This is the written report for the Charted Financial Analyst Institute research challenge of 2015

1. CFA Institute Research Challenge
hosted by/in
Local Challenge (e.g., CFA Society Virginia, Vietnam, etc.)
Western Kentucky University

2. [WKU Analysts]
Student Research
2
p. Dec. Year P/E
Ratio
.53 $0.44 $1.91 16.9x
.67 $0.59 $2.36 12.9x
.61 $0.62 $2.38 12.8x
Highlights
 HOLD Recommendation: Stock Yards Bancorp has an outstanding history of delivering solid
returns to shareholders even throughout the Great Recession. Although the current interest rate
environment is unfavorable for Stock Yards, the bank’s competitive advantages will mitigate the
effects of a decreasing net interest margin. Loan growth from newer markets as well as stable fee
income derived from the wealth management arm will allow Stock Yards to overcome low interest
rates and grow the bank’s net income going forward. We recommend a HOLD position on Stock
Yards Bancorp. Our valuation implies a target price of $34.24, resulting in a 4.67% premium to the
current price of $32.71. With a dividend yield of 2.81%, the total return is 7.48%
 Revenue Drivers: The main revenue drivers for Stock Yards Bancorp emanate from its wealth
management segment and increasing presence in growth markets. Stock Yards has differentiated
itself from most community banks by developing a wealth management segment that currently
generates about 15% of the company’s revenue. Stock Yards is also expanding in both of its growth
markets, Cincinnati and Indianapolis. Currently, it controls less than 1% of the market share in
both of these markets. Nonetheless, plans to increase the number of bank branches should allow
Stock Yards to consistently increase its market share as well as drive loan growth.
 Economic Outlook: Stock Yards delivered twenty consecutive years of increasing net income
leading up to the financial crisis, but was not immune from the impact that the recession had on the
banking industry. However, earnings have experienced a 4.6% compound annual growth rate since
2009. The main factors affecting Stock Yard’s earnings going forward will be the path that interest
rates follow due to improving economic conditions as well as the slope of the yield curve.
Projections are for lower long-term rates in addition to a flatter yield curve, which will weigh on
the company’s net interest margin and earnings growth. The bank must be able to grow loans at a
healthy pace in order to overcome the low-rate environment. The company has delivered
impressively on their fee income and loan growth targets, which will mitigate the effect of a lower
net interest margin.
 Financial Standing: Stock Yards Bancorp has a great financial track record with margins that are
slightly better than its competitors within theindustry, specifically an above-peer net interest
margin. While the company may have taken on more risk than competitors, via a high equity
multiplier, Stock Yards has demonstrated that it can profitably grow assets at a higher rate than
competitors over longer periods of time. Despitethe high equity muliplier, the bank maintains a
well-capitalized balance sheet (12.6% tier one capital ratio), which will enable thebank to pursue
opportunities in its growth markets.
Sources: S&P Capital IQ & Morningstar
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Stock Yards Bancorp, Inc. (NasdaqGS:SYBT) - Share Pricing
S&P 500 Index (^SPX) - Index Value
Ticker: SYBT (NasdaqGS) Recommendation: HOLD
Price: $32.71 Price Target: $34.24
Market Profile
Current Price $30.47
52 Week Price Range $27.14 - $34.63
Average Daily Volume 27,665.00
Beta 0.82
Dividend Yield (Estimated) 2.81%
Shares Outstanding 14,521,500 M
Market Capitalization $448.12 M
Institutional Holdings 38.98%
Insider Holdings 5.96%
Book Value per Share 17.63
Tier One Capital Ratio 12.60%
Return on Equity 14.2%
Stock Yards Bancorp, Inc.
[Financials – Regional Banks]
February 13, 2015

3. CFA Institute ResearchChallenge February 13, 2015
Business Description
Stock Yards Bancorp (SYBT) is the holding company of Stock Yards Bank & Trust, which is centered in
Louisville, Kentucky, with other locations in Indianapolis, Indiana, and Cincinnati, Ohio. SYBT was
incorporated in December 1988 to wholly own Stock Yards Bank & Trust, which is a state-chartered bank.
Stock Yards Bank & Trust was founded to serve theLouisville livestock industry, but has grown and
expanded over the years to reach not only different geographical areas, but a wide variety of customers with
different financial needs. With assets of over $2.4 billion and a totalof 34 branches, the bank is now well
recognized nationally, but still maintains thefocus of building lasting relationships with consumers. Stock
Yard Bank & Trust offers services in personal banking, business banking, and wealth management.
Financial Products
Checking Accounts
Checking accounts are available for individuals and businesses through Stock Yards Bank & Trust. There are
a wide variety of these products catering to different needs of customers. These accounts range from accounts
requiring no minimum balance and no monthly service fees to high interest accounts requiring a relatively
high balance at all times. Accounts for businesses require a $100 deposit to open, but have a wide range of
required daily minimum balances. These accounts also have varied limits on debit card transactions,
electronic transactions, and withdrawals and deposits, as well as different monthly service fees and interest
rates depending on theactivity level and balance in the account.
Savings Accounts
The savings products offered at Stock Yards Bank & Trust vary depending on how the customer wishes to
save money. Traditional savings accounts are offered as along with money market accounts, which have a
higher minimum balance and more fees depending on the requirements that must be met for the month. These
accounts are thesecond largest deposit accounts at Stock Yards. There are also Health Savings Accounts for
thosecustomers with high deductible health insurance, Certificates of Deposit for thosewishing to put their
money away for up to five years, and Individual Retirement Accounts with benefits of Traditional, Roth, or
SEP accounts as well as rollovers. Both debit and credit cards with ATM access are offered through Stock
Yards Bank & Trust for businesses and individuals.
Loan Products
The bank offers consumer and mortgage loans to individuals, but its main focus is on the commercial market.
Businesses will find that Stock Yards Bank can offer real estateloans, working capital lines of credit, term
loans, equipment leasing, letters of credit, and acquisition financing. By expanding into theseareas, the bank
is more equipped to fill the needs of any business just as well as a large, regional bank. The majority of the
loans that the bank funds are commercial loans (see Figure 1), which gives it the advantage of having close,
“sticky”relationships with customers. Theserelationships generate steady recurring revenue and aid in
consistent loan growth. Loan growth has been hard to achieve by many community banks due to their rural
locations; however, Stock Yards is well-positioned in growing, industrial markets that will help accomplish
mid-single digit loan growth targets set by management.
Figure: 2013 Deposit Composition and2014 Loan Composition
Source: S&P Capital IQ
31%
44%
11%
8%
6%
2014 Loan Composition
Commercial
Loans
Commercial
Mortgage Loans
Residential
Mortgage Loans
Consumer Loans
Construction
Loans
45%
32%
5%
18%
2013 Deposit Composition
Demand Deposits
Money Market
Account/Invest.
Saving Deposits
Time Deposits

4. CFA Institute ResearchChallenge February 13, 2015
Wealth Management
The wealth management segment at Stock Yards Bank is also competitive with those of larger banks. With
access to equities, mutual funds, and alternative investments such as real estateor hedge funds, consumers are
not limited on what they can include in their portfolios. The wealth management department stresses the
importance of risk tolerance and the interest rate environment when looking into investments, which is
valuable for an investor.
Financial Planning
The bank offers not only portfolio management, but retirement planning as well. Wealth advisors are
available to meet with individuals for an assessment of their needs before deciding on which approach to take
toward their retirement. Certified Financial Planners will meet with individuals at no cost and at no obligation
to evaluate the financial situation and review the available products. Wealth advisors are also equipped to
provide estateand trust plans for customers. Thebank wants to be available to provide service to its
customers in every area possible, and has significantly expanded its product set over the years.
Industry Overview
Commercial Banking
Commercial banking serves an integral role in the growth of our globalized economy. The key role of
commercial banks involves financial intermediation between savers and users of funds. This is the ultimate
driver of economic growth as the loaned funds are deployed into the economy when businesses and
consumers make capital investments. Consequently, the banking industry tracks the underlying economy and
is highly cyclical. Furthermore, the industry is extremely competitive because the core products -- loans --
are essentially commodities.
The fundamental method of increasing profits in the banking industry results from increasing the spread
between interest rates on loaned funds (assets) and borrowed funds (deposits). The key measure of this
spread is known as the net interest margin. The net interest margin is derived from a bank’s balance sheet,
which is primarily composed of loans. However, banks also invest in government and investment-grade
securities. Since the recession, several catalysts have increased the amount of securities that banks hold.
These include an increased amount of liquidity required by federal regulators, low interest rates, and slow
growth in loan demand. In addition, many banks are using securities as a source of liquidity to position
themselves for the projection of increasing interest rates in the near future. The most recent recession has
caused the Federal Reserve to lower interest rates to historical lows, which has depressed bank’s net interest
margins and returns on capital to historically low levels. If the Federal Reserve normalizes rates, banks that
have positioned themselves in an asset-sensitiveposition will stand to benefit tremendously through increased
loans rates as well as higher yields on securities. However, due to enlarged capital requirements and
regulatory burdens placed on banking institutions, profitability is unlikely to return to historic highs.
Trust Services and Asset Management
The wealth management industry is characterized by the administration of customer’s assets on their behalf in
order to satisfy their financial needs. The primary source of revenue for an asset manager stems from fees
charged on their total assets under management. Thus, the greater amount of assets the firm oversees, the
higher fee income they earn. These companies can grow their total assets under management in either of two
ways: attracting new clients/assets or the appreciation of capital markets. This industry is highly cyclical as
assets under management are directly correlated with the performance of capital markets. In addition,
investors often pull assets out of markets when economic growth contracts. These firms, through specialized
products and personalized services, can achieve differentiation in their markets. Their products consist mainly
of active and passive mutual funds as well as separately managed accounts. These funds encompass all
varieties of investments. Certain characteristics of a firm’s managed assets can produce outsized returns.
These include higher amounts of equity, alternative, and foreign stock funds, as well as greater proportions of
retail rather than institutional clients.
In addition, combining trust services with asset management provides companies with another source of fee
income derived from the administration of assets organized in trusts. Financial planning is also commonly
implemented with their product set, where high-net worth individuals provide significant sources of revenue.
The best asset managers can produce solid fee income in any market environment through the diversification
of their products. Theasset management industry has significant growth opportunities ahead as baby boomers
continue to retire and an increasing number of employees are left to manage their own retirement assets
through defined contribution plans.
Competitive Positioning
Business Strategy
The main strategy of Stock Yards Bancorp encompasses developing a strong, healthy commercial loan
portfolio funded by core deposits in order to deliver steady returns for shareholders. In addition, the company

5. CFA Institute ResearchChallenge February 13, 2015
5
is increasingly focused on boosting earnings through fee income derived from their wealth management arm.
Stock Yards also strives to generate revenues by cross-selling their diverse product set to customers, which
increases depositor loyalty as customers continue to seek all-in-one banking services. Another strategic focus
involves taking market share from its regional bank competitors. The company is achieving this through the
development of close, personal relationships with customers, offering competitive interest rates, and
increasing the number of branches in growth markets. Management has also conveyed that they are seeking
acquisition targets in both the Indianapolis and Cincinnati markets if the environment remains constructive.
Competitive Advantages
Wealth Management
Stock Yards has several competitive advantages that set it apart from peers including: a wealth management
arm, low-cost funding, lower regulatory concerns than regional peers, diverse product set, relationship
banking, and competitive positioning in growing markets. The repeal of the Glass-Steagall Act in 1999
resulted in an unprecedented move by banks in integrating securities services into their business models.
Wealth management, in particular, was highly pursued by commercial banks due to the lucrative fee income
that it generates on a recurring basis. While this service is mostly constrained to larger banks with the means
to implement such a service, Stock Yards has developed this department into a significant fee generator that
now comprises about 15% of revenues (see Appendix 6) and is the largest contributor to non-interest income.
In addition, the amount of assets under management surpassed two billion dollars in 2013 providing the bank
with the scale necessary to profitably compete with larger peers. Management has expressed that this
segment is a great booster of the bank’s return on assets, which is a key advantage in the current low-rate
environment. This is evidenced by the bank’s solid non-interest income to average assets ratio of 1.73%,
which has helped pushed the return on assets to an impressive 1.4% (see Appendix 9). This segment clearly
differentiates Stock Yards from other community bank peers that do not have the scale to deliver these
products to customers. This also gives them the advantage of retaining customers due to the high cost of
switching wealth managers. Moreover, management is focused on growing this business at a time when the
tailwinds for the wealth management industry are increasing. Assets under management have increased at a
five-year annual growth rate of 7.9%, which is faster than the net loan growth of 5.4% (see Appendix 14).
Furthermore, assets under management only declined once over the past decade in 2008 due to the severe
market downturn.
Figure 2: Assets Under Management Growth Rates
Source: S&P Capital IQ
Low-Cost Funding
The sources that banks utilize to build their funding base have great implications on the cost structure of the
bank. Stock Yards makes extensive use of low-cost funding such as money market deposit accounts and both
non-interest and interest-bearing demand deposits. Collectively, these accounts represent 77% of total
liabilities at the end of 2013. In addition, core deposits constitute94% of the bank’s average total assets. The
bank shies away from using non-core deposits and wholesale sources of funds because of their volatile
nature, high costs, and increasing regulatory scrutiny on these sources. This is reflected in the bank’s lower-
than-peer total interest expense of 0.3% on December 31, 2014. This demonstrates that the bank maintains a
loyal customer base willing to accept lower rates for access to superior service. Loyal depositors will allow
the bank to offer lower deposit rates and still maintain core depositors. Having this reliable deposit base will
be an advantage in the face of rising interest rates coupled with increasing loan demand.
Regulatory Scrutiny
Due to the financial crisis of 2008 that was brought on by the negligence of financial institutions, the
increased regulations placed on this industry have dramatically decreased the returns of most banks and have
increased the volatility of earnings. Regulators have placed increasing focus on the amount of capital and
liquidity that banks must maintain in order to escape penalties. Having to increase capital
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6. CFA Institute ResearchChallenge February 13, 2015
6
requirements and hold higher liquidity instruments has lowered the overall returns that banks are
experiencing. This is likely to persist in the future. However, Stock Yards has maintained adequate
levels of capital on its balance sheet even while assets have been increasing at a healthy pace. At the end
of 2014, the bank had a tier one risk-based capital ratio of 12.6%, well above the regulatory minimum of
6.0%. Moreover, the bank’s equity capital has increased at an 11% annual rate over the past five years.
The management team at Stock Yards has expressed that they like to hold excess capital levels in order
to maintain this well-capitalized position. This status allows the company to operate without the great
amount of scrutiny currently being placed on larger banks. Due to the complex structures and riskier
asset profiles of larger banks, they are currently operating under heavy regulatory burdens. In addition,
due to their actions causing the crisis, regulators to continue increase capital requirements and place fines
on them for their actions. Stock Yards has avoided these pressures and fines and will benefit from more
predictable returns due to compliance with regulatory matters and more transparent operations.
However, compliance with regulations will remain a key cost concern for smaller banks in the future.
Relationship Banking
Successful community banks can compete and differentiate themselves from their larger peers through
the use of relationship banking. Relationship banking is characterized by creating close, personal ties to
customers, having an in-depth knowledge of the local market, and the cross-selling of many products.
Management at Stock Yards focuses on creating strong relationships, especially concerning commercial
customers of the bank. The bank mainly seeks make loans in familiar or current markets, which allows
the bank to closely monitor its entire loan portfolio, which is a practice much more difficult for a larger
bank to perform. This effectively reduces the amount of non-performing assets and net charge-offs the
bank experiences, which ultimately increases returns. The ratio of non-performing loans to total loans at
the end of 2014 was 0.6%, below peer levels. The net charge-off ratio of 0.2% reflects a benign credit
portfolio and is indicative of Stock Yards’ unique ability to make high-quality commercial loans (see
Appendix 9). The bank’s low cost of funding as discussed above also reveals its strong ties to
customers. A loyal customer base will provide the bank with less volatile income sources during periods
of unpredictable interest rates. In addition, focusing on smaller markets allows the bank to specialize its
services to the preferences of individual customers as well as position its loan portfolio and funding
based on management’s expertise in assessing local economic conditions. Stock Yards also possesses an
advantage over its community bank peers due to its diverse product set encompassing personal banking,
business banking, wealth management, and trust services. Having the ability to cross-sell these unique
products produces a sticky set of clients due to the high switching costs of transferring funds to another
bank. Moreover, the diversity of services and personal relations that the bank is able to develop attracts
customers looking for a complete set of services for their financial needs. Most community banks do not
have the scale or expertise that Stock Yards possesses to develop these products.
Inorganic Growth
On April 13, 2013 SYBT completed the acquisition of THE BANCorp, Inc., which is the holding
company of THE BANK- Oldham County, Inc. All operations from THE BANK-Oldham County after
that date are considered transactions of Stock Yards Bank and have been considered in SYBT’s financial
results. With the growth prospects and size of Stock Yards Bank, they could afford more acquisitions of
smaller banks in the future which would help them to continue their growth. The increasing cost of
regulatory burdens put on small banks has caused an increasing amount of mergers and acquisitions in
the industry. In order to increase the industry’s depressed returns on capital, banks must grow in size to
develop economies of scale and efficiently cope with the increasing regulatory environment. This has
decreased the total number of community banks in existence, but creates many opportunities for these
banks to generate greater synergies. These banks also have the ability to differentiate their services from
larger peers to provide more personalized services that customers increasingly desire.
Growth Markets
Finally, Stock Yards has strategically positioned bank branches in growth markets in order to create
organic loan growth. Its core markets include Indianapolis, Indiana, Cincinnati, Ohio, and Louisville,
Kentucky. In its primary market of Louisville, the bank holds a 9% share of the market. However, they
hold less than 1% market share in both Indianapolis and Cincinnati (see Appendix 4). Management sees
the latter two markets as the key drivers for growth in the future. Stock Yards is specifically focused on
opening new branches in these markets, but is open to making acquisitions to capture growth
opportunities. They have set a target of achieving a loan portfolio comprised of 40% of total loans from
Indianapolis and Cincinnati (currently at 20%) with the balance from Louisville. Over the last five
years, the compound annual growth in loans for those two markets of 8% (Indianapolis) and 29%
(Cincinnati) far outpaced the 4% loan growth experienced in Louisville. Stock Yards’ distinctive ability
to make quality commercial loans will ensure that this growth does not inhibit the performance of their
entire loan portfolio. Management expressed the view that these two markets are “under-banked”
compared to Louisville as both markets exhibit a much lower ratio of bank branches to total assets (see
Appendix 4). This provides thebank ample opportunity to increase its number of branches and deposits

7. CFA Institute ResearchChallenge February 13, 2015
7
in these areas. They plan to execute this growth strategy by targeting the customers of the larger banks
that dominate these markets and potentially acquiring smaller banks at an attractive price. They have the
ability to take market share by offering competitive interest rates compared to those larger peers in
addition to developing the personal relationships that customers increasingly desire.
Porter’s 5 Forces (Refer to Appendix 7)
Threat of Substitutes – High
There are many substitutes for banking products in existence. Technological diffusion is also creating an
increasing number of products by the day. Many deposit products are offered by online firms with little
connection to traditional banks. These online products can be more convenient and easier to access than
banking at brick-and-mortar retail branches. These products can often be customized to individual
customers rather than the standardized products that traditional banks offer. Furthermore, many
companies now offer cheap financing when you buy their products, which eliminates banks from the
entire loan process. Traditional banks can decrease these threats by providing superior customer
relationships and more diverse products. Stock Yards possesses a diverse product set and strives to
nurture customer relationships.
Threat of New Entrants – Low
Opening a bank requires a large amount of initial capital, which is often hard to find in adequate
quantities. Banking regulations are also high, meaning that much time, money, and expertise needs to be
invested to obtain a charter. Increasing regulations are making it harder and less attractive to open a
bank. Moreover, larger firms achieve economies of scale and scope, which allow them to put smaller
banks out of business by their ability to offer lower rates on deposits and loans. Stock Yards has
obtained adequate economies of scale and scope, a loyal depositor base, and expertise of its local
markets. Their main threat stems from a larger bank entering one of their targeted growth markets that
management has deemed “under-banked.” However, the Louisville market is highly saturated compared
to both Cincinnati and Indianapolis and a new market participant is unlikely.
Buyer Power – Moderate
Buyers are largely at the mercy of market-based rates when obtaining loans. Most banks negotiate very
little on rates when dealing with retail customers while larger buyers may have the advantage of
negotiating lower rates. Banks are often unwilling to lend to undesirable buyers and base pricing on the
credit history of a potential customer. However, the vast amount of competition in a commoditized
market forces most firms to offer the lowest rate possible. Superior service capabilities and switching
costs can mitigate the power of buyers.
Supplier Power – Moderate
Supplier power of capital sources for a bank differ depending on the source. Depositors must accept
market-based rates on their deposits, though intense competition ensures that rates are similar across the
industry. Differentiation is largely achieved through service capabilities, most of which can be
duplicated over time. However, loyal customer bases achieved through superior customer relationships
can allow firms to offer lower deposit rates. Stock Yards strives to promote these close customer
relationships. Capital sources from other banks are offered at high rates and are non-negotiable. Lastly,
equity capital is often hard to obtain in large quantities and requires a high return on capital for investors.
Threat of Competition – High
There are numerous firms that compete in the markets where Stock Yards operates. The largest source of
competition comes from larger regional banks that may possess greater resources and products sets than
Stock Yards. However, the bank mitigates this threat through superior customer relationships and
attracting “sticky” assets through the wealth management arm and large number of commercial clients.
Moreover, the banking industry is highly saturated and mature, which means that growth comes mainly
through economic expansion. Because of this, most market share gains are achieved by luring customers
away from other firms. This can be accomplished most effectively by reducing the prices of products.
This causes intense competition and lower profitability for all institutions. Stock Yards’ loyal customer
base offsets some of this competition.
Investment Summary
HOLD Recommendation Summary
We are initiating coverage of Stock Yards Bancorp with a HOLD recommendation and a target price of
$34.24 implying a share price appreciation of 4.67% as of the close of the market on February 13, 2015.
Our HOLD recommendation is based partly on the following:
Revenue Drivers
The greatest opportunity for growth in Stock Yards revenues comes from its wealth management arm,
especially in this low-rate environment. The wealth management industry is currently experiencing many
tailwinds including greater numbers of employees controlling their retirement assets and the large

8. CFA Institute ResearchChallenge February 13, 2015
8
amount of baby boomers reaching retirement. Stock Yards is well-positioned to take advantage of these
tailwinds as they have the capability to deliver trust and brokerage services as well as financial planning
for potential clients. The large size and diverse product set of Stock Yards has enabled it to achieve
economies of scale to compete profitably with larger competitors. This segment generated 15% more
revenue in the September quarter than the same quarter last year. It also currently generates about 15%
of the company’s revenue (see Appendix 6) and is now ranked in the top 150 trust companies in terms
of revenue. Fee income derived from this unit is a great catalyst for an increasing return on assets and is
increasingly important as low interest rates persist. However, management has indicated that 2015 will
exhibit slower growth in this segment from the prior year and may not provide as much growth to
earnings as in the past. This ultimately means that the bank will experience less growth in fee-based
income in 2015. Therefore, Stock Yards will be forced to rely more on loan growth in order to increase
net income. In addition, if the U.S. falls back into a recession the reactions in capital markets would
decrease the banks total assets under management. This would cause Stock Yards’ fee income to
decrease dramatically.
Another opportunity for growth is derived from Stock Yards positioning in the Indianapolis and
Cincinnati markets. The company entered these markets in 2003 and 2008, respectively. Currently, they
possess less than 1% of the total market share in both of these markets. Management has expressed that
both of these markets are currently under-banked and they view the opportunity to capture deposits as
very favorable. The main targets are the large regional banks that dominate these markets. Management
has also expressed that they are seeking to make acquisitions in both of these markets if conditions are
favorable. Growing loans at a healthy pace in these markets will be key to overcoming low interest rates
persisting in the future and exhibiting pre-recession return levels. Encouragingly, Stock Yards grew its
entire loan portfolio at a 8.6% pace in 2014 (see Appendix 1).
Interest Rates
The uncertainty of the speed and magnitude of interest rate hikes by the Federal Reserve injects much
ambiguity for the earnings of commercial banks, including Stock Yards. The current consensus estimate
among industry analysts projects the federal funds rate will be just 0.73% at the end of 2015 and 1.75%
at the end of 2016, up from the current 0.25% (see Appendix 12). Rising rates will bode well for Stock
Yards over the long run if they are accompanied by a steeper yield curve. However, our projection is for
a flatter yield curve in the near-term meaning that the positive effect of higher rates is unlikely to be felt
over the next year. Approximately 36% of loans are variable rate, however, almost half of those loans
have reached their contractual floors of 4%. These loans would need the federal funds rate to increase by
more than 75 basis points to experience rate increases. The remainder of the variable rate loans would
reprice immediately. Although, with those loans only representing about 17% of the entire portfolio and
the federal funds rate only moving by the projected 48 basis points, the impact to earnings would be
marginal. In addition, the reported simulation analysis (see Appendix 15) indicates that Stock Yards’ net
interest income would drop by 3.58% and 2.05% if rates were to rise 100 basis points and fall 100 basis
points, respectively. Therefore, when the Federal Reserve does increase its target rate, there will be a
negative impact on Stock Yards’ earnings because deposit rates will reprice faster than asset rates.
Other factors will also weigh on the company’s earnings in addition to this intial rise in rates. This
pressure will come from lower overall interest rates as well as a flattening of the yield curve. These
factors are being felt due to the low inflation outlook, slow global growth, a strong dollar, and the
relative attractiveness of U.S. yields to foreign investors. Interest rates in economies around the world
have been decreasing and foreign investors are pouring money into U.S. government securities for safety
and yield. This will decrease long-run rates on all Treasury securities going forward. Moreover, these
effects have had a larger impact on longer duration securities and their yields have decreased at a quicker
pace than short-term rates, which has decreased the slope of the yield curve (see Appendix 13). The
Federal Reserve raising short-term rates also increases the likelihood of a flatter yield curve. This will
have a negative impact on Stock Yards’ net interest margin as the previous benefit of progressively
lower deposit rates diminishes and is overcome by the flattening yield curve. Because most of Stock
Yards’ loans are priced off of five-year Treasury yields, loan rates are likely to remain at depressed
levels. Stock Yards will have to consistenly grow their loan portfolio and earn sufficient non-interest
income to overcome this shrinking net interest margin. The bank did increase its net interest margin by
one basis points in 2014. However, this was solely the benefit of redeeming their trust preferred
securities in 2013. This benefit will not be felt in the future and Stock Yards net interest margin is
expected to decline in 2015 as loan yields continue to remain under pressure.
Consistency
Stock Yards experienced just two years of decreasing EPS growth through the financial crisis and prior
to the crisis delivered twenty consecutive years of increasing net income. Furthermore, over the past ten
years the bank has produced EPS growth of 6.39%. Net loans have also grown at a 6.61% CAGR (see
Appendix 14) over the past ten years. The consistency and predictability of Stock Yards’ growth is
impressive, allowing the company to earn a premium valuation to its peers. In addition, the management
team at Stock Yards continues to over-deliver on their promise to grow loans at a mid-single digit pace

9. CFA Institute ResearchChallenge February 13, 2015
9
and exploit their key competitive advantages. Therefore, it can be assumed that Stock Yards will
continue to deliver solid growth and trade at a premium to peers.
Corporate Management
The Board of Directors in recent years has averaged 11 members. There are a majority of independent
Directors on the SYB Board. Historically, three inside directors have been on the Board, these include
the Chairman and CEO, the manager of a significant business unit, the trust department, as well as the
President of the Bank. The pay-for-performance compensation philosophy of the Compensation
Committee supports S.Y. Bancorp’s primary objective of creating value for its shareholders. The
Compensation Committee strives to ensure that compensation of S.Y. Bancorp’s executive officers is
market-competitive to attract and retain talented individuals to lead S.Y. Bancorp and the Bank to
growth and higher profitability while maintaining stability and capital strength. Additionally, the Audit
Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight
responsibilities.
Valuation Framework
To derive an intrinsic value for Stock Yards Bancorp, Inc. our team decided to use a dividend discount
model (DDM) valuation, price-to-earnings (P/E) valuation and price-to-tangible book value (P/TBV)
valuation. Through analysis Stock Yards Bancorp’s history, we concluded that all three are equally
important valuation tools for the company. The bank has been steadily increasing its’ dividends since
1993, showing that the DDM is an accurate valuation tool for the company. Price-to-earnings and price-
to-tangible book value are also important valuation tools for Stock Yards Bancorp due to the historic
premium the company's stock has commanded in the market. This premium is deserved due to the
company's consistant performance in the face of many obstacles in the environment.
Dividend Discount Model
We decided to use a two-stage dividend discount models (DDM) due to there being less assumptions and
variables that would impact the calculation of Stock Yards Bancorp’s intrinsic value. This model only
required the calculation and selection of three pieces of information. In our DDM, we used calculations
over five-, ten-, and fifteen-year time periods because of the uncertainty of the duration of the abnormal
growth period.
There are three vital pieces of information to our valuation are the abnormal growth rate, the mature
growth rate, and the rate of return for Stock Yards Bancorp. The abnormal growth rate was calculated by
taking the compounded annual growth rate of the diluted earnings per share (EPS) for the last ten years.
The ten-year growth rate in EPS is 6.39%. We decided that the abnormal growth rate of the dividend
would be similar to this historic rate of EPS growth because dividends must be paid from earnings.
Therefore, dividends cannot increase faster than earnings indefinitely. We also assumed the company
would maintain a constant dividend payout ratio in the future. For the mature growth rate, we decided
that Stock Yards Bancorp will grow at a similar growth rate to the GDP growth of the United States. The
use of the U.S. GDP instead of international GDP is due to the fact that Stock Yards conducts all of its
business within the U.S. To forecast future GDP growth, we utilized a future estimate of United States’
GDP from 2014 to 2019 given by the International Monetary Fund. These estimates implied that the U.S
GDP would grow at a rate of 2.87% over the next five years. To find Stock Yards Bancorp’s rate of
return we used the CAPM equation. In our CAPM equation we assumed a risk-free rate of 1%. We
believe this is the long-run average rate of return for the one-year Treasury bill. We used the average
historic market premium of 7% and the beta of the company given by S&P (0.86) to get the required rate
of return of 7.02% for Stock Yards.
In the two-stage model, we calculated a best-, base-, and worst-case scenario. In each scenario we used
the same abnormal growth rate and mature growth rate. For the best-case scenario we used a fifteen-year
abnormal growth rate period. For the base case scenario we used a ten-year abnormal growth rate period
and for the worst case scenario we used a five-year abnormal growth rate period. We then used the
abnormal growth rate to project the dividend amount from the trailing twelve months ($0.88) to five-,
ten-, and fifteen-year time periods depending on the scenario. At the end of the allotted time period, we
took the final estimated dividend and derived a terminal value of the stock using the Gordon Growth
Model. This terminal value was calculated by increasing the dividend at the end of the abnormal growth
period by the mature growth rate. Then this dividend was divided by the difference between the required
rate of return and the mature growth rate. After forecasting the future dividends and terminal stock value,
we discounted them back to present value. The present values of all of the dividend payments as well as
the terminal stock price were then summed together to get the value of the stock for each scenario. We
then weighted the value of the base case scenario at 50% because we believe it has a greater probability
of occurring than the other two scenarios. The best and worst cases were weighted by 25% each because
we believe those scenarios have similar chances of happening. The intrinsic value we calculated for the
stock using the two-stage model is $29.08.

10. CFA Institute ResearchChallenge February 13, 2015
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Price to Tangible Book Value and Price to Earnings
In our team's price-to-tangible book value valuation (P/TBV), we used Stock Yards Bancorp's historic
figures. In our calculation we looked ten years back at the share price and the tangible book value per
share. From those two figures we calculated the P/TBV for each year by dividing the share price by the
tangible book value. After finding each individual P/TBV we took an arithmetic average for the ten year
period (2.17x). This average we used as the P/TBV multiplier in the valuation model. For the value
multiplier we used the trailing twelve month tangible book value for Stock Yards Bancorp ($17.10). The
intrinsic value we calculated using our P/TBV valuation is $37.10.
Our price-to-earnings (P/E) valuation was performed in a similar manner as the P/TBV valuation. We
used a ten year average of Stock Yards P/E ratios (15.48x) and the trailing twelve month earnings per
share for Stock Yards ($2.36). The intrinsic value calculated using the P/E valuation is $36.53.
Price Target
Our price target is based on all three valuations. As mentioned in the introduction of our valuation
framework, we gave the each valuation the same importance in calculating our price target. We took the
calculated intrinsic value for each model and took an average of the three outcomes to obtain our target
price of $34.24. This implies a 4.67% share price appreciation over the next year. In addition, Stock
Yards currently pays a dividend of $0.23 per quarter. If we project this dividend over the next year, the
shares have a dividend yield of 2.81%. Adding these two returns together to obtain a total return for
Stock Yards over the next year gives a total return of 7.48%.
Financial Analysis
Ratio Analysis
Profitability ratios examine the extent to which a firm is successfully generating profits. Over the past
five years, SYBT has demonstrated consistent profitability ratios with higher ROA and ROE in 2014
fisical year and five-year average compared with FITB and PNC. In addition, with the net interest
margin and profit margin both higher than FITB and PNC in 2014 and over five years, we can see SYBT
is successfully generating profits. Lastly, Stock Yards Bancorp has a unique niche in the regional market
because of abundant fee income as a main non-interest income source. Compared to its peer group, we
can see that Stock Yards Bancorp has a higher non-interest income to average assets ratio on September
30, 2014 and over past four years. Stock Yards Bancorp provides various fee-based services. These
services not only reduced its dependence on interest income, but also reduced its risk exposure to interest
rate sensitive assets and liabilities.
Capital adequency and asset quality are key factors for determining the success of banks. Regulators use
the tier one capital ratio to grade a firm’s capital adequency. If it is equal to or greater than 6%, a firm
can be classified as well-capitalized. Stock Yards Bancorp’s tier one ratio is 12.6% for fisical year 2014,
which is higher than the peer group and FITB.
Loans comprise the majority of a bank’s assets and are also the primary interest-bearing asset. Stock
Yards Bancorp focuses more on obtaining commercial real estate loans when compared to FITB, PNC
and its peers. Stock Yards Bancorp also ranked in the 87th
percentile in terms of the percentage of
commercial and industrial loans to total loans among its peer group on September 30,
2014. Lower
residential loans and higher commercial loans helps to explain Stock Yards’ high net interest margin and
earnings; however, it also exposes its operations to higher risk because commercial loans have higher
default risk. Stock Yards Bancorp has the lowest net charge-off ratio compared to FITB and PNC in
fiscal 2014 and over the past five years. Indicative of the ratio, SYBT has been successfully managing
risk. This demonstrates that Stock Yards has a unique ability to make the high-quality commercial loans,
which management has indicated is their desired customer.
Figure 3: Competitor Ratio Analysis
SYBT FITB PNC
Net Interest Margin (2014) 3.80% 3.10% 3.10%
Net Interest Margin - 5 Yr. Avg. 3.88% 3.50% 3.70%
Profit Margin (2014) 28.20% 25.80% 27.70%
Profit Margin - 5 Yr.Avg 26.00% 23.80% 25.20%
Interest Rate Spread(2014) 3.62% 2.94% 2.95%
Interest Rate Spread- 5 Yr. Avg. 3.70% 3.30% 3.60%
Return on Equity (2014) 14.20% 9.80% 9.30%
Return on Equity - 5 Yr. Avg. 13.50% 9.90% 9.00%
Return on Assets (2014) 1.40% 1.00% 1.30%
Return on Assets - 5 Yr. Avg. 1.30% 1.10% 1.20%
Total Assets Growth Rate (2014) 7.30% 6.30% 7.70%
Total Assets Growth Rate- 5 Yr. Avg. 7.50% 4.20% 5.20%
Noninterest Income/Total Revenue (2014) 31.80% 43.10% 45.40%
Noninterest Income/Total Revenue- 5 Yr. Avg. 35.90% 47.60% 44.00%
Net Charge-offs/Total Average Loans % (2014) 0.20% 0.60% N/A
Net Charge-offs/Total Average Loans % (5 Yr. Avg) 0.50% 1.30% 1.2%
Commercial Mortgage Loans / Total Loans % (2014) 44.40% 8.20% 11.40%
Commercial Mortgage Loans / Total Loans %- 5 Yr. Avg 44.80% 10.90% 10.90%
Companies Comparison

11. CFA Institute ResearchChallenge February 13, 2015
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Figure 4: Peer Group Ratio Analysis
Liquidity is the ability to meet financial obligations as they come due. Stock Yards Bancorp has lower
liquid assets to total assets among its peer group, this can be explained by a higher concentration of
real estate loans.
A highlight for Stock Yards is the ability to maintain thehighest net interest margin compared to
competitors this past year while also achieving thehighest deposit growth rate. In fact, Stock Yards has
experienced the highest deposit growth rate over the last five years at 8.4%, which is well above its
competitors. Theability to grow deposits and maintain a high net interest margin shows that the bank has
been successful in promoting its services through other means than just rates. Thehigh interest spread of
Stock Yards Bancorp is also indicated by having a higher totalearning assets yield and a lower interest-
bearing funds cost compared to thepeer group over the past four years. This shows the potentialfor high
profitability and leads to theconclusion that Stock Yards has excelled in therelationship development
portion of thebanking business.
Investment Risks
Economic Conditions
Economic conditions on both the local and national level affect the profitability of Stock Yards Bancorp.
Unemployement, government regulation, and economic recovery will affect Stock Yards on a national
level, but local factors will affect a large number of customers as well, especially for a community bank
serving in one general area. During times of poor economic conditions, it will be more of a financial
burden for customers to pay back their loans. There may also be a decrease in the demand for new loans.
With the deterioration of the bank’s credit portfolio comes less profitable income than usual from a
lending standpoint, which could directly affect the capital of the bank.
Loan Loss Allowance
Not building reserves enough for loan losses is a mistake that could be made which would decrease
earnings. If loans aren’t repaid by borrowers, collateral isn’t sufficient, or the guarantors on loans don’t
have the ability to pay back the loan themselves, this becomes a loss for the bank. While SYBT monitors
the credit risk in their portfolio and makes assumptions regarding the amount of loans that will result in a
loss, there are still errors that could be made. Regulators review these allowance numbers and could
require an increase if they think there is more risk than the bank is accounting for. More than half of the
loans in the bank’s portfolio are secured by real estate in some way. If there were a decrease in real estate
values in the market area, this would make the loans even more risky and could potentially increase
losses on loans. Having to increase the allowance for loan losses will have a negative effect on the
bank’s financials.
Policy and Security
The policies in place at the bank are vital to the protection of assets and growth of the company. There
are also many factors involved in valuing these assets which have been outlined and detailed within the
policies and procedures required of each employee. It is also vital that the bank protects their
infrastructure and operating systems from any sort of disaster, attack or security breach which could
disrupt the flow of daily activities or cause major harm to their customers. The bank has protection plans
in place in the form of third-party vendors who store information electronically at the bank so that
information would not be lost in the event of natural disaster. There are also security training sessions
frequently given to employees as well as detective controls to help prevent fraud or theft.
Regulations
Banks are highly regulated and examined each year by banking authorities on both the federal and state
level. Changes in laws and regulations the bank is held to could immediately impact the bank’s
operations and profitability. Banks must stay up to date on all compliance and regulation laws regarding
their procedures and operations due to the fact that these laws are always subject to change.
9/30/2014 9/30/2013 9/30/2012 9/30/2011
3.74 3.76 4.3 4.09
3.62 3.6 3.7 3.77
9/30/2014 9/30/2013 9/30/2012 9/30/2011
12.67 12.04 11.34 10.75
12.31 12.22 11.89 11.29
9/30/2014 9/30/2013 9/30/2012 9/30/2011
26.59 24.36 21.72 21.24
14.1 13.3 13.07 13.89
9/30/2014 9/30/2013 9/30/2012 9/30/2011
18.89 17.48 16.67 13.78
21 22.43 23.7 24.07
9/30/2014 9/30/2013 9/30/2012 9/30/2011
1.73 1.84 1.81 1.67
0.93 1.06 1.04 0.92
9/30/2014 9/30/2013 9/30/2012 9/30/2011
0.26 0.48 0.67 0.85
0.56 0.66 0.87 1.18
9/30/2014 9/30/2013 9/30/2012 9/30/2011
3.93 4.16 4.56 4.7
4 4.08 4.39 4.69
SYBT
SYBT
Peer Group
SYBT
Peer Group
SYBT
Net Interest Margin (%)
Tier one Capital Ratio
Commercial and Industrial Loans/Total Loans&Leases
Liquid Assets/Total Assets
Non interest Income/Avg Assets(%)
All Interest Bearing Funds Yield
Total Earning Assets Yield
Peer Group
SYBT
Peer Group
SYBT
Peer Group
Peer Group
SYBT
Peer Group

12. CFA Institute ResearchChallenge February 13, 2015
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Appendix 1: Annual Growth in Stock Yards Bancorp Loan Portfolio (2005-2014)
Source: S&P Capital IQ
Appendix 2: Annual Growth in Stock Yards Bancorp Deposits (2004-2013)
Source: S&P Capital IQ
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Commercial Loans 4.5% 21.8% 12.7% 12.5% -3.2% 2.1% 14.5% 8.4% 19.6% 13.2%
Commercial Mortgage Loans -30.9% 13.4% 4.6% 12.9% 11.8% 22.1% 2.6% 3.1% 5.7% 9.1%
Residential Mortgage Loans 0.0% -1.9% -3.3% 10.3% -8.1% 7.2% -2.2% 7.6% 10.5% 6.2%
Consumer Loans 18.4% -4.1% -4.6% 9.0% 7.9% -11.8% -9.3% -6.7% -2.9% 7.9%
Construction Loans 54.3% 5.0% 8.5% 15.7% 22.3% -22.1% -7.4% -11.1% -1.3% -8.9%
TotalLoans 7.0% 9.0% 4.6% 12.3% 6.4% 5.1% 2.4% 2.6% 8.6% 8.6%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Loan Growth
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Demand Deposits 2.9% -2.4% -4.3% -4.9% 6.4% 12.1% 14.7% 18.0% 21.3% 19.4%
Money Market Account/Invest. 35.9% 27.0% 11.5% 32.9% 23.0% 21.6% 19.8% 10.7% 10.1% 11.1%
Saving Deposits 6.0% 9.4% -13.7% -7.8% 18.5% 31.7% 10.5% 6.2% 19.5% 19.8%
Time Deposits 5.1% 14.6% 19.6% -8.5% 16.9% 2.7% -14.9% -5.5% -8.2% -6.8%
TotalDeposits 7.7% 8.6% 7.0% 0.3% 14.8% 11.6% 5.3% 8.3% 10.1% 11.2%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
Deposit Growth

13. CFA Institute ResearchChallenge February 13, 2015
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Appendix 3: Loan and Deposit Composition Changes
Source: S&P Capital IQ
Appendix 4: Percent of Deposit Share By Market
Source: Stock Yards Bancorp Company Presentation
24%
39%
10%
13%
14%
2009 Loan Composition
Commercial Loans
Commercial
Mortgage Loans
Residential
Mortgage Loans
Consumer Loans
Construction Loans
32%
28%
4%
36%
2009 Deposit Composition
Demand Deposits
Money Market
Account/Invest.
Saving Deposits
Time Deposits
31%
44%
11%
8%
6%
2014 Loan Composition
Commercial Loans
Commercial
Mortgage Loans
Residential
Mortgage Loans
Consumer Loans
Construction Loans
45%
32%
5%
18%
2013 Deposit Composition
Demand Deposits
Money Market
Account/Invest.
Saving Deposits
Time Deposits

14. CFA Institute ResearchChallenge February 13, 2015
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Appendix 5: Loan Growth By Market
Source: Stock Yards Bancorp Company Presentation
Appendix 6: Growth in Investment Management and Trust Revenue
Source: Stock Yards Bancorp Company Presentation

15. CFA Institute ResearchChallenge February 13, 2015
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Appendix 7: SWOT Analysis & Porter’s Five Forces of Competitive Position
Source: Student Analysis
Strengths
-Wealth management arm
-Close customer relationships
-Easy access to capital
-Low cost of funds
-Diverse product set
Weaknesses
-High regulatory burdens
-Less resources than larger competitors
-Lower market share than larger competitors
-Less brand recognition in wealth management
-Highly reliant on commercial loan market
Opportunities
-New growth markets
-Acquisitions in growth markets
-Technological improvements
Threats
-Larger institution entering market
-Increasing regulatory requirements
-Greater use of substitute online products
-Prolonged economic weakness nationally and locally

16. CFA Institute ResearchChallenge February 13, 2015
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Appendix 8: Valuation and Sensitivity Analysis
Source: Student Calculations
Assumptions
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Diluted
Earnings
Per Share
$1.27 $1.46 $1.55 $1.67 $1.59 $1.19 $1.67 $1.71 $1.85 $1.89 $2.36
Future Analysis of United States GDP
Gross domestic product, constant prices
(Billions)
Year CAGR
Growth Per Year
18,491.26 2019 2.87% 2.56%
18,029.30 2018 2.95% 2.73%
17,550.05 2017 3.03% 2.95%
17,047.24 2016 3.06% 3.03%
16,545.19 2015 3.09% 3.09%
16,048.73 2014
(Estimates by International Monetary Fund)
Discount Dividend Model
Stock Valuation
Price Weight
Best Case 32.59 25.0% 8.15
Average Case 29.11 50.0% 14.55
Worst Case 25.53 25.0% 6.38
Target Price 29.08
Price to Tangible Book
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TBV/Share 8.6 9.5 9.7 10.7 11.2 12.3 13.5 14.7 15.5 17.1
Share Price 23.83 28 23.94 27.5 21.35 24.55 20.53 22.42 31.92 33.34
P/TBV 2.76 2.95 2.46 2.58 1.90 1.99 1.52 1.53 2.06 1.95
10 Yr Average 2.17
2015 TBV
Estimate $17.10
Price Target $37.10
Price to Earnings
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
P/E 16.30 18.10 14.30 17.30 17.90 14.70 12.00 12.10 16.90 15.20
10 Yr Average P/E 15.48
2015 EPSEstimate $2.36
Price Target $36.53
Beta 0.86
Risk Free Rate 1.00%
Market Risk
Premium 7.0%
Rate of Return 7.02%

17. CFA Institute ResearchChallenge February 13, 2015
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Results
Stock Price Target
Model Price Target Weight
2 Stage DDM $29.08 33.33% 9.69
P/TBV $37.10 33.33% 12.37
P/E $36.53 33.33% 12.18
BlendedTarget $34.24
Current Price $32.71
Upside 4.7%
Appendix 9: Stock Yards Bancorp and Competitor Financial Ratio Comparison
Source: S&P Capital IQ
SYBT FITB PNC
P/ERatio (TTM) 13.57 11.32 12.27
P/E – 5 Yr. Avg 14.53 19.46 11.12
PEG Ratio 1.35% 1.69% 2.09%
PEG Ratio - 5 Yr. Avg(TTM) 2.23% 0.40% 0.86%
P/B (2014) 1.90 1.10 1.10
P/B - 5 Yr. Avg. 1.80 1.10 1.00
EPS(TTM) $2.23 $1.70 $7.52
EPS-5 Yr. Avg. $1.83 $1.38 $6.22
Profit Margin (2014) 28.20% 25.80% 27.70%
Profit Margin - 5 Yr.Avg 26.00% 23.80% 25.20%
Tier 1 capital ratio (2014) 12.60% 10.80% 12.70%
Tier 1 capital ratio-5 YearAvg. 12.60% 11.50% 12.30%
Allowance for Credit Losses/Total loans(2014) 1.30% 1.50% 1.60%
Allowance for Credit Losses/Total loans - 5 Yr. Avg. 1.70% 2.40% 2.30%
NonperformingLoans/Total Loans(2014) 0.60% 0.70% 1.20%
NonperformingLoans/Total Loans-5 Yr. Avg. 1.30% 1.40% 1.90%
Total Assets Growth Rate (2014) 7.30% 6.30% 7.70%
Total Assets Growth Rate-5 Yr. Avg. 7.50% 4.20% 5.20%
Gorss Loans Growth Rate(2014) 8.50% 0.90% 3.60%
Gorss Loans Growth Rate-5Yr. Avg. 5.40% 2.90% 5.20%
Total Deposits (2014) 7.20% 2.50% 5.10%
Total Deposits-5Yr. Avg. 8.40% 3.90% 4.60%
Net Charge-offs/Total Average Loans %(2014) 0.20% 0.60% N/A
Net Charge-offs/Total Average Loans %(5 Yr. Avg) 0.50% 1.30% 1.2%
Return on Equity(2014) 14.20% 9.80% 9.30%
Return on Equity - 5 Yr. Avg. 13.50% 9.90% 9.00%
Return on Assets (2014) 1.40% 1.00% 1.30%
Return on Assets - 5 Yr. Avg. 1.30% 1.10% 1.20%
Net InterestIncome 5 Year Avg Growth Rate 7.40% 1.40% -1.00%
Net Loans/Total Deposits (2014) 86.80% 87.30% 86.80%
Net Loans/Total Deposits- 5 Yr Avg. 90.50% 90.40% 84.10%
NoninterestIncome/Total Revenue (2014) 31.80% 43.10% 45.40%
NoninterestIncome/Total Revenue-5 Yr. Avg. 35.90% 47.60% 44.00%
Net InterestMargin (2014) 3.80% 3.10% 3.10%
Net InterestMargin - 5 Yr. Avg. 3.88% 3.50% 3.70%
Net interest Income/ Total Revenue (2014) 67.90% 62.40% 56.40%
Net interest Income/ Total Revenue-5Yr. Avg. 72.90% 63.30% 64.30%
Interest Rate Spread(2014) 3.62% 2.94% 2.95%
Interest Rate Spread-5 Yr. Avg. 3.70% 3.30% 3.60%
NoninterestIncome/Average Assets (2014) 1.60% 1.90% 2.1%
NoninterestIncome/Average Assets - 5 Yr. Avg. 1.70% 2.30% 2.1%
Equity Multiplier(2014) 9.9 8.9 7.5
Equity Multiplier- 5 Yr. Avg. 10.6 8.7 7.5

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Appendix 10: Stock Yards Bancorp and Competitor Loan/Deposit Composition Comparison
Source: S&P Capital IQ
Commercial Loans / Total Loans %(2014) 30.90% 49.40% 51.30%
Commercial Loans / Total Loans %- 5 Yr. Avg. 27.20% 45.20% 47.00%
Commercial Mortgage Loans / Total Loans %(2014) 44.40% 8.20% 11.40%
Commercial Mortgage Loans / Total Loans %- 5 Yr. Avg 44.80% 10.90% 10.90%
Residential Mortgage Loans/Total Loans %(2014) 10.40% 13.80% 6.80%
Residential Mortgage Loans/Total Loans %- 5 Yr. Avg 10.00% 13.40% 8.20%
Total ConsumerLoans / Total Loans %(2014) 8.00% 26.40% 30.30%
Total ConsumerLoans / Total Loans %- 5 Yr. Avg 9.20% 29.00% 33.60%
Demand Deposit/Total Deposit (2014) 24.70% 60.60% 31.60%
Demand Deposit/Total Deposit - 5Yr.Avg 36.70% 57.10% 31.90%
MoneyMarketand Savings Account Deposits / Total Deposits %(2014) N/A 31.60% N/A
MoneyMarketand Savings Account Deposits / Total Deposits %- 5 Yr. Avg 37.00% 30.70% 52.50%
Total Time Deposits / Total Deposits %(2014) N/A 6.70% N/A
Total Time Deposits / Total Deposits %- 5 Yr. Avg 23.20% 9.70% 15.60%
Appendix 11: SYBT vs. Peer Group Comparison
Source:FFIEC BHC Reports
Net Interest Margin (%) 9/30/2014 9/30/2013 9/30/2012 9/30/2011
SYBT as of 9/30/2014 Percentile 58 3.74 3.76 4.3 4.09
Peer Group 3.62 3.6 3.7 3.77
Non interest Income/Avg Assets(%)
SYBT 87 1.73 1.84 1.81 1.67
Peer Group 0.93 1.06 1.04 0.92
All Interest Bearing Funds Yield
SYBT 9 0.26 0.48 0.67 0.85
Peer Group 0.56 0.66 0.87 1.18
Total Earning Assets Yield
SYBT 49 3.93 4.16 4.56 4.7
Peer Group 4 4.08 4.39 4.69
Tier one Capital Ratio
SYBT 60 12.67 12.04 11.34 10.75
Peer Group 12.31 12.22 11.89 11.29
Total Assets Growth Rate
SYBT 48 5.16 8.9 5.73 5.7
Peer Group 7.32 5.05 4.32 2.16
Net Loans and Leases Growth Rate
SYBT 22 4.64 7.93 2.6 3.12
Peer Group 11.65 7.41 4.19 -1.78
Loans&Leases Allowance/Total Loans&Leases
SYBT 64 1.52 1.69 1.96 1.88
Peer Group 1.41 1.63 1.85 2.05
Mutual Fund Fee Income/Non interest Income
SYBT 79 5.19 5.62 6.63 6.63
Peer Group 1.98 1.82 1.78 2.22
Personnel Expense/Average Assets
SYBT 74 1.94 1.91 1.91 1.71
Peer Group 1.7 1.7 1.67 1.57
Commercial and Industrial Loans/Total Loans&Leases
SYBT 87 26.59 24.36 21.72 21.24
Peer Group 14.1 13.3 13.07 13.89
Commerical Real Estate Loans/Total Loans&Leases
SYBT 62 48.98 49.95 51.08 54.36
Peer Group 44.78 45.7 45.15 46.97
RE loans secured by 1-4 family/Total Loans&Leases
SYBT 28 16.81 16.71 17.29 18.68

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Peer Group 26.78 26.53 27.75 24.95
Liquid Assets/Total Assets
SYBT 45 18.89 17.48 16.67 13.78
Peer Group 21 22.43 23.7 24.07
Appendix 12: Federal Funds Rates Projection
Source: CNBC
Appendix 13: Graph of Yield Curve at Prior Dates
Source: S&P Capital IQ

20. CFA Institute ResearchChallenge February 13, 2015
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Appendix 14: Various Balance Sheet and Income Statement Items Growth Rate Calculations
Source: Student Calculations
Appendix 15: SYBT Simulation Analysis
Source: Stock Yards Bancorp 2013 10-K

21. CFA Institute ResearchChallenge February 13, 2015
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Disclosures:
Ownership and material conflicts of interest:
The authors, or a member of their household, of this report do not hold a financial interest in the securities of this company.
The authors,or a member oftheir household, ofthis report do not knowof the existence of any conflicts of interest that might bias the content or
publication of this report.
Receipt of compensation:
Compensation of the authors of this report is not based on investment banking revenue.
Position as an officer or director:
The authors, or a member of their household, do not serves as an officer, director or advisory board member of the subject company.
Market making:
The authors do not act as a market maker in the subject company’s securities.
Ratings guide:
Banks rate companies as eithera BUY, HOLD orSELL. A BUY ratingis given when the security is expected to deliver absolute returns of 15% or
greater overthe next twelve month period, andrecommends that investors takea position above the security’s weight in the S&P 500, or any other
relevant index.A SELL ratingis given when the security is expectedtodelivernegative returns over the next twelve months, while a HOLD rating
implies flat returns over the next twelve months.
Disclaimer:
The information set forth hereinhas been obtainedor derivedfrom sources generally available tothe public andbelievedby the authors to be reliable,
but the authors do not make anyrepresentationor warranty, express or implied, as to its accuracyorcompleteness. The information is not intended to
be used as the basis of any investment decisions by any person orentity. This information does not constitute investment advice, nor is it an offer or a
solicitationof an offertobuy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with
[Society Name], CFA Institute or the CFA Institute Research Challenge with regard to this company’s stock.