EX-99.5 6 ex99-5.htm ex99-5.htm
Exhibit 99.5
NEWS RELEASE
 
For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
 
1 of 11
 
 
JANUARY 29, 2013
GERMAN AMERICAN BANCORP, INC. (GABC) REPORTS RECORD 2012 EARNINGS & ANNOUNCES INCREASE IN QUARTERLY CASH DIVIDEND
 
Jasper, Indiana –January 29, 2013 -- German American Bancorp, Inc. (NASDAQ: GABC) reported record earnings for the year ended on December 31, 2012.  This continued level of strong financial performance in 2012 follows upon a period of exceptional performance during the past five years, as the period of 2008-2012 represents the best five years in the Company’s history in terms of reported annual earnings.  The Company’s return on average shareholder equity of 13.57% in 2012 also was a record, and represents the 8th consecutive year that German American has delivered double-digit returns on shareholders’ equity.

The Company’s 2012 net income of $24.1 million, or $1.90 per share, was an increase of 18%, on a per share basis, over its previous record annual net income of $20.2 million, or $1.61 per share reported in 2011, and represented a 57% increase, on a per share basis, from the $13.4 million, or $1.21 per share, record earnings the Company reported in 2010. Fourth quarter earnings were $6.2 million, or $0.49 per share, an increase of approximately 11% from 2011 fourth quarter results of $5.6 million, or $0.44 per share.

This 2012 record performance was attributable to both an increased level of net interest income, driven by a higher level of earning assets within both the Company’s loan portfolio and securities portfolio, and a reduced level of provision for loan loss, as the Company’s historic level of strong asset quality improved even further in 2012.

The Company also announced an increase in the level of its regular quarterly cash dividend. German American’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share which will be payable on February 20, 2013 to shareholders of record as of February 10, 2013.  This level of regular quarterly cash divided represents approximately a 7% increase above the Company’s prior quarterly cash dividend level.

Additionally, the Company also announced that it will, effective April 1, 2013, redeem all $19.25 million of its outstanding 8% Redeemable Subordinated Debentures due 2019 at a redemption price of 100 percent of the outstanding principal amount plus accrued unpaid interest.  The Debentures, which constitute supplemental regulatory capital for the Company, were issued in April 2009 as a precautionary measure in the face of the looming economic crisis.  Given the Company’s strong financial performance throughout the economic downturn and the stabilization of the current economic environment, the Company’s Board of Directors determined this supplemental regulatory capital is no longer needed, and, therefore, elected to invoke the early redemption feature of the debenture issue.

 
-1-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
2 of 11
 
Mark A. Schroeder, German American Chairman & CEO, stated, “This continuation of the trend of our Company’s exceptional financial performance in 2012 is truly a reflection of the skill of our team of financial professionals, the commitment of our client base to honor their financial obligations, and the economic strength within our market area of Southern Indiana.  We are extremely pleased to be able to once again deliver upon our pledge to our customers and our shareholders to offer the very best in financial products and services throughout our Southern Indiana footprint in a safe, sound, and secure manner.  The achievement of this record level of performance over the course of the past five years during an extremely difficult economic period places German American among a very elite group of financial institutions nationwide, and has provided us with the financial wherewithal to prudently redeem the precautionary supplemental regulatory capital issued in 2009, and, most importantly, to increase the level of cash dividends paid to our shareholders.”

Schroeder continued, “As we have previously stated, our Company’s sole focus is on our clients located throughout Southern Indiana, and we recognize that our past, present, and future success as an organization is explicitly linked to the financial well-being of those clients and to the prosperity of the Southern Indiana communities in which we do business.  Within our historic Southern Indiana markets, we’ve enjoyed a very strong level of organic deposit growth during the past several years and in 2012 we saw a significant increase in the level of loan demand from both our business and consumer clients.  Additionally, our presence has been extremely well received by a growing base of new clients since our expansion into the Bloomington, Indiana market in 2007, the Evansville, Indiana market in 2010, and now the Columbus, Indiana market in 2012.

Clearly, clients throughout Southern Indiana are, in increasing numbers, recognizing the value of doing business with German American, and are reaching out to us to assist them in the achievement of their financial goals.  We very much appreciate the opportunity these clients have afforded us and we pledge to them that we will work diligently to achieve their financial goals and to earn their confidence and trust.”

Balance Sheet Highlights

Total assets for the Company increased to $2.006 billion at December 31, 2012, representing an increase of $132.5 million compared with December 31, 2011.  The increase during 2012 was largely attributable to growth of the Company’s loan portfolio.
 
December 31, 2012 loans outstanding increased by $39.8 million, or approximately 14% on an annualized basis, compared with September 30, 2012, and increased $84.4 million, or approximately 8%, compared to year-end 2011.  The increase in loans during fourth quarter and year ended 2012 was broad based including commercial and industrial loans, commercial real estate loans and agricultural loans.

 
-2-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
 
3 of 11
End of Period Loan Balances
  
12/31/12
    
09/30/12
    
12/31/11
  
(dollars in thousands)
                  
                   
Commercial & Industrial Loans
   $ 335,373     $ 328,058     $ 293,172  
Commercial Real Estate Loans
     488,496       467,666       452,071  
Agricultural Loans
     179,906       165,198       167,693  
Consumer Loans
     115,540       116,480       124,479  
Residential Mortgage Loans
     88,586       90,744       86,134  
    $ 1,207,901     $ 1,168,146     $ 1,123,549  

Non-performing assets totaled $12.4 million at December 31, 2012 compared to $14.1 million of non-performing assets at September 30, 2012 and $20.6 million at December 31, 2011.  Non-performing assets represented 0.62% of total assets at December 31, 2012 compared to 0.72% of total assets at September 30, 2012, and compared to 1.10% at December 31, 2011.  Non-performing loans totaled $10.7 million at December 31, 2012 compared to $12.5 million at September 30, 2012, and compared to $18.3 million of non-performing loans at December 31, 2011.  Non-performing loans represented 0.89% of total loans at December 31, 2012 compared with 1.08% of total outstanding loans at September 30, 2012 and 1.63% of total loans outstanding at December 31, 2011.


Non-performing Assets
                  
(dollars in thousands)
                  
                   
   
12/31/12
    
9/30/12
    
12/31/11
  
Non-Accrual Loans
   $ 10,357     $ 12,144     $ 17,857  
Past Due Loans (90 days or more)
     -       -       -  
Restructured Loans
     362       382       409  
       Total Non-Performing Loans
     10,719       12,526       18,266  
Other Real Estate
     1,645       1,610       2,343  
       Total Non-Performing Assets
   $ 12,364     $ 14,136     $ 20,609  
 
The Company’s allowance for loan losses totaled $15.5 million at December 31, 2012 representing a decrease of $402,000 or 10% on an annualized basis from September 30, 2012 and an increase of $208,000 or 1% compared with year-end 2011.  The allowance for loan losses represented 1.29% of period end loans at December 31, 2012 compared with 1.37% of period-end loans at September 30, 2012 and December 31, 2011.  Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller.  The Company held a discount on acquired loans of $3.5 million as of December 31, 2012, $3.8 million at September 30, 2012 and $6.4 million at year-end 2011.

Total deposits increased $21.9 million or 5% on an annualized basis, as of December 31, 2012 compared with September 30, 2012 total deposits and increased by approximately $84.7 million or 5% compared with December 31, 2011.

 
-3-
 
 
NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
 
4 of 11
End of Period Deposit Balances
  
12/31/12
    
09/30/12
    
12/31/11
  
(dollars in thousands)
                  
                   
Non-interest-bearing Demand Deposits
   $ 349,174     $ 327,450     $ 282,335  
IB Demand, Savings, and MMDA Accounts
     962,574       933,561       899,584  
Time Deposits < $100,000
     233,422       248,290       273,663  
Time Deposits > $100,000
     95,761       109,736       100,616  
    $ 1,640,931     $ 1,619,037     $ 1,556,198  
                         
Results of Operations Highlights – Year ended December 31, 2012

Net income for the year ended December 31, 2012 totaled $24,055,000 or $1.90 per share, an increase of $3,806,000 or approximately 18% on a per share basis, from the year ended December 31, 2011 net income of $20,249,000 or $1.61 per share.
 
Summary Average Balance Sheet            
(Tax-equivalent basis / dollars in thousands)            
   
Year Ended December 31, 2012
    
Year Ended December 31, 2011
  
                                     
   
Principal Balance
    
Income/ Expense
    
Yield/Rate
    
Principal Balance
    
Income/ Expense
    
Yield/Rate
  
Assets
                                    
Federal Funds Sold and Other Short-term Investments
   $ 44,999     $ 91       0.20 %   $ 85,217     $ 216       0.25 %
Securities
     619,910       16,689       2.69 %     499,359       16,482       3.30 %
Loans and Leases
     1,147,891       61,951       5.40 %     1,114,181       64,684       5.81 %
Total Interest Earning Assets
   $ 1,812,800     $ 78,731       4.34 %   $ 1,698,757     $ 81,382       4.79 %
                                                 
Liabilities
                                                
Demand Deposit Accounts
   $ 313,812                     $ 256,544                  
IB Demand, Savings, and MMDA Accounts
   $ 947,707     $ 1,764       0.19 %   $ 870,652     $ 4,314       0.50 %
Time Deposits
     357,193       5,194       1.45 %     394,008       7,672       1.95 %
FHLB Advances and Other Borrowings
     118,201       3,954       3.35 %     126,922       4,194       3.30 %
Total Interest-Bearing Liabilities
   $ 1,423,101     $ 10,912       0.77 %   $ 1,391,582     $ 16,180       1.16 %
                                                 
Cost of Funds
                     0.60 %                     0.95 %
Net Interest Income
           $ 67,819                     $ 65,202          
Net Interest Margin
                     3.74 %                     3.84 %
                                                 
 
 
-4-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
5 of 11
 
During the year ended December 31, 2012, net interest income totaled $66,248,000 representing an increase of $2,267,000 or 4% from the year ended December 31, 2011 net interest income of $63,981,000.  The increased net interest income during 2012 compared with 2011 was driven by a higher level of earning assets including both average loan growth and growth in the securities portfolio.  The tax equivalent net interest margin for the year ended December 31, 2012 was 3.74% compared to 3.84% in 2011.  The decline in the net interest margin during 2012 compared with the 2011 was largely attributable to the continued downward pressure on earning asset yields being driven by a historically low market interest rate environment and a very competitive marketplace for lending opportunities.  Partially mitigating the decline in earning assets yields was a 35 basis points decline in the Company’s cost of funds during 2012 compared to 2011 which was driven by a continued decline in deposit rates.

The provision for loan loss totaled $2,412,000 during the year ended December 31, 2012 representing a decline of $4,388,000 or 65% from the year ended December 31, 2011.  During 2012, the provision for loan loss represented approximately 21 basis points of average loans while net charge-offs represented approximately 19 basis points of average loans.  The significant decline in the Company’s provision for loan loss during 2012 compared with 2011 was largely attributable to a lower level of net charge-offs and overall improvement in the level of adversely classified and non-performing loans.

During the year ended December 31, 2012, non-interest income increased approximately 1% from the year ended December 31, 2011.

   
Year Ended
    
Year Ended
  
Non-interest Income
  
12/31/12
    
12/31/11
  
(dollars in thousands)
            
             
Trust and Investment Product Fees
   $ 2,657     $ 2,145  
Service Charges on Deposit Accounts
     4,076       4,154  
Insurance Revenues
     5,524       5,819  
Company Owned Life Insurance
     974       1,100  
Interchange Fee Income
     1,724       1,501  
Other Operating Income
     1,955       1,452  
     Subtotal
     16,910       16,171  
Net Gains on Loans
     3,234       2,381  
Net Gains on Securities
     1,667       3,024  
Total Non-interest Income
   $ 21,811     $ 21,576  

Trust and investment product fees increased $512,000 or 24% during 2012 compared with 2011.  The increase was primarily attributable to increased trust revenues supplemented by increased retail brokerage revenues.  Insurance revenues decreased approximately $295,000 or 5% during 2012 as compared to 2011 as a result of lower contingency revenue.  Contingency revenue totaled $88,000 during 2012 compared $872,000 in 2011.  The decline in contingency revenue was partially offset by an increased level of commercial insurance revenues during 2012 compared with 2011.

 
-5-
 
 
NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
6 of 11

Other operating income increased $503,000 or 35% during 2012 compared with 2011.  The increase was primarily related to a net gain on sales of other real estate during 2012 compared with a net loss on sales and write-downs of other real estate during 2011.

Net gains on sales of loans increased $853,000, or 36%, during 2012 compared with the same period of 2011.  Loan sales totaled $186.8 million during 2012 compared with $134.2 million during 2011.  The net gain on securities declined $1,357,000, or 45%, during 2012 compared with 2011.  During 2012, the Company realized net gains on the sale of securities of $1,667,000 related to the sale of approximately $94.3 million of securities. During 2011, the Company realized net gains on securities of $3,024,000 related to the sale of approximately $59.3 million of securities in the fourth quarter of 2011 and a gain of $1,045,000 during the first quarter of 2011 related to the acquisition accounting treatment of the existing equity ownership position the Company held in American Community at the time of acquisition.

During the year ended December 31, 2012, non-interest expense remained very stable compared with the year ended December 31, 2011, increasing by less than 1%.

   
Year Ended
    
Year Ended
  
Non-interest Expense
  
12/31/12
    
12/31/11
  
(dollars in thousands)
            
             
Salaries and Employee Benefits
   $ 29,086     $ 27,992  
Occupancy, Furniture and Equipment Expense
     7,064       7,198  
FDIC Premiums
     1,116       1,473  
Data Processing Fees
     1,071       2,092  
Professional Fees
     2,247       2,056  
Advertising and Promotion
     1,714       1,525  
Intangible Amortization
     1,655       1,956  
Other Operating Expenses
     6,970       6,490  
Total Non-interest Expense
   $ 50,923     $ 50,782  

Salaries and employee benefits increased $1,094,000 or 4% during 2012 compared with 2011.  The increase in salaries and benefits during 2012 compared with 2011 was primarily the result of an increased number of full-time equivalent employees, increased costs related to the Company’s partially self-insured health insurance plan and increased commission payout related to higher levels of mortgage loan sales revenues in the secondary market and increased insurance revenues.  During 2011, approximately $875,000 of merger-related salary and benefit costs were incurred related to the acquisition of American Community Bancorp, Inc. which partially mitigated the increases in salaries and benefits during 2012.

The Company’s FDIC deposit insurance assessments decreased $357,000 or 24% during 2012 compared with 2011.  This decline was attributable to changes in the deposit insurance assessment calculation that became effective in the second quarter of 2011 related to the Dodd Frank Act.
 
 
-6-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
7 of 11

Data processing fees declined $1,021,000, or 49%, during 2012 compared with 2011.  The decline was largely related to running the Bank of Evansville’s separate core processing system during the first four months of 2011 and the resolution of a contractual dispute during the first quarter of 2012 related to the acquisition of American Community Bancorp and its banking subsidiary the Bank of Evansville.  An expense for the cancellation of the data processing contract was recorded in the first quarter of 2011, and upon resolution of the contractual dispute, a portion of that accrued expense was reversed in the first quarter of 2012.  The customers of the Bank of Evansville were moved to the Company’s core processing system during April 2011.

Results of Operations Highlights – Quarter ended December 31, 2012

Net income for the quarter ended December 31, 2012 totaled $6,194,000 or $0.49 per share, a decrease of $98,000, or 2%, from the third quarter of 2012 net income of $6,292,000 or $0.50 per share, and an increase of $621,000, or 11%, from the fourth quarter of 2011 net income of $5,573,000 or $0.44 per share.

Summary Average Balance Sheet
                                      
(Tax-equivalent basis / dollars in thousands)
 
                                      
   
Quarter Ended December 31, 2012
    
Quarter Ended September 30, 2012
    
Quarter Ended December 31, 2011
  
                                                       
   
Principal Balance
    
Income/ Expense
    
Yield/
Rate
    
Principal Balance
    
Income/ Expense
    
Yield/
Rate
    
Principal Balance
    
Income/ Expense
    
Yield/
Rate
  
Assets
                                                      
Federal Funds Sold and Other Short-term Investments
   $ 22,910     $ 7       0.12 %   $ 31,575     $ 11       0.14 %   $ 62,502     $ 37       0.24 %
Securities
     632,773       3,942       2.49 %     634,605       4,197       2.65 %     587,788       4,451       3.03 %
Loans and Leases
     1,194,173       15,377       5.13 %     1,161,325       15,148       5.19 %     1,124,687       15,884       5.61 %
Total Interest Earning Assets
   $ 1,849,856     $ 19,326       4.16 %   $ 1,827,505     $ 19,356       4.22 %   $ 1,774,977     $ 20,372       4.56 %
                                                                         
Liabilities
                                                                        
Demand Deposit Accounts
   $ 342,396                     $ 322,003                     $ 277,361                  
IB Demand, Savings, and MMDA Accounts
   $ 967,147     $ 394       0.16 %   $ 943,035     $ 387       0.16 %   $ 914,969     $ 820       0.36 %
Time Deposits
     341,510       1,041       1.21 %     358,477       1,235       1.37 %     390,787       1,702       1.73 %
FHLB Advances and Other Borrowings
     117,526       888       3.01 %     121,340       938       3.08 %     134,015       1,087       3.22 %
Total Interest-Bearing Liabilities
   $ 1,426,183     $ 2,323       0.65 %   $ 1,422,852     $ 2,560       0.72 %   $ 1,439,771     $ 3,609       0.99 %
                                                                         
Cost of Funds
                     0.50 %                     0.56 %                     0.80 %
Net Interest Income
           $ 17,003                     $ 16,796                     $ 16,763          
Net Interest Margin
                     3.66 %                     3.66 %                     3.76 %
 
-7-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
8 of 11
 
During the quarter ended December 31, 2012, net interest income totaled $16,594,000 representing an increase of $201,000, or 1%, from the quarter ended September 30, 2012 net interest income of $16,393,000 and an increase of $187,000, or approximately 1%, compared with the quarter ended December 30, 2011 net interest income of $16,407,000.  The tax equivalent net interest margin for the quarter ended December 31, 2012 was 3.66% compared to 3.66% in the third quarter of 2012 and 3.76% in the fourth quarter of 2011.  Accretion of loan discounts on acquired loans contributed approximately 8 basis points on an annualized basis to the net interest margin in the fourth quarter of 2012 compared with 6 basis points in both the third quarter of 2012 and the fourth quarter of 2011.
 
The provision for loan loss totaled $691,000 during the quarter ended December 31, 2012 representing an increase of $51,000 or 8% from the third quarter of 2012 and a decline of $2,290,000 or 76% from the fourth quarter of 2011.  During the fourth quarter of 2012, the provision for loan loss represented approximately 23 basis points of average loans on an annualized basis while net charge-offs represented approximately 37 basis points of average loans on an annualized basis.

During the quarter ended December 31, 2012, non-interest income totaled $6,019,000, a decrease of $139,000 or 2%, compared with the quarter ended September 30, 2012, and a decrease of $621,000, or 9%, compared with the fourth quarter of 2011.
 
                   
   
Quarter Ended
    
Quarter Ended
    
Quarter Ended
  
Non-interest Income
  
12/31/12
    
09/30/12
    
12/31/11
  
(dollars in thousands)
                  
                   
Trust and Investment Product Fees
   $ 638     $ 659     $ 584  
Service Charges on Deposit Accounts
     1,075       1,049       1,019  
Insurance Revenues
     1,306       1,469       1,219  
Company Owned Life Insurance
     251       213       264  
Interchange Fee Income
     415       418       375  
Other Operating Income
     455       811       470  
     Subtotal
     4,140       4,619       3,931  
Net Gains on Loans
     904       941       730  
Net Gains on Securities
     975       598       1,979  
Total Non-interest Income
   $ 6,019     $ 6,158     $ 6,640  

Insurance revenues decreased $163,000, or 11%, during the quarter ended December 31, 2012, compared with the third quarter of 2012 and increased $87,000, or 7%, compared with the fourth quarter of 2011.  The change in both comparative periods was largely attributable to commercial related insurance revenues.

 
-8-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
9 of 11

Other operating income decreased $356,000 or 44% during the quarter ended December 31, 2012 compared with the third quarter of 2012 and decreased $15,000 or 3% compared with the fourth quarter of 2011.  The decrease in the fourth quarter of 2012 compared to the third quarter of 2012 was largely related to the net gain on sales of other real estate which totaled approximately $301,000 during the third quarter of 2012 compared with a net loss on sales and write-downs of other real estate of $10,000 during the fourth quarter of 2012.

Net gains on sales of loans totaled $904,000 during the quarter ended December 31, 2012, a decrease of $37,000, or 4%, compared to the third quarter of 2012 and an increase of $174,000, or 24%, compared with the fourth quarter of 2011.  Loan sales totaled $58.6 million during the fourth quarter of 2012, compared with $37.8 million during the third quarter of 2012 and $55.9 million during the fourth quarter of 2011.

During the fourth quarter of 2012, the Company realized a net gain on the sale of securities of $975,000 related to the sale of approximately $44.8 million of securities, compared to $598,000 related to the sale of approximately $40.4 million of securities in the third quarter of 2012 and $1,979,000 related to the sale of $59.3 million in the fourth quarter of 2011.

During the quarter ended December 31, 2012, non-interest expense totaled $13,179,000, an increase of $451,000, or 4%, compared with the quarter ended September 30, 2012, and an increase of $543,000, or 4%, compared with the fourth quarter of 2011.
 
   
Quarter Ended
    
Quarter Ended
    
Quarter Ended
  
Non-interest Expense
  
12/31/12
    
09/30/12
    
12/31/11
  
(dollars in thousands)
                  
                   
Salaries and Employee Benefits
   $ 7,677     $ 7,261     $ 7,182  
Occupancy, Furniture and Equipment Expense
     1,791       1,716       1,739  
FDIC Premiums
     265       271       282  
Data Processing Fees
     325       311       271  
Professional Fees
     470       585       426  
Advertising and Promotion
     506       439       525  
Intangible Amortization
     386       405       461  
Other Operating Expenses
     1,759       1,740       1,750  
Total Non-interest Expense
   $ 13,179     $ 12,728     $ 12,636  
                         

 
-9-
 
 
NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
10 of 11

Salaries and benefits increased $416,000, or 6%, during the quarter ended December 31, 2012 compared with the third quarter of 2012 and increased $495,000, or 7%, compared with the fourth quarter of 2011.  The increase in salaries and benefits during the fourth quarter of 2012 compared with the third quarter of 2012 was largely related to an increased level of full-time equivalent employees and increased costs related to the Company’s incentive compensation plans based on projected results of the participant’s balanced scorecards.  The increase in salaries and benefits during the fourth quarter of 2012 compared with the fourth quarter of 2011 was primarily the result of an increased number of full-time equivalent employees, increased levels of incentive compensation, increased costs related to the Company’s partially self-insured health insurance plan and increased commission payout related to a higher level of insurance revenues.

About German American

German American Bancorp, Inc., is a NASDAQ-traded (symbol: GABC) financial services holding company based in Jasper, Indiana.  German American, through its banking subsidiary German American Bancorp, operates 34 retail banking offices in 13 southern Indiana counties. The Company also owns a trust, brokerage, and financial planning subsidiary (German American Financial Advisors & Trust Company) and a full line property and casualty insurance agency (German American Insurance, Inc.).

Cautionary Note Regarding Forward-Looking Statements

The Company’s statements in this press release regarding the continuing growth and expansion of the Company’s business, its continued improvement in asset quality metrics, and the continuation of its trend of record-setting financial performance could be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Readers are cautioned that, by their nature, forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results and experience could differ materially from the anticipated results or other expectations expressed or implied by these forward-looking statements as a result of a number of factors, including but not limited to, those discussed in the press release. Factors that could cause actual experience to differ from the expectations implied in this press release include the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates; changes in competitive conditions; the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; changes in customer borrowing, repayment, investment and deposit practices; changes in fiscal, monetary and tax policies; changes in financial and capital markets; deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration; capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; risks of expansion through acquisitions and mergers, such as unexpected credit quality problems of the acquired loans or other assets, unexpected attrition of the customer base of the acquired institution or branches, and difficulties in integration of the acquired operations; factors driving impairment charges on investments; the impact, extent and timing of technological changes; litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; actions of the Federal Reserve Board; changes in accounting principles and interpretations; potential increases of

 
-10-
 

NEWS RELEASE

For additional information, contact:
Mark A Schroeder, Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
11 of 11
 
federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Company’s banking subsidiary; actions of the regulatory authorities under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; and the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.  Such statements reflect our views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company.  Readers are cautioned not to place undue reliance on these forward-looking statements.  It is intended that these forward-looking statements speak only as of the date they are made.  We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

 
-11-
 

GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
 
Consolidated Balance Sheets
                   
   
December 31,
    
September 30,
    
December 31,
  
   
2012
    
2012
    
2011
  
                   
ASSETS
                  
     Cash and Due from Banks
   $ 41,624     $ 33,960     $ 28,366  
     Short-term Investments
     7,463       29,828       32,737  
     Interest-bearing Time Deposits with Banks
     2,707       2,715       5,986  
     Investment Securities
     587,948       612,742       517,534  
                         
     Loans Held-for-Sale
     16,641       18,993       21,485  
                         
     Loans, Net of Unearned Income
     1,204,866       1,165,134       1,120,993  
     Allowance for Loan Losses
     (15,520 )     (15,922 )     (15,312 )
        Net Loans
     1,189,346       1,149,212       1,105,681  
                         
     Stock in FHLB and Other Restricted Stock
     8,340       8,340       8,340  
     Premises and Equipment
     36,554       36,730       37,706  
     Goodwill and Other Intangible Assets
     21,557       21,942       23,211  
     Other Assets
     94,120       47,836       92,721  
     TOTAL ASSETS
   $ 2,006,300     $ 1,962,298     $ 1,873,767  
                         
LIABILITIES
                        
     Non-interest-bearing Demand Deposits
   $ 349,174     $ 327,450     $ 282,335  
     Interest-bearing Demand, Savings, and
                        
         Money Market Accounts
     962,574       933,561       899,584  
     Time Deposits
     329,183       358,026       374,279  
        Total Deposits
     1,640,931       1,619,037       1,556,198  
                         
     Borrowings
     161,006       141,074       130,993  
     Other Liabilities
     19,337       19,218       18,966  
    TOTAL LIABILITIES
     1,821,274       1,779,329       1,706,157  
                         
SHAREHOLDERS' EQUITY
                        
     Common Stock and Surplus
     108,254       108,065       107,633  
     Retained Earnings
     66,421       61,996       49,434  
     Accumulated Other Comprehensive Income
     10,351       12,908       10,543  
   TOTAL SHAREHOLDERS' EQUITY
     185,026       182,969       167,610  
                         
TOTAL LIABILITIES AND
                        
  SHAREHOLDERS' EQUITY
   $ 2,006,300     $ 1,962,298     $ 1,873,767  
                         
END OF PERIOD SHARES OUTSTANDING
     12,636,656       12,630,646       12,594,258  
                         
BOOK VALUE PER SHARE
   $ 14.64     $ 14.49     $ 13.31  

 
-12-
 
GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
 
Consolidated Statements of Income
                               
   
Three Months Ended
    
Year Ended
  
   
December 31,
    
September 30,
    
December 31,
    
December 31,
    
December 31,
  
   
2012
    
2012
    
2011
    
2012
    
2011
  
                               
INTEREST INCOME
                              
   Interest and Fees on Loans
   $ 15,311     $ 15,082     $ 15,825     $ 61,691     $ 64,445  
   Interest on Short-term Investments and Time Deposits
     7       11       37       91       216  
   Interest and Dividends on Investment Securities
     3,599       3,860       4,154       15,378       15,500  
  TOTAL INTEREST INCOME
     18,917       18,953       20,016       77,160       80,161  
                                         
INTEREST EXPENSE
                                        
   Interest on Deposits
     1,435       1,622       2,522       6,958       11,986  
   Interest on Borrowings
     888       938       1,087       3,954       4,194  
  TOTAL INTEREST EXPENSE
     2,323       2,560       3,609       10,912       16,180  
                                         
   NET INTEREST INCOME
     16,594       16,393       16,407       66,248       63,981  
   Provision for Loan Losses
     691       640       2,900       2,412       6,800  
   NET INTEREST INCOME AFTER
                                        
     PROVISION FOR LOAN LOSSES
     15,903       15,753       13,507       63,836       57,181  
                                         
NON-INTEREST INCOME
                                        
   Net Gain on Sales of Loans
     904       941       730       3,234       2,381  
   Net Gain on Securities
     975       598       1,979       1,667       3,024  
   Other Non-interest Income
     4,140       4,619       3,931       16,910       16,171  
  TOTAL NON-INTEREST INCOME
     6,019       6,158       6,640       21,811       21,576  
                                         
NON-INTEREST EXPENSE
                                        
   Salaries and Benefits
     7,677       7,261       7,182       29,086       27,992  
   Other Non-interest Expenses
     5,502       5,467       5,454       21,837       22,790  
  TOTAL NON-INTEREST EXPENSE
     13,179       12,728       12,636       50,923       50,782  
                                         
   Income before Income Taxes
     8,743       9,183       7,511       34,724       27,975  
   Income Tax Expense
     2,549       2,891       1,938       10,669       7,726  
                                         
NET INCOME
   $ 6,194     $ 6,292     $ 5,573     $ 24,055     $ 20,249  
                                         
BASIC EARNINGS PER SHARE
   $ 0.49     $ 0.50     $ 0.44     $ 1.91     $ 1.61  
DILUTED EARNINGS PER SHARE
   $ 0.49     $ 0.50     $ 0.44     $ 1.90     $ 1.61  
                                         
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING
     12,631,538       12,628,335       12,593,779       12,622,049       12,581,646  
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
     12,651,225       12,648,924       12,600,997       12,637,743       12,587,748  
                                         

 
-13-
 
GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)

     
Three Months Ended
    
Year Ended
  
     
December 31,
    
September 30,
    
December 31,
    
December 31,
    
December 31,
  
     
2012
    
2012
    
2011
    
2012
    
2011
  
EARNINGS PERFORMANCE RATIOS
                              
 
Annualized Return on Average Assets
     1.26 %     1.29 %     1.17 %     1.24 %     1.11 %
 
Annualized Return on Average Equity
     13.48 %     13.97 %     13.39 %     13.57 %     12.67 %
 
Net Interest Margin
     3.66 %     3.66 %     3.76 %     3.74 %     3.84 %
 
Efficiency Ratio (1)
     57.25 %     55.45 %     54.00 %     56.82 %     58.52 %
 
Net Overhead Expense to Average Earning Assets (2)
     1.55 %     1.44 %     1.35 %     1.61 %     1.72 %
                                           
ASSET QUALITY RATIOS
                                        
 
Annualized Net Charge-offs to Average Loans
     0.37 %     0.14 %     0.98 %     0.19 %     0.43 %
 
Allowance for Loan Losses to Period End Loans
     1.29 %     1.37 %     1.37 %                
 
Non-performing Assets to Period End Assets
     0.62 %     0.72 %     1.10 %                
 
Non-performing Loans to Period End Loans
     0.89 %     1.08 %     1.63 %                
 
Loans 30-89 Days Past Due to Period End Loans
     0.39 %     0.40 %     0.41 %                
                                           
                                           
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
                                        
 
Average Assets
   $ 1,972,666     $ 1,945,853     $ 1,902,179     $ 1,934,123     $ 1,823,703  
 
Average Earning Assets
   $ 1,849,856     $ 1,827,505     $ 1,774,977     $ 1,812,800     $ 1,698,757  
 
Average Total Loans
   $ 1,194,172     $ 1,161,325     $ 1,124,687     $ 1,147,891     $ 1,114,181  
 
Average Demand Deposits
   $ 342,396     $ 322,003     $ 277,361     $ 313,812     $ 256,544  
 
Average Interest Bearing Liabilities
   $ 1,426,183     $ 1,422,852     $ 1,439,771     $ 1,423,101     $ 1,391,582  
 
Average Equity
   $ 183,841     $ 180,181     $ 166,492     $ 177,207     $ 159,765  
                                           
 
Period End Non-performing Assets (3)
   $ 12,364     $ 14,136     $ 20,609                  
 
Period End Non-performing Loans (4)
   $ 10,719     $ 12,526     $ 18,266                  
 
Period End Loans 30-89 Days Past Due (5)
   $ 4,646     $ 4,603     $ 4,634                  
                                           
 
Tax Equivalent Net Interest Income
   $ 17,003     $ 16,796     $ 16,763     $ 67,819     $ 65,202  
 
Net Charge-offs during Period
   $ 1,093     $ 410     $ 2,754     $ 2,204     $ 4,805  
                                           
(1)
Efficiency Ratio is defined as Non-interest Expense divided by the sum of Net Interest Income, on a tax equivalent basis, and Non-interest Income.
(2)
Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest Income.
(3)
Non-performing assets are defined as Non-accrual Loans, Loans Past Due 90 days or more, Restructured Loans, and Other Real Estate Owned.
(4)
Non-performing loans are defined as Non-accrual Loans, Loans Past Due 90 days or more, and Restructured Loans.
(5)
Loans 30-89 days past due and still accruing.