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 30,1996
------------
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
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)
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 -- 1,634,715
shares issued and outstanding at July 5, 1996
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated financial statements of S.Y.
Bancorp, Inc. and Subsidiary (Stock Yards Bank & Trust Company) are
submitted herewith:
--Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
--Consolidated Statements of Income
for the three months ended June 30, 1996 and 1995
--Consolidated Statements of Income
for the six months ended June 30, 1996 and 1995
--Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and 1995
--Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
S. Y. BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
<CAPTION>
<S> June 30, 1996 December 31, 1995
(In thousands, except share data)
Assets
<C> <C>
Cash and due from banks $ 14,148 $ 16,229
Mortgage loans held for sale 7,986 3,910
Securities available for sale (amortized
cost $16,393 in 1996 and $15,117 in 1995) 16,490 15,545
Securities held to maturity (approximate market
value $34,270 in 1996 and $27,055 in 1995) 33,902 26,710
Loans 271,148 252,937
Less allowance for loan losses 4,838 4,507
------- -------
Net loans 266,310 248,430
Premises and equipment 7,974 6,817
Accrued interest receivable 2,212 2,192
Other assets 5,012 4,521
------- -------
TOTAL ASSETS $354,034 $324,354
======= =======
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing $ 51,205 $ 48,460
Interest bearing 249,492 232,133
------- -------
Total deposits 300,697 280,593
Securities sold under agreements
to repurchase and federal funds purchased 16,803 12,349
Short-term borrowings 3,722 745
Accrued interest payable and
other liabilities 2,906 2,446
Subordinated debentures 607 607
------- -------
TOTAL LIABILITIES 324,735 296,740
------- --------
Stockholders' equity
Common stock, no par value; 5,000,000
shares authorized in 1996 and 3,000,000
in 1995; 1,634,715 and1,627,334 shares
issued and outstanding in 1996 and 1995,
respectively 5,448 5,423
Surplus 13,370 13,245
Retained earnings 10,417 8,664
Net unrealized gain
on securities available for sale 64 282
------- -------
TOTAL STOCKHOLDERS' EQUITY 29,299 27,614
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $354,034 $ 324,354
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
S.Y. BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the three months ended June 30, 1996 and 1995
1996 1995
<CAPTION>
(In thousands, except share and per share data)
<S>
Interest income
<C> <C>
Loans $6,123 $5,344
Federal funds sold 27 188
Mortgage loans held for sale 150 43
U.S. Treasury and Federal agencies 567 528
Obligations of states and political
subdivisions 99 54
Other securities 23 21
----- -----
Total interest income 6,989 6,178
----- -----
Interest expense
Deposits 2,780 2,387
Securities sold under agreements
to repurchase and federal funds purchased 183 169
Short-term borrowings 18 26
Subordinated debentures 12 12
----- -----
Total interest expense 2,993 2,594
----- -----
Net interest income 3,996 3,584
Provision for loan losses 180 480
----- -----
Net interest income after
provision for loan losses 3,816 3,104
----- -----
Non-interest income
Investment management and trust services 608 601
Service charges on deposit accounts 382 305
Gains on sales of mortgage loans
held for sale 294 191
Other 129 140
----- -----
Total non-interest income 1,413 1,237
----- -----
Non-interest expenses
Salaries and employee benefits 1,889 1,500
Net occupancy expense 252 184
Furniture and equipment expense 327 256
FDIC insurance - 125
Other 784 677
----- -----
Total non-interest expenses 3,252 2,742
----- -----
Income before income taxes 1,977 1,599
Income tax expense 641 525
----- -----
Net income $1,336 $1,074
===== =====
Net income per share
Primary and fully diluted $ .79 $ .65
==== ====
Average common shares
Primary 1,682,179 1,649,916
========= =========
Fully diluted 1,684,267 1,649,913
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
S.Y. BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the six months ended June 30, 1996 and 1995
<CAPTION>
1996 1995
(In thousands, except share and per share data)
<S>
Interest income
<C> <C>
Loans $11,981 $10,256
Federal Funds sold 76 337
Mortgage loans held for sale 231 69
U.S. Treasury and Federal agencies 1,089 1,078
Obligations of states and political
subdivisions 195 104
Other securities 44 42
------ ------
Total interest income 13,616 11,886
------ ------
Interest expense
Deposits 5,485 4,373
Securities sold under agreements
to repurchase and federal funds purchased 334 360
Short-term borrowings 38 56
Subordinated debentures 23 23
----- -----
Total interest expense 5,880 4,812
----- -----
Net interest income 7,736 7,074
Provision for loan losses 360 700
----- -----
Net interest income after
provision for loan losses 7,376 6,374
----- -----
Non-interest income
Investment management and trust services 1,139 1,003
Service charges on deposit accounts 735 595
Gains on sales of mortgage loans
available for sale 489 299
Gains on sales of securities
held for sale 35 -
Other 249 238
----- -----
Total non-interest income 2,647 2,135
----- -----
Non-interest expenses
Salaries and employee benefits 3,722 3,025
Net occupancy expense 484 358
Furniture and equipment expense 672 516
FDIC insurance 1 249
Other 1,576 1,377
----- -----
Total non-interest expenses 6,455 5,525
----- -----
Income before income taxes 3,568 2,984
Income tax expense 1,160 980
----- -----
Net income $2,408 $2,004
===== =====
Net income per share
Primary and fully diluted $ 1.43 $ 1.21
==== ====
Average common shares
Primary 1,679,276 1,649,496
========= =========
Fully diluted 1,683,989 1,650,610
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
S.Y. BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
<CAPTION>
(In thousands) 1996 1995
<S>
Operating Activities
<C> <C>
Net income $ 2,408 $ 2,004
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 360 700
Depreciation, amortization and accretion, net 510 326
Gain on sales of mortgages held for sale ( 489) ( 299)
(Increase) decrease in mortgage loans held for sale ( 3,587) ( 1,387)
(Increase) decrease in accrued interest receivable ( 20) 6
(Increase) decrease in other assets ( 312) ( 850)
Increase (decrease) in accrued interest payable 63 489
Increase (decrease) in other liabilities 397 ( 282)
------ ------
Net cash provided (used) by operating activities ( 670) 707
------ ------
Investing Activities
Net (increase) decrease in federal funds sold - 8,000
Purchases of securities held to maturity (16,500) (28,729)
Purchases of securities available for sale ( 6,996) -
Proceeds from maturities of securities
held to maturity 9,164 16,624
Maturities of securities available for sale 1,010 3,001
Proceeds from sales of securities
available for sale 4,850 -
Net (increase) decrease in loans (18,240) (20,464)
Purchases of premises and equipment ( 1,663) ( 708)
------ ------
Net cash provided (used) by investing activities (28,375) (22,276)
------ ------
Financing Activities
Net increase (decrease) in deposits 20,104 25,558
Net increase (decrease) in securities sold under
agreements to repurchase 4,454 ( 169)
Net increase (decrease in short-term borrowings 2,977 104
Exercise of stock options 84 24
Cash dividends paid ( 655) ( 518)
------ ------
Net cash provided (used) by financing activities 26,964 24,999
------ ------
Net increase (decrease) in cash and cash equivalents ( 2,081) 3,430
Cash and cash equivalents at beginning of period 16,229 10,350
------ ------
Cash and cash equivalents at end of period $14,148 $13,780
====== ======
Income tax payments were $1,276,000 in 1996, and $1,146,000 in 1995.
Cash paid for interest was $5,817,000 in 1996, and $5,299,000 in 1995.
Noncash investing and financing activities aggregated $66,000 in 1996 and
$50,000 in 1995.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
S.Y. BANCORP, INC. AND SUBSIDIARY
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 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 consolidated financial statements include the accounts of S.Y.
Bancorp, Inc. (Bancorp) and its wholly owned subsidiary, Stock Yards Bank &
Trust Company. All significant intercompany transactions have been
eliminated in consolidation.
Effective January 1, 1996, Bancorp adopted three new accounting
pronouncements. SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of," requires
long-lived assets such as bank premises and equipment and real estate
acquired in satisfaction of debt, be reviewed for appropriate valuation.
SFAS No. 122, "Accounting for Mortgage Servicing Rights," applies to
all companies with mortgage banking operations and requires
capitalization of mortgage servicing rights, regardless of whether
they were acquired through purchase or origination activities. The
implementation of these accounting standards did not have a significant
impact on the Company's financial position or results of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation," introduces the
use of a new fair value based method of accounting for stock-based
compensation arrangements, but permits companies to retain the
intrinsic value based method prescribed by Accounting Principles Board
APB) Opinion No. 25, "Accounting for Stock Issued to Employees." Bancorp
intends to continue using the intrinsic value based method and will provide
expanded disclosures related to the fair value method of accounting for
stock-based compensation. These disclosures are not required for interim
financial statements.
A description of other significant accounting policies is presented
in the Consolidated Financial Statements for the year ended December 31,
1995 included in S.Y. Bancorp, Inc.'s Annual Report, and its Form 10-K
for the year then ended.
<PAGE>
Interim results for the three and six month periods ended June 30, 1996
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):
<TABLE>
1996 1995
<S> <C> <C>
Beginning balance $4,507 $3,649
Provision for loan losses 360 700
Loans charged off ( 54) ( 244)
Recoveries 25 61
----- -----
Ending balance $4,838 $4,166
===== =====
</TABLE>
Information regarding impaired loans at June 30, 1996 follows:
Recorded investment in impaired loans $ 1,346,000
Impaired loans with Statement 114 valuation allowance $ 217,000
Amount of Statement 114 valuation allowance $ 217,000
Amount of impaired loans without Statement 114
valuation allowance $ 1,129,000
==========
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 subsidiary, Stock Yards Bank & Trust Company
("the Bank") for the three and six months ended June 30, 1996 and
compares those periods with the same periods 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 the Bank that have occurred since
December 31, 1995. 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 $1,336,000 for the three months ended June 30, 1996
increased $262,000 or 24.4% from $1,074,000 for the comparable 1995
period. Net income per share on a fully diluted basis was $.79 for
the second quarter of 1996, an increase of 21.5% from the $.65 for the
same period in 1995. Return on average assets and return on average
stockholders' equity was 1.65% and 18.52%, respectively, for the second
quarter of 1996, compared to 1.49% and 16.89%, respectively, for the same
period in 1995.
<PAGE>
Net income of $2,408,000 for the six months ended June 30, 1996
increased $404,000 or 20.2% from $2,004,000 for the comparable 1995 period.
Net income per share on a fully diluted basis was $1.43 for the first six
months of 1996, an increase of 18.2% from the $1.21 for the same period
in 1995. Return on average assets and return on average stockholder's
equity was 1.47% and 16.93%, respectively, for the first six months of 1996
compared to 1.44% and 16.06%, respectively, for the same period in 1995.
The following paragraphs provide an analysis of the significant
factors affecting operating results and financial condition.
<TABLE>
Net Interest Income
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(In thousand except percentages)
<S> <C> <C> <C> <C>
Interest income $ 6,989 $ 6,178 $ 13,616 $ 11,886
Tax equivalent adjustment 52 38 103 73
----- ----- ------ ------
Interest income, tax
equivalent basis 7,041 6,216 13,719 11,959
Total interest expense 2,993 2,594 5,880 4,812
----- ----- ------ ------
Net interest income, tax
equivalent basis (1) $ 4,048 $ 3,622 $ 7,839 $ 7,147
===== ===== ===== =====
Net interest spread (2),
annualized 4.23% 4.41% 4.17% 4.51%
==== ==== ==== ====
Net interest margin(3),
annualized 5.13% 5.35% 5.08% 5.44%
==== ==== ==== ====
</TABLE>
Notes:
(1) Net interest income, the most significant component of the Bank's
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.
<PAGE>
Fully taxable equivalent net interest income of $4,048,000 for the three
months ended June 30, 1996 increased $426,000 or 11.8% from $3,622,000 for the
same period last year. For the six months ended June 30, 1996, net interest
income of $7,839,000 increased $692,000 or 9.7% from $7,147,000 for the same
period last year. Net interest spread and net interest margin were 4.23% and
5.13%, respectively, for the second quarter of 1996 and 4.41% and 5.35%,
respectively, for the second quarter of 1995. Net interest spread and net
interest margin were 4.17% and 5.08%, respectively, for the first six months
of 1996 and 4.51% and 5.44%, respectively, for the same period in 1995.
Interest rates have declined steadily since mid 1995. As discussed in the
second following paragraph the bank is liability sensitive. Variable rate
loans, approximately 50% of the Bank's largest interest earning asset,
reprice immediately with a change in prime rates; whereas deposits, the
Bank's largest interest bearing liability, do not respond as quickly. Also,
the Bank is experiencing loan growth; however, the average rate earned on
these loans is decreasing as rates fall. Thus, net interest spread and margin
are decreasing.
Average earning assets increased $45,442,000 or 17.2% to $310,250,000 for
the first six months of 1996 compared to 1995. Average interest bearing
liabilities increased $39,151,000 or 18.5% to $250,221,000 for the first six
months of 1996 compared to 1995.
Interest rate sensitivity has a major impact on the earnings of the Bank.
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 Bank manages its interest
rate risk by primarily making variable rate loans. The Bank does, however,
make fixed rate loans which it matches, along with investment securities,
against longer term fixed rate time deposits. At June 30, 1996, interest
bearing liabilities repricing within one year exceeded interest earning
assets repricing within one year. The cumulative interest sensitivity gap
through one year was approximately 2% negagive. A position of interest
bearing liabilities repricing more quickly than interest earning assets
generally allows for a positive impact on net interest income in periods of
falling interest rates and a negative impact in periods of rising interest
rates. Bank management is aware, however, that while interest rates on
approximately 50% of the loan portfolio are fixed, it will be necessary
to re-negotiate rates on some of these loans if prime rate drops.
In early June, 1996, the Bank entered into a two year interest rate swap
contract with a corresondent bank which effectively converts certain floating
rate loans to fixed rate loans. The notional amount of the contract is
$20 million. Bancorp 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 other such
factors that, in management's judgement, deserve current recognition in
estimating loan losses.
<PAGE>
An analysis of the changes in the allowance for loan losses and selected
ratios follows:
<TABLE>
<CAPTION>
Six months ended
June 30
1996 1995
<S> <C> <C>
Balance at January 1 $ 4,507 $ 3,649
Provision for loan losses 360 700
Loan charge-offs, net of recoveries ( 29) ( 183)
------- -------
Balance at June 30 $ 4,838 $ 4,166
===== =====
Average loans, net of unearned $262,159 $216,012
======= =======
Provision for loan losses to average loans (1) .27% .65%
===== =====
Net loan charge-offs
to average loans (1) .02% .17%
===== =====
Allowance for loan losses to average loans 1.85% 1.93%
===== =====
Allowance for loan losses to period-end loans 1.78% 1.83%
===== =====
(1) Amounts annualized
</TABLE>
<PAGE>
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, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
In thousands
<S>
Non-interest income <C> <C> <C> <C>
Investment management
and trust services $ 608 $ 601 $1,139 $1,003
Service charges on
deposit accounts 382 305 735 595
Gains on sales of mortgage
loans held for sale 294 191 489 299
Gains on sales of securities
available for sal - - 35 -
Other 129 140 249 238
----- ----- ----- -----
Total non-interest income $1,413 $1,237 $2,647 $2,135
===== ===== ===== =====
Non-interest expenses
Salaries and employee
benefits $1,889 $1,500 $3,722 $3,025
Net occupancy expense 252 184 484 358
Furniture and equipment
expense 327 256 672 516
FDIC insurance - 125 1 249
Other 784 677 1,576 1,377
----- ----- ----- -----
Total non-interest expense $3,252 $2,742 $6,455 $5,525
===== ===== ===== =====
</TABLE>
Non-interest income increased $176,000, or 14.2%, for the second quarter
of 1996, and $512,000 or 24.0% for the first six months of 1996 compared to the
same periods in 1995. Trust income increased $7,000 or 1.2% and $136,000 or
13.6% in the first half of 1996, as compared to the same periods in 1995.
Trust assets under management at June 30, 1996 were $379,800,000 as compared
to $343,000,000 at December 31, 1995.
Service charges on deposit accounts increased $77,000 or 25.2% in the
second quarter of 1996, and $140,000 or 23.5% in the first six months of 1996,
as compared to the same periods in 1995. Growth in deposit accounts spurred by
the introduction of new deposit products and by 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 1995.
<PAGE>
Gains on sales of mortgage loans were $294,000 in the second quarter of 1996
compared to $191,000 in 1995 and $489,000 in the first half of 1996 compared to
$299,000 in 1995. The Bank operates a mortgage banking division which
originates residential mortgage loans and sells the loans in the secondary
market. As interest rates decreased in the second half of 1995 and again in
February, 1996, the volume of loans originated and sold has increased.
Gains on sales of securities available for sale during the first quarter of
1996 occurred when management sold lower yielding, shorter term securities
for intermediate term, higher yielding securities.
Other non-interest income decreased $11,000 or 7.9% in the second quarter of
1996 and increased $11,000 or 4.6% in the first six months of 1996 compared to
1995. No matters of special significance are noted for this area.
Non-interest expenses increased $510,000 or 18.6% for the second quarter of
1996 and $930,000 or 16.8% for the first half of 1996 as compared to 1995
compared to the same periods in 1995. Salaries and employee benefits
increased $389,000, or 25.9%, for the second quarter of 1996 and $697,000 or
23.0% for the first half of 1996 compared to the same periods in 1995.
These increases arose in part from regular salary increases. Also, employees
were added throughout 1995 with the opening of new branches. The Bank had 207
full time equivalent employees as of June 30, 1996 and 177 full time
equivalents as of June 30, 1995. Net occupancy expense increased $68,000 or
37.0% in the second quarter of 1996, and $126,000 or 35.2% in the first half
of 1996 as compared to 1995. Furniture and equipment expense increased
$71,000, or 27.8%, for the second quarter of 1996 and $156,000 or 30.2% in
the first six months of 1996 compared to 1995. These increases are largely
due to the opening of new banking centers. In 1995 the Bank opened its Outer
Loop banking center and Elizabethtown loan production office. In the first
quarter of 1996, a loan production office in Lexington was opened. Expansion
in facilities and technology resulted in increased occupancy and equipment
expenses. FDIC insurance expense decreased by almost 100% in 1996 as
compared to 1995. During the third quarter of 1995, the FDIC determined the
Bank Insurance Fund had been replenished effective May, 1995. Accordingly,
they reduced the premium paid by well capitalized banks from 23 cents per
$100 of deposits to 4 cents per $100 of deposits. Additionally, they refunded
overpayments of deposit insurance premiums. Subsequently the FDIC has
reduced its assessment on well capitalized banks to theminimum assessment
payment allowed of $1,000 per semiannual period. The Bank's FDIC expense has
been reduced accordingly. Other non-interest expenses have increased 15.8%
in the second quarter and 14.5% in the first half of 1996. Again,
these increases are reflective of the Bank's expansion.
<PAGE>
Income Taxes
Bancorp had income tax expense of $1,160,000 for the first six months of 1996,
compared to $980,000 for the same period in 1995. The effective rate was
32.5% In 1996 and 32.8% in 1995.
B. FINANCIAL CONDITION
Total Assets
Total assets increased $29,680,000 from December 31, 1995 to June 30, 1996.
Average assets for the first six months of 1996 were $328,799,000. Total assets
at June 30, 1996 increased $52,992,000 from June 30, 1995, representing a 17.6%
increase. Since year end, loans have increased approximately $18.2 million;
cash due from banks and federal funds sold decreased $2.0 million; mortgage
loans held for sale increased $4.0 million; securities available for sale
increased $1million, and securities held to maturity increased $7.2 million.
Nonperforming Loans and Assets
Nonperforming loans, which include restructured, nonaccrual and loans past due
over 90 days, totaled $1,346,000 at June 30, 1996 and $1,212,000 at December 31,
1995. This represents .50% of total loans at June 30, 1996 compared to .48%
at December 31, 1995.
Nonperforming assets, which include nonperforming loans and other real estate
owned, (the bank had no other real estate owned at June 30, 1996 or December 31,
1995 totaled $1,346,000 at June 30, 1996 and $1,212,000 at December 31, 1995.
This represents .38% of total assets at June 30, 1996 compared to .37% at
December 31, 1995.
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 Bank has 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 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. These credit services provide the Bank with
another source of funds. To date, the 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 Bank. At June 30, 1996, the Bank may pay up to $6,970,000 in
dividends to Bancorp without regulatory approval.
<PAGE>
D. CAPITAL RESOURCES
At June 30, 1996, stockholders' equity totaled $29,299,000, an increase of
$1,685,000 or 6.1% since December 31, 1995.
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, 1996, Bancorp's tier 1 and total risk based capital ratios were
10.9% and 12.4%, respectively, compared to 11.1% and 12.0%, respectively, at
December 31, 1995. These ratios exceed the 4.00% tier 1 and 8.0% total risk
based capital minimums. A minimum leverage ratio, adopted by the Federal
Reserve Board to assist in the assessment of capital adequacy, supplements
the risk-based capital requirements. The minimum leverage ratio is 3%;
however, most bank holding companies are required to maintain a minimum in
excess of this percentage. Bancorp's leverage ratio at June 30, 1996 was
8.3% compared to 8.4% at December 31,1995.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 24, 1996, 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 1,363,055 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: 1,351,132 AGAINST: 3,135 ABSTAIN: 8,786
(2) Election of Directors: Bancorp has a staggered board of Directors. The
following individuals were nominated in 1996. All nominees were elected.
<TABLE>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Charles Edinger 1,361,205 271 -
David Heintzman 1,361,476 - -
Norman Tasman 1,361,355 121 -
Kathy Thompson 1,361,476 - -
Bert Trompeter 1,361,488 226 -
</TABLE>
(3) Approving the proposed form of Indemnification agreement with the Board
of Directors.
FOR: 1,321,565 AGAINST: 15,390 ABSTAIN: 26,100
(4) Approving the Amendment of the Articles of Incorporation to increase the
number of authorized shares from 3,000,000 to 5,000,000.
FOR: 1,338,964 AGAINST: 15,542 ABSTAIN: 8,550
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, 1996.
<PAGE>
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, 1996 By: \s\ David H. Brooks
David H. Brooks, Chairman
and Chief Executive Officer
Date: August 12, 1996 By: \s\ David P. Heintzman
David P. Heintzman, President
Date: August 12, 1996 By: \s\ Nancy B. Davis
Nancy B. Davis, Senior Vice
President, Treasurer and Chief
Financial Officer
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
S.Y. Bancorp, Inc. and Subsidiary
<CAPTION>
For the Three Months For the Six Months
Ended June 30 Ended June 30
1996 1995 1996 1995
PRIMARY
<S> <C> <C> <C> <C>
Average shares outstanding 1,633,886 1,621,827 1,632,126 1,621,084
Effect of assumed conversion
of stock options under
treasury stock method 47,866 28,089 46,937 28,412
--------- --------- --------- ---------
1,681,752 1,649,916 1,679,063 1,649,496
========= ========= ========= =========
Net income $1,336,000 $1,074,000 $2,408,000 $2,004,000
========== ========== ========== ==========
Per share $ .79 $ .65 $ 1.43 $ 1.21
========== ========== ========== ==========
FULLY DILUTED
Average shares outstanding 1,633,886 1,621,827 1,632,126 1,621,084
Effect of assumed conversion
of stock options under
treasury stock method 50,381 28,086 51,863 29,526
--------- --------- --------- ---------
1,684,267 1,649,913 1,683,989 1,650,610
========= ========= ========= =========
Net income $1,336,000 $1,074,000 $2,408,000 $2,004,000
========== ========== ========== ==========
Per share $ .79 $ .65 $ 1.43 $ 1.21
========== ========== ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 14148 14148
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 16490 16490
<INVESTMENTS-CARRYING> 33902 33902
<INVESTMENTS-MARKET> 34270 34270
<LOANS> 271148 271148
<ALLOWANCE> 4838 4838
<TOTAL-ASSETS> 354034 354034
<DEPOSITS> 300697 300697
<SHORT-TERM> 3722 3722
<LIABILITIES-OTHER> 19709 19709
<LONG-TERM> 607 607
0 0
0 0
<COMMON> 5448 5448
<OTHER-SE> 23851 23851
<TOTAL-LIABILITIES-AND-EQUITY> 354034 354034
<INTEREST-LOAN> 6273 12212
<INTEREST-INVEST> 689 1328
<INTEREST-OTHER> 27 76
<INTEREST-TOTAL> 6989 13616
<INTEREST-DEPOSIT> 2780 5485
<INTEREST-EXPENSE> 2993 5880
<INTEREST-INCOME-NET> 3996 7736
<LOAN-LOSSES> 180 360
<SECURITIES-GAINS> 0 35
<EXPENSE-OTHER> 3252 6455
<INCOME-PRETAX> 1977 3568
<INCOME-PRE-EXTRAORDINARY> 1977 3568
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1336 2408
<EPS-PRIMARY> .79 1.43
<EPS-DILUTED> .79 1.43
<YIELD-ACTUAL> 8.92 8.89
<LOANS-NON> 1346 1346
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 7742 7742
<ALLOWANCE-OPEN> 4680 4507
<CHARGE-OFFS> 32 54
<RECOVERIES> 10 25
<ALLOWANCE-CLOSE> 4838 4838
<ALLOWANCE-DOMESTIC> 4838 4838
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1100 4400
</TABLE>
