FOUNDATION OF
Success
2017
Summary
Annual
Report
Strength in
Numbers
Net Income & Earnings Per Share
(dollars in thousands, except per share amounts)
Earnings Per Share*
Total Shareholders’ Equity
(dollars in millions)
Annualized Return on Equity
$40,676
$35,184
$28,344
$30,064
$1.43
$1.51
$1.57
$1.77
$25,413
$1.32
$365
$330
$252
$229
$200
13.40%
13.21%
12.47%
10.94%
11.59%
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
*Earnings Per Share adjusted for 3-for-2 stock split completed in 2017.
Total Loans, Net of Unearned Income
(dollars in millions)
Commercial and Agriculture Loans as % of Total Loans
Total Assets
(dollars in millions)
Annualized Return on Assets
$3,500
$1,990
$2,142
$3,000
$3,144
$2,956
$1,448
$1,564
$1,382
81%
81%
82%
81%
81%
$2,164
$2,237
$2,374
1.25%
1.31%
1.33%
1.24%
1.35%
$2,500
$2,000
$1,500
$1,000
$500
$0
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
$2,500
$2,250
$2,000
$1,750
$1,500
$1,250
$1,000
$750
$500
$250
$0
8th
consecutive year
German American
has achieved
record earnings
13th
consecutive fiscal
year of double-digit
return on equity
15%
increase in
quarterly cash
dividend
Dear Shareholders:
2017 brought an acceleration of the economic recovery our
nation has been experiencing since the conclusion of the
Great Recession in the U.S. in June 2009. While the recovery
from the U.S. recession, which officially lasted from December
2007 to June 2009, had been very slow but steady during
the early years of the recovery, this past year we’ve seen the
economy come back very strong. At German American, we
have been fortunate to do business in a part of the country that
has historically demonstrated remarkably consistent, stable
performance in good times and bad. Just like the markets
we serve, German American Bancorp has likewise delivered
exceptional financial performance in both good times and bad to
the benefit of our customers, communities and shareholders.
We were pleased in 2017 to achieve another record year in terms
of total asset size and earnings. For the first time ever in our
107 year history, we eclipsed the $3.0 billion mark in total assets
Letter from Mark A. Schroeder
Chairman and CEO
and the $2.0 billon mark in total loans outstanding in 2017. We
also reported record net income in 2017 of $40.7 million, or $1.77
per share, which represents our 8th consecutive year of record
earnings. Additionally, we posted an 11.59% return on equity
in 2017, the 13th consecutive year in which we’ve delivered
a double-digit return on shareholder equity. Clearly from a
financial perspective, this level of performance is in keeping with
the Foundation of Success theme of this year’s annual report.
continued...
1
continued...
For German American, however, this Foundation of Success
is about so much more than just financial performance. It’s
about the ongoing geographic growth we’ve experienced over
the course of the past two decades. Starting in the 1990s with
the expansion of German American into the heritage counties
surrounding our home base of Jasper and Dubois County,
Indiana, and continuing over the past decade with expansion
into larger and economically vibrant markets in Southern
Indiana, we have grown German American into one of the
largest Indiana-domiciled banks encompassing a geographic
footprint throughout the lower third of the State of Indiana.
Expansions into metro markets in the past decade include
Bloomington, Columbus, and Evansville, Indiana, and most
recently Clark and Floyd counties on the Indiana side of the
Louisville, Kentucky MSA.
During 2017 we also completed the integration of River Valley
Bancorp, acquired in March 2016, which was marked by the
continuation of River Valley’s dominant presence in Madison,
Indiana, as well as by the integration of the Seymour and
North Vernon, Indiana, offices into our operations in Columbus,
Indiana. Additionally, we’ve seen dynamic growth in 2017 within
Clark and Floyd Counties, where we’ve built out the five-
branch network that River Valley had in those markets into its
own business unit that has seen tremendous acceptance and
growth within what is undoubtedly one of the fastest growing
and economically robust markets, not only in Indiana, but
throughout the entire Midwest.
2
Most importantly, this Foundation of Success is about
people and our relationships with our customers, employees,
shareholders and the communities we serve. It’s about our
commitment to make the greatest contribution possible to the
prosperity and quality of life of all our stakeholders. By building
customer relationships based on the trust and integrity of our
local financial professionals, who serve as community leaders
in every community we serve, we’re helping our customers
prosper and our communities thrive. This is true to our German
American Mission that states, “We support the communities we
serve and believe that when a community thrives, its people
prosper.” We do these things because it’s the right thing to do
and because it’s good for business. As a community banking
organization, our Foundation of Success is intricately linked to
the success of our customers and our communities.
Just as we celebrate the successes of 2017, the past decade, and
our entire 100+ years of existence, which has resulted in German
American being recognized as one of the best community banks
in the nation, we also look forward to the future and toward
further building upon the Foundation of Success that all of
our stakeholders – customers, communities, employees and
shareholders – have helped us create for more than a century.
Sincerely,
Mark A. Schroeder
Chairman & CEO
3
Where We
Are
Bloomington
MONROE
COUNTY
Bedford
LAWRENCE
COUNTY
DAVIESS
COUNTY
Odon/Cannelburg
Vincennes
Washington
KNOX COUNTY
Loogootee
MARTIN
COUNTY
Petersburg
Ireland
Dubois
Jasper
DUBOIS
COUNTY
Huntingburg
Princeton
GIBSON COUNTY
Oakland
City
VANDERBURGH
VANDERBURGH
COUNTY
COUNTY
Winslow
PIKE
COUNTY
WARRICK
COUNTY
Evansville
Newburgh
Rockport
Holland
Ferdinand
SPENCER
COUNTY
PERRY
COUNTY
Tell City
4
DECATUR
COUNTY
BARTHOLOMEW
COUNTY
Greensburg
Columbus
JACKSON
COUNTY
Seymour
JENNINGS
COUNTY
North Vernon
Osgood
RIPLEY
COUNTY
Dupont
JEFFERSON
COUNTY
Madison
Hanover
Carrollton
CARROLL COUNTY,
KENTUCKY
CLARK
COUNTY
Charlestown
Sellersburg
Sellersburg
Jeffersonville
Jeffersonville
New Albany
New Albany
FLOYD
COUNTY
Floyds
Knobs
Banking
Insurance
Investments
Ag Services
New office coming
May 2018 pending close
of German American’s
acquisition of
MainSource locations.
A strong foundation
established in 1910 . . .
On December 1st, 1910, German
American Bank opened for
business in Jasper, IN. Several
citizens in the community
worked together to open the bank
with $40,000 in capital stock,
approximately sixty stockholders
and two employees. Traits of this
Midwestern community located
in the heart of southwestern
Indiana were embedded in
German American Bank from
the beginning, including
people first, hard work, family,
community, integrity, and pride
in the German heritage while
celebrating new hopes and
dreams in America. German
American Bank was established
on this strong foundation, and
the company continues to hold
these values today.
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 values. 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 principles.
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.
5
“The world of banking and financial services has changed
dramatically during the past century and the pace of change
continues to accelerate, yet as long as we make certain that
our culture of ‘local-people-helping-local-people succeed’
stays at the center of our principles, I am confident that
German American will survive and prosper in the coming
years, and well beyond.”
- Mark Schroeder, Chairman and CEO
addressing the German American Bank team as they celebrated
the 100 year anniversary of the company in 2010
People are the core foundation of our success.
Establishing long-term relationships with our
customers, our employees, our shareholders and
our communities is critical as we strive to make
the greatest contribution possible to the prosperity
and quality of life of these key stakeholders. We
demonstrate this commitment through financial
performance and corporate responsibility.
People
We seek to attract, develop and retain talented local financial professionals in every community
we serve. We empower our employees to serve our customers in exceptional ways with local,
responsive decision-making. Our leaders are committed to being involved in the economic
development initiatives within their local communities. We actively look for ways to partner with
businesses, non-profits, schools, individuals and municipalities to strengthen the future of the
communities for a better place to live and work. In addition to the full array of financial services
we provide and the jobs and spending we bring to local economies, we also show our corporate
citizenship through the volunteer spirit of our entire German American team.
Local
Leadership
6
Customer
Centric
Relationship
Focus
Building customer relationships based on trust and integrity from local financial professionals
defines a community bank, and we believe no one does community banking better than
German American. We exist to help our customers with their banking, insurance, investment
and wealthy advisory needs through every stage of life. We combine top-rated customer
facing technology with a talented, customer-focused team to deliver service excellence.
The foundation to find the best financial products to help our customers achieve their dreams
and goals is based on a strong relationship with our customers. To us, that’s success.
Our
Core
Business
Since 1910 we’ve been serving the banking needs of our
customers. Not only have we grown and expanded our
footprint significantly since then, we’ve also expanded
the products and services we offer to become a complete
financial services resource for our customers. From
accumulating and managing wealth, effectively managing risk,
to the current technology for managing every day banking,
our team builds and expands relationships to serve our
customers’ best interests. With our eye on our future success,
we are committed to adapting to demand and implementing
new ideas to service our customers.
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, 2017 and 2016, 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, 2017, appearing in the Annual
Report on Form 10-K, not appearing herein. In our report dated March 1, 2018, 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 1, 2018
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 2017.
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
2017
2016
2015
2014
2013
$ 111,030
$ 103,365
$
81,620
$
80,386
$
75,672
11,121
99,909
1,750
98,159
31,854
77,803
52,210
11,534
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
$
40,676
$
35,184
$
30,064
$
28,344
$
25,413
$ 3,144,360
$ 2,955,994
$ 2,373,701
$ 2,237,099
$ 2,163,827
Total Loans, Net of Unearned Income
2,141,638
1,989,955
1,564,347
1,447,982
1,382,382
Total Deposits
Total Long-term Debt
Total Shareholders’ Equity
Average Balances:
Total Assets
2,484,052
2,349,551
1,826,376
1,779,761
1,812,156
141,717
364,571
120,560
330,267
95,606
252,348
64,591
228,824
87,237
200,097
$ 3,002,695
$ 2,841,096
$ 2,267,555
$ 2,170,761
$ 2,037,236
Total Loans, Net of Unearned Income
2,036,717
1,904,779
1,483,752
1,406,000
1,272,055
Total Deposits
Total Shareholders’ Equity
Per Share Data: (1)
Net Income(2)
Cash Dividends
Book Value at Year-end
Tangible Book Value Per Share(3)
Other Data at Year-end:
Number of Shareholders
Number of Employees
2,395,146
2,249,892
1,825,913
1,783,348
1,695,796
350,913
321,520
241,018
214,496
189,689
$
$
$
1.77
0.52
15.90
13.45
3,459
621
1.57
0.48
14.42
11.94
3,513
605
1.51
0.45
12.67
11.57
3,343
479
$
1.43
$
0.43
11.54
10.40
3,398
473
1.32
0.40
10.13
8.92
3,444
478
Weighted Average Number of Shares(1)(2)
22,924,726
22,391,115
19,888,374
19,834,766
19,211,517
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
1.35 %
11.59 %
11.59 %
29.11 %
0.04 %
0.73 %
3.76 %
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) Share and Per Share Data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.
(2) Share and Per Share Data includes the dilutive effect of stock options.
9
(3) Tangible Book Value per Share is defined as Total Shareholders’ Equity less Goodwill and
Other Intangible Assets divided by End of Period Shares Outstanding.
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
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; 45,000,000 shares authorized(1)
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(1)
(1) Share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.
See Annual Report on Form 10-K.
10
December 31,
2017
2016
$
58,233
12,126
70,359
$
48,467
16,349
64,816
740,994
709,786
6,719
15,273
2,145,019
1,993,404
(3,381 )
(15,694 )
(3,449 )
(14,808 )
2,125,944
1,975,147
13,048
54,246
54
54,058
2,102
46,385
30,451
13,048
48,230
242
54,058
2,835
46,642
25,917
$
3,144,360
$ 2,955,994
$
606,134
$
571,989
1,490,033
1,399,381
387,885
378,181
2,484,052
2,349,551
275,216
20,521
258,114
18,062
2,779,789
2,625,727
-
22,934
165,288
178,969
(2,620 )
-
15,261
171,744
149,666
(6,404 )
364,571
330,267
$
3,144,360
$ 2,955,994
22,934,403
22,904,157
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(1)
Diluted Earnings per Share(1)
Dividends per Share(1)
(1) Per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.
See Annual Report on Form 10-K.
2017
Years Ended December 31,
2016
2015
$
91,745
134
$
86,202
74
$
10,898
8,253
111,030
7,094
4,027
11,121
99,909
1,750
98,159
5,272
6,178
7,979
1,341
4,567
2,641
3,280
596
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
3,627
3,703
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
3,110
3,532
2,959
725
31,854
32,013
27,444
46,642
6,609
2,621
954
4,276
2,817
3,543
942
9,399
77,803
52,210
11,534
40,676
1.77
1.77
0.52
$
$
$
$
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
1.57
1.57
0.48
$
$
$
$
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
1.51
1.51
0.45
$
$
$
$
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 beginning
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 those
expectations 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 1, 2018, and we do not promise anyone that it will be
updated for changes or events after that date.
13
001CSN301F