What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-27 · 249 added, 183 removed, 1712 unchanged (20% of the section changed)

32 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

2 unchanged sentences

Allowance for Credit Losses on Loans

As discussed in Notes 1 and 4, the allowance for credit losses (the “ACL”) is an accounting estimate of expected credit losses over the estimated life of financial assets carried at amortized cost and off-balance-sheet credit exposures in accordance with Accounting Standards Update (the “ASU”) 2016-13, Financial Instruments —Credit Losses (Topic 326):

As discussed in Notes 1 and 5, the allowance for credit losses (the “ACL”) is an accounting estimate of expected credit losses over the estimated life of financial assets carried at amortized cost in accordance with Accounting Standards Update (the “ASU”) 2016-13, Financial Instruments —Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The standard requires the Company’s loan portfolio, measured at amortized cost, to be presented at the net amount expected to be collected.

The Company utilizes the static pool methodology for determining the allowance for credit losses.

The static pool methodology tracks loan pools by segment over a period of time to calculate a loss rate.

Estimates of expected credit losses for loans are based on historical experience, current conditions and reasonable and supportable forecasts over the estimated life of the loans.

In order to estimate the expected credit losses, the Company utilizes a loss estimation model.

The Company utilizes the static pool methodology for determining the allowance for credit losses.

The static pool methodology tracks loan pool by segment over a period of time to calculate a loss rate.

Loss rates are then qualitatively adjusted for current conditions and reasonable and supportable forecast.

Commercial and agricultural loans graded special mention and substandard are also adjusted based on a migration analysis technique.

Auditing the Allowance for Credit Losses for Loans was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management.

Auditing the Allowance for Credit Losses on Loans was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management.

The principal considerations resulting in our determination included the following:

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Report of Independent Registered Public Accounting Firm

• Substantively testing management’s process for developing the qualitative factors and assessing relevance and reliability of data used to develop factors, including evaluating their judgments and significant assumptions for reasonableness, and mathematical accuracy and appropriateness of the application of qualitative factors;

• Testing the effectiveness of controls over the Company’s loan risk rating;

• Testing the effectiveness of controls over the Company’s loan risk rating process;

• Substantively testing management’s process for developing the qualitative factors including assessing relevance and reliability of data used to develop factors, evaluating their judgments and significant assumptions for reasonableness, and testing mathematical accuracy and appropriateness of the application of qualitative factors;

• Substantively testing the accuracy of both the loan risk ratings as well as testing the accuracy of the transition matrix.

We have served as the Company’s auditor since 1977.

Louisville, Kentucky

February 27, 2024

Indianapolis, Indiana

March 3, 2025

Consolidated Balance Sheets

65 unchanged sentences

Interchange Fee Income 17,125 17,452 15,820

Sale of Assets of German American Insurance 38,323 — —

Other Operating Income 5,419 5,830 5,116

Net Gains on Sales of Loans 3,054 2,363 3,818

Net Gains on Securities 40 562 2,247

Net Gains (Losses) on Securities ( 34,788 ) 40 562

TOTAL NON-INTEREST INCOME 62,660 60,261 59,133

1 unchanged sentence

Salaries and Employee Benefits 82,257 83,244 84,145

Occupancy Expense 10,887 11,223 11,081

Furniture and Equipment Expense 3,580 3,698 3,750

Occupancy, Furniture and Equipment Expense 14,944 14,467 14,921

FDIC Premiums 2,908 2,829 1,860

39 unchanged sentences

Issuance of Common Stock for:

Acquisition of Citizens Union Bancorp 2,870,975 2,871 108,852 111,723

Restricted Share Grants 68,710 68 2,262 2,330

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Issuance of Common Stock for:

Acquisition of Citizens Union Bancorp 2,870,975 2,871 108,852 111,723

Restricted Share Grants 91,516 92 2,240 2,332

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Gain on Sale of Loans, net ( 3,054 ) ( 2,363 ) ( 3,818 )

Gain on Securities, net ( 40 ) ( 562 ) ( 2,247 )

Loss (Gain) on Sales of Other Real Estate and Repossessed Assets ( 83 ) ( 18 ) ( 101 )

Loss (Gain) on Securities, net 34,788 ( 40 ) ( 562 )

Gain on Sales of Other Real Estate and Repossessed Assets ( 37 ) ( 83 ) ( 18 )

Loss (Gain) on Disposition and Donation of Premises and Equipment 11 ( 547 ) ( 37 )

3 unchanged sentences

Equity Based Compensation 2,947 2,332 2,330

Sale of Assets of German American Insurance ( 36,507 ) — —

Change in Assets and Liabilities:

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Proceeds from Maturity of Other Short-term Investments — — 495

Proceeds from Maturities of Securities Available-for-Sale 287,084 143,418 208,156

Proceeds from Maturities, Calls and Redemptions of Securities Available-for-Sale 356,471 287,084 143,418

Proceeds from Sales of Securities Available-for-Sale 404,103 114,259 145,237

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Proceeds from Life Insurance — — 773

Sale of Bank Branches — — 1,694

Proceeds from Sale of German American Insurance Assets 40,000 — —

Acquisition of Citizens Union Bancorp of Shelbyville, Inc.

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Repayments of Long-term Debt ( 50,157 ) ( 132 ) ( 41,690 )

Issuance (Retirement) of Common Stock — — —

Dividends Paid ( 31,845 ) ( 29,433 ) ( 27,022 )

198 unchanged sentences

Recently Adopted Accounting Guidance

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”.

These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

It is intended to help stakeholders during the global market-wide reference rate transition period.

In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The guidance is effective for all entities as of March 12, 2020 through December 31, 2024.

The Company has discontinued originating LIBOR based loans and has a plan in place to transition LIBOR indexed loans primarily to term SOFR or other indices.

On March 31, 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326):

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The Company adopted the new guidance prospectively with no material impact to the consolidated financial statements.

The SEC released Staff Accounting Bulletin No.

121 (“SAB 121”), which provides interpretive guidance regarding the accounting for obligations to safeguard crypto-assets an entity holds for its customers, either directly through an agent or another third party acting on its behalf.

SAB 121 requires an entity to recognize a liability on its balance sheet to reflect the obligation to safeguard the crypto-assets of others, along with a corresponding safeguarding asset, both of which are measured

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

at fair value.

The SEC’s Staff Accounting Bulletin No.

121 (“SAB 121”) provides interpretive guidance regarding the accounting for obligations to safeguard crypto-assets an entity holds for its customers, either directly or through an agent or another third party acting on its behalf.

The Company has completed an evaluation and concluded that it does not have a safeguarding obligation under SAB 121 and therefore the disclosures do not apply.

Newly Issued But Not Yet Effective Accounting Standards

On March 29, 2023, the FASB issued ASU 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323):

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The amendments in this update permit reporting entities to account for certain tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

This guidance provides clarifications to address interpretive issues and prescribes specific information that reporting entities must disclose about tax credit investments each period.

This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities.

For all other entities, the ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted, including early adoption in any interim period as of the beginning of the fiscal year that includes that interim period.

Entities have the option of applying the forthcoming revisions using either a modified retrospective or retrospective adoption approach.

The Company is currently evaluating the impact of adopting this new guidance, however, adoption of the standard is not expected to have a material impact on the Company’s financial statements or disclosures.

This guidance provides clarifications to address interpretive issues and

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

prescribes specific information that reporting entities must disclose about tax credit investments each period.

The Company adopted this standard and there was no impact on the Company’s financial statements or disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024.

Retrospective application is required.

The Company adopted this standard and updated the segment disclosure.

See Note 17 for additional information.

Issued But Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvement to Income Tax Disclosures”.

This updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid.

This guidance is effective for annual periods beginning after December 15, 2024 and will be applied on a prospective basis with the option to apply retrospectively.

The Company is reviewing this guidance but doesn’t expect it to have a material impact on the Company’s tax disclosures.

NOTE 2 – Sale of Insurance Assets

Effective June 1, 2024, the Company completed a sale of substantially all of the assets of its wholly-owned subsidiary, German American Insurance, Inc.

(“GAI”), and ceased insurance-related activities for the Company.

The all-cash sales price totaled $ 40,000 and resulted in an after-tax gain, net of transaction costs, of approximately $ 27,476 , or $ 0.93 on a per share basis.

Gross Purchase Price pursuant to Asset Purchase Agreement $ 40,000

Write-off of Goodwill and Intangibles ( 1,332 )

Working Capital Adjustment Settled at Closing ( 345 )

Net Purchase Price 38,323

Transaction Costs ( 1,816 )

Pre-tax Gain on Sale of Insurance Assets $ 36,507

After-tax Gain on Sale of Insurance Assets $ 27,476

Based on management’s review of ASC 205-20-45, the sale of GAI was determined not to have met all necessary criteria to be considered discontinued operations at, or prior to, the time of the sale.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 3 – Securities

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The US Gov’t Sponsored Entities & Agencies in the above table have underlying collateral of equipment, machinery and commercial real estate.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

The amortized cost and fair value of securities at December 31, 2024 by contractual maturity are shown below.

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Total $ 1,796,040 $ 1,517,287

During 2024, the Company undertook a partial securities portfolio restructuring transaction whereby available-for-sale securities totaling $ 375,321 in book value were sold.

The approximate loss on these securities totaled $ 34,893 , $ 27,189 after tax, or $ 0.92 per share, and was included in earnings for the second quarter of 2024.

The proceeds from the securities sold were reinvested in the securities portfolio by the end of the third quarter of 2024.

2024 2023 2022

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Gross Losses on Sales 35,402 306 188

Income Taxes on Net Gains 8 118 472

Income Taxes on Net Gains (Losses) ( 7,305 ) 8 118

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 3 – Securities (continued)

The carrying value of securities pledged to secure repurchase agreements, public and trust deposits, and for other purposes as required by law was $ 1,065,880 and $ 366,576 as of December 31, 2024 and 2023, respectively.

At year-end 2024 and 2023, there were no holdings of securities of any one issuer, other than the U.S.

government and its agencies, in an amount great than 10% of shareholders’ equity.

Below is a summary of securities with unrealized losses as December 31, 2024 and 2023, presented by length of time the securities have been in a continuous unrealized loss position:

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For available-for-sale debt securities in an unrealized loss position, the Company assesses whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is reduced to fair value through

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is reduced to fair value through income.

For available-for sale debt securities that do not meet the criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

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Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

The decrease in unrealized losses from December 31, 2022 to December 31, 2023 was primarily the result of fair value adjustments caused by the change in market interest rates.

Unrealized losses at December 31, 2024 and December 31, 2023 are considered temporary and the result of fair value adjustments caused by market interest rate fluctuations.

No allowance for credit losses for available-for-sale debt securities was needed at December 31, 2024 or 2023.

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There was no additional impairment recognized through earnings during 2024 or 2023.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Derivatives

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Interest Rate Swaps $ 149,456 $ 6,476 $ 139,751 $ 7,467

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 3 – Derivatives (continued)

The following table presents the effect of derivative instruments on the Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 is as follows:

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The table above includes $ 11,178 and $ 13,237 of purchase credit deteriorated loans as of December 31, 2024 and 2023, respectively.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 5 – Loans (continued)

Allowance for Credit Losses for Loans:

The following tables present the activity in the allowance for credit losses by portfolio segment for the years ended December 31, 2024, 2023 and 2022:

December 31, 2023 Commercial

2024 Commercial

Loans Commercial

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Total Ending Allowance Balance $ 7,059 $ 25,818 $ 4,917 $ 397 $ 727 $ 2,196 $ 520 $ 2,802 $ 44,436

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

December 31, 2022 Commercial

2023 Commercial

Loans Commercial

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Beginning Balance $ 13,749 $ 21,598 $ 4,188 $ 209 $ 595 $ 1,344 $ 257 $ 2,228 $ 44,168

Acquisition of Citizens Union Bank of Shelbyville, KY - PCD Loans 376 1,945 689 — 2 — — 105 3,117

Provision (Benefit) for Credit Losses ( 4,190 ) 4,305 ( 324 ) 137 919 551 563 589 2,550

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Total Ending Allowance Balance $ 7,921 $ 25,923 $ 3,837 $ 346 $ 759 $ 1,834 $ 383 $ 2,762 $ 43,765

December 31, 2021 Commercial

2022 Commercial

Loans Commercial

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Beginning Balance $ 9,554 $ 19,245 $ 4,505 $ 200 $ 507 $ 1,061 $ 240 $ 1,705 $ 37,017

Acquisition of Citizens Union Bank of Shelbyville, KY - PCD Loans 376 1,945 689 — 2 — — 105 3,117

Provision (Benefit) for Credit Losses 4,942 463 ( 1,006 ) 9 991 351 163 437 6,350

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Management attempts to quantify qualitative reserves by anchoring to specific data points when possible.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 5 – Loans (continued)

The Company estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

6 unchanged sentences

When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date adjusted for selling costs.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

For the year ended December 31, 2023, the decline in allowance for credit losses was largely related to the resolution, during the fourth quarter of 2023, of a single commercial borrowing relationship with minimal loss recognition for which the Company had established a significant reserve in previous periods which was slightly offset by additional reserve for loan portfolio growth.

For the year ended December 31, 2024, the allowance for credit losses remained stable compared to December 31, 2023, with the Company adding reserve for loan portfolio growth during 2024.

Key indicators utilized in forecasting for the allowance calculations include unemployment rates and gross domestic product as well as commodity prices for the agricultural segment of the portfolio.

19 unchanged sentences

(1) Includes non-accrual loans with no allowance for credit loss and are also included in Non-Accrual loans totaling $ 10,934 .

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 5 – Loans (continued)

December 31, 2023 Non-Accrual With No Allowance for Credit Loss ⁽¹⁾ Non-Accrual Loans Past Due Over 89 Days Still Accruing

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Interest income on non-accrual loans recognized during the years ended December 31, 2024 and 2023 totaled $ 291 and $ 106 .

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2024 and 2023:

19 unchanged sentences

Total $ 16,741 $ 1,104 $ — $ 1,888 $ 19,733

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 5 – Loans (continued)

The following tables present the aging of the amortized cost basis in past due loans by class of loans as of December 31, 2024 and 2023:

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Total $ 9,160 $ 5,189 $ 9,430 $ 23,779 $ 4,109,488 $ 4,133,267

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

December 31, 2023 30-59 Days

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Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Company prospectively adopted ASU 2022-02, which eliminated the accounting for troubled debt restructurings while establishing a new standard for the treatment of modifications made to borrowers experiencing financial difficulties.

As such, effective with the adoption of the new standard, the Company will now include, prospectively, financial difficulty modifications in its presentation of nonperforming loans, nonperforming assets or classified assets.

Prior period data, which included troubled debt restructurings, has not been adjusted.

The Company’s loan modifications for borrowers experiencing financial difficulties will typically include one or a combination of the following:

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or a permanent reduction of the recorded investment in the loan.

No modifications in 2023 resulted in the permanent reduction of the recorded investment in the loan.

At December 31, 2023, the Company had no modified loans made to borrowers experiencing financial difficulty.

There were no modified loans that had a payment default during the year ended December 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

No modifications in 2024 or 2023 resulted in the permanent reduction of the recorded investment in the loan.

At December 31, 2024 and 2023, the Company had no modified loans made to borrowers experiencing financial difficulty.

There were no modified loans that had a payment default during the year ended December 31, 2024 and 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

The Company considers a loan to be in payment default once it is 30 days contractually past due under the modified terms.

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Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

Loans so classified have a well-defined weakness or weaknesses that jeopardize the

Notes to the Consolidated Financial Statements

1 unchanged sentence

NOTE 5 – Loans (continued)

liquidation of the debt.

They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

The following table presents the risk category of loans and current period gross charge-offs as of December 31, 2024 by loan class and vintage year:

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Total Commercial and Industrial Loans $ 112,673 $ 135,337 $ 86,555 $ 30,101 $ 34,281 $ 49,183 $ 141,411 $ 589,541

Current Period Gross Charge-Offs $ — $ 911 $ 32 $ 493 $ 7 $ 88 $ 261 $ 1,792

Commercial Real Estate:

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Total Commercial Real Estate Loans $ 314,475 $ 419,892 $ 487,582 $ 228,461 $ 148,419 $ 481,090 $ 41,916 $ 2,121,835

Current Period Gross Charge-Offs $ — $ — $ 56 $ — $ — $ — $ — $ 56

Agricultural:

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Total Agricultural Loans $ 46,443 $ 56,455 $ 40,954 $ 47,514 $ 25,755 $ 114,968 $ 91,714 $ 423,803

Current Period Gross Charge-Offs $ — $ — $ — $ 2 $ — $ — $ 25 $ 27

Pass $ 36,848 $ 12,281 $ 10,634 $ 6,086 $ 4,788 $ 1,351 $ — $ 71,988

3 unchanged sentences

Total Leases $ 36,848 $ 12,281 $ 10,634 $ 6,086 $ 4,788 $ 1,351 $ — $ 71,988

Current Period Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ —

Notes to the Consolidated Financial Statements

3 unchanged sentences

For residential, home equity and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

The following table presents the amortized cost in residential, home equity and consumer loans based on payment activity as well as the current period gross charge-offs for the period ended December 31, 2023.

Term Loans Amortized Cost Basis by Origination Year

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Total Consumer Loans $ 49,282 $ 21,480 $ 9,720 $ 2,756 $ 917 $ 1,912 $ 1,786 $ 87,853

Current Period Gross Charge-Offs $ 1,162 $ 42 $ 23 $ 71 $ 3 $ 1 $ 7 $ 1,309

Payment performance

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Total Home Equity Loans $ — $ 417 $ 488 $ 150 $ 165 $ 1,309 $ 297,156 $ 299,685

Current Period Gross Charge-Offs $ — $ — $ — $ 55 $ — $ 24 $ 15 $ 94

Residential Mortgage:

3 unchanged sentences

Total Residential Mortgage Loans $ 56,317 $ 65,361 $ 86,170 $ 41,639 $ 17,940 $ 95,417 $ — $ 362,844

Current Period Gross Charge-Offs $ — $ — $ 22 $ 36 $ — $ — $ — $ 58

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses.

33 unchanged sentences

2025 $ 846,651

Thereafter 13

Total $ 916,601

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At December 31, 2024, interest rates on long-term FHLB Advances ranged from 3.54 % to 3.99 % with a weighted average rate of 3.75 %.

At December 31, 2022 the Company held one long-term FHLB advance with an interest rate of 1.54 %.

At December 31, 2023, interest rates on long-term FHLB Advances ranged from 1.54 % to 3.57 % with a weighted average rate of 2.56 %.

At December 31, 2024 and 2023, the Company had no advances containing options whereby the FHLB may convert a fixed rate advance to an adjustable rate advance.

At December 31, 2024 and 2023, the Company had outstanding $ 39,628 and $ 39,545 , respectively, in aggregate principal amount, of its 4.50 % Fixed-to-Floating Rate Subordinated Notes due 2029 (the “Notes”).

The Notes bear interest at a fixed annual rate of 4.50 % until but excluding June 30, 2024, payable semi-annually in arrears.

The indenture for the Notes contemplates that, from and including June 30, 2024 to but excluding the maturity date of June 30, 2029, or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to the then-current three-month CME Term SOFR, plus the applicable spread adjustment of 0.26161 % percent, plus 2.68 % percent.

The Secured Overnight Financing Rate, or SOFR, is the preferred alternate rate to LIBOR, as identified by the Alternative Reference Rates Committee, a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York.

The Federal Reserve subsequently

Prior to June 30, 2024, the interest rate on the Notes was fixed at an annual rate of 4.50 %, payable semi-annually in arrears.

From and including June 30, 2024 to but excluding the maturity date of June 30, 2029, or early redemption date, the interest rate has and will reset quarterly to a rate per annum equal to the then-current three-month CME Term SOFR, plus the applicable spread adjustment of 0.26161 % percent, plus 2.68 % percent.

Notes to the Consolidated Financial Statements

1 unchanged sentence

NOTE 8 - FHLB Advances and Other Borrowings (continued)

adopted final regulations that, among other things, established LIBOR benchmark replacements based on SOFR under certain circumstances.

See Replacement of LIBOR Benchmark below for additional information.

The Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries.

8 unchanged sentences

At December 31, 2024, scheduled principal payments on long-term borrowings, excluding the capitalized lease obligation and acquired subordinated debentures (which are discussed below) are as follows:

2024 $ 25,000

Thereafter 39,628

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dollar LIBOR settings would cease to exist after June 30, 2023.

The LIBOR Act establishes a uniform national approach for replacing LIBOR in legacy contracts that do not provide for the use of a clearly defined replacement benchmark rate.

The LIBOR Act established a uniform national approach for replacing LIBOR in legacy contracts that do not provide for the use of a clearly defined replacement benchmark rate.

As directed by the LIBOR Act, on December 16, 2022, the Federal Reserve issued a final rule setting forth regulations to implement the LIBOR Act, including establishing benchmark replacements based on SOFR for contracts governed by U.S.

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As a result, on January 1, 2022, the Company began the required three-year phase-in by reflecting 25 % of the previously deferred estimated capital impact of CECL in its regulatory capital effective January 1, 2022.

An additional 25% was phased in on each of January 1, 2023 and January 1, 2024 and another 25% will be phased in on January 1, 2025 (at which time the cumulative effects of adopting CECL will have been fully phased into our regulatory capital).

Under the five-year transition option, the amount of adjustments to regulatory capital that could be deferred until the phase-in period began included both the initial impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ended December 31, 2021.

An additional 25 % was phased in on each of January 1, 2023, January 1, 2024 and January 1, 2025.

As of January 1, 2025, the adverse cumulative effects of adopting CECL have been fully phased into our regulatory capital.

Equity Plans and Equity Based Compensation

15 unchanged sentences

During the periods presented, awards of long-term incentives were granted in the form of restricted stock.

In 2019 and prior, awards that were granted to management and selected other employees under the Company’s management incentive plan were granted in tandem with cash credit entitlements in the form of 60 % restricted stock grants and 40 % cash credit entitlements.

In 2020, awards granted under the management incentive plan were granted in tandem with cash credit entitlements in the form of 66.67 % restricted stock grants and 33.33 % cash credit entitlements.

In 2019 and prior, the restricted stock grants and tandem cash credit entitlements, generally, vested in three annual installments of 33.3 % each.

In 2020, 100 % of the cash portion of an award vests towards the end of the year in which the grant was made, followed by the restricted stock grants vesting 50 % in each of the 2nd and 3rd years.

Beginning in 2021, for named executive officers, awards are granted in the form of 100 % restricted stock grants which will vest in one-third installments on the first, second and third anniversaries of the award date.

Awards granted under the management incentive plan are granted in tandem with cash credit entitlements in the form of 66.67 % restricted stock grants and 33.33 % cash credit entitlements.

The cash portion of an award vests towards the end of the year in which the grant was made, followed by the restricted stock grants vesting 50 % in each of the 2nd and 3rd years.

For named executive officers, awards are granted in the form of 100 % restricted stock grants which will vest in one-third installments on the first, second and third anniversaries of the award date.

Awards that are granted to directors as additional retainers for their services do not include any cash credit entitlement.

These director restricted stock grants are subject to forfeiture in the event that the recipient of the grant does not continue in service as a director of the Company through the end of the one-year compensation period or does not satisfy certain meeting attendance requirements, at which time they generally vest 100 %.

For measuring compensation costs, restricted stock awards are valued based upon the market value of the common shares on the date of grant.

Notes to the Consolidated Financial Statements

1 unchanged sentence

NOTE 9 – Shareholders ’ Equity (continued)

Awards that are granted to directors as additional retainers for their services do not include any cash credit entitlement.

These director restricted stock grants are subject to forfeiture in the event that the recipient of the grant does not continue in service as a director of the Company through December 31 of the year after grant or does not satisfy certain meeting attendance requirements, at which time they generally vest 100 percent.

For measuring compensation costs, restricted stock awards are valued based upon the market value of the common shares on the date of grant.

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax effect for the years ended 2023, 2022, and 2021:

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax effect for the years ended December 31, 2024, 2023, and 2022:

2024 2023 2022

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The Company’s shareholders approved the Company’s 2019 Employee Stock Purchase Plan on May 16, 2019, as well as an Amended and Restated 2019 Employee Stock Purchase Plan on May 21, 2020, which was amended and restated to reflect certain clarifying changes (the “2019 ESPP”).

The 2019 ESPP replaced the Company’s 2009 Employee Stock Purchase Plan, which expired by its own terms on August 16, 2019.

The 2019 ESPP provides for a series of 3 -month offering periods, commencing on the first day and ending on the last trading day of each calendar quarter, for the purchase of the Company’s common stock by participating employees.

8 unchanged sentences

Stock Repurchase Plan

On January 31, 2022, the Company’s Board of Directors approved a new plan to repurchase up to one million shares of the Company’s outstanding common stock.

On a share basis, the amount of common stock subject to the new repurchase plan represented approximately 3 % of the Company’s outstanding shares on the date it was approved.

The Company’s Board of Directors previously approved a plan to repurchase up to one million shares of the Company’s outstanding common stock.

On a share basis, the amount of common stock subject to the repurchase plan represented approximately 3 % of the Company’s outstanding shares on the date it was approved.

The Company is not obligated to purchase shares under the plan, and the plan may be discontinued at any time.

The actual timing, number and share price of shares purchased under the repurchase plan will be determined by the Company at its discretion and will depend upon such

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 8 – Shareholders ’ Equity (continued)

factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

The Company has not repurchased an shares under this repurchase plan.

The actual timing, number and share price of shares purchased under the repurchase plan will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

The Company has no t repurchased an shares under this repurchase plan.

In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted.

Among other things, the IRA imposes a new 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S.

Among other things, the IRA imposes a 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S.

corporations, like the Company.

With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 10 - Employee Benefit Plans

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Total Recognized in Net Postretirement Benefit Expense and Other Comprehensive Income $ ( 45 ) $ 359 $ 69

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 9 – Employee Benefit Plans (continued)

Assumptions Used to Determine Net Periodic Cost and Benefit Obligations:

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Year that the Rate Reaches the Rate it is Assumed to Remain at 2031 2030

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 10 – Employee Benefit Plans (continued)

Contributions

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Effective December 31, 2015, the plan was frozen.

Pension expense was approximately $ 141 and $ 53 during 2023 and 2022, respectively.

Pension expense was approximately $ 141 during 2023.

Specific plan asset and accumulated benefit information for the Company’s portion of the fund is not available.

Under the Employee Retirement Income and Security Act of 1974 (“ERISA”), a contributor to a multi-employer pension plan may be liable in the event of complete or partial withdrawal for the benefit payments guaranteed under ERISA.

The Company is in process of withdrawing from this multi-employer pension plan with finalization expected to occur in the second quarter of 2024.

As a result, the Company has accrued a withdrawal liability in the amount of $ 101 as of December 31, 2023.

The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (the “Pentegra DB Plan”), a tax-qualified defined-benefit pension plan.

The Company withdrew from this multi-employer pension plan in the second quarter of 2024.

As a result, the Company accrued a withdrawal liability totaling $ 101 as of December 31, 2023.

The withdrawal expense was fully accrued at December 31, 2023, and no additional pension expense was incurred in 2024.

The Company participated in the Pentegra Defined Benefit Plan for Financial Institutions (the “Pentegra DB Plan”), a tax-qualified defined-benefit pension plan.

The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under ERISA and the Internal Revenue Code.

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Accordingly, under the Pentegra DB Plan, contributions made by a participating employer may be used to provide benefits to participants of other participating employers.

Total contributions made to the Pentegra DB Plan, as reported on Form 5500, equal $ 142,405 and $ 248,563 for the plan years ended June 30, 2022 and 2021, respectively.

Total contributions made to the Pentegra DB Plan, as reported on Form 5500, equal $ 142,405 for the plan year ended June 30, 2022.

The Company’s contributions to the Pentegra DB Plan for the fiscal year ending December 31, 2023 were not more than 5 % of total contributions to the Pentegra DB Plan for the year ending June 30, 2022.

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Accrued Expenses 1,248 1,224

Business Combination Fair Value Adjustments — 205

Pension and Postretirement Plans 182 182

1 unchanged sentence

Non-Accrual Loan Interest Income 355 449

General Business Tax Credits — 198

Net Operating Loss Carryforward 488 650

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Insurance Revenues :

The Company earns insurance revenue from commissions derived from the sale of personal and corporate property and casualty insurance products.

These commissions are primarily earned over time as the Company provides the contracted insurance product to customers.

The Company earned insurance revenue from commissions derived from the sale of personal and corporate property and casualty insurance products.

These commissions were primarily earned over time as the Company provided the contracted insurance product to customers.

Other Operating Income :

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Level 3 pricing is obtained from a third-party based upon similar trades that are not traded frequently without adjustment by the Company.

At December 31, 2023, the Company held $ 75 in Level 3 securities which consist of non-rated Obligations of State and Political Subdivisions and $ 984 in Level 3 securities which consist of non-rated MBS/CMO.

Absent the credit rating, significant

At December 31, 2024, the Company held no Level 3 securities.

Absent the credit rating, significant assumptions must be made such that the credit risk input becomes an unobservable input and thus these investment securities are reported by the Company in a Level 3 classification.

Notes to the Consolidated Financial Statements

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NOTE 16 – Fair Value (continued)

assumptions must be made such that the credit risk input becomes an unobservable input and thus these investment securities are reported by the Company in a Level 3 classification.

The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Individually Analyzed Loans:

Collateral Dependent Loans:

Fair values for collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances includes consideration of offers obtained to purchase properties prior to foreclosure.

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Gain (Loss) 128 101

The total amount of gains and losses from changes in fair value included in earnings for the years ended December 31, 2023, 2022 and 2021 for loans held for sale were $( 25 ), $( 163 ), and $( 237 ), respectively.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022:

The total amount of gains(losses) from changes in fair value included in earnings for the years ended December 31, 2024, 2023 and 2022 for loans held for sale were $ 27 , $( 25 ), and $( 163 ), respectively.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the twelve months ended December 31, 2024 and 2023:

Obligations of State and Political Subdivisions MBS/CMO

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Maturities / Calls ( 15 ) — — —

Acquired through Bank Acquisition — 100 — 982

Transfers out of Level 3 ( 62 ) — ( 1,053 ) —

Balance of Recurring Level 3 Assets at December 31 $ — $ 75 $ — $ 984

Of the total gain/loss included in earnings for the years ended December 31, 2024 and 2023, $ 56 and $ 70 was attributable to other changes in fair value, respectively.

As of December 31, 2024, one MBS/CMO Security with a fair value of $ 1,053 and one Obligation of State and Political Subdivisions security with a fair value of $ 62 were transferred from Level 3 to Level 2 because observable market data became available.

Notes to the Consolidated Financial Statements

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(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 2) Significant Unobservable

(Level 3) Total

Individually Analyzed Loans

Collateral Dependent Loans

Commercial and Industrial Loans $ — $ — $ 3,695 $ 3,695

7 unchanged sentences

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 2) Significant Unobservable

(Level 3) Total

Individually Analyzed Loans

Collateral Dependent Loans

Commercial and Industrial Loans $ — $ — $ 2,506 $ 2,506

8 unchanged sentences

December 31, 2024 Fair Value Valuation Technique(s) Unobservable Input(s) Range (Weighted Average)

Individually Analyzed Loans - Commercial and Industrial Loans $ 2,506 Sales comparison approach Adjustment for physical condition of comparable properties sold 23 % - 100 %

Individually Analyzed Loans - Commercial Real Estate Loans $ 3,447 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 68 %

Individually Analyzed Loans - Agricultural Loans $ 2,395 Sales comparison approach Adjustment for physical condition of comparable properties sold 31 % - 100 %

Individually Analyzed Loans - Consumer Loans $ 9 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Individually Analyzed Loans - Home Equity Loans $ 326 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Individually Analyzed Loans - Residential Mortgage Loans $ 450 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Collateral Dependent Loans - Commercial and Industrial Loans $ 3,695 Sales comparison approach Adjustment for physical condition of comparable properties sold 30 % - 88 %

Collateral Dependent Loans - Commercial Real Estate Loans $ 1,402 Sales comparison approach Adjustment for physical condition of comparable properties sold 30 % - 68 %

Collateral Dependent Loans - Agricultural Loans $ 1,910 Sales comparison approach Adjustment for physical condition of comparable properties sold 30 % - 100 %

Collateral Dependent Loans - Consumer Loans $ 10 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Collateral Dependent Loans - Home Equity Loans $ 328 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Collateral Dependent Loans - Residential Mortgage Loans $ 303 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Notes to the Consolidated Financial Statements

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December 31, 2023 Fair Value Valuation Technique(s) Unobservable Input(s) Range (Weighted Average)

Individually Analyzed Loans - Commercial and Industrial Loans $ 1,858 Sales comparison approach Adjustment for physical condition of comparable properties sold 0 % - 100 %

Individually Analyzed Loans - Commercial Real Estate Loans $ 10,040 Sales comparison approach Adjustment for physical condition of comparable properties sold 30 % - 100 %

Individually Analyzed Loans - Agricultural Loans $ 2,970 Sales comparison approach Adjustment for physical condition of comparable properties sold 30 % - 100 %

Individually Analyzed Loans - Consumer Loans $ 8 Sales comparison approach Adjustment for physical condition of comparable properties sold 27 % - 100 %

Individually Analyzed Loans - Home Equity Loans $ 368 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 51 %

Individually Analyzed Loans - Residential Mortgage Loans $ 718 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 100 %

Collateral Dependent Loans - Commercial and Industrial Loans $ 2,506 Sales comparison approach Adjustment for physical condition of comparable properties sold 23 % - 100 %

Collateral Dependent Loans - Commercial Real Estate Loans $ 3,447 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 68 %

Collateral Dependent Loans - Agricultural Loans $ 2,395 Sales comparison approach Adjustment for physical condition of comparable properties sold 31 % - 100 %

Collateral Dependent Loans - Consumer Loans $ 9 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Collateral Dependent Loans - Home Equity Loans $ 326 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Collateral Dependent Loans - Residential Mortgage Loans $ 450 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

The carrying amounts and estimated fair values of the Company’s financial instruments not previously presented are provided in the tables below for the periods ending December 31, 2024 and 2023.

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Accrued Interest Payable ( 7,073 ) — ( 6,701 ) ( 372 ) ( 7,073 )

NOTE 16 - Segment Information

The Company’s operations include three primary segments:

core banking, wealth management services, and insurance operations.

The core banking segment also involves the sale of residential mortgage loans in the secondary

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 16 – Segment Information (continued)

The wealth management segment involves providing trust, investment advisory, brokerage and retirement planning services to customers.

The insurance segment offers a full range of personal and corporate property and casualty insurance products, primarily in the Company’s banking subsidiary’s local markets.

The core banking segment is comprised by the Company’s banking subsidiary, German American Bank, which operated through 76 banking offices at December 31, 2023.

NOTE 16 – Segment Information

The Company’s reportable segments are determined by the type of products and services offered and the level of information provided to the Company’s chief operating decision maker, who uses such information in evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company’s segments and in the determination of allocation resources.

For the first five months of 2024, the Company’s operations include three primary segments:

core banking, wealth management services, and insurance operations.

On June 1, 2024, the Company sold substantially all of the assets of its insurance operations and ceased insurance-related activities for the Company.

As a result of the sale, insurance revenue and expenses reported within the accompanying financial statements reflect operations during the first five months of 2024.

See Note 2 for additional information on this sale.

The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets by the Company’s banking subsidiary, German American Bank, which operated through 74 banking offices at December 31, 2024.

Net interest income from loans and investments funded by deposits and borrowings is the primary revenue for the core-banking segment.

The wealth management segment’s revenues are comprised primarily of fees generated by the trust operations of the Company’s banking subsidiary and by German American Investment Services, Inc.

The core banking segment also involves the sale of residential mortgage loans in the secondary market.

The wealth management segment’s revenues are comprised primarily of fees generated by the wealth advisory and trust operations of the Company’s banking subsidiary and by German American Investment Services, Inc.

These fees are derived by providing trust, investment advisory, brokerage and retirement planning services to its customers.

The insurance segment primarily consists of German American Insurance, Inc., which provides a full line of personal and corporate insurance products.

Commissions derived from the sale of insurance products are the primary source of revenue for the insurance segment.

The insurance segment offered a full range of personal and corporate property and casualty insurance products, primarily in the Company’s banking subsidiary’s local markets.

Commissions derived from the sale of insurance products by GAI were the primary source of revenue for the insurance segment.

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance.

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The evaluation process for segments does not include holding company income and expense.

Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 17 – Segment Information (continued)

Banking Wealth Management Services Insurance Other Consolidated

Year Ended December 31, 2024

Net Interest Income $ 195,215 $ 120 $ 56 $ ( 4,958 ) $ 190,433

Interest and Fees on Loans $ 240,241 $ — $ — $ — $ 240,241

Interest on Securities and Other Short-term Investments 50,552 158 1 532 51,243

Net Gains on Sales of Loans 3,054 — — — 3,054

Net Gains on Securities 40 — — — 40

Wealth Management Fees 6 14,410 — — 14,416

Insurance Revenues — 1 4,383 — 4,384

Noncash Items:

Reconciliation of Revenue:

Other Revenues 40,806

Elimination of Intercompany Revenues ( 441 )

Total Consolidated Revenue 353,703

Interest on Deposits 91,063 — — — 91,063

Interest on FHLB Advances and Other Borrowings 3,656 — — 6,174 9,830

Provision for Credit Losses 2,775 — — — 2,775

Depreciation and Amortization 9,025 31 48 456 9,560

Income Tax Expense (Benefit) 18,698 695 556 ( 2,190 ) 17,759

Segment Profit (Loss) 85,037 2,974 1,682 ( 3,805 ) 85,888

Salaries and Employee Benefits 71,610 6,958 3,079 610 82,257

Reconciliation of Income before Income Taxes:

Other Non-interest Expense 64,120

Elimination of Intersegment Expenses ( 441 )

Income before Income Taxes 104,099

Other Segment Disclosures:

Segment Profit (Loss) Before Taxes 70,418 5,381 37,595 ( 9,295 ) 104,099

Segment Assets at December 31, 2024 6,340,396 13,544 — ( 58,030 ) 6,295,910

(1) In the Other Segment Disclosures section, the column labeled “Other” includes holding company amounts and eliminating transactions between segments.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 17 – Segment Information (continued)

Banking Wealth Management Services Insurance Other Consolidated

Year Ended December 31, 2023

Net Interest Income $ 204,259 $ 46 $ 27 $ ( 3,748 ) $ 200,584

Interest and Fees on Loans $ 212,517 $ — $ — $ — $ 212,517

Interest on Securities and Other Short-term Investments 43,886 120 56 402 44,464

Net Gains on Sales of Loans 2,363 — — — 2,363

Net Gains on Securities 589 — — ( 27 ) 562

Wealth Management Fees 5 11,706 — — 11,711

Insurance Revenues 1 24 9,572 ( 1 ) 9,596

Noncash Items:

Reconciliation of Revenue:

Other Revenues 36,591

Elimination of Intercompany Revenues ( 325 )

Total Consolidated Revenue 316,917

Interest on Deposits 57,241 — — — 57,241

Interest on FHLB Advances and Other Borrowings 3,947 — — 5,360 9,307

Provision for Credit Losses 2,550 — — — 2,550

Depreciation and Amortization 9,571 41 48 456 10,116

Income Tax Expense (Benefit) 17,873 691 720 ( 1,933 ) 17,351

Segment Profit (Loss) 82,965 2,157 2,281 ( 5,578 ) 81,825

Salaries and Employee Benefits 70,355 6,240 6,114 535 83,244

Reconciliation of Income before Income Taxes:

Other Non-interest Expense 61,253

Elimination of Intersegment Expenses ( 325 )

Income before Income Taxes 103,647

Other Segment Disclosures:

Segment Profit (Loss) Before Taxes 103,735 3,669 2,238 ( 5,995 ) 103,647

Segment Assets at December 31, 2023 6,137,687 9,508 3,509 1,494 6,152,198

(1) In the Other Segment Disclosures section, the column labeled “Other” includes holding company amounts and eliminating transactions between segments.

Notes to the Consolidated Financial Statements

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Year Ended December 31, 2022

Net Interest Income $ 163,395 $ 42 $ 11 $ ( 2,618 ) $ 160,830

Interest and Fees on Loans $ 169,158 $ — $ — $ — $ 169,158

Interest on Securities and Other Short-term Investments 49,605 46 27 215 49,893

Net Gains on Sales of Loans 3,818 — — — 3,818

Net Gains on Securities 2,247 — — — 2,247

Wealth Management Fees 4 10,072 — — 10,076

Insurance Revenues 31 12 9,977 — 10,020

Noncash Items:

Reconciliation of Revenue:

Other Revenues 35,219

Elimination of Intercompany Revenues ( 125 )

Total Consolidated Revenue 278,059

Interest on Deposits 13,639 — — — 13,639

Interest on FHLB Advances and Other Borrowings 865 — — 3,963 4,828

Provision for Credit Losses 6,350 — — — 6,350

Depreciation and Amortization 8,346 46 57 321 8,770

Income Tax Expense (Benefit) 18,774 826 652 ( 1,604 ) 18,648

Segment Profit (Loss) 82,066 2,543 2,034 ( 2,506 ) 84,137

Salaries and Employee Benefits 72,240 5,557 5,814 534 84,145

Reconciliation of Income before Income Taxes:

Other Non-interest Expense 70,046

Elimination of Intersegment Expenses ( 125 )

Income before Income Taxes 99,176

Other Segment Disclosures:

Segment Profit (Loss) Before Taxes 100,838 2,848 3,001 ( 7,511 ) 99,176

Segment Assets at December 31, 2022 6,152,346 8,846 14,706 ( 19,907 ) 6,155,991

(1) In the Other Segment Disclosures section, the column labeled “Other” includes holding company amounts and eliminating transactions between segments.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 18 - Parent Company Financial Statements

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Adjustments to Reconcile Net Income to Net Cash from Operations

Net Amortization on Securities 8 — —

Change in Other Assets ( 989 ) 3,929 3,861

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CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Maturities, Calls and Redemptions of Securities Available-for-Sale 329 — —

Cash Used for Business Acquisitions — — ( 49,644 )

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Unaudited Pro Forma

Year Ended 12/31/2022 Unaudited Pro Forma

Year Ended 12/31/2022

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Acquired Goodwill — — 58,596

Divested Goodwill ( 1,332 ) — —

Impairment — — —

End of Year $ 179,025 $ 180,357 $ 180,357

The carrying amount of goodwill totaling $ 179,025 at December 31, 2024 is allocated to the core banking segment.

Of the $ 180,357 carrying amount of goodwill, $ 179,025 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for both periods ended December 31, 2023 and 2022.

Of the $ 121,761 carrying amount of goodwill, $ 120,429 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for the period ended December 31, 2021.

The decrease of $ 195 in 2021 is attributable to the sale of two branches located in Lexington, Kentucky.

The decrease of $ 1,332 in 2024 is attributable to the sale of substantially all of the assets of German American Insurance, Inc.

For additional information on the sale, see Note 2.

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value.

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Unrealized Gains and Losses on

Available-for-Sale Securities $ 40 Net Gain (Loss) on Securities

Available-for-Sale Securities $ ( 34,788 ) Net Gain (Losses) on Securities

7,681 Income Tax Expense

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Unrealized Gains and Losses on

Available-for-Sale Securities $ 562 Net Gain (Loss) on Securities

Available-for-Sale Securities $ 40 Net Gain (Losses) on Securities

( 8 ) Income Tax Expense

7 unchanged sentences

Unrealized Gains and Losses on

Available-for-Sale Securities $ 2,247 Net Gain (Loss) on Securities

Available-for-Sale Securities $ 562 Net Gain (Losses) on Securities

$ ( 118 ) Income Tax Expense

4 unchanged sentences

Total Reclassifications for the Period $ 444

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 21 – Subsequent Events

On February 1, 2025, the Company completed its previously announced acquisition of Heartland BancCorp (“Heartland”) through the merger of Heartland with and into the Company.

Immediately following completion of the Heartland holding company merger, Heartland’s subsidiary bank, Heartland Bank, was merged with and into the Company’s subsidiary bank, German American Bank.

Heartland, headquartered in Whitehall, Ohio, operated 20 retail banking offices located in Columbus, Ohio and Greater Cincinnati.

As of December 31, 2024, Heartland had total assets of approximately $ 1.97 billion (unaudited), total loans of approximately $ 1.56 billion (unaudited), and total deposits of approximately $ 1.75 billion (unaudited).

The acquired assets and liabilities will be recorded at fair value at the date of acquisition and will be reflected in the Company’s March 31, 2025 financial statements as such.

At the time of these consolidated financial statements, the Company is evaluating Heartland’s loan portfolio to determine the impact of day-one accounting under the CECL methodology.

Valuations and appraisals on other assets and liabilities are also in process and are not complete as of the time of these financial statements.

The Company issued approximately 7.74 million shares of its common stock, and paid approximately $ 23.1 million in cash, in exchange for all of the issued and outstanding shares of common stock of Heartland and in cancellation of all options to acquire Heartland common stock outstanding as of the effective time of the merger.

This acquisition was consistent with the Company’s strategy to build a regional presence in Southern Indiana, Kentucky and Ohio.

The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region.

Consideration

Cash for Stock Options, 401K Shares and Fractional Shares $ 23,102

Equity Instruments 320,007

Fair Value of Total Consideration Transferred $ 343,109

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data