Exhibit 99.1
S.Y. Bancorp Announces Third Quarter Results
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 20, 2004--S.Y. Bancorp,
Inc. (AMEX:SYI), parent company of Stock Yards Bank & Trust Company in
Louisville, southern Indiana and Indianapolis, today reported results
for the third quarter and nine months ended September 30, 2004.
Largely because of the industry-wide slowdown in mortgage refinancings
that has occurred since last fall, the Company's earnings in the third
quarter of 2004 were essentially flat in comparison with those of the
year-earlier period. Several factors helped offset the impact of the
decline in mortgage-related fee income, including a lower provision
for loan losses for the third quarter and improving results in several
categories of non-interest income, such as investment management and
trust operations and service fee income, as well as the modest
increase in non-interest expense experienced during the third quarter.
A summary of third quarter and year-to-date results follows:
Quarter ended September 30, 2004 2003 Change
- --------------------------- ----------- ----------- ------
Net income $ 4,971,000 $ 4,981,000 -0.20%
Net income per share, basic $ 0.36 $ 0.37 -2.70%
Net income per share, diluted $ 0.35 $ 0.36 -2.78%
Return on average equity 17.90% 20.76%
Return on average assets 1.71% 1.78%
Nine months ended September 30, 2004 2003 Change
- ------------------------------- ----------- ----------- ------
Net income $13,998,000 $13,247,000 5.67%
Net income per share, basic $ 1.02 $ 0.98 4.08%
Net income per share, diluted $ 0.99 $ 0.95 4.21%
Return on average equity 17.44% 19.25%
Return on average assets 1.65% 1.65%
Commenting on the announcement, Chairman David H. Brooks, said,
"The significant decline in mortgage refinancing activity since the
third quarter of 2003, together with ongoing pressure on net interest
margin, has continued to make overall advances in revenues and
earnings a challenge for us. Nevertheless, we are gratified that our
diverse operations have produced compensating increases in several key
areas of non-interest income, especially from Stock Yards Trust
Company and other fee related activities. Also, our continued focus on
controlling costs has enabled us to restrain the overall rate of
growth in non-interest expense, even though we have opened three new
offices since the third quarter of 2003. These offsetting factors
enabled us to post our highest quarterly earnings so far in 2004,
largely matching the Company's record results and outstanding
performance of the third quarter last year.
"We also are pleased to see ongoing signs of strong credit
quality," Mr. Brooks continued. "Our evaluation of credit quality and
risk led to reductions in the provision for loan losses of 40% for the
quarter and 22% for the year to date. While we recognize that credit
risk remains an inherent part of our business and can represent a
significant challenge to profitability, we are hopeful that the
general economy will continue to show evidence of improvement. As to
loan growth, the economic recovery so far has remained elusive,
promoting a generally cautious stance among our customers. However,
loan growth from the second quarter of 2004 to the third quarter of
2004 represented our best quarter-to-quarter increase since 2001. If
the recovery continues to gain momentum, we think it will further
strengthen our customers' financial position, leading not only to
improved loan quality, but also helping to revive loan growth.
Certainly, the trend seen over the past quarter provides a hopeful
sign that customers are becoming more confident about their future
plans."
Concluding, Mr. Brooks stated, "During the third quarter, we
celebrated the centennial anniversary of the founding of Stock Yards
Bank & Trust - a tremendous milestone for our Company and a tribute to
the women and men who fostered our prosperity over the past 100 years.
None, however, played a more important role in our progress than did
our customers, who from the beginning have provided loyal support for
the idea of a strong, locally based, community-oriented bank for
Louisville. Cognizant of our founding principles, we have remained
steadfast over the years in our focus on personal service for our
customers. We think this continued focus will be as important to our
future success as it has been in the past.
"Now, as we begin our second century, S.Y. Bancorp witnesses not
only the fruits of its efforts in metropolitan Louisville, with 23
branches in the area, but also looks expectantly for appropriate and
complementary opportunities in new markets. Recently, we expanded into
Indianapolis with the opening of our first branch there and, during
the third quarter, followed that with an investment in Indiana
Business Bank, an Indianapolis based, state-chartered de novo bank. We
believe these steps will augment our long-term strategy of building a
larger market position in the Indianapolis area. While this represents
my last formal communication to shareholders as Chairman and Chief
Executive Officer, considering my approaching retirement at the end of
December, I am confident that our management team possesses the
leadership skills and vision to build on the legacy of the past 100
years and take this Company to new heights in the future."
Net interest income, the Company's largest source of revenue, was
flat for the third quarter and up 3% for the first nine months of 2004
versus comparable 2003 periods, reflecting primarily growth in earning
assets that was offset by a decline in net interest margin. On a
taxable equivalent basis, net interest income was flat for the third
quarter of 2004 and up 4% for the year to date compared with
prior-year periods. Net interest margin for the third quarter, at
4.11%, was down 12 basis points from the year-earlier period and was
down 14 basis points from the second quarter of 2004. Although the
Company believes it is well positioned for a rising interest rate
environment, the increase in rates by the Federal Reserve during the
quarter may be offset by more competitive pressure in deposit pricing.
Depending on expected asset repricing and such factors as competitive
rate pressures or unforeseen changes in the Company's funding mix, the
net interest margin could continue to experience some slight
contraction during the next quarter.
The Company's provision for loan losses declined 40%, or $120,000,
in the third quarter of 2004 and 22%, or $410,000, for the nine months
ended September 30, 2004, compared with the same periods in 2003. The
quarterly provision for loan losses responds to various internal
measures of loan quality and inherent risk in the loan portfolio. Net
charge-offs continued to be relatively small during the third quarter.
It was the fifth consecutive quarter that net charge-offs represented
3 basis points or less of average loans outstanding. This compares
favorably with an average quarterly ratio of net charge-offs to
average loans of approximately 12 basis points for the five quarters
before that. Non-performing loans, while higher than in the second
quarter of 2004, were down slightly from the third quarter of 2003.
Management considers the allowance for loan losses adequate to cover
losses inherent in the loan portfolio at September 30, 2004.
Non-interest income declined 1% in the third quarter of 2004 and
was up 2% for the year-to-date period ended September 30, 2004,
compared with the same periods in 2003. These changes primarily
reflected higher investment management and trust income, as trust
assets under management rose 11% from September 30, 2003, higher
service charges on deposit accounts, increased bankcard transaction
volume, and increased brokerage fees with respect to the nine-month
period. These gains helped offset a large decline in mortgage banking
income of 68% for the quarter and 61% year to date caused by the
significant decline in mortgage refinance activity that began in
September 2003.
Non-interest expenses increased 2% for the quarter and 3% for the
year-to-date period compared with the same 2003 periods. An
approximate 3% increase in salaries and benefits for the year-to-date
period reflected the addition of professional staff along with annual
compensation increases. Salaries and benefits were down for the
quarter primarily due to better-than-expected claims experience in the
Company's self-funded health care plan. Net occupancy expense was up
19% for the quarter and 15% for the first nine months of the year,
largely as a result of the opening of new facilities and the
remodeling of some existing facilities.
Total assets for the third quarter increased 7% to $1.19 billion
from $1.12 billion at the end of the third quarter of 2003. Loans
increased 8% from the end of the third quarter 2003. Most of this
growth occurred during the three months ended September 30, 2004.
Deposits increased 3% from September 30, 2003; the Company
supplemented this growth earlier in 2004 by securing lower-cost,
fixed-rate advances from the Federal Home Loan Bank.
S.Y. Bancorp, Inc. was incorporated in 1988 as a bank holding
company in Louisville, Kentucky, and is the parent company of Stock
Yards Bank & Trust Company, which has 24 branch locations in
Louisville and southern Indiana, as well as a branch in Indianapolis.
Stock Yards Bank & Trust Company was established in 1904 in
Louisville, Kentucky. S.Y. Bancorp, Inc. is also the parent company of
S.Y. Bancorp Capital Trust I, a Delaware statutory business trust that
is a 100%-owned finance subsidiary.
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 market 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;
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
Summary Unaudited Financial Information
(in thousands except per share amounts)
Third Quarter Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2004 2003 2004 2003
------- ------- ------- -------
Net interest income $10,928 $10,930 $32,919 $31,828
Provision for loan losses 180 300 1,490 1,900
------- ------- ------- -------
Net interest income after
provision for loan losses 10,748 10,630 31,429 29,928
Non-interest income 6,235 6,292 18,475 18,092
Non-interest expense 9,702 9,523 29,332 28,404
------- ------- ------- -------
Net income before income
taxes 7,281 7,399 20,572 19,616
Provision for income taxes 2,310 2,418 6,574 6,369
------- ------- ------- -------
Net income $ 4,971 $ 4,981 $13,998 $13,247
======= ======= ======= =======
Net income per share:
Basic $ 0.36 $ 0.37 $ 1.02 $ 0.98
Fully diluted $ 0.35 $ 0.36 $ 0.99 $ 0.95
Weighted average shares
outstanding:
Basic 13,843 13,500 13,760 13,469
Fully diluted 14,192 13,973 14,153 13,952
Sept. 30, Dec. 31, Sept. 30,
2004 2003 2003
---------- ---------- ----------
Total assets $1,192,743 $1,118,521 $1,116,152
Total loans 932,812 886,153 860,584
Non-interest bearing deposits 164,925 143,901 147,275
Interest-bearing deposits 757,092 737,965 747,375
Stockholders' equity 113,510 100,414 97,009
Book value per share 8.18 7.40 7.16
Unaudited supplemental financial information for the third quarter
and nine months ended September 30, 2004 and 2003, may be obtained by
following this link: http://www.irinfo.com/syi/3q04fs.pdf.
CONTACT: S.Y. Bancorp, Inc., Louisville
Nancy B. Davis, 502-625-9176