German American Bancorp Reports Record Quarterly Earnings

Business Wire, April 25, 2006

JASPER, Ind. -- German American Bancorp, (NASDAQ:GABC) announced today the Company's first quarter 2006 financial results grew to a record level in terms of both net income and earnings per share. The Company's 2006 net income of $2,563,000, or $0.23 per share, represents the highest level of quarterly earnings in the Company's history and approximates a 6% increase over last year's first quarter net income of $2,411,000, or $0.22 per share.

Mark A. Schroeder, President & Chief Executive Officer of German American, commenting on the Company's first quarter financial performance stated, "The achievement of these record quarterly earnings is a continuation of our Company's recent trend of solid quarterly financial performance and comes on the heels of our previously reported record performance for the full year period in 2005. We're optimistic that our record first quarter results will provide the impetus for strong financial performance throughout the balance of 2006, and remain hopeful that the combination of this trend of record financial performance and our stock's extremely attractive dividend yield will positively impact our stock's long-term performance."

The Company's 2006 first quarter financial results are inclusive of the operating results of the recently completed acquisitions of PCB Holding Company and Stone City Bancshares, Inc. The current year first quarter earnings improvement, as compared to the first quarter of the prior year, was driven by an increase in net interest income, largely attributable to an increased tax-equivalent net interest margin and to the operations of the recent acquisitions, as well as a slightly higher level of non-interest income.

The increase in non-interest income was dampened by a $222,000 decline in mortgage servicing right recoveries, as a $45,000 recovery of previously recognized mortgage service rights impairment was recorded in 2006, compared to a recovery of $267,000 in 2005. Contributing to the increase in non-interest income was a $144,000 increase in the level of annual contingency commission income recorded within the Company's insurance operations during 2006 over that recorded in the prior year.

The Company's provision for loan losses was $192,000 lower in 2006 than that which was booked during the first quarter of 2005 as the need to establish increased reserves stabilized during the current quarter in comparison to the first quarter of 2005. Other non-interest expenses increased by $765,000, or slightly less than 10%, during the current year with the vast majority of the increase attributable to inclusion of the operating expenses of the recently completed acquisitions of PCB Holding Company and Stone City Bancshares, Inc. in the 2006 reported financial results. The integration of both operations is in line with original expectations and proceeding as planned.

The Company also announced its Board of Directors has declared a regular quarterly cash dividend of $0.14 per share which will be payable on May 20, 2006 to shareholders of record as of May 10, 2006.

German American Bancorp is a $1 billion financial services holding company based in Jasper, Indiana. The Company's Common Stock is traded on NASDAQ's National Market System under the symbol GABC. Including Stone City Bank, which was acquired January 1, 2006, the Company now operates six affiliated community banks with 29 retail banking offices in the nine contiguous Southwestern Indiana counties of Daviess, Dubois, Gibson, Knox, Lawrence, Martin, Perry, Pike, and Spencer. The Company also operates German American Financial Advisors & Trust Company, a trust, brokerage and financial planning subsidiary operating from the banking offices of the bank subsidiaries and German American Insurance, Inc., a full-line property and casualty insurance subsidiary with five independent insurance offices throughout its market area. The Company's lines of business include retail and commercial banking, mortgage banking, comprehensive wealth management, full service brokerage and trust administration, title insurance, and a full range of personal and corporate insurance products.

Forward-Looking Statements

German American's statements in this press release regarding financial performance, dividend yield, long-term stock performance and provision for loan losses may be deemed to include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that, by their nature, forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results and experience could differ materially from the anticipated results or other expectations expressed or implied by these forward-looking statements as a result of a number of factors, including but not limited to, those discussed in the press release. Factors which could cause actual results and experience to differ from these expectations include changes in interest rates; changes in competitive conditions; the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; changes in customer borrowing, repayment, investment and deposit practices; changes in fiscal, monetary and tax policies; changes in financial and capital markets; changes in general economic conditions, either nationally or regionally, resulting in, among other things, credit quality deterioration; capital management activities; actions of the Federal Reserve Board; changes in accounting principles and interpretations; and legislative and regulatory actions and reforms. These forward-looking statements speak only as of the date of this press release and German American undertakes no obligation to update any such forward-looking statement to reflect events or circumstances that occur after the date hereof.