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S.Y. Bancorp Inc. Reports Operating Results (10-Q)

May 04, 2012 | About:
10qk

10qk

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S.Y. Bancorp Inc. (SYBT) filed Quarterly Report for the period ended 2012-03-31.

S Y Bancorp Inc has a market cap of $321.4 million; its shares were traded at around $22.46 with a P/E ratio of 13.3 and P/S ratio of 2.7. The dividend yield of S Y Bancorp Inc stocks is 3.3%. S Y Bancorp Inc had an annual average earning growth of 4.5% over the past 10 years.

Highlight of Business Operations:

Bancorp completed the first quarter of 2012 with net income of $6.50 million or 18% more than the comparable period of 2011. The increase is primarily due to an improvement in net interest income, higher non-interest income, and decreasing non-interest expenses. Diluted earnings per share for the first quarter of 2012 were $0.47 compared to the first quarter of 2011 at $0.40. For purposes of comparability and to provide additional insight into the strength of Bancorps operations, it should be noted that first quarter 2012 earnings included a gain on an investment in a domestic private investment fund, which contributed approximately $0.03 per diluted share after tax to the Bancorps first quarter earnings (the funds contribution to earnings in the year-earlier quarter was less than $0.01 per diluted share). Excluding this gain, net income for the first quarter of 2012 on an adjusted basis, which is a non-GAAP measure, was $6.10 million or $0.44 per diluted share, reflecting an increase of 10% from the first quarter of 2011. See the Non-GAAP Financial Measures section for details on reconcilement to US GAAP measures.

The magnitude of its investment management and trust revenue distinguishes Bancorp from other similarly sized community banks, making total non-interest income a continuing key contributor to earnings in the first quarter of 2012. Income from investment management and trust services, which constitutes an average of 40% of non-interest income, was virtually unchanged in the first quarter of 2012 compared to the same period in 2011. Trust assets under management rose to $1.84 billion at March 31, 2012, compared to $1.74 billion at December 31, 2011. While fees are based on market values, because of asset allocation and diversification of asset classes in customer accounts, they typically do not fluctuate directly with the overall stock market. Accounts typically contain fixed income and equity asset classes, which generally react inversely to each other. Nonrecurring fees such as estate, financial planning, insurance, and some retirement fees are not affected by the fluctuations in the market. The mortgage division had a strong first quarter, with a 93% increase in gains on the sales of mortgage loans compared with the first quarter of 2011. This reflected a 44% increase in mortgage loans processed relating to home purchase activity a welcome sign that the housing market may be strengthening. Bancorp experienced increases in service charge income, and gains on sales of mortgage loans, as well as an improvement in the value of Bancorps investment in a domestic private investment fund. Non-interest income as a percentage of total revenues was 33% in the first quarter of 2012, compared to 32% in the first quarter of 2011.

Average earning assets increased $111.6 million or 6.4%, to $1.870 billion for the first three months of 2012 compared to 2011, reflecting growth in the loan portfolio and investment securities. Average interest bearing liabilities increased $42.1 million, or 2.9%, to $1.469 billion for the first three months of 2012 compared to 2011 primarily due to increases in interest bearing deposits.

Investment management and trust services income decreased $47,000, or 1.3%, in the first quarter of 2012, as compared to the same period in 2011, primarily due to a decrease in executor fees and financial planning fees, largely offset by the effect of an increased market value of assets under management. Most recurring fees earned for managing accounts are based on a percentage of market value on a monthly basis. Some revenues of the investment management and trust department, most notably executor, insurance, and some employee benefit plan-related fees, are non-recurring in nature and the timing of these revenues corresponds with the related administrative activities. Along with the effects of improving broader investment market conditions, this area of the Bank continued to grow through attraction of new business and retention of existing business, despite normal attrition. Trust assets under management at March 31, 2012 were $1.84 billion, compared to $1.79 billion at March 31, 2011.

The Banks mortgage banking division originates residential mortgage loans to be sold in the secondary market. Interest rates on the loans sold are locked with the borrower and investor prior to closing the loans, thus Bancorp bears no interest rate risk related to these loans. The division offers conventional, VA and FHA financing, for purchases and refinances, as well as programs for low-income and first time home buyers. The mortgage banking division also offers home equity conversion or reverse mortgages. Gains on sales of mortgage loans increased $357,000, or 93.5%, in the first quarter of 2012, as compared to the same period in 2011. Interest rates on mortgage loans directly impact the volume of business transacted by the mortgage banking division. Prevailing mortgage interest rates decreased during late 2011 and remained low into 2012, and as a result refinance volume increased from the first quarter of 2011 to 2012. In addition to the refinance activity, Bancorp experienced a 44% increase in loans processed relating to purchase activity.

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