Stock Yards Bancorp(SYBT) - 2024 Q3 - Quarterly Report

Financial Performance - Net income for the three months ended September 30, 2024, was $29.4 million, an increase of 8% from $27.1 million in the same period of 2023, resulting in diluted EPS of $1.00 compared to $0.92[215] - Net income for the nine months ended September 30, 2024, was $82.8 million, a decrease of 1% from $83.8 million in the same period of 2023, resulting in diluted EPS of $2.82 compared to $2.86[217] Loan Growth - Total loans increased by $661 million, or 12%, compared to September 30, 2023, with average loans rising by $688 million, or 13%[215] - Total loans increased by $661 million, or 12%, compared to September 30, 2023, with average loans also rising by $649 million, or 12%[217] - Average total loan balances increased by $688 million, or 13%, for the three months ended September 30, 2024, compared to the same period of 2023[234] - Total loans increased to $6,278,133 thousand, with fixed-rate loans representing 69% and variable-rate loans 31% of the total[344] Deposit Growth - Deposit balances increased by $323 million, or 5%, driven by growth in time deposits due to successful promotional rate offerings[215] - Deposit balances climbed $323 million, or 5%, driven by growth in time deposits, while average deposits increased by $270 million, or 4%[217] - Total deposits increased by $55 million, or 1%, from December 31, 2023, to September 30, 2024[368] Interest Income and Expenses - Net interest income (FTE) totaled $65.1 million, a 6% increase from the prior year, with interest income rising by $16.8 million, or 19%[215] - Net interest income (FTE) totaled $187.3 million for the nine months ended September 30, 2024, representing a $1.6 million, or 1%, increase compared to the same period in 2023[217] - Total interest income (FTE) increased by $16.8 million, or 19%, to $106 million for the three months ended September 30, 2024, compared to the same period of 2023[236] - Total interest expense increased by $49.4 million, or 75%, for the nine months ended September 30, 2024, driven by a significant rise in rates paid on deposits[261] Credit Losses and Allowance - Allowance for credit losses (ACL) on loans rose by $7 million, or 9%, attributed to significant loan growth and a deterioration in the Federal Reserve's unemployment forecast[215] - The allowance for credit losses (ACL) for loans was $85 million as of September 30, 2024, compared to $79 million at September 30, 2023, representing an ACL to total loans ratio of 1.36% and 1.39% for the respective periods[283] - Provision for credit losses on loans was $4.3 million for the three months ended September 30, 2024, attributed mainly to strong loan growth and deterioration in the FRB unemployment forecast[284] Non-Interest Income and Expenses - Non-interest income grew by $1.9 million, or 8%, largely due to strong performance in wealth management and treasury management fees[216] - Non-interest income increased by $3.9 million, or 6%, attributed to strong WM&T fees, treasury management fees, and card income[219] - Non-interest expenses increased by $1.8 million, or 4%, primarily due to higher compensation expenses and technology upgrades[216] - Non-interest expenses rose by $8.7 million, or 6%, primarily due to higher compensation, employee benefits, and technology expenses[219] Efficiency and Capital Ratios - The efficiency ratio (FTE) improved to 53.92% from 54.57% year-over-year, reflecting strong growth in net interest and non-interest income[216] - Bancorp maintained a "well-capitalized" status, with total stockholders' equity to total assets at 11.07%[216] - Tangible common equity to tangible assets increased to 8.79% as of September 30, 2024, compared to 8.09% and 7.69% at the end of 2023 and the same period in 2023, respectively[216] Economic Outlook - The current economic outlook remains volatile, with potential for multiple rate reductions in the coming months, impacting NIM and funding costs[227] Asset Management - Assets under management (AUM) totaled $7.32 billion at September 30, 2024, up from $6.67 billion at September 30, 2023, attributed mainly to strong equity market appreciation[295] - Approximately 80% of AUM were actively managed as of September 30, 2024, down from 82% at December 31, 2023[300] - Managed assets composition as of September 30, 2024 consisted of approximately 67% in equities and 33% in fixed income securities, compared to 64% and 36% as of December 31, 2023[303] Loan Quality - Non-performing loans decreased to $17,158 thousand from $19,168 thousand as of December 31, 2023, resulting in a non-performing loans to total loans ratio of 0.27%[346] - Delinquent loans increased to $28 million, with a delinquent loans to total loans ratio of 0.44% as of September 30, 2024, compared to 0.30% at December 31, 2023[348] - Classified loans rose to $167 million as of September 30, 2024, up from $96 million at December 31, 2023, primarily due to increases in OAEM and substandard classifications[349]