v3.25.2
Business Combinations
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
On February 1, 2025, the Company acquired 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 the closing of the transaction, Heartland had total assets of approximately $1.94 billion, total loans of approximately $1.58 billion, and total deposits of approximately $1.73 billion. The Company accounted for the transaction under the acquisition method of accounting, which means these financial assets and liabilities were recorded at fair value at the day of acquisition. The fair value of the common shares issued as part of the consideration paid for Heartland was based upon the closing price of the Company’s common shares on the acquisition date. Fair value adjustments on prepaid balances and certain fixed assets, as well as the related tax impacts, were made during the current quarter. There was no impact to net income as a result of these changes. Certain borrowings and other liabilities, deferred taxes, premises, and certain other asset measurements have not been finalized and remain subject to change. However, the Company does not expect material variances from the current estimates and expects final valuations will be completed prior to December 31, 2025, which is within the allowable one year measurement period.

In accordance with ASC 805, the Company has expensed approximately $23,060 of direct acquisition costs and recorded $198,951 of goodwill and $40,065 of intangible assets. The goodwill of $198,951 arising from the acquisition consisted largely of synergies and the cost savings resulting from combining the operations of the companies. This goodwill will be evaluated annually for impairment and is non-deductible for tax purposes. The intangible assets are related to core deposits and are being amortized over 8 years. The following table summarizes the fair value of the total consideration transferred as a part of the Heartland acquisition as well as the fair value of identifiable assets acquired and liabilities assumed as of the effective date of the transaction.
Consideration
   Cash for Stock Options, 401K Shares and Fractional Shares$23,102 
   Equity Instruments320,007 
Fair Value of Total Consideration Transferred$343,109 
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
Cash$6,216 
Federal Funds Sold and Other Short-term Investments39,550 
Interest-bearing Time Deposits with Banks— 
Securities220,358 
Loans, Net1,503,973 
Stock in FHLB and Other Restricted Stock, at Cost6,992 
Premises, Furniture & Equipment38,100 
Other Real Estate— 
Intangible Assets40,065 
Company Owned Life Insurance20,660 
Accrued Interest Receivable and Other Assets38,731 
Deposits - Non-interest Bearing(436,467)
Deposits - Interest Bearing(1,294,696)
FHLB Advances and Other Borrowings(29,341)
Accrued Interest Payable and Other Liabilities(9,983)
Total Identifiable Net Assets144,158 
Goodwill$198,951 

Under the terms of the merger agreement, each Heartland common shareholder of record at the effective time of the merger became entitled to receive 3.90 shares of common stock of the Company for each of their former shares of Heartland common stock. As a result, in connection with the closing of the merger on February 1, 2025, the Company issued 7,742,723 shares of its common stock to the former shareholders of Heartland and paid $23,102 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.

The fair value of purchased financial assets with credit deterioration was $78,478 on the date of acquisition. The gross contractual amounts receivable relating to the purchased financial assets with credit deterioration was $100,836. The Company estimates, on the date of acquisition, that $15,908 of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected.

The following table presents unaudited pro forma information as if the acquisition had occurred on January 1, 2024 after giving effect to certain adjustments. The unaudited pro forma information for the three and six months ended June 30, 2025 and 2024 includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, interest expense on deposits and borrowings acquired, and the related income tax effects. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.
Unaudited Pro FormaUnaudited Pro Forma
Quarter Ended 6/30/2025Quarter Ended 6/30/2024
Net Interest Income$73,155 $68,771 
Non-interest Income16,733 21,217 
   Total Revenue89,888 89,988 
Provision for Loan Losses Expense1,200 (643)
Non-interest Expense48,588 49,219 
   Income Before Income Taxes40,100 41,412 
Income Tax Expense8,039 9,725 
   Net Income$32,061 $31,687 
Earnings Per Share and Diluted Earnings Per Share$0.86 $0.85 
For the three months ended June 30, 2025, the above pro forma financial information excludes non-recurring merger costs that totaled $928 on a pre-tax basis.

Unaudited Pro FormaUnaudited Pro Forma
Six Months Ended 6/30/2025Six Months Ended 6/30/2024
Net Interest Income$145,916 $135,029 
Non-interest Income32,354 39,431 
   Total Revenue178,270 174,460 
Provision for Loan Losses Expense284 257 
Non-interest Expense99,615 99,475 
   Income Before Income Taxes78,371 74,728 
Income Tax Expense17,013 16,385 
   Net Income$61,358 $58,343 
Earnings Per Share and Diluted Earnings Per Share$1.64 $1.56 

For the six months ended June 30, 2025, the above pro forma financial information excludes non-recurring merger costs that totaled $6,860 on a pre-tax basis and Day 1 provision for credit losses under the CECL model of $16,200 on a pre-tax basis.