GlobeNewswire Inc | Oct 26, 2020 05:52PM EDT

October 26, 2020

JASPER, Indiana, Oct. 26, 2020 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq: GABC) reported third quarter earnings of $14.6 million, or $0.55 per share, for the quarter ending on September 30, 2020. The third quarter 2020 performance was an increase of approximately 12%, on a per share basis, compared to third quarter 2019 net income of $13.1 million, or $0.49 per share. The current quarterly earnings also represented an increase of approximately 2%, on a per share basis, as compared to second quarter 2020 net income of $14.3 million, or $0.54 per share.

Relative to the year-over-year comparison, third quarter 2020 earnings were positively impacted by a $1.2 million increase in non-interest income and a $2.5 million decrease in non-interest expenses. Partially offsetting this $3.7 million positive operating earnings impact was a $1.7 million increase in the current quarters provision for credit losses, which primarily enhanced the level of the Companys allowance for credit losses in response to developments related to the COVID-19 pandemic and its potential future economic impact.

End-of-period loans, as of September 30, 2020, were approximately $3.2 billion, which represented an increase of $164 million, or approximately 5%, from end of period loans as of September 30, 2019. This comparison is inclusive of PPP loans of $342 million, net of fees, as of September 30, 2020. Total deposits at September 30, 2020 of approximately $4.0 billion increased by $548 million, or approximately 16%, relative to third quarter 2019 end-of-period total deposits. Approximately 65% of the deposit growth during the year-over-year current quarter comparison occurred within the extremely valuable non-interest bearing demand deposit category.

Commenting on the Companys third quarter performance, Mark A. Schroeder, German Americans Chairman & CEO, stated, "In the face of an extremely difficult environment, were pleased to be able to report another period of very solid profitability during the third quarter of 2020, producing $14.6 million, or $0.55 per share, in earnings for the quarter, which was inclusive of a $4.5 million provision for credit losses. This level of profitability represented a 12% increase over third quarter 2019 earnings and is reflected in third quarter 2020 end of period tangible book value per share of $17.82, which increased by 11% from 2019 third quarter end of period tangible book value of $16.09 per share.

Schroeder continued, The current environment of extremely low general market interest rates makes it very difficult to drive growth of net interest income. Additionally, its prudent to continue to enhance the level of our allowance for credit losses until the future economic impact of the pandemic is more readily determinable. In spite of these headwinds, we were, nevertheless, able to generate very strong 12% year-over-year quarterly earnings improvement by focusing on the growth of multiple sources of non-interest income and solid control of nearly every category of operating expenses. As always, were extremely grateful to our clients for their continued business and loyalty, as well as to our entire team of financial professionals for their unwavering dedication to our clients, communities, and shareholders.

The Company also announced its Board of Directors declared a regular quarterly cash dividend of $0.19 per share, which will be payable on November 20, 2020 to shareholders of record as of November 10, 2020.

COVID-19 Pandemic Loan Information

The Company is participating in the Paycheck Protection Program (PPP) for loans provided through the Small Business Administration (SBA), as established under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). Under this program, the Company has lent funds primarily to its existing loan and/or deposit customers, based on a pre-determined SBA-developed formula, intended to incentivize small business owners to retain their employees. These loans carry a customer interest rate of 1.00% plus a processing fee that varies depending on the balance of the loan at origination and have a two-year or five-year maturity, depending on when the loan was made. The vast majority of the Company's PPP loans have two-year maturities. As of September 30, 2020, the Company had approximately $351.3 million outstanding, on 3,070 PPP loan relationships, under this program. The net processing fees related to the PPP, which are estimated to total approximately $12.0 million, are being recognized over the life of the loans. As of September 30, 2020, $9.5 million of such fees remain deferred.

In response to requests from borrowers who have experienced pandemic-related business or personal cash flow interruptions, and in accordance with recently issued regulatory guidance, the Company has made short-term loan modifications involving both interest only and full payment deferrals. As of September 30, 2020 the following active payment modifications are still in effect. These payment modifications are significantly reduced from the level of active modifications as of June 30, 2020.

% of Loan CategoryType of Loans Outstanding (Excludes PPP Loans) (dollars in thousands) Number of Balance As of 9/ As of 6/30 Loans 30/2020 /2020Commercial & Industrial 24 $ 6,154 1.2 % 10.8 %LoansCommercial Real Estate 44 82,986 5.7 % 15.3 %LoansAgricultural Loans ? ? ? % 0.3 %Consumer Loans 1 3 n/m^(1) 0.4 %Residential Mortgage 12 1,275 0.5 % 8.2 %LoansTotal 81 $ 90,418 3.1 % 10.4 %^ (1) n/m = not meaningful

The Company tracks lending exposure by industry classification to determine potential risk associated with industry concentrations, if any, that could lead to additional credit loss exposure. As a result of the COVID-19 pandemic, the Company has initially identified loan segments that could represent a potentially higher level of credit risk, as many of these customers may have incurred a significant negative impact to their businesses as a result of governmental stay-at-home orders and travel restrictions. At September 30, 2020, the Company had the following exposure to these potentially sensitive COVID-19 identified loan segments:

% of Total % ofIndustry Segment Number of Outstanding Loans Industry(dollars in thousands) Loans Balance (excludes Segment PPP Under Loans) DeferralLodging / Hotels 49 $ 133,063 4.6 % 39.1 %Student Housing 105 92,224 3.2 % ? %Retail Shopping / Strip 64 92,996 3.2 % 17.5 %CentersRestaurants 189 49,402 1.7 % 8.6 %

Balance Sheet Highlights

Total assets for the Company totaled $4.853 billion at September 30, 2020, representing an increase of $1.8 million, or less than 1% on an annualized basis, compared with June 30, 2020 and an increase of $496.9 million, or 11%, compared with September 30, 2019. The increase in total assets during the third quarter of 2020 compared with September 30, 2019 has been impacted by the Company's participation in the PPP and by significant growth of deposits during the period (primarily in the second quarter of 2020).

September 30, 2020 total loans decreased $45.7 million, or 6% on an annualized basis, compared with June 30, 2020 and increased $164.5 million, or 5%, compared with September 30, 2019. The decline in total loans was impacted by continued elevated pay-offs within the commercial real estate loan portfolio, reduced line utilization within the commercial loan portfolio, and continued pay-downs in the Company's residential loan portfolio related to the current interest rate environment. The increase in outstanding loans as of September 30, 2020 compared to a year ago was attributable to PPP loans, which were partially mitigated by declines across each segment of the Company's portfolio.

PPP loans totaled $351.3 million ($341.8 million net of deferred fees) at September 30, 2020 compared with $349.5 million in PPP loans ($338.7 million net of deferred fees) at June 30, 2020.

End of Period Loan 9/30/2020 6/30/2020 9/30/2019Balances(dollars in thousands) Commercial & Industrial $ 839,022 $ 852,416 $ 579,152 LoansCommercial Real Estate 1,453,280 1,473,234 1,477,204 LoansAgricultural Loans 376,215 373,483 386,685 Consumer Loans 294,276 291,555 305,027 Residential Mortgage Loans 262,439 280,246 312,674 $ 3,225,232 $ 3,270,934 $ 3,060,742

The Companys allowance for credit losses totaled $46.8 million at September 30, 2020 compared to $42.4 million at June 30, 2020 and $15.9 million at September 30, 2019. The allowance for credit losses represented 1.45% of period-end loans at September 30, 2020 compared with 1.30% of period-end loans at June 30, 2020 and 0.52% of period-end loans at September 30, 2019.

The Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("CECL") on January 1, 2020. As a result, the Company recognized a one-time cumulative adjustment to the allowance for credit losses of $15.7 million. The increase was primarily related to the Company's acquired loan portfolio which totaled approximately $851.1 million at the time of adoption. The increase included $6.9 million in non-accretable credit marks allocated to purchased credit deteriorated loans which were grossed up between loans and the allowance for credit losses. Under the CECL model, certain acquired loans continue to carry a fair value discount as well as an allowance for credit losses. As of September 30, 2020, the Company held net discounts on acquired loans of $8.6 million.

The allowance for credit losses increased during the quarter ended September 30, 2020, as a result of the Company recording a $4.5 million provision for credit losses while recording net charge-offs of approximately $163,000. This followed an increase in the allowance for credit losses during the quarter ended June 30, 2020, that resulted from the Company recording a $5.9 million provision for credit losses while recording net charge-offs of approximately $110,000. The provision for credit losses was elevated in the second and third quarters of 2020 primarily due to the developments during 2020 related to the COVID-19 pandemic and the resulting impact on the economic assumptions used in the CECL model.

Non-performing assets totaled $23.3 million at September 30, 2020 compared to $19.6 million at June 30, 2020 and $14.1 million at September 30, 2019. Non-performing assets represented 0.48% of total assets at September 30, 2020, 0.40% at June 30, 2020, and 0.32% at September 30, 2019. Non-performing loans totaled $22.9 million at September 30, 2020 compared to $19.1 million at June 30, 2020 and $13.5 million at September 30, 2019. Non-performing loans represented 0.71% of total loans at September 30, 2020 compared to 0.59% at June 30, 2020 and 0.44% at September 30, 2019. The increase in the level of non-performing assets and non-performing loans at September 30, 2020 compared with June 30, 2020 was primarily attributable to a single commercial real estate credit in the lodging industry. The increase in the level of non-performing assets and non-performing loans at September 30, 2020 compared with September 30, 2019 was largely attributable to the previously discussed commercial real estate relationship and the gross-up of purchased credit deteriorated loans upon the adoption of the CECL standard during 2020.

Non-performing Assets (dollars in thousands) 9/30/2020 6/30/2020 9/30/2019Non-Accrual Loans $ 22,878 $ 16,183 $ 13,512 Past Due Loans (90 days or more) ? 2,948 ? Total Non-Performing Loans 22,878 19,131 13,512 Other Real Estate 425 425 625 Total Non-Performing Assets $ 23,303 $ 19,556 $ 14,137 Restructured Loans $ 113 $ 114 $ 117

September 30, 2020 total deposits remained stable, increasing $241,000, compared to June 30, 2020 and increased $548.4 million, or 16%, compared with September 30, 2019. While the overall level of deposits did not change significantly as of September 30, 2020 compared with June 30, 2020, the mix of the deposit portfolio did adjust during the third quarter of 2020. Non-interest bearing deposit accounts increased $45.9 million, or 16% on annualized basis and interest bearing demand, savings and money market accounts increased $11.7 million, or 2% on an annualized basis, while time deposits declined $57.4 million, or 40% on an annualized basis. The increase in total deposits at September 30, 2020 compared with September 30, 2019 was impacted by participation in the PPP and inflows of customer deposits during the second quarter of 2020.

End of Period Deposit 9/30/2020 6/30/2020 9/30/2019Balances(dollars in thousands) Non-interest-bearing $ 1,185,814 $ 1,139,928 $ 827,259 Demand DepositsIB Demand, Savings, and 2,278,826 2,267,092 1,910,395 MMDA AccountsTime Deposits < $100,000 272,530 293,059 323,746 Time Deposits > $100,000 242,504 279,354 369,886 $ 3,979,674 $ 3,979,433 $ 3,431,286

Results of Operations Highlights Quarter ended September 30, 2020

Net income for the quarter ended September 30, 2020 totaled $14,593,000, or $0.55 per share, an increase of 2% on a per share basis compared with the second quarter 2020 net income of $14,255,000, or $0.54 per share, and an increase of 12% on a per share basis compared with the third quarter 2019 net income of $13,064,000, or $0.49 per share.

Summary Average Balance Sheet(Tax-equivalent basis/ dollars in thousands) Quarter Ended Quarter Ended Quarter Ended September 30, 2020 June 30, 2020 September 30, 2019 Principal Income/ Yield Principal Income/ Yield Principal Income/ Yield Balance Expense / Balance Expense / Balance Expense / Rate Rate RateAssets Federal Funds Sold and OtherShort-term $ 197,203 $ 45 0.09 % $ 239,164 $ 84 0.14 % $ 31,230 $ 163 2.07 %InvestmentsSecurities 1,021,111 6,369 2.49 % 897,193 6,087 2.71 % 870,369 6,472 2.97 %Loans and Leases 3,260,435 36,612 4.47 % 3,253,169 38,154 4.71 % 3,076,931 41,008 5.29 %Total Interest $ 4,478,749 $ 43,026 3.83 % $ 4,389,526 $ 44,325 4.06 % $ 3,978,530 $ 47,643 4.76 %Earning Assets Liabilities Demand Deposit $ 1,144,685 $ 1,074,739 $ 797,337 AccountsIB Demand, Savings, andMMDA Accounts $ 2,279,517 $ 813 0.14 % $ 2,220,549 $ 1,535 0.28 % $ 1,946,219 $ 3,189 0.65 %Time Deposits 540,248 1,679 1.24 % 586,179 2,208 1.51 % 725,347 3,210 1.75 %FHLB Advances and 212,859 1,233 2.30 % 227,562 1,339 2.37 % 286,587 1,934 2.68 %Other BorrowingsTotalInterest-Bearing $ 3,032,624 $ 3,725 0.49 % $ 3,034,290 $ 5,082 0.67 % $ 2,958,153 $ 8,333 1.12 %Liabilities Cost of Funds 0.33 % 0.47 % 0.83 %Net Interest Income $ 39,301 $ 39,243 $ 39,310 Net Interest Margin 3.50 % 3.59 % 3.93 %

During the third quarter of 2020, net interest income totaled $38,388,000, a decline of $71,000, or less than 1%, compared to the second quarter of 2020 net interest income of $38,459,000 and a decline of $190,000, or less than 1%, compared to the third quarter of 2019 net interest income of $38,578,000.

The relative stability in net interest income during the third quarter of 2020 compared with the second quarter of 2020 and the third quarter of 2019 was largely attributable to an increased level of average earning assets driven by participation in the PPP and a larger investment portfolio driven by significant deposit growth during the second quarter of 2020. The average balance of PPP loans during the third quarter of 2020 was $351 million while net fees recognized through interest income on these loans totaled $1.5 million, compared with the second quarter of 2020 average balance on PPP loans of approximately $276 million while the net fees recognized through interest income on those loans totaled approximately $1.1 million. Also contributing to the relatively stable net interest income was a significantly reduced cost of funds and a corresponding decline in the interest cost of interest bearing liabilities.

The tax equivalent net interest margin for the quarter ended September 30, 2020 was 3.50% compared with 3.59% in the second quarter of 2020 and 3.93% in the third quarter of 2019. The lower net interest margin during the third quarter of 2020 compared with the second quarter of 2020 was primarily attributable to a lower level of accretion on acquired loans. Lower market interest rates continue to negatively impact earning asset yields, but these declines have been largely mitigated by a lower cost of funds. The Company has continued to carry excess liquidity on the balance sheet that resulted from significant deposit growth during the second quarter of 2020 and continued muted loan growth. The decline in the tax equivalent net interest margin during the third quarter of 2020 compared with the third quarter of 2019 was attributable to lower market interest rates, excess liquidity on the balance sheet, the 1% interest rate applicable to the PPP loans and a lower level of accretion on acquired loans. Accretion of loan discounts on acquired loans contributed approximately 11 basis points to the net interest margin on an annualized basis in the third quarter of 2020, 19 basis points in the second quarter of 2020 and 20 basis points in the third quarter of 2019.

During the quarter ended September 30, 2020, the Company recorded a provision for credit losses of $4,500,000 compared with a provision for credit losses of $5,900,000 in the second quarter of 2020 and compared with a provision for loan losses of $2,800,000 during the third quarter of 2019. The level of provision for credit losses in both the third quarter of 2020 and the second quarter of 2020 was primarily due to the developments related to the COVID-19 pandemic and the resulting impact on the economic assumptions used in the CECL model.

Net charge-offs totaled $163,000 or 2 basis points on an annualized basis of average loans outstanding during the third quarter of 2020, compared with $110,000 or 1 basis point on an annualized basis of average loans during the second quarter of 2020 and compared with $3,170,000 or 41 basis points of average loans during the third quarter of 2019.

During the quarter ended September 30, 2020, non-interest income totaled $13,279,000, an increase of $856,000, or 7%, compared with the second quarter of 2020 and an increase of $1,223,000, or 10%, compared with the third quarter of 2019.

Quarter Ended Quarter Ended Quarter EndedNon-interest Income 9/30/2020 6/30/2020 9/30/2019(dollars in thousands) Trust and Investment Product $ 1,957 $ 1,867 $ 1,885 FeesService Charges on Deposit 1,773 1,365 2,395 AccountsInsurance Revenues 1,989 1,830 1,883 Company Owned Life Insurance 355 356 364 Interchange Fee Income 2,795 2,476 2,538 Other Operating Income 942 882 1,029 Subtotal 9,811 8,776 10,094 Net Gains on Loans 2,861 2,654 1,649 Net Gains on Securities 607 993 313 Total Non-interest Income $ 13,279 $ 12,423 $ 12,056

Service charges on deposit accounts increased $408,000, or 30%, during the third quarter of 2020 compared with the second quarter of 2020 and declined $622,000, or 26%, compared with the third quarter of 2019. The increase during the third quarter of 2020 compared with the second quarter of 2020 was largely related to improved economic activity in the third quarter of 2020 compared with the second quarter of 2020 and a corresponding change in deposit customer activity as a result of COVID-19 restrictions being loosened in various states. The decline during the third quarter of 2020 compared with the third quarter of 2019 was largely related to the economic impacts of the COVID-19 pandemic and resulting change in deposit customer activity.

Interchange fee income increased $319,000, or 13%, during the quarter ended September 30, 2020 compared with the second quarter of 2020 and increased $257,000, or 10%, compared with the third quarter of 2019. The increased level of fees during the third quarter of 2020 compared with both the second quarter of 2020 and the third quarter of 2019 was due to increased card utilization by customers.

Net gains on sales of loans increased $207,000, or 8%, during the third quarter of 2020 compared with the second quarter of 2020 and increased $1,212,000, or 74%, compared with the third quarter of 2019. The increase during the third quarter of 2020 compared with both the second quarter of 2020 and the third quarter of 2019 was generally attributable to a higher sales volume and higher pricing levels on loans sold. Loan sales totaled $83.5 million during the third quarter of 2020, compared with $79.7 million during the second quarter of 2020 and $60.4 million during the third quarter of 2019.

The Company realized $607,000 in gains on sales of securities during the third quarter of 2020 compared with $993,000 during the second quarter of 2020 and $313,000 during the third quarter of 2019. The sales of securities in all periods was done as part of modest shifts in the allocations within the securities portfolio.

During the quarter ended September 30, 2020, non-interest expense totaled $29,420,000, an increase of $1,332,000, or 5%, compared with the second quarter of 2020, and a decline of $2,541,000, or 8%, compared with the third quarter of 2019. The third quarter of 2019 non-interest expense included $2,258,000 in acquisition related expenses related to the acquisition of Citizens First Corporation on July 1, 2019.

Quarter Quarter Quarter Ended Ended EndedNon-interest Expense 9/30/2020 6/30/2020 9/30/2019(dollars in thousands) Salaries and Employee Benefits $ 17,409 $ 15,882 $ 17,579 Occupancy, Furniture and Equipment 3,362 3,481 3,751 ExpenseFDIC Premiums 326 123 ? Data Processing Fees 1,693 1,763 2,860 Professional Fees 875 1,082 1,324 Advertising and Promotion 708 882 1,054 Intangible Amortization 860 909 1,064 Other Operating Expenses 4,187 3,966 4,329 Total Non-interest Expense $ 29,420 $ 28,088 $ 31,961

Salaries and benefits increased $1,527,000, or 10%, during the quarter ended September 30, 2020 compared with the second quarter of 2020 and declined $170,000, or 1%, compared with the third quarter of 2019. The increase in salaries and benefits during the third quarter of 2020 compared with the second quarter of 2020 was primarily attributable to higher incentive plan costs and higher costs related to health insurance benefits during the third quarter of 2020, and the deferral of a portion of salary costs related to the origination of PPP loans during the second quarter of 2020. The decline in salaries and benefits during the third quarter of 2020 compared with the third quarter of 2019 was primarily attributable to acquisition related expenses of $695,000 during the third quarter of 2019.

Occupancy, furniture and equipment expense declined $119,000, or 3%, during the third quarter of 2020 compared with the second quarter of 2020 and declined $389,000, or 10%, compared to the third quarter of 2019. The decline during the third quarter of 2020 compared with the third quarter of 2019 was primarily due to the consolidation of three branch office facilities during 2020 and the timing of expenses for normal repairs and maintenance across the Company's branch office network.

FDIC premiums increased $203,000, or 165%, during the third quarter of 2020 compared with the second quarter of 2020 and increased $326,000, or 100%, compared with the third quarter of 2019. The change during the third quarter of 2020 to both comparative periods was related to credits received from the FDIC during the second quarter of 2020 and third quarter of 2019. There were no credits received during the third quarter of 2020. The credits received were due to the reserve ratio of the deposit insurance fund exceeding the FDIC targeted levels.

Data processing fees declined $70,000, or 4%, in the third quarter of 2020 compared with the second quarter of 2020 and declined $1,167,000, or 41%, compared with the third quarter of 2019. The decline in the third quarter of 2020 compared with the third quarter of 2019 was primarily attributable to acquisition related expenses of $999,000 during the third quarter of 2019.

Professional fees declined $207,000, or 19%, in the third quarter of 2020 compared with the second quarter of 2020 and declined $449,000, or 34%, compared with the third quarter of 2019. The decline in the third quarter of 2020 compared with the second quarter of 2020 was largely attributable to the timing of certain professional services that occurred during the second quarter of 2020 that did not recur in the third quarter of 2020. The decline in the third quarter of 2020 compared with the third quarter of 2019 was primarily attributable to acquisition related expenses of $401,000 during the third quarter of 2019.

Advertising and promotion expense declined $174,000, or 20%, in the third quarter of 2020 compared with the second quarter of 2020 and declined $346,000, or 33%, compared with the third quarter of 2019. The decline in the third quarter of 2020 compared with the second quarter of 2020 was largely related to the donation of a former branch facility in the second quarter of 2020. The decline in the third quarter of 2020 compared with the third quarter of 2019 was largely attributable to a decline in advertising expense due in part to the COVID-19 pandemic.

Other operating expenses increased $221,000, or 6%, during the third quarter of 2020 compared with the second quarter of 2020 and declined $142,000, or 3%, compared with the third quarter of 2019. The increase during the third quarter of 2020 compared with the second quarter of 2020 was primarily attributable to the write-down of a former office facility of the Company which totaled $311,000 during the third quarter of 2020.

About German American

German American Bancorp, Inc. is a Nasdaq-traded (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank, operates 73 banking offices in 20 contiguous southern Indiana counties and eight counties in Kentucky. The Company also owns an investment brokerage subsidiary (German American Investment Services, Inc.) and a full line property and casualty insurance agency (German American Insurance, Inc.).

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that, by their nature, forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results and experience could differ materially from the anticipated results or other expectations expressed or implied by these forward-looking statements as a result of a number of factors, including but not limited to, those discussed in this press release. Factors that could cause actual experience to differ from the expectations expressed or implied in this press release include 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; potential deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration; the severity and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and our business, results of operations and financial condition; our participation in the Paycheck Protection Program administered by the Small Business Administration; capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; risks of expansion through acquisitions and mergers, such as unexpected credit quality problems of the acquired loans or other assets, unexpected attrition of the customer base of the acquired institution or branches, and difficulties in integration of the acquired operations; factors driving impairment charges on investments; the impact, extent and timing of technological changes; potential cyber-attacks, information security breaches and other criminal activities; 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; potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Companys banking subsidiary; actions of the regulatory authorities under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to Consumer Financial Protection Bureau rules and regulations; the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends; and other risk factors expressly identified in the Companys filings with the United States Securities and Exchange Commission. Such statements reflect our views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements. It is intended that these forward-looking statements speak only as of the date they are made. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

GERMAN AMERICAN BANCORP, INC.(unaudited, dollars in thousands except per share data) Consolidated Balance Sheets September 30, June 30, 2020 September 30, 2020 2019ASSETS Cash and Due from Banks $ 56,706 $ 53,081 $ 64,791 Short-term Investments 194,476 227,275 26,328 Investment Securities 1,037,263 962,623 849,798 Loans Held-for-Sale 27,993 21,756 19,156 Loans, Net of Unearned 3,221,127 3,266,347 3,056,907 IncomeAllowance for Credit (46,768 ) (42,431 ) (15,869 )LossesNet Loans 3,174,359 3,223,916 3,041,038 Stock in FHLB and Other 13,168 13,368 13,968 Restricted StockPremises and Equipment 96,682 96,748 98,754 Goodwill and Other 131,783 132,676 133,818 Intangible AssetsOther Assets 120,400 119,608 108,231 TOTAL ASSETS $ 4,852,830 $ 4,851,051 $ 4,355,882 LIABILITIES Non-interest-bearing $ 1,185,814 $ 1,139,928 $ 827,259 Demand DepositsInterest-bearing Demand,Savings, and Money Market 2,278,826 2,267,092 1,910,395 AccountsTime Deposits 515,034 572,413 693,632 Total Deposits 3,979,674 3,979,433 3,431,286 Borrowings 214,544 219,700 316,687 Other Liabilities 54,631 57,244 44,982 TOTAL LIABILITIES 4,248,849 4,256,377 3,792,955 SHAREHOLDERS' EQUITY Common Stock and Surplus 300,659 300,514 305,270 Retained Earnings 272,579 263,011 241,801 Accumulated Other 30,743 31,149 15,856 Comprehensive IncomeSHAREHOLDERS' EQUITY 603,981 594,674 562,927 TOTAL LIABILITIES AND $ 4,852,830 $ 4,851,051 $ 4,355,882 SHAREHOLDERS' EQUITY END OF PERIOD SHARES 26,492,866 26,497,291 26,662,078 OUTSTANDING TANGIBLE BOOK VALUE PER $ 17.82 $ 17.44 $ 16.09 SHARE ^(1)

^(1) Tangible Book Value per Share is defined as Total Shareholders' Equityless Goodwill and Other Intangible Assets divided by End of Period SharesOutstanding.

GERMAN AMERICAN BANCORP, INC.(unaudited, dollars in thousands except per share data) Consolidated Statements of Income Three Months Ended Nine Months Ended September 30, June 30, 2020 September 30, September 30, September 30, 2020 2019 2020 2019INTEREST INCOMEInterest and $ 36,543 $ 38,080 $ 40,921 $ 112,481 $ 111,086 Fees on LoansInterest onShort-term 45 84 163 287 389 InvestmentsInterest andDividends on 5,525 5,377 5,827 16,457 17,661 InvestmentSecuritiesTOTALINTEREST 42,113 43,541 46,911 129,225 129,136 INCOME INTEREST EXPENSEInterest on 2,492 3,743 6,399 11,892 17,574 DepositsInterest on 1,233 1,339 1,934 4,230 5,752 BorrowingsTOTALINTEREST 3,725 5,082 8,333 16,122 23,326 EXPENSE NET INTEREST 38,388 38,459 38,578 113,103 105,810 INCOMEProvision for 4,500 5,900 2,800 15,550 3,725 Credit LossesNET INTERESTINCOME AFTER 33,888 32,559 35,778 97,553 102,085 PROVISION FORCREDIT LOSSES NON-INTEREST INCOMENet Gain onSales of 2,861 2,654 1,649 7,378 3,660 LoansNet Gain on 607 993 313 2,190 984 SecuritiesOtherNon-interest 9,811 8,776 10,094 30,215 29,579 IncomeTOTALNON-INTEREST 13,279 12,423 12,056 39,783 34,223 INCOME NON-INTEREST EXPENSESalaries and 17,409 15,882 17,579 50,691 46,740 BenefitsOtherNon-interest 12,011 12,206 14,382 37,145 37,598 ExpensesTOTALNON-INTEREST 29,420 28,088 31,961 87,836 84,338 EXPENSE Income before 17,747 16,894 15,873 49,500 51,970 Income TaxesIncome Tax 3,154 2,639 2,809 8,180 8,568 Expense NET INCOME $ 14,593 $ 14,255 $ 13,064 $ 41,320 $ 43,402 BASICEARNINGS PER $ 0.55 $ 0.54 $ 0.49 $ 1.56 $ 1.70 SHAREDILUTEDEARNINGS PER $ 0.55 $ 0.54 $ 0.49 $ 1.56 $ 1.70 SHARE WEIGHTEDAVERAGE 26,497,398 26,502,731 26,643,064 26,554,369 25,541,843 SHARESOUTSTANDINGDILUTEDWEIGHTEDAVERAGE 26,497,398 26,502,731 26,643,064 26,554,369 25,541,843 SHARESOUTSTANDING

GERMAN AMERICAN BANCORP, INC.(unaudited, dollars in thousands except per share data) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019EARNINGS PERFORMANCE RATIOS Annualized Return on 1.21 % 1.20 % 1.20 % 1.19 % 1.43 % Average Assets Annualized Return on 9.68 % 9.71 % 9.37 % 9.35 % 11.52 % Average Equity Annualized Return on Average 12.40 % 12.53 % 12.36 % 12.08 % 15.14 % Tangible Equity ^(1) Net Interest 3.50 % 3.59 % 3.93 % 3.60 % 3.89 % Margin Efficiency 55.95 % 54.36 % 62.22 % 56.55 % 59.31 % Ratio ^(2) Net Overhead Expense to Average 1.44 % 1.43 % 2.00 % 1.50 % 1.80 % Earning Assets ^(3) ASSET QUALITY RATIOS Annualized Net Charge-offs to 0.02 % 0.01 % 0.41 % 0.03 % 0.17 % Average Loans Allowance for Credit Losses 1.45 % 1.30 % 0.52 % to Period End Loans Non-performing Assets to 0.48 % 0.40 % 0.32 % Period End Assets Non-performing Loans to 0.71 % 0.59 % 0.44 % Period End Loans Loans 30-89 Days Past Due 0.20 % 0.23 % 0.30 % to Period End Loans SELECTED BALANCESHEET & OTHER FINANCIAL DATA Average Assets $ 4,834,954 $ 4,751,772 $ 4,355,111 $ 4,641,563 $ 4,051,884 Average $ 4,478,749 $ 4,389,526 $ 3,978,530 $ 4,281,831 $ 3,712,930 Earning Assets Average Total $ 3,260,435 $ 3,253,169 $ 3,076,931 $ 3,191,254 $ 2,840,435 Loans Average Demand $ 1,144,685 $ 1,074,739 $ 797,337 $ 1,022,885 $ 735,097 Deposits Average Interest $ 3,032,624 $ 3,034,290 $ 2,958,153 $ 2,978,430 $ 2,781,279 Bearing Liabilities Average Equity $ 603,155 $ 587,472 $ 557,447 $ 588,925 $ 502,532 Period End Non-performing $ 23,303 $ 19,556 $ 14,137 Assets ^(4) Period End Non-performing $ 22,878 $ 19,131 $ 13,512 Loans ^(5) Period End Loans 30-89 $ 6,523 $ 7,554 $ 9,054 Days Past Due ^(6) Tax Equivalent Net Interest $ 39,301 $ 39,243 $ 39,310 $ 115,528 $ 107,964 Income Net Charge-offs $ 163 $ 110 $ 3,170 $ 714 $ 3,679 during Period (1 ) Average Tangible Equity is defined as Average Equity less Average Goodwill and Other Intangibles. Efficiency Ratio is defined as Non-interest Expense divided by the sum(2 ) of Net Interest Income, on a tax equivalent basis, and Non-interest Income.(3 ) Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest Income.(4 ) Non-performing assets are defined as Non-accrual Loans, Loans Past Due 90 days or more, and Other Real Estate Owned.(5 ) Non-performing loans are defined as Non-accrual Loans and Loans Past Due 90 days or more. Loans 30-89(6 ) days past due and still accruing.



For additional information, contact:Mark A Schroeder, Chairman & Chief Executive Officer of German American Bancorp, Inc.Bradley M Rust, Executive Vice President/CFO of German American Bancorp, Inc.(812) 482-1314