What changed in GERMAN AMERICAN BANCORP, INC.'s 10-K — 2024 vs 2025
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Paragraph-level year-over-year comparison of GERMAN AMERICAN BANCORP, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.
+318 added−254 removedSource: 10-K (2026-02-27) vs 10-K (2025-03-03)
Top changes in GERMAN AMERICAN BANCORP, INC.'s 2025 10-K
318 paragraphs added · 254 removed · 201 edited across 7 sections
- Item 7. Management's Discussion & Analysis+178 / −153 · 117 edited
- Item 1. Business+70 / −51 · 40 edited
- Item 1A. Risk Factors+43 / −22 · 21 edited
- Item 1C. Cybersecurity+12 / −11 · 8 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+8 / −10 · 8 edited
Item 1. Business
Business — how the company describes what it does
40 edited+30 added−11 removed112 unchanged
Item 1. Business
Business — how the company describes what it does
40 edited+30 added−11 removed112 unchanged
2024 filing
2025 filing
Biggest changeThose risks, and other risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement, include but are not limited to : • changes in interest rates and the timing and magnitude of any such changes; • unfavorable economic conditions, including a prolonged period of inflation, and the resulting adverse impact on, among other things, credit quality; • the soundness of other financial institutions and general investor sentiment regarding the stability of financial institutions; • changes in our liquidity position; • the impacts of epidemics, pandemics or other infectious disease outbreaks; • changes in competitive conditions; • the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; • changes in customer borrowing, repayment, investment and deposit practices; • changes in fiscal, monetary and tax policies; • changes in financial and capital markets; • capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; • risks of expansion through acquisitions and mergers, including the possibility that the anticipated cost savings and strategic gains, are not realized when expected or at all as a result of unexpected credit quality problems of the acquired loans or other assets, unexpected attrition of the customer base or employee base of the acquired institution or branches, and difficulties in integration of the acquired operations; • factors driving impairment charges on investments; • the impact, extent and timing of technological changes; 16 • potential cyber-attacks, information security breaches and other criminal activities; • litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; • actions of the FRB; • the potential for increases to, and volatility in, the balance of our allowance for credit losses and related provision expense due to the current expected credit loss (CECL) standard; • changes in accounting principles and interpretations; • potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Company’s banking subsidiary; • actions of the regulatory authorities under the Dodd-Frank Act and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; • impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to CFPB rules and regulations; and • the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.
Biggest changeThose risks, and other risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement, include but are not limited to : • changes in interest rates and the timing and magnitude of any such changes; • unfavorable economic conditions, including prolonged periods of inflation, and the resulting adverse impact on, among other things, credit quality; • the soundness of other financial institutions and general investor sentiment regarding the stability of financial institutions; • changes in our liquidity position; • the impacts of epidemics, pandemics or other infectious disease outbreaks; • changes in competitive conditions; • the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; • changes in customer borrowing, repayment, investment and deposit practices; • changes in fiscal, monetary and tax policies; • changes in trade policies of, and other activities undertaken by, governments, including tariffs, which could have a material adverse effect on our customers and, as a result, our business; • changes in financial and capital markets; • capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; • risks of expansion through acquisitions and mergers, including the possibility that the anticipated cost savings and strategic gains, are not realized when expected or at all as a result of unexpected credit quality problems of the 17 acquired loans or other assets, unexpected attrition of the customer base or employee base of the acquired institution or branches, and difficulties in integration of the acquired operations; • factors driving impairment charges on investments; • the impact, extent and timing of technological changes; • potential cyber-attacks, information security breaches and other criminal activities; • litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; • actions of the FRB; • the regulatory and financial impacts associated with exceeding $10 billion in total assets; • changes in accounting principles and interpretations; • potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Company’s banking subsidiary; • actions of the regulatory authorities under the Dodd-Frank Act and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; • impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to CFPB rules and regulations; and • the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.
The Company expects to continue to evaluate opportunities to expand its business through opening of new banking, insurance or trust, brokerage and financial planning offices, and through acquisitions of other banks, bank branches, portfolios of loans or other assets, and other financial-service-related businesses and assets in the future. 6 Office Locations The map below illustrates the locations of the Company’s 94 retail and commercial banking, and investment offices. 7 Competition The industries in which the Company operates are highly competitive.
The Company expects to continue to evaluate opportunities to expand its business through opening of new banking, trust, brokerage and financial planning offices, and through acquisitions of other banks, bank branches, portfolios of loans or other assets, and other financial-service-related businesses and assets in the future. 6 Office Locations The map below illustrates the locations of the Company’s 94 retail and commercial banking, and investment offices. 7 Competition The industries in which the Company operates are highly competitive.
While most provisions of the final rule would have become effective on January 1, 2026, and the data 13 reporting requirements would have become effective on January 1, 2027, the District Court for the Northern District of Texas enjoined the federal banking regulators from enforcing the CRA final rule in its entirety, extending all implementation dates, day-for-day for each day that the injunction (which was issued on March 29, 2024) remains in place.
While most provisions of the final rule would have become effective on January 1, 2026, and the data reporting requirements would have become effective on January 1, 2027, the District Court for the Northern District of Texas enjoined the federal banking regulators from enforcing the CRA final rule in its entirety, extending all implementation dates, day-for-day for each day that the injunction (which was issued on March 29, 2024) remains in place.
In addition, we offer supplemental benefits such as accident, critical illness and hospital indemnity policies, discounted bank services and an Employee Stock Purchase Plan. We also invest in our employees’ future by sponsoring and prioritizing continued education throughout the Company’s employee ranks, including support of many bank-related certification programs and any required continuing education to support those certifications.
In addition, we offer supplemental benefits such as accident, critical illness and hospital indemnity policies, discounted bank services and an Employee Stock Purchase Plan. We also invest in our employees’ future by sponsoring and prioritizing continued education throughout the Company’s employee ranks, including support of many bank-related certification programs and any required continuing education to 8 support those certifications.
Full-time and part-time employees are eligible for our education assistance program which covers tuition and textbooks for work-related courses taken through a community college or university. Employees are also able to participate in on-the-job learning, classroom learning, mentoring and other internal and external career development programs 8 in order to advance or diversify their career paths throughout the organization.
Full-time and part-time employees are eligible for our education assistance program which covers tuition and textbooks for work-related courses taken through a community college or university. Employees are also able to participate in on-the-job learning, classroom learning, mentoring and other internal and external career development programs in order to advance or diversify their career paths throughout the organization.
To qualify as a “well-capitalized” institution, a depository institution under the Prompt Corrective Action requirements must have a leverage ratio of no less than 5%, a Tier I Capital ratio of no less than 8%, a CET1 ratio of no less than 6.5%, and a total risk-based capital ratio of no less than 10%, and the bank must not have been under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level.
To qualify as a “well-capitalized” institution, a depository institution under the Prompt Corrective Action requirements must have a leverage ratio of no less than 5%, a Tier I Capital ratio of no less than 8%, a CET1 ratio of no less than 6.5%, and a total 11 risk-based capital ratio of no less than 10%, and the bank must not have been under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level.
The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted, although any change could impact the regulatory structure under which we or our competitors operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to our business strategy, and limit our ability to pursue business opportunities in an efficient manner.
The substance or impact of pending or future legislation or regulation, or the 16 application thereof, cannot be predicted, although any change could impact the regulatory structure under which we or our competitors operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to our business strategy, and limit our ability to pursue business opportunities in an efficient manner.
Moreover, even if a community bank engages in proprietary trading or covered fund activities under the rule, they need only incorporate references to the Volcker Rule into their existing policies and procedures. The Economic Growth Act also served to raise the threshold of banks subject to the Volcker Rule to only those with more than $10 billion in assets.
Moreover, even if a community bank engages in proprietary trading or covered fund activities under the rule, they need only incorporate references to the Volcker Rule into their existing policies and procedures. The Economic Growth Act also served to raise the threshold of banks subject to the Volcker Rule to only those 13 with more than $10 billion in assets.
During June and July 2024, the Company undertook a partial restructuring of its securities portfolio by selling available-for-sale securities totaling approximately $375.3 million in book value, at an after-tax loss of approximately $27.2 million. The tax-equivalent yield on the bonds sold was approximately 3.12% with a duration of approximately 7 years.
During June and July 2024, the Company undertook a partial restructuring of its securities portfolio by selling available-for-sale securities totaling approximately $375.3 million in book value, at an after-tax loss of approximately $27.2 million. The tax- 5 equivalent yield on the bonds sold was approximately 3.12% with a duration of approximately 7 years.
Although banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer will technically comply with minimum capital requirements under the new rules, such institutions will face limitations on 10 the payment of dividends, common stock repurchases and discretionary cash payments to executive officers based on the amount of the shortfall.
Although banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer will technically comply with minimum capital requirements under the new rules, such institutions will face limitations on the payment of dividends, common stock repurchases and discretionary cash payments to executive officers based on the amount of the shortfall.
The insurance benefit generally covers up to a maximum of $250,000 per separately insured depositor. As an FDIC-insured bank, our bank 14 subsidiary is subject to deposit insurance premiums and assessments to maintain the DIF. The Bank’s deposit insurance premium assessment rate depends on the asset and supervisory categories to which it is assigned.
The insurance benefit generally covers up to a maximum of $250,000 per separately insured depositor. As an FDIC-insured bank, our bank subsidiary is subject to deposit insurance premiums and assessments to maintain the DIF. The Bank’s deposit insurance premium assessment rate depends on the asset and supervisory categories to which it is assigned.
The FDIC has authority to raise or lower assessment rates on insured banks in order to achieve statutorily required reserve ratios in the DIF and to impose special additional assessments. Under the current system, deposit insurance assessments are based on average total assets minus average tangible equity.
The FDIC has authority to raise or lower assessment rates on insured banks in order to achieve statutorily required reserve ratios in the DIF and to impose special additional assessments. 15 Under the current system, deposit insurance assessments are based on average total assets minus average tangible equity.
Such forward-looking statements can include statements about the Company’s net interest income or net interest margin; adequacy of the Company’s capital under regulatory requirements and of its allowance for loan losses, and the quality of the Company’s loans, investment securities and other assets; simulations of changes in interest rates; litigation results; dividend policy; acquisitions or mergers; estimated cost savings, plans and objectives for future operations; and expectations about the Company’s financial and business performance and other business matters as well as economic and market conditions and trends.
Such forward-looking statements can include statements about the Company’s net interest income or net interest margin; adequacy of the Company’s capital under regulatory requirements and of its allowance for credit losses, and the quality of the Company’s loans, investment securities and other assets; simulations of changes in interest rates; litigation results; dividend policy; acquisitions or mergers; estimated cost savings, plans and objectives for future operations; and expectations about the Company’s financial and business performance and other business matters as well as economic and market conditions and trends.
The community bank leverage ratio is the ratio of a banking organization’s Tier 1 Capital to its average total consolidated assets, both as reported on the banking 11 organization’s applicable regulatory filings.
The community bank leverage ratio is the ratio of a banking organization’s Tier 1 Capital to its average total consolidated assets, both as reported on the banking organization’s applicable regulatory filings.
Under FDICIA, a depository institution that is not well-capitalized is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. Since the Bank was well-capitalized throughout 2024, the FDICIA brokered deposit rule did not adversely affect its ability to accept brokered deposits.
Under FDICIA, a depository institution that is not well-capitalized is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. Since the Bank was well-capitalized throughout 2025, the FDICIA brokered deposit rule did not adversely affect its ability to accept brokered deposits.
For a tabular presentation of our regulatory capital ratios and those of the Bank as of December 31, 2024, see Note 9 (Shareholders’ Equity) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report, which Note 9 is incorporated herein by reference.
For a tabular presentation of our regulatory capital ratios and those of the Bank as of December 31, 2025, see Note 9 (Shareholders’ Equity) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report, which Note 9 is incorporated herein by reference.
As of December 31, 2024, the Bank exceeded the requirements contained in the applicable regulations, policies and directives pertaining to capital adequacy to be classified as “well-capitalized”, and is unaware of any material violation or alleged violation of these regulations, policies or directives.
As of December 31, 2025, the Bank exceeded the requirements contained in the applicable regulations, policies and directives pertaining to capital adequacy to be classified as “well-capitalized”, and is unaware of any material violation or alleged violation of these regulations, policies or directives.
Tier 1 Capital under the new rules consists of CET1 (subject to certain adjustments) and “additional Tier 1 capital” instruments meeting specified requirements, plus, in the case of smaller holding companies like ours, trust preferred securities in accordance with prior requirements for their inclusion in Tier I Capital.
Tier 1 Capital consists of CET1 (subject to certain adjustments) and “additional Tier 1 capital” instruments meeting specified requirements, plus, in the case of smaller holding companies like ours, trust preferred securities in accordance with prior requirements for their inclusion in Tier I Capital.
In addition, financial technology, or “FinTech,” companies continue their rapid growth into key areas of banking. Many of these competitors have substantially greater resources than the Company. Human Capital At February 20, 2025, the Company and its subsidiaries employed approximately 1,020 full-time equivalent employees. There are no collective bargaining agreements, and we consider employee relations to be good.
In addition, financial technology, or “FinTech,” companies continue their rapid growth into key areas of banking. Many of these competitors have substantially greater resources than the Company. Human Capital At February 20, 2026, the Company and its subsidiaries employed approximately 984 full-time equivalent employees. There are no collective bargaining agreements, and we consider employee relations to be good.
At December 31, 2024, the Bank was eligible for payment of dividends under the exemptive criteria established by DFI policy for this purpose, and could have declared and paid to the holding company approximately $150 million of its undivided profits without approval by the DFI in accordance with such criteria.
At December 31, 2025, the Bank was eligible for payment of dividends under the exemptive criteria established by DFI policy for this purpose, and could have declared and paid to the holding company approximately $145 million of its undivided profits without approval by the DFI in accordance with such criteria.
Future Legislation and Regulation The U.S. Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
The feedback focuses on several key metrics, including employee engagement, team dynamics, customer service, manager effectiveness, trust in leadership, future outlook, inclusion, individual needs, career growth and development and communication. During 2024, we had 70% employee participation in the survey.
The feedback focuses on several key metrics, including employee engagement, team dynamics, customer service, manager effectiveness, trust in leadership, future outlook, inclusion, individual needs, career growth and development and communication. During 2025, we had 84% employee participation in the survey.
This ability to target areas for improvement has resulted in an overall engagement score of greater than 71% in 2024, which is a score demonstrating a healthy organization in employee care and compares favorably to the banking industry.
This ability to target areas for improvement has resulted in an overall engagement score of 71% in 2025, which is a score demonstrating a healthy organization in employee care and compares favorably to the banking industry.
The Bank and the subsidiaries of the Bank may generally engage in activities that are permissible activities for state chartered banks under Indiana banking law, without regard to the limitations that might apply to such activities under the BHC Act if the Company were to engage directly in such activities at the parent company level or through parent company subsidiaries that were not also bank subsidiaries. 9 Indiana law and the BHC Act restrict certain types of expansion by the Company and its bank subsidiary.
The Bank and the subsidiaries of the Bank may generally engage in activities that are permissible activities for state chartered banks under Indiana banking law, without regard to the limitations that might apply to such activities under the BHC Act if the Company were to engage directly in such activities at the parent company level or through parent company subsidiaries that were not also bank subsidiaries.
The Basel III Rules require banking organizations to, among other things, maintain: • a minimum ratio of “Common Equity Tier 1 Capital” to risk-weighted assets of 4.5%, plus a 2.5% “conservation buffer” (bringing the Common Equity Tier 1 Capital to risk-weighted assets ratio to a total of at least 7.0%); • a minimum ratio of Tier 1 Capital to risk-weighted assets of 6% plus the conservation buffer (which results in a minimum required total Tier 1 Capital to risk-weighted assets ratio of 8.5%); • a minimum ratio of Total Capital (that is, Tier 1 Capital plus instruments includable in a tier called Tier 2 Capital) to risk-weighted assets of at least 8.0% plus the conservation buffer (which results in a minimum Total Capital to risk-weighted assets ratio of 10.5%); and • a minimum leverage ratio of 4% (calculated as the ratio of Tier 1 Capital to adjusted average consolidated assets).
The Basel III Rules require banking organizations to, among other things, maintain: • a minimum ratio of “Common Equity Tier 1 Capital” to risk-weighted assets of 4.5%, plus a 2.5% “conservation buffer” (bringing the Common Equity Tier 1 Capital to risk-weighted assets ratio to a total of at least 7.0%); • a minimum ratio of Tier 1 Capital to risk-weighted assets of 6% plus the conservation buffer (which results in a minimum required total Tier 1 Capital to risk-weighted assets ratio of 8.5%); • a minimum ratio of Total Capital (that is, Tier 1 Capital plus instruments includable in a tier called Tier 2 Capital) to risk-weighted assets of at least 8.0% plus the conservation buffer (which results in a minimum Total Capital to risk-weighted assets ratio of 10.5%); and • a minimum leverage ratio of 4% (calculated as the ratio of Tier 1 Capital to adjusted average consolidated assets). 10 “Common Equity Tier 1” (“CET1”) Capital consists of common stock instruments that meet the eligibility criteria in the new rules, retained earnings, accumulated other comprehensive income (“AOCI”) and common equity Tier 1 minority interest.
For further information regarding this merger and acquisition transaction, see Note 21 (Subsequent Events) in the Notes to the Consolidated Financial Statements included in Item 8 of this Report, which Note 21 is incorporated into this Item 1 by reference.
For further information regarding this merger and acquisition transaction, see Note 20 (Business Combinations, Goodwill and Intangible Assets) in the Notes to the Consolidated Financial Statements included in Item 8 of this Report, which Note 20 is incorporated into this Item 1 by reference.
Under FRB policy and the Dodd-Frank Wall Street Reform and Consumer Protection Act, a complex and wide-ranging statute (the “Dodd-Frank Act”), the Company is required to act as a source of financial and managerial strength to the Bank, and to commit resources to support the Bank, even in circumstances where the Company might not do so absent such a requirement.
Under FRB policy and the Dodd-Frank Act, the Company is required to act as a source of financial and managerial strength to the Bank, and to commit resources to support the Bank, even in circumstances where the Company might not do so absent such a requirement.
Retail Brokerage Jasper, IN Business Developments Effective June 1, 2024, GAI, a wholly-owned subsidiary of the Bank, sold substantially all of its assets to The Hilb Group of Indiana, LLC, a Delaware limited liability company (“Hilb”), for a purchase price of $40.0 million in cash.
(“GAI”), a wholly-owned subsidiary of the Bank, sold substantially all of its assets to The Hilb Group of Indiana, LLC, a Delaware limited liability company (“Hilb”), for a purchase price of $40.0 million in cash.
One of the principal exceptions to this prohibition is for activities deemed by the FRB to be “closely related to banking.” Under current regulations, bank holding companies and their subsidiaries are permitted to engage in such banking-related business ventures as consumer finance; equipment leasing; credit life insurance; computer service bureau and software operations; mortgage banking; and securities brokerage.
One of the principal exceptions to this prohibition is for activities deemed by the FRB to be “closely related to banking.” Under current regulations, bank holding companies and their subsidiaries are permitted to engage in such banking-related business ventures as consumer finance; equipment leasing; credit life insurance; computer service bureau and software operations; mortgage banking; and securities brokerage. 9 We are also a “financial holding company” under the BHC Act, which permits us to engage in a broader range of activities that are “financial in nature” and in activities that are determined to be incidental or complementary to activities that are financial in nature.
However, on the same day the final rule was released in October 2024, certain industry participants filed a complaint against the CFPB challenging the final rule. This legal challenge may delay or halt implementation of the final rule.
However, on the same day the final rule was released in October 2024, certain industry participants filed a complaint against the CFPB challenging the final rule.
For instance, the Dodd-Frank Act (or agency regulations adopted and implemented (or to be adopted and implemented) under the Dodd-Frank Act) altered the authority and duties of the federal banking and securities regulatory agencies, implemented certain corporate governance requirements for all public companies including financial institutions with regard to executive compensation, proxy access by shareholders, and certain whistleblower provisions; restricted certain proprietary trading and hedge fund and private equity activities of banks and their affiliates; eliminated the former statutory prohibition against the payment of interest on business checking accounts; limited interchange fees on debit card transactions by certain large processors; and established the Consumer Financial Protection Bureau (“CFPB”). 12 The CFPB was granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
For instance, the Dodd-Frank Act (or agency regulations adopted and implemented (or to be adopted and implemented) under the Dodd-Frank Act) altered the authority and duties of the federal banking and securities regulatory agencies, implemented certain corporate governance requirements for all public companies including financial institutions with regard to executive compensation, proxy access by shareholders, and certain whistleblower provisions; restricted certain proprietary trading and hedge fund and private equity activities of banks and their affiliates; eliminated the former statutory prohibition against the payment of interest on business checking accounts; limited interchange fees on debit card transactions by certain large processors; and established the CFPB.
In the meantime, the existing CRA regulations will remain in effect for the Company. In accordance with the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”), federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties.
The Company is actively monitoring the rulemaking process and will evaluate and implement any required changes to its CRA compliance program to ensure continued alignment with regulatory expectations. 14 In accordance with the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”), federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties.
In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.
If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties. In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.
See “Business Developments” below for additional information. Financial and other information by segment is included in Note 17 (Segment Information) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and is incorporated into this Item 1 by reference.
Our wealth management services involve providing trust, investment advisory, brokerage and retirement planning services to customers. Financial and other information by segment is included in Note 18 (Segment Information) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and is incorporated into this Item 1 by reference.
Furthermore, covered transactions that are loans and extensions of credit must be secured within specified amounts. In addition, all covered transactions and other affiliate transactions must be conducted on terms and under circumstances that are substantially the same as such transactions with unaffiliated entities.
In addition, all covered transactions and other affiliate transactions must be conducted on terms and under circumstances that are substantially the same as such transactions with unaffiliated entities. 12 Debit Interchange Fees Interchange fees are fees that merchants pay to card companies and card-issuing banks such as the Bank for processing electronic payment transactions on their behalf.
The proceeds from the securities sold were reinvested in the securities portfolio by the end of the third quarter of 2024. On February 1, 2025, German American Bancorp completed its previously announced acquisition of Heartland BancCorp (“Heartland”) through the merger of Heartland with and into the Bancorp.
The proceeds from the securities sold were reinvested in the securities portfolio by the end of the third quarter of 2024. Effective June 1, 2024, German American Insurance, Inc.
However, the impact of such changes on the regulatory, enforcement and supervisory priorities are uncertain at this time. Internet Address; Internet Availability of SEC Reports The Company’s Internet address is www.germanamerican.com.
Internet Address; Internet Availability of SEC Reports The Company’s Internet address is www.germanamerican.com.
Immediately following completion of the Heartland 5 holding company merger, Heartland’s subsidiary bank, Heartland Bank, was merged with and into the Bancorp’s subsidiary bank, German American Bank. Heartland, headquartered in Whitehall, Ohio, operated 20 retail banking offices located in Columbus, Ohio and Greater Cincinnati.
Retail Brokerage Jasper, IN Business Developments On February 1, 2025, German American Bancorp completed its previously announced acquisition of Heartland BancCorp (“Heartland”) through the merger of Heartland with and into the Bancorp. Immediately following completion of the Heartland holding company merger, Heartland’s subsidiary bank, Heartland Bank, was merged with and into the Bancorp’s subsidiary bank, German American Bank.
The increased assessment was expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC’s amended restoration plan. Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes.
The Bank had no brokered deposits at December 31, 2024.
The Bank’s brokered deposits at December 31, 2025 totaled $36.3 million.
Removed
Our wealth management services involve providing trust, investment advisory, brokerage and retirement planning services to customers. Effective June 1, 2024, the Bank’s wholly-owned subsidiary, German American Insurance, Inc. (“GAI”), sold substantially all of its assets. Prior to the sale, GAI was a full-service agency offering personal and commercial insurance products, primarily in the local markets of the Bank.
Added
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.
Removed
As of December 31, 2024, Heartland had total assets of approximately $1.97 billion (unaudited), total loans of approximately $1.56 billion (unaudited), and total deposits of approximately $1.75 billion (unaudited).
Added
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,(the “Dodd-Frank Act”), a complex and wide-ranging statute, the Bank also is subject to regulations issued by the Consumer Financial Protection Bureau (“CFPB”), with respect to consumer financial services and products, but is not subject to direct CFPB supervision or examination because the Bank has less than $10 billion in assets.
Removed
We are also a “financial holding company” under the BHC Act, which permits us to engage in a broader range of activities that are “financial in nature” and in activities that are determined to be incidental or complementary to activities that are financial in nature.
Added
If the Bank reports assets over $10 billion for four consecutive quarters, it would meet the FDIC’s definition of a “large financial institution” and would be subject to direct supervision by the CFPB for compliance with a variety of consumer compliance laws, and for assessment of the effectiveness of the Bank’s compliance management system.
Removed
As a financial holding company, we operated GABC Risk Management, Inc., a wholly-owned subsidiary (the “Captive”), as a pooled captive insurance company subsidiary to provide additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.
Added
However, in early 2025, the current Presidential administration announced its intention to close or substantially downsize the CFPB and has taken various actions to accomplish that objective, including significantly reducing the CFPB’s annual funding through legislation. These actions have been subject to litigation and the Company is actively monitoring the related developments.
Removed
On April 10, 2023, the Internal Revenue Service issued a proposed regulation impacting taxes on insurance companies under Section 831(b) of the Internal Revenue Code, both prospectively and retroactively, for a period of three years.
Added
Based on the Company’s past organic growth and growth from acquisitions, the Company’s total consolidated assets could exceed $10 billion as early as 2027.
Removed
As a result of the proposed regulation, the Company elected to decommission the Captive as an insurance company in December 2023 and subsequently dissolved the Captive as a corporation in the State of Nevada.
Added
As a result, during 2025, the Company engaged an advisory firm to perform a review of its compliance management system and its risk management program to assess its preparedness to meet the additional regulatory requirements and CFPB supervision that would be applicable to the Company and the Bank after surpassing the $10 billion threshold.
Removed
“Common Equity Tier 1” (“CET1”) Capital consists of common stock instruments that meet the eligibility criteria in the new rules, retained earnings, accumulated other comprehensive income (“AOCI”) and common equity Tier 1 minority interest.
Added
The assessment yielded several observations with recommended actions that have been prioritized based on criticality. The Company began implementing action plans to address these recommendations in 2025 and expects to continue to do so throughout 2026.
Removed
In October 2022, the FDIC adopted a final rule that increased the initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning with the first quarterly assessment period of 2023.
Added
Indiana law and the BHC Act restrict certain types of expansion by the Company and its bank subsidiary.
Removed
Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.
Added
Furthermore, covered transactions that are loans and extensions of credit must be secured within specified amounts.
Removed
Impact of Presidential and Congressional Elections on Recent Rulemaking Control of the White House and the U.S. Congress shifted to the Republican Party in January 2025 following the November 2024 Presidential and Congressional elections.
Added
The “Durbin Amendment” in the Dodd-Frank Act provides limits on the amount of debit card interchange that may be received or charged by the debit card issuer, for insured depository institutions with $10 billion or more in assets (inclusive of affiliates) as of the end of the calendar year.
Removed
As a result, there has been much discussion about significant reductions in 15 financial services regulation, potentially including amendments to the Dodd-Frank Act and other federal banking laws, and structural changes to the CFPB. In addition, changes in the leadership of the FDIC and CFPB have also been announced by the new Administration.
Added
Subject to certain exemptions and potential adjustments, the Durbin Amendment limits debit card interchange received or charged by the issuer to $0.21 plus 5 basis points multiplied by the value of the transaction.
Added
Upon crossing the $10 billion asset threshold in a calendar year, the rules require compliance with these limits by no later than July 1 of the following year.
Added
While the Bank will not likely exceed the $10 billion asset threshold until 2027 or thereafter, the Durbin Amendment will result in a material reduction of interchange fee income paid to the Bank by merchants.
Added
The CFPB was granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
Added
The Dodd-Frank Act also required publicly traded bank holding companies with more than $10 billion in total consolidated assets to establish and maintain a risk committee. Pursuant to the Federal Reserve’s final rules issued under the Economic Growth Act, that threshold was increased to $50 billion.
Added
Although it is not yet required to have a risk committee in place, the Company established such a committee, effective July 1, 2025, comprised of holding company directors to oversee risk matters in preparation for future growth.
Added
On July 29, 2025, following various motions filed, the court granted the CFPB’s request to stay the litigation, and on August 21, 2025, the CFPB issued an advance notice of proposed rulemaking, asking the public to respond to a series of questions related to the rule. Comments were due by October 21, 2025.
Added
The Company is monitoring developments concerning the rule. Concentrations in Commercial Real Estate Lending Federal bank regulatory guidance titled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”) requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.
Added
This could include enhanced strategic planning, CRE underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for credit losses and capital levels may also be required.
Added
The CRE Guidance provides the following criteria regulatory agencies will use as indicators to identify institutions that may be exposed to CRE concentration risk: (i) experienced rapid growth in CRE lending; (ii) notable exposure to a specific type of CRE; (iii) total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or (iv) total commercial real estate, which includes loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land are 300% or more of a bank’s total risk-based capital and the outstanding balance of the institutions’ CRE portfolio has increased by 50% or more during the prior 36 months.
Added
While the Bank’s loan portfolio is most heavily concentrated in commercial real estate loans (53% of the total portfolio in 2025), it did not exceed any of the above indicators.
Added
In addition, the Company believes its long-term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as its loan and credit monitoring and administration procedures, are generally appropriate to manage its concentrations as required under the guidance.
Added
On July 16, 2025, the federal banking regulators issued a joint notice of proposed rulemaking to rescind the CRA final rule issued in October 2023 and reinstate the CRA framework that existed prior to the October 2023 final rule, which framework has remained in effect due to the preliminary injunction.
Added
As the Company expects that its total consolidated assets could exceed $10 billion as early as 2027, the method that the FDIC uses to determine the amount of its deposit insurance premium will change as a result.
Added
Any increases in our assessment rate, future special assessments, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could adversely affect our business, financial condition, results of operations, or cash flows.
Added
Other Recent Legislative Developments In July 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or the “GENIUS Act,” was signed into law, establishing a federal licensing and supervisory framework for payment stablecoins and their issuers.
Added
The GENIUS Act may accelerate and increase the competition that non-traditional financial institutions pose to banks’ payment services, but may also create opportunities for banks to hold stablecoin reserve assets, custody stablecoins, or issue stablecoins.
Added
Several key provisions of the GENIUS Act require federal regulatory agencies to adopt implementing regulations, and the Act will take effect the earlier of 18 months after its enactment or 120 days after the agencies issue final implementing regulations. In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant tax changes.
Added
The OBBBA extends or makes permanent various tax provisions that were originally enacted in the 2017 Tax Cuts and Jobs Act and were set to expire at the end of 2025. The OBBBA features modified versions of individual and business tax relief proposals, and other new tax relief measures.
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
21 edited+22 added−1 removed103 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
21 edited+22 added−1 removed103 unchanged
2024 filing
2025 filing
Biggest changeAny such increases in our premiums and assessment fees may have a materially adverse effect on our results of operations and financial condition. Risks Related to Our Operations We face significant operational risks due to the high volume and the high dollar value nature of transactions we process.
Biggest changeIn addition, the method that the FDIC uses to determine the amount of our deposit insurance premium will change once our total consolidated assets exceed $10 billion, which we expect may happen as early as 2027. Any increases in our FDIC insurance premiums and assessment fees may have a materially adverse effect on our results of operations and financial condition.
We actively monitor our available-for-securities portfolio and we do not currently anticipate the need to realize material losses from the sale of securities for liquidity purposes. Furthermore, we believe it is unlikely that we would be required to sell any such securities before recovery of their amortized cost bases, which may be at maturity.
We actively monitor our available-for-sale securities portfolio and we do not currently anticipate the need to realize material losses from the sale of securities for liquidity purposes. Furthermore, we believe it is unlikely that we would be required to sell any such securities before recovery of their amortized cost bases, which may be at maturity.
Such pressures could negatively impact customers’ ability to obtain new loans or to repay existing loans, diminish the values of any collateral securing such loans and could cause increases in the number of the Company’s customers experiencing financial distress and in the levels of the Company’s delinquencies, non-performing loans and other problem assets, charge-offs and provision for credit losses, all of which could materially adversely affect our financial condition and results of operations.
Such pressures could negatively impact customers’ ability to obtain new loans or to repay existing loans, diminish the values of any collateral securing such loans and could cause increases in the number of the Company’s customers experiencing financial distress and in the levels of the Company’s delinquencies, non- 18 performing loans and other problem assets, charge-offs and provision for credit losses, all of which could materially adversely affect our financial condition and results of operations.
Furthermore, as we and other banks experienced in 2023, the failure of other financial institutions may cause deposit outflows as customers (i) spread deposits among several different banks so as to maximize their 19 amount of FDIC insurance, (ii) move deposits to larger banks (who may be considered “too big to fail”), or (iii) remove deposits from the banking system entirely.
Furthermore, as we and other banks experienced in 2023, the failure of other financial institutions may cause deposit outflows as customers (i) spread deposits among several different banks so as to maximize their amount of FDIC insurance, (ii) move deposits to larger banks (who may be considered “too big to fail”), or (iii) remove deposits from the banking system entirely.
Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them.
Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and 24 environments that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them.
The occurrence of any of these events could cause us to suffer financial loss, face regulatory action and suffer damage to our reputation. 22 Unauthorized disclosure of sensitive or confidential client or customer information, whether through a cyber-attack, other breach of our computer systems or otherwise, could harm our business.
The occurrence of any of these events could cause us to suffer financial loss, face regulatory action and suffer damage to our reputation. Unauthorized disclosure of sensitive or confidential client or customer information, whether through a cyber-attack, other breach of our computer systems or otherwise, could harm our business.
Although we have historically been able to replace maturing deposits and borrowings as necessary, we might not be able to replace such funds in the future if, among other things, our results of operations or financial condition or the results of operations or financial condition of our lenders or market conditions were to change.
Although we have historically been able to replace maturing deposits and borrowings as necessary, we might not be able to replace such funds in the future if, among other things, our results of 20 operations or financial condition or the results of operations or financial condition of our lenders or market conditions were to change.
Furthermore, the Company’s business operations may be disrupted due to vendors and third-party service providers being unable to work or provide services effectively during such a health crisis, including because of illness, quarantines or other government actions.
Furthermore, the Company’s business operations may be disrupted due to vendors and third-party service 19 providers being unable to work or provide services effectively during such a health crisis, including because of illness, quarantines or other government actions.
Any failure or 20 circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, cash flows and financial condition . Our methods of reducing risk exposure may not be effective.
Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, cash flows and financial condition . Our methods of reducing risk exposure may not be effective.
These regulations and supervisory guidance affect our lending practices, capital structure, investment practices, dividend policy and growth, among 21 other things. The U.S. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes.
These regulations and supervisory guidance affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. The U.S. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes.
We also depend upon the continued contributions of our management personnel, and in particular upon the abilities of our senior executive management, and the loss of the services of one or more of them could harm our business . Our controls and procedures may fail or be circumvented.
We also depend upon the continued 21 contributions of our management personnel, and in particular upon the abilities of our senior executive management, and the loss of the services of one or more of them could harm our business . Our controls and procedures may fail or be circumvented.
Furthermore, negative impacts on our customers caused by such a health crisis 18 could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans.
Furthermore, negative impacts on our customers caused by such a health crisis could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans.
Any problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, 23 could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Replacing these third party vendors could also entail significant delay and expense.
Any problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, 25 could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Replacing these third party vendors could also entail significant delay and expense.
While recent higher inflation levels have moderated, current economic conditions continue to be impacted by inflation rates that persistently remain above the Federal Reserve’s target rate and by elevated interest rates. A prolonged period of higher inflation may impact our profitability by negatively impacting our fixed costs and expenses.
Current economic conditions continue to be impacted by inflation rates that persistently remain above the Federal Reserve’s target rate and by elevated interest rates. A prolonged period of higher inflation may impact our profitability by negatively impacting our fixed costs and expenses.
As of December 31, 2024, approximately 22% of our deposits were uninsured and uncollateralized. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2025, approximately 25% of our deposits were uninsured and uncollateralized. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
From time to time, banking regulators change these capital adequacy guidelines. For example, as a result of the Basel III Rules required by the Dodd-Frank Act, we are now required to satisfy additional, more stringent, capital adequacy standards than we had in the past. See “Business - Regulation and Supervision, Capital Requirements” of Item 1 above for additional information.
For example, as a result of the Basel III Rules required by the Dodd-Frank Act, we are now required to satisfy additional, more stringent, capital adequacy standards than we had in the past. See “Business - Regulation and Supervision, Capital Requirements” of Item 1 above for additional information.
Factors impacting the price of our common stock include, among others: • actual or anticipated variations in our quarterly results of operations; • recommendations or research reports about us or the financial services industry in general published by securities analysts; • the failure of securities analysts to cover, or continue to cover, us; • operating and stock price performance of other companies that investors believe are comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry; • perceptions in the marketplace regarding us, or our reputation, competitors or other financial institutions; • actual or anticipated sales of our equity or equity-related securities; • our past and future dividend practice; • departure of our management team or other key personnel; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; • failure to integrate acquisitions or realize anticipated benefits from acquisitions; • existing or increased regulatory and compliance requirements, changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws and regulations; and • litigation and governmental investigations. 24 General market fluctuations, industry factors and general economic and political conditions and events (including elevated inflation, interest rate changes, credit loss trends, or economic slowdowns or recessions) could also cause our stock price to decrease regardless of operating results.
Factors impacting the price of our common stock include, among others: • actual or anticipated variations in our quarterly results of operations; • recommendations or research reports about us or the financial services industry in general published by securities analysts; • the failure of securities analysts to cover, or continue to cover, us; 26 • operating and stock price performance of other companies that investors believe are comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry; • perceptions in the marketplace regarding us, or our reputation, competitors or other financial institutions; • actual or anticipated sales of our equity or equity-related securities; • our past and future dividend practice; • departure of our management team or other key personnel; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; • failure to integrate acquisitions or realize anticipated benefits from acquisitions; • existing or increased regulatory and compliance requirements, changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws and regulations; and • litigation and governmental investigations.
The underwriting and credit monitoring policies and procedures that we have adopted cannot eliminate the risk that we might incur losses on account of factors relating to the economy like those identified above, and those losses could have a material adverse effect on our business, financial condition, results of operations and cash flows. 17 If our actual loan losses exceed our estimates, our earnings and financial condition will be impacted.
The underwriting and credit monitoring policies and procedures that we have adopted cannot eliminate the risk that we might incur losses on account of factors relating to the economy like those identified above, and those losses could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are required to maintain certain minimum amounts and types of capital and may be subject to more stringent capital requirements in the future. A failure to meet applicable capital requirements could have an adverse effect on us . We are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain.
A failure to meet applicable capital requirements could have an adverse effect on us . We are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain. From time to time, banking regulators change these capital adequacy guidelines.
We operate in many different businesses in diverse markets and rely on the ability of our employees and systems to process transactions.
Risks Related to Our Operations We face significant operational risks due to the high volume and the high dollar value nature of transactions we process. We operate different businesses in diverse markets and rely on the ability of our employees and systems to process transactions.
Risks Related to the Financial Services Industry We operate in a highly regulated environment and changes in laws and regulations to which we are subject may adversely affect our results of operations.
Failure to adapt to or comply with such varying expectations could negatively impact our reputation, ability to do business with certain partners, access to capital, and our stock price. 22 Risks Related to the Financial Services Industry We operate in a highly regulated environment and changes in laws and regulations to which we are subject may adversely affect our results of operations.
Removed
Failure to adapt to or comply with such varying expectations could negatively impact our reputation, ability to do business with certain partners, access to capital, and our stock price.
Added
Changes in trade policies by the United States or other countries, including tariffs or retaliatory tariffs, may cause inflation, which could impact the prices of products sold or purchased by our borrowers or the demand for their products, negatively impacting their profitability and ability to repay loans.
Added
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, which events could increase volatility in commodity and energy prices, and raise the possibility of supply disruptions.
Added
If our actual loan losses exceed our estimates, our earnings and financial condition will be impacted.
Added
We will become subject to increased regulation when we have more than $10 billion in total consolidated assets. An insured depository institution with $10 billion or more in total assets is subject to supervision, examination, and enforcement with respect to consumer protection laws by the CFPB rather than its primary federal banking regulator.
Added
Under its current policies, the CFPB will assert jurisdiction in the first quarter after an insured depository institution’s call reports show total consolidated assets of $10 billion or more for four consecutive quarters. As of December 31, 2025, the Company’s total assets were $8.4 billion.
Added
However, based on the Company’s past organic growth and growth from acquisitions, its total consolidated assets could exceed $10 billion as early as 2027.
Added
As a result, it is possible that at some time in 2028, the CFPB, instead of the FDIC, may have primary examination and enforcement authority over the Bank with respect to consumer protection laws and for assessment of the effectiveness of its compliance management system.
Added
As an independent bureau focused solely on consumer financial protection, the CFPB may interpret or enforce consumer protection laws more strictly or severely than the FDIC.
Added
While regulation by the CFPB remains possible, in early 2025, the current Presidential administration announced its intention to close or substantially downsize the CFPB and has taken various actions to accomplish that objective, including significantly reducing the CFPB’s annual funding through legislation. These actions have been subject to litigation, and the Company is actively monitoring the related developments.
Added
Additionally, other regulatory requirements apply to depository institutions and holding companies with $10 billion or more in total consolidated assets, including a cap on interchange transaction fees for debit cards, as required by Federal Reserve Board regulations, which would reduce our interchange revenue. See “Business - Regulation and Supervision - Debit Interchange Fees” of Item 1 above for additional information.
Added
Significant increases in compliance costs or decreases in interchange revenue could have a materially adverse effect on our results of operations and financial conditions. 23 We are required to maintain certain minimum amounts and types of capital and may be subject to more stringent capital requirements in the future.
Added
Our increased use of cloud and other technologies, such as remote work technologies, and the increased connectivity of third parties and electronic devices to our systems also increases our risk of being subject to a cyber-attack.
Added
The risk of a security breach or disruption, particularly through cyber-attack or cyber-intrusion, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
Added
Increasing fraud risk could adversely affect our business, financial condition, and reputation . We are exposed to an increasing risk of fraud, including cyber fraud, identity theft, account takeover, and other fraudulent activities targeting financial institutions and their customers.
Added
The sophistication and frequency of these schemes continue to grow, driven by advances in technology and the proliferation of digital banking channels. Fraudulent activity can result in financial losses for us or our customers, increased operational costs, and potential legal exposure.
Added
Although we employ robust security measures, including authentication protocols, transaction monitoring, and fraud detection systems, these controls may not be sufficient to prevent all fraudulent activity. Criminals continuously adapt their methods to circumvent existing safeguards, and emerging technologies such as artificial intelligence may further enhance their ability to perpetrate fraud.
Added
Significant fraud-related losses could negatively impact our earnings, capital, and liquidity. In addition, fraud incidents may harm our reputation, erode customer trust, and lead to regulatory scrutiny or enforcement actions. Failure to effectively manage and mitigate fraud risk could have a material adverse effect on our business, financial condition, and results of operations.
Added
Technological advancements may subject us to additional risks. The banking and financial services industry continually experiences technological changes, with frequent introductions of new technology-driven products and services, including the increased usage of intelligent automation within the industry.
Added
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations.
Added
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. In addition, our implementation of technological changes and upgrades to maintain current systems and integrate new ones may also create service interruptions, transaction processing errors, and system conversion delays.
Added
There can be no assurance that we will be able to successfully manage the risks associated with our increased dependency on technology. Failure to successfully keep pace with technological change affecting the banking and financial services industry could negatively affect our revenue and profitability.
Added
General market fluctuations, industry factors and general economic and political conditions and events (including elevated inflation, interest rate changes, credit loss trends, or economic slowdowns or recessions) could also cause our stock price to decrease regardless of operating results. Item 1B. Unresolved Staff Comments . None.
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
8 edited+4 added−3 removed8 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
8 edited+4 added−3 removed8 unchanged
2024 filing
2025 filing
Biggest changeIn accordance with the incident response plans, cross-functional management teams assess and assign a threat level to each cybersecurity incident. A cybersecurity incident (or incidents, if aggregated together) assigned a critical threat level is escalated to a committee consisting of the Company’s executive and certain other officers (for such purpose, the “Critical Threat Committee”) for review.
Biggest changeIn accordance with the incident response plans, cross-functional management teams assess and assign a threat level to each cybersecurity incident.
The Technology Committee 25 receives materials on a quarterly basis to address the identification and status of information technology cybersecurity risks. Each year, the full Board of Directors also receives a comprehensive update on the Company’s cyber and information security program. Our CDIO leads the Company’s digital optimization and information technology initiatives.
The Technology Committee receives materials on a quarterly basis to address the identification and status of information technology cybersecurity risks. Each year, the full Board of Directors also receives a comprehensive update on the Company’s cyber and information security program. Our CDIO leads the Company’s digital optimization and information technology initiatives.
He is also responsible for driving the strategy, execution and integration of all banking and nonbanking technology, information and digital initiatives in alignment with the Company’s corporate business strategy. Our CDIO assumed his current role in January 2022.
He is also responsible for driving the strategy, execution and integration of all banking and nonbanking technology, information and digital initiatives in alignment with the Company’s corporate business strategy. Our CDIO assumed his current role in January 2026.
In the event that the Critical Threat Committee determines that a critical cybersecurity incident (or incidents, if aggregated together) is deemed to be material, the Critical Threat Committee will brief the Board of Directors and oversee the disclosure process.
In the event that the Incident Response Team determines that a critical cybersecurity incident (or incidents, if aggregated together) is deemed to be material, the Incident Response Team will brief the Risk Committee and oversee the disclosure process.
Governance In exercising oversight over the Company’s information technology risks, including its cyber and information security program, our Board of Directors has established a Technology Committee that is led by the Company’s Chief Digital and Information Officer (“CDIO”) and is comprised of directors with technology industry backgrounds, all of the Company’s executive officers, the Company’s Information Security Officer (“ISO”) and the Company’s Chief Risk Officer.
Governance In exercising oversight over the Company’s information technology risks, including its cyber and information security program, the Company’s Enterprise Risk Management Committee (the “ERM Committee”) has established a Technology Committee that is led by the Company’s Chief Digital and Information Officer (“CDIO”) and is comprised of the Company’s executive officers, the Company’s Information Security Officer (“ISO”) and the Company’s Chief Risk Officer.
The Company’s Critical Threat Committee is responsible for evaluating the materiality of a cybersecurity incident based on criteria that has been reviewed with the Board of Directors, and for determining whether there are disclosure obligations under applicable securities laws.
The Company’s Incident Response Team (a sub-committee of the Technology Committee) has been established to evaluate the materiality of cybersecurity incidents based upon criteria that have been reviewed with the ERM Committee and the Board’s Risk Committee, and is responsible for determining whether there are disclosure obligations under applicable securities laws.
The Company has not experienced any cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected the Company, including its business strategy, results of operations, or financial condition.
A cybersecurity incident (or incidents, if aggregated together) assigned a critical threat level is escalated to the Board’s Risk Committee as described below in more detail. 27 The Company has not experienced any cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected the Company, including its business strategy, results of operations, or financial condition.
For all critical cybersecurity incidents that are not deemed to be material, the Critical Threat Committee will notify the Company’s Chairman and Chief Executive Officer to determine whether the Board of Directors will be notified of the critical incident during the next regularly-scheduled cybersecurity update to the Audit Committee, or sooner as circumstances warrant.
For all critical cybersecurity incidents that are not deemed to be material, the Incident Response Team will report such incidents to the Technology Committee, which will further report such critical incidents to the ERM Committee and the Risk Committee, as part of the next regularly-scheduled cybersecurity updates, or sooner as circumstances warrant.
Removed
Prior to that, he served as the Company’s Senior Vice President of Technology and Operations, where he lead the Company’s core processing and operations functions, and the development of technology-driven products and services. Our CDIO has over 20 years of technology and operations experience in the banking industry.
Added
Prior to that, he served as the Senior Vice President and Chief Enterprise Architect for a bank with over $30 billion in assets.
Removed
Our ISO oversees a team of employees dedicated to the prevention, detection, mitigation, and remediation of cybersecurity incidents. He joined the Company in September 2022 with more than 20 years of technology and information security experience in banking and as a consultant, and he holds a Certified Information Security Manager certification.
Added
In his over 25 years of technology experience in regulated industries, including banking, our CDIO has held leadership positions responsible for developing digital banking solutions, launching and integrating business enablement tools, artificial intelligence integration, and oversight of the technology framework. Our ISO oversees a team of employees dedicated to the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Removed
The team of employees includes information security professionals with a range of varying cybersecurity education and experience, many of whom have substantial experience assessing and managing cybersecurity initiatives and hold various cybersecurity certifications.
Added
He joined the Company in November 2025 with more than 25 years of technology and information security experience, specifically in the banking sector. His most recent roles included Information Security Officer and Director of Information Technology, along with various cybersecurity consulting engagements.
Added
In addition, the Company utilizes a specialized managed security provider to consult, monitor, alert and remediate issues related to cybersecurity. This oversight includes endpoint protection, firewall alerting, vulnerability detection and oversight over the Company’s system information and event management (SIEM) platform.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
2024 filing
2025 filing
Biggest changeItem 3. Legal Proceedings. There are no pending legal proceedings, other than routine litigation incidental to the business of the Company’s subsidiaries, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. Item 4. Mine Safety Disclosures. Not applicable. 26 PART II
Biggest changeItem 3. Legal Proceedings. There are no pending legal proceedings, other than routine litigation incidental to the business of the Company’s subsidiaries, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. Item 4. Mine Safety Disclosures. Not applicable. 28 PART II
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+0 added−0 removed7 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+0 added−0 removed7 unchanged
2024 filing
2025 filing
Biggest changeThe companies comprising the Indiana Bank Peer Group for purposes of the December 2024 comparison were: 1st Source Corp., First Financial Corp., First Merchants Corp., Lakeland Financial Corp., Old National Bancorp, Horizon Bancorp, First Internet Bancorp, First Savings Financial Corp., First Capital, Inc., Merchants Bancorp, and Richmond Mutual Bancorporation, Inc.
Biggest changeThe companies comprising the Indiana Bank Peer Group for purposes of the December 2025 comparison were: 1st Source Corporation, First Financial Corporation, First Merchants Corporation, Lakeland Financial Corporation, Old National Bancorp, Horizon Bancorp, Inc., First Internet Bancorp, First Savings Financial Group, Inc., First Capital, Inc., Merchants Bancorp, and Richmond Mutual Bancorporation, Inc.
Period Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) October 2024 — $ — — 1,000,000 November 2024 — — — 1,000,000 December 2024 — — — 1,000,000 Totals — $ — — (1) The Company’s Board of Directors has previously approved a plan to repurchase up to 1.0 million shares of the Company’s outstanding common stock.
Period Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) October 2025 — $ — — 1,000,000 November 2025 — — — 1,000,000 December 2025 — — — 1,000,000 Totals — $ — — (1) The Company’s Board of Directors has previously approved a plan to repurchase up to 1.0 million shares of the Company’s outstanding common stock.
The Indiana Bank Peer Group (which is a custom peer group identified by Company management) includes all Indiana-based commercial bank holding companies (excluding companies owning thrift institutions that are not regulated as bank holding companies) that have been in existence as commercial bank holding companies throughout the five-year period ended December 31, 2024, the stocks of which have been traded on an established securities market (NYSE, NYSE American or Nasdaq) throughout that five-year period.
The Indiana Bank Peer Group (which is a custom peer group identified by Company management) includes all Indiana-based commercial bank holding companies (excluding companies owning thrift institutions that are not regulated as bank holding companies) that have been in existence as commercial bank holding companies throughout the five-year period ended December 31, 2025, the stocks of which have been traded on an established securities market (NYSE, NYSE American or Nasdaq) throughout that five-year period.
Equity Compensation Plan Information See Item 12 of Part III of this Report for information regarding securities authorized for issuance under equity compensation plans. Item 6. [Reserved] 28
Equity Compensation Plan Information See Item 12 of Part III of this Report for information regarding securities authorized for issuance under equity compensation plans. Item 6. [Reserved] 30
The Company’s stock is currently included in the Russell 2000 Index and Russell Microcap Index. 27 Stock Repurchase Program Information The following table sets forth information regarding the Company’s purchases of its common shares during each of the three months ended December 31, 2024.
The Company’s stock is currently included in the Russell 2000 Index and Russell Microcap Index. 29 Stock Repurchase Program Information The following table sets forth information regarding the Company’s purchases of its common shares during each of the three months ended December 31, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Common Stock German American Bancorp, Inc.’s stock is traded on the Nasdaq Global Select Market under the symbol GABC. The Common Stock was held of record by approximately 3,134 shareholders at February 20, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Common Stock German American Bancorp, Inc.’s stock is traded on the Nasdaq Global Select Market under the symbol GABC. The Common Stock was held of record by approximately 2,988 shareholders at February 23, 2026.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
117 edited+61 added−36 removed81 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
117 edited+61 added−36 removed81 unchanged
2024 filing
2025 filing
Biggest changeThe need for specific reserves are considered for credits when: (a) the customer’s cash flow or net worth appears insufficient to repay the loan; (b) the loan has been criticized in a regulatory examination; (c) the loan is on non-accrual; or, (d) other reasons where the ultimate collectability of the loan is in question, or the loan characteristics require special monitoring. 45 Allowance for Credit Losses (dollars in thousands) Years Ended December 31, 2024 2023 2022 2021 2020 Balance of Allowance for Expected Credit Losses at Beginning of Period $ 43,765 $ 44,168 $ 37,017 $ 46,859 $ 16,278 Impact of adopting ASC 326 — — — — 8,767 Impact of adopting ASC 326 - PCD loans — — — — 6,886 Loans Charged-off: Commercial and Industrial Loans and Leases 223 1,792 1,149 2,777 2,119 Commercial Real Estate Loans 308 56 79 10 36 Agricultural Loans 8 27 — — — Home Equity and Consumer Loans 2,362 1,858 1,598 1,003 942 Residential Mortgage Loans — 58 24 45 39 Total Loans Charged-off 2,901 3,791 2,850 3,835 3,136 Recoveries of Previously Charged-off Loans: Commercial and Industrial Loans and Leases 55 154 26 61 23 Commercial Real Estate Loans 83 76 24 40 129 Agricultural Loans 2 — — — — Home Equity and Consumer Loans 657 605 479 359 358 Residential Mortgage Loans — 3 5 33 4 Total Recoveries 797 838 534 493 514 Net Loans Recovered (Charged-off) (2,104) (2,953) (2,316) (3,342) (2,622) Acquisition of Citizens Union Bank of Shelbyville, KY - PCD Loans — — 3,117 — — Additions to Allowance Charged to Expense 2,775 2,550 6,350 (6,500) 17,550 Balance at End of Period $ 44,436 $ 43,765 $ 44,168 $ 37,017 $ 46,859 Net Charge-offs (Recoveries) to Average Loans Outstanding 0.05 % 0.08 % 0.06 % 0.11 % 0.08 % Provision for Credit Losses to Average Loans Outstanding 0.07 % 0.07 % 0.17 % (0.21) % 0.55 % Allowance for Credit Losses to Total Loans at Year-end 1.08 % 1.10 % 1.17 % 1.23 % 1.52 % The following table indicates the breakdown of the allowance for credit losses for the periods indicated (dollars in thousands): Years Ended December 31, 2024 2023 2022 2021 2020 Commercial and Industrial Loans and Leases $ 7,456 $ 8,267 $ 13,958 $ 9,754 $ 6,645 Commercial Real Estate Loans 25,818 25,923 21,598 19,245 29,878 Agricultural Loans 4,917 3,837 4,188 4,505 6,756 Home Equity and Consumer Loans 3,443 2,976 2,196 1,808 1,636 Residential Mortgage Loans 2,802 2,762 2,228 1,705 1,944 Unallocated — — — — — Total Allowance for Credit Losses $ 44,436 $ 43,765 $ 44,168 $ 37,017 $ 46,859 The Company’s allowance for credit losses totaled $44.4 million at December 31, 2024 compared to $43.8 million at December 31, 2023.
Biggest changeAllowance for Credit Losses (dollars in thousands) Years Ended December 31, 2025 2024 2023 2022 2021 Balance of Allowance for Expected Credit Losses at Beginning of Period $ 44,436 $ 43,765 $ 44,168 $ 37,017 $ 46,859 Impact of Change in Accounting Method (7) — — — — Loans Charged-off: Commercial and Industrial Loans and Leases 764 223 1,792 1,149 2,777 Commercial Real Estate Loans 26 308 56 79 10 Agricultural Loans — 8 27 — — Home Equity, Consumer Loans and Credit Cards 2,668 2,362 1,858 1,598 1,003 Residential Mortgage Loans 114 — 58 24 45 Total Loans Charged-off 3,572 2,901 3,791 2,850 3,835 Recoveries of Previously Charged-off Loans: Commercial and Industrial Loans and Leases 49 55 154 26 61 Commercial Real Estate Loans — 83 76 24 40 Agricultural Loans — 2 — — — Home Equity, Consumer Loans and Credit Cards 832 657 605 479 359 Residential Mortgage Loans 21 — 3 5 33 Total Recoveries 902 797 838 534 493 Net Loans Recovered (Charged-off) (2,670) (2,104) (2,953) (2,316) (3,342) Acquisitions (Day 1 and Day 2 Impact) 32,703 — — 3,117 — Additions to Allowance Charged to Expense 3,232 2,775 2,550 6,350 (6,500) Balance at End of Period $ 77,694 $ 44,436 $ 43,765 $ 44,168 $ 37,017 Net Charge-offs (Recoveries) to Average Loans Outstanding 0.05 % 0.05 % 0.08 % 0.06 % 0.11 % Provision for Credit Losses to Average Loans Outstanding 0.09 % 0.07 % 0.07 % 0.17 % (0.21) % Allowance for Credit Losses to Total Loans at Year-end 1.32 % 1.08 % 1.10 % 1.17 % 1.23 % The following table indicates the breakdown of the allowance for credit losses for the periods indicated (dollars in thousands): Years Ended December 31, 2025 2024 2023 2022 2021 Commercial and Industrial Loans and Leases $ 20,754 $ 7,456 $ 8,267 $ 13,958 $ 9,754 Commercial Real Estate Loans 40,626 25,818 25,923 21,598 19,245 Agricultural Loans 3,324 4,917 3,837 4,188 4,505 Home Equity, Consumer Loans and Credit Cards 5,352 3,443 2,976 2,196 1,808 Residential Mortgage Loans 7,638 2,802 2,762 2,228 1,705 Unallocated — — — — — Total Allowance for Credit Losses $ 77,694 $ 44,436 $ 43,765 $ 44,168 $ 37,017 The Company’s allowance for credit losses totaled $77.7 million at December 31, 2025 compared to $44.4 million at December 31, 2024.
Actual results may differ materially from the expectations of the Company that is expressed or implied by any forward-looking statement.
Actual results may differ materially from the expectations of the Company that is expressed or implied by any forward-looking statement.
This Item 7, as well as the discussions in Item 1 (“Business”) entitled “Forward-Looking Statements and Associated Risks” and in Item 1A (“Risk Factors”) (which discussions are incorporated in this Item 7 by reference) list some of the factors that could cause the Company’s actual results to vary materially from those expressed or implied by any such forward-looking statements.
This Item 7, as well as the discussions in Item 1 (“Business”) entitled “Forward-Looking Statements and Associated Risks” and in Item 1A (“Risk Factors”) (which discussions are incorporated in this Item 7 by reference) list some of the factors that could cause the Company’s actual results to vary materially from those expressed or implied by any such forward-looking statements.
The all-cash sale price totaled $40.0 million and resulted in an after-tax gain, net of transaction costs, of approximately $27,476,000, or $0.93 per share. GAI net income, excluding the after-tax gain, contributed approximately $767,000, or $0.03 per share, during 2024 compared with net income of $1,639,000, or $0.06 per share, during the full year of 2023.
The all-cash sale price totaled $40.0 million and resulted in an after-tax gain, net of transaction costs, of approximately $27,476,000, or $0.93 per share. GAI net income, excluding the after-tax gain, contributed approximately $767,000, or $0.03 per share, during 2024 compared with net income of $1,639,000, or $0.06 per share, during the full year of 2023.
Net income for the year ended December 31, 2024 was also impacted by the securities portfolio restructuring transaction whereby available-for-sale securities totaling approximately $375.3 million in book value were sold. The approximate loss on these securities totaled $34,893,000, $27,189,000 after tax, or $0.92 per share, and was included in earnings for the second quarter of 2024.
Net income for the year ended December 31, 2024 was also impacted by the securities portfolio restructuring transaction whereby available-for-sale securities totaling approximately $375.3 million in book value were sold. The approximate loss on these securities totaled $34,893,000, $27,189,000 after tax, or $0.92 per share, and was included in earnings for the second quarter of 2024.
As discussed above, the properties securing our commercial real estate portfolio are diverse in terms of property type, occupancy type, and geographic location. This diversity helps reduce the Bank’s exposure to adverse economic events that affect any single market or industry. Management will continue to monitor and evaluate commercial real estate loans based on collateral, geography and risk grade criteria.
As discussed above, the properties securing our commercial real estate portfolio are diverse in terms of property type, occupancy type, and geographic location. This diversity helps reduce the Bank’s exposure to adverse economic events that affect any single market or industry. Management will continue to monitor and evaluate CRE loans based on collateral, geography and risk grade criteria.
Net income for the year ended December 31, 2024 included merger-related transaction costs associated with the Company’s merger with Heartland that totaled approximately $1,370,000, $1,082,000 after-tax, or $0.04 per share. Net income for the year end December 31, 2024 was impacted by the sale of substantially all of the assets of GAI during the second quarter of 2024.
Net income for the year ended December 31, 2024 included merger-related transaction costs associated with the Company’s merger with Heartland that totaled approximately $1,370,000, $1,082,000 after-tax, or $0.04 per share. Net income for the year ended December 31, 2024 was impacted by the sale of substantially all of the assets of GAI during the second quarter of 2024.
A valuation allowance reduces deferred tax assets to the amount management believes is more likely than not to be realized. In evaluating the realization of deferred tax assets, management considers the likelihood that sufficient taxable income of appropriate character will be generated within carry-back and carry-forward periods, including consideration of available tax planning strategies.
A valuation allowance reduces deferred tax assets to the amount management believes is more likely than not to be realized. In evaluating the realization of deferred tax assets, management considers the likelihood that sufficient taxable income of appropriate character will be generated within carry-back and carry-forward periods, including consideration of available tax 34 planning strategies.
Net income for the year ended December 31, 2024 included merger-related transaction costs associated with the Company’s merger with Heartland that totaled approximately $1,370,000, $1,082,000 after-tax, or $0.04 per share. Net income for the year end December 31, 2024 was impacted by the sale of substantially all of the assets of GAI during the second quarter of 2024.
Net income for the year ended December 31, 2024 included merger-related transaction costs associated with the Company’s merger with Heartland that totaled approximately $1,370,000, $1,082,000 after-tax, or $0.04 per share. Net income for the year ended December 31, 2024 was impacted by the sale of substantially all of the assets of GAI during the second quarter of 2024.
The Company’s simulation modeling monitors the potential impact to net interest income under various interest rate scenarios. The Company’s objective is to actively manage its asset/liability position within a one-year interval and to limit the risk in any of the interest rate scenarios to a reasonable level of tax-equivalent net interest income within that interval.
The Company’s simulation modeling monitors the 51 potential impact to net interest income under various interest rate scenarios. The Company’s objective is to actively manage its asset/liability position within a one-year interval and to limit the risk in any of the interest rate scenarios to a reasonable level of tax-equivalent net interest income within that interval.
The critical accounting policies and estimates that the Company has determined to be the most susceptible to change in the near term relate to the determination of the allowance for credit losses, the valuation of securities available for sale, income tax expense, and the valuation of goodwill and other intangible assets.
The critical accounting policies and estimates that the Company has determined to be the most susceptible to change in the near term relate to the determination of 32 the allowance for credit losses, the valuation of securities available for sale, income tax expense, and the valuation of goodwill and other intangible assets.
Professional fees increased $2,572,000, or 46%, during the year ended December 31, 2024 compared with 2023. The increase during 2024 compared with 2023 was attributable to the professional fees associated with the sale of assets of GAI and the merger with Heartland, which totaled $2,759,000 for the two transactions.
Professional fees increased $2,572,000, or 46%, during the year ended December 31, 2024 compared with 2023. The increase 40 during 2024 compared with 2023 was attributable to the professional fees associated with the sale of assets of GAI and the merger with Heartland, which totaled $2,759,000 for the two transactions.
The Basel III Rules require banking organizations to, among other things, maintain a minimum ratio of Total Capital to risk-weighted assets, a minimum ratio of Tier 1 Capital to risk-weighted assets, a minimum ratio of “Common Equity Tier 1 Capital” to risk-weighted assets, and a minimum leverage ratio (calculated as the ratio of Tier 1 Capital to adjusted average consolidated assets).
The Basel 41 III Rules require banking organizations to, among other things, maintain a minimum ratio of Total Capital to risk-weighted assets, a minimum ratio of Tier 1 Capital to risk-weighted assets, a minimum ratio of “Common Equity Tier 1 Capital” to risk-weighted assets, and a minimum leverage ratio (calculated as the ratio of Tier 1 Capital to adjusted average consolidated assets).
Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at December 31, 2024. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.
Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at December 31, 2025. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.
For further information about such commitments, see Note 15 42 (Commitments and Off-balance Sheet Items) in Notes to the Consolidated Financial Statements included in Item 8 of this Report. SOURCES OF FUNDS The Company’s primary source of funding is its base of core customer deposits.
For further information about such commitments, see Note 15 (Commitments and Off-balance Sheet Items) in Notes to the Consolidated Financial Statements included in Item 8 of this Report. 45 SOURCES OF FUNDS The Company’s primary source of funding is its base of core customer deposits.
The following table indicates the amounts of loans (excluding residential mortgages on 1-4 family residences and consumer loans) outstanding as of December 31, 2024, which, based on remaining scheduled repayments of principal, are due in the periods indicated (dollars in thousands).
The following table indicates the amounts of loans (excluding residential mortgages on 1-4 family residences and consumer loans) outstanding as of December 31, 2025, which, based on remaining scheduled repayments of principal, are due in the periods indicated (dollars in thousands).
The selection of and application of these 30 policies involve estimates, judgments, and uncertainties that are subject to change.
The selection of and application of these policies involve estimates, judgments, and uncertainties that are subject to change.
For information regarding the financial condition, result of operations, and cash flows of the Company, presented on a parent-company-only basis, see Note 18 (Parent Company Financial Statements) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report.
For information regarding the financial condition, result of operations, and cash flows of the Company, presented on a parent-company-only basis, see Note 19 (Parent Company Financial Statements) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report.
Financial Overview Net income for the year ended December 31, 2024 totaled $83,811,000, or $2.83 per share, a decline of $2,077,000, or approximately 3% on a per share basis, from the year ended December 31, 2023 net income of $85,888,000, or $2.91 per share.
Net income for the year ended December 31, 2024 totaled $83,811,000, or $2.83 per share, a decline of $2,077,000, or approximately 3% on a per share basis, from the year ended December 31, 2023 net income of $85,888,000, or $2.91 per share.
Once it is determined that the borrower’s 40 management possesses sound ethics and solid business acumen, our management examines market conditions and current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.
Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, our management examines market conditions and current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. CRE loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.
Occasionally, we will refer to the term “German American”, “Bancorp”, “parent company” or “holding company” when we mean to refer to only German American Bancorp, Inc., and the term “Bank” when we mean to refer to only the Company’s bank subsidiary.
Occasionally, we will refer to the term “German American Bancorp”, “Bancorp”, “parent company” or “holding company” when we mean to refer to only German American Bancorp, Inc., and the term “Bank” when we mean to refer to only the Company’s bank subsidiary.
Core deposits consist of demand deposits, savings, interest-bearing checking, money market accounts, and certificates of deposit of less than $100,000. Other deposit sources include certificates of deposit of $100,000 or more. The deposit base remains diverse with stable and manageable exposure to uninsured and uncollateralized deposits of approximately 22% of total deposits.
Core deposits consist of demand deposits, savings, interest-bearing checking, money market accounts, and certificates of deposit of less than $100,000. Other deposit sources include certificates of deposit of $100,000 or more and brokered deposits. The deposit base remains diverse with stable and manageable exposure to uninsured and uncollateralized deposits of approximately 25% of total deposits.
This Management’s Discussion and Analysis includes an analysis of the major components of the Company’s operations for the years 2022 through 2024 and its financial condition as of December 31, 2023 and 2024.
This Management’s Discussion and Analysis includes an analysis of the major components of the Company’s operations for the years 2023 through 2025 and its financial condition as of December 31, 2024 and 2025.
Financial and other information by segment is included in Note 17 (Segment Information) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and is incorporated into this Item 7 by reference.
Financial and other information by segment is included in Note 18 (Segment Information) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and is incorporated into this Item 7 by reference.
Deferred taxes arise from temporary differences, which are items recorded for financial statement purposes in a different period than for income tax returns. The Company’s effective tax rate was 19.5%, 17.1%, and 17.5%, respectively, in 2024, 2023, and 2022.
Deferred taxes arise from temporary differences, which are items recorded for financial statement purposes in a different period than for income tax returns. The Company’s effective tax rate was 19.6%, 19.5%, and 17.1%, respectively, in 2025, 2024, and 2023.
In addition, the Company had a borrowing capacity of approximately $595 million at the Federal Reserve Bank as of December 31, 2024, based on the then pledged collateral. The capacity for borrowings from the FHLB and the Federal Reserve Bank could be increased, in each case, by the Company pledging additional available collateral.
In addition, the Company had a borrowing capacity of approximately $749 million at the Federal Reserve Bank as of December 31, 2025, based on the then pledged collateral. The capacity for borrowings from the FHLB and the Federal Reserve Bank could be increased, in each case, by the Company pledging additional available collateral.
The composition of the year-end balances in the investment portfolio is presented in Note 3 (Securities) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and in the table below: Investment Portfolio, at Amortized Cost December 31, (dollars in thousands) 2024 % 2023 % 2022 % Federal Funds Sold and Other Short-term Investments $ 119,543 6 % $ 36,525 2 % $ 41,905 2 % U.S.
The composition of the year-end balances in the investment portfolio is presented in Note 3 (Securities) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report and in the table below: Investment Portfolio, at Amortized Cost December 31, (dollars in thousands) 2025 % 2024 % 2023 % Federal Funds Sold and Other Short-term Investments $ 46,954 2 % $ 119,543 6 % $ 36,525 2 % U.S.
The net loss on securities during the year ended December 31, 2024 totaled $34,788,000 and was primarily related to the net loss recognized on the securities restructuring transaction previously discussed. The approximate loss on the transaction totaled $34,893,000, $27,189,000 after tax, or $0.92, per share and was included in earnings for the second quarter of 2024.
The net loss on securities during 2024 totaled $34,788,000 which was primarily related to the net loss recognized on the securities restructuring transaction previously discussed. The approximate loss on the transaction totaled $34,893,000, $27,189,000 after tax, or $0.92, per share and was included in earnings for the second quarter of 2024.
These borrowings represent an important source of short-term liquidity for the Company’s bank subsidiary. The Company’s bank subsidiary is authorized by its Board to borrow up to $1.25 billion at the FHLB, but availability at December 31, 2024 was limited to approximately $470 million based on the then pledged collateral and outstanding borrowings.
These borrowings represent an important source of short-term liquidity for the Company’s bank subsidiary. The Company’s bank subsidiary is authorized by its Board to borrow up to $1.68 billion at the FHLB, but availability at December 31, 2025 was limited to approximately $619 million based on the then pledged collateral and outstanding borrowings.
PROVISION FOR CREDIT LOSSES The Company provides for credit losses through regular provisions to the allowance for credit losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. During 2024, the Company recorded a provision for credit losses of $2,775,000 compared with $2,550,000 during 2023 and $6,350,000 during 2022.
PROVISION FOR CREDIT LOSSES The Company provides for credit losses through regular provisions to the allowance for credit losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. During 2025, the Company recorded a provision for credit losses of $19,425,000 compared with $2,775,000 during 2024 and $2,550,000 during 2023.
December 31, 2024 December 31, 2023 % of Commercial Real Estate Portfolio % of Total Loan Portfolio % of Commercial Real Estate Portfolio % of Total Loan Portfolio Multi-Family Dwellings 20 % 11 % 21 % 11 % Retail Space 15 % 8 % 14 % 7 % 1-4 Family Investment Properties 11 % 6 % 12 % 7 % Industrial, Manufacturing, Warehousing Properties 10 % 5 % 10 % 5 % Office Real Estate 9 % 5 % 8 % 4 % Healthcare Facilities 7 % 4 % 7 % 4 % Land Development and Construction 7 % 4 % 6 % 3 % Lodging 6 % 3 % 6 % 3 % The Company’s commercial real estate (“CRE”) loan portfolio is further diversified by occupancy type, with approximately 77% of the CRE portfolio being non-owner occupied at December 31, 2024 (which is 42% of the Company’s overall loan portfolio), and 23% of the CRE portfolio being owner occupied (which is 12% of the Company’s total loan portfolio).
December 31, 2025 December 31, 2024 % of Commercial Real Estate Portfolio % of Total Loan Portfolio % of Commercial Real Estate Portfolio % of Total Loan Portfolio Multi-Family Dwellings 21 % 11 % 20 % 11 % Retail Space 14 % 7 % 15 % 8 % Industrial, Manufacturing, Warehousing Properties 9 % 5 % 10 % 5 % Lodging 9 % 5 % 6 % 3 % 1-4 Family Investment Properties 8 % 4 % 11 % 6 % Office Real Estate 8 % 4 % 9 % 5 % Healthcare Facilities 8 % 4 % 7 % 4 % Land Development and Construction 6 % 3 % 7 % 4 % The Company’s commercial real estate (“CRE”) loan portfolio is further diversified by occupancy type, with approximately 76% of the CRE portfolio being non-owner occupied at December 31, 2025 (which is 40% of the Company’s overall loan portfolio), and 24% of the CRE portfolio being owner occupied (which is 13% of the Company’s total loan portfolio).
Accretion of discounts on acquired loans totaled $1,507,000 during 2024, $2,814,000 during 2023, and $4,341,000 during 2022. The following table summarizes net interest income (on a tax-equivalent basis) for each of the past three years. For tax-equivalent adjustments, an effective tax rate of 21% was used for all periods presented (1) .
Accretion of discounts on acquired loans totaled $15,556,000 during 2025, $1,507,000 during 2024, and $2,814,000 during 2023. 36 The following table summarizes net interest income (on a tax-equivalent basis) for each of the past three years. For tax-equivalent adjustments, an effective tax rate of 21% was used for all periods presented (1) .
Of the increase in allowance for credit losses for the CUB portfolio, $6.3 million was recorded through the provision for credit losses on “Day 1” under the CECL model for non-PCD loans.
Of the increase in allowance for credit losses for the CUB portfolio, $6.3 million was recorded through the provision for credit losses on “Day 2” under the CECL methodology for non-PCD loans.
Refer also to the sections entitled “CRITICAL ACCOUNTING POLICIES AND 35 ESTIMATES” and “RISK MANAGEMENT - Lending and Loan Administration” for further discussion of the provision and allowance for credit losses. NON-INTEREST INCOME During the year ended December 31, 2024, non-interest income increased $2,399,000, or 4%, compared with the year ended December 31, 2023.
Refer also to the sections entitled “CRITICAL ACCOUNTING POLICIES AND ESTIMATES” and “RISK MANAGEMENT - Lending and Loan Administration” for further discussion of the provision and allowance for credit losses. 38 NON-INTEREST INCOME During the year ended December 31, 2025, non-interest income increased $4,652,000, or 7%, compared with the year ended December 31, 2024.
A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
For details related to borrowings, see Note 8 (FHLB Advances and Other Borrowings) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report. 44 At year-end 2024, the Company had available to it a $15 million revolving line of credit facility that will mature on September 24, 2025.
For details related to borrowings, see Note 8 (FHLB Advances and Other Borrowings) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report. At year-end 2025, the Company had available to it a $15 million revolving line of credit facility that will mature on September 23, 2026. Borrowings are available for general working capital purposes.
Net gains on sales of loans increased $691,000, or 29%, during the year ended December 31, 2024 compared with the year ended December 31, 2023. The increase during 2024 compared with 2023 was related to both a higher volume of loans sold and improved pricing levels.
The increase during 2025 compared with 2024 was related to the Heartland acquisition and a higher volume of loans sold. Net gains on sales of loans increased $691,000, or 29%, during the year ended December 31, 2024 compared with the year ended December 31, 2023.
The Company realized net charge-offs of $2,316,000 or 6 basis points of average loans during 2022. The provision for credit losses made during 2024 was made at a level deemed necessary by management to absorb expected losses in the loan portfolio.
The Company realized net charge-offs of $2,953,000 or 8 basis points of average loans during 2023. The provision for credit losses during 2025 was made at a level deemed necessary by management to absorb expected losses in the loan portfolio.
See Note 11 to the Company’s consolidated financial statements included in Item 8 of this Report for additional details relative to the Company’s income tax provision. CAPITAL RESOURCES As of December 31, 2024, shareholders’ equity increased by $51.5 million to $715.1 million compared with $663.6 million at year-end 2023.
See Note 11 to the Company’s consolidated financial statements included in Item 8 of this Report for additional details relative to the Company’s income tax provision. CAPITAL RESOURCES As of December 31, 2025, shareholders’ equity increased by $447.3 million to $1.162 billion compared with $715.1 million at year-end 2024.
Non-performing Assets December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Non-accrual Loans $ 10,934 $ 9,136 $ 12,888 $ 14,602 $ 21,507 Past Due Loans (90 days or more and accruing) 188 55 1,427 156 — Total Non-performing Loans 11,122 9,191 14,315 14,758 21,507 Other Real Estate — — — — 325 Total Non-performing Assets $ 11,122 $ 9,191 $ 14,315 $ 14,758 $ 21,832 Restructured Loans $ — $ — $ — $ 104 $ 111 Non-performing Loans to Total Loans 0.27 % 0.23 % 0.38 % 0.49 % 0.70 % Allowance for Credit Losses to Non-performing Loans 399.53 % 476.17 % 308.54 % 250.83 % 217.88 % The following tables present an analysis of the Company’s non-accrual loans and loans past due 90 days or more and still accruing.
Non-performing Assets December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Non-accrual Loans $ 29,319 $ 10,934 $ 9,136 $ 12,888 $ 14,602 Past Due Loans (90 days or more and accruing) 92 188 55 1,427 156 Total Non-performing Loans 29,411 11,122 9,191 14,315 14,758 Other Real Estate 68 — — — — Total Non-performing Assets $ 29,479 $ 11,122 $ 9,191 $ 14,315 $ 14,758 Restructured Loans $ — $ — $ — $ — $ 104 Non-performing Loans to Total Loans 0.50 % 0.27 % 0.23 % 0.38 % 0.49 % Allowance for Credit Losses to Non-performing Loans 264.17 % 399.53 % 476.17 % 308.54 % 250.83 % 50 The following tables present an analysis of the Company’s non-accrual loans and loans past due 90 days or more and still accruing.
Average demand, savings, and money market deposits totaled $4.432 billion or 93% of core deposits (81% of total funding sources) in 2024 compared with $4.608 billion or 95% of core deposits (85% of total funding sources) in 2023 and $5.226 billion or 95% 43 of core deposits (89% of total funding sources) in 2022.
Average demand, savings, and money market deposits totaled $5.585 billion or 93% of core deposits (78% of total funding sources) in 2025 compared with $4.432 billion or 93% of core deposits (81% of total funding sources) in 2024 and $4.608 billion or 95% of core deposits (85% of total funding sources) in 2023.
The Corporate Credit Risk Management Committee comprised of members of the Company’s and its subsidiary Bank’s executive officers and board of directors, strives to ensure a consistent application of the Company’s lending policies. The Company also maintains a comprehensive risk-grading and loan review program, which includes quarterly reviews of problem loans, delinquencies and charge-offs.
The Credit Risk Management Committee, comprised of members of the executive and senior management team, strives to ensure a consistent application of the Company’s lending policies. The Company also maintains a comprehensive risk-grading and loan review program, which includes quarterly reviews of problem loans, delinquencies and charge-offs.
The gross interest income that would have been recognized in 2024 on non-performing loans if the loans had been current in accordance with their original terms was $1,040,000.
The gross interest income that would have been recognized in 2025 on non-performing loans if the loans had been current in accordance with their original terms was $3,220,000.
The allowance for credit losses is comprised of: (a) specific reserves on individual credits; and (b) general reserves for certain loan categories and industries, and overall historical loss experience; based on performance trends in the loan portfolios, current economic conditions, and other factors that influence the level of estimated credit losses.
Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. 48 The allowance for credit losses is comprised of: (a) specific reserves on individual credits; and (b) general reserves for certain loan categories and industries, and overall historical loss experience; based on performance trends in the loan portfolios, current economic conditions, and other factors that influence the level of estimated credit losses.
For additional detail on individually analyzed loans, see Note 5 (Loans) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report. Interest income recognized on non-performing loans for 2024 was $724,000.
For additional detail on individually analyzed loans, see Note 5 (Loans) of the Notes to the Consolidated Financial Statements included in Item 8 of this Report. During the period in which loans were non-performing, interest income recognized on non-performing loans for 2025 was $581,000.
As of December 31, 2024, gross unrealized gains on the securities available-for-sale portfolio totaled approximately $413,000 and gross unrealized losses totaled approximately $279,166,000. The net amount of these two items, net of applicable taxes, is included in other comprehensive income (loss).
As of December 31, 2025, gross unrealized gains on the securities available-for-sale portfolio totaled approximately $6,453,000 and gross unrealized losses totaled approximately $214,791,000. The net amount of these two items, net of applicable taxes, is included in other comprehensive income (loss).
Following is a discussion of the Company’s philosophies and procedures to address these risks. LENDING AND LOAN ADMINISTRATION Primary responsibility and accountability for day-to-day lending activities rests with the Company’s subsidiary bank. Loan personnel at the subsidiary bank have the authority to extend credit under guidelines approved by the Bank’s board of directors.
LENDING AND LOAN ADMINISTRATION Primary responsibility and accountability for day-to-day lending activities rests with the Company’s subsidiary bank. Loan personnel at the subsidiary bank have the authority to extend credit under guidelines approved by the Bank’s board of directors.
Non-Accrual Loans December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Commercial and Industrial Loans and Leases $ 5,018 $ 3,707 $ 7,936 $ 10,530 $ 8,133 Commercial Real Estate Loans 1,745 1,889 1,950 2,243 10,188 Agricultural Loans 765 879 1,062 1,136 1,915 Home Equity Loans 1,087 1,033 310 24 271 Consumer Loans 117 253 400 82 170 Residential Mortgage Loans 2,202 1,375 1,230 587 830 Total $ 10,934 $ 9,136 $ 12,888 $ 14,602 $ 21,507 Loans Past Due 90 Days or More & Still Accruing December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Commercial and Industrial Loans and Leases $ — $ — $ 1,427 $ — $ — Commercial Real Estate Loans 183 55 — 156 — Agricultural Loans 5 — — — — Home Equity Loans — — — — — Consumer Loans — — — — — Residential Mortgage Loans — — — — — Total $ 188 $ 55 $ 1,427 $ 156 $ — Non-performing assets totaled $11.1 million, or 0.18% of total assets, at December 31, 2024 compared to $9.2 million, or 0.15% of total assets, at December 31, 2023 and compared to $14.3 million, or 0.23% of total assets, at December 31, 2022.
Non-Accrual Loans December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Commercial and Industrial Loans and Leases $ 16,549 $ 5,018 $ 3,707 $ 7,936 $ 10,530 Commercial Real Estate Loans 6,303 1,745 1,889 1,950 2,243 Agricultural Loans 3,123 765 879 1,062 1,136 Home Equity Loans 776 1,087 1,033 310 24 Consumer Loans and Credit Cards 181 117 253 400 82 Residential Mortgage Loans 2,387 2,202 1,375 1,230 587 Total $ 29,319 $ 10,934 $ 9,136 $ 12,888 $ 14,602 Loans Past Due 90 Days or More & Still Accruing December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Commercial and Industrial Loans and Leases $ — $ — $ — $ 1,427 $ — Commercial Real Estate Loans 92 183 55 — 156 Agricultural Loans — 5 — — — Home Equity Loans — — — — — Consumer Loans and Credit Cards — — — — — Residential Mortgage Loans — — — — — Total $ 92 $ 188 $ 55 $ 1,427 $ 156 Non-performing assets totaled $29.5 million, or 0.35% of total assets, at December 31, 2025 compared to $11.1 million, or 0.18% of total assets, at December 31, 2024 and compared to $9.2 million, or 0.15% of total assets, at December 31, 2023.
SECURITIES VALUATION Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, the Company assesses whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis.
For available-for-sale debt securities in an unrealized loss position, the Company assesses whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis.
Loan Portfolio December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Commercial and Industrial Loans and Leases $ 671,038 $ 661,529 $ 676,502 $ 548,350 $ 694,437 Commercial Real Estate Loans 2,224,872 2,121,835 1,966,884 1,530,677 1,467,397 Agricultural Loans 431,037 423,803 417,413 358,150 376,186 Home Equity and Consumer Loans 448,872 407,889 377,164 307,184 297,702 Residential Mortgage Loans 357,448 362,844 350,682 263,565 256,276 Total Loans 4,133,267 3,977,900 3,788,645 3,007,926 3,091,998 Less: Unearned Income (8,365) (6,818) (3,711) (3,662) (3,926) Subtotal 4,124,902 3,971,082 3,784,934 3,004,264 3,088,072 Less: Allowance for Credit Losses (44,436) (43,765) (44,168) (37,017) (46,859) Loans, Net $ 4,080,466 $ 3,927,317 $ 3,740,766 $ 2,967,247 $ 3,041,213 Net PPP Loans (Included in Commercial and Industrial Loans above) $ — $ — $ — $ 19,450 $ 181,984 Ratio of Loans to Total Loans Commercial and Industrial Loans and Leases 16 % 17 % 18 % 18 % 23 % Commercial Real Estate Loans 54 % 53 % 52 % 51 % 47 % Agricultural Loans 10 % 11 % 11 % 12 % 12 % Home Equity and Consumer Loans 11 % 10 % 10 % 10 % 10 % Residential Mortgage Loans 9 % 9 % 9 % 9 % 8 % Total Loans 100 % 100 % 100 % 100 % 100 % The Company’s policy is generally to extend credit to consumer and commercial borrowers in its primary geographic market area in southern Indiana and central and western Kentucky.
Loan Portfolio December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Commercial and Industrial Loans and Leases $ 848,240 $ 671,038 $ 661,529 $ 676,502 $ 548,350 Commercial Real Estate Loans 3,142,472 2,224,872 2,121,835 1,966,884 1,530,677 Agricultural Loans 489,168 431,037 423,803 417,413 358,150 Home Equity, Consumer Loans and Credit Cards 630,015 448,872 407,889 377,164 307,184 Residential Mortgage Loans 774,553 357,448 362,844 350,682 263,565 Total Loans 5,884,448 4,133,267 3,977,900 3,788,645 3,007,926 Less: Unearned Income (9,351) (8,365) (6,818) (3,711) (3,662) Subtotal 5,875,097 4,124,902 3,971,082 3,784,934 3,004,264 Less: Allowance for Credit Losses (77,694) (44,436) (43,765) (44,168) (37,017) Loans, Net $ 5,797,403 $ 4,080,466 $ 3,927,317 $ 3,740,766 $ 2,967,247 Net PPP Loans (Included in Commercial and Industrial Loans above) $ — $ — $ — $ — $ 19,450 Ratio of Loans to Total Loans Commercial and Industrial Loans and Leases 14 % 16 % 17 % 18 % 18 % Commercial Real Estate Loans 54 % 54 % 53 % 52 % 51 % Agricultural Loans 8 % 10 % 11 % 11 % 12 % Home Equity, Consumer Loans and Credit Cards 11 % 11 % 10 % 10 % 10 % Residential Mortgage Loans 13 % 9 % 9 % 9 % 9 % Total Loans 100 % 100 % 100 % 100 % 100 % The Company’s policy is generally to extend credit to consumer and commercial borrowers in its primary geographic market area in Indiana (central/southern), Kentucky (northern/central/western), and Ohio (central/ southwest).
Non-interest Income (dollars in thousands) Years Ended December 31, % Change From Prior Year 2024 2023 2022 2023 2022 Wealth Management Fees $ 14,416 $ 11,711 $ 10,076 23 % 16 % Service Charges on Deposit Accounts 12,669 11,538 11,457 10 1 Insurance Revenues 4,384 9,596 10,020 (54) (4) Company Owned Life Insurance 2,058 1,731 2,264 19 (24) Interchange Fee Income 17,125 17,452 15,820 (2) 10 Sale of Assets of German American Insurance 38,323 — — n/m (1) n/m (1) Other Operating Income 5,419 5,830 5,116 (7) 14 Subtotal 94,394 57,858 54,753 63 6 Net Gains on Sales of Loans 3,054 2,363 3,818 29 (38) Net Gains on Securities (34,788) 40 562 (87,070) (93) TOTAL NON-INTEREST INCOME $ 62,660 $ 60,261 $ 59,133 4 2 (1) n/m = not meaningful Wealth management fees increased $2,705,000, or 23%, during 2024 compared with 2023 and increased $1,635,000, or 16%, during 2023 compared with 2022.
Non-interest Income (dollars in thousands) Years Ended December 31, % Change From Prior Year 2025 2024 2023 2024 2023 Wealth Management Fees $ 16,808 $ 14,416 $ 11,711 17 % 23 % Service Charges on Deposit Accounts 15,083 12,669 11,538 19 10 Insurance Revenues — 4,384 9,596 n/m (1) (54) Company Owned Life Insurance 2,555 2,058 1,731 24 19 Interchange Fee Income 19,598 17,125 17,452 14 (2) Sale of Assets of German American Insurance — 38,323 — n/m (1) n/m (1) Other Operating Income 8,758 5,419 5,830 62 (7) Subtotal 62,802 94,394 57,858 (33) 63 Net Gains on Sales of Loans 4,510 3,054 2,363 48 29 Net Gains on Securities — (34,788) 40 (100) (87,070) TOTAL NON-INTEREST INCOME $ 67,312 $ 62,660 $ 60,261 7 4 (1) n/m = not meaningful Wealth management fees increased $2,392,000, or 17%, during 2025 compared with 2024.
The Company’s 41 level of obligations of state and political subdivisions decreased to $588.0 million, or 31% of the portfolio at December 31, 2024. Investment Securities, at Carrying Value (dollars in thousands) December 31, Securities Available-for-Sale 2024 2023 2022 U.S.
The Company’s level of obligations of state and political subdivisions decreased to 32% and 31% of the portfolio at December 31, 2025 and 2024, respectively. Investment Securities, at Carrying Value (dollars in thousands) December 31, Securities Available-for-Sale 2025 2024 2023 U.S.
The decline in the net interest margin in 2024 compared with 2023 was largely driven by an increased cost of funds and a lower level of accretion of loan discounts on acquired loans. The cost of funds increased 56 basis points year over year.
The decline in the net interest margin in 2024 compared with 2023 was largely driven by an increased cost of funds and a lower level of accretion of loan discounts on acquired loans. The Company’s net interest margin for all periods presented was impacted by the accretion of discounts on acquired loans.
The Company’s Asset/Liability Committee monitors compliance within established guidelines of the Funds Management Policy. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk section for further discussion regarding interest rate risk. 48
The Company’s Asset/Liability Committee monitors compliance within established guidelines of the Funds Management Policy. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk section for further discussion regarding interest rate risk. USE OF NON-GAAP FINANCIAL MEASURES The accounting and reporting policies of German American Bancorp, Inc.
RISK MANAGEMENT The Company is exposed to various types of business risk on an on-going basis. These risks include credit risk, liquidity risk and interest rate risk. Various procedures are employed at the Company’s subsidiary bank to monitor and mitigate risk in the loan and investment portfolios, as well as risks associated with changes in interest rates.
These risks include credit risk, liquidity risk and interest rate risk. Various procedures are employed at the Company’s subsidiary bank to monitor and mitigate risk in the loan and investment portfolios, as well as risks associated with changes in interest rates. Following is a discussion of the Company’s philosophies and procedures to address these risks.
Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.
Insurance revenues declined $5,212,000, or 54%, during 2024 compared with 2023, as a result of the sale of the assets of GAI effective June 1, 2024, with only five months of revenue being recognized by the Company during 2024. The year ended December 31, 2024 included $38,323,000 in net proceeds for the sale of the GAI assets.
Insurance revenues declined $5,212,000, or 54%, during 2024 compared with 2023, as a result of the sale of the assets of GAI effective June 1, 2024, with only five months of revenue being recognized by the Company during 2024 due to the aforementioned sale of assets.
Treasury 110,813 6 — — 64,097 3 Obligations of State and Political Subdivisions 587,963 31 889,940 47 939,193 44 MBS/CMO 817,553 43 761,025 40 846,519 40 US Gov’t Sponsored Entities & Agencies 279,711 14 220,295 11 245,017 11 Equity Securities 353 n/m ⁽¹⁾ 353 n/m ⁽¹⁾ 353 n/m ⁽¹⁾ Total Securities Portfolio $ 1,915,936 100 % $ 1,908,138 100 % $ 2,137,084 100 % (1) n/m = not meaningful The amortized cost of investment securities, including federal funds sold and short-term investments, increased $7.8 million, or less than 1%, at year-end 2024 compared to year-end 2023 and decreased $229.0 million, or 11%, at year-end 2023.
Treasury 152,026 8 110,813 6 — — Obligations of State and Political Subdivisions 603,528 32 587,963 31 889,940 47 MBS/CMO 795,574 42 817,553 43 761,025 40 US Gov’t Sponsored Entities & Agencies 314,604 16 279,711 14 220,295 11 Equity Securities 353 n/m ⁽¹⁾ 353 n/m ⁽¹⁾ 353 n/m ⁽¹⁾ Total Securities Portfolio $ 1,913,039 100 % $ 1,915,936 100 % $ 1,908,138 100 % (1) n/m = not meaningful The amortized cost of investment securities, including federal funds sold and short-term investments, declined $2.9 million, or less than 1%, at year-end 2025 compared to year-end 2024.
Average Balance Sheet (Tax-equivalent basis, dollars in thousands) Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Twelve Months Ended December 31, 2022 Principal Balance Income / Expense Yield / Rate Principal Balance Income / Expense Yield / Rate Principal Balance Income / Expense Yield / Rate ASSETS Federal Funds Sold and Other Short-term Investments $ 151,907 $ 7,697 5.07 % $ 39,452 $ 1,677 4.25 % $ 458,230 $ 5,765 1.26 % Securities: Taxable 947,884 26,586 2.80 % 890,841 20,614 2.31 % 1,015,958 20,453 2.01 % Non-taxable 586,549 20,910 3.56 % 738,769 27,656 3.74 % 844,772 29,810 3.53 % Total Loans and Leases ⁽²⁾ 4,035,670 241,344 5.98 % 3,835,157 213,195 5.56 % 3,680,708 169,593 4.61 % TOTAL INTEREST EARNING ASSETS 5,722,010 296,537 5.19 % 5,504,219 263,142 4.78 % 5,999,668 225,621 3.76 % Other Assets 556,022 578,399 559,949 Less: Allowance for Credit Losses (44,279) (44,744) (45,587) TOTAL ASSETS $ 6,233,753 $ 6,037,874 $ 6,514,030 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing Demand Deposits $ 1,720,823 $ 30,957 1.80 % $ 1,826,232 $ 28,378 1.55 % $ 2,013,969 $ 8,583 0.43 % Savings Deposits and Money Market Accounts 1,291,250 23,346 1.81 % 1,229,019 12,106 0.99 % 1,473,772 2,879 0.20 % Time Deposits 872,429 36,319 4.16 % 588,142 16,432 2.79 % 474,409 2,052 0.43 % FHLB Advances and Other Borrowings 196,480 9,830 5.00 % 210,837 9,307 4.41 % 159,029 4,828 3.04 % TOTAL INTEREST-BEARING LIABILITIES 4,080,982 100,452 2.46 % 3,854,230 66,223 1.72 % 4,121,179 18,342 0.45 % Demand Deposit Accounts 1,420,412 1,553,082 1,738,349 Other Liabilities 46,497 46,456 44,436 TOTAL LIABILITIES 5,547,891 5,453,768 5,903,964 Shareholders’ Equity 685,862 584,106 610,066 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,233,753 $ 6,037,874 $ 6,514,030 COST OF FUNDS 1.76 % 1.20 % 0.31 % NET INTEREST INCOME $ 196,085 $ 196,919 $ 207,279 NET INTEREST MARGIN 3.43 % 3.58 % 3.45 % (1) Effective tax rates were determined as though interest earned on the Company’s investments in municipal bonds and loans was fully taxable.
Average Balance Sheet (Tax-equivalent basis, dollars in thousands) Twelve Months Ended December 31, 2025 Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Principal Balance Income / Expense Yield / Rate Principal Balance Income / Expense Yield / Rate Principal Balance Income / Expense Yield / Rate ASSETS Federal Funds Sold and Other Short-term Investments $ 250,520 $ 10,817 4.32 % $ 151,907 $ 7,697 5.07 % $ 39,452 $ 1,677 4.25 % Securities: Taxable 1,129,114 37,041 3.28 % 947,884 26,586 2.80 % 890,841 20,614 2.31 % Non-taxable 469,137 17,258 3.68 % 586,549 20,910 3.56 % 738,769 27,656 3.74 % Total Loans and Leases ⁽²⁾ 5,604,879 360,410 6.43 % 4,035,670 241,344 5.98 % 3,835,157 213,195 5.56 % TOTAL INTEREST EARNING ASSETS 7,453,650 425,526 5.71 % 5,722,010 296,537 5.19 % 5,504,219 263,142 4.78 % Other Assets 857,238 556,022 578,399 Less: Allowance for Credit Losses (73,694) (44,279) (44,744) TOTAL ASSETS $ 8,237,194 $ 6,233,753 $ 6,037,874 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing Demand Deposits $ 1,882,386 $ 29,220 1.55 % $ 1,720,823 $ 30,957 1.80 % $ 1,826,232 $ 28,378 1.55 % Savings Deposits and Money Market Accounts 1,851,117 36,657 1.98 % 1,291,250 23,346 1.81 % 1,229,019 12,106 0.99 % Time Deposits 1,329,638 49,215 3.70 % 872,429 36,319 4.16 % 588,142 16,432 2.79 % FHLB Advances and Other Borrowings 215,334 10,865 5.05 % 196,480 9,830 5.00 % 210,837 9,307 4.41 % TOTAL INTEREST-BEARING LIABILITIES 5,278,475 125,957 2.39 % 4,080,982 100,452 2.46 % 3,854,230 66,223 1.72 % Demand Deposit Accounts 1,851,978 1,420,412 1,553,082 Other Liabilities 55,751 46,497 46,456 TOTAL LIABILITIES 7,186,204 5,547,891 5,453,768 Shareholders’ Equity 1,050,990 685,862 584,106 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 8,237,194 $ 6,233,753 $ 6,037,874 COST OF FUNDS 1.69 % 1.76 % 1.20 % NET INTEREST INCOME $ 299,569 $ 196,085 $ 196,919 NET INTEREST MARGIN 4.02 % 3.43 % 3.58 % (1) Effective tax rates were determined as though interest earned on the Company’s investments in municipal bonds and loans was fully taxable.
Non-interest Expense (dollars in thousands) Years Ended December 31, % Change From Prior Year 2024 2023 2022 2023 2022 Salaries and Employee Benefits $ 82,257 $ 83,244 $ 84,145 (1) % (1) % Occupancy, Furniture and Equipment Expense 14,944 14,467 14,921 3 (3) FDIC Premiums 2,908 2,829 1,860 3 52 Data Processing Fees 12,243 11,112 15,406 10 (28) Professional Fees 8,147 5,575 6,295 46 (11) Advertising and Promotion 3,939 4,857 4,416 (19) 10 Intangible Amortization 2,032 2,840 3,711 (28) (23) Other Operating Expenses 19,907 19,573 23,437 2 (16) TOTAL NON-INTEREST EXPENSE $ 146,377 $ 144,497 $ 154,191 1 (6) Salaries and benefits declined $987,000, or 1%, during the year ended December 31, 2024 compared with the year ended December 31, 2023.
Non-interest Expense (dollars in thousands) Years Ended December 31, % Change From Prior Year 2025 2024 2023 2024 2023 Salaries and Employee Benefits $ 107,742 $ 82,257 $ 83,244 31 % (1) % Occupancy, Furniture and Equipment Expense 19,634 14,944 14,467 31 3 FDIC Premiums 3,800 2,908 2,829 31 3 Data Processing Fees 17,579 12,243 11,112 44 10 Professional Fees 10,418 8,147 5,575 28 46 Advertising and Promotion 5,153 3,939 4,857 31 (19) Intangible Amortization 10,148 2,032 2,840 399 (28) Other Operating Expenses 27,475 19,907 19,573 38 2 TOTAL NON-INTEREST EXPENSE $ 201,949 $ 146,377 $ 144,497 38 1 Salaries and benefits increased $25,485,000, or 31%, during the year ended December 31, 2025 compared with the year ended December 31, 2024.
The decline in salaries and benefits during 2024 compared with 2023 was largely related to the GAI asset sale. Salaries and benefits declined $901,000, or 1%, during the year ended December 31, 2023 compared with 2022.
The decline in salaries and benefits during 2024 compared with 2023 was largely related to the GAI asset sale. Occupancy, furniture and equipment expense increased $4,690,000, or 31%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Data processing fees increased $1,131,000, or 10%, during the year ended December 31, 2024 compared with the year ended December 31, 2023. The increase during 2024 compared with 2023 was largely driven by costs associated with enhancements to the Company’s digital banking and data systems.
The increase during 2025 compared with 2024 was largely driven by the Heartland acquisition including operating costs of the existing Heartland systems and acquisition-related costs. Data processing fees increased $1,131,000, or 10%, during the year ended December 31, 2024 compared with the year ended December 31, 2023.
Heartland, headquartered in Whitehall, Ohio, operated 20 retail banking offices located in Columbus, Ohio and Greater Cincinnati. As of December 31, 2024, Heartland had total assets of approximately $1.97 billion (unaudited), total loans of approximately $1.56 billion (unaudited), and total deposits of approximately $1.75 billion (unaudited).
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.
For further information regarding this merger and acquisition transaction, see Note 19 (Business Combinations, Goodwill and Intangible Assets) in the Notes to the Consolidated Financial Statements included in Item 8 of this Report.
For further information regarding this transaction, see Note 2 (Sale of Insurance Assets) in the Notes to the Consolidated Financial Statements included in Item 8 of this Report.
FHLB advances and other borrowings represent an important source of other funding for the Company. Average borrowed funds decreased $14.4 million, or 7%, during 2024 following an increase of $51.8 million, or 33%, during 2023. Borrowings comprised approximately 4% of average total funding sources during 2024 and 2023 compared with 3% in 2022.
FHLB advances and other borrowings represent another source of other funding for the Company. Average borrowed funds increased $18.9 million, or 10%, during 2025 following a decrease of $14.4 million, or 7%, during 2024. Borrowings comprised approximately 3% of average total funding sources during 2025 compared with 4% in each of 2024 and 2023.
At December 31, 2024, the capital levels for the Company and its subsidiary 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. 38 The table below presents the Company’s consolidated and the subsidiary bank’s capital ratios under regulatory guidelines: 12/31/2024 Ratio 12/31/2023 Ratio Minimum for Capital Adequacy Purposes ⁽¹⁾ Well-Capitalized Guidelines Total Capital (to Risk Weighted Assets) Consolidated 17.15 % 16.50 % 8.00 % N/A Bank 15.02 14.76 8.00 10.00 % Tier 1 (Core) Capital (to Risk Weighted Assets) Consolidated 15.72 % 14.97 % 6.00 % N/A Bank 14.23 14.04 6.00 8.00 % Common Tier 1 (CET 1) Capital Ratio (to Risk Weighted Assets) Consolidated 15.02 % 14.26 % 4.50 % N/A Bank 14.23 14.04 4.50 6.50 % Tier 1 Capital (to Average Assets) Consolidated 12.28 % 11.75 % 4.00 % N/A Bank 11.12 11.03 4.00 5.00 % (1) Excludes capital conservation buffer.
The table below presents the Company’s consolidated and the subsidiary bank’s capital ratios under regulatory guidelines: 12/31/2025 Ratio 12/31/2024 Ratio Minimum for Capital Adequacy Purposes ⁽¹⁾ Well-Capitalized Guidelines Total Capital (to Risk Weighted Assets) Consolidated 14.93 % 17.15 % 8.00 % N/A Bank 13.80 15.02 8.00 10.00 % Tier 1 (Core) Capital (to Risk Weighted Assets) Consolidated 14.04 % 15.72 % 6.00 % N/A Bank 12.91 14.23 6.00 8.00 % Common Tier 1 (CET 1) Capital Ratio (to Risk Weighted Assets) Consolidated 13.52 % 15.02 % 4.50 % N/A Bank 12.91 14.23 4.50 6.50 % Tier 1 Capital (to Average Assets) Consolidated 11.54 % 12.28 % 4.00 % N/A Bank 10.61 11.12 4.00 5.00 % (1) Excludes capital conservation buffer.
For further information regarding this merger and acquisition transaction, see Note 21 (Subsequent Events) in the Notes to the 29 Consolidated Financial Statements included in Item 8 of this Report, which Note 21 is incorporated into this Item 1 by reference.
For further information regarding these redemptions, see Note 8 (FHLB Advances and Other Borrowings) in the Notes to the Consolidated Financial Statements included in Item 8 of this Report, which Note 8 is incorporated into this Item 7 by reference.
The increase in total loans at December 31, 2023 compared with year-end 2022 was broad-based across most segments of the portfolio. Commercial real estate loans increased $155.0 million, or 8%, agricultural loans grew $6.4 million, or 2%, and retail loans increased $42.9 million, or 6%.
December 31, 2024 total loans increased $155.4 million, or 4%, compared with December 31, 2023. The increase in total loans at December 31, 2024 compared with year-end 2023 was broad-based across most segments of the portfolio.
Interest income on loans includes loan fees of $3,325, $4,316, and $6,972 for 2024, 2023 and 2022, respectively. 34 The following table sets forth for the periods indicated a summary of the changes in interest income and interest expense resulting from changes in volume and changes in rates: Net Interest Income – Rate / Volume Analysis (Tax-Equivalent basis, dollars in thousands) 2024 compared to 2023 Increase / (Decrease) Due to ⁽¹⁾ 2023 compared to 2022 Increase / (Decrease) Due to ⁽¹⁾ Volume Rate Net Volume Rate Net Interest Income: Federal Funds Sold and Other Short-term Investments $ 5,641 $ 379 $ 6,020 $ (8,748) $ 4,660 $ (4,088) Taxable Securities 1,384 4,588 5,972 (2,689) 2,849 160 Non-taxable Securities (5,478) (1,268) (6,746) (3,894) 1,741 (2,153) Loans and Leases 11,491 16,658 28,149 7,365 36,237 43,602 Total Interest Income 13,038 20,357 33,395 (7,966) 45,487 37,521 Interest Expense: Savings and Interest-bearing Demand (580) 14,399 13,819 (1,590) 30,612 29,022 Time Deposits 9,875 10,012 19,887 605 13,775 14,380 FHLB Advances and Other Borrowings (662) 1,185 523 1,871 2,608 4,479 Total Interest Expense 8,633 25,596 34,229 886 46,995 47,881 Net Interest Income $ 4,405 $ (5,239) $ (834) $ (8,852) $ (1,508) $ (10,360) (1) The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
Interest income on loans includes loan fees of $17,956, $3,325, and $4,316 for 2025, 2024 and 2023, respectively. 37 The following table sets forth for the periods indicated a summary of the changes in interest income and interest expense resulting from changes in volume and changes in rates: Net Interest Income – Rate / Volume Analysis (Tax-Equivalent basis, dollars in thousands) 2025 compared to 2024 Increase / (Decrease) Due to ⁽¹⁾ 2024 compared to 2023 Increase / (Decrease) Due to ⁽¹⁾ Volume Rate Net Volume Rate Net Interest Income: Federal Funds Sold and Other Short-term Investments $ 4,395 $ (1,275) $ 3,120 $ 5,641 $ 379 $ 6,020 Taxable Securities 5,540 4,915 10,455 1,384 4,588 5,972 Non-taxable Securities (4,301) 649 (3,652) (5,478) (1,268) (6,746) Loans and Leases 99,759 19,307 119,066 11,491 16,658 28,149 Total Interest Income 105,393 23,596 128,989 13,038 20,357 33,395 Interest Expense: Savings and Interest-bearing Demand 12,752 (1,178) 11,574 (580) 14,399 13,819 Time Deposits 17,291 (4,395) 12,896 9,875 10,012 19,887 FHLB Advances and Other Borrowings 950 85 1,035 (662) 1,185 523 Total Interest Expense 30,993 (5,488) 25,505 8,633 25,596 34,229 Net Interest Income $ 74,400 $ 29,084 $ 103,484 $ 4,405 $ (5,239) $ (834) (1) The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
Net income for the year ended December 31, 2023 totaled $85,888,000, or $2.91 per share, an increase of $4,063,000, or approximately 5% on a per share basis, from the year ended December 31, 2022 net income of $81,825,000, or $2.78 per share.
Net income for the year ended December 31, 2024 totaled $83,811,000, or $2.83 per share, a decline of $2,077,000, or approximately 3% on a per share basis, from the year ended December 31, 2023 net income of $85,888,000, or $2.91 per share.
The Company’s net interest margin for all periods presented was impacted by the accretion of discounts on acquired loans. Accretion of discounts on acquired loans contributed approximately 3 basis point to the net interest margin in 2024, 5 basis 33 points in 2023 and 7 basis points during 2022.
Accretion of discounts on acquired loans contributed approximately 21 basis point to the net interest margin in 2025, 3 basis points in 2024 and 5 basis points in 2023.
The increase in both periods was largely attributable to continued increases in assets under management due to healthy capital markets and strong new business results, as compared to the year ended December 31, 2023. Wealth management fees increased $1,635,000, or 16%, during 2023 compared with 2022.
The increase was largely attributable to continued increases in assets under management due to healthy capital markets and strong new business results, as compared to the year ended December 31, 2023. Service charges on deposit accounts increased $2,414,000, or 19%, during the year ended December 31, 2025, compared with the same period of 2024.
After the restructuring, the investment portfolio continues to be relatively balanced with agency issued mortgage related securities and collateralized and uncollateralized federal agency securities totaling $1.097 billion, or 57% of the total securities portfolio at December 31, 2024.
The proceeds from the securities sold were reinvested in the securities portfolio by the end of the third quarter of 2024. 44 After the restructuring, the investment portfolio continues to be relatively balanced with agency issued mortgage-related securities and collateralized and uncollateralized federal agency securities totaling 58% and 57% of the total securities portfolio at December 31, 2025 and 2024, respectively.
Borrowings are available for general working capital purposes. Interest is payable quarterly at a floating rate based upon term SOFR rate plus a margin payable in respect of any principal amounts advanced under the revolving line of credit. There was no outstanding balance as of December 31, 2024.
Interest is payable quarterly at a floating rate based 47 upon term SOFR rate plus a margin payable in respect of any principal amounts advanced under the revolving line of credit. There was no outstanding balance as of December 31, 2025. RISK MANAGEMENT The Company is exposed to various types of business risk on an on-going basis.
Within One Year One to Five Years After Five Years Total Commercial and Agricultural $ 882,308 $ 1,750,745 $ 708,605 $ 3,341,658 Interest Sensitivity Fixed Rate Variable Rate Loans Maturing After One Year $ 892,218 $ 1,567,132 INVESTMENTS The investment portfolio is a principal source for funding the Company’s loan growth and other liquidity needs of its subsidiaries.
Within One Year One to Five Years After Five Years Total Commercial and Agricultural $ 1,335,804 $ 2,266,754 $ 894,257 $ 4,496,815 Interest Sensitivity Fixed Rate Variable Rate Loans Maturing After One Year $ 959,339 $ 2,201,672 INVESTMENTS The investment portfolio is a principal source for funding the Company’s loan growth and other liquidity needs of its subsidiaries.
Maturities and Average Yields of Securities at December 31, 2024 (dollars in thousands) Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Amount Yield Amount Yield Amount Yield Amount Yield U.S.
Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations. Maturities and Average Yields of Securities at December 31, 2025 (dollars in thousands) Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Amount Yield Amount Yield Amount Yield Amount Yield U.S.
Demand, savings, and money market deposits have provided a growing source of funding for the Company in each of the periods reported. Average demand, savings, and money market deposits declined 4% during 2024 and 12% in 2023.
Core deposits continue to represent a significant funding source for the Company’s operations and represented 84% of average funding sources during 2025 compared with 87% during 2024 and 90% during 2023. Demand, savings, and money market deposits have provided a growing source of funding for the Company in each of the periods reported.
Contractual and Other Obligations Payments Due In (dollars in thousands) One Year or Less Over One Year Total Deposits without Stated Maturities $ 4,412,474 $ — $ 4,412,474 Time Deposits 846,651 69,950 916,601 Federal Home Loan Bank Advances — 75,000 75,000 Other Borrowings (Subordinated Notes and Debentures) — 75,866 75,866 Federal Funds Purchased — — — Securities Sold under Repurchase Agreements 56,862 — 56,862 Lease Obligations 1,661 6,747 8,408 Total Contractual and Other Obligations $ 5,317,648 $ 227,563 $ 5,545,211 In the normal course of business, the Company makes commitments to extend credit and commitments to sell loans, which are not reflected in its consolidated financial statements.
Contractual and Other Obligations Payments Due In (dollars in thousands) One Year or Less Over One Year Total Deposits without Stated Maturities $ 5,700,205 $ — $ 5,700,205 Time Deposits 1,074,869 214,668 1,289,537 Federal Home Loan Bank Advances — 100,000 100,000 Other Borrowings (Subordinated Notes and Debentures) — 36,694 36,694 Federal Funds Purchased — — — Securities Sold under Repurchase Agreements 43,852 — 43,852 Lease Obligations 2,065 7,306 9,371 Total Contractual and Other Obligations $ 6,820,991 $ 358,668 $ 7,179,659 In the normal course of business, the Company makes commitments to extend credit and commitments to sell loans, which are not reflected in its consolidated financial statements.
As of January 1, 2025, the adverse cumulative effects of adopting CECL have been fully phased into our regulatory capital. USES OF FUNDS LOANS December 31, 2024 total loans increased $155.4 million, or 4%, compared with December 31, 2023. The increase in total loans at December 31, 2024 compared with year-end 2023 was broad-based across most segments of the portfolio.
As of January 1, 2025, the adverse cumulative effects of adopting CECL have been fully phased into our regulatory capital. USES OF FUNDS LOANS December 31, 2025 total loans increased $1.7 billion, or 42% on an annualized basis, compared with December 31, 2024.
The table below illustrates changes between years in the average balances of all funding sources: Funding Sources - Average Balances (dollars in thousands) December 31, % Change From Prior Year 2024 2023 2022 2024 2023 Demand Deposits Non-interest-bearing $ 1,420,412 $ 1,553,082 $ 1,738,349 (9) % (11) % Interest-bearing 1,720,823 1,826,232 2,013,969 (6) (9) Savings Deposits 507,203 572,623 640,653 (11) (11) Money Market Accounts 784,047 656,396 833,119 19 (21) Other Time Deposits 334,958 257,736 262,764 30 (2) Total Core Deposits 4,767,443 4,866,069 5,488,854 (2) (11) Certificates of Deposits of $100,000 or more 537,471 330,406 211,645 63 56 FHLB Advances and Other Borrowings 196,480 210,837 159,029 (7) 33 Total Funding Sources $ 5,501,394 $ 5,407,312 $ 5,859,528 2 (8) Maturities of certificates of deposit of $100,000 or more are summarized as follows: (dollars in thousands) 3 Months Or Less 3 - 6 Months 6 - 12 Months Over 12 Months Total December 31, 2024 $ 201,917 $ 171,838 $ 173,363 $ 42,403 $ 589,521 CORE DEPOSITS The Company’s overall level of average core deposits declined approximately $98.6 million, or 2%, during 2024 compared with 2023.
The table below illustrates changes between years in the average balances of all funding sources: Funding Sources - Average Balances (dollars in thousands) December 31, % Change From Prior Year 2025 2024 2023 2024 2023 Demand Deposits Non-interest-bearing $ 1,851,978 $ 1,420,412 $ 1,553,082 30 % (9) % Interest-bearing 1,882,386 1,720,823 1,826,232 9 (6) Savings Deposits 608,139 507,203 572,623 20 (11) Money Market Accounts 1,242,978 784,047 656,396 59 19 Other Time Deposits 414,442 334,958 256,909 24 30 Total Core Deposits 5,999,923 4,767,443 4,865,242 26 (2) Certificates of Deposits of $100,000 or more and Brokered Deposits 915,196 537,471 331,233 70 62 FHLB Advances and Other Borrowings 215,334 196,480 210,837 10 (7) Total Funding Sources $ 7,130,453 $ 5,501,394 $ 5,407,312 30 2 Maturities of certificates of deposit of $100,000 or more are summarized as follows: (dollars in thousands) 3 Months Or Less 3 - 6 Months 6 - 12 Months Over 12 Months Total December 31, 2025 $ 387,210 $ 229,450 $ 83,342 $ 113,639 $ 813,641 CORE DEPOSITS The Company’s overall level of average core deposits increased approximately $1.2 billion, or 26%, during 2025 compared with 2024.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
8 edited+0 added−2 removed9 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
8 edited+0 added−2 removed9 unchanged
2024 filing
2025 filing
Biggest changeManagement continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Company’s risk management strategy.
Biggest changeManagement continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Company’s risk management strategy. 54 The table below provides an assessment of the risk to net interest income over the next 12 months in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).
Actual results may differ materially from those expressed or implied therein as a result of certain risks and uncertainties, including those risks and uncertainties expressed above, those that are described in MANAGEMENT’S DISCUSSION AND ANALYSIS in Item 7 of this Report, and those that are described in Item 1 of this Report, “Business,” under the caption “Forward-Looking Statements and Associated Risks,” which discussions are incorporated herein by reference. 50
Actual results may differ materially from those expressed or implied therein as a result of certain risks and uncertainties, including those risks and uncertainties expressed above, those that are described in MANAGEMENT’S DISCUSSION AND ANALYSIS in Item 7 of this Report, and those that are described in Item 1 of this Report, “Business,” under the caption “Forward-Looking Statements and Associated Risks,” which discussions are incorporated herein by reference. 55
The table below provides an assessment of the risk to net interest income over the next 12 months in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).
The table below provides an assessment of the risk to NPV in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).
The liquidity of the parent company is dependent upon the receipt of dividends from its subsidiary bank, which is subject to certain regulatory limitations.
Primary market risks which impact the Company’s operations are liquidity risk and interest rate risk. The liquidity of the parent company is dependent upon the receipt of dividends from its subsidiary bank, which is subject to certain regulatory limitations.
The Company also monitors interest rate risk under other scenarios including a more gradual movement in market interest rates.
The Company also monitors interest rate risk under other scenarios including a more gradual movement in market interest rates. This type of scenario can at times produce different modeling results in measuring interest rate risk sensitivity.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company’s exposure to market risk is reviewed on a regular basis by the Asset/Liability Committee and Boards of Directors of the parent company and its subsidiary bank. Primary market risks which impact the Company’s operations are liquidity risk and interest rate risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company’s exposure to market risk is reviewed on a regular basis by the Asset/Liability Committee consisting of executive and senior officers of the Company and the Risk Committee of the Board of Directors of the Company.
Interest Rate Sensitivity as of December 31, 2024 - Net Interest Income Net Interest Income Changes in Rates Amount % Change +2% $ 223,479 0.14 % +1% 223,507 0.15 Base 223,163 — -1% 220,095 (1.37) -2% 215,961 (3.23) The above table is a measurement of the Company’s net interest income at risk, assuming a static balance sheet as of December 31, 2024 and instantaneous parallel changes in interest rates.
Interest Rate Sensitivity as of December 31, 2025 - Net Interest Income Net Interest Income Changes in Rates Amount % Change +2% $ 332,568 2.09 % +1% 329,423 1.12 Base 325,771 — -1% 320,593 (1.59) -2% 315,044 (3.29) The above table is a measurement of the Company’s net interest income at risk, assuming a static balance sheet as of December 31, 2025 and instantaneous parallel changes in interest rates.
Interest Rate Sensitivity as of December 31, 2024 - Net Portfolio Value Net Portfolio Value Net Portfolio Value as a % of Present Value of Assets Changes in Rates Amount % Change NPV Ratio Change +2% $ 771,464 (11.29) % 13.67 % (87) b.p. +1% 821,107 (5.58) 14.13 (41) b.p.
Interest Rate Sensitivity as of December 31, 2025 - Net Portfolio Value Net Portfolio Value Net Portfolio Value as a % of Present Value of Assets Changes in Rates Amount % Change NPV Ratio Change +2% $ 1,080,478 (5.53) % 14.46 % (9) b.p. +1% 1,115,142 (2.49) 14.55 — Base 1,143,676 — 14.55 — -1% 1,167,924 2.12 14.47 (8) b.p. -2% 1,187,161 3.80 14.31 (24) b.p.
Removed
This type of scenario can at times produce different modeling results in measuring interest rate risk sensitivity. 49 The table below provides an assessment of the risk to NPV in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).
Removed
Base 869,642 — 14.54 — -1% 908,549 4.47 14.75 21 b.p. -2% 932,318 7.21 14.72 18 b.p.