2016
SummaryAnnualReport
DRIVEN
by our
FUTURE
The Numbers
Net Income & Diluted Earnings Per Share
(dollars in thousands, except per share amounts)
$40,000
$35,000
$30,000
$25,000
$24,055
$35,184
$28,344
$30,064
$25,413
$1.90
$1.98
$2.14
$2.27
$2.36
Total Shareholders’ Equity
(dollars in millions)
Return on Equity
$330
$252
$229
$185
$200
13.57%
13.40%
13.21%
12.47%
10.94%
$350
$300
$250
$200
$150
$100
$50
$0
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
Total Loans, Net of Unearned Income
(dollars in millions)
Commercial and Agriculture Loans as % of Total Loans
Total Assets
(dollars in millions)
Return on Assets
$1,990
$1,448
$1,564
$1,382
$1,205
83%
81%
81%
82%
81%
$2,956
$2,237
$2,164
$2,374
$2,006
1.24%
1.25%
1.31%
1.33%
1.24%
$3,250
$3,000
$2,750
$2,500
$2,250
$2,000
$1,750
$1,500
$0
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
$20,000
$15,000
$10,000
$5,000
$0
$2,250
$2,000
$1,750
$1,500
$1,250
$1,000
$750
$0
Driven By Results
Dear Shareholders:
Letter from Mark A. Schroeder
Chairman and CEO
2016 represented another year of record performance for
German American. For the 7th consecutive year, your Company
posted record earnings, reporting annual net income of $35.2
million, or $2.36 per share. These 2016 reported earnings were
an approximately 4% improvement, on a per share basis, over
the prior year record earnings of $30.1 million, or $2.27 per share.
The 2016 financial performance also resulted in the achievement
of the 12th consecutive year in which we have delivered a double-
digit return on shareholders’ equity.
While we are honored and
humbled to receive this
recognition, the theme of
this year’s Summary Annual
Report, Driven By Our
Future, encapsulates our focus
and mindset of continuous
improvement and disciplined growth.
Perhaps most impressive was the ability to post this record level of
financial performance in 2016 in the face of current year reported
earnings being impacted by merger expenses associated with
the River Valley Bancorp merger transaction completed during
the first quarter of 2016. These merger related expenses, which
totaled approximately $4.3 million, or $2.7 million after tax,
impacted reported earnings per share by approximately $0.18
per share, the level of reported return on shareholders’ equity by
approximately .85%, and the level of reported return on average
assets by .10%.
While the merger costs associated with the River Valley Bancorp
transaction did impact 2016 earnings, the completion of this
merger transaction represented a significant strategic opportunity
for German American, which we believe will positively impact your
Company’s operating earnings going forward. The inclusion of the
River Valley franchise along the I-65 corridor between Columbus
and New Albany, Indiana, affords us significant opportunity for
future organic balance sheet and earnings growth.
The acquisition of River Valley expanded German American’s
footprint into the greater Madison, Indiana market, which is
very similar to our other heritage markets in Southern Indiana,
and gave us 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 in which we previously
operated a commercial loan production office. Additionally, River
Valley had banking offices in the Seymour and North Vernon,
Indiana markets, which complimented German American’s
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, made this merger a perfect fit for
your Company.
In executing our vision for the future, we will continue to reinvest
in your Company, building the capacity to support strong,
long-term profitable customer relationships. While we recognize
that we are in a people-centric business and that relationships
are the key to developing long-term value, both for our clients
and our shareholders, going forward it will take a combination of
ever-changing, technology-based delivery channels and our
traditional people-based approach to meet the expectations
of our clients as to what defines customer service excellence
in the future. To maintain our position as one of the nation’s
leading community banking organizations, it is imperative that
we continuously reinvest in our people and in our technology
infrastructure.
Disciplined growth has been one of the key factors in our past
success. Therefore, we must also stay focused on the growth of
your Company in the coming years. Within our existing markets,
we will continue to drive organic growth through market share
expansion, while also driving disciplined, strategic growth by
expanding our footprint into adjacent new territories that offer
dynamic, economically vibrant marketplaces. In both our existing
and expansion markets, we will continue to bring together
strong teams of local financial professionals with a like-minded
community-based culture and a proven history of building
relationships through customer service excellence.
At German American, resting on past successes is not an option.
Through a combination of continuous reinvestment in our people
and new technology and organic and disciplined strategic growth,
we will strive to build upon our past successes in creating long-
term shareholder value through continued exceptional financial
performance. As shareholders, you can be assured that all of us
who work for you - directors, officers and staff - are committed
to enhancing the value of your investment in German American,
and we are all Driven By Our Future!
The strength of your Company’s financial performance, in
terms of not only 7 consecutive years of record earnings and 12
years of double-digit returns on shareholders’ equity, but also a
consistent pattern of strong loan growth coupled with excellent
credit quality and exceptional expense management, has resulted
in German American receiving numerous recognitions as one
of the best community banking organizations in the country.
Sincerely,
Mark A. Schroeder
Chairman & CEO
1
Driven By Our Clients
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
Vincennes
Washington
KNOX COUNTY
Loogootee
MARTIN
COUNTY
CLARK
COUNTY
Charlestown
Sellersburg
Sellersburg
Jeffersonville
Jeffersonville
New Albany
New Albany
FLOYD
COUNTY
Floyds
Knobs
Depicts areas of
market expansion
during 2016
Banking
Insurance
Investments
Ag Services
Petersburg
Ireland
Dubois
Jasper
DUBOIS
COUNTY
Huntingburg
Holland
Ferdinand
SPENCER
COUNTY
PERRY
COUNTY
Tell City
Princeton
GIBSON COUNTY
Oakland
City
VANDERBURGH
VANDERBURGH
COUNTY
COUNTY
Winslow
PIKE
COUNTY
WARRICK
COUNTY
Evansville
Newburgh
Rockport
2
Our Mission
German American is dedicated to helping individuals, families and businesses achieve greater prosperity and
quality of life. Together, our financial team builds lasting client relationships based on integrity, responsive
service, innovation, and shared value. We support the communities we serve and believe that when a
community thrives, its people prosper.
Our Values
Integrity
Our reputation relies on integrity. We value honesty, open communication, diverse perspectives, and high
ethical principals.
People
People come first at German American. We invest in our communities and support social and economic
development. We value respect and courtesy for every person and believe in the power of positive
attitudes.
Relationships
We develop relationships based on a strong foundation of trust and mutual respect to help create loyal
customers and a loyal team. Our unified goal is serving individuals, families and businesses to achieve
financial success.
Performance
Performance is vital. German American employees must possess the determination and drive to succeed.
Our vast knowledge base and expertise enables us to work efficiently while providing customer service
excellence to support strong performance.
3
Driven By Our Future
There is no better time
to plan for the future than
when you are experiencing
record performance.
7th
consecutive year
German American
has achieved
record earnings
Net income of
$35.2million
$2.36per share
increase of approximately
4% in reported earnings
per share in 2016
12th
consecutive year
of double digit
return on
equity
American Banker named
Mark A. Schroeder one of three
Community Bankers
of The Year
in the nation for 2016
American Banker is an essential resource for breaking news,
research, data, and opinion content for approximately
560,000 senior executives in the banking and financial
services industry nationwide.
4
Vision for 2017 and Beyond
German American’s strategic vision responds to challenges and opportunities of the competitive
financial services environment. By executing on our vision for the future, we are building the capacity
to support strong, long-term, profitable customer relationships and to drive shareholder value.
The strategic vision that drives our future is based on five key areas: Client Experience, Technology,
Human Capital, Growth, and Financial Performance.
Client Experience
With a sharp, focused strategy on the client experience, our commitment is to deliver customer service
excellence through every delivery channel we offer. Developing relationships with our clients by truly
listening to their needs has been the foundation of German American’s success since 1910. We believe our
future success will continue to be based on client relationships, yet the shift will be in the delivery and
communication channels. It is imperative that we have a clear understanding about the best products,
services, and delivery channels to continue to make real connections with our clients and proactively
serve their financial needs. We are in a people-centric business, and relationships are the key to developing
long-term value. Serving our clients with integrity and honesty, along with making it easy to do business
with us, will continue to provide opportunities to help families and individuals purchase or build homes,
accumulate wealth, retire comfortably, and manage their everyday financial needs and to help businesses
grow and flourish.
Technology
Since the 1970’s when ATMs became an industry standard in banking, the evolution to technology has
been slowing rising. Today, it is evolving at a rapid pace with no indication of slowing down. At German
American, we are leveraging technology to operate more efficiently and reduce manual processes. We are
proactively analyzing our system applications, internal communication methods, employee training, and
leadership culture to empower our team members to provide our clients with timely, accurate service.
We offer our business and personal clients top technology in online and mobile banking service and are
dedicated to proactively monitor and evaluate new technology offerings. We are proving our commitment
to information security by expanding the security training for each of our team members and engaging
in consistent information security testing, monitoring, and reporting.
5
Driven By Our Future
Human Capital
Success doesn’t just happen. It takes the hard work of every German American team member to achieve
the record performance our company has experienced the last seven years. Our company is invested
in offering our team members training and technology to help each member perform at a high level.
Attracting and retaining top talent and preparing our team members for future roles within our company
is crucial. We have implemented a new recruitment and training technology system to provide consistency
throughout our company on these key initiatives. We invite all of our team members to participate in an
annual employee satisfaction survey and use the feedback to implement new employee benefits, offer
additional training, update equipment, and improve communication among our team members.
Growth
Our team is committed to deepening relationships with existing clients and growing market share in each
market we serve. We will continue our path of disciplined strategic growth designed to allow us to enter
into new territories adjacent to our existing footprint that offer dynamic, vibrant marketplaces, and bring
together strong financial companies with similar, like-minded community bank cultures and a proven
history of building relationships through customer service excellence.
6
Financial Performance
Resting on German American’s past success is not an option. Maintaining strong financial performance is
key for our shareholders, clients, employees and communities. Superior financial performance affords us
opportunities to invest in tools and resources to measure and enhance the client experience and invest in
top talented financial professionals. It allows us to grow into new, vibrant markets and invest in efficient
and secure technology. It gives us the ability to influence the health of our local communities in key areas
of economic development, education, and overall quality of life. We are committed to always being mindful
of the purpose of our organization with the understanding that superior financial performance allows us
to fulfill our mission.
Executive Team
D. Neil Dauby Executive Vice President, Chief Commercial Banking Officer
Keith A. Leinenbach Executive Vice President, Chief Credit Officer
Randall L. Braun Executive Vice President, Chief Retail Banking Officer and Chief Development Officer
Mark A. Schroeder Chairman and Chief Executive Officer
Bradley M. Rust Executive Vice President and Chief Financial Officer
Clay W. Ewing President
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, 2016 and 2015, 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, 2016, appearing in the Annual
Report on Form 10-K, not appearing herein. In our report dated March 9, 2017, 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, 2017
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 2016.
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
2016
2015
2014
2013
2012
$ 103,365
$
81,620
$
80,386
$
75,672
$
77,160
8,461
94,904
1,200
93,704
32,013
76,587
49,130
13,946
6,068
75,552
-
75,552
27,444
61,326
41,670
11,606
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
$
35,184
$
30,064
$
28,344
$
25,413
$
24,055
$ 2,955,994
$ 2,373,701
$ 2,237,099
$ 2,163,827
$ 2,006,300
Total Loans, Net of Unearned Income
1,989,955
1,564,347
1,447,982
1,382,382
1,204,866
Total Deposits
Total Long-term Debt
Total Shareholders’ Equity
Average Balances:
Total Assets
2,349,551
1,826,376
1,779,761
1,812,156
1,640,931
120,560
330,267
95,606
252,348
64,591
228,824
87,237
200,097
89,472
185,026
$ 2,841,096
$ 2,267,555
$ 2,170,761
$ 2,037,236
$ 1,934,123
Total Loans, Net of Unearned Income
1,904,779
1,483,752
1,406,000
1,272,055
1,147,891
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
2,249,892
1,825,913
1,783,348
1,695,796
1,618,712
321,520
241,018
214,496
189,689
177,207
$
$
$
2.36
0.72
21.64
3,513
605
2.27
0.68
19.00
3,343
479
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
Weighted Average Number of Shares(1)
14,927,410
13,258,916
13,223,178
12,807,678
12,637,743
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.
1.24 %
10.94 %
11.17 %
30.21 %
0.04 %
0.74 %
3.75 %
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 %
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
Securities Available-for-Sale, at Fair Value
Securities Held-to-Maturity, at Cost (Fair value of $0 and $95
on December 31, 2016 and 2015, 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 (Loss) Income
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,
2016
2015
$
48,467
16,349
64,816
709,786
$
36,062
15,947
52,009
637,840
-
95
15,273
10,762
1,993,404
1,568,075
(3,449 )
(14,808 )
(3,728 )
(14,438 )
1,975,147
1,549,909
13,048
48,230
242
54,058
2,835
46,642
25,917
8,571
37,817
169
20,536
1,283
32,732
21,978
$
2,955,994
$ 2,373,701
$
571,989
$
465,357
1,399,381
1,054,983
378,181
306,036
2,349,551
1,826,376
258,114
18,062
273,323
21,654
2,625,727
2,121,353
-
15,261
171,744
149,666
(6,404 )
-
13,279
110,145
125,112
3,812
330,267
252,348
$
2,955,994
$ 2,373,701
15,261,431
13,278,824
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
Debt 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.
2016
Years Ended December 31,
2015
2014
$
86,202
74
$
9,638
7,451
103,365
5,187
3,274
8,461
94,904
1,200
93,704
4,644
5,973
7,741
987
2,532
4,798
3,359
1,979
$
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
32,013
27,444
23,937
43,961
6,297
2,261
1,151
5,686
3,672
2,657
1,062
9,840
76,587
49,130
13,946
35,184
2.36
2.36
$
$
$
35,042
4,939
1,873
1,144
3,541
2,661
3,669
790
7,667
61,326
41,670
11,606
30,064
2.27
2.27
$
$
$
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
$
$
$
11
Board of Directors
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
12
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, 2017, and we do not promise anyone that it will be
updated for changes or events after that date.
13
001CSN27D0