| JASPER, INDIANA | OCTOBER 27, 2004 | GERMAN AMERICAN BANCORP REPORTS CONTINUING EARNINGS
IMPROVEMENT, DECLARES QUARTERLY CASH DIVIDEND, AND
ANNOUNCES CHANGE IN STOCK DIVIDEND POLICY |
German American Bancorp (NASDAQ: GABC) announced today that its earnings for the third quarter of 2004 increased by 10% from reported earnings for last year’s third quarter, representing the second successive quarter of a double-digit increase in earnings. The Company’s earnings for the three months ended September 30, 2004 were $2,376,000, or $0.22 per share, compared to $2,153,000, or $0.20 per share, for the comparable period in 2003.
The Company’s net income for the nine-month period ended September 30,2004 was $0.61 per share as compared to $0.59 per share for the comparable period in 2003. Reported earnings for the first nine months of 2004 were $6,660,000 compared to $6,634,000 in 2003. The year-to-date per share earnings comparison was impacted by the lower average number of shares outstanding in 2004 resulting from the Company’s self tender offer completed in March 2003.
Continuing improvements in the Company’s net interest income and net interest margin were significant drivers of the quarterly earnings increase. Net interest income for the third quarter of 2004 exceeded the net interest income of the immediately preceding quarterly periods for the fourth consecutive quarter. The earnings comparison was also positively impacted by a continuation of significant revenue growth in its insurance and financial advisory services segments.
Commenting on the Company’s reported operating results, Mark A. Schroeder, Company President & CEO, stated, “Our strong third quarter earnings increase was highlighted by significant continuing improvements in both our net interest income and net interest margin. As we have previously reported, we have taken steps over the past 18 to 24 months to position our balance sheet in a manner designed to enhance earnings during a period of increasing general market interest rates. The recent increases in short-term interest rates have had the positive earnings impact that we expected. We anticipate further improvements in our net interest income and net interest margin if general market interest rates increase in the coming months.”
Page 2 of 3
Schroeder continued, “Our Net Interest Income gains during the third quarter were driven in large part by continuing growth in our commercial loan portfolio and further reductions in our overall cost of funds. We’re pleased that our business bankers are differentiating themselves by being responsive and creative in providing total solutions which include both lending and deposit services for their clients. As to our cost of funds, our focus on retail and small business “core” deposits is having a very meaningful impact on the level of our funding cost.”
The Company also reported that its Board of Directors has completed its previously announced review of the Company’s dividend practices and policy, under which the Board of Directors has, in recent years, declared quarterly cash dividends and, during the fourth quarter of each year, a five-percent stock dividend. In reviewing the Company’s dividend policy, the Board of Directors took into account changes made to the federal income tax law in 2003 relative to the shareholders’ effective taxable rate on cash dividends, the effects of the stock dividend on the composition of the Company’s equity accounts under applicable accounting principles, and certain regulatory interpretations relating to stock dividends.
On the basis of this review, the Board of Directors determined that it would be in the best long-term interests of the Company to maximize the Company’s ability to maintain a strong cash dividend level and to discontinue the Company’s practice of declaring annual stock dividends. The Board affirmed the Company’s quarterly cash dividend by declaring a cash dividend of $0.14 per share which will be payable on November 20, 2004 to shareholders of record as of November 10, 2004.
Page 3 of 3
German American Bancorp is a financial services holding company based in Jasper, Indiana. The Company’s Common Stock is traded on NASDAQ’s National Market System under the symbol GABC. The Company operates five affiliated community banks with 27 retail banking offices in the eight contiguous Southwestern Indiana counties of Daviess, Dubois, Gibson, Knox, Martin, Perry, Pike, and Spencer, Indiana. The Company also operates German American Financial Advisors & Trust Company, a trust, brokerage and financial planning subsidiary operating from the banking offices of the bank subsidiaries and The Doty Agency, Inc., a full-line property and casualty insurance subsidiary with five independent insurance offices throughout its market area. The Company’s lines of business include retail and commercial banking, mortgage banking, comprehensive wealth management, full service brokerage and trust administration, title insurance, and a full range of personal and corporate insurance products.
Forward-Looking Statements
The Company’s statements in this press release regarding its expectation of changes in its net interest income and net interest margin, 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. Changes in the Company’s net interest income and net interest margin may vary materially from those that are presently expected, if interest rates should decline or not increase. Other factors that could cause net interest income, net interest margin and earnings to vary from those that are expected, or those that have historically been achieved in recent periods, include the effects of changes in competitive conditions; the introduction, withdrawal, success and timing of asset/liability management strategies or of business initiatives and business 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 regionally, 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 the Company undertakes no obligation to update any such forward-looking statement to reflect events or circumstances that occur after the date hereof.
GERMAN AMERICAN BANCORP
(unaudited, dollars in thousands except per share data)
Consolidated Balance Sheets
|
|---|
| September 30, |
|---|
| 2004
| | 2003
|
|---|
| |
| ASSETS | | | | | | | | |
| Cash and Due from Banks | | | $ | 25,310 | | $ | 29,419 | |
| Short-term Investments | | | | 8,054 | | | 14,131 | |
| Investment Securities | | | | 215,559 | | | 213,017 | |
| |
| Loans Held-for-Sale | | | | 1,220 | | | 1,266 | |
| |
| Loans, Net of Unearned Income | | | | 627,289 | | | 609,715 | |
| Allowance for Loan Losses | | | | (8,897 | ) | | (8,334 | ) |
|
| |
| |
| Net Loans | | | | 618,392 | | | 601,381 | |
| |
| Premises and Equipment | | | | 20,729 | | | 21,778 | |
| Other Assets | | | | 38,323 | | | 38,514 | |
|
| |
| |
| TOTAL ASSETS | | | $ | 927,587 | | $ | 919,506 | |
|
| |
| |
| |
| LIABILITIES | | |
| Non-interest-bearing Demand Deposits | | | $ | 121,963 | | $ | 109,982 | |
| Interest-bearing Demand, Savings, and | | |
| Money Market Accounts | | | | 282,895 | | | 252,440 | |
| Time Deposits under $100,000 | | | | 258,428 | | | 291,658 | |
| Time Deposits $100,000 or more and | | |
| Brokered Deposits | | | | 61,496 | | | 55,426 | |
|
| |
| |
| Total Deposits | | | | 724,782 | | | 709,506 | |
| |
| Borrowings | | | | 107,137 | | | 114,044 | |
| Other Liabilities | | | | 11,962 | | | 12,615 | |
|
| |
| |
| TOTAL LIABILITIES | | | | 843,881 | | | 836,165 | |
|
| |
| |
| |
| SHAREHOLDERS' EQUITY | | |
| Common Stock and Surplus | | | | 78,029 | | | 69,603 | |
| Retained Earnings | | | | 6,487 | | | 13,866 | |
| Accumulated Other Comprehensive Loss | | | | (810 | ) | | (128 | ) |
|
| |
| |
| TOTAL SHAREHOLDERS' EQUITY | | | | 83,706 | | | 83,341 | |
|
| |
| |
| |
| TOTAL LIABILITIES AND | | |
| SHAREHOLDERS' EQUITY | | | $ | 927,587 | | $ | 919,506 | |
|
| |
| |
| |
| BOOK VALUE PER SHARE | | | $ | 7.68 | | $ | 7.61 | (1) |
| |
| END OF PERIOD SHARES OUTSTANDING | | | | 10,898,241 | | | 10,433,597 | |
(1) Restated for December 2003 stock dividend.
(2) End of period shares outstanding were not restated for the effect of stock dividends.
GERMAN AMERICAN BANCORP
(unaudited, dollars in thousands except per share data)
Consolidated Statements of Income
|
|---|
| Three Months Ended
September 30, | Nine Months Ended
September 30, |
|---|
| 2004
| 2003
| 2004
| 2003
|
|---|
| |
| INTEREST INCOME | | | | | | | | | | | | | | |
| Interest and Fees on Loans | | | $ | 9,833 | | $ | 10,301 | | $ | 29,280 | | $ | 31,830 | |
| Interest on Short-term Investments | | | | 21 | | | 66 | | | 69 | | | 204 | |
| Interest and Dividends on Investment Securities | | | | 2,103 | | | 1,837 | | | 6,272 | | | 6,476 | |
|
| |
| |
| |
| |
| TOTAL INTEREST INCOME | | | | 11,957 | | | 12,204 | | | 35,621 | | | 38,510 | |
|
| |
| |
| |
| |
| |
| INTEREST EXPENSE | | |
| Interest on Deposits | | | | 2,818 | | | 3,381 | | | 8,937 | | | 10,751 | |
| Interest on Borrowings | | | | 1,239 | | | 1,798 | | | 3,571 | | | 5,614 | |
|
| |
| |
| |
| |
| TOTAL INTEREST EXPENSE | | | | 4,057 | | | 5,179 | | | 12,508 | | | 16,365 | |
|
| |
| |
| |
| |
| |
| Net Interest Income | | | | 7,900 | | | 7,025 | | | 23,113 | | | 22,145 | |
| Provision for Loan Losses | | | | 288 | | | 266 | | | 1,528 | | | 495 | |
|
| |
| |
| |
| |
| Net Interest Income after | | |
| Provision for Loan Losses | | | | 7,612 | | | 6,759 | | | 21,585 | | | 21,650 | |
|
| |
| |
| |
| |
| |
| NON-INTEREST INCOME | | |
| Other Operating Income | | | | 2,855 | | | 3,125 | | | 9,127 | | | 7,153 | |
| Net Gain on Sales of Loans and Related Assets | | | | 278 | | | 1,128 | | | 823 | | | 2,434 | |
| Net Gain on Sales of Securities | | | | --- | | | 54 | | | 5 | | | 77 | |
|
| |
| |
| |
| |
| TOTAL NON-INTEREST INCOME | | | | 3,133 | | | 4,307 | | | 9,955 | | | 9,664 | |
|
| |
| |
| |
| |
| |
| NON-INTEREST EXPENSE | | |
| Salaries and Benefits | | | | 4,534 | | | 4,503 | | | 13,644 | | | 13,344 | |
| Net Loss on Extinguishment of Borrowings | | | | --- | | | 914 | | | --- | | | 914 | |
| Other Operating Expenses | | | | 3,303 | | | 3,131 | | | 9,811 | | | 9,128 | |
|
| |
| |
| |
| |
| TOTAL NON-INTEREST EXPENSE | | | | 7,837 | | | 8,548 | | | 23,455 | | | 23,386 | |
|
| |
| |
| |
| |
| |
| Income before Income Taxes | | | | 2,908 | | | 2,518 | | | 8,085 | | | 7,928 | |
| Income Tax Expense | | | | 532 | | | 365 | | | 1,425 | | | 1,294 | |
|
| |
| |
| |
| |
| |
| NET INCOME | | | $ | 2,376 | | $ | 2,153 | | $ | 6,660 | | $ | 6,634 | |
|
| |
| |
| |
| |
| |
| EARNINGS PER SHARE & DILUTED EARNINGS PER SHARE | | | $ | 0.22 | | $ | 0.20 | (1) | $ | 0.61 | | $ | 0.59 | (1) |
| |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | | |
| Basic | | | | 10,898,241 | | | 10,953,666 | (1) | | 10,920,123 | | | 11,251,910 | (1) |
| Diluted | | | | 10,929,870 | | | 10,999,524 | (1) | | 10,954,121 | | | 11,296,239 | (1) |
(1) Restated for December 2003 stock dividend.
