Stock Yards Bancorp(SYBT) - 2025 Q1 - Quarterly Report

Financial Performance - Net income for the three months ended March 31, 2025, was $33.3 million, a 29% increase from $25.9 million in the same period of 2024, resulting in diluted EPS of $1.13 compared to $0.88 [177]. - Income before income tax expense increased by $8.7 million, or 26%, from $32.96 million in 2024 to $41.62 million in 2025 [243]. - The effective tax rate increased to 21.45% for the three months ended March 31, 2025, compared to 20.06% for the same period in 2024 [243]. - Stockholders' equity increased by $35 million, or 4%, to $975 million, supported by net income of $33.3 million [247]. - The TCE ratio improved to 8.72% at March 31, 2025, compared to 8.44% at December 31, 2024, driven by net income of $33.3 million [302]. Loan and Deposit Growth - Total loans increased by $797 million, or 14%, compared to March 31, 2024, with average loans also rising by $789 million, or 14% [177]. - Deposit balances grew by $685 million, or 13%, compared to March 31, 2024, largely due to the success of promotional rate offerings [177]. - Average loan balances for the three-month periods ended March 31, 2025, and 2024 were $6.6 billion and $5.8 billion, respectively, reflecting a significant increase in loan activity [204]. - Total deposits increased by $128 million, or 2%, from December 31, 2024, to March 31, 2025 [276]. - Average interest-bearing deposits increased by $536 million, or 11%, for the three months ended March 31, 2025, with a notable 31% increase in average time deposits [192]. Interest Income and Margin - Net interest income (FTE) reached $70.6 million for the three months ended March 31, 2025, an increase of $10.5 million, or 17%, from the same period in 2024 [177]. - The net interest margin (FTE) increased by 26 basis points to 3.46% for the three months ended March 31, 2025, driven by higher rates on interest-earning assets [177]. - Total average interest-earning assets increased by $703 million, or 9%, for the three months ended March 31, 2025, with the average rate earned climbing by 32 bps to 5.46% [186]. - Net interest income increased by 3.72% and 7.64% in response to interest rate increases of 100 bps and 200 bps, respectively, while a decrease of 6.22% and 3.21% occurred with rate decreases of 200 bps and 100 bps [201]. Credit Losses and Allowance - Bancorp's allowance for credit losses (ACL) on loans increased by $8 million, or 10%, compared to March 31, 2024, attributed to significant loan growth and increased specific reserves [177]. - The allowance for credit losses (ACL) for loans increased to $89 million as of March 31, 2025, compared to $81 million in the prior year, with an ACL to total loans ratio of 1.34% [205]. - Provision for credit losses on loans was recorded at $900,000 for the three-month period ended March 31, 2025, down from $1.2 million in the same period of 2024 [206][207]. - Non-performing loans decreased to $16.1 million, or 0.24% of total loans, down from $22.2 million, or 0.34%, at the end of 2024 [260]. Non-Interest Income and Expenses - Non-interest income decreased by $275,000, or 1%, for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to equity market depreciation and lower transaction volumes [182]. - Non-interest expenses increased by $2.1 million, or 4%, for the three months ended March 31, 2025, driven by higher compensation expenses and increased marketing costs [182]. - Compensation expenses increased by $1.7 million, or 7%, for the three months ended March 31, 2025, primarily due to annual merit-based salary increases [231]. Asset Management - Assets under management (AUM) totaled $6.80 billion at March 31, 2025, down from $7.50 billion at March 31, 2024, attributed to market downturns and a decline in net new business [216]. - Approximately 80% of AUM were actively managed as of March 31, 2025, compared to 79% at December 31, 2024 [220]. - Managed assets composition remained consistent with approximately 65% in equities and 35% in fixed income securities as of both March 31, 2025 and December 31, 2024 [222]. Capital and Liquidity - As of March 31, 2025, Bancorp maintained a "well-capitalized" status, with total stockholders' equity to total assets at 10.84% [182]. - Cash and cash equivalents surged by $113 million, or 39%, to $404 million, attributed to deposit growth and maturity activity [248]. - The company experienced a significant shift in deposit mix, with non-interest bearing deposits migrating to higher-yielding options, particularly time deposits [177]. Risk Management - Bancorp's interest rate risk management aims to optimize net interest income while considering capital adequacy, liquidity needs, and market opportunities [197]. - The company utilizes interest rate swaps to hedge against rising interest rates, with minimal impact on earnings due to offsetting contracts [202]. Legal and Compliance - Stock Yards Bancorp, Inc. management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures, concluding they were effective as of the end of the reporting period [313]. - No changes in the Company's internal control over financial reporting occurred during the fiscal quarter that materially affected its financial reporting [313]. - Bancorp and the Bank are involved in various legal proceedings typical for their business operations, but no adverse decisions are expected to materially impact their financial position [314].