Exhibit 99.1
S.Y. Bancorp Announces Record First
Quarter Results, as Net Income Increases 11% to $5,320,000 or $0.38
Per Diluted Share
LOUISVILLE, Ky.--(BUSINESS WIRE)--April 19, 2006--S.Y. Bancorp,
Inc. (NASDAQ: SYBT), parent company of Stock Yards Bank & Trust
Company in Louisville, southern Indiana and Indianapolis, today
reported record results for the first quarter ended March 31, 2006.
Performance highlights of the Company's first quarter report included
solid year-over-year growth in net interest income, driven primarily
by an improved net interest margin. In tandem with this, S.Y. Bancorp
witnessed ongoing strength in its asset quality, as levels for net
charge-offs and non-performing assets remained near five-year lows.
The first quarter also marked the Company's implementation of
Statement of Financial Standards No. 123R, "Share-Based Payment" (SFAS
No. 123R). Accordingly, S.Y. Bancorp recognized $174,000 in non-cash
compensation expense in the first quarter of 2006; no such expense was
recorded in the prior-year period.
A summary of the Company's first quarter results follows:
First quarter ended March 31, 2006 2005 Change
- ----------------------------- ---------- ---------- ------
Net income $5,320,000 $4,777,000 11%
Net income per share, diluted $ 0.38 $ 0.34 12%
Return on average equity 16.81% 16.41%
Return on average assets 1.60% 1.57%
Additional unaudited supplemental financial information for the
first quarter ended March 31, 2006 and 2005, may be obtained by
following this link: http://www.irinfo.com/sybt/1q06fss.pdf.
"These record results provide a strong start to the new fiscal
year and continue the momentum we witnessed in the fourth quarter of
2005," said David P. Heintzman, Chairman and Chief Executive Officer.
"We were pleased that this performance translated once again into high
returns on average equity and average assets - both above year-earlier
levels.
"While we witnessed solid growth in many areas of the Company
during the first quarter, our core banking businesses continued to
figure prominently in the success we have achieved," Heintzman
continued. "Concurrent with a 6% increase in our loan portfolio versus
the first quarter last year, we registered a 22-basis-point
improvement in our net interest margin in the same timeframe,
continuing a year-over-year uptrend that emerged in the second half of
2005. Other non-interest income also rose in the first quarter,
reflecting growth in deposit account and bankcard fees, as well as
higher income from investment management and trust services. On the
other side of the balance sheet, we posted a 7% increase in our
deposit base, providing funding for our growth and, in our view,
reflecting the underlying appeal of our service-driven banking
philosophies and the success of our programs that take our message to
the market."
Heintzman pointed out that, as S.Y. Bancorp has continued to
implement strategies to produce long-term, consistent growth, it also
has maintained a keen focus on asset quality. In 2005, these efforts
produced one of the best years ever for the Company in terms of asset
quality, and these strong trends continued into the first quarter of
2006. Non-performing loans were 0.50% of total loans in the first
quarter of 2006 versus 0.69% in the same quarter last year and were
0.59% relative to total assets compared with 0.79% in the first
quarter of 2005. Also, net charge-offs were 0.03% of average loans
outstanding versus 0.02% in the year-earlier quarter. Because of
changes in credit quality metrics in the first quarter versus the
fourth quarter of 2005, the Company provided $350,000 for loan losses
in the quarter versus zero in the fourth quarter of 2005 and $225,000
in the year-earlier period.
Looking ahead, Heintzman added, "Although we are pleased to have
begun 2006 with solid results, the marketplace clearly remains
challenging. Because of rate pressures and an increasing number of
competitors, recent loan growth has not measured up to our
expectations or objectives. As this became apparent in 2005, we began
to place increased emphasis on steps to build our loan portfolio and
meet the heightened competitive conditions we face. We remain intently
focused on achieving greater success in this area. Longer term and
more strategically, we remain excited about the opportunities we see
ahead to build on our style of banking in the Louisville area and in
Indianapolis. These opportunities are expected to take a tangible form
in 2006 as we push ahead with plans for two new Kentucky branches,
including our first office outside of Jefferson County. These
opportunities also will have geographic reach as we continue to
explore options available to us for a second location in Indianapolis
- - another step we expect to take in capitalizing on our business model
in this new, attractive market."
Heintzman noted that, outside of the Company's solid financial
performance in the first quarter, S.Y. Bancorp has continued to take
steps to maximize shareholder value. In March, the Company increased
its cash dividend 8% to $0.14 per common share, following two such
increases in 2005. Separately, the Company extended its stock
repurchase plan to February 2007. The Company had remaining
authorization under that plan to repurchase approximately 335,000
shares of common stock as of March 31, 2006.
Net interest income, the Company's largest source of revenue,
increased $1,714,000 or 15% in the first quarter of 2006 compared with
the year-earlier period. This increase was driven primarily by
improved net interest margins combined with growth in loans - the
Company's most significant earning asset. Net interest margin for the
first quarter increased 22 basis points to 4.26% compared with the
same period last year, as the Company's interest income and expense
both increased in a rising-rate environment. On a linked-quarter
basis, net interest margin declined 10 basis points from 4.36% in the
fourth quarter of 2005, as funding costs advanced significantly in the
first quarter largely in response to a certificate of deposit
promotion intended to help build the Company's deposit base. The
Company believes it remains well positioned for a rising interest rate
environment with approximately half of the Company's loan portfolio
being at variable rates. However, depending on expected asset
repricing and such factors as competitive rate pressures, unforeseen
changes in funding mix, and the possibility that the Federal Reserve
may begin to refrain from further rate increases in 2006, the Company
believes that further margin contraction will occur in the coming
year.
Non-interest income increased $322,000 or 5% in the first quarter,
primarily due to higher service charges on deposit accounts and an
increase in investment management and trust income. Service charges
rose 12% from the year-earlier quarter while investment management and
trust income was up 3% for the quarter. Also contributing to the
growth of non-interest income were increases in revenue from bankcard
transactions and gains on sales of mortgage loans, which helped offset
comparatively lower brokerage revenue for the quarter.
Non-interest expense increased $1,075,000 or 10% in the first
quarter of 2006 versus the same period last year. This increase
reflected primarily higher salaries and employee benefit costs - the
largest component of non-interest expenses - because of the addition
of staff in new and existing locations, along with annual compensation
increases. Also included in salaries and employee benefit costs in the
current quarter was $174,000 of share-based compensation expense
recorded with the implementation of SFAS 123R. The Company's
efficiency ratio for the first quarter of 2006 improved to 58.3% from
59.1% in the first quarter last year.
Total assets for the first quarter increased 8% to $1.36 billion
from $1.26 billion at the end of first quarter of 2005. The Company's
loan portfolio increased 6% over the year-earlier level, primarily due
to steady loan growth throughout the year. Deposits increased 7% from
March 31, 2005, as the Company witnessed solid growth in
non-interest-bearing accounts, time deposits and money market accounts
over the last year.
Louisville, Kentucky-based S.Y. Bancorp, Inc., with $1.4 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. S.Y. Bancorp, Inc. also is the parent company of
S.Y. Bancorp Capital Trust I, a Delaware statutory business trust that
is a 100%-owned finance subsidiary. The Company's Trust Preferred
securities are listed on the Amex under the symbol SYI PR.
This report contains forward-looking statements under the Private
Securities Litigation Reform Act that involve risks and uncertainties.
Although the Company's management believes the assumptions underlying
the forward-looking statements contained herein are reasonable, any of
these assumptions could be inaccurate. Therefore, there can be no
assurance the forward-looking statements included herein will prove to
be accurate. Factors that could cause actual results to differ from
those discussed in forward-looking statements include, but are not
limited to: economic conditions both generally and more specifically
in the markets in which the Company and its subsidiaries operate;
competition for the Company's customers from other providers of
financial services; government legislation and regulation, which
change from time to time and over which the Company has no control;
changes in interest rates; material unforeseen changes in liquidity,
results of operations, or financial condition of the Company's
customers; and other risks detailed in the Company's filings with the
Securities and Exchange Commission, all of which are difficult to
predict and many of which are beyond the control of the Company.
S.Y. Bancorp, Inc.
Summary Unaudited Financial Information
(in thousands except per share amounts)
Quarter Ended
March 31,
-----------------------
2006 2005
---------- ----------
Net interest income $ 12,973 $ 11,259
Provision for loan losses 350 225
---------- ----------
Net interest income after provision for
loan losses 12,623 11,034
Non-interest income 6,817 6,495
Non-interest expense 11,682 10,607
---------- ----------
Net income before income taxes 7,758 6,922
Provision for income taxes 2,438 2,145
---------- ----------
Net income $ 5,320 $ 4,777
========== ==========
Net income per share:
Basic $ 0.39 $ 0.34
Fully diluted $ 0.38 $ 0.34
Weighted average shares outstanding:
Basic 13,814 13,905
Fully diluted 14,047 14,204
Mar. 31, Dec. 31, Mar. 31,
2006 2005 2005
---------- ---------- ----------
Total assets $1,359,319 $1,330,438 $1,263,444
Total loans 1,060,842 1,053,871 996,351
Non-interest bearing deposits 183,378 180,628 168,274
Interest-bearing deposits 891,238 850,729 834,711
Stockholders' equity 128,331 125,797 116,377
Book value per share 9.30 9.11 8.37
Unaudited supplemental financial information for the first quarter
ended March 31, 2006 and 2005, may be obtained by following this link:
http://www.irinfo.com/sybt/1q06fss.pdf.
CONTACT: S.Y. Bancorp, Inc.
Nancy B. Davis, 502-625-9176