Market Overview

German American Bancorp, Inc. (GABC) Reports Strong Quarterly and Year-to-Date Earnings Growth

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JASPER, Ind., July 27, 2015 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (NASDAQ: GABC) reported today that the Company's second quarter earnings increased by 8%, on an earnings per share basis, over the earnings reported for the second quarter of the prior year.  Net income for the second quarter ended June 30, 2015 was $7.3 million, or $0.55 per share, as compared to same quarter 2014 net income of $6.7 million, or $0.51 per share.  On a year-to-date basis, 2015 earnings improved to $14.6 million, or $1.10 per diluted share, as compared to $13.0 million, or $0.98 per diluted share, for the first six months of 2014, representing an increase of 12% on a per share basis.

The Company's 2015 quarterly earnings improvement was attributable to increased revenue within both net interest income and non-interest income.   In the second quarter of 2015, as compared with the second quarter of 2014, net interest income increased by $335,000, or approximately 2%, largely attributable to the Company's growth in earning assets, and in particular growth of the loan portfolio.  During the second quarter, total loans, on a linked quarter annualized basis, increased by approximately 7%.  Total non-interest income increased by $619,000, or 11% during the current quarter, as compared to the same quarter last year, as the Company saw improvement in virtually every category of non-interest income with the largest of the increases in the area of mortgage banking revenue.  The Company was also able to control non-interest expenses in the current quarter as operating costs increased by only 1% in the second quarter relative to the operating expense incurred in the second quarter of 2014.

Mark A. Schroeder, German American's Chairman & CEO stated, "We're extremely pleased with our level of second quarter and year-to-date earnings, and the underlying continued growth within our loan portfolio and within virtually every fee income category.  These enhanced sources of revenue, coupled with our disciplined approach to expense control, have resulted in our being able to report quarterly earnings of $7.3 million in each of first two quarters of the current year and in excess of $7.0 million for each of the past four consecutive quarters.  We are also very encouraged by the continuation, during the quarter, of an expanding market environment in terms of customer demand for all types of loans and for our Company's fee-based products and services."

The Company also announced that its Board of Directors declared its regular quarterly cash dividend of $0.17 per share which will be payable on August 20, 2015 to shareholders of record as of August 10, 2015.

Balance Sheet Highlights

Total assets for the Company totaled $2.260 billion at June 30, 2015, an increase of $19.5 million, or 3%, on an annualized basis compared with March 31, 2015 and an increase of $66.1 million, or 3%, compared with June 30, 2014.

June 30, 2015 total loans outstanding increased $25.6 million or 7% on an annualized basis, compared with March 31, 2015, and increased $63.1 million, or 4%, compared to June 30, 2014 total loans outstanding. The increase in loans was broad based across all categories of loans throughout the Company's market area.

       
End of Period Loan Balances 6/30/2015 3/31/2015 6/30/2014
(dollars in thousands)      
       
Commercial & Industrial Loans $396,741  $388,249  $366,101 
Commercial Real Estate Loans 584,426  581,394  594,681 
Agricultural Loans 222,298  212,735  188,155 
Consumer Loans 135,874  132,107  130,290 
Residential Mortgage Loans 137,129  136,399  134,104 
  $1,476,468  $1,450,884  $1,413,331 
       

Non-performing assets totaled $5.8 million at June 30, 2015 compared to $6.4 million of non-performing assets at March 31, 2015 and $6.9 million at June 30, 2014.  Non-performing assets represented 0.26% of total assets at June 30, 2015 compared to 0.29% of total assets at March 31, 2015 and 0.31% of total assets at June 30, 2014.  Non-performing loans totaled $5.4 million at June 30, 2015 compared to $6.1 million at March 31, 2015 and $6.0 million of non-performing loans at June 30, 2014.  Non-performing loans represented 0.37% of total loans at June 30, 2015 compared to 0.42% at March 31, 2015 and June 30, 2014.

      
Non-performing Assets     
(dollars in thousands)     
 6/30/2015 3/31/2015 6/30/2014
Non-Accrual Loans$5,431  $5,943  $5,902 
Past Due Loans (90 days or more)15  131  67 
   Total Non-Performing Loans5,446  6,074  5,969 
Other Real Estate317  324  935 
  Total Non-Performing Assets$5,763  $6,398  $6,904 
      
Restructured Loans$2,587  $2,686  $3,596 
      

The Company's allowance for loan losses totaled $15.3 million at June 30, 2015 compared to $15.2 million at March 31, 2015 representing an increase of $89,000, or 2%, on an annualized basis and a decline of $292,000, or 2%, compared with June 30, 2014.  The allowance for loan losses represented 1.04% of period-end loans at June 30, 2015 compared with 1.05% of period-end loans at March 31, 2015 and 1.10% of period-end loans at June 30, 2014.  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 discount on acquired loans of $3.3 million as of June 30, 2015, $3.7 million at March 31, 2015 and $4.9 million at June 30, 2014.

Total deposits decreased $37.6 million, or 8% on an annualized basis, as of June 30, 2015 compared with March 31, 2015 and increased by $20.4 million, or 1%, compared with June 30, 2014.  The decline in total deposits at June 30, 2015 compared with March 31, 2015 was predominantly due to the maturity of short-term jumbo time deposits and short-term time deposits gathered through the CDARS network.

       
End of Period Deposit Balances 6/30/2015 3/31/2015 6/30/2014
(dollars in thousands)      
       
Non-interest-bearing Demand Deposits $425,547  $426,373  $398,621 
IB Demand, Savings, and MMDA Accounts 1,014,013  1,009,368  1,010,367 
Time Deposits < $100,000 189,615  193,665  209,998 
Time Deposits > $100,000 133,590  170,993  123,393 
  $1,762,765  $1,800,399  $1,742,379 
       

Results of Operations Highlights – Quarter ended June 30, 2015

Net income for the quarter ended June 30, 2015 totaled $7,325,000 or $0.55 per share, an increase of $19,000,  from the first quarter of 2015 net income of $7,306,000 or $0.55 per share and an increase of $638,000, or 8% on a per share basis, from the second quarter of 2014 net income of $6,687,000 or $0.51 per share.

                   
Summary Average Balance Sheet                  
(Tax-equivalent basis / dollars in thousands)                  
   Quarter Ended  Quarter Ended  Quarter Ended
  June 30, 2015 March 31, 2015 June 30, 2014
                   
   Principal Balance  Income/ Expense  Yield/ Rate  Principal Balance  Income/ Expense  Yield/ Rate  Principal Balance  Income/ Expense  Yield/ Rate
Assets                  
Federal Funds Sold and Other                  
  Short-term Investments $20,540  $4  0.07% $16,508  $3  0.08% $12,493  $3  0.11%
Securities 632,270  4,400  2.78% 635,849  4,379  2.75% 626,057  4,232  2.70%
Loans and Leases 1,456,699  16,630  4.58% 1,443,886  16,389  4.60% 1,390,185  16,215  4.68%
Total Interest Earning Assets $2,109,509  $21,034  4.00% $2,096,243  $20,771  4.00% $2,028,735  $20,450  4.04%
                   
Liabilities                  
Demand Deposit Accounts $420,341      $427,404      $400,656     
IB Demand, Savings, and                  
  MMDA Accounts $1,055,880  $345  0.13% $1,016,288  $311  0.12% $1,039,376  $322  0.12%
Time Deposits 341,678  677  0.79% 359,844  682  0.77% 336,901  715  0.85%
FHLB Advances and Other Borrowings 160,196  450  1.13% 170,049  458  1.09% 153,989  467  1.22%
Total Interest-Bearing Liabilities $1,557,754  $1,472  0.38% $1,546,181  $1,451  0.38% $1,530,266  $1,504  0.39%
                   
Cost of Funds     0.28%     0.28%     0.30%
Net Interest Income   $19,562      $19,320      $18,946   
Net Interest Margin     3.72%     3.72%     3.74%
                   

During the quarter ended June 30, 2015, net interest income totaled $18,706,000 representing an increase of $157,000, or 1%, from the quarter ended March 31, 2015 net interest income of $18,549,000 and an increase of $385,000, or 2%, compared with the quarter ended June 30, 2014 net interest income of $18,321,000.  The tax equivalent net interest margin for the quarters ended June 30, 2015 and March 31, 2015 was 3.72% compared with 3.74% in the second quarter of 2014.  The increase in net interest income during the second quarter of 2015 compared to both the first quarter of 2015 and the second quarter of 2014 was largely attributable to growth in earning assets and in particular growth of the loan portfolio.

Accretion of loan discounts on acquired loans contributed approximately 5 basis points on an annualized basis to the net interest margin in second quarter of 2015, 7 basis points in the first quarter of 2015, and 6 basis points in the second quarter of 2014.

During the quarters ended June 30, 2015 and March 31, 2015 the provision for loan loss totaled $250,000 while the provision totaled $200,000 in the second quarter of 2014.  During the second quarter of 2015, the provision for loan loss represented approximately 7 basis points of average loans on an annualized basis. During the second quarter of 2015, the Company had net charge-offs of $161,000 representing approximately 4 basis points of average loans on an annualized basis.

During the quarter ended June 30, 2015, non-interest income totaled $6,121,000, a decline of $1,021,000 or 14%, compared with the quarter ended March 31, 2015, and an increase of $619,000, or 11%, compared with the second quarter of 2014.

       
  Quarter Ended Quarter Ended Quarter Ended
Non-interest Income 6/30/2015 3/31/2015 6/30/2014
(dollars in thousands)      
       
Trust and Investment Product Fees $939  $984  $905 
Service Charges on Deposit Accounts 1,220  1,137  1,191 
Insurance Revenues 1,515  2,545  1,482 
Company Owned Life Insurance 207  205  192 
Interchange Fee Income 563  483  512 
Other Operating Income 631  576  590 
  Subtotal 5,075  5,930  4,872 
Net Gains on Loans 784  749  386 
Net Gains on Securities 262  463  244 
Total Non-interest Income $6,121  $7,142  $5,502 
       

Insurance revenues declined $1,030,000, or 40%, during the quarter ended June 30, 2015, compared with the first quarter of 2015 and increased $33,000, or 2%, compared with the second quarter of 2014.  The decline during the second quarter of 2015 compared with first quarter of 2015 was related to contingency revenue.  There was no contingency revenue received during the second quarter of 2015 while contingency revenue during the first quarter of 2015 totaled $949,000.  Typically the receipt of contingency revenue occurs during the first quarter of the calendar year as did occur in 2015 and is reflective of claims and loss experience with insurance carriers that the Company represents through its property and casualty insurance agency.

Net gains on sales of loans increased $35,000, or 5%, during the second quarter of 2015 compared with the first quarter of 2015 and increased $398,000 or 103% compared with the second quarter of 2014.  Loan sales totaled $38.9 million during the second quarter of 2015, compared with $32.7 million during the first quarter of 2015 and $21.8 million during the second quarter of 2014.

During the second quarter of 2015, the Company realized a net gain on the sale of securities of $262,000 compared with a net gain of $463,000 during the first quarter of 2015 and $244,000 during the second quarter of 2014.

During the quarter ended June 30, 2015, non-interest expense totaled $14,315,000, a decline of $518,000, or 3%, compared with the quarter ended March 31, 2015, and an increase of $176,000, or 1%, compared with the second quarter of 2014.

       
  Quarter Ended Quarter Ended Quarter Ended
Non-interest Expense 6/30/2015 3/31/2015 6/30/2014
(dollars in thousands)      
       
Salaries and Employee Benefits $8,259  $8,825  $7,886 
Occupancy, Furniture and Equipment Expense 1,683  1,705  1,698 
FDIC Premiums 284  282  276 
Data Processing Fees 870  837  947 
Professional Fees 642  644  553 
Advertising and Promotion 484  443  544 
Intangible Amortization 202  245  325 
Other Operating Expenses 1,891  1,852  1,910 
Total Non-interest Expense $14,315  $14,833  $14,139 
       

Salaries and benefits decreased $566,000, or 6%, during the quarter ended June 30, 2015 compared with the first quarter of 2015 and increased $373,000, or 5%, compared with the second quarter of 2014.  The decline in salaries and benefits during the second quarter of 2015 compared with the first quarter of 2015 was primarily due to lower costs attributable to benefits and payroll taxes that are directly attributable to the levels of cash compensation paid and due to lower costs related to the Company's partially self insured health insurance plan.  The increase in salaries and benefits during the second quarter of 2015 compared with the second quarter of 2014 was primarily attributable to an increased level of variable compensation related to an increased level of secondary market mortgage loan production and attributable to increased costs related to the Company's long-term equity incentive compensation plan.

About German American

German American Bancorp, Inc., is a NASDAQ-traded (symbol: GABC) financial services holding company based in Jasper, Indiana.  German American, through its banking subsidiary German American Bancorp, operates 37 banking offices in 13 southern Indiana counties. 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

The Company's statements in this press release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, descriptions of the levels of loan and banking service demand and economic strength that management is seeing in its geographical banking footprint.  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 the press release. Factors that could cause actual experience to differ from the expectations 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 and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; and the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.  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
      
 June 30, 2015 March 31, 2015 June 30, 2014
ASSETS     
Cash and Due from Banks$31,538  $34,277  $40,391 
Short-term Investments20,729  26,590  16,723 
Interest-bearing Time Deposits with Banks100  100  100 
Investment Securities618,891  619,673  615,576 
      
Loans Held-for-Sale10,622  6,290  8,812 
      
Loans, Net of Unearned Income1,472,646  1,447,013  1,409,485 
Allowance for Loan Losses(15,258) (15,169) (15,550)
Net Loans1,457,388  1,431,844  1,393,935 
      
Stock in FHLB and Other Restricted Stock8,122  7,200  9,096 
Premises and Equipment38,707  39,370  40,479 
Goodwill and Other Intangible Assets22,162  22,365  23,191 
Other Assets51,427  52,514  45,270 
TOTAL ASSETS$2,259,686  $2,240,223  $2,193,573 
      
LIABILITIES     
Non-interest-bearing Demand Deposits$425,547  $426,373  $398,621 
Interest-bearing Demand, Savings, and Money Market Accounts1,014,013  1,009,368  1,010,367 
Time Deposits323,205  364,658  333,391 
Total Deposits1,762,765  1,800,399  1,742,379 
      
Borrowings240,072  178,825  225,546 
Other Liabilities19,799  23,391  11,310 
TOTAL LIABILITIES2,022,636  2,002,615  1,979,235 
      
SHAREHOLDERS' EQUITY     
Common Stock and Surplus122,437  122,103  121,566 
Retained Earnings114,190  109,118  92,934 
Accumulated Other Comprehensive Income (Loss)423  6,387  (162)
TOTAL SHAREHOLDERS' EQUITY237,050  237,608  214,338 
      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$2,259,686  $2,240,223  $2,193,573 
      
END OF PERIOD SHARES OUTSTANDING13,259,594  13,251,470  13,210,395 
      
BOOK VALUE PER SHARE$17.88  $17.93  $16.22 


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
           
Consolidated Statements of Income
           
  Three Months Ended Six Months Ended
  June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014
INTEREST INCOME         
  Interest and Fees on Loans$16,537  $16,299  $16,142  $32,836  $32,086 
  Interest on Short-term Investments and Time Deposits4  3  3  7  6 
  Interest and Dividends on Investment Securities3,637  3,698  3,680  7,335  7,414 
  TOTAL INTEREST INCOME20,178  20,000  19,825  40,178  39,506 
           
INTEREST EXPENSE         
  Interest on Deposits1,022  993  1,037  2,015  2,073 
  Interest on Borrowings450  458  467  908  916 
  TOTAL INTEREST EXPENSE1,472  1,451  1,504  2,923  2,989 
           
  NET INTEREST INCOME18,706  18,549  18,321  37,255  36,517 
  Provision for Loan Losses250  250  200  500  550 
  NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES18,456  18,299  18,121  36,755  35,967 
           
NON-INTEREST INCOME         
  Net Gain on Sales of Loans784  749  386  1,533  862 
  Net Gain on Securities262  463  244  725  472 
  Other Non-interest Income5,075  5,930  4,872  11,005  10,449 
  TOTAL NON-INTEREST INCOME6,121  7,142  5,502  13,263  11,783 
           
NON-INTEREST EXPENSE         
  Salaries and Benefits8,259  8,825  7,886  17,084  16,310 
  Other Non-interest Expenses6,056  6,008  6,253  12,064  12,919 
  TOTAL NON-INTEREST EXPENSE14,315  14,833  14,139  29,148  29,229 
           
  Income before Income Taxes10,262  10,608  9,484  20,870  18,521 
  Income Tax Expense2,937  3,302  2,797  6,239  5,529 
           
NET INCOME$7,325  $7,306  $6,687  $14,631  $12,992 
           
BASIC EARNINGS PER SHARE$0.55  $0.55  $0.51  $1.11  $0.98 
DILUTED EARNINGS PER SHARE$0.55  $0.55  $0.51  $1.10  $0.98 
           
WEIGHTED AVERAGE SHARES OUTSTANDING13,256,026  13,221,455  13,210,150  13,238,836  13,194,754 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING13,263,604  13,237,493  13,230,812  13,246,359  13,216,084 


GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
           
  Three Months Ended Six Month Ended
  June 30, March 31, June 30, June 30, June 30,
  2015 2015 2014 2015 2014
EARNINGS PERFORMANCE RATIOS         
 Annualized Return on Average Assets1.31% 1.31% 1.24% 1.31% 1.21%
 Annualized Return on Average Equity12.27% 12.53% 12.68% 12.40% 12.50%
 Net Interest Margin3.72% 3.72% 3.74% 3.72% 3.76%
 Efficiency Ratio (1)55.74% 56.05% 57.83% 55.90% 59.02%
 Net Overhead Expense to Average Earning Assets (2)1.55% 1.47% 1.70% 1.51% 1.73%
           
ASSET QUALITY RATIOS         
 Annualized Net Charge-offs to Average Loans0.04% % 0.04% 0.02% (0.06)%
 Allowance for Loan Losses to Period End Loans1.04% 1.05% 1.10%    
 Non-performing Assets to Period End Assets0.26% 0.29% 0.31%    
 Non-performing Loans to Period End Loans0.37% 0.42% 0.42%    
 Loans 30-89 Days Past Due to Period End Loans0.21% 0.31% 0.34%    
           
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA         
 Average Assets$2,240,528  $2,227,107  $2,152,785  $2,233,855  $2,142,852 
 Average Earning Assets$2,109,509  $2,096,243  $2,028,735  $2,102,912  $2,017,250 
 Average Total Loans$1,456,699  $1,443,886  $1,390,185  $1,450,328  $1,380,825 
 Average Demand Deposits$420,341  $427,404  $400,656  $423,853  $403,008 
 Average Interest Bearing Liabilities$1,557,754  $1,546,181  $1,530,266  $1,551,999  $1,521,132 
 Average Equity$238,731  $233,175  $210,960  $235,968  $207,806 
           
 Period End Non-performing Assets (3)$5,763  $6,398  $6,904     
 Period End Non-performing Loans (4)$5,446  $6,074  $5,969     
 Period End Loans 30-89 Days Past Due (5)$3,025  $4,547  $4,728     
           
 Tax Equivalent Net Interest Income$19,562  $19,320  $18,946  $38,882  $37,742 
 Net Charge-offs during Period$161  $10  $134  $171  $(416)
           
           
 (1)Efficiency Ratio is defined as Non-interest Expense divided by the sum of Net Interest Income, on a tax equivalent basis, and Non-interest Income.
 (2)Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest Income.
 (3)Non-performing assets are defined as Non-accrual Loans, Loans Past Due 90 days or more, Restructured Loans, and Other Real Estate Owned.
 (4)Non-performing loans are defined as Non-accrual Loans, Loans Past Due 90 days or more, and Restructured Loans.
 (5)Loans 30-89 days past due and still accruing.

 

For additional information, contact: Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc. Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc. (812) 482-1314
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