Headed for
the Future
2014 Summary Annual Report
THE Numbers
Net Income & Diluted Earnings Per Share
(dollars in thousands)
$35,000
$30,000
$25,000
$20,000
$24,055
$25,413
$20,249
$28,344
$2.14
$15,000
$13,405
$10,000
$1.61
$1.98
$1.90
$5,000
$1.21
$0
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
Total Assets
(dollars in millions)
$2,006
$2,164
$2,237
$1,874
$2,500
$2,000
$1,500
$1,376
Total Loans, Net of Unearned Income
(dollars in millions)
Commercial and Agriculture Loans as % of Total Loans
$1,448
$1,382
$1,205
$1,121
$917
79%
81%
83%
81%
81%
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
Total Deposits
(dollars in millions)
Non-Maturity Deposit Accounts as % of Total Deposits
$1,556
$1,641
$1,812
$1,780
$1,087
67%
80%
81%
81%
76%
Total Shareholders’ Equity
(dollars in millions)
Annualized Return of Equity
$229
$200
$185
$168
13.57%
13.40%
13.21%
12.67%
$250
$200
$150
$100
$50
$0
$122
11.18%
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
$1,000
$500
$0
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
A LETTER TO OUR Shareholders
Mark A. Schroeder
Chairman and CEO
Dear Shareholders:
For the 5th consecutive year, your Company posted record
earnings by reporting annual net income of $28.3 million, or $2.14
per share in 2014. This record level of performance in 2014 was an
improvement, on a per share basis, of approximately 8% over the
previous record earnings level of $25.4 million, or $1.98 per share,
achieved in 2013. The continued strong earnings performance in
2014 also resulted in a 13.21% return on shareholders’ equity,
which represents the 10th consecutive year in which German
American has delivered a double-digit return on shareholders’
equity.
In 2014, we experienced strong growth across all four of our
lines of business - banking, insurance, investment, and trust -
as we saw a continued resurgence of the economic strength
within our markets throughout Southern Indiana. This marked
economic strength and stability was reflected in our ability, as a
banking organization, to generate continued growth within our
loan portfolio in 2014 while maintaining the level of superb asset
quality that has been German American’s hallmark.
The combination of a compound annual growth rate of earnings
per share in excess of 14% over the course of the past seven years
and a double-digit return on shareholders’ equity for the past
decade has also resulted in a period of strong market performance
for your Company’s stock. Our share price appreciation, measured
as of year-end 2014 on a compound annual growth rate basis, was
in excess of 13% over the course of both the past five and seven
year periods.
We recognize, however, that the future value of your investment
in German American will not be determined by our past
performance, but rather will be based on our ability to sustain a
strong level of performance going forward. This is why we chose
the theme of Headed for the Future for this year’s Summary
Annual Report.
Looking to the future, it is obvious that the world is going to
be a very different place. We all understand that technology is
expected to radically change how the financial services industry
will deliver products and services to clients. It is for this reason
that, during 2014, German American took some very important
steps forward to position your Company to continue to grow and
prosper in the future in the face of a rapidly changing landscape
relative to the delivery of financial products and services.
During this past year, we completed an extensive upgrade to
our commercial and retail digital banking offerings, including
the launch of mobile banking and mobile deposit for consumers.
Staying current on the latest
technology-based
delivery
channels will be critical to our
ability to stay relevant in the
coming years when we will be
facing a fundamental change, driven by the millennial generation,
in terms of how our clients will expect to access their financial
assets.
As we are Headed for the Future, we are also focused on how
to continue to hold fast to the core principles that have been the
secret to our success, both over the course of the last decade
and the last century. Central to this strategy is our ability to
always provide exceptional, personalized customer service to our
clients regardless of whether they are accessing us through our
branch network, by phone or computer, or through their tablet
or smartphone. For German American, that means continuing
our philosophy of developing and recruiting teams of the very
best local financial professionals, who are fully committed to
and exceedingly knowledgeable about their clients and local
communities. We believe this strategy of holding fast to our core
principles, while providing leading edge technology to our clients,
will be a winning combination going forward for both our clients
and our shareholders.
We are obviously very proud of the level of long-term financial
performance German American has attained, which has, in turn,
resulted in German American being nationally recognized as one
of the premier publicly-traded financial companies in the U.S.
While honored to have received this level of national recognition,
we fully acknowledge that this degree of long-term success was
only possible because of our clients’ continued acceptance of our
offerings of financial products and services, our staff’s dedication
toward making good on our pledge of exceptional customer
service, and, because of your, our shareholders’, unwavering
willingness to invest in our Company. We sincerely thank you for
your continued investment in German American, not only in the
past but also as we are Headed for the Future!
Sincerely,
Mark A. Schroeder
Chairman & CEO
1
2
TRUSTED Financial Partner
BARTHOLOMEW
COUNTY
Columbus
Banking
Investments
Insurance
Ag Services
DAVIESS
COUNTY
Odon/Cannelburg
Bloomington
MONROE
COUNTY
Bedford
LAWRENCE
COUNTY
Vincennes
Washington
KNOX COUNTY
Loogootee
MARTIN
COUNTY
Petersburg
Ireland
Princeton
GIBSON COUNTY
Oakland
City
VANDERBURGH
VANDERBURGH
COUNTY
COUNTY
Winslow
PIKE
COUNTY
WARRICK
COUNTY
Evansville
Newburgh
Rockport
Dubois
Jasper
DUBOIS
COUNTY
Huntingburg
Holland
Ferdinand
SPENCER
COUNTY
PERRY
COUNTY
Tell City
A genuine desire to provide financial solutions that help individuals, families and businesses thrive
and prosper is key to our success. Our financial professionals are involved in the communities
we serve. We engage in community conversations with key government and business leaders
to ensure we understand the strengths and challenges facing our communities now and in the
future. Clients value us as a confident and capable trusted financial advisor based on knowledge,
expertise and being a true community partner.
5 years of record earnings
7 year compound annual growth rate in
earnings per share of 14%
Decade of double digit return on
shareholders’ equity
3
CUSTOMER Solutions
Technology has changed and will continue to change the delivery of
financial services at a rapid pace. To keep our German American brand
and the products and services we offer relevant, we remain focused
on our customers. The financial solutions we offer our customers
must be of the highest security, offer the best functionality with a
superior user experience, and be capable of being supported by the
German American team.
Anticipating change keeps us focused on the future. In the past few
years, German American has allocated financial and human resources
to help us research and implement the latest technology solutions.
The importance of creating a team environment of keen eyes for
opportunity while providing every day customer service excellence
is crucial to our success. We are committed to responsive, timely
decision making to meet and exceed our customers’ expectations
every day . . . now and in the future.
Our customers’ success is what we care about. Providing strong
financial solutions, based on a deep understanding of the needs of
our customers, supports greater prosperity and quality of life for
our shareholders, our customers, our communities and our team
members.
4
Pictured: Terri Eckerle, Gaven Oexmann, Zach Sibrel, Rodney Russell, Jane Thoma, Jeff Cash, Gene Mattingly, Joel Smith, Tracey Gutgsell
BANKING
An investment into new platforms for both our retail and business
digital banking systems enables us to offer our customers the most
up-to-date online experiences available in today’s environment. Our
consumer customers also have access to mobile banking, mobile bill
pay, mobile deposit, Popmoney®, online home loan application, and
sophisticated online and mobile financial calculators. Businesses
throughout southern Indiana turn to German American for solid
financial guidance and robust online solutions. From checking and
savings accounts, check cards, home loans, home equity loans, credit
cards, consumer loans, commercial loans, and more, the German
American Banking Team is proficient in offering strong financial
products and services.
INSURANCE
Our Insurance Team is dedicated to risk management expertise
backed by a philosophy of careful analysis and personal service.
We represent a variety of excellent insurance carriers, which helps
our personal and commercial agents offer our clients cost-effective
protection.
INVESTMENTS
Our experienced Investment Team is skilled in addressing the unique
complexities and concerns individuals and business owners face.
Having managed assets through a wide range of market cycles, we
understand the importance of adopting a long-term perspective and
maintaining a consistent approach. Our client relationships start
with gaining a deep understanding of our clients’ values and unique
perspective on finances before we design a customized investment
and risk-management solution based upon the importance of prudent
diversification and the central role of asset allocation in managing risk.
TRUST
Our Trust Team has a high level of expertise to help clients who have
accumulated significant wealth manage and grow their assets. We
determine clients’ goals, tolerance for risk, and financial vision before
we invest any money, which keeps our clients as the top priority in
our Trust relationship.
Pictured: Rhonda Hopf, Michael Gerth, David Pleiss, Jean Emery, Alex Knepp, Mike Hayes, Tom Acton, Sherri Alley, Jay Baker, Jeremy Foster, Peggy Merkel
5
6
TALENTED Financial Team
Pictured: Alvin Basham, Lisa Matheis, David Henson, Jake Memmer, Donna Sholtis, Michael Kern
Randall L. Braun
Senior Vice President,
Retail Banking
Clay W. Ewing
President
Mark A. Schroeder
Chairman and
Chief Executive Officer
Keith A. Leinenbach
Senior Vice President,
and Chief Credit Officer
Bradley M. Rust
Executive Vice President,
and Chief Financial Officer
Pictured: Brent Sternberg, Laura Bogard, Joe Dedman, Tony Loudermilk, Everett Southern, Neil Dauby, John Lamb
Since 1910 the people of southern Indiana have trusted German American to help purchase homes, protect,
save, and manage their money, grow businesses and farm operations, pass wealth from one generation
to the next, retire comfortably, and send children to college. What has remained from the beginning is
the underlying understanding that we are in a people business. We are people helping people in the
communities we serve to financially grow, prosper and thrive. We are a team of financial professionals who
are available when our clients have questions. Our more experienced team members are working with our
younger team members to mentor, teach and coach.
Our team members live right here in southern Indiana. We empower our German American team to not
only engage in conversations about challenges that face our communities, but to take action. You will find
us teaching financial literacy, serving on non-profit boards, coaching youth sports, arts, and academic
teams, running 5ks and mini marathons, participating in chamber events, and more.
OUR Mission
OUR Vision
We build relationships mutually beneficial to
our clients and our shareholders.
• We create custom financial solutions that
help businesses and retail customers reach
their financial goals.
• We develop lifelong relationships that are
based on mutual respect and supported
by the strength and community ties of
German American.
• We support our customers and
shareholders on their quest to greater
prosperity and quality of life.
German American Bancorp, Inc. will build a regional presence
offering a full array of integrated financial products and services.
We will always be mindful of our community banking roots and the
importance of enhancing and growing the relationships we have
with our shareholders, customers, employees and communities.
We are deeply rooted and engaged within the communities
we serve. The German American professionals build strong
relationships that are based on a winning combination of
discipline and conservative management with a keen eye
for arising opportunities.
7
REPORT OF INDEPENDENT REGISTERED PUBLIC Accounting Firm
Board of Directors and Shareholders
German American Bancorp, Inc.
Jasper, Indiana
We have audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) the consolidated balance sheets of German American
Bancorp, Inc. as of December 31, 2014 and 2013, and the related consolidated statements
of income, comprehensive income, changes in shareholders’ equity, and cash flows for
each of the three years in the period ended December 31, 2014, appearing in the Annual
Report on Form 10-K, not appearing herein. In our report dated March 9, 2015, also
appearing in the Annual Report on Form 10-K, we expressed an unqualified opinion on
those consolidated financial statements.
In our opinion, the information set forth in the consolidated balance sheets and
consolidated statements of income presented on pages 10 and 11 is fairly stated, in all
material respects, in relation to the consolidated financial statements from which they
have been derived.
Crowe Horwath LLP
Indianapolis, Indiana
March 9, 2015
8
FIVE YEAR Summary
Dollars in thousands, except per share data
The following selected data should be read in conjunction with the Company’s Annual Report on Form 10-K for 2014.
Summary of Operations:
Interest Income
Interest Expense
Net Interest Income
Provision for Loan Losses
Net Interest Income after Provision for Loan Losses
Non-interest Income
Non-interest Expense
Income before Income Taxes
Income Tax Expense
Net Income
Year-end Balances:
Total Assets
2014
2013
2012
2011
2010
$
80,386
$
75,672
$
77,160
$
80,161
$
64,193
6,047
74,339
150
74,189
23,937
57,713
40,413
12,069
7,155
68,517
350
68,167
23,615
54,905
36,877
11,464
10,912
66,248
2,412
63,836
21,811
50,923
34,724
10,669
16,180
63,981
6,800
57,181
21,576
50,782
27,975
7,726
15,522
48,671
5,225
43,446
16,943
41,361
19,028
5,623
$
28,344
$
25,413
$
24,055
$
20,249
$
13,405
$ 2,237,099
$ 2,163,827
$ 2,006,300
$ 1,873,767
$ 1,375,888
Total Loans, Net of Unearned Income
1,447,982
1,382,382
1,204,866
1,120,993
917,236
Total Deposits
Total Long-term Debt
Total Shareholders’ Equity
Average Balances:
Total Assets
1,779,761
1,812,156
1,640,931
1,556,198
1,087,286
64,591
228,824
87,237
200,097
89,472
185,026
90,974
167,610
81,016
121,534
$ 2,170,761
$ 2,037,236
$ 1,934,123
$ 1,823,703
$ 1,330,540
Total Loans, Net of Unearned Income
1,406,000
1,272,055
1,147,891
1,114,181
906,127
Total Deposits
Total Shareholders’ Equity
Per Share Data:
Net Income(1)
Cash Dividends
Book Value at Year-end
Other Data at Year-end:
Number of Shareholders
Number of Employees
1,783,348
1,695,796
1,618,712
1,521,204
1,046,295
214,496
189,689
177,207
159,765
119,867
$
$
$
2.14
0.64
17.31
3,398
473
1.98
0.60
15.19
3,444
478
1.90
0.56
14.64
3,105
439
$
1.61
$
0.56
13.31
3,221
417
1.21
0.56
10.94
3,194
359
Weighted Average Number of Shares(1)
13,223,178
12,807,678
12,637,743
12,587,748
11,104,887
Selected Performance Ratios:
Return on Assets
Return on Equity
Equity to Assets
Dividend Payout
Net Charge-offs (Recoveries) to Average Loans
Allowance for Loan Losses to Loans
Net Interest Margin
(1) Share and Per Share Data includes the dilutive effect of stock options.
1.31 %
13.21 %
10.23 %
29.81 %
(0.01) %
1.03 %
3.76 %
1.25 %
13.40 %
9.25 %
30.18 %
0.10 %
1.05 %
3.67 %
1.24 %
13.57 %
9.22 %
29.38 %
0.19 %
1.29 %
3.74 %
1.11 %
12.67 %
8.95 %
34.80 %
0.43 %
1.37 %
3.84 %
1.01 %
11.18 %
8.83 %
46.36 %
0.32 %
1.45 %
3.98 %
9
CONSOLIDATED Balance Sheets
Dollars in thousands, except per share data
Assets
Cash and Due from Banks
Federal Funds Sold and Other Short-term Investments
Cash and Cash Equivalents
Interest-bearing Time Deposits with Banks
Securities Available-for-Sale, at Fair Value
Securities Held-to-Maturity, at Cost (Fair value of $186 and $271
on December 31, 2014 and 2013, respectively)
Loans Held-for-Sale, at Fair Value
Loans
Less:
Unearned Income
Allowance for Loan Losses
Loans, Net
Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost
Premises, Furniture and Equipment, Net
Other Real Estate
Goodwill
Intangible Assets
Company Owned Life Insurance
Accrued Interest Receivable and Other Assets
TOTAL ASSETS
Liabilities
Non-interest-bearing Demand Deposits
Interest-bearing Demand, Savings, and Money Market Accounts
Time Deposits
Total Deposits
FHLB Advances and Other Borrowings
Accrued Interest Payable and Other Liabilities
TOTAL LIABILITIES
Shareholders’ Equity
Preferred Stock, no par value; 500,000 shares authorized, no shares issued
Common Stock, no par value, $1 stated value; 30,000,000 shares authorized
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
End of period shares issued and outstanding
See Annual Report on Form 10-K.
10
$
December 31,
2014
2013
33,481
8,965
42,446
100
630,995
184
6,311
$
37,370
22,762
60,132
100
606,032
268
9,265
1,451,990
1,385,212
(4,008 )
(14,929 )
(2,830 )
(14,584 )
1,433,053
1,367,798
7,040
39,930
356
20,536
2,074
32,043
22,031
9,004
40,430
1,029
20,536
3,328
31,178
14,727
$
2,237,099
$ 2,163,827
$
428,016
$
400,024
1,018,320
1,063,098
333,425
349,034
1,779,761
1,812,156
206,064
22,450
140,770
10,804
2,008,275
1,963,730
-
13,216
108,660
104,058
2,890
-
13,174
108,022
84,164
(5,263 )
228,824
200,097
$
2,237,099
$ 2,163,827
13,215,800
13,173,793
CONSOLIDATED Statements of Income
Dollars in thousands, except per share data
Interest Income
Interest and Fees on Loans
Interest on Federal Funds Sold and Other Short-term Investments
Interest and Dividends on Securities:
Taxable
Non-taxable
$
TOTAL INTEREST INCOME
Interest Expense
Interest on Deposits
Interest on FHLB Advances and Other Borrowings
TOTAL INTEREST EXPENSE
NET INTEREST INCOME
Provision for Loan Losses
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
Non-Interest Income
Trust and Investment Product Fees
Service Charges on Deposit Accounts
Insurance Revenues
Company Owned Life Insurance
Interchange Fee Income
Other Operating Income
Net Gains on Sales of Loans
Net Gains on Securities
TOTAL NON-INTEREST INCOME
Non-Interest Expense
Salaries and Employee Benefits
Occupancy Expense
Furniture and Equipment Expense
FDIC Premiums
Data Processing Fees
Professional Fees
Advertising and Promotion
Intangible Amortization
Other Operating Expenses
TOTAL NON-INTEREST EXPENSE
Income before Income Taxes
Income Tax Expense
Net Income
Basic Earnings per Share
Diluted Earnings per Share
See Annual Report on Form 10-K.
2014
Years Ended December 31,
2013
2012
$
65,597
12
10,409
4,368
80,386
4,128
1,919
6,047
74,339
150
74,189
3,675
4,829
7,255
826
1,961
2,018
1,892
1,481
$
61,632
30
11,091
2,919
75,672
4,697
2,458
7,155
68,517
350
68,167
3,358
4,144
6,217
965
1,854
2,003
2,645
2,429
61,691
91
12,946
2,432
77,160
6,958
3,954
10,912
66,248
2,412
63,836
2,657
4,076
5,524
974
1,724
1,955
3,234
1,667
23,937
23,615
21,811
32,710
5,094
1,953
1,113
3,675
2,294
1,977
1,254
7,643
57,713
40,413
12,069
28,344
2.15
2.14
$
$
$
31,482
4,545
1,898
1,050
3,133
2,577
1,863
1,416
6,941
54,905
36,877
11,464
25,413
1.99
1.98
$
$
$
$
$
$
29,086
4,277
1,979
1,116
1,879
2,247
1,714
1,655
6,970
50,923
34,724
10,669
24,055
1.91
1.90
11
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BOARD OF Directors
Douglas A. Bawel
Christina M. Ernst
Marc D. Fine
U. Butch Klem
J. David Lett
Chris A. Ramsey
M. Darren Root
Mark A. Schroeder
Thomas W. Seger
Ray W. Snowden
Michael J. Voyles
CAUTIONARY NOTE REGARDING Forward-Looking Statements
This Summary Annual Report, including our CEO’s letter to our Shareholders on Page 1,
includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, relating to our expectations concerning our opportunities
for future growth and prosperity, and other matters. Readers are cautioned that actual
results and performance may differ materially from any of our present expectations
that are expressed or implied by any forward-looking statement due to the inherent
uncertainties in predicting the future, and risks affecting German American and its stock,
including those that are described in Item 1, “Business - Forward Looking Statements and
Associated Risks” and in Item 1A, “Risk Factors,” in our accompanying Annual Report on
Form 10-K. You may review that document (and our other SEC filings) via the internet
through the Investor Relations section of our website, www.germanamerican.com. This
report speaks only as of March 9, 2015, and we do not promise anyone that it will be
updated for changes or events after that date.
13
001CSN1B94