All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a m ...

Core Insights - German American Bancorp (GABC) reported a revenue of $89.89 million for the quarter ended June 2025, marking a 38.5% increase year-over-year [1] - The earnings per share (EPS) for the quarter was $0.86, up from $0.69 in the same quarter last year, exceeding the consensus EPS estimate of $0.83 by 3.61% [1] Financial Performance Metrics - The efficiency ratio was reported at 51.3%, better than the average estimate of 52.4% from three analysts [4] - The net interest margin stood at 3.9%, matching the average estimate from three analysts [4] - Net charge-offs to average loans were 0.1%, consistent with the average estimate from two analysts [4] - Total average interest-earning assets were $7.61 billion, slightly below the average estimate of $7.67 billion from two analysts [4] - Net gains on sales of loans were $1 million, compared to the estimated $1.81 million from three analysts [4] - Total non-interest income was $16.73 million, exceeding the average estimate of $16.36 million from three analysts [4] - Net interest income (FTE) was reported at $74.43 million, slightly below the average estimate of $74.81 million from two analysts [4] - Service charges on deposit accounts were $3.71 million, below the average estimate of $3.85 million from two analysts [4] - Net interest income was $73.16 million, compared to the average estimate of $73.49 million from two analysts [4] Stock Performance - Shares of German American Bancorp have returned +2.1% over the past month, while the Zacks S&P 500 composite increased by +4.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

German American Bancorp (GABC) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.83 per share. This compares to earnings of $0.69 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +3.61%. A quarter ago, it was expected that this financial services holding company would post earnings of $0.72 per share when it actually produced earnings of $0.79, delivering a surprise of +9.72%.Over t ...

NEWS RELEASE For additional information, contact: D. Neil Dauby, Chairman and Chief Executive Of icer Bradley M Rust, President and Chief Financial Of icer (812) 482-1314 1 of 20 JULY 28, 2025 GERMAN AMERICAN BANCORP, INC. (GABC) REPORTS STRONG SECOND QUARTER 2025 EARNINGS Jasper, Indiana: German American Bancorp, Inc. (Nasdaq: GABC) reported strong quarterly earnings of $31.4 million, or $0.84 per share, resulting in the second highest level of reported earnings per share in the Company's history. This lev ...

Company Overview - German American Bancorp (GABC) is a financial services holding company based in Jasper, operating in the Finance sector [3] - The company's shares have experienced a price change of -2.56% this year [3] Dividend Information - GABC currently pays a dividend of $0.29 per share, resulting in a dividend yield of 2.96% [3] - The dividend yield of GABC is lower than the Banks - Midwest industry's yield of 3.22% and the S&P 500's yield of 1.6% [3] - The annualized dividend of $1.16 represents a 7.4% increase from the previous year [4] - Over the last 5 years, GABC has increased its dividend 5 times, averaging an annual increase of 9.04% [4] - The current payout ratio for GABC is 39%, indicating that it paid out 39% of its trailing 12-month EPS as dividends [4] Earnings Growth - The Zacks Consensus Estimate for GABC's earnings in 2025 is $3.35 per share, with an expected increase of 18.37% from the previous year [5] Investment Considerations - GABC is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - Income investors should note that high-yielding stocks may face challenges during periods of rising interest rates [7]

Company Overview - German American Bancorp (GABC) is a financial services holding company based in Jasper, operating in the Finance sector [3] - The company's shares have experienced a price change of -3.23% this year [3] Dividend Information - GABC currently pays a dividend of $0.29 per share, resulting in a dividend yield of 2.98%, which is lower than the Banks - Midwest industry's yield of 3.18% and the S&P 500's yield of 1.53% [3] - The annualized dividend of $1.16 represents a 7.4% increase from the previous year [4] - Over the last 5 years, GABC has increased its dividend 5 times, averaging an annual increase of 9.04% [4] - The current payout ratio is 39%, indicating that GABC paid out 39% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - GABC is expected to see earnings growth this fiscal year, with the Zacks Consensus Estimate for 2025 at $3.35 per share, reflecting a year-over-year growth rate of 18.37% [5] Investment Perspective - GABC is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7]

Part I [Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the core unaudited financial statements for the quarter ended March 31, 2025, compared against prior periods [Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This section presents the core unaudited financial statements for the quarter ended March 31, 2025, compared against prior periods, reflecting significant growth driven by the Heartland BancCorp acquisition Consolidated Balance Sheet Highlights (in billions) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $8.420 | $6.296 | +$2.124 | | Loans, Net | $5.571 | $4.080 | +$1.491 | | Total Deposits | $7.098 | $5.329 | +$1.769 | | Total Shareholders' Equity | $1.046 | $0.715 | +$0.331 | Consolidated Income Statement Highlights (in millions, except per share data) | Account | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $66.572 | $44.994 | +$21.578 | | Provision for Credit Losses | $15.300 | $0.900 | +$14.400 | | Non-interest Income | $14.840 | $15.822 | -$0.982 | | Non-interest Expense | $52.782 | $36.738 | +$16.044 | | Net Income | $10.517 | $19.022 | -$8.505 | | Diluted EPS | $0.30 | $0.64 | -$0.34 | - Net income for Q1 2025 was **$10.5 million**, or **$0.30 per share**, a **53% per-share decline** from Q1 2024, primarily due to costs associated with the Heartland acquisition[168](index=168&type=chunk)[186](index=186&type=chunk) - The quarter's results included significant one-time items: **$5.9 million** in acquisition-related expenses and a **$16.2 million** Day 2 provision for credit losses under CECL for the Heartland portfolio[170](index=170&type=chunk)[187](index=187&type=chunk) - The company completed the sale of its insurance subsidiary, German American Insurance, Inc. (GAI), on June 1, 2024, for **$40.0 million**, resulting in no insurance revenue in Q1 2025[33](index=33&type=chunk)[167](index=167&type=chunk) [Business Combinations (Heartland Acquisition)](index=41&type=section&id=NOTE%2016%20%E2%80%93%20Business%20Combinations) This section details the acquisition of Heartland BancCorp, including its financial impact and the accounting treatment of goodwill and intangible assets - On February 1, 2025, the Company acquired Heartland BancCorp, which added approximately **$1.94 billion** in assets, **$1.58 billion** in loans, and **$1.73 billion** in deposits[146](index=146&type=chunk)[147](index=147&type=chunk) - The acquisition was accounted for using the acquisition method, resulting in the recognition of **$197.5 million** in goodwill and **$40.1 million** in core deposit intangible assets[150](index=150&type=chunk) Heartland Acquisition Consideration and Net Assets (in millions) | Item | Value | | :--- | :--- | | **Consideration** | | | Cash | $23.102 | | Equity Instruments | $320.007 | | **Total Consideration** | **$343.109** | | **Assets/Liabilities** | | | Total Identifiable Net Assets Acquired | $145.627 | | **Goodwill** | **$197.482** | [Loan Portfolio and Credit Quality](index=19&type=section&id=NOTE%207%20%E2%80%93%20Loans) This section analyzes the composition and credit quality of the loan portfolio, including changes in the Allowance for Credit Losses and non-accrual loans Loan Portfolio Composition (in millions) | Loan Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial and Industrial | $732.328 | $591.785 | | Commercial Real Estate | $3,055.074 | $2,224.872 | | Agricultural | $455.678 | $431.037 | | Residential Mortgage | $788.222 | $357.448 | | Other Retail | $543.897 | $448.872 | | **Total Loans** | **$5,654.944** | **$4,133.267** | - The Allowance for Credit Losses (ACL) increased from **$44.4 million** at year-end 2024 to **$75.2 million** at March 31, 2025. The increase includes a **$15.9 million** ACL for acquired Heartland PCD loans and a **$16.2 million** Day 2 CECL provision for the Heartland portfolio[57](index=57&type=chunk) - Effective March 31, 2025, the Company changed its ACL estimation method for most loan segments from a static pool to a discounted cash flow model, resulting in a **$1.7 million decrease** to the allowance[58](index=58&type=chunk) - Total non-accrual loans increased to **$17.9 million** as of March 31, 2025, up from **$10.9 million** at December 31, 2024[73](index=73&type=chunk)[74](index=74&type=chunk) [Securities Portfolio](index=16&type=section&id=NOTE%205%20%E2%80%93%20Securities) This section details the company's securities portfolio, including fair values and unrealized gains or losses Securities Available-for-Sale (in millions) | Security Type | Fair Value (Mar 31, 2025) | Fair Value (Dec 31, 2024) | | :--- | :--- | :--- | | U.S. Treasury | $144.667 | $110.864 | | Obligations of State and Political Subdivisions | $458.834 | $463.169 | | MBS/CMO | $709.425 | $702.179 | | US Gov't Sponsored Entities & Agencies | $249.758 | $241.075 | | **Total** | **$1,562.684** | **$1,517.287** | - As of March 31, 2025, the securities portfolio had gross unrealized losses of **$267.8 million**, primarily concentrated in securities held for 12 months or more. These losses are considered temporary and related to market interest rate fluctuations, with no allowance for credit losses deemed necessary[41](index=41&type=chunk)[43](index=43&type=chunk) [Segment Information](index=30&type=section&id=NOTE%209%20%E2%80%93%20Segment%20Information) This section outlines the financial performance of the company's core banking and wealth management segments following the divestiture of its insurance business - Following the sale of its insurance assets on June 1, 2024, the Company's operations now consist of two primary segments: core banking and wealth management services. As a result, no insurance revenue was recorded in Q1 2025[95](index=95&type=chunk) Segment Profit (Loss) Before Taxes - Q1 2025 (in millions) | Segment | Profit (Loss) Before Taxes | | :--- | :--- | | Core Banking | $16.811 | | Wealth Management Services | $1.410 | | Insurance | $0 | | Other / Eliminations | ($4.891) | | **Consolidated Total** | **$13.330** | [Management's Discussion and Analysis (MD&A)](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant impact of the Heartland BancCorp acquisition on the first quarter 2025 results, including adjusted net income and the sale of the insurance business [Results of Operations](index=47&type=section&id=RESULTS%20OF%20OPERATIONS) Net interest income increased 48% to $66.6 million, with the tax-equivalent net interest margin expanding 61 basis points to 3.96%, significantly boosted by 24 basis points from purchase accounting accretion on acquired loans - Tax-equivalent net interest margin was **3.96%** in Q1 2025, up from **3.35%** in Q1 2024. Accretion of discounts on acquired loans contributed **24 basis points** to the Q1 2025 margin[189](index=189&type=chunk) - The provision for credit losses of **$15.3 million** in Q1 2025 was primarily driven by the **$16.2 million** Day 2 CECL addition for the Heartland acquisition[192](index=192&type=chunk) - Non-interest income fell by **$1.0 million**, or **6%**, mainly because of a **$2.9 million** decline in insurance revenues following the sale of GAI, which was partially offset by growth in other fee income categories from the Heartland acquisition[196](index=196&type=chunk)[197](index=197&type=chunk)[200](index=200&type=chunk) - Non-interest expense increased by **$16.0 million**, or **44%**, driven by Heartland's operating costs and approximately **$5.9 million** in non-recurring acquisition-related expenses[203](index=203&type=chunk) [Financial Condition](index=53&type=section&id=FINANCIAL%20CONDITION) As of March 31, 2025, total assets reached $8.42 billion, a $2.12 billion increase from year-end 2024, driven by the Heartland acquisition, with corresponding growth in loans and deposits Key Balance Sheet Changes (in billions) | Account | March 31, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $8.42 | $6.30 | +$2.12 | | Total Loans | $5.65 | $4.13 | +$1.52 | | Total Deposits | $7.10 | $5.33 | +$1.77 | - The allowance for credit losses increased to **$75.2 million**, representing **1.33%** of period-end loans. This includes a **$32.1 million** addition related to the Heartland loan portfolio[219](index=219&type=chunk)[220](index=220&type=chunk) - Non-performing assets rose to **$18.6 million** (**0.22%** of total assets), up from **$11.1 million** (**0.18%** of total assets) at year-end 2024, with the Heartland acquisition contributing **$5.4 million** to the total[222](index=222&type=chunk) [Capital Resources and Liquidity](index=55&type=section&id=Capital%20Resources) Shareholders' equity increased by $331.0 million to $1.046 billion, primarily due to the issuance of 7.7 million shares valued at $320.0 million for the Heartland acquisition, with all regulatory capital ratios remaining well above 'well-capitalized' minimums - Shareholders' equity increased to **$1.046 billion**, largely due to issuing approximately **7.7 million shares** valued at **$320.0 million** to complete the Heartland acquisition[226](index=226&type=chunk)[227](index=227&type=chunk) Regulatory Capital Ratios | Ratio | 3/31/2025 | 12/31/2024 | Well-Capitalized Guideline | | :--- | :--- | :--- | :--- | | **Consolidated** | | | | | Total Capital | 15.01% | 17.15% | N/A | | Tier 1 Capital | 13.26% | 15.72% | N/A | | CET 1 Capital | 12.73% | 15.02% | N/A | | **Bank** | | | | | Total Capital | 13.47% | 15.02% | 10.00% | | Tier 1 Capital | 12.56% | 14.23% | 8.00% | - The company has significant available liquidity, including borrowing capacity of approximately **$389 million** at the FHLB and **$649 million** at the Federal Reserve Bank as of March 31, 2025[236](index=236&type=chunk) [Use of Non-GAAP Financial Measures](index=58&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) The company presents several non-GAAP financial measures to provide a clearer view of its core operational performance, excluding the CECL Day 2 provision, non-recurring merger expenses, and divested insurance business results Non-GAAP Reconciliation: Net Income and EPS (Q1 2025, in millions) | Item | Amount | | :--- | :--- | | Net Income, as reported | $10.517 | | Plus: CECL Day 2 non-PCD provision (after-tax) | $12.150 | | Plus: Non-recurring merger-related expenses (after-tax) | $4.620 | | **Adjusted Net Income** | **$27.287** | | EPS, as reported | $0.30 | | **EPS, as adjusted** | **$0.79** | [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are liquidity and interest rate risk, monitored via simulation modeling, with net interest income projected to be slightly asset-sensitive Net Interest Income Sensitivity (as of March 31, 2025) | Rate Change Scenario | % Change in Net Interest Income (12-month) | | :--- | :--- | | +200 bps | +0.73% | | +100 bps | +0.47% | | -100 bps | -1.35% | | -200 bps | -3.10% | Net Portfolio Value (NPV) Sensitivity (as of March 31, 2025) | Rate Change Scenario | % Change in NPV | | :--- | :--- | | +200 bps | -8.17% | | +100 bps | -3.69% | | -100 bps | +2.62% | | -200 bps | +3.71% | [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on management's evaluation, the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the first quarter - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2025[259](index=259&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter of 2025 that materially affected, or are reasonably likely to materially affect, internal controls[260](index=260&type=chunk) Part II [Other Information](index=64&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section consolidates several required disclosures, including legal proceedings, risk factors, stock repurchases, and Rule 10b5-1 trading arrangements [Other Disclosures](index=64&type=section&id=Item%201.%20Legal%20Proceedings) This section consolidates several required disclosures, including legal proceedings, risk factors, stock repurchases, and Rule 10b5-1 trading arrangements - The company is not a party to any material legal proceedings outside of routine litigation incidental to its business[262](index=262&type=chunk) - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[263](index=263&type=chunk) - No shares were repurchased during the quarter under the previously announced **1,000,000 share** repurchase plan[265](index=265&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[272](index=272&type=chunk)

Core Insights - German American Bancorp (GABC) reported a revenue of $81.41 million for Q1 2025, marking a year-over-year increase of 33.9% and exceeding the Zacks Consensus Estimate of $79.1 million by 2.92% [1] - The company's EPS for the same quarter was $0.79, up from $0.64 a year ago, representing a surprise of 9.72% compared to the consensus estimate of $0.72 [1] Financial Performance Metrics - Efficiency ratio was reported at 61.3%, higher than the estimated 56.3% by analysts [4] - Net Interest Margin stood at 4%, surpassing the average estimate of 3.7% [4] - Net charge-offs to average loans were 0%, compared to the estimated 0.1% [4] - Total Average Interest Earning Assets reached $6.92 billion, exceeding the estimate of $6.85 billion [4] - Net Gains on Sales of Loan were $0.83 million, slightly below the estimated $0.90 million [4] - Total Non-interest Income was reported at $14.84 million, lower than the estimated $15.95 million [4] - Net interest income (FTE) was $67.89 million, compared to the average estimate of $62.41 million [4] - Service charges on deposit accounts were $3.49 million, below the estimated $3.81 million [4] - Net Interest Income was reported at $66.57 million, exceeding the estimate of $63.51 million [4] Stock Performance - Shares of German American Bancorp have returned -3.1% over the past month, outperforming the Zacks S&P 500 composite's -4.3% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]

Company Performance - German American Bancorp (GABC) reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.64 per share a year ago, representing an earnings surprise of 9.72% [1] - The company posted revenues of $81.41 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.92%, compared to year-ago revenues of $60.82 million [2] - Over the last four quarters, the company has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - The stock has underperformed the market, losing about 9.2% since the beginning of the year, compared to the S&P 500's decline of 6.1% [3] - The current consensus EPS estimate for the coming quarter is $0.82 on revenues of $89.4 million, and for the current fiscal year, it is $3.27 on revenues of $351.25 million [7] - The estimate revisions trend for German American Bancorp is currently favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Banks - Midwest industry, to which German American Bancorp belongs, is currently ranked in the top 18% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Q1 2025 Financial & Operational Highlights](index=1&type=section&id=GERMAN%20AMERICAN%20BANCORP,%20INC.%20(GABC)%20REPORTS%20FIRST%20QUARTER%202025%20EARNINGS%3B%20CLOSES%20ON%20HEARTLAND%20MERGER) German American Bancorp reported Q1 2025 earnings significantly impacted by Heartland merger costs, while underlying performance showed positive trends and strategic integration progressed smoothly [Q1 2025 Earnings Summary](index=1&type=section&id=Q1%202025%20Earnings%20Summary) Q1 2025 GAAP net income decreased to $10.5 million ($0.30 EPS) due to $5.9 million merger expenses and a $16.2 million CECL provision, while adjusted net income remained stable at $27.3 million ($0.79 EPS) Q1 2025 Earnings Performance (GAAP vs. Adjusted) | Metric | Q1 2025 (GAAP) | Q4 2024 (GAAP) | Q1 2025 (Adjusted) | Q4 2024 (Adjusted) | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $10.5 million | $23.2 million | $27.3 million | $23.4 million | | **EPS** | $0.30 | $0.78 | $0.79 | $0.79 | - First-quarter earnings were significantly impacted by one-time merger and acquisition costs of **$5.9 million** and a 'Day 2' CECL provision of **$16.2 million** related to the Heartland acquisition, resulting in a total after-tax impact of **$16.8 million**[1](index=1&type=chunk) - Despite merger-related impacts, the quarter showed positive underlying performance, including net interest margin expansion, strong organic loan and deposit growth, and controlled operating expenses[1](index=1&type=chunk) [Strategic Developments and Outlook](index=3&type=section&id=Strategic%20Developments%20and%20Outlook) The company successfully closed the Heartland BancCorp acquisition and completed system conversion, with management expressing confidence in future profitability and shareholder value, supported by a declared $0.29 per share dividend - The Board of Directors declared a regular quarterly cash dividend of **$0.29 per share**, payable on May 20, 2025[8](index=8&type=chunk) - The company was ranked **second** in the nation on the Forbes "America's Best Banks 2025" list, reflecting its financial strength and stability[9](index=9&type=chunk) - CEO D. Neil Dauby highlighted the smooth conversion of Heartland's operating systems post-quarter end and expressed confidence in future growth and profitability driven by the newly combined team[10](index=10&type=chunk) [Financial Condition Analysis (Balance Sheet)](index=5&type=section&id=Balance%20Sheet%20Highlights) The balance sheet reflects significant growth driven by the Heartland acquisition, impacting total assets, loans, and deposits, while maintaining strong capital adequacy [Heartland Acquisition Details](index=5&type=section&id=Heartland%20Acquisition%20Details) German American completed the Heartland BancCorp acquisition on February 1, 2025, adding approximately $1.94 billion in assets, $1.58 billion in loans, and $1.73 billion in deposits, settled with 7.74 million shares and $23.1 million cash Heartland Financials at Acquisition | Metric | Value (approx.) | | :--- | :--- | | Total Assets | $1.94 billion | | Total Loans | $1.58 billion | | Total Deposits | $1.73 billion | - The acquisition was settled with approximately **7.74 million shares** of GABC common stock and **$23.1 million** in cash[12](index=12&type=chunk) [Loan Portfolio](index=5&type=section&id=Loan%20Portfolio) Total loans increased by **$1.52 billion** to **$5.65 billion** due to the Heartland acquisition, with 4% organic growth and diversified composition, while asset quality remained strong with non-performing loans at **0.33%** End of Period Loan Balances (in thousands) | Loan Category | 3/31/2025 | 12/31/2024 | 3/31/2024 | | :--- | :--- | :--- | :--- | | Commercial & Industrial | $812,073 | $671,038 | $646,162 | | Commercial Real Estate | $3,055,074 | $2,224,872 | $2,148,808 | | Agricultural Loans | $455,678 | $431,037 | $400,733 | | Residential Mortgage Loans | $788,222 | $357,448 | $361,236 | | **Total Loans** | **$5,654,944** | **$4,133,267** | **$3,978,919** | - Excluding acquired loans, organic loan growth was **4%** from March 31, 2024, to March 31, 2025. On a linked-quarter basis, organic commercial real estate loans grew **10% annualized**[3](index=3&type=chunk)[16](index=16&type=chunk) - The allowance for credit losses increased to **1.33%** of period-end loans, up from **1.08%** at year-end 2024, mainly due to a **$32.1 million** addition related to the Heartland portfolio[19](index=19&type=chunk)[20](index=20&type=chunk) Asset Quality Metrics | Metric | 3/31/2025 | 12/31/2024 | 3/31/2024 | | :--- | :--- | :--- | :--- | | Non-Performing Assets to Total Assets | 0.22% | 0.18% | 0.16% | | Non-Performing Loans to Total Loans | 0.33% | 0.27% | 0.25% | [Deposits](index=9&type=section&id=Deposits) Total deposits increased by **$1.77 billion** to **$7.10 billion** primarily due to the Heartland acquisition, with non-interest-bearing demand deposits growing organically by **$21 million** (6% annualized) and remaining **27%** of total deposits End of Period Deposit Balances (in thousands) | Deposit Category | 3/31/2025 | 12/31/2024 | 3/31/2024 | | :--- | :--- | :--- | :--- | | Non-interest-bearing Demand | $1,889,673 | $1,399,270 | $1,463,933 | | IB Demand, Savings, and MMDA | $3,788,889 | $3,013,204 | $2,918,459 | | Time Deposits | $1,419,323 | $916,601 | $836,955 | | **Total Deposits** | **$7,097,885** | **$5,329,075** | **$5,219,347** | - The Heartland acquisition contributed **$1.755 billion** in deposits as of March 31, 2025[24](index=24&type=chunk) - Excluding acquisition-related deposits, non-interest bearing demand deposits increased by **$21 million**, or **6%** on an annualized basis, compared to Q4 2024[4](index=4&type=chunk)[5](index=5&type=chunk) [Capital Adequacy](index=10&type=section&id=Capital%20Adequacy) As of March 31, 2025, the company and its subsidiary bank maintained capital levels significantly above minimum requirements, with the bank classified as 'well-capitalized' Capital Ratios | Ratio | 3/31/2025 | 12/31/2024 | 3/31/2024 | | :--- | :--- | :--- | :--- | | **Consolidated** | | | | | CET 1 Capital Ratio | 12.73% | 15.02% | 14.27% | | Tier 1 Capital Ratio | 13.26% | 15.72% | 14.97% | | Total Capital Ratio | 15.23% | 17.15% | 16.57% | | **Bank** | | | | | CET 1 Capital Ratio | 12.56% | 14.23% | 13.73% | [Results of Operations Analysis (Income Statement)](index=11&type=section&id=Results%20of%20Operations%20Highlights%20-%20Quarter%20ended%20March%2031,%202025) The income statement analysis highlights significant increases in net interest income and non-interest expense, largely driven by the Heartland acquisition, alongside a substantial credit loss provision [Net Interest Income & Margin](index=13&type=section&id=Net%20Interest%20Income%20%26%20Margin) Q1 2025 net interest income increased **30%** to **$66.6 million**, driven by higher earning assets and a significant net interest margin expansion to **3.96%**, with **24 basis points** from loan discount accretion Net Interest Margin Analysis | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income (tax-equivalent) | $67.9M | $52.2M | $46.6M | | Net Interest Margin (NIM) | 3.96% | 3.54% | 3.35% | | NIM Contribution from Accretion | 24 bps | 4 bps | 3 bps | - The increase in net interest income was primarily due to a higher level of earning assets from the Heartland acquisition and the expansion of the net interest margin[36](index=36&type=chunk) - Excluding accretion, the NIM improvement was driven by higher yields on earning assets and a lower cost of deposits, partly due to the Federal Reserve's rate actions in late 2024[39](index=39&type=chunk) [Provision for Credit Losses and Net Charge-offs](index=15&type=section&id=Provision%20for%20Credit%20Losses%20and%20Net%20Charge-offs) Q1 2025 provision for credit losses surged to **$15.3 million**, primarily due to a **$16.2 million** 'Day 2' CECL provision from the Heartland acquisition, while net charge-offs remained minimal at **4 basis points** - The Q1 2025 provision for credit losses of **$15.3 million** included a **$16.2 million** provision for the Day 2 CECL addition related to the Heartland acquisition[40](index=40&type=chunk) - Net charge-offs were very low, totaling only **4 basis points** of average loans for the quarter[3](index=3&type=chunk)[41](index=41&type=chunk) [Non-Interest Income](index=15&type=section&id=Non-Interest%20Income) Non-interest income increased **5%** to **$14.8 million** from Q4 2024 due to Heartland's operations, but declined **6%** year-over-year as expected, following the mid-2024 sale of the GAI business Non-Interest Income Breakdown (in thousands) | Category | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Wealth Management Fees | $3,836 | $3,687 | $3,366 | | Service Charges on Deposit Accounts | $3,486 | $3,344 | $2,902 | | Interchange Fee Income | $4,421 | $4,244 | $4,087 | | Insurance Revenues | $0 | $0 | $2,878 | | **Total Non-interest Income** | **$14,840** | **$14,114** | **$15,822** | - The increase in non-interest income compared to Q4 2024 was predominantly driven by the Heartland acquisition[6](index=6&type=chunk)[42](index=42&type=chunk) - The year-over-year decline was due to the sale of the German American Insurance (GAI) assets in the second quarter of 2024, which resulted in no insurance revenue in Q1 2025[43](index=43&type=chunk)[48](index=48&type=chunk) [Non-Interest Expense](index=19&type=section&id=Non-Interest%20Expense) Non-interest expense rose **47%** to **$52.8 million** from Q4 2024, driven by **$5.9 million** in non-recurring Heartland acquisition costs and the inclusion of Heartland's ongoing operating expenses Non-Interest Expense Breakdown (in thousands) | Category | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Salaries and Employee Benefits | $28,040 | $20,404 | $21,178 | | Data Processing Fees | $5,495 | $3,257 | $2,811 | | Professional Fees | $4,184 | $1,178 | $1,595 | | Intangible Amortization | $2,070 | $438 | $578 | | **Total Non-interest Expense** | **$52,782** | **$35,839** | **$36,738** | - Q1 2025 non-interest expense included approximately **$5.9 million** of non-recurring acquisition-related expenses for the Heartland merger[52](index=52&type=chunk) - Excluding one-time costs, the primary driver of the expense increase was the addition of Heartland's operating costs, including salaries, occupancy, and data processing[52](index=52&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Financial Statements & Reconciliations](index=27&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section presents the unaudited consolidated financial statements and reconciliations of non-GAAP financial measures, offering a comprehensive view of the company's financial position and performance [Consolidated Financial Statements](index=27&type=section&id=Consolidated%20Financial%20Statements) The report provides unaudited consolidated financial statements, including Balance Sheets and Statements of Income, along with key performance and asset quality ratios for periods ending March 31, 2025, December 31, 2024, and March 31, 2024 - The release contains the Consolidated Balance Sheets as of March 31, 2025, December 31, 2024, and March 31, 2024[70](index=70&type=chunk) - The release contains the Consolidated Statements of Income for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024[73](index=73&type=chunk) - A summary of key earnings performance, asset quality, and balance sheet ratios is provided[76](index=76&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=33&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) Non-GAAP financial measures are provided to exclude the 'Day 2' CECL provision, non-recurring Heartland merger expenses, and divested GAI business results, enhancing comparability for investors - Non-GAAP measures are used to exclude the impact of the Heartland merger's CECL Day 2 provision, non-recurring merger expenses, and the results of the sold GAI insurance business to improve comparability[80](index=80&type=chunk) Non-GAAP Reconciliation - Net Income and EPS (Q1 2025) | (in thousands, except per share) | As Reported (GAAP) | Adjustments | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net Income | $10,517 | +$16,770 | $27,287 | | Earnings Per Share | $0.30 | +$0.49 | $0.79 | Non-GAAP Reconciliation - Efficiency Ratio (Q1 2025) | Metric | As Reported (GAAP) | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Efficiency Ratio | 61.30% | 54.13% |