Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Note 5 – 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 Company’s banking subsidiary’s local markets.

The core banking segment is comprised by the Company’s banking subsidiary, German American Bancorp, which operated through 33 retail banking offices at June 30, 2011.  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 primarily consists of German American Insurance, Inc., which provides a full line of personal and corporate insurance products from seven offices.  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.

			Trust and
			Investment
	Core		Advisory									Consolidated
Three Months Ended	Banking		Services			Insurance			Other			Totals
June 30, 2011
Net Interest Income	$	16,790	$	5		$	6		$	(537	)	$	16,264
Net Gains on Sales of Loans		379		—			—			—			379
Net Gain on Securities		—		—			—			—			—
Trust and Investment Product Fees		1		495			—			(1	)		495
Insurance Revenues		19		2			1,282			(13	)		1,290
Noncash Items:
Provision for Loan Losses		1,300		—			—			—			1,300
Depreciation and Amortization		1,175		9			137			38			1,359
Income Tax Expense (Benefit)		2,626		(121	)		15			(329	)		2,191
Segment Profit (Loss)		5,403		(185	)		(11	)		(343	)		4,864
Segment Assets at June 30, 2011		1,822,774		12,142			7,852			(25,096	)		1,817,672

			Trust and
			Investment
	Core		Advisory									Consolidated
Three Months Ended	Banking		Services			Insurance			Other			Totals
June 30, 2010
Net Interest Income	$	12,356	$	2		$	9		$	(452	)	$	11,915
Net Gains on Sales of Loans		499		—			—			—			499
Net Gain on Securities		—		—			—			—			—
Trust and Investment Product Fees		1		395			—			(1	)		395
Insurance Revenues		17		1			1,072			(7	)		1,083
Noncash Items:
Provision for Loan Losses		1,000		—			—			—			1,000
Depreciation and Amortization		615		7			227			—			849
Income Tax Expense (Benefit)		1,883		(53	)		(105	)		(329	)		1,396
Segment Profit (Loss)		3,874		(80	)		(171	)		(215	)		3,408
Segment Assets at December 31, 2010		1,368,348		2,193			8,426			(3,079	)		1,375,888

			Trust and
			Investment
	Core		Advisory								Consolidated
Six Months Ended	Banking		Services			Insurance		Other			Totals
June 30, 2011
Net Interest Income	$	32,429	$	7		$	13	$	(1,078	)	$	31,371
Net Gains on Sales of Loans		788		—			—		—			788
Net Gain on Securities		—		—			—		1,045			1,045
Trust and Investment Product Fees		2		959			—		(2	)		959
Insurance Revenues		40		2			3,313		(16	)		3,339
Noncash Items:
Provision for Loan Losses		2,600		—			—		—			2,600
Depreciation and Amortization		2,320		17			273		75			2,685
Income Tax Expense (Benefit)		3,995		(147	)		330		(681	)		3,497
Segment Profit (Loss)		8,964		(223	)		439		329			9,509
Segment Assets at June 30, 2011		1,822,774		12,142			7,852		(25,096	)		1,817,672

			Trust and
			Investment
	Core		Advisory									Consolidated
Six Months Ended	Banking		Services			Insurance			Other			Totals
June 30, 2010
Net Interest Income	$	24,442	$	4		$	17		$	(899	)	$	23,564
Net Gains on Sales of Loans		817		—			—			—			817
Net Gain on Securities		—		—			—			—			—
Trust and Investment Product Fees		2		786			—			(2	)		786
Insurance Revenues		30		7			2,746			(14	)		2,769
Noncash Items:
Provision for Loan Losses		2,500		—			—			—			2,500
Depreciation and Amortization		1,335		13			464			—			1,812
Income Tax Expense (Benefit)		3,321		(104	)		8			(618	)		2,607
Segment Profit (Loss)		7,241		(157	)		(10	)		(415	)		6,659
Segment Assets at December 31, 2010		1,368,348		2,193			8,426			(3,079	)		1,375,888