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

• Record quarterly earnings of $1.03 per share
• Record quarterly return on average assets of 1.83%
• Robust net interest margin of 4.42%; Core* of 4.26%
• Linked quarter net interest income increase of $2.3 million, or approximately 3%
• Solid loan growth at approximately 4% annualized linked quarter
• Low efficiency ratio* of 49.05%
• Healthy credit with annualized net charge-offs of 0.04% and non-performing assets of 0.29% of total assets
• Strong level of non-interest bearing demand accounts representing 28% of total deposits
• Strong Return on Average Tangible Common Equity* (“ROATCE”) of 19.29%

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

For the three months ended September 30, 2026, the Company reported net income of $38.6 million, or $1.03 per share, which are the highest levels of reported net income and earnings per share in the Company’s history. This level of earnings reflects a linked quarter increase of $0.5 million, or approximately 1% on a per share basis, from second quarter 2026 record net income of $38.2 million, or $1.02 per share. Third quarter 2026 earnings reflect an increase of $3.6 million, or approximately 10% on a per share basis, from third quarter 2025 net income of $35.1 million, or $0.94 per share.

As discussed in more detail below, the Company’s record financial performance was driven by continued strong net interest margin expansion, solid loan growth, and controlled operating expenses. As a result, profitability and capital levels remained strong as return on average assets for the third quarter of 2026 was 1.83%, ROATCE was 19.29%, and the tangible common equity ratio* (“TCE ratio”) was 9.39%. These compare to return on average assets of 1.80%, ROATCE of 19.43%, and TCE of 10.05% in the second quarter of 2026, and 1.68%, 21.14%, and 8.86%, respectively, in the third quarter of 2025. At the same time, the Company was able to improve already strong credit metrics throughout the quarter.

Third Quarter 2026 highlights include:

• Robust and expanding net interest margin of 4.42%
  • 12 basis point (bp) expansion from second quarter 2026 driven by 13 bp earning asset yield increase as offset by a modest increase in funding costs of 1 bp
  • Core net interest margin* of 4.26% expanded by 13 bps from second quarter 2026
• Loan production and net growth were solid during the third quarter with balances remaining diversified and stable during the quarter
  • End of period loans increased $57.0 million, or approximately 4% on an annualized basis, over second quarter 2026
  • Loan growth was driven by commercial real estate, as well as consumer and home equity lending; commercial and industrial and agricultural segments were down as a result of reduced operating line utilization
• Total allowance for credit losses was $79.3 million, with total quarterly provision expense of $0.5 million, as credit metrics remained extremely healthy
  • Ratio of allowance to total loans remained relatively stable at 1.32%
  • Annualized net charge-offs declined slightly and remained minimal at 4 bps of average loans
  • Non-performing assets at 0.29% of September 30, 2026 period end assets, reflecting a 3 bp improvement from June 30, 2026 of 0.32%
• Deposits declined modestly during the quarter; however, non-interest bearing deposits remained at strong levels
  • End of period deposits decreased modestly by $59.3 million or approximately 3% on an annualized linked quarter basis
  • Non-interest bearing deposits remained at strong levels, representing 28% of total deposits overall
• The Company continues to rebuild capital quickly through its robust earnings. Tangible capital ratios remained strong, although rising long-term interest rates at the end of third quarter 2026 (10-year Treasury reaching a 24-year high) negatively impacted the TCE ratio and tangible book value per share
  • TCE ratio and tangible book value per share remain strong at 9.39% and $20.01 per share, respectively
• Non-interest income remained relatively stable across all business segments on a linked quarter basis, with the bright spot being an increase of approximately 7% over the prior quarter in deposit service income
  • Assets under management continue to grow, reaching $4.4 billion at September 30, 2026, while Wealth Management income remained flat to second quarter 2026 as a result of a challenging fixed income market
  • Income from mortgage loan sales declined $190,000, or 12%, from the prior quarter as activity declined in a rising rate environment
  • As mentioned, deposit service income increased 7% over the prior linked quarter, as product utilization increased
• Non-interest expense increased to $53.1 million, representing an approximate $2.7 million, or 5%, increase over second quarter 2026 non-interest expense of $50.4 million
  • The increase was driven by a combination of an increase in health insurance costs, a modest increase in full-time equivalent employees, seasonal external repair and maintenance costs, and the timing of certain donations and sponsorships, among other expenses
  • While operating expenses were modestly elevated in the third quarter of 2026, our efficiency ratio remained strong at 49.05%

D. Neil Dauby, Chairman and CEO of German American stated, “We are extremely pleased to deliver another record quarterly earnings performance for the third quarter 2026 and continue to drive our quarterly earnings per share above a dollar. We believe we are well positioned for continued profitability with a strong net interest margin, solid loan and income production as well as controlled expenses. We are encouraged by the strength of our pipeline, driven by our strong diversified footprint, as we move into the last quarter of 2026. We believe we are in the right markets with the right people. Our ability to grow reasonably priced deposits to fund such anticipated growth, in the face of heightened deposit competition, will be key as we move forward into the future.”

Dauby also stated, “We just completed a new strategic plan for 2027 and beyond, and we are excited for the future as we continue on our path as a high performing bank with a commitment to: creating an exceptional employee experience; providing a wide range of products and services that our customers value; supporting the communities we serve; and delivering superior returns to our shareholders. We are ready to adapt and evolve to an ever-changing environment that includes artificial intelligence, digital money/payments, enhanced fraud prevention, and cybersecurity just to name a few.”

Dauby concluded, “With our relationship-focused team of professionals, and 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 $8.411 billion at September 30, 2026, representing a decline of $28.7 million compared with June 30, 2026 and an increase of $10.0 million compared with September 30, 2025.

September 30, 2026 total loans increased $57.0 million, or 4% on an annualized basis, compared with June 30, 2026 and increased $210.8 million, or 4%, compared with September 30, 2025. The increase during the third quarter of 2026 compared with June 30, 2026 was driven by commercial real estate loans and home equity lines of credit. Commercial real estate loans increased $47.7 million, or 6% on an annualized basis, while agricultural loans declined $8.4 million, or 7% on an annualized basis, and commercial and industrial loans declined $3.9 million, or 2% on an annualized basis. Retail loans grew by $21.6 million, or 6% 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.

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.

At September 30, 2026, the Company’s allowance for credit losses totaled $79.3 million, representing 1.32% of period-end loans. This compares with an allowance of $79.4 million, or 1.34% of period-end loans, at June 30, 2026, and $76.1 million, or 1.32% of period-end loans, at September 30, 2025.

The allowance for credit losses remained relatively stable during the third quarter of 2026, though its composition changed. The Company released specific allocations associated with two acquired adversely classified credit relationships that were resolved without loss. These releases were substantially offset by higher reserves for pooled loans, reflecting continued economic and geopolitical uncertainty.

Under the current expected credit losses ("CECL") model, certain previously acquired loans continue to carry fair value discounts or premiums attributable to both credit and noncredit components. These discounts or premiums are reflected as a reduction to gross loans on the balance sheet, with the accretable portion recognized in interest income over the remaining lives of the underlying loans. As of September 30, 2026, the Company held net discounts on acquired loans of $43.3 million, including $41.5 million related to the Heartland loan portfolio.

Non-performing assets totaled $24.0 million, or 0.29% of total assets, at September 30, 2026, compared with $26.8 million, or 0.32% of total assets, at June 30, 2026, and $23.7 million, or 0.28% of total assets, at September 30, 2025. Non-performing loans represented 0.40% of total loans at September 30, 2026, 0.45% at June 30, 2026, and 0.41% at September 30, 2025. Total non-performing assets from the Heartland acquisition were approximately $14.5 million at September 30, 2026.

September 30, 2026 total deposits declined $59.3 million, or 3% on an annualized basis, compared to June 30, 2026 and declined $78.0 million, or 1%, compared with September 30, 2025. Non-interest bearing deposits as a percent of total deposits have remained relatively stable at approximately 28% in all periods presented including September 30, 2026, June 30, 2026, and September 30, 2025.

At September 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 September 30, 2026

Net income for the quarter ended September 30, 2026 totaled $38,637,000, or $1.03 per share, an increase of 1% on a per share basis compared with the second quarter 2026 net income of $38,172,000, or $1.02 per share, and an increase of 10% on a per share basis compared with the third quarter 2025 net income of $35,074,000, or $0.94 per share. Net income and earnings per share for the third quarter of 2026 were the highest levels reported in the Company's history.

On an adjusted basis, net income for the third quarter of 2025 was $34,444,000, or $0.92 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 third quarter of 2026, net interest income, on a non-tax-equivalent basis, totaled $83,518,000, an increase of $2,310,000, or 3%, compared to the second quarter of 2026 net interest income of $81,208,000 and an increase of $7,793,000, or 10%, compared to the third quarter of 2025 net interest income of $75,725,000.

The improvement in net interest income during the third quarter of 2026 compared with the second quarter of 2026 was the result of an improved net interest margin driven by increased yields on earning assets. The improvement in net interest income during the third quarter of 2026 compared with the same period of 2025 was the result of an improved net interest margin driven in large part by a lower cost of funds and a higher level of average earning assets.

The tax equivalent net interest margin for the quarter ended September 30, 2026 was 4.42% compared with 4.30% in the second quarter of 2026 and 4.06% in the third quarter of 2025. The continued improvement in the net interest margin during the third quarter of 2026 compared with the second quarter of 2026 was primarily attributable to improved yields on earning assets. The improvement in the third quarter of 2026 compared with the third 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 $3,020,000 during the third quarter of 2026, $3,235,000 during the second quarter of 2026, and $3,915,000 during the third quarter of 2025. Accretion of loan discounts on acquired loans contributed approximately 16 basis points to the net interest margin in the third quarter of 2026, 17 basis points in the second quarter of 2026 and 21 basis points in the third quarter of 2025.

During the quarter ended September 30, 2026, the Company recorded a provision for credit losses of $500,000 compared with a provision for credit losses of $1,500,000 in the second quarter of 2026 and a provision for credit losses of $700,000 during the third quarter of 2025. Net charge-offs totaled $581,000, or 4 basis points on an annualized basis, of average loans outstanding during the third quarter of 2026 compared with $673,000, or 5 basis points on an annualized basis, of average loans during the second quarter of 2026 and $748,000, or 5 basis points on an annualized basis, of average loans during the third quarter of 2025.

During the quarter ended September 30, 2026, non-interest income totaled $18,699,000, a decline of less than 1%, compared with the second quarter of 2026 and an increase of $270,000, or 1.5%, compared with the third quarter of 2025. The third quarter of 2025 was positively impacted by a $975,000 gain on the extinguishment of debt resulting from the redemption of $24.3 million of the Heartland fixed-to-floating rate subordinated notes during the third quarter of 2025.

Excluding the gain on the extinguishment of debt, non-interest income for the third quarter of 2025 was $17,454,000 on an adjusted basis. Adjusted non-interest income is a non-GAAP financial measure. 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.

Wealth management fees were flat during the third quarter of 2026 compared with the second quarter of 2026 and increased $719,000, or 17%, compared with the third quarter of 2025. The increase during the third quarter of 2026 compared with the third quarter of 2025 was 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 $292,000, or 7%, during the quarter ended September 30, 2026 compared with the second quarter of 2026 and increased $353,000, or 9%, compared with the third quarter of 2025. The increase during the third quarter of 2026 compared with both the second quarter of 2026 and the third quarter of 2025 was driven by continued increased customer utilization of deposit services.

Interchange fees remained relatively stable, declining less than 1%, during the quarter ended September 30, 2026 compared with the second quarter of 2026 and increased $219,000, or 4%, compared with the third quarter of 2025. The increase during the third quarter of 2026 compared with the third quarter of 2025 was largely related to a higher level of customer transaction volume.

Other operating income declined $110,000, or 5%, during the third quarter of 2026 compared with the second quarter of 2026 and declined $1,213,000, or 37%, compared with the third quarter of 2025. The decline during the third quarter of 2026 compared with the third quarter of 2025 was largely attributable to a $975,000 gain on the extinguishment of debt resulting from the redemption of $24.3 million of the Heartland fixed-to-floating rate subordinated notes during the third quarter of 2025.

Net gains on sales of loans declined $190,000, or 12%, during the third quarter of 2026 compared with the second quarter of 2026 and increased $170,000, or 14%, compared with the third quarter of 2025. Loan sales totaled $52.4 million during the third quarter of 2026 compared with $70.

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