Exhibit 99.1
S.Y. Bancorp Announces Higher Second Quarter Earnings as Net Income Per
Diluted Share Increases 8% to $0.43
LOUISVILLE, Ky.--(BUSINESS WIRE)--July 18, 2007--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 results for the quarter
and six months ended June 30, 2007. Highlights of the report included
record earnings, driven primarily by a strong earning asset base and
continued growth in the Company's investment management and trust
services. Strong credit quality performance also characterized S.Y.
Bancorp's results for the second quarter, leading to a reduction in
Company's provision for loan losses and helping to offset increasing
competitive pressures affecting loan growth and margin. A summary of
results for the second quarter and year-to-date period follows:
Quarter Ended June 30, 2007 2006 Change
- ---------------------------------- ------------ ------------ ------
Net income $ 6,297,000 $ 5,868,000 7.3%
Net income per share, diluted $ 0.43 $ 0.40 7.5%
Return on average equity 17.90% 18.02%
Return on average assets 1.80% 1.76%
Six Months Ended June 30, 2007 2006 Change
- ---------------------------------- ------------ ------------ ------
Net income $12,001,000 $11,188,000 7.3%
Net income per share, diluted $ 0.82 $ 0.76 7.9%
Return on average equity 17.26% 17.42%
Return on average assets 1.72% 1.68%
Additional unaudited supplemental financial information for the second
quarter and six months ended June 30, 2007 and 2006, may be obtained
by following this link: http://www.irinfo.com/sybt/SYBT2q07ftm.pdf.
Commenting on the announcement, David Heintzman, Chairman and
Chief Executive Officer, said, "We are pleased to report higher
earnings for the quarter, which are especially significant against the
backdrop of an increasingly competitive environment and considering
the investments we are making to expand our reach to new markets.
These earnings again provided strong returns on equity and earnings
for our stockholders and support our ongoing efforts to enhance
stockholder value through higher cash dividends.
"While we continue to face intense competitive conditions that
have restrained loan growth and exerted pressure on net interest
margin, we are gratified to note continued success in maintaining
solid asset quality," Heintzman added. "With this discipline, our
lending operations remain an important contributor to our overall
earnings performance. At the same time, our investment management and
trust operations continue to grow in significance, adding measurably
to non-interest income and our bottom line, and providing an even
stronger competitive distinction for our company and enhanced service
capabilities for our customers."
Heintzman noted that assets under management by Stock Yards Trust
Company have increased 14% over the past year, rising to $1.67 billion
as of June 30, 2007, and reflecting a net gain in new business as well
as market appreciation. In the second quarter alone, the Company
increased assets under management $66 million or 4%.
"Even as we remain focused on the fundamentals of our business to
achieve current growth within the context of a more challenging
climate, we also continue to dedicate significant energy to the
development of future growth opportunities," Heintzman continued. "We
are approaching the opening of our second location in Indianapolis,
following our entry into that market four years ago. Building from our
private banking model that proved to be so successful in Louisville,
our Indianapolis operations have ramped up rapidly to become a key
source of loan growth for the Company. We are excited about the
prospects of our second branch opening and adding to the momentum we
have witnessed there. We are equally enthusiastic about the
opportunities we see in the Cincinnati market and are confident that
our style of service-oriented banking, coupled with our continued
practice of developing a team of seasoned lenders with deep
local-market experience, will lay the groundwork for successful
expansion to our third and demographically largest market. With that
said, we have hired a seasoned banker to lead our expansion and have
established a temporary loan production office downtown until a
permanent location is available."
In the second quarter of 2007, net interest income, the Company's
largest source of revenue, increased $129,000 or 1% compared with the
year-earlier period. Net interest income increased $570,000 or 2% in
the first half of 2007 versus the same period last year. The increase
for the second quarter reflected growth in net interest earning
assets, offset by ongoing pressure on the net interest margin.
Although net interest margin improved three basis points in the second
quarter compared with the first quarter of 2007, net interest margin
for the second quarter, at 4.26%, declined 15 basis points versus
4.41% in the year-earlier quarter. This compression was due largely to
higher interest expense associated with the Company's recent promotion
of certificates of deposit. Also, the persistence of a relatively flat
yield curve, together with mounting competitive pressures on both loan
and deposit interest rates, continue to adversely affect our net
interest margin. While the Company believes it remains well positioned
for the current interest rate environment, with its loan portfolio
being split between approximately 60% fixed and 40% variable rates, it
expects ongoing pressure on net interest margin.
In the second quarter, there were $4.8 million of non-performing
loans, or 0.41%, relative to total loans, which showed improvement
from the first quarter of 2007, as well as from the 0.67% in the same
quarter last year. Net charge-offs also remained low at 0.05% of
average loans compared with 0.07% in the first quarter of 2007 and
0.03% in the second quarter of 2006. Management continues to view
these metrics as an indication of overall sound asset quality and
believes it has appropriately recognized the loan-loss exposure in its
portfolio. Based on the Bank's systematic credit risk assessment
process, including consideration of a declining level of
non-performing loans, the Company reduced its provision for loan
losses to $460,000 in the second quarter from $600,000 in the second
quarter of 2006. For the first six months of 2007, the loan loss
provision totaled $1,240,000 versus $950,000 in the year-earlier
period. The Company's allowance for loan losses was 1.04% of total
end-of-quarter loans at June 30, 2007, compared with 1.06% of total
end-of-quarter loans at March 31, 2007, and 1.14% at June 30, 2006.
Non-interest income increased $495,000 or 7% in the second quarter
compared with the same quarter last year, primarily due to higher
investment management and trust income, which rose $405,000 or 14%
during the quarter. This, along with higher bankcard transaction
revenue, gains on sales of mortgage loans and other non-interest
income, offset lower service charges on deposit accounts and brokerage
fees and commissions for the quarter. Non-interest income increased
$738,000 or 5% in the first half of 2007 compared with the
year-earlier period, again driven by investment management and trust
income.
Non-interest expense increased $206,000 or 2% in the second
quarter of 2007 versus the same period last year. The increase for the
second quarter reflected higher salaries and employee benefits, due in
part to the addition of staff associated with the development of a
second office in the Indianapolis market and the Company's recently
announced entry into the Cincinnati market, as well as higher data
processing expense and net occupancy expense. Non-interest expense
declined $198,000 or 1% in the first half of 2007 compared with the
year-earlier period. For the year-to-date period of 2007, salaries and
employee benefits were less than those of 2006 mainly due to lower
health insurance expense, reduced stock compensation expense and
deferral of salary expense related to loan originations. Further, the
first quarter of 2007 reflected a reduction in state bank taxes
resulting from tax credits purchased in the quarter. The Company's
efficiency ratio improved to 53.22% from 54.54% in the first quarter
of 2007 and 53.88% in the second quarter last year.
In the second quarter, total assets rose 6% to $1.425 billion from
$1.340 billion at June 30, 2006, and were up 1% from $1.414 billion at
March 31, 2007. The Company's loan portfolio increased 7% to $1.163
billion from $1.086 billion for the year-earlier period and rose 1%
from $1.150 billion at the end of the first quarter of 2007. Deposits
at June 30, 2007, increased 2% to $1.085 billion from $1.060 billion
at June 30, 2006, but declined 2% from $1.110 billion at March 31,
2007.
In May, the Company's Board of Directors increased the Company's
quarterly cash dividend rate 7% to $0.16 per common share. The new
rate was paid on July 2, 2007, to stockholders of record as of June
15, 2007.
Louisville, Kentucky-based S.Y. Bancorp, Inc., with $1.425 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
Summary Unaudited Financial Information
(in thousands except per share amounts)
Second Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Interest income $ 22,815 $ 21,244 $ 45,421 $ 41,571
Interest expense 9,236 7,794 18,428 15,148
---------- ---------- ---------- ----------
Net interest income 13,579 13,450 26,993 26,423
Provision for loan losses 460 600 1,240 950
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 13,119 12,850 25,753 25,473
Non-interest income 7,724 7,229 14,880 14,142
Non-interest expense 11,484 11,278 22,858 23,056
---------- ---------- ---------- ----------
Net income before income
taxes 9,359 8,801 17,775 16,559
Provision for income taxes 3,062 2,933 5,774 5,371
---------- ---------- ---------- ----------
Net income $ 6,297 $ 5,868 $ 12,001 $ 11,188
========== ========== ========== ==========
Net income per share
Basic $ 0.44 $ 0.41 $ 0.84 $ 0.77
Diluted $ 0.43 $ 0.40 $ 0.82 $ 0.76
Weighted average shares
outstanding
Basic 14,325 14,484 14,357 14,494
Diluted 14,536 14,752 14,588 14,750
June 30, Dec. 31, June 30,
2007 2006 2006
---------- ---------- ----------
Total assets $1,425,299 $1,426,321 $1,340,101
Total loans 1,162,906 1,148,954 1,085,739
Non-interest bearing
deposits 184,000 179,657 180,025
Interest-bearing deposits 901,316 923,585 879,500
---------- ---------- ----------
Total deposits 1,085,316 1,103,242 1,059,525
Stockholders' equity 141,888 137,444 129,810
Book value per share 9.92 9.54 9.00
Unaudited supplemental financial information for the second quarter
and six months ended June 30, 2007 and 2006, may be obtained by
following this link: http://www.irinfo.com/sybt/SYBT2q07ftm.pdf.
CONTACT: S.Y. Bancorp, Inc.
Nancy B. Davis, 502-625-9176
Executive Vice President,
Treasurer and Chief Financial Officer