Press Release

German American Bancorp, Inc. (GABC) Reports Record Quarterly Earnings

Company Release - 10/29/2018 5:15 PM ET

JASPER, Ind., Oct. 29, 2018 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (NASDAQ: GABC) reported quarterly earnings of $12.6 million, or $0.55 per share, in the third quarter of 2018.  This record level of quarterly earnings performance was an increase of approximately $1.5 million, or 15% on a per share basis, over second quarter 2018 net income of $11.1 million, or $0.48 per share, and an increase of approximately $3.0 million, or 31% on a per share basis, relative to the Company’s third quarter 2017 net income of $9.7 million, or $0.42 per share.

On a year-to-date basis, reported earnings for the first nine months of 2018 were $35.6 million, or $1.55 per share, which represents an increase of approximately $6.5 million, or 22% on a per share basis, from the first nine months of  2017 net income of $29.1 million, or $1.27 per share.  2018 reported earnings were inclusive of $1.5 million in acquisition-related expenses, of which $396,000 (approximately $317,000, or $0.01 per share, on an after-tax basis) were recorded in the third quarter, with the remaining $1.1 million (approximately $867,000, or $0.04 per share, on an after-tax basis) incurred in the first half of 2018.  These acquisition-related expenses were associated with the five-branch acquisition in the Columbus and Greensburg, Indiana markets that closed on May 18, 2018 and the merger with First Security, Inc. of Owensboro, Kentucky that closed on October 15, 2018.

2018 third quarter record financial performance, relative to that of the prior quarter of this year and the same quarter last year, was largely attributable to increased net interest income, which was driven by the Company’s double-digit increases, on an annualized basis, in the level of average loans outstanding.  Average loans outstanding during the third quarter of 2018 was $2.319 billion, which was an increase of $88.7 million, or  16% on an annualized basis, relative to the average loans outstanding during the second quarter of 2018.  Relative to the average loans in the third quarter of 2017, the current quarter average loans represented an increase of $260.2 million, or 13%.  These increases in average loans outstanding were driven by organic loan growth from the Company’s existing branch footprint and from the growth related to the branch acquisition the Company completed during the second quarter.

2018 third quarter, second quarter and year-to-date reported net income and earnings per share were also positively impacted by the federal income tax reform legislation, which reduced the Company’s corporate federal income tax statutory rate of 35% to 21% effective January 1, 2018.

Commenting on German American’s record quarterly performance, Mark A. Schroeder, German American’s Chairman & CEO, stated, "The record earnings performance achieved in the third quarter was a direct result of the combined organic and acquisition growth in deposits, loans, and total assets that our Company has achieved throughout the past year.  We are very encouraged about our prospects for continued growth in the future based on the economic strength within our existing Southern Indiana markets. Furthermore, we successfully completed, earlier this month, the previously announced pending merger transaction with Owensboro, Kentucky based First Security, Inc., which expands German American’s footprint into Bowling Green, Lexington and Owensboro, three of the most economically vibrant markets in the Commonwealth of Kentucky.  This combination of First Security and German American will elevate German American’s consolidated total assets to nearly $4.0 billion, with a projected total loan portfolio of approximately $2.8 billion and total deposit balances of approximately $3.0 billion.  We welcome the communities, customers, employees and shareholders of First Security to the German American family of community banks, and look forward to further enhancing our relationships with all these stakeholders.”

The Company also announced its Board of Directors declared a regular quarterly cash dividend of $0.15 per share, which will be payable on November 20, 2018 to shareholders of record as of November 10, 2018.

Balance Sheet Highlights

Total assets for the Company increased to $3.364 billion at September 30, 2018, representing an increase of $19.2 million, or 2% on an annualized basis, compared with June 30, 2018 and an increase of $290.9 million, or 9%, compared with September 30, 2017.  The increase in total assets compared to the prior year was driven by the acquisition of a five-branch network in the Columbus and Greensburg, Indiana markets as well as organic loan growth.

At September 30, 2018, total loans increased $18.3 million, or 3% on an annualized basis, compared with June 30, 2018 and increased $250.5 million, or 12%, compared with September 30, 2017.  At September 30, 2018, the loans acquired as a part of the branch acquisition which closed during May  2018, totaled $112.9 million.  At September 30, 2018, total loans, excluding those acquired as a part of the branch acquisition,  increased $136.7 million, or 7%, compared with September 30, 2017.

The increase in total loans during the third quarter of 2018 compared with the second quarter of 2018 was driven by an increase of approximately $9.6 million, or 7% on an annualized basis, of commercial and industrial loans, a decline of $571,000, or less than 1% on an annualized basis, of commercial real estate loans, an increase of $6.2 million, or 7% on an annualized basis, of agricultural loans and an increase of $3.0 million, or 3% on annualized basis, of retail loans.

       
End of Period Loan Balances 9/30/2018 6/30/2018 9/30/2017
(dollars in thousands)      
       
Commercial & Industrial Loans $527,938  $518,299  $474,917 
Commercial Real Estate Loans 985,915  986,486  898,752 
Agricultural Loans 358,543  352,308  327,026 
Consumer Loans 247,861  241,315  209,537 
Residential Mortgage Loans 219,916  223,437  179,481 
  $2,340,173  $2,321,845  $2,089,713 
       

Non-performing assets totaled $8.6 million at September 30, 2018 compared to $9.5 million of non-performing assets at June 30, 2018 and $10.2 million at September 30, 2017.  Non-performing assets represented 0.26% of total assets at September 30, 2018 compared to 0.28% of total assets at June 30, 2018 and 0.33% of total assets at September 30, 2017.  Non-performing loans totaled $8.5 million at September 30, 2018 compared to $9.5 million at June 30, 2018 and $9.7 million at September 30, 2017.  Non-performing loans represented 0.36% of total loans at September 30, 2018 compared to 0.41% at June 30, 2018 and 0.46% at September 30, 2017.

      
Non-performing Assets     
(dollars in thousands)     
 9/30/2018 6/30/2018 9/30/2017
Non-Accrual Loans$8,428  $8,953  $9,177 
Past Due Loans (90 days or more)69  534  474 
Total Non-Performing Loans8,497  9,487  9,651 
Other Real Estate100  40  568 
Total Non-Performing Assets$8,597  $9,527  $10,219 
      
Restructured Loans$122  $123  $152 
      

The Company’s allowance for loan losses totaled $16.1 million at September 30, 2018 compared to $15.6 million at June 30, 2018 and $15.3 million at September 30, 2017.  The allowance for loan losses represented 0.69% of period-end loans at September 30, 2018 compared with 0.67% of period-end loans at June 30, 2018 and 0.73% of period-end loans at September 30, 2017.  From time to time, the Company has acquired loans through bank and branch acquisitions with the most recent being a branch acquisition in the second quarter of 2018.  Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller.  The Company held a net discount on acquired loans of $9.0 million as of September 30, 2018, $9.6 million at June 30, 2018 and $8.0 million at September 30, 2017.

Total deposits increased $39.4 million, or 6% on an annualized basis, as of September 30, 2018 compared with June 30, 2018 and increased $216.3 million, or 9%, compared with September 30, 2017. The increase in total deposits as of September 30, 2018 compared with September 30, 2017 was largely driven by the previously discussed branch acquisition.   At September 30, 2018, the deposits acquired as a part of the branch acquisition totaled approximately $132.1 million.

       
End of Period Deposit Balances 9/30/2018 6/30/2018 9/30/2017
(dollars in thousands)      
       
Non-interest-bearing Demand Deposits $634,421  $629,724  $589,315 
IB Demand, Savings, and MMDA Accounts 1,605,818  1,611,583  1,454,073 
Time Deposits < $100,000 189,405  190,179  204,946 
Time Deposits > $100,000 211,203  169,954  176,238 
  $2,640,847  $2,601,440  $2,424,572 
       

Results of Operations Highlights – Quarter ended September 30, 2018

Net income for the quarter ended September 30, 2018 totaled $12,639,000, or $0.55 per share, an increase of 15% on a per share basis compared with second quarter 2018 net income of $11,097,000, or $0.48 per share, and an increase of 31% on a per share basis compared with the third quarter 2017 net income of $9,660,000, or $0.42 per share.

Summary Average Balance Sheet
(Tax-equivalent basis / dollars in thousands)
   Quarter Ended  Quarter Ended  Quarter Ended
  September 30, 2018 June 30, 2018 September 30, 2017
                   
   Principal
Balance
  Income/
Expense
  Yield/
Rate
  Principal
Balance
  Income/
Expense
  Yield/
Rate
  Principal
Balance
  Income/
Expense
  Yield/
Rate
Assets                  
Federal Funds Sold and Other                  
Short-term Investments $20,745  $101  1.94% $12,939  $54  1.68% $13,543  $46  1.38%
Securities 755,793  5,826  3.08% 751,367  5,758  3.07% 748,754  5,872  3.14%
Loans and Leases 2,318,657  28,240  4.84% 2,229,972  26,394  4.75% 2,058,453  23,358  4.51%
Total Interest Earning Assets $3,095,195  $34,167  4.39% $2,994,278  $32,206  4.31% $2,820,750  $29,276  4.13%
                   
Liabilities                  
Demand Deposit Accounts $636,989      $625,158      $572,204     
IB Demand, Savings, and                  
MMDA Accounts $1,617,768  $2,028  0.50% $1,560,838  $1,597  0.41% $1,447,693  $1,117  0.31%
Time Deposits 425,783  1,507  1.40% 417,585  1,251  1.20% 382,827  842  0.87%
FHLB Advances and Other Borrowings 257,460  1,392  2.14% 238,775  1,216  2.04% 246,698  1,110  1.79%
Total Interest-Bearing Liabilities $2,301,011  $4,927  0.85% $2,217,198  $4,064  0.74% $2,077,218  $3,069  0.59%
                   
Cost of Funds     0.63%     0.54%     0.43%
Net Interest Income   $29,240      $28,142      $26,207   
Net Interest Margin     3.76%     3.77%     3.70%

During the quarter ended September 30, 2018, net interest income totaled $28,548,000, which represented an increase of $1,079,000, or 4%, from the quarter ended June 30, 2018 net interest income of $27,469,000 and an increase of $3,631,000, or 15%, compared with the quarter ended September 30, 2017 net interest income of $24,917,000. The increased level of net interest income during the third quarter of 2018 compared with the both the second quarter of 2018 and third quarter of 2017 was driven primarily by a higher level of average earning assets.  Also contributing to the increased net interest income during the third quarter of 2018 compared with the third quarter of 2017 was an improvement in the tax equivalent net interest margin.  The increased level of average earning assets in the third quarter of  2018, compared with the second quarter of 2018, was driven by organic loan growth from the Company's existing branch footprint of $30.3 million combined with growth related to the branch acquisition of $58.4  million which was completed during May 2018.  The $30.3 million of average organic loan growth equated to approximately 6% annualized growth during third quarter of 2018, compared with the second quarter of 2018.

The tax equivalent net interest margin for the quarter ended September 30, 2018 was 3.76% compared with 3.77% in the second quarter of 2018 and 3.70% in the third quarter of 2017.  The lower federal income tax rates during 2018 had an approximately 9 basis point negative impact on the Company's net interest margin in both the second and third quarters of 2018 compared with 2017.  The improvement in the net interest margin,  excluding the impact of the lower federal tax rates, during third quarter of 2018 compared to both comparative periods was related to the positive impact on earning asset yields caused by the continued increase in short-term market interest rates partially offset by an increased cost of funds also related to the increased short-term interest rates.

Accretion of loan discounts on acquired loans contributed approximately 8 basis points to the net interest margin on an annualized basis in the third quarter of 2018, 7 basis points in the second quarter of 2018, and 5 basis points in the third quarter of 2017.

During the quarter ended September 30, 2018, the Company recorded a provision for loan loss of $500,000 compared with a provision for loan loss of $1,220,000 in the second quarter of 2018 and $250,000 in the third quarter of 2017.  The provision during all periods was done in accordance with the Company's standard methodology for determining the adequacy of its allowance for loan loss.

During the quarter ended September 30, 2018, non-interest income totaled $8,963,000, an  increase of $81,000, or 1%, compared with the quarter ended June 30, 2018, and an increase of $688,000, or 8%, compared with the third quarter of 2017.

  Quarter Ended Quarter Ended Quarter Ended
Non-interest Income 9/30/2018
 6/30/2018
 9/30/2017
(dollars in thousands)       
Trust and Investment Product Fees $1,585  $1,677  $1,301 
Service Charges on Deposit Accounts 1,858  1,643  1,608 
Insurance Revenues 1,827  1,696  1,728 
Company Owned Life Insurance 251  260  317 
Interchange Fee Income 1,847  1,714  1,186 
Other Operating Income 639  913  608 
Subtotal 8,007  7,903  6,748 
Net Gains on Loans 866  905  952 
Net Gains on Securities 90  74  575 
Total Non-interest Income $8,963  $8,882  $8,275 
       

Trust and investment product fees declined $92,000, or 5%, during the third quarter of 2018 compared with the second quarter of 2018 and increased $284,000, or 22%, compared with the third quarter of 2017.  The increase in the third quarter of 2018 compared with the third quarter of 2017 was largely attributable to increased assets under management in the Company's wealth advisory group.

Service charges on deposit accounts increased $215,000, or 13%, during the third quarter of 2018 compared with the second quarter of 2018 and increased $250,000, or 16%, compared with the third quarter of 2017.  The increase during the third quarter of 2018 compared with both the second quarter of 2018 and third quarter of 2017 was positively impacted by the five-branch acquisition completed during May 2018.

Interchange fees increased $133,000, or 8%, during the third quarter of 2018 compared with the second quarter of 2018 and increased $661,000, or 56%, compared with the third quarter of 2017.  The increase during the third quarter of 2018 compared with the second quarter of 2018 was largely attributable to increased card utilization by customers and the second quarter branch acquisition.  The increase during the third quarter of 2018 compared with the third quarter of 2017 was attributable to increased card utilization by customers, the branch acquisition and also attributable to the adoption of the new revenue recognition standard effective January 1, 2018.  While the adoption of the standard did not have a significant impact on the Company's financial results, the recording of revenue gross versus net of certain expenses, in accordance with the standard, did result in the reclassification of some expenses associated with the interchange fee revenue during the first first nine months of 2018.

Other operating income declined $274,000, or 30%, during the quarter ended September 30, 2018 compared with the second quarter of 2018 and increased $31,000, or 5%, compared with the third quarter of 2017.  The  decline in the third quarter of 2018 compared with the second quarter of 2018 was largely attributable to a decline in merchant card services revenue related to a non-recurring incentive payment received during the second quarter of 2018.

During the quarter ended September 30, 2018, non-interest expense totaled $21,576,000, a decline of $132,000, or 1%, compared with the quarter ended June 30, 2018, and an increase of $1,805,000, or 9%, compared with the third quarter of 2017.   The third quarter of 2018 included a full quarter of operating expenses for the five-branch acquisition completed during the second quarter of  2018.  The third quarter of 2018 included acquisition-related expenses of a non-recurring nature of approximately $396,000 (approximately $317,000 or $0.01 per share, on an after tax basis) while the second quarter of 2018 included acquisition-related expenses of approximately $904,000  (approximately $727,000 or $0.03 per share, on an after-tax basis) for the five-branch acquisition that closed on May 18, 2018 and the acquisition of First Security, Inc. that closed on October 15, 2018.

  Quarter Ended Quarter Ended Quarter Ended
Non-interest Expense 9/30/2018 6/30/2018 9/30/2017
(dollars in thousands)       
Salaries and Employee Benefits $12,134  $12,019  $11,570 
Occupancy, Furniture and Equipment Expense 2,738  2,527  2,372 
FDIC Premiums 324  238  241 
Data Processing Fees 1,309  1,398  1,067 
Professional Fees 793  1,361  551 
Advertising and Promotion 851  857  1,315 
Intangible Amortization 430  306  230 
Other Operating Expenses 2,997  3,002  2,425 
Total Non-interest Expense $21,576  $21,708  $19,771 
       

Salaries and benefits increased $115,000, or 1%, during the quarter ended September 30, 2018 compared with the second quarter of 2018 and increased $564,000, or 5%, compared with the third quarter of 2017.  The increase in salaries and benefits during the third quarter of 2018 compared with both the second quarter of 2018 and the third quarter of 2017 was primarily attributable to an increased number of full-time equivalent employees.

Occupancy, furniture and equipment expense increased $211,000, or 8%, during the third quarter of 2018 compared with the second quarter of 2018 and increased $366,000, or 15%, compared to the third quarter of 2017.  The increase during the third quarter of 2018 compared to both the second quarter of 2018 and the third quarter of 2017 was primarily due to operating costs related to the acquisition of the five banking branches in the Columbus and Greensburg, Indiana markets as well as other facilities the Company has placed into service over the past twelve months.

Data processing fees declined $89,000, or 6%, during the third quarter of 2018 compared with the second  quarter of 2018 and increased $242,000, or 23%, compared to the third quarter of 2017.  The decline during the third quarter of 2018 compared with the second quarter of 2018 was driven by a lower level of conversion-related costs associated with the aforementioned branch acquisition.  The higher level of costs during the third quarter of 2018 compared with the third quarter of 2017 was primarily attributable to costs associated with merger and acquisition activity during 2018 and overall growth of the Company.

Professional fees declined $568,000, or 42%, during the third quarter of 2018 compared with the second  quarter of 2018 and increased $242,000, or 44%, compared to the third quarter of 2017.  The decline during the third quarter of 2018 compared to the second quarter of 2018 was was largely related to a lower level of professional fees associated with the previously discussed merger and acquisition activity of the Company.  The increase during the third quarter of 2018 compared with the third quarter of 2017 was due to professional fees related to merger and acquisition activity during 2018, while there were no professional fee costs for acquisitions during the third quarter of 2017.

Advertising and promotion expense declined $6,000, or less than 1%, during the third quarter of 2018 compared with the second quarter of 2018 and declined $464,000, or 35%, compared to the third quarter of 2017.  The decline in the third quarter of 2018 compared to the third quarter of 2017 was primarily related to the donation of a former branch facility to a municipality in one of the Company's market areas during the third quarter of 2017.

Intangible amortization increased $124,000, or 41%, during the quarter ended September 30, 2018 compared with the second quarter of 2018 and increased $200,000, or 87%, compared with the third quarter of 2017.  The increase in intangible amortization was attributable to the previously discussed branch acquisition completed during the second quarter of 2018.

Other operating expenses declined $5,000, or less than 1%, during the third quarter of 2018 compared with the second quarter of 2018 and increased $572,000, or 24%, compared with the third quarter of 2017.  The increase in the third quarter of 2018 compared with the third quarter of 2017 was largely attributable to the adoption of the revenue recognition standard effective January 1, 2018 and the reclassification of expense as previously discussed.

The Company’s effective income tax rate was 18.1% during the three months ended September 30, 2018 compared with an effective tax rate of 17.3% during the second quarter of 2018 and 26.7% during the third quarter of 2017.  The Company's effective tax rate and provision for income tax was positively impacted during the first three quarters of 2018 by the reduction of federal income tax rates from a statutory rate of 35% to 21% effective January 1, 2018 related to the federal tax reform legislation enacted during the fourth quarter of 2017.

About German American

German American Bancorp, Inc. is a NASDAQ-traded (symbol: GABC) bank holding company based in Jasper, Indiana.  Following the merger and planned merger integration of First Security, Inc., German American, through its banking subsidiary German American Bank, will operate 66 banking offices in 20 contiguous southern Indiana counties and five counties in Kentucky.  The Company also owns an investment brokerage subsidiary (German American Investment Services, Inc.) and a full line property and casualty insurance agency (German American Insurance, Inc.).

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Readers are cautioned that, by their nature, forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results and experience could differ materially from the anticipated results or other expectations expressed or implied by these forward-looking statements as a result of a number of factors, including but not limited to, those discussed in this press release. Factors that could cause actual experience to differ from the expectations expressed or implied in this press release include the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates; changes in competitive conditions; the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; changes in customer borrowing, repayment, investment and deposit practices; changes in fiscal, monetary and tax policies; changes in financial and capital markets; potential deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration; capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; risks of expansion through acquisitions and mergers, such as unexpected credit quality problems of the acquired loans or other assets, unexpected attrition of the customer base of the acquired institution or branches, and difficulties in integration of the acquired operations; factors driving impairment charges on investments; the impact, extent and timing of technological changes; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; actions of the Federal Reserve Board; changes in accounting principles and interpretations; the expected impact of  U.S. tax regulations passed in December 2017; potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Company’s banking subsidiary; actions of the regulatory authorities under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to Consumer Financial Protection Bureau rules and regulations; the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends; and other risk factors expressly identified in the Company’s filings with the United States Securities and Exchange Commission. Such statements reflect our views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements. It is intended that these forward-looking statements speak only as of the date they are made. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
      
Consolidated Balance Sheets
      
 September 30, 2018 June 30, 2018 September 30, 2017
ASSETS           
Cash and Due from Banks$50,980  $60,244  $44,804 
Short-term Investments14,604  11,038  9,758 
Investment Securities739,980  739,834  741,710 
      
Loans Held-for-Sale9,178  9,552  8,484 
      
Loans, Net of Unearned Income2,336,625  2,318,510  2,086,325 
Allowance for Loan Losses(16,051) (15,637) (15,321)
Net Loans2,320,574  2,302,873  2,071,004 
      
Stock in FHLB and Other Restricted Stock13,048  13,048  13,048 
Premises and Equipment69,267  66,641  51,355 
Goodwill and Other Intangible Assets65,548  65,978  56,378 
Other Assets80,590  75,336  76,348 
TOTAL ASSETS$3,363,769  $3,344,544  $3,072,889 
      
LIABILITIES     
Non-interest-bearing Demand Deposits$634,421  $629,724  $589,315 
Interest-bearing Demand, Savings, and Money Market Accounts1,605,818  1,611,583  1,454,073 
Time Deposits400,608  360,133  381,184 
Total Deposits2,640,847  2,601,440  2,424,572 
      
Borrowings327,039  354,803  261,941 
Other Liabilities19,760  17,761  25,751 
TOTAL LIABILITIES2,987,646  2,974,004  2,712,264 
      
SHAREHOLDERS' EQUITY     
Common Stock and Surplus189,195  188,885  187,917 
Retained Earnings204,188  194,994  169,859 
Accumulated Other Comprehensive Income (Loss)(17,260) (13,339) 2,849 
SHAREHOLDERS' EQUITY376,123  370,540  360,625 
      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$3,363,769  $3,344,544  $3,072,889 
      
END OF PERIOD SHARES OUTSTANDING22,968,078  22,967,898  22,930,017 
      
TANGIBLE BOOK VALUE PER SHARE (1)$13.52  $13.26  $13.27 
      
 
(1) Tangible Book Value per Share is defined as Total Shareholders' Equity less Goodwill and Other Intangible Assets divided by End of Period Shares Outstanding.


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
           
Consolidated Statements of Income
           
  Three Months Ended Nine Months Ended
  September 30,
2018
 June 30,
2018
 September 30,
2017
 September 30,
2018
 September 30,
2017
INTEREST INCOME         
Interest and Fees on Loans$28,148  $26,308  $23,182  $78,406  $68,046 
Interest on Short-term Investments101  54  46  211  100 
Interest and Dividends on Investment Securities5,226  5,171  4,758  15,536  14,274 
TOTAL INTEREST INCOME33,475  31,533  27,986  94,153  82,420 
           
INTEREST EXPENSE         
Interest on Deposits3,535  2,848  1,959  8,666  5,028 
Interest on Borrowings1,392  1,216  1,110  3,860  2,937 
TOTAL INTEREST EXPENSE4,927  4,064  3,069  12,526  7,965 
           
NET INTEREST INCOME28,548  27,469  24,917  81,627  74,455 
Provision for Loan Losses500  1,220  250  2,070  1,100 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES28,048  26,249  24,667  79,557  73,355 
           
NON-INTEREST INCOME         
Net Gain on Sales of Loans866  905  952  2,421  2,598 
Net Gain on Securities90  74  575  434  575 
Other Non-interest Income8,007  7,903  6,748  24,482  21,087 
TOTAL NON-INTEREST INCOME8,963  8,882  8,275  27,337  24,260 
           
NON-INTEREST EXPENSE         
Salaries and Benefits12,134  12,019  11,570  36,279  34,474 
Other Non-interest Expenses9,442  9,689  8,201  27,460  23,329 
TOTAL NON-INTEREST EXPENSE21,576  21,708  19,771  63,739  57,803 
           
Income before Income Taxes15,435  13,423  13,171  43,155  39,812 
Income Tax Expense2,796  2,326  3,511  7,606  10,757 
           
NET INCOME$12,639  $11,097  $9,660  $35,549  $29,055 
           
BASIC EARNINGS PER SHARE$0.55  $0.48  $0.42  $1.55  $1.27 
DILUTED EARNINGS PER SHARE$0.55  $0.48  $0.42  $1.55  $1.27 
           
WEIGHTED AVERAGE SHARES OUTSTANDING22,968,047  22,968,178  22,929,864  22,958,977  22,922,724 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING22,968,047  22,968,178  22,929,864  22,958,977  22,922,724 
           


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
            
   Three Months Ended Nine Months Ended
   September 30, June 30, September 30, September 30, September 30,
   2018 2018 2017 2018 2017
EARNINGS PERFORMANCE RATIOS
          
Annualized Return on Average Assets 1.52% 1.38% 1.27% 1.47% 1.30%
Annualized Return on Average Equity 13.47% 12.15% 10.78% 12.88% 11.16%
Net Interest Margin 3.76% 3.77% 3.70% 3.72% 3.78%
Efficiency Ratio (1) 56.48% 58.63% 57.34% 57.43% 56.36%
Net Overhead Expense to Average Earning Assets (2) 1.63% 1.71% 1.63% 1.62% 1.61%
            
ASSET QUALITY RATIOS
          
Annualized Net Charge-offs to Average Loans 0.01% 0.01% 0.05% 0.10% 0.04%
Allowance for Loan Losses to Period End Loans 0.69% 0.67% 0.73%    
Non-performing Assets to Period End Assets 0.26% 0.28% 0.33%    
Non-performing Loans to Period End Loans 0.36% 0.41% 0.46%    
Loans 30-89 Days Past Due to Period End Loans 0.65% 0.52% 0.48%    
            
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
          
 Average Assets $3,333,005  $3,226,091  $3,033,055  $3,227,466  $2,977,023 
Average Earning Assets $3,095,195  $2,994,278  $2,820,750  $3,002,543  $2,769,758 
Average Total Loans $2,318,657  $2,229,972  $2,058,453  $2,230,100  $2,015,245 
Average Demand Deposits $636,989  $625,158  $572,204  $616,048  $563,679 
Average Interest Bearing Liabilities $2,301,011  $2,217,198  $2,077,218  $2,223,469  $2,044,112 
Average Equity $375,255  $365,197  $358,299  $368,053  $347,057 
            
Period End Non-performing Assets (3) $8,597  $9,527  $10,219     
Period End Non-performing Loans (4) $8,497  $9,487  $9,651     
Period End Loans 30-89 Days Past Due (5) $15,110  $12,146  $10,089     
            
Tax Equivalent Net Interest Income $29,240  $28,142  $26,207  $83,643  $78,306 
Net Charge-offs during Period $86  $43  $249  $1,713  $587 
            
(1) Efficiency Ratio is defined as Non-interest Expense divided by the sum of Net Interest Income, on a tax equivalent basis, and Non-interest Income.
(2) Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest Income.
(3) Non-performing assets are defined as Non-accrual Loans, Loans Past Due 90 days or more, Restructured Loans, and Other Real Estate Owned.
(4) Non-performing loans are defined as Non-accrual Loans, Loans Past Due 90 days or more, and Restructured Loans.
(5) Loans 30-89 days past due and still accruing.
For additional information, contact:
Mark A Schroeder, Chairman & Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314

Source: German American Bancorp, Inc.