GAB, Inc. reports $21.5M earnings for 3rd quarter

German American Bancorp, Inc. (Nasdaq: GABC) reported solid third-quarter earnings of $21.5 million, or $0.73 per share. This level of quarterly earnings reflected a linked quarter decrease of $0.7 million, or approximately 3 percent on a per share basis, from 2023 second-quarter earnings of $22.1 million or $0.75 per share. 

The company remained well-positioned at the end of the third quarter of 2023 with continued solid liquidity and strong capital. Third quarter 2023 operating performance was highlighted by marginal net interest margin compression, solid loan growth, a stable/diversified deposit base, continued strong credit metrics, reductions in non-interest expense and stable/diversified non-interest income.  

The net interest margin declined marginally from 3.63 percent to 3.57 percent, or six basis points, during the third quarter of 2023 on a linked quarter basis as the earning asset yield increase of 14 basis points mostly kept pace with the funding cost increase of 20 basis points. The rise in the cost of funds in the third quarter of 2023 was driven by the continued historic pace of Federal Reserve interest rate increases, extremely competitive deposit pricing in the marketplace, and a continued re-mixing of the company’s deposit composition as customers looked for higher yield opportunities.  

In the third quarter of 2023, deposits decreased approximately $44 million, or 3 percent, on an annualized basis compared to the second quarter of 2023. Non-interest-bearing accounts remained stable at a healthy 29 percent of total deposits. The core deposit base remains diverse, with stable and manageable exposure to uninsured and uncollateralized deposits of approximately 21 percent. 

During the third quarter of 2023, total loans increased by $63.1 million or 7 percent on an annualized basis, with most categories of loans showing growth. The company’s loan portfolio composition remained diverse, with a  low commercial real estate office concentration. Credit metrics remained strong as non-performing assets were 0.21 percent of period-end assets, and non-performing loans totaled 0.32 percent of period-end loans. 

Non-interest income for the third quarter of 2023 remained stable compared to the second quarter of  2023, as most revenue lines reflected minor changes over the linked second quarter. Non-interest expenses were stable as well, with an overall reduction in non-interest expenses of approximately 1 percent over the second quarter. 

The company also announced that its board of directors declared a regular quarterly cash dividend of $0.25  per share, payable on November 20, 2023, to shareholders of record as of November 10, 2023.  As previously reported, this dividend rate represents a 9 percent increase over the rate in effect during 2022. 

“We are extremely pleased to deliver yet another solid quarterly operating performance. German American remains extremely well-positioned with solid liquidity, strong capital and a diverse core deposit base, which continues to speak to the strength and resilience of our company,” D. Neil Dauby, German American’s Chairman & CEO, stated. “Thanks to the dedicated efforts of our relationship-focused team of professionals, we are confident that our strong community presence, healthy financial condition and disciplined approach to risk management and earnings growth will continue to drive future profitability. We remain excited and committed to the vitality and growth of our Indiana and Kentucky communities.”