German American Bancorp, Inc. Reports 1st Quarter Operating Results


JASPER, Ind., May 3, 2007 (PRIME NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq:GABC) reported today 1st quarter 2007 earnings of $1,479,000, or $0.13 per share.

"Our reported results for the 1st quarter of 2007 certainly require looking behind the numbers to determine the strength of our operating results," noted Mark Schroeder, President & CEO of German American Bancorp, Inc. "Our reported earnings include the impact of several events which, while having an adverse effect on the 1st quarter results, positions the Company very well in terms of future performance potential."

Schroeder continued, "We strongly believe that, driven by what is now a clean loan portfolio, strong loan and balance sheet growth, continued revenue growth, and market expansion opportunities from our new banking office in the economically vibrant Bloomington, Indiana market, German American is poised to continue its recent trend of strong financial performance in the coming quarters."

The comparison of the Company's 1st quarter 2007 results, with that of the prior year's same period earnings of $2,563,000 or $0.23 per share, were significantly affected by the costs associated with the previously reported resolution of a non-performing hotel facilities credit. Late in the 1st quarter, the Company gained control of the facilities which were subsequently sold on April 20, 2007. These credit-related costs included increased provision for loan losses of $1.3 million in direct charges related to the valuation of the properties, an additional $160,000 in indirect provision charges due to the impact on the Company's historical loss ratios and resulting reserve levels, and collection costs of $110,000. In total, the after-tax cost during the 1st quarter associated with the resolution of this matter was $948,000.

The 1st quarter 2007 results also included the start-up costs associated with the opening of the Company's new Bloomington, Indiana banking office on February 1, 2007. These start-up expenses totaled approximately $200,000 during the 1st quarter. Further, the Company's contingency commission income within its insurance operations recorded in the 1st quarter of the current year was $30,000, compared to the $271,000 recorded in the 1st quarter of last year. Total insurance revenues increased $83,000 from 2006 to 2007, despite the aforementioned decrease in contingency commission income.

Positively impacting the 1st quarter results was a $499,000 increase in net interest income as compared to the Company's level of net interest income in the same period last year. This net interest income increase was driven by a 15% increase in the average loans outstanding during the 3 month period ending on March 31, 2007, compared with the same period of the prior year.

The Company's 2007 1st quarter results are also reflective of the operating results of the acquisition of Keach & Grove Insurance based in Bedford, Indiana as of October 1, 2006.

The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $0.14 per share which will be payable on May 20, 2007 to shareholders of record as of May 10, 2007.

German American Bancorp, Inc. is a financial services holding company based in Jasper, Indiana. The Company's Common Stock is traded on NASDAQ's Global Select Market System under the symbol GABC. The principal subsidiary of German American Bancorp, Inc. is its banking subsidiary, German American Bancorp, which operates through six community banking affiliates with 30 retail banking offices in the ten contiguous Southern Indiana counties of Daviess, Dubois, Gibson, Knox, Lawrence, Martin, Monroe, Perry, Pike, and Spencer. German American Bancorp owns a trust, brokerage and financial planning subsidiary which operates from its banking offices and a full line property and casualty insurance agency with six insurance agency offices throughout its market area.

Forward-Looking Statements

German American's statements in this press release regarding its outlook for its future financial performance (including potential loan, balance sheet and revenue growth, its loan portfolio quality, and market expansion opportunities associated with its new Bloomington, Indiana, office) are "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 which could cause actual results and experience to differ from these expectations include 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; changes in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration; capital management activities; actions of the Federal Reserve Board; changes in accounting principles and interpretations; and legislative and regulatory actions and reforms. These forward-looking statements speak only as of the date of this press release and German American undertakes no obligation to update any such forward-looking statement to reflect events or circumstances that occur after the date hereof.


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

                       Consolidated Balance Sheets
 ---------------------------------------------------------------------


                                                     March 31,
                                                 2007         2006
                                              -----------  -----------

 ASSETS

  Cash and Due from Banks                     $    21,175  $    29,067
  Short-term Investments                            3,394       26,662
  Investment Securities                           173,192      202,580

  Loans Held-for-Sale                               2,009        2,186

  Loans, Net of Unearned Income                   810,789      683,330
  Allowance for Loan Losses                        (7,620)      (9,721)
                                              -----------  -----------
    Net Loans                                     803,169      673,609

  Stock in FHLB and Other Restricted Stock         10,621       14,483
  Premises and Equipment                           23,873       22,422
  Goodwill and Other Intangible Assets             14,356       13,014
  Other Assets                                     39,248       41,093
                                              -----------  -----------
  TOTAL ASSETS                                $ 1,091,037  $ 1,025,116
                                              ===========  ===========
 LIABILITIES

  Non-interest-bearing Demand Deposits        $   138,709  $   137,603
  Interest-bearing Demand, Savings, and Money
   Market Accounts                                315,820      314,523
  Time Deposits                                   426,800      355,448
                                              -----------  -----------
    Total Deposits                                881,329      807,574

  Borrowings                                      103,395      117,468
  Other Liabilities                                13,707       12,207
                                              -----------  -----------
  TOTAL LIABILITIES                               998,431      937,249
                                              -----------  -----------

 SHAREHOLDERS' EQUITY
  Common Stock and Surplus                         79,300       79,065
  Retained Earnings                                13,387       10,415
  Accumulated Other Comprehensive Loss                (81)      (1,613)
                                              -----------  -----------
 TOTAL SHAREHOLDERS' EQUITY                        92,606       87,867
                                              -----------  -----------

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,091,037  $ 1,025,116
                                              ===========  ===========

 END OF PERIOD SHARES OUTSTANDING              11,029,612   11,006,904

 BOOK VALUE PER SHARE                         $      8.40  $      7.98


                   Consolidated Statements of Income
 ---------------------------------------------------------------------

                                                Three Months Ended
                                                     March 31,
                                                 2007         2006
                                              -----------  -----------


 INTEREST INCOME

  Interest and Fees on Loans                  $    15,067  $    12,382
  Interest on Short-term Investments                  120          126
  Interest and Dividends on Investment
   Securities                                       2,142        2,240
                                              -----------  -----------
   TOTAL INTEREST INCOME                           17,329       14,748
                                              -----------  -----------
 INTEREST EXPENSE
  Interest on Deposits                              6,430        4,482
  Interest on Borrowings                            1,524        1,390
                                              -----------  -----------
   TOTAL INTEREST EXPENSE                           7,954        5,872
                                              -----------  -----------
    NET INTEREST INCOME                             9,375        8,876
    Provision for Loan Losses                       1,928          290
                                              -----------  -----------
    NET INTEREST INCOME AFTER                 
     PROVISION FOR LOAN LOSSES                      7,447        8,586
                                              -----------  -----------

 NON-INTEREST INCOME
  Net Gain on Sales of Loans and Related Assets       178          213
  Net Gain / (Loss) on Securities                      --           --
  Other Non-interest Income                         3,732        3,583
                                              -----------  -----------
   TOTAL NON-INTEREST INCOME                        3,910        3,796
                                              -----------  -----------
 NON-INTEREST EXPENSE
  Salaries and Benefits                             5,503        5,184
  Other Non-interest Expenses                       3,931        3,621
                                              -----------  -----------
   TOTAL NON-INTEREST EXPENSE                       9,434        8,805
                                              -----------  -----------
   Income before Income Taxes                       1,923        3,577
   Income Tax Expense                                 444        1,014
                                              -----------  -----------

 NET INCOME                                   $     1,479  $     2,563
                                              ===========  ===========
 EARNINGS PER SHARE & DILUTED EARNINGS PER
  SHARE                                       $      0.13  $      0.23

 WEIGHTED AVERAGE SHARES OUTSTANDING           11,008,562   10,993,232
 DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING   11,016,930   10,996,058

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

                                                  Three Months Ended
                                                       March 31
                                                   2007        2006
                                                ----------  ----------
 EARNINGS PERFORMANCE RATIOS
  Annualized Return on Average Assets                0.54%       1.02%
  Annualized Return on Average Equity                6.37%      11.69%
  Net Interest Margin                                3.86%       4.03%
  Efficiency Ratio (a)                              70.08%      67.96%
  Net Overhead Expense to Average Earning
   Assets (b)                                        2.21%       2.18%

 ASSET QUALITY RATIOS
  Annualized Net Charge-offs to Average
   Loans                                             0.72%       0.18%
  Allowance for Loan Losses to Period End
   Loans                                             0.94%       1.42%
  Non-performing Assets to Period End Assets         0.83%       1.56%
  Non-performing Loans to Period End Loans           0.75%       2.17%


 SELECTED BALANCE SHEET & OTHER FINANCIAL DATA 
  Average Assets                               $1,090,037  $1,004,556
  Average Earning Assets                       $  998,195  $  916,982
  Average Total Loans                          $  799,238  $  692,844
  Average Demand Deposits                      $  133,499  $  132,713
  Average Interest Bearing Liabilities         $  850,386  $  770,549
  Average Equity                               $   92,808  $   87,685

  Period End Non-performing Assets (c)         $    9,102  $   15,942
  Period End Non-performing Loans (d)          $    6,114  $   14,816

  Tax Equivalent Net Interest Income           $    9,552  $    9,160
  Net Charge-offs during Period                $    1,437  $      318

 (a) 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.

 (b) Net Overhead Expense is defined as Total Non-interest Expense 
     less Total Non-interest Income.
 
 (c) Non-performing assets are defined as Non-accrual Loans, Loans 
     Past Due 90 days or more, Restructured Loans, and Other Real 
     Estate Owned.

 (d) Non-performing loans are defined as Non-accrual Loans, Loans 
     Past Due 90 days or more, and Restructured Loans.


            

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