Stock Yards Bancorp (SYBT) 8-K S.Y. Bancorp Announces Solid Third Quarter Earnings

Exhibit 99.1

S.Y. Bancorp Announces Solid Third Quarter Earnings

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 22, 2008--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 third quarter and nine months ended September 30, 2008. Despite increasing volatility and turmoil in the economy throughout 2008, the Company's net income per diluted share for the third quarter and first nine months of the year remained at solid levels, extending the Company's record for high returns on average equity and assets. Highlights of the Company's report also included year-over-year increases in its loan portfolio and deposits of 14% and 19%, respectively. Moreover, loan and deposit balances remained comparable with levels in the second quarter of 2008. At the same time, even though the housing and credit markets remain under pressure, the Company reported that asset quality remained solid overall, with non-performing loans falling from both year-earlier and second quarter 2008 amounts, while other metrics also showed steady improvements. A summary of results for the third quarter and nine-month period follows:

Quarter Ended September 30,	2008			2007			Change
Net income	$	5,443,000		$	5,887,000		-8	%
Net income per share, diluted	$	0.40		$	0.41		-2	%
Return on average equity		15.84	%		16.50	%
Return on average assets		1.31	%		1.66	%
Nine Months Ended September 30,	2008			2007			Change
Net income	$	16,610,000		$	17,888,000		-7	%
Net income per share, diluted	$	1.22		$	1.23		-1	%
Return on average equity		16.50	%		17.00	%
Return on average assets		1.43	%		1.70	%

Commenting on the Company's progress, David Heintzman, Chairman and Chief Executive Officer, said, "Obviously, the recent turmoil we have witnessed in the stock market, and particularly in the banking industry, has created new uncertainties for investors and consumers. These pressures add to the concern that surrounds the real estate downturn of the past year. In Louisville, our largest and principal market, growth and expansion traditionally have been steady, and the city largely has avoided the rapid run-up in real estate prices that occurred elsewhere, so this market has remained strong and resilient thus far. Still, it is impossible to predict if and to what extent the more pronounced national trends reach Main Street. As a strong community bank operating against this backdrop, and without exposure to sub-prime debt and other financial instruments that have made headlines recently, we have continued to maintain a focus on sound long-term fundamentals in our operations. These essential strengths can be seen in our net interest income, which reflects the growth of our loan portfolio, and in our loan quality metrics for the third quarter, highlighted by declining non-performing loans, low charge-offs, and historically good coverage by our allowance for probable loan losses in our loan portfolio."

Heintzman pointed out that the Company's capital management efforts over the past year, primarily in the form of stock repurchases, helped mitigate the impact of lower net income on earnings per share. From October 2007 to March 2008, the Company repurchased a total or 639,000 common shares under its established stock repurchase plan. Since that time, however, S.Y. Bancorp made no purchases 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. Additionally, the Company has maintained a sound and consistent dividend payout, currently reflecting an indicated annual rate of $0.68 per share. In August, S.Y. Bancorp's Board of Directors declared its regular quarterly cash dividend of $0.17 per share. The latest dividend was distributed on October 1, 2008, to stockholders of record as of September 15, 2008.

Also in the third quarter of 2008, the Company issued $10 million of subordinated debentures with a 10-year term and two-year call feature. These subordinated debentures qualify as Tier 2 capital and, therefore, are included in total risk-based capital as of September 30, 2008, increasing it to 11.26%.

Heintzman noted that recent weakness in the stock market particularly affected one significant 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 and is inherently linked to stock market performance, declined 11% in the third quarter and 4% year to date after having posted double-digit increases on average over the last several years. Also contributing to the decline was a reduction in non-recurring estate fees. Because of falling stock prices, assets under management declined to $1.464 billion at September 30, 2008; however, growth during 2008 from net new accounts was approximately $87 million or double that of 2007. Also, the Company continues to absorb additional costs related to its expansion in Indianapolis, where the Company opened a second office in the fourth quarter of 2007, and in Cincinnati, a market the Company also entered in the fourth quarter last year. Expenses for those new offices were in the start-up phase 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 have contributed to the Company's loan growth in 2008, they still have represented a drag on earnings this year as they continue to ramp up to a breakeven level.

Concluding, Heintzman said, "While we are pleased with the Company's performance during these difficult times, we know the future is very uncertain and there is little visibility on how the current credit crunch will continue to or ultimately affect consumer sentiment, the real estate downturn we are witnessing, and the banking industry as a whole. Clearly, conditions remain fluid in the housing and credit markets, and, coupled with the recent severe downturn in the stock markets, it is impossible to predict how these interconnected factors will play out over the near term, or what their effects on future credit quality might be. Thus, safety and soundness continue to be our primary objectives. Against this backdrop, our focus remains on Main Street in the communities we serve, and on our mission to provide a full range of financial products for our customers, along with a high level of customer service, to meet and address their needs, requirements and challenges. Given our performance through the first nine months of 2008, and the fundamental strength and diversity of our business and markets, we remain confident about our prospects for long-term growth."

S.Y. Bancorp's total assets increased 17% to $1.653 billion at September 30, 2008, from $1.410 billion at September 30, 2007, and were up 4% from $1.596 billion at June 30, 2008. The year-over-year change in total assets was driven by strong growth in the Company's loan portfolio, which rose 14% to $1.317 billion at September 30, 2008, from $1.157 billion at September 30, 2007, but the loan portfolio was down slightly from $1.321 billion at June 30, 2008. Deposits increased 19% to $1.266 billion at September 30, 2008, compared with $1.067 billion a year ago, and were up slightly from $1.263 billion at the end of the second quarter of 2008, with increases largely reflecting higher time deposits.

Net interest income, the Company's largest source of revenue, increased $992,000 or 7% in the third quarter of 2008 compared with the year-earlier period, resulting primarily from the impact of the Company's growing loan portfolio. Net interest margin for the third quarter, reflecting heightened competitive factors, declined 39 basis points year over year to 3.79% from 4.18% in the third quarter of 2007, and was 28 basis points lower than the second quarter of 2008. Management expects that further rate reductions, along with strong competition for deposits used to fund loan growth, will put pressure on margins in upcoming quarters. For the first nine months of 2008, net interest income increased $1,634,000 or 4% versus the same period last year, primarily because of strong loan growth. For the first nine months of 2008, the Company's net interest margin declined 29 basis points to 3.93% compared with 4.22% in the year-earlier period.

Non-performing loans for the third quarter declined to $3,940,000 from $4,244,000 in the third quarter of 2007, and, on a linked-quarter basis, fell from $5,481,000 in the second quarter of 2008. Likewise, the ratio of non-performing loans to total loans declined to 0.30% in the third quarter of 2008 from 0.37% in the third quarter of last year and from 0.42% in the second quarter of 2008. At the current level of 0.30%, non-performing loans to total loans remain near the low end of the range for the past five years. Loans past due less than 90 days, however, increased to $6,856,000 in the third quarter of 2008 from $4,800,000 the second quarter of 2008. Meanwhile, trends in net charge-offs continued to underscore the strength of the Company's loan quality as net charge-offs totaled $571,000 in the third quarter of 2008 or 0.04% of average loans, compared with $365,000 or 0.03% in the year-earlier quarter, and $616,000, or 0.05% in the second quarter of 2008.

The Company's allowance for loan losses was 1.12% of total loans at September 30, 2008, up from 1.08% at September 30, 2007, and 1.09% at June 30, 2008. For the third quarter of 2008, the loan loss provision totaled $900,000 versus $850,000 in the year-earlier period. For the first nine months of 2008, the loan loss provision totaled $3,100,000 versus $2,090,000 in the first nine months of 2007.

Non-interest income declined $1,060,000 or 14% in the third quarter compared with the same quarter last year, primarily due to losses of $607,000 on sales of other banks' preferred securities during the quarter; lower investment management and trust income, which fell $342,000 or 11% during the quarter; lower brokerage fees and commissions, which were down $85,000 or 17%; and reduced service charge income, which declined $64,000 or 3%. These declines were partially offset by gains on sales of mortgage loans, which rose $139,000 or 61%, and higher bankcard transaction revenue, which rose $66,000 or 11% for the quarter. Non-interest income declined $984,000 or 4% in the first nine months of 2008 compared with the year-earlier period, primarily reflecting a slowdown in service charge income and investment management and trust income as well as the aforementioned loss on sale of securities.

Non-interest expense increased $393,000 or 3% in the third quarter of 2008 versus the same period last year. Higher non-interest expense for the quarter was due primarily to increases of $356,000 or 17% in other non-interest expenses for items such as professional fees, printing, telecommunications, and mail, and $204,000 or 22% in net occupancy expense, in part reflecting costs for a second banking location in the Indianapolis market and a new banking office in the Cincinnati market, both opened in late 2007. These increases were offset somewhat by a decline of $139,000 or 14% in data processing costs. Non-interest expense rose $1,718,000 or 5% in the first nine months of 2008 compared with the year-earlier period primarily due to salaries and employee benefits and net occupancy costs.

The Company's third quarter efficiency ratio was 55.97% compared with 53.95% in the third quarter of 2007 and 55.13% in the second quarter of 2008.

Louisville, Kentucky-based S.Y. Bancorp, Inc., with $1.653 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. Financial Information
Third Quarter 2008 Earnings Release
(In thousands unless otherwise noted)
	Third Quarter Ended					Nine Months Ended
	September 30,					September 30,
	2008			2007		2008			2007
Income Statement Data
Net interest income, fully tax equivalent (1)	$	14,790		$	13,802	$	42,918		$	41,355
Interest income
Loans	$	20,254		$	21,290	$	60,636		$	63,164
Federal funds sold		313			168		452			756
Mortgage loans held for sale		39			57		187			181
Securities		1,750			1,547		4,395			4,382
Total interest income		22,356			23,062		65,670			68,483
Interest expense
Deposits		6,342			7,855		19,003			23,540
Securities sold under agreements to repurchase and federal funds purchased		274			799		1,004			2,151
Other short-term borrowings		169			11		396			17
Federal Home Loan Bank advances		1,037			854		3,096			2,236
Subordinated debentures		1			2		3			5
Total interest expense		7,823			9,521		23,502			27,949
Net interest income		14,533			13,541		42,168			40,534
Provision for loan losses		900			850		3,100			2,090
Net interest income after provision for loan losses		13,633			12,691		39,068			38,444
Non-interest income
Investment management and trust income		2,885			3,227		9,400			9,760
Service charges on deposit accounts		2,196			2,260		6,305			6,482
Bankcard transaction revenue		662			596		1,974			1,728
Gains on sales of mortgage loans held for sale		366			227		999			874
Gain (loss) on the sale of securities		(607	)		-		(607	)		-
Brokerage commissions and fees		413			498		1,298			1,443
Bank owned life insurance		263			250		773			733
Other non-interest income		328			508		1,320			1,426
Total non-interest income		6,506			7,566		21,462			22,446
Non-interest expense
Salaries and employee benefits expense		6,824			6,865		21,318			20,104
Net occupancy expense		1,121			917		3,166			2,737
Data processing expense		840			979		2,488			3,045
Furniture and equipment expense		290			291		842			873
State bank taxes		340			326		994			815
Other non-interest expenses		2,505			2,149		7,295			6,811
Total non-interest expense		11,920			11,527		36,103			34,385
Net income before income tax expense		8,219			8,730		24,427			26,505
Income tax expense		2,776			2,843		7,817			8,617
Net income	$	5,443		$	5,887	$	16,610		$	17,888
Weighted average shares - basic		13,435			14,185		13,432			14,299
Weighted average shares - diluted		13,652			14,400		13,615			14,525
Basic earnings per share	$	0.41		$	0.42	$	1.24		$	1.25
Diluted earnings per share		0.40			0.41		1.22			1.23
Cash dividend declared per share		0.17			0.16		0.51			0.47
Balance Sheet Data (at period end)
Total loans						$	1,316,661		$	1,156,899
Allowance for loan losses							14,785			12,550
Total assets							1,653,456			1,410,453
Non-interest bearing deposits							184,647			167,614
Interest bearing deposits							1,081,319			899,815
Federal home loan bank advances							90,000			70,000
Subordinated debentures							10,060			90
Stockholders' equity							138,910			138,623
Total shares outstanding							13,457			14,005
Book value per share							10.32			9.90
Market value per share							30.62			27.04

S. Y. Bancorp, Inc. Financial Information
Third Quarter 2008 Earnings Release
	Third Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Average Balance Sheet Data
Average federal funds sold	$	66,222		$	12,404		$	29,870		$	18,675
Average investment securities		168,681			140,168			136,946			134,894
Average loans		1,315,401			1,155,211			1,286,403			1,152,709
Average earning assets		1,552,961			1,311,152			1,457,809			1,309,989
Average assets		1,647,361			1,409,653			1,551,679			1,405,845
Average interest bearing deposits		1,110,824			893,281			1,026,325			908,463
Average total deposits		1,292,493			1,063,718			1,199,571			1,078,815
Average federal funds purchased and securities sold under agreement to repurchase		78,466			92,552			79,287			84,993
Average short-term borrowings		14,757			1,215			14,278			830
Average long-term debt		90,169			70,090			90,535			62,220
Average interest bearing liabilities		1,294,216			1,057,138			1,210,425			1,056,505
Average stockholders' equity		136,664			141,583			134,428			140,700
Performance Ratios
Annualized return on average assets		1.31	%		1.66	%		1.43	%		1.70	%
Annualized return on average equity		15.84	%		16.50	%		16.50	%		17.00	%
Net interest margin, fully tax equivalent		3.79	%		4.18	%		3.93	%		4.22	%
Non-interest income to total revenue, fully tax equivalent		30.55	%		35.41	%		33.34	%		35.18	%
Efficiency ratio		55.97	%		53.95	%		56.08	%		53.89	%
Capital Ratios
Average stockholders' equity to average assets		8.30	%		10.04	%		8.66	%		10.01	%
Tier 1 risk-based capital								9.55	%		10.47	%
Total risk-based capital								11.26	%		11.42	%
Leverage								8.40	%		9.81	%
Loans by Type
Commercial and industrial							$	338,489		$	304,930
Construction and development								173,879			123,505
Real estate mortgage - commercial investment								258,687			236,847
Real estate mortgage - owner occupied commercial								210,456			186,564
Real estate mortgage - 1-4 family residential								159,034			144,221
Home equity - first lien								24,458
Home equity - junior lien								118,672
Home equity (2)											136,064
Consumer								35,318			24,768
Asset Quality Data
Allowance for loan losses to total loans								1.12	%		1.08	%
Allowance for loan losses to average loans								1.15	%		1.09	%
Allowance for loan losses to non-performing loans								375.25	%		295.71	%
Nonaccrual loans							$	3,880		$	2,985
Restructured loans								-			-
Loans - 90 days past due & still accruing								60			1,259
Total non-performing loans								3,940			4,244
OREO and repossessed assets								3,182			3,436
Total non-performing assets								7,122			7,680
Non-performing loans to total loans								0.30	%		0.37	%
Non-performing assets to total assets								0.43	%		0.54	%
Net charge-offs to average loans (3)		0.04	%		0.03	%		0.14	%		0.15	%
Net charge-offs	$	571		$	365		$	1,765		$	1,743
Other Information
Total assets under management (in millions)							$	1,464		$	1,707
Full-time equivalent employees								459			443

S. Y. Bancorp, Inc. Financial Information
Third Quarter 2008 Earnings Release
	Five Quarter Comparison
	9/30/08			6/30/08		3/31/08		12/31/07		9/30/07
Income Statement Data
Net interest income, fully tax equivalent (1)	$	14,790		$	14,621	$	13,508	$	13,499	$	13,802
Net interest income	$	14,533		$	14,374	$	13,261	$	13,243	$	13,541
Provision for loan losses		900			975		1,225		1,435		850
Net interest income after provision for loan losses		13,633			13,399		12,036		11,808		12,691
Investment management and trust income		2,885			3,236		3,279		3,126		3,227
Service charges on deposit accounts		2,196			2,117		1,992		2,276		2,260
Bankcard transaction revenue		662			691		621		631		596
Gains on sales of mortgage loans held for sale		366			319		314		290		227
Gain (loss) on the sale of securities		(607	)		-		-		-		-
Brokerage commissions and fees		413			444		441		486		498
Bank owned life insurance		263			258		252		252		250
Other non-interest income		328			570		422		739		508
Total non-interest income		6,506			7,635		7,321		7,800		7,566
Salaries and employee benefits expense		6,824			7,335		7,159		6,898		6,865
Net occupancy expense		1,121			1,036		1,009		985		917
Data processing expense		840			896		752		998		979
Furniture and equipment expense		290			276		276		275		291
State bank taxes		340			314		340		340		326
Other non-interest expenses		2,505			2,412		2,378		2,650		2,149
Total non-interest expense		11,920			12,269		11,914		12,146		11,527
Net income before income tax expense		8,219			8,765		7,443		7,462		8,730
Income tax expense		2,776			2,636		2,405		1,298		2,843
Net income	$	5,443		$	6,129	$	5,038	$	6,164	$	5,887
Weighted average shares - basic		13,435			13,409		13,452		13,779		14,185
Weighted average shares - diluted		13,652			13,584		13,610		13,974		14,400
Basic earnings per share	$	0.41		$	0.46	$	0.37	$	0.45	$	0.42
Diluted earnings per share		0.40			0.45		0.37		0.44		0.41
Cash dividend declared per share		0.17			0.17		0.17		0.16		0.16
Balance Sheet Data (at period end)
Total loans	$	1,316,661		$	1,320,509	$	1,289,913	$	1,201,938	$	1,156,899
Allowance for loan losses		14,785			14,456		14,097		13,450		12,550
Total assets		1,653,456			1,596,320		1,517,258		1,482,219		1,410,453
Non-interest bearing deposits		184,647			182,580		175,028		170,477		167,614
Interest bearing deposits		1,081,319			1,080,752		972,980		936,230		899,815
Federal home loan bank advances		90,000			90,000		90,000		90,000		70,000
Subordinated debentures		10,060			60		60		90		90
Stockholders' equity		138,910			134,848		131,547		133,024		138,623
Total shares outstanding		13,457			13,424		13,406		13,600		14,005
Book value per share		10.32			10.05		9.81		9.78		9.90
Market value per share		30.62			21.36		23.24		23.94		27.04

S. Y. Bancorp, Inc. Financial Information
Third Quarter 2008 Earnings Release
	Five Quarter Comparison
	9/30/08			6/30/08			3/31/08			12/31/07			9/30/07
Average Balance Sheet Data
Average loans	$	1,315,401		$	1,308,304		$	1,235,185		$	1,178,068		$	1,155,211
Average assets		1,647,361			1,536,473			1,470,153			1,436,666			1,409,653
Average earning assets		1,552,961			1,443,187			1,376,233			1,341,624			1,311,152
Average total deposits		1,292,493			1,187,325			1,117,873			1,089,400			1,063,718
Average long-term debt		90,169			91,379			90,062			76,394			70,090
Average interest bearing liabilities		1,294,216			1,195,756			1,140,382			1,089,233			1,057,138
Average stockholders' equity		136,664			134,696			131,901			135,370			141,583
Performance Ratios
Annualized return on average assets		1.31	%		1.60	%		1.38	%		1.70	%		1.66	%
Annualized return on average equity		15.84	%		18.30	%		15.36	%		18.07	%		16.50	%
Net interest margin, fully tax equivalent		3.79	%		4.07	%		3.95	%		3.99	%		4.18	%
Non-interest income to total revenue, fully tax equivalent		30.55	%		34.40	%		35.24	%		36.62	%		35.41	%
Efficiency ratio		55.97	%		55.13	%		57.26	%		57.03	%		53.95	%
Capital Ratios
Average stockholders' equity to average assets		8.30	%		8.77	%		8.97	%		9.42	%		10.04	%
Tier 1 risk-based capital		9.55	%		9.31	%		9.07	%		9.82	%		10.47	%
Total risk-based capital		11.26	%		10.32	%		10.06	%		10.82	%		11.42	%
Leverage		8.40	%		8.75	%		8.85	%		9.21	%		9.81	%
Loans by Type
Commercial and industrial	$	338,489		$	331,665		$	332,144		$	309,506		$	292,240
Construction and development		173,879			182,041			174,604			144,668			137,659
Real estate mortgage - commercial investment		258,687			264,743			252,706			240,610			236,847
Real estate mortgage - owner occupied commercial		210,456			207,398			202,714			200,122			186,564
Real estate mortgage - 1-4 family residential		159,034			160,152			148,324			145,362			142,757
Home equity - 1st lien		24,458
Home equity - junior lien		118,672
Home equity (2)					142,154			136,064			136,962			136,064
Consumer		35,318			38,037			43,357			24,708			24,768
Asset Quality Data
Allowance for loan losses to total loans		1.12	%		1.09	%		1.09	%		1.12	%		1.08	%
Allowance for loan losses to average loans		1.12	%		1.10	%		1.14	%		1.16	%		1.09	%
Allowance for loan losses to non-performing loans		375.25	%		263.75	%		307.19	%		399.11	%		295.71	%
Nonaccrual loans	$	3,880		$	4,938		$	4,034		$	2,964		$	2,985
Restructured loans		-			-			-			-			-
Loans - 90 days past due & still accruing		60			543			555			406			1,259
Total non-performing loans		3,940			5,481			4,589			3,370			4,244
OREO and repossessed assets		3,182			2,995			3,715			3,831			3,436
Total non-performing assets		7,122			8,476			8,304			7,201			7,680
Non-performing loans to total loans		0.30	%		0.42	%		0.36	%		0.28	%		0.37	%
Non-performing assets to total assets		0.43	%		0.53	%		0.55	%		0.49	%		0.54	%
Net charge-offs to average loans (3)		0.04	%		0.05	%		0.05	%		0.05	%		0.03	%
Net charge-offs	$	571		$	616		$	578		$	535		$	365
Other Information
Total assets under management (in millions)	$	1,464		$	1,536		$	1,549		$	1,669		$	1,707
Full-time equivalent employees		459			457			460			446			443
(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) - In September 2008, the Company changed its presentation for disclosing the types of loans in its portfolio to provide more detailed information. Home equity lines of credit were divided into two categories - first lien and junior lien; however, it was not feasible to obtain comparable amounts for these categories for prior periods.
(3) - 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