x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
INDIANA
|
35-1547518
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
711 Main Street, Box 810, Jasper,
Indiana
|
47546
|
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
Title
of Each Class
|
Name
of each exchange on which registered
|
|
Common
Shares, No Par Value
|
The
NASDAQ Stock Market LLC
|
|
Preferred
Stock Purchase Rights
|
|
Large
accelerated filer ¨
|
Accelerated
filer þ
|
Non-accelerated
filer ¨
|
Smaller
reporting company q
|
PART
I
|
|||
Item
1.
|
Business
|
3-7
|
|
Item
1A.
|
Risk
Factors
|
8-11
|
|
Item
1B.
|
Unresolved
Staff Comments
|
11
|
|
Item
2.
|
Properties
|
11
|
|
Item
3.
|
Legal
Proceedings
|
11
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
11
|
|
PART
II
|
|||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
12-13
|
|
Item
6.
|
Selected
Financial Data
|
14
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
15-30
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
30
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
31-65
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
66
|
|
Item
9A.
|
Controls
and Procedures
|
66
|
|
Item
9B.
|
Other
Information
|
66
|
|
PART
III
|
|||
Item
10.
|
Directors
and Executive Officers of the Registrant
|
67
|
|
Item
11.
|
Executive
Compensation
|
67
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
67-68
|
|
Item
13.
|
Certain
Relationships and Related Transactions
|
68
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
68
|
|
PART
IV
|
|||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
69
|
|
SIGNATURES
|
70
|
||
INDEX
OF EXHIBITS
|
|
71-73
|
1) Name
|
2) Type of Business
|
3) Principal Office Location
|
||
German
American Bancorp
|
Commercial
Bank
|
Jasper,
IN
|
||
German
American Insurance, Inc.
|
Multi-Line
Insurance Agency
|
Jasper,
IN
|
||
German
American Financial Advisors & Trust Company
|
|
Trust,
Brokerage, Financial Planning
|
|
Jasper,
IN
|
|
·
|
the
unknown future direction of interest rates and the timing and magnitude of
any changes in interest rates;
|
|
·
|
changes
in competitive conditions;
|
|
·
|
the
introduction, withdrawal, success and timing of asset/liability management
strategies or of mergers and acquisitions and other business initiatives
and strategies;
|
|
·
|
changes
in customer borrowing, repayment, investment and deposit
practices;
|
|
·
|
changes
in fiscal, monetary and tax
policies;
|
|
·
|
changes
in financial and capital markets;
|
|
·
|
continued
deterioration in general economic conditions, either nationally or
locally, resulting in, among other things, credit quality
deterioration;
|
|
·
|
capital
management activities, including possible future sales of new securities,
or possible repurchases or redemptions by the Company of outstanding debt
or equity securities;
|
|
·
|
factors
driving impairment charges on
investments;
|
|
·
|
the
impact, extent and timing of technological
changes;
|
|
·
|
litigation
liabilities, including related costs, expenses, settlements and judgments,
or the outcome of matters before regulatory agencies, whether pending or
commencing in the future;
|
|
·
|
actions
of the Federal Reserve Board;
|
|
·
|
changes
in accounting principles and
interpretations;
|
|
·
|
actions
of the Department of the Treasury and the Federal Deposit Insurance
Corporation under the EESA and the Federal Deposit Insurance Act and other
legislative and regulatory actions and reforms;
and
|
|
·
|
the
continued availability of earnings and excess capital
sufficient for the lawful and prudent declaration and payment of cash
dividends.
|
2008
|
2007
|
|||||||||||||||||||||||
Cash
|
Cash
|
|||||||||||||||||||||||
High
|
Low
|
Dividend
|
High
|
Low
|
Dividend
|
|||||||||||||||||||
Fourth
Quarter
|
$ | 12.90 | $ | 10.65 | $ | 0.140 | $ | 14.00 | $ | 12.12 | $ | 0.140 | ||||||||||||
Third
Quarter
|
$ | 13.60 | $ | 11.00 | $ | 0.140 | $ | 14.09 | $ | 11.91 | $ | 0.140 | ||||||||||||
Second
Quarter
|
$ | 13.23 | $ | 11.39 | $ | 0.140 | $ | 14.45 | $ | 13.10 | $ | 0.140 | ||||||||||||
First
Quarter
|
$ | 13.29 | $ | 11.31 | $ | 0.140 | $ | 14.50 | $ | 13.22 | $ | 0.140 | ||||||||||||
$ | 0.560 | $ | 0.560 |
Transfer
Agent:
|
Computershare
|
Shareholder
|
Terri
A. Eckerle
|
|
Priority
Processing
|
Information
and
|
German
American Bancorp, Inc
|
||
250
Royall St
|
Corporate
Office:
|
P.
O. Box 810
|
||
Canton,
MA 02021
|
Jasper,
Indiana 47547-0810
|
|||
Contact:
Shareholder Relations
|
(812)
482-1314
|
|||
(800)
884-4225
|
(800)
482-1314
|
Period
|
Total
Number
Of Shares
(or Units)
Purchased
|
Average Price
Paid Per Share
(or Unit)
|
Total Number of Shares
(or Units) Purchased as Part
of Publicly Announced Plans
or Programs
|
Maximum Number
(or Approximate Dollar
Value) of Shares (or Units)
that May Yet Be Purchased
Under the Plans or Programs (1)
|
||||||||
October
2008
|
—
|
—
|
—
|
272,789
|
||||||||
November
2008
|
—
|
—
|
—
|
272,789
|
||||||||
December
2008
|
—
|
—
|
—
|
272,789
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Summary
of Operations:
|
||||||||||||||||||||
Interest
Income
|
$ | 67,845 | $ | 72,261 | $ | 63,594 | $ | 50,197 | $ | 47,710 | ||||||||||
Interest
Expense
|
26,908 | 33,646 | 27,398 | 17,984 | 16,471 | |||||||||||||||
Net
Interest Income
|
40,937 | 38,615 | 36,196 | 32,213 | 31,239 | |||||||||||||||
Provision
for Loan Losses
|
3,990 | 3,591 | 925 | 1,903 | 2,015 | |||||||||||||||
Net
Interest Income after Provision
|
||||||||||||||||||||
For
Loan Losses
|
36,947 | 35,024 | 35,271 | 30,310 | 29,224 | |||||||||||||||
Non-interest
Income
|
18,210 | 15,704 | 15,993 | 14,502 | 9,620 | |||||||||||||||
Non-interest
Expense
|
36,716 | 37,221 | 37,059 | 31,756 | 30,609 | |||||||||||||||
Income
before Income Taxes
|
18,441 | 13,507 | 14,205 | 13,056 | 8,235 | |||||||||||||||
Income
Tax Expense
|
5,638 | 4,102 | 3,984 | 3,335 | 996 | |||||||||||||||
Net
Income
|
$ | 12,803 | $ | 9,405 | $ | 10,221 | $ | 9,721 | $ | 7,239 | ||||||||||
Year-end
Balances:
|
||||||||||||||||||||
Total
Assets
|
$ | 1,190,828 | $ | 1,131,710 | $ | 1,093,424 | $ | 946,467 | $ | 942,094 | ||||||||||
Total
Loans, Net of Unearned Income
|
890,436 | 867,721 | 796,259 | 651,956 | 629,793 | |||||||||||||||
Total
Deposits
|
941,750 | 877,421 | 867,618 | 746,821 | 750,383 | |||||||||||||||
Total
Long-term Debt
|
105,608 | 86,786 | 68,333 | 66,606 | 69,941 | |||||||||||||||
Total
Shareholders’ Equity
|
105,174 | 97,116 | 92,391 | 82,255 | 83,669 | |||||||||||||||
Average
Balances:
|
||||||||||||||||||||
Total
Assets
|
$ | 1,174,583 | $ | 1,114,140 | $ | 1,029,838 | $ | 925,851 | $ | 927,528 | ||||||||||
Total
Loans, Net of Unearned Income
|
880,630 | 840,849 | 715,260 | 634,526 | 622,240 | |||||||||||||||
Total
Deposits
|
922,137 | 889,736 | 814,440 | 730,220 | 731,467 | |||||||||||||||
Total
Shareholders’ Equity
|
99,711 | 93,677 | 88,451 | 84,479 | 82,558 | |||||||||||||||
Per Share Data (1):
|
||||||||||||||||||||
Net
Income
|
$ | 1.16 | $ | 0.85 | $ | 0.93 | $ | 0.89 | $ | 0.66 | ||||||||||
Cash
Dividends
|
0.56 | 0.56 | 0.56 | 0.56 | 0.56 | |||||||||||||||
Book
Value at Year-end
|
9.54 | 8.81 | 8.39 | 7.73 | 7.68 | |||||||||||||||
Other
Data at Year-end:
|
||||||||||||||||||||
Number
of Shareholders
|
3,684 | 3,647 | 3,438 | 3,494 | 3,219 | |||||||||||||||
Number
of Employees
|
348 | 371 | 397 | 367 | 372 | |||||||||||||||
Weighted
Average Number of Shares (1)
|
11,029,519 | 11,009,536 | 10,994,739 | 10,890,987 | 10,914,622 | |||||||||||||||
Selected
Performance Ratios:
|
||||||||||||||||||||
Return
on Assets
|
1.09 | % | 0.84 | % | 0.99 | % | 1.05 | % | 0.78 | % | ||||||||||
Return
on Equity
|
12.84 | % | 10.04 | % | 11.56 | % | 11.51 | % | 8.77 | % | ||||||||||
Equity
to Assets
|
8.83 | % | 8.58 | % | 8.45 | % | 8.69 | % | 8.88 | % | ||||||||||
Dividend
Payout
|
48.25 | % | 65.65 | % | 60.29 | % | 62.83 | % | 84.46 | % | ||||||||||
Net
Charge-offs to Average Loans
|
0.29 | % | 0.32 | % | 0.50 | % | 0.26 | % | 0.24 | % | ||||||||||
Allowance
for Loan Losses to Loans
|
1.07 | % | 0.93 | % | 0.90 | % | 1.42 | % | 1.40 | % | ||||||||||
Net
Interest Margin
|
3.82 | % | 3.83 | % | 3.96 | % | 3.92 | % | 3.86 | % |
(1)
|
Share
and Per Data excludes the dilutive effect of stock
options.
|
Twelve Months Ended
|
Twelve Months Ended
|
Twelve Months Ended
|
||||||||||||||||||||||||||||||||||
December 31, 2008
|
December 31, 2007
|
December 31, 2006
|
||||||||||||||||||||||||||||||||||
Principal
|
Income /
|
Yield /
|
Principal
|
Income /
|
Yield /
|
Principal
|
Income /
|
Yield /
|
||||||||||||||||||||||||||||
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Federal
Funds Sold and Other
|
||||||||||||||||||||||||||||||||||||
Short-term
Investments
|
$ | 35,065 | $ | 593 | 1.69 | % | $ | 9,626 | $ | 478 | 4.96 | % | $ | 10,971 | $ | 545 | 4.97 | % | ||||||||||||||||||
Securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
152,709 | 8,007 | 5.24 | % | 149,108 | 6,992 | 4.69 | % | 174,007 | 7,763 | 4.46 | % | ||||||||||||||||||||||||
Non-taxable
|
18,061 | 1,164 | 6.44 | % | 23,913 | 1,423 | 5.95 | % | 41,312 | 2,721 | 6.59 | % | ||||||||||||||||||||||||
Total Loans and Leases (2)
|
880,630 | 58,669 | 6.66 | % | 840,849 | 63,958 | 7.61 | % | 715,260 | 53,621 | 7.50 | % | ||||||||||||||||||||||||
TOTAL
INTEREST
|
||||||||||||||||||||||||||||||||||||
EARNING
ASSETS
|
1,086,465 | 68,433 | 6.30 | % | 1,023,496 | 72,851 | 7.12 | % | 941,550 | 64,650 | 6.87 | % | ||||||||||||||||||||||||
Other
Assets
|
97,275 | 98,389 | 97,570 | |||||||||||||||||||||||||||||||||
Less:
Allowance for Loan Losses
|
(9,157 | ) | (7,745 | ) | (9,282 | ) | ||||||||||||||||||||||||||||||
TOTAL
ASSETS
|
$ | 1,174,583 | $ | 1,114,140 | $ | 1,029,838 | ||||||||||||||||||||||||||||||
LIABILITIES
AND
|
||||||||||||||||||||||||||||||||||||
SHAREHOLDERS’
EQUITY
|
||||||||||||||||||||||||||||||||||||
Interest-bearing
Demand Deposits
|
$ | 212,467 | $ | 3,440 | 1.62 | % | $ | 153,033 | $ | 3,280 | 2.14 | % | $ | 140,786 | $ | 2,625 | 1.86 | % | ||||||||||||||||||
Savings
Deposits
|
209,593 | 3,407 | 1.63 | % | 177,001 | 4,858 | 2.74 | % | 174,095 | 4,263 | 2.45 | % | ||||||||||||||||||||||||
Time
Deposits
|
359,115 | 14,365 | 4.00 | % | 425,878 | 19,151 | 4.50 | % | 369,800 | 14,441 | 3.91 | % | ||||||||||||||||||||||||
FHLB
Advances and
|
||||||||||||||||||||||||||||||||||||
Other
Borrowings
|
138,887 | 5,696 | 4.10 | % | 117,084 | 6,357 | 5.43 | % | 113,559 | 6,069 | 5.34 | % | ||||||||||||||||||||||||
TOTAL
INTEREST-BEARING
|
||||||||||||||||||||||||||||||||||||
LIABILITIES
|
920,062 | 26,908 | 2.92 | % | 872,996 | 33,646 | 3.85 | % | 798,240 | 27,398 | 3.43 | % | ||||||||||||||||||||||||
Demand
Deposit Accounts
|
140,962 | 133,824 | 129,759 | |||||||||||||||||||||||||||||||||
Other
Liabilities
|
13,848 | 13,643 | 13,388 | |||||||||||||||||||||||||||||||||
TOTAL
LIABILITIES
|
1,074,872 | 1,020,463 | 941,387 | |||||||||||||||||||||||||||||||||
Shareholders’
Equity
|
99,711 | 93,677 | 88,451 | |||||||||||||||||||||||||||||||||
TOTAL
LIABILITIES AND
|
||||||||||||||||||||||||||||||||||||
SHAREHOLDERS’
EQUITY
|
$ | 1,174,583 | $ | 1,114,140 | $ | 1,029,838 | ||||||||||||||||||||||||||||||
NET
INTEREST INCOME
|
$ | 41,525 | $ | 39,205 | $ | 37,252 | ||||||||||||||||||||||||||||||
NET
INTEREST MARGIN
|
3.82 | % | 3.83 | % | 3.96 | % |
(1)
|
Effective
tax rates were determined as though interest earned on the Company’s
investments in municipal bonds and loans was fully
taxable.
|
(2)
|
Loans
held-for-sale and non-accruing loans have been included in average loans.
Interest income on loans includes loan fees of $127, $806, and $1,727 for
2008, 2007, and 2006,
respectively.
|
2008 compared to 2007
|
2007 compared to 2006
|
|||||||||||||||||||||||
Increase / (Decrease) Due to (1)
|
Increase / (Decrease) Due to (1)
|
|||||||||||||||||||||||
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
|||||||||||||||||||
Interest
Income:
|
||||||||||||||||||||||||
Federal
Funds Sold and Other
|
||||||||||||||||||||||||
Short-term
Investments
|
$ | 597 | $ | (482 | ) | $ | 115 | $ | (67 | ) | $ | — | $ | (67 | ) | |||||||||
Taxable
Securities
|
172 | 843 | 1,015 | (1,153 | ) | 382 | (771 | ) | ||||||||||||||||
Non-taxable
Securities
|
(370 | ) | 111 | (259 | ) | (1,056 | ) | (242 | ) | (1,298 | ) | |||||||||||||
Loans
and Leases
|
2,922 | (8,211 | ) | (5,289 | ) | 9,542 | 795 | 10,337 | ||||||||||||||||
Total
Interest Income
|
3,321 | (7,739 | ) | (4,418 | ) | 7,266 | 935 | 8,201 | ||||||||||||||||
Interest
Expense:
|
||||||||||||||||||||||||
Savings
and Interest-bearing Demand
|
1,921 | (3,212 | ) | (1,291 | ) | 344 | 906 | 1,250 | ||||||||||||||||
Time
Deposits
|
(2,808 | ) | (1,978 | ) | (4,786 | ) | 2,356 | 2,354 | 4,710 | |||||||||||||||
FHLB
Advances and Other Borrowings
|
1,059 | (1,720 | ) | (661 | ) | 190 | 98 | 288 | ||||||||||||||||
Total
Interest Expense
|
172 | (6,910 | ) | (6,738 | ) | 2,890 | 3,358 | 6,248 | ||||||||||||||||
Net
Interest Income
|
$ | 3,149 | $ | (829 | ) | $ | 2,320 | $ | 4,376 | $ | (2,423 | ) | $ | 1,953 |
% Change From
|
||||||||||||||||||||
Non-interest Income (dollars in thousands)
|
Years Ended December 31,
|
Prior Year
|
||||||||||||||||||
2008
|
2007
|
2006
|
2008
|
2007
|
||||||||||||||||
Trust
and Investment Product Fees
|
$ | 2,288 | $ | 2,590 | $ | 2,210 | (12 | )% | 17 | % | ||||||||||
Service
Charges on Deposit Accounts
|
4,920 | 4,361 | 3,901 | 13 | 12 | |||||||||||||||
Insurance
Revenues
|
6,306 | 5,794 | 5,094 | 9 | 14 | |||||||||||||||
Other
Operating Income
|
3,203 | 2,817 | 2,920 | 14 | (4 | ) | ||||||||||||||
Subtotal
|
16,717 | 15,562 | 14,125 | 7 | 10 | |||||||||||||||
Net
Gains on Sales of Loans and Related Assets
|
1,399 | 822 | 917 | 70 | (10 | ) | ||||||||||||||
Net
Gain (Loss) on Securities
|
94 | (680 | ) | 951 | n/m | (1) | n/m | (1) | ||||||||||||
TOTAL
NON-INTEREST INCOME
|
$ | 18,210 | $ | 15,704 | $ | 15,993 | 16 | (2 | ) |
% Change From
|
||||||||||||||||||||
Non-interest Expense (dollars in thousands)
|
Years Ended December 31,
|
Prior Year
|
||||||||||||||||||
2008
|
2007
|
2006
|
2008
|
2007
|
||||||||||||||||
Salaries
and Employee Benefits
|
$ | 20,786 | $ | 21,671 | $ | 21,491 | (4 | )% | 1 | % | ||||||||||
Occupancy,
Furniture and Equipment Expense
|
5,677 | 5,379 | 4,988 | 6 | 8 | |||||||||||||||
FDIC
Premiums
|
208 | 103 | 108 | 102 | (5 | ) | ||||||||||||||
Data
Processing Fees
|
1,493 | 1,370 | 1,646 | 9 | (17 | ) | ||||||||||||||
Professional
Fees
|
1,670 | 1,418 | 1,786 | 18 | (21 | ) | ||||||||||||||
Advertising
and Promotion
|
1,078 | 957 | 940 | 13 | 2 | |||||||||||||||
Supplies
|
570 | 625 | 619 | (9 | ) | 1 | ||||||||||||||
Intangible
Amortization
|
889 | 894 | 698 | (1 | ) | 28 | ||||||||||||||
Other
Operating Expenses
|
4,345 | 4,804 | 4,783 | (10 | ) | 1 | ||||||||||||||
TOTAL
NON-INTEREST EXPENSE
|
$ | 36,716 | $ | 37,221 | $ | 37,059 | (1 | ) | 1 |
Loan
Portfolio
|
December
31,
|
|||||||||||||||||||
(dollars
in thousands)
|
2008
|