FROM LOCAL SOURCES
JASPER -- Jasper-based German American saw an increase in the third quarter of the year, according to earnings reports released Tuesday by the company.
German American reported quarterly earnings of $13.1 million, or $0.49 per share, in the third quarter of 2019. This level of quarterly earnings performance was an increase of approximately $425,000, or 3% on a reported net income basis over third quarter 2018 net income of $12.6 million, or $0.55 per share.
On a per share basis, the quarter-over-quarter comparison was reflective of a higher level of shares outstanding in 2019 resulting in a $0.06, or approximately 11%, decrease in reported earnings per share relative to the third quarter of 2018.
The current year earnings are reflective of the inclusion of the acquisition of Citizens First Corporation of Bowling Green, Kentucky on July 1, 2019 and the acquisition of First Security, Inc. of Owensboro, Kentucky on October 15, 2018.
The third quarter of 2019 operating results included acquisition-related expenses of approximately $2.3 million ($1.7 million, or $0.06 per share, on an after-tax basis), while the results of the third quarter of 2018 included merger-related expenses of $395,000 ($317,000, or $0.01 per share, on an after-tax basis).
On a year-to-date basis, reported earnings for the first nine months of 2019 were $43.4 million, or $1.70 per share, which represents an increase of $7.9 million, or 10% on a per share basis, over the first nine months 2018 net income of $35.5 million, or $1.55 per share. 2019 third quarter financial position and performance, relative to that of the same quarter last year, was largely attributable to the inclusion of the operating results of the two previously noted acquisitions.
Total assets increased during the past year by nearly $1.0 billion, or approximately 30%, to $4.4 billion as of September 30, 2019, while average earning assets increased by $883.3 million, or approximately 29%, during the same period. Third quarter 2019 net interest income increased by $10.0 million, or approximately 35%, driven by the Company’s higher level of average earning assets and an increase in the net interest margin to 3.93% in third quarter of 2019, compared to 3.76% in the same quarter of 2018. Other significant positive contributors to the quarter-over-quarter earnings comparison included a $3.1 million, or approximately 35%, increase in other non-interest income.
Partially offsetting the $13.1 million revenue increase was $10.4 million of additional other non-interest expenses during the current quarter as compared to the third quarter of 2018, of which approximately $1.9 million was attributable to the quarter-over-quarter increase in the previously noted acquisition-related expenses. The 2019 third quarter results also included a $2.3 million increase in the Company’s provision for loan losses as compared to the third quarter of 2018.
Mark A. Schroeder, German American’s Chairman & CEO, stated, "The third quarter of 2019 marked another period of solid performance for our Company. While the third quarter results were impacted by significant acquisition-related expenses in connection with the completion of the Citizens First merger, we were very pleased with the level of incremental year-over-year growth in revenue, within both net interest income and various categories of non-interest income. The incrementally higher level of non-interest expenses in the third quarter 2019 was also largely attributable to the inclusion of both the merger-related expenses and general operating expenses of Citizens First. Those expenses are expected to be significantly mitigated going forward, as the operations of Citizens First are fully integrated into German American.”
Schroeder continued, “Further, the level of asset quality within our loan portfolio remains exceedingly strong, as indicated by our end of period non-performing asset ratio of only 0.32%. The level of organic loan growth during the current quarter was mitigated by a combination of elevated commercial loan payoffs, reduced utilization of operating lines of credit by agricultural and commercial clients, and the continued realignment of mortgage loans from our portfolio to the secondary market, yet we are extremely pleased with the level of continued strength in our loan pipeline, which we believe is indicative of the continued economic strength throughout our footprint. We look forward to building upon our exceptional record of delivering customer service excellence to our clients, continued reinvestment in the communities we serve, and long-term investment value to our shareholders.”
The Company also announced its Board of Directors declared a regular quarterly cash dividend of $0.17 per share, which will be payable on November 20, 2019 to shareholders of record as of November 10, 2019.