German American Bancorp, Inc. (Nasdaq: GABC) reported first quarter
earnings of $20.8 million, or $0.71 per share. This level of
quarterly earnings reflected an increase of $11.7 million, or
approximately 129% on a per share basis, from 2022 first quarter
earnings of $9.1 million or $0.31 per share. The first quarter of
2022 was largely impacted by transaction costs associated with the
acquisition of Citizens Union Bancorp of Shelbyville, Inc. (CUB)
that closed effective January 1, 2022. The first quarter 2023
earnings represented a 15% decline on a per share basis compared
with the strong fourth quarter 2022 earnings of $24.4 million, or
$0.83 per share.
The first quarter of 2023 provided a challenging
operating/economic backdrop for the banking industry as focus went
to stabilization of deposits, liquidity and capital. First quarter
2023 operating performance was highlighted by increased
non-interest income, as compared to fourth quarter 2022, continued
strong credit metrics, and non-agricultural organic loan growth.
However, from an earnings perspective, the increase in non-interest
income was more than offset by lower net interest income and net
interest margin resulting from higher deposit costs and a smaller
earning asset base and by an increase in non-interest expense
driven in part by somewhat seasonally higher operating costs, in
each case, as compared to fourth quarter of 2022.
The net interest margin declined from 3.78% to
3.69%, or 9 basis points, during the first quarter of 2023 on a
linked quarter basis as the funding cost increase of 25 basis
points outpaced the earning asset yield increase of 16 basis
points. The accelerated rise in the cost of funds in the first
quarter of 2023 was driven by the continued historic pace of
Federal Reserve interest rate increases, competitive deposit
pricing in the marketplace, and a change in the Company’s deposit
composition as customers looked for higher yield opportunities.
First quarter 2023 deposits declined
approximately $195 million, or 4%, on a linked quarter basis
compared to year-end 2022 with the core deposit base stabilizing
mid first quarter 2023. The core deposit base, however, remains
diverse with stable and manageable exposure to uninsured and
uncollateralized deposits of approximately 21%.
During the first quarter of 2023, total loans
were down $15.8 million on a linked quarter basis due primarily to
seasonal reductions in agricultural lines of credit. However, loans
in our commercial real estate, commercial and industrial, consumer,
and residential mortgage portfolios at March 31, 2023, in
aggregate, represented an increase of $23.0 million, or
approximately 3% on an annualized basis, compared to December 31,
2022. Credit metrics remained strong as non-performing assets were
0.24% of period end assets and non-performing loans totaled 0.39%
of period end loans.
Operating revenue for the first quarter 2023
increased $1.3 million, or 10% compared to the fourth quarter 2022,
driven by an increase in wealth management fees attributable to an
increase in assets under management, an increase in insurance
revenues driven by seasonal contingency revenue, and an increase in
interchange fee income driven by increased customer card
utilization.
The Company also announced that its Board of
Directors declared a regular quarterly cash dividend of $0.25 per
share, which will be payable on May 20, 2023 to shareholders of
record as of May 10, 2023. As previously reported, this dividend
rate represents a 9% increase over the rate in effect during
2022.
D. Neil Dauby, German American’s President &
CEO stated, “Despite the volatility the banking industry
experienced in the last part of the first quarter, German American
remains extremely well positioned with solid liquidity, strong
capital and a diverse core deposit base which speaks to the
strength and resilience of our Company. Thanks to the dedicated
efforts of our relationship-focused team of professionals, our
customers and communities were well taken care of during this
uncertain time. While we anticipate some potential recessionary
headwinds in 2023, we remain confident in the strength of our
Company and remain excited and committed to the vitality and growth
of our Indiana and Kentucky communities.”
Balance Sheet Highlights
Total assets for the Company totaled $5.997
billion at March 31, 2023, representing a decrease of $159.1
million compared with December 31, 2022 and a decline of $700.7
million compared with March 31, 2022. The decline in total assets
at March 31, 2023 compared with both December 31, 2022 and March
31, 2022 was largely attributable to a decline in total deposits
which in turn has led to a decline in short-term investments as
well as the Company's securities portfolio. Federal funds sold and
other short-term investments totaled $10.3 million at March 31,
2023 compared with $42.4 million at year-end 2022 and $611.1
million at March 31, 2022.
Securities available for sale declined $91.4
million as of March 31, 2023 compared with December 31, 2022 and
declined $253.4 million compared with March 31, 2022. The changes
in the available for sale securities portfolio during the first
quarter of 2023 compared with year-end 2022 was largely
attributable to the Company's utilization of cash flows from the
securities portfolio to partially fund deposit declines during the
first quarter, which were partially offset by an increase in the
fair value of the portfolio. Total cash flow generated from the
portfolio totaled approximately $147.0 million during the first
quarter of 2023, reflecting principal and interest payments as well
as a modest level of securities sales. Current projections indicate
approximately $160.0 million in principal and interest cash flows
from the portfolio over the next twelve months with rates
unchanged. The decline in the securities portfolio at March 31,
2023 compared with March 31, 2022 was largely attributable to fair
value adjustments on the portfolio caused by the rise in market
interest rates over the past year and the Company's utilization of
cash flows generated by the portfolio for general balance sheet
funding.
March 31, 2023 total loans declined $15.8
million, or less than 1% on a linked quarter basis, compared with
December 31, 2022 and increased $116.8 million, or 3%, compared
with March 31, 2022. The decline during the first quarter of 2023
compared with year-end 2022 was driven by a seasonal decline in
agricultural loans of approximately $38.8 million, or 9% on a
linked quarter basis, and a decline in commercial and industrial
loans of $9.2 million, or 1% on a linked quarter basis. These
declines were somewhat offset by an increased level of commercial
real estate loans which grew $33.4 million, or 2% on a linked
quarter basis. Retail loans remained relatively stable during the
first quarter of 2023 compared with year-end 2022.
| |
|
|
|
|
|
|
| End of Period Loan
Balances |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
| (dollars in
thousands) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Commercial & Industrial Loans |
|
$ |
667,306 |
|
$ |
676,502 |
|
$ |
636,519 |
| Commercial Real Estate
Loans |
|
|
2,000,237 |
|
|
1,966,884 |
|
|
1,938,528 |
| Agricultural Loans |
|
|
378,587 |
|
|
417,413 |
|
|
387,764 |
| Consumer Loans |
|
|
376,398 |
|
|
377,164 |
|
|
351,083 |
| Residential Mortgage
Loans |
|
|
350,338 |
|
|
350,682 |
|
|
342,140 |
| |
|
$ |
3,772,866 |
|
$ |
3,788,645 |
|
$ |
3,656,034 |
| |
|
|
|
|
|
|
| Net PPP Loans (included in
Commercial & Industrial Loans above) |
|
$ |
— |
|
$ |
— |
|
$ |
6,612 |
| |
|
|
|
|
|
|
The Company’s allowance for credit losses
totaled $44.3 million at March 31, 2023 compared to $44.2 million
at December 31, 2022 and $45.1 million at March 31, 2022. The
allowance for credit losses represented 1.18% of period-end loans
at March 31, 2023 compared with 1.17% at December 31, 2022 and
1.23% of period-end loans at March 31, 2022.
Non-performing assets totaled $14.6 million at
March 31, 2023 compared to $14.3 million at December 31, 2022 and
$15.3 million at March 31, 2022. Non-performing assets represented
0.24% of total assets at March 31, 2023 compared to 0.23% at
December 31, 2022 and 0.23% at March 31, 2022. Non-performing loans
totaled $14.6 million at March 31, 2023 compared to $14.3 million
at December 31, 2022 and $15.3 million at March 31, 2022.
Non-performing loans represented 0.39% of total loans at March 31,
2023 compared to 0.38% at December 31, 2022 and 0.42% at March 31,
2022.
| |
|
|
|
|
|
| Non-performing
Assets |
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
| |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
Non-Accrual Loans |
$ |
13,495 |
|
$ |
12,888 |
|
$ |
14,929 |
| Past Due Loans (90 days or
more) |
|
1,098 |
|
|
1,427 |
|
|
383 |
|
Total Non-Performing Loans |
|
14,593 |
|
|
14,315 |
|
|
15,312 |
| Other Real Estate |
|
— |
|
|
— |
|
|
30 |
|
Total Non-Performing Assets |
$ |
14,593 |
|
$ |
14,315 |
|
$ |
15,342 |
| |
|
|
|
|
|
| Restructured Loans |
$ |
— |
|
$ |
— |
|
$ |
102 |
| |
|
|
|
|
|
March 31, 2023 total deposits declined $195.2
million, or 4% on a linked quarter basis, compared to December 31,
2022 and declined $674.7 million, or 12%, compared with March 31,
2022. The overall decline in deposits slowed throughout the first
quarter of 2023. Deposits declined $13.7 million, or 7% of the
quarterly decline, in the month of March 2023, compared with $31.7
million, or 16% of the total decline, in February 2023 and $149.8
million, or 77% of the total decline, in January 2023.
A competitive market driven by rising interest
rates has been a significant contributing factor to the decline in
total deposits during the first quarter of 2023 compared with both
year-end 2022 and March 31, 2022. The Company has also continued to
see customer movement from both interest bearing and non-interest
bearing transactional accounts to time deposits due primarily to
the rising interest rate environment. Additionally, a meaningful
level of the outflow of deposits was captured within the Company's
wealth management group in both the first quarter of 2023 and over
the course of the past several quarters.
March 31, 2023 total borrowings declined $12.8
million, or 6% on a linked quarter basis, compared to December 31,
2022 and increased $34.9 million, or 22%, compared with March 31,
2022. The decline in the first quarter of 2023 compared with
year-end 2022 was related to a reduction of short-term secured
borrowings and federal funds purchased.
| |
|
|
|
|
|
|
| End of Period Deposit
Balances |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
| (dollars in
thousands) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Non-interest-bearing Demand Deposits |
|
$ |
1,601,206 |
|
$ |
1,691,804 |
|
$ |
1,789,353 |
| IB Demand, Savings, and MMDA
Accounts |
|
|
3,039,393 |
|
|
3,229,778 |
|
|
3,527,373 |
| Time Deposits <
$100,000 |
|
|
245,104 |
|
|
235,219 |
|
|
278,477 |
| Time Deposits >
$100,000 |
|
|
269,192 |
|
|
193,250 |
|
|
234,407 |
| |
|
$ |
5,154,895 |
|
$ |
5,350,051 |
|
$ |
5,829,610 |
| |
|
|
|
|
|
|
Results of Operations Highlights –
Quarter ended March 31, 2023
Net income for the quarter ended March 31, 2023
totaled $20,807,000, or $0.71 per share, a decline of 14% on a per
share basis, compared with the fourth quarter 2022 net income of
$24,415,000, or $0.83 per share, and an increase of 129% on a per
share basis compared with the first quarter 2022 net income of
$9,067,000, or $0.31 per share. The first quarter of 2022 was
significantly impacted by costs associated with the CUB acquisition
which closed effective January 1, 2022.
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Summary
Average Balance Sheet |
|
|
|
|
| (Tax-equivalent
basis / dollars in thousands) |
|
|
|
|
| |
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
| |
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Principal Balance |
|
Income/ Expense |
|
Yield/ Rate |
|
Principal Balance |
|
Income/ Expense |
|
Yield/ Rate |
|
Principal Balance |
|
Income/ Expense |
|
Yield/ Rate |
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Federal Funds Sold and
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Investments |
|
$ |
46,729 |
|
$ |
345 |
|
2.99 |
% |
|
$ |
234,107 |
|
$ |
2,200 |
|
3.73 |
% |
|
$ |
594,901 |
|
$ |
280 |
|
0.19 |
% |
| Securities |
|
|
1,729,189 |
|
|
12,595 |
|
2.91 |
% |
|
|
1,735,534 |
|
|
13,150 |
|
3.03 |
% |
|
|
1,986,917 |
|
|
11,533 |
|
2.32 |
% |
| Loans and Leases |
|
|
3,773,789 |
|
|
49,245 |
|
5.29 |
% |
|
|
3,728,788 |
|
|
47,262 |
|
5.03 |
% |
|
|
3,667,082 |
|
|
39,022 |
|
4.31 |
% |
| Total Interest Earning
Assets |
|
$ |
5,549,707 |
|
$ |
62,185 |
|
4.53 |
% |
|
$ |
5,698,429 |
|
$ |
62,612 |
|
4.37 |
% |
|
$ |
6,248,900 |
|
$ |
50,835 |
|
3.28 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Demand Deposit Accounts |
|
$ |
1,636,133 |
|
|
|
|
|
$ |
1,735,264 |
|
|
|
|
|
$ |
1,739,351 |
|
|
|
|
| IB Demand, Savings, and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMDA Accounts |
|
$ |
3,119,979 |
|
$ |
7,414 |
|
0.96 |
% |
|
$ |
3,359,079 |
|
$ |
6,347 |
|
0.75 |
% |
|
$ |
3,492,813 |
|
$ |
872 |
|
0.10 |
% |
| Time Deposits |
|
|
451,644 |
|
|
1,557 |
|
1.40 |
% |
|
|
426,710 |
|
|
692 |
|
0.64 |
% |
|
|
528,452 |
|
|
457 |
|
0.35 |
% |
| FHLB Advances and Other
Borrowings |
|
|
244,645 |
|
|
2,509 |
|
4.16 |
% |
|
|
162,792 |
|
|
1,441 |
|
3.51 |
% |
|
|
184,481 |
|
|
1,038 |
|
2.28 |
% |
| Total Interest-Bearing
Liabilities |
|
$ |
3,816,268 |
|
$ |
11,480 |
|
1.22 |
% |
|
$ |
3,948,581 |
|
$ |
8,480 |
|
0.85 |
% |
|
$ |
4,205,746 |
|
$ |
2,367 |
|
0.23 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of Funds |
|
|
|
|
|
0.84 |
% |
|
|
|
|
|
0.59 |
% |
|
|
|
|
|
0.15 |
% |
| Net Interest Income |
|
|
|
$ |
50,705 |
|
|
|
|
|
$ |
54,132 |
|
|
|
|
|
$ |
48,468 |
|
|
| Net Interest Margin |
|
|
|
|
|
3.69 |
% |
|
|
|
|
|
3.78 |
% |
|
|
|
|
|
3.13 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the first quarter of 2023, net interest
income, on a non tax-equivalent basis, totaled $49,009,000, a
decline of $3,372,000, or 6%, compared to the fourth quarter of
2022 net interest income of $52,381,000 and an increase of
$2,101,000, or 4%, compared to the first quarter of 2022 net
interest income of $46,908,000.
The decline in net interest income during the
first quarter of 2023 compared with the fourth quarter of 2022 was
primarily attributable to a lower level of average earning assets
driven by a reduced level of average deposits and a decline in the
Company's net interest margin. The increase in net interest income
during the first quarter of 2023 compared with the first quarter of
2022 was primarily attributable to an improved net interest margin
driven by the rise in market interest rates.
The tax equivalent net interest margin for the
quarter ended March 31, 2023 was 3.69% compared with 3.78% in the
fourth quarter of 2022 and 3.13% in the first quarter of 2022. The
decline in the net interest margin during the first quarter of 2023
compared with the fourth quarter of 2022 was largely driven by an
increase in the cost of funds. The cost of funds continued to
accelerate higher in the first quarter of 2023 due to the continued
increase of market interest rates, very competitive deposit pricing
in the marketplace, customers actively looking for yield
opportunities within and outside the banking industry and a change
in the Company's deposit composition. The improvement in the net
interest margin during the first quarter of 2023 compared with the
fourth quarter of 2022 was largely attributable to increased market
interest rates resulting in improved yields on earning assets that
outpaced increased cost of funds during 2022.
The Company's net interest margin and net
interest income have been impacted by accretion of loan discounts
on acquired loans. Accretion of discounts on acquired loans totaled
$530,000 during the first quarter of 2023, $603,000 during the
fourth quarter of 2022 and $1,112,000 during the first quarter of
2022. Accretion of loan discounts on acquired loans contributed
approximately 4 basis points to the net interest margin in both the
first quarter of 2023 and the fourth quarter of 2022 and 7 basis
points in the first quarter of 2022.
During the quarter ended March 31, 2023, the
Company recorded a provision for credit losses of $1,100,000
compared with a provision for credit losses of $500,000 in the
fourth quarter of 2022 and a provision for credit losses of
$5,200,000 during the first quarter of 2022. During the first
quarter of 2022, the provision for credit losses included
$6,300,000 for the Day 1 CECL addition to the allowance for credit
loss related to the CUB acquisition.
Net charge-offs totaled $953,000, or 10 basis
points on an annualized basis, of average loans outstanding during
the first quarter of 2023 compared with $1,031,000, or 11 basis
points on an annualized basis, of average loans during the fourth
quarter of 2022 and compared with $256,000, or 3 basis points, of
average loans during the first quarter of 2022.
During the quarter ended March 31, 2023,
non-interest income totaled $14,967,000, an increase of $1,299,000,
or 10%, compared with the fourth quarter of 2022 and a decline of
$1,221,000, or 8%, compared with the first quarter of 2022.
| |
|
|
|
|
|
|
| |
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
| Non-interest
Income |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
| (dollars in
thousands) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Wealth Management Fees |
|
$ |
2,644 |
|
$ |
2,420 |
|
$ |
2,638 |
| Service Charges on Deposit
Accounts |
|
|
2,788 |
|
|
2,889 |
|
|
2,683 |
| Insurance Revenues |
|
|
3,135 |
|
|
2,050 |
|
|
3,721 |
| Company Owned Life
Insurance |
|
|
401 |
|
|
496 |
|
|
458 |
| Interchange Fee Income |
|
|
4,199 |
|
|
3,972 |
|
|
3,627 |
| Other Operating Income |
|
|
1,211 |
|
|
1,258 |
|
|
1,268 |
|
Subtotal |
|
|
14,378 |
|
|
13,085 |
|
|
14,395 |
| Net Gains on Sales of
Loans |
|
|
587 |
|
|
494 |
|
|
1,421 |
| Net Gains on Securities |
|
|
2 |
|
|
89 |
|
|
372 |
| Total Non-interest
Income |
|
$ |
14,967 |
|
$ |
13,668 |
|
$ |
16,188 |
| |
|
|
|
|
|
|
Wealth management fees increased $224,000, or
9%, during the first quarter of 2023 compared with the fourth
quarter of 2022 and remained relatively stable, increasing by
$6,000, or less than 1%, during the first quarter of 2023 compared
with the first quarter of 2022. The increase during the first
quarter of 2023 compared with the first quarter of 2022 was largely
attributable to increased assets under management within the
Company's wealth management group.
Insurance revenues increased $1,085,000, or 53%,
during the quarter ended March 31, 2023, compared with the fourth
quarter of 2022 and declined $586,000, or 16%, compared with the
first quarter of 2022. The variance during the first quarter of
2023 compared with both the fourth quarter of 2022 and the first
quarter of 2022 was primarily related to contingency revenue.
Contingency revenue during the first quarter of 2023 totaled
$945,000 compared with no contingency revenue during the fourth
quarter of 2022 and $1,620,000 during the first quarter of 2022.
Contingency revenue is reflective of claims and loss experience
with insurance carriers that the Company represents through its
property and casualty insurance agency. Typically, the majority of
contingency revenue is recognized during the first quarter of the
year.
Interchange fee income increased $227,000, or
6%, during the quarter ended March 31, 2023 compared with the
fourth quarter of 2022 and increased $572,000, or 16%, compared
with the first quarter of 2022. The increased level of fees during
the first quarter of 2023 compared with both the fourth quarter of
2022 and the first quarter of 2022 was due to increased card
utilization by customers.
Net gains on sales of loans increased $93,000,
or 19%, during the first quarter of 2023 compared with the fourth
quarter of 2022 and declined $834,000, or 59%, compared with the
first quarter of 2022. The decline in the first quarter of 2023
compared with the first quarter of 2022 was largely related to a
lower volume of loans sold and lower pricing levels. Loan sales
totaled $23.4 million during the first quarter of 2023 compared
with $25.5 million during the fourth quarter of 2022 and $49.3
million during the first quarter of 2022.
During the quarter ended March 31, 2023,
non-interest expense totaled $37,616,000, an increase of
$2,002,000, or 6%, compared with the fourth quarter of 2022, and a
decline of $10,544,000, or 22%, compared with the first quarter of
2022. The first quarter of 2022 non-interest expenses included
approximately $11,705,000 of non-recurring acquisition-related
expenses for the acquisition of CUB.
| |
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|
|
|
| |
|
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
| Non-interest
Expense |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
| (dollars in
thousands) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
$ |
21,846 |
|
$ |
20,922 |
|
$ |
23,088 |
| Occupancy, Furniture and
Equipment Expense |
|
|
3,820 |
|
|
3,655 |
|
|
3,809 |
| FDIC Premiums |
|
|
741 |
|
|
442 |
|
|
476 |
| Data Processing Fees |
|
|
2,755 |
|
|
2,510 |
|
|
7,724 |
| Professional Fees |
|
|
1,562 |
|
|
1,171 |
|
|
2,363 |
| Advertising and Promotion |
|
|
1,167 |
|
|
1,036 |
|
|
1,138 |
| Intangible Amortization |
|
|
785 |
|
|
840 |
|
|
1,017 |
| Other Operating Expenses |
|
|
4,940 |
|
|
5,038 |
|
|
8,545 |
| Total Non-interest
Expense |
|
$ |
37,616 |
|
$ |
35,614 |
|
$ |
48,160 |
| |
|
|
|
|
|
|
Salaries and benefits increased $924,000, or 4%,
during the quarter ended March 31, 2023 compared with the fourth
quarter of 2022 and declined $1,242,000, or 5%, compared with the
first quarter of 2022. The increase in salaries and benefits during
the first quarter of 2023 compared with the fourth quarter of 2022
was primarily due to seasonal increases related to retirement plan
matching costs, payroll taxes and annual salary adjustments. The
decline in salaries and benefits during the first quarter of 2023
compared with the first quarter of 2022 was largely related to
approximately $1,470,000 of acquisition-related salary and benefit
costs of a non-recurring nature in the first quarter of 2022
related to the CUB acquisition.
FDIC premiums increased $299,000, or 68%, during
the quarter ended March 31, 2023 compared with the fourth quarter
of 2022 and increased $265,000, or 56%, compared with the first
quarter of 2022. The increase in the first quarter of 2023 compared
with both periods was primarily related to an industry-wide 2 basis
point increase in the base FDIC premium assessment effective
January 1, 2023.
Data processing fees increased $245,000, or 10%,
during the first quarter of 2023 compared with the fourth quarter
of 2022 and declined $4,969,000, or 64%, compared with the first
quarter of 2022. The increase during the first quarter of 2023
compared with the fourth quarter of 2022 was largely driven by
costs associated with enhancements to the Company's data processing
systems. The decline during the first quarter of 2023 compared with
the first quarter of 2022 was driven by acquisition-related costs
which totaled approximately $4,973,000 during the first quarter of
2022.
Professional fees increased $391,000, or 33%, in
the first quarter of 2023 compared with the fourth quarter of 2022
and declined $801,000, or 34%, compared with the first quarter of
2022. The increase during the first quarter of 2023 compared with
the fourth quarter of 2022 was largely attributable to the timing
of services rendered for various events and initiatives for the
Company. The decline in the first quarter of 2023 compared with the
first quarter of 2022 was due to merger related professional fees
associated with the CUB acquisition that totaled on approximately
$1,336,000 during the first quarter of 2022.
Other operating expenses declined $98,000, or
2%, during the first quarter of 2023 compared with the fourth
quarter of 2022 and declined $3,605,000, or 42%, compared with the
first quarter of 2022. The decline in the first quarter of 2023
compared to the first quarter of 2022 was attributable to
acquisition-related costs that totaled approximately $3,733,000 in
the first quarter of 2022. The acquisition-related costs were
primarily vendor contract termination costs.
About German American
German American Bancorp, Inc. is a Nasdaq-traded
(symbol: GABC) financial holding company based in Jasper, Indiana.
German American, through its banking subsidiary German American
Bank, operates 77 banking offices in 20 contiguous southern Indiana
counties and 14 counties in Kentucky. The Company also owns an
investment brokerage subsidiary (German American Investment
Services, Inc.) and a full line property and casualty insurance
agency (German American Insurance, Inc.).
Cautionary Note Regarding Forward-Looking
Statements
Certain statements in this press release may be
deemed “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Readers are
cautioned that, by their nature, forward-looking statements are
based on assumptions and are subject to risks, uncertainties, and
other factors. Forward-looking statements can often, but not
always, be identified by the use of words like “believe”,
“continue”, “pattern”, “estimate”, “project”, “intend”,
“anticipate”, “expect” and similar expressions or future or
conditional verbs such as “will”, “would”, “should”, “could”,
“might”, “can”, “may”, or similar expressions. Actual results and
experience could differ materially from the anticipated results or
other expectations expressed or implied by these forward-looking
statements as a result of a number of factors, including but not
limited to, those discussed in this press release. Factors that
could cause actual experience to differ from the expectations
expressed or implied in this press release include:
- changes in
interest rates and the timing and magnitude of any such
changes;
- unfavorable
economic conditions, including a prolonged period of inflation, and
the resulting adverse impact on, among other things, credit
quality;
- the impacts
related to or resulting from recent bank failures or adverse
developments at other banks on general investor sentiment regarding
the stability and liquidity of banks;
- the impacts of
epidemics, pandemics or other infectious disease outbreaks,
including the continuation of the COVID-19 pandemic;
- 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;
- capital
management activities, including possible future sales of new
securities, or possible repurchases or redemptions by German
American 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 or employee 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;
- potential
cyber-attacks, information security breaches and other criminal
activities;
- 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;
- the possible
effects of the replacement of the London Interbank Offering Rate
(LIBOR);
- the potential
for increases to, and volatility in, the balance of our allowance
for credit losses and related provision expense due to the current
expected credit loss (CECL) standard;
- changes in
accounting principles and interpretations;
- potential
increases of federal deposit insurance premium expense, and
possible future special assessments of FDIC premiums, either
industry wide or specific to German American’s banking
subsidiary;
- actions of the
regulatory authorities under the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank Act”) and the Federal
Deposit Insurance Act and other possible legislative and regulatory
actions and reforms;
- impacts
resulting from possible amendments or revisions to the Dodd-Frank
Act and the regulations promulgated thereunder, or to Consumer
Financial Protection Bureau rules and regulations;
- the continued
availability of earnings and excess capital sufficient for the
lawful and prudent declaration and payment of cash dividends;
- with respect to
the merger with CUB, the possibility that the benefits of the
transaction, including cost savings and strategic gains, do not
continue as anticipated, including as a result of the impact of, or
problems arising from, the continued integration of the two
companies, unexpected credit quality problems of the acquired loans
or other assets, or unexpected attrition of the customer base of
the acquired institution or branches; and
- other risk
factors expressly identified in German American’s filings with the
SEC.
Such statements reflect our views with respect
to future events and are subject to these and other risks,
uncertainties and assumptions relating to the operations, results
of operations, growth strategy and liquidity of German American.
Readers are cautioned not to place undue reliance on these
forward-looking statements. It is intended that these
forward-looking statements speak only as of the date they are made.
We do not undertake any obligation to release publicly any
revisions to these forward-looking statements to reflect future
events or circumstances or to reflect the occurrence of
unanticipated events.
|
|
|
GERMAN AMERICAN BANCORP, INC. |
|
(unaudited, dollars in thousands except per share
data) |
| |
|
|
|
|
|
|
Consolidated Balance Sheets |
| |
|
|
|
|
|
| |
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
| ASSETS |
|
|
|
|
|
|
Cash and Due from Banks |
$ |
70,506 |
|
|
$ |
77,174 |
|
|
$ |
60,477 |
|
|
Short-term Investments |
|
10,289 |
|
|
|
42,405 |
|
|
|
611,110 |
|
|
Investment Securities |
|
1,670,609 |
|
|
|
1,762,022 |
|
|
|
1,923,973 |
|
|
|
|
|
|
|
|
|
Loans Held-for-Sale |
|
6,011 |
|
|
|
8,600 |
|
|
|
12,675 |
|
|
|
|
|
|
|
|
|
Loans, Net of Unearned Income |
|
3,768,872 |
|
|
|
3,784,934 |
|
|
|
3,652,452 |
|
|
Allowance for Credit Losses |
|
(44,315 |
) |
|
|
(44,168 |
) |
|
|
(45,078 |
) |
|
Net Loans |
|
3,724,557 |
|
|
|
3,740,766 |
|
|
|
3,607,374 |
|
|
|
|
|
|
|
|
|
Stock in FHLB and Other Restricted Stock |
|
14,957 |
|
|
|
15,037 |
|
|
|
15,455 |
|
|
Premises and Equipment |
|
112,225 |
|
|
|
112,237 |
|
|
|
111,815 |
|
|
Goodwill and Other Intangible Assets |
|
188,929 |
|
|
|
189,783 |
|
|
|
190,949 |
|
|
Other Assets |
|
198,836 |
|
|
|
207,967 |
|
|
|
163,801 |
|
|
TOTAL ASSETS |
$ |
5,996,919 |
|
|
$ |
6,155,991 |
|
|
$ |
6,697,629 |
|
| |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Non-interest-bearing Demand Deposits |
$ |
1,601,206 |
|
|
$ |
1,691,804 |
|
|
$ |
1,789,353 |
|
|
Interest-bearing Demand, Savings, and Money Market Accounts |
|
3,039,393 |
|
|
|
3,229,778 |
|
|
|
3,527,373 |
|
|
Time Deposits |
|
514,296 |
|
|
|
428,469 |
|
|
|
512,884 |
|
|
Total Deposits |
|
5,154,895 |
|
|
|
5,350,051 |
|
|
|
5,829,610 |
|
|
|
|
|
|
|
|
|
Borrowings |
|
191,052 |
|
|
|
203,806 |
|
|
|
156,124 |
|
|
Other Liabilities |
|
45,641 |
|
|
|
43,741 |
|
|
|
62,859 |
|
|
TOTAL LIABILITIES |
|
5,391,588 |
|
|
|
5,597,598 |
|
|
|
6,048,593 |
|
| |
|
|
|
|
|
| SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
Common Stock and Surplus |
|
417,203 |
|
|
|
416,664 |
|
|
|
414,758 |
|
|
Retained Earnings |
|
418,620 |
|
|
|
405,167 |
|
|
|
352,679 |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
(230,492 |
) |
|
|
(263,438 |
) |
|
|
(118,401 |
) |
| SHAREHOLDERS'
EQUITY |
|
605,331 |
|
|
|
558,393 |
|
|
|
649,036 |
|
| |
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
5,996,919 |
|
|
$ |
6,155,991 |
|
|
$ |
6,697,629 |
|
| |
|
|
|
|
|
| END OF PERIOD SHARES
OUTSTANDING |
|
29,573,439 |
|
|
|
29,493,193 |
|
|
|
29,485,683 |
|
| |
|
|
|
|
|
| TANGIBLE BOOK VALUE
PER SHARE (1) |
$ |
14.08 |
|
|
$ |
12.50 |
|
|
$ |
15.54 |
|
| |
|
|
|
|
|
| (1) Tangible Book
Value per Share is defined as Total Shareholders' Equity less
Goodwill and Other Intangible Assets divided by End of Period
Shares Outstanding. |
| |
|
GERMAN AMERICAN BANCORP, INC. |
|
(unaudited, dollars in thousands except per share
data) |
| |
|
|
|
|
|
|
|
Consolidated Statements of Income |
| |
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
| INTEREST
INCOME |
|
|
|
|
|
|
Interest and Fees on Loans |
$ |
49,061 |
|
$ |
47,108 |
|
$ |
38,935 |
|
Interest on Short-term Investments |
|
345 |
|
|
2,200 |
|
|
280 |
|
Interest and Dividends on Investment Securities |
|
11,083 |
|
|
11,553 |
|
|
10,060 |
|
TOTAL INTEREST INCOME |
|
60,489 |
|
|
60,861 |
|
|
49,275 |
| |
|
|
|
|
|
|
| INTEREST
EXPENSE |
|
|
|
|
|
|
Interest on Deposits |
|
8,971 |
|
|
7,039 |
|
|
1,329 |
|
Interest on Borrowings |
|
2,509 |
|
|
1,441 |
|
|
1,038 |
|
TOTAL INTEREST EXPENSE |
|
11,480 |
|
|
8,480 |
|
|
2,367 |
| |
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
49,009 |
|
|
52,381 |
|
|
46,908 |
|
Provision for Credit Losses |
|
1,100 |
|
|
500 |
|
|
5,200 |
|
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES |
|
47,909 |
|
|
51,881 |
|
|
41,708 |
| |
|
|
|
|
|
|
|
NON-INTEREST INCOME |
|
|
|
|
|
|
Net Gain on Sales of Loans |
|
587 |
|
|
494 |
|
|
1,421 |
|
Net Gain on Securities |
|
2 |
|
|
89 |
|
|
372 |
|
Other Non-interest Income |
|
14,378 |
|
|
13,085 |
|
|
14,395 |
|
TOTAL NON-INTEREST INCOME |
|
14,967 |
|
|
13,668 |
|
|
16,188 |
| |
|
|
|
|
|
|
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
Salaries and Benefits |
|
21,846 |
|
|
20,922 |
|
|
23,088 |
|
Other Non-interest Expenses |
|
15,770 |
|
|
14,692 |
|
|
25,072 |
|
TOTAL NON-INTEREST EXPENSE |
|
37,616 |
|
|
35,614 |
|
|
48,160 |
| |
|
|
|
|
|
|
|
Income before Income Taxes |
|
25,260 |
|
|
29,935 |
|
|
9,736 |
|
Income Tax Expense |
|
4,453 |
|
|
5,520 |
|
|
669 |
| |
|
|
|
|
|
|
| NET
INCOME |
$ |
20,807 |
|
$ |
24,415 |
|
$ |
9,067 |
| |
|
|
|
|
|
|
| BASIC
EARNINGS PER SHARE |
$ |
0.71 |
|
$ |
0.83 |
|
$ |
0.31 |
| DILUTED
EARNINGS PER SHARE |
$ |
0.71 |
|
$ |
0.83 |
|
$ |
0.31 |
| |
|
|
|
|
|
|
| WEIGHTED
AVERAGE SHARES OUTSTANDING |
|
29,507,446 |
|
|
29,485,940 |
|
|
29,403,052 |
| DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
29,507,446 |
|
|
29,485,940 |
|
|
29,403,052 |
| |
|
|
|
|
|
|
|
|
|
GERMAN AMERICAN BANCORP, INC. |
|
(unaudited, dollars in thousands except per share
data) |
| |
|
|
|
|
|
|
|
| |
|
|
Three Months Ended |
| |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
| EARNINGS
PERFORMANCE RATIOS |
|
|
|
|
|
|
| |
Annualized Return on Average
Assets |
|
|
1.37 |
% |
|
|
1.56 |
% |
|
|
0.54 |
% |
| |
Annualized Return on Average
Equity |
|
|
14.39 |
% |
|
|
18.99 |
% |
|
|
4.88 |
% |
| |
Annualized Return on Average
Tangible Equity (1) |
|
|
21.38 |
% |
|
|
30.14 |
% |
|
|
6.56 |
% |
| |
Net Interest Margin |
|
|
3.69 |
% |
|
|
3.78 |
% |
|
|
3.13 |
% |
| |
Efficiency Ratio (2) |
|
|
57.28 |
% |
|
|
52.53 |
% |
|
|
74.49 |
% |
| |
Net Overhead Expense to
Average Earning Assets (3) |
|
|
1.63 |
% |
|
|
1.54 |
% |
|
|
2.05 |
% |
| |
|
|
|
|
|
|
|
| ASSET
QUALITY RATIOS |
|
|
|
|
|
|
| |
Annualized Net Charge-offs to
Average Loans |
|
|
0.10 |
% |
|
|
0.11 |
% |
|
|
0.03 |
% |
| |
Allowance for Credit Losses to
Period End Loans |
|
|
1.18 |
% |
|
|
1.17 |
% |
|
|
1.23 |
% |
| |
Non-performing Assets to
Period End Assets |
|
|
0.24 |
% |
|
|
0.23 |
% |
|
|
0.23 |
% |
| |
Non-performing Loans to Period
End Loans |
|
|
0.39 |
% |
|
|
0.38 |
% |
|
|
0.42 |
% |
| |
Loans 30-89 Days Past Due to
Period End Loans |
|
|
0.27 |
% |
|
|
0.37 |
% |
|
|
0.17 |
% |
| |
|
|
|
|
|
|
|
| SELECTED
BALANCE SHEET & OTHER FINANCIAL DATA |
|
|
|
|
|
|
| |
Average Assets |
|
$ |
6,078,126 |
|
|
$ |
6,243,859 |
|
|
$ |
6,739,970 |
|
| |
Average Earning Assets |
|
$ |
5,549,707 |
|
|
$ |
5,698,429 |
|
|
$ |
6,248,900 |
|
| |
Average Total Loans |
|
$ |
3,773,789 |
|
|
$ |
3,728,788 |
|
|
$ |
3,667,082 |
|
| |
Average Demand Deposits |
|
$ |
1,636,133 |
|
|
$ |
1,735,264 |
|
|
$ |
1,739,351 |
|
| |
Average Interest Bearing
Liabilities |
|
$ |
3,816,268 |
|
|
$ |
3,948,581 |
|
|
$ |
4,205,746 |
|
| |
Average Equity |
|
$ |
578,562 |
|
|
$ |
514,335 |
|
|
$ |
743,518 |
|
| |
|
|
|
|
|
|
|
| |
Period End Non-performing
Assets (4) |
|
$ |
14,593 |
|
|
$ |
14,315 |
|
|
$ |
15,342 |
|
| |
Period End Non-performing
Loans (5) |
|
$ |
14,593 |
|
|
$ |
14,315 |
|
|
$ |
15,312 |
|
| |
Period End Loans 30-89 Days
Past Due (6) |
|
$ |
10,360 |
|
|
$ |
14,040 |
|
|
$ |
6,185 |
|
| |
|
|
|
|
|
|
|
| |
Tax Equivalent Net Interest
Income |
|
$ |
50,705 |
|
|
$ |
54,132 |
|
|
$ |
48,468 |
|
| |
Net Charge-offs during
Period |
|
$ |
953 |
|
|
$ |
1,031 |
|
|
$ |
256 |
|
| |
|
|
|
|
|
|
|
|
(1) |
Average Tangible
Equity is defined as Average Equity less Average Goodwill and Other
Intangibles. |
|
(2) |
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. |
|
(3) |
Net Overhead Expense
is defined as Total Non-interest Expense less Total Non-interest
Income. |
|
(4) |
Non-performing
assets are defined as Non-accrual Loans, Loans Past Due 90 days or
more, and Other Real Estate Owned. |
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(5) |
Non-performing loans
are defined as Non-accrual Loans and Loans Past Due 90 days or
more. |
|
(6) |
Loans 30-89 days past due and
still accruing. |
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For additional information, contact:D.
Neil Dauby, President and Chief Executive
OfficerBradley M Rust, Sr. EVP, Chief Operating
Officer and Chief Financial Officer(812) 482-1314
German American Bancorp (NASDAQ:GABC)
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German American Bancorp (NASDAQ:GABC)
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