Unassociated Document

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 March 31, 2010

¨ 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 001-15877

German American Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Indiana	35-1547518
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x NO ¨

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 ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

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

YES ¨ 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 May 5, 2010
Common Stock, no par value	11,101,560

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 the discussions of our forward-looking statements and associated risks in our annual report on Form 10-K for the year ended December 31, 2009, in Item 1, “Business – Forward-Looking Statements and Associated Risks” and our discussion of risk factors in Item 1A, “Risk Factors” of that annual report on Form 10-K, as updated from time to time in our subsequent SEC filings, including by 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.”

*****

INDEX

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Consolidated Balance Sheets – March 31, 2010 and December 31, 2009	4

	Consolidated Statements of Income and Comprehensive Income -
	Three Months Ended March 31, 2010 and 2009	5

	Consolidated Statements of Cash Flows – Three Months Ended
	March 31, 2010 and 2009	6

	Notes to Consolidated Financial Statements – March 31, 2010	7-17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18-26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26-27

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	28

SIGNATURES		29

INDEX OF EXHIBITS		30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands except share and per share data)

	March 31,			December 31,
	2010			2009

ASSETS
Cash and Due from Banks	$	15,480		$	16,052
Federal Funds Sold and Other Short-term Investments		29,919			12,002
Cash and Cash Equivalents		45,399			28,054

Securities Available-for-Sale, at Fair Value		260,732			250,940
Securities Held-to-Maturity, at Cost (Fair value of $2,141 and $2,801 on March 31, 2010 and December 31, 2009, respectively)		2,101			2,774

Loans Held-for-Sale		5,270			5,706

Loans		867,641			879,475
Less: Unearned Income		(1,623	)		(1,653	)
Allowance for Loan Losses		(10,713	)		(11,016	)
Loans, Net		855,305			866,806

Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost		10,621			10,621
Premises, Furniture and Equipment, Net		21,122			22,153
Other Real Estate		1,639			2,363
Goodwill		9,655			9,655
Intangible Assets		2,400			2,618
Company Owned Life Insurance		24,212			24,008
Accrued Interest Receivable and Other Assets		15,556			17,267
TOTAL ASSETS	$	1,254,012		$	1,242,965

LIABILITIES
Non-interest-bearing Demand Deposits	$	158,163		$	155,268
Interest-bearing Demand, Savings, and Money Market Accounts		473,278			484,699
Time Deposits		341,554			329,676
Total Deposits		972,995			969,643

FHLB Advances and Other Borrowings		151,647			148,121
Accrued Interest Payable and Other Liabilities		13,121			11,652
TOTAL LIABILITIES		1,137,763			1,129,416

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		11,102			11,077
Additional Paid-in Capital		68,892			68,816
Retained Earnings		30,741			29,041
Accumulated Other Comprehensive Income, Net of Tax		5,514			4,615
TOTAL SHAREHOLDERS’ EQUITY		116,249			113,549
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,254,012		$	1,242,965
End of period shares issued and outstanding		11,101,560			11,077,382

See accompanying notes to consolidated financial statements.

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(unaudited, dollars in thousands except share and per share data)

	Three Months Ended
	March 31,
	2010		2009
INTEREST INCOME
Interest and Fees on Loans	$	12,839	$	13,394
Interest on Federal Funds Sold and Other Short-term Investments		9		17
Interest and Dividends on Securities:
Taxable		2,465		2,190
Non-taxable		270		256
TOTAL INTEREST INCOME		15,583		15,857

INTEREST EXPENSE
Interest on Deposits		2,612		4,005
Interest on FHLB Advances and Other Borrowings		1,322		1,211
TOTAL INTEREST EXPENSE		3,934		5,216

NET INTEREST INCOME		11,649		10,641
Provision for Loan Losses		1,500		750
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		10,149		9,891

NON-INTEREST INCOME
Trust and Investment Product Fees		391		390
Service Charges on Deposit Accounts		946		1,060
Insurance Revenues		1,686		1,487
Company Owned Life Insurance		202		238
Other Operating Income		1,036		504
Net Gains on Sales of Loans		318		565
Net Gain (Loss) on Securities		—		—
TOTAL NON-INTEREST INCOME		4,579		4,244

NON-INTEREST EXPENSE
Salaries and Employee Benefits		5,549		5,614
Occupancy Expense		887		867
Furniture and Equipment Expense		652		662
FDIC Premiums		352		335
Data Processing Fees		359		357
Professional Fees		521		607
Advertising and Promotion		269		288
Supplies		195		135
Intangible Amortization		218		221
Other Operating Expenses		1,264		995
TOTAL NON-INTEREST EXPENSE		10,266		10,081

Income before Income Taxes		4,462		4,054
Income Tax Expense		1,211		1,112
NET INCOME	$	3,251	$	2,942

COMPREHENSIVE INCOME	$	4,150	$	4,305

Earnings Per Share and Diluted Earnings Per Share	$	0.29	$	0.27
Dividends Per Share	$	0.14	$	0.14

See accompanying notes to consolidated financial statements.

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, dollars in thousands)

	Three Months Ended
	March 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	3,251		$	2,942
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Net Amortization (Accretion) on Securities		109			(111	)
Depreciation and Amortization		963			898
Loans Originated for Sale		(17,467	)		(46,525	)
Proceeds from Sales of Loans Held-for-Sale		18,221			36,995
Loss in Investment in Limited Partnership		17			41
Provision for Loan Losses		1,500			750
Gain on Sale of Loans , Net		(318	)		(565	)
Loss (Gain) on Sales of Other Real Estate and Repossessed Assets		(358	)		57
Loss (Gain) on Disposition of Premises and Equipment		(56	)		11
Increase in Cash Surrender Value of Company Owned Life Insurance		(204	)		(241	)
Equity Based Compensation		101			118
Change in Assets and Liabilities:
Interest Receivable and Other Assets		1,694			2,591
Interest Payable and Other Liabilities		977			(636	)
Net Cash from Operating Activities		8,430			(3,675	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities Available-for-Sale		10,511			8,663
Proceeds from Sales of Securities Available-for-Sale		—			379
Purchase of Securities Available-for-Sale		(19,022	)		(29,587	)
Proceeds from Maturities of Securities Held-to-Maturity		674			309
Purchase of Loans		(175	)		(550	)
Proceeds from Sales of Loans		1,325			3,603
Loans Made to Customers, Net of Payments Received		8,522			15,885
Proceeds from Sales of Other Real Estate		1,405			111
Property and Equipment Expenditures		(142	)		(333	)
Proceeds from Sales of Property and Equipment		491			—
Net Cash from Investing Activities		3,589			(1,520	)

CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits		3,352			10,756
Change in Short-term Borrowings		3,557			(1,600	)
Repayments of Long-term Debt		(32	)		(29	)
Dividends Paid		(1,551	)		(1,544	)
Net Cash from Financing Activities		5,326			7,583

Net Change in Cash and Cash Equivalents		17,345			2,388
Cash and Cash Equivalents at Beginning of Year		28,054			44,992
Cash and Cash Equivalents at End of Period	$	45,399		$	47,380

Cash Paid During the Period for
Interest	$	4,156		$	5,587
Income Taxes		3			—

Supplemental Non Cash Disclosures
Loans Transferred to Other Real Estate	$	323		$	715

See accompanying notes to consolidated financial statements.

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and 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. Certain prior year amounts have been reclassified to conform with current classifications. 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, 2009 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
	March 31,
	2010		2009
Earnings per Share:
Net Income	$	3,251	$	2,942

Weighted Average Shares Outstanding		11,081,680		11,036,942
Earnings per Share	$	0.29	$	0.27

Diluted Earnings per Share:
Net Income	$	3,251	$	2,942

Weighted Average Shares Outstanding		11,081,680		11,036,942
Potentially Dilutive Shares, Net		6,707		—
Diluted Weighted Average Shares Outstanding		11,088,387		11,036,942

Diluted Earnings per Share	$	0.29	$	0.27

Stock options for 99,275 and 201,254 shares of common stock were not considered in computing diluted earnings per share for the quarter ended March 31, 2010 and 2009, respectively, because they were anti-dilutive.

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and 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 March 31, 2010 and December 31, 2009, were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
Securities Available-for-Sale:	Cost		Gains		Losses			Value

March 31, 2010
U.S. Treasury and Agency Securities	$	5,000	$	2	$	—		$	5,002
Obligations of State and Political Subdivisions		21,678		1,281		(10	)		22,949
Mortgage-backed Securities - Residential		222,824		7,623		(101	)		230,346
Equity Securities		2,818		22		(405	)		2,435
Total	$	252,320	$	8,928	$	(516	)	$	260,732

December 31, 2009
U.S. Treasury and Agency Securities	$	5,000	$	—	$	(30	)	$	4,970
Obligations of State and Political Subdivisions		21,511		931		(64	)		22,378
Mortgage-backed Securities - Residential		214,591		7,065		(404	)		221,252
Equity Securities		2,818		13		(491	)		2,340
Total	$	243,920	$	8,009	$	(989	)	$	250,940

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. All mortgage-backed securities in the above table are residential mortgage-backed securities and guaranteed by government sponsored entities.

The carrying amount, unrecognized gains and losses and fair value of Securities Held-to-Maturity at March 31, 2010 and December 31, 2009, were as follows:

			Gross		Gross
	Carrying		Unrecognized		Unrecognized		Fair
Securities Held-to-Maturity:	Amount		Gains		Losses		Value
March 31, 2010
Obligations of State and Political Subdivisions	$	2,101	$	40	$	—	$	2,141

December 31, 2009
Obligations of State and Political Subdivisions	$	2,774	$	27	$	—	$	2,801

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 3 – Securities (continued)

The amortized cost and fair value of Securities at March 31, 2010 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay certain obligations with or without call or prepayment penalties. Mortgage-backed and Equity Securities are not due at a single maturity date and are shown separately.

	Amortized		Fair
	Cost		Value
Securities Available-for-Sale:
Due in one year or less	$	819	$	833
Due after one year through five years		3,469		3,668
Due after five years through ten years		10,074		10,204
Due after ten years		12,316		13,246
Mortgage-backed Securities - Residential		222,824		230,346
Equity Securities		2,818		2,435
Totals	$	252,320	$	260,732

	Carrying		Fair
	Amount		Value
Securities Held-to-Maturity:
Due in one year or less	$	175	$	177
Due after one year through five years		669		683
Due after five years through ten years		937		957
Due after ten years		320		324
Totals	$	2,101	$	2,141

Below is a summary of securities with unrealized losses as of March 31, 2010 and December 31, 2009, presented by length of time the securities have been in a continuous unrealized loss position:

At March 31, 2010:	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		1,785		(10	)		—		—			1,785		(10	)
Mortgage-backed Securities - Residential		47,964		(100	)		39		(1	)		48,003		(101	)
Equity Securities		1,619		(405	)		—		—			1,619		(405	)
Total	$	51,368	$	(515	)	$	39	$	(1	)	$	51,407	$	(516	)

At December 31, 2009:	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	$	4,970	$	(30	)	$	—	$	—		$	4,970	$	(30	)
Obligations of State and Political Subdivisions		3,419		(64	)		—		—			3,419		(64	)
Mortgage-backed Securities - Residential		47,726		(403	)		40		(1	)		47,766		(404	)
Equity Securities		1,533		(491	)		—		—			1,533		(491	)
Total	$	57,648	$	(988	)	$	40	$	(1	)	$	57,688	$	(989	)

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 3 – Securities (continued)

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 many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The Company doesn’t intend to sell or expect to be required to sell these securities, 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 guaranteed by government sponsored entities, are investment grade, and are performing as expected.

The Company’s equity securities consist of non-controlling investments in other banking organizations. When a decline in fair value below cost is deemed to be other-than-temporary, the unrealized loss must be recognized as a charge to earnings. At March 31, 2010 and December 31, 2009, certain equity securities in the Company’s portfolio with fair values below amortized cost were deemed to not be other-than-temporarily impaired due in large part to the overall financial condition of the issuers which included continued profitability throughout the first quarter of 2010 and during 2009 and that the fair value of the securities has declined due to difficult macroeconomic conditions for equity security valuations of banking organizations. In addition, the length of time that fair value has been less than cost was assessed and it is reasonable to expect that fair value can recover to a level greater than cost in a reasonable period of time.

Proceeds from the sales of Available-for-Sale Securities are summarized below:

	Three Months		Three Months
	Ended		Ended
	March 31, 2010		March 31, 2009

Proceeds from Sales and Calls	$	—	$	379
Gross Gains on Sales and Calls		—		—

Income Taxes on Gross Gains		—		—

Note 4 – Loans

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

	March 31,			December 31,
	2010			2009

Commercial and Industrial Loans	$	197,490		$	188,962
Commercial Real Estate Loans		328,565			334,255
Agricultural Loans		144,396			156,845
Consumer Loans		113,640			114,736
Residential Mortgage Loans		83,550			84,677
Total Loans	$	867,641		$	879,475
Less: Unearned Income		(1,623	)		(1,653	)
Allowance for Loan Losses		(10,713	)		(11,016	)
Loans, Net	$	855,305		$	866,806

Information Regarding Impaired Loans:

Impaired Loans with No Allowance for Loan Losses Allocated	$	684		$	1,213
Impaired Loans with Allowance for Loan Losses Allocated		6,931			6,932

Amount of Allowance Allocated to Impaired Loans		2,138			3,024

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 5 – Allowance for Loan Losses

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

	March 31,			March 31,
	2010			2009

Balance as of January 1	$	11,016		$	9,522
Provision for Loan Losses		1,500			750
Recoveries of Prior Loan Losses		102			514
Loan Losses Charged to the Allowance		(1,905	)		(742	)
Balance as of March 31	$	10,713		$	10,044

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 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. 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 from seven offices; and German American Reinsurance Company, Ltd., 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
March 31, 2010			Trust and
			Investment
	Core		Advisory								Consolidated
	Banking		Services			Insurance		Other			Totals

Net Interest Income	$	12,086	$	2		$	8	$	(447	)	$	11,649
Net Gains on Sales of Loans		318		—			—		—			318
Net Gain (Loss) on Securities		—		—			—		—			—
Trust and Investment Product Fees		1		391			—		(1	)		391
Insurance Revenues		13		6			1,674		(7	)		1,686
Noncash Item:
Provision for Loan Losses		1,500		—			—		—			1,500
Depreciation and Amortization		720		6			237		—			963
Income Tax Expense		1,438		(51	)		113		(289	)		1,211
Segment Profit (Loss)		3,367		(77	)		161		(200	)		3,251
Segment Assets		1,248,042		2,151			8,535		(4,716	)		1,254,012

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 6 – Segment Information (continued)

Three Months Ended
March 31, 2009			Trust and
			Investment
	Core		Advisory								Consolidated
	Banking		Services			Insurance		Other			Totals

Net Interest Income	$	10,747	$	1		$	13	$	(120	)	$	10,641
Net Gains on Sales of Loans		565		—			—		—			565
Net Gain (Loss) on Securities		—		—			—		—			—
Trust and Investment Product Fees		1		390			—		(1	)		390
Insurance Revenues		16		2			1,483		(14	)		1,487
Noncash Item:
Provision for Loan Losses		750		—			—		—			750
Depreciation and Amortization		665		7			226		—			898
Income Tax Expense		1,342		(53	)		23		(200	)		1,112
Segment Profit (Loss)		2,950		(80	)		36		36			2,942
Segment Assets		1,197,562		1,929			8,640		(3,828	)		1,204,303

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 is purchased. As of March 31, 2010, 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 three months ended March 31, 2010.

Note 8 – Equity Plans and Equity Based Compensation

The Company maintains equity incentive plans under which stock options, restricted stock, and other equity incentive awards can be granted. At March 31, 2010, the Company has reserved 657,956 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 three months ended March 31, 2010 and 2009, the Company granted no options, and accordingly, recorded no stock option expense related to option grants during the three months ended March 31, 2010 and 2009. In addition, there was no unrecognized option expense as all outstanding options were fully vested prior to March 31, 2010 and 2009.

During the quarters ended March 31, 2010 and 2009, the Company granted awards of 24,178 and 42,775 shares of restricted stock, respectively. The expense recorded for the restricted stock grants totaled $100 (or $60, net of an income tax benefit of $40) during the three months ended March 31, 2010. The expense recorded for the restricted stock grants totaled $118 (or $71, net of an income tax benefit of $47) during the three months ended March 31, 2009. Unrecognized expense associated with the restricted stock grants totaled $300 and $352 as of March 31, 2010 and 2009, respectively.

The Company maintains an Employee Stock Purchase Plan (a 1999 plan that expired at the end of the most recent plan year in August 2009; a 2009 plan that is substantively the same in all material respects has succeeded the 1999 plan for the annual offering period that commenced in August 2009) 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.

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

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

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 1999 plan provided for the purchase of up to 542,420 shares of common stock, and the 2009 plan provides for the purchase of up to 500,000 shares of common stock. The Company may obtain shares for sale under both the 1999 and 2009 plans 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. The Employee Stock Purchase Plan was not considered compensatory and no expense was recorded during the 2008/2009 and 2009/2010 plan years.

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
	March 31,
	2010			2009
Service Cost	$	—		$	—
Interest Cost		9			9
Expected Return on Assets		(1	)		(3	)
Amortization of Transition Amount		—			—
Amortization of Prior Service Cost		(1	)		(1	)
Recognition of Net (Gain)/Loss		6			5
Net Periodic Benefit Cost	$	13		$	10

Loss on Settlements and Curtailments	None			None

The Company previously disclosed in its financial statements for the year ended December 31, 2009, that it expected to contribute $75 to the pension plan during the fiscal year ending December 31, 2010. As of March 31, 2010, the Company has contributed $25 to the pension plan.

Note 10 – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

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.

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 Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 10 – Fair Value (continued)

Impaired Loans: Values for collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure. 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. Value 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 investors required return. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sale and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate (ORE) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property utilizing similar techniques as discussed above for Impaired Loans, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, impairment loss is recognized.

Loans Held-for-Sale: The fair values of loans held for sale are determined by using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).

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 March 31, 2010 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Treasury and Agency Securities	$	5,002	$	—	$	5,002	$	—
Obligations of State and Political Subdivisions		22,949		—		22,949		—
Mortgage-backed Securities-Residential		230,346		—		230,346		—
Equity Securities		2,435		2,082		—		353
Loans Held-for-Sale		5,270		—		5,270		—

			Fair Value Measurements at December 31, 2009 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Treasury and Agency Securities	$	4,970	$	—	$	4,970	$	—
Obligations of State and Political Subdivisions		22,378		—		22,378		—
Mortgage-backed Securities-Residential		221,252		—		221,252		—
Equity Securities		2,340		1,987		—		353
Loans Held-for-Sale		5,706		—		5,706		—

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 10 – Fair Value (continued)

The table below presents a reconciliation and income statement classification of gains and losses for equity securities that do not have readily determinable fair values and are evaluated for impairment on a periodic basis. These assets were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended March 31, 2010:

	Fair Value Measurements
	Using Significant
	Unobservable Inputs
	(Level 3)
	Available-for-Sale
	Securities
Three Months Ended March 31, 2010:
Balance of Recurring Level 3 Assets at January 1, 2010	$	353
Sale of Securities		—
Other-than-temporary Impairment Charges Recognized through Net Income		—
Ending Balance, March 31, 2010	$	353

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 March 31, 2010 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired Loans with Specific
Allocations	$	4,549	$	—	$	—	$	4,549
Other Real Estate		1,639		—		—		1,639

	Fair Value Measurements at December 31, 2009 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired Loans with Specific
Allocations	$	3,699	$	—	$	—	$	3,699
Other Real Estate		2,363		—		—		2,363

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $6,487 with a valuation allowance of $1,938, resulting in an additional provision for loan losses of $574 for the three months ended March 31, 2010. Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $6,602 with a valuation allowance of $2,903, resulting in an additional provision for loan losses of $2,517 for the year ended December 31, 2009.

Other Real Estate which is measured at the lower of carrying or fair value less costs to sell, had a carrying amount of $1,639 at March 31, 2010. No additional write-down occurred for the three months ended March 31, 2010. Other Real Estate which is measured at the lower of carrying or fair value less costs to sell, had a carrying amount of $2,363 at December 31, 2009, resulting in a write-down of $228 for the year ending December 31, 2009.

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 10 – Fair Value (continued)

The carrying amount and estimated fair values of the Company’s financial instruments, not previously presented, are provided in the table below. Not all of the Company’s assets and liabilities are considered financial instruments, and therefore are not included in the table. Because no active market exists for a significant portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

	March 31, 2010						December 31, 2009
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
Financial Assets:
Cash and Short-term Investments	$	45,399		$	45,399		$	28,054		$	28,054
Securities Held-to-Maturity		2,101			2,141			2,774			2,801
FHLB Stock and Other Restricted Stock		10,621			N/A			10,621			N/A
Loans, including Loans Held-for-Sale, Net		860,575			857,305			872,512			880,077
Accrued Interest Receivable		6,088			6,088			6,605			6,605
Financial Liabilities:
Demand, Savings, and Money Market Deposits		(631,441	)		(631,441	)		(639,967	)		(639,967	)
Other Time Deposits		(341,554	)		(341,656	)		(329,676	)		(330,628	)
Short-term Borrowings		(38,358	)		(38,358	)		(34,801	)		(34,801	)
Long-term Debt		(113,289	)		(115,579	)		(113,320	)		(114,742	)
Accrued Interest Payable		(2,070	)		(2,070	)		(2,292	)		(2,292	)
Unrecognized Financial Instruments:
Commitments to Extend Credit		—			—			—			—
Standby Letters of Credit		—			—			—			—
Commitments to Sell Loans		—			—			—			—

The fair value for cash and short-term investments and accrued interest receivable is estimated to be equal to their carrying value. The fair values of securities held to maturity are based on quoted market prices or dealer quotes, if available, or by using quoted market prices for similar instruments. The fair value of loans held-for-sale is estimated using commitment prices or market quotes on similar loans. The fair value of loans are estimated by discounting future cash flows using the current rates at which similar loans would be made for the average remaining maturities. It was not practicable to determine the fair value of FHLB stock and other restricted stock due to restrictions placed on its transferability. The fair value of demand deposits, savings accounts, money market deposits, short-term borrowings and accrued interest payable is the amount payable on demand at the reporting date. The fair value of fixed-maturity time deposits and long-term borrowings are estimated using the rates currently offered on these instruments for similar remaining maturities. Commitments to extend credit and standby letters of credit are generally short-term or variable rate with minimal fees charged. These instruments have no carrying value, and the fair value is not significant. The fair value of commitments to sell loans is the cost or benefit of settling the commitments with the counter-party at the reporting date. At March 31, 2010 and December 31, 2009, none of the Company’s commitments to sell loans were mandatory, and there is no cost or benefit to settle these commitments.

Note 11 – Mergers and Acquisition Activity

German American Bancorp, the banking subsidiary of the Company, entered into a Branch Purchase Agreement with Farmers State Bank of Alto Pass, Ill. dated February 17, 2010. Under the Agreement, German American Bancorp has agreed to purchase the two branches of Farmers in metropolitan Evansville, Indiana. One of the branches is located in Evansville (Vanderburgh County, Indiana) and the other in adjacent Newburgh (Warrick County, Indiana).

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(unaudited, dollars in thousands except share and per share data)

Note 11 – Mergers and Acquisition Activity (continued)

In general, German American has agreed to buy and assume from Farmers all of Farmers' interest in the physical assets associated with the branches (including the real estate of the branches, automated teller machines, and furniture, fixtures and equipment) and most of the loans and deposits of the branches. Loans to be purchased are expected to total approximately $40 million and deposits to be assumed are expected to approximate $50 million at the time of closing. In addition, a fixed sum of $4.9 million will be paid by German American for all assets other than loans and cash balances.

Consummation of the transaction is currently expected to be completed within the second quarter of 2010.

Note 12 – New Accounting Pronouncements

On June 12, 2009, the FASB issued new guidance impacting FASB ASC 860, Transfers and Servicing. The new guidance amends ASC 860, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. The new standard was effective January 1, 2010. The adoption of this standard did not have a material effect on the Company’s consolidated results of operations or financial position.

On June 12, 2009, the FASB issued new guidance impacting FASB ASC 810-10, Consolidation (Statement No. 167 amends FIN 46(R)). The new guidance replaces the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with a qualitative approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity (VIE) that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. Unlike previous guidance, this Statement requires ongoing reconsideration of whether (1) an entity is a VIE and (2) an enterprise is the primary beneficiary of a VIE. It is expected that the amendments will result in more entities consolidating VIEs that previously were not consolidated This new guidance will also require additional disclosures about the Company’s involvement in variable interest entities. This new guidance was effective January 1, 2010. The adoption of this standard did not have a material effect on the Company’s consolidated results of operations or financial position.

In January 2010, the FASB amended guidance for fair value measurements and disclosures to clarify and provide additional disclosure requirements related to recurring and non-recurring fair value measurements. The update requires new disclosures for transfers in and out of Levels 1 and 2, and requires a reconciliation be provided for the activity in Level 3 fair value measurements. A reporting entity should disclose separately the amounts of significant transfers in and out of Levels 1 and 2 and provide an explanation for the transfers. This guidance is effective for interim periods beginning after December 15, 2009, and did not have a material effect on the Company’s consolidated results of operations or financial position. In the reconciliation for fair value measurements using observable inputs (Level 3) a reporting entity should present separately information about purchases, sales, issuances, and settlements on a gross basis rather than a net basis. Disclosures relating to purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurement will become effective beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this standard is not expected to have a material effect on the Company’s consolidated results of operations or financial position.

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 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 seven 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 March 31, 2010 and December 31, 2009 and the consolidated results of operations for the three months ended March 31, 2010 and 2009. 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, 2009 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, 2009 Annual Report on Form 10-K.

During the first quarter of 2010, the Company generated earnings of $3,251,000 or $0.29 per share. On a net income basis, first quarter 2010 earnings were approximately 11% higher than the $2,942,000 or $0.27 per share reported in the first quarter of 2009. Earnings in the first quarter 2010 compared with the first quarter 2009 were positively affected by an improved net interest margin and higher level of non-interest revenues, offset by modestly higher non-interest operating costs and elevated level of provision for loan losses. Each of these areas will be discussed in more detail below.

In the second quarter of 2010, the Company plans to complete its acquisition of two branches (including their related loan assets and deposit liabilities) of another bank in the Evansville, Indiana banking market, which is a new market for the Company. For further information see Note 11 to the Company’s consolidated financial statements included in Item 1 of this Report.

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 the valuation allowance on deferred tax assets.

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.

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 three-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 includes 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, the duration of the decline and whether the Company intends to sell or believes it will be required to sell the securities prior to recovery. As of March 31, 2010, gross unrealized losses on the securities available-for-sale portfolio totaled approximately $516,000. As of March 31, 2010, held-to-maturity securities had a gross unrecognized gain of approximately $40,000.

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. 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.

RESULTS OF OPERATIONS

Net Income:

Net income increased $309,000 or 11% to $3,251,000 or $0.29 per share for the quarter ended March 31, 2010, compared to $2,942,000 or $0.27 per share for the first quarter of 2009.

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. Several factors contribute to the determination of net interest income and net interest margin, including the volume and mix of earning assets, interest rates, and income taxes. Many factors affecting net interest income are subject to control by management policies and actions. Factors beyond the control of management include the general level of credit and deposit demand, Federal Reserve Board monetary policy, and changes in tax laws.

The following table summarizes net interest income (on a tax-equivalent basis). For tax-equivalent adjustments, an effective tax rate of 34% was used for all periods presented (1).

	Average Balance Sheet
	(Tax-equivalent basis / dollars in thousands)
	Three Months Ended								Three Months Ended
	March 31, 2010								March 31, 2009
	Principal			Income /		Yield /			Principal			Income /		Yield /
	Balance			Expense		Rate			Balance			Expense		Rate
Assets
Federal Funds Sold and Other Short-term Investments	$	25,257		$	9		0.15	%	$	22,239		$	17		0.32	%
Securities:
Taxable		238,211			2,465		4.14	%		180,754			2,190		4.85	%
Non-taxable		26,590			410		6.16	%		23,100			388		6.71	%
Total Loans and Leases (2)		877,629			12,906		5.96	%		887,910			13,450		6.13	%
Total Interest Earning Assets		1,167,687			15,790		5.46	%		1,114,003			16,045		5.82	%
Other Assets		96,518								92,219
Less: Allowance for Loan Losses		(11,308	)							(9,832	)
Total Assets	$	1,252,897							$	1,196,390

Liabilities and Shareholders’ Equity
Interest-bearing Demand, Savings and Money Market Deposits	$	476,246		$	426		0.36	%	$	445,524		$	864		0.79	%
Time Deposits		342,488			2,186		2.59	%		353,500			3,141		3.60	%
FHLB Advances and Other Borrowings		151,318			1,322		3.54	%		131,876			1,211		3.72	%
Total Interest-bearing Liabilities		970,052			3,934		1.64	%		930,900			5,216		2.27	%
Demand Deposit Accounts		154,219								146,308
Other Liabilities		13,391								12,624
Total Liabilities		1,137,662								1,089,832
Shareholders’ Equity		115,235								106,558
Total Liabilities and Shareholders’ Equity	$	1,252,897							$	1,196,390

Cost of Funds							1.36	%							1.90	%
Net Interest Income				$	11,856							$	10,829
Net Interest Margin							4.10	%							3.92	%

(1)	Effective tax rates were determined as though interest earned on the Company’s investments in municipal bonds and loans was fully taxable.

(2)	Loans held-for-sale and non-accruing loans have been included in average loans.

Net interest income increased $1,008,000 or 9% (an increase of $1,027,000 or 9% on a tax-equivalent basis) for the quarter ended March 31, 2010 compared with the same quarter of 2009. 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 first quarter 2010 was 4.10% compared to 3.92% for the first quarter of 2009. The yield on earning assets totaled 5.46% during the quarter ended March 31, 2010 compared to 5.82% in the same period of 2009 while the cost of funds (expressed as a percentage of average earning assets) totaled 1.36% during the quarter ended March 31, 2010 compared to 1.90% in the same period of 2009.

Average earning assets increased by approximately $53.7 million or 5% during the three months ended March 31, 2010 compared with the same period of 2009. Average loans outstanding declined by $10.3 million or 1% during the three months ended March 31, 2010 compared with the first quarter of 2009. The increase in average earning assets was related to an increased securities portfolio in the three months ended March 31, 2010. The key driver of the increased securities portfolio and overall increased average earnings assets was a higher level of average core deposits (core deposits defined as demand deposits - both interest and non-interest bearing, savings, money market and time deposits in denominations of less than $100,000). During the first quarter of 2010, average core deposits increased $43.7 million or 5%, compared to the first quarter of 2009.

The expansion of the Company’s net interest income and net interest margin in the three months ended March 31, 2010 compared with the first quarter of 2009 has been aided by utilization of interest rate floors on adjustable rate commercial and agricultural loans. As of March 31, 2010 the Company’s commercial and agricultural loan portfolio totaled $670.5 million of which approximately 67% were adjustable rate loans. Of these adjustable rate loans, approximately 84% contain interest rate floors which range predominantly from 4% to 7%. At March 31, 2010, approximately $228 million of these loans were at their contractual floor.

Also contributing to the expansion of the Company’s net interest income and net interest margin in the first quarter of 2010 compared with the first quarter of 2009 has been the relative liability sensitive nature of the Company’s balance sheet. The Company has been able to effectively lower interest rates on its interest-bearing non-maturity deposits while continuing to expand its core deposit base. In addition, a significant level of time deposits matured during the past year allowing the Company to lower its cost of funds of these deposits in a time of historically low interest rates.

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 $1,500,000 during the quarter ended March 31, 2010, representing an increase of $750,000 or 100% from the first quarter 2009 provision of $750,000.

During the first quarter of 2010, the annualized provision for loan loss represented 0.68% of average loans outstanding compared with 0.34% on an annualized basis of average loans outstanding during the first quarter of 2009. Net charge-offs totaled $1,803,000 or 0.82% on an annualized basis of average loans outstanding during the three months ended March 31, 2010 compared with $228,000 or 0.10% on an annualized basis of average loans outstanding during the same period of 2009. The elevated level of net charge-offs during the first quarter of 2010 was the result of the disposition of two commercial real estate loan relationships during the first quarter of 2010. The resulting net charge-offs of these two relationships totaled approximately $1.7 million which had been nearly fully allocated in prior periods.

The provision for loan losses made during the quarter ended March 31, 2010 was 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 provision 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 first quarter of 2010, non-interest income increased approximately 8% over the first quarter of 2009.

					Change from
Non-interest Income	Three Months				Prior Period
($ in thousands)	Ended March 31,				Amount			Percent
	2010		2009		Change			Change
Trust and Investment Product Fees	$	391	$	390	$	1			—	%
Service Charges on Deposit Accounts		946		1,060		(114	)		-11	%
Insurance Revenues		1,686		1,487		199			13	%
Company Owned Life Insurance		202		238		(36	)		-15	%
Other Operating Income		1,036		504		532			106	%
Subtotal		4,261		3,679		582			16	%
Net Gains on Sales of Loans		318		565		(247	)		-44	%
Net Gain (Loss) on Securities		—		—		—			—	%
Total Non-interest Income	$	4,579	$	4,244	$	335			8	%

Deposit service charges and fees declined by 11% during the first quarter of 2010 compared with the first quarter of 2009 due in large part to less customer utilization of the Company’s overdraft protection program. Insurance revenues increased 13% during the quarter ended March 31, 2010, compared with 2009. The increase was largely attributable to an increase in contingency revenue at the Company’s property and casualty insurance subsidiary, German American Insurance.

Other operating income increased $532,000 or 106% during the first quarter of 2010 compared with the same period of 2009. The increase was attributable to the gain on sale of a commercial other real estate owned property and to a lesser extent a gain from the sale of a former operations office facility of the Company.

During the first quarter of 2010, the net gain on sale of residential loans decreased 44% from the gain recognized in the first quarter of 2009 driven largely by a lower level of loans sold into the secondary market during 2010 as compared to 2009. Loans sold during 2010 totaled $17.9 million compared to $36.6 million during the first quarter of 2009.

Non-interest Expense:

During the quarter ended March 31, 2010, non-interest expense increased approximately 2% compared with the same period of 2009.

					Change from
Non-interest Expense	Three Months				Prior Period
($ in thousands)	Ended March 31,				Amount			Percent
	2010		2009		Change			Change
Salaries and Employee Benefits	$	5,549	$	5,614	$	(65	)		-1	%
Occupancy, Furniture and Equipment Expense		1,539		1,529		10			1	%
FDIC Premiums		352		335		17			5	%
Data Processing Fees		359		357		2			1	%
Professional Fees		521		607		(86	)		-14	%
Advertising and Promotion		269		288		(19	)		-7	%
Intangible Amortization		218		221		(3	)		-1	%
Other Operating Expenses		1,459		1,130		329			29	%
Total Non-interest Expense	$	10,266	$	10,081	$	185			2	%

Salaries and benefits expense declined approximately 1% during the first quarter of 2010 compared with the first quarter of 2009. The decrease was primarily the result of lower costs associated with the Company’s partially self-insured health insurance plan. Professional fees declined 14% during the quarter ended March 31, 2010 compared with the same quarter of 2009 as a result of lower legal expenses.

Other operating expenses increased by 29% during the quarter ended March 31, 2010 compared with the first quarter of 2009. The increase was largely attributable to an increased level of loan collection costs, amortization expense related to a new markets tax credit project in which the Company invested in the fourth quarter of 2009, and increased supplies expense related to the Company’s common identity initiative.

Income Taxes:

The Company’s effective income tax rate approximated 27.1% during the three months ended March 31, 2010 compared with 27.4% during the same period of 2009. The effective tax rate in both 2010 and 2009 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 a new markets tax credit project, and income generated by subsidiaries domiciled in a state with no state or local income tax.

FINANCIAL CONDITION

Total assets at March 31, 2010 increased $11.0 million to $1.254 billion compared with $1.243 billion in total assets at December 31, 2009. Cash and cash equivalents increased $17.3 million to $45.4 million at March 31, 2010 compared with $28.1 million at year-end 2009. Securities available-for-sale increased $9.8 million to $260.7 million at March 31, 2010 compared with $250.9 million at year-end 2009. The increase in cash and cash equivalents and securities available-for-sale was attributable to an overall decline in Company’s loan portfolio combined with modest deposit and borrowed fund growth.

End-of-period loans outstanding declined 5% on an annualized basis during the first quarter of 2010 compared with the year-ended December 31, 2009. The overall decline in the level of loans has largely been driven by soft loan demand in the commercial real estate and consumer portfolios attributable a cautious economic environment and a seasonal decline in the Company’s agricultural loan portfolio. These declines were partially offset by an increase in the level of commercial and industrial portfolio driven largely by short-term tax exempt loan financing to school corporations in the Company’s primary market areas.

End of Period Loan Balances:					Current			Annualized
($ in thousands)	March 31,		December 31,		Period			Percent
	2010		2009		Change			Change

Commercial and Industrial Loans	$	197,490	$	188,962	$	8,528			18	%
Commercial Real Estate Loans		328,565		334,255		(5,690	)		-7	%
Agricultural Loans		144,396		156,845		(12,449	)		-32	%
Consumer Loans		113,640		114,736		(1,096	)		-4	%
Residential Mortgage Loans		83,550		84,677		(1,127	)		-5	%
Total Loans	$	867,641	$	879,475	$	(11,834	)		-5	%

The Company’s allowance for loan losses totaled $10.7 million at March 31, 2010. This level of allowance represents a decline of $303,000 or 3% from year-end 2009. The decline was attributable to the disposition of two commercial real estate loan relationships during the first quarter of 2010. The resulting net charge-off on these two relationships totaled approximately $1.7 million which had been nearly fully allocated in prior periods. The allowance for loan losses represented 1.24% of period end loans at March 31, 2010 compared with 1.25% at year-end 2009. The allowance for loan losses represented 115% of period end non-performing loans at March 31, 2010 and 125% of period end non-performing loans at December 31, 2009.

End-of-period deposits increased approximately 1% on an annualized basis during the quarter-ended March 31, 2010 compared with year-end December 31, 2009.

End of Period Deposit Balances:					Current			Annualized
($ in thousands)	March 31,		December 31,		Period			Percent
	2010		2009		Change			Change

Non-interest-bearing Demand Deposits	$	158,163	$	155,268	$	2,895			7	%
Interest-bearing Demand, Savings, & Money Market Accounts		473,278		484,699		(11,421	)		-9	%
Time Deposits < $100,000		261,095		256,401		4,694			7	%
Time Deposits of $100,000 or more & Brokered Deposits		80,459		73,275		7,184			39	%
Total Deposits	$	972,995	$	969,643	$	3,352			1	%

Non-performing Assets:

The following is an analysis of the Company’s non-performing assets at March 31, 2010 and December 31, 2009 (dollars in thousands):

	March 31,			December 31,
	2010			2009
Non-accrual Loans	$	9,129		$	8,374
Past Due Loans (90 days or more)		178			113
Restructured Loans		26			306
Total Non-performing Loans		9,333			8,793
Other Real Estate		1,639			2,363
Total Non-performing Assets	$	10,972		$	11,156

Non-performing Loans to Total Loans		1.08	%		1.00	%
Allowance for Loan Loss to Non-performing Loans		114.79	%		125.28	%

Non-performing assets totaled $11.0 million at March 31, 2010 compared with $11.2 million at December 31, 2009. Non-performing loans totaled $9.3 million at March 31, 2010 compared to $8.8 million of non-performing loans at December 31, 2009. Non-performing loans represented 1.08% of total outstanding loans at March 31, 2010 compared with 1.00% of total loans outstanding at year-end 2009. The increase in non-performing loans was primarily attributable to a single commercial real estate loan that migrated from the Company’s watch list to a non-performing credit during the first quarter of 2010.

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 March 31, 2010.

At March 31, 2010, 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:

	Minimum for
	Capital			At			At
	Adequacy			March 31,			December 31,
	Purposes			2010			2009

Leverage Ratio		4.00	%		8.10	%		7.64	%
Tier 1 Capital to Risk-adjusted Assets		4.00	%		10.51	%		10.10	%
Total Capital to Risk-adjusted Assets		8.00	%		14.32	%		14.09	%

As of March 31, 2010, shareholders’ equity increased by $2.7 million to $116.2 million compared with $113.5 million at year-end 2009. The increase in shareholders’ equity was primarily attributable to an increase of $1.7 million in retained earnings and an increase of $899,000 in accumulated other comprehensive income. Shareholders’ equity represented 9.3% of total assets at March 31, 2010 and 9.1% at December 31, 2009. Shareholders’ equity included $12.1 million of goodwill and other intangible assets at March 31, 2010 compared to $12.3 million of goodwill and other intangible assets at December 31, 2009.

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 $17.3 million during the three months ended March 31, 2010 ending at $45.4 million. During the three months ended March 31, 2010, operating activities resulted in net cash inflows of $8.4 million. Investing activities resulted in net cash inflows of $3.6 million during the three months ended March 31, 2010. Financing activities resulted in net cash inflows for the three month period ended March 31, 2010 of $5.3 million.

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 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.

In this Report, the Company’s statements regarding its expectations concerning its expectation of completing its acquisition of two branches in the Evansville, Indiana banking market during the second quarter of 2010 are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. While the Company expects that all conditions to closing will be satisfied and this acquisition completed on the agreed terms, the satisfaction of some of the closing conditions is outside of the Company’s control and cannot be assured.

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.

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, including asset/liability management strategies; changes in customer borrowing, repayment, investment, and deposit practices; changes in fiscal, monetary, and tax policies; changes in financial and capital markets; 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; possible future capital management activities that the Company may utilize, including possible future sales or repurchases or redemptions by the Company of debt or equity securities issued by it or that it may issue; actions of the Federal Reserve Board; actions of the Treasury and the Federal Deposit Insurance Corporation under the Emergency Economic Stabilization Act of 2008 and the Federal Deposit Insurance Act (and specifically actions of the Federal Deposit Insurance Corporation in respect of possible future special assessments of deposit insurance premiums), and other 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, 2009, 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.

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 March 31, 2010
						Net Portfolio Value
	Net Portfolio					as a % of Present Value
	Value					of Assets
Changes
in rates	$ Amount		% Change			NPV Ratio			Change
+2%	$	128,745		(12.47	)%		10.72	%	(104) b.p.
Base		147,092		—			11.76	%		—
-2%		116,509		(20.79	)%		9.20	%	(256) 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 March 31, 2010, 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 first fiscal quarter of 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 March 31, 2010.

Period	Total Number Of Shares (or Units) Purchased		Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)




1/1/10 – 1/31/10		—		—		—		272,789
2/1/10 – 2/28/10		—		—		—		272,789
3/1/10 – 3/31/10		—		—		—		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 March 31, 2010 (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 three months ended March 31, 2010.

Item 6. Exhibits

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

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: May 5, 2010	By/s/Mark A. Schroeder
	Mark A. Schroeder
	Chairman of the Board and Chief Executive Officer

Date: May 5, 2010	By/s/Bradley M. Rust
	Bradley M. Rust
	Executive Vice President and Chief Financial Officer

INDEX OF EXHIBITS

Exhibit No.		Description
2		Branch Purchase Agreement between German American Bancorp, as Buyer, Farmers State Bank of Alto Pass, Ill., as Seller, and Farmers State Holding Corp., as the Seller Affiliate, dated February 17, 2010. Schedules identified in the list of Schedules to this Agreement are not filed as part of this Exhibit, but the Registrant agrees to furnish to the Commission supplementally any omitted schedule upon request.
31.1		Sarbanes-Oxley Act of 2002, Section 302 Certification for Chairman of the Board and Chief Executive Officer.
31.2		Sarbanes-Oxley Act of 2002, Section 302 Certification for Executive Vice President and Chief Financial Officer.
32.1		Sarbanes-Oxley Act of 2002, Section 906 Certification for Chairman of the Board and Chief Executive Officer.
32.2		Sarbanes-Oxley Act of 2002, Section 906 Certification for Executive Vice President and Chief Financial Officer.

31.	Assignability	53

32.	Counterparts	53

33.	Press Releases	54

34.	Confidentiality	54

35.	Exclusive Dealing	54

36.	Severability	55

37.	Jury Waiver	55

SCHEDULE 1(b)	ATMs

SCHEDULE 1(g)	Assigned Contracts

SCHEDULE 2(a)(1)	Deposit Accounts

SCHEDULE 2(a)(5)	Accrued Liabilities

SCHEDULE 9(c)	Liens and Encumbrances

SCHEDULE 9(d)	Premises Matters

SCHEDULE 9(e)	Environmental Matters

SCHEDULE 9(f)	Loan Matters

SCHEDULE 9(i)	Litigation

SCHEDULE 9(j)	Regulatory Matters

SCHEDULE 9(l)(2)	Seller Regulatory Approvals

SCHEDULE 9(l)(3)	Required Consents

SCHEDULE 9(o)	Personal Property Matters

SCHEDULE 9(r)	Tax Matters

SCHEDULE 9(s)	Employee Benefit Plan Matters

SCHEDULE 10(d)	Buyer Regulatory Approvals

SCHEDULE 1-KO	Kick-out Loan Schedule

if to the Buyer:		Personal & Confidential
		German American Bancorp
		Mark A. Schroeder, Chairman and CEO
		711 Main Street
		Box 810
		Jasper, Indiana 47546
		Fax: (812) 482-0745
		E-mail: mark.schroeder@germanamerican.com

with copies to:		Ice Miller LLP
		Attn: Mark Barnes
		One American Square, Suite 2900
		Indianapolis, Indiana 46282-0020
		Fax: (317) 592-4868
		E-mail: barnes@icemiller.com

if to the Seller or Seller Affiliate:		Personal & Confidential
		Farmers State Bank of Alto Pass, ILL.
		Attn: Thomas Franks
		555 South Commercial
		Harrisburg, Illinois 62946
		Fax: (618) 253-4300
		E-mail: tom@franksllc.com

with a copy to:		Ziemer, Stayman, Weitzel & Shoulders, LLP
		Attn: Marco DeLucio
		P.O Box 916
		Evansville, Indiana 47706
		Fax: (812) 421-5089
		E-mail: mdelucio@zsws.com

	GERMAN AMERICAN BANCORP

	By:	/s/ Mark A. Schroeder
		Mark A. Schroeder, Chairman and Chief Executive Officer

	FARMERS STATE BANK OF ALTO PASS, ILL.

	By:	/s/ Thomas W. Franks
	Name:	Thomas W. Franks
	Title:	Chairman

	FARMERS STATE HOLDING CORP.

	By:	/s/ Thomas W. Franks
	Name:	Thomas W. Franks
	Title:	Chairman and CEO

	FARMERS STATE BANK OF ALTO PASS

	By:
		Name:
		Title:

		Page No.

1.	Purchase and Sale of Assets	1

2.	Assumption of Liabilities; Excluded Liabilities	3

3.	Calculation and Allocation of Purchase Price	4

4.	Payment of the Purchase Price	8

5.	Closing and Closing Date	9

6.	Obligations at Closing	9

7.	Conditions Precedent to Seller’s Obligations	12

8.	Conditions Precedent to Buyer’s Obligations	13

9.	Representations and Warranties of Seller	15

10.	Representations and Warranties of Buyer	29

11.	Seller’s Covenants	31

12.	Buyer Covenants	33

13.	Additional Covenants.	33

14.	Regulatory Compliance, Conversion and Transition Matters	38

15.	Name Change, etc	46

16.	Contracts	46

17.	Indemnification	46

18.	Taxes	49

19.	No Partnership or Joint Venture	50

20.	Further Assurances	50

21.	Amendment; Waiver	50

22.	Termination of Agreement	50

23.	Responsibilities Upon Termination	51

24.	Entire Agreement	51

25.	Notices	52

26.	Governing Law; Forum and Consent to Jurisdiction	52

27.	Descriptive Headings	53

28.	Parties in Interest; Third Party Beneficiaries	53

29.	Expenses and Brokers	53

30.	Specific Performance	53

Estimated Liabilities:
Aggregate balance of Deposit Liabilities (including accrued interest)	$	(		)

Estimated Purchase Price:
Cash on Hand
Prepaid Expenses
Unpaid principal balance of the Loans, plus Accrued Interest
All other Assets and Additional Assets			4,990,000


Estimated Payment Amount Payable by ____ to ____

GERMAN AMERICAN BANCORP			FARMERS STATE BANK OF ALTO PASS, ILL.


By: __________________________________________________________			By: __________________________________________________________
Name:			Name:
Title:			Title: