This in-depth report, updated October 27, 2025, offers a multifaceted examination of Stock Yards Bancorp, Inc. (SYBT), analyzing its business moat, financial statements, and future growth outlook to ascertain its fair value. The analysis is further enriched by benchmarking SYBT against key competitors, including WesBanco, Inc. (WSBC) and Commerce Bancshares, Inc. (CBSH), while applying the value investing principles of Warren Buffett and Charlie Munger.
Mixed outlook for Stock Yards Bancorp. The bank is a profitable operator with a standout wealth management division that provides stable fee income. This unique strength sets it apart from many community bank peers. However, future growth is likely to be modest due to intense competition from larger rivals. The stock also appears overvalued, trading at a significant premium to its tangible book value. Balance sheet risks, including tight liquidity and investment losses, warrant caution. Investors should consider waiting for a more attractive entry point for this quality company.
US: NASDAQ
Stock Yards Bancorp, Inc. (SYBT) operates a dual-pronged business model centered on community banking and wealth management services. The core of its operation is traditional banking, serving individuals and small-to-medium-sized businesses across its key markets in Louisville, Kentucky; Indianapolis, Indiana; and Cincinnati, Ohio. The bank's primary revenue driver is net interest income, earned from the spread between the interest it collects on loans and the interest it pays on deposits. Its main products include commercial and industrial (C&I) loans, commercial real estate (CRE) loans, and residential mortgages. Complementing this is a robust deposit-gathering operation through its network of local branches. The second, and highly significant, pillar of SYBT's business is its Wealth Management and Trust division, which provides investment management, trust, and estate services, generating a substantial portion of the company's noninterest (fee-based) income. This combination allows SYBT to build deep, multi-faceted relationships with its customers, creating a sticky client base.
The bank's largest business line is commercial lending, encompassing both Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans, which together constitute the majority of its loan portfolio and are the primary engine for its net interest income. These loans are extended to local businesses for various purposes, including working capital, equipment purchases, and property acquisition or development. The market for commercial lending in the Midwest is highly competitive, featuring large national banks, other regional players, and smaller community banks all vying for business. The growth in this market is closely tied to the economic health of the local regions. SYBT competes not on scale but on service and local expertise, positioning itself as a relationship-based lender. Unlike larger competitors who may rely on standardized underwriting, SYBT emphasizes personalized service and deep knowledge of its clients' businesses and local market conditions. Its target customers are established small and medium-sized enterprises that value a long-term banking partner. This relationship-based approach creates high switching costs, as businesses are often reluctant to move complex lending and treasury management services, making the customer base sticky. The moat for this service is built on these intangible assets—local relationships and reputation—rather than on cost advantages.
SYBT's second key product area is its Wealth Management and Trust division, which is a major differentiator and contributes significantly to revenue, accounting for over half of the bank's noninterest income. This division provides a suite of services including financial planning, investment management, and administration of trusts and estates for high-net-worth individuals, families, and institutions. With a long history, it is one of the largest bank trust departments in its region. The U.S. wealth management market is vast and growing, but it is also fragmented, with competition from national wirehouses like Morgan Stanley, independent registered investment advisors (RIAs), and other bank trust departments. SYBT's wealth division distinguishes itself by integrating its services with the bank's traditional offerings, providing a holistic financial solution for clients. Customers are typically affluent individuals and business owners who often already have a lending or deposit relationship with the bank. The stickiness of these clients is exceptionally high due to the deeply personal and complex nature of trust and estate planning, creating powerful switching costs. This division's moat is formidable, based on a trusted brand built over generations, high switching costs, and the generation of stable, recurring fee revenue that is not dependent on interest rate cycles.
Finally, the bank's retail banking and deposit-gathering operations form the foundation of its business model. Through its network of approximately 79 branches, SYBT offers standard products like checking and savings accounts, CDs, and residential mortgages to the general public. This operation provides the low-cost funding—in the form of customer deposits—that the bank uses to make loans. The market for retail deposits is intensely competitive, especially in a rising rate environment where customers seek higher yields. SYBT competes with national banks, credit unions, and online-only banks. Its primary consumer is the local resident or family who values the convenience of a physical branch and the potential for a personal banking relationship. While individual retail deposit accounts can be less sticky than commercial ones, the convenience of a local branch network and the bundling of services (like a mortgage with a checking account) help with retention. The moat here is less about a single product and more about the scale of its localized network. By establishing a dense presence in its key markets, SYBT creates a convenient and trusted option for local communities, which supports a stable, granular deposit base, a crucial advantage for funding its lending activities at a reasonable cost.
In conclusion, Stock Yards Bancorp's business model is robust and well-balanced. It combines the steady, relationship-driven profits of community banking with the high-margin, stable fee income of a major wealth management operation. This diversification is a key strategic advantage, making the company far more resilient to interest rate fluctuations than many of its regional banking peers. The moat is primarily derived from intangible assets and high switching costs. For its commercial and wealth clients, the deep, long-standing relationships and the complexity of moving accounts create a powerful deterrent to switching providers. Its brand, established over more than a century in its home market of Louisville, further cements its position.
The primary vulnerability of this model is its geographic concentration. An economic downturn specifically affecting the Louisville, Indianapolis, or Cincinnati metropolitan areas could disproportionately impact the bank's loan portfolio and overall health. However, the diversification provided by the wealth management arm mitigates this risk to a degree, as fee income is less correlated with local economic cycles than loan performance is. Overall, SYBT's business model appears durable and well-defended. The company has successfully carved out a profitable niche by focusing on relationship-based service, leveraging its strong local brand, and building a premier wealth management business that provides a significant competitive edge and a stable foundation for long-term value creation.
Stock Yards Bancorp (SYBT) demonstrates healthy operational performance, marked by strong revenue and profitability growth in its recent financial reports. For the second quarter of 2025, revenue grew 13.36% year-over-year to $95.65 million, driven by a significant 18.46% increase in net interest income. This core earnings power is reflected in solid profitability metrics, with a return on assets (ROA) of 1.49% and return on equity (ROE) of 13.74%, both of which are strong for a regional bank. The company's efficiency is also a bright spot, with an efficiency ratio around 54%, indicating good cost control relative to the income it generates. This suggests a well-managed core banking operation capable of generating consistent profits.
However, a closer look at the balance sheet reveals areas that warrant caution. While the bank's capital appears adequate with a tangible common equity to total assets ratio of 8.66%, its liquidity position is tighter than some peers. The loans-to-deposits ratio stands at a relatively high 91.2%, indicating that the majority of its deposits are already lent out, which could limit flexibility for future loan growth without securing more expensive funding. Furthermore, like many banks, SYBT faces pressure from higher interest rates, evident in the -$75.31 million of accumulated other comprehensive income (AOCI), which represents unrealized losses on its investment securities portfolio. This negatively impacts its tangible book value.
From a cash flow perspective, the company generates sufficient operating cash flow to support its activities and consistently pay dividends to shareholders. The dividend has a modest payout ratio of around 29%, suggesting it is well-covered by earnings and sustainable. Leverage, measured by the debt-to-equity ratio of 0.49, is manageable and in line with industry norms. Overall, Stock Yards Bancorp's financial foundation appears stable on the earnings front, but its balance sheet carries moderate risks related to liquidity and interest rate sensitivity. Investors should weigh the strong current profitability against these potential balance sheet vulnerabilities.
Over the analysis period of fiscal years 2020 through 2024, Stock Yards Bancorp, Inc. (SYBT) executed a successful growth strategy, significantly expanding the scale of its operations. This is evident in its revenue, which grew at a compound annual rate of nearly 20% from $166.3 million in 2020 to $342.6 million in 2024, driven by both organic expansion and acquisitions. This top-line growth translated into a consistent increase in earnings per share (EPS), which rose from $2.61 to $3.91 over the same period, representing a solid compound annual growth rate of 10.6%.
The bank's profitability has been a consistent strong point. Its return on equity (ROE), a key measure of how effectively it uses shareholder money, has remained robust, averaging approximately 13% over the last five years. This level of profitability is a hallmark of a well-run institution. Furthermore, SYBT has reliably generated positive and growing cash from operations, allowing it to consistently raise its dividend. The dividend per share increased from $1.08 in 2020 to $1.22 in 2024, reinforcing its commitment to shareholder returns. This track record of profitable growth often compares favorably to peers like WesBanco on core profitability metrics like Return on Assets.
However, the historical record also reveals two notable weaknesses. First, the bank's operational efficiency has deteriorated. The efficiency ratio, which measures non-interest expenses as a percentage of revenue, worsened from a strong 51.9% in 2021 to a weaker 56.3% in 2024. This trend suggests that the costs of running the bank are growing faster than its revenue, a potential drag on future profitability. Second, while the bank has been buying back stock, these efforts have been completely overshadowed by the issuance of new shares for acquisitions. The total number of shares outstanding increased by over 29% from 22.7 million in 2020 to 29.4 million in 2024. While growth is positive, such significant dilution means each existing share represents a smaller piece of the company, tempering the benefits of the earnings growth.
The U.S. regional banking industry is navigating a period of significant change, with the outlook for the next 3-5 years shaped by evolving interest rate expectations, heightened regulatory scrutiny, and relentless technological disruption. A primary shift will be the normalization of the interest rate environment. After a period of rapid hikes, a potential plateau or gradual decline in rates will force banks to compete more fiercely on service and relationships rather than just deposit yields. This environment will likely lead to continued net interest margin (NIM) compression before stabilizing. Regulatory changes, such as the proposed "Basel III Endgame" rules, could increase capital requirements for mid-sized banks, potentially constraining lending capacity and increasing compliance costs. The industry is expected to see modest overall growth, with a projected market CAGR for regional banks around 2-4%. A key catalyst for demand will be the economic health of local communities, driving loan demand from small and medium-sized businesses. The competitive landscape is intensifying. While high capital requirements and regulatory hurdles make it difficult to charter new banks, the real threat comes from non-bank fintech companies and large national banks with superior technology budgets. These competitors are chipping away at traditional revenue streams like payments, personal loans, and wealth management, making it harder for regional players to retain customers based on convenience alone. Digital banking adoption, now exceeding 75% among U.S. consumers, underscores the need for continuous technological investment to remain relevant. Banks that successfully integrate digital convenience with personalized, local service will be best positioned to thrive. The next few years will also likely feature a continued wave of M&A activity. Smaller banks struggling with scale, technology costs, and regulatory burdens will become attractive targets for larger regionals like Stock Yards, which can use acquisitions to enter new markets and gain operating efficiencies. This consolidation is a defining trend, reshaping the competitive map by creating larger, more resilient regional players. For investors, the key is to identify banks with diversified revenue streams, disciplined expense management, and a clear strategy to navigate these industry-wide shifts. The regional banking sector is moving from a period where a rising tide lifted all boats to one where strategic execution and competitive differentiation are paramount. Those that can't adapt risk being acquired or slowly losing market share. Now, let's look into how Stock Yards Bancorp's main business lines are positioned for this future. Its core commercial lending franchise faces a cautious environment. Current consumption is constrained by elevated interest rates, which have dampened business investment and expansion plans. This has limited demand for new Commercial & Industrial (C&I) loans, with many businesses delaying capital expenditures. Looking ahead, loan consumption is expected to increase gradually as interest rates stabilize or decline, likely beginning in late 2024 or 2025. The increase will be driven by businesses resuming delayed projects and needing working capital to support growth. We may see a decrease in speculative or highly leveraged lending, with a shift towards more conservative, secured loans to established businesses. The U.S. C&I loan market is projected to grow at a modest 3-5% annually once economic conditions become more certain. A potential catalyst could be a stronger-than-expected economic recovery in the Midwest manufacturing and logistics sectors, which are core to SYBT's geographic footprint. Competition is fierce, with customers choosing between the scale and technology of national banks like JPMorgan Chase and the personalized service of community banks like SYBT. Stock Yards outperforms when a business values a long-term relationship and quick, local decision-making. However, larger banks are likely to win share for bigger, more complex deals or clients who prioritize sophisticated treasury management platforms. The number of smaller community banks will continue to decrease due to consolidation, driven by the high costs of technology and compliance. Key risks for SYBT include a regional economic downturn that sours credit quality (medium probability) and intense pricing competition from larger banks compressing loan yields (high probability). The bank's Commercial Real Estate (CRE) lending business faces a more complex and bifurcated future. Current lending activity is muted, particularly for office and some retail properties, due to high vacancy rates (national office vacancy is near 20%) and uncertainty over future property values. Demand is limited by high financing costs and a wide gap between buyer and seller price expectations. Over the next 3-5 years, consumption will shift significantly. Lending for office properties is likely to decrease further, while demand for industrial/warehouse space and multifamily housing will increase, driven by e-commerce trends and housing shortages. The growth in the industrial real estate market is expected to continue, with rent growth projected around 5-7% annually. Catalysts for growth in SYBT's favored segments include potential federal or state incentives for housing development and the onshoring of manufacturing, which boosts demand for industrial facilities. SYBT competes with other regional banks and a growing number of private credit funds. Customers often choose based on lending expertise in a specific property type and the lender's reliability. SYBT can outperform in its local markets where it has deep knowledge of property values and developer track records. However, private credit funds are winning share on higher-risk transitional properties by offering more flexible terms. The number of banks active in CRE lending may shrink slightly due to heightened regulatory scrutiny on CRE loan concentrations. Forward-looking risks for SYBT are significant; a sharp, prolonged downturn in the CRE market could lead to meaningful credit losses, especially if their office loan portfolio underperforms (medium probability). Additionally, regulators could impose stricter limits on CRE lending, constraining future growth (high probability). In stark contrast, Stock Yards' Wealth Management and Trust division is a powerful engine for future growth. Current consumption of these services is strong and steady, driven by an aging population, intergenerational wealth transfer, and demand for professional financial advice. Consumption is primarily limited by intense competition and the challenge of attracting and retaining skilled financial advisors. Over the next 3-5 years, demand for holistic financial planning and trust services is set to increase substantially. This growth will be fueled by the trillions of dollars expected to be passed down from the baby boomer generation. The U.S. wealth management market is projected to grow its assets under management (AUM) by 5-6% annually. SYBT's AUM was approximately $4.8 billion as of early 2024, representing a significant base for growth. A key catalyst will be the bank's ability to successfully cross-sell wealth services to its commercial and retail banking clients, a core part of its strategy. SYBT competes with national wirehouses (Morgan Stanley), independent Registered Investment Advisors (RIAs), and other bank trust departments. Customers often choose based on trust, reputation, and the depth of the advisor relationship. SYBT's key advantage is its integration of banking and wealth services, offering a one-stop shop for affluent business owners. However, independent RIAs are winning share by offering more open-architecture platforms and a fiduciary-first model. The number of independent RIAs is growing, increasing competitive pressure. Risks for this division include a severe equity market downturn, which would reduce AUM and fee revenue (high probability of a market correction within a 5-year period), and the potential loss of key advisor teams to competitors, which could trigger client departures (medium probability). Finally, the retail banking and mortgage segment is undergoing a fundamental transformation. Current consumption is shifting from physical branches to digital channels for daily transactions. Branch usage is now more focused on complex needs like mortgage applications or financial advice. Consumption is constrained by intense competition for deposits from high-yield online savings accounts and the slick mobile apps of national banks. In the next 3-5 years, the trend of declining in-branch transactions will accelerate, while digital user engagement will become the primary measure of success. The role of the branch will shift definitively towards sales and advisory. There will be an increase in the use of digital mortgage application platforms, which SYBT must invest in to keep pace. The U.S. mortgage origination market is highly cyclical, but the underlying demand for housing should provide a stable, long-term base. Catalysts for growth include a decline in mortgage rates, which would spur refinancing activity and improve affordability for homebuyers. SYBT competes with large national banks, online lenders like Rocket Mortgage, and local credit unions. Customers choose based on a mix of interest rates, fees, and service. SYBT can win with its existing banking customers and those who prefer an in-person application process. However, price-sensitive borrowers and those who prioritize digital convenience are more likely to be won by online lenders. The number of banks and branches will continue to decline, but the need for a local presence for key life-event products like mortgages will remain. Key risks for SYBT are falling behind on digital banking technology, which would lead to customer attrition, especially among younger demographics (medium probability), and continued pressure on deposit costs as customers actively seek higher yields online (high probability). Looking beyond specific products, SYBT's future growth will also heavily depend on its ability to execute its M&A strategy. The bank has a proven track record of successfully integrating smaller banks, which allows it to enter adjacent markets and leverage its operating platform to cut costs. Future acquisitions are a key part of the growth story, providing a pathway to deploy excess capital and boost earnings per share. Another critical factor will be the bank's investment in technology for its commercial clients, particularly in treasury and payment services. While retail banking apps get more attention, providing sophisticated cash management tools is essential for retaining valuable business deposit relationships. The bank's ability to balance these strategic investments with maintaining disciplined expense control will ultimately determine its ability to deliver consistent shareholder returns in a challenging macro environment.
As of October 24, 2025, an in-depth analysis of Stock Yards Bancorp, Inc. (SYBT) at a price of $67.91 suggests the stock is trading at a premium valuation. While the bank demonstrates strong profitability, the price demanded by the market appears to be high relative to its asset base and when compared to industry peers, indicating an overvalued position.
A triangulated valuation reinforces this view. Using a multiples approach, SYBT's P/E ratio of 15.61 is above the regional bank industry average, which is currently around 11.7. More critically, its Price-to-Tangible Book (P/TBV) ratio is 2.51 (calculated as $67.91 price / $27.06 Tangible Book Value Per Share). This is a significant premium compared to high-quality peers, which have historically averaged a P/TBV of 2.3x, and well above the broader sector average which can be closer to 1.5x. Applying a more reasonable, yet still premium, P/TBV multiple of 2.0x to its tangible book value per share of $27.06 would imply a fair value of $54.12.
From a yield perspective, the dividend yield is 1.88%, which is noticeably lower than the average 3.31% for regional banks. This suggests that investors are not being compensated with a high income stream for the premium valuation they are paying. Furthermore, the bank is not returning capital via buybacks; in fact, it has experienced minor share dilution recently (-0.46% buyback yield). A simple dividend discount model, assuming a generous 3.3% long-term growth rate and a conservative 7% required return, struggles to justify the current price, yielding a value below $40.
The primary valuation method for banks, the asset-based approach, centers on the P/TBV multiple in relation to profitability (ROTCE). SYBT's calculated ROTCE of 16.4% is excellent, justifying a premium valuation over its book value. However, a P/TBV of 2.51 is at the upper end of what even high-quality performers typically receive. Triangulating these methods, with the heaviest weight on the P/TBV-to-ROTCE relationship, a fair value range of $54.00 - $60.00 seems appropriate.
Bill Ackman's investment thesis for banks focuses on identifying high-quality, dominant franchises with strong pricing power and a clear path to value creation, either through inherent quality or activist-led improvements. From this perspective, Stock Yards Bancorp (SYBT) presents a mixed picture. Ackman would appreciate its solid profitability, highlighted by a Return on Average Assets (ROAA) of 1.25%, and its valuable wealth management division, which provides stable fee income. However, he would be concerned by its lack of scale and a mediocre efficiency ratio of around 65%, which lags far behind best-in-class peers operating in the 55% range, signaling operational sluggishness rather than a compelling turnaround opportunity. At a Price-to-Tangible Book Value (P/TBV) of 1.6x, the stock isn't cheap enough to be a value play, nor is its business moat wide enough to be considered a truly dominant franchise. Management's capital allocation is sensible, with a 35% dividend payout ratio allowing for reinvestment in organic growth, a standard practice that is neither exceptionally brilliant nor flawed. Forced to choose top investments in the sector, Ackman would likely favor superior operators like Commerce Bancshares (CBSH) for its unmatched efficiency and moat, UMB Financial (UMBF) for its unique high-margin fee businesses, and perhaps Old National Bancorp (ONB) as a value play with a clear catalyst in its post-merger integration. For retail investors, the takeaway is that Ackman would likely avoid SYBT, viewing it as a good-but-not-great bank that fails to meet his high bar for either quality or value. Ackman's decision could change if the stock price fell over 25-30%, offering a much more compelling earnings yield, or if a clear catalyst emerged to significantly improve its operational efficiency.
Warren Buffett would view Stock Yards Bancorp as a solid, respectable, and durable community bank, but likely not a compelling investment at its current valuation in 2025. He would appreciate its century-long history, conservative lending practices, and the stable, high-margin fee income from its significant wealth management division, which manages over $5 billion in assets. However, he would be concerned by its relatively mediocre efficiency ratio of around 65%, which lags behind best-in-class peers and suggests a lack of scale. While the bank's profitability, measured by its Return on Assets of 1.25%, is strong, the valuation at 1.6x tangible book value does not offer the significant margin of safety Buffett demands. For retail investors, the key takeaway is that SYBT is a well-run institution, but Buffett would likely keep it on his watchlist and wait for a market downturn to provide a much more attractive entry point. If forced to choose the best banks, Buffett would gravitate towards premier franchises like Commerce Bancshares (CBSH) for its unmatched history of profitability (ROTCE > 20%) and UMB Financial (UMBF) for its highly defensible fee-based businesses, viewing their quality as worth a premium price. Buffett's decision on SYBT could change if the stock price were to fall closer to its tangible book value, offering a clear margin of safety.
Charlie Munger would view Stock Yards Bancorp as a simple, understandable, and high-quality community banking franchise, a type of business he appreciates when managed with extreme discipline. He would be drawn to its century-long operating history, conservative credit culture, and its valuable wealth management division, which provides stable, high-margin fee income—a key differentiator from more commoditized lenders. Munger would note the bank's strong Return on Average Assets, consistently above 1.25%, as clear evidence of a profitable operation, even if its efficiency ratio around 65% isn't best-in-class. The bank's focus on organic growth and a conservative dividend payout ratio of 35% would appeal to his preference for businesses that sensibly reinvest capital back into their own profitable operations. However, he would also recognize its smaller scale and geographic concentration as inherent risks compared to larger, more diversified peers. If forced to choose the best banks, Munger would likely favor the unimpeachable quality of Commerce Bancshares (CBSH) for its superior moat and profitability (ROTCE >20%) and UMB Financial (UMBF) for its unique, high-fee institutional businesses, with SYBT representing a solid, traditional choice. Munger's decision could change if the bank's disciplined credit standards were to slip or if its valuation became unreasonably high relative to its growth prospects.
Stock Yards Bancorp, Inc. stands as a testament to traditional community banking, built on long-term relationships and a conservative approach to lending. With a history stretching back over a century, its brand is deeply entrenched in its primary markets of Louisville, Indianapolis, and Cincinnati. The company's strategy revolves around a three-pronged approach: commercial banking, retail banking, and a significant wealth management and trust division. This latter unit is a key differentiator, providing a stable source of non-interest income that is less sensitive to interest rate fluctuations than traditional lending, giving it an edge over smaller peers who rely almost entirely on loan spreads.
When compared to the broader universe of regional banks, SYBT often appears as a middle-of-the-pack performer. It doesn't typically lead in terms of loan growth or technological innovation, but it compensates with strong asset quality and a fortress-like balance sheet. This conservative stance means it may lag behind more aggressive peers during economic booms but tends to hold up better during downturns. Its financial metrics, such as profitability and efficiency, are generally solid but rarely spectacular, reflecting a deliberate focus on steady, sustainable growth rather than rapid, riskier expansion.
This deliberate and steady approach defines its competitive positioning. SYBT is not trying to compete with the national banking giants on scale or with fintech startups on technology. Instead, it carves out a niche by serving small-to-medium-sized businesses and high-net-worth individuals who value personalized service and local decision-making. Its challenge lies in scaling this high-touch model efficiently and attracting younger generations of customers who may prioritize digital convenience over personal relationships. Its performance relative to competitors often hinges on how well it can balance this traditional strength with the necessary investments in technology and modernization to remain relevant in a changing banking world.
WesBanco, Inc. presents a very direct and compelling comparison for Stock Yards Bancorp, as both operate in similar geographies, including Kentucky and Ohio, and are of a comparable asset size. Both banks focus on community-based commercial and retail banking, but WesBanco has a slightly larger and more diversified geographic footprint. While SYBT boasts a stronger wealth management division, WesBanco has historically pursued a more active M&A strategy to fuel its growth. This makes the comparison one of an organically focused, high-touch bank (SYBT) versus a more growth-oriented serial acquirer (WesBanco).
In terms of business and moat, both banks enjoy strong local brands and high switching costs inherent in primary banking relationships. For brand, SYBT's century-long history in Louisville gives it a deep moat in its home market, while WesBanco has a similarly strong presence in its core West Virginia and Western Pennsylvania markets. For scale, WesBanco is slightly larger with assets around $17 billion compared to SYBT's $7.5 billion, giving it a minor edge in operational leverage. Both face high regulatory barriers common to the industry. Switching costs are high for both, evidenced by stable, low-cost deposit bases; SYBT's noninterest-bearing deposits were recently 30% of total deposits. Overall, the moats are very similar and rooted in community presence. Winner: Even, as SYBT's wealth management strength offsets WesBanco's slightly larger scale.
From a financial statement perspective, the comparison reveals differing priorities. For revenue growth, WesBanco has shown slightly higher growth historically, often aided by acquisitions. In terms of profitability, SYBT often posts a stronger Return on Average Assets (ROAA), recently around 1.25% versus WesBanco's 1.05%, indicating more efficient use of its assets. However, WesBanco often runs a better efficiency ratio (which measures non-interest expenses to revenue, so lower is better), hovering around 60% while SYBT's can be closer to 65%. Both maintain robust capital levels, with CET1 ratios well above the 7% regulatory minimum. SYBT’s dividend yield is typically around 3.0% with a conservative payout ratio of 35%, very similar to WesBanco's figures. Overall Financials winner: Stock Yards Bancorp, Inc., due to its superior ROAA, which points to better fundamental profitability despite slightly lower efficiency.
Looking at past performance, both stocks have delivered solid returns to shareholders over the long term. Over the past five years, revenue CAGR has been slightly higher for WesBanco due to acquisitions. However, SYBT's EPS CAGR has been more consistent, showcasing strong organic earnings power. In terms of Total Shareholder Return (TSR) over the last 3-year period, performance has been comparable, often moving in lockstep with the broader regional bank index. For risk, both maintain conservative loan portfolios, but SYBT has historically shown slightly lower loan charge-offs. SYBT's stock volatility has also been marginally lower. Overall Past Performance winner: Stock Yards Bancorp, Inc., for its more consistent organic earnings growth and slightly better risk profile.
For future growth, both banks face a similar economic environment, but their strategies diverge. WesBanco's growth is more heavily tied to its ability to identify and successfully integrate acquisitions, a strategy that carries execution risk. SYBT's growth drivers are more organic, centered on expanding its market share in its existing metropolitan areas and growing its high-fee wealth management business, which manages over $5 billion in assets. Analyst consensus for next-year EPS growth is in the low-single-digits for both, reflecting macroeconomic headwinds. WesBanco has a slight edge in TAM/demand signals due to its larger footprint, but SYBT's focus on the niche wealth segment provides a more predictable fee income stream. Overall Growth outlook winner: Even, as WesBanco's M&A potential is balanced by the execution risk, while SYBT's organic path is steadier but potentially slower.
In terms of valuation, both banks typically trade at similar multiples. SYBT currently trades at a Price-to-Tangible Book Value (P/TBV) of around 1.6x, while WesBanco trades at a slightly lower 1.4x. This small premium for SYBT can be justified by its higher ROAA and the stability of its wealth management income. SYBT's P/E ratio of 11x is also in line with WesBanco's 10.5x. Both offer a comparable dividend yield of around 3.0%. From a value perspective, WesBanco appears slightly cheaper on a book value basis. However, investors are paying a small premium for SYBT's higher quality and more consistent profitability. Winner for better value: WesBanco, Inc., as the discount in its P/TBV multiple offers a slightly better entry point for a very similar risk profile.
Winner: Stock Yards Bancorp, Inc. over WesBanco, Inc. This is a very close contest, but SYBT earns the victory due to its superior asset quality and profitability, evidenced by a consistently higher ROAA (1.25% vs. 1.05%). Its significant wealth management division provides a key differentiating factor, offering a stable, high-margin fee income stream that diversifies its revenue away from pure interest-rate-driven lending. While WesBanco is slightly larger and more attractively valued on a Price-to-Book basis, SYBT's conservative management and more consistent organic growth offer a more compelling risk-adjusted profile for long-term investors. The verdict hinges on SYBT's proven ability to generate higher returns from its asset base, making it a higher-quality choice.
First Financial Bancorp. (FFBC) is a Cincinnati-based regional bank, making it a direct and fierce competitor to Stock Yards Bancorp in one of its key expansion markets. With a larger asset base and a significant presence across Ohio, Indiana, and Kentucky, FFBC represents a scaled-up version of a community-focused commercial bank. The primary difference lies in strategy and scale; FFBC is a larger, more transaction-oriented bank with a greater emphasis on commercial lending, whereas SYBT leans more on its wealth management and trust services to augment its traditional banking operations. This sets up a classic battle between scale and specialization.
Regarding their business and moat, both banks leverage strong local reputations. FFBC’s brand is more widely recognized across its tri-state footprint due to its larger size and branch network of over 130 locations, compared to SYBT's 70. This gives FFBC a scale advantage, allowing for greater marketing spend and operational efficiencies. Switching costs are similarly high for both, as they serve as the primary bank for many local businesses and individuals. Regulatory barriers are identical for both. SYBT’s moat comes from its specialized wealth management unit, which creates stickier, more profitable relationships. Winner: First Financial Bancorp., as its superior scale and denser branch network in shared markets provide a more formidable competitive barrier.
Financially, the two banks exhibit different strengths. FFBC's larger scale allows it to generate higher revenue in absolute terms, and its revenue growth has been strong, supported by both organic loan growth and strategic acquisitions. FFBC also boasts a superior efficiency ratio, often coming in below 60%, while SYBT is typically in the 60-65% range, indicating FFBC runs a leaner operation. However, SYBT consistently delivers a higher Return on Average Assets (ROAA), with its 1.25% often outpacing FFBC’s 1.10%. Both maintain strong capital positions, with CET1 ratios comfortably above regulatory requirements. FFBC offers a slightly higher dividend yield (~3.5% vs. ~3.0%). Overall Financials winner: First Financial Bancorp., because its better efficiency and scale are powerful advantages, even if SYBT is slightly more profitable on a per-asset basis.
Analyzing past performance reveals a story of scale versus consistency. Over the last five years, FFBC has demonstrated stronger revenue and EPS growth CAGR, driven by its successful integration of acquisitions and strong commercial loan demand in its markets. This has translated into a better Total Shareholder Return (TSR) for FFBC over most trailing periods (1y, 3y, 5y). In terms of risk, both banks have excellent credit quality with low net charge-offs. SYBT’s stock has shown slightly lower beta, making it a less volatile holding. Overall Past Performance winner: First Financial Bancorp., as its superior growth has created more value for shareholders historically.
Looking ahead, future growth prospects are nuanced. FFBC's growth is tied to the economic health of the industrial Midwest and its ability to continue winning commercial clients through its larger lending capacity. Its guidance often points to mid-single-digit loan growth. SYBT's growth pathway is more reliant on its wealth management arm and deepening relationships in its core metro areas. This provides a more stable, albeit potentially slower, growth trajectory. Given the current economic uncertainty, SYBT’s less cyclical fee-income stream is a significant advantage. FFBC has the edge on TAM/demand due to its size, but SYBT has an edge in a higher-margin niche. Overall Growth outlook winner: Stock Yards Bancorp, Inc., as its wealth management focus offers a more defensive and predictable growth driver in a potentially slowing economy.
From a valuation standpoint, the market generally assigns similar multiples to both. FFBC often trades at a slight discount on a P/TBV basis, recently around 1.4x compared to SYBT's 1.6x. This discount reflects its slightly lower profitability (ROAA) and higher exposure to cyclical commercial lending. Their P/E ratios are nearly identical, typically around 10x to 11x. FFBC's higher dividend yield (3.5%) makes it more attractive to income-focused investors. The quality vs. price tradeoff is clear: investors pay a small premium for SYBT's higher-quality earnings stream from its wealth division. Winner for better value: First Financial Bancorp., due to its higher dividend yield and lower P/TBV multiple, offering more income and assets per dollar invested.
Winner: First Financial Bancorp. over Stock Yards Bancorp, Inc. FFBC takes the win based on its superior scale, operational efficiency, and stronger historical growth record. Its larger asset base and denser branch network provide a significant competitive advantage in overlapping markets, while its lower efficiency ratio (<60%) demonstrates better cost control. Although SYBT is a high-quality institution with a more profitable asset base (higher ROAA) and a valuable wealth management niche, FFBC's stronger track record of shareholder returns and more attractive valuation (higher dividend yield, lower P/TBV) make it a more compelling investment choice. For investors seeking growth and income in a Midwest regional bank, FFBC's proven ability to execute at scale gives it the definitive edge.
German American Bancorp, Inc. (GABC) offers an insightful comparison as a smaller, more rural-focused peer operating within SYBT's key state of Indiana. While SYBT is concentrated in larger metropolitan areas, GABC has built a strong presence in the smaller cities and rural communities of Southern Indiana. This contrast highlights different strategies within community banking: SYBT's focus on complex urban markets and wealth services versus GABC's traditional, relationship-based lending in less competitive, but slower-growing, rural areas. GABC is smaller, with assets around $6 billion compared to SYBT's $7.5 billion.
In terms of business and moat, both banks rely on deep community ties. GABC's brand is exceptionally strong in its specific Southern Indiana towns, where it has operated for over a century. SYBT has a similar stronghold in Louisville. GABC's moat is its dominant market share in smaller, less crowded markets where larger banks don't compete as aggressively. SYBT's moat is its more sophisticated service offering, especially its wealth management division. Scale is a slight advantage for SYBT. Switching costs and regulatory barriers are comparable. Winner: Even, as GABC's rural market dominance provides a different but equally effective moat compared to SYBT's urban specialization.
Financially, both are solid performers. Historically, both banks have posted similar ROAA, typically in the 1.10% to 1.25% range, indicating effective management. GABC often achieves a better efficiency ratio, sometimes dipping below 60%, as operating costs in its rural markets are lower than SYBT's urban locations. Revenue growth for both has been driven by steady, organic loan production and occasional small acquisitions. In terms of balance sheet strength, both are well-capitalized with strong credit quality and low-cost deposit bases. GABC's loan-to-deposit ratio is often more conservative, around 80%, compared to SYBT's 85-90%. Overall Financials winner: German American Bancorp, Inc., due to its slightly better operational efficiency and more conservative balance sheet management.
Looking at past performance, both have been reliable compounders for long-term shareholders. Over the last five years, their revenue and EPS growth CAGRs have been quite similar, usually in the mid-to-high single digits. Their Total Shareholder Return (TSR) profiles are also closely correlated, reflecting similar investor perceptions and market exposures. GABC's stock might exhibit slightly lower volatility due to its stable, slow-growth markets. In terms of risk, both have a pristine history of credit management, with net charge-offs remaining consistently low. Overall Past Performance winner: Even, as both banks have demonstrated remarkably similar and consistent performance trajectories over multiple time horizons.
Future growth prospects differentiate the two. SYBT's presence in the larger, more economically dynamic cities of Louisville, Indianapolis, and Cincinnati gives it a higher ceiling for TAM/demand and organic growth. GABC's growth is more constrained by the slower demographic and economic trends of its rural markets. However, GABC's dominant market share provides a stable platform for incremental gains and potential bolt-on acquisitions of even smaller community banks. SYBT's growth engine is its wealth management and commercial banking units in growing cities. Overall Growth outlook winner: Stock Yards Bancorp, Inc., as its exposure to larger, more dynamic metropolitan economies provides a clearer path to meaningful long-term growth.
Valuation metrics for these two high-quality community banks are often very close. Both typically trade at a P/TBV in the 1.5x to 1.7x range and a P/E ratio between 10x and 12x. Their dividend yields are also comparable, usually around 3.0%, with sustainable payout ratios. Currently, GABC trades at a P/TBV of 1.5x while SYBT is at 1.6x. The choice often comes down to minor fluctuations in market sentiment rather than a clear, persistent valuation gap. They represent two sides of the same high-quality coin. Winner for better value: German American Bancorp, Inc., by a razor-thin margin, as the slightly lower P/TBV multiple offers a marginally better price for a similarly performing institution.
Winner: Stock Yards Bancorp, Inc. over German American Bancorp, Inc. Although GABC is a very well-run bank with superior efficiency, SYBT secures the win due to its more promising long-term growth trajectory. SYBT's strategic focus on major metropolitan areas provides access to a larger and more dynamic economic base than GABC's rural-centric footprint. Furthermore, SYBT's robust wealth management and trust division offers a critical source of diversified, high-margin fee income that GABC cannot match at the same scale. While an investor is unlikely to go wrong with either, SYBT's superior growth potential in more vibrant markets gives it a decisive edge for future value creation.
Old National Bancorp (ONB) is a significantly larger regional bank and a major competitor to Stock Yards Bancorp, especially after its merger with First Midwest. With assets exceeding $48 billion, ONB has a commanding presence across the Midwest, including SYBT's key markets of Indiana and Kentucky. The comparison highlights the immense pressures of scale in modern banking. ONB's strategy is focused on leveraging its size to be a leading commercial bank in the Midwest, while SYBT remains a more traditional, community-focused institution with a strong wealth management niche.
When analyzing their business and moat, ONB's primary advantage is scale. Its vast branch network and lending capacity far exceed SYBT's, giving it significant cost advantages and the ability to serve much larger commercial clients. ONB's brand is well-established across a multi-state footprint, whereas SYBT's is more concentrated. Both benefit from high switching costs and regulatory barriers. SYBT’s key advantage is the depth of its client relationships and its highly-regarded trust department, a specialized moat that is harder to replicate at ONB's massive scale. However, the sheer size of ONB is a powerful competitive weapon. Winner: Old National Bancorp, as its overwhelming scale provides a more durable and wide-reaching competitive advantage in the commoditized world of banking.
Financially, the difference in scale is stark. ONB’s revenue base is many times that of SYBT. Critically, ONB achieves a much better efficiency ratio, often in the mid-50% range post-merger, compared to SYBT's 60-65%. This is a direct result of economies of scale. In terms of profitability, however, SYBT holds its own, often generating a higher ROAA (~1.25% vs. ONB's ~1.0%). This indicates that while ONB is more efficient, SYBT generates more profit from each dollar of assets. Both are well-capitalized, but ONB's larger balance sheet gives it more flexibility. ONB also offers a slightly higher dividend yield (~3.8%). Overall Financials winner: Old National Bancorp, as its superior efficiency and scale are more powerful financial attributes in the long run, despite SYBT's higher ROAA.
Past performance reflects ONB's M&A-driven strategy. Over the last five years, ONB's revenue and asset growth have dwarfed SYBT's due to major acquisitions. This has created a larger, more diversified institution. However, integrating large mergers can be disruptive and sometimes harms near-term profitability and stock performance. SYBT’s growth has been slower but more organic and predictable. In terms of TSR, performance can be volatile for ONB around merger announcements, while SYBT's has been a steadier climb. For risk, SYBT has a simpler, more transparent balance sheet, whereas ONB carries the integration risk of large deals. Overall Past Performance winner: Stock Yards Bancorp, Inc., for delivering more consistent, organic growth and avoiding the execution risk associated with large-scale M&A.
For future growth, ONB's path is clear: leverage its new scale to gain market share in commercial banking across the Midwest, particularly in the competitive Chicago market. The success of the First Midwest merger is paramount to its future. SYBT’s growth is more granular, focused on winning clients one by one in its three key metro areas and expanding its wealth business. ONB has a much larger TAM and more levers to pull for growth, but also more execution risk. Analysts project ONB could achieve higher earnings growth if merger synergies are fully realized. Overall Growth outlook winner: Old National Bancorp, as its expanded scale and market presence give it a higher ceiling for growth, assuming successful merger integration.
Valuation-wise, the market seems to discount ONB for its merger integration risk. It trades at a significantly lower P/TBV multiple of ~1.2x compared to SYBT's 1.6x. Its P/E ratio of ~9x is also lower than SYBT's 11x. This discount, combined with a higher dividend yield of 3.8%, makes ONB look compelling on paper. The market is pricing in the uncertainty of its large-scale transformation while valuing SYBT at a premium for its stability and predictable business model. Winner for better value: Old National Bancorp, as the steep discount to its tangible book value offers a significant margin of safety and potential for upside as it proves out its post-merger strategy.
Winner: Old National Bancorp over Stock Yards Bancorp, Inc. Despite SYBT being a high-quality, well-managed bank, ONB wins this matchup due to the compelling advantages of its newfound scale. The banking industry is increasingly a scale game, and ONB's sub-60% efficiency ratio and much larger lending capacity give it a decisive long-term edge. While SYBT boasts a higher ROAA, this advantage is not enough to overcome the strategic benefits of ONB's size. Furthermore, ONB's significantly discounted valuation (1.2x P/TBV) and higher dividend yield provide a more attractive entry point for investors willing to underwrite the integration risk. ONB offers a path to greater growth and a better current value proposition.
UMB Financial Corporation (UMBF) represents another top-tier regional bank, similar to Commerce Bancshares, that serves as a high-quality benchmark for Stock Yards Bancorp. Based in Kansas City, Missouri, UMBF has a much larger and more diversified business model with assets over $40 billion. What truly sets UMBF apart is its significant non-bank fee-generating businesses, including institutional custody services (Fund Services) and healthcare banking solutions. This makes it far less reliant on traditional lending spreads than SYBT, which, despite its wealth unit, remains a more conventional bank at its core.
Regarding their business and moat, UMBF's is demonstrably wider and deeper. Its brand is a regional powerhouse with a national reputation in its niche institutional businesses. Its scale in asset management and custody provides it with a global reach that SYBT cannot approach. These institutional businesses create extremely high switching costs, as changing a custodian for a multi-billion dollar fund is a massive undertaking. This, combined with its corporate treasury services, creates a powerful and unique moat. SYBT's moat is its local community focus, which is valuable but not as formidable as UMBF's institutional entrenchment. Winner: UMB Financial Corporation, by a landslide, due to its unique and defensible national businesses that generate high-margin, recurring fee income.
Financially, UMBF consistently demonstrates superior performance. Its diversified revenue streams, with non-interest income often making up 40% or more of total revenue (compared to ~25-30% for SYBT), lead to more stable earnings. UMBF typically generates a higher ROAA (~1.30% or higher) and a better efficiency ratio (~60%). Its revenue growth is also less cyclical than SYBT's. On the balance sheet, UMBF is known for its strong capital position and excellent liquidity, partly due to the large, non-interest-bearing deposits held by its institutional clients. SYBT is financially sound, but UMBF operates at a higher level of profitability and revenue diversity. Overall Financials winner: UMB Financial Corporation for its more resilient and profitable business mix.
Analyzing past performance, UMBF has a long history of creating shareholder value through disciplined growth. Its EPS CAGR over the past decade has been robust, driven by the strong secular growth in its fee-based businesses. This has led to a superior TSR compared to SYBT over most 3-year and 5-year periods. UMBF has also managed risk exceptionally well, with a conservative credit culture and the stabilizing effect of its fee income, which cushions results during economic downturns when loan losses typically rise. SYBT's performance has been solid, but not as dynamic as UMBF's. Overall Past Performance winner: UMB Financial Corporation, for delivering stronger growth and shareholder returns.
Looking at future growth, UMBF is better positioned for a variety of economic environments. Its institutional custody and healthcare banking businesses are exposed to secular growth trends that are independent of the Midwest's economic cycle. This gives it a clear edge in TAM/demand. The bank continues to invest in technology to further scale these national platforms. SYBT's growth is more tethered to the economic fortunes of its three core cities. While these are healthy markets, they lack the diversification of UMBF's growth drivers. Overall Growth outlook winner: UMB Financial Corporation, as its national, fee-based businesses provide a more powerful and reliable growth engine.
Valuation is the only aspect where SYBT holds an advantage. The market recognizes UMBF's superior business model and values it at a premium. UMBF typically trades at a P/TBV of ~1.8x and a P/E of ~12x, compared to SYBT's 1.6x P/TBV and 11x P/E. UMBF's dividend yield is also lower, usually around 2.0%, versus SYBT’s 3.0%. An investor in SYBT gets a higher starting yield and pays a lower multiple for each dollar of tangible assets. This is a clear choice between paying for quality and seeking value. Winner for better value: Stock Yards Bancorp, Inc., as its lower valuation multiples and higher dividend yield offer a more attractive entry point for value-conscious investors.
Winner: UMB Financial Corporation over Stock Yards Bancorp, Inc. UMBF is the decisive winner, as it is fundamentally a superior business. Its highly-differentiated strategy, with major contributions from national, fee-generating divisions like Fund Services, creates a wider moat and a more resilient earnings stream than SYBT's traditional banking model. This results in better financial performance across profitability (ROAA >1.3%), growth, and risk management. While SYBT is a well-run community bank and offers a better valuation, the strategic advantages and higher quality of UMBF's business model are worth the premium. For an investor, UMBF represents a more durable and dynamic way to invest in the financial services sector.
Based on industry classification and performance score:
Stock Yards Bancorp operates a traditional community banking model significantly enhanced by a large and profitable wealth management division. This combination creates a strong business moat, with the bank benefiting from sticky, low-cost local deposits and the trust division providing a stable, high-margin stream of fee income. This diversification reduces its reliance on fluctuating interest rates, a key advantage over many peers. While the bank's geographic concentration in a few Midwestern markets presents a risk, its durable customer relationships in both banking and wealth management provide a resilient foundation. The overall investor takeaway is positive, reflecting a well-managed bank with a distinct competitive edge.
The bank's large wealth management and trust division provides a significant and stable source of fee income, making it less reliant on interest rates than most peers.
A key strength for Stock Yards Bancorp is its well-developed stream of noninterest income, which provides a valuable buffer against interest rate volatility. In the first quarter of 2024, noninterest income represented about 29% of the bank's total revenue, a level that is significantly ABOVE the average for many regional banks (typically 20-25%). The primary driver of this strength is the Wealth Management and Trust division, which generated $12.1 million in fees, accounting for a remarkable 55% of total noninterest income. This high-margin, recurring revenue from wealth services diversifies the bank's earnings, reduces its dependence on the net interest margin, and represents a powerful competitive advantage that many peers lack.
The bank's community-focused model fosters a granular and diversified deposit base, minimizing reliance on large, single-source, or volatile funding.
Stock Yards Bancorp's funding profile appears well-diversified, stemming from its strategic focus on serving a broad mix of local individuals, families, and small-to-medium-sized businesses. This community banking approach naturally leads to a granular deposit base without heavy concentration in a few large depositors. While the bank does not explicitly break down its deposit mix by customer type, its business model implies a healthy balance between retail and commercial accounts. Importantly, the bank has minimal reliance on brokered deposits, which are sourced from third parties and are considered less stable and more expensive than core relationship deposits. This lack of dependence on 'hot money' enhances the stability of its balance sheet and reduces funding risk, especially during turbulent economic times.
SYBT excels in its chosen niche of relationship-based commercial lending within its specific Midwestern markets, demonstrating expertise and a defensible local focus.
While not focused on a single product niche like agriculture, Stock Yards Bancorp has successfully cultivated a powerful niche in relationship-based commercial lending to small and medium-sized businesses in its core markets. Its loan portfolio is heavily weighted towards Commercial Real Estate and Commercial & Industrial loans, where local knowledge and personalized service are critical competitive advantages. The bank acts as a key financial partner to local businesses rather than just a transactional lender. This focused strategy allows SYBT to achieve deep market penetration and build a loyal client base with high switching costs. This disciplined approach to serving its local business community is a more durable strategy than attempting to compete broadly across all loan types against larger national banks.
SYBT has a stable and valuable deposit base, with a healthy portion of noninterest-bearing accounts and a manageable cost of funds, which supports consistent profitability.
A bank's strength is its ability to attract and retain low-cost, stable deposits. As of Q1 2024, 26% of Stock Yards Bancorp's total deposits were noninterest-bearing, meaning the bank pays no interest on over a quarter of its funding base. This is a strong figure, especially in a rising rate environment, and is in line with or above many regional bank peers. The bank’s cost of total deposits was 2.15%, a manageable level that reflects its stable base of relationship-driven accounts. Furthermore, with an estimated 71% of deposits being insured or collateralized, the portion of uninsured deposits is around 29%, which is a prudent level that reduces the risk of deposit flight during periods of market stress. This sticky deposit franchise provides SYBT with a durable funding advantage.
The bank maintains an efficient and well-placed branch network in its core markets, supporting strong deposit gathering with solid deposits per branch.
Stock Yards Bancorp operates a network of 79 branches concentrated in Kentucky, Indiana, and Ohio. This physical presence is central to its community banking strategy, facilitating relationship-building with local individuals and businesses. The bank's efficiency is demonstrated by its deposits per branch, which stands at approximately $79.7 million ($6.3 billion in total deposits / 79 branches). This figure is solid and generally in line with or slightly above the average for efficient community banks, indicating healthy productivity from its physical locations. By focusing its network geographically, SYBT achieves local scale and brand recognition that larger, more diffuse competitors cannot easily replicate. This strategic density supports its ability to gather the low-cost deposits that fund its loan growth.
Stock Yards Bancorp's recent financial statements show a company with solid profitability and growth, but also some notable risks. The bank is successfully growing its core earnings, with net interest income up 18.46% year-over-year in the latest quarter and a strong return on equity of 13.74%. However, its loan portfolio is growing quickly, leading to a high loans-to-deposits ratio of 91.2%, and unrealized losses on its investment portfolio are weighing on its tangible book value. The investor takeaway is mixed; the bank is performing well operationally, but investors should be aware of the liquidity and interest rate risks on its balance sheet.
The bank maintains adequate capital levels, but its liquidity is somewhat tight, with a high loan-to-deposit ratio suggesting heavy reliance on its existing deposit base.
Stock Yards Bancorp's capital position appears sound, but its liquidity profile is a key area to watch. The bank's tangible common equity to total assets ratio is 8.66%, which is considered average and provides a reasonable cushion to absorb potential losses. However, its loans-to-deposits ratio is 91.2% ($6.85 billion in loans vs. $7.51 billion in deposits). While a ratio below 100% is necessary, this level is on the higher side compared to a peer average that is often closer to 80-85%, indicating that the bank has less room to expand lending without attracting more deposits or more expensive wholesale funding.
Data on the CET1 ratio and uninsured deposit coverage is not available, which limits a full assessment. While the bank is growing deposits, which is a positive sign, the high loan-to-deposit ratio points to a tighter liquidity position than is ideal and poses a risk if deposit growth slows.
The bank appears to be adequately reserved for potential loan losses, with its allowance levels in line with industry standards.
Stock Yards Bancorp's credit risk management appears prudent based on its reserve levels. As of the latest quarter, the bank's allowance for credit losses stood at $90.72 million against a total gross loan portfolio of $6.85 billion. This results in an allowance to total loans ratio of 1.32%. This level of reserves is in line with the typical range of 1.2% to 1.5% for regional banks, suggesting the bank is setting aside a reasonable amount to cover potential future defaults. The provision for loan losses increased to $2.18 million in the most recent quarter, up from $0.9 million in the prior quarter, which could indicate management is preparing for slightly higher risk, but the absolute amount remains modest.
While critical metrics like nonperforming loans and net charge-offs are not provided, the solid reserve coverage suggests a disciplined approach to credit quality.
The bank's tangible equity is being negatively impacted by unrealized losses on its investment portfolio due to higher interest rates, creating a notable risk for investors.
Stock Yards Bancorp is exposed to interest rate risk, primarily through its securities portfolio. This is evident from the accumulated other comprehensive income (AOCI), which shows a loss of -$75.31 million as of the latest quarter. This figure represents unrealized losses on investments. When measured against the bank's tangible common equity ($797.64 million), these losses account for a significant 9.4% of its tangible equity base. This is a material weakness as it reduces the bank's high-quality capital buffer and could limit its financial flexibility if these losses were to be realized.
While the specific duration of the securities portfolio and the percentage of variable-rate loans are not provided, the size of the AOCI loss itself is a clear red flag. This situation is common for banks in a rising-rate environment but represents a tangible risk to book value that investors should not ignore.
The bank is successfully growing its core earnings power, with strong double-digit growth in net interest income driven by higher interest rates.
The bank's core profitability from lending and investing is performing very well. In the second quarter of 2025, net interest income—the difference between what the bank earns on assets and pays on liabilities—grew by a robust 18.46% year-over-year to $73.47 million. This strong growth indicates the bank has been able to reprice its loans and investments at higher rates more effectively than its funding costs have increased. While the specific net interest margin (NIM) percentage is not provided, a rough estimate places it around 3.23%, which is a healthy level for the current environment and likely in line with or slightly above the industry average. This ability to expand the interest spread in a challenging rate environment is a major financial strength and the primary driver of the bank's recent earnings growth.
The bank operates very efficiently with a strong efficiency ratio that is better than many of its peers, indicating excellent cost management.
Stock Yards Bancorp demonstrates strong discipline in managing its expenses. In the most recent quarter, the bank's efficiency ratio was 53.9%. This ratio measures noninterest expenses as a percentage of revenue, and a lower number is better. A ratio below 60% is generally considered good for a regional bank, and a figure near 50% is excellent, placing SYBT's performance in the strong category and well above the industry average. This means the bank spends only about 54 cents to generate each dollar of revenue. This operational leverage allows more revenue to fall to the bottom line, boosting profitability and is a significant strength.
Stock Yards Bancorp has demonstrated strong past performance, characterized by impressive growth in its core business. Over the last five years, the bank grew loans and deposits at over 15% annually, leading to a 10.6% compound annual growth in earnings per share. Key strengths are its consistent profitability, with an average return on equity around 13%, and a reliable record of increasing dividends each year. However, this growth was accompanied by significant weaknesses, including a rising efficiency ratio, indicating costs are growing faster than revenue, and substantial share dilution from acquisitions. The takeaway for investors is mixed: while the bank has a proven ability to grow its business, the benefits to individual shareholders have been partially offset by rising costs and an increased share count.
The bank has an exceptional track record of strong and steady growth in both loans and deposits, demonstrating successful market share expansion.
Over the four-year period from FY2020 to FY2024, Stock Yards Bancorp achieved impressive growth in its core banking operations. Net loans grew from $3.48 billion to $6.43 billion, a compound annual growth rate (CAGR) of 16.6%. In lockstep, total deposits expanded from $3.99 billion to $7.17 billion, a 15.7% CAGR. This balanced growth shows the bank is successfully gathering low-cost funding (deposits) to support its lending activities.
The bank's balance sheet management appears prudent. The loan-to-deposit ratio, which measures lending activity against funding capacity, has remained in a reasonable range, ending FY2024 at 90.9%. While this is at the higher end of its historical range, it reflects a healthy deployment of its growing deposit base into interest-earning loans. This consistent, strong growth in the bank's fundamental business is a clear sign of positive past performance.
While the bank has successfully grown its net interest income, its operational efficiency has consistently worsened, indicating a negative trend in cost control.
On one hand, the bank's past performance in growing its core revenue source, Net Interest Income (NII), has been strong. NII grew from $135.9 million in FY2020 to $257.0 million in FY2024, a compound annual growth rate of 17.3%, reflecting the successful expansion of its loan book. This demonstrates a solid ability to generate revenue from core banking operations.
However, the trend in the bank's efficiency ratio is a significant concern. This ratio, which measures non-interest expenses relative to revenue (where lower is better), has deteriorated steadily. After reaching a very strong 51.9% in FY2021, it has climbed each year to 56.3% in FY2024. While this is still a respectable figure, the negative trend indicates that expenses are growing faster than revenues, eroding operational leverage. As competitors like First Financial Bancorp often boast better efficiency, this worsening trend is a clear weakness in the bank's historical performance.
The company has delivered a consistent and impressive track record of growing its earnings per share, supported by high profitability.
Stock Yards Bancorp has a strong history of translating its business growth into rising profits for shareholders. Earnings per share (EPS) grew every single year from FY2020 to FY2024, climbing from $2.61 to $3.91. This represents a compound annual growth rate (CAGR) of 10.6%, a very solid performance for a regional bank. This growth wasn't a one-time event but a steady upward march, demonstrating management's consistent execution.
This earnings growth is underpinned by strong profitability. The bank's return on equity (ROE) has consistently hovered around 13% over the last five years, a figure that places it among higher-quality peers. An ROE this high indicates that management is very effective at using shareholders' capital to generate profits. This consistent ability to grow earnings at a double-digit rate is a clear pass.
The bank has maintained a stable and conservative credit profile, with its allowance for loan losses remaining robust even as the loan portfolio grew significantly.
Stock Yards Bancorp's history reflects a disciplined and conservative approach to credit risk. A key indicator is the allowance for loan losses (ACL) as a percentage of total gross loans. This ratio has been consistently strong and stable, standing at 1.33% at the end of FY2024. Over the past five years, it has remained comfortably above 1.25%, indicating the bank is well-reserved against potential future loan defaults.
Provisions for credit losses have been managed appropriately, with a notable increase to $18.4 million in 2020 during the pandemic uncertainty, followed by more normalized levels in subsequent years. Qualitative comparisons to peers like WesBanco and First Financial Bancorp also suggest that SYBT maintains excellent credit quality with low historical charge-offs. This stable and prudent underwriting history is a significant strength, showing the bank has not sacrificed quality for growth.
The bank has an excellent record of annual dividend increases, but its capital return strategy is undermined by significant share dilution from acquisitions.
Stock Yards Bancorp has consistently rewarded shareholders with a growing dividend, increasing it from $1.08 per share in FY2020 to $1.22 in FY2024. The dividend payout ratio has remained conservative, typically between 30% and 40% of earnings, which is a healthy level that allows for both shareholder returns and reinvestment in the business. The company has also been active in the market, repurchasing a few million dollars in stock each year, including -$4.22 million in FY2024.
However, these positive actions are overshadowed by a substantial increase in the number of shares outstanding, which grew from 22.7 million at the end of 2020 to 29.4 million by the end of 2024. This 29.5% increase, primarily due to shares issued for acquisitions, means that each shareholder's ownership stake has been significantly diluted. While acquisitions fueled growth, the fact that buybacks did not come close to offsetting this dilution is a major weakness in the bank's capital return history.
Stock Yards Bancorp's future growth outlook is mixed, balancing significant strengths against broad industry headwinds. The company's crown jewel, its wealth management division, is poised for steady growth and provides a crucial stream of fee income that insulates it from interest rate volatility. Furthermore, a disciplined M&A strategy offers a clear path to expand its footprint and earnings power in the Midwest. However, like most regional banks, SYBT faces challenges from intense competition for deposits, which pressures margins, and a cautious outlook for loan growth amid economic uncertainty. The investor takeaway is cautiously optimistic, as the bank's unique strengths may allow it to outperform peers, but it cannot fully escape the pressures facing the entire sector.
Reflecting broad industry trends, the bank faces a muted outlook for loan growth due to economic uncertainty and the impact of higher interest rates on borrower demand.
Like most of its peers, Stock Yards Bancorp faces a challenging environment for loan growth. Higher interest rates have made businesses and consumers more cautious about taking on new debt, leading to softer demand across the industry. Management has not provided explicit, aggressive loan growth guidance, reflecting this uncertainty. While the bank's focus on relationship lending in its stable Midwestern markets provides a solid foundation, it cannot fully escape the broader macroeconomic pressures. Until there is more clarity on the economic outlook and the future path of interest rates, loan growth is likely to remain in the low single digits, presenting a headwind to significant revenue growth from its core lending operations.
A history of disciplined and successful acquisitions, combined with strong capital levels, positions the bank to continue growing through strategic M&A.
Stock Yards Bancorp's growth strategy relies heavily on mergers and acquisitions, and it has proven to be a capable acquirer. The successful integration of past deals demonstrates management's ability to identify the right targets, execute transactions, and realize cost savings. The bank maintains a strong capital position, with a Common Equity Tier 1 (CET1) ratio comfortably above regulatory requirements, providing the necessary firepower for future deals. In a consolidating industry, this M&A capability is a significant competitive advantage, allowing SYBT to expand its geographic reach and build scale in a way that organic growth alone cannot achieve. This strategic deployment of capital is a clear and viable path to increasing shareholder value over the next several years.
The bank is managing its physical footprint efficiently but appears to be a follower, not a leader, in digital banking innovation, creating a long-term risk of losing younger customers.
Stock Yards Bancorp has demonstrated a practical approach to managing its physical presence, consolidating branches after acquisitions to improve efficiency. Its deposits per branch of approximately $79.7 million is a solid figure, indicating good productivity from its locations. However, the future of banking is increasingly digital, and in this arena, SYBT's strategy appears more reactive than proactive. While the bank offers necessary digital tools, it lacks the scale and budget of national competitors like Chase or Bank of America, whose mobile apps set consumer expectations. The risk is that SYBT's digital offerings will not evolve fast enough, making it difficult to attract and retain the next generation of customers who prioritize a seamless digital experience over a physical branch.
The bank's net interest margin is under pressure from rising deposit costs, a significant headwind that is likely to constrain profitability in the near term.
The battle for deposits is intense across the banking sector, and Stock Yards Bancorp is not immune. The cost of funding has been rising faster than the yield on assets as customers move money to higher-yielding accounts. This dynamic has squeezed the bank's net interest margin (NIM), which is the key driver of its profitability. While the bank has a solid base of low-cost core deposits, competition from online banks and money market funds will continue to exert pressure. Management's outlook likely reflects a stable-to-compressing NIM in the coming quarters. This profitability headwind is one of the most significant challenges facing the bank and the industry over the next 12-18 months.
The bank's large and growing Wealth Management and Trust division is a key differentiator, providing a significant and stable source of high-margin fee income.
Stock Yards Bancorp's most significant strength is its robust noninterest income, driven by its premier Wealth Management and Trust division. This business accounts for over half of the bank's fee income, providing a stable and high-margin revenue stream that is not dependent on the direction of interest rates. This diversification makes SYBT's earnings profile far more resilient than that of a typical community bank. With an aging population and significant intergenerational wealth transfer expected, the demand for wealth and trust services is a long-term tailwind. The bank's plans to continue growing this division, both organically and by cross-selling to its banking clients, represents its clearest and most compelling path to future earnings growth.
As of October 24, 2025, with a stock price of $67.91, Stock Yards Bancorp, Inc. appears to be overvalued. The company trades at a significant premium to its peers based on its Price-to-Tangible Book (P/TBV) value of 2.51, which is not fully supported by its otherwise solid profitability. While the bank is a strong performer, its current market price appears to have run ahead of its intrinsic value, offering a limited margin of safety. The takeaway for investors is neutral to negative, suggesting caution at the current price.
The stock trades at a high premium to its tangible book value, a core valuation metric for banks, suggesting the market has already priced in a great deal of optimism.
For banks, the Price to Tangible Book Value (P/TBV) is a crucial valuation measure. SYBT's P/TBV is 2.51 (calculated from a price of $67.91 and a tangible book value per share of $27.06). This is a very high multiple. Historically, a select group of high-performing regional banks have traded at an average P/TBV of 2.3x, while the rest of the sector is closer to 1.5x. A multiple above 2.5x implies the market believes the bank can generate exceptionally high returns consistently. While SYBT's profitability is strong, this valuation leaves little room for error or a slowdown in performance.
The bank's high profitability, evidenced by a strong Return on Tangible Common Equity, provides a solid rationale for its premium Price-to-Book multiple.
A bank's ability to generate profit from its equity base (ROE) should be aligned with its valuation multiple (P/B). SYBT has a reported Return on Equity (ROE) of 13.74% and a calculated Return on Tangible Common Equity (ROTCE) of approximately 16.4%. This level of profitability is strong and compares favorably with the average ROTCE of other high-performing banks, which is around 16.0%. In an environment where the 10-Year Treasury yield is around 4.0%, a mid-teens ROTCE is excellent. This high return justifies a P/B multiple (1.99) and P/TBV multiple (2.51) that are significantly above 1.0x. The alignment between strong returns and a premium valuation is logical and passes this check.
The stock's P/E ratio is slightly elevated compared to the industry average, but its strong recent earnings per share (EPS) growth provides some justification for the premium.
SYBT's trailing twelve months (TTM) P/E ratio is 15.61, while its forward P/E is 14.87. This is higher than the regional bank industry's current average P/E of 11.74 and the forward average of around 11.8x. A higher P/E ratio can mean investors expect higher growth. SYBT has delivered impressive recent EPS growth, with 22.34% and 28.41% increases in the last two quarters. While this historical growth is strong, the forward P/E suggests analysts expect this to slow to around 5%. Given the strong recent performance, the current P/E can be seen as reasonable, though not a clear bargain.
The company offers a modest dividend yield and is not currently reducing its share count, resulting in a total shareholder yield that is unlikely to attract income-focused investors.
Stock Yards Bancorp provides a dividend yield of 1.88%, which is below the average for its regional banking peers, often found to be above 3%. The dividend itself appears safe, with a conservative payout ratio of 28.74%. This means the bank retains a large portion of its earnings for growth. However, total shareholder yield is not enhanced by buybacks. The "buyback yield/dilution" is -0.46%, indicating a slight increase in shares outstanding rather than repurchases. For investors prioritizing income and capital returns, this profile is underwhelming compared to other options in the sector.
Compared to its peers, Stock Yards Bancorp appears expensive across key valuation multiples (P/E and P/TBV) and offers a lower dividend yield.
On a relative basis, SYBT's valuation appears stretched. Its TTM P/E of 15.61 is above the industry average of 11.74. Its P/TBV of 2.51 is significantly higher than the peer median, which has been closer to 1.35x recently. The dividend yield of 1.88% also lags the sector average of approximately 3.3%. The stock's low beta of 0.63 indicates lower volatility than the broader market, which is a positive trait. However, the premium valuation across multiple metrics makes it unattractive from a relative value perspective.
The primary macroeconomic risk facing Stock Yards Bancorp is its sensitivity to the economic cycles of its main operating regions in Kentucky, Indiana, and Ohio. A future economic downturn or recession would directly threaten the bank's asset quality. This could lead to a rise in non-performing loans and higher provisions for credit losses, which would reduce earnings. Furthermore, the interest rate environment poses a significant challenge. While rising rates can initially boost a bank's net interest margin (the difference between what it earns on loans and pays on deposits), a prolonged period of high rates can strain borrowers' ability to repay debt, increasing credit risk. Conversely, a sharp decline in rates would compress lending margins and squeeze profitability.
The banking industry is undergoing significant structural change, presenting competitive and regulatory hurdles for a regional player like SYBT. The bank competes against money-center giants like JPMorgan Chase and Bank of America, which possess vastly larger technology budgets and marketing scale. Simultaneously, it faces disruption from fintech companies that are unbundling traditional banking services and attracting customers with digital-first platforms. To remain competitive, SYBT must continuously invest in technology, which can weigh on expenses. On the regulatory front, the fallout from the 2023 regional banking crisis will likely result in stricter capital, liquidity, and stress-testing requirements from regulators, potentially increasing compliance costs and limiting the bank's ability to deploy capital for growth.
From a company-specific perspective, SYBT's strategy of growth through acquisition carries inherent risks. While this approach has helped the bank expand its footprint, future success depends on identifying suitable targets at reasonable valuations and successfully integrating their operations, technology, and culture, none of which is guaranteed. A misstep in a large acquisition could be costly for shareholders. The bank's balance sheet, like many of its peers, holds significant exposure to commercial real estate (CRE). While historically well-managed, this loan concentration makes it vulnerable to a downturn in the commercial property market, especially in sectors like office space that are facing secular headwinds from remote work. Finally, the ongoing battle for low-cost core deposits remains a persistent vulnerability, as customers are now more willing to move funds to seek higher yields, potentially increasing the bank's funding costs over time.
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