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

February 29, 2012 | About:

S.Y. Bancorp Inc. (NASDAQ:SYBT) filed Annual Report for the period ended 2011-12-31.

S Y Bancorp Inc has a market cap of $308.1 million; its shares were traded at around $22.1 with a P/E ratio of 13.1 and P/S ratio of 2.6. The dividend yield of S Y Bancorp Inc stocks is 3.2%. S Y Bancorp Inc had an annual average earning growth of 3.9% over the past 10 years.

Highlight of Business Operations:

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 2011. Total non-interest income in 2011 was essentially level with 2010. Income from investment management and trust services, which constitutes an average of 40% of non-interest income, increased 4% for 2011 due to higher asset values and an expanding client base. Trust assets under management rose to $1.74 billion at December 31, 2011, compared to $1.70 billion at December 31, 2010. While fees are based on market values, 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. As a broad approximation, a 10% drop in the S&P 500 index would decrease fees approximately 2 4%. Nonrecurring fees such as estate, financial planning, insurance, and some retirement fees are not affected by the fluctuations in the market. In addition, Bancorp experienced increases in bankcard transaction income and brokerage income. Offsetting these increases was a decline in value of Bancorps investment in a domestic private investment fund.

Total non-interest income decreased 1.5% for the year ended December 31, 2011 compared to 2010. The largest component of non-interest income is investment management and trust revenue. Along with the effects of improving investment market conditions in 2010 and 2011, 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 totaled $1.74 billion at December 31, 2011, compared to $1.70 billion at December 31, 2010. 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. For 2011, 2010 and 2009 executor fees totaled approximately $362,000, $668,000 and $225,000, respectively.

Bankcard transaction revenue increased $409,000 or 12.3% in 2011 compared to 2010 and primarily represents income the Bank derives from customers use of debit cards. Results in 2011 compared favorably to 2010 as bankcard transaction volume continued 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 indirectly 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 may negatively affect this source of income.

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 decreased $199,000, or 8.6%, in 2011 compared to 2010. 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 as a result refinance volume increased late in the year.

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 are charged a fee based on a percentage of assets. Total securities brokerage fees increased $83,000 or 3.9% for 2011 compared to the prior year corresponding to higher overall brokerage volume. Bancorp deploys its brokers primarily through its branch network, while larger managed accounts are serviced in the investment management and trust department.

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