German American Bancorp, Inc. · NASDAQ:GABC
German American Bancorp — Debt Investor Presentation (June 2019)
25 slides from German American Bancorp's debt investor presentation, Jun 25, 2019
Slide 1: Cautionary Note Regarding Forward-Looking Statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS When used in this presentation and our oral statements, the words or phrases “believe,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “fo
Slide 2: Terms of Planned Capital Raise
Terms of Planned CapitalRaise German American Bancorp, Inc. Private Placement with Registration Rights [•] 2029 through the maturity date or early redemption date Redeemable at 100% of principal amount, plus accrued and unpaid interest beginning in [•] 2024 The Company intends to use the proceeds fr
Slide 3: Investment Highlights
Investment Highlights • Consistent record of strong financial condition and above-peer operating performance driven primarily by disciplined expense management, reliable fee-income sources and net interest margin (1.39% return on average assets and 12.1% return on average equity) • Highly respected
Slide 4: History of Superior Financial Performance
HistoryofSuperiorFinancialPerformance • Solidly profitable throughout prior financial crisis (lower bound return on average assets was 1.01% in 2009) • Nine Years of Consecutive Record Earnings Performance • Double-Digit Return on Equity for Past 14 Consecutive Fiscal Years • Recent Notable Awards:
Slide 5: Experienced Management Team
ExperiencedManagement Team Senior management has on average 31 years in the banking industry and 24 years at GABC Mark A. Schroeder Chairman and Chief Executive Officer Mark is Chairman and CEO of German American Bancorp, and has been with the Company over 45 years. He also serves as the vice chairm
Slide 6: Experienced Management Team
ExperiencedManagement Team Randall L. Braun Executive Vice President & Chief Retail Banking & Development Officer Randall is Executive Vice President & Chief Retail Banking & Development Officer of German American Bancorp. He joined the Company in November 2011 and before that spent over 20 years wi
Slide 7: Branch Network
BranchNetwork • GABC holds a top 3 deposit market share in 8 of its top 10 counties Source: S&P Global Market Intelligence; Data shown as of June 30, 2018 and pro forma for acquisition of Citizens First Corpor ation (merger pending) and First Security, Inc. (merger completed) 9 Deposits by State Ken
Slide 8: Diversified Economic Base
DiversifiedEconomicBase GABC’s market area has a diverse economic base with no dominant employer or industry • MAJOR INDIANA EMPLOYERS: Education Indiana University Indiana University Southeast University of Southern Indiana Vincennes University Greater Clark County School Corp MAJOR KENTUCKY EMPLOY
Slide 9: Disciplined, Proven Acquiror
Disciplined, ProvenAcquiror • GABC has successfully announced and integrated seven whole bank and branch acquisitions over the last decade (Citizens First currently pending) 5 branches from MainSource Financial Group, Inc. • $116mm loans • $175mm deposits 2 branches from Farmers State Holding Corp.
Slide 10: Review of Pending Citizens First Acquisition
ReviewofPending Citizens First Acquisition • The Citizens First Corporation acquisition was announced on February 21, 2019 and the shareholder vote is June 25, 2019 GABC anticipates closing the transaction in July 2019 CZFC expands GABC’s position in attractive Bowling Green, KY market by tripling i
Slide 11: Historical Financial Performance
Historical FinancialPerformance Total Assets Gross Loans (Includes HFS) Deposits Gross Loans / Deposits $2,374 1,575 1,826 86% $2,956 2,005 2,350 85% $3,144 2,148 2,484 86% $3,929 2,732 3,073 89% $3,896 2,717 3,065 88% Total Equity Tangible Common Equity / Tangible Assets Tier 1 Leverage Ratio Tier
Slide 12: Performance vs. Peers
Performance vs. Peers 1.70% 20.0% 1.55% 18.0% 1.40% 16.0% 1.32% 1.24% 1.25% 14.0% 1.10% 12.0% 0.99% 10.0% 0.95% 8.0% 0.80% 2015Y 2016Y 2017Y 2018Y 1Q'19 2015Y 2016Y 2017Y 2018Y 1Q'19 4.00% 75.0% 70.0% 3.80% 65.0% 3.60% 59.7% 59.4% 58.6% 60.0% 3.40% 55.0% 3.20% 50.0% 2015Y 2016Y 2017Y 2018Y 1Q'19 201
Slide 13: Non-Interest Income by Business Segment
Non-Interest Income byBusiness Segment $40.0 Banking Insur ance Wealth M anag ement $30.0 $20.0 $10.0 $0.0 2014Y 2015Y 2016Y 2017Y 2018Y Note: Dollars in millions Source: S&P Global Market Intelligence, Company documents 16 $6.7 $4.6 $5.3 $8.3 $4.0 $7.7 $8.0 $3.7 $7.5 $22.1 $7.3 $19.6 $18.6 $16.0 $1
Slide 14: Diversified Revenue Streams
Diversified Revenue Streams • Includes brokerage, asset management, trust administration, financial planning, investment services and life insurance solutions Gains on Loans 8.5% Wealth Management Other 13.9% • Includes personal, commercial, employee benefits and client services Insurance 21.9% Inte
Slide 15: Historical Loan Portfolio
Historical Loan Portfolio CRE 1-4 Family C&I Farm & Ag Multifamily C&D Consumer Other Loans $3,500 $3,000 % 1.8% 5.1% $2,500 $2,000 $1,500 $1,000 $500 $0 2015Y 2016Y 2017Y 2018Y 1Q'19 Pro Forma with CZFC Total Loans: CRE/Total RBC: Loan Yield: $1,575 176% 4.52% $2,005 203% 4.55% $2,148 211% 4.54% $2
Slide 16: Current Loan Portfolio Detail
CurrentLoan Portfolio Detail Cons truction & De ve lopment Loans 5.1% • GABC maintains a strong focus on local business customers Re s ide ntial M ortgage Loans 11.7% • Minimal participations Hom e Equity Loans 7.6% Agricultural • Not involved with shared national credits Cons umer Loans 2.5% Com me
Slide 17: Credit Quality Review
Credit Quality Review 1.00% 0.80% 400% 0.60% 300% 0.40% 200% 135% 142% 126% 0.20% 100% 0.00% 0% 2015Y 2016Y 2017Y 2018Y 1Q'19 2015Y 2016Y 2017Y 2018Y 1Q'19 0.50% 1.00% 0.40% 0.80% 0.30% 0.60% 0.20% 0.40% 0.10% 0.20% 0.00% 0.00% 2015Y 2016Y 2017Y 2018Y 1Q'19 2015Y 2016Y 2017Y 2018Y 1Q'19 1) Excludes
Slide 18: Attractive Deposit Mix
Attractive Deposit Mix Jumbo Time 5% Acquired Deposits $3.4 ¹ Nonint. Bearing 21% Retail Time 18% MMDA + Savings 26% Trans. 30% 2015 2016 2017 2018 1Q'19 Pro Forma MRQ Cost of Deposits: 0.75% Total Deposits ($mm): $3,447 • At March 31, 2019, German American had a diversified public fund deposit port
Slide 19: Securities Portfolio
SecuritiesPortfolio • GABC maintains a high quality and relatively short term securities portfolio Weighted Average TEY 3.1% % AFS 100.0% Avg. Life 4.9 yrs Agency CMO (Fixed) 30% Agency MBS (Fixed) 36% Modified Duration 4.4 yrs Municipals - Tax-Exempt 35% AAA 2% AA 64% A 32% NR 2% Total 100% Agency
Slide 20: Interest Rate Sensitivity
InterestRate Sensitivity Consistent net interest margin over the last 5 years indicates effective interest rate risk management • Year 1 Year 2 2.8% 2.5% 1.5% -2.8% (15.7%) - 200 bps - 100 bps + 100 bps + 200 bps + 300 bps -3.9% -14.1% - 200 bps - 100 bps + 100 bps + 200 bps + 300 bps Source: Compan
Slide 21: Holding Company Liquidity
HoldingCompanyLiquidity • On October 11, 2018, German American entered into a Loan Agreement with a correspondent bank, providing the Company with a term loan of $25.0 million and a revolving credit loan of $15.0 million • The term loan was advanced in its entirety for purposes of the cash payment r
Slide 22: Capital Overview
Capital Overview 15.00% 12.27% 11.90% 12.50% 10.00% 7.50% 5.00% 2.50% 0.00% Tier 1 Leverage Common Equity Tier 1 Tier 1 RBC Total RBC • Internal guidelines for Tier 1 Leverage and Total RBC are 8.00% and 13.00%, respectively 2018 dividend per share $0.60 per share or a 30% dividend payout ratio The
Slide 23: Pro Forma Capitalization Table
Pro Forma Capitalization Table 1) Adjustments utilizes financial data as of announcement date Note: Assumes a $30 million holding company issuance with 0% of issuance is downstreamed to German American Bank and 20% risk weighting; The Company intends to use the proceeds from the offering to pay $15.
Slide 24: Double Leverage & Interest Coverage
Double Leverage & InterestCoverage Bank-level Equity $227,417 $322,138 $342,053 $469,919 $490,105 Consolidated Equity $252,348 $330,267 $364,571 $458,640 $479,187 Proposed Holding Company Subordinated Debt Offering $30,000 Pro Forma Bank-level Equity (Assumes 0% Downstreamed) $490,105 PF for CZFC To
Slide 25: rey 21TY 2o1eY 1807
rey 21TY 2o1eY 1807 Baniclevel Equity seorat7 $822,138 $342053—s4en.919 $400,105, Consolidated Equity $2238 —_—SS00.267 _—«SRGNSTH _—«SASBBAO_—_«SATONBT [Double Leverage Ratio 20% 28% 34% 102% 102% Proposed Holing Company Subordinated Debt Ofering $90,000 ro Forma Bankc-level Equity (Assumes O% Down
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