Stock Yards Bancorp (SYBT) 10-Q 2003 Q3 Quarterly report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                           to                          .
Commission file number  1-13661

S. Y. BANCORP, INC.

(Exact name of registrant as specified in its charter)

Kentucky	61-1137529
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1040 East Main Street, Louisville, Kentucky, 40206
(Address of principal executive offices)
(Zip Code)
(502) 582-2571
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes  ý    No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value – 13,564,916

shares issued and outstanding at November 4, 2003

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
The following consolidated financial statements of S.Y. Bancorp, Inc. and Subsidiaries, Stock Yards Bank & Trust Company and S.Y. Bancorp Capital Trust I, are submitted herewith:
–	Unaudited Consolidated Balance Sheets September 30, 2003 and December 31, 2002
–	Unaudited Consolidated Statements of Income for the three months ended September 30, 2003 and 2002
–	Unaudited Consolidated Statements of Income for the nine months ended September 30, 2003 and 2002
–	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002
–	Unaudited Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2003
–	Unaudited Consolidated Statement of Comprehensive Income for the three months ended September 30, 2003 and 2002
–	Unaudited Consolidated Statement of Comprehensive Income for the nine months ended September 30, 2003 and 2002
–	Notes to Unaudited Consolidated Financial Statements

S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

September 30, 2003 and December 31, 2002

(In thousands, except share data)

	September 30, 2003		December 31, 2002
Assets
Cash and due from banks	$	31,116	34,918
Federal funds sold	86		4,582
Mortgage loans held for sale	10,883		27,534
Securities available for sale (amortized cost $169,230 in 2003 and $114,046 in 2002)	172,246		117,760
Securities held to maturity (approximate fair value $6,480 in 2003 and $9,859 in 2002)	6,098		9,373
Loans	860,584		818,573
Less allowance for loan losses	11,365		11,705
Net loans	849,219		806,868
Premises and equipment, net	24,770		22,021
Accrued interest receivable and other assets	21,115		16,624
Total assets	$	1,115,533	1,039,680
Liabilities and Stockholders’ Equity
Deposits:
Non-interest bearing	$	147,275	131,505
Interest bearing	747,375		729,582
Total deposits	894,650		861,087
Securities sold under agreements to repurchase and federal funds purchased	82,637		52,659
Other short-term borrowings	2,005		2,657
Accrued interest payable and other liabilities	19,022		16,970
Long-term debt	210		240
Long-term debt - trust preferred securities	20,000		20,000
Total liabilities	1,018,524		953,613
Stockholders’ equity:
Preferred stock, no par value; 1,000,000 shares authorized; no shares issued or outstanding	—		—
Common stock, no par value; 20,000,000 shares authorized; 13,554,976 and 13,433,062 shares issued and outstanding in 2003 and 2002, respectively	6,061		5,858
Surplus	15,901		14,889
Retained earnings	73,283		63,081
Accumulated other comprehensive income	1,764		2,239
Total stockholders’ equity	97,009		86,067
Total liabilities and stockholders’ equity	$	1,115,533	1,039,680

See accompanying notes to unaudited consolidated financial statements.

All share information has been restated to reflect the September 2003 two-for-one stock split.

2

S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

For the three months ended September 30, 2003 and 2002

(In thousands, except share and per share data)

	2003		2002
Interest income:
Loans	$	13,540	14,376
Federal funds sold	90		176
Mortgage loans held for sale	250		145
U.S. Treasury and Federal agencies	937		942
Obligations of states and political subdivisions	278		288
Total interest income	15,095		15,927
Interest expense:
Deposits	3,564		4,985
Securities sold under agreements to repurchase and federal funds purchased	146		208
Other short-term borrowings	3		8
Long-term debt	2		2
Long-term debt - trust preferred securities	450		450
Total interest expense	4,165		5,653
Net interest income	10,930		10,274
Provision for loan losses	300		1,150
Net interest income after provision for loan losses	10,630		9,124
Non-interest income:
Investment management and trust services	2,071		2,002
Service charges on deposit accounts	2,205		1,908
Bankcard transaction revenue	246		226
Gains on sales of mortgage loans held for sale	1,201		1,024
Gains on sales of securities available for sale	10		—
Brokerage commissions and fees	372		291
Other	649		423
Total non-interest income	6,754		5,874
Non-interest expenses:
Salaries and employee benefits	5,966		5,198
Net occupancy expense	677		544
Data processing expense	794		756
Furniture and equipment expense	273		216
State bank taxes	270		300
Other	2,005		1,895
Total non-interest expenses	9,985		8,909
Income before income taxes	7,399		6,089
Income tax expense	2,418		2,001
Net income	$	4,981	4,088
Net income per share:
Basic	$	0.37	0.30
Diluted	$	0.36	0.29
Average common shares:
Basic	13,545,601		13,451,014
Diluted	13,972,646		13,961,024

See accompanying notes to unaudited consolidated financial statements.

All share and per share information has been restated to reflect the September 2003 two-for-one stock split.

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S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

For the nine months ended September 30, 2003 and 2002

(In thousands, except share and per share data)

	2003		2002
Interest income:
Loans	$	40,637	42,886
Federal funds sold	298		353
Mortgage loans held for sale	650		302
U.S. Treasury and Federal agencies	2,717		2,744
Obligations of states and political subdivisions	799		880
Total interest income	45,101		47,165
Interest expense:
Deposits	11,437		15,131
Securities sold under agreements to repurchase and federal funds purchased	474		690
Other short-term borrowings	6		21
Long-term debt	6		7
Long-term debt - trust preferred securities	1,350		1,350
Total interest expense	13,273		17,199
Net interest income	31,828		29,966
Provision for loan losses	1,900		3,150
Net interest income after provision for loan losses	29,928		26,816
Non-interest income:
Investment management and trust services	6,156		6,065
Service charges on deposit accounts	6,184		5,439
Bankcard transaction revenue	781		645
Gains on sales of mortgage loans held for sale	3,430		1,877
Gains on sales of securites available for sale	10		—
Brokerage commissions and fees	913		866
Other	1,873		1,250
Total non-interest income	19,347		16,142
Non-interest expenses:
Salaries and employee benefits	17,409		14,910
Net occupancy expense	1,910		1,538
Data processing expense	2,550		2,256
Furniture and equipment expense	753		682
State bank taxes	818		775
Other	6,219		5,716
Total non-interest expenses	29,659		25,877
Income before income taxes	19,616		17,081
Income tax expense	6,369		5,626
Net income	$	13,247	11,455
Net income per share:
Basic	$	0.98	0.85
Diluted	$	0.95	0.82
Average common shares:
Basic	13,513,026		13,418,922
Diluted	13,952,431		13,941,414

See accompanying notes to unaudited consolidated financial statements.

All share and per share information has been restated to reflect the September 2003 two-for-one stock split.

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S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

For the nine months ended September 30, 2003 and 2002

(In thousands)

	2003			2002
Operating activities:
Net income	$	13,247		11,455
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,900			3,150
Depreciation, amortization and accretion, net	2,134			1,589
Gains on sales of mortgage loans held for sale	(3,430		)	(1,877	)
Origination of mortgage loans held for sale	(205,531		)	(103,564	)
Proceeds from sale of mortgage loans held for sale	225,612			99,892
Gains on sales of securities available for sale	(10		)	—
Loss on the sale of premises and equipment	—			91
Loss (gain) on the sale of other real estate	24			(4	)
Income tax benefit of stock options exercised	335			327
Increase in accrued interest receivable and other assets	(9,773		)	(531	)
Increase in accrued interest payable and other liabilities	1,908			672
Net cash provided by operating activities	26,416			11,200
Investing activities:
Net decrease (increase) in federal funds sold	4,496			(28,080	)
Purchases of securities available for sale	(105,911		)	(87,610	)
Proceeds from sales of securities available for sale	1,014			—
Proceeds from maturities of securities available for sale	49,539			14,605
Proceeds from maturities of securities held to maturity	3,284			3,576
Net increase in loans	(39,746		)	(20,350	)
Purchases of premises and equipment	(4,708		)	(3,805	)
Proceeds from sales of other real estate	976			347
Net cash used by investing activities	(91,056		)	(121,317	)
Financing activities:
Net increase in deposits	33,563			135,610
Net increase (decrease) in securities sold under agreements to repurchase and federal funds purchased	29,978			(25,272	)
Net (decrease) increase in other short-term borrowings	(652		)	1,520
Repayments of long-term debt	(30		)	(30	)
Issuance of common stock for options and dividend reinvestment plan	921			928
Common stock repurchases	(41		)	(437	)
Cash dividends paid	(2,901		)	(2,479	)
Net cash provided by financing activities	60,838			109,840
Net decrease in cash and cash equivalents	(3,802		)	(277	)
Cash and cash equivalents at beginning of period	34,918			29,803
Cash and cash equivalents at end of period	$	31,116		29,526
Supplemental cash flow information:
Income tax payments	$	5,550		5,550
Cash paid for interest	$	13,244		17,166

See accompanying notes to unaudited consolidated financial statements.

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S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statement of Changes in Stockholders’ Equity

For the nine months ended September 30, 2003

(In thousands, except share and per share data)

	Common Stock					Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total
	Number of Shares		Amount
Balance December 31, 2002	13,433,062		$	5,858		$	14,889		$	63,081		$	2,239		$	86,067
Net income	—		—			—			13,247			—			13,247
Change in other comprehensive income, net of tax	—		—			—			—			(475		)	(475		)
Shares issued for stock options exercised and employee benefit plans	124,340		207			1,049			—			—			1,256
Cash dividends, $0.23 per share	—		—			—			(3,045		)	—			(3,045		)
Shares repurchased	(2,426	)	(4		)	(37		)	—			—			(41		)
Balance September 30, 2003	13,554,976		$	6,061		$	15,901		$	73,283		$	1,764		$	97,009

See accompanying notes to unaudited consolidated financial statements.

All share and per share information has been restated to reflect the September 2003 two-for-one stock split.

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S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income

For the three months ended September 30, 2003 and 2002

(In thousands)

	2003			2002
Net income	$	4,981		4,088
Other comprehensive income, net of tax:
Unrealized holding (losses) gains on securities available for sale arising during the period	(907		)	887
Less reclassification adjustment for gains included in net income	7			—
Other comprehensive (loss) income	(900		)	887
Comprehensive income	$	4,081		4,975

See accompanying notes to unaudited consolidated financial statements.

7

S.Y. BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income

For the nine months ended September 30, 2003 and 2002

(In thousands)

	2003			2002
Net income	$	13,247		11,455
Other comprehensive income, net of tax:
Unrealized holding (losses) gains on securities available for sale arising during the period	(482		)	1,804
Less reclassification adjustment for gains included in net income	7			—
Other comprehensive (loss) income	(475		)	1,804
Comprehensive income	$	12,772		13,259

See accompanying notes to unaudited consolidated financial statements.

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S.Y. BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1)Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The consolidated financial statements of S.Y. Bancorp, Inc. (Bancorp) and its subsidiaries reflect all adjustments (consisting only of adjustments of a normal recurring nature) which are, in the opinion of management, necessary for a fair presentation of financial condition and results of operations for the interim periods.

The unaudited consolidated financial statements include the accounts of S.Y. Bancorp, Inc. and its wholly-owned subsidiaries, Stock Yards Bank & Trust Company and S.Y. Bancorp Capital Trust I.  All significant intercompany transactions have been eliminated in consolidation.

A description of other significant accounting policies is presented in the notes to the Consolidated Financial Statements for the year ended December 31, 2002 included in S.Y. Bancorp, Inc.’s Annual Report on Form 10-K for the year then ended.

Interim results for the three and nine month periods ended September 30, 2003 are not necessarily indicative of the results for the entire year.

All common stock share and per share information has been restated to reflect the September 2003 two for one stock split.

Stock-Based Compensation

As permitted by Statement of Financial Accounting Standards (SFAS) No. 148, “ Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of FASB Statement No. 123,” Bancorp will continue to apply the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock-Based Compensation,” for all stock option grants and has elected to disclose pro forma net income and earnings per share amounts as if the fair-value based method had been applied in measuring compensation costs.

No stock based compensation is reflected in net income because all options granted under the current stock incentive plan have an exercise price equal to the market price of Bancorp’s stock at the grant date.  Bancorp discloses proforma net income and earnings per share in the notes to its consolidated financial statements as if compensation were measured at the date of grant based on the fair value of the award and recognized over the service period.

9

Bancorp’s as reported and proforma earnings per share information for the three months ended September 30 follows:

	Three Months Ended September 30
(In thousands, except per share data)	2003		2002
Net income, as reported	$	4,981	$	4,088
Less: stock-based compensation expense determined under fair value method, net of tax	54		42
Proforma net income	$	4,927	$	4,046
Basic EPS:
As reported	$	0.37	$	0.30
Proforma	0.36		0.30
Diluted EPS:
As reported	0.36		0.29
Proforma	0.35		0.29

Bancorp’s as reported and proforma earnings per share information for the nine months ended September 30 follows:

	Nine Months Ended September 30
(In thousands, except per share data)	2003		2002
Net income, as reported	$	13,247	$	11,455
Less: stock-based compensation expense determined under fair value method, net of tax	163		127
Proforma net income	$	13,084	$	11,328
Basic EPS:
As reported	$	0.98	$	0.85
Proforma	0.97		0.84
Diluted EPS:
As reported	0.95		0.82
Proforma	0.94		0.81

Options were granted in the third quarter of 2003 to acquire 2,000 shares of common stock at a strike price equal to the market value of the Bancorp’s common stock at the time of the grant, or $18.95.  These options are subject to a vesting schedule of 20% per year, and the fair value of each option was $4.16.  No options were granted in the first nine months of 2002.

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(2)Allowance for Loan Losses

An analysis of the changes in the allowance for loan losses for the nine months ended September 30 follows:

(In thousands)	2003			2002
Beginning balance	$	11,705		10,965
Provision for loan losses	1,900			3,150
Loans charged off	(2,843		)	(2,703	)
Recoveries	603			118
Ending balance	$	11,365		11,530

(3)Long-term Debt – Trust Preferred Securities

On June 1, 2001, S.Y. Bancorp Capital Trust I (Trust), a Delaware statutory business trust and 100%-owned finance subsidiary of Bancorp, issued $20.0 million of 9.00% Cumulative Trust Preferred Securities (Securities) which will mature on June 30, 2031, but prior redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules.  The principal asset of S.Y. Bancorp Capital Trust I is a $20.0 million subordinated debenture of Bancorp.  The subordinated debenture bears interest at the rate of 9.00% and matures June 30, 2031, subject to prior redemption under certain circumstances.  Bancorp owns all of the common securities of the Trust.

The Securities, the assets of the Trust, and the common securities issued by the Trust are redeemable in whole or in part on or after June 30, 2006, or at any time in whole, but not in part, from the date of issuance upon the occurrence of certain events.  The Securities are included in Tier 1 capital for regulatory capital adequacy determination purposes, subject to certain limitations.

The obligations of Bancorp with respect to the issuance of the Securities constitute a full and unconditional guarantee by Bancorp of the Trust’s obligation with respect to the Securities.

Subject to certain exceptions and limitations, Bancorp may, from time to time, defer subordinated debenture interest payments, which would result in a deferral of distribution payments on the related Securities and, with certain exceptions, prevent Bancorp from declaring or paying cash distributions on Bancorp’s common stock or debt securities that rank pari passu or junior to the subordinated debenture.

(4)Intangible Assets

Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets” (“SFAS No. 142”), requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually.  Bancorp currently has unamortized goodwill remaining from the acquisition of a bank in southern Indiana in the amount of $682,000.  This goodwill is assigned to the commercial and retail banking segment of Bancorp.

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(5)Commitments to Extend Credit

As of September 30, 2003, the Company had various commitments outstanding that arose in the normal course of business, such as standby letters of credit and commitments to extend credit, which are properly not reflected in the consolidated financial statements. In management’s opinion, commitments to extend credit of $200,578,000, including standby letters of credit of $10,257,000, represent normal banking transactions, and no significant losses are anticipated to result therefrom as of September 30, 2003. Commitments to extend credit were $174,707,000, including letters of credit of $10,563,000, as of December 31, 2002.  The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments is represented by the contractual amount of these instruments. The Company uses the same credit and collateral policies in making commitments and conditional guarantees as for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements.

(6)Preferred Stock

At Bancorp’s annual meeting of shareholders held in April 2003, the shareholders approved an amendment to the Articles of Incorporation to create a class of preferred stock and authorize 1,000,000 shares of this preferred stock.  The relative rights, preferences and other terms of this stock or any series within the class will be determined by the Board of Directors prior to any issuance.  Some of this preferred stock will be used in connection with a shareholders’ rights plan upon the occurrence of certain triggering events.  None of this stock has been issued as of September 30, 2003.

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(7)Net Income Per Share

The following table reflects, for the three and nine months periods ended September 30, net income (the numerator) and average shares outstanding (the denominator) for the basic and diluted net income per share computations (in thousands except per share data):

	Three Months Ended September 30			Nine Months Ended September 30
	2003		2002	2003	2002
Net income, basic and diluted	$	4,981	4,088	13,247	11,455
Average shares outstanding	13,546		13,451	13,513	13,419
Effect of dilutive securities	427		510	439	522
Average shares outstanding including dilutive securities	13,973		13,961	13,952	13,941
Net income per share, basic	$	0.37	0.30	0.98	0.85
Net income per share, diluted	$	0.36	0.29	0.95	0.82

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(8)Segments

The Bank’s, and thus Bancorp’s, principal activities include commercial and retail banking, investment management and trust, and mortgage banking.  Commercial and retail banking provides a full range of loans and deposit products to individual consumers and businesses.  Investment management and trust provides wealth management services including brokerage, estate planning and administration, retirement plan management, and custodian or trustee services. Mortgage banking originates residential loans and sells them, servicing released, in the secondary market.

The financial information for each business segment reflects that which is specifically identifiable or allocated based on an internal allocation method.  The measurement of the performance of the business segments is based on the management structure of the Bank and is not necessarily comparable with similar information for any other financial institution.  The information presented is also not necessarily indicative of the segments’ operations, if they were independent entities.

Selected financial information by business segment for the three and nine months ended September 30, 2003 and 2002 follows:

	Three Months Ended September 30			Nine Months Ended September 30
(In thousands)	2003		2002	2003	2002
Net interest income:
Commercial and retail banking	$	10,459	10,083	30,472	29,523
Investment management and trust	268		32	774	57
Mortgage banking	203		159	582	386
Total	$	10,930	10,274	31,828	29,966
Non-interest income:
Commercial and retail banking	$	2,756	2,384	7,893	6,938
Investment management and trust	2,443		2,293	7,069	6,931
Mortgage banking	1,555		1,197	4,385	2,273
Total	$	6,754	5,874	19,347	16,142
Net income:
Commercial and retail banking	$	3,748	3,115	9,809	9,145
Investment management and trust	823		619	2,329	1,757
Mortgage banking	410		354	1,109	553
Total	$	4,981	4,088	13,247	11,455

Principally, all of the net assets of S.Y. Bancorp, Inc. are involved in the commercial and retail banking segment.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

This item discusses the results of operations for S.Y. Bancorp, Inc. (Bancorp), and its subsidiaries, Stock Yards Bank & Trust Company and S.Y. Bancorp Capital Trust I for the three and nine months ended September 30, 2003 and compares that period with the same period of the previous year.  Unless otherwise indicated, all references in this discussion to the “Bank” include Bancorp.  In addition, the discussion describes the significant changes in the financial condition of Bancorp and the Bank that have occurred during the first nine months of 2003 compared to December 31, 2002.  This discussion should be read in conjunction with the unaudited consolidated financial statements and accompanying notes presented in Part I, Item 1 of this report.

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

(a)Results Of Operations

Net income of $4,981,000 for the three months ended September 30, 2003 increased $893,000 or 21.8% from $4,088,000 for the comparable 2002 period.  Basic net income per share was $0.37 for the third quarter of 2003, an increase of 23.3% from the $0.30 for the same period in 2002.  Net income on a diluted basis was $0.36 for the third quarter of 2003 compared to $0.29 for the third quarter of 2002.  This represents a 24.1% increase.  Annualized return on average assets and annualized return on average stockholders’ equity were 1.78% and 20.76%, respectively, for the third quarter of 2003, compared to 1.60% and 19.85%, respectively, for the same period in 2002.

Net income of $13,247,000 for the nine months ended September 30, 2003 increased $1,792,000 or 15.6% from the comparable 2002 period.  Basic net income per share was $0.98 for the first nine months of 2003, compared to $0.85, representing an increase of 15.3% from the same period in 2002.  Net income on a diluted basis was $0.95 for the first nine months of 2003 compared to $0.82 for the first nine months of 2002. This represents a 15.9% increase.  Annualized return on average assets and annualized return on average stockholders’ equity were 1.65% and 19.25%, respectively, for the first nine months of 2003, compared to 1.56% and 19.74%, respectively, for the same period in 2002.

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The following paragraphs provide a more detailed analysis of the significant factors affecting operating results and financial condition.

Net Interest Income

	Three Months Ended September 30					Nine Months Ended September 30
(Dollars in thousands)	2003			2002		2003		2002
Interest income	$	15,095		15,927		45,101		47,165
Tax equivalent	181			178		528		498
Interest income, tax equivalent basis	15,276			16,105		45,629		47,663
Total interest expense	4,165			5,653		13,273		17,199
Net interest income, tax equivalent basis (1)	$	11,111		10,452		32,356		30,464
Net interest spread (2), annualized	3.86		%	3.86	%	3.87	%	3.92	%
Net interest margin (3), annualized	4.23		%	4.33	%	4.27	%	4.41	%

Notes:

(1)Net interest income, the most significant component of the Bank’s earnings, is total interest income less total interest expense.  The level of net interest income is determined by the mix and volume of interest earning assets, interest bearing deposits and borrowed funds, and by changes in interest rates.

(2)Net interest spread is the difference between the taxable equivalent rate earned on interest earning assets less the rate expensed on interest bearing liabilities.

(3)Net interest margin represents net interest income on a taxable equivalent basis as a percentage of average interest earning assets.  Net interest margin is affected by both the interest rate spread and the level of non-interest bearing sources of funds, primarily consisting of demand deposits and stockholders’ equity.

Fully taxable equivalent net interest income of $11,111,000 for the three months ended September 30, 2003 increased $659,000 or 6.3% from $10,452,000 when compared to the same period last year.  Net interest spread and net interest margin were 3.86% and 4.23%, respectively, for the third quarter of 2003 and 3.86% and 4.33%, respectively, for the third quarter of 2002.  Fully taxable equivalent net interest income of $32,356,000 for the nine months ended September 30, 2003 increased $1,892,000 or 6.2% from the same period last year.  Net interest spread and net interest margin were 3.87% and 4.27%, respectively, for the first nine months of 2003 and 3.92% and 4.41%, respectively, for the first nine months of 2002. The decrease in net interest spread and margin for the quarter and the year can be attributed to the decline in rates on earning assets that were partially offset by declines in rates on interest bearing liabilities.  Management expects continued margin contraction during 2003 as rates on interest earning assets are projected to decline further.  Margin contraction could range from five to ten basis points depending on such factors as competitive rate pressures or unforeseen changes in the Bank’s

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funding mix.  This estimate does not include effects from any further potential interest rate cuts by the Federal Reserve.

Average earning assets increased $88,731,000, or 9.6% to $1,013,343,000 for the first nine months of 2003 compared to 2002, reflecting continued growth in the loan portfolio.  Average interest bearing liabilities increased $53,618,000 or 6.9% to $827,161,000 for the first nine months of 2003 compared to 2002 primarily due to increases in interest bearing deposits.

Managing interest rate risk is fundamental for the financial services industry. The primary objective of interest rate risk management is to neutralize effects of interest rate changes on net income.  Bank management evaluates interest rate sensitivity while attempting to optimize net interest income within the constraints of prudent capital adequacy, liquidity needs, market opportunities and customer requirements.

Bancorp uses an earnings simulation model to measure and evaluate the impact of changing interest rates on earnings.  The simulation model is designed to reflect the dynamics of all interest earning assets and interest bearing liabilities, combining factors affecting rate sensitivity into a one year forecast.  By forecasting management’s estimate of the most likely rate environment and adjusting those rates up and down the model can reveal approximate interest rate risk exposure.  The September 30, 2003 simulation analysis indicates that an increase in interest rates would have a positive effect on net interest income, and a decrease in interest rates would have a negative effect on net interest income.

Interest Rate Simulation Sensitivity Analysis

	Net Interest Income Change		Net Income Change
Increase 200bp	11.94	%	21.52	%
Increase 100bp	4.65		8.37
Decrease 100bp	(7.11	)	(12.82	)
Decrease 200bp	(14.13	)	(25.47	)

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Provision for Loan Losses

The allowance for loan losses is based on management’s continuing review of individual credits, loss experience, current economic conditions, the risk characteristics of the various categories of loans, and such other factors that, in management’s judgment, deserve current recognition in estimating loan losses.

An analysis of the changes in the allowance for loan losses and selected ratios follows:

	Nine Months Ended September 30
(Dollars in thousands)	2003			2002
Balance at the beginning of the period	$	11,705		10,965
Provision for loan losses	1,900			3,150
Loan charge-offs, net of recoveries	(2,240		)	(2,585	)
Balance at the end of the period	$	11,365		11,530
Average loans, net of unearned income	$	846,905		789,274
Provision for loan losses to average loans (1)	0.22		%	0.40	%
Net loan charge-offs to average loans (1)	0.26		%	0.33	%
Allowance for loan losses to average loans	1.34		%	1.46	%
Allowance for loan losses to period-end loans	1.32		%	1.45	%

(1) Amounts not annualized

The provision for loan losses declined 39.7% in 2003 as compared to 2002 in consideration of several factors, all of which estimate the level of inherent risk in the loan portfolio.  The credit quality of the Bank’s loan portfolio showed improvement during the third quarter of 2003 as internal loan quality metrics including loss experience, information about specific borrower situations and past due levels were at their best levels in several quarters.  Management considers the allowance for loan losses adequate to cover losses inherent in the loan portfolio.

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Non-interest Income and Expenses

The following table sets forth the major components of non-interest income and expenses for the three and nine months ended September 30, 2003 and 2002.

	Three Months Ended September 30			Nine Months Ended September 30
(In thousands)	2003		2002	2003	2002
Non-interest income:
Investment management and trust services	$	2,071	2,002	6,156	6,065
Service charges on deposit accounts	2,205		1,908	6,184	5,439
Bankcard transaction revenue	246		226	781	645
Gains on sales of mortgage loans held for sale	1,201		1,024	3,430	1,877
Brokerage commissions and fees	372		291	913	866
Other	659		423	1,883	1,250
Total non-interest income	$	6,754	5,874	19,347	16,142
Non-interest expenses:
Salaries and employee benefits	5,966		5,198	17,409	14,910
Net occupancy expense	677		544	1,910	1,538
Data processing expense	794		756	2,550	2,256
Furniture and equipment expense	273		216	753	682
State bank taxes	270		300	818	775
Other	2,005		1,895	6,219	5,716
Total non-interest expenses	$	9,985	8,909	29,659	25,877

Non-interest income increased $880,000, or 15.0%, for the third quarter of 2003, compared to the same period in 2002.  Non-interest income increased $3,205,000 or 19.9% for the first nine months of 2003 compared to the same period of 2002.

Investment management and trust services income increased $69,000 or 3.4% in the third quarter of 2003, as compared to the same period in 2002.  Investment management and trust services income increased $91,000 or 1.5% in the first three quarters of 2003 as compared to the same period in 2002. Trust assets under management at September 30, 2003 were $1.26 billion, compared to $1.15 billion at December 31, 2002 and $1.11 billion at September 30, 2002.  Trust assets are expressed in terms of market value.  Assets under management are affected directly by the performance of the equity and bond markets and would be positively impacted by sustained positive performance as was seen in the second and third quarters of 2003.  Also, the addition of new accounts continues to help grow assets under management.

Service charges on deposit accounts increased $297,000 or 15.6% in the third quarter of 2003 and $745,000 or 13.7% in the first nine months of 2003 as compared to the same periods in 2002. Growth in service charges on deposit accounts is primarily due to increased account volumes and an increase in the overall fee schedule for deposit accounts as compared to the prior year.  Continued growth in the Company’s market share and promotion of retail accounts have resulted in more deposit accounts and increased fee income.

Bankcard transaction revenue increased $20,000 or 8.8% in the third quarter of 2003 as compared to the same period in 2002 and $136,000 or 21.1% during the first nine months of 2003 compared to 2002.  This source of revenue continues to increase as more and more

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customers utilize this electronic payment source.  These revenues should continue to grow as the use of this convenient service becomes more popular with our customers.

Gains on sales of mortgage loans were $1,201,000 in the third quarter of 2003 and $3,430,000 in the first nine months of 2003 compared to $1,024,000 and $1,877,000, respectively, in 2002.  The Bank operates a mortgage banking company which originates residential mortgage loans and sells the loans in the secondary market.  As long term interest rates continued at or near historically low levels during most of the third quarter of 2003, refinancing activity was strong.  However, as mortgage rates began to climb during the end of the third quarter of this year, the volume of mortgage applications slowed significantly.  This reduced activity will result in a corresponding decline in gains on sales of mortgage loans beginning in the upcoming fourth quarter.

Brokerage commissions and fees increased $81,000 or 27.8% in the third quarter of 2003 and increased $47,000 or 5.4% in the first nine months of 2003 as compared to similar periods in 2002. Improved performance of the overall equity markets and restored investor confidence, allowed the brokerage department to report strong results for the third quarter.

Other non-interest income increased $236,000 or 55.8% in the second quarter of 2003 and $633,000 or 50.6% in the first nine months of 2003 compared to 2002.  Numerous factors contributed to this increase, but it was primarily the result of various fee income related to the mortgage company’s increased volume.  Additional factors, though not as significant, were increases in non-customer check cashing fees and internet banking fees.

Non-interest expenses increased $1,076,000 or 12.1% for the third quarter of 2003 and $3,782,000 or 14.6% year to date 2003 as compared to the same periods in 2002.  Salaries and employee benefits increased $768,000, or 14.8%, for the third quarter of 2003 and $2,499,000 or 16.8% year to date compared to the same periods in 2002.  These increases arose in part from regular salary increases and higher commissions to mortgage company employees, as well as increased costs related to health insurance and other benefits.  Also, employees continue to be added to support the Bank’s growth.  The Bank had 386 full time equivalent employees as of September 30, 2003 and 363 full time equivalents as of September 30, 2002.  Net occupancy expense increased $133,000 or 24.4% in the third quarter of 2003 as compared to 2002 and increased $372,000 or 24.2% on a year to date basis.  The increases are largely a result of the opening of new facilities, including four new branches since September 30, 2002, as well as new space occupied by the Company’s investment management and trust department.  Data processing expense increased $38,000 for the third quarter of 2003 and $294,000 for the year to date period 2003 compared to 2002.  The increases are a result of continued upgrades in equipment as Bancorp continues to improve its infrastructure in support of current and anticipated growth.  Furniture and equipment expense increased $57,000 or 26.4% for the third quarter of 2003 and $71,000 or 10.4% for the year to date period 2003 compared to 2002.  State bank taxes were down $30,000 for the third quarter of 2003 and increased $43,000 for the year to date period 2003 compared to 2002.  Other non-interest expenses have increased $110,000 or 5.8% in the third quarter of 2003 and $503,000 or 8.8% year to date 2003 as compared to 2002.  Numerous factors contributed to this increase during the year, but it was primarily the result of various expenses related to increased mortgage banking activity.

Income Taxes

Bancorp had income tax expense of $6,369,000 for the first nine months of 2003, compared to $5,626,000 for the same period in 2002.  The effective rate for each nine month period was 32.5% in 2003 and 32.9% in 2002.

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In the third quarter of 2003, Bancorp had income tax expense of $2,418,000, compared to $2,001,000 for the same period in 2002.  The effective rate for each three month period was 32.7% in 2003 and 32.9% in 2002.

(b)Financial Condition

Balance Sheet

Total assets increased $75,853,000 from $1.040 billion on December 31, 2002 to $1.115 billion on September 30, 2003.  Average assets for the first nine months of 2003 were $1.074 billion.  Total assets at September 30, 2003 increased $54,142,000 from September 30, 2002, representing a 5.1% increase.  Total liabilities increased $64,911,000 from $953,613,000 on December 31, 2002 to $1.019 billion on September 30, 2003.  Average liabilities for the first nine months of 2003 were $981,969,000.  Total liabilities at September 30, 2003 increased $40,340,000 from September 30, 2002, representing a 4.1% increase.

Since year end, loans have increased approximately $42,011,000 and securities available for sale have increased $54,486,000, offset by the $16,651,000 decrease in mortgage loans held for sale and funded primarily through the $33,563,000 increase in deposits and the $29,978,000 increase in securities sold under agreements to repurchase and federal funds purchased.  Loan growth continues to be disappointing, as the lack of a meaningful rebound in business activity has presented fewer opportunities for new business.  Additionally, new loan business has been somewhat offset by accelerated run-off of existing business.

Non-performing Loans and Assets

Non-performing loans, which included non-accrual loans of $3,923,000 and loans past due over 90 days and still accruing of $1,123,000, totaled $5,046,000 at September 30, 2003.  Non-performing loans were $5,594,000 at December 31, 2002. This represents 0.59% of total loans at September 30, 2003 compared to 0.68% at December 31, 2002.

Non-performing assets, which include non-performing loans, other real estate and repossessed assets, if any, totaled $8,793,000 at September 30, 2003 and $5,992,000 at December 31, 2002.  This represents 0.79% of total assets at September 30, 2003 compared to 0.58% at December 31, 2002.  The increase in non-performing assets was primarily related to inclusion of real estate acquired in satisfaction of one former credit in the second quarter of 2003.  The estimated loss on this credit was included in 2002 in the specific allocations of the allowance for loan losses.  Due to the nature of the property, management anticipates that total disposition of the property may require some two to three years to complete.

(c)Liquidity

The role of liquidity is to ensure that funds are available to meet depositors’ withdrawal and borrowers’ credit demands while at the same time maximizing profitability.  This is accomplished by balancing changes in demand for funds with changes in the supply of those funds.  Liquidity to meet demand is provided by maturing assets, short-term liquid assets that can be converted to cash, and the ability to attract funds from external sources, principally deposits.  Management believes it has the ability to increase deposits at any time by offering rates slightly higher than the market rate.

The Bank has a number of sources of funds to meet its liquidity needs on a daily basis.  The deposit base, consisting of relatively stable consumer and commercial deposits, and large

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denomination ($100,000 and over) certificates of deposit, is a source of funds.  The majority of these deposits are from long-term customers and are a stable source of funds.  The Bank has no brokered deposits.

Other sources of funds available to meet daily needs include the sale of securities under agreements to repurchase and funds made available under a treasury tax and loan note agreement with the federal government.  Also, the Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB).  As a member of the FHLB, the Bank has access to credit products of the FHLB.  Additionally, the Bank has an available line of credit and federal funds purchased lines with correspondent banks totaling $58 million.

Bancorp’s liquidity depends primarily on the dividends paid to it as the sole shareholder of the Bank.  At September 30, 2003, the Bank may pay up to $38,953,000 in dividends to Bancorp without regulatory approval subject to the ongoing capital requirements of the Bank.  During the first three quarters of 2003 the Bank paid dividends to Bancorp totaling $4,395,000.

(d)Capital Resources

At September 30, 2003, stockholders’ equity totaled $97,009,000, an increase of $10,942,000 since December 31, 2002.  Accumulated other comprehensive income which for Bancorp consists of net unrealized gains on securities available for sale and a minimum pension liability adjustment, both of which are net of taxes, was $1,764,000 at September 30, 2003 and $2,239,000 at December 31, 2002.  The change since year end is a reflection of the effect of changing interest rates on the valuation of the Bank’s portfolio of securities available for sale.

On August 20, 2003, Bancorp announced that its Board of Directors declared a two-for-one split of the Company’s common stock, to be effected in the form of a 100% stock dividend.  The dividend was distributed on September 19, 2003, to shareholders of record as of September 3, 2003.  All common stock share and per share information has been restated to reflect the September 2003 two for one stock split.

Bancorp issued $20.0 million of 9.00% Cumulative Trust Preferred Securities in June 2001.  The issue was sold in a public offering.  Bancorp used approximately $13.3 million of the net proceeds from this offering to reduce indebtedness outstanding under a line of credit with an unaffiliated bank.  The remaining net proceeds were used for making additional capital contributions to the Bank, for repurchases of common stock, and for general corporate purposes.  The trust preferred securities increased Bancorp’s regulatory capital and allow for the continued growth of its banking franchise.  The ability to treat these trust preferred securities as regulatory capital under Federal Reserve guidelines, coupled with the Federal income tax deductibility of the related expense, provides Bancorp with a cost-effective form of capital.

Bank holding companies and their subsidiary banks are required by regulators to meet risk based capital standards.  These standards, or ratios, measure the relationship of capital to a combination of balance sheet and off-balance sheet risks.  The values of both balance sheet and off-balance sheet items are adjusted to reflect credit risks.

At September 30, 2003, Bancorp’s tier 1, total risk based capital and leverage ratios were 13.57%, 14.84% and 10.31% respectively, compared to 12.63%, 13.92% and 9.85%, respectively, in the same period for 2002.  These ratios exceed the minimum required by regulators to be well capitalized.

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(e)Recently Issued Accounting Pronouncements

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 expands disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees and requires the guarantor to recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 applies to most types of guarantees except for, among others, guarantees relating to employee compensation, residual value guarantees under capital lease arrangements, commercial letters of credit, loan commitments, and guarantees of a company’s own future performance. Historically, the guarantor has not recorded guarantees until it was probable that a payment would be required under the guarantee. The new accounting requirements now require a guarantor to record a liability at its fair value at the time the guarantee is made. Certain guarantees are subject to the disclosure requirements of FIN 45, but not to its recognition provisions. These guarantees include, but are not limited to, guarantees treated as derivatives under SFAS No. 133, guarantees that are considered contingent consideration in a business combination, and guarantees issued between parent corporations and their subsidiaries or between entities under common control. The new disclosure requirements require a guarantor to disclose the following about each guarantee: the overall details of the guarantee, the maximum, potential amount of future payments that could be required, the carrying amount of the guarantor’s obligation under the guarantee, the fair value of the liability included in the statement of financial position, and the nature and extent of recourse provisions and collateral related to the guarantee and the extent of any potential amounts that the guarantor may, recover from third parties as a result of payments made under the guarantee. The new accounting requirements are to be applied prospectively to any guarantees issued or modified after December 31, 2002. The new disclosure requirements are applicable to all guarantees covered by this Interpretation, no matter when issued, and are effective for interim or annual financial statements for periods ending after December 15, 2002.  The adoption of FIN 45 did not have a material effect on Bancorp’s consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” which amends SFAS No. 123, “Accounting for Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 requires more frequent and prominent disclosures in the financial statements about the effects of stock-based compensation. It also provides alternative methods for voluntary transition to the expense recognition method of accounting for stock options. The transition and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002 and are included in Footnote 1 in this quarterly report.  As permitted by SFAS No. 148, Bancorp will continue to apply the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock-Based Compensation,” for all stock option grants and has elected to disclose pro forma net income and earnings per share amounts as if the fair-value based method had been applied in measuring compensation costs.

On January 17, 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements.”  This interpretation addresses the consolidation by business enterprises of variable interest entities to which the normal conditions for consolidation do not apply, due to the entities’ lack of voting interest or lack of control through ownership of a voting interest.  The Interpretation requires that an enterprise review its degree of involvement in a variable interest entity to determine if it is the primary beneficiary.  Certain disclosures about the variable interest entity and the enterprise’s involvement are required by both the primary beneficiary and by enterprise that has a significant interest in a variable interest entity.  Enterprises with variable interests in variable interest entities created after January 31, 2003, must apply the provisions of the Interpretation to

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those entities no later than the beginning of the first interim or annual reporting period beginning after December 15, 2003. If it reasonably possible that an enterprise will consolidate or disclose information about the variable interest entity when this Interpretation becomes effective, the enterprise must make similar disclosures in all financial statements issued after January 31, 2003, regardless of the date on which the variable interest entity was created.  Bancorp has a statutory trust that was formed, prior to January 31, 2003, for the purpose of issuing Trust Preferred Securities (see note 3 to the consolidated financial statements).  This statutory trust will be subjected to FIN 46 in the fourth quarter of 2003.  Management currently believes the continued consolidation of this trust is appropriate under FIN 46.  However, the applications of FIN 46 to this type of trust are an emerging issue and a possible unintended consequence of FIN 46 is the deconsolidation of this statutory trust.  The deconsolidation of this trust would not have a material effect on our consolidated balance sheet or our consolidated statement of income.  In July 2003, the Board of Governors of the Federal Reserve system issued a supervisory letter instructing bank holding companies to continue to include the trust preferred securities in their Tier 1 capital for regulatory capital purposes until notice is given to the contrary.  The Federal Reserve intends to review the regulatory implications of any accounting treatment changes and, if warranted, provide further appropriate guidance.  There can be no assurance that the Federal Reserve will continue to allow institutions to include trust preferred securities in Tier 1 capital for regulatory capital purposes.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133.  The new guidance amends SFAS No. 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, (b) in connection with other FASB projects dealing with financial instruments, (c) regarding implementation issues raised in relation to the application of the definition of derivative.  The amendments set forth in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly.  SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.  The provisions of SFAS No. 149 did not have a material impact on the Bancorp’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Instruments with Characteristics of Both Liabilities and Equity,” which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.  SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope, which may have previously been reported as equity, as a liability (or an asset in some circumstances).  This statement is effective for financial instruments entered into or modified after May 31, 2003, with certain exceptions, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of nonpublic companies.  The adoption of SFAS No. 150 did not have a material impact on the Bancorp’s consolidated financial statements.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

Information required by this item is included in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 4.Controls and Procedures

Bancorp maintains disclosure controls and procedures designed to ensure that it is able to collect the information it is required to disclose in reports it files with the Securities and Exchange Commission (SEC), and to record, process, summarize and report this information within the time periods specified in the rules and forms of the SEC.  Based on their evaluation of Bancorp’s disclosure controls and procedures as of the end of the quarterly period covered by this report, the Chief Executive Officer, President and Chief Financial Officer believe that these controls and procedures are effective to ensure that Bancorp is able to collect, process and disclose the information it is required to disclose in reports it files with the SEC within the required time periods.  There has been no change in internal controls over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect those controls.

PART II – OTHER INFORMATION

Item 6.Exhibits and Reports on Form 8-K

(a)	Exhibits
	The following exhibits are filed or furnished as a part of this report:

Exhibit Number		Description of Exhibit
31.1		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act by David H. Brooks
31.2		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act by David P. Heintzman
31.3		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act by Nancy B. Davis
32		Certifications pursuant to 18 U.S.C. Section 1350
(b)	Reports on Form 8-K
	On July 17, 2003 Bancorp furnished a Form 8-K pursuant to Items 9 and 12 results of operations for the second quarter of 2003.  Attached as an exhibit to such Form 8-K was a copy of a related press release dated July 16, 2003.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		S.Y. BANCORP, INC.
Date:	November 12, 2003		By:	/s/ David H. Brooks
				David H. Brooks, Chairman and Chief Executive Officer
Date:	November 12, 2003		By:	/s/ David P. Heintzman
				David P. Heintzman, President
Date:	November 12, 2003		By:	/s/ Nancy B. Davis
				Nancy B. Davis, Executive Vice President, Treasurer and Chief Financial Officer

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