S.y. Bancorp, Inc. has a market cap of $323.5 million; its shares were traded at around $23.83 with a P/E ratio of 12.8 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:Net interest income increased $2.9 million, or 6%, for the first nine months of 2012, compared to the same period in 2011. The positive effect of increased volumes on earning assets offset the negative effect of declining interest rates earned over the past year. Interest expense declined due to lower funding costs on deposits and borrowings arising from lower interest rates and a more favorable deposit mix. The net interest margin declined to 3.99% for the first nine months of 2012, compared to 4.02% for the same period in 2011. Net interest income for the first three quarters of 2012 included prepayment fees and late penalties totaling approximately $900,000 associated with a surge in loan refinancing activity.
· 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 $344,000 and $370,000, respectively, for the three month periods ended September 30, 2012 and 2011 and $1,088,000 and $1,158,000, respectively, for the nine month periods ended September 30, 2012 and 2011.
Investment management and trust services revenue increased $168,000, or 5.0% in the third quarter of 2012 and $130,000, or 1.2% for the first nine months of 2012, as compared to the same periods in 2011. Recurring fees earned for managed accounts, which are based on a percentage of market value, increased 6% for the third quarter, and 3% for the first nine months of 2012, compared to the same periods in 2011. Non-recurring fees, notably executor fees, are behind the same periods in 2011. 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. Assets under management at September 30, 2012 were $1.92 billion, compared to $1.72 billion at September 30, 2011.
Bankcard transaction revenue increased $40,000, or 4.2%, in the third quarter of 2012, and increased $185,000, or 6.6%, for the first nine 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 nine 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. While this threshold indicates Bancorp will not be directly affected, it appears this change will affect Bancorp as vendors continue to push for lower fees to be paid to all banks. While there are many uncertainties about its effect or ultimately when these changes may take place, the Dodd-Frank legislation will negatively affect this source of income.
The Banks mortgage banking department 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 department 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 $703,000, or 122.5%, in the third quarter of 2012, and increased $1,485,000, or 106.3%, for the first nine months of 2012, as compared to the same periods in 2011. Interest rates on mortgage loans directly impact the volume of business transacted by this department. 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.
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