2015
Summary
Annual Report
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Net Income & Diluted Earnings Per Share
(dollars in thousands, except per share amounts)
$30,064
$28,344
$2.27
$2.14
$24,055
$25,413
$1.98
$1.90
$20,249
$1.61
Total Shareholders’ Equity
(dollars in millions)
Return on Equity
$252
$229
$200
$185
$168
12.67%
13.57%
13.40%
13.21%
12.47%
$300
$250
$200
$150
$100
$50
$0
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
Total Loans, Net of Unearned Income
(dollars in millions)
Commercial and Agriculture Loans as % of Total Loans
$1,564
$1,448
$1,382
$1,205
$1,121
83%
81%
81%
81%
82%
Total Assets
(dollars in millions)
Return on Assets
$3,000
$2,500
$2,000
$1,874
$2,006
$2,164
$2,237
$2,374
1.24%
1.25%
1.31%
1.33%
1.11%
$1,500
$1,000
$500
$0
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Dear Shareholders:
I am extremely pleased to report to you, our shareholders, that your Company, in
2015, continued the trend of exceptional financial performance generated over
the course of the past decade. Our 2015 reported net income of $30.1 million,
or $2.27 per share, was an increase of approximately 6% over the prior year’s
earnings of $28.3 million, or $2.14 per share. This level of performance in 2015
represented the 6th consecutive year in which your Company has posted record
annual earnings and the 11th consecutive year of double-digit annual return on
shareholders’ equity.
Most importantly, from your perspective as a shareholder, this consistent pattern
of strong earnings performance, which has grown at a compound annual growth
rate of in excess of 13%, on a per share basis, over the course of the past 5 year
period, has resulted in a similar level of superior performance
in total return for our shareholders. On a total return basis, our
share value has more than doubled over this same 5 year period
and has significantly outperformed the index of publicly-traded
Indiana banking companies, as well as the Russell Microcap
Index and the Russell 2000 Index, both of which include German
American in their broader market-based indices.
During 2015, we remained focused, as always, on the realization
that the ultimate driver of our performance lies in our clients’
continued acceptance of our array of offerings of financial
products and services. We also fully recognize that our clients’
satisfaction with and loyalty to German American is dependent
upon our ability to deliver those financial products and services
in a manner that provides exceptional value to our clients, in
terms of not only the product benefits, but also the counsel and
advice of our team of financial professionals as they make good on our pledge
of exceptional customer service. We believe our ability to successfully do so over
the course of the past decade, as well as our ability to do so going forward, is
directly linked to our business model and 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 their local communities.
the past decade has proven this approach to doing business is valued by our
clients and is a model that our competitors have not been able to replicate.
I encourage you to take the time to review this year’s Summary Annual Report to
learn more about German American’s “secret to success.”
Over the past decade, we have remained committed to our Mission, Vision,
and Core Values while pursuing our strategy of disciplined geographic growth
into adjacent southern Indiana market areas. This disciplined growth strategy
continued in 2015 with the October announcement of the pending merger
transaction with River Valley Bancorp of Madison, Indiana. This transaction,
which was completed in March 2016, positions your Company to enhance our
previously stated objective of expanding our southern Indiana footprint into the
vibrant southeast Indiana market area. River Valley has built
a solid community banking franchise in three distinct market
areas, which we believe will represent an excellent opportunity
for growth as we take our successful approach to doing business
to each of these markets.
River Valley is headquartered in the Madison, Indiana market,
which is very similar to our other heritage markets in southern
Indiana. Much like German American’s experience within our
heritage markets, River Valley has operated in Madison for over
a century and is a leader in the market from both a business
and civic perspective. Additionally, River Valley has a strong
presence with five banking offices in the vibrant and rapidly
growing market area of the Indiana side of the Louisville,
Kentucky MSA, a market which German American entered
in early 2015 with a commercial loan production office. They
also have banking offices in the Seymour and North Vernon, Indiana markets,
which match-up very well with our existing growing franchise in the adjacent
Columbus, Indiana market. This opportunity to enhance our existing presence in
two of German American’s newest markets, as well as allowing for a new market
presence in Madison, Indiana, makes this merger a perfect fit for our Company.
Mark A. Schroeder
Chairman and CEO
It is for this reason that in this year’s Summary Annual Report, we have chosen to
highlight the Mission, Vision, and Core Values by which your Company is governed
and to highlight several of those teams of talented local financial professionals,
who make good, day-in and day-out, on our pledge of delivering exceptional
value-added financial products and services to their clients throughout southern
Indiana. While our business model and philosophy is not complicated, it does
require an unwavering commitment to all of our clients and each of our local
communities to successfully execute. Obviously, our success over the course of
In closing, I would like to welcome the River Valley customers, employees, and
shareholders to German American, and to thank all of you, as German American
shareholders, for your continued investment and support.
Sincerely,
Mark A. Schroeder
Chairman & CEO
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A company rich in history and founded in 1910, German American
is dedicated to helping individuals, families and businesses achieve
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team builds lasting client relationships based on integrity,
responsive service, innovation, and shared values. We support the
communities we serve because we believe that when a community
thrives, its people prosper.
We are deeply rooted and
engaged with the communities
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we serve. The German American
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professionals build strong
our community banking roots and the importance of enhancing
relationships based on a winning
and growing the relationships we have with our shareholders,
combination of discipline and
customers, employees and communities.
conservative management with a
keen eye for arising opportunities.
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6th consecutive year German American
has achieved record earnings
million
per share
increase of approximately 6% in reported net income in 2015
11th consecutive year of double digit
return on equity
December 2015 average unemployment rate of the 19 counties
German American serves in the southern Indiana area
*Indiana state average was 4.6%.
**United States average was 5.0%.
*number of German American team members
inclusive of River Valley
*Includes full and part time employees
Rates listed are non-seasonally adjusted.
*Source: DWD, Local Area Unemployment Statistics
**Source: Bureau of Labor Statistics
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A strong internal culture prepares our team to provide responsive
conservative values based on a keen eye for opportunities, which
service with integrity and confidence. Our financial professionals
anchors our success. We promote and encourage this management
commit to being accessible and accountable to one another as we
style to our clients, whether they are running a business or managing
focus on growing the client relationship. Our team meetings have
their individual or family finances. From helping clients protect assets,
representation from all divisions and areas of expertise within our
plan and grow a financial portfolio,
company, which helps us gain a deeper understanding of our clients’
and expand businesses, to
needs. Structuring financial strategies based on teamwork, smart
managing everyday financial
solutions and a desire to achieve has proven successful for our
transactions, the German
clients, our company, and our shareholders.
American team rises above
the competition.
At German American, it’s not about selling a product or service;
it’s about helping people succeed. Our company is managed with
John Lamb, Regional President
Alvin Basham, Lindsay Botsch, Tracy Helmer, Diana Wilderman,
Rob Bingham and Dave Mitchell
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Everett Southern, Julie Donham, Chris Flynn and Jerry Towle
Mason Seay
Jim McDonald
Ag Services
A strong commitment to local, responsive service puts
our Agricultural financial experts in the driver’s seat
of German American Ag Services trucks. Southern
Indiana is a leader in crop and animal farming. German
American has been serving farmers since our company
was organized in 1910. We listen. We research. We
study. Then, we serve the Ag community with financial
products and services to help achieve present and
long-term strategies.
Many financial services companies
state they are community focused.
At German American, we live it.
Our employees and our clients live,
work, raise families, coach youth
teams, teach financial
literacy,
volunteer for nonprofits, celebrate
community festivals, and help each
other in time of need. Quite simply,
besides being the right thing to do,
being a strong community partner
is a good business decision for us.
Creating healthy communities
that thrive and attract talent
and employment is vital to our
success and the success of
our clients.
Mark Franklin, Regional President
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local...responsive...
committed
“We are in a ‘people’ business,
and we affect the lives of
thousands upon thousands
of customers and the many
communities we
serve. Staffing our
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Mark Schroeder
Chairman
and CEO
services companies with local
people who are helping
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in each of our markets is a key
ingredient of our
success.”
Vinc
KNOX CO
Princeton
GIBSON COUNTY
Oa
C
VANDERBURGH
VANDERBURGH
COUNTY
COUNTY
Evansville
N
Bloomington
MONROE
COUNTY
Bedford
LAWRENCE
COUNTY
BARTHOLOMEW
COUNTY
Columbus
JACKSON
COUNTY
Seymour
Osgood
RIPLEY
COUNTY
JENNINGS
COUNTY
North Vernon
Dupont
JEFFERSON
COUNTY
Madison
Hanover
Carrollton
CARROLL COUNTY,
KENTUCKY
DAVIESS
COUNTY
Odon/Cannelburg
Washington
Loogootee
MARTIN
COUNTY
cennes
OUNTY
Petersburg
Ireland
Dubois
Jasper
DUBOIS
COUNTY
Huntingburg
Holland
Ferdinand
SPENCER
COUNTY
PERRY
COUNTY
Tell City
akland
City
Winslow
PIKE
COUNTY
WARRICK
COUNTY
Newburgh
Rockport
CLARK
COUNTY
Charlestown
Sellersburg
Sellersburg
Jeffersonville
Jeffersonville
New Albany
New Albany
FLOYD
COUNTY
Floyds
Knobs
Banking
Investments
Insurance
Ag Services
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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, 2015 and 2014, 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, 2015, appearing in the Annual
Report on Form 10-K, not appearing herein. In our report dated March 9, 2016, 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, 2016
The following selected data should be read in conjunction with the Company’s Annual Report on Form 10-K for 2015.
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
Total Loans, Net of Unearned Income
Total Deposits
Total Long-term Debt
Total Shareholders’ Equity
Average Balances:
Total Assets
Total Loans, Net of Unearned Income
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
Weighted Average Number of Shares(1)
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
2015
2014
2013
2012
2011
$
$
81,620
6,068
75,552
-
75,552
27,444
61,326
41,670
11,606
30,064
$
$
80,386
6,047
74,339
150
74,189
23,937
57,713
40,413
12,069
28,344
$
$
75,672
7,155
68,517
350
68,167
23,615
54,905
36,877
11,464
25,413
$
$
77,160
10,912
66,248
2,412
63,836
21,811
50,923
34,724
10,669
24,055
$
$
80,161
16,180
63,981
6,800
57,181
21,576
50,782
27,975
7,726
20,249
$ 2,373,701
1,564,347
1,826,376
95,606
252,348
$ 2,237,099
1,447,982
1,779,761
64,591
228,824
$ 2,163,827
1,382,382
1,812,156
87,237
200,097
$ 2,006,300
1,204,866
1,640,931
89,472
185,026
$ 1,873,767
1,120,993
1,556,198
90,974
167,610
$ 2,267,555
1,483,752
1,825,913
241,017
$ 2,170,761
1,406,000
1,783,348
214,496
$ 2,037,236
1,272,055
1,695,796
189,689
$ 1,934,123
1,147,891
1,618,712
177,207
$ 1,823,703
1,114,181
1,521,204
159,765
$
$
2.27
0.68
19.00
2.14
0.64
17.31
$
$
1.98
0.60
15.19
$
1.90
0.56
14.64
1.61
0.56
13.31
3,343
479
13,258,916
3,398
473
13,223,178
3,444
478
12,807,678
3,105
439
12,637,743
3,221
417
12,587,748
1.33 %
12.47 %
10.63 %
29.97 %
0.03 %
0.92 %
3.70 %
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 %
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(1) Share and Per Share
Data includes the dilutive
effect of stock options.
9
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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 $95 and $186
on December 31, 2015 and 2014, 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
$
December 31,
2015
2014
36,062
15,947
52,009
-
637,840
95
10,762
1,568,075
(3,728 )
(14,438 )
1,549,909
8,571
37,817
169
20,536
1,283
32,732
21,978
$
33,481
8,965
42,446
100
630,995
184
6,311
1,451,990
(4,008 )
(14,929 )
1,433,053
7,040
39,930
356
20,536
2,074
32,043
22,031
TOTAL ASSETS
$
2,373,701
$ 2,237,099
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
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
End of period shares issued and outstanding
$
465,357
1,054,983
306,036
428,016
$
1,018,320
333,425
1,826,376
1,779,761
273,323
21,654
206,064
22,450
2,121,353
2,008,275
-
13,279
110,145
125,112
3,812
252,348
-
13,216
108,660
104,058
2,890
228,824
$
2,373,701
$ 2,237,099
13,278,824
13,215,800
10
See Annual Report
on Form 10-K.
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
2015
Years Ended December 31,
2014
2013
$
66,740
13
9,017
5,850
81,620
3,976
2,092
6,068
75,552
-
75,552
3,957
4,826
7,489
846
2,127
4,515
2,959
725
$
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
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27,444
23,937
23,615
35,042
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3,669
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7,667
61,326
41,670
11,606
30,064
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2.27
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$
32,710
5,094
1,953
1,113
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2,294
1,977
1,254
7,643
57,713
40,413
12,069
28,344
2.15
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31,482
4,545
1,898
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3,133
2,577
1,863
1,416
6,941
54,905
36,877
11,464
25,413
1.99
1.98
$
$
$
See Annual Report
on Form 10-K.
11
B
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12
Douglas A. Bawel
Lonnie D. Collins
Christina M. Ernst
Marc D. Fine
U. Butch Klem
J. David Lett
Chris A. Ramsey
M. Darren Root
Mark A. Schroeder
Thomas W. Seger
Raymond W. Snowden
Michael J. Voyles
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 for future growth and
other matters. Readers are cautioned that actual results and performance may differ
materially from 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,
2016, and we do not promise anyone that it will be updated for changes or events after
that date.
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13
A co m pany rich in history
and founded in 1910,