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Analyst Blog

On Feb 8, 2014, Zacks Investment Research upgraded SY Bancorp Inc. (SYBT - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

SY Bancorp has been witnessing rising earnings estimates following the announcement of impressive fourth-quarter results and due to its strong capital deployment activities. Moreover, this regional bank’s earnings growth rate is expected to be 8.7% for 2014.

SY Bancorp reported fourth-quarter and 2013 results on Jan 27. Though the fourth-quarter earnings per share missed the Zacks Consensus Estimate by a penny, there was 4.2% growth on a year-over-year basis.

Results benefited from increased net interest income and lower-than-expected provision for loan losses, partially offset by fall in both fee income and operating expenses. Further, impressive credit quality and strong capital ratios were the tailwinds.

Additionally, during 2013, SY Bancorp meaningfully deployed capital (raised quarterly dividend by 5% and acquired THE BANCorp, INC.) and redeemed 10% fixed-rate cumulative trust preferred securities. The company has been experiencing synergies from the acquisition with growth in loan and deposit balances. Furthermore, the redemption will lower interest expenses in the future and is also expected to be accretive to the company’s earnings by improving earnings per share by 13 cents in 2014.

Additionally, over the last 30 days, the Zacks Consensus Estimate for 2014 increased 3.9% to $2.14 per share. Similarly, for 2014, the Zacks Consensus Estimate nudged up nearly 1% to $2.26 per share over the same time period.

Other Stocks to Consider

While we prefer SY Bancorp, other banks with a Zacks Rank #1 include Bridge Bancorp, Inc. (BDGE - Snapshot Report), Arrow Financial Corp. (AROW - Snapshot Report) and Heritage Commerce Corp. (HTBK - Snapshot Report).

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