Note 16 - Income Taxes

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(16) Income Taxes

Components of income tax expense from operations were as follows:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2016			2015			2016		2015
Current tax expense
Federal	$	4,222		$	3,884		$	6,595	$	6,960
State		186			186			310		273
Total current tax expense		4,408			4,070			6,905		7,233
Deferred tax expense
Federal		(711	)		109			390		1,093
State		(21	)		(28	)		57		78
Total deferred tax expense (benefit)		(732	)		81			447		1,171
Total income tax expense	$	3,676		$	4,151		$	7,352	$	8,404

STOCK YARDS BANCORP, INC. AND SUBSIDIARY

An analysis of the difference between statutory and effective tax rates for the six months ended June 30, 2016 and 2015 follows:

	Six months ended June 30,
	2016			2015
U.S. federal statutory tax rate		35.0	%		35.0	%
Tax exempt interest income		(1.3	)		(1.4	)
Tax credits		(9.5	)		(2.5	)
Cash surrender value of life insurance		(0.9	)		(0.9	)
State income taxes, net of federal benefit		0.9			0.9
Other, net		2.7			0.4
Effective tax rate		26.9	%		31.5	%

State income tax expense represents tax owed in Indiana. Kentucky and Ohio state bank taxes are based on capital levels, and are recorded as other non-interest expense.

US GAAP provides guidance on financial statement recognition and measurement of tax positions taken, or expected to be taken, in tax returns. As of June 30, 2016 and December 31, 2015, the gross amount of unrecognized tax benefits, including penalties and interest, was $48 thousand and $42 thousand, respectively. If recognized, tax benefits would reduce tax expense and accordingly, increase net income. The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current year tax positions, expiration of open income tax returns due to statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examination, litigation and legislative activity and addition or elimination of uncertain

tax positions. Federal and state income tax returns are subject to examination for the years after 2011.