Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549-1004
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
April
16,
2007
Date
of
Report (Date of earliest event reported)
GERMAN
AMERICAN BANCORP, INC.
(Exact
name of registrant as specified in its charter)
|
Indiana
(State
or other jurisdiction of incorporation)
|
0-11244
(Commission
File Number)
|
35-1547518
(IRS
Employer Identification Number)
|
|
711
Main Street
Box
810
Jasper,
Indiana
(Address
of principal executive offices)
|
47546
(Zip
Code)
|
Registrant's
telephone number, including area code: (812) 482-1314
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
8.01. Other Events.
As
previously disclosed in Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Non-Performing Assets”, of its
Annual Report on Form 10-K for the year ended December 31, 2006, German American
Bancorp, Inc. (the “Company”) at December 31, 2006 had a level of non-performing
loans that was higher than historic levels. At December 31, 2006, a single
credit facility, which was extended to a borrower that owned and operated two
hotel facilities, was largely responsible for the elevated level of
non-performing loans. This facility included extensions of credit in the
approximate amount of $3.5 million (after a partial charge-off during 2006)
that
were secured by a first priority lien on the hotel properties.
In
late
March, 2007, the Company acquired deeds in lieu of foreclosure of these two
hotel properties and placed the hotels under control of an independent
management company pending their sale. On April 16, 2007, the Company agreed
to
sell the two hotels, subject to conventional financing by
the Company, to an unaffiliated purchaser for a sales price of
approximately $2.2 million, net of the costs of sale, and the sale of the
properties closed on April 20, 2007.
The
net
effect of these activities was to decrease the level of the Company’s
non-performing loans at March 31, 2007, by the entire $3.5 million year-end
carrying value of the credit secured by the hotel facilities, and to record
the
carrying value of the hotel properties as “other real estate owned” at $2.2
million as of March 31, 2007. During the first quarter of 2007, the Company
charged the difference of $1.3 million against its allowance for loan losses
and
recorded a corresponding expense ($785 thousand after tax) for a special
provision for loan losses.
In
connection with the Company’s agreement with its borrower under which the deeds
to the hotels were acquired in lieu of foreclosure, one of the principals of
the
borrower executed and delivered to the Company’s subsidiary bank his ten-year
monthly installment personal promissory note in the principal amount of $1.1
million, and has in fact paid the first two installments due under that note.
Due to substantial uncertainty about the personal financial ability of the
obligor under the note to pay it in accordance with its terms, however, the
Company has not recognized any value for this personal note in its financial
statements. If, and to the extent that, this obligor continues to pay
installments under the note in accordance with its terms, or the note is
otherwise sold or liquidated for value by the Company, the Company could recover
some of this charge-off in future periods.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
GERMAN AMERICAN BANCORP,
INC. |
| |
|
|
| |
|
|
|
Dated:
April 25, 2007
|
By:
|
/s/
Mark A. Schroeder
|
| |
|
Mark
A. Schroeder, President and
Chief
Executive Officer
|