Southern Indiana Business Report
JASPER – German American Bancorp Inc. (Nasdaq: GABC) reported first quarter 2024 earnings of $19 million, or $0.64 per share, compared to earnings of $21.5 million, or $0.73 per share, for fourth quarter 2023, and earnings of $20.8 million, or $0.71 per share, for first quarter 2023, according to its latest earnings report.
First quarter 2024 operating performance was highlighted by strong linked quarter commercial real estate and retail organic loan growth, linked quarter non-public fund deposit growth, strong credit metrics, controlled operating expenses, and a solid level of diversified non-interest income. However, from an earnings perspective, these increases were more than offset by lower net interest income as a result of modest net interest margin compression driven by higher deposit costs.
The net interest margin declined from 3.43% to 3.35%, or 8 basis points, during the first quarter of 2024 on a linked quarter basis as the funding cost increase of 12 basis points outpaced the earning asset yield increase of 4 basis points. The rise in the cost of funds in the first quarter of 2024 was driven by the continued competitive deposit pricing in the marketplace, and the ongoing re-mixing of German American’s deposit composition as customers continued to move into time deposit accounts seeking higher yields.
First quarter 2024 deposits declined approximately $33.6 million, or 3%, on an annualized linked quarter basis compared to year-end 2023 driven by a delayed seasonal outflow of public fund deposits into first quarter 2024. Non-public funds however continued to grow positively on a linked quarter basis. The overall core deposit base remains diverse with stable and manageable exposure to uninsured and uncollateralized deposits of approximately 21% and non-interest bearing demand accounts remaining stable at 28% of total deposits
During the first quarter of 2024, loans remained stable and diversified with commercial real estate and retail organic loan growth helping to offset the larger seasonal reductions in utilization of agricultural lines of credit and ongoing reduced utilization in commercial and industrial lines. Credit quality remained strong as non-performing assets were 0.16% of period end assets and non-performing loans totaled 0.25% of period end loans.
Non-interest income for the first quarter 2024 was driven by an increase in wealth management fees attributable to the ongoing growth and gathering of assets under management. Insurance revenues also contributed in a meaningful way driven by seasonal contingency income as well as improved commercial lines revenue.
GAB also announced that its board of directors declared a regular quarterly cash dividend of $0.27 per share, which will be payable on May 20 to shareholders of record as of May 10. As previously reported, this dividend rate represents an 8% increase over the rate in effect during 2023.
D. Neil Dauby, German American chairman and CEO stated, “Our Company delivered solid first quarter results to kick off the 2024 year while maintaining strong capital levels and a solid liquidity position. During the quarter, we continued to add key talent to our team in both customer facing and operational areas. We continued to invest in new digital platforms/systems to improve customer experience, drive customer acquisition/retention and drive future revenues. Our talented team of ‘relationship driven, value added’ professionals, innovative technology and continuous improvement mindset will position us well for continued growth across our footprint.”
Balance sheet highlights
Total assets totaled $6.112 billion at March 31, representing a decline of $40.3 million compared with Dec. 31, 2023, and an increase of $115.0 million compared with March 31, 2023. The modest decline in total assets at March 31, 2024 compared with year-end 2023 was largely related to a decline in the securities portfolio while the increase in total assets at March 31, 2024 compared to March 31, 2023 was largely attributable to an increase in total loans, partially offset by a decline in the securities portfolio.
Total loans remained relatively stable at March 31, 2024 compared with year-end 2023, increasing by $1 million, while total loans increased $206.1 million, or 6%, compared with March 31, 2023. The modest increase during the first quarter of 2024 compared with year-end 2023 was largely attributable to increased commercial real estate loans and retail loans, partially offset by lower seasonal line utilization for agricultural loans and lower line utilization for commercial and industrial loans. Commercial real estate loans increased $27.0 million, or 5% on an annualized basis, while retail loans grew $12.5 million, or 6% on an annualized basis. Partially offsetting these increases was a decline in agricultural loans of $23.1 million, or 22% on an annualized basis, and a decline in commercial and industrial loans of $15.4 million, or 9% on an annualized basis, as line of credit utilization declined in both of these segments.