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

HUNTINGTON, Ind., Feb. 14, 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, December 31,
———— ————
2010 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
December 31,
2010 2009
—- —-
Total interest income $3,201,718 $3,357,035
Total interest expense 984,273 1,297,815
———————- ——- ———
Net interest income $2,217,445 $2,059,220
——————- ———- ———-
Provision for loan losses 350,000 475,000
Net interest income after
provision for loan losses $1,867,445 $1,584,220
Service charges on deposit
accounts 153,950 188,198
Net loss on securities (102,212) (150,100)

Other than temporary impairment-
securities – -
Net gain on sale of loans 307,061 92,274
Net gain (loss) on sale of
repossessed assets 81,473 3,437
Net gain (loss) on sale of fixed
assets (1,068) (1,645)
Brokerage fees 80,560 87,831
Other income 215,267 247,644
————
Total noninterest income $735,031 $467,639
———————— ——– ——–
Salaries and employee benefits 815,611 738,023
Occupancy 232,580 231,545
Data processing 200,322 187,345
Deposit insurance premiums 84,000 55,000
Professional fees 75,590 85,197
Correspondent bank charges 31,629 31,412
Valuation allowances -
repossessed assets 148,000 -
Other expense 196,429 238,041
————- ——- ——-
Total noninterest expenses $1,784,161 $1,566,563
————————–
Income/(Loss) before income tax
expense $818,315 $485,296
——————————- ——– ——–
Income tax expense/(benefit) 288,555 134,593
Net Income $529,760 $350,703

Twelve Months Ended
December 31,
2010 2009
—- —-
Total interest income $12,893,073 $13,803,756
Total interest expense 4,333,959 5,649,469
———————- ——— ———
Net interest income $8,559,114 $8,154,287
——————- ———- ———-
Provision for loan losses 1,700,000 1,400,000
Net interest income after
provision for loan losses $6,859,114 $6,754,287
Service charges on deposit
accounts 669,294 707,905
Net loss on securities (171,470) (234,235)

Other than temporary impairment-
securities – -
Net gain on sale of loans 787,771 754,283
Net gain (loss) on sale of
repossessed assets 27,390 (123,219)
Net gain (loss) on sale of fixed
assets (968) 1,703
Brokerage fees 385,474 303,521
Other income 913,526 927,315
———— ——-
Total noninterest income $2,611,017 $2,337,273
———————— ———- ———-
Salaries and employee benefits 3,369,347 3,052,370
Occupancy 887,338 861,214
Data processing 766,761 753,975
Deposit insurance premiums 317,400 381,000
Professional fees 296,711 287,353
Correspondent bank charges 124,496 122,861
Valuation allowances -
repossessed assets 148,000 -
Other expense 756,795 882,669
————- ——- ——-
Total noninterest expenses $6,666,848 $6,341,442
————————–
Income/(Loss) before income tax
expense $2,803,283 $2,750,118
——————————- ———- ———-
Income tax expense/(benefit) 790,985 872,160
Net Income $2,012,298 $1,877,958

NORTHEAST INDIANA BANCORP
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended
December 31,
2010 2009
—- —-
Basic Earnings per common share 0.43 0.29
Dilutive Earnings per share 0.43 0.29
Net interest margin 3.59% 3.47%
Return on average assets 0.81% 0.55%
Return on average equity 8.70% 6.05%
Efficiency Ratio 60.43% 62.00%
Average shares outstanding -
primary 1,228,770 1,228,770
Average shares outstanding -
diluted 1,228,770 1,228,770
—————————- ——— ———

Allowance for loan losses:
Balance at beginning of period $2,823,116 $2,422,874
Charge-offs:
One-to-four family 9,645 -
Commercial real estate – -
Commercial 89,303 -
Consumer 25,028 39,496
—— ——
Gross charge-offs 123,976 39,496
——- ——
Recoveries:
One-to-four family 64,525 800
Commercial real estate – -
Commercial 101,304 -
Consumer 12,875 9,290
—— —–
Gross recoveries 178,704 10,090
——- ——
Net charge-offs (recoveries) (54,728) 29,406
Additions charged to operations 350,000 475,000
——- ——-
Balance at end of period $3,227,844 $2,868,468
========== ==========

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

At December At September
Nonperforming assets (000′s) 31, 30,
Loans: 2010 2010
—- —-
Non-accrual $7,275 $6,246
Past 90 days or more and still
accruing – -
Troubled debt restructured 737 708
— —
Total nonperforming loans 8,012 6,954
Real estate owned 594 1,487
Other repossessed assets – 19
— —
Total nonperforming assets $8,606 $8,460
====== ======

Nonperforming assets to total
assets 3.36% 3.28%
Nonperforming loans to total loans 4.30% 3.65%
Allowance for loan losses to
nonperforming loans 40.29% 40.59%
Allowance for loan losses to total
receivable 1.76% 1.48%
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

Twelve Months Ended
December 31,
2010 2009
—- —-
Basic Earnings per common share 1.64 1.53
Dilutive Earnings per share 1.64 1.53
Net interest margin 3.54% 3.45%
Return on average assets 0.78% 0.75%
Return on average equity 8.49% 8.32%
Efficiency Ratio 59.68% 60.44%
Average shares outstanding -
primary 1,229,383 1,228,239
Average shares outstanding -
diluted 1,229,895 1,228,779
—————————- ——— ———

Allowance for loan losses:
Balance at beginning of period $2,868,468 $1,750,605
Charge-offs:
One-to-four family 322,150 203,962
Commercial real estate 302,368 -
Commercial 890,409 74,193
Consumer 56,314 183,525
—— ——-
Gross charge-offs 1,571,241 461,680
——— ——-
Recoveries:
One-to-four family 67,450 2,555
Commercial real estate 455 -
Commercial 108,095 136,635
Consumer 54,617 40,353
—— ——
Gross recoveries 230,617 179,543
——- ——-
Net charge-offs (recoveries) 1,340,624 282,137
Additions charged to operations 1,700,000 1,400,000
——— ———
Balance at end of period $3,227,844 $2,868,468
========== ==========

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

At December
Nonperforming assets (000′s) At June 30, 31,
Loans: 2010 2009
—- —-
Non-accrual $4,552 $2,826
Past 90 days or more and still
accruing – -
Troubled debt restructured 621 3,008
— —–
Total nonperforming loans 5,173 5,834
Real estate owned 1,058 934
Other repossessed assets 6 11
— —
Total nonperforming assets $6,237 $6,779
====== ======

Nonperforming assets to total
assets 2.42% 2.68%
Nonperforming loans to total loans 2.68% 3.01%
Allowance for loan losses to
nonperforming loans 54.86% 49.16%
Allowance for loan losses to total
receivable 1.49% 1.50%

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.