German American Bancorp, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported record net income of $38.6 million ($1.03 per share) for the quarter ended September 30, 2026, up 1% from Q2 2026 ($38.2 million, $1.02 per share) and 10% from Q3 2025 ($35.1 million, $0.94 per share).
• Net interest income increased $2.3 million (3%) to $83.5 million compared to Q2 2026 and $7.8 million (10%) compared to Q3 2025.
• Net interest margin expanded to 4.42% (tax-equivalent), up 12 basis points from Q2 2026 (4.30%) and 36 basis points from Q3 2025 (4.06%); core net interest margin was 4.26%.
• Non-interest income totaled $18.7 million, relatively stable compared to Q2 2026 ($18.7 million) and up 1.5% from Q3 2025 ($18.4 million).
• Non-interest expense increased 5% to $53.1 million from Q2 2026 ($50.4 million) and 7% from Q3 2025 ($49.7 million).
• Efficiency ratio was 49.05%, compared to 47.38% in Q2 2026 and 49.26% in Q3 2025.
• Return on average assets (ROAA) was 1.83%, up from 1.80% in Q2 2026 and 1.68% in Q3 2025.
• Return on average tangible common equity (ROATCE) was 19.29%, down slightly from 19.43% in Q2 2026 but up from 21.14% in Q3 2025.
• Tangible common equity ratio was 9.39%, compared to 10.05% in Q2 2026 and 8.86% in Q3 2025.
• Provision for credit losses was $0.5 million, down from $1.5 million in Q2 2026 and $0.7 million in Q3 2025.
• Annualized net charge-offs were 4 basis points of average loans, down from 5 basis points in Q2 2026 and Q3 2025.
• Total allowance for credit losses was $79.3 million, representing 1.32% of period-end loans.

Guidance and Future Outlook:

• Management stated confidence in continued profitability driven by a strong net interest margin, solid loan and income production, and controlled expenses.
• A new strategic plan for 2027 and beyond was completed, focusing on creating an exceptional employee experience, providing valued products, supporting communities, and delivering superior shareholder returns.
• Management anticipates adapting to an evolving environment including artificial intelligence, digital money/payments, enhanced fraud prevention, and cybersecurity.
• The company expects to continue growing reasonably priced deposits to fund anticipated growth despite heightened deposit competition.
• Management expressed confidence in the strength of the pipeline driven by a diversified footprint as the company moves into the final quarter of 2026.

Business Segments and Product Lines:

• Total loans increased $57.0 million (4% annualized) to $6.0 billion; growth was driven by commercial real estate and consumer/home equity lending.
• Commercial real estate loans increased $47.7 million (6% annualized), while commercial and industrial loans declined $3.9 million (2% annualized) and agricultural loans declined $8.4 million (7% annualized).
• Retail loans grew $21.6 million (6% annualized), primarily due to strong home equity loan originations, partially offset by reduced residential mortgage loans.
• Non-interest bearing demand deposits represented 28% of total deposits, remaining stable across periods.
• Total deposits declined $59.3 million (3% annualized) to $6.94 billion.
• Assets under management grew to $4.4 billion.
• Deposit service income increased 7% from Q2 2026 due to increased product utilization.
• Income from mortgage loan sales declined 12% to $1.4 million due to reduced activity in a rising rate environment.
• Wealth management income remained flat compared to Q2 2026, impacted by a challenging fixed income market.

Market and Competitive Landscape:

• The company operates 92 banking offices across Indiana, Kentucky, and Ohio, including the Heartland Bank division in Columbus, Ohio, and Greater Cincinnati.
• The 10-year Treasury rate reached a 24-year high at the end of Q3 2026, negatively impacting the tangible common equity ratio and tangible book value per share.
• The company noted heightened deposit competition as a key challenge for future funding.
• The loan portfolio is heavily weighted in commercial real estate (54%), followed by commercial and industrial (14%), residential mortgage (13%), home equity (9%), and agricultural (8%).

Risks and Challenges:

• Rising long-term interest rates negatively impacted tangible book value per share and the tangible common equity ratio.
• Economic and geopolitical uncertainty led to higher reserves for pooled loans, offsetting releases from resolved acquired credit relationships.
• Non-performing assets increased slightly to $24.0 million (0.29% of total assets) from $23.7 million in Q3 2025, though improved from $26.8 million in Q2 2026.
• Total non-performing assets from the Heartland acquisition stood at approximately $14.5 million as of September 30, 2026.
• The company holds $43.3 million in net discounts on acquired loans, including $41.5 million related to the Heartland portfolio.
• Forward-looking statements note risks related to interest rate changes, economic conditions, regulatory changes (including Dodd-Frank impacts), cyber-attacks, and integration risks from acquisitions.

Management Commentary and Tone:

• Chairman and CEO D. Neil Dauby expressed extreme pleasure at delivering another record quarterly earnings performance and maintaining earnings per share above $1.00.
• Management highlighted a strong pipeline and a disciplined approach to growth, citing a "relationship-focused team" and "strong community presence."
• Dauby emphasized the company's readiness to adapt to technological changes and evolving market conditions.
• The tone was confident regarding future profitability and long-term shareholder value, despite acknowledging the challenging fixed income market and deposit competition.

Other Key Points:

• The Board of Directors declared a regular cash dividend of $0.31 per share, payable on November 20, 2026, to shareholders of record as of November 10, 2026.
• On February 1, 2025, the Company completed the acquisition of Heartland BancCorp, adding 20 retail banking offices in Columbus, Ohio, and Greater Cincinnati.
• The acquisition involved issuing approximately 7.74 million shares of common stock and paying $23.1 million in cash.
• Tangible book value per share was $20.01 at September 30, 2026, down from $21.48 in Q2 2026 and up from $18.89 in Q3 2025.
• Total assets were $8.411 billion at September 30, 2026, a decline of $28.7 million from June 30, 2026, and an increase of $10.0 million from September 30, 2025.
• The company's capital levels remained well in excess of minimum requirements, with the Bank considered well-capitalized.