Earnings momentum for
German American Bancorp Inc.
) has been advancing since this regional bank posted strong second
quarter results, which included an earnings surprise of 11.9%. The
company has now surpassed the Zacks Consensus Estimate for six
straight quarters with an average surprise of 21.1%.
Strong estimate revisions helped German American Bancorp achieve a
Zacks #1 Rank (Strong Buy) on August 3 and reach its 52-week high
on August 6. In addition, with a P/B multiple of just 1.51, this
stock is an attractive pick for value investors.
Strong Second Quarter Results
On July 30, German American Bancorp reported second quarter 2012
earnings of 47 cents per share, outpacing the Zacks Consensus
Estimate of 42 cents and rising 20.5% from 39 cents in the year-ago
quarter. The improvement was driven by growth on the top line,
partially offset by higher operating expenses.
Net interest income surged 2.4% from the year-ago quarter to $16.6
million. Likewise, non-interest income jumped 10.8% to $4.8
million. Nevertheless, non-interest expenses inched up 1.2% to
$12.4 million on the back of higher salaries and benefit costs.
German American Bancorp witnessed a modest improvement in its asset
quality during the quarter with provisions for loan losses showing
a drastic decline. It fell from $1.3 million in the prior-year
quarter to $0.4 million. Moreover, nonperforming assets totaled
$18.1 million, down 8.9% from the year-ago quarter.
Surge in Earnings Estimates
Over the last 30 days, the Zacks Consensus Estimate for 2012
increased 8.2% to $1.84 per share with all five estimates revised
upward. This implies year-over-year growth of 14.2%. Similarly, for
2013, all five estimates moved north over the same time frame,
helping the Zacks Consensus Estimate improve 8.0% to $1.88.
Valuation Looks Reasonable
Along with a P/B multiple of 1.51, German American Bancorp has a
forward P/E ratio of 11.5 (A P/E ratio under 15.0 and P/B ratio
below 3.0 generally indicate value). Additionally, it currently
enjoys a robust dividend yield of 2.65%. Therefore, in addition to
being a value stock, the company also offers a steady income
Jasper, Indiana-based German American Bancorp is a financial
services holding company with a market capitalization of
approximately $266.9 million. The company operates nearly 34 retail
banking offices in 12 southern Indiana counties through its banking
subsidiary - German American Bancorp. In addition, the company also
owns a trust, brokerage and financial planning subsidiary, as well
as a property and casualty insurance agency. Moreover, German
American Bancorp competes with Firstbank Corporation (
) and Enterprise Financial Services Corp. (
) among others.
GERMAN AMER BCP (GABC): Free Stock Analysis
To read this article on Zacks.com click here.