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

JASPER, Ind., Jan. 27, 2020 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (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 Loans 13,992     13,512     13,212  
Other Real Estate 425     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 (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 Investments 45,898     26,328     32,251  
Investment Securities 855,178     849,798     812,964  
           
Loans Held-for-Sale 17,713     19,156     4,263  
           
Loans, Net of Unearned Income 3,077,091     3,056,907     2,728,059  
Allowance for Loan Losses (16,278 )   (15,869 )   (15,823 )
Net Loans 3,060,813     3,041,038     2,712,236  
           
Stock in FHLB and Other Restricted Stock 13,968     13,968     13,048  
Premises and Equipment 96,651     98,754     80,627  
Goodwill and Other Intangible Assets 133,962     133,818     113,645  
Other Assets 112,444     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 Accounts 1,965,640     1,910,395     1,768,177  
Time Deposits 631,396     693,632     588,483  
Total Deposits 3,430,021     3,431,286     3,072,632  
           
Borrowings 349,686     316,687     376,409  
Other Liabilities 43,071     44,982     21,409  
TOTAL LIABILITIES 3,822,778     3,792,955     3,470,450  
           
SHAREHOLDERS' EQUITY          
Common Stock and Surplus 305,625     305,270     254,314  
Retained Earnings 253,090     241,801     211,424  
Accumulated Other Comprehensive Income (Loss) 15,105     15,856     (7,098 )
SHAREHOLDERS' EQUITY 573,820     562,927     458,640  
           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,396,598     $ 4,355,882     $ 3,929,090  
           
END OF PERIOD SHARES OUTSTANDING 26,671,368     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 Investments 133     163     97     522     308  
Interest and Dividends on Investment Securities 5,810     5,827     5,821     23,471     21,357  
TOTAL INTEREST INCOME 47,338     46,911     39,596     176,474     133,749  
                     
INTEREST EXPENSE                  
Interest on Deposits 6,231     6,399     4,959     23,805     13,625  
Interest on Borrowings 1,692     1,934     1,654     7,444     5,514  
TOTAL INTEREST EXPENSE 7,923     8,333     6,613     31,249     19,139  
                     
NET INTEREST INCOME 39,415     38,578     32,983     145,225     114,610  
Provision for Loan Losses 1,600     2,800         5,325     2,070  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 37,815     35,778     32,983     139,900     112,540  
                     
NON-INTEREST INCOME                  
Net Gain on Sales of Loans 973     1,649     583     4,633     3,004  
Net Gain on Securities 264     313     272     1,248     706  
Other Non-interest Income 10,041     10,094     8,878     39,620     33,360  
TOTAL NON-INTEREST INCOME 11,278     12,056     9,733     45,501     37,070  
                     
NON-INTEREST EXPENSE                  
Salaries and Benefits 17,145     17,579     15,027     63,885     51,306  
Other Non-interest Expenses 12,679     14,382     14,787     50,277     42,247  
TOTAL NON-INTEREST EXPENSE 29,824     31,961     29,814     114,162     93,553  
                     
Income before Income Taxes 19,269     15,873     12,902     71,239     56,057  
Income Tax Expense 3,449     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 OUTSTANDING 26,663,405     26,643,064     24,962,878     25,824,538     23,381,616  
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 26,663,405     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