Northeast Indiana Bancorp, Inc. Announces Increased Quarterly Earnings

HUNTINGTON, Ind., July 14, 2011 /PRNewswire/ –Northeast Indiana Bancorp, Inc.
(OTC Bulletin Board: NIDB), the parent company of First Federal Savings Bank,
today announced net income of $677,000 ($0.55 per diluted common share) for the
Company’s second quarter ended June 30, 2011, an increase of $186,000 or 37.9%
when compared to net income of $491,000 ($0.40 per diluted common share)for the
second quarter ended June 30, 2010. The current three months earnings equates to
an annualized return on average assets (ROA) of 1.05% and a return on average
equity (ROE) of 11.05% compared to an annualized ROA of 0.76% and an ROE of
8.38% for the three months ended June 30, 2010.

Commenting on the financial results, CEO Michael S. Zahn stated, “We are very
pleased to have recorded such strong earnings for our shareholders in a
challenging environment. These results are a reflection of the dedication and
commitment by our employees. As a community bank, we take pride in serving our
customers and the communities in which we operate.”

Net interest income increased by $107,000 or 5.0% to $2.2 million for the
quarter ended June 30, 2011 when compared to $2.1 million for the quarter ended
June 30, 2010. The Company’s net interest margin increased by nineteen basis
points to 3.74% for the current quarter compared to 3.55% in the year earlier
quarter. Sequentially, the current quarter’s 3.74% net interest margin was also
a sixteen basis point improvement over the quarter ended March 31, 2011 net
interest margin of 3.58%.

The Company made a $350,000 provision for loan loss during the quarter ended
June 30, 2011 compared to a $500,000 provision for loan loss for the quarter
ended June 30, 2010. Management continues to feel it is prudent to maintain or
increase the allowance for loan losses by setting aside provisions for loan
losses at higher levels during these weak economic conditions. The bank recorded
net charge-offs of $432,000 for the quarter ended June 30, 2011 compared to net
charge-offs of $452,000 for the quarter ended June 30, 2010.

Noninterest income increased by $16,000 to $717,000 during the quarter ended
June 30, 2011 when compared to $701,000 in the same quarterly period a year ago.
This was primarily due to an increase in net gains on security sales partially
offset by reductions in service charges, brokerage fees and other income.

Noninterest expense increased by $39,000 but was relatively unchanged at $1.7
million for the quarter ended June 30, 2011 and for the quarter June 30, 2010.
Modest increases in occupancy and data processing were partially offset by a
decrease to other expense. Professional fees increased as collection efforts
remain high while compliance costs have been increasing as well. The Company’s
efficiency ratio improved to 57.4% for the current three month period compared
to 58.5% in the prior year three month period.

Net income for the six months ended June 30, 2011 decreased to $663,000 ($0.54
per diluted common share) compared to net income of $944,000 ($0.76 per diluted
common share) for the six months ended June 30, 2010. The decrease in net income
between six month periods is solely due to an increase in loan loss provisions
of $700,000 that management elected to take during the quarter ended March 31,
2011 to bolster the allowance for loan losses due to continued weak real estate
markets in which we do business.

Noninterest income was unchanged between six month periods at $1.2 million while
noninterest expense increased $91,000 or 2.8% during the same time frame due
mostly to higher occupancy and professional fees.

Total assets decreased $891,000 to $255.2 million at June 30, 2011 compared to
December 31, 2010 assets of $256.1 million. Net loans decreased $8.7 million to
$174.2 million at June 30, 2011 compared to $182.9 million at December 31, 2010
as weak loan demand continues to persist. Total deposits increased by $7.7
million to $184.9 million at June 30, 2011 from $176.4 million at December 31,
2010. The increase in total deposits came in NOW, MMDA and Savings balances
through First Federal’s full service branches. These newly acquired
lower-costing deposits were utilized to pay off maturing brokered deposits and
wholesale borrowed funds. Borrowed funds declined $9.7 million or 18.0% to $43.9
million at June 30, 2011 compared to $53.6 million at December 31, 2010.

Shareholder’s equity increased to $24.9 million at June 30, 2011 compared to
$24.1 million at December 31, 2010. The book value of NIDB’s stock was $20.08
per common share as of June 30, 2011. The number of outstanding common shares
was 1,239,946 as of the same date. The last reported trade of the stock on July
13, 2011 was $11.95 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 June 30, December 31,
——– ————-
2011 2010
—- —-
Interest-earning cash and cash equivalents $10,026,304 $9,450,979
Noninterest earning cash and cash equivalents 2,316,321 2,045,215
——— ———
Total cash and cash equivalents 12,342,625 11,496,194
Securities available for sale 52,398,200 46,477,692
Securities held to maturity 505,008 400,000
Loans held for sale 571,000 353,642
Loans receivable, net of allowance for loan
loss June 30, 2011 $3,608,088 and December
31, 2010 $3,227,844 174,204,600 182,913,386
Accrued interest receivable 980,598 981,357
Premises and equipment 2,526,198 2,554,170
Investments in limited liability partnerships 193,407 233,001
Cash surrender value of life insurance 6,892,218 6,765,215
Other assets 4,596,256 3,926,783
Total Assets $255,210,110 $256,101,440
============ ============
LIABILITIES AND STOCKHOLDERS’ EQUITY
Non-interest bearing deposits 12,852,438 14,301,482
Interest bearing deposits 171,250,359 162,099,970
Borrowed Funds 43,899,081 53,565,973
Accrued interest payable and other
liabilities 2,309,902 1,998,866
——— ———
Total Liabilities 230,311,780 231,966,291
———– ———–

Retained earnings – substantially restricted 24,898,330 24,135,149
Total Liabilities and Shareholder’s Equity $255,210,110 $256,101,440
============ ============

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended
June 30,
2011 2010
—- —-
Total interest income $3,054,984 $3,235,620
Total interest expense 811,963 1,100,060
———————- ——- ———
Net interest income $2,243,021 $2,135,560
——————- ———- ———-
Provision for loan losses 350,000 500,000
Net interest income after
provision for loan losses $1,893,021 $1,635,560
Service charges on deposit
accounts 154,307 177,870

Net gain (loss) on sale of
securities 114,180 (5,646)
Net gain on sale of loans 192,274 214,723
Net loss on sale of repossessed
assets (51,795) (37,575)
Brokerage fees 93,602 106,870
Increase in cash surrender value
of life insurance 62,138 63,319
Other income 152,697 181,083
————
Total noninterest income $717,403 $700,644
———————— ——– ——–
Salaries and employee benefits 859,351 865,240

Occupancy 245,581 224,035
Data processing 197,936 187,372
Deposit insurance premiums 79,000 78,000
Professional fees 109,643 81,172
Correspondent bank charges 34,977 31,653
Other expense 171,738 191,284
————- ——- ——-
Total noninterest expenses $1,698,226 $1,658,756
————————–
Income before income tax expenses $912,198 $677,448
——————————— ——– ——–
Income tax expense 235,419 186,668
Net Income $676,779 $490,780
========== ======== ========

Six Months Ended
June 30,
2011 2010
—- —-
Total interest income $6,084,635 $6,443,281
Total interest expense 1,696,326 2,276,889
———————- ——— ———
Net interest income $4,388,309 $4,166,392
——————- ———- ———-
Provision for loan losses 1,550,000 850,000
Net interest income after
provision for loan losses $2,838,309 $3,316,392
Service charges on deposit
accounts 289,989 343,316

Net gain (loss) on sale of
securities 114,180 (39,847)
Net gain on sale of loans 254,086 245,568
Net loss on sale of repossessed
assets (101,296) (53,342)
Brokerage fees 190,157 217,745
Increase in cash surrender value
of life insurance 127,003 126,638
Other income 317,129 349,068
———— ——-
Total noninterest income $1,191,248 $1,189,146
———————— ———- ———-
Salaries and employee benefits 1,709,110 1,705,032

Occupancy 471,347 428,388
Data processing 392,573 377,719
Deposit insurance premiums 163,000 149,400
Professional fees 186,841 143,170
Correspondent bank charges 67,327 60,547
Other expense 350,982 385,569
————- ——- ——-
Total noninterest expenses $3,341,180 $3,249,825
————————–
Income before income tax expenses $688,377 $1,255,713
——————————— ——– ———-
Income tax expense 25,760 312,105
Net Income $662,617 $943,608
========== ======== ========

NORTHEAST INDIANA BANCORP
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended
June 30,
2011 2010
—- —-
Basic Earnings per common share 0.55 0.40
Dilutive Earnings per share 0.55 0.40
Net interest margin 3.74% 3.55%
Return on average assets 1.05% 0.76%
Return on average equity 11.05% 8.38%
Efficiency ratio 57.36% 58.49%
Average shares outstanding -
primary 1,231,675 1,238,246
Average shares outstanding -
diluted 1,231,675 1,238,246
—————————- ——— ———

Allowance for loan losses:
Balance at beginning of period $3,690,382 $2,790,401
Charge-offs:
One-to-four family – 7,292
Commercial real estate 289,340 128,082
Land/land development – -
Commercial 77,705 328,269
Consumer 76,048 8,983
—— —–
Gross charge-offs 443,093 472,627
Recoveries:
One-to-four family 650 975
Commercial real estate – -
Land/land development – -
Commercial – -
Consumer 10,149 19,611
—— ——
Gross recoveries 10,799 20,586
—— ——
Net charge-offs 432,294 452,041
Additions charged to operations 350,000 500,000
——- ——-
Balance at end of period $3,608,088 $2,838,360
========== ==========

Net loan charge-offs to average
loans (1) 0.96% 0.93%
——————————- —- —-

At March
Nonperforming assets (000′s) At June 30, 31,
Loans: 2011 2011
—- —-
Non-accrual $5,640 $5,908
Past 90 days or more and still
accruing – -
Troubled debt restructured 2,421 2,611
—– —–
Total nonperforming loans 8,061 8,520
Real estate owned 1,586 1,694
Other repossessed assets 1 1
— —
Total nonperforming assets $9,648 $10,215
====== =======

Nonperforming assets to total
assets 3.78% 3.99%
Nonperforming loans to total
loans 4.53% 4.65%
Allowance for loan losses to
nonperforming loans 44.77% 43.32%
Allowance for loan losses to net
loans receivable 2.07% 2.05%

At June 30,
2011 2010
—- —-

Stockholders’ equity as a % of
total assets 9.76% 9.18%
Book value per share $20.08 $19.11
Common shares outstanding- EOP 1,239,946 1,239,946

Six Months Ended
June 30,
2011 2010
—- —-
Basic Earnings per common share 0.54 0.76
Dilutive Earnings per share 0.54 0.76
Net interest margin 3.66% 3.52%
Return on average assets 0.51% 0.74%
Return on average equity 5.44% 9.64%
Efficiency ratio 59.88% 60.69%
Average shares outstanding -
primary 1,231,419 1,236,933
Average shares outstanding -
diluted 1,231,728 1,236,966
—————————- ——— ———

Allowance for loan losses:
Balance at beginning of period $3,227,844 $2,868,468
Charge-offs:
One-to-four family 330,453 99,359
Commercial real estate 289,340 128,082
Land/land development 284,961 -
Commercial 124,292 675,061
Consumer 158,903 9,353
——- —–
Gross charge-offs 1,187,949 911,855
Recoveries:
One-to-four family 1,450 1,950
Commercial real estate – -
Land/land development – -
Commercial – -
Consumer 16,743 29,797
—— ——
Gross recoveries 18,193 31,747
—— ——
Net charge-offs 1,169,756 880,108
Additions charged to operations 1,550,000 850,000
——— ——-
Balance at end of period $3,608,088 $2,838,360
========== ==========

Net loan charge-offs to average
loans (1) 1.27% 0.90%
——————————- —- —-

Nonperforming assets (000′s) At December 31,
Loans: 2010
—-
Non-accrual $7,275
Past 90 days or more and still
accruing -
Troubled debt restructured 737
—
Total nonperforming loans 8,012
Real estate owned 594
Other repossessed assets -
—
Total nonperforming assets $8,606
======

Nonperforming assets to total
assets 3.36%
Nonperforming loans to total
loans 4.30%
Allowance for loan losses to
nonperforming loans 40.29%
Allowance for loan losses to net
loans receivable 1.76%

Stockholders’ equity as a % of
total assets
Book value per share
Common shares outstanding- EOP

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

SOURCE Northeast Indiana Bancorp, Inc.