Ratio (Non-GAAP) | (dollars in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total non-interest expenses (GAAP) | $56,297 | $24,973 | | Less: Non-recurring merger expenses | $(19,500) | $(400) | | Less: Amortization of tax credit partnerships | $(88) | $(31) | | Total revenue (GAAP) | $68,147 | $51,718 | | **Efficiency ratio (Non-GAAP)** | **53.87%** | **47.45%** | [Quantitative and Qualitative Disclosures about Market Risk](index=114&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The primary market risk is interest rate risk, with analysis showing a slightly liability-sensitive balance sheet profile - Information regarding market risk is included in the Management's Discussion and Analysis section[448](index=448&type=chunk) [Controls and Procedures](index=114&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[448](index=448&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the first fiscal quarter of 2022[448](index=448&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=114&type=section&id=Item%201.%20Legal%20Proceedings.) Ongoing legal proceedings from the ordinary course of business are not expected to have a material adverse effect - Bancorp and its bank are defendants in various legal proceedings arising in the ordinary course of business, but management **does not expect any to have a material adverse effect** on the company's financial condition[449](index=449&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=115&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company repurchased 43,378 shares to satisfy employee tax obligations, separate from its public buyback plan - The company has a share repurchase program authorizing the repurchase of up to 1 million shares, which was extended in May 2021 and expires in May 2023; **approximately 741,000 shares remain eligible** for repurchase[453](index=453&type=chunk) Share Repurchases Q1 2022 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31 | 5,070 | $63.31 | | Feb 1 - Feb 28 | 9,290 | $58.63 | | Mar 1 - Mar 31 | 29,018 | $53.14 | | **Total** | **43,378** | **$55.50** | - All shares repurchased during the quarter were shares withheld to pay taxes due on vested stock awards and were **not part of the public repurchase plan**[452](index=452&type=chunk) [Exhibits](index=115&type=section&id=Item%206.%20Exhibits.) This section lists filed exhibits, including Sarbanes-Oxley certifications and financial statements in inline XBRL format - The report includes **CEO and CFO certifications** pursuant to Sections 302 and 902 of the Sarbanes-Oxley Act[454](index=454&type=chunk) - Financial statements, notes, and the cover page are provided in **inline XBRL format** as required[454](index=454&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-13661 STOCK YARDS BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-1137529 (State or other jurisdiction of incorporation or organiza ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2021 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 1-13661 STOCK YARDS BANCORP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I ...

Company Profile - Stock Yards Bancorp had $6.1 billion in assets as of June 30, 2021[3] - Wealth Management & Trust AUM was $4.4 billion as of June 30, 2021[3] Financial Performance - Net income increased by 12% and earnings per share increased by 12% over three decades of growth[7] - Net interest income in 2020 was $125.3 million[9] - Net income in 2020 was $66.1 million[9] - Earnings per share (diluted) in 2020 was $2.89[9] - Total assets in 2020 were $3.724 billion[9] - For the six months ending June 30, 2021, net income was $79.4 million, a 20% increase from $66.0 million in 2020[16] SBA Payroll Protection Plan - The company originated 3,400 first-round loans totaling $657 million[18] - The company originated 2,100 second-round loans totaling $261 million[18] Loan Portfolio - As of June 30, 2021, CRE-Investment loans accounted for 28% ($872 million) of the loan portfolio[62] - Commercial (C&I) loans accounted for 21% ($604 million) of the loan portfolio[62] Deposit Detail - Total core deposits were $5.119 billion, representing 97% of total deposits[70]

Stock Yards Bancorp Raymond James U.S. Bank Conference September 8, 2021 | --- | --- | |----------------------------------------------------------------------------------------------|-----------------------| | Cautionary statement for investors | | | This presentation contains forward-looking | statements | | about future financial performance, business strategies of Stock Yards Bancorp, Inc. | plans and Because | | forwardlooking statements involve risks and | uncertainties, actual | | results may differ m ...

Stock Yards Bancorp KBW 22nd Annual Community Bank Investor Conference August 4, 2021 | --- | --- | |----------------------------------------------------------------------------------------------|-----------------------| | Cautionary statement for investors | | | This presentation contains forward-looking | statements | | about future financial performance, business strategies of Stock Yards Bancorp, Inc. | plans and Because | | forwardlooking statements involve risks and | uncertainties, actual | | results ...

STOCK YARDS BANCORP, INC. Merger with Commonwealth Bancshares, Inc. August 3, 2021 Forward-Looking Statements 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 proposed merger transaction between S ...

Credit Losses and Allowance - Bancorp recorded a net reduction of retained earnings of $8.8 million upon the adoption of ASC 326, with an increase in the allowance for credit losses (ACL) on loans of $8.2 million[52]. - The total allowance for credit losses on loans increased from $26.8 million to $36.6 million, reflecting a change in accounting policy[55]. - The ACL on commercial real estate - non-owner occupied increased by $3.1 million, from $5.2 million to $8.3 million[55]. - The ACL on commercial and industrial loans decreased by $1.2 million, from $12.4 million to $11.3 million[55]. - The ACL on off-balance sheet credit exposures increased by $3.5 million, from $0.35 million to $3.85 million[55]. - Bancorp estimates the Allowance for Credit Losses (ACL) on loans based on the underlying assets' amortized cost basis, adjusting for collection of payment and partial charge-offs[57]. - Expected credit losses are reflected in the ACL on loans through a charge to provision, with uncollectible assets written off and the ACL reduced accordingly[58]. - Bancorp's methodologies for estimating the ACL consider historical loss information and reasonable forecasts about future economic conditions[59]. - The total ACL for the six months ended June 30, 2021, was $59,424,000, with an initial provision of $51,920,000[138]. - The impact of adopting ASC 326 on the initial ACL was reflected in the total of $47,708,000[139]. - The total commercial real estate ACL increased to $29,295,000, reflecting a charge-off of $3,065,000 during the period[136]. - The residential real estate ACL totaled $7,772,000, with recoveries amounting to $4,000[137]. - The commercial and industrial ACL reached $14,988,000, with a charge-off of $114,000[136]. - The construction and land development ACL was reported at $5,193,000, with a charge-off of $337,000[137]. - The home equity lines of credit ACL stood at $1,230,000, with recoveries of $1,000[137]. - The consumer ACL totaled $572,000, with charge-offs of $223,000[137]. - The total amount of non-accrual loans across all categories was $12,814,000, with an ACL of $6,883,000[143]. - The company experienced a deterioration in credit quality, leading to increased provisions for credit losses[141]. - Total collateral dependent loans as of June 30, 2021, amounted to $19,128,000, with an allowance for credit losses (ACL) of $4,164,000[145]. - The aging of contractually past due loans shows a total past due amount of $17,855,000 as of June 30, 2021, compared to $16,939,000 as of December 31, 2020[147]. - Outstanding CARES Act loan deferrals were $8 million as of June 30, 2021, down from $37 million as of December 31, 2020[148]. Acquisition and Market Expansion - Bancorp completed the acquisition of Kentucky Bancshares, Inc. for a total consideration of $233 million, which includes both stock and cash[111]. - The acquisition added 19 branches across 11 communities in central and eastern Kentucky, enhancing Bancorp's market presence[111]. - The total assets acquired amounted to approximately $1.265 billion, while total liabilities assumed were about $1.156 billion, resulting in net assets acquired of $108.93 million[114]. - Goodwill recorded from the acquisition is approximately $124 million, reflecting expected operational synergies[116]. - The acquisition is expected to enhance Bancorp's Commercial Banking segment, with goodwill not expected to be tax-deductible[116]. - The acquisition is part of Bancorp's strategy to expand its footprint and enhance service offerings in the region[111]. - The company acquired loans totaling $755 million as a result of the KB acquisition, enhancing its loan portfolio[131]. - Approximately $91 million in available-for-sale debt securities were sold shortly after the acquisition[117]. - Bancorp's evaluation of the acquired investment portfolio led to adjustments in loans to reflect estimated fair value[117]. Financial Performance - Net income for the six months ended June 30, 2021, was $50,893 thousand, representing a 63.1% increase from $31,220 thousand for the same period in 2020[119]. - Net interest income for the three months ended June 30, 2021, was $47,465 thousand, an increase of 11.8% from $42,664 thousand for the same period in 2020[119]. - Provision for loan losses decreased to $(3,167) thousand for the three months ended June 30, 2021, compared to $7,525 thousand for the same period in 2020, indicating improved credit quality[119]. - Non-interest income for the six months ended June 30, 2021, was $36,090 thousand, an increase of 10.5% from $32,719 thousand for the same period in 2020[119]. - Basic earnings per share for the three months ended June 30, 2021, was $0.95, up from $0.62 for the same period in 2020, indicating strong profitability growth[119]. - The company expects to recover the fair value of its investment securities as they reach maturity, despite current unrealized losses attributed to interest rate changes[129]. - The total amount of available credit from the FHLB was $875 million as of June 30, 2021, compared to $804 million at December 31, 2020[188]. - Total deposits increased to $5.26 billion as of June 30, 2021, up from $3.99 billion at December 31, 2020, representing a growth of approximately 32%[181]. - Non-interest bearing demand deposits rose to $1.74 billion, compared to $1.19 billion at the end of 2020, marking a 47% increase[181]. Risk Management and Legal Proceedings - The company is involved in ongoing legal proceedings related to its proposed merger with Kentucky Bancshares, Inc., with claims believed to be without merit by the management[195][197]. - Bancorp's management believes that the ultimate result of pending legal actions will not have a material adverse effect on its consolidated financial position or results of operations[198]. - The company has not recorded any valuation allowance for mortgage servicing rights (MSRs) as of June 30, 2021, as their fair value exceeded the cost[204]. - Bancorp's collateral-dependent loans are evaluated based on the estimated fair value of the collateral, with adjustments for selling and closing costs typically ranging from 8% to 10% of the appraised value[205]. - The fair value of collateral dependent loans was $12,416,000, with appraisal discounts averaging 27.1%[209]. - The fair value of other real estate owned was $648,000, with appraisal discounts averaging 40.8%[209]. Stock-Based Compensation - Total stock-based compensation expense for the three months ended June 30, 2021, was $1,414,000, compared to $976,000 for the same period in 2020[222]. - The total estimated unrecognized stock-based compensation expense for the remainder of 2021 is $2,276,000[222]. - As of June 30, 2021, there were 545 SARs outstanding with a weighted average exercise price of $30.40 and an aggregate intrinsic value of $11,165,000[223]. - Unvested RSAs at June 30, 2021, totaled 103,000 shares with a grant date weighted average cost of $41.02[224]. - In the first quarters of 2021 and 2020, Bancorp awarded 7,758 and 6,570 RSUs to non-employee directors with grant date fair values of $315,000 and $270,000, respectively[219].