Attached files
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| 8-K - 8-K - GERMAN AMERICAN BANCORP, INC. | earningsreleaseq42016.htm |
Exhibit 99.1
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
JANUARY 30, 2017 | GERMAN AMERICAN BANCORP, INC. (GABC) POSTS 7th CONSECUTIVE YEAR OF RECORD ANNUAL EARNINGS & ANNOUNCES CASH DIVIDEND INCREASE |
Jasper, Indiana: January 30, 2017 -- German American Bancorp, Inc. (NASDAQ: GABC) reported that the Company has achieved record earnings for the year ended on December 31, 2016, marking the 7th consecutive year that the Company has attained this level of performance. This record financial performance in 2016 continues a trend of exceptional performance by German American, as the Company has consistently delivered double-digit returns on shareholders’ equity over the course of the past twelve fiscal years.
The Company’s 2016 net income of $35.2 million, or $2.36 per share, was an increase of approximately 4%, on a per share basis, over its previous record annual net income of $30.1 million, or $2.27 per share, reported in 2015. Fourth quarter earnings in the current year of $10.1 million, or $0.66 per share, represented an increase of approximately 14%, on a per share basis, relative to 2015 fourth quarter results of $7.7 million, or $0.58 per share. The Company’s 2016 reported net income was inclusive of ten month’s operations of River Valley Bancorp, following completion of the merger transaction on March 1, 2016, and reflected merger related costs totaling approximately $4.3 million, or $2.7 million on an after-tax basis, representing approximately $0.18 per share.
The 2016 record performance was largely attributable to an increased level of net interest income and net interest margin, driven primarily by a higher level of average loans outstanding and a portfolio mix shift within the Company’s securities portfolio to a higher percentage of non-taxable municipal securities. 2016 year-end loans outstanding increased by approximately $425 million, or 27%, from the prior year-end level. The year-over-year increase in loans outstanding was largely due to the acquisition of River Valley, as well as organic growth, exclusive of the impact of the River Valley acquisition, of approximately $118 million, or 8%.
Commenting on the Company’s continuation of record financial performance in 2016, Mark A. Schroeder, German American’s Chairman & CEO, stated, "Our exceptionally strong 2016 financial performance was driven by a combination of both merger-related expansion and organic growth within our existing market footprint. The acquisition of River Valley Bancorp in March provided an opportunity to enter the vibrant Southeast Indiana area. With a well connected team of financial professionals and an established branch network along the I-65 corridor between our existing Columbus, Indiana presence and the Indiana counties of Clark and Floyd, which are a rapidly growing component of the greater Louisville, Kentucky market area, the inclusion of River Valley positions us very well for future growth within this market area. We have already seen significant community banking opportunities within these markets, and we fully expect these new markets for German American will provide significant growth potential going forward.”
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Schroeder continued, “Perhaps most importantly, we were able to successfully complete the merger integration of River Valley during 2016 while remaining focused on enhancing our market share within our existing footprint. Exclusive of River Valley, we were also able to generate approximately $118 million in year-over-year loan growth within our existing branch network, which represents the 2nd consecutive year in which we were able to generate approximately 8% organic loan growth. The relative level of employment within our markets in 2016 remained among the strongest in the state, and compared favorably to national statistics. A testament to the local business environment, this combination of economic strength and stability throughout our Southern Indiana market area in 2016 afforded us the opportunity, as a banking organization, to provide our clients with a wide array of financial products and services.”
The Company also announced that it was increasing the level of its regular quarterly cash dividend. German American's Board of Directors declared a regular quarterly cash dividend of $0.19 per share, which will be payable on February 20, 2017 to shareholders of record as of February 10, 2017. This level of regular quarterly cash dividend represents approximately a 6% increase above the Company’s prior quarterly cash dividend level. This is the 5th consecutive year of annual dividend increases.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Balance Sheet Highlights
Total assets for the Company decreased to $2.956 billion at December 31, 2016, representing a decline of $23.5 million, or 3% on an annualized basis, compared with September 30, 2016 and an increase of $582.3 million compared with December 31, 2015. The year-over-year increase was largely attributable to the acquisition of River Valley Bancorp ("River Valley") and its banking subsidiary River Valley Financial Bank effective March 1, 2016. River Valley's total assets as of the effective date of the merger totaled approximately $516.3 million.
December 31, 2016 total loans declined $12.7 million, or 3% on an annualized basis, compared with September 30, 2016 and increased $425.3 million, or 27%, compared with December 31, 2015. The decline during the fourth quarter of 2016 was largely related to payoff activity of several commercial real estate projects in addition to pay-down activity on commercial lines of credit. The year-over-year increase was largely attributable to the acquisition of River Valley as well as growth within the Company's existing branch network, excluding River Valley, which totaled approximately $118 million, or 8% growth.
End of Period Loan Balances | 12/31/2016 | 9/30/2016 | 12/31/2015 | |||||||||
(dollars in thousands) | ||||||||||||
Commercial & Industrial Loans | $ | 457,372 | $ | 469,255 | $ | 418,154 | ||||||
Commercial Real Estate Loans | 856,094 | 862,998 | 618,788 | |||||||||
Agricultural Loans | 303,128 | 299,080 | 246,886 | |||||||||
Consumer Loans | 193,520 | 186,854 | 147,931 | |||||||||
Residential Mortgage Loans | 183,290 | 187,903 | 136,316 | |||||||||
$ | 1,993,404 | $ | 2,006,090 | $ | 1,568,075 | |||||||
Non-performing assets totaled $4.0 million at December 31, 2016 compared to $5.5 million of non-performing assets at September 30, 2016 and $3.5 million at December 31, 2015. Non-performing assets represented 0.14% of total assets at December 31, 2016 compared to 0.18% of total assets at September 30, 2016 and 0.15% of total assets at December 31, 2015. Non-performing loans totaled $3.8 million at December 31, 2016 compared to $5.1 million at September 30, 2016 and $3.3 million of non-performing loans at December 31, 2015. Non-performing loans represented 0.19% of total loans at December 31, 2016 compared to 0.25% at September 30, 2016 and 0.21% at December 31, 2015. The decline in non-performing assets and non-performing loans during the fourth quarter of 2016 compared with September 30, 2016 levels was attributable to both a decline in non-performing loans acquired in the River Valley merger transaction and payoff of a non-accrual commercial real estate credit relationship unrelated to River Valley.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Non-performing Assets | |||||||||||
(dollars in thousands) | |||||||||||
12/31/2016 | 9/30/2016 | 12/31/2015 | |||||||||
Non-Accrual Loans | $ | 3,793 | $ | 4,906 | $ | 3,143 | |||||
Past Due Loans (90 days or more) | 2 | 191 | 143 | ||||||||
Total Non-Performing Loans | 3,795 | 5,097 | 3,286 | ||||||||
Other Real Estate | 242 | 355 | 169 | ||||||||
Total Non-Performing Assets | $ | 4,037 | $ | 5,452 | $ | 3,455 | |||||
Restructured Loans | $ | 28 | $ | 50 | $ | 2,203 | |||||
The Company’s allowance for loan losses totaled $14.8 million at December 31, 2016 compared to $15.2 million at September 30, 2016 and $14.4 million at December 31, 2015. The allowance for loan losses represented 0.74% of period-end loans at December 31, 2016 compared with 0.76% of period-end loans at September 30, 2016 and 0.92% of period-end loans at December 31, 2015. The year-over-year decline in the allowance for loan loss as a percent of total loans was the result of the acquisition of River Valley. 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 $10.0 million as of December 31, 2016, $11.1 million at September 30, 2016 and $3.0 million at December 31, 2015.
Total deposits increased $19.9 million, or 3% on an annualized basis, as of December 31, 2016 compared with September 30, 2016 and increased $523.2 million compared with December 31, 2015. The increase in total deposits as of December 31, 2016 compared with year-end 2015 was largely attributable to the acquisition of River Valley which had total deposits of approximately $405.4 million as of the effective date of the merger.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
End of Period Deposit Balances | 12/31/2016 | 9/30/2016 | 12/31/2015 | |||||||||
(dollars in thousands) | ||||||||||||
Non-interest-bearing Demand Deposits | $ | 571,989 | $ | 534,620 | $ | 465,357 | ||||||
IB Demand, Savings, and MMDA Accounts | 1,399,381 | 1,361,522 | 1,054,983 | |||||||||
Time Deposits < $100,000 | 207,824 | 214,235 | 186,859 | |||||||||
Time Deposits > $100,000 | 170,357 | 219,286 | 119,177 | |||||||||
$ | 2,349,551 | $ | 2,329,663 | $ | 1,826,376 | |||||||
Results of Operations Highlights - Year ended December 31, 2016
Net income for the year ended December 31, 2016 totaled $35,184,000 or $2.36 per share, an increase of $5,120,000, or approximately 4% on a per share basis, from the year ended December 31, 2015 net income of $30,064,000 or $2.27 per share. The 2016 results of operations included ten month's operations of River Valley and were impacted by merger related charges associated with the closing of the River Valley transaction which was effective March 1, 2016. These merger related charges totaled approximately $4,318,000, or $2,725,000 on an after tax basis, which represented approximately $0.18 per share during 2016.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Summary Average Balance Sheet | ||||||||||||||||||||||
(Tax-equivalent basis / dollars in thousands) | ||||||||||||||||||||||
Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||||||||
Principal Balance | Income/ Expense | Yield/Rate | Principal Balance | Income/ Expense | Yield/Rate | |||||||||||||||||
Assets | ||||||||||||||||||||||
Federal Funds Sold and Other | ||||||||||||||||||||||
Short-term Investments | $ | 22,180 | $ | 73 | 0.33 | % | $ | 19,187 | $ | 13 | 0.07 | % | ||||||||||
Securities | 723,044 | 21,102 | 2.92 | % | 634,232 | 18,018 | 2.84 | % | ||||||||||||||
Loans and Leases | 1,904,779 | 86,756 | 4.55 | % | 1,483,752 | 67,109 | 4.52 | % | ||||||||||||||
Total Interest Earning Assets | $ | 2,650,003 | $ | 107,931 | 4.07 | % | $ | 2,137,171 | $ | 85,140 | 3.98 | % | ||||||||||
Liabilities | ||||||||||||||||||||||
Demand Deposit Accounts | $ | 513,199 | $ | 430,312 | ||||||||||||||||||
IB Demand, Savings, and | ||||||||||||||||||||||
MMDA Accounts | $ | 1,322,593 | $ | 2,515 | 0.19 | % | $ | 1,045,079 | $ | 1,343 | 0.13 | % | ||||||||||
Time Deposits | 414,100 | 2,672 | 0.65 | % | 350,522 | 2,633 | 0.75 | % | ||||||||||||||
FHLB Advances and Other Borrowings | 242,483 | 3,274 | 1.35 | % | 178,767 | 2,092 | 1.17 | % | ||||||||||||||
Total Interest-Bearing Liabilities | $ | 1,979,176 | $ | 8,461 | 0.43 | % | $ | 1,574,368 | $ | 6,068 | 0.39 | % | ||||||||||
Cost of Funds | 0.32 | % | 0.28 | % | ||||||||||||||||||
Net Interest Income | $ | 99,470 | $ | 79,072 | ||||||||||||||||||
Net Interest Margin | 3.75 | % | 3.70 | % | ||||||||||||||||||
During the year ended December 31, 2016, net interest income totaled $94,904,000 representing an increase of $19,352,000 or 26% from the year ended December 31, 2015 net interest income of $75,552,000. The tax equivalent net interest margin for the year ended December 31, 2016 was 3.75% compared to 3.70% in 2015. The increase in the net interest margin during 2016 was primarily attributable to an increase in the amount of accretion of loan discounts on acquired loans combined with an increased loan yield stemming largely from the addition of the River Valley loan portfolio and a securities portfolio mix shift to a higher percentage of total securities in non-taxable securities rather than in taxable securities, partially offset by a higher cost of funds. Accretion of loan discounts on acquired loans contributed approximately 13 basis points to the net interest margin in 2016 compared with approximately 4 basis points in 2015.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
The Company recorded a $1,200,000 provision for loan loss during 2016 compared with no provision during the year ended December 31, 2015.
During the year ended December 31, 2016, non-interest income increased approximately 17% from the year ended December 31, 2015. The increase during 2016 compared with 2015 was largely the result of the acquisition of River Valley and an increase in the level of gains on the sale of securities. The year ended December 31, 2016 included ten months of River Valley operations while 2015 had no operations of River Valley included.
Year Ended | Year Ended | |||||||
Non-interest Income | 12/31/2016 | 12/31/2015 | ||||||
(dollars in thousands) | ||||||||
Trust and Investment Product Fees | $ | 4,644 | $ | 3,957 | ||||
Service Charges on Deposit Accounts | 5,973 | 4,826 | ||||||
Insurance Revenues | 7,741 | 7,489 | ||||||
Company Owned Life Insurance | 987 | 846 | ||||||
Interchange Fee Income | 2,532 | 2,127 | ||||||
Other Operating Income | 4,798 | 4,515 | ||||||
Subtotal | 26,675 | 23,760 | ||||||
Net Gains on Loans | 3,359 | 2,959 | ||||||
Net Gains on Securities | 1,979 | 725 | ||||||
Total Non-interest Income | $ | 32,013 | $ | 27,444 | ||||
During 2016, the Company realized net gains on the sale of securities of $1,979,000 related to the sale of $100.1 million of securities compared with a net gain on the sale of securities of $725,000 in 2015 related to the sale of $18.3 million of securities.
During 2016, non-interest expense increased $15,261,000, or 25%, compared with 2015. During 2016, the Company recorded costs related to the River Valley merger transaction that totaled $4,318,000. The majority of the remainder of the increase in operating expenses during 2016 compared with 2015 were related to the operating costs of River Valley.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Year Ended | Year Ended | |||||||
Non-interest Expense | 12/31/2016 | 12/31/2015 | ||||||
(dollars in thousands) | ||||||||
Salaries and Employee Benefits | $ | 43,961 | $ | 35,042 | ||||
Occupancy, Furniture and Equipment Expense | 8,558 | 6,812 | ||||||
FDIC Premiums | 1,151 | 1,144 | ||||||
Data Processing Fees | 5,686 | 3,541 | ||||||
Professional Fees | 3,672 | 2,661 | ||||||
Advertising and Promotion | 2,657 | 3,669 | ||||||
Intangible Amortization | 1,062 | 790 | ||||||
Other Operating Expenses | 9,840 | 7,667 | ||||||
Total Non-interest Expense | $ | 76,587 | $ | 61,326 | ||||
Salaries and benefits increased $8,919,000, or 25%, in 2016 compared with 2015. Included in the increase in 2016 was $1,934,000 of merger costs related to the settlement of various employment and benefit arrangements. The remainder of the increase was largely related to a higher number of full-time equivalent employees stemming from the acquisition of River Valley.
Occupancy, furniture and equipment expense increased $1,746,000, or 26%, in 2016 compared with 2015. This increase was related to the operation of River Valley's 15 branch network during 2016.
Data processing fees increased $2,145,000, or 61%, in 2016 compared with 2015. Included in the increase was $1,288,000 of merger costs related to the consolidation of various data processing and information systems.
Professional fees increased $1,011,000, or 38%, in 2016 compared with 2015. Included in the increase in 2016 was $770,000 of merger related costs.
Advertising and promotion declined $1,012,000, or 28%, during 2016 compared with 2015. The decline in advertising and promotion during 2016 compared with 2015 was related to the recognition of a $1,750,000 contribution expense during 2015 in connection with the donation of a building and accompanying real estate to an economic development foundation in one of the Company's market areas.
Other operating expenses increased $2,173,000, or 28%, in 2016 compared with 2015. Included in the increase in 2016 was $284,000 of merger related costs. The inclusion of River Valley's operations was the primary driver of the remainder of the increase.
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Results of Operations Highlights – Quarter ended December 31, 2016
Net income for the quarter ended December 31, 2016 totaled $10,065,000, or $0.66 per share, which represented a decline of approximately 1% on a per share basis compared with the third quarter 2016 net income of $10,185,000, or $0.67 per share, and represented an increase of approximately 14% on a per share basis compared with the fourth quarter 2015 net income $7,712,000 or $0.58 per share. The results of operations during both the third and fourth quarters of 2016 fully included the operations of River Valley.
Summary Average Balance Sheet | |||||||||||||||||||||||||||||||||
(Tax-equivalent basis / dollars in thousands) | |||||||||||||||||||||||||||||||||
Quarter Ended | Quarter Ended | Quarter Ended | |||||||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||||
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 | $ | 19,738 | $ | 12 | 0.24 | % | $ | 22,709 | $ | 25 | 0.44 | % | $ | 17,502 | $ | 3 | 0.07 | % | |||||||||||||||
Securities | 737,619 | 5,582 | 3.03 | % | 734,869 | 5,426 | 2.95 | % | 639,352 | 4,697 | 2.94 | % | |||||||||||||||||||||
Loans and Leases | 2,004,983 | 22,734 | 4.51 | % | 1,982,291 | 22,475 | 4.51 | % | 1,540,491 | 17,294 | 4.46 | % | |||||||||||||||||||||
Total Interest Earning Assets | $ | 2,762,340 | $ | 28,328 | 4.09 | % | $ | 2,739,869 | $ | 27,926 | 4.07 | % | $ | 2,197,345 | $ | 21,994 | 3.98 | % | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
Demand Deposit Accounts | $ | 559,597 | $ | 522,994 | $ | 444,951 | |||||||||||||||||||||||||||
IB Demand, Savings, and | |||||||||||||||||||||||||||||||||
MMDA Accounts | $ | 1,412,398 | $ | 708 | 0.20 | % | $ | 1,363,654 | $ | 671 | 0.20 | % | $ | 1,080,603 | $ | 357 | 0.13 | % | |||||||||||||||
Time Deposits | 412,151 | 675 | 0.65 | % | 416,968 | 652 | 0.62 | % | 344,820 | 617 | 0.71 | % | |||||||||||||||||||||
FHLB Advances and Other Borrowings | 217,033 | 829 | 1.52 | % | 274,365 | 851 | 1.23 | % | 183,603 | 611 | 1.32 | % | |||||||||||||||||||||
Total Interest-Bearing Liabilities | $ | 2,041,582 | $ | 2,212 | 0.43 | % | $ | 2,054,987 | $ | 2,174 | 0.42 | % | $ | 1,609,026 | $ | 1,585 | 0.39 | % | |||||||||||||||
Cost of Funds | 0.32 | % | 0.32 | % | 0.29 | % | |||||||||||||||||||||||||||
Net Interest Income | $ | 26,116 | $ | 25,752 | $ | 20,409 | |||||||||||||||||||||||||||
Net Interest Margin | 3.77 | % | 3.75 | % | 3.69 | % | |||||||||||||||||||||||||||
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
During the quarter ended December 31, 2016, net interest income totaled $24,889,000 representing an increase of $329,000, or 1%, from the quarter ended September 30, 2016 net interest income of $24,560,000 and an increase of $5,451,000, or 28%, compared with the quarter ended December 31, 2015 net interest income of $19,438,000.
The tax equivalent net interest margin for the quarter ended December 31, 2016 was 3.77% compared with 3.75% in the third quarter of 2016 and 3.69% in the fourth quarter of 2015. Accretion of loan discounts on acquired loans contributed approximately 13 basis points to the net interest margin on an annualized basis in the fourth quarter of 2016, 9 basis points in the third quarter of 2016, and 2 basis points in the fourth quarter of 2015.
During the quarters ended December 31, 2016, September 30, 2016, and December 31, 2015, the Company recorded no provision for loan loss. The lack of recording a provision during all periods was done in accordance with the Company's standard methodology for determining the adequacy of its allowance for loan loss.
During the quarter ended December 31, 2016, non-interest income totaled $8,357,000, a decline of less than 1% compared with the quarter ended September 30, 2016, and an increase of $1,933,000, or 30%, compared with the fourth quarter of 2015. The increase during the fourth quarter of 2016 compared with the fourth quarter of 2015 was largely the result of the acquisition of River Valley.
Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||
Non-interest Income | 12/31/2016 | 9/30/2016 | 12/31/2015 | |||||||||
(dollars in thousands) | ||||||||||||
Trust and Investment Product Fees | $ | 1,209 | $ | 1,191 | $ | 983 | ||||||
Service Charges on Deposit Accounts | 1,594 | 1,612 | 1,232 | |||||||||
Insurance Revenues | 1,748 | 1,661 | 1,677 | |||||||||
Company Owned Life Insurance | 278 | 247 | 229 | |||||||||
Interchange Fee Income | 708 | 688 | 534 | |||||||||
Other Operating Income | 1,515 | 1,523 | 1,174 | |||||||||
Subtotal | 7,052 | 6,922 | 5,829 | |||||||||
Net Gains on Loans | 752 | 1,004 | 595 | |||||||||
Net Gains on Securities | 553 | 458 | — | |||||||||
Total Non-interest Income | $ | 8,357 | $ | 8,384 | $ | 6,424 | ||||||
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & 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 16
Net gains on sales of loans decreased $252,000, or 25%, during the fourth quarter of 2016 compared with the third quarter of 2016 and increased $157,000, or 26%, compared with the fourth quarter of 2015. Loan sales totaled $37.9 million during the fourth quarter of 2016, compared with $34.4 million during the third quarter of 2016 and $21.9 million during the fourth quarter of 2015. The decline in net gain during the fourth quarter of 2016 compared with the third quarter of 2016 was primarily related to the decline in value of open commitments to sell loans in future periods.
During the quarter ended December 31, 2016, non-interest expense totaled $19,355,000, an increase of $702,000, or 4%, compared with the quarter ended September 30, 2016, and an increase of $4,143,000, or 27%, compared with the fourth quarter of 2015. The increase during the fourth quarter of 2016 compared with the fourth quarter of 2015 was largely the result of the acquisition of River Valley.
Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||
Non-interest Expense | 12/31/2016 | 9/30/2016 | 12/31/2015 | |||||||||
(dollars in thousands) | ||||||||||||
Salaries and Employee Benefits | $ | 11,604 | $ | 10,572 | $ | 8,960 | ||||||
Occupancy, Furniture and Equipment Expense | 2,229 | 2,224 | 1,663 | |||||||||
FDIC Premiums | 111 | 373 | 294 | |||||||||
Data Processing Fees | 1,079 | 1,261 | 933 | |||||||||
Professional Fees | 797 | 777 | 588 | |||||||||
Advertising and Promotion | 797 | 687 | 544 | |||||||||
Intangible Amortization | 262 | 280 | 160 | |||||||||
Other Operating Expenses | 2,476 | 2,479 | 2,070 | |||||||||
Total Non-interest Expense | $ | 19,355 | $ | 18,653 | $ | 15,212 | ||||||
Salaries and benefits increased $1,032,000, or 10%, during the quarter ended December 31, 2016 compared with the third quarter of 2016 and increased $2,644,000, or 30%, compared with the fourth quarter of 2015. The increase in salaries and benefits during the fourth quarter of 2016 compared with the third quarter of 2016 was attributable to increased costs related to the Company's employee benefit plans including incentive compensation, retirement, and health insurance plans.
FDIC premiums declined $262,000, or 70%, during the quarter ended December 31, 2016 compared with the third quarter of 2016 and declined $183,000, or 62%, compared with the fourth quarter of 2015. The decline
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
12 of 16
in the fourth quarter of 2016 compared with both the third quarter of 2016 and the fourth quarter of 2015 was primarily due to a reduction in FDIC assessment rates.
Data processing fees declined $182,000, or 14%, in the fourth quarter of 2016 compared with the third quarter of 2016 and increased $146,000, or 16%, compared with the fourth quarter of 2015. The decline during the fourth quarter of 2016 compared with third quarter of 2016 was primarily related to charges associated with the acquisition of River Valley that were incurred during the third quarter of 2016.
About German American
German American Bancorp, Inc., is a NASDAQ-traded (symbol: GABC) bank holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bancorp, operates 51 banking offices in 19 contiguous southern Indiana counties and one northern Kentucky county. 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. 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 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; potential 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; 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; changes in accounting principles and interpretations; potential increases of federal deposit insurance premium expense, and possible future special
NEWS RELEASE
For additional information, contact:
Mark A Schroeder, Chairman & Chief Executive Officer of German American Bancorp, Inc.
Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.
(812) 482-1314
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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; the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends; and other risk factors expressly identified in the Company’s filings with the United States Securities and Exchange Commission. 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.
GERMAN AMERICAN BANCORP, INC. | |||||||||||
(unaudited, dollars in thousands except per share data) | |||||||||||
Consolidated Balance Sheets | |||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||
ASSETS | |||||||||||
Cash and Due from Banks | $ | 48,467 | $ | 38,329 | $ | 36,062 | |||||
Short-term Investments | 16,349 | 16,455 | 15,947 | ||||||||
Interest-bearing Time Deposits with Banks | — | 744 | — | ||||||||
Investment Securities | 709,786 | 732,911 | 637,935 | ||||||||
Loans Held-for-Sale | 15,273 | 12,967 | 10,762 | ||||||||
Loans, Net of Unearned Income | 1,989,955 | 2,002,380 | 1,564,347 | ||||||||
Allowance for Loan Losses | (14,808 | ) | (15,154 | ) | (14,438 | ) | |||||
Net Loans | 1,975,147 | 1,987,226 | 1,549,909 | ||||||||
Stock in FHLB and Other Restricted Stock | 13,048 | 13,048 | 8,571 | ||||||||
Premises and Equipment | 48,230 | 48,074 | 37,817 | ||||||||
Goodwill and Other Intangible Assets | 56,893 | 56,767 | 21,819 | ||||||||
Other Assets | 72,801 | 73,019 | 54,879 | ||||||||
TOTAL ASSETS | $ | 2,955,994 | $ | 2,979,540 | $ | 2,373,701 | |||||
LIABILITIES | |||||||||||
Non-interest-bearing Demand Deposits | $ | 571,989 | $ | 534,620 | $ | 465,357 | |||||
Interest-bearing Demand, Savings, and Money Market Accounts | 1,399,381 | 1,361,522 | 1,054,983 | ||||||||
Time Deposits | 378,181 | 433,521 | 306,036 | ||||||||
Total Deposits | 2,349,551 | 2,329,663 | 1,826,376 | ||||||||
Borrowings | 258,114 | 279,110 | 273,323 | ||||||||
Other Liabilities | 18,062 | 29,776 | 21,654 | ||||||||
TOTAL LIABILITIES | 2,625,727 | 2,638,549 | 2,121,353 | ||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Common Stock and Surplus | 187,005 | 186,519 | 123,424 | ||||||||
Retained Earnings | 149,666 | 142,347 | 125,112 | ||||||||
Accumulated Other Comprehensive Income (Loss) | (6,404 | ) | 12,125 | 3,812 | |||||||
TOTAL SHAREHOLDERS' EQUITY | 330,267 | 340,991 | 252,348 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,955,994 | $ | 2,979,540 | $ | 2,373,701 | |||||
END OF PERIOD SHARES OUTSTANDING | 15,261,431 | 15,257,849 | 13,278,824 | ||||||||
TANGIBLE BOOK VALUE PER SHARE (1) | $ | 17.91 | $ | 18.63 | $ | 17.36 | |||||
(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 | Year Ended | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||||
INTEREST INCOME | ||||||||||||||||||||
Interest and Fees on Loans | $ | 22,557 | $ | 22,311 | $ | 17,202 | $ | 86,202 | $ | 66,740 | ||||||||||
Interest on Short-term Investments and Time Deposits | 12 | 25 | 3 | 74 | 13 | |||||||||||||||
Interest and Dividends on Investment Securities | 4,532 | 4,398 | 3,818 | 17,089 | 14,867 | |||||||||||||||
TOTAL INTEREST INCOME | 27,101 | 26,734 | 21,023 | 103,365 | 81,620 | |||||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||
Interest on Deposits | 1,383 | 1,323 | 974 | 5,187 | 3,976 | |||||||||||||||
Interest on Borrowings | 829 | 851 | 611 | 3,274 | 2,092 | |||||||||||||||
TOTAL INTEREST EXPENSE | 2,212 | 2,174 | 1,585 | 8,461 | 6,068 | |||||||||||||||
NET INTEREST INCOME | 24,889 | 24,560 | 19,438 | 94,904 | 75,552 | |||||||||||||||
Provision for Loan Losses | — | — | — | 1,200 | — | |||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 24,889 | 24,560 | 19,438 | 93,704 | 75,552 | |||||||||||||||
NON-INTEREST INCOME | ||||||||||||||||||||
Net Gain on Sales of Loans | 752 | 1,004 | 595 | 3,359 | 2,959 | |||||||||||||||
Net Gain on Securities | 553 | 458 | — | 1,979 | 725 | |||||||||||||||
Other Non-interest Income | 7,052 | 6,922 | 5,829 | 26,675 | 23,760 | |||||||||||||||
TOTAL NON-INTEREST INCOME | 8,357 | 8,384 | 6,424 | 32,013 | 27,444 | |||||||||||||||
NON-INTEREST EXPENSE | ||||||||||||||||||||
Salaries and Benefits | 11,604 | 10,572 | 8,960 | 43,961 | 35,042 | |||||||||||||||
Other Non-interest Expenses | 7,751 | 8,081 | 6,252 | 32,626 | 26,284 | |||||||||||||||
TOTAL NON-INTEREST EXPENSE | 19,355 | 18,653 | 15,212 | 76,587 | 61,326 | |||||||||||||||
Income before Income Taxes | 13,891 | 14,291 | 10,650 | 49,130 | 41,670 | |||||||||||||||
Income Tax Expense | 3,826 | 4,106 | 2,938 | 13,946 | 11,606 | |||||||||||||||
NET INCOME | $ | 10,065 | $ | 10,185 | $ | 7,712 | $ | 35,184 | $ | 30,064 | ||||||||||
BASIC EARNINGS PER SHARE | $ | 0.66 | $ | 0.67 | $ | 0.58 | $ | 2.36 | $ | 2.27 | ||||||||||
DILUTED EARNINGS PER SHARE | $ | 0.66 | $ | 0.67 | $ | 0.58 | $ | 2.36 | $ | 2.27 | ||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 15,258,378 | 15,257,814 | 13,275,915 | 14,926,091 | 13,255,002 | |||||||||||||||
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | 15,258,378 | 15,257,814 | 13,280,058 | 14,927,410 | 13,258,916 | |||||||||||||||
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, | ||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
EARNINGS PERFORMANCE RATIOS | ||||||||||||||||||||
Annualized Return on Average Assets | 1.36 | % | 1.38 | % | 1.33 | % | 1.24 | % | 1.33 | % | ||||||||||
Annualized Return on Average Equity | 11.90 | % | 12.07 | % | 12.36 | % | 10.94 | % | 12.47 | % | ||||||||||
Net Interest Margin | 3.77 | % | 3.75 | % | 3.69 | % | 3.75 | % | 3.70 | % | ||||||||||
Efficiency Ratio (1) | 56.15 | % | 54.64 | % | 56.69 | % | 58.25 | % | 57.57 | % | ||||||||||
Net Overhead Expense to Average Earning Assets (2) | 1.59 | % | 1.50 | % | 1.60 | % | 1.68 | % | 1.59 | % | ||||||||||
ASSET QUALITY RATIOS | ||||||||||||||||||||
Annualized Net Charge-offs to Average Loans | 0.07 | % | 0.03 | % | 0.09 | % | 0.04 | % | 0.03 | % | ||||||||||
Allowance for Loan Losses to Period End Loans | 0.74 | % | 0.76 | % | 0.92 | % | ||||||||||||||
Non-performing Assets to Period End Assets | 0.14 | % | 0.18 | % | 0.15 | % | ||||||||||||||
Non-performing Loans to Period End Loans | 0.19 | % | 0.25 | % | 0.21 | % | ||||||||||||||
Loans 30-89 Days Past Due to Period End Loans | 0.36 | % | 0.39 | % | 0.22 | % | ||||||||||||||
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA | ||||||||||||||||||||
Average Assets | $ | 2,970,408 | $ | 2,943,564 | $ | 2,327,377 | $ | 2,841,096 | $ | 2,267,555 | ||||||||||
Average Earning Assets | $ | 2,762,340 | $ | 2,739,869 | $ | 2,197,345 | $ | 2,650,003 | $ | 2,137,171 | ||||||||||
Average Total Loans | $ | 2,004,983 | $ | 1,982,291 | $ | 1,540,491 | $ | 1,904,779 | $ | 1,483,752 | ||||||||||
Average Demand Deposits | $ | 559,597 | $ | 522,994 | $ | 444,951 | $ | 513,199 | $ | 430,312 | ||||||||||
Average Interest Bearing Liabilities | $ | 2,041,583 | $ | 2,054,987 | $ | 1,609,026 | $ | 1,979,176 | $ | 1,574,368 | ||||||||||
Average Equity | $ | 338,270 | $ | 337,449 | $ | 249,661 | $ | 321,520 | $ | 241,017 | ||||||||||
Period End Non-performing Assets (3) | $ | 4,037 | $ | 5,452 | $ | 3,455 | ||||||||||||||
Period End Non-performing Loans (4) | $ | 3,795 | $ | 5,097 | $ | 3,286 | ||||||||||||||
Period End Loans 30-89 Days Past Due (5) | $ | 7,109 | $ | 7,776 | $ | 3,460 | ||||||||||||||
Tax Equivalent Net Interest Income | $ | 26,116 | $ | 25,752 | $ | 20,409 | $ | 99,470 | $ | 79,072 | ||||||||||
Net Charge-offs during Period | $ | 346 | $ | 150 | $ | 332 | $ | 830 | $ | 491 | ||||||||||
(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. | |||||||||||||||||||