-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GEgMG9RIYzrMbW5Ug/kOirzH8VXlW7xxHMc+eGMZDcSrVBv0/5Sl/beAipPnJfKy x6IMB8CKvl0nL0ke29Re6Q== 0000835324-97-000004.txt : 19970813 0000835324-97-000004.hdr.sgml : 19970813 ACCESSION NUMBER: 0000835324-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: S Y BANCORP INC CENTRAL INDEX KEY: 0000835324 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 611137529 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17262 FILM NUMBER: 97656270 BUSINESS ADDRESS: STREET 1: 1040 E MAIN ST CITY: LOUISVILLE STATE: KY ZIP: 40206 BUSINESS PHONE: 5025822571X302 MAIL ADDRESS: STREET 1: 1040 EAST MAIN STREET CITY: LOUISVILLE STATE: KY ZIP: 40206 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 1997 OR [ ] 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 17262. S. Y. BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-1137529 (State or other jurisdiction) (I.R.S. Employer Identification No.) 1040 East Main Street, Louisville, Kentucky, 40206 (Address of principal executive offices) (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 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 X No ___ 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 - 3,276,475 shares issued and outstanding at August 12, 1997 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 (Kentucky) and Stock Yards Bank & Trust Company (Indiana), are submitted herewith: Consolidated Balance Sheets June 30, 1997 and December 31, 1996 Consolidated Statements of Income for the three months ended June 30, 1997 and 1996 Consolidated Statements of Income for the six months ended June 30, 1997 and 1996 Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and 1996 Notes to Consolidated Financial Statements S. Y. BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 1997 and December 31, 1996
June 30, 1997 December 31, 1996 (In thousands, except share data) Assets Cash and due from banks $ 22,986 $ 15,348 Federal funds sold 600 4,500 Mortgage loans held for sale 4,922 4,362 Securities available for sale (amortized cost $29,500 in 1997 and $19,111 in 1996) 29,610 19,441 Securities held to maturity (approximate market value $31,006 in 1996 and $56,055 in 1996) 31,011 56,079 Loans 327,926 301,548 Allowance for loan losses 5,575 5,155 ------- ------- Net loans 322,351 296,393 Premises and equipment 12,582 10,079 Accrued interest receivable 2,684 2,299 Other assets 6,928 6,864 ------- ------- TOTAL ASSETS $433,674 $415,365 ======= ======= Liabilities and Stockholders' Equity Deposits Non-interest bearing $ 67,110 $ 63,627 Interest bearing 306,215 291,624 ------- ------- Total deposits 373,325 355,251 Securities sold under agreements to repurchase and federal funds purchased 16,911 19,728 Short-term borrowings 3,969 2,668 Accrued interest payable and other liabilities 3,315 3,427 Long-term debt 2,185 2,697 ------- ------- TOTAL LIABILITIES 399,705 383,771 ======= ======= Stockholders' equity Common stock, no par value; 5,000,000 shares authorized; 3,275,675 and 3,271,480 shares issued and outstanding in 1997 and 1996, respectively 5,465 5,451 Surplus 13,480 13,390 Retained earnings 14,950 12,535 Net unrealized gain on securities available for sale, net of tax 74 218 ------- ------ TOTAL STOCKHOLDERS' EQUITY 33,969 31,594 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $433,674 $415,365 ======= ======= See accompanying notes to consolidated financial statements
S.Y. BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income For the three months ended June 30, 1997 and 1996
1997 1996 (In thousands, except share and per share data) Interest income Loans $7,405 $6,123 Federal funds sold 63 27 Mortgage loans held for sale 72 150 U.S. Treasury and Federal agencies 915 590 Obligations of states and political subdivisions 98 99 ----- ----- Total interest income 8,553 6,989 ----- ----- Interest expense Deposits 3,389 2,780 Securities sold under agreements to repurchase and federal funds purchased 243 183 Short-term borrowings 30 18 Long-term debt 43 12 ----- ----- Total interest expense 3,705 2,993 ----- ----- Net interest income 4,848 3,996 Provision for loan losses 225 180 Net interest income after ----- ----- provision for loan losses 4,623 3,816 ----- ----- Non-interest income Investment management and trust services 862 608 Service charges on deposit accounts 496 382 Gains on sales of mortgage loans held for sale 275 294 Other 220 129 ----- ----- Total non-interest income 1,853 1,413 ----- ----- Non-interest expenses Salaries and employee benefits 2,316 1,889 Net occupancy expense 278 252 Furniture and equipment expense 414 327 Other 883 784 ----- ----- Total non-interest expenses 3,891 3,252 ----- ----- Income before income taxes 2,585 1,977 Income tax expense 864 641 ----- ----- Net income $1,721 $1,336 ===== ===== Net income per share Primary and fully diluted $ .51 $ .40 ===== ===== Average common shares Primary 3,397,506 3,364,358 Fully diluted 3,399,799 3,368,534 See accompanying notes to consolidated financial statements.
S.Y. BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Income For the six months ended June 30, 1997 and 1996
1997 1996 (In thousands, except share and per share data) Interest income Loans $14,466 $11,981 Federal funds sold 243 76 Mortgage loans held for sale 129 231 U.S. Treasury and Federal agencies 1,738 1,133 Obligations of states and political subdivisions 194 195 ------ ------ Total interest income 16,770 13,616 ------ ------ Interest expense Deposits 6,752 5,485 Securities sold under agreements to repurchase and federal funds purchased 395 334 Short-term borrowings 52 38 Long-term debt 86 23 ----- ----- Total interest expense 7,285 5,880 ----- ----- Net interest income 9,485 7,736 Provision for loan losses 450 360 ----- ----- Net interest income after provision for loan losses 9,035 7,376 ----- ----- Non-interest income Investment management and trust services 1,508 1,139 Service charges on deposit accounts 940 735 Gains on sales of mortgage loans held for sale 488 489 Gains on sales of securities available for sale 80 35 Other 417 249 ----- ----- Total non-interest income 3,433 2,647 ----- ----- Non-interest expenses Salaries and employee benefits 4,633 3,722 Net occupancy expense 533 484 Furniture and equipment expense 771 672 Other 1,750 1,577 ----- ----- Total non-interest expenses 7,687 6,455 Income before income taxes 4,781 3,568 Income tax expense 1,577 1,160 ----- ----- Net income $3,204 $2,408 ===== ===== Net income per share Primary and fully diluted $ .94 $ .72 ===== ===== Average common shares Primary 3,390,675 3,358,552 Fully diluted 3,395,395 3,367,978 See accompanying notes to consolidated financial statements.
S.Y. BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows For the six months ended June 30, 1997 and 1996
(In thousands) 1997 1996 Operating Activities Net income $ 3,204 $ 2,408 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 450 360 Depreciation, amortization and accretion, net 649 510 Gains on sales of mortgages held for sale ( 488) ( 489) Gains on sales of securities available for sale ( 80) ( 35) (Increase) decrease in mortgage loans held for sale ( 72) ( 3,587) (Increase) decrease in accrued interest receivable ( 385) ( 20) (Increase) decrease in other assets ( 197) ( 312) Increase (decrease) in accrued interest payable 78 63 Increase (decrease) in other liabilities 256) 397 ------- ------- Net cash provided (used) by operating activities 2,903 ( 705) ------- ------- Investing Activities Net (increase) decrease in federal funds sold 3,900 - Purchases of securities held to maturity ( 10,994) ( 16,500) Purchases of securities available for sale ( 17,749) ( 6,996) Proceeds from maturities of securities held to maturity 36,128 9,164 Proceeds from maturities of securities available for sale 3,348 1,010 Proceeds from sales of securities available for sale 4,026 4,885 Proceeds from sales of other real estate owned 172 - Net (increase) decrease in loans ( 26,408) ( 18,240) Purchases of premises and equipment ( 3,115) ( 1,663) -------- -------- Net cash provided (used) by investing activities ( 10,692) ( 28,340) -------- -------- Financing Activities Net increase (decrease) in deposits 18,074 20,104 Net increase (decrease) in securities sold under agreements to repurchase and federal funds purchased ( 2,817) 4,454 Net increase (decrease) in short-term borrowings 1,301 2,977 Issuance of common stock for options and dividend reinvestment plan 104 84 Cash dividends paid ( 723) ( 655) Repayments of long-term debt ( 512) - ------ ------- Net cash provided (used) by financing activities 15,427 26,964 ------ ------ Net increase (decrease) in cash and cash equivalents 7,638 ( 2,081) Cash and cash equivalents at beginning of period 15,348 16,229 ------- ------- Cash and cash equivalents at end of period $ 22,986 $ 14,148 ======= ======== Income tax payments were $1,644,000 in 1997, and $1,276,000 in 1996. Cash paid for interest was $7,363,000 in 1997, and $5,817,000 in 1996. See accompanying notes to consolidated financial statements.
S.Y. BANCORP, INC. AND SUBSIDIARIES Notes to 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 generally accepted accounting principles for complete financial statements. The consolidated financial statements of S.Y. Bancorp, Inc. and 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 consolidated financial statements include the accounts of S.Y. Bancorp, Inc. and its wholly owned subsidiaries, Stock Yards Bank & Trust Company, a Kentucky bank, and Stock Yards Bank & Trust Company, an Indiana bank. All significant intercompany transactions have been eliminated in consolidation. The Indiana Bank was acquired on October 1, 1996, and its operations are reflected in the consolidated financial statements subsequent to that date. A description of other significant accounting policies is presented in the Consolidated Financial Statements for the year ended December 31, 1996 included in S.Y. Bancorp, Inc.'s Annual Report, and its Form 10-K for the year then ended. Interim results for the quarter and/or six month period ended June 30, 1997 are not necessarily indicative of the results for the entire year. Bancorp's common stock split 2-for-1 in August, 1996. The split was effected in the form of a 100% stock dividend. All share and per share information has been restated to reflect the stock split. On January 1, 1997, Bancorp implemented Statement of Financial Accounting Standard ("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." Under this standard, accounting for transfers and servicing of financial assets and extinguishments of liabilities is based on control. After a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered and derecognizes liabilities when extinguished. The implementation of SFAS No. 125 did not have a material effect on Bancorp's consolidated financial statements because Bancorp does not have sgnificant transactions of this nature. (2) Allowance for Loan Losses An analysis of the changes in the allowance for loan losses for the six months ended June 30 follows (in thousands): 1997 1996 Beginning balance $5,155 $4,507 Provision for loan losses 450 360 Loans charged off ( 52) ( 54) Recoveries 22 25 ----- ----- Ending balance $5,575 $4,838 ===== ===== Information regarding impaired loans at June 30, 1997 follows: Recorded investment in impaired loans $ 855,000 Impaired loans with Statement 114 valuation allowance $ 9,000 Amount of Statement 114 valuation allowance $ 9,000 Amount of impaired loans without Statement 114 valuation allowance $ 846,000 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 ("the Kentucky Bank") and Stock Yards Bank & Trust Company ("the Indiana Bank") for the three and six months ended June 30, 1997 and compares those periods with the same periods of the previous year. Unless otherwise indicated, all references in this discussion to the "Banks" include Bancorp. In addition, the discussion describes the significant changes in the financial condition of the Banks that have, occurred during the first six months of 1997 compared to December 31, 1996. This discussion should be read in conjunction with the consolidated financial statements and accompanying notes presented in Part I, Item 1 of this report. A. RESULTS OF OPERATIONS Net income of $1,721,000 for the three months ended June 30, 1997 increased $385,000 or 28.8% from $1,336,000 for the comparable 1996 period. Net income per share on a fully diluted basis was $.51 for the second quarter of 1997, an increase of 27.5% from the $.40 for the same period in 1996. Return on average assets and return on average stockholders' equity were 1.62% and 20.63%, respectively, for the second quarter of 1997, compared to 1.65% and 18.52%, respectively, for the same period in 1996. Net income of $3,204,000 for the six months ended June 30, 1997 increased $796,000 or 33.1% from $2,408,000 for the comparable 1996 period. Net income per share on a fully diluted basis was $.94 for the first six months of 1997, an increase of 30.6% from the $.72 for the same period in 1996. Return on average assets and return on average stockholders' equity were 1.55% and 19.70%, respectively, for the first six months of 1997, compared to 1.47% and 16.93%, respectively, for the same period in 1996. The following paragraphs provide an analysis of the significant factors affecting operating results and financial condition. Net Interest Income In thousands except percentages Three Months Ended Six Months Ended June 30 June 30 1997 1996 1997 1996 Interest income $ 8,553 $ 6,989 $ 16,770 $ 13,616 Tax equivalent 45 52 89 103 ----- ----- ------ ------ Interest income, tax equivalent basis 8,598 7,041 16,859 13,719 Total interest expense 3,705 2,993 7,285 5,880 ------ ------ ------ ------ Net interest income , tax equivalent basis (1) $ 4,893 $ 4,048 $ 9,574 $ 7,839 ====== ====== ====== ====== Net interest spread (2), annualized 4.17% 4.23% 4.12% 4.17% Net interest margin (3), annualized 4.98% 5.13% 4.95% 5.08% Notes: (1) Net interest income, the most significant component of the Banks' 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 $4,893,000 for the three months ended June 30, 1997 increased $845,000 or 20.9% from $4,048,000 for the same period last year. For the six months ended June 30, 1997, net interest income of $9,574,000 increased $1,735,000 or 22.1 % from $7,839,000 for the same period last year. Net interest spread and net interest margin were 4.17% and 4.98%, respectively, for the second quarter of 1997 and 4.23% and 5.13%, respectively, for the second quarter of 1996. Net interest spread and margin were 4.12% and 4.95%, respectively, for the first six months of 1997 and 4.17% and 5.08%, respectively, for the same period in 1996. In the relatively stable interest rate environment, higher yielding interest earning assets have matured. Thus, net interest spread and margin are decreasing. Average earning assets increased $79,733,000, or 25.7% to $389,982,000 for the first six months of 1997 compared to 1996. Average interest bearing liabilities increased $69,231,000 or 27.7% to $319,452,000 for the first six months of 1997 compared to 1996. Interest rate sensitivity has a major impact on the earnings of the Banks. As interest rates change in the market, rates earned on assets do not necessarily move identically with rates paid on liabilities. Proper asset and liability management involves the matching of interest sensitive assets and liabilities to reduce interest rate risk. The Banks manage interest rate risk by primarily making variable rate loans. The Banks do, however, make fixed rate loans which are matched, along with investment securities against longer term fixed rate time deposits. The Banks' largest interest earning asset is loans and approximately half of the loan portfolio is comprised of variable rate loans. Variable rate loans reprice immediately with a change in prime rates. Deposits, the Banks' largest interest bearing liability, do not respond nearly as quickly nor as significantly to changes in market interest rates. At June 30, 1997, interest earning assets repricing within one year slightly exceeded interest bearing liabilities repricing within one year. A position of interest earning assets repricing more quickly than interest bearing liabilities generally allows for a positive impact on net interest income in periods of rising interest rates and a negative impact in periods of declining interest rates. The cumulative interest sensitivity gap through one year was approximately 6.5% and Bancorp believes it has the ability to effectively manage its interest sensitivity gap to control the degree of interest rate risk on the balance sheet. Provision for Loan Losses The allowance for loan losses is based on management's continuing review of individual credits, recent 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 follow: Six months ended June 30 (In thousands except percentages) 1997 1996 Balance at January 1 $ 5,155 $ 4,507 Provision for loan losses 450 360 Loan charge-offs, net of recoveries ( 30) ( 29) ------- -------- Balance at June 30 $ 5,575 $ 4,838 ======= ======= Average loans, net of unearned income $314,736 $262,159 Provision for loan losses to average loans (1) .29% .27% Net loan charge-offs to average loans (1) .02% .02% Allowance for loan losses to average loans 1.77% 1.85% Allowance for loan losses to period-end loans 1.70% 1.78% (1) Amounts annualized Non-interest Income and Expenses The following table sets forth the major components of non-interest income and expenses for the three and six months ended June 30, 1997 and 1996. In thousands Three Months Ended Six Months Ended June 30 June 30 1997 1996 1997 1996 Non-interest income Investment management and trust services $ 862 $ 608 $ 1,508 $ 1,139 Service charges on deposit accounts 496 382 940 735 Gains on sales of mortgage loans held for sale 275 294 488 489 Gains on sales of securities available for sale - - 80 35 Other 220 129 417 249 ----- ----- ---- ----- Total non-interest income $1,853 $1,413 $ 3,433 $ 2,647 ====== ===== ====== ====== Non-interest expenses Salaries and employee benefits $2,316 $1,889 $ 4,633 $ 3,722 Net occupancy expense 278 252 533 484 Furniture and equipment expense 414 327 771 672 Other 883 784 1,750 1,577 ------ ----- ----- ----- Total non-interest expenses $3,891 $3,252 $ 7,687 $ 6,455 ===== ===== ===== ===== Non-interest income increased $440,000, or 31.1%, for the second quarter of 1997, and $786,000 or 30.0% for the first six months of 1997, compared to the same periods in 1996. Trust income increased $254,0000 or 41.8% in the second quarter of 1997 and $369,000 or 32.4% in the first half of 1997, as compared to the same periods in 1996. Trust assets under management at June 30, 1997 were $595,000,000 as compared to $470,000,000 at December 31, 1996. Service charges on deposit accounts increased $114,000 or 29.8% in the second quarter of 1997 and $205,000 or 27.9% in the first six months of 1997, as compared to the same periods in 1996. Growth in deposit accounts spurred by the introduction of new deposit products and by the opening of new branch offices has presented opportunities for increased fee income in this area. Additionally, rates for some deposit services were raised in the second quarter of 1996. Gains on sales of mortgage loans were $275,000 in the second quarter of 1997 compared to $294,000 in 1996 and $488,000 in the first half of 1997, as compared to $489,000 in 1996. The Kentucky Bank operates a mortgage banking company which originates residential mortgage loans and sells the loans in the secondary market. The volume of loans originated by the mortgage company has increased more than the gains on sales would indicate. Profit margins on these loans have decreased markedly as competition in the industry has increased. Gains on sales of securities available for sale during the first quarter of both 1997 and 1996 occurred as management sold lower yielding, shorter term securities for intermediate term, higher yielding securities. Other non-interest income increased $91,000 or 70.5% in the second quarter of 1997 and $168,000 or 67.5% in the first half of 1997 compared to 1996. Numerous factors contribute to this increase including the addition of a brokerage function in the first quarter of 1996. Non-interest expenses increased $639,000 or 19.6% for the second quarter of 1997 and $1,232,000 or 19.1% for the first six months of 1997 compared to the same periods in 1996. Salaries and employee benefits increased $427,000, or 22.6%, for the second quarter of 1997 and $911,000 or 24.5% for the first half of 1997 compared to the same periods in 1996. These increases arose in part from regular salary increases. Also, employees have been added throughout 1997 and 1996 with the opening of new branches. The Banks had 231 full time equivalent employees as of June 30, 1997 and 207 full time equivalents as of June 30, 1996. In addition, the Banks have an incentive plan in place which is based on profitability and employee performance. Expense accrues throughout the year, and with higher earnings and a growing employee base, these incentives have increased. Net occupancy expense increased $26,000 or 10.3% in the second quarter of 1997 and $49,000 or 10.1% for the first six months of 1997, as compared to 1996. Furniture and equipment expense increased $87,000, or 26.6%, for the second quarter of 1997 and $99,000 or 14.7% for the first half of 1997 compared to 1996. These increases are largely due to the opening of new banking centers. In 1996 the Kentucky Bank opened its Stony Brook and Springhurst banking centers and the Indiana Bank was acquired. In 1997, the Stony Brook branch moved into its permanent facility, and the historic rehabilitation of the Bourbon Stockyards Exchange building was completed. Virtually all non-customer contact employees moved into this building during the second quarter of 1997. Additionally, the Banks continue to update computer equipment and software as technology advances. These additions flow through the statement of income as depreciation expense. Other non-interest expenses have increased 12.6% in the second quarter and 11.0% in the first half of 1997 as compared to 1996. Again, these increases are reflective of the Banks' expansion. Also, goodwill amortization related to the Indiana Bank acquisition is included in 1997 totals. That amount was $35,000 in the first half of 1997. Income Taxes Bancorp had income tax expense of $1,577,000 for the first six months of 1997 compared to $1,160,000 for the same period in 1996. The effective rate was 33.0% in 1997 and 32.5% in 1996. The increase in the effective tax rate is due to a decreasing proportion of tax exempt interest. B. FINANCIAL CONDITION Total Assets Total assets increased $18,309,000 from December 31, 1996 to June 30, 1997. Average assets for the first six months of 1997 were $416,327,000. Total assets at June 30, 1997 increased $79,640,000 from June 30, 1996, representing a 22.5% increase. Since year end, loans have increased approximately $26.4 million; cash, due from banks and federal funds sold increased $3.7 million; securities available for sale increased $10.2 million, and securities held to maturity decreased $25.1 million. Nonperforming Loans and Assets Nonperforming loans, which include nonaccrual and loans past due over 90 days, totaled $855,000 at June 30, 1997 and $854,000 at December 31, 1996. This represents .26% of total loans at June 30, 1997 compared to .28% at December 31, 1996. Nonperforming assets, which include nonperforming loans, other real estate owned and repossessed assets, totaled $973,000 at June 30, 1997 and $1,129,000 at December 31, 1996. This represents .22% of total assets at June 30, 1997 compared to .27% at December 31, 1996. 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. The Banks have a number of sources of funds to meet its liquidity needs on a daily basis. An increase in loans affects liquidity as the repayment of principal and interest are a daily source of funds. The deposit base, consisting of relatively stable consumer and commercial deposits, and large denomination ($100,000 and over) certificates of deposit, is another source of funds. The majority of these deposits are from long term customers and are a stable source of funds. In addition, federal funds purchased continue to be a source of funds. 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 Kentucky Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB). As a member of the FHLB, the Kentucky Bank has access to credit products of the FHLB. These credit services provide the Kentucky Bank with another source of funds. To date, the Kentucky Bank has not accessed this source of funds. Bancorp's liquidity depends primarily on the dividends paid to it as the sole shareholder of the Banks. At June 30, 1997, the Banks may pay up to $9,173,000 in dividends to Bancorp without regulatory approval. D. CAPITAL RESOURCES At June 30, 1997, stockholders' equity totaled $33,969,000, an increase of $2,375,000 since December 31, 1996. One component of equity is net unrealized gain (loss) on securities available for sale, net of tax. Fluctuations in the bond market resulted in a net unrealized gain as of June 30, 1997. The unrealized gain on securities available for sale, net of tax, showed a $218,000 gain at year end and a $74,000 gain as of June 30, 1997. 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 June 30, 1997, and December 31, 1996, the Banks' and Bancorp's tier 1 total risk based capital and leverage ratios were 9.83%, 11.20% and 7.78%, respectively. These ratios exceed the 4.00% tier 1, 8.0% total risk based capital and 4% leverage ratio minimums. Capital ratios of the Kentucky Bank and the consolidated entity have decreased slowly. Despite record earnings and conservative dividend policies, with the rapid expansion of the Kentucky Bank assets have increased faster than capital has grown. Management monitors this situation and plans to maintain capital ratios within well capitalized parameters. E. NEW ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128 "Earnings Per Share" and SFAS No. 129 "Disclosure of Information About Capital Structure." SFAS No. 128 simplifies the computation of earnings per share ("EPS") by replacing the presentation of primary EPS with a presentation of basic EPS. The Statement requires dual presentation of basic and diluted EPS by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully diluted EPS. SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods, and requires restatement of all prior period EPS data presented. Bancorp does not expect the implementation of this Statement to have a material effect on the financial statements. SFAS No. 129 establishes standards for disclosing information about an entity's capital structure. This Statement contains no change in disclosure requirements for companies that were subject to previously existing requirements. This Statement was issued to eliminate the exemption of nonpublic entities from certain previously issued disclosure requirements. This Statement is effective for financial statements for periods ending after December 15, 1997. Implementation of this Statement will not have a material effect on Bancorp's financial statements. Part II - Other Information Item 4. Submission of Matters to a Vote of Security Holders On April 23, 1997, at the Annual Meeting of Shareholders of S.Y. Bancorp, Inc., the following matters were submitted to a vote of shareholders. Represented in person or by proxy were 2,130,226 shares, and those shares were as follows. (1)Fixing the number of directors at fifteen (15) and electing at the Annual Meeting five (5) directors: FOR: 2,116,346 AGAINST: 2,085 ABSTAIN: 11,796 (2) Election of Directors: Bancorp has a staggered board of Directors. The following individuals were nominated in 1996. All nominees were elected. FOR AGAINST ABSTAIN James Carrico 10,639,006 10,110 - Jack Crowner 10,646,266 2,850 - Leonard Kaufman 10,642,636 6,480 - George Keller 10,622,347 26,768 - Bruce Madison 10,643,557 5,560 - Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (11) Computation of Per Share earnings (b) Reports on Form 8-K The registrant was not required to file a Form 8-K for any of the three months ended June 30, 1997. 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: August 12, 1997 By: /s/ David H. Brooks David H. Brooks, Chairman and Chief Executive Officer Date: August 12, 1997 By: /s/ David P. Heintzman David P. Heintzman, President Date: August 12, 1997 By: /s/ Nancy B. Davis Nancy B. Davis, Senior Vice President, Treasurer and Chief Financial Officer EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS S.Y. Bancorp, Inc. and Subsidiaries For the Three Months For the Six Months Ended June 30 Ended June 30 1997 1996 1997 1996 PRIMARY Average shares outstanding 3,275,257 3,267,772 3,274,143 3,264,252 Effect of assumed conversion of stock options under treasury stock method 122,249 96,586 116,532 94,300 3,397,506 3,364,358 3,390,675 3,358,552 Net income $1,721,000 $1,336,000 $3,204,000 $2,408,000 Per share $ .51 $ .40 $ .94 $ .72 FULLY DILUTED Average shares outstanding 3,275,257 3,267,772 3,274,143 3,264,252 Effect of assumed conversion of stock options under treasury stock method 124,542 100,762 121,252 103,726 3,399,799 3,368,534 3,395,395 3,367,978 Net income $1,721,000 $1,336,000 $3,204,000 $2,408,000 Per share $ .51 $ .40 $ .94 $ .72 All share and per share information has been restated to reflect the 2-for-1 stock split which occurred in the third quarter of 1996. EX-27 3
9 3-MOS 6-MOS DEC-31-1997 DEC-31-1997 JUN-30-1997 JUN-30-1997 22,986 22,986 0 0 600 600 0 0 29,610 29,610 31,011 31,011 31,006 31,006 327,926 327,926 5,575 5,575 433,674 433,674 373,325 373,325 3,969 3,969 20,226 20,226 2,185 2,185 0 0 0 0 5,465 5,465 28,504 28,504 433,674 433,674 7,405 14,466 1,013 1,932 135 372 8,553 16,770 3,389 6,752 3,705 7,285 4,848 9,485 225 450 0 80 3,891 7,687 2,585 4,781 2,585 4,781 0 0 0 0 1,721 3,204 .51 .94 .51 .94 8.75 8.72 855 855 0 0 0 0 4,930 4,930 5,359 5,155 21 52 12 22 5,575 5,575 5,575 5,575 0 0 1,095 1,095
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