S.Y. Bancorp Inc. Reports Operating Results (10-Q)
S.y. Bancorp, Inc. has a market cap of $318.48 million; its shares were traded at around $22.96 with a P/E ratio of 13.05 and P/S ratio of 2.67. The dividend yield of S.y. Bancorp, Inc. stocks is 3.31%. S.y. Bancorp, Inc. had an annual average earning growth of 4.5% over the past 10 years.
Highlight of Business Operations:· Interest income on a fully tax equivalent basis includes the additional amount of interest income that would have been earned if investments in certain tax-exempt interest earning assets had been made in assets subject to federal taxes yielding the same after-tax income. Interest income on municipal securities and loans have been calculated on a fully tax equivalent basis using a federal income tax rate of 35%. The approximate tax equivalent adjustments to interest income were $373,000 and $394,000, respectively, for the three month periods ended June 30, 2012 and 2011 and $744,000 and $788,000, respectively, for the six month periods ended June 30, 2012 and 2011.
Average earning assets increased $108.5 million or 6.1%, to $1.88 billion for the first six months of 2012 compared to 2011, reflecting growth in the loan portfolio and investment securities. Average interest bearing liabilities increased $35.3 million, or 2.5%, to $1.47 billion for the first six months of 2012 compared to 2011 primarily due to increases in interest bearing demand and money market deposits, partially offset by decreases in certificates of deposits and long term debt.
Bankcard transaction revenue increased $57,000, or 5.94%, in the second quarter of 2012, and increased $145,000, or 7.9%, for the first six months of 2012, as compared to the same periods in 2011 and primarily represents income the Bank derives from customers use of debit cards. Results in the first six months of 2012 compared favorably to the same period in 2011 as bankcard transaction volume continues to increase. Most of this revenue is interchange income based on rates set by service providers in a competitive market. Beginning in October 2011, this rate was set by the Federal Reserve Board for banks with over $10 billion in assets. In July 2012, Visa, MasterCard and credit card-issuing major banks agreed to settle a long-running lawsuit alleging the violation of antitrust laws in setting credit card interchange fees. The out-of-court settlement, pending judicial approval, also includes a 10-basis-point reduction in credit card interchange rates for eight months which will be deducted from the interchange revenue of all banks. Preliminary estimates by the American Bankers Association indicate this reduction will reduce our interchange income approximately 5% per month for an as yet undetermined eight-month period. For Bancorp, this would be a reduction of approximately $130,000 in bankcard transaction revenue for the eight month period.
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. Gains on sales of mortgage loans increased $425,000, or 96.4%, in the second quarter of 2012, and increased $782,000, or 95.0%, for the first six months of 2012, as compared to the same periods 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 continued to drop into 2012, and as a result refinance volume increased from 2011 to 2012. In addition to the refinance activity, Bancorp experienced a 54% increase in loans relating to purchase activity in the first six months of 2012.
Brokerage commissions and fees earned consist primarily of stock, bond and mutual fund sales as well as wrap fees on accounts. Wrap fees are charges for investment programs that bundle together a suite of services, such as brokerage, advisory, research, and management, and based on a percentage of assets. Brokerage commissions and fees increased $122,000, or 23.0%, in the second quarter of 2012, and increased $150,000 or 14.4% for the first six months of 2012, as compared to the same period in 2011, corresponding to higher overall brokerage volume. Bancorp deploys its brokers primarily through its
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