Business Combinations

3 Months Ended

Mar. 31, 2025

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

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. The fair value estimates included in these financial statements are based on preliminary valuations; certain loan, deposits, deferred tax, premises and equipment and certain other

asset measurements have not been finalized and are subject to change. The Company does not expect material variances from these estimates and expects final valuation estimates will be completed prior to December 31, 2025.

In accordance with ASC 805, the Company has expensed approximately $22,132 of direct acquisition costs and recorded $197,482 of goodwill and $40,065 of intangible assets. The goodwill of $197,482 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 Instruments	320,007
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 Investments	39,550
Interest-bearing Time Deposits with Banks	—
Securities	220,358
Loans, Net	1,503,973
Stock in FHLB and Other Restricted Stock, at Cost	6,992
Premises, Furniture & Equipment	38,390
Other Real Estate	—
Intangible Assets	40,065
Company Owned Life Insurance	20,660
Accrued Interest Receivable and Other Assets	39,476
Deposits - Non-interest Bearing	(436,467)
Deposits - Interest Bearing	(1,294,696)
FHLB Advances and Other Borrowings	(28,900)
Accrued Interest Payable and Other Liabilities	(9,990)
Total Identifiable Net Assets	145,627
Goodwill	$	197,482

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 months ended March 31, 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 Forma		Unaudited Pro Forma
	Quarter Ended 3/31/2025		Quarter Ended 3/31/2024

Net Interest Income	$	72,171	$	65,668
Non-interest Income	15,650		18,252
Total Revenue	87,821		83,920
Provision for Loan Losses Expense	(916)		900
Non-interest Expense	51,521		50,750
Income Before Income Taxes	37,216		32,270
Income Tax Expense	8,712		6,401
Net Income	$	28,504	$	25,869
Earnings Per Share and Diluted Earnings Per Share	$	0.76	$	0.69

For the three months ended March 31, 2025, the above pro forma financial information excludes non-recurring merger costs that totaled $5,932 on a pre-tax basis and Day 1 provision for credit losses under the CECL model of $16,200 on a pre-tax basis.