German American Bancorp, Inc. (Nasdaq: GABC) reported solid second
quarter earnings of $22.1 million, or $0.75 per share. This level
of quarterly earnings reflected a linked quarter increase of $1.3
million, or approximately 6% on a per share basis, from 2023 first
quarter earnings of $20.8 million or $0.71 per share.
The Company remained well positioned at the end
of the second quarter 2023 with continued solid liquidity and
strong capital. Second 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 growth in most
non-interest income categories.
The net interest margin declined marginally from
3.69% to 3.63%, or 6 basis points, during the second quarter of
2023 as compared to the first quarter of 2023, as the earning asset
yield increase of 21 basis points mostly kept pace with the funding
cost increase of 27 basis points. The continued rise in the cost of
funds in the second quarter of 2023 was driven by the continued
historic pace of Federal Reserve interest rate increases,
competitive deposit pricing in the marketplace, and a change in the
Company’s deposit composition as customers looked for higher yield
opportunities.
Second quarter 2023 deposits increased
approximately $24.8 million, or 2% on an annualized basis, compared
to the first quarter of 2023. Non interest bearing accounts
remained stable at a healthy 30% of total deposits. The core
deposit base remains diverse with stable and manageable exposure to
uninsured and uncollateralized deposits of approximately 21%.
During the second quarter of 2023, total loans
increased $57.6 million, or 6% on an annualized basis, with all
categories of loans showing growth. The Company’s loan portfolio
composition remained diverse with minimal risk exposure to the
commercial office sector. 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 second quarter 2023
was relatively flat when compared to the linked first quarter 2023,
as cyclical insurance contingency revenue of nearly $1 million was
recognized in the first quarter. Most other non-interest income
lines reflected solid increases over the linked first quarter.
Wealth management fees increased 10% attributable to increased
assets under management; interchange fee income increased 5% driven
by increased customer card utilization; and other operating income
increased 21% driven by interest rate swap transactions.
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 August 20, 2023 to shareholders of
record as of August 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 solid second
quarter operating performance. German American remains extremely
well positioned with solid liquidity, strong capital and a diverse
core deposit base which speaks 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 $6.053
billion at June 30, 2023, representing an increase of $56.4 million
compared with March 31, 2023 and a decline of $418.4 million
compared with June 30, 2022. The increase in total assets at June
30, 2023 compared with March 31, 2023 was primarily related to an
increase in total loans, while the decline in total assets compared
to June 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 $62.9 million
at June 30, 2023 compared with $10.3 million at March 31, 2023 and
$415.1 million at June 30, 2022.
Securities available for sale declined $69.5
million as of June 30, 2023 compared with March 31, 2023 and
declined $221.0 million compared with June 30, 2022. The changes in
the available for sale securities portfolio during the second
quarter of 2023 compared with the end of the first quarter 2023 was
largely attributable to the Company's utilization of cash flows
from the securities portfolio to fund loan growth. Total cash flow
generated from the portfolio totaled approximately $56.0 million
during the second quarter of 2023, reflecting principal and
interest payments as well as a modest level of securities sales.
Current projections indicate approximately $150.0 million in
principal and interest cash flows from the portfolio over the next
twelve months with rates unchanged. The decline in the securities
portfolio at June 30, 2023 compared with June 30, 2022 was largely
attributable to fair value adjustments on the portfolio caused by
the rise in market interest rates over the past year and the
Company's utilization of cash flows generated by the portfolio for
general balance sheet funding.
June 30, 2023 total loans increased $57.6
million, or 6% on an annualized basis, compared with March 31, 2023
and increased $177.7 million, or 5%, compared with June 30, 2022.
The increase during the second quarter of 2023 compared with March
31, 2023 was broad-based across all segments of the portfolio.
Commercial and industrial loans increased $1.8 million, or 1% on an
annualized basis, commercial real estate loans increased $20.9
million, or 4% on an annualized basis, while agricultural loans
grew $16.9 million, or 18% on an annualized basis, and retail loans
grew by $18.0 million, or 10% on an annualized basis.
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 |
|
6/30/2023 |
|
3/31/2023 |
|
6/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial & Industrial Loans |
|
$ |
669,137 |
|
$ |
667,306 |
|
$ |
641,496 |
Commercial Real Estate
Loans |
|
|
2,021,109 |
|
|
2,000,237 |
|
|
1,904,235 |
Agricultural Loans |
|
|
395,466 |
|
|
378,587 |
|
|
397,524 |
Consumer Loans |
|
|
389,440 |
|
|
376,398 |
|
|
366,322 |
Residential Mortgage
Loans |
|
|
355,329 |
|
|
350,338 |
|
|
343,166 |
|
|
$ |
3,830,481 |
|
$ |
3,772,866 |
|
$ |
3,652,743 |
|
|
|
|
|
|
|
The Company’s allowance for credit losses
totaled $44.3 million at both June 30, 2023 and March 31, 2023
compared to $45.0 million at June 30, 2022. The allowance for
credit losses represented 1.16% of period-end loans at June 30,
2023 compared with 1.18% at March 31, 2023 and 1.23% of period-end
loans at June 30, 2022.
Non-performing assets totaled $12.4 million at
June 30, 2023 compared to $14.6 million at March 31, 2023 and $15.1
million at June 30, 2022. Non-performing assets represented 0.21%
of total assets at June 30, 2023 compared to 0.24% at March 31,
2023 and 0.23% at June 30, 2022. Non-performing loans totaled $12.4
million at June 30, 2023 compared to $14.6 million at March 31,
2023 and $15.1 million at June 30, 2022. Non-performing loans
represented 0.32% of total loans at June 30, 2023 compared to 0.39%
at March 31, 2023 and 0.41% at June 30, 2022.
|
|
|
|
|
|
Non-performing
Assets |
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
6/30/2023 |
|
3/31/2023 |
|
6/30/2022 |
Non-Accrual Loans |
$ |
11,423 |
|
$ |
13,495 |
|
$ |
13,921 |
Past Due Loans (90 days or
more) |
|
1,000 |
|
|
1,098 |
|
|
1,161 |
Total Non-Performing Loans |
|
12,423 |
|
|
14,593 |
|
|
15,082 |
Other Real Estate |
|
— |
|
|
— |
|
|
— |
Total Non-Performing Assets |
$ |
12,423 |
|
$ |
14,593 |
|
$ |
15,082 |
|
|
|
|
|
|
Restructured Loans |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
Overall deposits stabilized during the second
quarter of 2023 compared with the overall level of deposits at
March 31, 2023. June 30, 2023 total deposits increased $24.8
million, or 2% on an annualized basis, compared to March 31, 2023
and declined $533.9 million, or 9%, compared with June 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 June 30, 2023
non-interest deposits totaling 30% of total deposits compared with
31% at both March 31, 2023 and June 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.
June 30, 2023 total borrowings increased $36.4
million compared to March 31, 2023 and increased $82.6 million
compared with June 30, 2022. The increase in total borrowings over
the course of the second quarter of 2023 and past year has been to
fund loan growth and mitigate deposit outflows.
|
|
|
|
|
|
|
End of Period Deposit
Balances |
|
6/30/2023 |
|
3/31/2023 |
|
6/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing Demand Deposits |
|
$ |
1,540,564 |
|
$ |
1,601,206 |
|
$ |
1,745,067 |
IB Demand, Savings, and MMDA
Accounts |
|
|
3,056,396 |
|
|
3,039,393 |
|
|
3,503,789 |
Time Deposits <
$100,000 |
|
|
256,504 |
|
|
245,104 |
|
|
263,798 |
Time Deposits >
$100,000 |
|
|
326,241 |
|
|
269,192 |
|
|
200,954 |
|
|
$ |
5,179,705 |
|
$ |
5,154,895 |
|
$ |
5,713,608 |
|
|
|
|
|
|
|
At June 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.
|
|
6/30/2023Ratio |
|
3/31/2023Ratio |
|
6/30/2022Ratio |
Total Capital (to Risk
Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
16.06 |
% |
|
15.89 |
% |
|
15.07 |
% |
Bank |
|
14.50 |
% |
|
14.37 |
% |
|
13.86 |
% |
Tier 1 (Core) Capital (to Risk
Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
14.50 |
% |
|
14.32 |
% |
|
13.58 |
% |
Bank |
|
13.76 |
% |
|
13.63 |
% |
|
13.23 |
% |
Common Tier 1 (CET 1) Capital
Ratio(to Risk Weighted Assets) |
|
|
|
|
|
|
Consolidated |
|
13.78 |
% |
|
13.60 |
% |
|
12.85 |
% |
Bank |
|
13.76 |
% |
|
13.63 |
% |
|
13.23 |
% |
Tier 1 Capital (to Average
Assets) |
|
|
|
|
|
|
Consolidated |
|
11.44 |
% |
|
11.08 |
% |
|
9.57 |
% |
Bank |
|
10.87 |
% |
|
10.55 |
% |
|
9.33 |
% |
Results of Operations Highlights –
Quarter ended June 30, 2023
Net income for the quarter ended June 30, 2023
totaled $22,123,000, or $0.75 per share, an increase of 6% on a per
share basis, compared with the first quarter 2023 net income of
$20,807,000, or $0.71 per share, and a decline of 7% on a per share
basis compared with the second quarter 2022 net income of
$23,747,000, or $0.81 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Average
Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Tax-equivalent basis /
dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 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 |
|
$ |
54,228 |
|
$ |
660 |
|
4.88 |
% |
|
$ |
46,729 |
|
$ |
345 |
|
2.99 |
% |
|
$ |
606,488 |
|
$ |
1,232 |
|
0.81 |
% |
Securities |
|
|
1,667,871 |
|
|
12,094 |
|
2.90 |
% |
|
|
1,729,189 |
|
|
12,595 |
|
2.91 |
% |
|
|
1,875,202 |
|
|
12,625 |
|
2.69 |
% |
Loans and Leases |
|
|
3,787,436 |
|
|
52,350 |
|
5.54 |
% |
|
|
3,773,789 |
|
|
49,245 |
|
5.29 |
% |
|
|
3,649,466 |
|
|
40,058 |
|
4.40 |
% |
Total Interest Earning
Assets |
|
$ |
5,509,535 |
|
$ |
65,104 |
|
4.74 |
% |
|
$ |
5,549,707 |
|
$ |
62,185 |
|
4.53 |
% |
|
$ |
6,131,156 |
|
$ |
53,915 |
|
3.52 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Deposit Accounts |
|
$ |
1,545,455 |
|
|
|
|
|
$ |
1,636,133 |
|
|
|
|
|
$ |
1,740,592 |
|
|
|
|
IB Demand, Savings, and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMDA Accounts |
|
$ |
3,118,225 |
|
$ |
10,035 |
|
1.29 |
% |
|
$ |
3,119,979 |
|
$ |
7,414 |
|
0.96 |
% |
|
$ |
3,622,748 |
|
$ |
1,113 |
|
0.12 |
% |
Time Deposits |
|
|
546,982 |
|
|
3,322 |
|
2.44 |
% |
|
|
451,644 |
|
|
1,557 |
|
1.40 |
% |
|
|
492,453 |
|
|
436 |
|
0.36 |
% |
FHLB Advances and Other
Borrowings |
|
|
177,146 |
|
|
1,899 |
|
4.30 |
% |
|
|
244,645 |
|
|
2,509 |
|
4.16 |
% |
|
|
145,705 |
|
|
1,120 |
|
3.08 |
% |
Total Interest-Bearing
Liabilities |
|
$ |
3,842,353 |
|
$ |
15,256 |
|
1.59 |
% |
|
$ |
3,816,268 |
|
$ |
11,480 |
|
1.22 |
% |
|
$ |
4,260,906 |
|
$ |
2,669 |
|
0.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Funds |
|
|
|
|
|
1.11 |
% |
|
|
|
|
|
0.84 |
% |
|
|
|
|
|
0.17 |
% |
Net Interest Income |
|
|
|
$ |
49,848 |
|
|
|
|
|
$ |
50,705 |
|
|
|
|
|
$ |
51,246 |
|
|
Net Interest Margin |
|
|
|
|
|
3.63 |
% |
|
|
|
|
|
3.69 |
% |
|
|
|
|
|
3.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the second quarter of 2023, net interest
income, on a non tax-equivalent basis, totaled $48,258,000, a
decline of $751,000, or 2%, compared to the first quarter of 2023
net interest income of $49,009,000 and a decline of $1,339,000, or
3%, compared to the second quarter of 2022 net interest income of
$49,597,000.
The decline in net interest income during the
second quarter of 2023 compared with the first quarter of 2023 was
primarily attributable to a decline in the Company's net interest
margin. The decline in net interest income during the second
quarter of 2023 compared with the second quarter of 2022 was
primarily attributable to a decline in average earning assets,
driven by a reduced level of average deposits, which was partially
mitigated by an improved net interest margin resulting from the
rise in market interest rates.
The tax equivalent net interest margin for the
quarter ended June 30, 2023 was 3.63% compared with 3.69% in the
first quarter of 2023 and 3.35% in the second quarter of 2022. The
decline in the net interest margin during the second quarter of
2023 compared with the first quarter of 2023 was largely driven by
an increase in the cost of funds. The cost of funds continued to
accelerate higher in the second 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 improvement in the
net interest margin during the second quarter of 2023 compared with
the second quarter of 2022 was largely attributable to increased
market interest rates resulting in improved yields on earning
assets that outpaced increased cost of funds over the course of the
past year.
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
$716,000 during the second quarter of 2023, $530,000 during the
first quarter of 2023 and $1,528,000 during the second quarter of
2022. Accretion of loan discounts on acquired loans contributed
approximately 5 basis points to the net interest margin in the
second quarter of 2023, 4 basis points in the first quarter of 2023
and 10 basis points in the second quarter of 2022.
During the quarter ended June 30, 2023, the
Company recorded a provision for credit losses of $550,000 compared
with a provision for credit losses of $1,100,000 in the first
quarter of 2023 and a provision for credit losses of $300,000
during the second quarter of 2022.
Net charge-offs totaled $599,000, or 6 basis
points on an annualized basis, of average loans outstanding during
the second quarter of 2023 compared with $953,000, or 10 basis
points on an annualized basis, of average loans during the first
quarter of 2023 and compared with $347,000, or 4 basis points, of
average loans during the second quarter of 2022.
During the quarter ended June 30, 2023,
non-interest income totaled $14,896,000, a decline of $71,000, or
less than 1%, compared with the first quarter of 2023 and a decline
of $284,000, or 2%, compared with the second quarter of 2022.
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
Non-interest
Income |
|
6/30/2023 |
|
3/31/2023 |
|
6/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wealth Management Fees |
|
$ |
2,912 |
|
$ |
2,644 |
|
$ |
2,642 |
Service Charges on Deposit
Accounts |
|
|
2,883 |
|
|
2,788 |
|
|
2,871 |
Insurance Revenues |
|
|
2,130 |
|
|
3,135 |
|
|
2,254 |
Company Owned Life
Insurance |
|
|
429 |
|
|
401 |
|
|
894 |
Interchange Fee Income |
|
|
4,412 |
|
|
4,199 |
|
|
4,167 |
Other Operating Income |
|
|
1,462 |
|
|
1,211 |
|
|
1,225 |
Subtotal |
|
|
14,228 |
|
|
14,378 |
|
|
14,053 |
Net Gains on Sales of
Loans |
|
|
630 |
|
|
587 |
|
|
1,049 |
Net Gains on Securities |
|
|
38 |
|
|
2 |
|
|
78 |
Total Non-interest
Income |
|
$ |
14,896 |
|
$ |
14,967 |
|
$ |
15,180 |
|
|
|
|
|
|
|
Wealth management fees increased $268,000, or
10%, during the second quarter of 2023 compared with the first
quarter of 2023 and increased by $270,000, or 10%, compared with
the second quarter of 2022. The increase during the second quarter
of 2023 was largely attributable to increased assets under
management within the Company's wealth management group as compared
with both the first quarter of 2023 and second quarter of 2022.
Insurance revenues declined $1,005,000, or 32%,
during the quarter ended June 30, 2023, compared with the first
quarter of 2023 and declined $124,000, or 6%, compared with the
second quarter of 2022. The variance during the second quarter of
2023 compared with the first quarter of 2022 was primarily related
to contingency revenue. Contingency revenue during the second
quarter of 2023 totaled $10,000 compared with $945,000 during the
first quarter of 2023. Contingency revenue is reflective of claims
and loss experience with insurance carriers that the Company
represents through its property and casualty insurance agency.
Typically, the majority of contingency revenue is recognized during
the first quarter of the year.
Interchange fee income increased $213,000, or
5%, during the quarter ended June 30, 2023 compared with the first
quarter of 2023 and increased $245,000, or 6%, compared with the
second quarter of 2022. The increased level of fees during the
second quarter of 2023 compared with both the first quarter of 2023
and the second quarter of 2022 was due to increased card
utilization by customers.
Other operating income increased $251,000, or
21%, during the second quarter of 2023 compared with the first
quarter of 2023 and increased $237,000, or 19%, compared with the
second quarter of 2022. The increase during the second quarter of
2023 compared with both periods was largely attributable to fees
associated with interest rate swap transactions with loan
customers.
Net gains on sales of loans increased $43,000,
or 7%, during the second quarter of 2023 compared with the first
quarter of 2023 and declined $419,000, or 40%, compared with the
second quarter of 2022. The decline in the second 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 $24.8 million during the second quarter of 2023 compared
with $23.4 million during the first quarter of 2023 and $52.5
million during the second quarter of 2022.
During the quarter ended June 30, 2023,
non-interest expense totaled $35,726,000, a decline of $1,890,000,
or 5%, compared with the first quarter of 2023, and remained
relatively stable compared with the second quarter of 2022.
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
Non-interest
Expense |
|
6/30/2023 |
|
3/31/2023 |
|
6/30/2022 |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
$ |
20,103 |
|
$ |
21,846 |
|
$ |
20,384 |
Occupancy, Furniture and
Equipment Expense |
|
|
3,443 |
|
|
3,820 |
|
|
3,772 |
FDIC Premiums |
|
|
687 |
|
|
741 |
|
|
465 |
Data Processing Fees |
|
|
2,803 |
|
|
2,755 |
|
|
2,460 |
Professional Fees |
|
|
1,614 |
|
|
1,562 |
|
|
1,573 |
Advertising and Promotion |
|
|
1,261 |
|
|
1,167 |
|
|
1,027 |
Intangible Amortization |
|
|
734 |
|
|
785 |
|
|
957 |
Other Operating Expenses |
|
|
5,081 |
|
|
4,940 |
|
|
5,063 |
Total Non-interest
Expense |
|
$ |
35,726 |
|
$ |
37,616 |
|
$ |
35,701 |
|
|
|
|
|
|
|
Salaries and benefits declined $1,743,000, or
8%, during the quarter ended June 30, 2023 compared with the first
quarter of 2023 and declined $281,000, or 1%, compared with the
second quarter of 2022. The decline in salaries and benefits during
the second quarter of 2023 compared with the first quarter of 2023
was primarily due to lower incentive plan costs, declines in
retirement plan matching costs, and lower health insurance benefit
costs.
Occupancy, furniture and equipment expense
declined $377,000, or 10%, during the quarter ended June 30, 2023
compared with the first quarter of 2023 and declined $329,000, or
9%, compared with the second quarter of 2022. The decline in the
second quarter of 2023 compared with the first quarter of 2023 was
primarily attributable to lower repairs and maintenance costs,
lower utility costs and reduced real and personal property tax
expense. The decline in the second quarter of 2023 compared with
the second quarter of 2022 was largely attributable to lower
repairs and maintenance costs and reduced net costs related to
leased properties.
FDIC premiums declined $54,000, or 7%, during
the quarter ended June 30, 2023 compared with the first quarter of
2023 and increased $222,000, or 48%, compared with the second
quarter of 2022. The increase in the second quarter of 2023
compared with the second quarter of 2022 was primarily related to
an industry-wide 2 basis point increase in the base FDIC premium
assessment effective January 1, 2023.
Data processing fees increased $48,000, or 2%,
during the second quarter of 2023 compared with the first quarter
of 2023 and increased $343,000, or 14%, compared with the second
quarter of 2022. The increase during the second quarter of 2023
compared with the second quarter of 2022 was largely driven by
costs associated with enhancements to the Company's data processing
systems.
Advertising and promotion expense increased
$94,000, or 8%, in the second quarter of 2023 compared with the
first quarter of 2022 and increased $234,000, or 23%, compared with
the second quarter of 2022. The increase during the second quarter
of 2023 compared with the first quarter of 2023 was largely
attributable to the timing of contributions made to organizations
within the Company's markets. The increase in the second quarter of
2023 compared with the second quarter of 2022 was primarily due to
an increase in overall marketing and advertising costs.
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:
a. changes in interest rates and the timing and magnitude of any
such changes;
b. unfavorable economic conditions, including a prolonged period
of inflation, and the resulting adverse impact on, among other
things, credit quality;
c. 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;
d. the impacts of epidemics, pandemics or other
infectious disease outbreaks;
e. changes in competitive conditions;
f. the introduction, withdrawal, success and
timing of asset/liability management strategies or of mergers and
acquisitions and other business initiatives and strategies;
g. changes in customer borrowing, repayment,
investment and deposit practices;
h. changes in fiscal, monetary and tax
policies;
i. changes in financial and capital markets;
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. 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;
l. factors driving impairment charges on investments;
m. the impact, extent and timing of
technological changes;
n. potential cyber-attacks, information security
breaches and other criminal activities;
o. litigation liabilities, including related
costs, expenses, settlements and judgments, or the outcome of
matters before regulatory agencies, whether pending or commencing
in the future;
p. actions of the Federal Reserve Board;
q. the possible effects of the replacement of
the London Interbank Offered Rate (LIBOR);
r. 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;
s. changes in accounting principles and
interpretations;
t. 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;
u. 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;
v. 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;
w. the continued availability of earnings and
excess capital sufficient for the lawful and prudent declaration
and payment of cash dividends; 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 |
|
|
|
|
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
ASSETS |
|
|
|
|
|
Cash and Due from Banks |
$ |
78,223 |
|
|
$ |
70,506 |
|
|
$ |
111,904 |
|
Short-term Investments |
|
62,948 |
|
|
|
10,289 |
|
|
|
415,136 |
|
Investment Securities |
|
1,601,062 |
|
|
|
1,670,609 |
|
|
|
1,822,088 |
|
|
|
|
|
|
|
Loans Held-for-Sale |
|
8,239 |
|
|
|
6,011 |
|
|
|
9,171 |
|
|
|
|
|
|
|
Loans, Net of Unearned Income |
|
3,826,009 |
|
|
|
3,768,872 |
|
|
|
3,649,369 |
|
Allowance for Credit Losses |
|
(44,266 |
) |
|
|
(44,315 |
) |
|
|
(45,031 |
) |
Net Loans |
|
3,781,743 |
|
|
|
3,724,557 |
|
|
|
3,604,338 |
|
|
|
|
|
|
|
Stock in FHLB and Other Restricted Stock |
|
14,856 |
|
|
|
14,957 |
|
|
|
15,259 |
|
Premises and Equipment |
|
112,629 |
|
|
|
112,225 |
|
|
|
111,341 |
|
Goodwill and Other Intangible Assets |
|
188,130 |
|
|
|
188,929 |
|
|
|
191,611 |
|
Other Assets |
|
205,439 |
|
|
|
198,836 |
|
|
|
190,855 |
|
TOTAL ASSETS |
$ |
6,053,269 |
|
|
$ |
5,996,919 |
|
|
$ |
6,471,703 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Non-interest-bearing Demand Deposits |
$ |
1,540,564 |
|
|
$ |
1,601,206 |
|
|
$ |
1,745,067 |
|
Interest-bearing Demand, Savings, and Money Market Accounts |
|
3,056,396 |
|
|
|
3,039,393 |
|
|
|
3,503,789 |
|
Time Deposits |
|
582,745 |
|
|
|
514,296 |
|
|
|
464,752 |
|
Total Deposits |
|
5,179,705 |
|
|
|
5,154,895 |
|
|
|
5,713,608 |
|
|
|
|
|
|
|
Borrowings |
|
227,484 |
|
|
|
191,052 |
|
|
|
144,885 |
|
Other Liabilities |
|
43,515 |
|
|
|
45,641 |
|
|
|
38,781 |
|
TOTAL LIABILITIES |
|
5,450,704 |
|
|
|
5,391,588 |
|
|
|
5,897,274 |
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Common Stock and Surplus |
|
418,033 |
|
|
|
417,203 |
|
|
|
415,851 |
|
Retained Earnings |
|
433,384 |
|
|
|
418,620 |
|
|
|
369,673 |
|
Accumulated Other Comprehensive Income (Loss) |
|
(248,852 |
) |
|
|
(230,492 |
) |
|
|
(211,095 |
) |
SHAREHOLDERS'
EQUITY |
|
602,565 |
|
|
|
605,331 |
|
|
|
574,429 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ |
6,053,269 |
|
|
$ |
5,996,919 |
|
|
$ |
6,471,703 |
|
|
|
|
|
|
|
END OF PERIOD SHARES
OUTSTANDING |
|
29,572,783 |
|
|
|
29,573,439 |
|
|
|
29,483,045 |
|
|
|
|
|
|
|
TANGIBLE BOOK VALUE
PER SHARE(1) |
$ |
14.01 |
|
|
$ |
14.08 |
|
|
$ |
12.98 |
|
|
|
|
|
|
|
|
(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 |
|
Six Months Ended |
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
INTEREST
INCOME |
|
|
|
|
|
|
|
|
|
Interest and Fees on Loans |
$ |
52,202 |
|
$ |
49,061 |
|
$ |
39,987 |
|
$ |
101,263 |
|
$ |
78,922 |
Interest on Short-term Investments |
|
660 |
|
|
345 |
|
|
1,232 |
|
|
1,005 |
|
|
1,512 |
Interest and Dividends on Investment Securities |
|
10,652 |
|
|
11,083 |
|
|
11,047 |
|
|
21,735 |
|
|
21,107 |
TOTAL INTEREST INCOME |
|
63,514 |
|
|
60,489 |
|
|
52,266 |
|
|
124,003 |
|
|
101,541 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
Interest on Deposits |
|
13,357 |
|
|
8,971 |
|
|
1,549 |
|
|
22,328 |
|
|
2,878 |
Interest on Borrowings |
|
1,899 |
|
|
2,509 |
|
|
1,120 |
|
|
4,408 |
|
|
2,158 |
TOTAL INTEREST EXPENSE |
|
15,256 |
|
|
11,480 |
|
|
2,669 |
|
|
26,736 |
|
|
5,036 |
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
48,258 |
|
|
49,009 |
|
|
49,597 |
|
|
97,267 |
|
|
96,505 |
Provision for Credit Losses |
|
550 |
|
|
1,100 |
|
|
300 |
|
|
1,650 |
|
|
5,500 |
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES |
|
47,708 |
|
|
47,909 |
|
|
49,297 |
|
|
95,617 |
|
|
91,005 |
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
|
Net Gain on Sales of Loans |
|
630 |
|
|
587 |
|
|
1,049 |
|
|
1,217 |
|
|
2,470 |
Net Gain on Securities |
|
38 |
|
|
2 |
|
|
78 |
|
|
40 |
|
|
450 |
Other Non-interest Income |
|
14,228 |
|
|
14,378 |
|
|
14,053 |
|
|
28,606 |
|
|
28,448 |
TOTAL NON-INTEREST INCOME |
|
14,896 |
|
|
14,967 |
|
|
15,180 |
|
|
29,863 |
|
|
31,368 |
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Salaries and Benefits |
|
20,103 |
|
|
21,846 |
|
|
20,384 |
|
|
41,949 |
|
|
43,472 |
Other Non-interest Expenses |
|
15,623 |
|
|
15,770 |
|
|
15,317 |
|
|
31,393 |
|
|
40,389 |
TOTAL NON-INTEREST EXPENSE |
|
35,726 |
|
|
37,616 |
|
|
35,701 |
|
|
73,342 |
|
|
83,861 |
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes |
|
26,878 |
|
|
25,260 |
|
|
28,776 |
|
|
52,138 |
|
|
38,512 |
Income Tax Expense |
|
4,755 |
|
|
4,453 |
|
|
5,029 |
|
|
9,208 |
|
|
5,698 |
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME |
$ |
22,123 |
|
$ |
20,807 |
|
$ |
23,747 |
|
$ |
42,930 |
|
$ |
32,814 |
|
|
|
|
|
|
|
|
|
|
|
BASIC
EARNINGS PER SHARE |
$ |
0.75 |
|
$ |
0.71 |
|
$ |
0.81 |
|
$ |
1.45 |
|
$ |
1.11 |
DILUTED
EARNINGS PER SHARE |
$ |
0.75 |
|
$ |
0.71 |
|
$ |
0.81 |
|
$ |
1.45 |
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING |
|
29,573,042 |
|
|
29,507,446 |
|
|
29,483,848 |
|
|
29,540,425 |
|
|
29,443,673 |
DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
29,573,042 |
|
|
29,507,446 |
|
|
29,483,848 |
|
|
29,540,425 |
|
|
29,443,673 |
GERMAN AMERICAN BANCORP, INC. |
(unaudited, dollars in thousands except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
EARNINGS
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
|
|
Annualized Return on Average
Assets |
|
|
1.47 |
% |
|
|
1.37 |
% |
|
|
1.43 |
% |
|
|
1.42 |
% |
|
|
0.98 |
% |
|
Annualized Return on Average
Equity |
|
|
14.66 |
% |
|
|
14.39 |
% |
|
|
15.87 |
% |
|
|
14.52 |
% |
|
|
9.79 |
% |
|
Annualized Return on Average
Tangible Equity(1) |
|
|
21.32 |
% |
|
|
21.38 |
% |
|
|
23.29 |
% |
|
|
21.34 |
% |
|
|
13.68 |
% |
|
Net Interest Margin |
|
|
3.63 |
% |
|
|
3.69 |
% |
|
|
3.35 |
% |
|
|
3.66 |
% |
|
|
3.24 |
% |
|
Efficiency Ratio(2) |
|
|
54.08 |
% |
|
|
56.08 |
% |
|
|
52.37 |
% |
|
|
55.09 |
% |
|
|
62.69 |
% |
|
Net Overhead Expense to
Average Earning Assets(3) |
|
|
1.51 |
% |
|
|
1.63 |
% |
|
|
1.34 |
% |
|
|
1.57 |
% |
|
|
1.70 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
Annualized Net Charge-offs to
Average Loans |
|
|
0.06 |
% |
|
|
0.10 |
% |
|
|
0.04 |
% |
|
|
0.08 |
% |
|
|
0.03 |
% |
|
Allowance for Credit Losses to
Period End Loans |
|
|
1.16 |
% |
|
|
1.18 |
% |
|
|
1.23 |
% |
|
|
|
|
|
Non-performing Assets to
Period End Assets |
|
|
0.21 |
% |
|
|
0.24 |
% |
|
|
0.23 |
% |
|
|
|
|
|
Non-performing Loans to Period
End Loans |
|
|
0.32 |
% |
|
|
0.39 |
% |
|
|
0.41 |
% |
|
|
|
|
|
Loans 30-89 Days Past Due to
Period End Loans |
|
|
0.29 |
% |
|
|
0.27 |
% |
|
|
0.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
BALANCE SHEET & OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Average Assets |
|
$ |
6,034,900 |
|
|
$ |
6,078,126 |
|
|
$ |
6,637,969 |
|
|
$ |
6,056,393 |
|
|
$ |
6,688,688 |
|
|
Average Earning Assets |
|
$ |
5,509,535 |
|
|
$ |
5,549,707 |
|
|
$ |
6,131,156 |
|
|
$ |
5,529,510 |
|
|
$ |
6,189,703 |
|
|
Average Total Loans |
|
$ |
3,787,436 |
|
|
$ |
3,773,789 |
|
|
$ |
3,649,466 |
|
|
$ |
3,780,650 |
|
|
$ |
3,658,225 |
|
|
Average Demand Deposits |
|
$ |
1,545,455 |
|
|
$ |
1,636,133 |
|
|
$ |
1,740,592 |
|
|
$ |
1,590,544 |
|
|
$ |
1,739,975 |
|
|
Average Interest Bearing
Liabilities |
|
$ |
3,842,353 |
|
|
$ |
3,816,268 |
|
|
$ |
4,260,906 |
|
|
$ |
3,829,382 |
|
|
$ |
4,233,478 |
|
|
Average Equity |
|
$ |
603,666 |
|
|
$ |
578,562 |
|
|
$ |
598,440 |
|
|
$ |
591,183 |
|
|
$ |
670,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Non-performing
Assets(4) |
|
$ |
12,423 |
|
|
$ |
14,593 |
|
|
$ |
15,082 |
|
|
|
|
|
|
Period End Non-performing
Loans(5) |
|
$ |
12,423 |
|
|
$ |
14,593 |
|
|
$ |
15,082 |
|
|
|
|
|
|
Period End Loans 30-89 Days
Past Due(6) |
|
$ |
11,045 |
|
|
$ |
10,360 |
|
|
$ |
9,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Equivalent Net Interest
Income |
|
$ |
49,848 |
|
|
$ |
50,705 |
|
|
$ |
51,246 |
|
|
$ |
100,554 |
|
|
$ |
99,713 |
|
|
Net Charge-offs during
Period |
|
$ |
599 |
|
|
$ |
953 |
|
|
$ |
347 |
|
|
$ |
1,552 |
|
|
$ |
603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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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