Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

– The consolidated financial statements include the accounts of Stock Yards Bancorp, Inc. (“Holding Company”), and its wholly-owned subsidiary, Stock Yards Bank & Trust Company (“Bank”). All significant inter-company transactions and accounts have been eliminated in consolidation. All companies are collectively referred to as “Bancorp” or the “Company.”

The Bank, chartered in

1904,

is a Louisville, Kentucky-based, state-chartered non-member financial institution that provides services in the Louisville, Kentucky, Indianapolis, Indiana and Cincinnati, Ohio Metropolitan Statistical Areas (“MSAs”) through

38

full service banking center locations. 

As of

March 31, 2019,

Bancorp was divided into

two

reportable segments: Commercial banking and Wealth Management & Trust (“WM&T”):

Commercial Banking provides a full range of loan and deposit products to individual consumers and businesses through commercial lending, retail lending, deposit services, treasury management services, private banking, online banking, mobile banking, merchant services, workplace banking, international banking, correspondent banking and other banking services. The Bank also offers securities brokerage services via its banking center network through an arrangement with a

third

party broker-dealer. 

WM&T, with approximately

$3

billion in assets under management, provides custom-tailored financial planning, investment management, retirement planning and trust and estate services in all markets in which Bancorp operates.  

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form

10

-Q and Rule

10

-

01

of Regulation S-

X.

Accordingly, the financial statements do

not

include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the

three

months ended

March 31, 2019

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 

31,

 

2019.

For further information, refer to the consolidated financial statements and notes thereto included in Bancorp’s Annual Report on Form

10

-K for the year ended

December 31, 2018.

Certain reclassifications have been made in the prior year financial statements to conform to current year classifications.

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Standards Updates (“ASUs”)

The following ASU was issued prior to

March 31, 2019

and is considered relevant to Bancorp’s financial statements. Generally, if an issued-but-

not

-yet-effective ASU with an expected immaterial impact to Bancorp has been disclosed in prior SEC filings, it will

not

be re-disclosed.

In

June 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

13,

Measurement of Credit Losses on Financial Instruments

, (“CECL”). This ASU significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. The guidance is effective for annual and interim reporting periods beginning after

December 15, 2019.

Bancorp expects to recognize a

one

-time cumulative-effect adjustment to the allowance on

January 1, 2020.

Interagency guidance issued in

December 2018

allows for a

three

year phase-in of the cumulative-effect adjustment for regulatory capital reporting.

As a result of this ASU, Bancorp could experience an increase in its allowance. Bancorp has formed a committee to oversee its transition to the CECL methodology. Bancorp has devoted internal resources and purchased a

third

party software solution to analyze, compute and report upon the CECL disclosure requirements. In addition, Bancorp has analyzed loan-level data and concluded upon its CECL loan segmentation and initial segment calculation methodologies.  Bancorp is currently exploring regression techniques and has begun to run forecasting scenarios.

Recently adopted accounting standards

Bancorp adopted ASU

2016

-

02,

Leases

and related amendments using an alternative transition method, effective

January 1, 2019

and upon adoption recorded

$17

million of right-of-use lease assets and

$18

million of operating lease liabilities on its balance sheet as of

March 31, 2019.

Prior periods have

not

been restated. The right-of-use lease asset and operating lease liability are recorded in others assets and other liabilities, respectively, on the consolidated balance sheet. Bancorp elected all applicable practical expedients, including the option to expense short-term leases, which are defined as leases with a term of

one

year or less. Bancorp also elected

not

to separate lease components from non-lease components.

The adoption of this ASU did

not

have a meaningful impact on Bancorp's performance metrics, including regulatory capital ratios and return on average assets.  Additionally, Bancorp does

not

believe that the adoption of this ASU by its clients will have a significant impact on Bancorp's ability to underwrite credit when client financial statements are presented inclusive of the requirements of this ASU. See the note titled “Leases” for additional information on lease activities.