Credit Loss Allowance and Methodologies - Bancorp recorded a net reduction of retained earnings of $8.8 million upon the adoption of ASC 326, with an increase in the ACL on loans of $8.2 million and an increase in the ACL on off-balance sheet credit exposures of $3.5 million[46]. - The total allowance for credit losses on loans increased from $26.8 million to $36.6 million due to the adoption of ASC 326, reflecting an increase of $9.9 million[49]. - The ACL on loans is estimated based on the net amount expected to be collected over the life of the loans, considering factors such as creditworthiness and expected future cash flows[26]. - Bancorp's methodologies for estimating the ACL on loans include relevant information about past events, current conditions, and reasonable forecasts[27]. - Bancorp estimates the Allowance for Credit Losses (ACL) on loans based on the amortized cost basis of underlying assets, adjusting for collection of payment and charge-offs[51]. - Expected credit losses are reflected in the ACL through a charge to provision, with uncollectible financial assets written off and the ACL reduced accordingly[52]. - Bancorp's methodologies for estimating the ACL consider historical loss information, current conditions, and reasonable forecasts, reverting to historical loss information when necessary[53]. - The company stratifies its loan portfolio into homogeneous groups to estimate credit losses, ensuring a comprehensive assessment of risk[27]. - The total allowance for credit losses on off-balance sheet exposures was $3.85 million, reflecting a significant increase of $3.5 million due to the adoption of ASC 326[49]. Loan Portfolio and Performance - Total loans increased to $3.635 billion as of March 31, 2021, up from $3.532 billion at December 31, 2020, representing a growth of 2.9%[115]. - The allowance for credit losses (ACL) on loans decreased by $1.2 million, or 2%, from December 31, 2020, attributed to improved unemployment forecasts and other factors[119]. - Loans to directors and related interests rose to $52 million as of March 31, 2021, compared to $43 million at December 31, 2020, indicating a 20.9% increase[117]. - The total commercial real estate loans reached $1.404 billion as of March 31, 2021, an increase from $1.342 billion at December 31, 2020, reflecting a growth of 4.6%[115]. - The total commercial and industrial loans amounted to $1.383 billion, slightly up from $1.353 billion, marking a 2.2% increase[115]. - The total residential real estate loans increased to $398.9 million as of March 31, 2021, from $380.1 million at December 31, 2020, representing a growth of 4.9%[115]. - The total amount of outstanding loan deferrals as of March 31, 2021, was $14,000,000, compared to $37,000,000 as of December 31, 2020[128]. - The total loans categorized as substandard non-performing amounted to $5,994,000 as of March 31, 2021[127]. - The total net loan recoveries for the three months ended March 31, 2021, were $50.714 million, down from $51.920 million in the previous period[120]. Financial Performance and Income - Net income for the three months ended March 31, 2021, was $22,710,000, compared to $13,232,000 for the same period in 2020, representing a year-over-year increase of 71%[191]. - Basic net income per share increased to $1.00 for Q1 2021 from $0.59 in Q1 2020, while diluted net income per share rose to $0.99 from $0.58[191]. - Net interest income for the commercial banking segment increased to $37,742,000 in Q1 2021 from $32,361,000 in Q1 2020, representing a growth of 16.7%[219]. - Total non-interest income rose to $13,844,000 in Q1 2021, up from $12,536,000 in Q1 2020, reflecting an increase of 10.5%[220]. - The provision for credit losses decreased significantly to $(1,475,000) in Q1 2021 compared to $5,925,000 in Q1 2020, indicating improved credit quality[219]. Capital and Regulatory Compliance - As of March 31, 2021, Bancorp's total risk-based capital was $483,547 thousand, representing a ratio of 13.39%, exceeding the minimum requirement of 8.00% for adequately capitalized institutions[212]. - The Common Equity Tier 1 Risk-Based Capital ratio for Bancorp was 12.32% as of March 31, 2021, above the minimum requirement of 4.50%[212]. - Bancorp's leverage ratio was 9.46% as of March 31, 2021, above the minimum requirement of 4.00%[212]. - Bancorp continues to exceed all regulatory capital requirements and intends to maintain a capital position that meets or exceeds the "well-capitalized" standards[211]. Legal and Regulatory Matters - A lawsuit was filed by a purported shareholder challenging the proposed merger with Kentucky Bancshares, alleging breaches of fiduciary duties and misleading information dissemination[172]. - The company believes that the pending legal actions will not have a material adverse effect on its consolidated financial position or results of operations[175]. - The claims asserted in the lawsuits are believed to be without merit by the company and its board of directors[174]. Other Financial Metrics - The effective tax rate for Q1 2021 was 19.4%, compared to 14.5% in Q1 2020, reflecting an increase of 4.9 percentage points[157]. - Current income tax expense for Q1 2021 was $4,015 thousand, up from $1,973 thousand in Q1 2020, indicating a year-over-year increase of 103%[157]. - Total deposits grew from $3,988,634 thousand at December 31, 2020 to $4,199,962 thousand at March 31, 2021, representing an increase of 5.3%[160]. - The average outstanding balance of Securities Sold Under Agreements to Repurchase (SSUAR) increased from $33,413 thousand in Q1 2020 to $46,937 thousand in Q1 2021, a growth of 40.5%[162].

Operational Efficiency - The efficiency ratio for the years ended December 31, 2020, 2019, and 2018 was 54.86%, 56.07%, and 55.89%, respectively, indicating improved operational efficiency[28] - The company has not made any material staffing or compensation changes due to the pandemic, prioritizing employee safety[30] - The company maintains a focus on organic growth while capitalizing on strategic acquisitions to enhance its market presence[27] Community Engagement - The company created approximately 300 new relationship prospects during the COVID-19 pandemic, enhancing its community-focused approach[25] - The company’s community banking model emphasizes personalized service tailored to individual client needs, enhancing its competitive edge[34] Financial Position and Capitalization - The company is categorized as well-capitalized, exceeding the minimum requirements for Common Equity Tier 1 Risk-Based Capital ratio, Tier 1 Risk-Based Capital ratio, and Total Risk-Based Capital ratio[45] - The capital conservation buffer was fully implemented at 2.5% effective January 1, 2019, with adequately-capitalized minimums of 6.0%, 8.5%, and 10.5% for the respective capital ratios[46] - As of December 31, 2020, the company had approximately $440 million in variable rate loans tied to LIBOR, with about $330 million maturing beyond December 31, 2021[71] Revenue Sources - Significant growth has been observed in non-interest revenue sources, particularly in treasury management services and debit/credit card services[26] - Income from Wealth Management and Trust (WM&T) constitutes approximately 45% of non-interest income, indicating a strong dependency on market performance[67] Asset Quality and Risks - The company anticipates that current asset quality metrics, which are historically strong, may normalize over time, potentially affecting future financial results[64] - Excess liquidity has been experienced over the past year, which is expected to continue into 2021, posing risks to net interest margin (NIM) and financial condition[78] - The company is subject to liquidity risks, relying on the ability to generate deposits and manage loan repayment schedules effectively[77] Competition and Market Dynamics - The company faces significant competition from both traditional and non-traditional financial institutions, which may pressure profitability and market share[75] - The rapid evolution of non-bank alternatives for financial transactions could lead to a loss of fee income, deposits, and loans, adversely affecting the company's financial condition[87] Regulatory and Compliance Issues - Regulatory changes and compliance issues could substantially impact the company's financial condition and operations[88] - Changes in federal tax laws, such as potential increases in corporate tax rates, may have a material adverse effect on the company's financial condition and results of operations[89] - The Kentucky corporate income tax, effective in 2021, will be assessed at 5% of Kentucky taxable income, impacting the company's state income tax expense[90] Technology and Cybersecurity - The company relies on technology-driven products and services to meet customer demands, and failure to keep pace with technological changes could impair its competitive position[86] - Cybersecurity risks, including breaches and fraud, pose significant threats to the company's financial assets and customer information[84] Legal and Litigation Risks - The company faces litigation risk related to fiduciary responsibilities, which could result in significant financial liability and reputational damage if claims are not resolved favorably[91] Infrastructure and Operational Risks - Extended disruptions of vital infrastructure could negatively impact the company's operations and financial condition[83] - The adoption of the Current Expected Credit Loss (CECL) model has resulted in a significant increase in the Allowance for Credit Losses (ACL) for loans, impacting financial condition and results of operations[59] - The planned phasing out of LIBOR as a financial benchmark presents risks, with potential impacts on financial instruments held by the company[71] - The Federal Reserve Board (FRB) has lowered the Federal Funds Target Rate (FFTR) five times since the end of 2018, resulting in a combined decrease of 225 basis points, with the Prime rate ending 2020 at 3.25%[57]

COVID-19 Impact and Response - Stock Yards Bancorp generally followed its Pandemic Plan updated in November 2019[4] - The company originated 3,250 SBA Payroll Protection Plan loans totaling $647 million and received $20 million in origination fees[9] - COVID-19 related loan deferrals totaled $502.29 million, representing 17% of the total loan portfolio[13] Financial Performance - As of June 30, 2020, Stock Yards Bancorp had $4.3 billion in assets and $3.2 billion in Wealth Management & Trust AUM[21] - For the year ended December 31, 2019, Stock Yards' Return on Average Assets was 1.90% and Return on Average Equity was 17.10%, outperforming peer percentiles[28] - Net income for 2019 was $66.1 million, with earnings per share (diluted) at $2.89[27] - Net interest income for 2019 was $125.2 million[27] Loan Portfolio - The loan portfolio as of June 30, 2020, included $815 million in CRE-Investment (23%), $765 million in Commercial (C&I) (22%), and $630 million in C&I PPP loans (18%)[60] - Total loans in Louisville were $2.364 billion (68%), Indianapolis $571 million (17%), and Cincinnati $529 million (15%) as of 2Q 2020[40] Deposit Base - The company has a growing core deposit base, reaching $3.623 billion as of 2Q 2020[41] - Non-interest bearing demand deposits accounted for 32% of the deposit composition as of 2Q 2020[44] Wealth Management - Wealth management and trust generated $22.6 million in revenue for 2019, with a 45% pre-tax margin[50] - Assets Under Management (AUM) in Wealth Management were $3.2 billion as of June 30, 2020[70]

Stock Yards Bancorp KBW Community Bank Virtual Investor Conference July 28-29, 2020 | --- | --- | |--------------------------------------------------------------|-------------------------| | Cautionary statement for investors | | | This presentation contains forward-looking | statements | | about future financial performance, business | plans and | | strategies of Stock Yards Bancorp, Inc. Because | forward- | | looking statements involve risks and | uncertainties, actual | | results may differ materially f ...

Stock Yards Bancorp KBW Winter Financial Services Symposium Boca Raton, Fl. February 13-14, 2020 | --- | --- | |----------------------------------------------------------------------------------------------|-----------------------| | 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 ...

Company Overview - Stock Yards Bancorp has $3.3 billion in assets as of March 31, 2019 [3] - The company's Wealth Management & Trust AUM was $2.9 billion as of March 31, 2019 [3] - The company has demonstrated over three decades of growth, with a compound annual growth rate in net income of 13% from 1988 to 2018 [7] Financial Performance - Net interest income for 2018 was $114.4 million [9] - Wealth management and trust income for 2018 was $21.5 million [9] - Net income for 2018 reached $55.5 million [9] - The company's return on average equity for 2018 was 16.0% [9] - The efficiency ratio for 2018 was 48.0% [15] - First quarter 2019 net interest income increased by 8.6% to $29.7 million compared to $27.3 million in first quarter 2018 [18] - First quarter 2019 net income increased by 16.7% to $15.6 million compared to $13.4 million in first quarter 2018 [18] Loan Portfolio and Growth - Total loans reached $2.548 billion in 2018, compared to $1.508 billion in 2010 [24] - Louisville accounted for 71% of total loans with $1.819 billion in 2018 [24] - The company's non-interest income represents 28% of total income, compared to a peer average of 19% [31]