German American Bancorp, Inc. (GABC) Announces Record Earnings for Second Quarter 2026

• Record quarterly earnings of $1.02 per share
• Record quarterly return on average assets of 1.80%
• Robust net interest margin of 4.30%; Core adjusted* of 4.13%
• Strong loan production at approximately 6% annualized linked quarter
• Low efficiency ratio* of 47.38%
• Healthy credit metrics with annualized net charge-offs of 0.05% and non-performing assets of 0.32% to total assets
• Strong level of non-interest bearing demand accounts representing 28% of total deposits
• Tangible common equity* ("TCE") ratio increased 42 basis points to 10.05%; Return on average TCE* ("ROATCE") of 19.43%
• Continued build out of our wealth management, commercial and industrial lending, and treasury management talent throughout our major metro and MSA markets

JASPER, Ind.--(BUSINESS WIRE)--German American Bancorp, Inc. (Nasdaq: GABC) (German American or the “Company”) announced record earnings for the three months ended June 30, 2026. The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $0.31 per share, which will be payable on August 20, 2026 to shareholders of record as of August 10, 2026.

For the three months ended June 30, 2026, the Company reported net income of $38.2 million, or $1.02 per share, which are the highest level of reported net income and earnings per share in the Company's history. This level of earnings reflects a linked quarter increase of $5.0 million, or approximately 16% on a per share basis, from first quarter 2026 net income of $33.2 million or $0.88 per share. Second quarter 2026 earnings reflect an increase of $6.8 million, or approximately 21% on a per share basis, from the June 30, 2025 prior year same quarter net income of $31.4 million or $0.84 per share.

As discussed in more detail below, the Company’s record financial performance was driven by continued net interest margin expansion, strong growth in loans and non-interest income, and controlled operating expenses. As a result, profitability remained strong as return on average assets for the second quarter of 2026 was 1.80% and ROATCE* was 19.43%. These compared to return on average assets of 1.58% and ROATCE* of 17.08% in the first quarter of 2026 and 1.49% and 19.87% in the second quarter of 2025. At the same time, the Company was able to maintain strong credit metrics throughout the quarter.

Second Quarter 2026 highlights include:

• Robust and expanding net interest margin of 4.30%
  • 4 basis point (bp) expansion from first quarter 2026 driven by a 1 bp earning asset yield pickup and a 3 bps reduction in funding costs
  • Core net interest margin of 4.13% expanded by 5 bps from first quarter 2026, with an added 1 bp differential in loan accretion
• Loan growth was strong during the second quarter with balances remaining diversified and stable
  • End of period loans increased $83 million, or approximately 6% on an annualized basis, over the first quarter of 2026
  • Loan growth was broad-based across all segments of commercial and included growth in home equity lines of credit, as well
• Total allowance for credit losses was $79.4 million, with total quarterly provision expense of $1.5 million, as credit metrics remained very healthy
  • Ratio of allowance to total loans remained stable at 1.34%
  • Annualized net charge offs remained minimal at 5 bps of average loans
  • Non-performing assets at 0.32% of June 30, 2026 period end assets, reflecting a 3 bps improvement from March 31, 2026
• Deposits increased modestly during the quarter
  • End of period deposits increased modestly by $14.9 million or 0.9% on an annualized linked quarter basis
  • Non-interest bearing deposits increased by $41 million or 8.5% on an annualized linked quarter basis and represented 28% of total deposits overall
• Capital ratios remained strong
  • Tangible common equity of 10.05%
  • Tangible book value per share of $21.48, representing a $1.04 per share, or 5%, increase from March 31, 2026 tangible book value of $20.44
• Non-interest income increased across all business segments by an aggregate $1.5 million or approximately 9% on a linked quarter basis, led by wealth management and interchange income
  • Wealth management income increased by approximately 11% over the prior quarter, driven by increased assets under management as well as growth in the capital markets; we also continue to build a full-service wealth advisory team in our newer Columbus, Ohio market
  • Interchange income increased by approximately 12% driven mostly by increased customer card usage
  • Mortgage and deposit service income each increased by over 4% from the prior quarter, as activity increased in both areas
• Non-interest expense declined meaningfully to $50.4 million representing an approximate $2.0 million, or 4%, decrease over first quarter 2026 non-interest expense of $52.4 million.
  • Salaries and benefits decreased approximately $1.2 million, or 4%, quarter over linked quarter as those expenses normalized from elevated amounts in the first quarter of 2026 that were driven by 2025 incentive payouts and a reset of various payroll taxes and retirement matching contributions; also contributing to the decline were lower health insurance costs
  • Increased revenues, combined with well controlled expenses, resulted in a strong efficiency ratio of 47.38% for the second quarter of 2026 and strong operating leverage improvement

D. Neil Dauby, Chairman and CEO of German American stated, “We are extremely pleased to deliver a record quarterly earnings performance for the second quarter of 2026 and exceed $1 quarterly earnings per share for the first time in our Company’s history. We believe we are well positioned for continued profitability with a strong net interest margin, solid non-interest income production and well controlled expenses. We are encouraged by the strength of our pipeline driven by our strong diversified organic growth footprint as we move into the second half of 2026. Our ability to grow deposits to fund such anticipated growth will be key as we move forward into the future."

Dauby also stated, “We continue to add top talent to our relationship-focused team of professionals, and with their dedicated efforts, we are confident that our strong community presence, healthy financial condition and disciplined approach to growth will continue to drive future profitability and long-term shareholder value. We remain excited and committed to the vitality and future growth of our Indiana, Kentucky and Ohio communities.”

Balance Sheet Highlights

On February 1, 2025, the Company completed its acquisition of Heartland BancCorp (“Heartland”) through the merger of Heartland with and into the Company. Immediately following completion of the Heartland holding company merger, Heartland’s subsidiary bank, Heartland Bank, was merged with and into the Company’s subsidiary bank, German American Bank (the “Bank”). Heartland, headquartered in Whitehall, Ohio, operated 20 retail banking offices located in Columbus, Ohio and Greater Cincinnati. As of the closing of the transaction, Heartland had total assets of approximately $1.94 billion, total loans of approximately $1.58 billion, and total deposits of approximately $1.73 billion. The Company issued approximately 7.74 million shares of its common stock, and paid approximately $23.1 million in cash, in exchange for all of the issued and outstanding shares of common stock of Heartland and in cancellation of all options to acquire Heartland common stock outstanding as of the effective time of the merger.

Total assets for the Company were $8.440 billion at June 30, 2026, representing an increase of $57.5 million compared with March 31, 2026 and an increase of $159.9 million compared with June 30, 2025.

June 30, 2026 total loans increased $82.8 million, or 6% on an annualized basis, compared with March 31, 2026 and increased $192.3 million, or 3%, compared with June 30, 2025. The increase during the second quarter of 2026 compared with March 31, 2026 was broad based across all segments of commercial loans and included growth in home equity lines of credit. The increase was partially mitigated by declines in residential mortgage loans and other retail loans. Commercial real estate loans increased $67.1 million, or 9% on an annualized basis, agricultural loans increased $9.4 million, or 8% on an annualized basis, and commercial and industrial loans increased $0.9 million, or 0.4% on an annualized basis. Retail loans grew by $5.4 million, or 2% on an annualized basis, due in large part to strong home equity loan originations, which were partially offset by a reduced level of residential mortgage loans and consumer loans.

The composition of the loan portfolio has remained relatively stable and diversified over the past several years. The addition of the Heartland loan portfolio during the first quarter of 2025 resulted in only modest changes to the overall portfolio composition, most notably in the residential mortgage loan segment. The portfolio is most heavily weighted in commercial real estate loans at 54% of the portfolio, followed by commercial and industrial loans at 14% of the portfolio, residential mortgage loans at 13% of the portfolio, home equity loans at 9% of the portfolio and agricultural loans at 8% of the portfolio. The Company’s commercial lending is extended to various industries, including multi-family housing and lodging, agribusiness and manufacturing, as well as health care, wholesale, and retail services.

The Company’s allowance for credit losses totaled $79.4 million at June 30, 2026 compared to $78.5 million at March 31, 2026 and $75.5 million at June 30, 2025. The allowance for credit losses represented 1.34% of period-end loans at June 30, 2026, 1.34% at March 31, 2026 and 1.32% of period-end loans at June 30, 2025.

Under the current expected credit losses ("CECL") model, certain acquired loans continue to carry a fair value discount as well as an allowance for credit losses. As of June 30, 2026, the Company held net discounts on acquired loans of $46.3 million, which included $44.6 million related to the Heartland loan portfolio.

Non-performing assets totaled $26.8 million at June 30, 2026, $29.6 million at March 31, 2026, and $25.1 million at June 30, 2025. Non-performing assets represented 0.32% of total assets at June 30, 2026, 0.35% at March 31, 2026 and 0.30% at June 30, 2025. Non-performing loans represented 0.45% of total loans at June 30, 2026, 0.51% at March 31, 2026, and 0.44% at June 30, 2025. Total non-performing assets from the Heartland acquisition were approximately $17.7 million at June 30, 2026.

June 30, 2026 total deposits increased $14.9 million, or 0.9% on an annualized basis, compared to March 31, 2026 and increased $41.1 million, or 0.6%, compared with June 30, 2025. Non-interest bearing deposits as a percent of total deposits have remained relatively stable at approximately 28% at both June 30, 2026 and March 31, 2026, and 27% at June 30, 2025.

At June 30, 2026, the capital levels for the Company and the Bank remained well in excess of the minimum amounts needed for capital adequacy purposes and the Bank’s capital levels met the necessary requirements to be considered well-capitalized.

Results of Operations Highlights – Quarter ended June 30, 2026

Net income for the quarter ended June 30, 2026 totaled $38,172,000, or $1.02 per share, an increase of 16% on a per share basis compared with the first quarter 2026 net income of $33,152,000, or $0.88 per share, and an increase of 21% on a per share basis compared with the second quarter 2025 net income of $31,361,000, or $0.84 per share. On an adjusted basis, net income for the second quarter of 2025 was $32,058,000, or $0.86 per share. Adjusted net income and adjusted earnings per share are non-GAAP financial measures. Refer to “Use of Non-GAAP Financial Measures” contained in this release for additional information, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

During the second quarter of 2026, net interest income, on a non tax-equivalent basis, totaled $81,208,000 an increase of $2,357,000, or 3%, compared to the first quarter of 2026 net interest income of $78,851,000 and an increase of $8,053,000, or 11%, compared to the second quarter of 2025 net interest income of $73,155,000.

The improvement in net interest income during the second quarter of 2026 compared with both the first quarter of 2026 and the second quarter of 2025 was the result of an improved net interest margin and a higher level of average earning assets.

The tax equivalent net interest margin for the quarter ended June 30, 2026 was 4.30% compared with 4.26% in the first quarter of 2026 and 3.92% in the second quarter of 2025. The continued improvement in the net interest margin during the second quarter of 2026 compared with both the first quarter of 2026 and second quarter of 2025 was driven by a lower cost of funds primarily attributable to lower deposit costs and improved yields on earning assets.

The Company’s net interest margin and net interest income in all periods presented have been impacted by accretion of loan discounts on acquired loans. Accretion of discounts on acquired loans totaled $3,235,000 during the second quarter of 2026, $3,456,000 during the first quarter of 2026, and $3,483,000 during the second quarter of 2025. Accretion of loan discounts on acquired loans contributed approximately 17 basis points to the net interest margin in the second quarter of 2026, 18 basis points in the first quarter of 2026 and 18 basis points in the second quarter of 2025.

During the quarter ended June 30, 2026, the Company recorded a provision for credit losses of $1,500,000 compared with a provision for credit losses of $2,000,000 in the first quarter of 2026 and a provision for credit losses of $1,200,000 during the second quarter of 2025. Net charge-offs totaled $673,000, or 5 basis points on an annualized basis, of average loans outstanding during the second quarter of 2026 compared with $1,147,000, or 8 basis points on an annualized basis, of average loans during the first quarter of 2026 and $848,000, or 6 basis points on an annualized basis, of average loans during the second quarter of 2025.

During the quarter ended June 30, 2026, non-interest income totaled $18,746,000, an increase of $1,520,000, or 9%, compared with the first quarter of 2026 and an increase of $2,013,000, or 12%, compared with the second quarter of 2025. The increase during the second quarter of 2026 was broad based across all segments compared to the first quarter of 2026 driven in large part by improved wealth management fees and interchange revenue.

Wealth management fees increased $501,000, or 11%, during the second quarter of 2026 compared with the first quarter of 2026 and increased $845,000, or 20%, compared with the second quarter of 2025. The increase during the second quarter of 2026 compared with the first quarter of 2026 was primarily attributable to seasonal revenue related to customer tax fees, strong new business results, and continued solid capital markets. The increase during the second quarter of 2026 compared with the second quarter of 2025 was also largely attributable to increased assets under management driven by healthy capital markets throughout the past year and continued strong new business results.

Service charges on deposit accounts increased $162,000, or 4%, during the quarter ended June 30, 2026 compared with the first quarter of 2026 and increased $274,000, or 7%, compared with the second quarter of 2025. The increase during the second quarter of 2026 compared with both the first quarter of 2026 and the second quarter of 2025 was driven by continued increased customer utilization of deposit services.

Interchange fees increased $552,000, or 12%, during the quarter ended June 30, 2026 compared with the first quarter of 2026 and increased $271,000, or 5%, compared with the second quarter of 2025. The increase during the second quarter of 2026 compared with the first quarter of 2026 and the second quarter of 2025 was largely related to a higher level of customer transaction volume.

Net gains on sales of loans increased $66,000, or 4%, during the second quarter of 2026 compared with the first quarter of 2026 and increased $389,000, or 21%, compared with the second quarter of 2025. The increase during the second quarter of 2026 compared with both the first quarter of 2026 and second quarter of 2025 was driven by a higher volume of loans sold. Loan sales totaled $70.8 million during the second quarter of 2026 compared with $52.1 million during the first quarter of 2026 and $50.2 million during the second quarter of 2025.

During the quarter ended June 30, 2026, non-interest expense totaled $50,382,000, a decline of $1,986,000, or 4%, compared with the first quarter of 2026, and an increase of $865,000, or 2%, compared with the second quarter of 2025. The second quarter of 2025 non-interest expenses included approximately $929,000 of non-recurring acquisition-related expenses associated with the Heartland acquisition.

Salaries and benefits declined $1,170,000, or 4%, during the quarter ended June 30, 2026 compared with the first quarter of 2026 and increased $504,000, or 2%, compared with the second quarter of 2025. The decline in salaries and benefits during the second quarter of 2026 compared with the first quarter of 2026 was in part seasonal declines related to annual resets of certain payroll taxes and retirement matching contributions, a decline in incentive compensation and an overall decline in health insurance costs partially mitigated by an increase in variable compensation related to investment services and residential mortgage commissions.

Occupancy, furniture and equipment expense declined $158,000, or 3%, during the second quarter of 2026 compared with the first quarter of 2026 and increased $427,000, or 9%, compared to the second quarter of 2025. The decline during the second quarter of 2026 compared with the first quarter of 2026 was primarily attributable to seasonal increases related to snow removal and utility costs during the first quarter of 2026. The increase during the second quarter of 2026 compared with the second quarter of 2025 was largely attributable to increased levels of real estate taxes, depreciation and repairs and maintenance costs.

Advertising and promotion expense declined $376,000, or 23%, during the second quarter of 2026 compared with the first quarter of 2026 and declined $60,000, or 5%, compared with the second quarter of 2025.

D. Neil Dauby, Chairman and Chief Executive Officer
Bradley M. Rust, President and Chief Financial Officer
(812) 482-1314