Press Release

German American Bancorp, Inc. (GABC) Posts 10th Consecutive Year of Record Annual Earnings, Announces Share Repurchase Plan, and Declares 12% Cash Dividend Increase

Company Release - 1/27/2020 5:00 PM ET

JASPER, Ind., Jan. 27, 2020 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq: GABC) reported that, for the 10th consecutive year, the Company has achieved record annual earnings, posting net income of $59.2 million, or $2.29 per share, for the year ended on December 31, 2019.  This level of annual earnings performance resulted in a double-digit return on shareholders’ equity in 2019, marking the 15th consecutive fiscal year in which the Company has delivered a double-digit return on shareholders’ equity.  The Company also announced a new share repurchase plan for up to one million GABC shares and the declaration of a 12% increase in its quarterly cash dividend.

Annual net income for 2019 represented an increase of $12.7 million, or approximately 15% on a per share basis, from the prior 2018 net income of $46.5 million, or $1.99 per share.  Fourth quarter 2019 net income of $15.8 million, or $0.59 per share, represented approximately a 34% increase, on a per share basis, from fourth quarter 2018 net income of $11.0 million, or $0.44 per share.  The operating results of both 2019 and 2018 were reflective of the inclusion of the acquisition of Citizens First Corporation of Bowling Green, Kentucky on July 1, 2019 and First Security, Inc. of Owensboro, Kentucky, on October 15, 2018.

The Company also announced that its Board has approved a new share repurchase plan authorizing the repurchase of up to one million shares, or approximately 4% of the Company's total common shares outstanding.  Stock repurchases are expected to be made from time to time on the open market or in privately negotiated transactions, subject to applicable securities law. The plan does not obligate the Company to repurchase any specific dollar amount or number of shares.

The Company also announced a 12% increase in its regular quarterly cash dividend, as its Board of Directors declared a regular quarterly cash dividend of $0.19 per share, which will be payable on February 20, 2020 to shareholders of record as of February 10, 2020.

Mark A. Schroeder, German American’s Chairman & CEO, stated, "2019 saw the continuation of our ongoing efforts to build upon our historic levels of growth and profitability and the enhancement of long-term shareholder value.  In particular, we saw continued strong organic growth during this past year within our markets in Southeast Indiana, following the acquisition of River Valley Bancorp in 2016, which opened for us the vibrant markets in the Indiana portion of the Louisville, Kentucky MSA, and the 2018 acquisition of a five-branch network in the greater Columbus, Indiana market area, which greatly enhanced our market presence in that growing area of the state of Indiana.  Additionally, we continued in 2019 our strategic expansion into the Commonwealth of Kentucky with the acquisition in July 2019 of Citizens First Corporation of Bowling Green, Kentucky.  The combination of the Citizens First footprint in the greater Bowling Green area with that of First Security, Inc. of Owensboro, Kentucky, which we also acquired in 2018, resulted in German American acquiring approximately $1 billion of banking assets within the Commonwealth.  We will continue our focus in 2020 on the integration of these operations, as we position the Company for what we believe will be strong organic growth from the Kentucky market area in the coming years.”

Schroeder continued, “We are also extremely pleased to have achieved the milestone in 2019 of a decade of consecutive annual record earnings performance and a decade and a half of delivering a double digit annual return on shareholders’ equity.   Very few banking organizations in the country can match that level of consistent, long-term profitability.  Because of the capital strength resulting from this level of strong profitability, we are able to announce today another double-digit increase in our cash dividend and a new share repurchase program, continuing our ongoing efforts to drive long-term value for our shareholders.  With this dividend increase, German American has increased the level of our cash dividends each year for the past eight consecutive years.  The new share repurchase program is designed to help facilitate the Company’s capital management efforts.”

Balance Sheet Highlights

On July 1, 2019, the Company completed its acquisition of Citizens First Corporation (“Citizens First”) and its subsidiary bank, Citizen First Bank, Inc.  Citizens First, headquartered in Bowling Green, Kentucky, operated eight retail banking offices through Citizens First Bank, Inc. in Barren, Hart, Simpson and Warren Counties in Kentucky.

On October 15, 2018, the Company completed its acquisition of First Security, Inc. ("First Security") and its subsidiary bank, First Security Bank, Inc.  First Security was based in Owensboro, Kentucky, and operated 11 retail banking offices in Owensboro, Bowling Green, Franklin and Lexington, Kentucky and in Evansville and Newburgh, Indiana.

In addition, the Company completed a five-branch acquisition of locations of First Financial Bancorp (formerly branch locations of Mainsource Financial Group, Inc. prior to its merger with First Financial Bancorp) on May 18, 2018.  Four of the branches are located in Columbus, Indiana, and one in Greensburg, Indiana.

Total assets for the Company totaled $4.397 billion at December 31, 2019, representing an increase of $40.7 million, or 4% on an annualized basis, compared with September 30, 2019 and an increase of $467.5 million, or 12%, compared with December 31, 2018.  The increase in total assets as of December 31, 2019 compared to a year ago was driven largely by the acquisition of Citizens First.

December 31, 2019 total loans increased $21.2 million, or 3% on an annualized basis, compared with September  30, 2019 and increased $350.2 million, or 13%, compared with December 31, 2018.  Loan growth during 2019 was impacted in each quarterly period by elevated large pay-offs within the agricultural and commercial loan portfolios.  Fourth quarter 2019 large pay-offs were significantly elevated, at approximately $30 million greater than the average of large pay-offs during the first three quarters of 2019.  The majority of the increase in outstanding loans as of December 31, 2019 compared with December 31, 2018 was attributable to the acquisition of Citizens First.  As of December 31, 2019, outstanding loans from the Citizens First acquisition totaled approximately $320.3 million.

       
End of Period Loan Balances 12/31/2019 9/30/2019 12/31/2018
(dollars in thousands)      
       
Commercial & Industrial Loans $589,758  $579,152  $543,761 
Commercial Real Estate Loans 1,495,862  1,477,204  1,208,646 
Agricultural Loans 384,526  386,685  365,208 
Consumer Loans 306,972  305,027  285,534 
Residential Mortgage Loans 304,855  312,674  328,592 
  $3,081,973  $3,060,742  $2,731,741 
       

Non-performing assets totaled $14.4 million at December 31, 2019 compared to $14.1 million at September 30, 2019 and $13.5 million at December 31, 2018.  Non-performing assets represented 0.33% of total assets at December 31, 2019, 0.32% at September 30, 2019, and 0.34% at December 31, 2018.  Non-performing loans totaled $14.0 million at December 31, 2019 compared to $13.5 million at September 30, 2019 and $13.2 million at December 31, 2018.  Non-performing loans represented 0.45% of total loans at December 31, 2019 compared to 0.44% at September 30, 2019 and 0.48% at December 31, 2018.

      
Non-performing Assets     
(dollars in thousands)     
 12/31/2019 9/30/2019 12/31/2018
Non-Accrual Loans$13,802  $13,512  $12,579 
Past Due Loans (90 days or more)190    633 
Total Non-Performing Loans13,992  13,512  13,212 
Other Real Estate425  625  286 
Total Non-Performing Assets$14,417  $14,137  $13,498 
      
Restructured Loans$116  $117  $121 
      

The Company’s allowance for loan losses totaled $16.3 million at December 31, 2019 compared to $15.9 million at September 30, 2019 and $15.8 million at December 31, 2018.  The allowance for loan losses represented 0.53% of period-end loans at December 31, 2019 compared with 0.52% of period-end loans at September 30, 2019 and 0.58% of period-end loans at December 31, 2018.  From time to time, the Company has acquired loans through bank and branch acquisitions with the most recent being the Citizens First acquisition during the third quarter of 2019 and the First Security acquisition during the fourth 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 $20.4 million at December 31, 2019, $22.9 million at September 30, 2019 and $19.5 million at December 31, 2018.

December 31, 2019 total deposits remained relatively stable compared to September 30, 2019 and increased $357.4 million, or 12%, compared with December 31, 2018.  The increase in total deposits at December 31, 2019 compared with year-end 2018 was largely related to the acquisition of Citizens First.  As of December 31, 2019, deposits from the Citizens First acquisition totaled approximately $359.7 million.

       
End of Period Deposit Balances 12/31/2019 9/30/2019 12/31/2018
(dollars in thousands)      
       
Non-interest-bearing Demand Deposits $832,985  $827,259  $715,972 
IB Demand, Savings, and MMDA Accounts 1,965,640  1,910,395  1,768,177 
Time Deposits < $100,000 314,789  323,746  249,309 
Time Deposits > $100,000 316,607  369,886  339,174 
  $3,430,021  $3,431,286  $3,072,632 
       

Results of Operations Highlights – Year ended December 31, 2019

Net income for the year ended December 31, 2019 totaled $59,222,000, or $2.29 per share, an increase of $12,693,000, or approximately 15% on a per share basis, from the year ended December 31, 2018 net income of $46,529,000, or $1.99 per share.

Net income for both 2018 and 2019 was impacted by merger and acquisition activity.  The year ended December 31, 2019 included acquisition-related expenses of approximately $3,360,000 (approximately $2,594,000 or $0.10 per share, on an after tax basis).  The year ended December 31, 2018 included acquisition-related expenses of approximately $4,592,000 (approximately $3,526,000 or $0.15 per share, on an after tax basis) for the aforementioned acquisitions.

Summary Average Balance Sheet            
(Tax-equivalent basis / dollars in thousands)            
  Year Ended December 31, 2019  Year Ended December 31, 2018
             
   Principal
Balance
  Income/
Expense
  Yield/Rate  Principal
Balance
  Income/
Expense
  Yield/Rate
Assets            
Federal Funds Sold and Other            
Short-term Investments $27,166  $522  1.92% $18,587  $308  1.65%
Securities 851,457  26,006  3.05% 768,361  23,739  3.09%
Loans and Leases 2,899,939  152,836  5.27% 2,339,089  112,437  4.81%
Total Interest Earning Assets $3,778,562  $179,364  4.75% $3,126,037  $136,484  4.36%
             
Liabilities            
Demand Deposit Accounts $761,515      $640,865     
IB Demand, Savings, and            
MMDA Accounts $1,861,617  $12,049  0.65% $1,616,558  $7,709  0.48%
Time Deposits 670,802  11,756  1.75% 459,289  5,916  1.29%
FHLB Advances and Other Borrowings 279,675  7,444  2.66% 257,737  5,514  2.14%
Total Interest-Bearing Liabilities $2,812,094  $31,249  1.11% $2,333,584  $19,139  0.82%
             
Cost of Funds     0.83%     0.61%
Net Interest Income   $148,115      $117,345   
Net Interest Margin     3.92%     3.75%
             

During the year ended December 31, 2019, net interest income totaled $145,225,000, representing an increase of $30,615,000, or 27%, from the year ended December 31, 2018 net interest income of $114,610,000. The increased level of net interest income during 2019 compared with 2018 was driven primarily by a higher level of average earning assets resulting from the previously discussed merger and acquisition activity and improvement in the tax equivalent net interest margin.

The tax equivalent net interest margin for the year ended December 31, 2019 was 3.92% compared to 3.75% in 2018.  The improvement in the net interest margin during 2019 compared to 2018 was related to improved earning asset yields partially offset by an increased cost of funds largely related to higher short-term market interest rates during much of 2019 compared with 2018.  Also positively impacting the net interest margin was an increased level of accretion of loan discounts and recoveries on acquired loans.  Accretion of loan discounts and recoveries on acquired loans contributed approximately 30 basis points to the net interest margin during 2019 and 8 basis points in 2018.

During the year ended December 31, 2019, the Company recorded a provision for loan loss of $5,325,000 compared with a provision for loan loss of $2,070,000 during 2018.  The provision during both periods was done in accordance with the Company's standard methodology for determining the adequacy of its allowance for loan loss.

During the year ended December 31, 2019, non-interest income increased $8,431,000, or 23%, from the year ended December 31, 2018.

  Year Ended Year Ended
Non-interest Income 12/31/2019 12/31/2018
(dollars in thousands)    
     
Trust and Investment Product Fees $7,278  $6,680 
Service Charges on Deposit Accounts 8,718  7,044 
Insurance Revenues 8,940  8,330 
Company Owned Life Insurance 2,005  1,243 
Interchange Fee Income 9,450  7,278 
Other Operating Income 3,229  2,785 
Subtotal 39,620  33,360 
Net Gains on Loans 4,633  3,004 
Net Gains on Securities 1,248  706 
Total Non-interest Income $45,501  $37,070 
     

Trust and investment product fees increased $598,000, or 9%, during 2019 compared with 2018.  The increase in 2019 compared with 2018 was largely attributable to increased assets under management in the Company's wealth management group.

Service charges on deposit accounts increased $1,674,000, or 24%, during 2019 compared with 2018.  The increase during 2019 compared with 2018 was primarily attributable to the acquisition activity completed during 2018 and 2019.

Company owned life insurance revenue increased $762,000, or 61%, during 2019, compared with 2018.  The increase was largely related to death benefits received from life insurance policies during 2019 with additional increases resulting from the acquisitions completed during 2018 and 2019.

Interchange fees increased $2,172,000, or 30%, during 2019 compared to 2018.  The increase during 2019 was largely attributable to increased card utilization by customers and the acquisition activity completed during 2018 and 2019.

Net gains on sales of loans increased $1,629,000, or 54%, during 2019 compared with 2018.  The increase in the net gain on sales of loans during 2019 compared with 2018 was largely attributable to the higher volume of loans sold.  Loan sales totaled $185.4 million during 2019 and $135.3 million during 2018.

During 2019, non-interest expense totaled $114,162,000, an increase of $20,609,000, or 22%, compared with 2018.  The increase during 2019 was largely impacted by the inclusion of operating expenses related to the branch acquisition completed during the second quarter of 2018 as well as operating expenses related to the bank acquisitions completed in the fourth quarter of 2018 and third quarter of 2019.  Acquisition-related expenses totaled $3,360,000 during 2019 and $4,592,000 during 2018.

  Year Ended Year Ended
Non-interest Expense 12/31/2019 12/31/2018
(dollars in thousands)    
     
Salaries and Employee Benefits $63,885  $51,306 
Occupancy, Furniture and Equipment Expense 13,776  10,877 
FDIC Premiums 533  1,033 
Data Processing Fees 7,927  6,942 
Professional Fees 4,674  5,362 
Advertising and Promotion 4,230  3,492 
Intangible Amortization 3,721  1,752 
Other Operating Expenses 15,416  12,789 
Total Non-interest Expense $114,162  $93,553 
     

Salaries and benefits increased $12,579,000, or 25%, during 2019 compared with 2018.  The increase in salaries and benefits during 2019 compared with 2018 was largely attributable to an increased number of full-time equivalent employees due primarily to the acquisition transactions completed during 2018 and 2019.

Occupancy, furniture and equipment expense increased $2,899,000, or 27%, during 2019 compared with 2018.  The increase during 2019 compared to 2018 was primarily due to operating costs related to the acquisition activity during 2018 and 2019.

FDIC premiums declined $500,000, or 48%, during 2019 compared with 2018.  The decline in FDIC premiums is attributable to credits received from the FDIC in 2019.  The credits received were due to the reserve ratio of the deposit insurance fund exceeding the FDIC's targeted levels.

Data processing fees increased $985,000, or 14%, during 2019 compared with 2018. The increase in data processing fees during 2019 compared with 2018 was largely related to the on-going operating costs associated with the acquisitions completed during 2018 and 2019.  Acquisition-related costs totaled $1,235,000 during 2019 and $2,002,000 during 2018.

Professional fees declined $688,000, or 13%, during 2019 compared with 2018.  The decline in professional fees during 2019 compared with 2018 was largely related to lower levels of  merger and acquisition related professional fees.  Merger and acquisition related professional fees totaled approximately $1,167,000 during 2019 compared to $1,738,000 during 2018.

Intangible amortization increased $1,969,000, or 112%, during 2019 compared with 2018.  The increase in intangible amortization was attributable to the previously discussed acquisitions completed during 2018 and 2019.

Other operating expenses increased $2,627,000, or 21%, during 2019 compared with 2018.  The increase during 2019 compared with 2018 was largely attributable to the operating costs related to the acquisitions completed in 2018 and 2019.

Results of Operations Highlights – Quarter ended December 31, 2019

Net income for the quarter ended December 31, 2019 totaled $15,820,000, or $0.59 per share, an increase of  20% on a per share basis compared with the third quarter 2019 net income of $13,064,000, or $0.49 per share, and an increase of 34% on a per share basis compared with the fourth quarter 2018 net income of $10,980,000, or $0.44 per share.  The change in net income during the fourth quarter of 2019, compared with the fourth quarter of 2018, was largely impacted by the completed acquisition activity during 2018 and 2019.  A detailed analysis of the factors impacting fourth quarter 2019 income and expenses, as compared to third quarter 2019, is included in the remaining discussion.

Net income for each quarter presented was impacted by merger and acquisition activity during 2018 and 2019.  The fourth quarter of 2019 results of operations included acquisition-related expenses of approximately $135,000 ($100,000 or less than $0.01 per share, on an after tax basis), while the third quarter of 2019 results of operations included acquisition-related expenses of approximately $2,258,000 ($1,696,000 or $0.06 per share, on an after tax basis) and the fourth quarter of 2018 included approximately $3,107,000 ($2,343,000 or $0.09 per share on an after tax basis).

                   
Summary Average Balance Sheet                  
(Tax-equivalent basis / dollars in thousands)                  
   Quarter Ended  Quarter Ended  Quarter Ended
  December 31, 2019 September 30, 2019 December 31, 2018
                   
   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 $31,521  $133  1.66% $31,230  $163  2.07% $20,925  $97  1.83%
Securities 866,889  6,462  2.98% 870,369  6,472  2.97% 812,191  6,447  3.18%
Loans and Leases 3,076,509  41,486  5.35% 3,076,931  41,008  5.29% 2,662,502  33,771  5.04%
Total Interest Earning Assets $3,974,919  $48,081  4.81% $3,978,530  $47,643  4.76% $3,495,618  $40,315  4.58%
                   
Liabilities                  
Demand Deposit Accounts $839,906      $797,337      $714,504     
IB Demand, Savings, and                  
MMDA Accounts $1,968,365  $3,220  0.65% $1,946,219  $3,189  0.65% $1,794,891  $2,808  0.62%
Time Deposits 679,005  3,011  1.76% 725,347  3,210  1.75% 593,615  2,151  1.44%
FHLB Advances and Other Borrowings 256,163  1,692  2.62% 286,587  1,934  2.68% 271,834  1,654  2.42%
Total Interest-Bearing Liabilities $2,903,533  $7,923  1.08% $2,958,153  $8,333  1.12% $2,660,340  $6,613  0.99%
                   
Cost of Funds     0.79%     0.83%     0.75%
Net Interest Income   $40,158      $39,310      $33,702   
Net Interest Margin     4.02%     3.93%     3.83%
                   

During the quarter ended December 31, 2019, net interest income totaled $39,415,000, an increase of $837,000, or 2%, compared to the quarter ended September 30, 2019 net interest income of $38,578,000. The increased level of net interest income during the fourth quarter of 2019 compared with the third quarter of 2019 was driven primarily by an increased tax equivalent net interest margin.

The tax equivalent net interest margin for the quarter ended December 31, 2019 was 4.02% compared with 3.93% in the third quarter of 2019.  Accretion of loan discounts and recoveries on acquired loans contributed approximately 36 basis points to the net interest margin on an annualized basis in the fourth quarter of 2019 and 24 basis points in the third quarter of 2019.

During the quarter ended December 31, 2019, the Company recorded a provision for loan loss of $1,600,000 compared with $2,800,000 in the third quarter of  2019.  The provision during both periods was done in accordance with the Company's standard methodology for determining the adequacy of its allowance for loan loss.

Net charge-offs totaled $1,191,000 or 15 basis points on an annualized basis of average loans outstanding during the three months ended December 31, 2019, compared with $3,170,000 or 41 basis point on an annualized basis of average loans outstanding during third quarter of 2019.  The majority of the net charge-offs during the fourth quarter of 2019 was attributable to a single, adversely classified commercial lending relationship.  The higher level of net charge-offs during the third quarter of 2019 was primarily attributable to a partial charge-off on a single, adversely classified, commercial lending relationship.

During the quarter ended December 31, 2019, non-interest income totaled $11,278,000, a decline of $778,000, or 6%, compared with the quarter ended September 30, 2019.

       
  Quarter Ended Quarter Ended Quarter Ended
Non-interest Income  12/31/2019  9/30/2019  12/31/2018
(dollars in thousands)      
             
Trust and Investment Product Fees $1,913  $1,885  $1,645 
Service Charges on Deposit Accounts 2,399  2,395  2,072 
Insurance Revenues 1,923  1,883  1,877 
Company Owned Life Insurance 453  364  420 
Interchange Fee Income 2,485  2,538  2,235 
Other Operating Income 868  1,029  629 
Subtotal 10,041  10,094  8,878 
Net Gains on Loans 973  1,649  583 
Net Gains on Securities 264  313  272 
Total Non-interest Income $11,278  $12,056  $9,733 
       

Net gains on sales of loans declined $676,000, or 41%, during the fourth quarter of 2019 compared with the third quarter of 2019.  The decline was primarily due to lower sales volume, decreased margins on loans sold, and a lower level of commitments to originate loans which resulted in a lower fair value adjustment on those commitments.  Loan sales for the fourth quarter of 2019 totaled $56.6 million compared with $60.4 million during the third quarter of 2019.

During the quarter ended December 31, 2019, non-interest expense totaled $29,824,000, a decline of $2,137,000, or 7%, compared with the quarter ended September 30, 2019.  The fourth quarter of 2019 included acquisition-related expenses of $135,000 while the third quarter of 2019 included acquisition-related expenses of approximately $2,258,000.

       
  Quarter Ended Quarter Ended Quarter Ended
Non-interest Expense 12/31/2019 9/30/2019 12/31/2018
(dollars in thousands)      
       
Salaries and Employee Benefits $17,145  $17,579  $15,027 
Occupancy, Furniture and Equipment Expense 3,594  3,751  3,203 
FDIC Premiums     234 
Data Processing Fees 1,681  2,860  3,108 
Professional Fees 849  1,324  2,337 
Advertising and Promotion 1,370  1,054  1,083 
Intangible Amortization 1,012  1,064  810 
Other Operating Expenses 4,173  4,329  4,012 
Total Non-interest Expense $29,824  $31,961  $29,814 
       

Salaries and benefits declined $434,000, or 2%, during the quarter ended December 31, 2019 compared with the third quarter of 2019.  The decline in salaries and benefits during the fourth quarter of 2019 compared with the third quarter of 2019 was largely attributable to a decline in acquisition related salary and benefit costs incurred during the third quarter of 2019.  The third quarter of 2019 included approximately $695,000 of acquisition-related salary and benefit costs of a non-recurring nature.

Data processing fees declined $1,179,000, or 41%, during the fourth quarter of 2019 compared with the third quarter of 2019.  The decline during the fourth quarter of 2019 compared with the third quarter of 2019 was largely driven by acquisition-related costs which totaled approximately $999,000 during the third quarter of 2019 and only $3,000 during the fourth quarter of 2019.

Professional fees declined $475,000, or 36%, during the fourth quarter of 2019 compared with the third quarter of 2019.  The decline during the fourth quarter of 2019 compared to the third quarter of 2019 was due in large part to professional fees related to merger and acquisition activity.  Merger and acquisition-related professional fees totaled approximately $53,000 during the fourth quarter of 2019 compared with approximately $401,000 in the third quarter of 2019.

About German American

German American Bancorp, Inc. is a Nasdaq-traded (symbol: GABC) financial   holding company based in Jasper, Indiana.  German American, through its banking subsidiary German American Bank, operates 76 banking offices in 20 contiguous southern Indiana counties, seven counties in Kentucky and one county in Tennessee.  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; 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
      
 December 31, 2019 September 30, 2019 December 31, 2018
ASSETS     
Cash and Due from Banks$59,971  $64,791  $64,549 
Short-term Investments45,898  26,328  32,251 
Investment Securities855,178  849,798  812,964 
      
Loans Held-for-Sale17,713  19,156  4,263 
      
Loans, Net of Unearned Income3,077,091  3,056,907  2,728,059 
Allowance for Loan Losses(16,278) (15,869) (15,823)
Net Loans3,060,813  3,041,038  2,712,236 
      
Stock in FHLB and Other Restricted Stock13,968  13,968  13,048 
Premises and Equipment96,651  98,754  80,627 
Goodwill and Other Intangible Assets133,962  133,818  113,645 
Other Assets112,444  108,231  95,507 
TOTAL ASSETS$4,396,598  $4,355,882  $3,929,090 
      
LIABILITIES     
Non-interest-bearing Demand Deposits$832,985  $827,259  $715,972 
Interest-bearing Demand, Savings, and Money Market Accounts1,965,640  1,910,395  1,768,177 
Time Deposits631,396  693,632  588,483 
Total Deposits3,430,021  3,431,286  3,072,632 
      
Borrowings349,686  316,687  376,409 
Other Liabilities43,071  44,982  21,409 
TOTAL LIABILITIES3,822,778  3,792,955  3,470,450 
      
SHAREHOLDERS' EQUITY     
Common Stock and Surplus305,625  305,270  254,314 
Retained Earnings253,090  241,801  211,424 
Accumulated Other Comprehensive Income (Loss)15,105  15,856  (7,098)
SHAREHOLDERS' EQUITY573,820  562,927  458,640 
      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$4,396,598  $4,355,882  $3,929,090 
      
END OF PERIOD SHARES OUTSTANDING26,671,368  26,662,078  24,967,458 
      
TANGIBLE BOOK VALUE PER SHARE (1)$16.49  $16.09  $13.81 
      
 
(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 Twelve Months Ended
  December 31,
2019
 September 30,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
INTEREST INCOME         
Interest and Fees on Loans$41,395  $40,921  $33,678  $152,481  $112,084 
Interest on Short-term Investments133  163  97  522  308 
Interest and Dividends on Investment Securities5,810  5,827  5,821  23,471  21,357 
TOTAL INTEREST INCOME47,338  46,911  39,596  176,474  133,749 
           
INTEREST EXPENSE         
Interest on Deposits6,231  6,399  4,959  23,805  13,625 
Interest on Borrowings1,692  1,934  1,654  7,444  5,514 
TOTAL INTEREST EXPENSE7,923  8,333  6,613  31,249  19,139 
           
NET INTEREST INCOME39,415  38,578  32,983  145,225  114,610 
Provision for Loan Losses1,600  2,800    5,325  2,070 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES37,815  35,778  32,983  139,900  112,540 
           
NON-INTEREST INCOME         
Net Gain on Sales of Loans973  1,649  583  4,633  3,004 
Net Gain on Securities264  313  272  1,248  706 
Other Non-interest Income10,041  10,094  8,878  39,620  33,360 
TOTAL NON-INTEREST INCOME11,278  12,056  9,733  45,501  37,070 
           
NON-INTEREST EXPENSE         
Salaries and Benefits17,145  17,579  15,027  63,885  51,306 
Other Non-interest Expenses12,679  14,382  14,787  50,277  42,247 
TOTAL NON-INTEREST EXPENSE29,824  31,961  29,814  114,162  93,553 
           
Income before Income Taxes19,269  15,873  12,902  71,239  56,057 
Income Tax Expense3,449  2,809  1,922  12,017  9,528 
           
NET INCOME$15,820  $13,064  $10,980  $59,222  $46,529 
           
BASIC EARNINGS PER SHARE$0.59  $0.49  $0.44  $2.29  $1.99 
DILUTED EARNINGS PER SHARE$0.59  $0.49  $0.44  $2.29  $1.99 
           
WEIGHTED AVERAGE SHARES OUTSTANDING26,663,405  26,643,064  24,962,878  25,824,538  23,381,616 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING26,663,405  26,643,064  24,962,878  25,824,538  23,381,616 
           


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
            
   Three Months Ended Twelve Months Ended
   December 31, September 30, December 31, December 31, December 31,
   2019 2019 2018 2019 2018
EARNINGS PERFORMANCE RATIOS          
 Annualized Return on Average Assets 1.45% 1.20% 1.15% 1.43% 1.38%
 Annualized Return on Average Equity 11.14% 9.37% 10.05% 11.41% 12.07%
 Net Interest Margin 4.02% 3.93% 3.83% 3.92% 3.75%
 Efficiency Ratio (1) 57.98% 62.22% 68.64% 58.96% 60.59%
 Net Overhead Expense to Average Earning Assets (2) 1.87% 2.00% 2.30% 1.82% 1.81%
            
ASSET QUALITY RATIOS          
 Annualized Net Charge-offs to Average Loans 0.15% 0.41% 0.03% 0.17% 0.08%
 Allowance for Loan Losses to Period End Loans 0.53% 0.52% 0.58%    
 Non-performing Assets to Period End Assets 0.33% 0.32% 0.34%    
 Non-performing Loans to Period End Loans 0.45% 0.44% 0.48%    
 Loans 30-89 Days Past Due to Period End Loans 0.45% 0.30% 0.54%    
            
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA          
 Average Assets $4,355,980  $4,355,111  $3,384,251  $4,128,535  $3,380,409 
 Average Earning Assets $3,974,919  $3,978,530  $3,495,618  $3,778,562  $3,126,037 
 Average Total Loans $3,076,509  $3,076,931  $2,662,502  $2,899,939  $2,339,089 
 Average Demand Deposits $839,906  $797,337  $714,504  $761,515  $640,865 
 Average Interest Bearing Liabilities $2,903,533  $2,958,153  $2,660,340  $2,812,094  $2,333,584 
 Average Equity $567,897  $557,447  $437,177  $519,010  $385,476 
            
 Period End Non-performing Assets (3) $14,417  $14,137  $13,498     
 Period End Non-performing Loans (4) $13,992  $13,512  $13,212     
 Period End Loans 30-89 Days Past Due (5) $13,959  $9,054  $14,815     
            
 Tax Equivalent Net Interest Income $40,158  $39,310  $33,702  $148,115  $117,345 
 Net Charge-offs during Period $1,191  $3,170  $228  $4,870  $1,941 
            
(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, and Other Real Estate Owned.    
(4)Non-performing loans are defined as Non-accrual Loans and Loans Past Due 90 days or more.    
(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.