German American Bancorp Reports Record 2005 Earnings

Business Wire, Feb 1, 2006

JASPER, Ind. -- German American Bancorp, (NASDAQ:GABC) reported today that 2005 earnings achieved record levels in terms of both net income and earnings per share. The Company's 2005 net income of $9,721,000, or $0.89 per share, represents the highest level of earnings in the Company's history and approximates a 35% increase over last year's net income of $7,239,000, or $0.66 per share.

2005 fourth quarter earnings continued the Company's recent trend of solid quarterly financial performance with net income of $2,431,000, or $0.22 per share, increasing significantly from the $579,000, or $0.05 per share, recorded in the fourth quarter of 2004. The prior year fourth quarter results were reduced by the recording of a non-cash, other than temporary impairment charge related to certain securities held in the Company's investment portfolio.

In addition to the effect of the securities impairment charge, the earnings comparison of 2005 to 2004 was positively impacted by improvements in both net interest income and tax-equivalent net interest margin, as well as increases in the level of other non-interest income. The Company's net interest income increased by approximately $1 million while the net interest margin improved to 3.92% in 2005 from 3.86% in 2004.

Non-interest income (not including net gain on the sales of loans and related assets and net loss on securities) increased in 2005 by nearly $900,000, representing a 7% increase in this growing component of the Company's revenue. The combined increases in net interest income and other non-interest income of approximately $1.9 million were somewhat offset by increased operating expenses of slightly over $800,000, the majority of which was attributable to higher employee health insurance costs.

Mark A. Schroeder, President & Chief Executive Officer of German American, commenting on the Company's record financial performance stated, "It is extremely gratifying to have been able to deliver record financial performance during 2005 for the benefit of our shareholders. The historic low level of interest rates and difficult economic conditions over the past several years has certainly presented a challenging environment relative to our Company's financial and stock performance."

Schroeder continued, "Throughout this period, we have maintained our focus on growing and enhancing shareholder value with a long-term perspective, and we are pleased that our steadfast commitment has been rewarded in terms of this achievement of the highest level of reported annual net income and earnings per share in the Company's history. We're hopeful that the combination of this past year's record financial performance and our stock's extremely attractive dividend yield will positively impact our stock's long-term performance."

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 February 20, 2006 to shareholders of record as of February 10, 2006.

German American Bancorp is a 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, and long-term stock performance 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.