SYBT 10-K & 10-Q changes, risk factors and insider trading
Stock Yards Bancorp, Inc. · Nasdaq · State Commercial Banks · CIK 835324 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Organic expansion into new markets could adversely affect our business, financial condition and results of operations.”
New heading “The development and use of generative artificial intelligence (AI) technology presents risks and challenges that may adversely impact our business, financial condition and results of operations.”
Removed heading “Transactions between Bancorp and its former insurance subsidiary, the Captive, may be subject to certain IRS responsibilities and penalties.”
Largest changes
“The dramatic rise in interest rates experienced in 2022 provided significant benefit to NIM, as interest earning assets experienced higher yields and elevated levels of liquidity allowed deposit costs to remain near pandemic-era lows. However, as liquidity dissipated in 2023, driven in large part by the institutional failures of that year, intense competition for deposits created significant pricing pressure and drove deposit costs up. …”see in full comparison
“Transactions between Bancorp and its former insurance subsidiary, the Captive, may be subject to certain IRS responsibilities and penalties.”see in full comparison
“The development and use of generative artificial intelligence (AI) technology presents risks and challenges that may adversely impact our business, financial condition and results of operations.”see in full comparison
“The interest rate environment has experienced significant volatility over the past several years. The FRB’s severe, pandemic-driven interest rate reductions in March of 2020 lowered the FFTR to a range of 0% - 0.25%, and Prime to 3.25%, levels that were sustained for approximately two years. In an effort to combat the resulting inflation that had risen to its highest levels in decades, the FRB increased the FFTR a total of 525 bps via numerous, incremental rate increases over the course of 2022 and 2023, driving the FFTR to a range of 5.25% - 5.50-%, and Prime to 8.50%, by July of 2023.”see in full comparison
“Organic expansion into new markets could adversely affect our business, financial condition and results of operations.”see in full comparison
While the economic outlook forsee in full comparison20252026 is generally positive,proposedprojectingpolicymodestchanges from the incoming administration, including tariffs and extended or additional tax cuts,growth, the FRB’s continuedeffortseffort tocontrolnavigate economic challenges, including stubborn inflation andotheraeconomicsofteningchallenges,labor market, coupled with geopolitical andcompoundingtradegeopolitical riskstensions, create a number of uncertainties heading into2025.2026. The impact that thesechanges,factors, and any other developments, have on local, regional and national economic conditions could have a significant effect on our borrowers’ ability to meet contractual obligations.
Full comparison: every changed paragraph (26)
Interest rates have experienced significant volatility over the past several years. A rising rate environment that was driven by the FRB’s strategy to combat decades-high inflation via numerous, incremental rate increases over the course of 2022 and 2023 took the FFTR to a range of 5.25% - 5.50%, and Prime to 8.50%, by July of 2023. These levels were sustained until September of 2024, when the FRB began its attempt to engineer a “soft landing,” with several rate reductions that brought the FFTR to a range of 4.25% - 4.50%, and Prime to 7.50%, as of December 31, 2024.
The yield curve was challenged by flatness and/or inversion during 2025, with a semblance of steepness on the longest portion of the yield curve only beginning to be experienced towards the end of the year. Three consecutive 25 bps rate reductions from the FRB in September, October and December resulted in the FFTR falling to a range of 3.50% - 3.75%, and Prime to 6.75%, as of December 31, 2025.
The interest rate environment has experienced significant volatility over the past several years. The FRB’s severe, pandemic-driven interest rate reductions in March of 2020 lowered the FFTR to a range of 0% - 0.25%, and Prime to 3.25%, levels that were sustained for approximately two years. In an effort to combat the resulting inflation that had risen to its highest levels in decades, the FRB increased the FFTR a total of 525 bps via numerous, incremental rate increases over the course of 2022 and 2023, driving the FFTR to a range of 5.25% - 5.50-%, and Prime to 8.50%, by July of 2023.
These levels of interest rates were sustained for over a year until September of 2024, when the FRB reduced the FFTR 50 bps, representing their first rate reduction in over four years, lowering the FFTR to a range of 4.75% - 5.00%, and Prime to 8.00%. Consistent with a strategy of engineering a “soft landing,” they followed suit in November and December of 2024, cutting the FFTR further with respective 25 bps reductions, bringing the FFTR to a range of 4.25% - 4.50%, and Prime to 7.50%, as of December 31, 2024.
The dramatic rise in interest rates experienced in 2022 provided significant benefit to NIM, as interest earning assets experienced higher yields and elevated levels of liquidity allowed deposit costs to remain near pandemic-era lows. However, as liquidity dissipated in 2023, driven in large part by the institutional failures of that year, intense competition for deposits created significant pricing pressure and drove deposit costs up. The resulting shift in Bancorp’s deposit mix, with a large portion of non-interest bearing and lower-rate deposits migrating to higher-yielding alternatives, created significant NIM compression, which was a scenario that continued into 2024 in conjunction with Bancorp’s substantial loan growth. While short term interest rates have recently declined consistent with the FRB’s rate reductions, the middle and longer-term portions of the yield curve have been relatively stagnant. Managing volatility within the interest rate environment will continue to be a primary focus for Bancorp, and the banking industry generally, as we enter 2025.
The current economic outlook remains uncertain and is regularly changing as new economic data becomes available and the FRB’s efforts to manage economic challenges continue.available. Recent projections indicate that the FRBpotential willfor slow or halt FFTRadditional rate reductions in 2025.2026. While NIM expansion was experienced in the second half of 2024,2025, the previously mentioned flattening of the yield curve,curve challenges and pricing pressure/competition for both loans and deposits, and changing levels of liquiditydeposits could continue to pose challenges to NIM and net interest spread expansion in 2025.2026.
While the economic outlook for 20252026 is generally positive, proposedprojecting policymodest changes from the incoming administration, including tariffs and extended or additional tax cuts,growth, the FRB’s continued effortseffort to controlnavigate economic challenges, including stubborn inflation and othera economicsoftening challenges,labor market, coupled with geopolitical and compoundingtrade geopolitical riskstensions, create a number of uncertainties heading into 2025.2026. The impact that these changes,factors, and any other developments, have on local, regional and national economic conditions could have a significant effect on our borrowers’ ability to meet contractual obligations.
Credit-related concerns stemming from the higherchanging interest rate environment and contractual renewal and maturity activity may be experienced over the next year. Strong loan volumes were experienced during the historically low pandemic-era interest rate environment that began in 2020 and was marked by Prime falling to 3.25%, a level at which it remained until 2022. Given the standard five-year term often associated with many of our traditional lending facilities, 2025 will begin a period of elevated interest rate risk for certain borrowers,borrowers will continue in 2026, as notes originated or renewed during that period will either renew or mature in an interest rate environment that is now significantly higher, with Prime more than doubling since 2020 and standing at 7.50%6.75% as of December 31, 2024.2025.
A combination of higher interest rates and rising central business district vacancies across the country have created credit and collateral concerns over the past year, specifically within the CRE sector. While we believe the quality of our CRE portfolio, and the overall loan portfolio, remains solid, with no exposure to large office towers and minimal exposure to central business districts, we are not immune from potential deterioration in the value of loan collateral and could be negatively impacted by the effects of any such activity.
Significant improvement in the overall loss position of our investment securities portfolio was experienced in 2025 as a result of changes in the interest rate environment and the corresponding impact on the market value of our investment securities portfolio. While this improvement benefitted other comprehensive income, and as a result, overall capital levels in 2025, the investment securities portfolio remains in an overall loss position and is still subject to the factors noted above.
Organic expansion into new markets could adversely affect our business, financial condition and results of operations.
Organically expanding into new geographical markets presents unique challenges associated with brand awareness, talent acquisition and relationship building. It also exposes us to new economies and potentially different economic drivers. While these challenges can be approached with more gradual and measured strategies compared to entering a new market by acquisition, the success of organic expansion depends on our ability to find the appropriate personnel, successfully implement our community banking model and ensure continual fit with our strategic goals and high standards for performance. Failure to do so could adversely affect our business, financial condition and results of operations in addition to damaging Bancorp’s reputation as a premier community bank.
We began to expand our geographic footprint organically in 2025, announcing the appointment of a market president in December that will help lead our entry into the south-central Kentucky market. While we feel this expansion is a natural extension of our deep Kentucky roots, this strategic initiative represents entrance into a market that is new to Bancorp. As such, our ability to build brand recognition, develop and grow a talented team of relationship managers and implement our full-service, community banking model in a new market from the ground up will be key to successfully establishing ourselves in south-central Kentucky.
We’ve experienced a shift in the mix of our deposit portfolio over the past twoseveral years, consistent with a higher interest rate environment. Customers have moved from non-interest or low-interest bearing deposits into higher yielding options, particularly time deposits and money market offerings, which has driven a substantial increase in the cost of deposits and overall funding. Further, alternative investment options for customers holding excess levels of liquidity, such as treasury bonds, have resulted in a portion of deposit balances being invested with non-bank competitors, such as brokerages. While we have generally not experienced fallout within the customer base as a result, such activity impacts our overall deposit levels.
Policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding judgments and estimates pertaining to these matters, there can be no assurances that actual our results will not differ from those estimates. See the section titled “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information.
During 2025, the disclosure of several large loan losses resulting from suspected fraud were made by a number of regional banks, creating broader fraud-based credit concerns for the banking industry generally. While fraud associated with more operationally-focused transactions, such as wire transfers, card fraud or check fraud typically involve smaller individual amounts and occur with more frequency, credit fraud stemming from the origination of loans to borrowers under false pretenses can drive substantial losses with just one occurrence. The inability to prevent such fraud through our underwriting and operational processes could negatively impact our business, results of operations and financial condition, as well as our overall reputation.
The development and use of generative artificial intelligence (AI) technology presents risks and challenges that may adversely impact our business, financial condition and results of operations.
We, or our third-party vendors, clients or counterparties may develop or incorporate AI technology into certain business processes, services or products. While we have established programs to manage our increasing exposure to AI, including processes for monitoring related risks, managing third party relationships, incident response, as well as employee awareness and education, the rapid adoption and broad use of AI across technological platforms and industries exposes us to growing and evolving risks that could adversely impact our business, financial condition and results of operations.
Generative AI models, whether developed or used internally or by third-parties, may produce output or take undesirable action, reflect biases included in any data or assumptions in which they are trained, disclose private or confidential information or otherwise operate in a harmful manner. To the extent use of such models, or AI technology generally, limits transparency or grows in complexity, any failure to understand, monitor or adapt to such technology could present unique risks to our operations and business.
Further, the legal and regulatory environment related to AI is uncertain and continually evolving, expanding to incorporate intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI. These laws and regulations could impact our implementation and use of AI technology, subject us to risk of non-compliance and legal or regulatory consequences, harm our reputation and increase costs related to prevention, mitigation or resolution of such issues.
We will be subject to increased regulation once our total consolidated assets exceed $10 billion.billion as of any year-end.
Key provisions from the Tax Cuts and Jobs Act of 2017 arewere originally set to expire December 31, 2025. WhileHowever, legislation enacted in 2025 by the recentcurrent electionsadministration, havenamely the “One Big Beautiful Bill Act,” made many of these provisions permanent or extended them with modifications. While this has generally been perceived as a positive for tax policy, any political gridlock regarding the structure of tax policy, the expiration, renewal or reformation of current tax provisions, or the proposal of additional changes to the tax code could present challenges or necessitate strategic changes for our business. Further, such changes, or delays in making crucial tax policy decisions, could have adverse repercussions for both our business and that of our customers.
Transactions between Bancorp and its former insurance subsidiary, the Captive, may be subject to certain IRS responsibilities and penalties.
The Captive, formerly a wholly owned subsidiary of Bancorp, was a Nevada-based captive insurance company that was taxed under Section 831(b) of the Internal Revenue Code. On April 10, 2023, the IRS issued a proposed regulation that would potentially classify section 831(b) captive activity as a, “listed transaction,” and possibly disallow the related tax benefits, both prospectively and retroactively. The regulation was finalized in January 2025 and its impact is being evaluated by management. Bancorp elected not to renew the Captive in August of 2023 and ultimately dissolved the Captive in December of 2023. The finalization of the proposal and any disallowance of related tax benefits could negatively impact our financial condition and results of operations.
Companies arehave facingfaced increasingincreased scrutiny from regulators, investors and other stakeholders related to their ESG practices and disclosure.disclosure over the past several years. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. IncreasedAny increase in ESG-related compliance costs could result in increases to our overall operational costs. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence and disclosure. Additionally, concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts to mitigate those impacts. Failure to adapt or comply with related legislation, regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, financial condition and results of operations.
While the current administration has a reduced focus on these practices and disclosures, future government regulations could result in new or more stringent forms of ESG oversight and the expansion of mandatory and voluntary reporting, diligence and disclosure. Additionally, concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts to mitigate those impacts. Failure to adapt or comply with related legislation, regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, financial condition and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “General highlights for the year ended December 31, 2025 compared to December 31, 2024:”
New heading “*See table titled, "Average Balance Sheets and Interest Rates (FTE)" for detail of Net interest income (FTE).”
New heading “(1) Ratios are not annualized”
New heading “(1) Non-managed assets represent those for which the WM&T department does not hold investment discretion.”
New heading “(1) Includes assumed lease renewals.”
New heading “(2) Consists primarily of contractual requirements relating to community sponsorships.”
Removed heading “General highlights for the year ended December 31, 2023 compared to December 31, 2022:”
Removed heading “Fair Value Measurements”
Largest changes
“The AFS debt securities portfolio is comprised of U.S. Treasury and other U.S. government obligations, debt securities of U.S. government-sponsored corporations (including mortgage-backed securities), and obligations of state and political subdivisions. U.S. Treasury securities are priced using quoted prices of identical securities in an active market. These measurements are classified as Level 1 in the hierarchy above. …”see in full comparison
“OREO, which is carried in other assets at the lower of cost or fair value, is periodically assessed for impairment based on fair value at the reporting date. Fair value is commonly based on recent real estate appraisals or valuations performed by internal or external parties which use judgments and assumptions that are property-specific and sensitive to changes in the overall economic environment. Appraisals may be further discounted based on management’s judgement and/or changes in market conditions from the date of the most recent appraisal. …”see in full comparison
“*See table titled, "Average Balance Sheets and Interest Rates (FTE)" for detail of Net interest income (FTE).”see in full comparison
“While recent projections indicate that the FRB will slow or halt interest rate reductions in 2025, Bancorp expects ongoing pricing pressure/competition for both loans and deposits and general liquidity management to be the primary challenges to NIM and net interest income growth in 2025.”see in full comparison
“Prime rate, the five year Treasury note rate, and one month term SOFR are included in the preceding table to provide a general indication of the interest rate environment Bancorp has operated in during the past three years, a period marked by dramatic changes in interest rates. In March 2022, the FRB began a rate hike strategy aimed at taming inflation, which had reached its highest levels in decades, and exiting the near-zero interest rate environment of the pandemic era. …”see in full comparison
Events that could potentially trigger goodwill impairment include deterioration in economic conditions, a decline in market-dependent multiples or metrics (i.e. stock price declining below tangible book value), negative trends in overall financial performance and regulatory actions. In 2025, Bancorp changed its goodwill impairment testing date from September 30 to October 1. The change was applied prospectively and was not material to the Company’s consolidated financial statements, as it did not delay, accelerate or avoid an impairment charge. At September 30,see in full comparison2024,2025 and October 1, 2025, Bancorp performed its annual qualitative assessment to determine if it was more-likely-than-not that the fair value of the reporting units exceeded their carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting units exceeded their fair value.
Full comparison: every changed paragraph (198)
As a result of its acquisition of Kentucky Bancshares, Inc. on May 31, 2021, Bancorp became the 100% successor owner of a Nevada-based insurance captive taxed under Section 831(b) of the Internal Revenue Code. On April 10, 2023, the IRS issued a proposed regulation that would potentially classify section 831(b) captive activity as a, “listed transaction,” and possibly disallow the related tax benefits, both prospectively and retroactively. The regulation was finalized inon January 202510, and2025, itsclarifying impactwhat is beingconsidered evaluateda bylisted management.transaction or a transaction of interest. Based on the final regulations, there is no change in the status for the captive insurance structure in place previously, which Bancorp elected not to renew the Captivedissolved in August of 2023 and ultimately dissolved the Captive in December of 2023. The Captive’scaptive activityremains isclassified includedas ina thetransaction Company’sof consolidated financial statements and was included in its 2023 federal income tax return. The Captive’s activity served to reduce Bancorp’s ETR by 0.20% and 0.29%interest for the open tax years ended December 31, 2023 and 2022,there respectively.is no reserve for an uncertain tax position based on the final regulation.
Also as a result of its acquisition of Commonwealth Bancshares, Inc., Bancorp acquired a 60% interest in LFA, a Bowling Green, Kentucky-based wealth management services company. Effective December 31, 2022, Bancorp’s partial interest in LFA was sold, resulting in a pre-tax loss of $870,000 recorded in other non-interest expense on the consolidated income statements for the quarter and year ended December 31, 2022. This acquired line of business was not within the Company’s geographic footprint and ultimately did not align with the Company’s long-term strategic model. Net income related to LFA and attributable to Bancorp’s 60% interest, excluding the pre-tax loss on disposition noted above, totaled $483,000 for the year ended December 31, 2022.
Management continually evaluates itsthe accounting policies and estimates that it uses to prepare the consolidated financial statements. In general, management’s estimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third-party professionals. Actual results may differ from those estimates made by management.
Critical accounting policiesestimates are those that management believes are the most important to the portrayal of Bancorp’s financial condition and operating results and require management to make estimates that are difficult, subjective and complex. Most accounting policiesestimates are not considered by management to be critical accounting policies.estimates. Several factors are considered in determining whether or not aan policyestimate is critical in the preparation of the financial statements. These factors include, among other things, whether the estimates have a significant impact on the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including independent third parties or available pricing, sensitivity of the estimates to changes in economic conditions and whether alternative methods of accounting may be utilized under GAAP. Management has discussed each critical accounting policyestimate and the methodology for the identification and determination of critical accounting policiesestimates with Bancorp’s Audit Committee. As of December 31, 2024,2025, the significant accounting policyestimate considered the most critical in preparing Bancorp’s consolidated financial statements is the determination of the ACL on loans.
General highlights for the year ended December 31, 2025 compared to December 31, 2024:
Total stockholder’s equity to total assets was 11.28% as of December 31, 2025 compared to 10.61% at December 31, 2024. Total equity increased to $1.08 billion in 2025, driven by net income of $140.2 million and a $30 million improvement in AOCI, offset partially by $37 million of dividends declared. The improvement in AOCI from December 31, 2024 to December 31, 2025 was the result of the changing interest rate environment and its corresponding impact on the valuation of the AFS debt securities portfolio.
TCE is a measure of a company’s capital, which is useful in evaluating the quality and adequacy of capital. Bancorp’s ratio of TCE to total tangible assets was 9.32% as of December 31, 2025, compared to 8.44% at December 31, 2024, the improvement driven mainly by growth in stockholder’s equity associated with the year’s record operating results and to a lesser extent, the positive change in AOCI related to the valuation of the AFS debt securities portfolio. See the section titled “Non-GAAP Financial Measures” for reconcilement of non-GAAP to GAAP measures.
TCE is a measure of a company’s capital, which is useful in evaluating the quality and adequacy of capital. Bancorp’s ratio of TCE to total tangible assets was 8.44% as of December 31, 2024, compared to 8.09% at December 31, 2023, the improvement driven mainly by growth in stockholder’s equity associated with the year’s strong operating results and to a much smaller extent, the positive change in AOCI related to the valuation of the AFS debt securities portfolio. See the section titled “Non-GAAP Financial Measures” for reconcilement of non-GAAP to GAAP measures.
General highlights for the year ended December 31, 2023 compared to December 31, 2022:
Total stockholder’s equity to total assets was 10.50% as of December 31, 2023 compared to 10.14% at December 31, 2022. Total equity increased to $858 million in 2023, driven by net income of $107.7 million and a $23 million positive change in AOCI, offset partially by $35 million of dividends declared. The increase in AOCI from December 31, 2022 to December 31, 2023 was the result of the changing interest rate environment and its corresponding impact on the valuation of the AFS debt securities portfolio.
*See table titled, "Average Balance Sheets and Interest Rates (FTE)" for detail of Net interest income (FTE).
Prime rate, the five year Treasury note rate, and one month term SOFR are included in the preceding table to provide a general indication of the interest rate environment Bancorp has operated in during the past three years, a period marked by interest rate volatility. A rising rate environment that was driven by the FRB’s strategy to combat decades-high inflation via numerous, incremental rate increases over the course of 2022 and 2023 took the FFTR to a range of 5.25% - 5.50%, and Prime to 8.50%, by July of 2023. These levels were sustained until September of 2024, when the FRB began its attempt to engineer a “soft landing,” with several rate reductions that brought the FFTR to a range of 4.25% - 4.50%, and Prime to 7.50%, as of December 31, 2024.
Prime rate, the five year Treasury note rate, and one month term SOFR are included in the preceding table to provide a general indication of the interest rate environment Bancorp has operated in during the past three years, a period marked by dramatic changes in interest rates. In March 2022, the FRB began a rate hike strategy aimed at taming inflation, which had reached its highest levels in decades, and exiting the near-zero interest rate environment of the pandemic era. This resulted in the FFTR being increased a total of 525 basis points in just under a year and a half, taking it from a range of 0.00% - 0.25% to a range of 5.25% - 5.50% by July 2023. Prime increased from 3.25% to 8.50% over this same period.
Interest rates remained at these levels until September 2024, when the FRB implemented its first rate reduction in over four years, beginning its attempt to avoid recession and pilot a “soft landing,” with three separate decreases of the FFTR over the final four months of year, ultimately lowering the FFTR a total of 100 bps. The FFTR stood at a range of 4.25% - 4.50%, and Prime at 7.50%, as of December 31, 2024.
Bancorp experienced significant benefit from the rate increases enactedthat began in 2022, as the majority of Bancorp’s variable rate loans eventually rose above their 4.00% floors and deposit rates remained relatively low. However, as interest rates continued to rise in 2023, the positive impact rising rates had on the loan portfolio began to be offset by higher deposit rates stemming from intense pricing pressure and competition, which began to drive NIM compression. While this trend continued into 2024, significant average loan growth and the benefit of higher rates upon average interest earning assets eventually managed to outpace rising funding costs in the latter half of the year,2024, as deposit cost expansion began to moderate.
While the yield curve was challenged by flatness and/or inversion during 2025, continued loan growth at higher rates and the benefit of repricing on portions of the loan portfolio that had been carrying lower pandemic-era rates drove NIM expansion during the year, as these positive forces were coupled with a decline in overall funding costs attributed to deposit rate cuts and improved liquidity, the latter of which ended the need for more expensive overnight borrowings that had been utilized more heavily in the prior year.
Towards the end of 2025, a semblance of steepness on the longest portion of the yield curve began to be experienced, as three consecutive 25 bps rate reductions from the FRB in September, October and December resulted in the FFTR falling to a range of 3.50% - 3.75%, and Prime to 6.75%, as of December 31, 2025. However, despite a slight improvement in the overall yield curve’s trajectory, the shorter end of the curve that is most critical to Bancorp’s business (overnight through 5 years) remains flat and/or inverted and to the extent that trend continues, NIM and net interest spread expansion could be challenged in 2026.
While recent projections indicate that the FRB will slow or halt interest rate reductions in 2025, Bancorp expects ongoing pricing pressure/competition for both loans and deposits and general liquidity management to be the primary challenges to NIM and net interest income growth in 2025.
Net interest spread (FTE) and NIM (FTE) were 2.58%2.89% and 3.31%,3.53%, for the year ended December 31, 2024,2025, compared to 2.78%2.58% and 3.39%3.31% for the prior year, respectively. NIM during the year ended December 31, 2024 was significantly impacted by the following:
Net interest income (FTE) increased $43.3 million, or 17%, for the year ended December 31, 2025 compared to the prior year, as the impact of significant loan growth on interest income far surpassed the increase in interest expense tied to interest bearing deposit growth.
Total average interest earning assets increased $731 million, or 9%, for the year ended December 31, 2025, as compared to the prior year, attributed to substantial average loan growth. The average rate earned on total average interest earning assets climbed 19 bps to 5.50%.
Total interest income (FTE) increased $54.7 million, or 13%, to $468 million for the year ended December 31, 2025, as compared to the prior year.
Total average interest bearing liabilities increased $693 million, or 12%, to $6.41 billion for the year ended December 31, 2025 compared to the prior year.
Total interest expense increased $11.4 million, or 7%, for the year ended December 31, 2025 compared to the prior year, driven almost entirely by increased time deposit expense associated with successful CD promotion, which was only partially offset by smaller declines in virtually every other interest-bearing liability category. Despite the increased expense, the cost of interest-bearing deposits declined 6 bps to 2.53% and total interest-bearing liability cost declined 12 bps 2.61%, which was attributed to the impact of the FRB’s interest rate reductions enacted during the year.
Net interest spread (FTE) and NIM (FTE) were 2.58% and 3.31%, for the year ended December 31, 2024, compared to 2.78% and 3.39% for the prior year, respectively.
Net interest spread (FTE) and NIM (FTE) were 2.78% and 3.39%, for the year ended December 31, 2023 compared to 3.21% and 3.35% for the year ended December 31, 2022, respectively. NIM during the year ended December 31, 2023 was significantly impacted by the following:
Net interest income (FTE) increased $13.6 million, or 6%, for the year ended December 31, 2023 compared to the same period of 2022, attributed largely to significant organic loan growth, the full year impact of acquisition-related activity and the benefits of a rising interest rate environment, which more than offset rising funding costs.
Total average interest earning assets increased $316 million, or 5%, to $7.30 billion for the year ended December 31, 2023, as compared to year ended December 31, 2022, with the average rate earned on total interest earning assets increasing 114 bps to 4.75%.
Total interest income (FTE) increased $94.7 million, or 37%, to $347.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Total average interest bearing liabilities increased $513.2 million, or 11%, to $5.05 billion for the year ended December 31, 2023 compared with the year ended December 31, 2022, with the total average cost increasing 157 bps to 1.97%.
Total interest expense increased $81.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by substantial deposit rate increases and increased borrowing activity, and to a lesser extent, acquisition-related expansion. As a result, the cost of interest bearing liabilities increased 157 bps to 1.97% for the year ended December 31, 2023 compared to the prior year.
Bancorp’s interest rate sensitivity analysis detailsindicates that increases in interest rates of 100 and 200 bps would have a positive effect on net interest income, while decreases in interest rates of 100 and 200 bps would have a negative impact. These results depict a slightlyan asset-sensitive interest rate risk profile. The increase in net interest income in the rising rate scenarios is primarily due to variable rate loans and short-term investments repricing more quickly than deposits and short-term borrowings. Net interest income decreases in the falling rate scenarios because rates on non-maturity deposits cannot be lowered sufficiently to offset the decline in interest income associated with assets that immediately reprice as rates fall.
In addition, Bancorp periodically uses derivative financial instruments as part of its interest rate risk management, including interest rate swaps. These interest rate swaps are designated as cash flow hedges as described in the footnote titled “Derivative Financial Instruments.” For these derivatives, the effective portion of gains or losses isare reported as a component of OCI and is subsequently reclassified into earnings as an adjustment to interest expense in periods in which the hedged forecasted transaction affects earnings.
(1) Ratios are not annualized
The ACL for loans totaled $92 million as of December 31, 2025 compared to $87 million at December 31, 2024, representing an ACL to total loans ratio of 1.30% and 1.33% for the respective periods.
Provision expense for credit losses on loans of $5.6 million was recorded for the year ended December 31, 2025, driven by strong loan growth and slight deterioration within the FRB’s national unemployment forecast, which were partially offset by annual CECL model updates and a decrease in specific reserves. Net charge offs of $626,000 were recorded for the year ended December 31, 2025.
Provision expense for credit losses on loans of $8.8 million was recorded for the year ended December 31, 2024, which was driven mainly by strong loan growth, net charge offs of $1.2 million, and to a much lesser extent, an improved unemployment forecast and other factors within the CECL model.
While separate from the ACL for loans and recorded in other liabilities on the consolidated balance sheets, the ACL for off balance sheet credit exposures also increased between December 31, 2024 and December 31, 2025. Provision expense of $1.2 million for off balance sheet credit exposures was recorded for the year ended December 31, 2025, driven by higher C&D availability assumptions. The ACL for off balance sheet exposures totaled $7.9 million as of December 31, 2025.
Provision for off balance sheet credit exposures of $925,000 was recorded for the year ended December 31, 2024, driven largely by an increase in expected future utilization within the C&D portfolio. The ACL for off balance sheet credit exposures totaled $6.8 million as of December 31, 2024.
Bancorp’s loan portfolio is well-diversified with no significant concentrations of credit. Geographically, most loans are extended to borrowers in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets. The adequacy of the ACL is monitored on an ongoing basis and it is the opinion of management that the balance of the ACL at December 31, 2025 is adequate to absorb probable losses inherent in the loan portfolio as of the financial statement date.
While separate from the ACL for loans and recorded in other liabilities on the consolidated balance sheets, the ACL for off balance sheet credit exposures also experienced an increase between December 31, 2023 and December 31, 2024. Provision expense of $925,000 was recorded for the year ended December 31, 2024, driven largely by an increase in expected future utilization within the C&D portfolio. The ACL for off balance sheet credit exposures totaled $6.8 million as of December 31, 2024.
Provision for credit loss expense for off balance sheet credit exposures of $1.3 million$925,000 was recorded for the year ended December 31, 2023,2024, driven largely by an increase in expected future utilization within the addition of new C&D and C&I lines of credit.portfolio. The ACL for off balance sheet credit exposures totaled $5.9$6.8 million as of December 31, 2023.2024.
Bancorp’s loan portfolio is well-diversified with no significant concentrations of credit. Geographically, most loans are extended to borrowers in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets. The adequacy of the ACL is monitored on an ongoing basis and it is the opinion of management that the balance of the ACL at December 31, 2024 is adequate to absorb probable losses inherent in the loan portfolio as of the financial statement date.
The ACL for loans totaled $79 million as of December 31, 2023 compared to $74 million at December 31, 2022, representing an ACL to total loans ratio of 1.38% and 1.41% for those periods, respectively. Based on the 100% SBA guarantee of the PPP loan portfolio, which totaled $4 million at December 31, 2023 and $19 million at December 31, 2022, Bancorp did not reserve for potential losses for these loans within the ACL.
Provision expense for credit losses on loans of $12.5 million was recorded for the year ended December 31, 2023. In addition to strong loan growth, a flat unemployment forecast and other factors within the CECL allowance model, provision expense for the year ended December 31, 2023 was driven by net charge offs $6.6 million. Elevated net charge off activity for the year ended December 31, 2023 was attributed mainly to the charge off of two isolated and unrelated C&I relationships, one of which was fully reserved for in a prior period.
Provision expense (excluding acquisition-related activity) of $5.3 million was recorded for the year ended December 31, 2022. Significant loan growth, inflation and recession-based increases in the projected unemployment rate forecast, along with qualitative factor updates related to the potential impact of rising rates on the C&I portfolio, were the main drivers of expense within the CECL model for 2022. Further, net charge off/recovery activity for the year ended December 31, 2022 was minimal.
Credit loss expense recorded for the acquired CB loan portfolio totaled $4.4 million in 2022, bringing total provision for credit losses on loans to $9.7 million for the year. Further, the ACL for loans was also increased $10 million as a result of the PCD loan portfolio added through the CB acquisition during the first quarter of 2022, with the corresponding offset recorded to goodwill (as opposed to provision expense).
The ACL for off balance sheet credit exposures also increased between December 31, 2022 and December 31, 2023. Provision for credit loss expense for off balance sheet credit exposures of $1.3 million was recorded for the year ended December 31, 2023, driven largely by the addition of new C&D and C&I lines of credit. The ACL for off balance sheet credit exposures totaled $5.9 million as of December 31, 2023.
Provision for credit loss expense for off balance sheet credit exposures (excluding acquisition-related activity) of $575,000 was recorded for the year ended December 31, 2022, driven largely by the addition of new lines of credit, and thus increased availability, within the C&D portfolio. The ACL for off balance sheet credit exposures was also increased $500,000 during the first quarter of 2022 as a result of the CB acquisition, with the offset recorded to goodwill (as opposed to provision expense). The ACL for off balance sheet credit exposures totaled $4.5 million as of December 31, 2022.
Total non-interest income increased $3.0$1.7 million, or 3%,2%, for the year ended December 31, 20242025 compared to the same period of 2023.2024. Non-interest income comprised 24% and 27% of total revenue, defined as net interest income and non-interest income, for the years ended both December 31, 20242025 and 2023,2024, respectively. WM&T revenue comprised 45%44% of total non-interest income for the year ended December 31, 20242025 compared to 43%45% for the same period of 2023,2024, respectively.
The magnitude of WM&T revenue distinguishes Bancorp from other community banks of similar asset size. WM&T revenue increaseddecreased $3.0 million,$35,000, or 8%,less than 1%, for the year ended December 31, 2024,2025, as compared with the same period of 2023,2024, consistentthe withlatter of which marked a record year for WM&T. Despite the decrease compared to prior year, which was driven in part by lower non-recurring estate fees, solid WM&T revenue for 2025 was attributed to strong equity and fixed income market appreciation andin higheraddition estateto fee income, which more than offset a decline inpositive net new business expansion.business.
Net new business refers to revenue generated from newly acquired customers, excluding revenue from upselling or cross-selling to existing active customers. It plays a crucial role in expanding Bancorp’s financial base and ensuring long-term sustainability and success. DuringIn the thirdlatter quarterpart of 2024, the WM&T department experienced negative net new business for the first time in several years, driven inby large part toemployee attrition associated with employeeaggressive retirementsrecruiting and market competition.competition Totalfor WM&Tclients, which drove AUM contraction and hampered revenue is currently projected to increase over the next twelve months, although not at levels experienced in the past, as projected moderate market growth wouldfor moreseveral than offset the potential negative impact from the previously mentioned attrition and an expected decline in non-recurring estate fees.months. Positions impacted by attrition have since been filled and Bancorp expects WM&T to begin experiencingexperienced positive net new business induring the comingyear quarters.ended December 31, 2025.
Recurring fees earned for managing accounts are based on a percentage of market value of AUM and are typically assessed on a monthly basis. Recurring fees, which generally comprise the vast majority of WM&T revenue, increased $2.6 million,$340,000, or 7%1% for the year ended December 31, 2024,2025, as compared with the same period of 2023.2024. The increase was driven largely by equity market appreciation over the past year.year in addition to the impact of net new business expansion.
A portion of WM&T revenue, most notably estate and certain employee benefit plan-related fees, are non-recurring in nature and the timing of these revenues corresponds with the related administrative activities. For this reason, such fees are subject to greater period over period fluctuation. Total non-recurring fees increaseddecreased $432,000$375,000 for the year ended December 31, 2024,2025, as compared with the same period of 2023,2024, driven by increaseda decline in estate fee income.
AUM, stated at market value, totaled $7.64 billion at December 31, 2025 compared with $7.07 billion at December 31, 2024 compared with $7.16 billion at December 31, 2023.2024. The decreaseincrease in AUM between December 31, 20232024 and December 31, 20242025 is attributed mainly to market appreciation, and to a lesser extent, the previously mentioned declineimpact inof net new business.
Total AUM (not included on balance sheet) decreasedincreased fromto $7.16$7.64 billion at December 31, 20232025 tofrom $7.07 billion at December 31, 2024 as follows:
(1) Non-managed assets represent those for which the WM&T department does not hold investment discretion.
Managed assets are invested in instruments for which market values can be readily determined, the majority of which are sensitive to market fluctuations and consist of approximately 65% in equities and 35% in fixed income securities as of both December 31, 2025 and December 31, 2024, compared to 64% and 36% as of December 31, 2023.respectively. This composition has been relatively consistent from period to period.
Deposit service charges, which consist of non-sufficient funds charges and to a lesser extent, other activity based charges, increaseddecreased $40,000,$174,000, or less than 1%,2%, for the year ended December 31, 2024,2025, as compared with the same period of 2023.2024. Consistent with the banking industry generally, Bancorp has experienced a steady decline in the volume of fees earned on overdrawn checking accounts over the past several years. This trend has been driven by lower check presentment volume, which has in turn led to fewer overdrawn accounts in general. Further, Bancorp anticipates that future growth of this revenue stream could be significantly impacted by changing industry practices. Bancorp could be faced with strategic decisions surrounding deposit-related service charges in the future, which could negatively impact the contributions made by this, or similar, revenue streams.
Debit and credit card income consists of interchange revenue, ancillary fees and incentives received from card processors. Debit and credit card revenue increaseddecreased $644,000,$209,000, or 3%,1%, for the year ended December 31, 2024,2025, as compared with the same period of 2023,2024, driven mainly by higherlower transaction volume.volumes. Total debit card income increaseddecreased $174,000,$86,000, or less than 1%, and total credit card income increaseddecreased $470,000,$123,000, or 8%2% for the year ended December 31, 2024,2025, compared the same period of the prior year. While Bancorp generally expects this revenue stream to grow with continued expansion of the customer base, interchange rate compression and fluctuations in business and consumer spend levels could serve as challenges to future growth.
What changed in the latest 10-Q
Risk Factors
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Management's Discussion & Analysis (MD&A)
New heading “General highlights for the six months ended June 30, 2026 compared to June 30, 2025:”
New heading “Net Interest Income (FTE) – Six months ended June 30, 2026 compared to June 30, 2025:”
New heading “Average Balance Sheets and Interest Rates (FTE) – Six-Month Comparison”
New heading “Classified Loans”
Removed heading “(1) Includes client directed instruments such as rights, warrants, annuities, insurance policies, unit investment trusts, and oil and gas rights.”
Largest changes
“Average Balance Sheets and Interest Rates (FTE) – Six-Month Comparison”see in full comparison
“(1) Includes client directed instruments such as rights, warrants, annuities, insurance policies, unit investment trusts, and oil and gas rights.”see in full comparison
“Net Interest Income (FTE) – Six months ended June 30, 2026 compared to June 30, 2025:”see in full comparison
“General highlights for the six months ended June 30, 2026 compared to June 30, 2025:”see in full comparison
see in full comparisonBancorp continues to experience a shift in the deposit portfolio mix, as customers have sought higher-yielding alternatives in the current interest rate environment. However, theThe cost of interest-bearing deposits experienced a favorable declineduringover thefirstpastthree12months of 2026,months, ending at2.31%2.29% for the six months ended June 30, 2026 compared to2.43%2.55% for thefourthsixquartermonthofended June 30, 2025, as Bancorp strategically lowered deposit rates in tandem with the rate reductions implemented by the FRB in the latter part of 2025 and the higher-rate time deposit portfolio continued to reprice favorably to the promotional rates offered in the prior year. The cost of total deposits also decreased during thethreesix months endedMarchJune31,30, 2026 compared to thefourthsamequarter,period of 2025, declining718 bps to1.88%.1.85%. However, despite thedecreases,decreases noted above, Bancorp remains cautious regarding deposit costs and anticipates higher funding costs going forward due topotentialpricing pressure/competition.competition and potential changes in the overall deposit mix.
“Total average interest earning assets increased $638 million, or 8%, for the six months ended June 30, 2026, as compared to the same period of 2025, attributed primarily to average organic loan and interest-bearing cash balance growth, and to a lesser extent, the impact of the FM acquisition. This growth was only partially offset by a decline in average investment securities driven by scheduled maturities and normal amortization. …”see in full comparison
Full comparison: every changed paragraph (129)
SYB, established in 1904, is a state-chartered non-member financial institution that provides services inthroughout Louisville,the central,state eastern and northernof Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio markets through 7581 full service banking center locations. The Bank is registered with, and subject to supervision, regulation and examination by the FDIC and the Kentucky Department of Financial Institutions.
On May 1, 2026, Bancorp completed its acquisition of Field & Main Bancorp, Inc. and its wholly owned subsidiary, Field & Main Bank, a Henderson, Kentucky-based commercial bank and trust company, which operated 6 retail branches, including three in Henderson County, Kentucky and one each in Lexington, Kentucky, Cynthiana, Kentucky and Evansville, Indiana. At the time of acquisition and including purchase accounting adjustments, FM had $839 million in assets, including $626 million in net loans, $56 million in investment securities, and $765 million in deposits in addition to maintaining a Wealth Management and Trust Department with total assets under management of approximately $825 million. Bancorp acquired all outstanding common stock of Field & Main Bancorp, Inc. in an all-stock transaction that resulted in total consideration paid to Field & Main Bancorp, Inc. shareholders of $112 million.
Bancorp recorded goodwill of $44 million and incurred pre-tax merger related expenses totaling $2.3 million for the three months ended June 30, 2026 as a result of the FM acquisition.
Further, the FM acquisition served to increase the ACL on loans by $16 million at acquisition date. This increase consisted of $11 million attributed to the acquired PCD loan portfolio and $5 million attributed to the acquired non-PCD portfolio, with the corresponding offset for both recorded to goodwill.
The following table presents an overview of Bancorp’s financial performance for the three months ended MarchJune 31,30, 2026 and 2025:
General highlights for the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025:
The following table presents an overview of Bancorp’s financial performance for the six months ended June 30, 2026 and 2025:
General highlights for the six months ended June 30, 2026 compared to June 30, 2025:
NIM and net interest spread calculations above exclude the sold portion of certain participation loans, which totaled $2 million at both March 31, 2026 and December 31, 2025. These sold loans are on Bancorp’s balance sheet as required by GAAP because Bancorp retains some form of effective control; however, Bancorp receives no interest income on the sold portion. These participation loans sold are excluded from NIM and spread analysis, as Bancorp believes it provides a more accurate depiction of loan portfolio performance.
At MarchJune 31,30, 2026, Bancorp’s loan portfolio consisted of approximately 63%64% fixed and 37%36% variable rate loans. At inception, most of Bancorp’s fixed rate loans are generally priced in relation to the five year treasury note. Bancorp’s variable rate loans are typically indexed to either Prime or one month term SOFR, repricing as those rates change. At MarchJune 31,30, 2026, approximately 54%55% and 46%45% of Bancorp’s variable rate loan portfolio was indexed to Prime and SOFR, respectively.
Towards the end of 2025, slight steepness on the longest portion of the yield curve began to be experienced, as three consecutive 25 bps rate reductions from the FRB in September, October and December resulted in the FFTR falling to a range of 3.50% - 3.75%, and Prime to 6.75%, as of December 31, 2025. TheseWhile these levels were maintained through MarchJune 31,30, 2026. However, despite a slight improvement in2026, the overall yield curve’scurve trajectory,continued to improve during the shorterfirst endhalf of this year, with spreads on the portion of the curve that is most critical to Bancorp’s business (overnight through 5 years) remainedshowing relativelya flatsemblance throughof normalization during the second quarter after battling flatness/inversion during the first quarterthree months of this year.2026.
The NIM expansion experienced during the three months ended MarchJune 31,30, 2026 compared to recent quarters was attributed mainly to a continued decline in the cost of interest-bearing deposits. Bancorp strategically lowered deposit rates in tandem with FRB rate reductions and the repricing of the time deposit portfolio as the prior year’s promotional rates have adjusted to lower current offerings has provided significant benefit to NIM. In addition, while earning-asset yields have been challenged by lower rates, excess liquidity provided by deposit growth and the scheduled maturity of lower-yielding investment securities over the past 12 months has been used to fund higher-yielding loan growth, servingproviding gradual improvement to buoy yields.
Recent projections indicate a likelihood that the FRB maywill haltlikely ratehold reductionsrates forsteady during the remaindersecond half of 2026. However, given current geopolitical uncertainty and regularly changing economic data/conditions, interestprojections rateremain volatilityvolatile. Further, Bancorp remains cautious regarding both loan and deposit rates as pricing related to competitive pressures could presentintensify challenges throughoutin the year.coming quarters.
Net Interest Income (FTE) – Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025:
Net interest spread (FTE) and NIM (FTE) were 3.08%3.26% and 3.65%,3.84%, for the three months ended MarchJune 31,30, 2026, compared to 2.83%2.87% and 3.46%3.53% for the same period of 2025, respectively.
Net interest income (FTE) increased $7.9$14.4 million, or 11%,20%, for the three months ended MarchJune 31,30, 2026 compared to the same period of 2025, driven by thestrong impact of strongorganic average loan growth on interest income andgrowth, a decline in interest expense related to eliminatingthe strategic reduction of deposit rates in tandem with FRB rate cuts and the needimpact forof the moreF&M expensive overnight borrowings that were utilized throughacquisition, the first quarterlatter of 2025.which represents two months worth of activity.
Total average interest earning assets increased $464$810 million, or 6%,10%, for the three months ended MarchJune 31,30, 2026, as compared to the same period of 2025, attributed to both organic average loanearning asset growth and interest-bearingthe cashimpact balanceof growththe thatFM acquisition, which was partially offset by a decline in average investment securities driven by scheduled maturities and normal amortization. The rate earned on average earning assets increased 19 bpbps to 5.47%5.61% despite the impact of rate reductions implemented by the FRB in the latter part of 2025, as liquidity provided by the scheduled maturity of lower-yielding securities helped fund higher-yielding organic loan growth.growth and earning assets added through the FM acquisition helped boost yields.
Total interest income (FTE) increased $6.5$13.3 million, or 6%,12%, to $117.7$128.4 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of 2025.
Total average interest bearing liabilities increased $394$628 million, or 6%,10%, to $6.65$6.91 billion for the three month period ended MarchJune 31,30, 2026 compared with the same period in 2025.2025, driven by both organic growth and the impact of the FM acquisition.
Total interest expense decreased $1.4$1.0 million, or 3%, for the three months ended MarchJune 31,30, 2026 compared to the same period of 2025,2025 drivendespite primarilyadditional bycosts the decrease in average FHLB advances duerelated to the needacquired fordeposit overnightportfolio, borrowingsconsistent utilizedwith the strategic reduction of deposit rates in thetandem priorwith yearFRB periodrate being eliminated.reductions.
Net Interest Income (FTE) – Six months ended June 30, 2026 compared to June 30, 2025:
Net interest spread (FTE) and NIM (FTE) were 3.17% and 3.75%, for the six months ended June 30, 2026, compared to 2.85% and 3.50% for the same period of 2025, respectively.
Net interest income (FTE) increased $22.2 million, or 15%, for the six months ended June 30, 2026 compared to the same period of 2025, driven by the impact of strong organic average loan growth on interest income, a decline in interest expense related to eliminating the need for the more expensive overnight borrowings that were utilized through the first quarter of 2025 and the impact of the FM acquisition, the latter of which represents two months worth of activity.
Total average interest earning assets increased $638 million, or 8%, for the six months ended June 30, 2026, as compared to the same period of 2025, attributed primarily to average organic loan and interest-bearing cash balance growth, and to a lesser extent, the impact of the FM acquisition. This growth was only partially offset by a decline in average investment securities driven by scheduled maturities and normal amortization. The rate earned on average earning assets increased 5 bp to 5.54% despite the impact of rate reductions implemented by the FRB in the latter part of 2025, as liquidity provided by the scheduled maturity of lower-yielding securities helped fund higher-yielding loan growth. The earning assets added through the FM acquisition also provided benefit to earning asset yields for the six months ended June 30, 2026.
Total interest income (FTE) increased $19.8 million, or 9%, to $246.1 million for the six months ended June 30, 2026, as compared to the same period of 2025.
Total average interest bearing liabilities increased $512 million, or 8%, to $6.78 billion for the six month period ended June 30, 2026 compared with the same period in 2025, attributed primarily to organic growth, and to a lesser extent, the impact of the FM acquisition.
Total interest expense decreased $2.4 million, or 3%, for the six months ended June 30, 2026 compared to the same period of 2025 despite the added costs associated with the FM acquisition, driven primarily by eliminating the necessity of more expensive overnight borrowings from the FHLB.
Average Balance Sheets and Interest Rates (FTE) – Six-Month Comparison
The results of the interest rate sensitivity analysis performed as of MarchJune 31,30, 2026 were derived from conservative assumptions Bancorp uses in its model, particularly in relation to deposit betas, which measure how responsive management’s deposit repricing may be to changes in market rates based on historical data. Management uses different betas in the rising and falling rate scenarios in an effort to best simulate expected earnings trends.
Provision for credit losses on loans at MarchJune 31,30, 2026 represents the amount of expense that, based on management’s judgment, is required to maintain the ACL for loans at an appropriate level under the CECL model. The determination of the amount of the ACL for loans is complex and involves a high degree of judgment and subjectivity. See the footnote titled “Basis of Presentation and Summary of Significant Accounting Policies” in Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2025 for detailed discussion regarding Bancorp’s ACL methodology by loan segment.
The ACL for loans totaled $94$109 million as of MarchJune 31,30, 2026 compared to $89$91 million at March 31,June, 2025, representing an ACL to total loans ratio of 1.30%1.38% and 1.34%1.32% for the respective periods. The ACL for loans was increased $16 million as a result of the loan portfolio added through the FM acquisition during the second quarter, with the corresponding offset recorded to goodwill (as opposed to provision for credit loss expense).
ProvisionNo provision expense on loans of $1.6 million was recorded for the three month period ended MarchJune 31,30, 2026, consistent with muted organic loans growth, strong credit quality metrics and annual CECL methodology updates made during the second quarter. Provision expense on loans totaling $1.6 million was recorded for the six month period ended June 30, 2026, driven primarily by strong organic loan growth,growth whichthat was concentrated in the first quarter and was only partially offset by improvement in the unemployment forecast and decreased specific reserves. Net recoveriescharge ofoff/recovery $104,000activity werewas recordedminimal for both the three and six month periodperiods ended MarchJune 31,30, 2026.
Provision expense on loans of $900,000$2.3 million and $3.2 million was recorded for the three and six month periodperiods ended MarchJune 31,30, 2025. ExpenseWhile expense for both periods of the prior year periodwere wasconsistent attributed mainly towith strong loan growth, increased specific reserves, and to a lesser extent, slight deterioration within the unemployment forecast,forecast whichand wereincreased partiallyspecific offsetreserves, expense for the six month period was also impacted by annual CECL model updates.updates Additionally,made during the first quarter of 2025. Net charge offs of $342,000 and net recoveries of $971,000$629,000 were recorded for the three and six month periodperiods ended MarchJune 31,30, 2025.2025, respectively.
The ACL for off balance sheet credit exposures, which is separate from the ACL for loan and recorded in other liabilities on the consolidated balance sheets, wasincreased unchanged$375,000 between December 31, 2025 and MarchJune 31,30, 2026. NoWhile no provision expense was recorded for off balance sheet credit exposures for the three and six months ended MarchJune 31,30, 2026, the liability was increased as a result of the line of credit availabilityportfolio decreasedadded through the FM acquisition, with the corresponding offset recorded to goodwill (as opposed to provision expense). The lack of expense for the first half of 2026, is consistent with lower availability (excluding acquisition-related activity) stemming from improved overallutilization utilization.and the impact of payoff activity within the CRE and C&D portfolios. The ACL for off balance sheet exposures totaled $7.9$8.3 million as of MarchJune 31,30, 2026.
NoNegative provision (credit to expense) of $75,000 for off balance sheet credit exposures was recorded for the three and six month periodperiods ended MarchJune 31,30, 2025, as overallline of credit utilization was flatimproved during the priorfirst yearhalf period.of 2025, reducing the reserve necessary for line availability. The ACL for off balance sheet exposures totaled $6.8$6.7 million as of MarchJune 31,30, 2025.
Bancorp’s loan portfolio is well-diversified with no significant concentrations of credit. Geographically, most loans are extended to borrowers in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets. The adequacy of the ACL is monitored on an ongoing basis and it is the opinion of management that the balance of the ACL at MarchJune 31,30, 2026 is adequate to absorb probable losses inherent in the loan portfolio as of the financial statement date.
Total non-interest income increased $1.6$2.4 million, or 7%,10%, and $4.0 million, or 8%, for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to the same periodperiods of 2025. Non-interest income comprised 23.9%23.3% and 23.6% of total revenues, defined as net interest income and non-interest income, for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to 24.6%24.9% and 24.7% for the same periodperiods of 2025. The decreasedecreases from the prior year wereare attributed to the increase in net interest income comparedgrowth tooutpacing priornon-interest year.income. WM&T services comprised 46.1%47.0% and 46.5% of total non-interest income for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to 46.3%43.0% and 44.6% for the same periodperiods of the prior year. The increases over the prior year were driven by WM&T revenue growth outpacing the other non-interest income categories.
Total non-interest income attributed to the FM acquisition for the three and six month periods ended June 30, 2026 totaled $1.3 million and represents two full months of activity related to FM.
The magnitude of WM&T revenue distinguishes Bancorp from other community banks of similar asset size. WM&T revenue increased $688,000,$2.1 million, or 6%,20%, and $2.8 million, or 13%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, attributed to AUM expansion over the past 12 months, which has been driven by both general market appreciation and new business development.development in addition to the impact of the FM acquisition, the latter of which contributed approximately $789,000 in revenue for the three and six month periods ended June 30, 2026.
Recurring fees earned for managing accounts are based on a percentage of market value of AUM and are typically assessed on a monthly basis. Recurring fees, which generally comprise the vast majority of WM&T revenue, increased $801,000,$2.2 million, or 8%,21%, and $3.0 million, or 14%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, consistent with AUM expansion andexpansion, general market appreciation.appreciation and the impact of the FM acquisition.
A portion of WM&T revenue, most notably executor and certain employee benefit plan-related fees, are non-recurring in nature and the timing of these revenues corresponds with the related administrative activities. For this reason, such fees are subject to greater period over period fluctuation. Total non-recurring fees decreased $113,000,$76,000, or 36%,25%, and $189,000, or 29%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, due to the prior year periodperiods experiencing stronger estate fee revenue.
AUM, stated at market value, totaled $7.60$8.84 billion at MarchJune 31,30, 2026 compared with $7.64 billion at December 31, 2025 and $6.80$7.19 billion at MarchJune 31,30, 2025. The increase in AUM between MarchJune 31,30, 2025 and MarchJune 31,30, 2026 was attributed largely to the impact of the FM acquisition, but was also driven by appreciation within the equity and fixed income markets in addition to organic new business development over the past 12 months. AUM attributed to FM totaled $890 million as of June 30, 2026.
AUM (not included on balance sheet) increased from $7.64 billion at December 31, 2025 to $7.60$8.84 billion at MarchJune 31,30, 2026 as follows:
As of MarchJune 31,30, 2026 and December 31, 2025, approximately 81%83% and 80% of AUM were actively managed, respectively. Company retirement plan accounts consist primarily of participant-directed assets. The amount of custody and safekeeping accounts are insignificant to overall WM&T operations.
(1) Includes client directed instruments such as rights, warrants, annuities, insurance policies, unit investment trusts, and oil and gas rights.
Managed assets are invested in instruments for which market values can be readily determined, the majority of which are sensitive to market fluctuations and consist of approximately 63%66% in equities and 37%34% in fixed income securities as of MarchJune 31,30, 2026, compared to 65% and 35% as of December 31, 2025. This composition has remained relatively consistent from period to period.
Deposit service charges, which consist of non-sufficient funds charges and to a lesser extent, other activity based charges, increased $77,000,$299,000, or 4%,14%, and $376,000, or 9%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025.2025, Consistentdriven by both acquisition-related activity and organic growth. However, consistent with the banking industry generally, Bancorp has experienced a steady decline in the volume of fees earned on overdrawn checking accounts over the past several years. This trend has been driven by lower check presentment volume, which has in turn led to fewer overdrawn accounts in general. Further, Bancorp anticipateswill thatbe futureimplementing growthcompliance-related changes associated with regulatory deposit settlement requirements during the third quarter of 2026, which are consistent with changing industry practices and will negatively impact this revenue stream could be significantly impacted by changing industry practices. Bancorp could be faced with strategic decisions surrounding deposit-related service charges in the future, which could negatively impact the contributions made by this, or similar, revenue streams.stream.
Debit and credit card income consists of interchange revenue, ancillary fees and incentives received from card processors. Debit and credit card revenue increased $130,000,$307,000, or 3%,6%, and $437,000, or 5%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, drivenattributed mainlyto byboth higheracquisition-related debitactivity cardand transactionorganic volume.growth. Total debitDebit card income increased $141,000,$374,000, or 5%,11%, and $515,000, or 8%, and total credit card income decreased $11,000,$67,000, or less4%, thanand 1%$78,000, or 3%, for the three and six month periodperiods ended MarchJune 31,30, 2026,2026 compared the same periodperiods of the prior year. While Bancorp generally expects this revenue stream to grow with continued expansion of the customer base, interchange rate compression and fluctuations in business and consumer spend levels could serve as challenges to future growth. Further, Bancorp will be subject to regulatory limitations on interchange transaction fees for debit card transactions after total consolidated assets exceed $10 billion as of any given December 31, which will negatively impact this revenue stream. Such limitations begin on July 1 of the calendar year immediately following the year an institution crosses this threshold. Bancorp expects to officially cross the $10 billion threshold for regulatory purposes on December 31, 2027.
Treasury management fees primarily consist of fees earned for cash management services provided to commercial customers. Treasury management fees increased $315,000,$170,000, or 12%,6%, and $485,000 or 9%, for the year ended MarchJune 31,30, 2026,2026 as compared with the same periodperiods of 2025, driven by broad fee increases implemented towards the end of the first quarter of 2025 in addition to organic growth and new product sales. Treasury management fees have seen significant annual growth overWhile the pastFM severalacquisition years,had duelittle inimpact largeon part to acquisition-related customer base expansion and organic growth that was augmented by new product sales, including increased demand for fraud prevention services. To the extent such activity cannot be replicated, futureoverall treasury management fee revenueincome willfor likelythe growthree atand six month periods ended June 30, 2026, the customer base added through the acquisition is expected to provide opportunities for future growth given Bancorp’s ability to offer these new customers a slowerbroader pacearray thanof hastreasury been experienced in recent years.services.
Mortgage banking income primarily includes gains on sales of mortgage loans and net loan servicing income offset by MSR amortization. Bancorp’s mortgage banking department predominantly originates residential mortgage loans to be sold in the secondary market, primarily to FNMA and FHLMC. Bancorp offers conventional, VA, FHA and GNMA financing for purchases and refinances, as well as programs for first-time homebuyers. Interest rates on mortgage loans directly influence the volume of business transacted by the mortgage-banking department. Mortgage banking revenue increaseddecreased $13,000,$81,000, or 1%,7%, and $68,000, or 3%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025. While overall volumes have remained steady, yields on mortgage loans sold in the secondary market have declined as a result of competitive pricing pressures, negatively impacting mortgage banking revenue. The FM acquisition had minimal impact on mortgage banking revenue for the three and six months ended June 30, 2026.
Net investment product sales commissions and fees are generated primarily on stock, bond and mutual fund sales, as well as wrap fees earned on brokerage accounts via an arrangement with a third party broker-dealer. Wrap fees represent charges for investment programs that bundle together a suite of services, such as brokerage, advisory, research and management and are based on a percentage of account assets. Bancorp deploys its financial advisors primarily through its branch network, while larger managed accounts are generally serviced by Bancorp’s WM&T group. Net investment product sales commissions and fees increased $51,000,$94,000, or 5%,10%, and $145,000, or 7%, for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to the same periodperiods of 2025. The FM acquisition had minimal impact on this non-interest revenue stream.
BOLI assets represent the cash surrender value of life insurance policies on certain active and non-active employees who have provided consent for Bancorp to be the beneficiary for a portion of such policies. The related change in cash surrender value and any death benefits received under the policies are recorded as non-interest income and serves to offset the cost of various employee benefits. BOLI income increased $10,000,$62,000, or 2%,10%, and $72,000, or 6%, for the yearthree and six month periods ended MarchJune 31,30, 2026 compared to the same periodperiods of 2025, consistentprimarily withas yieldsa withinresult of adding BOLI assets totaling approximately $13 million as a result of the policyFM plans.acquisition.
A loss of $34,000 on the sale of premises and equipment was recorded for the three months ended June 30, 2026 while a gain of $445,000 was recorded for the six months ended June 30, 2026. Activity for the first half of 2026 consisted primarily of the sale of a former branch location during the first quarter of 2026, which was only partially offset by a loss recorded during the second quarter related to the disposal of miscellaneous equipment. A gain of $74,000 was recorded for the three and six month periods ended June 30, 2025 as a result of the sale of a property owned through a prior acquisition that had been held for sale.
Gains on the sale of premises and equipment totaled $479,000 for the three months ended March 31, 2026, which was attributed entirely to the sale of a former branch location. No activity was recorded for the prior year period.
Other non-interest income decreased $165,000,$424,000, or 31%,36%, and $589,000, or 34%, for the three and six month periodperiods ended MarchJune 31,30, 2026 compared with the same periodperiods of 2025, driven largelymainly by lowerthe prior year periods benefitting from swap fee and letter of credit fee income. The prior year period also benefitted from a miscellaneous tax credit investment distribution.activity.
Total non-interest expenses increased $4.2$11.1 million, or 8%,21%, and $15.3 million, or 15%, for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to the same periodperiods of 2025. Compensation and employee benefits comprised 64.0%60.4% and 62.1% of Bancorp’s total non-interest expensesexpenses, excluding one-time merger-related expenses, for the three and six month periodperiods ended MarchJune 31,30, 2026, compared to 62.2%61.9% and 62.0% for the same periodperiods of 2025, the increase being attributed to general FTE growth and higher bonus accrual levels compared to the prior year.2025.
Total non-interest expense, excluding one-time merger-related expenses, attributed to the FM acquisition for the three and six month periods ended June 30, 2026 totaled $3.5 million and effectively represents two full months of activity related to FM. One-time merger-related expenses totaled $2.3 million for the three and six month periods ended June 30, 2026. Such expenses are expected to be recorded throughout the third and fourth quarters of 2026.
Compensation, which includes salaries, incentives, bonuses and stock based compensation, increased $3.2$3.7 million, or 12%,13%, and $6.9 million, or 13%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025. The increase was attributed primarily to growth in full time equivalent employees, whichincluding includedthe impact of the FM acquisition and a focus on sales team expansion, annual merit-based salary increases and higher bonus accrual levels. Net full time equivalent employees totaled 1,1441,270 at MarchJune 31,30, 2026 compared to 1,0891,118 at MarchJune 31,30, 2025.
Employee benefits consists of all personnel-related expense not included in compensation, with the most significant items being health insurance, payroll taxes and employee retirement plan contributions. Employee benefits increased $384,000,$853,000, or 7%,16%, and $1.2 million, or 11%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, driven mainly by the previously mentioned growth in FTEsFTEs, andincluding higherthe healthimpact insuranceof claimsthe activity.FM acquisition.
Net occupancy and equipment expenses primarily include depreciation, rent, property taxes, utilities and maintenance. Costs of capital asset additions flow through the statement of income over the lives of the assets in the form of depreciation expense. Net occupancy expense increased $197,000,$720,000, or 5%,18%, and $917,000, or 11%, for the three and six month periodperiods ended MarchJune 31,30, 2026, as compared with the same periodperiods of 2025, consistent with the impact of the FM acquisition and organic branch network expansion in addition to higher rent and depreciation expense. ThreeIn addition to the six full-service locations added through the FM acquisition, three new branch locations were opened over the past 12 months. At MarchJune 31,30, 2026, Bancorp’s branch network consisted of 7581 locations throughout Louisville,the central,state eastern and Northernof Kentucky, as well as the MSAs of Indianapolis, Indiana and Cincinnati, Ohio.
SYBT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 3 filings (3 insiders, 3 trade dates, 8,183 shares, about $686.0K). Net open-market shares: -8,183 (purchases minus sales); net value about -$686.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-21 | Woods Michael W |
Open-market sale | 139 | $79.02 | $11.0K |
| 2026-09-21 | Hardy David L. |
Grant/award | 51 | $78.81 | $4.0K |
| 2026-09-21 | Priebe Stephen M |
Grant/award | 124 | $78.81 | $9.8K |
| 2026-09-21 | Saunier Edwin S |
Grant/award | 40 | $78.81 | $3.2K |
| 2026-09-03 | Woods Michael W |
Shares withheld for tax | 61 | $80.28 | $4.9K |
| 2026-08-20 | Saunier Edwin S |
Grant/award | 40 | $82.05 | $3.3K |
| 2026-08-20 | Priebe Stephen M |
Grant/award | 69 | $82.05 | $5.7K |
| 2026-08-20 | Hardy David L. |
Grant/award | 69 | $82.05 | $5.7K |
| 2026-07-30 | Wells Laura L |
Open-market sale | 6,823 | $86.29 | $588.8K |
| 2026-07-27 | Priebe Stephen M |
Grant/award | 88 | $82.45 | $7.3K |
| 2026-07-27 | Hardy David L. |
Grant/award | 92 | $82.45 | $7.6K |
| 2026-07-27 | Saunier Edwin S |
Grant/award | 39 | $82.45 | $3.2K |
| 2026-06-17 | Saunier Edwin S |
Grant/award | 43 | $72.32 | $3.1K |
| 2026-06-17 | Priebe Stephen M |
Grant/award | 135 | $72.32 | $9.8K |
| 2026-06-17 | Hardy David L. |
Grant/award | 55 | $72.32 | $4.0K |
| 2026-06-12 | Stinnett Thomas C |
Shares withheld for tax | 2,646 | $75.58 | $200.0K |
| 2026-06-12 | Stinnett Thomas C |
Option exercise | 3,606 | $40.00 | $144.2K |
| 2026-05-21 | Saunier Edwin S |
Grant/award | 46 | $71.28 | $3.3K |
| 2026-05-21 | Priebe Stephen M |
Grant/award | 79 | $71.28 | $5.6K |
| 2026-05-21 | Hardy David L. |
Grant/award | 79 | $71.28 | $5.6K |
| 2026-05-21 | Poindexter Philip |
Open-market sale | 1,221 | $70.68 | $86.3K |
| 2026-05-11 | Poindexter Philip |
Shares withheld for tax | 3,747 | $70.72 | $265.0K |
| 2026-05-11 | Poindexter Philip |
Option exercise | 4,968 | $40.00 | $198.7K |
| 2026-04-28 | Schutte John |
Grant/award | 55 | $73.09 | $4.0K |
| 2026-04-28 | Bickel Paul J Iii |
Grant/award | 55 | $73.09 | $4.0K |
| 2026-04-28 | Hardy David L. |
Grant/award | 104 | $73.09 | $7.6K |
| 2026-04-28 | Saunier Edwin S |
Grant/award | 38 | $73.09 | $2.8K |
| 2026-04-28 | Priebe Stephen M |
Grant/award | 77 | $73.09 | $5.6K |
| 2026-04-23 | Bickel Paul J Iii |
Grant/award | 4 | $70.44 | $282 |
Well-known investors holding SYBT (13F)
None of the 59 investors we track reported a position in their latest 13F.