Stock Yards Bancorp(US:SYBT)2023-08-04 15:58Financial Performance - Net income for the three months ended June 30, 2023, was $27.7 million, a 3% increase from $26.8 million in the same period of 2022, resulting in diluted EPS of $0.94 compared to $0.91[194] - Net income available to stockholders for the six months ended June 30, 2023, was $56.7 million, a 63% increase from $34.7 million in the same period of 2022[198] - Diluted earnings per share rose to $1.93 for the six months ended June 30, 2023, up 58% from $1.22 in the prior year[198] - Total revenue for the six months ended June 30, 2023, was $169,226 thousand, an increase from $147,332 thousand for the same period in 2022[363] Loan Growth - Total loans (excluding PPP) increased by $571 million, or 12%, compared to June 30, 2022, with average loans increasing by $481 million, or 10%[196] - Total loans (excluding PPP) increased by $571 million, or 12%, compared to June 30, 2022, with average loans rising by $717 million, or 16%[201] - Average total loan balances increased by $441 million, or 9%, for the three months ended June 30, 2023, with non-PPP loan growth of $481 million, or 10%[214] - Bancorp's average total loans for the six months ended June 30, 2023, were approximately $5.26 billion, compared to $4.61 billion for the same period in 2022[243] - Bancorp's total loans increased to $5,418,609 thousand as of June 30, 2023, up from $5,205,918 thousand as of December 31, 2022, with non-PPP loans totaling $5,411,521 thousand[362] Credit Losses and Allowance - The allowance for credit losses (ACL) on loans rose by $11 million, or 17%, attributed to significant organic loan growth, with a provision for credit losses of $2.2 million for the three months ended June 30, 2023[196] - Bancorp's allowance for credit losses (ACL) on loans increased by $11 million, or 17%, compared to June 30, 2022, reflecting significant organic loan growth[203] - The allowance for credit losses on loans was $76,678 thousand, up from $62,020 thousand in the previous year[228] - The Allowance for Credit Losses (ACL) for loans increased to $78 million as of June 30, 2023, up from $74 million at December 31, 2022, reflecting a provision expense of $4.4 million for the first half of 2023[308] - The net charge-off activity for the three and six months ended June 30, 2023, totaled $113,000 and $221,000, respectively[244] Deposits and Funding - Deposit balances declined by $341 million, or 5%, compared to June 30, 2022, due to inflationary pressures and rising interest rates[196] - The company experienced a significant shift in deposit mix, with non-interest bearing deposits migrating to higher-yielding options, increasing the overall cost of funds[196] - Total deposits decreased by $183 million, or 3%, from December 31, 2022, to June 30, 2023, primarily due to a $184 million decline in non-interest bearing deposits[324] - The cost of interest-bearing deposits rose to 1.39% for the six months ended June 30, 2023, compared to 0.14% for the same period of the prior year[325] Interest Income and Margin - Net interest income (FTE) for the six months ended June 30, 2023, totaled $124.3 million, representing a 17% increase from $106.2 million in the same period of 2022[200] - Bancorp's net interest margin (NIM) improved by 36 basis points, or 11%, to 3.50% for the six months ended June 30, 2023, compared to 3.14% in the prior year[200] - Net interest income (FTE) increased by $3.8 million, or 7%, to $57.9 million for the three months ended June 30, 2023, driven by organic loan growth and higher rates[211] - Total interest income (FTE) rose by $24.0 million, or 41%, to $83.1 million for the three months ended June 30, 2023[215] - The net interest margin (NIM) for the first half of 2023 was 3.42%, up from 3.20% in the same period of 2022[227] Non-Interest Income - Non-interest income increased by $3.8 million, or 9%, for the six months ended June 30, 2023, driven by record WM&T fees and treasury management fees[201] - Total non-interest income increased by $920,000, or 4%, for the three months ended June 30, 2023, and by $3.8 million, or 9%, for the six months ended June 30, 2023, compared to the same periods in 2022[251] - Wealth management and trust (WM&T) revenue rose by $651,000, or 7%, for the three months and by $1.9 million, or 11%, for the six months ended June 30, 2023, compared to the same periods in 2022[252] Expenses and Efficiency - Total non-interest expenses increased by $1.1 million, or 3%, for the three month period, while decreasing by $9.9 million, or 10%, for the six month period ended June 30, 2023, influenced by one-time merger expenses[271] - Bancorp's efficiency ratio improved to 54.57% for the three months ended June 30, 2023, compared to 56.42% for the same period in 2022, reflecting a reduction in one-time merger-related expenses[287] - The efficiency ratio improved to 53.84% for the six months ended June 30, 2023, down from 68.52% for the same period in 2022[363] Capital and Assets - As of June 30, 2023, total stockholders' equity to total assets was 10.45%, up from 9.85% a year earlier, indicating strong capital growth[200] - Stockholders' equity increased by $48 million, or 6%, to $808 million at June 30, 2023, supported by net income of $56.7 million[292] - The Common Equity Tier 1 Risk-Based Capital ratio was 10.45% as of June 30, 2023, compared to 10.14% as of December 31, 2022, indicating strong capital ratios exceeding regulatory requirements[360] - Total assets increased by $236 million, or 3%, to $7.73 billion at June 30, 2023, with total loans rising by $213 million, or 4%[290] Economic Outlook - The current economic outlook suggests potential pricing pressure and competition for loans and deposits, with expectations of continued NIM pressure in the second half of 2023[210] - The company anticipates future rising rate scenario betas to return to historic averages, with a deposit beta of approximately 60% for rising rates and 30% for falling rates[234]