10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2008

Or

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from _______________ to ___________________

Commission File Number 0-11244

German American Bancorp, Inc

(Exact name of registrant as specified in its charter)

Indiana	35-1547518
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

711 Main Street, Jasper, Indiana 47546

(Address of Principal Executive Offices and Zip Code)

Registrant’s telephone number, including area code: (812) 482-1314

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x      NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large Accelerated filer o       Accelerated filer x      Non-accelerated filer o      Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YES o       NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at August 1, 2008
Common Stock, no par value	11,029,869

1

CAUTION REGARDING FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Information included in or incorporated by reference in this Quarterly Report on Form 10-Q, our other filings with the Securities and Exchange Commission (the “SEC”) and our press releases or other public statements, contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to a discussion of our forward-looking statements and associated risks in Item 2 of Part I of this Report (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) at the conclusion of that Item 2 under the heading “Forward-Looking Statements and Associated Risks.”

2

*****

INDEX

PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements	4
	Consolidated Balance Sheets - June 30, 2008 and December 31, 2007	4
	Consolidated Statements of Income and Comprehensive Income - Three and Six Months Ended June 30, 2008 and 2007	5-6
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2008 and 2007	7
	Notes to Consolidated Financial Statements - June 30, 2008	8-16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24-25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 6.	Exhibits	26
SIGNATURES		27
INDEX OF EXHIBITS		28

3

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands except per share data)

	June 30,			December 31,
	2008			2007
ASSETS
Cash and Due from Banks	$	26,955		$	25,283
Federal Funds Sold and Other Short-term Investments		19,578			2,631
Cash and Cash Equivalents		46,533			27,914
Securities Available-for-Sale, at Fair Value		162,753			148,300
Securities Held-to-Maturity, at Cost (Fair value of $4,103 and $4,496
on June 30, 2008 and December 31, 2007, respectively)		4,060			4,464
Loans Held-for-Sale		9,080			5,697
Loans		879,544			870,643
Less: Unearned Income		(2,325	)		(2,922	)
Allowance for Loan Losses		(9,853	)		(8,044	)
Loans, Net		867,366			859,677
Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost		10,621			10,621
Premises, Furniture and Equipment, Net		22,891			22,783
Other Real Estate		1,815			1,517
Goodwill		9,655			9,655
Intangible Assets		3,586			4,030
Company Owned Life Insurance		22,940			22,533
Accrued Interest Receivable and Other Assets		13,680			14,519
TOTAL ASSETS	$	1,174,980		$	1,131,710
LIABILITIES
Non-interest-bearing Demand Deposits	$	154,029		$	136,212
Interest-bearing Demand, Savings, and Money Market Accounts		427,408			353,643
Time Deposits		342,280			387,566
Total Deposits		923,717			877,421
FHLB Advances and Other Borrowings		139,563			144,170
Accrued Interest Payable and Other Liabilities		13,496			13,003
TOTAL LIABILITIES		1,076,776			1,034,594
SHAREHOLDERS’ EQUITY
Preferred Stock, $10 par value; 500,000
shares authorized, no shares issued		—			—
Common Stock, no par value, $1 stated value;
20,000,000 shares authorized		11,030			11,029
Additional Paid-in Capital		68,409			68,408
Retained Earnings		19,436			16,681
Accumulated Other Comprehensive Income (Loss)		(671	)		998
TOTAL SHAREHOLDERS’ EQUITY		98,204			97,116
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,174,980		$	1,131,710
End of period shares issued and outstanding		11,029,869			11,029,484

See accompanying notes to consolidated financial statements.

4

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(unaudited, dollars in thousands except per share data)

	Three Months Ended
	June 30,
	2008		2007
INTEREST INCOME
Interest and Fees on Loans	$	14,426	$	15,846
Interest on Federal Funds Sold and Other Short-term Investments		283		84
Interest and Dividends on Securities:
Taxable		1,889		1,782
Non-taxable		180		246
TOTAL INTEREST INCOME		16,778		17,958
INTEREST EXPENSE
Interest on Deposits		5,324		6,825
Interest on FHLB Advances and Other Borrowings		1,389		1,639
TOTAL INTEREST EXPENSE		6,713		8,464
NET INTEREST INCOME		10,065		9,494
Provision for Loan Losses		934		375
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,131		9,119
NON-INTEREST INCOME
Trust and Investment Product Fees		636		660
Service Charges on Deposit Accounts		1,245		1,114
Insurance Revenues		1,307		1,541
Other Operating Income		901		737
Net Gains on Sales of Loans and Related Assets		404		173
Net Gain on Securities		—		—
TOTAL NON-INTEREST INCOME		4,493		4,225
NON-INTEREST EXPENSE
Salaries and Employee Benefits		5,118		5,554
Occupancy Expense		806		779
Furniture and Equipment Expense		592		569
Data Processing Fees		371		343
Professional Fees		441		350
Advertising and Promotion		293		178
Supplies		139		139
Other Operating Expenses		1,225		1,556
TOTAL NON-INTEREST EXPENSE		8,985		9,468
Income before Income Taxes		4,639		3,876
Income Tax Expense		1,528		1,233
NET INCOME	$	3,111	$	2,643
COMPREHENSIVE INCOME	$	279	$	1,334
Earnings Per Share and Diluted Earnings Per Share	$	0.28	$	0.24
Dividends Per Share	$	0.14	$	0.14

See accompanying notes to consolidated financial statements.

5

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(unaudited, dollars in thousands except per share data)

	Six Months Ended
	June 30,
	2008		2007
INTEREST INCOME
Interest and Fees on Loans	$	29,885	$	30,913
Interest on Federal Funds Sold and Other Short-term Investments		469		204
Interest and Dividends on Securities:
Taxable		3,884		3,652
Non-taxable		365		518
TOTAL INTEREST INCOME		34,603		35,287
INTEREST EXPENSE
Interest on Deposits		11,511		13,255
Interest on FHLB Advances and Other Borrowings		2,908		3,163
TOTAL INTEREST EXPENSE		14,419		16,418
NET INTEREST INCOME		20,184		18,869
Provision for Loan Losses		2,278		2,303
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		17,906		16,566
NON-INTEREST INCOME
Trust and Investment Product Fees		1,223		1,341
Service Charges on Deposit Accounts		2,428		2,032
Insurance Revenues		3,210		3,045
Other Operating Income		1,651		1,426
Net Gains on Sales of Loans and Related Assets		728		333
Net Gain on Securities		285		—
TOTAL NON-INTEREST INCOME		9,525		8,177
NON-INTEREST EXPENSE
Salaries and Employee Benefits		10,445		11,057
Occupancy Expense		1,660		1,541
Furniture and Equipment Expense		1,210		1,157
Data Processing Fees		777		699
Professional Fees		1,005		741
Advertising and Promotion		526		369
Supplies		274		289
Other Operating Expenses		2,436		3,091
TOTAL NON-INTEREST EXPENSE		18,333		18,944
Income before Income Taxes		9,098		5,799
Income Tax Expense		2,967		1,677
NET INCOME	$	6,131	$	4,122
COMPREHENSIVE INCOME	$	4,462	$	3,015
Earnings Per Share and Diluted Earnings Per Share	$	0.55	$	0.37
Dividends Per Share	$	0.28	$	0.28

See accompanying notes to consolidated financial statements.

6

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, dollars in thousands)

	Six Months Ended
	June 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	6,131		$	4,122
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Net Accretion on Securities		(582	)		(179	)
Depreciation and Amortization		1,676			1,626
Loans Originated for Sale		(64,062	)		(28,466	)
Proceeds from Sales of Loans Held-for-Sale		61,407			27,904
Loss in Investment in Limited Partnership		108			85
Provision for Loan Losses		2,278			2,303
Gain on Sale of Loans		(728	)		(333	)
Gain on Securities, Net		(285	)		—
Loss / (Gain) on Sales of Other Real Estate and Repossessed Assets		18			(43	)
Gain on Disposition and Impairment of Premises and Equipment		(19	)		(2	)
Increase in Cash Surrender Value of Company Owned Life Insurance		(407	)		(393	)
Equity Based Compensation		2			174
Change in Assets and Liabilities:
Interest Receivable and Other Assets		1,623			1,932
Interest Payable and Other Liabilities		198			(74	)
Net Cash from Operating Activities		7,358			8,656
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturity of Other Short-term Investments		—			100
Proceeds from Maturities of Securities Available-for-Sale		38,092			22,385
Proceeds from Sales of Securities Available-for-Sale		16,130			—
Purchase of Securities Available-for-Sale		(70,370	)		—
Proceeds from Maturities of Securities Held-to-Maturity		405			1,036
Purchase of Loans		(17,811	)		(13,563	)
Proceeds from Sales of Loans		1,048			450
Loans Made to Customers, Net of Payments Received		6,001			(45,240	)
Proceeds from Sales of Other Real Estate		499			2,552
Property and Equipment Expenditures		(1,427	)		(985	)
Proceeds from Sales of Property and Equipment		58			—
Net Cash from Investing Activities		(27,375	)		(33,265	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits		46,326			44,519
Change in Short-term Borrowings		(26,078	)		(19,778	)
Advances of Long-term Debt		25,000			10,000
Repayments of Long-term Debt		(3,524	)		(7,022	)
Dividends Paid		(3,088	)		(3,086	)
Net Cash from Financing Activities		38,636			24,633
Net Change in Cash and Cash Equivalents		18,619			24
Cash and Cash Equivalents at Beginning of Year		27,914			29,695
Cash and Cash Equivalents at End of Period	$	46,533		$	29,719

See accompanying notes to consolidated financial statements.

7

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 1 - Basis of Presentation

German American Bancorp, Inc. operates primarily in the banking industry. The accounting and reporting policies of German American Bancorp, Inc. and its subsidiaries conform to U.S. generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods reported have been included in the accompanying unaudited consolidated financial statements, and all such adjustments are of a normal recurring nature. It is suggested that these consolidated financial statements and notes be read in conjunction with the financial statements and notes thereto in the German American Bancorp, Inc. December 31, 2007 Annual Report on Form 10-K.

Note 2 - Per Share Data

The computations of Earnings per Share and Diluted Earnings per Share are as follows:

	Three Months Ended
	June 30,
Earnings per Share:	2008		2007
Net Income	$	3,111	$	2,643
Weighted Average Shares Outstanding		11,029,484		11,008,562
Earnings per Share	$	0.28	$	0.24
Diluted Earnings per Share:
Net Income	$	3,111	$	2,643
Weighted Average Shares Outstanding		11,029,484		11,008,562
Potentially Dilutive Shares, Net		51		13,912
Diluted Weighted Average Shares Outstanding		11,029,535		11,022,474
Diluted Earnings per Share	$	0.28	$	0.24

Stock options for 249,396 and 257,063 shares of common stock were not considered in computing diluted earnings per share for the quarter ended June 30, 2008 and 2007, respectively, because they were anti-dilutive.

	Six Months Ended
	June 30,
Earnings per Share:	2008		2007
Net Income	$	6,131	$	4,122
Weighted Average Shares Outstanding		11,029,484		11,008,562
Earnings per Share	$	0.55	$	0.37
Diluted Earnings per Share:
Net Income	$	6,131	$	4,122
Weighted Average Shares Outstanding		11,029,484		11,008,562
Potentially Dilutive Shares, Net		101		11,722
Diluted Weighted Average Shares Outstanding		11,029,585		11,020,284
Diluted Earnings per Share	$	0.55	$	0.37

Stock options for 236,025 and 257,063 shares of common stock were not considered in computing diluted earnings per share for the six months ended June 30, 2008 and 2007, respectively, because they were anti-dilutive.

8

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 3 - Securities

The amortized cost, unrealized gross gains and losses recognized in accumulated other comprehensive income (loss), and fair value of Securities Available-for-Sale at June 30, 2008 and December 31, 2007, were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
Securities Available-for-Sale:	Cost		Gains		Losses			Value
June 30, 2008
U.S. Treasury and Agency Securities	$	498	$	5	$	—		$	503
Obligations of State and Political Subdivisions		9,924		210		—			10,134
Mortgage-backed Securities		148,587		316		(1,996	)		146,907
Equity Securities		4,557		652		—			5,209
Total	$	163,566	$	1,183	$	(1,996	)	$	162,753
December 31, 2007
U.S. Treasury and Agency Securities	$	25,306	$	433	$	—		$	25,739
Obligations of State and Political Subdivisions		11,387		216		(1	)		11,602
Mortgage-backed Securities		105,302		608		(421	)		105,489
Equity Securities		4,557		913		—			5,470
Total	$	146,552	$	2,170	$	(422	)	$	148,300

Equity securities that do not have readily determinable fair values are included in the above totals, are carried at historical cost and are evaluated for impairment on a periodic basis.

The carrying amount, unrecognized gains and losses and fair value of Securities Held-to-Maturity at June 30, 2008 and December 31, 2007, were as follows:

Securities Held-to-Maturity:	Carrying Amount		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 2008
Obligations of State and Political Subdivisions	$	4,060	$	43	$	—	$	4,103
December 31, 2007
Obligations of State and Political Subdivisions	$	4,464	$	32	$	—	$	4,496

Below is a summary of securities with unrealized losses as of June 30, 2008 and December 31, 2007, presented by length of time the securities have been in a continuous unrealized loss position:

At June 30, 2008:	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and Agency Securities	$	—	$	—		$	—	$	—		$	—	$	—
Obligations of State and Political Subdivisions		—		—			—		—			—		—
Mortgage-backed Securities		117,447		(1,989	)		799		(7	)		118,246		(1,996	)
Equity Securities		—		—			—		—			—		—
Total	$	117,447	$	(1,989	)	$	799	$	(7	)	$	118,246	$	(1,996	)

9

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 3 - Securities (continued)

At December 31, 2007:	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and Agency Securities	$	—	$	—		$	—	$	—		$	—	$	—
Obligations of State and Political Subdivisions		—		—			230		(1	)		230		(1	)
Mortgage-backed Securities		1,544		(1	)		56,647		(420	)		58,191		(421	)
Equity Securities		—		—			—		—			—		—
Total	$	1,544	$	(1	)	$	56,877	$	(421	)	$	58,421	$	(422	)

Securities are written down to fair value when a decline in fair value is not considered temporary. In estimating other-than-temporary losses, management considers the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The Company has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to changes in market interest rates, therefore, the Company does not consider these securities to be other-than-temporarily impaired. All mortgage-backed securities in the Company’s portfolio are performing as expected with no disruption in cash flows.

Note 4 - Loans

Total loans, as presented on the balance sheet, are comprised of the following classifications:

	June 30,			December 31,
	2008			2007
Commercial and Industrial Loans	$	492,997		$	457,033
Residential Mortgage Loans		106,660			116,908
Consumer Loans		125,540			131,110
Agricultural Loans		154,347			165,592
Total Loans	$	879,544		$	870,643
Less: Unearned Income		(2,325	)		(2,922	)
Allowance for Loan Losses		(9,853	)		(8,044	)
Loans, Net	$	867,366		$	859,677
Information Regarding Impaired Loans:
Impaired Loans with No Allowance for Loan Losses Allocated	$	1,224		$	1,919
Impaired Loans with Allowance for Loan Losses Allocated		5,725			2,384
Amount of Allowance Allocated to Impaired Loans		2,393			399

Note 5 - Allowance for Loan Losses

A summary of the activity in the Allowance for Loan Losses follows:

	June 30,			June 30,
	2008			2007
Balance as of January 1	$	8,044		$	7,129
Provision for Loan Losses		2,278			2,303
Recoveries of Prior Loan Losses		248			191
Loan Losses Charged to the Allowance		(717	)		(1,847	)
Balance as of June 30	$	9,853		$	7,776

10

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 6 - Segment Information

The Company’s operations include three primary segments: core banking, trust and investment advisory services, and insurance operations. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets. The core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory, and brokerage services to customers. The insurance segment offers a full range of personal and corporate property and casualty insurance products, primarily in the affiliate banks’ local markets.

The core banking segment is comprised by the Company’s banking subsidiary, German American Bancorp, which operates through six community banking affiliates with 28 retail banking offices. Net interest income from loans and investments funded by deposits and borrowings is the primary revenue for the core-banking segment. The trust and investment advisory services segment’s revenues are comprised primarily of fees generated by German American Financial Advisors & Trust Company (“GAFA”). These fees are derived by providing trust, investment advisory, and brokerage services to its customers. The insurance segment consists of German American Insurance, Inc., which provides a full line of personal and corporate insurance products as agent under six distinctive insurance agency names from six offices; and German American Reinsurance Company, Ltd. (“GARC”), which reinsures credit insurance products sold by the Company’s affiliate banks. Commissions derived from the sale of insurance products are the primary source of revenue for the insurance segment.

The following segment financial information has been derived from the internal financial statements of German American Bancorp, Inc., which are used by management to monitor and manage the financial performance of the Company. The accounting policies of the three segments are the same as those of the Company. The evaluation process for segments does not include holding company income and expense. Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

Three Months Ended
June 30, 2008			Trust and
			Investment
	Core		Advisory							Consolidated
	Banking		Services		Insurance		Other			Totals
Net Interest Income	$	10,205	$	19	$	18	$	(177	)	$	10,065
Net Gains on Sales of Loans and
Related Assets		404		—		—		—			404
Net Gain on Securities		—		—		—		—			—
Trust and Investment Product Fees		2		635		—		(1	)		636
Insurance Revenues		21		4		1,300		(18	)		1,307
Noncash Item:
Provision for Loan Losses		934		—		—		—			934
Depreciation and Amortization		631		7		204		—			842
Income Tax Expense		1,611		79		54		(216	)		1,528
Segment Profit / (Loss)		3,142		115		98		(244	)		3,111
Segment Assets		1,165,563		2,206		9,551		(2,340	)		1,174,980

11

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 6 - Segment Information (continued)

Three Months Ended
June 30, 2007			Trust and
			Investment
	Core		Advisory							Consolidated
	Banking		Services		Insurance		Other			Total
Net Interest Income	$	9,752	$	21	$	29	$	(308	)	$	9,494
Net Gains on Sales of Loans and
Related Assets		173		—		—		—			173
Net Gain on Securities		—		—		—		—			—
Trust and Investment Product Fees		1		685		—		(26	)		660
Insurance Revenues		22		17		1,522		(20	)		1,541
Noncash Item:
Provision for Loan Losses		375		—		—		—			375
Depreciation and Amortization		612		5		196		—			813
Income Tax Expense		1,350		75		111		(303	)		1,233
Segment Profit / (Loss)		2,744		114		167		(382	)		2,643
Segment Assets		1,109,581		2,186		9,639		499			1,121,905

Six Months Ended
June 30, 2008			Trust and
			Investment
	Core		Advisory							Consolidated
	Banking		Services		Insurance		Other			Totals
Net Interest Income	$	20,600	$	51	$	38	$	(505	)	$	20,184
Net Gains on Sales of Loans and
Related Assets		728		—		—		—			728
Net Gain on Securities		285		—		—		—			285
Trust and Investment Product Fees		3		1,246		—		(26	)		1,223
Insurance Revenues		40		6		3,200		(36	)		3,210
Noncash Item:
Provision for Loan Losses		2,278		—		—		—			2,278
Depreciation and Amortization		1,254		14		408		—			1,676
Income Tax Expense		3,026		143		297		(499	)		2,967
Segment Profit / (Loss)		5,971		213		494		(547	)		6,131
Segment Assets		1,165,563		2,206		9,551		(2,340	)		1,174,980

12

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 6 - Segment Information (continued)

Six Months Ended			Trust and
June 30, 2007			Investment
	Core		Advisory							Consolidated
	Banking		Services		Insurance		Other			Totals
Net Interest Income	$	19,351	$	42	$	58	$	(582	)	$	18,869
Net Gains on Sales of Loans and
Related Assets		333		—		—		—			333
Net Gain on Securities		—		—		—		—			—
Trust and Investment Product Fees		2		1,392		—		(53	)		1,341
Insurance Revenues		62		20		3,002		(39	)		3,045
Noncash Item:
Provision for Loan Losses		2,303		—		—		—			2,303
Depreciation and Amortization		1,225		10		391		—			1,626
Income Tax Expense		1,875		166		192		(556	)		1,677
Segment Profit / (Loss)		4,282		253		285		(698	)		4,122
Segment Assets		1,109,581		2,186		9,639		499			1,121,905

Note 7 - Stock Repurchase Plan

On April 26, 2001 the Company announced that its Board of Directors approved a stock repurchase program for up to 607,754 (as adjusted for subsequent stock dividends) of the outstanding Common Shares of the Company. Shares may be purchased from time to time in the open market and in large block privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time before the maximum number of shares specified by the program are purchased. As of June 30, 2008, the Company had purchased 334,965 (as adjusted for subsequent stock dividends) shares under the program. No shares were purchased under the plan during the six months ended June 30, 2008.

Note 8 - Equity Plans and Equity Based Compensation

The Company maintains two equity incentive plans under which stock options, restricted stock, and other equity incentive awards can be granted. At June 30, 2008, the Company has reserved 620,144 shares of Common Stock (as adjusted for subsequent stock dividends and subject to further customary anti-dilution adjustments) for the purpose of issuance pursuant to outstanding and future grants of options, restricted stock, and other equity awards to officers, directors and other employees of the Company.

For the six months ended June 30, 2008 and 2007 there were no stock options granted. There was no option expense during the three or six month periods ended June 30, 2008 and 2007. In addition, there was no unrecognized option expense as all outstanding options were fully vested prior to June 30, 2008 and 2007.

During the quarter and six months ended June 30, 2008, the Company granted awards of 385 shares of restricted stock. During the quarter and six months ended June 30, 2007, the Company granted awards of 350 shares and 21,400 shares of restricted stock. The expense recorded for the restricted stock grants totaled $1, net of an income tax benefit of $1, during the three and six months ended June 30, 2008, respectively. The expense recorded for the restricted stock grants totaled $50, net of an income tax benefit of $33, and $83, net of an income tax benefit of $55, during the three and six months ended June 30, 2007, respectively. Unrecognized expense associated with the restricted stock grants totaled $3 and $140 as of June 30, 2008 and 2007, respectively.

The Company maintains an Employee Stock Purchase Plan whereby eligible employees have the option to purchase the Company’s common stock at a discount. The plan year for the Employee Stock Purchase Plan runs from August 17 through August 16 of the subsequent year. For years prior to the plan year beginning August 17, 2007, the purchase price of the shares were determined annually and in the range from 85% to 100% of the fair market value of such stock at either the beginning or end of the plan year. For the plan year beginning August 17, 2007, the purchase price of the shares under this Plan is 95% of the fair market value of the Company’s common stock as of the last day of the plan year. The plan provides for the purchase of up to 542,420 shares of common stock, which the Company may obtain by purchases on the open market or from private sources, or by issuing authorized but unissued common shares. Funding for the purchase of common stock is from employee and Company contributions.

13

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 8 - Equity Plans and Equity Based Compensation (continued)

Based on the above referenced setting of the purchase price at 95% of the fair market value of the Company’s common stock for the 2007/2008 plan year, the Employee Stock Purchase Plan will not be considered compensatory and no expense will be recorded during the 2007/2008 plan year. The expense recorded for the Employee Stock Purchase Plan totaled $11 net of an income tax benefit of $7, and $22, net of an income tax benefit of $14, during the three and six months ended June 30, 2007, respectively. Unrecognized compensation expense as of June 30, 2007 totaled $12 for the Employee Stock Purchase Plan.

Note 9 - Employee Benefit Plans

The Company acquired through previous bank mergers a noncontributory defined benefit pension plan with benefits based on years of service and compensation prior to retirement. The benefits under the plan were suspended in 1998. The following tables represent the components of net periodic benefit cost for the periods presented:

	Three Months Ended
	June 30,
	2008			2007
Service Cost	$	—		$	—
Interest Cost		10			10
Expected Return on Assets		(3	)		(3	)
Amortization of Transition Amount		—			(1	)
Amortization of Prior Service Cost		(1	)		(1	)
Recognition of Net (Gain)/Loss		5			7
Net Periodic Benefit Cost	$	11		$	12
Loss on Settlements and Curtailments		None			45

	Six Months Ended
	June 30,
	2008			2007
Service Cost	$	—		$	—
Interest Cost		19			19
Expected Return on Assets		(6	)		(6	)
Amortization of Transition Amount		—			(1	)
Amortization of Prior Service Cost		(2	)		(2	)
Recognition of Net (Gain)/Loss		10			14
Net Periodic Benefit Cost	$	21		$	24
Loss on Settlements and Curtailments		None			45

The Company previously disclosed in its financial statements for the year ended December 31, 2007, that it expected to contribute $97 to the pension plan during the fiscal year ending December 31, 2008. As of June 30, 2008, the Company had contributed $37 to the pension plan.

Note 10 - New Accounting Pronouncements

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements. The standard is effective for fiscal years beginning after November 15, 2007. Statement 157 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

14

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 10 - New Accounting Pronouncements (continued)

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at June 30, 2008 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	June 30, 2008		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for Sale Securities	$	162,753	$	3,116	$	157,544	$	2,093

Equity securities that do not have readily determinable fair values are carried at cost and are evaluated for impairment on a periodic basis. Equity securities carried at cost and included in the table above totaled $2,093 at June 30, 2008. There were no changes in fair value for these equity securities during the first six months of 2008.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements at June 30, 2008 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	June 30, 2008		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired Loans	$	3,232	$	—	$	—	$	3,232

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $5,464, with a valuation allowance of $2,232, resulting in an additional provision for loan losses of $710 and $1,777 for the three and six months ended June 30, 2008, respectively. Values for collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisals and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure or other factors management deems relevant to arrive at a representative fair value. Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value in the cost to replace the current property. Values of market comparison approach evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and an investor’s required return. The final fair value is based on the reconciliation of these three approaches.

In February 2007, the FASB issued Statement No. 159 - The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159).  The standard provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities.  The new standard is effective for the Company on January 1, 2008.  The Company did not elect the fair value option for any financial assets or liabilities as of January 1, 2008.

15

GERMAN AMERICAN BANCORP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(unaudited, dollars in thousands except per share data)

Note 10 - New Accounting Pronouncements (continued)

In September 2006, the FASB Emerging Issues Task Force finalized Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. This issue requires that a liability be recorded during the service period when a split-dollar life insurance agreement continues after participants’ employment or retirement. The required accrued liability will be based on either the post-employment benefit cost for the continuing life insurance or based on the future death benefit depending on the contractual terms of the underlying agreement. This issue became effective for the Company on January 1, 2008. The impact of adoption of this issue was an adjustment to lower retained earnings of the Company by $288 effective January 1, 2008.

On November 5, 2007, the SEC issued Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value through Earnings (“SAB 109”). Previously, SAB 105, Application of Accounting Principles to Loan Commitments, stated that in measuring the fair value of a derivative loan commitment, a company should not incorporate the expected net future cash flows related to the associated servicing of the loan. SAB 109 supersedes SAB 105 and indicates that the expected net future cash flows related to the associated servicing of the loan should be included in measuring fair value for all written loan commitments that are accounted for at fair value through earnings. SAB 105 also indicated that internally-developed intangible assets should not be recorded as part of the fair value of a derivative loan commitment, and SAB 109 retains that view. SAB 109 is effective for derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The impact of adoption of this standard was not material to the Company’s financial statements.

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

GERMAN AMERICAN BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

German American Bancorp, Inc. is a financial services holding company based in Jasper, Indiana. The Company’s Common Stock is traded on NASDAQ’s Global Select Market, under the symbol GABC. The principal subsidiary of German American Bancorp, Inc. is its banking subsidiary, German American Bancorp, which operates through six community banking affiliates with 28 retail banking offices in the ten contiguous Southern Indiana counties of Daviess, Dubois, Gibson, Knox, Lawrence, Martin, Monroe, Perry, Pike, and Spencer. German American Bancorp owns a trust, brokerage, and financial planning subsidiary, which operates from its banking offices, and a full line property and casualty insurance agency with six insurance agency offices throughout its market area.

Throughout this Management’s Discussion and Analysis, as elsewhere in this report, when we use the term “Company”, we will usually be referring to the business and affairs (financial and otherwise) of the Company and its subsidiaries and affiliates as a whole. Occasionally, we will refer to the term “parent company” or “holding company” when we mean to refer to only German American Bancorp, Inc.

This section presents an analysis of the consolidated financial condition of the Company as of June 30, 2008 and December 31, 2007 and the consolidated results of operations for the three and six months ended June 30, 2008 and 2007. This discussion should be read in conjunction with the consolidated financial statements and other financial data presented elsewhere herein and with the financial statements and other financial data, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s December 31, 2007 Annual Report on Form 10-K.

MANAGEMENT OVERVIEW

This updated discussion should be read in conjunction with the Management Overview that was included in our Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s December 31, 2007 Annual Report on Form 10-K.

During the second quarter of 2008, the Company generated earnings of $3,111,000 or $0.28 per share, an 18% increase from the $2,643,000 or $0.24 per share in the second quarter of 2007. This level of quarterly earnings represents the third successive quarter that the Company has reported the highest level of quarterly earnings in its history. In comparison with prior year results, the Company produced enhanced performance during the second quarter of 2008 in each major category within the income statement reflecting increased revenue from both net interest income and total non-interest income coupled with a reduction in non-interest expense. Partially offsetting these improvements was an increased level of provision for loan loss. Each of these areas will be discussed in more detail below.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The financial condition and results of operations for German American Bancorp, Inc. presented in the Consolidated Financial Statements, accompanying Notes to the Consolidated Financial Statements, and selected financial data appearing elsewhere within this report, are, to a large degree, dependent upon the Company’s accounting policies. The selection of and application of these policies involve estimates, judgments and uncertainties that are subject to change. The critical accounting policies and estimates that the Company has determined to be the most susceptible to change in the near term relate to the determination of the allowance for loan losses, the valuation of securities available for sale, and income tax expense.

Allowance for Loan Losses

The Company maintains an allowance for loan losses to cover probable incurred credit losses at the balance sheet date. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. A provision for loan losses is charged to operations based on management's periodic evaluation of the necessary allowance balance. Evaluations are conducted at least quarterly and more often if deemed necessary. The ultimate recovery of all loans is susceptible to future market factors beyond the Company's control.

The Company has an established process to determine the adequacy of the allowance for loan losses. The determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on other classified loans and pools of homogeneous loans, and consideration of past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors, all of which may be susceptible to significant change. The allowance consists of two components of allocations, specific and general. These two components represent the total allowance for loan losses deemed adequate to cover losses inherent in the loan portfolio.

17

Commercial and agricultural loans are subject to a standardized grading process administered by an internal loan review function. The need for specific reserves is considered for credits when graded substandard or special mention, or when: (a) the customer’s cash flow or net worth appears insufficient to repay the loan; (b) the loan has been criticized in a regulatory examination; (c) the loan is on non-accrual; or, (d) other reasons where the ultimate collectibility of the loan is in question, or the loan characteristics require special monitoring. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that we believe indicates the loan is impaired. Specific allocations on impaired loans are determined by comparing the loan balance to the present value of expected cash flows or expected collateral proceeds. Allocations are also applied to categories of loans not considered individually impaired but for which the rate of loss is expected to be greater than historical averages, including those graded substandard or special mention and non-performing consumer or residential real estate loans. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values.

General allocations are made for other pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on a five-year historical average for loan losses for these portfolios, judgmentally adjusted for economic factors and portfolio trends.

Due to the imprecise nature of estimating the allowance for loan losses, the Company’s allowance for loan losses may include a minor unallocated component. The unallocated component of the allowance for loan losses incorporates the Company’s judgmental determination of inherent losses that may not be fully reflected in other allocations, including factors such as economic uncertainties, lending staff quality, industry trends impacting specific portfolio segments, and broad portfolio quality trends. Therefore, the ratio of allocated to unallocated components within the total allowance may fluctuate from period to period.

Securities Valuation

Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported separately in accumulated other comprehensive income (loss), net of tax. The Company obtains market values from a third party on a monthly basis in order to adjust the securities to fair value. Equity securities that do not have readily determinable fair values are carried at cost. Additionally, all securities are required to be written down to fair value when a decline in fair value is other than temporary; therefore, future changes in the fair value of securities could have a significant impact on the Company’s operating results. In determining whether a market value decline is other than temporary, management considers the reason for the decline, the extent of the decline and the duration of the decline. As of June 30, 2008, gross unrealized losses on the securities available-for-sale portfolio totaled approximately $1,996,000.

Income Tax Expense

Income tax expense involves estimates related to the valuation allowance on deferred tax assets and loss contingencies related to exposure from tax examinations.

A valuation allowance reduces deferred tax assets to the amount management believes is more likely than not to be realized. In evaluating the realization of deferred tax assets, management considers the likelihood that sufficient taxable income of appropriate character will be generated within carryback and carryforward periods, including consideration of available tax planning strategies. As of December 31, 2007, the Company had a deferred tax asset of $649,000 which includes tax credit carryforwards of $403,000. Based on the long carryforward periods available, management has assessed it more likely than not that these credits will be realized and no valuation allowance has been established on this asset.

Tax-related loss contingencies, including assessments arising from tax examinations and tax strategies, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. In considering the likelihood of loss, management considers the nature of the contingency, the progress of any examination or related protest or appeal, the views of legal counsel and other advisors, experience of the Company or other enterprises in similar matters, if any, and management’s intended response to any assessment.

18

RESULTS OF OPERATIONS

Net Income:

Net income increased $468,000 or 18% to $3,111,000 or $0.28 per share for the quarter ended June 30, 2008, compared to $2,643,000 or $0.24 per share for the second quarter of 2007. The increase in net income during the second quarter 2008 compared with same quarter of 2007 was due to improvement across the major categories of the income statement including net interest income, non-interest income, non-interest expense, partially offset by an increased level of provision for loan losses.

Net income for the first six months of 2008 totaled $6,131,000 or $0.55 per share representing an increase of $2,009,000 or 49% over the $4,122,000 or $0.37 per share recorded in the six months ended June 30, 2007. The increase in net income during the first half of 2008 compared with the same period of 2007 was attributable to improvement in net interest income, non-interest income and expense, and a relatively flat level of provision for loan losses.

Net Interest Income:

Net interest income is the Company’s single largest source of earnings, and represents the difference between interest and fees realized on earning assets, less interest paid on deposits and borrowed funds. The following table summarizes the Company’s net interest income (on a tax-equivalent basis, at an effective tax rate of 34%) for each of the periods presented herein (dollars in thousands):

	Three Months				Change from
	Ended June 30,				Prior Period
	2008		2007		Amount			Percent
Interest Income (T/E)	$	16,911	$	18,109	$	(1,198	)		(6.6	)%
Interest Expense		6,713		8,464		(1,751	)		(20.7	)%
Net Interest Income (T/E)	$	10,198	$	9,645	$	553			5.7	%

Net interest income increased $571,000 or 6% (an increase of $553,000 or 6% on a tax-equivalent basis) for the quarter ended June 30, 2008 compared with the same quarter of 2007. The net interest margin represents tax-equivalent net interest income expressed as a percentage of average earning assets. The tax equivalent net interest margin for the second quarter 2008 was 3.75% compared to 3.78% for the second quarter of 2007. The yield on earning assets totaled 6.23% during the quarter ended June 30, 2008 compared to 7.11% in the same period of 2007 while the cost of funds (expressed as a percentage of average earning assets) totaled 2.48% during 2008 compared to 3.33% in 2007.

Average earning assets totaled approximately $1.090 billion for the quarter ended June 30, 2008 compared with $1.021 billion for the quarter ended June 30, 2007. During the second quarter of 2008, average loans outstanding totaled $872.3 million, an increase of $37.8 million or 5%, compared to the $834.5 million in average loans outstanding during the second quarter of 2007. Average commercial and agricultural loans totaled $629.4 million, an increase of $45.5 million or 8% during the quarter ended June 30, 2008 compared with the same quarter of the prior year. Average residential mortgage loans and consumer loans totaled $242.9 million during the quarter ended June 30, 2008 representing an decline of $7.7 million or 3% over 2007.

	Six Months				Change from
	Ended June 30,				Prior Period
	2008		2007		Amount			Percent
Interest Income (T/E)	$	34,862	$	35,616	$	(754	)		(2.1	)%
Interest Expense		14,419		16,418		(1,999	)		(12.2	)%
Net Interest Income (T/E)	$	20,443	$	19,198	$	1,245			6.5	%

Net interest income increased $1,315,000 or 7% (an increase of $1,245,000 or 7% on a tax-equivalent basis) for the six months ended June 30, 2008 compared with the six months ended June 30, 2007. The tax equivalent net interest margin for the six months ended June 30, 2008 was 3.82% compared to 3.83% for the same period of 2007. The yield on earning assets totaled 6.53% during the first half of 2008 compared to 7.10% in the same period of 2007 while the cost of funds (expressed as a percentage of average earning assets) totaled 2.71% during 2008 compared to 3.27% in 2007.

Average earning assets totaled approximately $1.073 billion for the six months ended June 30, 2008 compared with $1.010 billion for the six months ended June 30, 2007. During the first half of 2008, average loans outstanding totaled $870.3 million, an increase of $53.4 million or 7%, compared to the $816.9 million in average loans outstanding during the first half of 2007. Average commercial and agricultural loans totaled $623.8 million, an increase of $56.0 million or 10% during the six months ended June 30, 2008 compared with the same period of the prior year. Average residential mortgage loans and consumer loans totaled $246.5 million during the six months ended June 30, 2008 representing a decrease of $2.5 million or 1% over 2007.

19

Provision for Loan Losses:

The Company provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. The provision for loan loss totaled $934,000 during the quarter ended June 30, 2008, representing an increase of $559,000 from the second quarter 2007 provision of $375,000. During the second quarter of 2008, the annualized provision for loan loss represented 0.43% of average loans outstanding compared with 0.18% on an annualized basis of average loans outstanding during the second quarter of 2007. The higher level of provision during the second quarter of 2008 compared with the same period of 2007 was largely attributable to loan growth and an increased level of non-performing loans.

The provision for loan loss totaled $2,278,000 during the six months ended June 30, 2008, representing a decline of $25,000 from the first half of 2007 provision of $2,303,000. During the six months ended June 30, 2008, the annualized provision for loan loss represented 0.52% of average loans outstanding compared with 0.56% on an annualized basis of average loans outstanding during the six months ended June 30, 2007.

Net charge-offs totaled $279,000 or 0.13% on an annualized basis of average loans outstanding during the three months ended June 30, 2008 compared with $219,000 or 0.10% on an annualized basis of average loans outstanding during the same period of 2007. Net charge-offs totaled $469,000 or 0.11% on an annualized basis of average loans outstanding during the six months ended June 30, 2008 compared with $1,656,000 or 0.41% on an annualized basis of average loans outstanding during the same period of 2007. The significantly higher level of net charge-offs during the six months ended June 30, 2007, was primarily attributable to the charge-off related to a single large commercial credit facility.

The provisions for loan losses made during the quarter ended June 30, 2008 were made at a level deemed necessary by management to absorb estimated, probable incurred losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for loan losses is completed quarterly by management, the results of which are used to determine provisions for loan losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

Non-interest Income:

During the second quarter of 2008, non-interest income totaled $4,493,000 representing an increase of $268,000 or 6% over the second quarter of 2007. During the six months ended June 30, 2008, non-interest income totaled $9,525,000 representing an increase of $1,348,000 or 16% over 2007.

Trust and investment product fees totaled $636,000 during the quarter ended June 30, 2008 representing a decline of $24,000 or 4% from the same period of 2007. Trust and investment product fees totaled $1,223,000 during the six months ended June 30, 2008 representing a decline of $118,000 or 9% from the same period of 2007.

Deposit service charges and fees totaled $1,245,000 during the quarter ended June 30, 2008 representing an increase of $131,000 or 12% over the same period of 2007. Deposit service charges and fees totaled $2,428,000 during the six months ended June 30, 2008 representing an increase of $396,000 or 19% over the same period of 2007. The increase was attributable to a combination of increased gross fees and a reduced level of refunded and waived fees.

During the second quarter of 2008, insurance commission and fees totaled $1,307,000 which is a decline of $234,000 or 15% compared to the second quarter of 2007. The decline was largely attributable to the receipt of $109,000 in contingency revenue at the Company’s property and casualty insurance subsidiary, German American Insurance during the second quarter of 2007 while all 2008 contingency revenues were received during the first quarter of 2008. During the six month period ended June 30, 2008, insurance commission and fees totaled $3,210,000 which is an increase of $165,000 or 5% compared to 2007. The increase was attributable to an increase of $316,000 in contingency revenue during the first half of 2008 compared with the first half of 2007.

During the quarter ended June 30, 2008, the net gain on sale of residential loans totaled $404,000, an increase of $231,000 or 134% over the gain recognized in the quarter ended June 30, 2007. The increase was primarily attributable to higher levels of residential loan sales which totaled $32.3 million in the second quarter of 2008, compared to $15.5 million in the same period of 2007. During the six months ended June 30, 2008, the net gain on sale of residential loans totaled $728,000, an increase of $395,000 or 119% over the gain of $333,000 recognized in the six months ended June 30, 2007. The increase was attributable to higher levels of residential loan sales which totaled $60.7 million in the first half of 2008, compared to $27.6 million in the same period of 2007.

20

Net gain on securities totaled $285,000 during the six months ended June 30, 2008, compared with no gains during the same period of 2007. The Company recognized a net gain on securities of $285,000 in the first quarter of 2008. The Company sold approximately $16 million of agency mortgage related securities at a gain of $189,000. In addition, the Company recognized a gain of $96,000 on the mandatory redemption on a portion of VISA stock acquired as part of the initial public offering of VISA, Inc.

Non-interest Expense:

During the quarter ended June 30, 2008, non-interest expense totaled $8,985,000, a decline of $483,000 or 5% from the same period of 2007. During the six months ended June 30, 2008, non-interest expense totaled $18,333,000, a decline of $611,000 or 3% from the same period of 2007.

Salaries and benefits totaled $5,118,000 in the quarter ended June 30, 2008 representing a decline of $436,000 or 8% from 2007. Salaries and benefits totaled $10,445,000 in the first half of 2008 representing a decline of $612,000 or 6% from 2007. The declines were largely attributable to a decrease in excess of 30 full-time equivalent employees, or 8% of total full-time equivalent employees, during the three and six months ended June 30, 2008 compared with the same periods of 2007. The decline in salaries and benefits was achieved while the Company recognized $196,000 and $466,000 in the three and six months ended June 30, 2008, respectively, for post-retirement benefits for employees that were accrued as part of the Company’s formal review of effectiveness and efficiency.

In the quarter ended June 30, 2008, occupancy and furniture and equipment expense totaled $1,398,000, an increase of $50,000 or 4% compared to the quarter ended June 30, 2007. During the six months ended June 30, 2008, occupancy and furniture and equipment expense totaled $2,870,000, an increase of $172,000 or 6% compared to the six months ended June 30, 2007. The increases were largely attributable to higher levels of real estate taxes and higher levels of furniture, fixtures and equipment depreciation.

Professional fees increased $91,000 or 26% during the second quarter of 2008 and $264,000 or 36% during the six months ended June 30, 2008, compared with the same periods of 2007. The increases were due primarily to professional fees associated with the Company’s formal review of effectiveness and efficiency.

During the three and six months ended June 30, 2008, collection costs declined by $120,000 and $239,000, respectively, as compared with the same periods of 2007. The declines were largely due to elevated levels in 2007 related to the resolution of a single large non-performing commercial credit facility. During the three and six months ended June 30, 2008, losses related to fraudulent ATM/debit card transactions decreased by $168,000 and $244,000, respectively, compared with the same periods of 2007; however, losses of this type have been incurred at an increased level during the third quarter of 2008 and it is therefore likely that losses of this type for the full year 2008 could be closer to those incurred in 2007 than the partial year comparisons might otherwise suggest.

Income Taxes:

The Company’s effective income tax rate approximated 32.9% during the three months ended June 30, 2008 compared with 31.8% during the same period of 2007. The Company’s effective income tax rate approximated 32.6% during the six months ended June 30, 2008 compared with 28.9% during the same period of 2007. The higher effective tax rate during the three and six month periods ended June 30, 2008 compared with the same periods of 2007 was the result of higher levels of before tax net income combined with a lower level of tax-exempt investment income. The effective tax rate in both 2008 and 2007 was lower than the blended statutory rate of 39.6% resulting primarily from the Company’s tax-exempt investment income on securities and loans, income tax credits generated from investments in affordable housing projects, and income generated by subsidiaries domiciled in a state with no state or local income tax.

FINANCIAL CONDITION

Total assets at June 30, 2008 increased $43.3 million to $1.175 billion compared with $1.132 billion in total assets at December 31, 2007. Cash and cash equivalents increased $18.6 million to $46.5 million at June 30, 2008 compared with $27.9 million at year-end 2007. This increase was largely attributable to an increase in deposits during 2008. Securities available-for-sale and held-to-maturity increased $14.0 million to $166.8 million at June 30, 2008 compared with $152.8 million at year-end 2007. Loans, net of unearned income, increased $9.5 million to $877.2 million at June 30, 2008 compared to $867.7 million at December 31, 2007. Commercial and industrial loans increased $36.5 million or 8%, agricultural based loans decreased $11.2 million or 7%, consumer loans decreased $5.6 million or 4% and residential mortgage loans declined $10.2 million or 9% during the six months ended June 30, 2008.

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Total Deposits at June 30, 2008, increased $46.3 million to $923.7 million compared with $877.4 million in total deposits at December 31, 2007. Demand, savings, and money market accounts increased $91.6 million while time deposits decreased $45.3 million.

Non-performing Assets:

The following is an analysis of the Company’s non-performing assets at June 30, 2008 and December 31, 2007 (dollars in thousands):

	June 30,			December 31,
	2008			2007
Non-accrual Loans	$	9,633		$	4,356
Past Due Loans (90 days or more)		16			8
Restructured Loans		—			—
Total Non-performing Loans		9,649			4,364
Other Real Estate		1,815			1,517
Total Non-performing Assets	$	11,464		$	5,881
Non-performing Loans to Total Loans		1.10	%		.50	%
Allowance for Loan Loss to Non-performing Loans		102.11	%		184.33	%

The Company’s level of overall non-performing assets increased by approximately $5.6 million and non-performing loans increased by approximately $5.3 million during the six months ended June 30, 2008. This level of non-performing loans represents 1.10% of total loans outstanding at June 30, 2008, an increase from 0.50% as of year-end 2007. The majority of the increase was related to a single commercial real estate credit which is secured by a newly constructed apartment complex. This credit is a participation loan in which the Company is a 53% participant, with the Company’s outstanding balance at June 30, 2008 totaling approximately $2.9 million. The remaining increase in non-performing loans was primarily related to commercial credits that each totaled less than $1.0 million.

The largest credit facility, other than the above referenced apartment complex credit, included in non-performing assets is an approximately $736,000 loan (after a partial charge-off during 2006) to a manufacturing entity which has ceased operations. During the third quarter of 2005, the real estate and equipment of the manufacturing entity were sold at auction to an unrelated third party. The closing of this auction sale was completed during the third quarter of 2008, with no additional write-down required.

Capital Resources:

Federal banking regulations provide guidelines for determining the capital adequacy of bank holding companies and banks. These guidelines provide for a more narrow definition of core capital and assign a measure of risk to the various categories of assets. The Company is required to maintain minimum levels of capital in proportion to total risk-weighted assets and off-balance sheet exposures such as loan commitments and standby letters of credit.

Tier 1, or core capital, consists of shareholders’ equity less goodwill, core deposit intangibles, other identifiable intangibles and certain deferred tax assets defined by bank regulations. Tier 2 capital currently consists of the amount of the allowance for loan losses which does not exceed a defined maximum allowance limit of 1.25 percent of gross risk adjusted assets and subordinated debenture obligations. Total capital is the sum of Tier 1 and Tier 2 capital.

The minimum requirements under these standards are generally at least a 4.0 percent leverage ratio, which is Tier 1 capital divided by defined “total assets”; 4.0 percent Tier 1 capital to risk-adjusted assets; and, an 8.0 percent total capital to risk-adjusted assets ratios. Under these guidelines, the Company, on a consolidated basis, and its subsidiary bank, have capital ratios that exceed the regulatory minimums.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires federal regulatory agencies to define capital tiers. These are: well-capitalized, adequately-capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized. Under these regulations, a “well-capitalized” entity must achieve a Tier 1 risk-based capital ratio of at least 6.0 percent; a total capital ratio of at least 10.0 percent; and, a leverage ratio of at least 5.0 percent, and not be under a capital directive. The Company’s subsidiary bank was categorized as well-capitalized as of June 30, 2008.

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At June 30, 2008, management was not under such a capital directive, nor was it aware of any current recommendations by banking regulatory authorities which, if they were to be implemented, would have or are reasonably likely to have, a material effect on the Company’s liquidity, capital resources or operations.

The table below presents the Company’s consolidated capital ratios under regulatory guidelines:

				To be Well
				Capitalized
				Under Prompt
	Minimum for			Corrective
	Capital			Action			At			At
	Adequacy			Provisions			June 30,			December 31,
	Purposes			(FDICIA)			2008			2007
Leverage Ratio		4.00	%		5.00	%		7.35	%		7.41	%
Tier 1 Capital to Risk-adjusted Assets		4.00	%		6.00	%		9.09	%		8.69	%
Total Capital to Risk-adjusted Assets		8.00	%		10.00	%		11.23	%		10.63	%

As of June 30, 2008, shareholders’ equity increased by $1.1 million to $98.2 million compared with $97.1 million at year-end 2007. The increase in shareholders’ equity was attributable to an increase of $2.8 million in retained earnings and a decline of $1.7 million in accumulated other comprehensive income (“AOCI”). The decline in AOCI was related to a higher unrealized loss in the securities available for sale portfolio. Shareholders’ equity represented 8.4% of total assets at June 30, 2008 compared with 8.6% at December 31, 2007. Shareholders’ equity included $13.2 million of goodwill and other intangible assets at June 30, 2008, compared to $13.7 million of goodwill and other intangible assets at December 31, 2007.

Liquidity:

The Consolidated Statement of Cash Flows details the elements of changes in the Company’s consolidated cash and cash equivalents. Total cash and cash equivalents increased $18.6 million during the six months ended June 30, 2008 ending at $46.5 million. During the six months ended June 30, 2008, cash flows from operating activities provided $7.4 million of available cash, which included net income of $6.1 million. Investing activities resulted in net cash outflows of $27.4 million during the six months ended June 30, 2008 due primarily to growth in the Company’s loan portfolio and securities portfolio. Financing activities resulted in net cash inflows for the period ended June 30, 2008 of $38.6 million due primarily to growth of deposits of $46.3 million offset partially by a net cash outflow of $3.1 million in dividends paid to shareholders.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

The Company from time to time in its oral and written communications makes statements relating to its expectations regarding the future. These types of statements are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may include forward-looking statements in filings with the Securities and Exchange Commission (“SEC”), such as this Form 10-Q, in other written materials, and in oral statements made by senior management to analysts, investors, representatives of the media, and others. Such forward looking statements can include statements about the Company’s operating effectiveness and the impact of its Effectiveness Plan (described above in Management Overview) upon future non-interest income and non-interest expense: the Company’s net interest income or net interest margin; its adequacy of allowance for loan losses, levels of provisions for loan losses, and the quality of the Company’s loans and other assets; simulations of changes in interest rates; expected results from mergers with or acquisitions of other businesses; litigation results; tax estimates and recognition; dividend policy; parent company cash resources and cash requirements, and parent company capital resources; estimated cost savings, plans and objectives for future operations; and expectations about the Company’s financial and business performance and other business matters as well as economic and market conditions and trends. They often can be identified by the use of words like “expect,” “may,” “will,” “would,” “could,” “should,” “intend,” “project,” “estimate,” “believe” or “anticipate,” or similar expressions.

It is intended that these forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the forward-looking statement is made. 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 may differ materially from the expectations of the Company that are expressed or implied by any forward-looking statement.

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Readers are cautioned that, by their nature, all forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results may differ materially and adversely from the expectations of the Company that are expressed or implied by any forward-looking statement. The discussions in this Item 2 list some of the factors that could cause the Company's actual results to vary materially from those expressed or implied by any forward-looking statements. Other risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates; the effects of changes in competitive conditions; of the possibility that the Company may acquire other businesses or intangible customer relationships of other companies and the costs of integrations of such acquired businesses and intangible customer relationships; the introduction, withdrawal, success, and timing of 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 including those arising from the continuing uncertainties commonly associated with the mortgage-backed securities markets and the auction-rate securities markets, and those arising from uncertainties concerning the financial stability of bond insurers; the possibility of a recession or other adverse change in general economic conditions, either nationally or regionally, resulting in, among other things, credit quality deterioration; the impact, extent and timing of technological changes; capital management activities; actions of the Federal Reserve Board and legislative and regulatory actions and reforms; changes in accounting principles and interpretations; the inherent uncertainties involved in litigation and regulatory proceedings which could result in the Company’s incurring loss or damage regardless of the merits of the Company’s claims or defenses; and the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.

Investors should consider these risks, uncertainties, and other factors, in addition to those mentioned by the Company in its Annual Report on Form 10-K for its fiscal year ended December 31, 2007, and its Quarterly Report on Form 10-Q for its quarter ended March 31, 2008, and other SEC filings from time to time, when considering any forward-looking statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk is reviewed on a regular basis by the Asset/Liability Committee and Boards of Directors of the parent company and its subsidiary bank. Primary market risks which impact the Company’s operations are liquidity risk and interest rate risk.

The liquidity of the parent company is dependent upon the receipt of dividends from its subsidiary bank, which is subject to certain regulatory limitations. The bank’s source of funding is predominately core deposits, maturities of securities, repayments of loan principal and interest, federal funds purchased, securities sold under agreements to repurchase and borrowings from the Federal Home Loan Bank.

The Company monitors interest rate risk by the use of computer simulation modeling to estimate the potential impact on its net interest income under various interest rate scenarios, and by estimating its static interest rate sensitivity position. Another method by which the Company’s interest rate risk position can be estimated is by computing estimated changes in its net portfolio value (“NPV”). This method estimates interest rate risk exposure from movements in interest rates by using interest rate sensitivity analysis to determine the change in the NPV of discounted cash flows from assets and liabilities.

NPV represents the market value of portfolio equity and is equal to the estimated market value of assets minus the estimated market value of liabilities. Computations are based on a number of assumptions, including the relative levels of market interest rates and prepayments in mortgage loans and certain types of investments. These computations do not contemplate any actions management may undertake in response to changes in interest rates, and should not be relied upon as indicative of actual results. In addition, certain shortcomings are inherent in the method of computing NPV. Should interest rates remain or decrease below current levels, the proportion of adjustable rate loans could decrease in future periods due to refinancing activity. In the event of an interest rate change, prepayment levels would likely be different from those assumed in the table. Lastly, the ability of many borrowers to repay their adjustable rate debt may decline during a rising interest rate environment.

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The table below provides an assessment of the risk to NPV in the event of a sudden and sustained 2% increase and decrease in prevailing interest rates (dollars in thousands).

Interest Rate Sensitivity as of June 30, 2008

			Net Portfolio Value
	Net Portfolio		as a % of Present Value
Changes	Value		of Assets
in rates	$ Amount	% Change	NPV Ratio	Change
+2%	$136,436	-4.70%	11.85%	(24) b.p.
Base	143,162	—	12.09%	—
-2%	137,015	-4.29%	11.35%	(74) b.p.

This Item 3 includes forward-looking statements. See “Forward-looking Statements” included in Part I, Item 2 of this Report for a discussion of certain factors that could cause the Company’s actual exposure to market risk to vary materially from that expressed or implied above. These factors include possible changes in economic conditions; interest rate fluctuations, competitive product and pricing pressures within the Company’s markets; and equity and fixed income market fluctuations. Actual experience may also vary materially to the extent that the Company’s assumptions described above prove to be inaccurate.

Item 4. Controls and Procedures

As of June 30, 2008, the Company carried out an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based on this evaluation, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were as of that date effective in timely alerting them to material information required to be included in the Company's periodic reports filed with the Securities and Exchange Commission. There are inherent limitations to the effectiveness of systems of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective systems of disclosure controls and procedures can provide only reasonable assurances of achieving their control objectives.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s second fiscal quarter of 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(e) The following table sets forth information regarding the Company's purchases of its common shares during each of the three months ended June 30, 2008.

	Total			Maximum Number
	Number		Total Number of Shares	(or Approximate Dollar
	Of Shares	Average Price	(or Units) Purchased as Part	Value) of Shares (or Units)
	(or Units)	Paid Per Share	of Publicly Announced Plans	that May Yet Be Purchased
Period	Purchased	(or Unit)	or Programs	Under the Plans or Programs(1)
4/1/08 - 4/30/08	—	—	—	272,789
5/1/08 - 5/31/08	—	—	—	272,789
6/1/08 - 6/30/08	—	—	—	272,789
	—	—	—

⁽¹⁾ On April 26, 2001, the Company announced that its Board of Directors had approved a stock repurchase program for up to 607,754 of its outstanding common shares, of which the Company had purchased 334,965 common shares through June 30, 2008 (both such numbers adjusted for subsequent stock dividends). The Board of Directors established no expiration date for this program. The Company purchased no shares under this program during the six months ended June 30, 2008.

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Shareholders on April 24, 2008. At the Annual Meeting, the shareholders elected the following Directors for three-year terms expiring in the year 2011:

	Votes		Votes		Broker
Nominee	Cast for		Withheld/Abstained		Non-Votes
Christina M. Ernst		8,160,506		162,960		—
Gene C. Mehne		8,163,016		160,449		—
Mark A. Schroeder		8,133,230		190,235		—

Item 6. Exhibits

The exhibits described by the Exhibit Index immediately following the Signature Page of this Report are incorporated herein by reference.

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SIGNATURES

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

	GERMAN AMERICAN BANCORP, INC.
Date: August 4, 2008	By:	/s/ Mark A. Schroeder
		Mark A. Schroeder President and Chief Executive Officer

Date: August 4, 2008	By:	/s/ Bradley M. Rust
		Bradley M. Rust Executive Vice President and Chief Financial Officer

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INDEX OF EXHIBITS

Exhibit No.	Description
10.1	Early Retirement and General Release Agreement dated May 7, 2008 between German American Bancorp and Stan Ruhe.*
10.2	Description of Director Compensation Arrangements for the 12 month period ending at the 2009 Annual Meeting of Shareholders.*
31.1	Sarbanes-Oxley Act of 2002, Section 302 Certification for President and Chief Executive Officer.
31.2	Sarbanes-Oxley Act of 2002, Section 302 Certification for Senior Vice President and Chief Financial Officer.
32.1	Sarbanes-Oxley Act of 2002, Section 906 Certification for President and Chief Executive Officer.
32.2	Sarbanes-Oxley Act of 2002, Section 906 Certification for Senior Vice President and Chief Financial Officer.

*Exhibits that describe or evidence all management contracts or compensatory plans or arrangements required to be filed as exhibits to this Report are indicated by an asterisk.

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EX-10.1

EARLY RETIREMENT AND GENERAL RELEASE AGREEMENT

Caution: Read Carefully

This Is A Release Of All Claims

THIS EARLY RETIREMENT AND GENERAL RELEASE AGREEMENT (hereinafter “Agreement”) is voluntarily entered into as of the date(s) set forth below by and between the undersigned individual, Stan J. Ruhe (hereinafter referred to in the first person as "I," "me," etc.) and German American Bancorp, an Indiana banking corporation.

WHEREAS, I have provided notice that I desire to retire from my employment, and the parties have agreed that my employment shall terminate on December 26, 2008 ("Retirement Date") as a result of my decision to retire; and

WHEREAS, the parties have reached an amicable agreement regarding my retirement and, while neither party believes that any claims exist between us, the parties wish to enter into this Agreement in order to memorialize our agreement and to resolve any and all claims that I may have, as described in this Agreement, and to further define the obligations that the parties have to one another including, but not limited to, the confidentiality of various matters.

NOW, THEREFORE, in consideration of the mutual understandings, covenants, and the release contained herein, and for other good and valuable consideration, the sufficiency of which are hereby acknowledged, the parties hereby voluntarily agree as follows:

1.Definitions. Specific terms used in this Agreement have the following meanings: (a) words such as "I," "me," and "my" include both the undersigned and anyone who has or obtains any legal right or claims through me; and (b) "Company" means German American Bancorp, its past and present officers, directors, employees, trustees, parent, agents, divisions, affiliates, insurers, any and all employee benefit plans (and any fiduciary of such plans) sponsored by such entities, and each such entity's subsidiaries, predecessors, successors, and assigns, and all other entities, persons, firms, or corporations liable or who might be claimed to be liable, none of whom admit any liability to me, but all of whom expressly deny any such liability.

2. My Claims. I hereby release Company from any and all claims and actions that I may have against it. The claims I am releasing ("My Claims") include all of my rights to any relief of any kind from the Company, including without limitation, all claims I have now, whether or not I now know about the claims. These claims include, but are not limited to the following:

(a) all claims relating to my retirement from and/or my employment with Company, or the termination of that employment, including, but not limited to, any claims arising under the Fair Labor Standards Act; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1866; the Age Discrimination in Employment Act ("ADEA"); the Older Worker Benefits Protection Act ("OWBPA"); the Employee Retirement Income Security Act; the Family and Medical Leave Act ("FMLA") (to the extent that FMLA claims may be released under governing law); the Americans with Disabilities Act; and/or any other federal, state or local law, including, without limitation, the Indiana Civil Rights Law;

(b) all claims under any principle of common law or equity, including but not limited to, claims for alleged unpaid compensation or other monies (other than salary I earn prior to my Retirement Date); commissions; any tort; breach of contract; and any other allegedly wrongful employment practices; and

(c) all claims for any type of relief from the Company, including but not limited to, claims for damages, costs and attorney's fees.

3.Exclusions From Release.I understand that My Claims released under this Agreement do not include any rights or claims that may arise after the Effective Date of this Agreement (the “Effective Date” of this Agreement is that date occurring on the eighth (8^th) day after I sign this Agreement, provided that I do not revoke it, as described below). I understand I do not waive future claims. Also, I further understand that nothing in this Agreement shall in any way adversely affect whatever vested rights I may have to benefits under any retirement or other employee benefit plan. In addition, I acknowledge that this Agreement is not intended to (a) prevent me from filing a charge or complaint including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”); (b) prevent me from participating in any investigation or proceeding conducted by the EEOC; or (c) establish a condition precedent or other barrier to exercising these rights. While I have the right to participate in an investigation, I understand that I am waiving my right to any monetary recovery arising from any investigation or pursuit of claim on my behalf. I acknowledge that I have the right to file a charge alleging a violation of the ADEA with any administrative agency and/or to challenge the validity of the waiver and release of any claim I might have under the ADEA without either: (a) repaying to the Company the amounts paid by it to me or on my behalf under this Agreement; or (b) paying to the Company any other monetary amounts (such as attorney's fees and/or damages).

4.Amendment to Confidentiality and Non-Compete Agreement. The Company and I entered into a Confidentiality and Non-Compete Agreement (“Non-Compete Agreement”), dated July 1, 2000, which shall remain enforceable in accordance with its terms and conditions. Because the Company has agreed, in this Agreement, to make payments to me for a period of four (4) years and nine (9) months after my Retirement Date, I agree that Section 8 of the Non-Compete Agreement is hereby amended and said Section 8 shall heretofore be replaced by a new Section 8, as set forth in Exhibit A, attached to and incorporated in this Agreement.

5.Company's Agreement to Make Payments to Me . In exchange for my release and other promises made by me in this Agreement, and on the condition that I enter into the Supplemental Release Agreement with Company, attached to and incorporated herein as Exhibit B, on or after my Retirement Date, and on the further conditions that my employment is not terminated and that I do not resign prior to the Retirement Date, the Company agrees as follows:

(a)As soon as practical after June 26, 2009 (six (6) months following the Retirement Date), the Company shall pay me Thirty Seven Thousand Five Hundred Dollars ($37,500), less taxes and other required deductions ("Initial Payment"). Thereafter, the Company shall pay me an annualized amount of Seventy Five Thousand Dollars ($75,000), which amount shall be prorated for partial calendar years, and payable in equal installments on a biweekly basis, less taxes and other required deductions. The parties agree that the first biweekly installment shall be paid to me as soon as practical after the Initial Payment, and that no payment shall be paid to me after I reach the age of 62 (September 2, 2013). In the event of my death prior to September 2, 2013, any remaining unpaid biweekly installment payments shall be paid in accordance with the same schedule set forth above to my surviving spouse or, if she does not survive me, to my estate.

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(b)The Company agrees that, effective on the Retirement Date, I shall be eligible to elect early retiree medical insurance coverage under the German American Bancorp, Inc. Employee Benefits Plan, as it may be amended from time to time.

I acknowledge that the foregoing constitutes full and fair consideration for the release of My Claims and the other promises made by me in this Agreement, that the Company is not otherwise obligated to provide such consideration to me, and that it is in addition to any other sums to which I am otherwise due. I also acknowledge that I have received all other forms of compensation, of whatever kind, that may be due to me by Company, other than salary that I will earn prior to my Retirement Date.

In addition, I understand and agree that during my remaining employment with the Company I shall perform all assigned duties and responsibilities to the best of my abilities and in a timely and professional manner, and I shall continue to adhere to all Company policies and procedures. I understand that among my responsibilities will be to assist the Company in business transition matters and I shall remain actively engaged in all responsibilities that may be assigned to me during my remaining employment. I also understand that during my remaining employment, I shall remain an at-will employee and that if the Company determines, in its sole discretion, that I have failed to perform my duties and responsibilities as described above, it may terminate my employment at any time, in which case I shall not be entitled to any payment pursuant to this Agreement or any other payment from the Company, other than the salary I earn through my last day of employment.

I agree to comply with all of the terms and conditions of this Agreement. I understand and agree that if I fail to do so, including, but not limited to, those set forth above, I shall not be entitled to any payment pursuant to this Agreement or any other payment from the Company, other than the salary I earn through my last day of employment.

6.Return of Company Property. I hereby represent and warrant that, on or before the Retirement Date, or at such other time as requested by the Company, I shall return to the Company all of its property that was ever in my possession or control. This property includes, but is not limited to, financial and other business records, personnel records, office and other keys, directories, computer hardware and software, books, documents, memoranda, and all other records, and copies of all such items.

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7.Termination of Relationship. I acknowledge that my employment will be separated as of the Retirement Date. I acknowledge that neither the Company nor its successors have any obligation, contractual or otherwise, to rehire, reemploy, recall, or hire me in the future.

8.Consultation with Attorney. As required by the ADEA and OWBPA, I acknowledge that the Company has advised me that it is up to me as to whether I consult an attorney prior to signing this Agreement, and that the Company has advised that I should do so.

9.Confidentiality and Non-Disparagement. In further consideration of the payment described above, I agree, consistent with applicable law, to protect the Company from intrusion into its business by not disclosing to any third-party any confidential information or trade secrets of the Company.Such information includes, but not limited to, confidential information regarding the sales and other business activities of the Company, and information regarding the Company's employees, services, marketing strategies, business plans, operations, costs, research and development efforts, technical data and know-how, financial information, internal procedures, forecasts, methods, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Company’s business (collectively referred to as “Confidential Information”). I agree that all such Confidential Information is and shall remain the sole and exclusive property of the Company. Except as may be expressly authorized by the Company in writing, or as may be required by law after providing due notice thereof to the Company, I agree not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party as long as such information remains confidential (or as limited by applicable law) and I agree not to make use of any such Confidential Information for my own purpose or for the benefit of any other entity or person. I agree to refrain from making any negative or disparaging statement about the Company, its employees, agents, operations, or plans. In further protection of the interests of the Company, I agree that, as to any matters currently pending, or which arise relating to my employment with the Company, I will cooperate with the Company and its attorneys in connection with any proceeding involving the Company before a court, an administrative agency, governmental organization, or an arbitrator. I further understand that it is an essential and material condition of this Agreement that the existence and terms of this Agreement are to remain strictly confidential and shall not be disclosed by me to any person other than to my attorney, my spouse, or as required by law. This Agreement shall supplement any obligations that I may have to Company pursuant to the Non-Compete Agreement and pursuant to all applicable state and federal trade secrets laws.

10.Violation of Agreement. I agree that if I violate this Agreement by suing the Company for any of My Claims (other than one under the ADEA or the OWBPA), or in any other respect, I will pay all costs and expenses of defending the action or lawsuit incurred by the Company, including but not limited to, reasonable attorneys’ fees, costs, disbursements, awards, and judgments. In addition, if I violate this Agreement by suing the Company for any of My Claims (other than one under the ADEA or the OWBPA), or if I violate it in any other respect, I will promptly reimburse the Company all amounts paid to me by it under this Agreement, plus legal interest, and the Company shall be relieved of all obligations to me under this Agreement, and the Company shall be entitled to collect all amounts paid to me by it through legal process or otherwise, from me. As to any actions, claims, or charges that would not be released because of the revocation, invalidity, or unenforceability of this Agreement (other than one under the ADEA or the OWBPA), I understand that the return of the payments made by the Company under this Agreement to me and on my behalf, with legal interest, is a prerequisite to asserting or bringing any such claims, charges, or actions. In the event the Company brings any successful action against me to enforce this Agreement, I shall reimburse the Company for its attorneys' fees, costs and expenses incurred in such action.

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11.Severability. I understand, and it is my intent, that in the event this Agreement is ever held to be invalid or unenforceable (in whole or in part) as to any particular type of claim or charge or as to any particular circumstances, it shall remain fully valid and enforceable as to all other claims, charges, and circumstances.

12.Period to Consider Agreement and Expiration of Offer. As required by the ADEA and the OWBPA, I understand that I have forty five (45) calendar days from the day that I receive this Agreement, not counting the day upon which I received it, to consider whether I wish to sign it. If I sign this Agreement before the end of the forty five (45) calendar day period, it will be my personal and voluntary decision to do so. I also understand that if I fail to deliver this Agreement to the Company within said period of time, it shall expire and be deemed withdrawn by the Company.

13.Right to Revoke Agreement. As required by the ADEA and the OWBPA, I understand that I may revoke this Agreement at any time within seven (7) calendar days after I sign it, not counting the day upon which I sign it. This Agreement will not become effective or enforceable unless and until the seven (7) calendar day revocation period has expired without my revoking it, i.e. on the eighth calendar day after I sign this Agreement.

14.Procedure to Accept or Revoke. To accept this Agreement, I must deliver the Agreement, after it has been signed and dated by me, to the Company, by hand or by mail, and it must be received by the Company’s President, Mark A. Schroeder, within the forty five (45) calendar day period that I have to consider this Agreement. To revoke my acceptance, I must deliver a written, signed statement that I revoke my acceptance to Mr. Schroeder by hand or by mail and any such notice of revocation must be received by him within seven (7) calendar days after I signed the Agreement. If I choose to deliver my acceptance or revocation notice by mail, it must be: (a) postmarked and received by the above-named individual at the Company within the applicable period stated above; (b) properly addressed to said individual; and (c) sent by certified mail, return receipt requested.

15.My Representations. I HAVE READ THIS AGREEMENT CAREFULLY, I HAVE HAD AN ADEQUATE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, AND I UNDERSTAND ALL OF ITS TERMS. IN AGREEING TO SIGN THIS AGREEMENT, I HAVE NOT RELIED ON ANY STATEMENTS OR EXPLANATIONS MADE BY THE COMPANY, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT. I UNDERSTAND THAT IN CONSIDERATION OF ACCEPTING THE PAYMENT DESCRIBED ABOVE, I MAY BE GIVING UP POSSIBLE FUTURE ADMINISTRATIVE AND/OR LEGAL CLAIMS.

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16.Group Reduction In Force Information. I acknowledge that, as required by the ADEA, 29 U.S.C. Section 626(f), I have received (in Exhibit C, attached hereto and incorporated herein) adequate written notice of any class, unit, or group of individuals covered by this employment termination program, any eligibility factors for such program, and any time limits applicable to this program. I acknowledge that said exhibit, pursuant to 29 U.S.C. Section 626(f), adequately informs me of the job titles and ages of all persons eligible or selected for this program, and the ages of all individuals in my same job classification or organizational unit who are not eligible or selected for this program.

17.Miscellaneous. The parties agree that: (a) this Agreement shall inure to the benefit of, may be enforced by, and shall be binding on the parties and their heirs, executors, administrators, personal representatives, assigns and successors in interest; and (b) this Agreement may be assigned by the Company without notice to me and without my consent. However, the parties also agree that this Agreement is personal to me and that I may not assign it. In the event of any dispute about this Agreement, the laws of the State of Indiana shall govern the validity, performance, enforcement, and all other aspects of this Agreement. I also understand and agree that this Agreement contains all of the agreements between the Company and me relating to the matters included in this Agreement. I also agree that this Agreement may be executed in one or more counterparts, including fax or pdf counterparts, all of which, taken together, shall constitute one and the same Agreement.

Please read this Agreement carefully. This Agreement includes a release of all known and unknown claims.

Stan J. Ruhe
By:	/s/ Stan J. Ruhe
Date:	May 7, 2008

Received and agreed to by German American Bancorp on behalf of itself and all other persons and entities released herein:
By:	/s/ Mark A. Schroeder
Date:	May 7, 2008

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EXHIBIT A

8.Non-Compete. In connection with Employee’s employment with the Company, Employee has or will become acquainted with the affairs of the Company, its officers and employees, its services, products, business practices, the needs and requirements of its customers and prospective customers, trade secrets, Confidential Information that the Company has or will acquire at its cost and expense and he will develop business relationships and goodwill with the Company’s customers or potential customers. Therefore, as an essential ingredient and in consideration of this Agreement and Employee’s employment or continued employment, and for the other consideration stated herein, Employee hereby agrees, in addition to any other obligations or duties Employee owes to the Company, that during the term of Employee’s employment and for the period of four (4) years and nine (9) months thereafter, Employee shall not, do any of the following:

(a)Engage in any activity that is competitive with Company, including, but not limited to, banking, investments, insurance, or other services which are offered by the Company to its customers or which, at the time of the terminations of Employee’s employment, it planned to offer to its customers. Employee acknowledges and agrees that the foregoing prohibition is intended to be broadly interpreted and that this is reasonable in view of the breadth and scope of services offered by the Company to its customers, in view of the Company’s strategies and plans for the future, and in view of the Company’s promise to make payments to him as set forth in the Early Retirement and General Release Agreement that he entered into with Company.

(b)Perform on behalf of any person or entity that competes with Company, the same or similar services as those Employee performed for Company prior to the termination of his employment;

(c)Directly or indirectly own, operate, accept employment or be employed with, engage with, participate with, consult with or assist in any way any company or business that is involved in or associated with banking, investments, insurance, or other services offered by Company to its customers or which, at the time of the termination of his employment, Company planned to offer to its customers;

(d)Contact or have contact with the customers, suppliers, or vendors of Company, either directly or indirectly, for himself or for any other person or entity, so as to: (i) directly or indirectly divert or influence or attempt to divert or influence any business of Company to a competitor of Company; (ii) directly or indirectly solicit or provide products or services similar to those provided by Company; or (iii) otherwise directly or indirectly interfere in any fashion with the business or operations then being conducted by Company or in order to assist Employee or others in any endeavor that is competitive with the business of Company then being conducted, or which Company, at the time of the termination of his employment, planned to conduct; and

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(e)Hire, employ or attempt to hire or employ any person who is then an employee of Company, or who was within the preceding one (1) year period an employee of Company, or in any way: (i) cause or assist or attempt to cause or assist any employee to leave Company; or (ii) directly or directly seek to solicit, induce, bring about, influence, promote, facilitate, or encourage any current employee of Company to leave Company to join a competitor or otherwise.

The restrictions set forth in sections (a), (b), (c), (d), and (e) above shall be applicable and enforceable within each of the following geographic areas: (i) Jasper, Indiana, and any location within a fifty (50) mile radius of Jasper; and (ii) any location within a fifty (50) mile radius of any location in which Employee was employed or performed services for the Company during his employ.

Employee and the Company agree that for purposes of the restrictions and covenants set forth in this Section 8, the “term of Employee’s employment,” shall include not only the period during which Employee is directly employed by the Company, but any period thereafter during which he provides services to the Company in any manner whatsoever. Employee agrees and acknowledges that he shall be bound by the terms of Section 8 at all times during which he provides services to the Company in any manner whatsoever and for four (4) years and nine (9) months after the last date on which he has provided such services. Employee’s obligations set forth in this Section 8 and the Company’s rights and remedies with respect thereto shall remain in full force and effect for the period(s) stated herein regardless of any termination or resignation of Employee or other prior termination of his employment and/or this Agreement for any reason.

Employee and the Company further agree that due to the nature of the Company’s business, and in order to protect the Company’s Confidential Information and goodwill, the covenants and restrictions in this Section 8, including, but not limited to, the restrictions on the Employee’s ability to engage in activity competitive with the Company, are required to be broad in scope.

If the Employee has violated any of the restrictions or covenants set forth in Section 8 of this Agreement or there is a basis for the granting of injunctive relief in accordance with the terms of Section 4, then the parties agree that the period of all restrictions and covenants set forth in this Section 8 automatically shall be extended by the number of days that (i) the Employee was in violation of such restriction or covenant or (ii) such a basis for the granting of injunctive relief existed, whichever is longer.

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EXHIBIT B

NOTE: THIS AGREEMENT IS NOT TO BE SIGNED BEFORE YOUR FINAL DATE OF EMPLOYMENT WITH THE COMPANY

SUPPLEMENTAL SEPARATION AND GENERAL RELEASE AGREEMENT

This Supplemental Separation and General Release Agreement ("Agreement") is entered into by and between German American Bancorp, an Indiana banking corporation, and the undersigned individual ("Employee").

WHEREAS, the parties have entered into a separate Early Retirement and General Release Agreement (“Early Retirement Agreement”) which contemplates that Employee will sign this Agreement in exchange for the benefits set forth in the Early Retirement Agreement;

WHEREAS, while the parties do not believe that any claims exist between them, they wish to enter into this Agreement in order to memorialize their agreement.

NOW, THEREFORE, in consideration of the mutual understandings, covenants, and the release contained herein, the parties hereby voluntarily agree as follows:

1.Specific terms used in this Agreement have the following meanings: (a) "Employee" includes the undersigned individual and anyone who has or obtains any legal right or claims through him; and (b) “Company” has the same meaning as set forth in the Early Retirement Agreement. No person or entity released by this Agreement admits any liability to Employee all such persons and entities expressly deny any such liability to Employee.

2.The claims Employee is releasing (“Employee's Claims”) include all of his rights to any relief of any kind from the Company, including, but not limited to, all claims Employee has now, whether or not Employee now knows about the claims, including, but not limited to: any and all claims (including, but not limited to, claims for attorneys’ fees), demands, losses, damages, injuries (whether personal, emotional or other), agreements, actions, promises or causes of action (known or unknown) in connection with or arising directly or indirectly out of or in any way related to any and all matters, transactions, events or other things occurring prior to the date hereof, including all those arising out of or in connection with his employment with the Company or arising out of any events, facts or circumstances which either preceded, flowed from or followed the cessation of his employment, or which occurred during the course of his employment with the Company or incidental theretoor arising out of any other matter or claim of any kind whatsoever and whether pursuant to common law, statute, ordinance, regulation or otherwise and including claims of fraud or misrepresentation in the making, negotiation or execution of this Agreement. Claims or actions released herein include, but are not limited to, those based on allegations of wrongful discharge and/or breach of contract; those arising under each of the laws specifically set forth in the Early Retirement Agreement and any other federal, state or local law, ordinance, rule or regulation. Employee agrees and understands that any claims he may have under any legal theory or the aforementioned statutes or any other federal, state or local law, ordinance, rule or regulation are effectively waived by this Agreement. The parties understand and agree that no claims arising after the Effective Date of this Agreement are waived or released by this Agreement (the “Effective Date” of this Agreement is the eighth day after it is signed by Employee, on the condition that the Agreement is not revoked by him as provided below).

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3.In exchange for the consideration set forth in the Early Retirement Agreement, which the Company is otherwise not obligated to provide to Employee, Employee agrees to give up, release, and waive all of Employee’s Claims and all other actions, causes of action, claims or demands that he has against the Company. Employee will not bring any lawsuits against the Company relating to the claims described above, nor will Employee allow any suit to be brought on Employee’s behalf. The Separation Payment constitutes full and fair consideration for the release of Employee’s Claims. Employee agrees that his rights under the aforementioned statutes and any other federal, state, or local law, rule or regulation are effectively waived by this Agreement.

4.Employee hereby represents and warrants that he has returned to the Company all of its property that was in his possession or control. This includes, but is not limited to, those items set forth in the Early Retirement Agreement.

5.Employee understands that, as a condition of this Agreement, the fact of and terms and conditions of this Agreement are to remain strictly confidential, and shall not be disclosed by him to any person other than to his attorney, spouse, or as required by law or lawfully-issued subpoena.

6.Employee represents and warrants that in the making, negotiation and execution of this Agreement, he is not relying upon any representation, statement or assertion of fact or opinion made by any agent, attorney, partner, employee or representative of the persons, parties, partnerships or corporations being released herein, and he hereby waives any right to rely upon all prior agreements and/or oral representations made by any agent, attorney, partner, employee or representative of such persons, parties, partnerships or corporations even though made for the purpose of inducing him to enter into this Agreement. The parties stipulate and agree that all clauses and provisions of this Agreement are distinct and severable, and Employee understands, and it is his intent, that in the event this Agreement is ever held to be invalid or unenforceable (in whole or in part) as to any particular type of claim or as to any particular circumstances, it shall remain fully valid and enforceable as to all other claims and circumstances.

7. This Agreement contains the entire agreement of the parties and supersedes all previous negotiations, whether written or oral. This Agreement may be changed only by an instrument in writing signed by the party against whom the change, waiver, modification, extension or discharge is sought. As required by the ADEA and the OWBPA, Employee understands that: (a) he has forty five (45) calendar days after he receives this Agreement to consider it, and that if he does not sign it within that period of time, it shall be deemed withdrawn by the Company; (b) he may revoke this Agreement within seven (7) calendar days after signing it by providing written notice of revocation to Mark Schroeder, President of the Company; and (c) he has been advised by the Company that he should seek the advice of legal counsel prior to signing this Agreement, and he has had an adequate opportunity to do so. After signing this Agreement, Employee shall return it personally in an envelope marked "Personal and Confidential" to Mr. Schroeder.

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8. This Agreement shall inure to the benefit of, may be enforced by, and shall be binding on the parties and their heirs, executors, administrators, personal representatives, assigns and successors in interest. It is understood and agreed that no breach of this Agreement shall be cause to set it aside or to revive any of the claims being released herein. In the event of any dispute about this Agreement, the laws of the State of Indiana shall govern the validity, performance, enforcement, and all other aspects of this Agreement.

9.Employee agrees that if he violates this Agreement by suing the Company for any of the claims he has released herein (other than one under the ADEA or OWBPA), or if he violates it in any other respect, he will pay all costs and expenses of defending the action or lawsuit incurred by the Company, including but not limited to, reasonable attorneys’ fees, costs, disbursements, awards, and judgments. In addition, if he violates this Agreement by suing the Company for any of the claims released herein (other than one under the ADEA or OWBPA), or if he violates it in any other respect, he will promptly reimburse the Company all amounts paid to him and on his behalf by the Company under this Agreement and the Early Retirement Agreement, plus legal interest, and the Company shall be entitled to collect same through legal process or otherwise, from him, and the Company shall be relieved of any obligation to Employee under this Agreement. As to any actions, claims, or charges that would not be released because of the revocation, invalidity, or unenforceability of this Agreement (other than one under the ADEA or OWBPA), Employee understands that the return of the payment made by the Company under this Agreement and the Early Retirement Agreement to him and on his behalf, with legal interest, is a prerequisite to asserting or bringing any such claims, charges, or actions. In the event the Company brings any successful action against Employee to enforce this Agreement, Employee shall reimburse the Company for its attorneys' fees, costs and expenses incurred in such action.

10.Employee acknowledges that, as required by the ADEA, 29 U.S.C. Section 626(f), he has received (in Exhibit C, attached to the Early Retirement Agreement that he previously signed) adequate written notice of any class, unit, or group of individuals covered by this employment termination program, any eligibility factors for such program, and any time limits applicable to this program. Employee also acknowledges that said exhibit, pursuant to 29 U.S.C. Section 626(f), adequately informs him of the job titles and ages of all persons eligible or selected for this program, and the ages of all individuals in his same job classification or organizational unit who are not eligible or selected for this program.

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11.Employee represents that he has read this Agreement; fully understands each and every provision of this Agreement; and has voluntarily, on his own accord, executed this Agreement. This Agreement may be executed in counterparts, including facsimile, pdf, or photocopy counterparts, each of which shall be deemed an original but all of which taken together shall constitute a single document. Employee also understands that, in signing this Agreement, he may be giving up possible legal and/or administrative claims or rights.

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the dates set forth below.

Stan J. Ruhe

Signature:

Date:

Received and agreed to by German American Bancorp on behalf of itself and all other persons and entities released herein:

By:  

Date:

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EXHIBIT C

INFORMATION REQUIRED BY ADEA AND OWBPA

REGARDING OFFER OF SEPARATION PAYMENT

[This exhibit omitted as the information is not material to Investors. The Registrant agrees to furnish supplementally such exhibit to the Commission upon request.]

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EX-10.2

Exhibit 10.2

German American Bancorp, Inc. (the "Company"), compensates its directors for their service to the Company and the Company's subsidiaries based on a twelve-month period commencing with each year's annual reorganization meeting of the Board.  The Governance/Nominating Committee made a recommendation with respect to director compensation to the Board and the Board approved such recommendation at its annual reorganization meeting on  May 7, 2008.

For services of directors during the current annual period that commenced at the 2008 annual meeting, the Company is compensating its directors, including the CEO, through an annual retainer of $16,000 paid in cash during June 2008 in a lump sum (which is earned regardless of the number of meetings held or attended, and regardless of committee membership or attendance) and is paying an additional attendance fee of $500 for each meeting of the Board that they attend during this period.

In addition, those members of the Board (other than the CEO, who as a salaried employee of the Company is ineligible) who serve on the board of directors (including any regional advisory board) of at least one of the subsidiaries receives additional compensation for his or her service to such subsidiaries in the form of director/advisory fees for meetings actually attended of (i) $500 per meeting of the board of directors of German American Bancorp (our bank subsidiary) or of any regional advisory board, and (ii) $250 per each meeting of the board of directors of German American Financial Advisors & Trust Company and German American Insurance, Inc.

EX-31.1

Exhibit 31.1

Sarbanes-Oxley Act of 2002, Section 302 Certification for President and Chief Executive Officer

I, Mark A. Schroeder, President and Chief Executive Officer of German American Bancorp, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of German American Bancorp, Inc. (the “registrant”):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 4, 2008 Date

/s/ Mark A. Schroeder

Mark A. Schroeder

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Sarbanes-Oxley Act of 2002, Section 302 Certification for Senior Vice President and Chief Financial Officer

I, Bradley M. Rust, Executive Vice President and Chief Financial Officer of German American Bancorp, Inc. certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of German American Bancorp, Inc., (the “registrant”):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 4, 2008 Date

/s/ Bradley M. Rust

Bradley M. Rust

Executive Vice President and Chief Financial Officer

(principal accounting officer and principal financial officer)

EX-32.1

Exhibit 32.1

Sarbanes-Oxley Act of 2002, Section 906 Certification for President and Chief Executive Officer

I, Mark A. Schroeder, President and Chief Executive Officer of German American Bancorp, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that:

(1) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of German American Bancorp, Inc.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Periodic Report.

August 4, 2008 Date

/s/ Mark A. Schroeder

Mark A. Schroeder

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Sarbanes-Oxley Act of 2002, Section 906 Certification for Senior Vice President and Chief Financial Officer

I, Bradley M. Rust, Executive Vice President and Chief Financial Officer of German American Bancorp, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that:

(1) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of German American Bancorp, Inc.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Periodic Report.

August 4, 2008 Date

/s/ Bradley M. Rust

Bradley M. Rust

Executive Vice President and Chief Financial Officer

(principal accounting officer and principal financial officer)