German American Bancorp Inc. (GABC) on Monday reported third-quarter net income of $12.6 million, or $0.55 per share, in the third quarter of 2018.
This record level of quarterly earnings performance was an increase of approximately $1.5 million, or 15% on a per share basis, over second quarter 2018 net income of $11.1 million, or $0.48 per share, and an increase of approximately $3.0 million, or 31% on a per share basis, relative to the company’s third quarter 2017 net income of $9.7 million, or $0.42 per share.
On a year-to-date basis, reported earnings for the first nine months of 2018 were $35.6 million, or $1.55 per share, which represents an increase of approximately $6.5 million, or 22% on a per share basis, from the first nine months of 2017 net income of $29.1 million, or $1.27 per share.
2018 reported earnings were inclusive of $1.5 million in acquisition-related expenses, of which $396,000 (approximately $317,000, or $0.01 per share, on an after-tax basis) were recorded in the third quarter, with the remaining $1.1 million (approximately $867,000, or $0.04 per share, on an after-tax basis) incurred in the first half of 2018.
These acquisition-related expenses were associated with the five-branch acquisition in the Columbus and Greensburg, Indiana markets that closed on May 18, 2018 and the merger with First Security, Inc. of Owensboro, Kentucky that closed on October 15, 2018.
The company reported the increased financial performance was based on the increased net interest income on loans. Outstanding loans increased $88.7 million during the third quarter of 2018. An increase of 16% over the second quarter of 2018. These increases were driven by organic loan growth from the company’s existing branch footprint and from the growth related to the branch acquisition GAB completed during the second quarter.
2018 third quarter, second quarter and year-to-date reported net income and earnings per share were also positively impacted by the federal income tax reform legislation, which reduced the company’s corporate federal income tax statutory rate of 35% to 21% effective January 1, 2018.
“The record earnings performance achieved in the third quarter was a direct result of the combined organic and acquisition growth in deposits, loans, and total assets that our company has achieved throughout the past year,” Mark A. Schroeder, German American’s Chairman and CEO, stated. “We are very encouraged about our prospects for continued growth in the future based on the economic strength within our existing Southern Indiana markets. Furthermore, we successfully completed, earlier this month, the previously announced pending merger transaction with Owensboro, Kentucky based First Security, Inc., which expands German American’s footprint into Bowling Green, Lexington and Owensboro, three of the most economically vibrant markets in the Commonwealth of Kentucky.”
“This combination of First Security and German American will elevate German American’s consolidated total assets to nearly $4.0 billion, with a projected total loan portfolio of approximately $2.8 billion and total deposit balances of approximately $3.0 billion,” he said. “We welcome the communities, customers, employees and shareholders of First Security to the German American family of community banks, and look forward to further enhancing our relationships with all these stakeholders.”
The company also announced its Board of Directors declared a regular quarterly cash dividend of $0.15 per share, which will be payable on November 20, 2018 to shareholders of record as of November 10, 2018.