German American reports third-quarter resultsOctober 29, 2013
From local sources
JASPER — German American Bancorp Inc. (Nasdaq: GABC) today reported its third-quarter results.
During the quarter ended Sept. 30, German American’s reported net income of $6.5 million, or 51 cents per share, representing an increase of approximately 3 percent above the net income of $6.3 million, or 50 cents per share, reported in the third quarter of 2012. On a year-to-date basis, according to a company news release, 2013 net income was $18.8 million, or $1.48 per share, which was approximately a 5 percent improvement over the $17.9 million, or $1.41 per share, reported for the first nine months of 2012.
As compared to the third-quarter results in the prior year, this year’s earnings were positively affected by a nearly $800,000, or approximately 5 percent, increase in net interest income. This net interest income improvement was driven primarily by continued growth within the company’s loan portfolio, as end-of-period total loans, exclusive of loans held for sale, increased by $116 million, or approximately 10 percent, in 2013 relative to loans outstanding as of Sept. 30. On a linked quarter basis, total end-of-period loans in the current quarter increased by approximately $40 million, which represents a 12 percent annualized growth rate, from the second quarter of the current year.
Further enhancing the company’s third-quarter 2013 earnings was a $400,000 negative provision for potential loan losses, which was a $1 million reduction compared to the $640,000 of expense recorded as the provision for potential loan losses during the third quarter of 2012. This change in provision for loan losses was related to a continued improvement in the company’s asset quality metrics, as the company’s historically strong level of asset quality showed further improvement during the quarter. As of Sept. 30, the ratio of German American’s nonperforming assets to total assets and the ratio of its nonperforming loans to total loans have declined to pre-recessionary levels.
The company’s quarterly year-over-year performance was also reflective of a $143,000 increase in trust and investment product fees, as well as a $328,000 decrease in net gains from the sale of residential mortgage loans, and a $170,000 decrease in net gains on the sales of securities.
The company’s level of other operating income also declined by $416,000 during the third quarter of this year primarily related to fees associated with interest rate swap transactions with loan customers and gains from other real estate sales activities booked during the third quarter of last year. The increase in general market interest rates that occurred late in the second quarter and continued through the third quarter of this year impacted the company’s opportunities in the areas of net gains on the sales of loans and securities.
The company’s total noninterest expenses increased by approximately $856,000, or 7 percent, during the current third quarter compared to the same quarter of last year. The increase in total noninterest expense during the third quarter of this year was largely attributable to an approximately $425,000 increase in salaries and benefits and occupancy-related expenses in connection with both increased staffing levels and an increased number of banking locations, and by a nearly $400,000 increase in professional fees during the quarter. The elevated level of professional fees was associated with the acquisition of United Commerce Bancorp of Bloomington, completed Oct. 1, and with the company’s review of its overall operating effectiveness and efficiency conducted during the third quarter of this year.
“We’re pleased with our financial performance during the past quarter and year to date and are encouraged by both the level of loan demand we’re seeing throughout our footprint and the very positive trends we’re seeing relative to the asset quality of the loans in our portfolio,” said Mark A. Schroeder, German American’s chairman and CEO. “The improved economic environment in our market area is reflected in the business activity of our agricultural and commercial clients and in the mindset of our consumer customers, and we’re honored to be able to assist our clients and customers in the growth of their operations and in the achievement of their financial goals.”
The company also announced that its board of directors declared its regular quarterly cash dividend of 15 cents per share, which will be payable Nov. 20 to shareholders of record as of Nov. 10.
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