Northeast Indiana Bancorp, Inc. Announces Increased Year End 2010 Earnings

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Feb 11, 2011, 12:31 ET

HUNTINGTON, Ind., Feb. 11, 2011 /PRNewswire/ -- Northeast Indiana Bancorp, Inc., (OTC Bulletin Board: NIDB), the parent company of First Federal Savings Bank, today announced earnings for the year ended December 31, 2010 of $2.0 million ($1.64 per diluted common share) compared to net income of $1.9 million ($1.53 per diluted common share) for the year ended December 31, 2009. The full year 2010 earnings equates to an annualized return on average assets (ROA) of 0.78% and a return on average equity (ROE) of 8.49% as compared to an ROA of 0.75% and an ROE of 8.32% for the full year 2009.

Commenting on the financial results, First Federal Savings Bank President Michael S. Zahn stated, "We are very happy with the Company's performance in 2010 and extremely proud to have achieved this level of success without any government assistance. In a continued challenging economic environment, the Company was able to significantly increase our core deposits while sharply reducing higher costing borrowed funds, increase earnings, increase capital and continue to aggressively fund the allowance for loan losses. This enabled the board to reward our shareholders with an increased dividend in 2010."

Net interest income increased by $405,000 or 5.0% to $8.6 million for the year ended December 31, 2010 when compared to $8.2 million for the year ended December 31, 2009. The Company's net interest margin increased 9 basis points to 3.54% for the twelve months ended December 31, 2010 versus 3.45% for the twelve months ended December 31, 2009.

The Company made a $1.7 million provision for loan loss for the year ended December 31, 2010 compared to a $1.4 million provision for loan loss for the year ended December 31, 2009. Management continues to feel it is prudent to increase the allowance for loan losses by setting aside provisions for loan losses at higher levels during these uncertain economic conditions. The bank recorded net charge-offs of $1.3 million for the year ended December 31, 2010 compared to net charge-offs of $282,000 for the year ended December 31, 2009.

Noninterest income increased by $274,000 to $2.6 million for the year ended December 31, 2010 when compared to $2.3 million for the year ended December 31, 2009. This increase is primarily due to decreased losses on security sales as well as a net gain on the sale of repossessed assets for 2010 compared to a net loss in the same area for 2009. Brokerage fees also increased sharply in 2010. These increases more than offset a decrease in service charges on deposits due to regulatory changes implemented on courtesy overdraft programs.

Non-interest expenses increased to $6.7 million for the year ended December 31, 2010 compared to $6.3 million for the year ended December 31, 2009. This increase came from both increases in wages and occupancy from the first full year of a new full service branch which opened in Fort Wayne, Indiana during September 2009.

Net income was reported at $530,000 for the three months ended December 31, 2010, an increase of $179,000 or 51.1% from net income of $351,000 for the three months ended December 31, 2009. The sharp increase between quarterly periods is primarily due to increased noninterest income, increased net interest income as well as lower levels of loan loss provisions taken between quarterly periods. Net interest income increased $158,000 due to an improving net interest margin for the current quarter ended December 31, 2010 compared to the quarter one year ago. Noninterest income increased to $735,000 for the three months ended December 31, 2010 when compared to $468,000 for the three months ended December 31, 2009 due to significantly increased net gains on the sale of loans as well as increased net gain on the sale of repossessed assets. Noninterest expenses increased $218,000 to $1.8 million for the quarter ended December 31, 2010 when compared to $1.6 million for the quarter ended December 31, 2009, primarily due to increased wages and valuation allowances on repossessed assets. Valuation allowances on repossessed assets for the quarter ended December 31, 2010 included an additional reserve of $148,000 set up against some real estate parcels in REO.

Total assets increased $3.4 million to $256.1 million at December 31, 2010 compared to December 31, 2009 assets of $252.7 million. Net loans receivable decreased to $182.9 million at December 31, 2010 from $191.3 million at December 31, 2009. Total deposits increased $21.8 million or 14.1% to $176.4 million at December 31, 2010 from $154.6 million at December 31, 2009. Non-maturity deposit balances increased $36.8 million while time deposit balances declined by $15.0 million over the current twelve month period. Borrowed funds decreased $19.5 million or 36.4% to $53.6 million at December 31, 2010 compared to $73.1 million at December 31, 2009.

Shareholder's equity at December 31, 2010 was $24.1 million compared to the $23.0 million reported at December 31, 2009. The Company paid out cash dividends of $855,000 to shareholders during the year ended December 31, 2010. The book value of NIDB stock was $19.46 per common share as of December 31, 2010 as compared to a book value of $18.66 per common share as of December 31, 2009. The number of outstanding common shares was 1,239,946. The last reported trade of the stock on December 31, 2010 was $13.00 per common share.

Northeast Indiana Bancorp, Inc. is headquartered at 648 N. Jefferson Street, Huntington, Indiana. The company offers a full array of banking and financial brokerage services to its customers through its main office in Huntington and four full-service Indiana offices in Huntington (2), Warsaw and Fort Wayne. The Company is traded on the Over the Counter Bulletin Board under the symbol "NIDB". Our web site address is www.firstfedindiana.com.

This press release may contain forward-looking statements, which are based on management's current expectations regarding economic, legislative and regulatory issues. Factors which may cause future results to vary materially include, but are not limited to, general economic conditions, changes in interest rates, loan demand, and competition. Additional factors include changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, regulatory and technological factors affecting each company's operations, pricing, products and services.

NORTHEAST INDIANA BANCORP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

*ASSETS*	December 31, 2010		December 31, 2009
Interest-earning cash and cash equivalents	$	9,450,979	$	10,929,272
Noninterest earning cash and cash equivalents	2,045,215		2,473,235
Total cash and cash equivalents	11,496,194		13,402,507
Securities available for sale	46,477,692		33,025,298
Securities held to maturity (fair value: Dec. 31, 2010 – $400,000 and Dec. 31, 2009 - $550,000)	400,000		550,000
Loans held for sale	353,642		53,200
Loans receivable, net of allowance for loan loss Dec. 31, 2010 $3,227,844 and Dec. 31, 2009 $2,868,468	182,913,386		191,267,218
Accrued interest receivable	981,357		1,040,528
Premises and equipment	2,554,170		2,158,406
Investments in limited liability partnerships	233,001		317,643
Cash surrender value of life insurance	6,765,215		6,514,390
Other assets	3,926,783		4,395,150
*Total Assets*	$	256,101,440	$	252,724,340
*LIABILITIES AND STOCKHOLDERS' EQUITY*
Non-interest bearing deposits	14,301,482		11,065,663
Interest bearing deposits	162,099,970		143,563,858
Borrowed Funds	53,565,973		73,064,228
Accrued interest payable and other liabilities	1,998,866		2,065,832
*Total Liabilities*	231,966,291		229,759,581

Retained earnings – substantially restricted	24,135,149		22,964,759
*Total Liabilities and Shareholders' Equity*	$	256,101,440	$		252,724,340

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2010		2009		2010		2009
Total interest income	$	3,201,718	$	3,357,035	$	12,893,073	$	13,803,756
Total interest expense		984,273		1,297,815		4,333,959		5,649,469
Net interest income	$	2,217,445	$	2,059,220	$	8,559,114	$	8,154,287
Provision for loan losses		350,000		475,000		1,700,000		1,400,000
Net interest income after provision for loan losses	$	1,867,445	$	1,584,220	$	6,859,114	$	6,754,287
Service charges on deposit accounts		153,950		188,198		669,294		707,905
Net loss on securities		(102,212)		(150,100)		(171,470)		(234,235)
Other than temporary impairment- securities		-		-		-		-
Net gain on sale of loans		307,061		92,274		787,771		754,283
Net gain (loss) on sale of repossessed assets		81,473		3,437		27,390		(123,219)
Net gain (loss) on sale of fixed assets		(1,068)		(1,645)		(968)		1,703
Brokerage fees		80,560		87,831		385,474		303,521
Other income		215,267		247,644		913,526		927,315
Total noninterest income	$	735,031	$	467,639	$	2,611,017	$	2,337,273
Salaries and employee benefits		815,611		738,023		3,369,347		3,052,370
Occupancy		232,580		231,545		887,338		861,214
Data processing		200,322		187,345		766,761		753,975
Deposit insurance premiums		84,000		55,000		317,400		381,000
Professional fees		75,590		85,197		296,711		287,353
Correspondent bank charges		31,629		31,412		124,496		122,861
Valuation allowances – repossessed assets		148,000		-		148,000		-
Other expense		196,429		238,041		756,795		882,669
Total noninterest expenses	$	1,784,161	$	1,566,563	$	6,666,848	$	6,341,442
Income/(Loss) before income tax expense	$	818,315	$	485,296	$	2,803,283	$	2,750,118
Income tax expense/(benefit)		288,555		134,593		790,985		872,160
Net Income	$	529,760	$	350,703	$	2,012,298	$	1,877,958

NORTHEAST INDIANA BANCORP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	Three Months Ended December 31,					Twelve Months Ended December 31,
	2010			2009		2010		2009
Basic Earnings per common share	0.43			0.29		1.64		1.53
Dilutive Earnings per share	0.43			0.29		1.64		1.53
Net interest margin	3.59%			3.47%		3.54%		3.45%
Return on average assets	0.81%			0.55%		0.78%		0.75%
Return on average equity	8.70%			6.05%		8.49%		8.32%
Efficiency Ratio	60.43%			62.00%		59.68%		60.44%
Average shares outstanding - primary	1,228,770			1,228,770		1,229,383		1,228,239
Average shares outstanding - diluted	1,228,770			1,228,770		1,229,895		1,228,779

Allowance for loan losses:
Balance at beginning of period	$		2,823,116	$	2,422,874	$	2,868,468	$	1,750,605
Charge-offs:
One-to-four family	9,645			-		322,150		203,962
Commercial real estate	-			-		302,368		-
Commercial	89,303			-		890,409		74,193
Consumer	25,028			39,496		56,314		183,525
Gross charge-offs	123,976			39,496		1,571,241		461,680
Recoveries:
One-to-four family	64,525			800		67,450		2,555
Commercial real estate	-			-		455		-
Commercial	101,304			-		108,095		136,635
Consumer	12,875			9,290		54,617		40,353
Gross recoveries	178,704			10,090		230,617		179,543
Net charge-offs (recoveries)	(54,728)			29,406		1,340,624		282,137
Additions charged to operations	350,000			475,000		1,700,000		1,400,000
Balance at end of period	$		3,227,844	$	2,868,468	$	3,227,844	$	2,868,468

Net loan charge-offs (recoveries) to average loans (1)	(0.03)%			0.01%		0.69%		0.14%

Nonperforming assets (000's)	At December 31,			At September 30,		At June 30,		At December 31,
Loans:	2010			2010		2010		2009
Non-accrual	$		7,275	$	6,246	$	4,552	$	2,826
Past 90 days or more and still accruing	-			-		-		-
Troubled debt restructured	737			708		621		3,008
Total nonperforming loans	8,012			6,954		5,173		5,834
Real estate owned	594			1,487		1,058		934
Other repossessed assets	-			19		6		11
Total nonperforming assets	$		8,606	$	8,460	$	6,237	$	6,779

Nonperforming assets to total assets	3.36%			3.28%		2.42%		2.68%
Nonperforming loans to total loans	4.30%			3.65%		2.68%		3.01%
Allowance for loan losses to nonperforming loans	40.29%			40.59%		54.86%		49.16%
Allowance for loan losses to total receivable	1.76%			1.48%		1.49%		1.50%
	At December 31,
	2010			2009
Stockholders' equity as a % of total assets	9.42%			9.09%
Book value per share	$	19.46		$	18.66
Common shares outstanding- EOP	1,239,946			1,230,670

(1) Ratios for the three-month periods are annualized.