EX-99.1 2 a6690700ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

S.Y. Bancorp First Quarter Earnings Per Diluted Share Up 11% To $0.40 Versus $0.36 For the Year-Earlier Quarter

LOUISVILLE, Ky.--(BUSINESS WIRE)--April 20, 2011--S.Y. Bancorp, Inc. (NASDAQ:SYBT), parent company of Stock Yards Bank & Trust Company, with offices in the Louisville, Indianapolis and Cincinnati metropolitan markets, today reported improved financial results for the first quarter ended March 31, 2011. For the first quarter, net income per diluted share rose 11% compared with the prior-year period, underscoring continued strong results from core banking services. Ongoing loan growth over the past year, along with a year-over-year improvement in net interest margin, provided a 10% increase in net interest income for the first quarter of 2011. The following is a summary of the Company's reported results:

Quarter Ended March 31,

     

2011

   

2010

     

Change

Net income $ 5,491,000 $ 4,981,000

10%

Net income per share, diluted $ 0.40 $ 0.36 11%
Return on average equity 12.88% 12.76%
Return on average assets 1.17% 1.12%

Commenting on the announcement, David Heintzman, Chairman and Chief Executive Officer, said, "We are pleased to report a solid increase in first quarter earnings, together with continued balance sheet growth. These results demonstrate our strong presence in Louisville as well as the success of our market expansion strategies, through which we have extended our brand to Indianapolis and Cincinnati.

"With sustained growth in Louisville and the benefit of strategic market expansion, our loan portfolio has increased 5% over the past year," Heintzman continued. "At the same time, net interest margin has increased 16 basis points. We also continue to enjoy solid revenue diversification, reflected by higher investment management and trust services income. In our investment management and trust department, total assets under management have increased to almost $1.8 billion."

Concluding, Heintzman said, "While we are pleased to report solid improvements in many areas of our operations for the first quarter of 2011, which translated into higher year-over-year earnings, we know the economy continues to be uncertain, the real estate market remains stressed, and unemployment levels are troubling. Future trends for these economic factors will continue to dictate the overall economic recovery and, thus, will have a bearing on our performance in the year to come."

S.Y. Bancorp's total assets increased $117 million to $1.919 billion at March 31, 2011, from $1.802 billion at March 31, 2010. The Company's loan portfolio increased $77 million to $1.518 billion at March 31, 2011, compared with $1.441 billion at March 31, 2010. Likewise, total deposits increased $81 million to $1.516 billion at March 31, 2011, from $1.435 billion a year ago.

In the first quarter of 2011, capital levels continued to strengthen and remained well ahead of that required to be considered "well-capitalized" under regulatory standards – the highest capital rating for financial institutions. Importantly, this strengthening has occurred concurrently with growth in assets, not as a result of shrinkage of the balance sheet. The Tier 1 leverage ratio, Tier 1 risk-based capital ratio and Total risk-based capital ratio at March 31, 2011, were 10.45%, 12.12% and 13.98%, respectively, all exceeding the required minimums of 5%, 6% and 10%, respectively, necessary to be deemed a well-capitalized institution. The ratio of tangible common equity to total tangible assets (see reconciliation of GAAP/non-GAAP measures later in this release) was 9.00% as of March 31, 2011, up from 8.89% at December 31, 2010, and 8.70% at March 31, 2010. The Company intends to maintain capital ratios at historically high levels at least until the economy demonstrates sustained improvement.

Net interest income – the Company's largest source of revenue – increased $1.5 million in the first quarter of 2011 to $17.3 million from $15.8 million in the year-earlier period. This increase reflected continued growth in net interest-earning assets together with a higher quarter-over-quarter net interest margin. In the first quarter of 2011, net interest margin was 4.00%, up eight basis points from 3.92% in the fourth quarter of 2010, and up 16 basis points from 3.84% in the first quarter of 2010.

Non-performing loans (NPLs) totaled $15.1 million or 0.99% of total loans outstanding at March 31, 2011, down from $19.3 million or 1.28% of total period-end loans at December 31, 2010, but up from $13.5 million or 0.94% of period-end loans at March 31, 2010. The decrease from the fourth quarter of 2010 mainly reflected transfers of NPLs to other real estate owned (OREO). However, non-performing assets (NPAs), which include NPLs, OREO and repossessed assets, decreased slightly to $24.2 million or 1.26% of total assets at March 31, 2011, compared with $24.8 million or 1.30% of total assets at December 31, 2010, and increased from $16.1 million or 0.89% of total assets at March 31, 2010. At current levels, NPLs and NPAs remain at the high end of the Company's historic range for these metrics. Still, while first quarter peer data is not yet available, the Company's credit quality metrics have continued to trend significantly below those of $1-to-$2.5 billion publicly traded banks, which as of December 31, 2010, posted average NPLs and NPAs of 5.08% and 4.26%, respectively, according to a leading industry data service.

Even as the economy continues to show some signs of general improvement, this strengthening is not steady or broad-based, and the prolonged economic downturn experienced by many borrowers continues to affect credit quality. These conditions will likely have an ongoing effect on borrowers until the real estate market and overall business conditions improve. Additionally, should market conditions worsen and foreclosed assets increase significantly, the Company's flexibility to approach collateral sales in an orderly fashion to minimize losses may be reduced and management may be forced to liquidate problem loans more rapidly, thus increasing the loss on these assets.

Net charge-offs in the first quarter of 2011 totaled $1.4 million or 0.09% of average loans – a level more in line with historic results, improving from $2.6 million or 0.17% of average loans in the fourth quarter of 2010. In the first quarter of 2010, net charge-offs totaled $0.9 million or 0.06% of average loans.

The Company's loan loss provision for the first quarter of 2011 was $2.8 million compared with $3.7 million in the fourth quarter of 2010 and $2.7 million in the year-earlier period. Due primarily to a continued high level of NPLs and the Company's assessment of risk in the loan portfolio, the allowance as a percentage of loans continues to grow. The allowance increased to 1.78% of total loans at March 31, 2011, from 1.69% of total loans at December 31, 2010, and 1.51% at March 31, 2010. Since the Company is unable to determine how long business and economic conditions will continue to be depressed or when they will begin to improve meaningfully, S.Y. Bancorp intends to continue with its historically conservative stance toward credit quality, remaining cautious in assessing the potential risk in the loan portfolio. Accordingly, the Company expects the allowance for loan losses to remain at a high level compared with historic amounts, even though charge-offs may continue to moderate, until there are clearer signs of a sustained economic recovery and, thus, a reduction in overall credit risk.

Non-interest income was essentially flat at $8.0 million in the first quarter of 2011 and for the same quarter last year. An 8% increase in investment management and trust services income, along with higher bankcard transaction revenue and brokerage commissions and fees, was largely offset by lower other non-interest income, reflecting a larger increase in the value of a domestic private equity fund in the year-earlier quarter versus the current-year quarter.

Non-interest expense increased $1.0 million to $14.8 million in the first quarter of 2011 versus $13.8 million in the same period last year. The increase primarily reflected write-downs on OREO, office renovation costs, and normal annual salary increases. The Company's first quarter efficiency ratio was 57.66% compared with 57.21% in the first quarter of 2010.

In February 2011, S.Y. Bancorp's Board of Directors declared its regular quarterly cash dividend of $0.18 per share. The latest dividend was distributed on April 1, 2011, to stockholders of record as of March 14, 2011.

Louisville, Kentucky-based S.Y. Bancorp, Inc., with $1.9 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. The Company's common shares trade on the NASDAQ Global Select Market under the symbol SYBT. The trust preferred securities of S.Y. Bancorp Capital Trust II also trade on the NASDAQ Global Select Market under the symbol SYBTP.

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.

The following table provides a reconciliation of total stockholders' equity to tangible common equity in accordance with applicable regulatory requirements and GAAP. The Company provides the tangible common equity ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

S.Y. Bancorp, Inc.

Tangible Common Equity Ratio

(Amounts in thousands)

     
March 31, 2011 December 31,

2010

March 31, 2010
Total stockholders' equity (a) $ 173,361 $ 169,861 $ 157,336
Less goodwill   (682 )   (682 )   (682 )
Tangible common equity (c) $ 172,679   $ 169,179   $ 156,654  
 
Total assets (b) $ 1,919,323 $ 1,902,945 $ 1,801,977
Less goodwill   (682 )   (682 )   (682 )
Tangible assets (d) $ 1,918,641   $ 1,902,263   $ 1,801,295  
 
Total stockholders' equity to total assets (a/b) 9.03 % 8.93 % 8.73 %
Tangible common equity ratio (c/d)   9.00 %   8.89 %   8.70 %
S. Y. Bancorp, Inc. Financial Information
First Quarter 2011 Earnings Release
(In thousands unless otherwise noted)
    Three Months Ended
March 31,
  2011     2010
Income Statement Data
Net interest income, fully tax equivalent (1) $ 17,709 $ 16,071
Interest income
Loans $ 19,600 $ 19,214
Federal funds sold 46 25
Mortgage loans held for sale 63 66
Securities   1,579   1,652
Total interest income   21,288   20,957
Interest expense
Deposits 2,671 3,682
Securities sold under agreements to repurchase 67 87
Federal funds purchased 13 9
Other short-term borrowings - -
Federal Home Loan Bank advances 361 525
Subordinated debentures   861   860
Total interest expense   3,973   5,163
Net interest income 17,315 15,794
Provision for loan losses   2,800   2,695
Net interest income after provision for loan losses   14,515   13,099
Non-interest income
Investment management and trust income 3,537 3,261
Service charges on deposit accounts 1,924 1,998
Bankcard transaction revenue 877 751
Gains on sales of mortgage loans held for sale 382 385
Gain (loss) on the sale of securities - -
Brokerage commissions and fees 513 456
Bank owned life insurance 249 243
Other non-interest income   523   882
Total non-interest income   8,005   7,976
Non-interest expense
Salaries and employee benefits expense 8,400 8,089
Net occupancy expense 1,230 1,276
Data processing expense 1,137 1,137
Furniture and equipment expense 355 314
FDIC insurance expense 621 471
Other non-interest expenses   3,084   2,471
Total non-interest expense   14,827   13,758
Net income before income tax expense 7,693 7,317
Income tax expense   2,202   2,336
Net income $ 5,491 $ 4,981
 
Weighted average shares - basic 13,747 13,645
Weighted average shares - diluted 13,837 13,718
 
Basic earnings per share $ 0.40 $ 0.37
Diluted earnings per share 0.40 0.36
Cash dividend declared per share 0.18 0.17
Balance Sheet Data (at period end)      
Total loans $ 1,517,786 $ 1,441,196
Allowance for loan losses 26,956 21,811
Total assets 1,919,323 1,801,977
Non-interest bearing deposits 263,166 232,201
Interest bearing deposits 1,253,299 1,202,813
Federal home loan bank advances 60,439 60,450
Subordinated debentures 40,900 40,900
Stockholders' equity 173,361 157,336
Total shares outstanding 13,780 13,683
Book value per share 12.58 11.50
Market value per share 25.16 22.75
S. Y. Bancorp, Inc. Financial Information        
First Quarter 2011 Earnings Release  
 
Three Months Ended
March 31,
2011 2010
Average Balance Sheet Data
Average federal funds sold $ 62,694 $ 54,329
Average investment securities 217,827 198,387
Average loans 1,507,574 1,438,138
Average earning assets 1,793,309 1,695,669
Average assets 1,910,869 1,796,599
Average interest bearing deposits 1,245,660 1,211,468
Average total deposits 1,509,160 1,425,999
Average securities sold under agreement to repurchase 53,756 55,447
Average federal funds purchased 25,052 17,701
Average short-term borrowings 1,209 1,257
Average long-term debt 101,340 101,355
Average interest bearing liabilities 1,427,017 1,387,228
Average stockholders' equity 172,926 158,252
 
Performance Ratios
Annualized return on average assets 1.17% 1.12%
Annualized return on average equity 12.88% 12.76%
Net interest margin, fully tax equivalent 4.00% 3.84%
Non-interest income to total revenue, fully
tax equivalent 31.13% 33.17%
Efficiency ratio 57.66% 57.21%
 
Capital Ratios
Average stockholders' equity to average assets 9.05% 8.81%
Tier 1 risk-based capital 12.12% 11.83%
Total risk-based capital 13.98% 13.73%
Leverage 10.45% 10.26%
 
Loans by Type
Commercial and industrial $ 345,340 $ 299,878
Construction and development 158,559 200,529
Real estate mortgage - commercial investment 360,425 320,544
Real estate mortgage - owner occupied commercial 334,899 282,258
Real estate mortgage - 1-4 family residential 157,479 159,733
Home equity - first lien 39,781 39,676
Home equity - junior lien 85,870 101,126
Consumer 35,433 37,452
 
Asset Quality Data
Allowance for loan losses to total loans 1.78% 1.51%
Allowance for loan losses to average loans 1.79% 1.52%
Allowance for loan losses to non-performing loans 178.72% 161.78%
Nonaccrual loans $ 10,747 $ 9,546
Troubled debt restructuring 2,878 3,574
Loans - 90 days past due & still accruing 1,458 362
Total non-performing loans 15,083 13,482
OREO and repossessed assets 9,138 2,609
Total non-performing assets 24,221 16,091
Non-performing loans to total loans 0.99% 0.94%
Non-performing assets to total assets 1.26% 0.89%
Net charge-offs to average loans (2) 0.09% 0.06%
Net charge-offs $ 1,387 $ 884
 
Other Information
Total assets under management (in millions) $ 1,791 $ 1,574
Full-time equivalent employees 473 471
S. Y. Bancorp, Inc. Financial Information
First Quarter 2011 Earnings Release
         
Five Quarter Comparison
  3/31/11   12/31/10   9/30/10   6/30/10   3/31/10
Income Statement Data
Net interest income, fully tax equivalent (1) $ 17,709 $ 17,723 $ 17,597 $ 16,873 $ 16,071
Net interest income $ 17,315 $ 17,324 $ 17,214 $ 16,547 $ 15,794
Provision for loan losses   2,800   3,695   2,695   2,384   2,695
Net interest income after provision for loan losses   14,515   13,629   14,519   14,163   13,099
Investment management and trust income 3,537 3,722 3,045 3,232 3,261
Service charges on deposit accounts 1,924 2,165 2,250 2,187 1,998
Bankcard transaction revenue 877 862 837 863 751
Gains on sales of mortgage loans held for sale 382 890 601 445 385
Gain (loss) on the sale of securities - - 159 - -
Brokerage commissions and fees 513 652 525 503 456
Bank owned life insurance 249 253 251 248 243
Other non-interest income   523   1,034   594   445   882
Total non-interest income   8,005   9,578   8,262   7,923   7,976
Salaries and employee benefits expense 8,400 8,880 8,197 8,319 8,089
Net occupancy expense 1,230 1,226 1,136 1,296 1,276
Data processing expense 1,137 1,256 1,119 1,322 1,137
Furniture and equipment expense 355 321 316 321 314
FDIC Insurance expense 621 538 498 531 471
Other non-interest expenses   3,084   2,862   2,643   2,592   2,471
Total non-interest expense   14,827   15,083   13,909   14,381   13,758
Net income before income tax expense 7,693 8,124 8,872 7,705 7,317
Income tax expense   2,202   2,073   2,507   2,149   2,336
Net income $ 5,491 $ 6,051 $ 6,365 $ 5,556 $ 4,981
 
Weighted average shares - basic 13,747 13,720 13,701 13,690 13,645
Weighted average shares - diluted 13,837 13,822 13,807 13,790 13,718
 
Basic earnings per share $ 0.40 $ 0.44 $ 0.46 $ 0.41 $ 0.37
Diluted earnings per share 0.40 0.44 0.46 0.40 0.36
Cash dividend declared per share 0.18 0.18 0.17 0.17 0.17
 
Balance Sheet Data (at period end)
Total loans $ 1,517,786 $ 1,508,425 $ 1,489,398 $ 1,477,304 $ 1,441,196
Allowance for loan losses 26,956 25,543 24,433 22,933 21,811
Total assets 1,919,323 1,902,945 1,881,122 1,859,478 1,801,977
Non-interest bearing deposits 263,166 247,465 251,481 250,427 232,201
Interest bearing deposits 1,253,299 1,246,003 1,211,298 1,223,404 1,202,813
Federal home loan bank advances 60,439 60,442 80,445 70,448 60,450
Subordinated debentures 40,900 40,900 40,900 40,900 40,900
Stockholders' equity 173,361 169,861 167,609 162,035 157,336
Total shares outstanding 13,780 13,737 13,707 13,695 13,683
Book value per share 12.58 12.37 12.23 11.83 11.50
Market value per share 25.16 24.55 24.82 22.98 22.75
S. Y. Bancorp, Inc. Financial Information
First Quarter 2011 Earnings Release
         
Five Quarter Comparison
  3/31/11     12/31/10     9/30/10     6/30/10     3/31/10  
Average Balance Sheet Data
Average loans $ 1,507,574 $ 1,492,674 $ 1,484,741 $ 1,460,147 $ 1,438,138
Average assets 1,910,869 1,907,385 1,871,048 1,813,302 1,796,599
Average earning assets 1,793,309 1,794,477 1,760,255 1,703,151 1,695,669
Average total deposits 1,509,160 1,484,224 1,464,119 1,441,865 1,425,999
Average long-term debt 101,340 115,039 117,650 105,964 101,355
Average interest bearing liabilities 1,427,017 1,442,271 1,412,640 1,391,586 1,387,228
Average stockholders' equity 172,926 170,320 165,578 159,983 158,252
 
Performance Ratios
Annualized return on average assets 1.17 % 1.26 % 1.35 % 1.23 % 1.12 %
Annualized return on average equity 12.88 % 14.10 % 15.25 % 13.93 % 12.76 %
Net interest margin, fully tax equivalent 4.00 % 3.92 % 3.97 % 3.97 % 3.84 %
Non-interest income to total revenue, fully
tax equivalent 31.13 % 35.08 % 31.95 % 31.95 % 33.17 %
Efficiency ratio 57.66 % 55.25 % 53.79 % 58.00 % 57.21 %
 
Capital Ratios
Average stockholders' equity to average assets 9.05 % 8.93 % 8.85 % 8.82 % 8.81 %
Tier 1 risk-based capital 12.12 % 12.06 % 11.99 % 11.83 % 11.83 %
Total risk-based capital 13.98 % 13.93 % 13.87 % 13.71 % 13.73 %
Leverage 10.45 % 10.31 % 10.29 % 10.36 % 10.26 %
 
Loans by Type
Commercial and industrial $ 345,340 $ 343,956 $ 336,594 $ 315,462 $ 299,878
Construction and development 158,559 159,482 174,546 182,436 200,529
Real estate mortgage - commercial investment 360,425 343,163 333,568 337,830 320,544
Real estate mortgage - owner occupied commercial 334,899 336,032 312,137 304,540 282,258
Real estate mortgage - 1-4 family residential 157,479 157,983 159,604 161,466 159,733
Home equity - 1st lien 39,781 39,449 40,428 41,043 39,676
Home equity - junior lien 85,870 91,813 95,368 98,119 101,126
Consumer 35,433 36,547 37,153 36,408 37,452
 
Asset Quality Data
Allowance for loan losses to total loans 1.78 % 1.69 % 1.64 % 1.55 % 1.51 %
Allowance for loan losses to average loans 1.79 % 1.71 % 1.65 % 1.57 % 1.52 %
Allowance for loan losses to non-performing loans 178.72 % 132.25 % 195.54 % 166.13 % 161.78 %
Nonaccrual loans $ 10,747 $ 14,388 $ 8,485 $ 9,640 $ 9,546
Troubled debt restructuring 2,878 2,882 3,544 3,548 3,574
Loans - 90 days past due & still accruing 1,458 2,044 466 616 362
Total non-performing loans 15,083 19,314 12,495 13,804 13,482
OREO and repossessed assets 9,138 5,445 4,943 2,038 2,609
Total non-performing assets 24,221 24,759 17,438 15,842 16,091
Non-performing loans to total loans 0.99 % 1.28 % 0.84 % 0.93 % 0.94 %
Non-performing assets to total assets 1.26 % 1.30 % 0.93 % 0.85 % 0.89 %
Net charge-offs to average loans (2) 0.09 % 0.17 % 0.08 % 0.09 % 0.06 %
Net charge-offs 1,387 $ 2,585 $ 1,195 $ 1,262 $ 884
 
Other Information
Total assets under management (in millions) $ 1,791 $ 1,698 $ 1,578 $ 1,499 $ 1,574
Full-time equivalent employees 473 475 473 474 471
 
(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) - Interim ratios 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