German American(GABC) - 2025 Q3 - Quarterly Results

Financial Performance - Record earnings of $35.1 million, or $0.94 per share, for Q3 2025, representing a 12% increase from Q2 2025 and a 32% increase from Q3 2024[1] - Net income for Q3 2025 was $35,074,000, or $0.94 per share, a 12% increase from Q2 2025 and a 32% increase from Q3 2024[24] - Adjusted net income for Q3 2025 was $34,444,000, or $0.92 per share, compared to $32,058,000, or $0.86 per share in Q2 2025, and $21,722,000, or $0.73 per share in Q3 2024[25] - The net income for the three months ended September 30, 2025, was $35,074 thousand, an increase from $31,361 thousand in the previous quarter and $21,048 thousand in the same quarter last year, representing a year-over-year growth of 66.7%[61] - Basic earnings per share for the three months ended September 30, 2025, was $0.94, compared to $0.84 in the previous quarter and $0.71 in the same quarter last year, indicating a year-over-year increase of 32.4%[61] Revenue and Income Growth - Non-interest income rose by $1.7 million, or 10%, driven by a 3% increase in wealth management and a 6% increase in deposit fees[5] - Non-interest income for Q3 2025 totaled $18,429,000, a 10% increase from Q2 2025 and a 34% increase from Q3 2024[34] - Total interest income for the three months ended September 30, 2025, was $108,097 thousand, up from $106,435 thousand in the previous quarter, and $74,653 thousand in the same quarter last year, representing a year-over-year increase of 44.8%[61] - Net interest income for Q3 2025 was $75,725,000, a 4% increase from Q2 2025 and a 56% increase from Q3 2024[28] - Net Interest Income (FTE) for Q3 2025 was $76,998,000, an increase from $49,745,000 in Q3 2024, marking a 54.7% year-over-year growth[75] Asset and Deposit Growth - Total assets reached $8.401 billion, an increase of $121.1 million from Q2 2025 and $2.140 billion from Q3 2024, largely due to the Heartland acquisition[10] - Total deposits increased by 3.4% on an annualized basis, with non-interest bearing demand deposits rising by 9%, representing over 28% of total deposits[4] - Total deposits reached $7,014,502,000 as of September 30, 2025, compared to $6,954,686,000 in Q2 2025 and $5,271,279,000 in Q3 2024[59] Efficiency and Profitability - The efficiency ratio improved to 49.26%, indicating enhanced profitability[6] - The efficiency ratio improved to 49.26% for the three months ended September 30, 2025, compared to 51.25% in the previous quarter and 56.15% in the same quarter last year, indicating enhanced operational efficiency[63] Loan Portfolio and Credit Quality - The loan portfolio increased by $39.3 million, or 3% on an annualized basis, with agricultural loans up by 10% and retail loans up by 7%[11] - Non-performing assets totaled $23.7 million, representing 0.28% of total assets, an increase from $9.7 million or 0.15% a year earlier[17] - The allowance for credit losses was $76.1 million, representing 1.32% of period-end loans, consistent with the previous quarter[14] - The provision for credit losses in Q3 2025 was $700,000, down from $1,200,000 in Q2 2025 and up from $625,000 in Q3 2024[33] Acquisition Impact - The Heartland acquisition added approximately $1.615 billion in deposits and $1.58 billion in loans to the company[9][12] - The Heartland acquisition contributed significantly to the increases in net interest income, non-interest income, and overall performance metrics[29] Expense Management - Non-interest expense for Q3 2025 was $49,700,000, a slight increase of less than 1% from Q2 2025 and a 38% increase from Q3 2024[43] - Total non-interest expense for Q3 2025 was $49,700,000, compared to $49,517,000 in Q2 2025 and $36,126,000 in Q3 2024[46] - Salaries and employee benefits decreased by $1,194,000, or 4%, in Q3 2025 compared to Q2 2025, but increased by $5,726,000, or 29%, compared to Q3 2024[47] - Other operating expenses increased by $854,000, or 12%, in Q3 2025 compared to Q2 2025, and rose by $2,513,000, or 48%, compared to Q3 2024[51] Operational Metrics - The annualized return on average assets for the three months ended September 30, 2025, was 1.68%, up from 1.49% in the previous quarter and 1.35% in the same quarter last year[63] - Average total loans for the three months ended September 30, 2025, were $5,766,875 thousand, compared to $5,678,929 thousand in the previous quarter and $4,052,673 thousand in the same quarter last year, reflecting a year-over-year increase of 42.4%[63] Other Financial Highlights - The tangible book value per share increased to $18.89 in Q3 2025 from $17.40 in Q2 2025, while it was $18.90 in Q3 2024[59] - The company operates 94 banking offices across Indiana, Kentucky, and Ohio, with a focus on expanding its Heartland Bank brand in the Greater Cincinnati area[52] - The company reported a gain on debt extinguishment of $975,000 in Q3 2025, contributing positively to the financial results[73]