Good morning, and welcome to the 2026 Annual Meeting of Shareholders of Stock Yards Bancorp, Inc. We are not expecting any technical disruptions with today's webcast. However, should we experience a loss of audio or webcast connection, participants will be placed on hold while we attempt to resolve the issue. Please wait 10 minutes for a resolution. If we are unable to resolve the issue within that time, we will announce that the meeting is being adjourned, and we will resume at a later date at this same website address. Please consult this meeting page or the company's investor relations site for information on the details of the rescheduled meeting. I would now like to turn the meeting over to the company's Chairman of the Board and Chief Executive Officer, James A. Hillebrand.
Thank you, and good morning, ladies and gentlemen. I am Ja y Hillebrand, Chairman and Chief Executive Officer of Stock Yards Bancorp and Stock Yards Bank & Trust Company. On behalf of your board of directors, it is my pleasure to welcome each of you to the company's 2026 Annual Meeting of Shareholders. We are excited to again be hosting our annual meeting in an online virtual format, which allows us to engage with more of our shareholders. We have designed today's online meeting format to provide the same opportunities for shareholder participation as an in-person meeting. Those persons who have joined the meeting through the shareholder login portion of the meeting screen and entered their individual 16-digit control numbers have the opportunity to vote and submit questions through the online portal.
We will hold a question and answer period later in the meeting to respond to any questions submitted either before or during the meeting. If you wish to submit a question during the meeting, please include your name and company affiliation with your question if you did not enter that information previously on the meeting login page. I would like to review the voting procedures for this meeting. All shareholders entitled to vote at the meeting have the ability to do so online during the meeting until I close the polls. The polls will remain open through the presentation of all proposals to be voted upon today. If you have previously voted your shares through one of the methods described in the proxy materials for the meeting, those votes have been recorded, and there is no need for you to vote again.
If you have not already voted or wish to change your vote or revoke a proxy, you may do so by clicking the Vote Here button on your meeting screen. The time is now 10:03 A.M. on Thursday, April 23rd, and I declare the polls open. Please note that we will reserve time after all ballot items have been presented to address any shareholder questions relating to the matters to be voted upon today. First, let me offer some thanks to our 1,100-plus employees. Thank you for your continued commitment to our customers and each other. We have a great one- company, one-purpose culture that focuses on always taking care of the customers' needs first, not ours. This culture continues to drive financial performance that is in the top quartiles of our industry.
I can't introduce all of our employees today, but I do want to name our executive management team on the call today. Each of us takes the individual responsibility of growing our company as a team, and behind each of us, there is a very deep bench moving this company forward. First, Phil Poindexter, our President, Clay Stinnett, Chief Financial Officer, Michael Rehm, our Chief Lending Officer, Shannon Budnick, Director of Wealth Management & Trust, Mike Croce, Director of Retail Banking, Bill Otten, Chief Credit Officer. To our customers, many of whom are shareholders, thank you for your business and loyalty. We appreciate the relationship we have with you. You are the reason our company exists, and your business is never taken for granted. To our shareholders, thank you for your continued belief in our company and our long-term focus to remain relevant in our industry.
The banking industry continues to evolve, and we will stay at the front of technology in our industry to support the real drivers of revenue, our relationship managers. That's the community bank service style that differentiates us from both a service level as well as financial performance. One final thanks to the communities that we serve. Thank you for the return on the investment we make. We are proud of our community investment. It serves all of us well to invest in the entire community where each of us live, work, and play. Now, before we proceed to the business of the meeting, I would like to make several preliminary announcements regarding the conduct of today's meeting.
The order of proceedings will follow the meeting agenda that will appear shortly on the meeting screen and is available at any time during the meeting by clicking the icon at the bottom of the page. At the conclusion of our formal agenda, I will briefly comment on other matters involving the bank's operations, as well as discuss our first quarter results, which we announced yesterday morning. Today's meeting will be conducted in accordance with the company's bylaws and rules of conduct and procedures, which are linked on the meeting screen. Among other things, this document provides guidelines for submitting questions through the web portal and identifies certain subject matters that we consider inappropriate for discussion at the meeting.
Please also note that certain comments made by our senior executives during the course of today's meeting may contain references to our expectations, assumptions, or judgments regarding the company's future performance, results of operations, business plans, and strategies and prospects. These statements are not historical facts, and we consider them to be forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws. They are made subject to the cautionary note that is linked on the meeting screen. Please consult that document as well as reports that we file with the Securities and Exchange Commission for a discussion of factors and information that could cause our actual results to differ, perhaps materially, from the results expressed or implied by those forward-looking statements.
Finally, a replay of today's meeting will be available on the virtual meeting website within 24 hours, and the slide presentation may be viewed on the investor relations page of our website at www.syb.com. Any other recording of this meeting is strictly prohibited. We will now move to the official business portion of today's meeting. I would first like to introduce our director nominees, each of whom is attending today's meeting remotely, like all of you. Steve Priebe, President of Hall Contracting of Kentucky and our Lead Independent Director. Mr. Priebe also serves as Chairman of the company's Nominating and Corporate Governance Committee. Shannon Arvin, President and CEO, Keeneland Association and Chair of the company's Trust Committee. Allison Donovan, Member, Stoll Keenon Ogden PLLC. David Hardy, Managing Director of CBRE's Kentucky operations since 2005. Carl Herde, Vice President, Financial Policy of Kentucky Hospital Association and Chairman of the company's Audit Committee.
Richard Lechleiter, President of Catholic Education Foundation of Louisville and Chairman of the company's Compensation Committee. Phil Poindexter, President of Stock Yards Bancorp and Stock Yards Bank & Trust Company. Ed Sonnier, President, Sonnier Moving & Storage, and Chairman of the company's Credit & Risk Committee. Also attending today's meeting remotely via teleconference are Chris Huber and Bree King from BDO USA, P.C., our independent registered public accounting firm. BDO audited our financial statements for 2025. The representatives of BDO will be available to answer any questions later in the meeting. I will now call the meeting to order. I have in my possession copies of the notice of Internet availability of proxy materials, notice of meeting, proxy statement, annual report, and an affidavit of distribution from Broadridge Financial Solutions, certifying that these documents were mailed to the shareholders of record of Stock Yards Bancorp.
We will file these documents with the minutes of the meeting. I now declare the meeting to be duly called. A list of shareholders entitled to vote at this meeting has been on file in the company's offices and open for examination during normal business hours for the past five business days. That list is also posted on the meeting website and available for review by shareholders. The official business to be conducted at today's meeting was outlined in the proxy statement that we mailed or made available to all shareholders of record on February 28th, 2026, the record date for the meeting. This agenda involves consideration and approval of the following three proposals. In accordance with the company's bylaws, these are the only proposals to be voted upon at the meeting. First, the election of nine directors for a one-year term.
Second, the ratification of BDO USA, P.C. as the independent registered public accounting firm for the company for the year ending December 31st, 2026. Third, advisory vote on executive compensation, which we refer to in our proxy statement as the say on pay proposal. While the vote on executive compensation is non-binding on our company and the board of directors, it does provide the board's Compensation Committee with information regarding shareholder sentiment about our executive compensation philosophy, policies, and practices, which they consider when determining future executive compensation arrangements. Our order of business today will be to consider these proposals. We have received the voting report from our proxy tabulator, Broadridge Financial Solutions, and will include this report with the minutes of this meeting.
Preliminary voting results indicate that a majority of the shares of the company's outstanding common stock entitled to vote at this meeting are present by proxy. In accordance with our bylaws, a quorum is present. Therefore, I declare this meeting duly constituted for the conduct of business. The first matter to be considered today is the election of directors. The Nominating Committee of the board of directors has proposed the following slate of nominees to be elected to serve as directors for the following year. Shannon Arvin, Allison Donovan, David Hardy, Carl Herde, Jay Hillebrand, Richard Lechleiter, Phil Poindexter, Steve Priebe, and Ed Sonnier. No other nominations have been received from shareholders in accordance with the company's bylaws, and I therefore declare the nominations closed.
The second item of business is a proposal to ratify the selection of BDO USA, P.C. as the independent registered public accounting firm for Stock Yards Bancorp, Inc. for the year ending December 31st, 2026. Finally, the board of directors has directed that the following advisory resolution regarding compensation of the company's named executive officers be presented for consideration and a vote by shareholders at this meeting. Resolved, that the shareholders of Stock Yards Bancorp, Inc. approve, on an advisory basis, the compensation paid to the company's named executive officers as disclosed in the Stock Yards Bancorp 2026 proxy statement, pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the summary compensation table, and the other executive compensation tables and related narratives. The board of directors has recommended a vote for each of the director nominees and for proposals two and three.
We will now pause to see if any questions have been submitted by shareholders relating to the three agenda items. No other questions have been submitted, and I will now call the question on the proposals that are properly before this meeting. At this time, we will pause briefly to allow shareholders wishing to vote through the online web portal a final opportunity to do so. It is now 10:14 A.M. on April 23rd, and I declare the polls closed. The company's General Counsel and Corporate Secretary, Nathan Berger, will report the voting results.
Mr. Chairman, I have been advised by our proxy tabulator, Broadridge Financial Solutions, that a total of 25,370,545 common shares, or 85.96% of the company's outstanding common stock is represented at this meeting by proxy. Based upon a preliminary tabulation of votes, I am advised that a majority of the shares represented at the meeting and entitled to vote on each proposal have been cast to elect each of the nine director nominees to ratify the selection of BDO USA, P.C. as the independent registered public accounting firm for 2026, and for advisory approval of the compensation of the company's named executive officers. Details of today's voting results will be included in a report on Form 8-K that the company will file with the Securities and Exchange Commission within four business days following the meeting.
Thank you, Nathan. Let the minutes reflect these results as reported. That concludes the official business of our annual meeting, which is now adjourned. I will now provide some comments and slides about last year and the first quarter of 2026. First, 2025 marked the best year in the company's history. By focusing on organic growth, full service customer relationships, and our proven community banking model, we delivered record earnings for the fifth consecutive year and increased our dividend for the 18th time since 2012. While organic growth was the story for 2025 and remains the central tenet of our strategic plan, we also laid the groundwork for future growth during the year by announcing our expansion into the South Central and Western Kentucky markets.
In December, we announced the appointment of a new market president in Bowling Green, Kentucky, which was followed just weeks later by news of our agreement to acquire Field & Main Bancorp, headquartered in Henderson, Kentucky, the western part of our state. Both announcements represent natural extensions of our footprint in our home state of Kentucky and align with our strategic plan, offering us additional avenues for future growth and the ability to continue delivering long-term value that has become synonymous with the Stock Yards name. As we sit here today, four months into 2026, and with our focus on the months ahead, let me briefly comment on our outstanding 2025 and the results for the first quarter of this year, which as I said, were released yesterday morning. On the screen are the financial highlights in total for 2025.
Net income of $140 million and diluted earnings per share of $4.75 set new records, surpassing the previous records set in 2024. Some of the highlights from this record-setting year include record total revenue, which comprises net interest income and non-interest income that reached $398 million. Strong organic loan growth that led to record total loans of over $7 billion as of year-end. Record net interest income, which climbed to over $300 million, driven by strong earning asset growth and record total non-interest income of $97 million, which was driven by solid contributions from all non-interest revenue streams, including record treasury management fees and record brokerage income. Record tangible book value of $29.50, representing a 19% increase over the prior year.
Net interest margin also expanded nicely during 2025, increasing 22 basis points over the prior year to 3.53%, attributed to higher earning asset yields and a decline in the cost of interest-bearing liabilities. Now shifting our focus to the present year, our first quarter 2026 results were released again. I'm happy to report strong operating results. Net income totaled $36.6 million, or $1.24 per diluted share, compared to net income of $33.3 million, or $1.13 per diluted share for the first quarter of 2025. The significant increases shown on this slide compared to the prior year were driven largely by strong organic growth experienced over the last 12 months. Total loans increased $580 million or 9% to $7.2 billion as of March 31st, 2026.
While the yield earned on the loan portfolio declined slightly as a result of rate reductions implemented by the Federal Reserve in the latter part of 2025, the growth of the portfolio was the engine that drove a $6.5 million or 6% increase in interest income. Total deposits grew $463 million or 6% to $7.8 billion as of March 31st, 2026, which was driven by organic growth and the success of promotional time deposit offerings over the past 12 months. The liquidity provided by deposit growth, in addition to the scheduled maturities from our investment portfolio, helped fund our loan growth and also eliminated the necessity of more expensive overnight borrowings that had been utilized through the first quarter of last year.
This led to a $1.4 million or 3% decrease in total interest expense, which, coupled with the previously mentioned growth in interest income, resulted in net interest income expanding $7.8 million or 11% over the same period of last year. Despite our balance sheet growth over the past year, we have not only remained well-capitalized, we've experienced increases in all regulatory capital ratios compared to the first quarter of last year, signifying our balance sheet strength and ability to grow prudently. Additionally, we experienced period-over-period increases for virtually every non-interest revenue stream, led by wealth management and trust and treasury fees, and our non-interest expenses remain in line with management's expectations, consistent with our growth, continued investment in technology, and strong operating results. We carry the momentum of a record 2025 into the first quarter of this year and remain keenly focused on organic growth.
As we welcome Field & Main to the Stock Yards family, we are also focused on the opportunities presented by this expansion and look forward to establishing ourselves as the premier community bank in our newest market. As I've noted, we experienced strong organic loan growth during the year, with balances increasing $521 million or 8% to a record $7 billion. While percentage growth was below the double-digit increases we had experienced the four consecutive prior years, it remains well above period averages and was well spread across portfolio segments and all markets. Additionally, total line of credit utilization reached its highest level since 2019, which was a meaningful driver of the loan growth we experienced during 2025. In recent years, I have mentioned our optimism regarding the potential for utilization to improve after bottoming out during the pandemic.
While it has been a very gradual climb, this past year saw the optimism largely come to fruition, and we believe there is still room for utilization to reach higher historical norms. We continued to see loan demand during the first quarter of this year, experiencing growth of $185 million through March 31st, a record first quarter for us. Pipelines look steady, and we hope to keep a similar pace. Credit quality remains solid. Our portfolio continues to be well-diversified with a relatively low concentration of classified and delinquent loans. The latter of which was just 0.19% of the total portfolio as of December 31st. Further, with credit loss reserves to total loans of 1.3% at year-end, we believe we are well-positioned for the year ahead. Our loan portfolio has experienced remarkable growth over the past decade.
While Louisville remains our primary market, this growth is also attributed to our expansion into the Indianapolis, Cincinnati, and Central Kentucky markets. As you can see on the current slide, these markets are significant components of our total loan portfolio, and we remain optimistic about the opportunities they provide, not only for lending, but also for our diversified non-interest revenue streams. Our Cincinnati market reached a significant milestone in 2025, surpassing $1 billion in total loans for the first time during the third quarter, just a year after our Indianapolis market crossed the same threshold. This market was established in 2007 and has grown organically, one account at a time, continuing to grow as our team and branch delivery channels expand. Our Central Kentucky market also crossed the $1 billion juncture during the first quarter of this year.
While we entered this market in 2021 through acquisition, as opposed to our de novo entrances to Indianapolis and Cincinnati, it has proven to be the strategic fit we envisioned it would be. The growth we've experienced in Central Kentucky since that acquisition demonstrates our ability to enter a new market with the Stock Yards name and successfully replicate the community banking business model that has been a staple of our continued success. There are many opportunities for growth in our newer markets, both organically and through acquisition. The strategies we have followed in Cincinnati, Indianapolis, and Central Kentucky provide us with a foundation we feel is critical to successfully expand into the South Central and Western Kentucky markets, staying true to the full service community banking model that has been the cornerstone of our organization since we opened over 120 years ago.
Again, this year, I would like to share a slide that displays the bank's line of credit availability for the commercial and industrial portfolio. While utilization has remained below historical norms since the pandemic, we experienced substantial improvement in line utilization in 2025, and we are excited about the potential for further expansion as business customers continue to grow and utilize these lines. The number across the top represents total commercial and industrial lines of credit, obviously growing every year. Pre-pandemic, total line commitments were $895 million in 2019, and today they total $1.7 billion, representing an 85% increase. The five-year average for C&I line utilization leading up to the pandemic was 44%, with utilization reaching its low point at 26% in 2020. Since that time, utilization has seen its ups and downs, but has ultimately remained below historical expectations due largely to substantial new line production.
We will see further potential for variable rate loan growth somewhere between line utilization of 37% today and the 5-year average of 44%. As you can see on this slide here, we have built a number of non-interest revenue streams into our business, led most notably by our wealth management and trust business, which provides us a significant advantage over similarly sized peers. Our non-interest income represents 24% of total revenue, compared to 19% for our peer group. Our non-interest revenue streams remain a critical piece of our overall operating strategy and our ability to provide full service customer relationships. Further, these sources of revenue provide us with an ability to weather the ups and downs associated with the cyclical nature of banking, which can be attributed to interest rate volatility or economic cycles.
The growth we've experienced across our non-interest revenue sources over the past several years has played a critical role in our sustained performance. While the growth of our non-interest revenue streams continues to be a highlight of our performance, controlling non-interest expenses is paramount to managing our business. The efficiency ratio is one way for us to measure our ability to do so. Provided on the current slide is a multi-year trend of that ratio, which depicts our efforts to manage expenses with a very respectable range, ending 2025 at 53.4%. This metric captures the investments we make in technology and our continued growth, including expansion of our branch network. We must continually invest in the technology necessary to provide a customer experience that meets constantly changing needs and expectations, a strong information security infrastructure, and maximization of internal resources.
Further, we added full service locations in our Indianapolis market, Cincinnati market in 2025, as well as a location in Bardstown, Kentucky, just south of Louisville. Managing these investments through conservative cost management and a focus on operational efficiency will remain a top priority as we grow. We continue to exceed the regulatory requirements for all capital ratios and intend to maintain a capital position that meets or exceeds the requirements to be designated as well-capitalized, as defined by the FRB and FDIC. Bancorp's tangible common equity to tangible assets ratio was 9.69% at March 31st, 2026, compared to 8.72% a year ago, increasing nearly 100 basis points over the past 12 months. Now, like any successful business or investment, it takes time and patience to grow prudently, and we appreciate the long-term holders of our stock.
Your time, patience, and belief in our company have paid off for you. Your management team has a lot of energy and focus to continue our prudent growth, and we appreciate your confidence in us. The slide you see now displays our net income over the course of more than 30 years. While this trajectory shows an obvious trend, the rise we have seen since 2020 has been particularly remarkable, with net income more than doubling over that span, growing 138%. While the two acquisitions that we completed during this period have provided significant benefit over the past several years, organic growth has been the primary driver of our results and remains the central component of our strategy. Our ability to execute our strategy and the resulting performance over this period is also evidenced by the stellar growth of our tangible book value.
While I touched on the growth this metric experienced during 2025 earlier in the presentation, we saw tangible book value per share jump from $18.78 at the end of 2020 to $29.50 at the end of 2025, an increase of 57%. Such a feat is rare for an institution that has pursued acquisitions as we have over the past several years, signifying our effective capital investment strategies and our ability to deliver long-term value for you, our shareholders. On that note, let's look at a shareholder return slide. Nothing shows the success of our strategies better than this slide. For those of us who are long-term holders of our stock, we have enjoyed a 10-year return of over 225%. Our 10-year total shareholder return is well above the performance of the bank indexes referenced in the graph.
While this long-term snapshot of performance captures our tremendous growth, the period between 2020 and 2025 has been truly transformative for our organization. We have more than doubled in size over this period, growing from total assets of $4.6 billion in 2020 to $9.5 billion at the end of 2025. As previously mentioned, net income grew at an even greater pace over the same period, increasing 138% to over $140 million. In 2020, our branch network consisted of 44 full-service banking center locations. At the end of 2025, we had 75 across a substantially larger geographic footprint. While this growth has been remarkable and fast, it has been accomplished while prudently managing cost, maintaining credit quality, and continually exceeding the regulatory requirements necessary to be considered well-capitalized. The quality of our earnings and the strength of our balance sheet have not been compromised for the sake of growth.
In other words, we have continued to hit the nail on the head while executing our strategic plan over this period. Our balance sheet strength has allowed us to continue pursuing capital strategies that enhance shareholder value, including a substantial and sustained dividend. These efforts were reflected by a dividend payout of $1.26 per share in 2025. With a record-setting 2025 behind us, we look forward to delivering the strong results you've come to expect from the Stock Yards team in 2026. We feel we are well-positioned for continued success as the largest bank headquartered in the state of Kentucky. Our markets are strong, our footprint is expanding, and we continue to complement net interest income with a plethora of growing, diversified non-interest revenue streams.
Our commitment to customer relationships and our community banking model, both in our established markets and the markets we are entering, will remain essential to our success. Fostering both new and existing relationships, along with continued commitment to the communities we serve, create strong prospects for growth across our footprint and a bright path forward for Stock Yards Bank & Trust Company. We will now open the meeting to questions submitted by shareholders through the web portal. As a reminder, you may submit a question by entering it in the Q&A text box in the lower corner of your meeting screen. We will attempt to answer as many questions as possible during the remaining time allotted for this meeting. Please note that we will only respond to questions relevant to the meeting as outlined in the rules of conduct.
This portion of the meeting will be moderated by our Chief Financial Officer, Clay Stinnett. We will now take a brief pause to review questions. We have no further questions at this time. That brings us to the end of today's meeting. Thank you for your participation and continued support of Stock Yards Bank & Trust. I will now turn the proceedings back to our host to conclude the meeting.
Thank you. The 2026 annual meeting of shareholders of Stock Yards Bancorp, Inc. is now complete. At this time, you may disconnect from the meeting. Thank you for attending, and good day.