Firm declares 10% cash dividend increase; stock repurchase plan announced
Southern Indiana Business Report
JASPER — German American Bancorp Inc. reported record annual earnings of $84.1million, or $3.17 per share, for the year-end 2021, representing the 12th consecutive year that the company has reported record annual earnings. This level of annual earnings performance resulted in a 13.1% return on average shareholders’ equity and a 16.4% return on average tangible common equity in 2021, marking the 17th consecutive fiscal year in which the company has delivered a double-digit return on shareholders’ equity. The company also announced the declaration of a 10% increase in its quarterly cash dividend, marking the 10th consecutive year of increased cash dividends, and the approval of a new share repurchase plan for up to one million GABC shares.
2021 year-to-date record net income represented an increase of $21.9 million, or approximately 35% on a per share basis, from the prior year annual earnings of $62.2 million, or $2.34 per share. Virtually every category of income and expenses showed improvement in 2021, as compared to 2020, with the exception of an elevated level on non-interest expense, which was attributable to non-recurring expenses associated with various initiatives management undertook in 2021 with the intention of better positioning the company going forward in light of the current operating environment.
Fourth quarter 2021 net income of $19.3 million, or $0.73 per share, represented a decline of $1.6 million, or approximately 8% on a per share basis, from fourth quarter 2020 net income of $20.9 million, or $0.79 per share. On a quarter-over-quarter comparison, the earnings differential was primarily due to a reduced level of net interest income attributable to a lower level of fee income from PPP loans, as that program was in its final stages during the fourth quarter of 2021. The elevated level of non-interest expense was attributable to the previously noted non-recurring expenses associated with various management initiatives in 2021.
Quarter ended Dec. 31, 2021
Net income for the quarter ended Dec. 31, 2021, totaled $19,272,000, or $0.73 per share, a decline of 10% on a per share basis compared with the third quarter 2021 net income of $21,486,000, or $0.81 per share, and a decline of 8% on a per share basis compared with the fourth quarter 2020 net income of $20,890,000, or $0.79 per share.
Repurchase plan and dividend increase
The company also announced that its board has approved a new share repurchase plan authorizing the repurchase of one million shares, or approximately 4% of the its total common shares outstanding as of Dec. 31, 2021. Stock repurchases are expected to be made from time to time on the open market or in privately negotiated transactions, subject to applicable securities law. The plan does not obligate the company to repurchase any specific dollar amount or number of shares.
Additionally, the company announced a 10% increase in its regular quarterly cash dividend, as its board of directors declared a regular quarterly cash dividend of $0.23 per share, which will be payable on Feb. 20 to shareholders of record as of Feb. 10.
Comments from leadership
Mark A. Schroeder, German American’s executive chairman, stated, “We were extremely pleased with the annual operating results our company was able to post in 2021, continuing our decades long trend of exceptional financial performance, in the face of what was obviously a continued challenging but improving operating environment. Perhaps more importantly, we also took steps in 2021 to better position the company for future success. While we expect 2022 to continue to be a very challenging year, we put in place various initiatives that will not only mitigate the impact of these challenges in the current year, but will position German American to be in an even stronger position when the general economy returns to a more normalized environment in the coming years.”
D. Neil Dauby, German American’s president & CEO, commenting on the company’s initiatives for future success undertaken in 2021, stated, “We are excited to build upon our history of strong financial performance and even more excited for the future growth potential in connection with the closing of our acquisition of Citizens Union Bancorp of Shelbyville, Kentucky, on Jan. 1, 2022. The acquisition allows us to significantly build upon our presence in the fast growing Greater Louisville market area. This acquisition, along with our anticipated first quarter opening of a loan production office in the Greater Indianapolis area (Greenwood, Indiana) and our completed optimization and continuous improvement initiatives in 2021, will provide us with opportunities to enhance future balance sheet growth and operating performance.”
About German American
German American Bancorp Inc. is a Nasdaq-traded (symbol: GABC) financial holding company based in Jasper. German American, through its banking subsidiary German American Bank, operates 78 banking offices in 19 contiguous southern Indiana counties and 14 counties in Kentucky. The company also owns an investment brokerage subsidiary (German American Investment Services Inc.) and a full line property and casualty insurance agency (German American Insurance Inc.).