German American Bancorp, Inc. (Nasdaq: GABC) reported solid third
quarter earnings of $21.5 million, or $0.73 per share. This level
of quarterly earnings reflected a linked quarter decrease of $0.7
million, or approximately 3% on a per share basis, from 2023 second
quarter earnings of $22.1 million or $0.75 per share.
The Company remained well-positioned at the end
of the third quarter of 2023 with continued solid liquidity and
strong capital. Third quarter 2023 operating performance was
highlighted by marginal net interest margin compression, solid loan
growth, a stable/diversified deposit base, continued strong credit
metrics, reductions in non-interest expense and stable/diversified
non-interest income.
The net interest margin declined marginally from
3.63% to 3.57%, or 6 basis points, during the third quarter of 2023
on a linked quarter basis as the earning asset yield increase of 14
basis points mostly kept pace with the funding cost increase of 20
basis points. The rise in the cost of funds in the third quarter of
2023 was driven by the continued historic pace of Federal Reserve
interest rate increases, extremely competitive deposit pricing in
the marketplace, and a continued re-mixing of the Company’s deposit
composition as customers looked for higher yield opportunities.
Third quarter 2023 deposits decreased
approximately $44 million, or 3%, on an annualized basis compared
to the second quarter of 2023. Non-interest bearing accounts
remained stable at a healthy 29% of total deposits. The core
deposit base remains diverse with stable and manageable exposure to
uninsured and uncollateralized deposits of approximately 21%.
During the third quarter of 2023, total loans
increased $63.1 million or 7% on an annualized basis with most
categories of loans showing growth. The Company’s loan portfolio
composition remained diverse with a low commercial real estate
office concentration. Credit metrics remained strong as
non-performing assets were 0.21% of period end assets and
non-performing loans totaled 0.32% of period end loans.
Non-interest income for the third quarter of
2023 remained stable when compared to the second quarter of 2023,
as most revenue lines reflected minor changes over the linked
second quarter. Non-interest expenses were stable as well with an
overall reduction in non-interest expense of approximately 1% over
the second quarter.
The Company also announced that its Board of
Directors declared a regular quarterly cash dividend of $0.25 per
share, which will be payable on November 20, 2023 to shareholders
of record as of November 10, 2023. As previously reported, this
dividend rate represents a 9% increase over the rate in effect
during 2022.
D. Neil Dauby, German American’s Chairman &
CEO stated, “We are extremely pleased to deliver yet another solid
quarterly operating performance. German American remains extremely
well-positioned with solid liquidity, strong capital and a diverse
core deposit base which continues to speak to the strength and
resilience of our Company. Thanks to the dedicated efforts of our
relationship-focused team of professionals, we are confident that
our strong community presence, healthy financial condition and
disciplined approach to risk management and earnings growth will
continue to drive future profitability. We remain excited and
committed to the vitality and growth of our Indiana and Kentucky
communities.”
Balance Sheet Highlights
Total assets for the Company totaled $6.006
billion at September 30, 2023, representing a decline of $47.6
million compared with June 30, 2023 and a decline of $254.2 million
compared with September 30, 2022. The decline in total assets at
September 30, 2023 compared with June 30, 2023 was primarily
related to a decline in the market value of the securities
portfolio partially offset by an increase in total loans, while the
decline in total assets compared to September 30, 2022 was largely
attributable to a decline in total deposits which in turn has led
to a decline in short-term investments as well as the Company's
securities portfolio. Federal funds sold and other short-term
investments totaled $60.4 million at September 30, 2023 compared
with $62.4 million at June 30, 2023 and $302.4 million at September
30, 2022.
Securities available for sale declined $123.8
million as of September 30, 2023 compared with June 30, 2023 and
declined $224.7 million compared with September 30, 2022. The
decline in the available for sale securities portfolio during the
third quarter of 2023 compared with the end of the second quarter
of 2023 was largely attributable to fair value adjustments on the
portfolio caused by a rise in market interest rates while the
decline from the third quarter of 2022 was primarily the result of
the Company's utilization of cash flows from the securities
portfolio to fund loan growth. Total cash flow generated from the
portfolio totaled approximately $35.0 million during the third
quarter of 2023, reflecting principal and interest payments.
Current projections indicate approximately $140.0 million in
principal and interest cash flows from the portfolio over the next
twelve months with rates unchanged.
September 30, 2023 total loans increased $63.1
million, or 7% on an annualized basis, compared with June 30, 2023
and increased $207.2 million, or 6%, compared with September 30,
2022. The increase during the third quarter of 2023 compared with
June 30, 2023 was broad-based across most segments of the
portfolio. Commercial real estate loans increased $55.9 million, or
11% on an annualized basis, while agricultural loans grew $2.6
million, or 3% on an annualized basis, and retail loans grew by
$7.8 million, or 4% on an annualized basis. Partially offsetting
these increases was a modest decline in commercial and industrial
loans of $3.2 million, or 2% on an annualized basis, as line of
credit utilization remains muted.
The composition of the loan portfolio has
remained relatively stable and diversified over the past several
years, including 2023. The portfolio is most heavily concentrated
in commercial real estate loans at 53% of the portfolio, followed
by commercial and industrial loans at 17% of the portfolio, and
agricultural loans at 10% of the portfolio. The Company’s
commercial lending is extended to various industries, including
multi-family housing and lodging, agribusiness and manufacturing,
as well as health care, wholesale, and retail services. The
Company's commercial real estate portfolio has limited exposure to
office real estate, with office exposure totaling approximately 4%
of the total loan portfolio.
|
|
|
|
|
|
|
End of Period Loan
Balances |
|
9/30/2023 |
|
6/30/2023 |
|
9/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial & Industrial Loans |
|
$ |
665,892 |
|
|
$ |
669,137 |
|
|
$ |
644,284 |
|
Commercial Real Estate
Loans |
|
|
2,076,962 |
|
|
|
2,021,109 |
|
|
|
1,923,794 |
|
Agricultural Loans |
|
|
398,109 |
|
|
|
395,466 |
|
|
|
401,608 |
|
Consumer Loans |
|
|
396,000 |
|
|
|
389,440 |
|
|
|
370,335 |
|
Residential Mortgage
Loans |
|
|
356,610 |
|
|
|
355,329 |
|
|
|
346,347 |
|
|
|
$ |
3,893,573 |
|
|
$ |
3,830,481 |
|
|
$ |
3,686,368 |
|
|
|
|
|
|
|
|
The Company’s allowance for credit losses
totaled $44.6 million at September 30, 2023 compared to $44.3
million at June 30, 2023 and $44.7 million at September 30, 2022.
The allowance for credit losses represented 1.15% of period-end
loans at September 30, 2023 compared with 1.16% at June 30, 2023
and 1.21% of period-end loans at September 30, 2022.
Non-performing assets totaled $12.4 million at
both September 30, 2023 and June 30, 2023 and $13.8 million at
September 30, 2022. Non-performing assets represented 0.21% of
total assets at both September 30, 2023 and June 30, 2023 and 0.22%
at September 30, 2022. Non-performing loans totaled $12.4 million
at both September 30, 2023 and June 30, 2023 and $13.8 million at
September 30, 2022. Non-performing loans represented 0.32% of total
loans at both September 30, 2023 and June 30, 2023 and 0.37% at
September 30, 2022.
|
|
|
|
|
|
Non-performing
Assets |
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
9/30/2023 |
|
6/30/2023 |
|
9/30/2022 |
Non-Accrual Loans |
$ |
11,206 |
|
|
$ |
11,423 |
|
|
$ |
13,054 |
|
Past Due Loans (90 days or
more) |
|
1,170 |
|
|
|
1,000 |
|
|
|
726 |
|
Total Non-Performing Loans |
|
12,376 |
|
|
|
12,423 |
|
|
|
13,780 |
|
Other Real Estate |
|
24 |
|
|
|
— |
|
|
|
— |
|
Total Non-Performing Assets |
$ |
12,400 |
|
|
$ |
12,423 |
|
|
$ |
13,780 |
|
|
|
|
|
|
|
Restructured Loans |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
Overall deposits remained relatively stable
during the third quarter of 2023 compared with the overall level of
deposits at June 30, 2023. September 30, 2023 total deposits
declined $43.8 million, or 1% on a linked quarter basis, compared
to June 30, 2023 and declined $438.5 million, or 8%, compared with
September 30, 2022. The Company has continued to see customer
movement from both interest bearing and non-interest bearing
transactional accounts to time deposits due primarily to the rising
interest rate environment. Non-interest bearing deposits have
remained relatively stable as a percent of total deposits with
September 30, 2023 non-interest deposits totaling 29% of total
deposits compared with 30% at June 30, 2023 and 31% at September
30, 2022.
A competitive market driven by rising interest
rates has been a significant contributing factor to the decline in
total deposits over the course of the past year. Additionally, a
meaningful level of the outflow of deposits experienced during the
past year was captured within the Company's wealth management
group.
September 30, 2023 total borrowings increased
$58.7 million compared to June 30, 2023 and increased $140.2
million compared with September 30, 2022. The increase in total
borrowings over the course of the third quarter of 2023 and past
year has been to fund loan growth and mitigate deposit
outflows.
|
|
|
|
|
|
|
End of Period Deposit
Balances |
|
9/30/2023 |
|
6/30/2023 |
|
9/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing Demand Deposits |
|
$ |
1,502,175 |
|
|
$ |
1,540,564 |
|
|
$ |
1,755,065 |
|
IB Demand, Savings, and MMDA
Accounts |
|
|
2,932,180 |
|
|
|
3,056,396 |
|
|
|
3,381,082 |
|
Time Deposits <
$100,000 |
|
|
269,829 |
|
|
|
256,504 |
|
|
|
248,455 |
|
Time Deposits >
$100,000 |
|
|
431,687 |
|
|
|
326,241 |
|
|
|
189,739 |
|
|
|
$ |
5,135,871 |
|
|
$ |
5,179,705 |
|
|
$ |
5,574,341 |
|
|
|
|
|
|
|
|
At September 30, 2023, the capital levels for
the Company and its subsidiary bank, German American Bank (the
"Bank"), remained well in excess of the minimum amounts needed for
capital adequacy purposes and the Bank’s capital levels met the
necessary requirements to be considered well-capitalized.
|
|
|
|
|
|
|
|
|
9/30/2023Ratio |
|
6/30/2023Ratio |
|
9/30/2022Ratio |
Total Capital (to Risk
Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
16.21 |
% |
|
16.06 |
% |
|
15.21 |
% |
Bank |
|
14.83 |
% |
|
14.50 |
% |
|
13.88 |
% |
Tier 1 (Core) Capital (to Risk
Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
14.66 |
% |
|
14.50 |
% |
|
13.76 |
% |
Bank |
|
14.10 |
% |
|
13.76 |
% |
|
13.26 |
% |
Common Tier 1 (CET 1) Capital
Ratio(to Risk Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
13.95 |
% |
|
13.78 |
% |
|
13.04 |
% |
Bank |
|
14.10 |
% |
|
13.76 |
% |
|
13.26 |
% |
Tier 1 Capital (to Average
Assets) |
|
|
|
|
|
|
Consolidated |
|
11.70 |
% |
|
11.44 |
% |
|
10.10 |
% |
Bank |
|
11.26 |
% |
|
10.87 |
% |
|
9.75 |
% |
|
|
|
|
|
|
|
|
|
|
Results of Operations Highlights –
Quarter ended September 30, 2023
Net income for the quarter ended September 30,
2023 totaled $21,451,000, or $0.73 per share, a decline of 3% on a
per share basis, compared with the second quarter 2023 net income
of $22,123,000, or $0.75 per share, and a decline of 12% on a per
share basis compared with the third quarter 2022 net income of
$24,596,000, or $0.83 per share. The decline in net income in the
third quarter of 2023 compared to both periods was largely driven
by a reduced level of average earning assets and net interest
margin resulting in a decline in net interest income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
Average Balance Sheet |
(Tax-equivalent
basis / dollars in thousands) |
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
|
|
September 30, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
20,243 |
|
|
$ |
199 |
|
|
3.91 |
% |
|
$ |
54,228 |
|
|
$ |
660 |
|
|
4.88 |
% |
|
$ |
402,006 |
|
|
$ |
2,053 |
|
|
2.03 |
% |
Securities |
|
|
1,596,653 |
|
|
|
11,677 |
|
|
2.93 |
% |
|
|
1,667,871 |
|
|
|
12,094 |
|
|
2.90 |
% |
|
|
1,848,165 |
|
|
|
12,955 |
|
|
2.80 |
% |
Loans and Leases |
|
|
3,855,586 |
|
|
|
55,343 |
|
|
5.70 |
% |
|
|
3,787,436 |
|
|
|
52,350 |
|
|
5.54 |
% |
|
|
3,676,862 |
|
|
|
43,251 |
|
|
4.67 |
% |
Total Interest Earning
Assets |
|
$ |
5,472,482 |
|
|
$ |
67,219 |
|
|
4.88 |
% |
|
$ |
5,509,535 |
|
|
$ |
65,104 |
|
|
4.74 |
% |
|
$ |
5,927,033 |
|
|
$ |
58,259 |
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Deposit Accounts |
|
$ |
1,524,682 |
|
|
|
|
|
|
$ |
1,545,455 |
|
|
|
|
|
|
$ |
1,738,237 |
|
|
|
|
|
IB Demand, Savings, and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMDA Accounts |
|
$ |
2,973,909 |
|
|
$ |
10,601 |
|
|
1.41 |
% |
|
$ |
3,118,225 |
|
|
$ |
10,035 |
|
|
1.29 |
% |
|
$ |
3,477,902 |
|
|
$ |
3,131 |
|
|
0.36 |
% |
Time Deposits |
|
|
640,992 |
|
|
|
4,977 |
|
|
3.08 |
% |
|
|
546,982 |
|
|
|
3,322 |
|
|
2.44 |
% |
|
|
451,390 |
|
|
|
466 |
|
|
0.41 |
% |
FHLB Advances and Other
Borrowings |
|
|
219,371 |
|
|
|
2,505 |
|
|
4.53 |
% |
|
|
177,146 |
|
|
|
1,899 |
|
|
4.30 |
% |
|
|
143,548 |
|
|
|
1,229 |
|
|
3.39 |
% |
Total Interest-Bearing
Liabilities |
|
$ |
3,834,272 |
|
|
$ |
18,083 |
|
|
1.87 |
% |
|
$ |
3,842,353 |
|
|
$ |
15,256 |
|
|
1.59 |
% |
|
$ |
4,072,840 |
|
|
$ |
4,826 |
|
|
0.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Funds |
|
|
|
|
|
1.31 |
% |
|
|
|
|
|
1.11 |
% |
|
|
|
|
|
0.32 |
% |
Net Interest Income |
|
|
|
$ |
49,136 |
|
|
|
|
|
|
$ |
49,848 |
|
|
|
|
|
|
$ |
53,433 |
|
|
|
Net Interest Margin |
|
|
|
|
|
3.57 |
% |
|
|
|
|
|
3.63 |
% |
|
|
|
|
|
3.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the third quarter of 2023, net interest
income, on a non tax-equivalent basis, totaled $47,559,000, a
decline of $699,000, or 1%, compared to the second quarter of 2023
net interest income of $48,258,000 and a decline of $4,139,000, or
8%, compared to the third quarter of 2022 net interest income of
$51,698,000.
The decline in net interest income during the
third quarter of 2023 compared with the second quarter of 2023 was
primarily attributable to a decline in the Company's net interest
margin. The decline in net interest income during the third quarter
of 2023 compared with the third quarter of 2022 was primarily
attributable to a decline in average earning assets, driven by a
reduced level of average deposits, and a modestly lower net
interest margin.
The tax equivalent net interest margin for the
quarter ended September 30, 2023 was 3.57% compared with 3.63% in
the second quarter of 2023 and 3.59% in the third quarter of 2022.
The decline in the net interest margin during the third quarter of
2023 compared with both the second quarter of 2023 and the third
quarter of 2022 was largely driven by an increase in the cost of
funds. The cost of funds continued to accelerate higher in the
third quarter of 2023 due to the continued increase of market
interest rates, very competitive deposit pricing in the
marketplace, customers actively looking for yield opportunities
within and outside the banking industry and a change in the
Company's deposit composition.
The Company's net interest margin and net
interest income have been impacted by accretion of loan discounts
on acquired loans. Accretion of discounts on acquired loans totaled
$1,288,000 during the third quarter of 2023, $716,000 during the
second quarter of 2023 and $1,099,000 during the third quarter of
2022. Accretion of loan discounts on acquired loans contributed
approximately 9 basis points to the net interest margin in the
third quarter of 2023, 5 basis points in the second quarter of 2023
and 7 basis points in the third quarter of 2022.
During the quarter ended September 30, 2023, the
Company recorded a provision for credit losses of $900,000 compared
with a provision for credit losses of $550,000 in the second
quarter of 2023 and a provision for credit losses of $350,000
during the third quarter of 2022.
Net charge-offs totaled $520,000, or 5 basis
points on an annualized basis, of average loans outstanding during
the third quarter of 2023 compared with $599,000, or 6 basis points
on an annualized basis, of average loans during the second quarter
of 2023 and compared with $682,000, or 7 basis points, of average
loans during the third quarter of 2022.
During the quarter ended September 30, 2023,
non-interest income totaled $14,804,000, a decline of $92,000, or
less than 1%, compared with the second quarter of 2023 and an
increase of $707,000, or 5%, compared with the third quarter of
2022.
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
Non-interest
Income |
|
9/30/2023 |
|
6/30/2023 |
|
9/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wealth Management Fees |
|
$ |
2,957 |
|
|
$ |
2,912 |
|
|
$ |
2,376 |
|
Service Charges on Deposit
Accounts |
|
|
2,982 |
|
|
|
2,883 |
|
|
|
3,014 |
|
Insurance Revenues |
|
|
2,065 |
|
|
|
2,130 |
|
|
|
1,995 |
|
Company Owned Life
Insurance |
|
|
446 |
|
|
|
429 |
|
|
|
416 |
|
Interchange Fee Income |
|
|
4,470 |
|
|
|
4,412 |
|
|
|
4,054 |
|
Other Operating Income |
|
|
1,270 |
|
|
|
1,462 |
|
|
|
1,365 |
|
Subtotal |
|
|
14,190 |
|
|
|
14,228 |
|
|
|
13,220 |
|
Net Gains on Sales of
Loans |
|
|
614 |
|
|
|
630 |
|
|
|
854 |
|
Net Gains on Securities |
|
|
— |
|
|
|
38 |
|
|
|
23 |
|
Total Non-interest
Income |
|
$ |
14,804 |
|
|
$ |
14,896 |
|
|
$ |
14,097 |
|
|
|
|
|
|
|
|
Wealth management fees increased $45,000, or 2%,
during the third quarter of 2023 compared with the second quarter
of 2023 and increased by $581,000, or 24%, compared with the third
quarter of 2022. The increase during the third quarter of 2023 was
largely attributable to increased assets under management within
the Company's wealth management group as compared with both the
second quarter of 2023 and third quarter of 2022.
Interchange fee income increased $58,000, or 1%,
during the quarter ended September 30, 2023 compared with the
second quarter of 2023 and increased $416,000, or 10%, compared
with the third quarter of 2022. The increased level of fees during
the third quarter of 2023 compared with both the second quarter of
2023 and the third quarter of 2022 was due to increased card
utilization by customers.
Other operating income declined $192,000, or
13%, during the third quarter of 2023 compared with the second
quarter of 2023 and declined $95,000, or 7%, compared with the
third quarter of 2022. The decline during the third quarter of 2023
compared with both periods was largely attributable to a fair value
adjustment to the asset held for the Company's lender risk account
with the Federal Home Loan Bank.
Net gains on sales of loans decreased $16,000,
or 3%, during the third quarter of 2023 compared with the second
quarter of 2023 and declined $240,000, or 28%, compared with the
third quarter of 2022. The decline in the third quarter of 2023
compared with the second quarter of 2022 was largely related to a
lower volume of loans sold and lower pricing levels. Loan sales
totaled $33.8 million during the third quarter of 2023 compared
with $24.8 million during the second quarter of 2023 and $40.9
million during the third quarter of 2022.
During the quarter ended September 30, 2023,
non-interest expense totaled $35,421,000, a decline of $305,000, or
1%, compared with the second quarter of 2023, and increased
$705,000, or 2%, compared with the third quarter of 2022.
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
Non-interest
Expense |
|
9/30/2023 |
|
6/30/2023 |
|
9/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
$ |
20,347 |
|
|
$ |
20,103 |
|
|
$ |
19,751 |
|
Occupancy, Furniture and
Equipment Expense |
|
|
3,691 |
|
|
|
3,443 |
|
|
|
3,685 |
|
FDIC Premiums |
|
|
700 |
|
|
|
687 |
|
|
|
477 |
|
Data Processing Fees |
|
|
2,719 |
|
|
|
2,803 |
|
|
|
2,712 |
|
Professional Fees |
|
|
1,229 |
|
|
|
1,614 |
|
|
|
1,188 |
|
Advertising and Promotion |
|
|
1,278 |
|
|
|
1,261 |
|
|
|
1,215 |
|
Intangible Amortization |
|
|
685 |
|
|
|
734 |
|
|
|
897 |
|
Other Operating Expenses |
|
|
4,772 |
|
|
|
5,081 |
|
|
|
4,791 |
|
Total Non-interest
Expense |
|
$ |
35,421 |
|
|
$ |
35,726 |
|
|
$ |
34,716 |
|
|
|
|
|
|
|
|
Salaries and benefits increased $244,000, or 1%,
during the quarter ended September 30, 2023 compared with the
second quarter of 2023 and increased $596,000, or 3%, compared with
the third quarter of 2022. The increase in salaries and benefits
during the third quarter of 2023 compared with the second quarter
of 2023 was primarily due to higher employee benefit costs
including health insurance benefit costs. The increase in salaries
and benefits during the third quarter of 2023 compared with the
third quarter of 2022 was due in large part to higher salary costs
primarily associated with annual adjustments for employees
throughout the past year.
Occupancy, furniture and equipment expense
increased $248,000, or 7%, during the quarter ended September 30,
2023 compared with the second quarter of 2023 and remained stable
compared with the second quarter of 2022. The increase in the third
quarter of 2023 compared with the second quarter of 2023 was
primarily attributable to increased repairs and maintenance costs,
utility costs and real and personal property tax expense.
FDIC premiums increased $13,000, or 2%, during
the quarter ended September 30, 2023 compared with the second
quarter of 2023 and increased $223,000, or 47%, compared with the
third quarter of 2022. The increase in the third quarter of 2023
compared with the third quarter of 2022 was primarily related to an
industry-wide 2 basis point increase in the base FDIC premium
assessment effective January 1, 2023.
Professional fees declined $385,000, or 24%, in
the third quarter of 2023 compared with the second quarter of 2023
and increased $41,000, or 3%, compared with the third quarter of
2022. The decline during the third quarter of 2023 compared with
the second quarter of 2023 was largely attributable to increased
professional fees in the second quarter of 2023 related to
fiduciary related tax services for wealth management customers,
fees for certain retirement plan services and the timing of other
professional fees.
Other operating expenses declined $309,000, or
6%, during the quarter ended September 30, 2023 compared with the
second quarter of 2023 and declined $19,000, or less than 1%,
compared with the third quarter of 2022. The decline in the third
quarter of 2023 compared with the second quarter of 2023 was due in
large part to a reduced liability for unfunded commitments and
various fees associated with ATM/debit cards.
About German American
German American Bancorp, Inc. is a Nasdaq-traded
(symbol: GABC) financial holding company based in Jasper, Indiana.
German American, through its banking subsidiary German American
Bank, operates 76 banking offices in 20 contiguous southern Indiana
counties 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:
- changes in
interest rates and the timing and magnitude of any such
changes;
- unfavorable
economic conditions, including a prolonged period of inflation, and
the resulting adverse impact on, among other things, credit
quality;
- the impacts
related to or resulting from recent bank failures or adverse
developments at other banks on general investor sentiment regarding
the stability and liquidity of banks;
- the impacts of
epidemics, pandemics or other infectious disease outbreaks;
- 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;
- capital
management activities, including possible future sales of new
securities, or possible repurchases or redemptions by German
American 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 or employee 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;
- the possible
effects of the replacement of the London Interbank Offered Rate
(LIBOR);
- the potential
for increases to, and volatility in, the balance of our allowance
for credit losses and related provision expense due to the current
expected credit loss (CECL) standard;
- 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 German American’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 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, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
ASSETS |
|
|
|
|
|
Cash and Due from Banks |
$ |
72,063 |
|
|
$ |
78,223 |
|
|
$ |
70,660 |
|
Short-term Investments |
|
60,856 |
|
|
|
62,948 |
|
|
|
303,133 |
|
Investment Securities |
|
1,477,309 |
|
|
|
1,601,062 |
|
|
|
1,701,981 |
|
|
|
|
|
|
|
Loans Held-for-Sale |
|
7,085 |
|
|
|
8,239 |
|
|
|
10,418 |
|
|
|
|
|
|
|
Loans, Net of Unearned Income |
|
3,887,550 |
|
|
|
3,826,009 |
|
|
|
3,682,516 |
|
Allowance for Credit Losses |
|
(44,646 |
) |
|
|
(44,266 |
) |
|
|
(44,699 |
) |
Net Loans |
|
3,842,904 |
|
|
|
3,781,743 |
|
|
|
3,637,817 |
|
|
|
|
|
|
|
Stock in FHLB and Other Restricted Stock |
|
14,763 |
|
|
|
14,856 |
|
|
|
15,106 |
|
Premises and Equipment |
|
111,252 |
|
|
|
112,629 |
|
|
|
111,098 |
|
Goodwill and Other Intangible Assets |
|
187,373 |
|
|
|
188,130 |
|
|
|
190,812 |
|
Other Assets |
|
232,061 |
|
|
|
205,439 |
|
|
|
218,880 |
|
TOTAL ASSETS |
$ |
6,005,666 |
|
|
$ |
6,053,269 |
|
|
$ |
6,259,905 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Non-interest-bearing Demand Deposits |
$ |
1,502,175 |
|
|
$ |
1,540,564 |
|
|
$ |
1,755,065 |
|
Interest-bearing Demand, Savings, and Money Market Accounts |
|
2,932,180 |
|
|
|
3,056,396 |
|
|
|
3,381,082 |
|
Time Deposits |
|
701,516 |
|
|
|
582,745 |
|
|
|
438,194 |
|
Total Deposits |
|
5,135,871 |
|
|
|
5,179,705 |
|
|
|
5,574,341 |
|
|
|
|
|
|
|
Borrowings |
|
286,193 |
|
|
|
227,484 |
|
|
|
146,015 |
|
Other Liabilities |
|
45,210 |
|
|
|
43,515 |
|
|
|
44,848 |
|
TOTAL LIABILITIES |
|
5,467,274 |
|
|
|
5,450,704 |
|
|
|
5,765,204 |
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Common Stock and Surplus |
|
418,530 |
|
|
|
418,033 |
|
|
|
416,249 |
|
Retained Earnings |
|
447,475 |
|
|
|
433,384 |
|
|
|
387,510 |
|
Accumulated Other Comprehensive Income (Loss) |
|
(327,613 |
) |
|
|
(248,852 |
) |
|
|
(309,058 |
) |
SHAREHOLDERS'
EQUITY |
|
538,392 |
|
|
|
602,565 |
|
|
|
494,701 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
6,005,666 |
|
|
$ |
6,053,269 |
|
|
$ |
6,259,905 |
|
|
|
|
|
|
|
END OF PERIOD SHARES
OUTSTANDING |
|
29,575,451 |
|
|
|
29,572,783 |
|
|
|
29,485,121 |
|
|
|
|
|
|
|
TANGIBLE BOOK VALUE
PER SHARE(1) |
$ |
11.87 |
|
|
$ |
14.01 |
|
|
$ |
10.31 |
|
|
|
|
|
|
|
(1)Tangible Book
Value per Share is defined as Total Shareholders' Equity less
Goodwill and Other Intangible Assets divided by End of Period
Shares Outstanding. |
|
|
GERMAN AMERICAN BANCORP, INC. |
(unaudited, dollars in thousands except per share
data) |
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
|
September 30, 2023 |
|
September 30, 2022 |
INTEREST
INCOME |
|
|
|
|
|
|
|
|
|
Interest and Fees on Loans |
$ |
55,196 |
|
|
$ |
52,202 |
|
|
$ |
43,128 |
|
|
$ |
156,459 |
|
|
$ |
122,050 |
|
Interest on Short-term Investments |
|
199 |
|
|
|
660 |
|
|
|
2,053 |
|
|
|
1,204 |
|
|
|
3,565 |
|
Interest and Dividends on Investment Securities |
|
10,247 |
|
|
|
10,652 |
|
|
|
11,343 |
|
|
|
31,982 |
|
|
|
32,450 |
|
TOTAL INTEREST INCOME |
|
65,642 |
|
|
|
63,514 |
|
|
|
56,524 |
|
|
|
189,645 |
|
|
|
158,065 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
Interest on Deposits |
|
15,578 |
|
|
|
13,357 |
|
|
|
3,597 |
|
|
|
37,906 |
|
|
|
6,475 |
|
Interest on Borrowings |
|
2,505 |
|
|
|
1,899 |
|
|
|
1,229 |
|
|
|
6,913 |
|
|
|
3,387 |
|
TOTAL INTEREST EXPENSE |
|
18,083 |
|
|
|
15,256 |
|
|
|
4,826 |
|
|
|
44,819 |
|
|
|
9,862 |
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
47,559 |
|
|
|
48,258 |
|
|
|
51,698 |
|
|
|
144,826 |
|
|
|
148,203 |
|
Provision for Credit Losses |
|
900 |
|
|
|
550 |
|
|
|
350 |
|
|
|
2,550 |
|
|
|
5,850 |
|
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES |
|
46,659 |
|
|
|
47,708 |
|
|
|
51,348 |
|
|
|
142,276 |
|
|
|
142,353 |
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
INCOME |
|
|
|
|
|
|
|
|
|
Net Gain on Sales of Loans |
|
614 |
|
|
|
630 |
|
|
|
854 |
|
|
|
1,831 |
|
|
|
3,324 |
|
Net Gain on Securities |
|
— |
|
|
|
38 |
|
|
|
23 |
|
|
|
40 |
|
|
|
473 |
|
Other Non-interest Income |
|
14,190 |
|
|
|
14,228 |
|
|
|
13,220 |
|
|
|
42,796 |
|
|
|
41,668 |
|
TOTAL NON-INTEREST INCOME |
|
14,804 |
|
|
|
14,896 |
|
|
|
14,097 |
|
|
|
44,667 |
|
|
|
45,465 |
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
Salaries and Benefits |
|
20,347 |
|
|
|
20,103 |
|
|
|
19,751 |
|
|
|
62,296 |
|
|
|
63,223 |
|
Other Non-interest Expenses |
|
15,074 |
|
|
|
15,623 |
|
|
|
14,965 |
|
|
|
46,467 |
|
|
|
55,354 |
|
TOTAL NON-INTEREST EXPENSE |
|
35,421 |
|
|
|
35,726 |
|
|
|
34,716 |
|
|
|
108,763 |
|
|
|
118,577 |
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes |
|
26,042 |
|
|
|
26,878 |
|
|
|
30,729 |
|
|
|
78,180 |
|
|
|
69,241 |
|
Income Tax Expense |
|
4,591 |
|
|
|
4,755 |
|
|
|
6,133 |
|
|
|
13,799 |
|
|
|
11,831 |
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME |
$ |
21,451 |
|
|
$ |
22,123 |
|
|
$ |
24,596 |
|
|
$ |
64,381 |
|
|
$ |
57,410 |
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER
SHARE |
$ |
0.73 |
|
|
$ |
0.75 |
|
|
$ |
0.83 |
|
|
$ |
2.18 |
|
|
$ |
1.95 |
|
DILUTED EARNINGS PER
SHARE |
$ |
0.73 |
|
|
$ |
0.75 |
|
|
$ |
0.83 |
|
|
$ |
2.18 |
|
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING |
|
29,573,461 |
|
|
|
29,573,042 |
|
|
|
29,484,394 |
|
|
|
29,551,558 |
|
|
|
29,457,396 |
|
DILUTED WEIGHTED
AVERAGE SHARES OUTSTANDING |
|
29,573,461 |
|
|
|
29,573,042 |
|
|
|
29,484,394 |
|
|
|
29,551,558 |
|
|
|
29,457,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GERMAN AMERICAN BANCORP, INC. |
(unaudited, dollars in thousands except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
EARNINGS
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
|
|
Annualized Return on Average Assets |
|
|
1.43 |
% |
|
|
1.47 |
% |
|
|
1.53 |
% |
|
|
1.42 |
% |
|
|
1.16 |
% |
|
Annualized Return on Average
Equity |
|
|
14.36 |
% |
|
|
14.66 |
% |
|
|
16.77 |
% |
|
|
14.47 |
% |
|
|
11.92 |
% |
|
Annualized Return on Average
Tangible Equity(1) |
|
|
20.95 |
% |
|
|
21.32 |
% |
|
|
24.87 |
% |
|
|
21.21 |
% |
|
|
16.95 |
% |
|
Net Interest Margin |
|
|
3.57 |
% |
|
|
3.63 |
% |
|
|
3.59 |
% |
|
|
3.63 |
% |
|
|
3.35 |
% |
|
Efficiency Ratio(2) |
|
|
54.33 |
% |
|
|
54.08 |
% |
|
|
50.10 |
% |
|
|
54.84 |
% |
|
|
58.40 |
% |
|
Net Overhead Expense to
Average Earning Assets(3) |
|
|
1.51 |
% |
|
|
1.51 |
% |
|
|
1.39 |
% |
|
|
1.55 |
% |
|
|
1.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
Annualized Net Charge-offs to
Average Loans |
|
|
0.05 |
% |
|
|
0.06 |
% |
|
|
0.07 |
% |
|
|
0.07 |
% |
|
|
0.05 |
% |
|
Allowance for Credit Losses to
Period End Loans |
|
|
1.15 |
% |
|
|
1.16 |
% |
|
|
1.21 |
% |
|
|
|
|
|
Non-performing Assets to
Period End Assets |
|
|
0.21 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
|
|
|
|
|
Non-performing Loans to Period
End Loans |
|
|
0.32 |
% |
|
|
0.32 |
% |
|
|
0.37 |
% |
|
|
|
|
|
Loans 30-89 Days Past Due to
Period End Loans |
|
|
0.33 |
% |
|
|
0.29 |
% |
|
|
0.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
BALANCE SHEET & OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Average Assets |
|
$ |
6,003,069 |
|
|
$ |
6,034,900 |
|
|
$ |
6,440,580 |
|
|
$ |
6,038,423 |
|
|
$ |
6,605,076 |
|
|
Average Earning Assets |
|
$ |
5,472,482 |
|
|
$ |
5,509,535 |
|
|
$ |
5,927,033 |
|
|
$ |
5,510,292 |
|
|
$ |
6,101,184 |
|
|
Average Total Loans |
|
$ |
3,855,586 |
|
|
$ |
3,787,436 |
|
|
$ |
3,676,862 |
|
|
$ |
3,805,903 |
|
|
$ |
3,664,506 |
|
|
Average Demand Deposits |
|
$ |
1,524,682 |
|
|
$ |
1,545,455 |
|
|
$ |
1,738,237 |
|
|
$ |
1,568,348 |
|
|
$ |
1,739,389 |
|
|
Average Interest Bearing
Liabilities |
|
$ |
3,834,272 |
|
|
$ |
3,842,353 |
|
|
$ |
4,072,841 |
|
|
$ |
3,831,030 |
|
|
$ |
4,179,344 |
|
|
Average Equity |
|
$ |
597,375 |
|
|
$ |
603,666 |
|
|
$ |
586,744 |
|
|
$ |
593,270 |
|
|
$ |
642,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Non-performing
Assets(4) |
|
$ |
12,400 |
|
|
$ |
12,423 |
|
|
$ |
13,780 |
|
|
|
|
|
|
Period End Non-performing
Loans(5) |
|
$ |
12,376 |
|
|
$ |
12,423 |
|
|
$ |
13,780 |
|
|
|
|
|
|
Period End Loans 30-89 Days
Past Due(6) |
|
$ |
12,673 |
|
|
$ |
11,045 |
|
|
$ |
11,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Equivalent Net Interest
Income |
|
$ |
49,136 |
|
|
$ |
49,848 |
|
|
$ |
53,433 |
|
|
$ |
149,690 |
|
|
$ |
153,147 |
|
|
Net Charge-offs during
Period |
|
$ |
520 |
|
|
$ |
599 |
|
|
$ |
682 |
|
|
$ |
2,072 |
|
|
$ |
1,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Average Tangible Equity is defined as Average Equity less Average
Goodwill and Other Intangibles. |
(2) |
|
Efficiency Ratio is defined as Non-interest Expense less Intangible
Amortization divided by the sum of Net Interest Income, on a tax
equivalent basis, and Non-interest Income less Net Gain on
Securities. |
(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. |
|
|
|
For additional information, contact:D.
Neil Dauby, Chairman and Chief Executive
OfficerBradley M Rust, President and Chief
Financial Officer(812) 482-1314
German American Bancorp (NASDAQ:GABC)
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