JASPER, Ind., April 30, 2009 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq:GABC) today announced the Company's 1st quarter earnings of $2,942,000, or $0.27 per share. On a per share basis, 1st quarter 2009 earnings were equal to the record $0.27 per share reported in the 1st quarter of last year. On a net income basis, the current year's reported 1st quarter earnings were only $78,000, or 2.6%, less than the $3,020,000 reported as last year's record 1st quarter earnings.
Mark A. Schroeder, President & CEO of German American, commenting on the 1st quarter results stated, "Our 1st quarter delivered yet another quarter of solid financial performance, coming on the heels of our record 2008 financial performance. In spite of the challenges of significantly increased FDIC insurance premiums and higher employee health benefit costs, we were able to post solid earnings by largely offsetting these higher operating costs through an improved level of net interest income and a reduction in the Company's credit costs. We're very pleased that our performance continues to set us apart within the financial services industry in terms of both earnings and credit quality."
Schroeder continued, "As compared to both the prior year-end and prior year quarter-end data, our Company's credit quality showed improvement by virtually every measure. We're encouraged that our customers have been able to continue to meet their credit obligations in the face of a difficult economic environment. Additionally, our securities portfolio hasn't been impacted by market value other-than-temporary impairment charges that have affected the securities portfolios of many other financial institutions. We are, however, acutely aware of the current economic reality and the challenges that may face the national economy and our market area in the coming months, and accordingly we continue to very closely monitor the performance of both our loan and our securities portfolios."
The Company also announced that its Board of Directors declared its regular quarterly cash dividend of $0.14 per share which will be payable on May 20, 2009 to shareholders of record as of May 10, 2009.
Balance Sheet Highlights
End-of-period loans outstanding declined by 9% on an annualized basis during the first quarter of 2009. The decrease was largely attributable to a seasonal decline in the Company's agriculture related loan portfolio. In addition, the Company's residential loan portfolio declined as market interest rates have continued to trend lower. The Company continues to actively originate residential mortgage loans, with the vast majority of production being sold into the secondary market. Partially offsetting the declines in other segments of the portfolio was an increase in the Company's commercial and industrial loan portfolio (including both real estate and non-real estate loans).
End of Period Loan Balances
--------------------------- Annualized
03/31/09 12/31/08 $ Change % Change
-------- -------- -------- ---------
Commercial & Industrial
Loans $510,324 $505,191 $ 5,133 4%
Agricultural Loans 144,524 159,923 (15,399) -39%
Consumer Loans 123,354 127,343 (3,989) -13%
Residential Mortgage Loans 94,164 100,054 (5,890) -24%
-------- -------- --------
$872,366 $892,511 $(20,145) -9%
======== ======== ========
Average loans outstanding increased by just over 2% during the first quarter of 2009 compared with the first quarter of 2008. The increase in average loan balances was driven by the Company's commercial and industrial loans (including both real estate and non-real estate loans).
Average Loan Balances
--------------------- Qtr Ended Qtr Ended
03/31/09 3/31/08 $ Change % Change
-------- -------- -------- ---------
Commercial & Industrial
Loans $507,059 $465,206 $ 41,853 9%
Agricultural Loans 149,582 153,051 (3,469) -2%
Consumer Loans 125,652 129,269 (3,617) -3%
Residential Mortgage Loans 105,617 120,895 (15,278) -13%
-------- -------- --------
$887,910 $868,421 $ 19,489 2%
======== ======== ========
Non-performing loans totaled $8.2 million at March 31, 2009 compared to $8.4 million of non-performing loans at December 31, 2008. Non-performing loans represented 0.95% of total outstanding loans at March 31, 2009 and 0.94% of total loans outstanding at December 31, 2008.
The Company's allowance for loan losses totaled $10.0 million at March 31, 2009, an increase of $522,000 or 5%, compared with $9.5 million at year-end 2008. The allowance for loan losses represented 1.15% of period end loans at March 31, 2009 compared with 1.07% of period end total loans at December 31, 2008.
End-of-period deposits increased approximately 5% at March 31, 2009 compared with year-end 2008. The increase was attributable to growth across all segments of the Company's core deposit base which is defined as its demand deposits (interest-bearing and non-interest-bearing), savings, money market, and time deposits in denominations of less than $100,000.
End of Period Deposit Balances
------------------------------
Annualized
03/31/09 12/31/08 $ Change % Change
-------- -------- -------- ---------
Non-interest-bearing
Demand Deposits $149,197 $147,977 $ 1,220 3%
Interest-bearing Demand,
Savings, & Money Market
Accounts 448,550 439,305 9,245 8%
Time Deposits < $100,000 253,504 250,339 3,165 5%
Time Deposits of $100,000
or more & Brokered
Deposits 101,240 104,129 (2,889) -11%
-------- -------- --------
$952,491 $941,750 $ 10,741 5%
======== ======== ========
Average deposits increased approximately 5% for the quarter ended March 31, 2009 compared to the first quarter of 2008. The increase in average deposits was driven by significant growth in the Company's non-maturity deposit balances.
Average Deposit Balances
------------------------ Qtr Ended Qtr Ended
03/31/09 3/31/08 $ Change % Change
-------- -------- -------- ---------
Non-interest-bearing Demand
Deposits $146,308 $134,835 $ 11,473 9%
Interest-bearing Demand,
Savings, & Money Market
Accounts 445,524 376,768 68,756 18%
Time Deposits < $100,000 253,184 278,264 (25,080) -9%
Time Deposits of $100,000
or more & Brokered
Deposits 100,316 114,379 (14,063) -12%
-------- -------- --------
$945,332 $904,246 $ 41,086 5%
======== ======== ========
Income Statement Highlights
Quarter ended March 31, 2009 compared to quarter ended March 31, 2008
Net income for the first quarter of 2009 totaled $2,942,000, a decrease of $78,000 or 3% compared to first quarter 2008 net income of $3,020,000.
During the quarter ended March 31, 2009, net interest income totaled $10,641,000 representing an increase of $522,000 or 5% over the first quarter of 2008. The tax equivalent net interest margin for the first quarter 2009 was 3.92% compared to 3.89% for the first quarter of 2008. The yield on earning assets totaled 5.82% during the quarter ended March 31, 2009 compared to 6.83% in the same period of 2008 while the cost of funds totaled 1.90% during 2009 compared to 2.94% in 2008.
The provision for loan loss totaled $750,000 during the quarter ended March 31, 2009, representing a decline of $594,000 from the first quarter of 2008. During the first quarter of 2009, the annualized provision for loan loss represented approximately 34 basis points of average loans while annualized net charge-offs represented approximately 10 basis points of average loans.
During the first quarter of 2009, non-interest income declined approximately 16% over the first quarter of 2008.
Non-interest Income
------------------- Qtr Ended Qtr Ended
03/31/09 3/31/08 $ Change % Change
-------- -------- -------- ---------
Trust and Investment
Product Fees $ 390 $ 587 $ (197) -34%
Service Charges on
Deposit Accounts 1,060 1,183 (123) -10%
Insurance Revenues 1,487 1,903 (416) -22%
Other Operating Income 742 750 (8) -1%
-------- -------- --------
Subtotal 3,679 4,423 (744) -17%
Net Gains on Sales of
Loans and Related Assets 565 324 241 74%
Net Gain (Loss) on
Securities -- 285 (285) -100%
-------- -------- --------
Total Non-interest Income $ 4,244 $ 5,032 $ (788) -16%
======== ======== ========
Trust and investment product fees decreased 34% during the first quarter of 2009 compared with the same period of 2008. Management believes this decline was primarily attributable to difficult and volatile economic and market conditions. Deposit service charges and fees declined by 10% due in large part to less customer utilization of the Company's overdraft protection program. Insurance revenues declined 22% due to a reduced level of contingency revenue at the Company's property and casualty insurance subsidiary, German American Insurance.
During the quarter ended March 31, 2009, the net gain on sale of residential loans increased 74% over the gain recognized in the quarter ended March 31, 2008. The increase was attributable to higher levels of residential loan sales and a larger pipeline of residential mortgage loans in the first quarter of 2009, compared to the same period of 2008.
The Company had no security sale activity during the first quarter of 2009. During the first quarter of 2008, the Company recognized a net gain on securities of $285,000 resulting from the sale of approximately $16 million of agency mortgage related securities and a gain on the mandatory redemption on a portion of the Company's VISA stock holdings acquired as part of the initial public offering of VISA, Inc.
During the quarter ended March 31, 2009, non-interest expense increased approximately 8% compared with the same period of 2008.
Non-interest Expense
-------------------- Qtr Ended Qtr Ended
03/31/09 3/31/08 $ Change % Change
-------- -------- -------- ---------
Salaries and Employee
Benefits $ 5,614 $ 5,327 $ 287 5%
Occupancy, Furniture and
Equipment Expense 1,529 1,472 57 4%
FDIC Premiums 335 26 309 1,188%
Data Processing Fees 357 406 (49) -12%
Professional Fees 607 564 43 8%
Advertising and Promotion 288 233 55 24%
Intangible Amortization 221 222 (1) 0%
Other Operating Expenses 1,130 1,098 32 3%
-------- -------- --------
Total Non-interest Expense $ 10,081 $ 9,348 $ 733 8%
======== ======== ========
Salaries and benefits expense increased approximately 5% during the first quarter of 2009 compared with the first quarter of 2008. The increase was nearly exclusively related to an increase in costs associated with the Company's self-insured health insurance plan.
The Company's FDIC insurance assessments increased in excess of $300,000 during the first quarter of 2009 compared with the first quarter of 2008. The Company's subsidiary bank is required to pay deposit insurance premiums to the FDIC. Because the FDIC's deposit insurance fund fell below prescribed levels in 2008, the FDIC has announced increased premiums for all insured depository institutions, including the Company's subsidiary bank, in order to begin recapitalizing the fund. Insurance assessments ranged from 0.12% to 0.50% of total deposits for the first quarter of 2009. Effective April 1, 2009 insurance assessments will range from .07% to 0.78%, depending on an institution's risk classification and other factors. The Company was in the lower end of the assessment range during the first quarter of 2009.
In addition, under an interim rule adopted during the first quarter of 2009 subject to public comment, the FDIC proposed to impose a one-time 20 basis point emergency assessment on all insured depository institutions to be paid on September 30, 2009, based on deposits at June 30, 2009. The FDIC has subsequently indicated the amount of this special assessment could decrease if certain events transpire. The interim rule also authorizes the FDIC to impose an additional emergency assessment of up to 10 basis points in respect of deposits for quarters ended after June 30, 2009 if necessary to maintain public confidence in federal deposit insurance. Each basis point of any future special assessment during 2009, based on the Company's most recent FDIC deposit insurance assessment, would cost the Company, on a pre-tax basis, approximately $95,000 in additional FDIC deposit insurance premium expense. While the interim rules are subject to change and the exact amount of the special assessment is reportedly under legislative and regulatory study, the Company expects that a material special assessment will be assessed by the FDIC in respect of the insured deposits of all banks as of June 30, 2009.
Forward Looking Statements
The Company's statements in this press release regarding the performance of its loan and securities portfolios and the prospects for special FDIC insurance assessments 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 that could cause actual experience to differ from the expectations implied in this press release 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; continued deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration and dampened loan demand; actions of the Federal Reserve Board; changes in accounting principles and interpretations; and actions of the Department of the Treasury and the Federal Deposit Insurance Corporation under the Emergency Economic Stabilization Act of 2008 and the Federal Deposit Insurance Act and other 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,
2009 2008
----------- -----------
ASSETS
Cash and Due from Banks $ 18,450 $ 28,209
Short-term Investments 28,930 60,888
Investment Securities 201,544 145,807
Loans Held-for-Sale 13,172 6,613
Loans, Net of Unearned Income 870,544 858,589
Allowance for Loan Losses (10,044) (9,198)
----------- -----------
Net Loans 860,500 849,391
Stock in FHLB and Other Restricted Stock 10,621 10,621
Premises and Equipment 21,970 23,152
Goodwill and Other Intangible Assets 12,575 13,463
Other Assets 36,541 36,816
----------- -----------
TOTAL ASSETS $ 1,204,303 $ 1,174,960
=========== ===========
LIABILITIES
Non-interest-bearing Demand Deposits $ 149,197 $ 142,281
Interest-bearing Demand, Savings, and
Money Market Accounts 448,550 399,789
Time Deposits 354,744 374,605
----------- -----------
Total Deposits 952,491 916,675
Borrowings 130,036 144,454
Other Liabilities 13,723 14,364
----------- -----------
TOTAL LIABILITIES 1,096,250 1,075,493
----------- -----------
SHAREHOLDERS' EQUITY
Common Stock and Surplus 79,519 79,437
Retained Earnings 24,417 17,869
Accumulated Other Comprehensive Income 4,117 2,161
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 108,053 99,467
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,204,303 $ 1,174,960
=========== ===========
END OF PERIOD SHARES OUTSTANDING 11,073,063 11,029,484
BOOK VALUE PER SHARE $ 9.76 $ 9.02
GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
Consolidated Statements of Income
--------------------------------------------------------------------
Three Months Ended
March 31,
2009 2008
---------- ----------
INTEREST INCOME
Interest and Fees on Loans $ 13,394 $ 15,459
Interest on Short-term Investments 17 186
Interest and Dividends on Investment
Securities 2,446 2,180
---------- ----------
TOTAL INTEREST INCOME 15,857 17,825
---------- ----------
INTEREST EXPENSE
Interest on Deposits 4,005 6,187
Interest on Borrowings 1,211 1,519
---------- ----------
TOTAL INTEREST EXPENSE 5,216 7,706
---------- ----------
NET INTEREST INCOME 10,641 10,119
Provision for Loan Losses 750 1,344
NET INTEREST INCOME AFTER PROVISION FOR ---------- ----------
LOAN LOSSES 9,891 8,775
---------- ----------
NON-INTEREST INCOME
Net Gain on Sales of Loans and Related
Assets 565 324
Net Gain (Loss) on Securities -- 285
Other Non-interest Income 3,679 4,423
---------- ----------
TOTAL NON-INTEREST INCOME 4,244 5,032
---------- ----------
NON-INTEREST EXPENSE
Salaries and Benefits 5,614 5,327
Other Non-interest Expenses 4,467 4,021
---------- ----------
TOTAL NON-INTEREST EXPENSE 10,081 9,348
---------- ----------
Income before Income Taxes 4,054 4,459
Income Tax Expense 1,112 1,439
---------- ----------
NET INCOME $ 2,942 $ 3,020
========== ==========
EARNINGS PER SHARE & DILUTED EARNINGS PER
SHARE $ 0.27 $ 0.27
WEIGHTED AVERAGE SHARES OUTSTANDING 11,036,942 11,029,484
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 11,036,942 11,029,607
GERMAN AMERICAN BANCORP, INC.
(unaudited, dollars in thousands except per share data)
Three Months Ended
March 31,
2009 2008
--------- ---------
EARNINGS PERFORMANCE RATIOS
Annualized Return on Average Assets 0.98% 1.06%
Annualized Return on Average Equity 11.04% 12.29%
Net Interest Margin 3.92% 3.89%
Efficiency Ratio (1) 66.88% 61.19%
Net Overhead Expense to Average Earning
Assets (2) 2.10% 1.64%
ASSET QUALITY RATIOS
Annualized Net Charge-offs to Average Loans 0.10% 0.09%
Allowance for Loan Losses to Period End
Loans 1.15% 1.07%
Non-performing Assets to Period End Assets 0.88% 0.91%
Non-performing Loans to Period End Loans 0.95% 1.09%
SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
Average Assets $1,196,390 $1,144,828
Average Earning Assets $1,114,003 $1,055,886
Average Total Loans $ 887,910 $ 868,421
Average Demand Deposits $ 146,308 $ 134,835
Average Interest Bearing Liabilities $ 930,900 $ 897,373
Average Equity $ 106,558 $ 98,295
Period End Non-performing Assets (3) $ 10,604 $ 10,730
Period End Non-performing Loans (4) $ 8,237 $ 9,332
Tax Equivalent Net Interest Income $ 10,829 $ 10,244
Net Charge-offs during Period $ 228 $ 190
(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.