German American Bancorp Reports $10.5 Million Net Income, 53% Decline Due to Acquisition Costs

German American Bancorp, Inc. reported a net income of $10.5 million, or $0.30 per share, for the first quarter of 2025, reflecting a significant decline of 53% compared to $19.0 million, or $0.64 per share, in the same period last year. This decrease was primarily attributed to acquisition-related expenses from the recent merger with Heartland BancCorp, which closed on February 1, 2025. The company incurred approximately $5.9 million in acquisition-related costs and a Day 2 provision for credit losses of $16.2 million under the Current Expected Credit Loss (CECL) model. Adjusted net income for the quarter, excluding these items, was reported at $27.3 million, or $0.79 per share.

Total interest income for the quarter increased to $96.2 million, up from $68.3 million in the prior year, driven by a higher volume of loans and improved net interest margin, which rose to 3.96% from 3.35%. Net interest income after provisions for credit losses was $51.3 million, compared to $44.1 million in the previous year. The company’s total loans increased by $1.5 billion to $5.7 billion, largely due to the Heartland acquisition, which added approximately $1.6 billion in loans. Excluding the acquisition, organic loan growth was modest at $16.8 million.

In terms of operational metrics, German American Bancorp's total assets reached $8.4 billion, an increase of $2.1 billion from the end of 2024, primarily due to the Heartland acquisition. The company’s total deposits also rose significantly, increasing by $1.8 billion to $7.1 billion, with Heartland contributing approximately $1.8 billion in deposits. The company’s allowance for credit losses increased to $75.2 million, representing 1.33% of total loans, up from 1.08% at the end of 2024, reflecting the addition of Heartland's loan portfolio.

Strategically, the acquisition of Heartland BancCorp is expected to enhance German American's regional presence and profitability by expanding its customer base and introducing existing products to new markets. The merger aligns with the company's growth strategy, particularly in Southern Indiana, Kentucky, and Ohio. Looking ahead, the company anticipates continued integration of Heartland's operations and expects to realize synergies that will contribute positively to its financial performance in the coming quarters.