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)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 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 (I.R.S. Employer incorporation or organization) Identification No.) 711 Main Street, Jasper, Indiana 47546 (Address of Principal ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2023 Commission File Number 001-15877 711 Main Street, Jasper, Indiana 47546 (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code: (812) 482-1314 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section ...

German American Twelve of the past Thirteen Years of Improved Earnings Performance Total Loans, Net of Unearned Income Total Shareholders' Equity Earnings Per Share Indiana & Kentucky Community-focused Financial Services Organization FINANCIAL TRENDS Commercial & Agricultural Loans as % of Total Loans $2,728 $3,077 $3,088 $3,004 $3,785 78% 80% 82% 81% 81% $- $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000 $3,250 $3,500 $3,750 $4,000 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 ...

[Glossary of Terms and Acronyms](index=6&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) Defines key terms and acronyms like AOCI, Basel III, CECL, CET1, FDIC, FRB, GAAP, LIBOR, and SOFR for report clarity - The report defines key terms and acronyms to ensure clarity, including '**Company**' referring to German American Bancorp, Inc. and its consolidated subsidiaries, and '**Bank**' referring to German American Bank[11](index=11&type=chunk)[19](index=19&type=chunk) - Important financial and regulatory terms such as **Accumulated Other Comprehensive Income (AOCI)**, **Basel III Rules**, **Current Expected Credit Losses (CECL)**, **Common Equity Tier 1 Capital (CET1)**, **Federal Deposit Insurance Corporation (FDIC)**, **Federal Reserve Board (FRB)**, **Generally Accepted Accounting Principles (GAAP)**, **London Interbank Offered Rate (LIBOR)**, and **Secured Overnight Financing Rate (SOFR)** are explicitly defined[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) PART I [Item 1. Business](index=8&type=section&id=Item%201.%20Business.) Provides an overview of German American Bancorp's business, including operations, recent developments, competition, human capital, and regulatory environment - German American Bancorp, Inc. (GABC) is a Nasdaq-traded financial holding company operating **77 banking offices** across **20 southern Indiana counties** and **14 Kentucky counties**, alongside investment brokerage and property & casualty insurance subsidiaries[18](index=18&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) - On **January 1, 2022**, the Company completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc. (CUB), expanding its presence in Kentucky with **15 additional retail banking offices**[24](index=24&type=chunk)[174](index=174&type=chunk) CUB Acquisition Details (January 1, 2022) | Metric | Amount (approx.) | | :--------------------- | :----------------- | | Total Assets | $1.109 billion | | Total Loans | $683.8 million | | Total Deposits | $930.5 million | | Common Stock Issued | 2.9 million shares | | Cash Paid | $50.8 million | - In 2021, the Company executed an operating optimization plan, consolidating **seven branch offices**, implementing staff reductions, and selling **two branches** in Lexington, Kentucky, to enhance efficiency[25](index=25&type=chunk)[27](index=27&type=chunk) - The Company operates in a highly competitive environment, facing competition from other financial institutions, non-depository financial intermediaries, and rapidly growing FinTech companies, many of which possess greater resources[34](index=34&type=chunk)[119](index=119&type=chunk) - As of February 23, 2023, the Company employed approximately **866 full-time equivalent employees** and emphasizes attracting, developing, and retaining talent through competitive compensation, comprehensive benefits, and continuous education programs[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The Company is subject to extensive regulation by the **FRB**, **DFI**, and **FDIC**, including capital requirements (**Basel III Rules**), Prompt Corrective Action classifications, and restrictions on dividends and affiliate transactions. It maintains capital ratios well above '**well-capitalized**' standards[44](index=44&type=chunk)[51](index=51&type=chunk)[65](index=65&type=chunk)[69](index=69&type=chunk)[238](index=238&type=chunk) - The **Dodd-Frank Act** has significantly impacted the Company's business through changes in regulatory authority, corporate governance, restrictions on proprietary trading, and the establishment of the **CFPB**, though the **Volcker Rule**'s impact is not material for the Company due to its asset size[73](index=73&type=chunk)[74](index=74&type=chunk)[77](index=77&type=chunk) - The Company actively participated in the **Paycheck Protection Program (PPP)** during the COVID-19 pandemic, with all PPP loans forgiven or repaid by **December 31, 2022**[87](index=87&type=chunk)[187](index=187&type=chunk)[390](index=390&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors.) Outlines principal risks including economic weakness, loan losses, CECL volatility, interest rate changes, LIBOR transition, pandemics, PPP litigation, competition, and operational risks - Economic weakness, particularly in the Company's Southern Indiana and Kentucky markets, poses a significant risk, potentially impacting loan repayment ability, collateral values, and increasing delinquencies and credit losses[100](index=100&type=chunk)[101](index=101&type=chunk) - The adoption of the **CECL methodology** introduces potential increases and volatility in the allowance for credit losses and related provision expense, as estimates rely on significant management judgments and forecasts[103](index=103&type=chunk)[104](index=104&type=chunk) - Changes in **interest rates**, influenced by economic conditions and FRB policies, can adversely affect net interest income, loan origination, deposit acquisition, and the fair value of financial assets and liabilities[105](index=105&type=chunk) - The transition from **LIBOR** to alternative reference rates like **SOFR**, mandated by the LIBOR Act and Federal Reserve regulations, could have adverse effects on the Company's business, financial condition, and results of operations, which are currently unknown[106](index=106&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - The Company faces risks from **epidemics and pandemics**, such as **COVID-19**, which can disrupt operations, increase cybersecurity risks, negatively impact loan demand and collateral values, and lead to increased delinquencies[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Participation in the **SBA Paycheck Protection Program (PPP)** exposes the Company to litigation risks from clients or other parties due to ambiguities in program rules, potentially leading to financial liability or reputational damage[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - **Operational risks**, including fraud, transaction processing errors, internal control breaches, **cyber-attacks**, and reliance on third-party vendors, could result in financial loss, regulatory action, and reputational damage[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[147](index=147&type=chunk) - **Future acquisitions** of banks or financial service assets pose risks such as exposure to unknown liabilities, asset quality issues, integration difficulties, potential loss of key personnel/customers, and dilution of tangible book value or net income per share[150](index=150&type=chunk)[151](index=151&type=chunk) [Item 1B. Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The Company has no unresolved staff comments from the SEC - There are no unresolved staff comments[154](index=154&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties.) Executive offices are in Jasper, Indiana; the Company operates **78 locations**, with **60 owned** and **18 leased** - The Company's executive offices are located at 711 Main Street, Jasper, Indiana, in the main office building of German American Bank, which spans approximately **23,600 square feet**[155](index=155&type=chunk) - The Company operates a total of **78 locations**, including **50 in Southern Indiana** and **28 in Kentucky**, with **60 properties owned** and **18 leased** from third parties[155](index=155&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings.) The Company is not involved in any material pending legal proceedings beyond routine business litigation - There are no pending legal proceedings, other than routine litigation incidental to the business of the Company's subsidiaries, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject[156](index=156&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the Company - This item is not applicable[157](index=157&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Details the market for GABC common stock, including trading, shareholder information, performance, and the stock repurchase program - German American Bancorp, Inc.'s common stock is traded on the **Nasdaq Global Select Market** under the symbol **GABC**[158](index=158&type=chunk) - As of February 23, 2023, the Company had approximately **3,164 shareholders** of record[159](index=159&type=chunk) - The Company's Board of Directors approved a new plan on **January 31, 2022**, to repurchase up to **1.0 million shares** of its outstanding common stock, representing approximately **3%** of outstanding shares at approval. No shares were repurchased under this plan in 2022[164](index=164&type=chunk)[235](index=235&type=chunk)[447](index=447&type=chunk) - The **Inflation Reduction Act of 2022 (IRA)** imposes a new **1% excise tax** on stock repurchases by publicly traded U.S. corporations after **December 31, 2022**[236](index=236&type=chunk)[448](index=448&type=chunk) [Item 6. [Reserved]](index=31&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[166](index=166&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Analyzes German American Bancorp's financial condition and results of operations from 2020-2022, covering key metrics, accounting policies, funding, and risk management - The Company completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc. (CUB) on **January 1, 2022**, significantly impacting its financial condition and results of operations[174](index=174&type=chunk) Net Income and EPS (2020-2022) | Year Ended December 31 | Net Income ($000s) | Basic EPS ($) | | :----------------------- | :------------------ | :------------ | | 2022 | 81,825 | 2.78 | | 2021 | 84,137 | 3.17 | | 2020 | 62,210 | 2.34 | - Net income in 2022 was negatively impacted by **$12.323 million** in acquisition-related expenses and a **$6.3 million** Day 1 provision for credit losses under the **CECL model** related to the CUB transaction[177](index=177&type=chunk)[196](index=196&type=chunk) Net Interest Income and Margin (2020-2022) | Year Ended December 31 | Net Interest Income ($000s) | Net Interest Margin (%) | | :----------------------- | :-------------------------- | :---------------------- | | 2022 | 200,584 | 3.45 | | 2021 | 160,830 | 3.31 | | 2020 | 155,243 | 3.63 | - The increase in net interest income in **2022** was primarily due to higher earning assets from the CUB acquisition and an expanded net interest margin, partially offset by lower PPP loan fee recognition[200](index=200&type=chunk) Provision for Credit Losses (2020-2022) | Year Ended December 31 | Provision for Credit Losses ($000s) | % of Average Loans Outstanding | | :----------------------- | :---------------------------------- | :----------------------------- | | 2022 | 6,350 | 0.17% | | 2021 | (6,500) | (0.21)% | | 2020 | 17,550 | 0.55% | - The negative provision in **2021** was driven by improvements in adversely criticized assets and pandemic-related stressed sectors[210](index=210&type=chunk) Non-Interest Income (2020-2022) | Non-interest Income Category | 2022 ($000s) | 2021 ($000s) | 2020 ($000s) | | :--------------------------- | :------------- | :------------- | :------------- | | Wealth Management Fees | 10,076 | 10,321 | 8,005 | | Service Charges on Deposits | 11,457 | 7,723 | 7,334 | | Insurance Revenues | 10,020 | 9,268 | 8,922 | | Company Owned Life Insurance | 2,264 | 1,529 | 2,307 | | Interchange Fee Income | 15,820 | 13,116 | 10,529 | | Other Operating Income | 5,116 | 6,991 | 3,388 | | Net Gains on Sales of Loans | 3,818 | 8,267 | 9,908 | | Net Gains on Securities | 562 | 2,247 | 4,081 | | **TOTAL** | **59,133** | **59,462** | **54,474** | - Non-interest expense increased by **24%** in **2022**, largely due to **$12.323 million** in non-recurring acquisition-related expenses for the CUB transaction and CUB's operating costs[220](index=220&type=chunk) Non-Interest Expense (2020-2022) | Non-interest Expense Category | 2022 ($000s) | 2021 ($000s) | 2020 ($000s) | | :---------------------------- | :------------- | :------------- | :------------- | | Salaries and Employee Benefits| 84,145 | 68,570 | 68,112 | | Occupancy, Furniture & Equip. | 14,921 | 14,831 | 14,024 | | FDIC Premiums | 1,860 | 1,419 | 740 | | Data Processing Fees | 15,406 | 7,611 | 6,889 | | Professional Fees | 6,295 | 5,009 | 3,998 | | Advertising and Promotion | 4,416 | 4,197 | 3,589 | | Intangible Amortization | 3,711 | 2,731 | 3,539 | | Other Operating Expenses | 23,437 | 19,639 | 16,232 | | **TOTAL** | **154,191** | **124,007** | **117,123** | - Total loans increased by **$780.7 million (26%)** in **2022**, driven by the CUB acquisition and organic growth, partially offset by a decrease in PPP loans[242](index=242&type=chunk) Loan Portfolio Composition (December 31, 2022) | Loan Category | Amount ($000s) | % of Total Loans | | :------------------------------ | :------------- | :--------------- | | Commercial Real Estate Loans | 1,966,884 | 52% | | Commercial and Industrial Loans | 676,502 | 18% | | Agricultural Loans | 417,413 | 11% | | Home Equity and Consumer Loans | 377,164 | 10% | | Residential Mortgage Loans | 350,682 | 9% | | **Total Loans** | **3,788,645** | **100%** | - Non-performing assets totaled **$14.3 million (0.23% of total assets)** at **December 31, 2022**, a decrease from **$14.8 million (0.26% of total assets)** at **December 31, 2021**[283](index=283&type=chunk) Non-Performing Assets (2020-2022) | Metric | Dec 31, 2022 ($000s) | Dec 31, 2021 ($000s) | Dec 31, 2020 ($000s) | | :----------------------------------------- | :------------------- | :------------------- | :------------------- | | Non-accrual Loans | 12,888 | 14,602 | 21,507 | | Past Due Loans (90+ days & accruing) | 1,427 | 156 | — | | **Total Non-performing Loans** | **14,315** | **14,758** | **21,507** | | Other Real Estate | — | — | 325 | | **Total Non-performing Assets** | **14,315** | **14,758** | **21,832** | | Non-performing Loans to Total Loans | 0.38% | 0.49% | 0.70% | | Allowance for Credit Losses to Non-perf. Loans | 308.54% | 250.83% | 217.88% | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Details market risk management, focusing on liquidity and interest rate risk, using simulation modeling to assess impact on net interest income and NPV - The Company's primary market risks are **liquidity risk** and **interest rate risk**, regularly reviewed by the Asset/Liability Committee and Boards of Directors[290](index=290&type=chunk) - **Interest rate risk** is monitored through computer-assisted simulation modeling to estimate the impact on **net interest income** and **net portfolio value (NPV)** under various interest rate scenarios[292](index=292&type=chunk)[293](index=293&type=chunk) Net Interest Income Sensitivity (December 31, 2022) | Changes in Rates | Amount ($000s) | % Change | | :--------------- | :------------- | :------- | | +2% | 223,005 | 2.27% | | +1% | 220,788 | 1.25% | | Base | 218,060 | — | | -1% | 213,585 | (2.05)% | | -2% | 205,675 | (5.68)% | Net Portfolio Value (NPV) Sensitivity (December 31, 2022) | Changes in Rates | Amount ($000s) | % Change | NPV Ratio (%) | Change (b.p.) | | :--------------- | :------------- | :------- | :------------ | :------------ | | +2% | 809,819 | (8.71)% | 14.81 | (36) | | +1% | 848,905 | (4.31)% | 15.02 | (15) | | Base | 887,112 | — | 15.17 | — | | -1% | 914,987 | 3.14% | 15.14 | (3) | | -2% | 925,626 | 4.34% | 14.84 | (33) | [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) Presents audited consolidated financial statements for 2020-2022, including balance sheets, income statements, cash flows, and notes, with the independent auditor's report - Crowe LLP, the independent registered public accounting firm, issued an **unqualified opinion** on the Company's consolidated financial statements and the effectiveness of internal control over financial reporting as of **December 31, 2022**[304](index=304&type=chunk) - The **Allowance for Credit Losses on Loans** was identified as a **critical audit matter** due to the extensive auditor judgment and effort required to evaluate management's subjective and complex judgments in its calculation[312](index=312&type=chunk)[313](index=313&type=chunk) Consolidated Balance Sheet Highlights (December 31, $000s) | Metric | 2022 | 2021 | | :----------------------------------------- | :---------- | :---------- | | Total Assets | 6,155,991 | 5,608,539 | | Cash and Cash Equivalents | 119,079 | 396,890 | | Securities Available-for-Sale (Fair Value) | 1,761,669 | 1,889,617 | | Loans, Net | 3,740,766 | 2,967,247 | | Total Deposits | 5,350,051 | 4,744,316 | | FHLB Advances and Other Borrowings | 203,806 | 152,183 | | Total Shareholders' Equity | 558,393 | 668,459 | Consolidated Statements of Income Highlights (Years Ended December 31, $000s) | Metric | 2022 | 2021 | 2020 | | :----------------------------------------- | :-------- | :-------- | :-------- | | Total Interest Income | 218,926 | 170,379 | 174,369 | | Total Interest Expense | 18,342 | 9,549 | 19,126 | | Net Interest Income | 200,584 | 160,830 | 155,243 | | Provision for Credit Losses | 6,350 | (6,500) | 17,550 | | Total Non-Interest Income | 59,133 | 59,462 | 54,474 | | Total Non-Interest Expense | 154,191 | 124,007 | 117,123 | | Income before Income Taxes | 99,176 | 102,785 | 75,044 | | Income Tax Expense | 17,351 | 18,648 | 12,834 | | Net Income | 81,825 | 84,137 | 62,210 | | Basic Earnings per Share | 2.78 | 3.17 | 2.34 | Consolidated Statements of Cash Flows Highlights (Years Ended December 31, $000s) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--------------------------------- | :---------- | :---------- | :---------- | | Net Cash from Operating Activities | 110,036 | 100,844 | 92,418 | | Net Cash from Investing Activities | (24,181) | (640,299) | (346,078) | | Net Cash from Financing Activities | (363,666) | 590,597 | 495,524 | | Net Change in Cash and Cash Equivalents | (277,811) | 51,142 | 241,864 | | Cash and Cash Equivalents at End of Year | 119,079 | 396,890 | 345,748 | - The Company's allowance for credit losses totaled **$44.2 million** at **December 31, 2022**, representing **1.17%** of period-end loans, compared to **$37.0 million (1.23%)** at **December 31, 2021**[278](index=278&type=chunk) - Shareholders' equity declined by **$110.1 million** in **2022**, primarily due to a **$278.9 million decrease** in **accumulated other comprehensive income (AOCI)** related to unrealized losses on available-for-sale securities, partially offset by the issuance of common shares for the CUB acquisition and retained earnings[232](index=232&type=chunk)[322](index=322&type=chunk) Regulatory Capital Ratios (December 31, 2022) | Capital Ratio (Consolidated) | Actual Ratio | Minimum for Capital Adequacy | | :--------------------------- | :----------- | :--------------------------- | | Total Capital | 15.45% | 8.00% | | Tier 1 Capital | 13.97% | 6.00% | | Common Tier 1 (CET1) Capital | 13.26% | 4.50% | | Tier 1 Capital (to Average Assets) | 10.50% | 4.00% | - The Company and its subsidiary bank consistently exceeded all '**well-capitalized**' regulatory capital requirements at **December 31, 2022**[65](index=65&type=chunk)[238](index=238&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk) - The Company adopted the **five-year transition option** for **CECL**'s impact on regulatory capital, beginning the **three-year phase-in** of deferred capital impact on **January 1, 2022**[239](index=239&type=chunk)[435](index=435&type=chunk) - The Company's primary funding source is core customer deposits, which represented **94%** of average total funding sources in **2022**, increasing by approximately **$1.2 billion (27%)** due to the CUB acquisition[258](index=258&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - The fair value of available-for-sale securities decreased by **$127.9 million** in **2022**, primarily due to a **$333.2 million** fair value adjustment resulting from rising market interest rates[252](index=252&type=chunk)[374](index=374&type=chunk)[378](index=378&type=chunk) [Report of Independent Registered Public Accounting Firm](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Consolidated Balance Sheets](index=57&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Income](index=59&type=section&id=Consolidated%20Statements%20of%20Income) [Consolidated Statements of Comprehensive Income (Loss)](index=61&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) [Consolidated Statements of Changes in Shareholders' Equity](index=63&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) [Consolidated Statements of Cash Flows](index=64&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Notes to the Consolidated Financial Statements](index=66&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [NOTE 1 – Summary of Significant Accounting Policies](index=66&type=section&id=NOTE%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) [NOTE 2 – Securities](index=71&type=section&id=NOTE%202%20%E2%80%93%20Securities) [NOTE 3 - Derivatives](index=74&type=section&id=NOTE%203%20-%20Derivatives) [NOTE 4 – Loans](index=75&type=section&id=NOTE%204%20%E2%80%93%20Loans) [NOTE 5 – Premises, Furniture, and Equipment](index=86&type=section&id=NOTE%205%20%E2%80%93%20Premises%2C%20Furniture%2C%20and%20Equipment) [NOTE 6 – Deposits](index=87&type=section&id=NOTE%206%20%E2%80%93%20Deposits) [NOTE 7 – FHLB Advances and Other Borrowings](index=87&type=section&id=NOTE%207%20%E2%80%93%20FHLB%20Advances%20and%20Other%20Borrowings) [NOTE 8 - Shareholders' Equity](index=90&type=section&id=NOTE%208%20-%20Shareholders'%20Equity) [NOTE 9 - Employee Benefit Plans](index=94&type=section&id=NOTE%209%20-%20Employee%20Benefit%20Plans) [NOTE 10 - Income Taxes](index=97&type=section&id=NOTE%2010%20-%20Income%20Taxes) [NOTE 11 - Revenue Recognition](index=99&type=section&id=NOTE%2011%20-%20Revenue%20Recognition) [NOTE 12 – Per Share Data](index=100&type=section&id=NOTE%2012%20%E2%80%93%20Per%20Share%20Data) [NOTE 13 - Leases](index=100&type=section&id=NOTE%2013%20-%20Leases) [NOTE 14 – Commitments and Off-balance Sheet Items](index=101&type=section&id=NOTE%2014%20%E2%80%93%20Commitments%20and%20Off-balance%20Sheet%20Items) [NOTE 15 – Fair Value](index=102&type=section&id=NOTE%2015%20%E2%80%93%20Fair%20Value) [NOTE 16 - Segment Information](index=107&type=section&id=NOTE%2016%20-%20Segment%20Information) [NOTE 17 - Parent Company Financial Statements](index=109&type=section&id=NOTE%2017%20-%20Parent%20Company%20Financial%20Statements) [NOTE 18 - Business Combinations, Goodwill and Intangible Assets](index=113&type=section&id=NOTE%2018%20-%20Business%20Combinations%2C%20Goodwill%20and%20Intangible%20Assets) [NOTE 19 - Other Comprehensive Income (Loss)](index=116&type=section&id=NOTE%2019%20-%20Other%20Comprehensive%20Income%20%28Loss%29) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=118&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) No changes or disagreements with accountants on accounting and financial disclosure have occurred - There have been no changes in or disagreements with accountants on accounting and financial disclosure[524](index=524&type=chunk) [Item 9A. Controls and Procedures](index=118&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - As of **December 31, 2022**, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were **effective**[525](index=525&type=chunk) - Management assessed the effectiveness of the Company's internal control over financial reporting as of **December 31, 2022**, based on **COSO criteria**, and concluded it was **effective**[528](index=528&type=chunk) - There were **no changes** in the Company's internal control over financial reporting during the **fourth fiscal quarter of 2022** that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[526](index=526&type=chunk) [Item 9B. Other Information](index=118&type=section&id=Item%209B.%20Other%20Information.) This item is not applicable to the Company - This item is not applicable[530](index=530&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=118&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to the Company - This item is not applicable[531](index=531&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=119&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the Company's **2023 Proxy Statement**[532](index=532&type=chunk) [Item 11. Executive Compensation](index=119&type=section&id=Item%2011.%20Executive%20Compensation.) Executive compensation details, including committee interlocks, are incorporated by reference from the 2023 Proxy Statement - Information relating to executive compensation is incorporated by reference from the 'Executive and Director Compensation' section of the **2023 Proxy Statement**[533](index=533&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=119&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Details security ownership and equity compensation plans, with **1,562,062 shares** available for future issuance as of December 31, 2022 - Information on security ownership of beneficial owners and management is incorporated by reference from the 'Ownership of Our Common Shares by Our Directors and Executive Officers' and 'Principal Owners of Common Shares' sections of the **2023 Proxy Statement**[534](index=534&type=chunk) Equity Compensation Plan Information (December 31, 2022) | Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants or Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans | | :---------------------------------------------- | :----------------------------------------------------------------------- | :-------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | — | — | 1,562,062 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **—** | **—** | **1,562,062** | - The **1,562,062 shares** available for future issuance include **750,000 shares** under the **2019 ESPP** and **812,062 shares** under the **2019 LTI Plan**[535](index=535&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information on related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 'Election of Directors' and 'Transactions with Related Persons' sections of the **2023 Proxy Statement**[536](index=536&type=chunk) [Item 14. Principal Accounting Fees and Services](index=120&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Principal accounting fees and services information is incorporated by reference from the 2023 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the 'Principal Accountant Fees and Services' caption in the **2023 Proxy Statement**[537](index=537&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=121&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) Lists all financial statements, schedules, and exhibits included or incorporated by reference into the Form 10-K report - The report includes **audited consolidated financial statements** for German American Bancorp, Inc. and Subsidiaries, such as Balance Sheets, Statements of Income, Comprehensive Income (Loss), Changes in Shareholders' Equity, and Cash Flows, along with accompanying notes[539](index=539&type=chunk) - A **comprehensive list of exhibits** is provided, incorporating by reference various legal and corporate documents, including the Amended and Restated Articles of Incorporation, Bylaws, Indenture agreements, and descriptions of Director and Executive Compensation Arrangements[541](index=541&type=chunk)[542](index=542&type=chunk) - Certifications under the **Sarbanes-Oxley Act of 2002 (Sections 302 and 906)** for the President and CEO, and Executive Vice President (Principal Financial Officer) are included as exhibits[542](index=542&type=chunk) [Item 16. Form 10-K Summary](index=125&type=section&id=Item%2016.%20Form%2010-K%20Summary.) This item is not applicable to the Company - This item is not applicable[548](index=548&type=chunk) SIGNATURES [SIGNATURES](index=126&type=section&id=SIGNATURES) Contains required signatures for the Form 10-K report from key executives and directors as of March 1, 2023 - The report is duly signed on behalf of German American Bancorp, Inc. by D. Neil Dauby, President and Chief Executive Officer, and other key executives and directors, as of **March 1, 2023**[550](index=550&type=chunk)[551](index=551&type=chunk)

[Glossary of Terms and Acronyms](index=4&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section defines key terminology and acronyms used throughout the financial report - The glossary defines key terms and acronyms used throughout the report, including 'Company' (German American Bancorp, Inc and its consolidated subsidiaries), 'parent company' (German American Bancorp, Inc only), and 'Bank' (German American Bank)[11](index=11&type=chunk)[12](index=12&type=chunk) - Key acronyms include ASC, ASU, Basel III Rules, CARES Act, CECL, CET1, CMO, COVID-19, CUB (Citizens Union Bancorp of Shelbyville, Inc acquired Jan 1, 2022), Dodd-Frank Act, FASB, FDIC, FHLB, FRB, GAAP, LIBOR, MBS, NPV, OCC, PCD, PPP, SBA, SEC, SOFR, and TDR[13](index=13&type=chunk)[14](index=14&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and management's analysis of financial condition and results of operations [Item 1. Unaudited Financial Statements](index=7&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This section presents the unaudited consolidated financial statements of German American Bancorp, Inc for the period ended September 30, 2022 [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (September 30, 2022 vs. December 31, 2021) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :-------------------- | -----------: | -----------: | -----: | -------: | | **Assets** | | | | | | Total Assets | $6,259,905 | $5,608,539 | $651,366 | 11.61% | | Cash and Cash Equivalents | $373,046 | $396,890 | $(23,844) | -6.01% | | Securities Available-for-Sale | $1,701,628 | $1,889,617 | $(187,989) | -9.95% | | Loans, Net | $3,637,817 | $2,967,247 | $670,570 | 22.59% | | Goodwill | $180,476 | $121,761 | $58,715 | 48.22% | | **Liabilities** | | | | | | Total Deposits | $5,574,341 | $4,744,316 | $830,025 | 17.49% | | Total Liabilities | $5,765,204 | $4,940,080 | $825,124 | 16.70% | | **Shareholders' Equity** | | | | | | Total Shareholders' Equity | $494,701 | $668,459 | $(173,758) | -25.99% | | Accumulated Other Comprehensive Income (Loss) | $(309,058) | $15,484 | $(324,542) | -2095.98% | | End of period shares outstanding | 29,485,121 | 26,553,508 | 2,931,613 | 11.04% | [Consolidated Statements of Income – Three Months Ended September 30, 2022 and 2021](index=9&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20Months%20Ended%20September%2030%2C%202022%20and%202021) Consolidated Statements of Income Highlights (Three Months Ended September 30) | Metric (in thousands, except per share) | Sep 30, 2022 | Sep 30, 2021 | Change | % Change | | :------------------------------------ | -----------: | -----------: | -----: | -------: | | Total Interest Income | $56,524 | $43,575 | $12,949 | 29.72% | | Total Interest Expense | $4,826 | $2,288 | $2,538 | 110.92% | | Net Interest Income | $51,698 | $41,287 | $10,411 | 25.22% | | Provision (Benefit) for Credit Losses | $350 | $(2,000) | $2,350 | -117.50% | | Total Non-Interest Income | $14,097 | $15,556 | $(1,459) | -9.38% | | Total Non-Interest Expense | $34,716 | $32,444 | $2,272 | 7.00% | | Income before Income Taxes | $30,729 | $26,399 | $4,330 | 16.40% | | Income Tax Expense | $6,133 | $4,913 | $1,220 | 24.83% | | NET INCOME | $24,596 | $21,486 | $3,110 | 14.47% | | Basic Earnings per Share | $0.83 | $0.81 | $0.02 | 2.47% | | Diluted Earnings per Share | $0.83 | $0.81 | $0.02 | 2.47% | [Consolidated Statements of Income – Nine Months Ended September 30, 2022 and 2021](index=11&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) Consolidated Statements of Income Highlights (Nine Months Ended September 30) | Metric (in thousands, except per share) | Sep 30, 2022 | Sep 30, 2021 | Change | % Change | | :------------------------------------ | -----------: | -----------: | -----: | -------: | | Total Interest Income | $158,065 | $127,394 | $30,671 | 24.08% | | Total Interest Expense | $9,862 | $7,295 | $2,567 | 35.19% | | Net Interest Income | $148,203 | $120,099 | $28,104 | 23.40% | | Provision (Benefit) for Credit Losses | $5,850 | $(8,500) | $14,350 | -168.82% | | Total Non-Interest Income | $45,465 | $44,495 | $970 | 2.18% | | Total Non-Interest Expense | $118,577 | $92,740 | $25,837 | 27.86% | | Income before Income Taxes | $69,241 | $80,354 | $(11,113) | -13.83% | | Income Tax Expense | $11,831 | $15,489 | $(3,658) | -23.62% | | NET INCOME | $57,410 | $64,865 | $(7,455) | -11.49% | | Basic Earnings per Share | $1.95 | $2.44 | $(0.49) | -20.08% | | Diluted Earnings per Share | $1.95 | $2.44 | $(0.49) | -20.08% | [Consolidated Statements of Comprehensive Income (Loss)](index=13&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) Highlights (Three and Nine Months Ended September 30) | Metric (in thousands) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | NET INCOME | $24,596 | $21,486 | $57,410 | $64,865 | | Unrealized Holding Gain (Loss) Arising During the Period (Net of Tax) | $(97,963) | $(15,161) | $(324,542) | $(24,111) | | COMPREHENSIVE INCOME (LOSS) | $(73,367) | $6,325 | $(267,132) | $40,754 | [Consolidated Statements of Changes in Shareholders' Equity](index=15&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' Equity Changes (January 1, 2022 to September 30, 2022) | Metric (in thousands) | January 1, 2022 | September 30, 2022 | Change | | :-------------------- | ---------------: | -----------------: | -----: | | Total Shareholders' Equity | $668,459 | $494,701 | $(173,758) | | Net Income | $9,067 (Q1) + $23,747 (Q2) + $24,596 (Q3) = $57,410 | - | $57,410 | | Other Comprehensive Income (Loss) | - | $(309,058) | $(324,542) | | Cash Dividends | - | $(20,264) | $(20,264) | | Issuance of Common Stock for Acquisition | - | $111,723 | $111,723 | | Issuance of Common Stock for Restricted Share Grants | - | $822 | $822 | - The significant decline in total shareholders' equity from January 1, 2022, to September 30, 2022, was primarily driven by a substantial increase in **accumulated other comprehensive loss**, largely due to unrealized losses on available-for-sale securities[27](index=27&type=chunk) - The acquisition of Citizens Union Bancorp of Shelbyville, Inc (CUB) on January 1, 2022, resulted in the **issuance of 2,870,975 common shares**, increasing common stock and additional paid-in capital[27](index=27&type=chunk) [Consolidated Statements of Cash Flows](index=17&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Nine Months Ended September 30) | Cash Flow Activity (in thousands) | 2022 | 2021 | Change | | :-------------------------------- | -----------: | -----------: | ---------: | | Net Cash from Operating Activities | $82,492 | $73,933 | $8,559 | | Net Cash from Investing Activities | $84,088 | $(449,994) | $534,082 | | Net Cash from Financing Activities | $(190,424) | $479,056 | $(669,480) | | Net Change in Cash and Cash Equivalents | $(23,844) | $102,995 | $(126,839) | | Cash and Cash Equivalents at End of Period | $373,046 | $448,743 | $(75,697) | - Investing activities saw a significant shift from net outflow in 2021 to net inflow in 2022, largely due to the acquisition of Citizens Union Bancorp of Shelbyville, Inc (CUB), which provided **$207,598 thousand in cash**[32](index=32&type=chunk) - Financing activities experienced a substantial net outflow in 2022, primarily driven by a **decrease in deposits and repayments of long-term debt**, contrasting with a net inflow in 2021[32](index=32&type=chunk) [Notes to Consolidated Financial Statements](index=19&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [NOTE 1 – Basis of Presentation and Market Conditions](index=19&type=section&id=NOTE%201%20%E2%80%93%20Basis%20of%20Presentation%20and%20Market%20Conditions) - The Company's financial statements conform to **U.S. GAAP**, with certain information condensed or omitted for interim reporting[35](index=35&type=chunk) - All necessary adjustments for fair presentation are included and are of a normal recurring nature[35](index=35&type=chunk) [NOTE 2 - Recent Accounting Pronouncements](index=19&type=section&id=NOTE%202%20-%20Recent%20Accounting%20Pronouncements) - The FASB issued ASU No 2020-04 and ASU 2021-01 on Reference Rate Reform (Topic 848) to ease accounting burdens related to the **LIBOR transition**, effective through December 31, 2022[36](index=36&type=chunk) - The Company has ceased originating LIBOR-based loans and plans to transition existing ones to SOFR or other indices[36](index=36&type=chunk) - ASU 2022-02, 'Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,' **eliminates TDR recognition guidance** and enhances disclosures, effective for fiscal years beginning after December 15, 2022[37](index=37&type=chunk) [NOTE 3 – Per Share Data](index=20&type=section&id=NOTE%203%20%E2%80%93%20Per%20Share%20Data) Earnings Per Share (Three and Nine Months Ended September 30) | Metric | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Basic Earnings per Share | $0.83 | $0.81 | $1.95 | $2.44 | | Diluted Earnings per Share | $0.83 | $0.81 | $1.95 | $2.44 | | Weighted Average Shares Outstanding (Basic) | 29,484,394 | 26,545,868 | 29,457,396 | 26,534,044 | - There were **no anti-dilutive shares** for the three and nine months ended September 30, 2022 and 2021[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 4 – Securities](index=21&type=section&id=NOTE%204%20%E2%80%93%20Securities) Securities Available-for-Sale (September 30, 2022 vs. December 31, 2021) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :-------------------- | -----------: | -----------: | -----: | | Amortized Cost | $2,092,522 | $1,869,198 | $223,324 | | Gross Unrealized Gains | $117 | $36,068 | $(35,951) | | Gross Unrealized Losses | $(391,011) | $(15,649) | $(375,362) | | Fair Value | $1,701,628 | $1,889,617 | $(187,989) | - The significant increase in **unrealized losses** on available-for-sale securities was primarily due to fluctuations in interest rates and temporary market investments[49](index=49&type=chunk) - **No allowance for credit losses** was recorded for available-for-sale debt securities at September 30, 2022, or December 31, 2021[49](index=49&type=chunk) Proceeds and Gains from Sales of Securities (Three and Nine Months Ended September 30) | Metric (in thousands) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Proceeds from Sales | $2,073 | $36,075 | $99,572 | $102,823 | | Gross Gains on Sales | $23 | $218 | $473 | $1,493 | [NOTE 5 – Derivatives](index=23&type=section&id=NOTE%205%20%E2%80%93%20Derivatives) - The Company uses interest rate swaps with commercial banking customers and simultaneously hedges these with offsetting swaps with third parties to **minimize net risk exposure**[53](index=53&type=chunk) Fair Value of Interest Rate Swaps (September 30, 2022 vs. December 31, 2021) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | -----------: | -----------: | | Notional Amount | $135,880 | $143,593 | | Fair Value (Assets) | $10,554 | $4,519 | | Fair Value (Liabilities) | $10,352 | $4,762 | Effect of Derivative Instruments on Income (Three and Nine Months Ended September 30) | Metric (in thousands) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Included in Other Operating Income | $111 | $179 | $455 | $854 | [NOTE 6 – Loans](index=24&type=section&id=NOTE%206%20%E2%80%93%20Loans) Loan Classifications (September 30, 2022 vs. December 31, 2021) | Loan Type (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :----------------------- | -----------: | -----------: | -----: | -------: | | Commercial & Industrial | $585,449 | $493,005 | $92,444 | 18.75% | | Commercial Real Estate | $1,923,794 | $1,530,677 | $393,117 | 25.68% | | Agricultural | $401,608 | $358,150 | $43,458 | 12.13% | | Leases | $58,835 | $55,345 | $3,490 | 6.31% | | Home Equity | $273,786 | $222,525 | $51,261 | 23.04% | | Consumer | $80,617 | $70,302 | $10,315 | 14.67% | | Credit Cards | $15,932 | $14,357 | $1,575 | 10.97% | | Residential Mortgage | $346,347 | $263,565 | $82,782 | 31.41% | | **Total Loans** | **$3,686,368** | **$3,007,926** | **$678,442** | **22.56%** | - The increase in total loans is significantly influenced by the acquisition of Citizens Union Bancorp of Shelbyville, Inc (CUB) on January 1, 2022, which added **$678,167 thousand in fair value of loans**[59](index=59&type=chunk)[60](index=60&type=chunk)[167](index=167&type=chunk) - As of September 30, 2022, **all Paycheck Protection Program (PPP) loans have been forgiven** by the SBA and repaid to the Company[66](index=66&type=chunk)[67](index=67&type=chunk) Allowance for Credit Losses Activity (Three Months Ended September 30) | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :-------------------- | -----------: | -----------: | | Beginning balance | $45,031 | $39,995 | | Provision (Benefit) for credit loss expense | $350 | $(2,000) | | Loans charged-off | $(820) | $(279) | | Recoveries collected | $138 | $82 | | Total ending allowance balance | $44,699 | $37,798 | Allowance for Credit Losses Activity (Nine Months Ended September 30) | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :-------------------- | -----------: | -----------: | | Beginning balance | $37,017 | $46,859 | | Acquisition of CUB | $3,117 | — | | Provision (Benefit) for credit loss expense | $5,850 | $(8,500) | | Loans charged-off | $(1,636) | $(892) | | Recoveries collected | $351 | $331 | | Total ending allowance balance | $44,699 | $37,798 | - The allowance for credit losses increased for the nine months ended September 30, 2022, primarily due to the **CUB acquisition**[76](index=76&type=chunk) Non-Accrual Loans and Loans Past Due Over 89 Days (September 30, 2022 vs. December 31, 2021) | Loan Type (in thousands) | Non-Accrual (Sep 30, 2022) | Non-Accrual (Dec 31, 2021) | Past Due >89 Days Still Accruing (Sep 30, 2022) | Past Due >89 Days Still Accruing (Dec 31, 2021) | | :----------------------- | -------------------------: | -------------------------: | -----------------------------------------------: | -----------------------------------------------: | | Commercial & Industrial | $8,695 | $10,530 | $28 | $0 | | Commercial Real Estate | $2,059 | $2,243 | $0 | $156 | | Agricultural | $899 | $1,136 | $698 | $0 | | Home Equity | $262 | $24 | $0 | $0 | | Consumer | $14 | $18 | $0 | $0 | | Credit Cards | $75 | $64 | $0 | $0 | | Residential Mortgage | $1,050 | $587 | $0 | $0 | | **Total** | **$13,054** | **$14,602** | **$726** | **$156** | - The Company had **no troubled debt restructurings** as of September 30, 2022, a decrease from $104 thousand at December 31, 2021[85](index=85&type=chunk) [NOTE 7 – Repurchase Agreements Accounted for as Secured Borrowings](index=34&type=section&id=NOTE%207%20%E2%80%93%20Repurchase%20Agreements%20Accounted%20for%20as%20Secured%20Borrowings) - Repurchase agreements, secured by mortgage-backed securities, totaled **$43,455 thousand** at September 30, 2022, a decrease from $68,328 thousand at December 31, 2021[103](index=103&type=chunk) - The Company manages risk by continuously monitoring the value of pledged collateral and requiring additional collateral if its fair value declines[103](index=103&type=chunk) [NOTE 8 – Segment Information](index=34&type=section&id=NOTE%208%20%E2%80%93%20Segment%20Information) - The Company operates in three primary segments: **core banking, wealth management services, and insurance operations**[104](index=104&type=chunk) - The core banking segment's primary revenue is net interest income from loans and investments, operating through 78 banking offices at September 30, 2022[105](index=105&type=chunk) - Wealth management segment revenues are primarily fees from trust, investment advisory, brokerage, and retirement planning services[105](index=105&type=chunk) - The insurance segment's primary revenue is commissions from selling personal and corporate property and casualty insurance products[107](index=107&type=chunk) Segment Profit (Loss) (Three Months Ended September 30) | Segment (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :--------------------- | -----------: | -----------: | | Core Banking | $26,213 | $21,267 | | Wealth Management Services | $461 | $722 | | Insurance | $189 | $250 | | Other | $(2,267) | $(753) | | **Consolidated Totals** | **$24,596** | **$21,486** | Segment Profit (Loss) (Nine Months Ended September 30) | Segment (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :--------------------- | -----------: | -----------: | | Core Banking | $58,162 | $63,204 | | Wealth Management Services | $1,717 | $1,811 | | Insurance | $2,038 | $1,812 | | Other | $(4,507) | $(1,962) | | **Consolidated Totals** | **$57,410** | **$64,865** | [NOTE 9 – Stock Repurchase Plan](index=37&type=section&id=NOTE%209%20%E2%80%93%20Stock%20Repurchase%20Plan) - On January 31, 2022, the Board approved a plan to repurchase up to **1,000,000 shares** (approximately 3% of outstanding shares at approval)[113](index=113&type=chunk) - The Company is not obligated to purchase shares and has **not repurchased any shares** under this plan or the prior 2021 plan[113](index=113&type=chunk) [NOTE 10 – Equity Plans and Equity Based Compensation](index=37&type=section&id=NOTE%2010%20%E2%80%93%20Equity%20Plans%20and%20Equity%20Based%20Compensation) - The Company maintains the 2019 Long-Term Equity Incentive Plan (2019 LTI Plan) for stock options, restricted stock, and other equity awards, authorizing up to **1,000,000 shares**[114](index=114&type=chunk) - **No stock options were granted or outstanding**, and no stock compensation expense was recorded for options during the reported periods[115](index=115&type=chunk)[120](index=120&type=chunk) Restricted Stock and Cash Entitlement Expense (Three and Nine Months Ended September 30) | Metric (in thousands) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Restricted Stock Expense | $398 | $355 | $1,915 | $1,322 | | Cash Entitlement Expense | $163 | $180 | $497 | $547 | | Tax Effect | $(146) | $(139) | $(626) | $(485) | | Net of Tax | $415 | $396 | $1,786 | $1,384 | - Unrecognized expense for restricted stock and cash entitlements totaled **$3,061 thousand** at September 30, 2022, and $2,753 thousand at September 30, 2021[118](index=118&type=chunk) - The 2019 Employee Stock Purchase Plan (2019 ESPP) allows employees to purchase common stock at **95% of fair value**[119](index=119&type=chunk)[120](index=120&type=chunk) [NOTE 11 – Fair Value](index=38&type=section&id=NOTE%2011%20%E2%80%93%20Fair%20Value) - Fair value measurements are categorized into three levels: **Level 1** (quoted prices in active markets), **Level 2** (significant other observable inputs), and **Level 3** (significant unobservable inputs)[121](index=121&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) - Investment securities are valued using quoted market prices (Level 1), market prices of similar securities (Level 2), or discounted cash flows/other market indicators (Level 3)[125](index=125&type=chunk)[133](index=133&type=chunk) - Derivatives are valued using valuation models with observable market data (Level 2)[126](index=126&type=chunk)[133](index=133&type=chunk) - Individually analyzed loans and other real estate are generally valued based on appraisals, often involving significant unobservable inputs, resulting in **Level 3 classification**[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - Loans held-for-sale are valued using quoted prices for similar assets, adjusted for specific attributes (Level 2)[130](index=130&type=chunk)[133](index=133&type=chunk) [NOTE 12 - Other Comprehensive Income (Loss)](index=44&type=section&id=NOTE%2012%20-%20Other%20Comprehensive%20Income%20(Loss)) Changes in Accumulated Other Comprehensive Income (Loss) (Three Months Ended September 30) | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :-------------------- | -----------: | -----------: | | Beginning Balance | $(211,095) | $26,425 | | Net Current Period Other Comprehensive Income (Loss) | $(97,963) | $(15,161) | | Ending Balance | $(309,058) | $11,264 | Changes in Accumulated Other Comprehensive Income (Loss) (Nine Months Ended September 30) | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :-------------------- | -----------: | -----------: | | Beginning Balance | $15,484 | $35,375 | | Net Current Period Other Comprehensive Income (Loss) | $(324,542) | $(24,111) | | Ending Balance | $(309,058) | $11,264 | - The significant decline in accumulated other comprehensive income (loss) in 2022 is primarily due to **unrealized losses on available-for-sale securities**[144](index=144&type=chunk) [NOTE 13 - Revenue Recognition](index=46&type=section&id=NOTE%2013%20-%20Revenue%20Recognition) Non-interest Income Segregated by Topic 606 Scope (Three Months Ended September 30) | Non-interest Income (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :--------------------------------- | -----------: | -----------: | | In-Scope of Topic 606 | $12,296 | $10,813 | | Out-of-Scope of Topic 606 | $1,801 | $4,743 | | **Total Non-interest Income** | **$14,097** | **$15,556** | Non-interest Income Segregated by Topic 606 Scope (Nine Months Ended September 30) | Non-interest Income (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :--------------------------------- | -----------: | -----------: | | In-Scope of Topic 606 | $38,477 | $32,217 | | Out-of-Scope of Topic 606 | $6,988 | $12,278 | | **Total Non-interest Income** | **$45,465** | **$44,495** | - Revenue streams in-scope of Topic 606 include Wealth Management Fees, Service Charges on Deposit Accounts, Insurance Revenues, Interchange Fee Income, and Other Operating Income[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [NOTE 14 – Leases](index=47&type=section&id=NOTE%2014%20%E2%80%93%20Leases) - The Company has finance leases for branch offices and operating leases for branch offices, ATM locations, and certain office equipment[157](index=157&type=chunk) Total Lease Cost (Three and Nine Months Ended September 30) | Lease Cost (in thousands) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :------------------------ | --------------------: | --------------------: | --------------------: | --------------------: | | Total Lease Cost | $493 | $506 | $1,535 | $1,553 | Weighted Average Lease Term and Discount Rates (September 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | | :---------------------- | -----------: | -----------: | | Finance Leases (Term) | 10 years | 10 years | | Operating Leases (Term) | 8 years | 7 years | | Finance Leases (Rate) | 11.42% | 11.46% | | Operating Leases (Rate) | 2.87% | 3.04% | [NOTE 15 - Business Combinations](index=49&type=section&id=NOTE%2015%20-%20Business%20Combinations) - On January 1, 2022, the Company acquired Citizens Union Bancorp of Shelbyville, Inc (CUB), expanding its presence in Kentucky with **15 retail banking offices**[163](index=163&type=chunk) - CUB had approximately **$1,108,546 thousand in total assets**, $683,807 thousand in total loans, and $930,533 thousand in total deposits at closing[164](index=164&type=chunk) - The acquisition involved issuing 2,870,975 shares of common stock and paying $50.8 million in cash, resulting in **$58,716 thousand of goodwill** and $7,572 thousand of intangible assets[165](index=165&type=chunk)[167](index=167&type=chunk) Unaudited Pro Forma Net Income (Three and Nine Months Ended September 30) | Metric (in thousands, except per share) | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :------------------------------------ | --------------------: | --------------------: | --------------------: | --------------------: | | Net Income | $24,740 | $26,582 | $71,633 | $78,487 | | Earnings Per Share | $0.84 | $0.90 | $2.43 | $2.67 | - Pro forma financial information for 2022 excludes **$12,276 thousand in non-recurring merger costs** and a $6,300 thousand Day 1 CECL provision for credit losses[172](index=172&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&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 condition and results of operations, highlighting key trends and the CUB acquisition impact [MANAGEMENT OVERVIEW](index=52&type=section&id=MANAGEMENT%20OVERVIEW) - The Company completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc (CUB) on January 1, 2022, adding **15 retail banking offices** in Kentucky and approximately **$1.109 billion in total assets**[179](index=179&type=chunk) Net Income and EPS Overview (Three and Nine Months Ended September 30) | Metric | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Net Income (in thousands) | $24,596 | $21,486 | $57,410 | $64,865 | | EPS | $0.83 | $0.81 | $1.95 | $2.44 | - The decline in net income and EPS for the nine months ended September 30, 2022, was largely due to **$12,276 thousand in acquisition-related expenses** and a **$6,300 thousand Day 1 provision for credit losses** related to the CUB acquisition[181](index=181&type=chunk) - The issuance of approximately **2.9 million common shares** as part of the CUB merger consideration also impacted the per-share net income for the nine-month period[181](index=181&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=52&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - Critical accounting policies and estimates include the allowance for credit losses, valuation of securities, income tax expense, and valuation of goodwill[183](index=183&type=chunk) - The **allowance for credit losses is inherently subjective**, requiring significant estimates for future cash flows, losses on classified loans, and economic conditions[185](index=185&type=chunk) - Available-for-sale debt securities in unrealized loss positions are evaluated quarterly for impairment; **no allowance for credit losses was needed** at September 30, 2022[190](index=190&type=chunk)[191](index=191&type=chunk) - Goodwill and intangible assets are tested for impairment annually; **no goodwill impairment was indicated** in 2022[195](index=195&type=chunk)[196](index=196&type=chunk) [RESULTS OF OPERATIONS](index=54&type=section&id=RESULTS%20OF%20OPERATIONS) Net Income and EPS (Three and Nine Months Ended September 30) | Metric | 3 Months Sep 30, 2022 | 3 Months Sep 30, 2021 | 9 Months Sep 30, 2022 | 9 Months Sep 30, 2021 | | :-------------------------- | --------------------: | --------------------: | --------------------: | --------------------: | | Net Income (in thousands) | $24,596 | $21,486 | $57,410 | $64,865 | | EPS | $0.83 | $0.81 | $1.95 | $2.44 | - **Net interest income increased by 25%** for Q3 2022 and **23% for the nine months** ended September 30, 2022, primarily due to higher earning assets from the CUB acquisition and improved net interest margin[200](index=200&type=chunk)[204](index=204&type=chunk) - The tax equivalent **net interest margin improved to 3.59%** in Q3 2022, driven by increased market interest rates and improved yields on earning assets[201](index=201&type=chunk)[205](index=205&type=chunk) - PPP loan fees recognized through net interest income **significantly decreased to $46 thousand** in Q3 2022 from $4,111 thousand in Q3 2021[203](index=203&type=chunk)[207](index=207&type=chunk) - Provision for credit losses was **$5,850 thousand for the nine months** ended September 30, 2022, including a **$6,300 thousand Day 1 CECL addition** for the CUB acquisition[208](index=208&type=chunk)[209](index=209&type=chunk) - **Non-interest income decreased by 9%** in Q3 2022, mainly due to lower loan sales volume and the absence of branch sale gains from 2021[212](index=212&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - **Non-interest expense increased by 28%** for the nine months ended September 30, 2022, primarily driven by operating costs and non-recurring acquisition-related expenses for CUB[226](index=226&type=chunk)[231](index=231&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - The effective income tax rate was **17.1% for the nine months** ended September 30, 2022, lower than the statutory rate due to tax-exempt income and credits[239](index=239&type=chunk) [FINANCIAL CONDITION](index=62&type=section&id=FINANCIAL%20CONDITION) - **Total assets increased by $651.4 million to $6.260 billion** at September 30, 2022, largely due to the CUB acquisition[240](index=240&type=chunk) - Securities available for sale **declined by $188.0 million**, primarily due to fair value adjustments caused by rising market interest rates[241](index=241&type=chunk) - **Total loans increased by $678.4 million to $3.686 billion**, driven by the CUB acquisition[242](index=242&type=chunk) - The allowance for credit losses increased to **$44.7 million (1.21% of period-end loans)**, including a $9.4 million addition from the CUB acquisition under CECL[243](index=243&type=chunk)[244](index=244&type=chunk) - **Non-performing assets decreased to $13.8 million** (0.22% of total assets) from $14.8 million (0.26% of total assets) at year-end 2021[247](index=247&type=chunk) - **Total deposits increased by $830.0 million to $5.574 billion**, largely attributable to the CUB acquisition[248](index=248&type=chunk) - **Shareholders' equity declined by $173.8 million to $494.7 million**, primarily due to a **$324.5 million decrease in accumulated other comprehensive income** from unrealized losses on securities[250](index=250&type=chunk) - The Company and its subsidiary bank maintained capital levels **well in excess of minimum regulatory requirements**, meeting 'well-capitalized' status[254](index=254&type=chunk) Regulatory Capital Ratios (September 30, 2022 vs. December 31, 2021) | Capital Ratio | Sep 30, 2022 | Dec 31, 2021 | Minimum for Capital Adequacy | Well-Capitalized Guidelines | | :---------------------------- | -----------: | -----------: | ---------------------------: | --------------------------: | | Consolidated Total Capital | 15.21% | 16.20% | 8.00% | N/A | | Bank Total Capital | 13.88% | 13.36% | 8.00% | 10.00% | | Consolidated Tier 1 Capital | 13.76% | 14.61% | 6.00% | N/A | | Bank Tier 1 Capital | 13.26% | 12.83% | 6.00% | 8.00% | | Consolidated Common Tier 1 (CET1) | 13.04% | 14.18% | 4.50% | N/A | | Bank Common Tier 1 (CET1) | 13.26% | 12.83% | 4.50% | 6.50% | | Consolidated Tier 1 (to Average Assets) | 10.10% | 10.10% | 4.00% | N/A | | Bank Tier 1 (to Average Assets) | 9.75% | 8.88% | 4.00% | 5.00% | - The Company elected the **five-year transition option for CECL's impact** on regulatory capital, beginning the phase-in on January 1, 2022[255](index=255&type=chunk) - PPP loans are assigned a **zero percent risk weight** for regulatory capital purposes[257](index=257&type=chunk) - Cash and cash equivalents decreased by $23.8 million to $373.0 million, with net cash outflows from financing activities ($190.4 million) offsetting inflows from operating and investing activities[258](index=258&type=chunk) [FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS](index=60&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20ASSOCIATED%20RISKS) - The report contains forward-looking statements regarding future expectations, including net interest income, credit loss allowance, and economic conditions[260](index=260&type=chunk) - Readers are cautioned that actual results may differ materially due to various risks and uncertainties, including interest rate fluctuations and economic deterioration[262](index=262&type=chunk)[265](index=265&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, primarily liquidity and interest rate risk, and the methods used for monitoring them - The Company's market risk exposure, including liquidity and interest rate risk, is regularly reviewed by the Asset/Liability Committee and Boards of Directors[266](index=266&type=chunk) - Interest rate risk is monitored using computer simulation modeling to estimate impacts on net interest income and net portfolio value (NPV)[268](index=268&type=chunk) Net Interest Income Sensitivity (September 30, 2022) | Changes in Rates | Amount (in thousands) | % Change | | :--------------- | --------------------: | --------: | | +2% | $232,690 | 4.18% | | +1% | $228,257 | 2.20% | | Base | $223,354 | — | | -1% | $215,692 | (3.43)% | | -2% | $204,337 | (8.51)% | Net Portfolio Value Sensitivity (September 30, 2022) | Changes in Rates | Amount (in thousands) | % Change | NPV Ratio | Change (b.p.) | | :--------------- | --------------------: | --------: | --------: | ------------: | | +2% | $825,144 | (6.25)% | 14.76% | (1) | | +1% | $852,841 | (3.11)% | 14.78% | 1 | | Base | $880,195 | — | 14.77% | — | | -1% | $898,703 | 2.10% | 14.60% | (17) | | -2% | $898,664 | 2.10% | 14.14% | (63) | [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal controls - As of September 30, 2022, the Company's disclosure controls and procedures were deemed **effective** by its principal executive and financial officers[278](index=278&type=chunk) - There were **no material changes** in the Company's internal control over financial reporting during the third fiscal quarter of 2022[279](index=279&type=chunk) [PART II. OTHER INFORMATION](index=62&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other required disclosures [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The Company reported no pending legal proceedings other than routine litigation incidental to its business - There are **no pending legal proceedings**, other than routine litigation incidental to the business of the Company's subsidiaries[281](index=281&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report - **No material changes** to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[282](index=282&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any of its common shares during the three months ended September 30, 2022 - The Company **did not repurchase any shares** of common stock during July, August, or September 2022[284](index=284&type=chunk) - A plan approved on January 31, 2022, authorizes the repurchase of up to **1,000,000 shares**, but no shares have been purchased under this plan[284](index=284&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - **No defaults** upon senior securities were reported[285](index=285&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is **not applicable**[285](index=285&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - **No other information** was reported[285](index=285&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits included with the report, such as articles of incorporation, bylaws, and various certifications - Exhibits include Amended and Restated Articles of Incorporation, Amended and Restated Bylaws, Terms of Common Shares, Specimen stock certificate, Indenture, Form of 4.50% Fixed-to-Floating Subordinated Note due 2029, Sarbanes-Oxley Act Section 302 and 906 Certifications, and Inline XBRL documents[288](index=288&type=chunk)