Yahoo Finance

“Deposit balances grew nicely during the fourth quarter, expanding $440 million, or 7% and growing $496 million, or 7%, over the past 12 months,” Hillebrand continued. “Each of our markets posted deposit growth for the second consecutive quarter, led by time deposit, money market and seasonal public funds accounts. We continue to focus on organic growth while improving our funding position, which contributed to net interest margin expansion for the third consecutive linked quarter. Fourth quarter net interest margin expanded 19 basis points compared to a year ago and 11 basis points on the linked quarter, boosted by substantial loan growth, higher interest earning asset yields and a reduction in our cost of funds. We anticipate this expansion to continue into 2025, with potential cost of funds pressure being more than offset by expected earning asset and yield growth.

“In 2024, we celebrated our 120^th anniversary, highlighting more than a century of personal relationships, community development and growth to support our valued customers. During the year, we increased our community support initiatives throughout our markets, and as we look to 2025, we remain focused on meeting the evolving needs of our customers, while also supporting our employees, communities, and shareholders,” said Hillebrand.

As of December 31, 2024, the Company had $8.86 billion in assets, $6.52 billion in loans and $7.17 billion in total deposits. The Company’s combined enterprise, which encompasses 72 branch offices across three contiguous states, will continue to benefit from a diversified geographic footprint.

Key factors contributing to the fourth quarter of 2024 results included:

• Total loans increased $749 million, or 13%, over the last 12 months, while growing a record $242 million, or 4%, on the linked quarter. Broad based loan growth during the quarter included increases in all markets for the third consecutive quarter, with the Indianapolis market reaching the $1.00 billion threshold for the first time. Nearly all loan categories expanded on the linked quarter. Commercial real estate loan growth of $203 million led all categories, benefiting from strong construction-to-permanent financing conversion during the quarter. The yield earned on total loans totaled 6.10% for the fourth quarter of 2024, with yield expansion and increased production driving a 31-basis point increase compared to the same period in 2023.

• Deposit balances expanded $496 million, or 7%, over the last 12 months, with the deposit mix continuing to shift from non-interest bearing and low interest-bearing deposits into higher cost deposits. Non-interest-bearing demand accounts declined $93 million, or 6%, while interest-bearing deposits grew $589 million, or 11%, led by time deposit and money market growth. On the linked quarter, total deposits expanded $440 million, or 7%. Non-interest-bearing demand accounts decreased $52 million, or 3%, while total interest-bearing deposit accounts increased $492 million, or 9%, led by interest bearing demand, money market and time deposit growth.

• Net interest income increased $8.0 million, or 13%, for the fourth quarter of 2024 compared to the fourth quarter a year ago, with net interest margin expanding 19 basis points to 3.44%, as the overall growth in interest earning assets and yield growth outpaced cost of funds expansion. On the linked quarter, net interest income increased $5.0 million, or 8%, while net interest margin expanded 11 basis points.

• Provision for credit loss expense⁽¹⁾ of $2.7 million was recorded for the fourth quarter of 2024, primarily attributed to strong loan growth offset by improvement within the Federal Reserve Bank’s unemployment rate forecast used in the CECL allowance model. Traditional credit quality statistics remained strong at year-end.

• Non-interest income declined $910,000, or 4%, over the fourth quarter of 2023. Wealth Management & Trust (WM&T) income expanded $247,000, or 2%, to $10.3 million, with the growth trend muted by a decline in net new business expansion, a reduction in quarterly estate fees and market performance. Treasury management fees grew $144,000, or 6%, over the last 12 months to $2.7 million. Other non-interest income decreased $1.6 million, or 77%, as the fourth quarter of 2023 included several non-recurring items, including a Visa Class B stock gain of $487,000, a net gain on the sale of OREO of $207,000, Insurance Captive income of $235,000 and additional swap fee income of $284,000.

• Total non-interest expenses increased $1.6 million, or 3%, during the fourth quarter of 2024 compared to the fourth quarter of 2023, and increased $3.2 million, or 7%, on the linked quarter.

• Tangible common equity per share⁽³⁾ was $24.82 on December 31, 2024, compared to $24.58 on September 30, 2024, and $21.95 on December 31, 2023.

Highlights for the year ended December 31, 2024:

• Loans grew a record $749 million, or 13%, over the past 12 months, marking the fourth consecutive year of double- digit organic loan growth. Nearly all loan categories expanded with commercial real estate loans posting the highest gain.

• Average loans increased $663 million, or 12%, for the year.

• Total line of credit utilization expanded to 46%, with Commercial & Industrial (C&I) line utilization reaching 34%, the highest level achieved in both categories in five years.

• Deposit balances grew by $496 million, or 7%, over the past 12 months. Interest bearing demand, money market, and time deposit expansion was partially offset by the decline in non-interest-bearing demand accounts.

• Net interest income increased $9.7 million, or 4%, to a record $257.0 million for 2024.

• Despite the increase in net interest income, net interest margin contracted eight basis points to 3.31% in 2024 over 2023, as cost of funds expansion outpaced earning asset yields.

• Total non-interest income increased $3.0 million, or 3%, to a record $95.2 million in 2024 over 2023.

• Customer expansion and increased transaction volume led to record 2024 card, treasury management and brokerage income.

Hillebrand concluded, “In November, we were once again nationally recognized by American Banker Magazine as one of the Best Banks to Work For in 2024. This program identifies and honors U.S. banks for outstanding employee satisfaction. This is the fourth consecutive year we have achieved this recognition, which is a testament to the dedication of each of our 1,000 + employees.”

Results of Operations – Fourth Quarter 2024, Compared with Fourth Quarter 2023

Net interest income, the Company’s largest source of revenue, increased by $8.0 million, or 13%, to $70.0 million. Strong organic loan growth and correlating interest income expansion contributed to significant net interest income expansion.

• Total interest income increased by $15.1 million, or 16%, to $110.3 million.

  • Interest income and fees on loans increased $15.1 million, or 18%, over the prior year quarter. Consistent with the $706 million, or 12%, increase in average loans and interest rate expansion, the average quarterly yield earned on loans increased 31 basis points over the past 12 months to 6.10%.

  • Interest income on securities increased $310,000, or 4%, compared to the fourth quarter of 2023. While average securities balances declined $182 million, or 11%, over the past 12 months, the rate earned on securities improved 35 basis points to 2.40%, as a result of lower-yielding investment maturities. Over the past 12 months, cash flows from investment portfolio maturities and amortization have been utilized to fund loan growth and provide liquidity in lieu of redeployment into the portfolio.

  • Interest income on overnight funds decreased $469,000, or 13%, consistent with the $8 million, or 3%, average balance decrease and the decline in interest rates compared to the prior quarter.
    

• Total interest expense increased $7.1 million, or 21%, to $40.3 million, as the cost of interest-bearing liabilities increased 23 basis points to 2.67%.

  • Interest expense on deposits increased $6.4 million, or 22% over the past 12 months, as the overall cost of interest- bearing deposits increased to 2.59% in the fourth quarter of 2024 from 2.34% in the fourth quarter of 2023. Interest expense expansion was spread over most deposit categories, with time deposits and money market interest expense expanding the most.

  • Interest expense on Federal Home Loan Bank (FHLB) advances increased $820,000, or 38%, with the cost of funds declining 21 basis points to 3.95%. While the Bank did not utilize overnight advances during the fourth quarter of 2024, an additional $100 million long-term advance was entered into along with a related interest rate swap.

The Company recorded provision for credit losses on loans of $2.2 million for the fourth quarter of 2024, consistent with strong loan growth and $625,000 of net charge-offs, partially offset by improved unemployment rate projections. In addition, $450,000 of provision for credit losses on off balance sheet exposures was recorded, driven mainly by an increase in expected future utilization within the Construction and Land Development (C&LD) loan portfolio. For the fourth quarter of 2023, the Company recorded $5.8 million in provision for credit losses on loans and $275,000 of provision for credit losses off balance sheet exposures associated with line of credit expansion. Also, during the fourth quarter of 2023 the Bank recorded $4.5 million of net-charge offs, with $4.1 million related to one isolated C&I relationship.

Non-interest income decreased $910,000, or 4%, to $23.5 million compared to the fourth quarter of 2023.

• WM&T income ended the fourth quarter of 2024 at $10.3 million, increasing $247,000, or 2%, over the fourth quarter of 2023. WM&T income expansion was muted by a decline in net new business expansion, a reduction in quarterly estate fees and market performance.

• Compared to the fourth quarter of 2023, treasury management fees increased $144,000, or 6%, to $2.7 million. Consistent treasury management growth has been driven by strong transaction volume, organic growth, modified fee schedules, strong foreign exchange income and new product sales.

• Card income set a quarterly record, increasing $20,000 over the fourth quarter of 2023. Debit card income reached a quarterly record of $3.9 million.

• Other non-interest income, which includes swap fees, letter of credit fees and OREO activity, decreased by $1.6 million or 77%. The Company’s Insurance Captive, which was not renewed in 2024, contributed approximately $235,000 to other non-interest income in the fourth quarter of 2023. In addition, a Visa Class B stock gain of $487,000, a net gain on the sale of OREO of $207,000 and additional swap fee income of $284,000 all contributed to strong other non-interest income for the fourth quarter of 2023.

Non-interest expenses increased $1.6 million, or 3%, compared to the fourth quarter of 2023, to $51.7 million.

• Compensation and benefits expense combined to increase $2.8 million, or 10%, compared to the fourth quarter of 2023, consistent with increased bonus levels and full-time equivalent employee expansion. Bonus expense increased $1.3 million in the fourth quarter of 2024 compared to the fourth quarter a year ago, consistent with record loan growth and record operating results.

• Net occupancy and equipment expenses decreased $1.2 million, or 24%, over the fourth quarter of 2023, as the prior period included expenses related to the relocation of the WM&T group to a consolidated central location.

• Marketing and business development expense increased $1.1 million, or 60%, compared to the fourth quarter of 2023. The quarter over prior year quarter increase relates to elevated advertising expense tied to time deposit product promotions and additional community support expense to bolster the Bank’s Foundation, which was formed to support the charitable causes in the communities in which the Bank operates.

• Other non-interest expenses declined $830,000, or 27%, compared to the fourth quarter of 2023, primarily due to modifications made to the corporate credit card reward program and significant declines in check and card losses.

Financial Condition – December 31, 2024, Compared with December 31, 2023

Total assets increased $693 million, or 8%, year over year to $8.86 billion.

Total loans increased $749 million, or 13%, to $6.52 billion, with growth spread across all categories and markets. Total line of credit usage ended at 46% as of December 31, 2024, compared to 39% as of December 31, 2023. C&I line of credit usage expanded to 34% as of period end, representing the highest level of utilization since 2020, however well below pre-pandemic levels.

Total investment securities decreased $111 million, or 8%, year over year. Over the past 12 months, cash flows from the investment portfolio have been utilized to fund loan growth and provide liquidity in lieu of redeployment.

Total deposits increased $496 million, or 7%, over the past 12 months, with the deposit mix continuing to shift from non-interest bearing and low interest-bearing deposits into higher cost deposits. Non-interest-bearing demand accounts declined $93 million, or 6%, while interest-bearing deposits grew $589 million, or 11%, led by $255 million of time deposit growth and $184 million of growth in money market balances.

Non-performing loans totaled $22 million, or 0.34% of total loans outstanding on December 31, 2024, compared to $19 million, or 0.33% of total loans outstanding on December 31, 2023. The ratio of allowance for credit losses to loans ended at 1.33% on December 31, 2024, compared to 1.38% on December 31, 2023.

As of December 31, 2024, the Company continued to be “well-capitalized,” the highest regulatory capital rating for financial institutions, with all capital ratios experiencing meaningful growth. Total equity to assets⁽³⁾ was 10.61% and the tangible common equity ratio⁽³⁾ was 8.44% on December 31, 2024, compared to 10.50% and 8.09% on December 31, 2023, respectively.

In November 2024, the board of directors declared a quarterly cash dividend to $0.31 per common share. The dividend was paid December 31, 2024, to shareholders of record as of December 16, 2024.

No shares have been purchased since 2020, and approximately 741,000 shares remain eligible for repurchase under the current buy-back plan, which expires in May 2025.

Results of Operations – Fourth Quarter 2024, Compared with Third Quarter 2024

Net interest margin improved 11 basis points on the linked quarter to 3.44%, boosted by strong loan growth, higher interest earning asset yields and a decline in cost of funds.

Net interest income increased $5.0 million, or 8%, over the prior quarter to $70.0 million.

• Total interest income increased $4.6 million, or 4%.

  • Interest income on loans, including fees, increased $2.1 million, or 2%. Average loans increased $208 million, or 3%, and the corresponding yield earned declined 7 basis points to 6.10%.

• Total interest expense decreased $404,000, or 1%.

  • Interest expense on deposits, which increased $2.1 million, or 6%, was more than offset by the decline in FHLB borrowings, as no overnight advances were utilized during the fourth quarter.

During the fourth quarter of 2024, the Company recorded $2.7 million in provision for credit losses⁽¹⁾, which included a $2.2 million in provision for credit losses on loans and $450,000 of provision for credit losses for off-balance sheet exposures. During the third quarter of 2024, the Company recorded $4.3 million in provision for credit losses on loans and no provision for credit losses on off-balance sheet exposures.

Non-interest income decreased $1.3 million, or 5%, on the linked quarter, to $23.5 million. WM&T income declined $585,000, or 5%, consistent with a decline in net new business expansion, a reduction in quarterly estate fees and market performance.

Non-interest expenses increased $3.2 million, or 7% on the linked quarter to $51.7 million, due to increases in compensation expense and marketing and business development expenses, which included additional community support expense.

Financial Condition – December 31, 2024, Compared with September 30, 2024

Total assets increased $426 million, or 5%, on the linked quarter to $8.86 billion.

Total loans expanded a record $242 million, or 4%, on the linked quarter, led by increases in nearly every loan category. Total line of credit usage was 46% as of December 31, 2024, compared to 43% as of September 30, 2024. C&I line of credit usage totaled 34% as of December 31, 2024, compared to 32% as of September 30, 2024.

Total deposits increased $440 million, or 7%, on the linked quarter. Non-interest-bearing demand accounts decreased $52 million, or 3%, while total interest-bearing deposit accounts increased $492 million, or 9%.

About the Company

Louisville, Kentucky-based Stock Yards Bancorp, Inc., with $8.86 billion in assets, was incorporated in 1988 as a bank holding company. It is the parent company of Stock Yards Bank & Trust Company, which was established in 1904. The Company’s common shares trade on The Nasdaq Stock Market under the symbol “SYBT.”

This report contains forward-looking statements under the Private Securities Litigation Reform Act that involve risks and uncertainties. Although the Company’s management believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Therefore, there can be no assurance the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from those discussed in forward-looking statements include, but are not limited to: economic conditions both generally and more specifically in the markets in which the Company and its banking subsidiary operates; competition for the Company’s customers from other providers of financial services; changes in, or forecasts of, future political and economic conditions, inflation and efforts to control it; government legislation and regulation, which change and over which the Company has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of the Company’s customers; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. Refer to Stock Yards’ Annual Report on Form 10-K for the year ended December 31, 2023, as well as its other filings with the SEC for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

Contact:        
T. Clay Stinnett
Executive Vice President,
Treasurer and Chief Financial Officer
(502) 625-0890