EX-99.1 2 a5732336_ex991.htm EXHIBIT 99.1

Exhibit 99.1

S.Y. Bancorp Announces Record Quarterly Per Share Results as Diluted EPS Increase 5% over Same Period Last Year

LOUISVILLE, Ky.--(BUSINESS WIRE)--S.Y. Bancorp, Inc. (NASDAQ:SYBT), parent company of Stock Yards Bank & Trust Company, with offices in the Louisville metropolitan area, Indianapolis and Cincinnati, today reported financial results for the second quarter and first half of 2008. Highlights of the report, which reflected record earnings per share for the quarter, included a continued upswing in quarterly loan growth despite turmoil in the economy, as the Company's loan portfolio increased 14% year over year in the second quarter, surpassing the 9% year-over-year growth in the first quarter of 2008. Concurrent with this growth, the Company also reported that asset quality remained solid. A summary of results for the second quarter and six-month period follows:

Quarter Ended June 30,

 

2008

 

2007

 

Change

Net income $ 6,129,000 $ 6,297,000 -3%
Net income per share, diluted $ 0.45 $ 0.43 5%
Return on average equity 18.30% 17.90%
Return on average assets 1.60% 1.80%
 

Six Months Ended June 30,

2008

2007

Change

Net income $ 11,167,000 $ 12,001,000 -7%
Net income per share, diluted $ 0.82 $ 0.82 0%
Return on average equity 16.85% 17.26%
Return on average assets 1.49% 1.72%

Commenting on the Company's progress, David Heintzman, Chairman and Chief Executive Officer, said, "It is gratifying that, in the face of difficult economic conditions, S.Y. Bancorp has continued to demonstrate sound long-term fundamentals, most notably signified by robust loan growth. Despite national economic trends, our asset quality has remained strong. All of these factors bode well for the Company's fundamental performance in the future and serve to counter the near-term impact of our expansion to new markets, which has placed additional pressure on earnings as these newer offices continue to gain momentum."

Heintzman pointed out that in the fourth quarter of 2007, the Company opened a second office in Indianapolis and entered the Cincinnati market with one new office there. Expenses for those offices were in the process of ramping up in the second half of 2007 in terms of personnel and office space, and those expenses only reached normalized operating levels beginning in 2008. While these expansion initiatives contributed to the Company's loan growth in the second quarter, their start-up expenses also weighed on Company's second quarter earnings as the breakeven point for new offices is usually 18 months or more.

Heintzman noted that recent weakness in the broader stock market has hurt one important area of non-interest income for the Company. Income from investment management and trust services, which constitutes the single largest component of non-interest income, has been virtually flat in 2008 compared with average double-digit increases in the last several years. While assets under management declined slightly to $1.536 billion at June 30, 2008, growth from net new accounts was nearly $50 million or double that of second quarter 2007.

Concluding, Heintzman said, "Recent capital management strategies, primarily focused on stock repurchases, resulted in higher earnings per share for the second quarter of 2008 versus the year-earlier period despite slightly lower net income for the period. Although we are pleased with our progress in many aspects of our business, we remain cautious about the near term, knowing that current economic pressures will continue to have an impact on already fluid conditions in the housing and credit markets. We believe the Company's second quarter performance was solid given these conditions, showing the fundamental strength and diversity of our business and markets, and we remain confident in our strategies to drive top- and bottom-line growth over the longer term."

S.Y. Bancorp's total assets increased 12% to $1.596 billion at June 30, 2008, from $1.425 billion at June 30, 2007, and were up 5% from $1.517 billion at March 31, 2008. The year-over-year change in total assets was driven by strong growth in the Company's loan portfolio, which rose 14% to $1.321 billion at June 30, 2008, from $1.163 billion at June 30, 2007, and 2% versus $1.290 billion at March 31, 2008. Deposits increased 16% to $1.263 billion at June 30, 2008, compared with $1.085 billion a year ago, and were up 10% from $1.148 billion at the end of the first quarter of 2008, with increases largely reflecting higher time deposits.

Net interest income, the Company's largest source of revenue, increased $795,000 or 6% in the second quarter of 2008 compared with the year-earlier period, reflecting primarily the impact of the Company's growing loan portfolio. Net interest margin for the second quarter declined 19 basis points year over year to 4.07% from 4.26% in the second quarter of 2007, but improved 12 basis points from 3.95% in the first quarter of the year. While the net interest margin expanded sequentially from the first quarter of 2008, management expects that strong competition for deposits used to fund loan growth will put pressure on margins in upcoming quarters. For the first half of 2008, net interest income increased $642,000 or 2% versus the same period last year, primarily because of strong loan growth, which offset pressure on net interest margin in the wake of recent rate cuts by the Federal Reserve together with competitive factors. For the first six months of 2008, the Company's net interest margin was 4.01% compared with 4.24% in the year-earlier period.

Non-performing loans for the second quarter increased to $5,481,000 from $4,769,000 in the second quarter of 2007, and, on a linked-quarter basis, increased from $4,589,000 in the first quarter of 2008. However, the ratio of non-performing loans to total loans was 0.42% in the second quarter of 2008, compared with 0.41% in the second quarter of last year, and up slightly from 0.36% in the first quarter of 2008. Despite the sequential quarterly increase in non-performing loans, non-performing loans to total loans, at 0.42%, remains below the average for the past five years. Also, net charge-offs totaled $616,000 in the second quarter of 2008, or 0.05% of average loans in the second quarter of 2008, which was unchanged from both the year-earlier quarter and the first quarter of 2008. Further, loans past due less than 90 days fell in the second quarter of 2008 compared with the first quarter of 2008.

The Company's allowance for loan losses was 1.09% of total loans at June 30, 2008, up from 1.04% at June 30, 2007, but unchanged from 1.09% at March 31, 2008. For the second quarter of 2008, the loan loss provision totaled $975,000 versus $460,000 in the year-earlier period. For the first six months of 2008, the loan loss provision totaled $2,200,000 versus $1,240,000 in the first half of 2007.

Non-interest income declined $57,000 or 1% in the second quarter compared with the same quarter last year, primarily due to lower investment management and trust income, which fell $100,000 or 3% during the quarter; reduced service charge income, which declined $87,000 or 4%; and lower gains on sales of mortgage loans, which were down $40,000 or 10%. These declines were partially offset by higher bankcard transaction revenue, which rose $101,000 or 17% for the quarter. Non-interest income increased $137,000 or 1% in the first half of 2008 compared with the year-earlier period, primarily reflecting a slowdown in service charge income and management and trust income.

Non-interest expense increased $817,000 or 7% in the second quarter of 2008 versus the same period last year. Higher non-interest expense for the quarter was due primarily to an increase of $735,000 or 11% in salaries and employee benefits, in part reflecting staffing costs for a second banking location in the Indianapolis market and a new banking office in the Cincinnati market, both opened since the first quarter last year, along with an associated increase of $106,000 in net occupancy expense. These increases were offset somewhat by a decline of $155,000 in data processing expenses. Non-interest expense rose $1,386,000 or 6% in the first half of 2008 compared with the year-earlier period primarily due to salaries and employee benefits.

The Company's second quarter efficiency ratio was 55.19% compared with 53.22% in the second quarter of 2007 and 57.26% in the first quarter of 2008.

In May, S.Y. Bancorp's Board of Directors declared its regular quarterly cash dividend of $0.17 per share. The latest dividend was distributed on July 1, 2008, to stockholders of record as of June 16, 2008. During the second quarter of 2008, S.Y. Bancorp made no repurchases of its common stock, choosing instead to use its capital to support loan growth. The Company has remaining authorization to purchase up to 163,000 shares under the current plan, which will expire in November 2008 unless otherwise extended or completed at an earlier date.

Louisville, Kentucky-based S.Y. Bancorp, Inc., with $1.596 billion in assets, was incorporated in 1988 as a bank holding company. It is the parent company of Stock Yards Bank & Trust Company, which was established in 1904.

This report contains forward-looking statements under the Private Securities Litigation Reform Act that involve risks and uncertainties. Although the Company's management believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Therefore, there can be no assurance the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from those discussed in forward-looking statements include, but are not limited to: economic conditions both generally and more specifically in the markets in which the Company and its subsidiaries operate; competition for the Company's customers from other providers of financial services; government legislation and regulation, which change from time to time and over which the Company has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of the Company's customers; and other risks detailed in the Company's filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company.

S.Y. Bancorp, Inc.

Summary Unaudited Financial Information

(in thousands except per share amounts)

   
Second Quarter Ended

June 30,

Six Months Ended

June 30,

  2008     2007   2008     2007
Interest income $ 21,436 $ 22,815 $ 43,314 $ 45,421
Interest expense   7,062   9,236   15,679   18,428
Net interest income 14,374 13,579 27,635 26,993
Provision for loan losses   975   460   2,200   1,240
Net interest income after provision for loan losses
13,399 13,119 25,435 25,753
Non-interest income 7,667 7,724 15,017 14,880
Non-interest expense   12,301   11,484   24,244   22,858
Net income before income taxes 8,765 9,359 16,208 17,775
Income tax expense   2,636   3,062   5,041   5,774
Net income $ 6,129 $ 6,297 $ 11,167 $ 12,001
Net income per share:
Basic $ 0.46 $ 0.44 $ 0.83 $ 0.84
Diluted $ 0.45 $ 0.43 $ 0.82 $ 0.82
Weighted average shares outstanding:
 
Basic   13,409   14,325   13,431   14,357
Diluted   13,584   14,536   13,598   14,588
 
June 30,

2008

Dec. 31,

2007

June 30,

2007

Total assets $ 1,596,320 $ 1,482,219 $ 1,425,299
Total loans 1,320,509 1,201,938 1,162,906
Non-interest-bearing deposits 182,580 170,477 184,000
Interest-bearing deposits   1,080,752   936,230   901,316
Total deposits 1,263,332 1,106,707 1,085,316
Stockholders' equity 134,848 133,024 141,888
Book value per share 10.05 9.78 9.92
 

Unaudited supplemental financial information for the second quarter and six months ended June 30, 2008 and 2007, appears on the following pages.

S. Y. Bancorp, Inc. Financial Information
Second Quarter 2008 Earnings Release
(all figures other than per share amounts and number of employees are expressed in thousands unless otherwise noted)
             
Second Quarter Ended Six Months Ended
June 30, June 30,
  2008   2007   2008   2007
Income Statement Data
Net interest income, fully tax equivalent (1) $ 14,621 $ 13,856 $ 28,129 $ 27,553
Net interest income $ 14,374 $ 13,579 $ 27,635 $ 26,993
Provision for loan losses   975   460   2,200   1,240
Net interest income after provision for loan losses   13,399   13,119   25,435   25,753
Gain on the sale of securities - - - -
Investment management and trust income 3,236 3,336 6,515 6,533
Service charges on deposit accounts 2,117 2,204 4,109 4,222
Bankcard transaction revenue 691 590 1,312 1,132
Gains on sales of mortgage loans held for sale 351 391 694 647
Brokerage commissions and fees 444 452 885 945
Bank owned life insurance 258 247 510 483
Other non-interest income   570     504   992     918
Total non-interest income   7,667     7,724   15,017     14,880
Salaries and employee benefits expense 7,367 6,632 14,555 13,239
Net occupancy expense 1,036 930 2,045 1,820

Data processing expense

896 1,051 1,648 2,066
Furniture and equipment expense 276 290 552 582
State bank taxes 314 311 654 489
Other non-interest expenses   2,412   2,270   4,790   4,662
Total non-interest expense   12,301   11,484   24,244   22,858
Net income before income tax expense 8,765 9,359 16,208 17,775
Income tax expense   2,636   3,062   5,041   5,774
Net income $ 6,129 $ 6,297 $ 11,167 $ 12,001
 
Weighted average shares - basic 13,409 14,325 13,431 14,357
Weighted average shares - diluted 13,584 14,536 13,598 14,588
 
Basic earnings per share $ 0.46 $ 0.44 $ 0.83 $ 0.84
Diluted earnings per share 0.45 0.43 0.82 0.82
Cash dividend declared per share 0.17 0.16 0.34 0.31
 
Balance Sheet Data (at period end)
Total loans $ 1,320,509 $ 1,162,906
Allowance for loan losses 14,456 12,065
Total assets 1,596,320 1,425,299
Non-interest bearing deposits 182,580 184,000
Interest bearing deposits 1,080,752 901,316
Federal home loan bank advances 90,000 70,000
Subordinated debentures 60 90
Stockholders' equity 134,848 141,888
Total shares outstanding 13,424 14,298
Book value per share 10.05 9.92
Market value per share 21.36 23.76
S. Y. Bancorp, Inc. Financial Information
Second Quarter 2008 Earnings Release
         
 
Second Quarter Ended Six Months Ended
June 30, June 30,
  2008     2007     2008     2007  
Average Balance Sheet Data
Average loans $ 1,308,304 $ 1,160,064 $ 1,271,745 $ 1,151,437
Average assets 1,536,473 1,401,020 1,503,313 1,403,910
Average earning assets 1,443,187 1,304,508 1,409,710 1,309,397
Average deposits 1,187,325 1,075,459 1,152,600 1,086,489
Average long-term debt 91,379 60,420 90,721 58,218
Average interest bearing liabilities 1,195,756 1,048,552 1,168,069 1,056,183
Average stockholders' equity 134,696 141,133 133,298 140,252
 
Performance Ratios
Annualized return on average assets 1.60 % 1.80 % 1.49 % 1.72 %
Annualized return on average equity 18.30 % 17.90 % 16.85 % 17.26 %
Net interest margin, fully tax equivalent 4.07 % 4.26 % 4.01 % 4.24 %
Non-interest income to total revenue, fully tax equivalent
34.40 % 35.79 % 34.81 % 35.07 %
Efficiency ratio 55.19 % 53.22 % 56.19 % 53.87 %
 
Capital Ratios
Average stockholders' equity to average assets 8.77 % 10.07 % 8.87 % 9.99 %
Tier 1 risk-based capital 9.31 10.70
Total risk-based capital 10.32 11.62
Leverage 8.75 10.17
 
Loans by Type
Commercial and industrial $ 331,665 $ 310,697
Construction and development 182,041 127,793
Real estate mortgage - commercial investment 264,743 227,530
Real estate mortgage - owner occupied commercial 207,398 183,199
Real estate mortgage - 1-4 family residential 160,152 145,165
Home equity 142,154 143,015
Consumer 38,037 25,507
 
Asset Quality Data
Allowance for loan losses to total loans 1.09 % 1.04 %
Allowance for loan losses to average loans 1.14 % 1.05 %
Allowance for loan losses to non-performing loans 263.75 % 252.99 %
Nonaccrual loans $ 4,938 $ 4,055
Restructured loans - -
Loans - 90 days past due & still accruing 543 714
Total non-performing loans 5,481 4,769
OREO and repossessed assets 2,995 2,780
Total non-performing assets 8,476 7,549
Non-performing loans to total loans 0.42 % 0.41 %
Non-performing assets to total assets 0.53 % 0.53 %
Net charge-offs to average loans (2) 0.09 % 0.12 %
Net charge-offs $ 616 $ 578 $ 1,194 $ 1,378
 
Other Information
Total assets under management (in millions) $ 1,536 $ 1,669
Full-time equivalent employees 457 460
S. Y. Bancorp, Inc. Financial Information
Second Quarter 2008 Earnings Release
           
 
Five Quarter Comparison
  6/30/08   3/31/08   12/31/07   9/30/07   6/30/07
Income Statement Data
Net interest income, fully tax equivalent (1) $ 14,621 $ 13,508 $ 13,499 $ 13,802 $ 13,856
Net interest income $ 14,374 $ 13,261 $ 13,243 $ 13,541 $ 13,579
Provision for loan losses   975   1,225   1,435     850   460
Net interest income after provision for loan losses   13,399   12,036   11,808     12,691   13,119
Gain on the sale of securities - - - - -
Investment management and trust income 3,236 3,279 3,126 3,227 3,336
Service charges on deposit accounts 2,117 1,992 2,276 2,260 2,204
Bankcard transaction revenue 691 621 631 596 590
Gains on sales of mortgage loans held for sale 351 343 290 227 391
Brokerage commissions and fees 444 441 486 498 452
Bank owned life insurance 258 252 252 250 247
Other non-interest income   570   422   739     508   504
Total non-interest income   7,667   7,350   7,800     7,566   7,724
Salaries and employee benefits expense 7,367 7,188 6,898 6,865 6,632
Net occupancy expense 1,036 1,009 985 917 930
Data processing expense 896 752 998 979 1,051
Furniture and equipment expense 276 276 275 291 290
State bank taxes 314 340 340 326 311
Other non-interest expenses   2,412   2,378   2,650   2,149   2,270
Total non-interest expense   12,301   11,943   12,146   11,527   11,484
Net income before income tax expense 8,765 7,443 7,462 8,730 9,359
Income tax expense   2,636   2,405   1,298   2,843   3,062
Net income $ 6,129 $ 5,038 $ 6,164 $ 5,887 $ 6,297
 
Weighted average shares - basic 13,409 13,452 13,779 14,185 14,325
Weighted average shares - diluted 13,584 13,610 13,974 14,400 14,536
 
Basic earnings per share $ 0.46 $ 0.37 $ 0.45 $ 0.42 $ 0.44
Diluted earnings per share 0.45 0.37 0.44 0.41 0.43
Cash dividend declared per share 0.17 0.17 0.16 0.16 0.16
 
Balance Sheet Data (at period end)
Total loans $ 1,320,509 $ 1,289,913 $ 1,201,938 $ 1,156,899 $ 1,162,906
Allowance for loan losses 14,456 14,097 13,450 12,550 12,065
Total assets 1,596,320 1,517,258 1,482,219 1,410,453 1,425,299
Non-interest bearing deposits 182,580 175,028 170,477 167,614 184,000
Interest bearing deposits 1,080,752 972,980 936,230 899,815 901,316
Federal home loan bank advances 90,000 90,000 90,000 70,000 70,000
Subordinated debentures 60 60 90 90 90
Stockholders' equity 134,848 131,547 133,024 138,623 141,888
Total shares outstanding 13,424 13,406 13,600 14,005 14,298
Book value per share 10.05 9.81 9.78 9.90 9.92
Market value per share 21.36 23.24 23.94 27.04 23.76
S. Y. Bancorp, Inc. Financial Information
Second Quarter 2008 Earnings Release
         
Five Quarter Comparison
  6/30/08   3/31/08   12/31/07   9/30/07   6/30/07
Average Balance Sheet Data
Average loans $ 1,308,304 $ 1,235,185 $ 1,178,068 $ 1,155,211 $ 1,160,064
Average assets 1,536,473 1,470,153 1,436,666 1,409,653 1,401,020
Average earning assets 1,443,187 1,376,233 1,341,624 1,311,152 1,304,508
Average deposits 1,187,325 1,117,873 1,089,400 1,063,718 1,075,459
Average long-term debt 91,379 90,062 76,394 70,090 60,420
Average interest bearing liabilities 1,195,756 1,140,382 1,089,233 1,057,138 1,048,552
Average stockholders' equity 134,696 131,901 135,370 141,583 141,133
 
Performance Ratios
Annualized return on average assets 1.60% 1.38% 1.70% 1.66% 1.80%
Annualized return on average equity 18.30% 15.36% 18.07% 16.50% 17.90%
Net interest margin, fully tax equivalent 4.07% 3.95% 3.99% 4.18% 4.26%
Non-interest income to total revenue, fully
tax equivalent 34.40% 35.24% 36.62% 35.41% 35.79%
Efficiency ratio 55.19% 57.26% 57.03% 53.95% 53.22%
 
Capital Ratios
Average stockholders' equity to average assets 8.77% 8.97% 9.42% 10.04% 10.07%
Tier 1 risk-based capital 9.31% 9.07% 9.82% 10.47% 10.70%
Total risk-based capital 10.32% 10.06% 10.82% 11.42% 11.62%
Leverage 8.75% 8.85% 9.21% 9.81% 10.17%
 
Loans by Type
Commercial and industrial $ 331,665 $ 332,144 $ 309,506 $ 292,240 $ 298,006
Construction and development 182,041 174,604 144,668 137,659 145,468
Real estate mortgage - commercial investment 264,743 252,706 240,610 236,847 227,530
Real estate mortgage - owner occupied commercial 207,398 202,714 200,122 186,564 183,199
Real estate mortgage - 1-4 family residential 160,152 148,324 145,362 142,757 140,181
Home equity 142,154 136,064 136,962 136,064 143,015
Consumer 38,037 43,357 24,708 24,768 25,507
 
Asset Quality Data
Allowance for loan losses to total loans 1.09% 1.09% 1.12% 1.08% 1.04%
Allowance for loan losses to average loans 1.14% 1.14% 1.16% 1.09% 1.05%
Allowance for loan losses to non-performing loans 263.75% 307.19% 399.11% 295.71% 252.99%
Nonaccrual loans $ 4,938 $ 4,034 $ 2,964 $ 2,985 $ 4,055
Restructured loans - - - - -
Loans - 90 days past due & still accruing 543 555 406 1,259 714
Total non-performing loans 5,481 4,589 3,370 4,244 4,769
OREO and repossessed assets 2,995 3,715 3,831 3,436 2,780
Total non-performing assets 8,476 8,304 7,201 7,680 7,549
Non-performing loans to total loans 0.42% 0.36% 0.28% 0.37% 0.41%
Non-performing assets to total assets 0.53% 0.55% 0.49% 0.54% 0.53%
Net charge-offs to average loans (2) 0.09% 0.05% 0.05% 0.05% 0.05%
Net charge-offs $ 616 $ 578 $ 535 $ 365 $ 578
 
Other Information
Total assets under management (in millions) $ 1,536 $ 1,549 $ 1,669 $ 1,707 $ 1,669
Full-time equivalent employees 457 460 446 443 460
(1) - Interest income on a fully tax equivalent basis includes the additional amount of interest income that would have been earned if investments in certain tax-exempt interest earning assets had been made in assets subject to federal, state and local taxes yielding the same after-tax income.
 
(2) - Amounts not annualized
 
Certain prior-period amounts have been reclassified to conform with current presentation.

CONTACT:
S.Y. Bancorp, Inc.
Nancy B. Davis, 502-625-9176
Executive Vice President,
Treasurer and Chief Financial Officer