"Clearly, clients throughout Southern Indiana are, in increasing numbers, recognizing the value of doing business with German American, and are reaching out to us to assist them in the achievement of their financial goals. We very much appreciate the opportunity these clients have afforded us and we pledge to them that we will work diligently to achieve their financial goals and to earn their confidence and trust."

Balance Sheet Highlights

Total assets for the Company increased to $2.006 billion at December 31, 2012, representing an increase of $132.5 million compared with December 31, 2011. The increase during 2012 was largely attributable to growth of the Company's loan portfolio.

December 31, 2012 loans outstanding increased by $39.8 million, or approximately 14% on an annualized basis, compared with September 30, 2012, and increased $84.4 million, or approximately 8%, compared to year-end 2011. The increase in loans during fourth quarter and year ended 2012 was broad based including commercial and industrial loans, commercial real estate loans and agricultural loans.
End of Period Loan Balances 12/31/12 09/30/12 12/31/11
(dollars in thousands)      
       
Commercial & Industrial Loans  $ 335,373  $ 328,058  $ 293,172
Commercial Real Estate Loans  488,496  467,666  452,071
Agricultural Loans  179,906  165,198  167,693
Consumer Loans  115,540  116,480  124,479
Residential Mortgage Loans  88,586  90,744  86,134
   $ 1,207,901  $ 1,168,146  $ 1,123,549

Non-performing assets totaled $12.4 million at December 31, 2012 compared to $14.1 million of non-performing assets at September 30, 2012 and $20.6 million at December 31, 2011. Non-performing assets represented 0.62% of total assets at December 31, 2012 compared to 0.72% of total assets at September 30, 2012, and compared to 1.10% at December 31, 2011. Non-performing loans totaled $10.7 million at December 31, 2012 compared to $12.5 million at September 30, 2012, and compared to $18.3 million of non-performing loans at December 31, 2011. Non-performing loans represented 0.89% of total loans at December 31, 2012 compared with 1.08% of total outstanding loans at September 30, 2012 and 1.63% of total loans outstanding at December 31, 2011.
Non-performing Assets      
(dollars in thousands)      
       
  12/31/12 9/30/12 12/31/11
Non-Accrual Loans  $ 10,357  $ 12,144  $ 17,857
Past Due Loans (90 days or more)  --  --  --
Restructured Loans  362  382  409
Total Non-Performing Loans  10,719  12,526  18,266
Other Real Estate  1,645  1,610  2,343
Total Non-Performing Assets  $ 12,364  $ 14,136  $ 20,609

The Company's allowance for loan losses totaled $15.5 million at December 31, 2012 representing a decrease of $402,000 or 10% on an annualized basis from September 30, 2012 and an increase of $208,000 or 1% compared with year-end 2011. The allowance for loan losses represented 1.29% of period end loans at December 31, 2012 compared with 1.37% of period-end loans at September 30, 2012 and December 31, 2011. Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller. The Company held a discount on acquired loans of $3.5 million as of December 31, 2012, $3.8 million at September 30, 2012 and $6.4 million at year-end 2011.

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