JASPER, Ind., May 20, 2024 (GLOBE NEWSWIRE) -- German American Bank was named to the Forbes America's Best Banks list, ranking 19th among 200 eligible banks. In addition, German American Bank earned accolades as a top community bank with a #15 ranking in the Raymond James Community Bankers Cup awards. About German American Bank German American Bancorp, Inc. is a Nasdaq-traded (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Ba ...

[GLOSSARY OF TERMS AND ACRONYMS](index=4&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section defines key terms and acronyms used throughout the report, referring to German American Bancorp, Inc. and its consolidated subsidiaries - References to "Company," "we," "our," "us," and similar terms refer to German American Bancorp, Inc. and its consolidated subsidiaries as a whole[11](index=11&type=chunk) - The term "Bank" refers to German American Bank, the Company's bank subsidiary[11](index=11&type=chunk) - Key acronyms defined include ASU, Basel III Rules, CECL, CET1, CRE, FASB, FDIC, FHLB, FRB, GAAP, LIBOR, MBS, NPV, OCC, SEC, SOFR[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the Company [Item 1. Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This section presents the unaudited consolidated financial statements for German American Bancorp, Inc. and its subsidiaries for the quarter ended March 31, 2024, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Balance Sheets – March 31, 2024 and December 31, 2023](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20March%2031%2C%202024%20and%20December%2031%2C%202023) This section provides a comparative overview of the Company's financial position at March 31, 2024, and December 31, 2023 | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total Assets | $6,111,929 | $6,152,198 | $(40,269) | -0.65% | | Total Liabilities | $5,456,675 | $5,488,640 | $(31,965) | -0.58% | | Total Shareholders' Equity | $655,254 | $663,558 | $(8,304) | -1.25% | | Securities Available-for-Sale | $1,539,270 | $1,596,832 | $(57,562) | -3.60% | | Loans, Net | $3,928,156 | $3,927,317 | $839 | 0.02% | | Total Deposits | $5,219,347 | $5,252,963 | $(33,616) | -0.64% | [Consolidated Statements of Income – Three Months Ended March 31, 2024 and 2023](index=7&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) This section presents the Company's financial performance for the three months ended March 31, 2024, and 2023 | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net Income | $19,022 | $20,807 | $(1,785) | -8.58% | | Basic Earnings per Share | $0.64 | $0.71 | $(0.07) | -9.86% | | Diluted Earnings per Share | $0.64 | $0.71 | $(0.07) | -9.86% | | Net Interest Income | $44,994 | $49,009 | $(4,015) | -8.19% | | Total Non-Interest Income | $15,822 | $14,967 | $855 | 5.71% | | Total Non-Interest Expense | $36,738 | $37,616 | $(878) | -2.33% | [Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended March 31, 2024 and 2023](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) This section details the Company's comprehensive income and loss for the three months ended March 31, 2024, and 2023 | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net Income | $19,022 | $20,807 | $(1,785) | | Unrealized Holding Gain (Loss) Arising During the Period | $(25,178) | $41,749 | $(66,927) | | Net of Tax (Other Comprehensive Income (Loss)) | $(19,895) | $32,946 | $(52,841) | | Comprehensive Income (Loss) | $(873) | $53,753 | $(54,626) | [Consolidated Statements of Changes in Shareholders' Equity - Three Months Ended March 31, 2024 and 2023](index=11&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20-%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) This section outlines changes in the Company's shareholders' equity for the three months ended March 31, 2024, and 2023 | Metric | March 31, 2024 (in thousands) | January 1, 2024 (in thousands) | Change (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | :-------------------- | | Total Shareholders' Equity | $655,254 | $663,558 | $(8,304) | | Net Income | $19,022 | N/A | N/A | | Other Comprehensive Income (Loss) | $(19,895) | N/A | N/A | | Cash Dividends Paid | $(7,955) | N/A | N/A | | Issuance of Common Stock (Restricted Share Grants Net) | $524 | N/A | N/A | - Cash dividends paid were **$0.27 per share** for Q1 2024, up from **$0.25 per share** for Q1 2023[23](index=23&type=chunk) [Consolidated Statements of Cash Flows – Three Months Ended March 31, 2024 and 2023](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) This section details the Company's cash flow activities for the three months ended March 31, 2024, and 2023 | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :----------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net Cash from Operating Activities | $23,853 | $31,466 | $(7,613) | | Net Cash from Investing Activities | $28,061 | $145,028 | $(116,967) | | Net Cash from Financing Activities | $(43,774) | $(215,278) | $171,504 | | Net Change in Cash and Cash Equivalents | $8,140 | $(38,784) | $46,924 | | Cash and Cash Equivalents at End of Period | $123,470 | $80,295 | $43,175 | [Notes to Consolidated Financial Statements – March 31, 2024](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%E2%80%93%20March%2031%2C%202024) This section provides detailed explanatory notes to the Company's consolidated financial statements as of March 31, 2024 [NOTE 1 – Basis of Presentation and Market Conditions](index=14&type=section&id=NOTE%201%20%E2%80%93%20Basis%20of%20Presentation%20and%20Market%20Conditions) This note describes the basis of financial statement presentation and relevant market conditions affecting the Company - German American Bancorp, Inc. operates primarily in the banking industry, with financial statements conforming to U.S. GAAP[29](index=29&type=chunk) - Certain prior period financial statements were reclassified to conform to the current presentation, with no effect on net income or total shareholders' equity[29](index=29&type=chunk) [NOTE 2 - Recent Accounting Pronouncements](index=14&type=section&id=NOTE%202%20-%20Recent%20Accounting%20Pronouncements) This note details the Company's adoption and impact of recent accounting pronouncements - The Company adopted ASU 2020-04 (Reference Rate Reform) and transitioned LIBOR-indexed loans to SOFR and other indices[30](index=30&type=chunk) - ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures) was adopted prospectively with no material impact to consolidated financial statements[31](index=31&type=chunk) - The Company concluded it does not have a safeguarding obligation under SEC's Staff Accounting Bulletin No. 121 (SAB 121) for crypto-assets[32](index=32&type=chunk) - ASU 2023-02 (Accounting for Investments in Tax Credit Structures) was adopted with no impact on the Company's financial statements or disclosures[35](index=35&type=chunk) [NOTE 3 – Per Share Data](index=15&type=section&id=NOTE%203%20%E2%80%93%20Per%20Share%20Data) This note provides a breakdown of the Company's basic and diluted earnings per share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Basic Earnings per Share | $0.64 | $0.71 | | Diluted Earnings per Share | $0.64 | $0.71 | - There were no anti-dilutive shares for the three months ended March 31, 2024 and 2023[36](index=36&type=chunk) [NOTE 4 – Securities](index=15&type=section&id=NOTE%204%20%E2%80%93%20Securities) This note details the Company's securities portfolio, including available-for-sale securities and their fair value adjustments | Securities Available-for-Sale (Fair Value) | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :---------------------------- | :------------------------------- | :-------------------- | :------- | | Total | $1,539,270 | $1,596,832 | $(57,562) | -3.60% | | Total Gross Unrealized Gains | $339 | $1,337 | $(998) | -74.64% | | Total Gross Unrealized Losses | $(299,980) | $(275,765) | $(24,215) | 8.78% | - The increase in unrealized losses from December 31, 2023, to March 31, 2024, was primarily due to fair value adjustments caused by changes in market interest rates[44](index=44&type=chunk) - No allowance for credit losses was recorded for available-for-sale debt securities at March 31, 2024, or December 31, 2023[44](index=44&type=chunk) [NOTE 5 - Derivatives](index=17&type=section&id=NOTE%205%20-%20Derivatives) This note describes the Company's derivative instruments, their notional amounts, and fair values | Derivative Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :---------------- | :---------------------------- | :------------------------------- | :-------------------- | | Notional Amount | $150,251 | $139,751 | $10,500 | | Fair Value (Assets) | $8,287 | $7,458 | $829 | | Fair Value (Liabilities) | $8,294 | $7,467 | $827 | - Interest rate swaps are simultaneously hedged by offsetting instruments with third parties to minimize net risk exposure[47](index=47&type=chunk) - Changes in the fair value of derivatives are reported in earnings as non-interest income, with a gain of **$225 thousand** in Q1 2024 compared to a loss of **$(50) thousand** in Q1 2023[51](index=51&type=chunk) [NOTE 6 – Loans](index=18&type=section&id=NOTE%206%20%E2%80%93%20Loans) This note provides detailed information on the Company's loan portfolio, including classifications and allowance for credit losses | Loan Classification | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------ | :---------------------------- | :------------------------------- | :-------------------- | :------- | | Total Loans (Gross) | $3,978,919 | $3,977,900 | $1,019 | 0.03% | | Allowance for Credit Losses | $(43,754) | $(43,765) | $11 | -0.03% | | Loans, Net | $3,928,156 | $3,927,317 | $839 | 0.02% | | Non-Accrual Loans | $9,898 | $9,136 | $762 | 8.34% | | Allowance for Credit Losses Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Provision (Benefit) for credit loss expense | $900 | $1,100 | | Loans charged-off | $(1,061) | $(1,238) | | Recoveries collected | $150 | $285 | - The Company adopted ASU 2022-02, eliminating troubled debt restructuring recognition and measurement guidance, and had no modified loans for borrowers experiencing financial difficulty in Q1 2024 or Q1 2023[69](index=69&type=chunk)[71](index=71&type=chunk) [NOTE 7 – Repurchase Agreements Accounted for as Secured Borrowings](index=27&type=section&id=NOTE%207%20%E2%80%93%20Repurchase%20Agreements%20Accounted%20for%20as%20Secured%20Borrowings) This note details the Company's repurchase agreements, which are accounted for as secured borrowings | Repurchase Agreements | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :-------------------- | :---------------------------- | :------------------------------- | :-------------------- | :------- | | Total | $38,764 | $40,968 | $(2,204) | -5.38% | - Repurchase agreements are short-term borrowings, secured by mortgage-backed securities, and mature overnight and continuously[87](index=87&type=chunk) [NOTE 8 – Segment Information](index=27&type=section&id=NOTE%208%20%E2%80%93%20Segment%20Information) This note provides financial information broken down by the Company's operating segments - The Company operates three primary segments: core banking, wealth management services, and insurance operations[88](index=88&type=chunk) | Segment (Q1 2024) | Net Interest Income (in thousands) | Segment Profit (in thousands) | | :----------------------- | :------------------------------- | :---------------------------- | | Core Banking | $46,218 | $18,905 | | Wealth Management Services | $29 | $1,001 | | Insurance | $1 | $676 | [NOTE 9 – Stock Repurchase Plan](index=28&type=section&id=NOTE%209%20%E2%80%93%20Stock%20Repurchase%20Plan) This note outlines the Company's stock repurchase plan and related activities - The Board of Directors approved a plan in January 2022 to repurchase up to **1,000,000 shares** of common stock, representing approximately **3%** of outstanding shares at the time[94](index=94&type=chunk) - No shares have been repurchased under this plan as of March 31, 2024[94](index=94&type=chunk)[230](index=230&type=chunk) - The Inflation Reduction Act of 2022 imposes a new **1%** excise tax on the fair value of stock repurchased after December 31, 2022[95](index=95&type=chunk) [NOTE 10 – Equity Plans and Equity Based Compensation](index=29&type=section&id=NOTE%2010%20%E2%80%93%20Equity%20Plans%20and%20Equity%20Based%20Compensation) This note details the Company's equity plans and the expense recognized for equity-based compensation - No stock options were granted or outstanding for the three months ended March 31, 2024 and 2023[98](index=98&type=chunk)[104](index=104&type=chunk) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Restricted Stock Expense | $640 | $539 | | Cash Entitlement Expense | $188 | $182 | - Unrecognized expense associated with restricted stock grants and cash entitlements totaled **$6,188 thousand** as of March 31, 2024[100](index=100&type=chunk) - The 2019 Employee Stock Purchase Plan (ESPP) resulted in **$12 thousand** of expense for both Q1 2024 and Q1 2023[102](index=102&type=chunk) [NOTE 11 – Fair Value](index=30&type=section&id=NOTE%2011%20%E2%80%93%20Fair%20Value) This note describes the Company's fair value measurements and their categorization into different levels - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[105](index=105&type=chunk)[106](index=106&type=chunk) | Asset Category (Fair Value) | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Total Securities | $1,539,270 | $1,596,832 | | Loans Held-for-Sale | $10,325 | $5,226 | | Derivative Assets | $8,287 | $7,458 | | Derivative Liabilities | $8,294 | $7,467 | - Individually analyzed loans and other real estate are primarily measured using Level 3 inputs, based on appraisals with significant unobservable inputs[109](index=109&type=chunk)[112](index=112&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk) [NOTE 12 - Other Comprehensive Income (Loss)](index=35&type=section&id=NOTE%2012%20-%20Other%20Comprehensive%20Income%20(Loss)) This note presents the components of the Company's other comprehensive income (loss) and its accumulated balance | Metric | March 31, 2024 (in thousands) | January 1, 2024 (in thousands) | Change (in thousands) | | :---------------------------------------------- | :---------------------------- | :----------------------------- | :-------------------- | | Ending Balance of Accumulated Other Comprehensive Income (Loss) | $(236,955) | $(217,060) | $(19,895) | | Net Current Period Other Comprehensive Income (Loss) | $(19,895) | N/A | N/A | - The primary driver of the change in accumulated other comprehensive income (loss) was unrealized gains and losses on available-for-sale securities[126](index=126&type=chunk) [NOTE 13 - Revenue Recognition](index=36&type=section&id=NOTE%2013%20-%20Revenue%20Recognition) This note details the Company's non-interest income streams and their recognition | Non-interest Income Stream | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total Non-interest Income | $15,822 | $14,967 | $855 | 5.71% | | Wealth Management Fees | $3,366 | $2,644 | $722 | 27.31% | | Insurance Revenues | $2,878 | $3,135 | $(257) | -8.20% | | Interchange Fee Income | $4,087 | $4,199 | $(112) | -2.67% | [NOTE 14 – Leases](index=37&type=section&id=NOTE%2014%20%E2%80%93%20Leases) This note provides information on the Company's lease arrangements, including costs and weighted-average terms | Lease Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total Lease Cost | $462 | $503 | | Lease Type | Weighted Average Remaining Lease Term (March 31, 2024) | Weighted Average Discount Rate (March 31, 2024) | | :--------------- | :------------------------------------- | :------------------------------ | | Finance Leases | 8 years | 11.36% | | Operating Leases | 6 years | 3.07% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition for Q1 2024. It highlights a decline in net income due to lower net interest income, partially offset by increased non-interest income and reduced non-interest expense. It also discusses critical accounting policies, loan portfolio stability, deposit trends, capital adequacy, and liquidity [MANAGEMENT OVERVIEW](index=40&type=section&id=MANAGEMENT%20OVERVIEW) This section provides an executive summary of the Company's financial performance and key operational highlights for the quarter - Net income for Q1 2024 totaled **$19,022 thousand** (**$0.64 per share**), a **10%** decline on a per share basis compared to Q1 2023[149](index=149&type=chunk) - The decline in net income was primarily attributable to lower net interest income due to modest net interest margin compression driven by higher deposit costs[149](index=149&type=chunk) - Non-interest income increased **$855 thousand** (**6%**) due to increased wealth management fees, while non-interest expense declined **$878 thousand** (**2%**) due to lower salary expense[149](index=149&type=chunk) - Total loans increased by **$1,019 thousand** compared to year-end 2023, with commercial real estate and retail growth offsetting seasonal agricultural and commercial and industrial line reductions[150](index=150&type=chunk) - Deposits declined approximately **$33,600 thousand** (**3% annualized**) due to a delayed seasonal outflow of public fund deposits, but non-public funds grew[151](index=151&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=40&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section outlines the Company's critical accounting policies and estimates that are most susceptible to change, including the allowance for credit losses, valuation of available-for-sale securities, income tax expense, and valuation of goodwill and other intangible assets, all of which involve significant management judgment and are subject to future market factors [Allowance for Credit Losses](index=41&type=section&id=Allowance%20for%20Credit%20Losses) This section details the methodology and key considerations for estimating the allowance for credit losses - The allowance for credit losses is a subjective estimate covering expected credit losses over the loan portfolio's contractual life, determined at least quarterly[153](index=153&type=chunk)[154](index=154&type=chunk) - The Company uses a static pool methodology, historical loss experience, and qualitative adjustments for economic variables like unemployment rate, GDP, and agricultural producer price index[55](index=55&type=chunk)[56](index=56&type=chunk)[159](index=159&type=chunk) - The allowance for credit losses remained stable at March 31, 2024, compared to December 31, 2023[60](index=60&type=chunk)[159](index=159&type=chunk) [Securities Valuation](index=42&type=section&id=Securities%20Valuation) This section describes the Company's policies and procedures for valuing its securities portfolio - Available-for-sale debt securities in unrealized loss positions are evaluated quarterly for impairment related to credit losses[161](index=161&type=chunk) - No allowance for credit losses for available-for-sale debt securities was needed at March 31, 2024[161](index=161&type=chunk) - As of March 31, 2024, gross unrealized gains totaled **$339 thousand** and gross unrealized losses totaled **$299,980 thousand** on available-for-sale securities[161](index=161&type=chunk) [Income Tax Expense](index=42&type=section&id=Income%20Tax%20Expense) This section explains the Company's accounting policies and estimates related to income tax expense - Income tax expense involves estimates related to the valuation allowance on deferred tax assets and loss contingencies from tax examinations[163](index=163&type=chunk) - A valuation allowance reduces deferred tax assets to the amount management believes is more likely than not to be realized[164](index=164&type=chunk) [Goodwill and Other Intangible Assets](index=42&type=section&id=Goodwill%20and%20Other%20Intangible%20Assets) This section outlines the Company's accounting treatment for goodwill and other intangible assets, including impairment testing - Goodwill is not amortized but tested for impairment at least annually, with December 31 selected as the annual test date[165](index=165&type=chunk) - No impairment to Goodwill was indicated based on year-end testing[165](index=165&type=chunk) - Other intangible assets (core deposit and acquired customer relationship intangibles) are amortized over estimated useful lives ranging from **6 to 10 years**[166](index=166&type=chunk) [RESULTS OF OPERATIONS](index=42&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the Company's financial performance for the three months ended March 31, 2024, compared to the same period in 2023, covering net income, net interest income, provision for credit losses, non-interest income, non-interest expense, and income taxes [Net Income](index=42&type=section&id=Net%20Income) This section analyzes the Company's net income and earnings per share for the reporting period | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income | $19,022 | $20,807 | | Basic Earnings per Share | $0.64 | $0.71 | - The decline in net income was largely the result of lower net interest income, driven by net interest margin compression, as higher deposit costs exceeded improved yields on earning assets[167](index=167&type=chunk) [Net Interest Income](index=44&type=section&id=Net%20Interest%20Income) This section discusses the Company's net interest income and net interest margin performance | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net Interest Income (non-tax-equivalent) | $44,994 | $49,009 | $(4,015) | -8.19% | | Tax Equivalent Net Interest Margin | 3.35% | 3.69% | -0.34% | -9.21% | | Cost of Funds | 1.67% | 0.84% | 0.83% | 98.81% | - The decline in net interest margin was largely driven by an increase in the cost of funds due to competitive deposit pricing and a shift to higher time deposits[169](index=169&type=chunk) - Accretion of loan discounts on acquired loans contributed approximately **3 basis points** to the net interest margin in Q1 2024, down from **4 basis points** in Q1 2023[170](index=170&type=chunk) [Provision for Credit Losses](index=46&type=section&id=Provision%20for%20Credit%20Losses) This section details the Company's provision for credit losses and net charge-offs | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Provision for Credit Losses | $900 | $1,100 | $(200) | -18.18% | | Net Charge-offs | $911 | $953 | $(42) | -4.41% | | Net Charge-offs (annualized basis of average loans) | 9 basis points | 10 basis points | -1 basis point | -10.00% | - The provision for credit losses was deemed necessary by management to absorb expected losses in the loan portfolio, based on a quarterly evaluation[173](index=173&type=chunk) [Non-interest Income](index=46&type=section&id=Non-interest%20Income) This section analyzes the various components of the Company's non-interest income | Non-interest Income Stream | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total Non-interest Income | $15,822 | $14,967 | $855 | 5.71% | | Wealth Management Fees | $3,366 | $2,644 | $722 | 27% | | Insurance Revenues | $2,878 | $3,135 | $(257) | -8% | | Other Operating Income | $1,362 | $1,211 | $151 | 12% | | Net Gains on Sales of Loans | $751 | $587 | $164 | 28% | - The increase in wealth management fees was largely attributable to increased assets under management[175](index=175&type=chunk) - The decline in insurance revenues was related to a decrease in contingency revenue, partially offset by increased commercial lines revenue[176](index=176&type=chunk) [Non-interest Expense](index=48&type=section&id=Non-interest%20Expense) This section details the Company's non-interest expenses, including salaries and benefits | Non-interest Expense Item | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total Non-interest Expense | $36,738 | $37,616 | $(878) | -2% | | Salaries and Employee Benefits | $21,178 | $21,846 | $(668) | -3% | | Intangible Amortization | $578 | $785 | $(207) | -26% | - The decline in salaries and benefits was primarily due to a lower level of full-time equivalent employees and lower incentive compensation[181](index=181&type=chunk) - Intangible amortization decreased due to the accelerated amortization method for core deposit intangibles[182](index=182&type=chunk) [Income Taxes](index=48&type=section&id=Income%20Taxes) This section discusses the Company's income tax expense and effective tax rate | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------- | :-------------------------------- | :-------------------------------- | | Effective Income Tax Rate | 17.9% | 17.6% | - The effective tax rate was lower than the blended statutory rate due to tax-exempt investment income, affordable housing tax credits, and income from subsidiaries in states with no state or local income tax[183](index=183&type=chunk) [FINANCIAL CONDITION](index=48&type=section&id=FINANCIAL%20CONDITION) Total assets slightly declined by **$40.3 million** to **$6.112 billion** at March 31, 2024, primarily due to a decrease in the securities portfolio. Loans remained stable, while deposits experienced a seasonal outflow. Capital levels remained strong, and liquidity was managed through various funding sources - Total assets for the Company totaled **$6.112 billion** at March 31, 2024, representing a decline of **$40.3 million** compared with December 31, 2023[184](index=184&type=chunk) [Securities available for sale](index=48&type=section&id=Securities%20available%20for%20sale) This section details the Company's available-for-sale securities portfolio and its changes - Securities available for sale declined **$57.6 million** as of March 31, 2024, compared with December 31, 2023, primarily due to the utilization of cash flows to fund loan growth and other balance sheet needs[185](index=185&type=chunk) - Current projections indicate approximately **$190.0 million** in principal and interest cash flows from the portfolio over the next twelve months[185](index=185&type=chunk) [Total loans](index=48&type=section&id=Total%20loans) This section provides an overview of the Company's total loan portfolio by category | Loan Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :---------------------------- | :------------------------------- | :-------------------- | | Total Loans | $3,978,919 | $3,977,900 | $1,019 | | Commercial Real Estate Loans | $2,148,808 | $2,121,835 | $26,973 | | Home Equity and Consumer Loans | $421,980 | $407,889 | $14,091 | | Agricultural Loans | $400,733 | $423,803 | $(23,070) | | Commercial and Industrial Loans and Leases | $646,162 | $661,529 | $(15,367) | - The modest increase in total loans was largely attributable to increased commercial real estate loans and retail loans, partially offset by lower seasonal line utilization for agricultural loans and lower line utilization for commercial and industrial loans[186](index=186&type=chunk) - The commercial real estate portfolio is well-diversified over numerous property types (e.g., Multi-Family Dwellings **21%**, Retail Space **14%**) and by occupancy type (**76%** non-owner occupied)[188](index=188&type=chunk) [Allowance for Credit Losses](index=50&type=section&id=Allowance%20for%20Credit%20Losses) This section discusses the Company's allowance for credit losses in relation to its loan portfolio | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Total Allowance for Credit Losses | $43,754 | $43,765 | - The allowance for credit losses represented **1.10%** of period-end loans at both March 31, 2024, and December 31, 2023[191](index=191&type=chunk) - As of March 31, 2024, the Company held net discounts on acquired loans of **$3.6 million**[191](index=191&type=chunk) [Non-performing Assets](index=51&type=section&id=Non-performing%20Assets) This section details the Company's non-performing assets, including non-performing loans | Non-performing Asset Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :---------------------------- | :---------------------------- | :------------------------------- | :-------------------- | :------- | | Total Non-performing Assets | $9,983 | $9,191 | $792 | 8.62% | | Non-performing Loans | $9,983 | $9,191 | $792 | 8.62% | | Non-performing Loans to Total Loans | 0.25% | 0.23% | 0.02% | 8.70% | - The modest increase in non-performing loans was related to two commercial credit relationships of less than **$1.0 million** each[192](index=192&type=chunk) [Deposits](index=51&type=section&id=Deposits) This section provides a breakdown of the Company's deposit base by category | Deposit Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | % Change | | :------------------------------------- | :---------------------------- | :------------------------------- | :-------------------- | :------- | | Total Deposits | $5,219,347 | $5,252,963 | $(33,616) | -0.64% | | Non-interest-bearing Demand Deposits | $1,463,933 | $1,493,160 | $(29,227) | -1.96% | | Interest-bearing Demand, Savings, & Money Market Accounts | $2,918,459 | $2,992,761 | $(74,302) | -2.48% | | Time Deposits < $100,000 | $328,804 | $289,077 | $39,727 | 13.74% | | Time Deposits of $100,000 or more | $508,151 | $477,965 | $30,186 | 6.31% | - The decline in total deposits was largely attributable to seasonal outflows of public entity funds[193](index=193&type=chunk) - Non-interest bearing deposits remained relatively stable at **28%** of total deposits, and uninsured and uncollateralized deposits were approximately **21%** of total deposits[193](index=193&type=chunk) [Capital Resources](index=52&type=section&id=Capital%20Resources) This section outlines the Company's capital structure and regulatory capital ratios - Shareholders' equity declined by **$8.3 million** to **$655.3 million** at March 31, 2024, primarily due to a **$20.0 million** decrease in accumulated other comprehensive income (loss) related to available-for-sale securities[195](index=195&type=chunk) - The Company and its subsidiary bank remained well-capitalized, exceeding all minimum regulatory capital ratios at March 31, 2024[199](index=199&type=chunk) | Capital Ratio (March 31, 2024) | Consolidated | Bank | | :----------------------------- | :----------- | :------ | | Total Capital (to Risk Weighted Assets) | 16.57% | 14.53% | | Tier 1 (Core) Capital (to Risk Weighted Assets) | 14.97% | 13.73% | | Common Tier 1 (CET 1) Capital Ratio (to Risk Weighted Assets) | 14.27% | 13.73% | | Tier 1 Capital (to Average Assets) | 12.01% | 11.02% | - The Company began the three-year phase-in of CECL's regulatory capital impact on January 1, 2022, with an additional **25%** phased in on January 1, 2024[201](index=201&type=chunk) [Liquidity](index=53&type=section&id=Liquidity) This section discusses the Company's liquidity position and funding sources - Total cash and cash equivalents increased **$8.1 million** during Q1 2024, ending at **$123.5 million**[202](index=202&type=chunk) - Primary funding sources include customer deposits, reciprocal deposits, and short-term borrowings from the FHLB (approx. **$220 million** available) and Federal Reserve Bank (approx. **$186 million** capacity)[203](index=203&type=chunk)[204](index=204&type=chunk) - The parent company had approximately **$83.4 million** of cash and cash equivalents available to meet its cash flow needs at March 31, 2024[205](index=205&type=chunk) [FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS](index=53&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20ASSOCIATED%20RISKS) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - Statements regarding future expectations are considered "forward-looking statements" and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially[206](index=206&type=chunk)[208](index=208&type=chunk) - Key risks include changes in interest rates, unfavorable economic conditions, changes in liquidity, competitive conditions, and regulatory actions[209](index=209&type=chunk) - The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's market risk exposure, primarily liquidity and interest rate risk, is regularly reviewed. Interest rate risk is monitored using computer simulation modeling to estimate the potential impact on its net interest income and net portfolio value (NPV) under various interest rate scenarios - Primary market risks impacting the Company's operations are liquidity risk and interest rate risk[212](index=212&type=chunk) - Interest rate risk is monitored using computer simulation modeling to estimate the potential impact on net interest income and net portfolio value (NPV) under various interest rate scenarios[214](index=214&type=chunk) | Changes in Rates | Net Interest Income Amount (in thousands) | % Change | | :--------------- | :-------------------------------------- | :------- | | +2% | $203,363 | (0.55)% | | +1% | $204,537 | 0.03% | | Base | $204,483 | — | | -1% | $202,203 | (1.12)% | | -2% | $199,037 | (2.66)% | | Changes in Rates | Net Portfolio Value Amount (in thousands) | % Change | | :--------------- | :-------------------------------------- | :------- | | +2% | $636,724 | (15.76)% | | +1% | $696,934 | (7.80)% | | Base | $755,860 | — | | -1% | $805,070 | 6.51% | | -2% | $835,197 | 10.50% | [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2024, the Company's principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective. There were no material changes to the Company's internal control over financial reporting during the first fiscal quarter of 2024 - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2024[224](index=224&type=chunk) - There was no change in the Company's internal control over financial reporting that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting during Q1 2024[225](index=225&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) There are no pending legal proceedings, other than routine litigation incidental to the business of the Company's subsidiaries - There are no pending legal proceedings, other than routine litigation incidental to the business of the Company's subsidiaries[227](index=227&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in German American Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023[228](index=228&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any shares of its common stock during January, February, or March 2024 under its publicly announced repurchase plan, which authorizes up to 1,000,000 shares - The Company did not repurchase any shares of its common stock during January, February, or March 2024[230](index=230&type=chunk) - The publicly announced plan, approved January 31, 2022, authorizes the repurchase of up to **1,000,000 shares**[230](index=230&type=chunk) [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[231](index=231&type=chunk) [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[232](index=232&type=chunk) [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This section states that there is no information required to be disclosed in a Form 8-K, no changes to director nomination procedures, and no insider trading arrangements adopted or terminated by directors or officers in Q1 2024 - No information required to be disclosed in a report on Form 8-K[234](index=234&type=chunk) - No changes to director nomination procedures[236](index=236&type=chunk) - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during Q1 2024[237](index=237&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists all exhibits included with the report or incorporated by reference, such as articles of incorporation, bylaws, stock certificates, indentures, executive management incentive plan descriptions, and Sarbanes-Oxley Act certifications - The report includes various exhibits such as Amended and Restated Articles of Incorporation, Bylaws, Indenture, and Form of Subordinated Note[239](index=239&type=chunk) - Sarbanes-Oxley Act Section 302 and 906 Certifications of Principal Executive Officer and Principal Financial Officer are included[239](index=239&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) This section contains the official signatures of the Company's principal executive and financial officers, certifying the report's accuracy - The report is signed by D. Neil Dauby (Chairman and Chief Executive Officer), Bradley M. Rust (President and Chief Financial Officer), and Vicki L. Schuler (Senior Vice President, Controller) on May 8, 2024[246](index=246&type=chunk)

German American Bancorp (GABC) reported $60.82 million in revenue for the quarter ended March 2024, representing a year-over-year decline of 5%. EPS of $0.64 for the same period compares to $0.71 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $61.05 million, representing a surprise of -0.38%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.64.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- a ...

[First Quarter 2024 Earnings Highlights](index=1&type=section&id=First%20Quarter%202024%20Earnings) German American Bancorp's Q1 2024 performance saw a decline in net income due to margin compression, despite strong loan growth and expense control [Performance Summary](index=1&type=section&id=1.1%20Performance%20Summary) Q1 2024 net income of **$19.0 million** ($0.64/share) declined due to net interest margin compression, despite strong loan growth and controlled expenses Quarterly Earnings Comparison | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $19.0 | $21.5 | $20.8 | | Earnings Per Share (EPS) ($) | $0.64 | $0.73 | $0.71 | - Positive performance factors in Q1 2024 included **strong commercial real estate and retail loan growth**, **growth in non-public fund deposits**, **solid credit metrics**, and **controlled operating expenses**[2](index=2&type=chunk) - Net interest margin compressed by **8 basis points** to **3.35%** on a linked-quarter basis, as the **12 basis point increase** in funding costs outpaced the **4 basis point increase** in earning asset yield[3](index=3&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.27 per share**, an **8% increase** over the 2023 rate[6](index=6&type=chunk) [Financial Condition](index=2&type=section&id=Balance%20Sheet%20Highlights) The company's financial position reflects stable assets, diversified loan growth, strong asset quality, and robust capital adequacy [Assets](index=2&type=section&id=2.1%20Assets) Total assets were **$6.112 billion** at March 31, 2024, slightly down linked-quarter but up year-over-year due to loan growth Total Assets Comparison | Date | Total Assets (in billions) | | :--- | :--- | | March 31, 2024 | $6.112 | | December 31, 2023 | $6.152 | | March 31, 2023 | $5.997 | - The available-for-sale securities portfolio declined as cash flows were used to fund loan growth, with approximately **$190.0 million** in projected cash flows over the next twelve months[9](index=9&type=chunk) [Loans](index=2&type=section&id=2.2%20Loans) Total loans remained stable linked-quarter at **$3.98 billion** but grew **6%** year-over-year, with diversified portfolio composition End of Period Loan Balances (in thousands) | Loan Type | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | Commercial & Industrial | $646,162 | $661,529 | $667,306 | | Commercial Real Estate | $2,148,808 | $2,121,835 | $2,000,237 | | Agricultural Loans | $400,733 | $423,803 | $378,587 | | Consumer Loans | $421,980 | $407,889 | $376,398 | | Residential Mortgage | $361,236 | $362,844 | $350,338 | | **Total Loans** | **$3,978,919** | **$3,977,900** | **$3,772,866** | - The loan portfolio is heavily concentrated in commercial real estate (**54%**), with limited office real estate exposure at approximately **4%** of the total portfolio[11](index=11&type=chunk) [Asset Quality](index=3&type=section&id=2.3%20Asset%20Quality) Asset quality remained strong with low non-performing assets (**0.16%**) and stable allowance for credit losses (**1.10%** of loans) Non-performing Assets (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | Total Non-Performing Loans | $9,983 | $9,191 | $14,593 | | Total Non-Performing Assets | $9,983 | $9,191 | $14,593 | Key Asset Quality Ratios | Ratio | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | NPA to Total Assets (%) | 0.16% | 0.15% | 0.24% | | NPL to Total Loans (%) | 0.25% | 0.23% | 0.39% | | Allowance for Credit Losses to Loans (%) | 1.10% | 1.10% | 1.18% | [Deposits](index=4&type=section&id=2.4%20Deposits) Total deposits declined linked-quarter by **$33.6 million** due to seasonal outflows, but grew year-over-year by **$64.5 million** End of Period Deposit Balances (in thousands) | Deposit Type | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | Non-interest-bearing Demand | $1,463,933 | $1,493,160 | $1,601,206 | | IB Demand, Savings, MMDA | $2,918,459 | $2,992,761 | $3,039,393 | | Time Deposits | $836,955 | $767,042 | $514,296 | | **Total Deposits** | **$5,219,347** | **$5,252,963** | **$5,154,895** | - The linked-quarter decline in deposits was largely due to seasonal outflows of public entity funds, with non-interest bearing deposits stable at **28%** of total deposits[15](index=15&type=chunk) [Capital Adequacy](index=4&type=section&id=2.5%20Capital%20Adequacy) The company and its subsidiary maintained capital levels well in excess of minimum regulatory requirements for well-capitalized status Capital Ratios | Ratio (Consolidated) | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | Total Capital (to RWA) (%) | 16.57% | 16.50% | 15.89% | | Tier 1 (Core) Capital (to RWA) (%) | 14.97% | 14.97% | 14.32% | | Common Tier 1 (CET 1) (to RWA) (%) | 14.27% | 14.26% | 13.60% | | Tier 1 Capital (to Avg Assets) (%) | 12.01% | 11.75% | 11.08% | [Results of Operations](index=5&type=section&id=Results%20of%20Operations%20Highlights) The company's Q1 2024 operations saw a decline in net income driven by net interest margin compression, partially offset by non-interest income growth [Net Income](index=5&type=section&id=3.1%20Net%20Income) Q1 2024 net income was **$19.0 million** ($0.64/share), representing a decline from both prior quarters Quarterly Net Income Comparison | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $19,022 | $21,507 | $20,807 | | Diluted EPS ($) | $0.64 | $0.73 | $0.71 | [Net Interest Income and Margin](index=5&type=section&id=3.2%20Net%20Interest%20Income%20and%20Margin) Net interest income decreased to **$45.0 million** in Q1 2024, with net interest margin compressing to **3.35%** due to higher funding costs Net Interest Margin and Income (Tax-equivalent) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income (in millions) | $46.6 | $47.2 | $50.7 | | Net Interest Margin (%) | 3.35% | 3.43% | 3.69% | | Cost of Funds (%) | 1.67% | 1.55% | 0.84% | - The decline in net interest margin was largely driven by an increase in the cost of funds, which accelerated in Q1 2024 due to highly competitive deposit pricing and customers seeking higher yields[20](index=20&type=chunk)[21](index=21&type=chunk) - Accretion of discounts on acquired loans contributed approximately **3 basis points** to the net interest margin in Q1 2024[22](index=22&type=chunk) [Provision for Credit Losses](index=6&type=section&id=3.3%20Provision%20for%20Credit%20Losses) A provision for credit losses of **$900,000** was recorded in Q1 2024, with net charge-offs stable at **9 basis points** - The company recorded a provision for credit losses of **$900,000** in Q1 2024, compared with no provision in Q4 2023 and **$1,100,000** in Q1 2023[23](index=23&type=chunk) - Net charge-offs were **$911,000**, or an annualized **9 basis points** of average loans, during Q1 2024, comparable to prior quarters[24](index=24&type=chunk) [Non-interest Income](index=6&type=section&id=3.4%20Non-interest%20Income) Non-interest income increased to **$15.8 million** in Q1 2024, driven by wealth management fees and loan sales gains Non-interest Income Breakdown (in thousands) | Income Source | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Wealth Management Fees | $3,366 | $3,198 | $2,644 | | Insurance Revenues | $2,878 | $2,266 | $3,135 | | Interchange Fee Income | $4,087 | $4,371 | $4,199 | | Net Gains on Sales of Loans | $751 | $532 | $587 | | **Total Non-interest Income** | **$15,822** | **$15,594** | **$14,967** | - Wealth management fees increased **27%** YoY, largely due to increased assets under management[27](index=27&type=chunk) - Insurance revenues increased **27%** from Q4 2023 due to seasonal contingency revenue (**$391,000**), but declined **8%** YoY due to lower contingency revenue compared to Q1 2023 (**$945,000**)[28](index=28&type=chunk) [Non-interest Expense](index=8&type=section&id=3.5%20Non-interest%20Expense) Non-interest expense totaled **$36.7 million** in Q1 2024, increasing linked-quarter but decreasing year-over-year Non-interest Expense Breakdown (in thousands) | Expense Category | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Salaries and Employee Benefits | $21,178 | $20,948 | $21,846 | | Occupancy, Furniture and Equipment | $3,804 | $3,513 | $3,820 | | Professional Fees | $1,595 | $1,170 | $1,562 | | **Total Non-interest Expense** | **$36,738** | **$35,734** | **$37,616** | - Salaries and benefits declined **3%** YoY due to a lower number of full-time equivalent employees and lower incentive compensation[33](index=33&type=chunk) - Professional fees increased **36%** linked-quarter, attributable to costs for year-end financial reporting, annual meeting preparations, and talent recruiting[35](index=35&type=chunk) [Company Overview and Forward-Looking Statements](index=8&type=section&id=About%20German%20American%20and%20Forward-Looking%20Statements) This section provides an overview of German American Bancorp and important cautionary notes regarding forward-looking statements [About German American](index=8&type=section&id=4.1%20About%20German%20American) German American Bancorp, Inc. is a financial holding company operating **74** banking offices and various financial subsidiaries - German American Bancorp, Inc. (GABC) operates **74** banking offices in **20** southern Indiana counties and **14** Kentucky counties through its subsidiary, German American Bank[36](index=36&type=chunk) - The company also owns German American Investment Services, Inc. (an investment brokerage) and German American Insurance, Inc. (a property and casualty insurance agency)[36](index=36&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=9&type=section&id=4.2%20Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks, including interest rate changes, economic conditions, and cybersecurity threats - The press release contains forward-looking statements subject to risks and uncertainties as defined by the Private Securities Litigation Reform Act of 1995[37](index=37&type=chunk) - Key risk factors that could affect results include changes in interest rates, unfavorable economic conditions, soundness of other financial institutions, changes in liquidity, and potential cyber-attacks[37](index=37&type=chunk) [Consolidated Financial Statements](index=11&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated balance sheets, statements of income, and key performance and asset quality ratios [Consolidated Balance Sheets](index=11&type=section&id=5.1%20Consolidated%20Balance%20Sheets) The consolidated balance sheet details the company's financial position, including assets, liabilities, and equity, as of March 31, 2024 Consolidated Balance Sheets (unaudited, in thousands) | | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | **TOTAL ASSETS** | **$6,111,929** | **$6,152,198** | **$5,996,919** | | Net Loans | $3,928,156 | $3,927,317 | $3,724,557 | | Total Deposits | $5,219,347 | $5,252,963 | $5,154,895 | | **TOTAL LIABILITIES** | **$5,456,675** | **$5,488,640** | **$5,391,588** | | **SHAREHOLDERS' EQUITY** | **$655,254** | **$663,558** | **$605,331** | [Consolidated Statements of Income](index=12&type=section&id=5.2%20Consolidated%20Statements%20of%20Income) The consolidated statement of income presents the company's revenues and expenses, resulting in a Q1 2024 net income of **$19.0 million** Consolidated Statements of Income (unaudited, in thousands) | | Three Months Ended | | | | :--- | :--- | :--- | :--- | | | March 31, 2024 | December 31, 2023 | March 31, 2023 | | NET INTEREST INCOME | $44,994 | $45,607 | $49,009 | | Provision for Credit Losses | $900 | $— | $1,100 | | TOTAL NON-INTEREST INCOME | $15,822 | $15,594 | $14,967 | | TOTAL NON-INTEREST EXPENSE | $36,738 | $35,734 | $37,616 | | **NET INCOME** | **$19,022** | **$21,507** | **$20,807** | | **DILUTED EARNINGS PER SHARE** | **$0.64** | **$0.73** | **$0.71** | [Key Performance and Asset Quality Ratios](index=13&type=section&id=5.3%20Key%20Performance%20and%20Asset%20Quality%20Ratios) Key performance ratios, including Return on Average Assets (**1.25%**), declined, while asset quality ratios remained strong and stable Selected Performance and Asset Quality Ratios | Ratio | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Annualized Return on Average Assets (%) | 1.25% | 1.43% | 1.37% | | Annualized Return on Average Equity (%) | 11.58% | 15.45% | 14.39% | | Net Interest Margin (%) | 3.35% | 3.43% | 3.69% | | Efficiency Ratio (%) | 57.92% | 55.87% | 56.08% | | Annualized Net Charge-offs to Avg Loans (%) | 0.09% | 0.09% | 0.10% | | NPA to Period End Assets (%) | 0.16% | 0.15% | 0.24% |

JASPER, Ind., April 29, 2024 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (NASDAQ:GABC) reported first quarter 2024 earnings of $19.0 million, or $0.64 per share, compared to earnings of $21.5 million, or $0.73 per share, for fourth quarter 2023, and earnings of $20.8 million, or $0.71 per share, for first quarter 2023. First quarter 2024 operating performance was highlighted by strong linked quarter commercial real estate and retail organic loan growth, linked quarter non-public fund deposit growth, s ...

Wall Street analysts forecast that German American Bancorp (GABC) will report quarterly earnings of $0.64 per share in its upcoming release, pointing to a year-over-year decline of 9.9%. It is anticipated that revenues will amount to $61.05 million, exhibiting a decline of 4.6% compared to the year-ago quarter.The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their in ...

German American Bancorp (GABC) shares rallied 6% in the last trading session to close at $33. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.3% loss over the past four weeks.Almost a week after getting hurt by the industry-wide concern related to commercial real estate (CRE) loans, shares of German American Bancorp are showing signs of improvement. While CRE loans constitute almost 50% of the company’s tot ...

JASPER, Ind., March 04, 2024 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (NASDAQ:GABC) and its banking subsidiary, German American Bank, announces that Scott Powell has been appointed Executive Vice President, Chief Credit Officer, effective April 1, 2024. Powell will succeed current Executive Vice President and Chief Credit Officer, Keith A. Leinenbach, who will be retiring. Leinenbach will retire after 24 years with the organization and over 40 years of broad-based banking industry experience. Keith ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 Commission File Number 001-15877 GERMAN AMERICAN BANCORP, INC. (Exact name of registrant as specified in its charter) Indiana 35-1547518 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 711 Main Street, Box 810, Jasper, Indiana 47546 (Address of Prin ...

[Glossary of Terms and Acronyms](index=4&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) Provides definitions for key terms and abbreviations used throughout the report [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and operating results [Item 1. Unaudited Financial Statements](index=6&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This chapter presents German American Bancorp, Inc.'s unaudited consolidated financial statements as of September 30, 2023, covering balance sheets, income, comprehensive income, equity changes, cash flows, and detailed notes on key accounting areas [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and shareholders' equity as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheet Key Data (As of September 30, 2023, and December 31, 2022) | Metric | September 30, 2023 (Thousands of USD) | December 31, 2022 (Thousands of USD) | | :----------------------------------- | :------------------------------------ | :----------------------------------- | | **Assets** | | | | Cash and cash equivalents | 132,419 | 119,079 | | Securities available for sale, at fair value | 1,476,956 | 1,761,669 | | Loans, net | 3,842,904 | 3,740,766 | | Total assets | 6,005,666 | 6,155,991 | | **Liabilities** | | | | Total deposits | 5,135,871 | 5,350,051 | | FHLB advances and other borrowings | 286,193 | 203,806 | | Total liabilities | 5,467,274 | 5,597,598 | | **Shareholders' Equity** | | | | Total shareholders' equity | 538,392 | 558,393 | [Consolidated Statements of Income – Three Months Ended September 30, 2023 and 2022](index=8&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20Months%20Ended%20September%2030,%202023%20and%202022) Details the company's financial performance for the three months ended September 30, 2023, and 2022, including interest income, expenses, and net income Consolidated Statements of Income Key Data (Three Months Ended September 30, 2023, and 2022) | Metric (Thousands of USD) | September 30, 2023 | September 30, 2022 | | :--------------------------------- | :----------------- | :----------------- | | Total interest income | 65,642 | 56,524 | | Total interest expense | 18,083 | 4,826 | | Net interest income | 47,559 | 51,698 | | Provision for credit losses | 900 | 350 | | Net interest income (after provision for credit losses) | 46,659 | 51,348 | | Total non-interest income | 14,804 | 14,097 | | Total non-interest expense | 35,421 | 34,716 | | Income tax expense | 4,591 | 6,133 | | Net income | 21,451 | 24,596 | | Basic earnings per share | 0.73 | 0.83 | | Diluted earnings per share | 0.73 | 0.83 | [Consolidated Statements of Income – Nine Months Ended September 30, 2023 and 2022](index=10&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Nine%20Months%20Ended%20September%2030,%202023%20and%202022) Details the company's financial performance for the nine months ended September 30, 2023, and 2022, including interest income, expenses, and net income Consolidated Statements of Income Key Data (Nine Months Ended September 30, 2023, and 2022) | Metric (Thousands of USD) | September 30, 2023 | September 30, 2022 | | :--------------------------------- | :----------------- | :----------------- | | Total interest income | 189,645 | 158,065 | | Total interest expense | 44,819 | 9,862 | | Net interest income | 144,826 | 148,203 | | Provision for credit losses | 2,550 | 5,850 | | Net interest income (after provision for credit losses) | 142,276 | 142,353 | | Total non-interest income | 44,667 | 45,465 | | Total non-interest expense | 108,763 | 118,577 | | Income tax expense | 13,799 | 11,831 | | Net income | 64,381 | 57,410 | | Basic earnings per share | 2.18 | 1.95 | | Diluted earnings per share | 2.18 | 1.95 | [Consolidated Statements of Comprehensive Income (Loss)](index=12&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Presents the company's comprehensive income (loss) for the three and nine months ended September 30, 2023, and 2022, including net income and other comprehensive income (loss) Consolidated Statements of Comprehensive Income (Loss) Key Data (Three and Nine Months Ended September 30, 2023, and 2022) | Metric (Thousands of USD) | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net income | 21,451 | 24,596 | 64,381 | 57,410 | | Total other comprehensive income (loss) | (78,761) | (97,963) | (64,175) | (324,542) | | Total comprehensive income (loss) | (57,310) | (73,367) | 206 | (267,132) | [Consolidated Statements of Changes in Shareholders' Equity](index=14&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Outlines the changes in the company's shareholders' equity for the period ended September 30, 2023, reflecting net income, other comprehensive income (loss), dividends, and stock awards Changes in Shareholders' Equity (As of September 30, 2023) | Metric (Thousands of USD) | Balance January 1, 2023 | Net Income | Other Comprehensive Income (Loss) | Cash Dividends | Net Restricted Stock Awards | Balance September 30, 2023 | | :------------------------ | :---------------------- | :--------- | :-------------------------------- | :------------- | :-------------------------- | :------------------------- | | Common stock | 29,493 | — | — | — | 82 | 29,575 | | Additional paid-in capital | 387,171 | — | — | — | 1,784 | 388,955 | | Retained earnings | 405,167 | 64,381 | — | (22,073) | — | 447,475 | | Accumulated other comprehensive income (loss) | (263,438) | — | (64,175) | — | — | (327,613) | | **Total Shareholders' Equity** | **558,393** | **64,381** | **(64,175)** | **(22,073)** | **1,866** | **538,392** | [Consolidated Statements of Cash Flows](index=16&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023, and 2022 Consolidated Statements of Cash Flows Key Data (Nine Months Ended September 30, 2023, and 2022) | Cash Flow Activity (Thousands of USD) | September 30, 2023 | September 30, 2022 | | :------------------------------------ | :----------------- | :----------------- | | Net cash provided by operating activities | 77,657 | 82,492 | | Net cash provided by investing activities | 89,638 | 84,088 | | Net cash used in financing activities | (153,955) | (190,424) | | Net change in cash and cash equivalents | 13,340 | (23,844) | | Cash and cash equivalents at end of period | 132,419 | 373,046 | [Notes to Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures regarding the company's accounting policies, financial instruments, and other significant financial information - The company has ceased originating LIBOR-based loans and plans to convert existing LIBOR-indexed loans primarily to SOFR or other indices[37](index=37&type=chunk) - The company adopted ASU 2022-02 on January 1, 2023, which eliminated the recognition and measurement guidance for troubled debt restructurings and established new criteria for loan modifications to borrowers experiencing financial difficulty, with no material impact on consolidated financial statements[38](index=38&type=chunk) - As of September 30, 2023, available-for-sale securities had an amortized cost of **$1,891,435 thousand**, a fair value of **$1,476,956 thousand**, and total gross unrealized losses of **$414,489 thousand**[47](index=47&type=chunk) - As of September 30, 2023, total loans were **$3,893,573 thousand**, with commercial real estate loans representing the largest portion at **$2,076,962 thousand**[61](index=61&type=chunk) - As of September 30, 2023, the total allowance for credit losses was **$44,646 thousand**, a slight increase from **$44,168 thousand** as of December 31, 2022[62](index=62&type=chunk)[64](index=64&type=chunk) - The company operates in three primary segments: core banking, wealth management services, and insurance business, with core banking being the main revenue source[103](index=103&type=chunk)[104](index=104&type=chunk) - The company's Board of Directors approved a stock repurchase program on January 31, 2022, authorizing the repurchase of up to **1,000,000 shares** of common stock, but no shares have been repurchased to date[111](index=111&type=chunk) - As of September 30, 2023, unrecognized compensation cost related to restricted stock awards and cash equity totaled **$3,805 thousand**[118](index=118&type=chunk) - As of September 30, 2023, the company held **$82 thousand** in Level 3 available-for-sale securities (non-rated state and political subdivision obligations) and **$943 thousand** in Level 3 available-for-sale securities (non-rated MBS/CMO)[125](index=125&type=chunk) - As of September 30, 2023, the company's total lease liabilities were **$8,297 thousand**, comprising **$2,699 thousand** for finance lease liabilities and **$5,598 thousand** for operating lease liabilities[160](index=160&type=chunk)[162](index=162&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This chapter analyzes German American Bancorp, Inc.'s financial condition and operating results as of September 30, 2023, noting a Q3 net income decrease due to lower earning assets and net interest margin, while year-to-date net income increased due to higher 2022 acquisition costs [MANAGEMENT OVERVIEW](index=49&type=section&id=MANAGEMENT%20OVERVIEW) Provides an executive summary of the company's financial performance, highlighting key trends in net income and earnings per share Net Income and Earnings Per Share (As of September 30, 2023, and 2022) | Metric | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :----- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net income | $21,451 thousand | $24,596 thousand | $64,381 thousand | $57,410 thousand | | EPS | $0.73 | $0.83 | $2.18 | $1.95 | - Net income for Q3 2023 decreased by **12%** (per share), primarily due to reduced average earning assets and a lower net interest margin[168](index=168&type=chunk) - Net income for the first nine months of 2023 increased by **12%** (per share), mainly because the first nine months of 2022 were significantly impacted by CUB acquisition-related costs[169](index=169&type=chunk) - The company completed the acquisition of CUB on January 1, 2022, issuing approximately **2.9 million** shares of common stock and paying approximately **$50.8 million** in cash[170](index=170&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=49&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Discusses the significant accounting policies and estimates that require management's judgment and can materially affect the financial statements - Critical accounting policies and estimates include the allowance for credit losses, valuation of available-for-sale securities, income tax expense, and valuation of goodwill and other intangible assets[172](index=172&type=chunk)[173](index=173&type=chunk) - The determination of the allowance for credit losses is subjective, involving significant estimates of future cash flows, loan loss rates, economic conditions, and reasonable and supportable forecasts[175](index=175&type=chunk) - As of September 30, 2023, the available-for-sale securities portfolio had total gross unrealized gains of approximately **$10 thousand** and total gross unrealized losses of approximately **$414,489 thousand**[183](index=183&type=chunk) - Goodwill and intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually, with the company selecting December 31 as its annual impairment testing date[187](index=187&type=chunk) [RESULTS OF OPERATIONS](index=52&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the company's operating performance, including net interest income, credit loss provisions, non-interest income, and non-interest expenses - Net interest income (tax-equivalent) for Q3 2023 was **$47,559 thousand**, an **8%** year-over-year decrease, primarily due to reduced average earning assets and a slight decline in net interest margin[191](index=191&type=chunk)[192](index=192&type=chunk) - Net interest income (tax-equivalent) for the first nine months of 2023 was **$144,826 thousand**, a **2%** year-over-year decrease, mainly due to reduced average earning assets, partially offset by improved net interest margin from rising market interest rates[197](index=197&type=chunk) - The provision for credit losses for Q3 2023 was **$900 thousand**, higher than **$350 thousand** in the same period of 2022[199](index=199&type=chunk) - The provision for credit losses for the first nine months of 2023 was **$2,550 thousand**, lower than **$5,850 thousand** in the same period of 2022, which included a **$6,300 thousand** initial CECL increase related to the CUB acquisition[200](index=200&type=chunk) - Total non-interest income for Q3 2023 was **$14,804 thousand**, a **5%** year-over-year increase, driven by growth in wealth management fees and bank card interchange fees[204](index=204&type=chunk) - Total non-interest income for the first nine months of 2023 was **$44,667 thousand**, a **2%** year-over-year decrease, primarily due to lower insurance income and company-owned life insurance income, partially offset by increased wealth management fees and bank card interchange fees[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - Total non-interest expense for Q3 2023 was **$35,421 thousand**, a **2%** year-over-year increase, mainly due to higher salaries and employee benefits and increased FDIC premiums[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - Total non-interest expense for the first nine months of 2023 was **$108,763 thousand**, an **8%** year-over-year decrease, primarily because the same period in 2022 included approximately **$12,276 thousand** in non-recurring acquisition-related expenses[221](index=221&type=chunk) - The company's effective income tax rates for Q3 2023 and the first nine months were **17.6%** and **17.7%**, respectively, lower than the statutory rate due to tax-exempt investment income and tax credits[228](index=228&type=chunk) [FINANCIAL CONDITION](index=60&type=section&id=FINANCIAL%20CONDITION) Evaluates the company's balance sheet, including assets, liabilities, and equity, and discusses changes in key financial components - As of September 30, 2023, total assets were **$6.006 billion**, a decrease of **$150.3 million** from year-end 2022, primarily due to a reduction in the securities portfolio driven by deposit declines, partially offset by loan growth[229](index=229&type=chunk) - As of September 30, 2023, available-for-sale securities decreased by **$284.7 million**, primarily used to offset deposit declines and support loan growth[231](index=231&type=chunk) - As of September 30, 2023, total loans increased by **$104.9 million** (an annualized **4%** growth), driven by commercial real estate and retail loan growth[232](index=232&type=chunk) Loan Portfolio Composition (As of September 30, 2023) | Loan Type | Percentage | | :------------------------- | :--------- | | Commercial real estate loans | 53% | | Commercial and industrial loans | 17% | | Agricultural loans | 10% | - As of September 30, 2023, the total allowance for credit losses was **$44.6 million**, representing **1.15%** of period-end loans, slightly down from **1.17%** at year-end 2022[234](index=234&type=chunk) - As of September 30, 2023, total non-performing assets decreased to **$12.4 million** from **$14.3 million** at year-end 2022, representing **0.21%** of total assets[236](index=236&type=chunk) - As of September 30, 2023, total deposits decreased by **$214.2 million** (**4%**), primarily influenced by competitive deposit pricing and customers seeking higher-yielding opportunities[237](index=237&type=chunk)[239](index=239&type=chunk) - As of September 30, 2023, total borrowings increased by **$82.4 million** (**40%**), utilized to fund loan growth and deposit outflows[241](index=241&type=chunk) - As of September 30, 2023, shareholders' equity decreased by **$20 million** to **$538.4 million**, mainly due to a **$64.2 million** reduction in accumulated other comprehensive income (loss) from the decline in fair value of available-for-sale securities, partially offset by a **$42.3 million** increase in net income[242](index=242&type=chunk) - As of September 30, 2023, the company and its subsidiary bank maintained capital levels well above regulatory requirements, meeting the "well-capitalized" standard[246](index=246&type=chunk) - As of September 30, 2023, cash and cash equivalents increased by **$13.3 million** to **$132.4 million**[248](index=248&type=chunk) [FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS](index=65&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20ASSOCIATED%20RISKS) Highlights the inherent uncertainties and risks associated with forward-looking statements, including market conditions, regulatory changes, and economic factors - Forward-looking statements are based on assumptions and are subject to risks and uncertainties such as interest rate changes, adverse economic conditions, impacts from recent bank failures, changes in competitive conditions, technological changes, cyberattacks, litigation liabilities, Federal Reserve actions, LIBOR replacement, CECL standard impacts, increased FDIC premiums, and regulatory actions[253](index=253&type=chunk)[254](index=254&type=chunk) - The company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of the statement[252](index=252&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discloses the company's exposure to market risks, primarily liquidity and interest rate risks, and assesses their potential impact on net interest income and net portfolio value using simulation models - The company's primary market risks are liquidity risk and interest rate risk, which are regularly reviewed by the Asset/Liability Committee and the Board of Directors[257](index=257&type=chunk) - The company uses computer simulation models to assess the potential impact of interest rate changes on net interest income and net portfolio value (NPV)[259](index=259&type=chunk) Interest Rate Sensitivity Analysis: Net Interest Income (As of September 30, 2023) | Rate Change | Amount (Thousands of USD) | Percentage Change | | :---------- | :------------------------ | :---------------- | | +2% | 197,287 | (0.32)% | | +1% | 197,692 | (0.12)% | | Baseline | 197,930 | — | | -1% | 195,745 | (1.10)% | | -2% | 191,533 | (3.23)% | Interest Rate Sensitivity Analysis: Net Portfolio Value (As of September 30, 2023) | Rate Change | Net Portfolio Value (Thousands of USD) | Percentage Change | NPV Ratio | Change (Basis Points) | | :---------- | :------------------------------------- | :---------------- | :-------- | :-------------------- | | +2% | 582,710 | (15.19)% | 11.11% | (117) | | +1% | 633,282 | (7.83)% | 11.69% | (59) | | Baseline | 687,079 | — | 12.28% | — | | -1% | 735,299 | 7.02% | 12.72% | 44 | | -2% | 775,055 | 12.80% | 12.98% | 70 | [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed and confirmed the effectiveness of the company's disclosure controls and procedures as of September 30, 2023, noting inherent limitations but no significant changes to internal controls during the quarter - As of September 30, 2023, the company's disclosure controls and procedures were assessed as effective in ensuring timely reporting of material information to management[269](index=269&type=chunk) - Internal control systems have inherent limitations, including the possibility of human error and circumvention, thus providing only reasonable assurance[269](index=269&type=chunk) - No significant changes occurred in the company's internal control over financial reporting during the third fiscal quarter of 2023[270](index=270&type=chunk) [PART II. OTHER INFORMATION](index=70&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company currently has no pending legal proceedings beyond routine litigation incidental to its ordinary course of business - The company and its subsidiaries currently have no pending legal proceedings other than routine litigation incidental to their ordinary course of business[272](index=272&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) This chapter updates the company's risk factors, emphasizing the potential adverse impact of recent bank failures on financial services liquidity and competition, and new regulatory requirements that may increase operating costs and reduce profitability - Recent bank failures (e.g., Silicon Valley Bank, Signature Bank, and First Republic Bank) have led to widespread uncertainty in the financial services industry and raised concerns about the adequacy of liquidity in the banking sector[274](index=274&type=chunk) - Market uncertainty and external factors may unpredictably affect the competitive landscape for bank deposits, and rising interest rates have increased the cost of liquidity acquisition[274](index=274&type=chunk) - Recent events in the financial services industry are expected to lead to new regulatory requirements, increasing the company's operating costs and reducing profitability, including potential increases in FDIC insurance premiums[275](index=275&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This chapter discloses that the company did not repurchase any common stock during the third quarter of 2023, despite a board-approved plan from January 31, 2022, authorizing the repurchase of up to 1 million shares - The company did not repurchase any shares of common stock during the third quarter of 2023[278](index=278&type=chunk) - The company's Board of Directors approved a stock repurchase program on January 31, 2022, authorizing the repurchase of up to **1,000,000 shares** of common stock, representing approximately **3%** of outstanding shares at that time, but the company is not obligated to purchase shares, and the plan may be terminated at any time[278](index=278&type=chunk) [Item 3. Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities as of the end of this reporting period - The company has no defaults upon senior securities[279](index=279&type=chunk) [Item 4. Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable - Mine safety disclosures are not applicable[280](index=280&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) This chapter discloses that for the three months ended September 30, 2023, the company had no information required to be disclosed in a Form 8-K report, no changes in director nomination procedures, and no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No information required to be disclosed in a Form 8-K report[282](index=282&type=chunk) - No changes in director nomination procedures[284](index=284&type=chunk) - During the third quarter of 2023, no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[285](index=285&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This chapter lists the exhibits filed with this report or incorporated by reference, including articles of incorporation, stock certificate specimens, indentures, executive compensation arrangements, and XBRL documents - Exhibits include articles of incorporation, stock certificate specimens, indentures, executive compensation arrangements, and XBRL documents[287](index=287&type=chunk)