Stock Yards Bancorp Inc. Annual Report 2019

Plain-text annual report

2 0 1 9 S U M M A R Y A N N U A L R E P OR T PAGE 1 2019 Financial Highlights As of and for the years ended December 31, (Dollars in thousands, except per share data) 2019 2018 2017 Net income PER COMMON SHARE Net income per share, diluted Cash dividends declared Book value Market price AT YEAR END Assets Loans Deposits Stockholders’ equity RATIOS Return on average assets Return on average equity Efﬁciency ratio, FTE $ $ $ 66,067 $ 55,517 2.89 1.04 17.97 41.06 3,724,197 2,845,016 3,133,938 406,297 $ $ 2.42 0.96 16.11 32.80 3,302,924 2,548,171 2,794,356 366,500 $ $ $ 38,043 1.66 0.80 14.71 37.70 3,239,646 2,409,570 2,578,295 333,644 % 1.90 17.09 56.13 % 1.76 16.00 55.92 % 1.25 11.61 60.61 $ 175.0 157.5 140.0 122.5 105.0 87.5 70.0 52.5 35.0 17.5 0.0 $ 3.0 2.7 2.4 2.1 1.8 1.5 1.2 0.9 0.6 0.3 0.0 TOTAL REVENUE (FTE) (dollars in millions) 10 11 12 13 14 15 16 17 18 19 $ 3,800 3,420 3,040 2,660 2,280 1,900 1,520 1,140 760 380 0 TOTAL ASSETS (dollars in millions) 10 11 12 13 14 15 16 17 18 19 DILUTED EPS $ 1.08 DIVIDENDS PER SHARE 0.90 0.72 0.54 0.36 0.18 0.00 10 11 12 13 14 15 16 17 18 19 10 11 12 13 14 15 16 17 18 19 STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT “Our outstanding performance demonstrates why Stock Yards Bancorp remains among the nation's highest-performing community banks...”“Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. ”$192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% compared to a 197% increase for the commonly margin compression as the Federal Reserve cut interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With PAGE 2 in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. While there are many factors that drive investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, our diversiﬁed markets and revenue streams and the consistency of our returns. STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT Ja Hillebrand Chief Executive Officer To Our Stockholders I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, Cincinnati and Indianapolis markets along with exceptional credit quality metrics. While Wealth Management & Trust continues to lead our non-interest revenue growth, I’m especially proud of our continued diversification INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. “For the 10-year period ended with 2019, Stock Yard Bancorp total return was 282% compared to a 197% increase for the commonly used NASDAQ Bank Index.” in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification PAGE 3 Phil Poindexter President In our opinion, it is best to measure a company’s performance over a meaningful timeframe which takes into account both up and down market cycles. For the 10-year period ended with 2019, Stock Yard Bancorp total return was 282% compared to a 197% increase for the commonly used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s highest-performing community banks, and I am pleased to note that we were named to the Bank and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on our continued growth, proﬁtability, credit quality and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. KING SOUTHERN BANK ACQUISITION In May, we completed the acquisition of King Bancorp, Inc. the holding company for King Southern Bank (KSB), expanding our presence in both Louisville and nearby Nelson County. With STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all markets and divisions. While our net interest margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, prudent balance sheet management steadied margin compression as the Federal Reserve cut interest rates three times during the year. Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, signifying the success of our diversiﬁcation strategies. Wealth Management & Trust income increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth in corporate retirement accounts. Card income and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. We continue to hire experienced relationship managers in all of our markets, and as demonstrated below, the beneﬁts of these investments have been seen across the Company. STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. Our amazing growth in 2019 underscores the talent of all our dedicated employees. in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% of the Company’s total loan portfolio – up from 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private Banking area. Similarly, deposits increased 9% to support this growth. Paula Moan Market President Indianapolis Our Wealth Management & Trust group had another strong year of performance in Indianapolis, achieving record production – up 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of operation at our Plainﬁeld location, which greatly exceeded our expectations, and we continue to explore expansion options in this vibrant market. PAGE 4 CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, Business Banking, and Private Banking groups all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. These accomplishments, coupled with record new treasury management revenue in 2019, reﬂect the attractive prospects of this market. Stephen Brown Market President Cincinnati / NKY As with our Indianapolis market, we continue to explore opportunities for expansion to complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards business lending. Loan growth was strong in 2019 as all three markets contributed to record loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. “The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period.” in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. PAGE 5 Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, a new emphasis on Corporate Banking, which focuses on larger middle-market clients, aims to supplement growth further. “Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio.” BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT Kathy Beach Director of Operations RETAIL BANKING Retail Banking remains a critical part of what we do every day − meeting the banking needs for thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. This resource provides opportunities across our markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION Our private banking services meet the needs of afﬂuent customers by providing all of our solutions and alternatives in a personalized, one-on-one experience with our private banking professionals. We saw solid performance in all markets with continued success in dental lending, medical ofﬁce building projects and medical residence lending programs. Indianapolis delivered signiﬁcant loan growth, while loan production in Cincinnati doubled that of 2018. PAGE 6 We focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. Kathy Thompson Director of Wealth Management & Trust TREASURY MANAGEMENT SERVICES Treasury Management recorded a record year of production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. MORTGAGE SERVICES Mortgage lending continues to help diversify our non-interest revenue streams and is an important dimension of the many services we offer. Mortgage banking revenue increased 20% over prior year and represents 6% of our total non-interest income. The strong performance we saw in 2019 was driven by lower rates, which was a catalyst for re-ﬁnance and purchase activity. We expect lower rates to provide similar motivation for such activity in 2020. STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” PAGE 7 STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With PAGE 8 Selected Consolidated Financial Data (Dollars in thousands, except per share data) 2019 2018 2017 2016 2015 As of and for the years ended December 31, INCOME STATEMENT Net interest income Provision for loan and lease losses Non-interest income Non-interest expenses Net income PER SHARE Net income per share, diluted Cash dividends declared Book value Market value BALANCE SHEET Loans Allowance for loan and lease losses Assets Deposits Stockholders’ equity EARNINGS PERFORMANCE Return on average assets Return on average equity Net interest margin, FTE KEY RATIOS Non-performing assets to total assets Net loan charge-offs (recoveries) Allowance for loan losses to total loans Avg stockholder’s equity to avg assets Total risk-based capital Leverage ratio FTE - Fully Tax Equivalent $ $ $ 125,221 1,000 49,790 98,351 66,067 2.89 1.04 17.97 41.06 2,845,016 26,791 3,724,197 3,133,938 406,297 $ $ $ 114,416 2,705 45,346 89,509 55,517 2.42 0.96 16.11 32.80 2,548,171 25,534 3,302,924 2,794,356 366,500 $ $ $ 103,653 2,550 44,499 90,420 38,043 1.66 0.80 14.71 37.70 2,409,570 24,885 3,239,646 2,578,295 333,644 $ $ $ 97,289 3,000 42,920 80,938 41,027 1.80 0.72 13.88 46.95 2,305,375 24,007 3,039,481 2,520,548 313,872 $ $ $ 88,383 750 39,315 72,828 37,187 1.65 0.64 12.80 25.19 2,033,007 22,441 2,816,801 2,371,702 286,519 % 1.90 17.09 3.81 % 0.34 ) (0.01 0.94 11.10 12.86 10.60 % 1.76 16.00 3.83 % 0.13 0.08 1.00 10.98 13.91 11.33 % 1.25 11.61 3.64 % 0.31 0.07 1.03 10.79 13.52 10.70 % 1.42 13.49 3.59 % 0.39 0.07 1.04 10.54 13.04 10.54 % 1.44 13.55 3.67 % 0.48 0.17 1.10 10.66 13.31 10.53 STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. CINCINNATI MARKET: Cincinnati (Downtown): 101 W. Fourth Street Cincinnati, OH 45202 (513) 824-6100 M-F: 9-5 Hyde Park: 2651 Observatory Avenue Cincinnati, OH 45208 (513) 824-6130 M-F: 9-5 Madeira: 7124 Miami Avenue Cincinnati, OH 45243 (513) 824-6160 M-F: 9-5 Florence: 4790 Houston Road Florence, KY 41042 (859) 538-1465 M-F: 9-5 Highland Heights: 2635 Alexandria Pike Highland Heights, KY 41076 (859) 547-4900 M-F: 9-5 St. Matthews: 3794 Lexington Road Louisville, KY 40207 (502) 625-2280 M-Th: 9-4, F: 9-6, S: 9-12 Springhurst: 9400 Brownsboro Road Louisville, KY 40241 (502) 625-2400 M-Th: 9-4, F: 9-6, S: 9-12 Stony Brook: 2811 South Hurstbourne Parkway Louisville, KY 40220 (502) 625-2444 M-Th: 9-4, F: 9-6, S: 9-12 Southern Parkway: 4640 Southern Parkway Louisville, KY 40214 (502) 625-2552 M-Th: 9-4, F: 9-5:30 INDIANAPOLIS MARKET: Binford: 6840 Lake Plaza Drive Indianapolis, IN 46220 (317) 238-2860 M-F: 9-5 Carmel: 11450 N. Meridian Street Carmel, IN 46032 (317) 238-2831 M-F: 9-5 Indianapolis (Downtown): 201 N. Illinois Street, Suite 100 Indianapolis, IN 46204 (317) 238-2800 M-F: 9-5 Plainfield: 345 S. Perry Road Plainfield, IN 46168 (317) 893-0550 M-F: 9-5 St Francis: 7915 S. Emerson Avenue Indianapolis, IN 46237 (317) 238-2877 M-F: 9-5 Location Information LOUISVILLE MARKET: Anchorage: 12900 Factory Lane Louisville, KY 40245 (502) 222-8424 M-F: 9-5 Austin: 275 Highway 31 North Austin, IN 47102 (812) 794-2191 M-Th: 9-4, F: 9-5:30 Blankenbaker: 11751 Bluegrass Parkway Jeffersontown, KY 40299 (502) 625-0888 M-F: 9-5 Bloomfield: 111 Chaplin Road Bloomfield, KY 40008 (502) 719-4565 M-Th 8:30-4, F: 8:30– 5, S: 8:30-12 Broadway: 2710 W. Broadway Louisville, KY 40211 (502) 625-1782 M-F: 9-5, S: 9-12 Chaplin: 5916 Lawrenceburg Road Chaplin, KY 40012 (502) 719-4560 M-Th 8:30-4, F: 8:30– 5, S: 8:30-12 Charlestown Road: 2860 Charlestown Road New Albany, IN 47150 (812) 542-0653 M-Th: 9-4, F: 9-6, S: 9-12 Clarksville: 227 East Lewis & Clark Parkway Clarksville, IN 47129 (812) 945-0635 M-Th: 9-4, F: 9-6, S: 9-12 Crestwood: 6317 W. Highway 146 Crestwood, KY 40014 (502) 222-8422 M-Th: 9-4, F: 9-6, S: 9-12 Dixie Highway: 5220 Dixie Highway Louisville, KY 40216 (502) 625-2288 M-Th: 9-4, F: 9-6, S: 9-12 Dupont: 4098 Dutchmans Lane Louisville, KY 40207 (502) 625-1870 M-F: 9-5 Fifth Street: 214 South Fifth Street Louisville, KY 40202 (502) 625-1780 M-Th: 9-4, F: 9-5 Fern Creek: 10000 Will Way Louisville, KY 40291 (502) 625-1785 M-Th: 9-4, F: 9-6, S: 9-12 Highlands: 2292 Bardstown Road Louisville, KY 40205 (502) 625-1050 M-Th: 9:30-5, F: 9:30-6, S: 9-12 Hikes Point: 3063 Breckenridge Lane Louisville, KY 40220 (502) 625-1910 M-Th: 9-4, F: 9-6, S: 9-12 Hillview: 5026 Mud Lane Louisville, KY 40229 (502) 625-1030 M-Th: 9-4, F: 9-6, S: 9-12 Jeffersontown: 10421 Taylorsville Road Louisville, KY 40299 M-Th: 9-4, F: 9-6 Jeffersonville: 3230 E. 10th Street Jeffersonville, IN 47130 (812) 285-9080 M-Th: 9-4, F: 9-6 LaGrange: 515 S. First Street LaGrange, KY 40031 (502) 222-8421 M-Th: 9-5, F: 9-6, S: 9-12 Main Office: 1040 East Main Street Louisville, KY 40206 (502) 625-1790 M-Th: 9-4, F: 9-5:30 Middletown: 11800 Shelbyville Road Louisville, KY 40243 (502) 625-2290 M-Th: 9-4, F: 9-6, S: 9-12 Mt. Washington: 160 Dakota Court Mt. Washington, KY 40047 (502) 625-9350 M-Th: 9-4, F: 9-6 North Oldham: 12889 W. Highway 42 Prospect, KY 40059 (502) 222-8423 M-Th: 9-4, F: 9-6 Outer Loop: 4537 Outer Loop Louisville, KY 40219 (502) 625-2599 M-Th: 9-4, F: 9-6, S: 9-12 Poplar Level: 4016 Poplar Level Road Louisville, KY 40213 (502) 625-2299 M-Th: 9-4, F: 9-6 Prospect: 9201 U.S. Highway 42 Prospect, KY 40059 (502) 625-9210 M-Th: 9-4, F: 9-6, S: 9-12 Rudy Lane: 4800 Brownsboro Road Louisville, KY 40207 (502) 625-0800 M-Th: 9-4, F: 9-6 Shepherdsville: 183 Adam Shepherd Parkway Shepherdsville, KY 40165 (502) 625-9915 M-Th: 9-4, F: 9-6, S: 9-12 STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT STOCK YARDS FINANCIAL SERVICES Stock Yards Financial Services offers a range of investment options to help customers plan for their ﬁnancial future and expand the diversiﬁcation of their assets. These products include individual stocks and bonds, mutual funds, money market investments, annuities and other insurance products. These services are a valuable source of recurring revenue and help further diversify non-interest income. IN MEMORIAM We would like to pay our respects to the family of Leonard Kaufman, former Chairman of the Board and Chief Executive Officer, who passed away in 2019. Leonard joined the Bank in 1947 and his career spanned over 45 years. He served on the Board from 1984 until 2000 and was Chief Executive Officer and Chairman from December 1987 until his retirement in April 1993. We are deeply indebted to Leonard for his guidance, commitment and contributions to the Company. CONCLUSION Our mission statement summarizes the overall goals and objectives of Stock Yards Bancorp as follows: “We are a premier community bank committed to our customers’ financial goals by establishing trusted relationships earned by knowledgeable and enthusiastic employees.” The exceptional performance of this past year afﬁrms the strategies we pursue to grow our business, build our reputation and enhance shareholder value. We are excited about our success and look forward to carrying this momentum into 2020. James A. (Ja) Hillebrand Chief Executive Ofﬁcer in regard to our non-interest revenue sources. We had record contributions from debit and credit card income along with treasury management fees and mortgage services. This diversity will help us weather the ups and downs of business cycles. I am truly grateful for our outstanding senior management team and all of our employees throughout our company. I attribute our success to the team we’ve built and their ability to execute our proven business model. Our amazing growth in 2019 underscores the talent of all our dedicated employees. STOCKHOLDER RETURNS We continue to pursue strategies to enhance stockholder value, including a substantial and sustained dividend payout ratio. As was the case in each of the previous ﬁve years, our Board of Directors increased the Company’s quarterly cash dividend twice during 2019. The Company has now raised its quarterly dividend rate a total of 12 times since the beginning of 2013, resulting in a cumulative increase of 93% over this period. I am pleased to report that 2019 was an excellent year for Stock Yards Bancorp and our strongest to date. Record total revenue, net income, loan production and net loan growth led the way to a 19% increase in diluted earnings per share and solid returns on average assets and equity of 1.90% and 17.09%. In addition to completing our ﬁrst bank acquisition since 2013, this past year was highlighted by signiﬁcant organic growth across our Louisville, While there are many factors that drive Cincinnati and Indianapolis markets along with exceptional credit quality metrics. investment decisions, I believe our stockholders are attracted to our pursuit of attractive growth opportunities, our conservative lending culture, While Wealth Management & Trust continues to our diversiﬁed markets and revenue streams and lead our non-interest revenue growth, I’m the consistency of our returns. especially proud of our continued diversification $192 million in assets, $164 million in loans and $126 million in deposits, this acquisition served to complement our organic growth as well as our capital allocation strategies. It has been an honor to welcome the KSB customers to the Stock Yards family and by every measure, the transaction has exceeded our expectations. FINANCIAL OVERVIEW As previously mentioned, 2019 was another record year for Stock Yards Bancorp. Despite elevated levels of payoffs, the combination of record organic loan production and the KSB acquisition boosted our loan portfolio by $297 million, or 12%, with strong contributions from all In our opinion, it is best to measure a company’s markets and divisions. While our net interest performance over a meaningful timeframe which takes into account both up and down margin ended the year at 3.81%, down just slightly compared to the 3.83% seen in 2018, market cycles. For the 10-year period ended with prudent balance sheet management steadied 2019, Stock Yard Bancorp total return was 282% margin compression as the Federal Reserve cut compared to a 197% increase for the commonly interest rates three times during the year. used NASDAQ Bank Index. This outstanding performance demonstrates why Stock Yards Bancorp remains among the nation’s Non-interest income sources, which contributed 28% of net revenues, grew 10% year-over-year, highest-performing community banks, and I am signifying the success of our diversiﬁcation pleased to note that we were named to the Bank strategies. Wealth Management & Trust income and Thrift “SM-ALL STARS” by Sandler O’Neill & Partners in 2019. We were one of only 30 institutions to receive this designation based on increased 5%, as assets under management grew to a record $3.3 billion, driven by both record net new business, strong market returns and growth our continued growth, proﬁtability, credit quality in corporate retirement accounts. Card income and capital strength. We are honored to be recognized for our performance and we are conﬁdent in our ability to continue to deliver value to our shareholders. and treasury management fees, bolstered by increased volume and usage, also continued to stand out, representing a combined 26% of total non-interest income. KING SOUTHERN BANK ACQUISITION We continue to hire experienced relationship In May, we completed the acquisition of King managers in all of our markets, and as Bancorp, Inc. the holding company for King demonstrated below, the beneﬁts of these Southern Bank (KSB), expanding our presence in investments have been seen across the Company. both Louisville and nearby Nelson County. With INDIANAPOLIS MARKET Our Indianapolis market generated its third consecutive year of record loan production, contributing 33% of the Bank’s loan growth and ending the year representing approximately 17% CINCINNATI MARKET The Cincinnati market also generated record loan production in 2019 and ended the year representing 14% of the Company’s total loan portfolio. Our Cincinnati based Retail, Commercial, of the Company’s total loan portfolio – up from Business Banking, and Private Banking groups 15% at the end of 2018. These results reﬂect a superb year for commercial real estate lending as well as continued success in our Private all produced double digit deposit growth in 2019, leading to a record deposit increase of 28% and supporting our strong loan growth. Banking area. Similarly, deposits increased 9% to These accomplishments, coupled with record support this growth. Our Wealth Management & Trust group had another strong year of performance in new treasury management revenue in 2019, reﬂect the attractive prospects of this market. As with our Indianapolis market, we continue to Indianapolis, achieving record production – up explore opportunities for expansion to 14% from 2018. Our wealth advisors continue to grow and strengthen relationships with our existing customers while also acquiring new customers who value our personalized approach. complement the ﬁve branches we currently operate. We plan to open a sixth location in Evendale during the third quarter of 2020. Now with ﬁve banking centers, Indianapolis continues to present new opportunities for us. We recently completed our ﬁrst full year of COMMERCIAL BANKING DIVISION While our customer base is broad, ranging from consumers to commercial customers, our focus continues to be signiﬁcantly directed towards operation at our Plainﬁeld location, which greatly business lending. Loan growth was strong in exceeded our expectations, and we continue to 2019 as all three markets contributed to record explore expansion options in this vibrant market. loan production, leading to a 9% increase in net interest income for the year. Commercial & industrial loans combined with owner-occupied commercial real estate loans, which we consider our core lending areas, constitute nearly one half of our $2.8 billion loan portfolio. Commercial & industrial lending was steady throughout the year and commercial real estate loan demand was strong despite an increasingly competitive environment. The commercial pipelines are strong heading into 2020 and asset quality continues to be excellent. Opportunities in other areas continue to provide additional avenues for growth. Our business credit card product, initially launched in 2016, is generating substantial non-interest income. Total accounts grew 20% while International Banking saw record revenue in 2019 and is poised for a great 2020. In addition, RETAIL BANKING a new emphasis on Corporate Banking, which Retail Banking remains a critical part of what we focuses on larger middle-market clients, aims to do every day − meeting the banking needs for supplement growth further. WEALTH MANAGEMENT & TRUST SERVICES Our Wealth Management & Trust Group performed well in 2019, increasing revenues 5% over 2018, and comprising 45% of our non-interest income. As previously mentioned, assets under management reached a record $3.3 billion in 2019. Despite volatility in the stock market, our conservative, risk-adjusted approach and diversiﬁed asset allocation helped our clients achieve strong investment performance in 2019. It was also an excellent year for new business as we continue the growth of our Indianapolis and Cincinnati markets. thousands of customers through our many delivery channels. The success of a retail banking program can be gauged by its deposit trends, which were very positive in 2019 with total deposits growing 12% to $3.1 billion, reﬂecting gains in the number of depositors as well as average balances. We continue to invest in our branch network. The KSB acquisition added locations in Jeffersontown, Bloomﬁeld and Chaplin while our Mount Washington location opened in July of 2019. As previously mentioned, we plan to open another branch in northern Cincinnati in the third quarter of 2020, along with a new branch in the Valley Station area of our Louisville market. We also continue to develop our delivery channels, particularly digital offerings, to meet the needs of our customers. Our goal is to provide access and service to all customers through the delivery channels they prefer and we are committed to investing in the technology necessary to do so. BUSINESS BANKING Our business banking division focuses on small and middle-market companies that have different ﬁnancial needs than larger businesses that are serviced by the commercial lending area. By tailoring solutions and products to their speciﬁc needs through credit, savings and checking solutions, we help small businesses achieve ﬁscal efﬁciencies and improve proﬁtability. This division generated record loan production for 2019 in all three markets. This resource provides opportunities across our Treasury Management recorded a record year of TREASURY MANAGEMENT SERVICES markets and the growth we have seen is a testament to the relationships we have fostered with our clients, many of which trace back three to four generations. Through an experienced staff of professional and support personnel, we focus on serving the investment, ﬁnancial and trust needs of individuals, multi-generational families and institutions by providing holistic ﬁnancial plans for every client. PRIVATE BANKING DIVISION production and revenue for 2019, up 9% over the prior year. These results came from all three of the Bank’s markets. Treasury Management products utilize technology to increase income, mitigate risk and improve working capital. The treasury group’s expertise includes payments and disbursement management, lockbox, remote deposit, Automated Clearing House (ACH), sweep accounts, liquidity management, online banking, and information reporting. Our private banking services meet the needs of MORTGAGE SERVICES afﬂuent customers by providing all of our Mortgage lending continues to help diversify our solutions and alternatives in a personalized, non-interest revenue streams and is an important one-on-one experience with our private dimension of the many services we offer. banking professionals. We saw solid Mortgage banking revenue increased 20% over performance in all markets with continued prior year and represents 6% of our total success in dental lending, medical ofﬁce non-interest income. The strong performance building projects and medical residence lending we saw in 2019 was driven by lower rates, which programs. Indianapolis delivered signiﬁcant was a catalyst for re-ﬁnance and purchase loan growth, while loan production in activity. We expect lower rates to provide similar Cincinnati doubled that of 2018. motivation for such activity in 2020. DIRECTORS SHAREHOLDER INFORMATION PAGE 10 David P. Heintzman Chairman of the Board, Stock Yards Bancorp, Inc. and Stock Yards Bank & Trust Company James A. (Ja) Hillebrand Chief Executive Ofﬁcer, Stock Yards Bancorp, Inc. and Stock Yards Bank & Trust Company Stephen M. Priebe President, Hall Contracting of Kentucky Paul J. Bickel III President, U.S. Specialties J. McCauley Brown Retired Vice President, Brown-Forman Corporation Donna L. Heitzman Retired Portfolio Manager, KKR Prisma Capital Carl G. Herde Vice President / Finance, Kentucky Hospital Association Richard A. Lechleiter President, Catholic Education Foundation of Louisville John L. Schutte Chief Executive Ofﬁcer, GeriMed, Inc. Norman Tasman President, Tasman Industries, Inc. and Tasman Hide Processing, Inc. Kathy C. Thompson Senior Executive Vice President, Stock Yards Bancorp, Inc. and Stock Yards Bank & Trust Company EXECUTIVE OFFICERS James A. (Ja) Hillebrand Chief Executive Ofﬁcer Philip S. Poindexter President Kathy C. Thompson Senior Executive Vice President Wealth Management & Trust Michael J. Croce Executive Vice President Retail Banking Group William M. Dishman III Executive Vice President Chief Risk Ofﬁcer Michael V. Rehm Executive Vice President Chief Lending Ofﬁcer T. Clay Stinnett Executive Vice President Chief Financial Ofﬁcer Transfer Agent The transfer agent for the common stock of Stock Yards Bancorp, Inc. is: (FIRST CLASS / REGISTERED / CERTIFIED MAIL:) Computershare Investor Services P.O. Box 505000 Louisville, Kentucky 40233-5000 (800) 368-5948 (COURIER SERVICES:) Computershare Investor Services 462 South Fourth Street, Suite 1600 Louisville, Kentucky 40202 Automatic Dividend Reinvestment Service The Company’s automatic dividend reinvestment service enables stockholders to reinvest cash dividends in additional shares of Stock Yards Bancorp, Inc. stock. For additional information, please contact the Transfer Agent. Mailing And Street Addresses The mailing address for Stock Yards Bancorp, Inc. is: P.O. Box 32890, Louisville, Kentucky 40232-2890. The street address is: 1040 East Main Street, Louisville, Kentucky 40206. Internet Address The internet address for Stock Yards Bancorp, Inc. is www.syb.com. Please visit the Investor Relations section of our web site for the following: Corporate Overview, Stock Information, SEC Filings, Financial Information and News and Market Data. Common Stock Stock Yards Bancorp, Inc.’s common stock trades on the NASDAQ Global Select Market under the symbol SYBT. Forms 10-K And 10-Q Stock Yards Bancorp, Inc.’s annual report on Form 10-K and quarterly reports on Form 10-Q, as ﬁled with the Securities and Exchange Commission, can be found at www.syb.com (see “Investor Relations”) or by writing, emailing or calling Customer Service - OnlineCustomerService@syb.com, (502) 582-2571. LOUISVILLE - Corporate Center 1040 East Main Street Louisville, Kentucky 40206 (502) 582-2571 INDIANAPOLIS - Regional Center 201 North Illinois Street, Suite 100 Indianapolis, Indiana 46204 (317) 238-2800 CINCINNATI - Regional Center 101 West Fourth Street Cincinnati, Ohio 45202 (513) 824-6100 STOCK YARDS BANCORP, INC. 2019 SUMMARY ANNUAL REPORT

Continue reading text version or see original annual report in PDF format above