Prepared by MerrillDirect

S.Y. BANCORP, INC. AND SUBSIDIARY Unaudited Consolidated Statements of Income For the three months ended June 30, 2001 and 2000 (In thousands, except share and per share data)
			2001		2000

Interest income:
	Loans		$	15,010	13,452
	Federal funds sold		275		51
	Mortgage loans held for sale		115		47
	U.S. Treasury and Federal agencies		900		844
	Obligations of states and political subdivisions		303		254

		Total interest income	16,603		14,648

Interest expense:
	Deposits		7,411		6,129
	Securities sold under agreements to repurchase and federal funds purchased		413		645
	Other short-term borrowings		18		44
	Long-term debt		107		40
	Long-term debt - trust preferred securities		150		—

		Total interest expense	8,099		6,858

		Net interest income	8,504		7,790
Provision for loan losses			1,075		585

		Net interest income after provision for loan losses	7,429		7,205

Non-interest income:
	Investment management and trust services		1,890		1,520
	Service charges on deposit accounts		1,802		1,539
	Gains on sales of mortgage loans held for sale		477		300
	Other		682		643

		Total non-interest income	4,851		4,002

Non-interest expenses:
	Salaries and employee benefits		4,301		4,058
	Net occupancy expense		446		468
	Furniture and equipment expense		581		594
	Other		2,039		1,795

		Total non-interest expenses	7,367		6,915

		Income before income taxes	4,913		4,292
Income tax expense			1,561		1,390


		Net income	$	3,352	2,902


Net income per share:
	Basic		$	0.50	0.44

	Diluted		$	0.49	0.43

Average common shares
	Basic		6,656,341		6,632,598

	Diluted		6,909,938		6,820,667


See accompanying notes to unaudited consolidated financial statements.

S.Y. BANCORP, INC. AND SUBSIDIARY Unaudited Consolidated Statements of Income For the six months ended June 30, 2001 and 2000 (In thousands, except share and per share data)
			2001		2000

Interest income:
	Loans		$	29,956	25,707
	Federal funds sold		531		110
	Mortgage loans held for sale		170		91
	U.S. Treasury and Federal agencies		1,817		1,711
	Obligations of states and political subdivisions		597		510

		Total interest income	33,071		28,129

Interest expense:
	Deposits		15,096		11,496
	Securities sold under agreements to repurchase and federal funds purchased		992		1,277
	Other short-term borrowings		34		72
	Long-term debt		147		81
	Long-term debt - trust preferred securities		150		—

		Total interest expense	16,419		12,926

		Net interest income	16,652		15,203
Provision for loan losses			1,875		1,165

		Net interest income after provision for loan losses	14,777		14,038

Non-interest income:
	Investment management and trust services		3,580		2,978
	Service charges on deposit accounts		3,383		2,523
	Gains on sales of mortgage loans held for sale		844		553
	Other		1,414		1,270

		Total non-interest income	9,221		7,324

Non-interest expenses:
	Salaries and employee benefits		8,661		7,881
	Net occupancy expense		920		905
	Furniture and equipment expense		1,184		1,197
	Other		3,842		3,275

		Total non-interest expenses	14,607		13,258

		Income before income taxes	9,391		8,104
Income tax expense			3,000		2,610


		Net income	$	6,391	5,494


Net income per share:
	Basic		$	0.96	0.83

	Diluted		$	0.93	0.81

Average common shares
	Basic		6,650,736		6,635,217

	Diluted		6,874,830		6,823,787


See accompanying notes to unaudited consolidated financial statements.

S.Y. BANCORP, INC. AND SUBSIDIARY Unaudited Consolidated Statements of Cash Flows For the six months ended June, 2001 and 2000 (In thousands)
			2001			2000

Operating activities:
Net income			$	6,391		5,494
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Provision for loan losses		1,875			1,165
	Depreciation, amortization and accretion, net		899			955
	Gains on sales of mortgage loans held for sale		(844		)	(553	)
	Origination of mortgage loans held for sale		(48,912		)	(26,078	)
	Proceeds from sale of mortgage loans held for sale		46,478			25,219
	Income tax benefit of stock options exercised		30			17
	Increase in accrued interest receivable and other assets		(61		)	(1,344	)
	Decrease in accrued interest payable and other liabilities		(553		)	(316	)

		Net cash provided by operating activities	5,303			4,559

Investing activities:
	Net decrease in federal funds sold		15,520			4,859
	Purchases of securities available for sale		(18,906		)	(1,832	)
	Proceeds from maturities of securities available for sale		14,205			5,555
	Proceeds from maturities of securities held to maturity		1,812			2,476
	Proceeds from sales of securities available for sale		—			—
	Net increase in loans		(54,698		)	(72,254	)
	Purchases of premises and equipment		(1,939		)	(1,174	)

		Net cash used by investing activities	(44,006		)	(62,370	)

Financing activities:
	Net increase in deposits		17,348			61,525
	Net increase (decrease) in securities sold under agreements to repurchase and federal funds purchased		(8,699		)	559
	Net increase (decrease) in other short-term borrowings		1,917			(1,475	)
	Repayments of long-term debt		(1,800		)	—
	Proceeds from long-term debt - trust preferred securities		20,000			—
	Issuance of common stock for options and dividend reinvestment plan		323			342
	Common stock repurchases		(220		)	(686	)
	Cash dividends paid		(1,396		)	(1,197	)

		Net cash provided by financing activities	27,473			59,068

Net increase (decrease) in cash and cash equivalents			(11,230		)	1,257
Cash and cash equivalents at beginning of period			44,597			27,813

Cash and cash equivalents at end of period			$	33,367		29,070

Supplemental cash flow information:
	Income tax payments		$	3,700		2,100
	Cash paid for interest		$	16,278		12,882

See accompanying notes to unaudited consolidated financial statements.

S.Y. BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statement of Changes in Stockholders' Equity
For the six months ended June 30, 2001
(In thousands, except share and per share data)


	Common Stock											Accumulated
												Other
	Number of								Retained			Comprehensive
	Shares		Amount			Surplus			Earnings			Income		Total


Balance December 31, 2000	6,637,477		$	5,595		$	14,292		$	40,380		$	21	$	60,288

Net income	—		—			—			6,391			—		6,391

Change in other
comprehensive income,
net of tax	—		—			—			—			567		567

Shares issued for stock
options exercised and
employee benefit plans	37,765		113			240			—			—		353


Cash dividends, $0.22 per share	—		—			—			(1,465		)	—		(1,465		)

Shares repurchased	(10,121	)	(34		)	(186		)	—			—		(220		)


Balance June 30, 2001	6,665,121		$	5,674		$	14,346		$	45,306		$	588	$	65,914


See accompanying notes to unaudited consolidated financial statements.

S.Y.BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Comprehensive Income
For the three months ended June 30, 2001 and 2000
(In thousands)


			2001			2000

Net income			$	3,352		2,902
Other comprehensive income (loss), net of tax:
	Unrealized holding losses on securities available for sale arising during the period		(27		)	(101	)
	Less reclassification adjustment for gains included in net income		—			—


Other comprehensive income (loss)			(27		)	(101	)


		Comprehensive income	$	3,325		2,801


See accompanying notes to unaudited consolidated financial statements.

S.Y. BANCORP, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Comprehensive Income
For the six months ended June 30, 2001 and 2000
(In thousands)


				2001		2000

Net income				$	6,391	5,494
Other comprehensive income (loss), net of tax:
	Unrealized holding gains (losses) on securities available for sale			567		(310	)
		arising during the period
	Less reclassification adjustment for gains included in net income			—		—


Other comprehensive income (loss)				567		(310	)


			Comprehensive income	$	6,958	5,184


See accompanying notes to unaudited consolidated financial statements.

S.Y. BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited 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 accounting principles generally accepted in the United States of America for complete financial statements. The consolidated financial statements of S.Y. Bancorp, Inc. and its subsidiary 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 unaudited consolidated financial statements include the accounts of S.Y. Bancorp, Inc. and its wholly-owned subsidiary, Stock Yards Bank & Trust Company. All significant intercompany transactions have been eliminated in consolidation.

A description of other significant accounting policies is presented in the notes to the Consolidated Financial Statements for the year ended December 31, 2000 included in S.Y. Bancorp, Inc.’s Annual Report on Form 10-K for the year then ended.

Interim results for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results for the entire year.

(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)		2001			2000

Beginning balance		$	9,331		7,336
Provision for loan losses		1,875			1,165
Loans charged off		(1,133		)	(336	)
Recoveries		147			552


	Ending balance	$	10,220		8,717

(3) Long-term Debt – Trust Preferred Securities

On June 1, 2001, S.Y. Bancorp Capital Trust I (Trust), a Delaware statutory business trust and 100%-owned finance subsidiary of Bancorp, issued $20.0 million of 9.00% Cumulative Trust Preferred Securities (Securities) which will mature on June 30, 2031, but prior redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules. The principal asset of S.Y. Bancorp Capital Trust I is a $20.0 million subordinated debenture of Bancorp. The subordinated debenture bears interest at the rate of 9.00% and matures June 30, 2031, subject to prior redemption under certain circumstances. Bancorp owns all of the common securities of the Trust.

The Securities, the assets of the Trust, and the common securities issued by the Trust are redeemable in whole or in part on or after June 30, 2006, or at any time in whole, but not in part, from the date of issuance upon the occurrence of certain events. The Securities are included in Tier 1 capital for regulatory capital adequacy determination purposes, subject to certain limitations. The obligations of Bancorp with respect to the issuance of the Securities constitute a full and unconditional guarantee by Bancorp of the Trust’s obligation with respect to the Securities.

Subject to certain exceptions and limitations, Bancorp may, from time to time, defer subordinated debenture interest payments, which would result in a deferral of distribution payments on the related Securities and, with certain exceptions, prevent Bancorp from declaring or paying cash distributions on Bancorp’s common stock or debt securities that rank pari passu or junior to the subordinated debenture.

(4) Net Income per share

The following table reflects, for the three and six months periods ended June 30, the numerators (net income) and denominators (average shares outstanding) for the basic and diluted net income per share computations (in thousands except per share data):

	Three Months			Six Months
	Ended June 30			Ended June 30
	2001		2000	2001	2000

Net income, basic and diluted	$	3,352	2,902	6,391	5,494

Average shares outstanding	6,656		6,633	6,651	6,635
Effect of dilutive securities	254		188	224	189


Average shares outstanding including dilutive securities	6,910		6,821	6,875	6,824


Net income per share, basic	$	0.50	.44	0.96	.83

Net income per share, diluted	$	0.49	.43	0.93	.81

(5) Segments

The Bank’s, and thus Bancorp’s principal activities include commercial and retail banking, investment management and trust, and mortgage banking. Commercial and retail banking provides a full range of loans and deposit products to individual consumers and businesses. Investment management and trust provides wealth management services including brokerage, estate planning and administration, retirement plan management, and custodian or trustee services. Mortgage banking originates residential loans and sells them, servicing released, in the secondary market.

The financial information for each business segment reflects that which is specifically identifiable or allocated based on an internal allocation method. The measurement of the performance of the business segments is based on the management structure of the Bank and is not necessarily comparable with similar information for any other financial institution. The information presented is also not necessarily indicative of the segments’ operations, if they were independent entities.

Selected financial information by business segment for the three and six months ended June 30, 2001 and 2000 follows:

			Three Months				Six Months
			Ended June 30				Ended June 30
(In thousands)			2001			2000	2001	2000


Net interest income:
	Commercial and retail banking		$	8,409		7,386	16,434	14,293
	Investment management and trust		(10		)	291	4	688
	Mortgage banking		105			113	214	222


		Total	$	8,504		7,790	16,652	15,203


Non-interest income:
	Commercial and retail banking		$	2,270		1,928	4,334	3,271
	Investment management and trust		1,934			1,668	3,752	3,304
	Mortgage banking		647			406	1,135	749


		Total	$	4,851		4,002	9,221	7,324


Net income:
	Commercial and retail banking		$	2,659		2,044	5,103	3,958
	Investment management and trust		552			739	1,016	1,355
	Mortgage banking		141			119	272	181


		Total	$	3,352		2,902	6,391	5,494

Principally, all of the net assets of S.Y. Bancorp, Inc. are involved in the commercial and retail banking segment.

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 subsidiary, Stock Yards Bank & Trust Company for the three and six months ended June 30, 2001 and compares that period with the same period of the previous year. Unless otherwise indicated, all references in this discussion to the “Bank” include Bancorp. In addition, the discussion describes the significant changes in the financial condition of Bancorp and the Bank that have occurred during the first six months of 2001 compared to December 31, 2000. This discussion should be read in conjunction with the consolidated financial statements and accompanying notes presented in Part I, Item 1 of this report.

This report contains forward-looking statements under the Private Securities Litigation Reform act that involve risks and uncertainties. Although Bancorp believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Factors that could cause actual results to differ from results discussed in forward-looking statements include, but are not limited to: economic conditions both generally and more specifically in the market in which Bancorp and its subsidiary operate; competition for Bancorp’s customers from other providers of financial services; government legislation and regulation which change from time to time and over which Bancorp has no control; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of Bancorp’s customers; other risks detailed in Bancorp’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of Bancorp.

(a) Results Of Operations

Net income of $3,352,000 for the three months ended June 30, 2001 increased $450,000 or 15.5% from $2,902,000 for the comparable 2000 period. Basic net income per share was $.50 for the second quarter of 2001, an increase of 13.6% from the $.44 for the same period in 2000. Net income on a diluted basis was $.43 for the second quarter of 2000 compared to $.49 for the second quarter of 2001. This represents a 14.0% increase. Return on average assets and return on average stockholders’ equity were 1.55% and 21.06%, respectively, for the second quarter of 2001, compared to 1.59% and 21.97%, respectively, for the same period in 2000.

Net income of $6,391,000 for the six months ended June 31, 2001 increased $897,000 or 16.3% from the comparable 2000 period. Basic net income per share was $.96 for the first six months of 2001, an increase of 15.7% from the same period in 2000. Net income on a diluted basis was $.93 for the first six months of 2001 compared to $.81 for the first six months of 2000. This represents a 14.8% increase. Return on average assets and return on average stockholders’ equity were 1.50% and 20.35%, respectively, for the first six months of 2001, compared to 1.55% and 21.26%, respectively, for the same period in 2000.

The following paragraphs provide a more detailed analysis of the significant factors affecting operating results and financial condition.

Net Interest Income

			Three Months					Six Months
			Ended June 30					Ended June 30
(Dollars in thousands)			2001			2000		2001		2000


Interest income			$	16,603		14,648		33,071		28,129
Tax equivalent			147			111		276		224


	Interest income, tax equivalent basis		16,750			14,759		33,347		28,353

Total interest expense			8,099			6,858		16,419		12,926


		Net interest income, tax equivalent basis (1)	8,651			7,901		16,928		15,427


Net interest spread (2), annualized			3.54		%	3.82	%	3.51	%	3.91	%

Net interest margin (3), annualized			4.24		%	4.60	%	4.23	%	4.66	%

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 $8,651,000 for the three months ended June 30, 2001 increased $750,000 or 9.5% from $7,901,000 from the same period last year. Net interest spread and net interest margin were 3.54% and 4.24%, respectively, for the second quarter of 2001 and 3.82% and 4.60%, respectively, for the second quarter of 2000. Management expects net interest margin to decline somewhat in the third quarter and show improvement in the fourth quarter. These expectations could be impacted negatively by rate decreases by the Federal Reserve Bank beyond what is expected by Management. Management currently expects an additional 25 basis point cut in the prime lending rate by the Federal Reserve Bank in 2001.

Fully taxable equivalent net interest income of $16,928,000 for the six months ended June 30, 2001 increased $1,501,000 or 9.7% from the same period last year. Net interest spread and net interest margin were 3.51% and 4.23%, respectively, for the first half of 2001 and 3.91% and 4.66%, respectively, for the first half of 2000.

Average earning assets increased $140,556,000, or 21.1% to $807,502,000 for the first half of 2001 compared to 2000. Average interest bearing liabilities increased $128,232,000 or 22.9% to $687,229,000 for the first six months of 2001 compared to 2000.

Managing interest rate risk is fundamental for the financial services industry. The primary objective of interest rate risk management is to neutralize effects of interest rate changes on net income. By using both on and off-balance sheet financial instruments, Bank management evaluates interest rate sensitivity while attempting to optimize net interest income within the constraints of prudent capital adequacy, liquidity needs, market opportunities and customer requirements.

Bancorp uses an earnings simulation model to measure and evaluate the impact of changing interest rates on earnings. The simulation model is designed to reflect the dynamics of all interest earning assets, interest bearing liabilities and off-balance sheet financial instruments, combining factors affecting rate sensitivity into a one year forecast. By forecasting management’s estimate of the most likely rate environment and adjusting those rates up and down the model can reveal approximate interest rate risk exposure. The June 30, 2001 simulation analysis indicates that an increase in interest rates would have a positive effect on net interest income, and a decrease in interest rates would have a negative effect on net interest income.

Interest Rate Simulation Sensitivity Analysis

	Net Interest Income Change		Net Income Change


Increase 200bp	8.95	%	16.60	%
Increase 100bp	4.50		8.34
Decrease 100bp	(4.53	)	(8.41	)
Decrease 200bp	(9.16	)	(16.99	)

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:

(Dollars in thousands)		Six Months Ended June 30

		2001			2000


Balance at the beginning of the period		$	9,331		$	7,336
Provision for loan losses		1,875			1,165
Loan charge-offs, net of recoveries		(986		)	216


	Balance at the end of the period	$	10,220		$	8,717


Average loans, net of unearned income		$	692,879		$	582,893


Provision for loan losses to average loans (1)		0.55		%	0.40		%


Net loan charge-offs (recoveries) to average loans (1)		0.29		%	(0.07		)%


Allowance for loan losses to average loans		1.48		%	1.50		%

Allowance for loan losses to period-end loans		1.42		%	1.41		%

(1) Amounts annualized

The provision for loan losses increased in 2001 due to significant loan growth and in consideration of loan charge offs during the period. Approximately $700,000 of net charge-offs for the first six months of 2001 relate to one commercial relationship. Management expects no further charge-offs related to this relationship. No other charge-offs during the period were individually significant.

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, 2001 and 2000.

(In thousands)			Three Months Ended June 30			Six Months Ended June 30
			2001		2000	2001	2000

Non-interest income:
	Investment management and trust services		$	1,890	1,520	3,580	2,978
	Service charges on deposit accounts		1,802		1,539	3,383	2,523
	Gains on sales of mortgage loans held for sale		477		300	844	553
	Other		682		643	1,414	1,270


		Total non-interest income	$	4,851	4,002	9,221	7,324


Non-interest expenses:
	Salaries and employee benefits		4,301		4,058	8,661	7,881
	Net occupancy expense		446		468	920	905
	Furniture and equipment expense		581		594	1,184	1,197
	Other		2,039		1,795	3,842	3,275


		Total non-interest expenses	$	7,367	6,915	14,607	13,258

Non-interest income increased $849,000, or 21.2%, for the second quarter of 2001, compared to the same period in 2000. Investment management and trust services income increased $370,000 or 24.3% in the second quarter of 2001, as compared to the same period in 2000. Trust assets under management at June 30, 2001 were $1.11 billion as compared to $1.06 billion at December 31, 2000 and $1.03 billion at June 30, 2000. Investment management and trust services income was positively affected by growth in the number accounts and the mix of account types in addition to the growth in assets under management.

Non-interest income increased $1,897,000 or 25.9% for the first half of 2001 compared to the same period of 2000. Investment management and trust services income increased $602,000 or 20.2% in the first half of 2001 as compared to the same period.

Service charges on deposit accounts increased $263,000 or 17.1% in the second quarter of 2001 and $860,000 or 34.1% in the first half of 2001 as compared to the same periods in 2000. Opening new branch offices and promotion of retail accounts have presented opportunities for growth in deposit accounts and increased fee income. Additionally, in March of 2000 the Bank began offering an overdraft service to retail depositors. The service allows checking customers meeting specific criteria to incur overdrafts up to a predetermined limit, generally $500. For each check paid resulting in or increasing an overdraft, the customer pays the standard overdraft charge. During the second quarter and first six months of 2001, these fees totaled approximately $518,000 and $889,910, respectively.

Gains on sales of mortgage loans were $477,000 in the second quarter of 2001 and $844,000 in the first half of 2001 compared to $300,000 and $553,000, respectively, in 2000. The Bank operates a mortgage banking company which originates residential mortgage loans and sells the loans in the secondary market. Favorable interest rates in 2001 have stimulated home buying and refinancing. As interest rates have decreased, mortgage loan volume has increased, resulting in a corresponding increase in revenues.

No gains on sales of securities occurred in 2001 or 2000.

Other non-interest income increased $39,000 or 6.1% in the second quarter of 2001 and $144,000 or 11.3% in the first half of 2001 compared to 2000. Numerous factors contributed to this increase, including (year to date) approximately $60,000 related to recoveries on other real estate owned, $70,000 from check card income, and $71,000 from fees for mortgage loans sold. These increases were partially offset by a decrease in brokerage income during the period.

Non-interest expenses increased $452,000 or 6.5% for the second quarter of 2001 and $1,349,000 or 10.2% year to date 2001 as compared to the same periods in 2000. Salaries and employee benefits increased $243,000, or 6.0%, for the second quarter of 2001 and $780,000 or 9.9% year to date compared to the same periods in 2000. Employees continue to be added to support the Bank’s growth. The Bank had 329 full time equivalent employees as of June 30, 2001 and 321 full time equivalents as of June 30, 2000. These increases also arose in part from regular salary increases. Net occupancy expense decreased $22,000 or 4.7% in the second quarter of 2001 as compared to 2000,while it increased $15,000 or 1.7% on a year to date basis. Furniture and equipment expense was down slightly or $13,000 for the second quarter of 2001 and year to date 2001 compared to 2000. Other non-interest expenses have increased $244,000 or 13.6% in the second quarter of 2001 and $567,000 or 17.3% year to date 2001 as compared to 2000.

Income Taxes

Bancorp had income tax expense of $3,000,000 for the first six months of 2001, compared to $2,610,000 for the same period in 2000. The effective rate for each six month period was 31.9% in 2001 and 32.2% in 2000.

(b) Financial Condition

Total Assets

Total assets increased $33,908,000 from $852,260,000 on December 31, 2000 to $886,168,000 on June 30, 2001. Average assets for the first six months of 2001 were $858,380,000. Total assets at June 30, 2001 increased $132,191,000 from June 30, 2000, representing a 17.5% increase. Since year end, loans have increased approximately $53.7 million; cash and due from banks and federal funds sold decreased $26.8 million; securities available for sale increased $5.5 million, and securities held to maturity decreased $1.8 million. Mortgage loans available for sale increased $3.3 million since the end of 2000.

Non-performing Loans and Assets

Non-performing loans, which included non-accrual loans of $3,531,000 and loans past due over 90 days of $419,000, totaled $3,950,000 at June 30, 2001. Non-performing loans were $2,944,000 at December 31, 2000. This represents .55% of total loans at June 30, 2001 compared to .44% at December 31, 2000.

Non-performing assets, which include non-performing loans, other real estate and repossessed assets, totaled $3,950,000 at June 30, 2001 and $3,777,000 at December 31, 2000. This represents .45% of total assets at June 30, 2001 compared to .44% at December 31, 2000.

(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. Management believes it has the ability to increase deposits at any time by offering rates slightly higher than the market rate.

The Bank has a number of sources of funds to meet its liquidity needs on a daily basis. The deposit base, consisting of relatively stable consumer and commercial deposits, and large denomination ($100,000 and over) certificates of deposit, is a source of funds. The majority of these deposits are from long-term customers and are a stable source of funds. The Bank has no brokered deposits.

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 Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB). As a member of the FHLB, the Bank has access to credit products of the FHLB. To date, the Bank has not needed to access this source of funds. Additionally, the Bank has an available line of credit and federal funds purchased lines with correspondent banks totaling $56 million.

Bancorp’s liquidity depends primarily on the dividends paid to it as the sole shareholder of the Bank. At June 30, 2001, the Bank may pay up to $21,375,000 in dividends to Bancorp without regulatory approval subject to the ongoing capital requirements of the Bank. During the first and second quarters the Bank paid dividends to Bancorp totaling $1,598,000.

(d) Capital Resources

At June 30, 2001, stockholders’ equity totaled $65,914,000, an increase of $5,626,000 since December 31, 2000. One component of equity is accumulated other comprehensive income which for Bancorp consists of net unrealized gains on securities available for sale, and a minimum pension liability adjustment, net of taxes. Accumulated other comprehensive income was $588,000 at June 30, 2001 and $21,000 at December 31, 2000. The change since year end is a reflection of the effect of changing interest rates on the valuation of the Bank’s portfolio of securities available for sale.

Bancorp issued $20.0 million of 9.00% Cumulative Trust Preferred Securities in June 2001. The issue was sold in a public offering. Bancorp used approximately $13.3 million of the net proceeds from this offering to reduce indebtedness outstanding under a line of credit with an unaffiliated bank. The remaining net proceeds will be used for making additional capital contributions to the Bank, for repurchases of common stock, and for general corporate purposes. The trust preferred securities increased Bancorp’s regulatory capital and allow for the continued growth of its banking franchise. The ability to treat these trust preferred securities as regulatory capital under Federal Reserve guidelines, coupled with the Federal income tax deductibility of the related expense, provides Bancorp with a cost-effective form of capital.

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, 2001, Bancorp’s tier 1, total risk based capital and leverage ratios were 12.35%, 13.64% and 9.92%, respectively. These ratios exceed the minimum required by regulators to be well capitalized.

(e) Recently Issued Accounting Pronouncements

In September, 2000, the Financial Accounting Standards Board issued Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities” that replaces Statement No. 125. This statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The standards are based on the consistent application of the financial components approach, where upon after a transfer, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred and derecognizes financial liabilities when extinguished.

This statement is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. This statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000.

A transfer of financial assets in which the transferor surrenders control is accounted for as a sale to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. This statement requires that liabilities and derivatives transferred be initially measured at fair value, if practicable. Servicing assets and other retained interests in the transferred assets are to be measured by allocating the previous carrying amount between the assets and retained interest sold, if any, based on their relative fair values are the date of the transfer.

This statement requires the servicing assets and liabilities be subsequently measured by amortization in proportion to and over the period of estimated net servicing income or loss and assessment for asset impairment or increased obligation based on their fair values.

This statement also requires that a liability be derecognized if the debtor pays the creditor and is relieved of its obligation for the liability or the debtor is legally released from being the primary obligor under the liability either judicially or by the creditor.

As Bancorp currently has no servicing assets, management believes there is no impact on the consolidated financial statements.

In July 2001, the Financial Accounting Standards Board issued Statement No. 141, “Business Combinations” which supersedes Accounting Principles Board (APB) Opinion No. 16, “Business Combinations.” Statement No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. The elimination of the pooling-of-interests method is effective for transactions initiated after June 30, 2001. The remaining provisions of Statement No. 141 will be effective for transactions accounted for using the purchase method that are completed after June 30, 2001.

In July 2001, the Financial Accounting Standards Board also issued Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets” which supersedes APB Opinion No. 17, “Intangible Assets.” Statement No. 142 eliminates the current requirement to amortize goodwill and intangible assets, addresses the amortization of intangible assets with a defined life and addresses impairment testing and recognition for goodwill and intangible assets. Statement No. 142 will apply to goodwill and intangible assets arising from transactions completed before and after the Statement’s effective date. Statement No. 142 is effective for 2002. Management believes the impact of adoption will be immaterial to Bancorp’s consolidated financial statements, as current goodwill and intangible amortization is considered immaterial.

Part II - Other Information

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Information required by this item is include in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 4. Submission of Matters to a Vote of Security Holders

On April 25, 2001, 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 4,769,890 shares, and those shares were as follows:

(1) Fixing the number of directors at thirteen (13) and electing at the Annual Meeting three (3) directors:

	FOR	4,762,633
	AGAINST	3,656
	ABSTAIN	3,601

(2) Election of Directors: Bancorp has a staggered Board of Directors. The following individuals were nominated in 2001. All
nominees were elected. The results below reflect cumulative voting.

	For	Against	Abstain	Withhold

David H. Brooks	14,297,724	-	-	11,946
Carl T. Fischer, Jr.	14,306,532	-	-	3,138
Stanley A. Gall, M.D.	14,306,100	-	-	3,570

Item 6. Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K

On June 4, 2001 the registrant filed a Form 8-K announcing the completion of an offering of 9.00% Cumulative Trust Preferred Securities of S.Y. Bancorp Capital Trust I, a finance subsidiary of S.Y. Bancorp, Inc.

On June 11, 2001 the registrant filed a Form 8-K to include certain exhibits relating to the 9.00% Cumulative Trust Preferred Securities of S.Y. Bancorp Capital Trust I and the 9.00% Subordinated Debentures due 2031 of S.Y. Bancorp, Inc., which were issued and sold on June 1,2001.

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 10, 2001	By:	/s/ David H. Brooks

			David H. Brooks, Chairman
			and Chief Executive Officer


Date:	August 10, 2001	By:	/s/ David P. Heintzman

			David P. Heintzman, President


Date:	August 10, 2001	By:	/s/ Nancy B. Davis

			Nancy B. Davis, Executive Vice
			President, Treasurer and Chief
			Financial Officer

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the quarterly period ended June 30, 2001

	OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Kentucky		61-1137529

(State or other jurisdiction		(I.R.S. Employer
or organization)		Identification No.)


1040 East Main Street, Louisville, Kentucky, 40206
(Address of principal executive offices)
(Zip Code)

(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)

-	Unaudited Consolidated Balance Sheets
	June 30, 2001 and December 31, 2000

-	Unaudited Consolidated Statements of Income
	for the three months ended June 30, 2001 and 2000

-	Unaudited Consolidated Statements of Income
	for the six months ended June 30, 2001 and 2000

-	Unaudited Consolidated Statements of Cash Flows
	for the six months ended June 30, 2001 and 2000

-	Unaudited Consolidated Statement of Changes in Stockholders’
	Equity for the six months ended June 30, 2001

-	Unaudited Consolidated Statement of Comprehensive Income
	for the three months ended June 30, 2001 and 2000

-	Unaudited Consolidated Statement of Comprehensive Income
	for the six months ended June 30, 2001 and 2000

-	Notes to Unaudited Consolidated Financial Statements

S.Y. BANCORP, INC. AND SUBSIDIARY Unaudited Consolidated Balance Sheets June 30, 2001 and December 31, 2000 (In thousands, except share data)

			June 30,		December 31,
Assets			2001		2000

Cash and due from banks			$	33,367	44,597
Federal funds sold			13,500		29,020
Mortgage loans held for sale			5,608		2,330
Securities available for sale (amortized cost $74,252 in 2001 and $69,601 in 2000)			75,443		69,934
Securities held to maturity (approximate fair value $15,389 in 2001 and $17,004 in 2000)			15,083		16,889
Loans			718,346		664,634
Less allowance for loan losses			10,220		9,331

		Net loans	708,126		655,303

Premises and equipment			18,598		17,497
Accrued interest receivable and other assets			16,443		16,690


		Total assets	$	886,168	852,260

Liabilities and Stockholders' Equity
Deposits:
	Non-interest bearing		$	107,627	103,172
	Interest bearing		635,378		622,485

		Total deposits	743,005		725,657

Securities sold under agreements to repurchase and federal funds purchased			43,577		52,276
Other short-term borrowings			3,730		1,813
Accrued interest payable and other liabilities			9,642		10,126
Long-term debt			300		2,100
Long-term debt - trust preferred securities			20,000		—

		Total liabilities	820,254		791,972

Stockholders' equity:
	Common stock, no par value; 10,000,000 shares authorized; 6,665,121 and 6,637,477 shares issued and outstanding in 2001 and 2000, respectively		5,674		5,595
	Surplus		14,346		14,292
	Retained earnings		45,306		40,380
	Accumulated other comprehensive income		588		21

		Total stockholders' equity	65,914		60,288


		Total liabilities and stockholders' equity	$	886,168	852,260


See accompanying notes to unaudited consolidated financial statements.