gabc-20221031
false000071439500007143952022-10-312022-10-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
______________________

Date of Report (Date of earliest event reported): October 31, 2022

GERMAN AMERICAN BANCORP, INC.
(Exact name of registrant as specified in its charter)

Indiana
(State or other jurisdiction of incorporation)

001-1587735-1547518
(Commission File Number)(IRS Employer Identification No.)
711 Main Street
Jasper,Indiana47546
(Address of Principal Executive Offices)(Zip Code)
            
Registrant’s telephone number, including area code: (812) 482-1314

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[☐]     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[☐]     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[☐]     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[☐]     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [☐]
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange
on which registered
Common Stock, no par valueGABCNasdaq Global Select Market



Item 2.02. Results of Operations and Financial Condition.

On October 31, 2022, German American Bancorp, Inc. (the “Company”) issued a press release announcing its results for the quarter ended September 30, 2022, and making other disclosures. The press release (including the accompanying unaudited consolidated financial statements as of and for the quarter ended September 30, 2022, and other financial data) is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 2.02, including the information incorporated herein from Exhibit 99.1, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01. Other Events.

Cash Dividend. As announced in the press release furnished as Exhibit 99.1 to this report, the Company’s Board of Directors has declared a cash dividend of $0.23 per share which will be payable on November 20, 2022, to shareholders of record as of November 10, 2022.

Item 9.01. Financial Statements and Exhibits.


(d)Exhibits
Exhibit No.Description
Press release, dated October 31, 2022, issued by German American Bancorp, Inc.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).



* * * * * *





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 31, 2022
By: GERMAN AMERICAN BANCORP, INC.

 
/s/ D. Neil Dauby
D. Neil Dauby, President and Chief Executive Officer



        Exhibit 99.1

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314

1 of 15




OCTOBER 31, 2022     GERMAN AMERICAN BANCORP, INC. (GABC) POSTS STRONG THIRD QUARTER PERFORMANCE

Jasper, Indiana: October 31, 2022 -- German American Bancorp, Inc. (Nasdaq: GABC) reported strong operating performance for the third quarter ended September 30, 2022, with earnings of $24.6 million, resulting in the Company’s second highest level of historical earnings per share at $0.83 per share. This level of quarterly earnings represented an increase of $0.9 million, or approximately 2.5% on a per share basis, from its 2022 second quarter earnings of $23.7 million, or $0.81 per share. On a year-over-year basis, the current quarterly earnings represented an increase of $3.1 million, or approximately 2.5% on a per share basis, from its 2021 third quarter earnings of $21.5 million, or $0.81 per share.

The third quarter 2022 earnings performance was driven by a number of factors including continued net interest margin expansion as well as solid credit metrics and ongoing disciplined operating expense management. The third quarter 2021 earnings included a reserve release of $2.0 million and $4.1 million of Paycheck Protection Program ("PPP") fees.

As of September 30, 2022, the Company’s balance sheet contracted somewhat as a result of a decline in deposits and a decline in the market value of available-for-sale securities. The Company continues to focus on its strong deposit mix and the retention of relational deposit accounts. Total loans increased $33.6 million, or 4% annualized, as solid loan originations for the quarter were partially offset by certain large pay offs late in the quarter as a result of business sales. All loan categories including commercial, agriculture and retail experienced some level of growth during the third quarter of 2022. Commercial line utilization still remains suppressed as business balance sheets and cash positions remain strong. While lending pipelines remain relatively healthy across our footprint and credit metrics are currently strong, we continue to closely monitor and stress our credit portfolio in light of inflationary and potential recessionary headwinds.

The Company’s net interest income increased by $2.1 million, or 4%, in the third quarter of 2022 when compared to the second quarter of 2022 primarily driven by an improved net interest margin and solid loan growth early in the quarter.

The Company continues to maintain a very diversified operating revenue stream which declined slightly quarter over sequential quarter. Non-interest income of $14.1 million declined in the third quarter by $1.1 million, or 7%, compared with second quarter of 2022 driven mostly by a decline in wealth management fees as a result of down equity markets, a company owned life insurance death benefit claim in the second quarter of 2022 and declining mortgage revenues as the housing market continues to contract in this high interest rate environment.

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


2 of 15
The Company’s non-interest expenses declined approximately $1.0 million, or 3%, in the third quarter of 2022, as compared to the second quarter of 2022 as the Company continues to focus on controlling expenses and increasing efficiency.

D. Neil Dauby, German American’s President and CEO, stated, “We were very pleased to continue building upon our momentum from our first quarter acquisition of Citizen Union Bank of Shelbyville, Inc. (“CUB”) which has contributed positively to our strong third quarter earnings. Acquisitions over the past several years have provided us geographic diversity in our footprint allowing opportunity for organic growth within our banking and non-banking operations. We remain cautiously optimistic about continued improvements in our net interest margin and the strength of our lending pipeline for continued growth. Although continued fears of inflation and recession may potentially slow future growth and stress credit, we are preparing to face the headwinds from any future economic uncertainties.”

The Company also announced its Board of Directors has declared a regular quarterly cash dividend of $0.23 per share, which will be payable on November 20, 2022 to shareholders of record as of November 10, 2022.

Balance Sheet Highlights

On January 1, 2022, the Company completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc. (“CUB”). CUB, headquartered in Shelbyville, Kentucky, operated 15 retail banking offices located in Shelby, Jefferson, Spencer, Bullitt, Oldham, Owen, Gallatin and Hardin counties in Kentucky through its banking subsidiary, Citizens Union Bank of Shelbyville, Inc. As of the closing of the transaction, CUB had total assets of approximately $1.109 billion, total loans of approximately $683.8 million, and total deposits of approximately $930.5 million. The Company issued approximately 2.9 million shares of its common stock, and paid approximately $50.8 million in cash, in exchange for all of the issued and outstanding shares of common stock of CUB.

Total assets for the Company totaled $6.260 billion at September 30, 2022, representing a decrease of $211.8 million compared with June 30, 2022 and an increase of $784.2 million compared with September 30, 2021. The decline in total assets at September 30, 2022 compared with June 30, 2022 was largely attributable to a decline in deposits and a decline in the market value of available-for-sale securities. The increase in total assets at September 30, 2022 compared with September 30, 2021 was in large part attributable to the acquisition of CUB.

Securities available for sale declined $120.1 million as of September 30, 2022 compared with June 30, 2022 and increased $5.4 million compared with September 30, 2021. The decline in the available for sale securities portfolio during the third quarter of 2022 compared with June 30, 2022 was due primarily to fair value adjustments on the portfolio caused by the rise in market interest rates.


    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


3 of 15
September 30, 2022 total loans increased $33.6 million, or approximately 4% on an annualized basis, compared with June 30, 2022 and increased $673.4 million, or 22%, compared with September 30, 2021. Commercial and industrial loans increased approximately $2.8 million, or 2% on an annualized basis, during the third quarter of 2022 compared with June 30, 2022, commercial real estate loans increased $19.6 million, or 4% on an annualized basis, while agricultural loans increased $4.1 million, or 4% on an annualized basis. During the third quarter of 2022 compared with June 30, 2022, retail loans increased $7.2 million, or 4% on an annualized basis.

The increase at September 30, 2022 compared with September 30, 2021 was largely due to the acquisition of CUB and to organic loan growth from throughout the Company's existing market areas partially offset by a decrease in PPP loans. There were no PPP loans outstanding at September 30, 2022 compared with PPP loans, net of deferred fees, of $0.6 million at June 30, 2022 and $68.0 million at September 30, 2021.

End of Period Loan Balances9/30/20226/30/20229/30/2021
(dollars in thousands)
Commercial & Industrial Loans$644,284 $641,496 $566,769 
Commercial Real Estate Loans1,923,794 1,904,235 1,528,493 
Agricultural Loans401,608 397,524 349,321 
Consumer Loans370,335 366,322 299,000 
Residential Mortgage Loans346,347 343,166 269,406 
$3,686,368 $3,652,743 $3,012,989 
Net PPP Loans (included in Commercial & Industrial Loans above)$— $598 $68,047 

The Company’s allowance for credit losses totaled $44.7 million at September 30, 2022 compared to $45.0 million at June 30, 2022 and $37.8 million at September 30, 2021. The allowance for credit losses represented 1.21% of period-end loans at September 30, 2022 compared with 1.23% at June 30, 2022 and 1.26% of period-end loans at September 30, 2021.

The Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("CECL") on January 1, 2020. The Company added $9.4 million to the allowance for credit losses in conjunction with the closing of the CUB acquisition on January 1, 2022 related to the CUB loan portfolio. Of the increase in the allowance for credit losses for the CUB portfolio, $6.3 million was recorded through the provision for credit losses on "Day 1" under the CECL model.


    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


4 of 15
Under the CECL model, certain acquired loans continue to carry a fair value discount as well as an allowance for credit losses. As of September 30, 2022, the Company held net discounts on acquired loans of $6.6 million which included $2.8 million related to the CUB loan portfolio.

Non-performing assets totaled $13.8 million at September 30, 2022 compared to $15.1 million at June 30, 2022 and $18.6 million at September 30, 2021. Non-performing assets represented 0.22% of total assets at September 30, 2022 compared to 0.23% at June 30, 2022 and 0.34% at September 30, 2021. Non-performing loans totaled $13.8 million at September 30, 2022 compared to $15.1 million at June 30, 2022 and $18.4 million at September 30, 2021. Non-performing loans represented 0.37% of total loans at September 30, 2022 compared to 0.41% at June 30, 2022 and 0.61% at September 30, 2021.

Non-performing Assets
(dollars in thousands)
9/30/20226/30/20229/30/2021
Non-Accrual Loans$13,054 $13,921 $18,434 
Past Due Loans (90 days or more)726 1,161 — 
       Total Non-Performing Loans13,780 15,082 18,434 
Other Real Estate— — 112 
       Total Non-Performing Assets$13,780 $15,082 $18,546 
Restructured Loans$— $— $106 

September 30, 2022 total deposits declined $139.3 million, or 10% on an annualized basis, compared to June 30, 2022 and increased $981.4 million, or 21%, compared with September 30, 2021. A competitive market driven by rising interest rates was a contributing factor to the decline in total deposits during the third quarter of 2022 compared with June 30, 2022. The increase in total deposits at September 30, 2022 compared with September 30, 2021 was largely attributable to the CUB acquisition.
End of Period Deposit Balances9/30/20226/30/20229/30/2021
(dollars in thousands)
Non-interest-bearing Demand Deposits$1,755,065 $1,745,067 $1,453,197 
IB Demand, Savings, and MMDA Accounts3,381,082 3,503,789 2,762,328 
Time Deposits < $100,000248,455 263,798 214,359 
Time Deposits > $100,000189,739 200,954 163,067 
$5,574,341 $5,713,608 $4,592,951 

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


5 of 15
Results of Operations Highlights – Quarter ended September 30, 2022

Net income for the quarter ended September 30, 2022 totaled $24,596,000, or $0.83 per share, an increase of 2% on a per share basis compared with the second quarter 2022 net income of $23,747,000, or $0.81 per share, and an increase of 2% on a per share basis compared with the third quarter 2021 net income of $21,486,000, or $0.81 per share.


Summary Average Balance Sheet
(Tax-equivalent basis / dollars in thousands)
 Quarter Ended Quarter Ended Quarter Ended
September 30, 2022June 30, 2022September 30, 2021
 Principal Balance Income/ Expense Yield/ RatePrincipal BalanceIncome/ Expense Yield/ Rate Principal Balance Income/ Expense Yield/ Rate
Assets
Federal Funds Sold and Other
        Short-term Investments$402,006 $2,053 2.03 %$606,488 $1,232 0.81 %$391,814 $141 0.14 %
Securities1,848,165 12,955 2.80 %1,875,202 12,625 2.69 %1,645,522 9,198 2.24 %
Loans and Leases3,676,862 43,251 4.67 %3,649,466 40,058 4.40 %3,055,926 35,538 4.62 %
Total Interest Earning Assets$5,927,033 $58,259 3.91 %$6,131,156 $53,915 3.52 %$5,093,262 $44,877 3.51 %
Liabilities
Demand Deposit Accounts$1,738,237 $1,740,592 $1,409,841 
IB Demand, Savings, and
        MMDA Accounts$3,477,902 $3,131 0.36 %$3,622,748 $1,113 0.12 %$2,737,358 $663 0.10 %
Time Deposits451,390 466 0.41 %492,453 436 0.36 %395,114 476 0.48 %
FHLB Advances and Other Borrowings143,548 1,229 3.39 %145,705 1,120 3.08 %190,252 1,149 2.40 %
Total Interest-Bearing Liabilities$4,072,840 $4,826 0.47 %$4,260,906 $2,669 0.25 %$3,322,724 $2,288 0.27 %
Cost of Funds0.32 %0.17 %0.18 %
Net Interest Income$53,433 $51,246 $42,589 
Net Interest Margin3.59 %3.35 %3.33 %

During the third quarter of 2022, net interest income, on a non tax-equivalent basis, totaled $51,698,000, an increase of $2,101,000, or 4%, compared to the second quarter of 2022 net interest income of $49,597,000

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


6 of 15
and an increase of $10,411,000, or 25%, compared to the third quarter of 2021 net interest income of $41,287,000.

The increase in net interest income during the third quarter of 2022 compared with the second quarter of 2022 was primarily attributable to an increase in the Company's net interest margin. The increase in net interest income during the third quarter of 2022 compared with the third quarter of 2021 was primarily attributable to an improved net interest margin, a higher level of earning assets driven largely by the CUB acquisition and deposit growth which led to a higher level of securities investment, which was partially mitigated by a lower level of PPP loan fee recognition.

The tax equivalent net interest margin for the quarter ended September 30, 2022 was 3.59% compared with 3.35% in the second quarter of 2022 and 3.33% in the third quarter of 2021. The improvement in the net interest margin during the third quarter of 2022 was largely attributable to increased market interest rates resulting in improved yields on earning assets. The Company's net interest margin and net interest income in all periods presented has been impacted by fees recognized as a part of the PPP and accretion of loan discounts on acquired loans. The impact of the PPP fees and accretion of loan discounts was lower in the third quarter of 2022 compared with both the second quarter of 2022 and the third quarter of 2021.

Fees recognized on PPP loans through net interest income totaled $46,000 during the third quarter of 2022, $264,000 during the second quarter of 2022 and $4,111,000 during the third quarter of 2021. The fees recognized related to the PPP was immaterial to the net interest margin in the third quarter of 2022, contributed approximately 2 basis points to the net interest margin on an annualized basis in the second quarter of 2022, and 32 basis points in the third quarter of 2021. Accretion of loan discounts on acquired loans contributed approximately 7 basis points to the net interest margin in the third quarter of 2022, 10 basis points in the second quarter of 2022 and 4 basis points in the third quarter of 2021. Accretion of discounts on acquired loans totaled $1,099,000 during the third quarter of 2022, $1,528,000 during the second quarter of 2022 and $516,000 during the third quarter of 2021.

During the quarter ended September 30, 2022, the Company recorded a provision for credit losses of $350,000 compared with a provision for credit losses of $300,000 in the second quarter of 2022 and a negative provision for credit losses of $2,000,000 during the third quarter of 2021. The negative provision for credit losses in the third quarter of 2021 was largely due to a decline in certain adversely criticized assets, improvement in the agricultural loan sector and improvement in certain pandemic-related stressed sectors for which the Company had provided significant levels of allowance for credit losses during 2020.

Net charge-offs totaled $682,000, or 7 basis point on an annualized basis, of average loans outstanding during the third quarter of 2022 compared with $347,000, or 4 basis points on an annualized basis, of

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


7 of 15
average loans during the second quarter of 2022 and compared with $197,000, or 3 basis point, of average loans during the third quarter of 2021.

During the quarter ended September 30, 2022, non-interest income totaled $14,097,000, a decline of $1,083,000, or 7%, compared with the second quarter of 2022 and a decline of $1,459,000, or 9%, compared with the third quarter of 2021.
Quarter EndedQuarter EndedQuarter Ended
Non-interest Income9/30/20226/30/20229/30/2021
(dollars in thousands)
Wealth Management Fees$2,376 $2,642 $2,690 
Service Charges on Deposit Accounts3,014 2,871 2,017 
Insurance Revenues1,995 2,254 2,007 
Company Owned Life Insurance416 894 493 
Interchange Fee Income4,054 4,167 3,339 
Other Operating Income1,365 1,225 2,595 
     Subtotal13,220 14,053 13,141 
Net Gains on Sales of Loans854 1,049 2,197 
Net Gains on Securities23 78 218 
Total Non-interest Income$14,097 $15,180 $15,556 

Wealth management fees declined $266,000, or 10%, during the third quarter of 2022 compared with the second quarter of 2022 and declined $314,000, or 12%, compared with the third quarter of 2021. The decline during the third quarter of 2022 compared with both the the second quarter of 2022 and the third quarter of 2021 was primarily the result of declines in the overall equity markets.

Service charges on deposit accounts increased $143,000, or 5%, during the third quarter of 2022 compared with the second quarter of 2022 and increased $997,000, or 49%, compared with the third quarter of 2021. The increase during the third quarter of 2022 compared with the second quarter of 2022 was attributable to increased deposit customer activity. The increase during the third quarter of 2022 compared with the third quarter of 2021 was the result of the CUB acquisition as well as increased deposit customer activity.

Company owned life insurance declined $478,000, or 53%, during the third quarter of 2022 compared with the second quarter of 2022 and declined $77,000, or 16%, compared with the third quarter of 2021. The

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


8 of 15
decline in the third quarter of 2022 compared to the second quarter of 2022 was primarily the result of death benefit claims received during the second quarter of 2022.

Interchange fee income declined $113,000, or 3%, during the quarter ended September 30, 2022 compared with the second quarter of 2022 and increased $715,000, or 21%, compared with the third quarter of 2021. The increase in the level of fees during the third quarter of 2022 compared with the third quarter of 2021 was largely related to the CUB acquisition as well as increased card utilization by customers.

Other operating income increased $140,000, or 11%, during the third quarter of 2022 compared with second quarter of 2022 and declined $1,230,000 or 47% compared with the third quarter of 2021. The decline during the third quarter of 2022 compared with the same period of the prior year was primarily attributable to the net gain of approximately $1.4 million related to the sale of two branch office locations during the third quarter of 2021 .

Net gains on sales of loans declined $195,000, or 19%, during the third quarter of 2022 compared with the second quarter of 2022 and declined $1,343,000, or 61%, compared with the third quarter of 2021. The decline in the third quarter of 2022 compared with both periods was largely related to a lower volume of loans sold and lower pricing levels. Loan sales totaled $40.9 million during the third quarter of 2022 compared with $52.5 million during the second quarter of 2022 and $69.7 million during the second quarter of 2021.

During the quarter ended September 30, 2022, non-interest expense totaled $34,716,000, a decline of $985,000, or 3%, compared with the second quarter of 2022, and an increase of $2,272,000, or 7%, compared with the third quarter of 2021.

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


9 of 15
Quarter EndedQuarter EndedQuarter Ended
Non-interest Expense9/30/20226/30/20229/30/2021
(dollars in thousands)
Salaries and Employee Benefits$19,751 $20,384 $17,274 
Occupancy, Furniture and Equipment Expense3,685 3,772 3,453 
FDIC Premiums477 465 383 
Data Processing Fees2,712 2,460 2,006 
Professional Fees1,188 1,573 1,357 
Advertising and Promotion1,215 1,027 897 
Intangible Amortization897 957 661 
Other Operating Expenses4,791 5,063 6,413 
Total Non-interest Expense$34,716 $35,701 $32,444 



Salaries and benefits declined $633,000, or 3%, during the quarter ended September 30, 2022 compared with the second quarter of 2022 and increased $2,477,000, or 14%, compared with the third quarter of 2021. The decline in salaries and benefits during the third quarter of 2022 compared with the second quarter of 2022 was primarily due to benefit costs associated with certain employee retirements during the second quarter of 2022. The increase in salaries and benefits during the third quarter of 2022 compared with the third quarter of 2021 was largely related to the salaries and benefit costs for the CUB employee base and a higher number of full time equivalent employees.

Data processing fees increased $252,000, or 10%, during the third quarter of 2022 compared with the second quarter of 2022 and increased $706,000, or 35%, compared with the third quarter of 2021. The increase during the third quarter of 2022 compared with the second quarter of 2022 was largely driven by costs associated with enhancements to the Company's digital banking systems. The increase in data processing fees during the third quarter of 2022 compared with the same period of the prior year was in part attributable to the CUB acquisition and additionally related to continued data system enhancements.

Professional fees declined $385,000, or 24%, in the third quarter of 2022 compared with the second quarter of 2022 and declined $169,000, or 12%, compared with the third quarter of 2021. The decline during the third quarter of 2022 compared with the second quarter of 2022 was largely attributable to a decline in

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


10 of 15
professional fees associated with the CUB acquisition and various other professional fee expenses that were incurred in the second quarter of 2022.

Other operating expenses declined $272,000, or 5%, during the third quarter of 2022 compared with the second quarter of 2022 and declined $1,622,000, or 25%, compared with the third quarter of 2021. The decline in the third quarter of 2022 compared to the second quarter of 2022 was largely attributable to a decline in acquisition-related costs. The decline during the third quarter of 2022 compared with the third quarter of 2021 was primarily attributable to the establishment of a $3,050,000 settlement reserve for a lawsuit challenging the Company’s assessment of overdraft fees for certain debit card transactions during the third quarter of 2021. Partially offsetting this decline were increased operating costs related to the acquisition of CUB.

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 78 banking offices in 20 contiguous southern Indiana counties and 14 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. Forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. 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:

a.the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates;
b.changes in competitive conditions;
c.the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies;

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


11 of 15
d.changes in customer borrowing, repayment, investment and deposit practices;
e.changes in fiscal, monetary and tax policies;
f.changes in financial and capital markets;
g.potential deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration;
h.the severity and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and our business, results of operations and financial condition;
i.our participation in the Paycheck Protection Program administered by the Small Business Administration;
j.capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by German American of outstanding debt or equity securities;
k.factors driving impairment charges on investments;
l.the impact, extent and timing of technological changes;
m.potential cyber-attacks, information security breaches and other criminal activities;
n.litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future;
o.actions of the Federal Reserve Board;
p.the possible effects of the replacement of the London Interbank Offering Rate (LIBOR);
q.the impact of the current expected credit loss (CECL) standard;
r.changes in accounting principles and interpretations;
s.potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to German American’s banking subsidiary;
t.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;
u.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;
v.the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends;
w.with respect to the merger with CUB, the possibility that the anticipated benefits of the transaction, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies, unexpected credit quality

    

NEWS RELEASE

For additional information, contact:
D. Neil Dauby, President and Chief Executive Officer
Bradley M Rust, Sr. EVP, Chief Operating Officer and Chief Financial Officer
(812) 482-1314


12 of 15
problems of the acquired loans or other assets, or unexpected attrition of the customer base of the acquired institution or branches; and
x.other risk factors expressly identified in German American’s filings with the SEC.
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 German American. 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, 2022June 30, 2022September 30, 2021
ASSETS
     Cash and Due from Banks $70,660 $111,904 $54,617 
     Short-term Investments 303,133 415,136 394,871 
     Investment Securities1,701,981 1,822,088 1,696,578 
     Loans Held-for-Sale10,418 9,171 15,361 
     Loans, Net of Unearned Income3,682,516 3,649,369 3,009,260 
     Allowance for Credit Losses(44,699)(45,031)(37,798)
        Net Loans3,637,817 3,604,338 2,971,462 
     Stock in FHLB and Other Restricted Stock15,106 15,259 13,048 
     Premises and Equipment111,098 111,341 89,649 
     Goodwill and Other Intangible Assets190,812 191,611 128,275 
     Other Assets218,880 190,855 111,889 
   TOTAL ASSETS$6,259,905 $6,471,703 $5,475,750 
LIABILITIES
     Non-interest-bearing Demand Deposits$1,755,065 $1,745,067 $1,453,197 
     Interest-bearing Demand, Savings, and Money Market Accounts3,381,082 3,503,789 2,762,328 
     Time Deposits438,194 464,752 377,426 
        Total Deposits5,574,341 5,713,608 4,592,951 
     Borrowings146,015 144,885 186,389 
     Other Liabilities44,848 38,781 46,271 
   TOTAL LIABILITIES5,765,204 5,897,274 4,825,611 
SHAREHOLDERS' EQUITY
     Common Stock and Surplus416,249 415,851 302,228 
     Retained Earnings387,510 369,673 336,647 
     Accumulated Other Comprehensive Income (Loss)(309,058)(211,095)11,264 
SHAREHOLDERS' EQUITY494,701 574,429 650,139 
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$6,259,905 $6,471,703 $5,475,750 
END OF PERIOD SHARES OUTSTANDING 29,485,121 29,483,045 26,546,100 
TANGIBLE BOOK VALUE PER SHARE (1)
$10.31 $13.02 $19.66 
(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 EndedNine Months Ended
September 30, 2022June 30, 2022September 30, 2021September 30, 2022September 30, 2021
INTEREST INCOME
   Interest and Fees on Loans$43,128 $39,987 $35,483 $122,050 $105,091 
   Interest on Short-term Investments2,053 1,232 141 3,565 329 
   Interest and Dividends on Investment Securities11,343 11,047 7,951 32,450 21,974 
  TOTAL INTEREST INCOME56,524 52,266 43,575 158,065 127,394 
INTEREST EXPENSE
   Interest on Deposits3,597 1,549 1,139 6,475 3,850 
   Interest on Borrowings1,229 1,120 1,149 3,387 3,445 
  TOTAL INTEREST EXPENSE4,826 2,669 2,288 9,862 7,295 
   NET INTEREST INCOME51,698 49,597 41,287 148,203 120,099 
   Provision for Credit Losses350 300 (2,000)5,850 (8,500)
   NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES51,348 49,297 43,287 142,353 128,599 
NON-INTEREST INCOME
   Net Gain on Sales of Loans854 1,049 2,197 3,324 6,417 
   Net Gain on Securities23 78 218 473 1,493 
   Other Non-interest Income13,220 14,053 13,141 41,668 36,585 
  TOTAL NON-INTEREST INCOME14,097 15,180 15,556 45,465 44,495 
NON-INTEREST EXPENSE
   Salaries and Benefits19,751 20,384 17,274 63,223 51,454 
   Other Non-interest Expenses14,965 15,317 15,170 55,354 41,286 
  TOTAL NON-INTEREST EXPENSE34,716 35,701 32,444 118,577 92,740 
   Income before Income Taxes30,729 28,776 26,399 69,241 80,354 
   Income Tax Expense6,133 5,029 4,913 11,831 15,489 
NET INCOME$24,596 $23,747 $21,486 $57,410 $64,865 
BASIC EARNINGS PER SHARE $0.83 $0.81 $0.81 $1.95 $2.44 
DILUTED EARNINGS PER SHARE $0.83 $0.81 $0.81 $1.95 $2.44 
WEIGHTED AVERAGE SHARES OUTSTANDING 29,484,394 29,483,848 26,545,868 29,457,396 26,534,044 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 29,484,394 29,483,848 26,545,868 29,457,396 26,534,044 


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20222022202120222021
EARNINGS PERFORMANCE RATIOS
Annualized Return on Average Assets1.53 %1.43 %1.58 %1.16 %1.63 %
Annualized Return on Average Equity16.77 %15.87 %13.05 %11.92 %13.53 %
Annualized Return on Average Tangible Equity (1)
24.87 %23.29 %16.23 %16.95 %16.97 %
Net Interest Margin3.59 %3.35 %3.33 %3.35 %3.34 %
Efficiency Ratio (2)
51.41 %53.75 %55.80 %59.70 %55.17 %
Net Overhead Expense to Average Earning Assets (3)
1.39 %1.34 %1.33 %1.60 %1.30 %
ASSET QUALITY RATIOS
Annualized Net Charge-offs to Average Loans0.07 %0.04 %0.03 %0.05 %0.02 %
Allowance for Credit Losses to Period End Loans1.21 %1.23 %1.26 %
Non-performing Assets to Period End Assets0.22 %0.23 %0.34 %
Non-performing Loans to Period End Loans0.37 %0.41 %0.61 %
Loans 30-89 Days Past Due to Period End Loans0.31 %0.26 %0.12 %
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
Average Assets$6,440,580 $6,637,969 $5,437,467 $6,605,076 $5,297,013 
Average Earning Assets$5,927,033 $6,131,156 $5,093,262 $6,101,184 $4,941,567 
Average Total Loans$3,676,862 $3,649,466 $3,055,926 $3,664,506 $3,094,214 
Average Demand Deposits$1,738,237 $1,740,592 $1,409,841 $1,739,389 $1,352,519 
Average Interest Bearing Liabilities$4,072,841 $4,260,906 $3,322,724 $4,179,344 $3,258,929 
Average Equity$586,744 $598,440 $658,634 $642,326 $639,283 
Period End Non-performing Assets (4)
$13,780 $15,082 $18,546 
Period End Non-performing Loans (5)
$13,780 $15,082 $18,434 
Period End Loans 30-89 Days Past Due (6)
$11,445 $9,350 $3,745 
Tax Equivalent Net Interest Income$53,433 $51,246 $42,589 $153,147 $123,616 
Net Charge-offs during Period$682 $347 $197 $1,285 $561 
(1)Average Tangible Equity is defined as Average Equity less Average Goodwill and Other Intangibles.
(2)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.
(3)Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest Income.
(4)Non-performing assets are defined as Non-accrual Loans, Loans Past Due 90 days or more, and Other Real Estate Owned.
(5)Non-performing loans are defined as Non-accrual Loans and Loans Past Due 90 days or more.
(6)Loans 30-89 days past due and still accruing.